Extreme Networks, Inc.

Good day and thank you for standing by. Welcome to the Extreme Network's fourth quarter fiscal year 2021 financial results conference call. At this time, all participants 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 one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Stan Kovler, Vice President of Corporate Strategy and Investor Relations. Please go ahead.

Thank you, Operator. Welcome, everyone, to the Xtreme Network's fourth quarter 2021 and year-end 2021 earnings conference call. I'm Stan Kobler, Vice President of Corporate Strategy and Investor Relations. With me today are Xtreme Network's President and CEO, Ed Myercord, and CFO, Remy Thomas. We just distributed a press release and filed an 8K detailing Xtreme Network's financial results for the quarter 2021. For your convenience, a copy of the press release, which includes our gaps and non-gap reconciliations, is available at 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 Xtreme's future business, financial and operational results, growth expectations and strategies, the impact of the COVID pandemic, challenges in our supply chain, specifically as they relate to chip shortages, the impact of tariffs, digital transformation initiatives as well. 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, as described in our risk factors in our 10 report for the period ending June 30, 2020, filed with the SEC, and any additional risk factors in subsequent 10 filings. Any forward-looking statements made on this call They 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's President and CEO, Ed Myercord.

Thank you, Stan, and thank you all for joining us this morning. Q4 capped off a record year in our 25-year history as we crossed over the billion-dollar revenue mark for the very first time. This is an important milestone, and it was a long-term goal of ours. And importantly, the momentum we've built throughout the year with 36% overall year-over-year bookings growth that drove 29% revenue growth in the fourth quarter has carried into fiscal 22. And the strength of our year-end results are understated, given the fact that we tripled our backlog to over 100 million over the course of the year. Our execution has never been sharper, and as a result, Xtreme is in the strongest competitive position it's ever been in. This is evident in our industry leadership and significant growth opportunities and two of the fastest growth segments in our industry, cloud-driven enterprise networking and 5G network infrastructure services. The demand for our solutions and the volume of new opportunities are unprecedented, and we're taking share. This is evident in our funnel, our current and projected top-line growth forecast, our highest-ever full-year gross and operating margins, and our record free cash flow generation. The momentum of our cloud-driven business bookings continues to grow. Market share data from 650 Group affirmed that Xtreme remains the second largest in cloud networking, with 11% share last year. We're outpacing the market with our fourth consecutive quarter of triple-digit growth in new subscriptions bookings and 111% bookings growth during Q4. Our total cloud services business is now on an annualized run rate of over $100 million in bookings and over $70 million in revenue. As the second largest cloud-based networking vendor, we currently manage 1.7 million devices on XIQ, which marks eight straight quarters of rapid growth in customer accounts and managed devices. We continue to innovate with our cloud networking capabilities, making our co-pilot tool available to all users in June It delivers what we call explainable AI for a growing list of use cases in the form of next-level analytics and automation. And importantly, we brought our network management software that includes third-party devices with our XIQ site engine offering, which opens a seamless path to bring millions of devices managed by our popular and widely deployed XMC on-prem software to the cloud. The industry is noticing our momentum. CRN named XIQ product of the year, and Copilot was named coolest new offering of the year. We continue to be a leader in the Gartner Magic Quadrant, and we consistently carry the top rankings for customer service in Gartner's peer reviews for the last four years. To date, we have upgraded approximately 40% of our portfolio to universal hardware which is the latest generation of chipsets from Broadcom with embedded XIQ licenses. This is on track with our plan we laid out in the beginning of the year. In fiscal Q3, we noted that the 5520 was the most successful product introduction ever, but we broke this record in Q4 with the introduction of the 5420. The 5420 brings higher margins to our value tier with 80 gig stacking, MaxSec ready encryption, and new multi-rate capabilities up to 2.5 gigabit speeds, along with up to 90 watts of PoE. We also launched our 9920 NextGen Packet Broker this quarter. The product was delivered in record time with a product cycle of one year on a new hardware platform. This was an amazing feat by our engineering and product teams that is unprecedented. On the wireless side, we enable routing capabilities on the AP302W to expand our SD-WAN capabilities. And as we announced earlier this week, we were the first enterprise networking company in the industry to ship Wi-Fi 6E access points to our customers. That's the AP4000. Wi-Fi 6E brings an unprecedented amount of clean spectrum at the six gigahertz band that enables new apps and use cases. It's the first time in more than a decade that a new frequency band has been added to Wi-Fi. This band enables super high multi-gig speeds, and the AP can run on 2.4, 5, and 6 gigahertz frequencies simultaneously with enhanced security on top. Our target customers are on the front end of an investment cycle, and the momentum of large deals and project-based business continues to grow. as our large deal funnel is up 50% heading into fiscal 22. Customers are accelerating their return to work environments that are more flexible and hybrid in nature, supporting our infinite enterprise vision. The networking industry is set to experience the highest growth in years given this new normal, and global stimulus spending is also fueling growth as we come out of the historic pandemic. As Remy will discuss, the next wave of recovery in spending is coming from the hospitality sector, and we experienced particular strength with casino and hospitality customers this quarter, such as Wynn Resorts, Shooting Star Casino, Turning Stone Casino, Hard Rock Amsterdam Hotel, and others. In the sports and entertainment segment, notable new wins were Stanford University Stadium, where we displayed Cisco in the heart of Silicon Valley. Government stimulus is also funding part of the recovery. with programs across the globe in the education space, such as the FCC's Emergency Connectivity Fund, providing $7 billion to address the homework gap. Korea has announced $250 million direct investment in COVID-related education initiatives. The UK, $1.4 billion sterling catch-up program. These programs complement existing programs like DigitalPAC in Germany and GigaSchools in Japan. With extremes exposure to the education market, we stand to benefit from all these investments globally over the next several years. So what is Xtreme doing to capitalize on this unique opportunity? Having proven out our success with essentially one main SaaS application at XIQ, we're making investments in our business to monetize the secular trend towards more software services with a complete migration to cloud. We're investing in talent and new programs to drive SaaS customer success, This required not only new sales and services expertise that we have brought in-house, but also focused IT investments to enable a more enhanced SaaS experience. We intend to make the customer experience a core competency, and investing in new IT platforms to deliver these capabilities will be a keen focus for Xtreme over the next fiscal year. And on the senior leadership front, we have made new hires from the likes of ServiceNow and other SaaS native companies. In our service provider business, we recognize initial bookings and revenue of our 5G growth opportunities and we remain well on our way to over 20 million of 5G business in fiscal 22 in line with our expectations. Both of our 5G solutions, the 9920 platform for services assurance and the cloud native infrastructure solutions we sell to our OEM partner are gaining stream in the marketplace. We remain confident in our growth plan for CNIS as the list of service providers around the world testing this solution continues to grow, and we have clear visibility to the ramp in sales. The funnel of opportunities remains strong across the broad range of verticals and market segments that we serve. The record backlog with which we entered fiscal 22 gives us confidence in our ability to capitalize on our growth objectives. We expect to grow our market share, and realize a level of organic growth we have not witnessed for many years. And with that, I'll turn the call over to our CFO, Remy Thomas.