Extreme Networks, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Extreme Networks Q4 Fiscal Year 20 Financial Results Conference Call. At this time, all participant lines are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Stan Kovler, Vice President of Corporate Strategy and Investor Relations. Thank you. Please go ahead, sir.

Thank you, Gigi, and welcome to the Xtreme Network's fourth quarter of fiscal year-end 2020 earnings conference call. I'm Stan Kovler, Vice President of Corporate Strategy and Investor Relations, and with me today are Xtreme Network's President and CEO, Ed Meyercord, and CFO, Remy Thomas. We just distributed a press release and filed an 8K detailing Extreme Network's fiscal fourth quarter and year-end fiscal 2020 financial results. For your convenience, a copy of the press release, which includes our GAAP to non-GAAP reconciliations and our financial results presentation, are both available in the investor relations section of our website at extremenetworks.com. I would like to remind you that during today's call, our discussion may include forward-looking statements about Extreme Network's future business, financial and operational results, Growth Expectations and Strategies, The Impact of COVID-19 Pandemic, Acquired Technologies, Products, Operations, Pricing, Changes to Our Supply Chain, The Impact of Tariffs, Acquisition and Integration of Arrowhive Networks, and Digital Transformation Initiatives. We caution you not to put undue reliance on these forward-looking statements as they involve risks and uncertainties that can cause actual results to differ materially from those anticipated by these statements and As described in our risk factors in our 10-K report for the period ending June 30, 2019, filed with the SEC, and in our more recent 8-K and 10-Q filings. Any forward-looking statements made on this call reflect our analysis as of today, and we have no plans or duty to update them except as required by law. Now I will turn the call over to Xtreme Network's President and CEO, Ed Meyercord.

Thank you, Stan, and thank you all for joining us this morning. First off, I also want to say thank you to our employees, customers, and partners in the front line of COVID who continue to face heightened risks in keeping our vital networking infrastructure up and running. It's been truly amazing to see how our customers' teams across all our industry verticals facing unprecedented challenges are responding with creative and innovative solutions to deliver enterprise applications to end users with secure and high-quality connections across new distributed networks. Our Q4 results reflect the resilience of our business and our ability to move quickly to adapt to the new normal. Networking infrastructure remains vital for our customers and demand remains strong. Now more than ever before, our brand promise of effortless networking is resonating with customers. Our universal hardware platforms from the wireless edge to wired core managed entirely from the cloud with machine learning insights and new AI tools to drive IT automation allow us to make it very easy to deploy and manage distributed networks. And networks are becoming more and more about data. Xtreme is the only provider in the industry to offer cloud choice and unlimited data and the first to bring end-to-end fabric management into the cloud. Our ability to bring enhanced flexibility and effortless is up-leveling our competitive position in dialogue with customers. So, has Xtreme implemented our own solutions internally? And the answer is yes. And how did we do it? Literally overnight. This is the power of Xtreme Cloud IQ. This week, Xtreme simultaneously transformed 18 global office locations by deploying new wireless and wired infrastructure managed by our cloud. By utilizing the capabilities of Xtreme Cloud IQ, we were able to pre-configure and architect our global environment before hardware was shipped to locations. Our automated device discovery and provisioning eliminated the need for any physical IT resources at each of the locations and allowed us to complete these 18 offices in a day. This rollout combined with planned expansions over the next 30 days will support Xtreme's entire global workforce of 3,000 people. On a personal note, I also implemented Xtreme Cloud a few months ago and I admit I'm not that technical. I was able to deploy four access points throughout my house with existing Ethernet cables, the beauty of power over Ethernet, along with a switch. The whole exercise took less than an hour, and since then, I've been demoing my cloud environment network performance with ML Insights regularly with customers, partners, and employees. It's that easy, effortless. Here are five of many milestones we achieved during the quarter. One, we had strong adoption of our cloud. 42% sequential growth in new subscription bookings and 8.5% sequential growth in our managed devices to 1.1 million. Two, we strengthened our financial position and flexibility by further reducing our revenue break-even point, delivering on profitability and cash generation during the quarter. Throughout the entire COVID crisis, Xtreme has generated Positive Free Cash Flow. Three, we revamped our go-to-market strategy and hired Joe Vidalone as our new Chief Revenue Officer. Joe is a proven sales leader, five-time CRO, has an excellent track record of leading and winning in our go-to-market model. As an added benefit, Joe and our new Chief Marketing Officer, Wes DeRoe, work together at Mitel, and both have had successful experiences pivoting businesses from on-prem to They've also identified our busy building new routes to market and improved processes that will ramp our lead gen, build funnel, and drive growth. Four, we restructured our R&D organization under our talented chief product officer, Nabeel Bukhari, and recently added CTO to his title so he can focus on next-gen technology innovation, bolstering our thought leadership in the industry, and and strengthening our strategic customer relationships. And five, we operationalize Extreme Cloud IQ to run on all three major public cloud platforms. And we're the only company that offers public, private or on-prem deployments. Not only that, we announce unlimited data for the lifetime of our customer subscription. In some respects, COVID has leveled the playing field in marketing. We've experienced unprecedented attendance and participation in customer events. During the fourth quarter, we generated over 1.7 billion impressions from our PR efforts. Our webinar attendance was up five times, and we generated three times as many marketing-qualified leads during the quarter than we did during the first three quarters. At our upcoming Connect User Conference, we're expecting five times the participation rate versus last year. The increase in our marketing productivity during COVID is only giving us confidence in our ability to grow and take share. Our sales teams are stepping up in a big way. We restructured our global field organization to enhance coverage of strategic and territory accounts and to support volume sales motions. We also launched a new sales playbook platform that was built by sales for sales and will empower every seller in our organization with very specific tools and training for their roles. Our field fully embraced and already signed up for our strength and commission plan and our cloud incentives in the first month of our fiscal year. And we just concluded our sales kickoff that received high marks and a better than expected response given the virtual environment. All in all, our sellers are off to a great start to fiscal 21. On August 10th, we will launch Extreme Empower. This is our channel self-service environment with volume-based promotions, to enable zero-touch discount authorizations to our distributors and partners. Extreme Empower is already in production with a select group of distributors, very positive, and we're committed to bringing Effortless to the channel as well. So, wrapping up Q4, a few key customer wins during the quarter included Madrid Digital Telehealth Network. We delivered secure access to the Department of Virtual Health and Social Services from 1.5 million citizens of Madrid, the capital of Spain. Nearly 17,000 healthcare administrators across 30 locations will deliver telehealth services and collect data from remote medical devices from Extreme Cloud IQ. Seoul, South Korea's Samsung display conducted significant edge migration of its network using a range of extreme edge switches. This is a wallet share win with one of the world's largest manufacturers. And we had significant state and local government and education wins, including the multi-million dollar network deployment at Jefferson County Public School System in Kentucky, the 29th largest system in the U.S., enabling digital learning tools and applications for 169 schools. And outside the U.S., we won several multi-million dollar deals with education systems in Germany, and Japan, driven by Extreme Cloud IQ. As we pivoted to fiscal year 21, we got off to a solid start with strong July linearity and funnel visibility that gives us confidence in our ability to deliver 4% sequential growth in what is typically a seasonally down quarter. We expect the gradual recovery from COVID to continue throughout fiscal 21 and believe Extreme will emerge from all of this As a stronger and more competitive company. With that, I'll turn the call over to our CFO, Remy Tola.