Extreme Networks, Inc.

The conference will begin shortly. To raise your hand during Q&A, you can dial star 1-1. Good day, and thank you for standing by. Welcome to the Extreme Network's fourth quarter fiscal year 2022 financial results. 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'll need to press star 1-1 on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Stan Kovler, Vice President, Investor Relations and Corporate Strategy. Please go ahead.

Thank you, Catherine. Welcome to the Xtreme Network's fourth fiscal quarter and year-end 2022 earnings conference call. I'm Stan Kovler, Vice President of Corporate Strategy and Investor Relations. With me today are Xtreme Network's President and CEO, Ed Myercord, and CFO, Rami Tama. We just distributed a press release and filed an 8K detailing Xtreme Network's financial results for the quarter. For your convenience, a copy of the press release, which includes our gap to non-gap reconciliations, is 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 Xtreme's future business, financial, and operational results, growth expectations, and strategies. 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 10K report for the period ending June 30th, 2021, filed with the SEC. Any forward-looking statements made on this call reflect our analysis as of today. 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 Meyerchord.

Thank you, Stan, and thank you all for joining us this morning. We have a strong quarter and year, and I'm pleased with the progress our teams are making. Our results for fiscal 22 highlight unprecedented demand for extreme solutions and a very vibrant and healthy market for networking. We reported record bookings growth of 24%, which is a clear indication that we're taking share and winning in the market. And our forward-looking funnel for fiscal 23 is up double digits year over year. This is a leading indicator of future bookings growth. The differentiation of our fabric and cloud solutions for enterprise customers and our targeted solutions for very large service provider customers combined with the high performance of our global sales and channel team gives us the confidence in our outlook for continued growth and demand. Our technology solutions are critical to infrastructure initiatives underpinning digital transformation for all of our customers around the world. We believe these important projects will continue to remain a priority irrespective of a changing macroeconomic environment. For the year, our double-digit revenue growth led to an all-time high revenue of $1.1 billion, yet it was understated by the $400 million of incremental backlog we built during the year. Our total Q4 ending backlog was $513 million, thanks to the current supply chain environment. Despite margin pressures, we were also pleased to generate a record $60 million a free cash flow during the order. Bringing our net debt to even go below one. The continued improvement in our operating model allowed us to achieve record non-GAAP EPS of 70 cents per share for the year, up 35% year-over-year. We expect these bottom-line earnings growth trends to continue. A record 208 customers spent more than a million dollars with Xtreme during fiscal 22 up 28% from a year ago. We attribute this success to our strategy of leveraging channel partners as a vehicle for growth in the enterprise market, while focusing our direct sellers on larger projects. Our sales productivity is at an all-time high as a result, and we have more teams over quota than any time in our history. There's never been a better time to be at Xtreme as demonstrated by our sellers in the field. In addition, our competitive position in the industry has never been stronger. Small share gains have a large impact on Xtreme from both a financial and industry recognition perspective. Our distributors, channel partners, and our customers have taken notice of the industry accolades we're receiving for our solutions and service. For the first time, we eclipsed the largest industry player in the Gartner Magic Quadrant, where we are an established leader for four years, and for the fifth year in a row, Xtreme was named Gartner's choice for wired and wireless land access infrastructure. This recognition carries weight with our target enterprise customers. Our differentiated cloud-based solutions drove subscription bookings growth to 58%, and we achieved annualized cloud SaaS bookings of 170 million exiting Q4. Demand for innovative SaaS solutions is also driving demand for our products, and we believe the level of organic subscription growth we are seeing today is sustainable. Our ARR reached 103 million in Q4, up 47% year-over-year and 8% quarter-over-quarter. We continue to build on our vision of the infinite enterprise with the launch of Extreme Cloud SD-WAN solutions extending our cloud edge services across wide area networks. These solutions, along with our AIOps development around digital twin and co-pilot, will provide the next wave of growth in our subscription business and support our long-term subscription revenue outlook of 35% to 45%. We received tremendous feedback from our annual Connect user conference that we held live for the first time in several years. Associated content sessions were viewed more than 4,000 times over one and a half days. We also showcased our ecosystem of over 100 plus technology integrations and partnerships on display at the event. Next week, we're oversubscribed for our sales kickoff event for our direct sellers and channel partners where we expect over 1,000 lives up in Boston. We exceeded our stated goal of generating an incremental 20 million and fiscal 22 sales of our 5G solutions to service providers. We're starting to experience pull-through business thanks to a significant ramp in next-generation global telco network deployment. And we're working on expanded use cases with our OEM partner for additional cloud-native solutions where we're the preferred vendor. Today, our teams are more confident in navigating the challenging supply chain environment thanks to a combination of strategic relationships, new processes, and more consistency with secondary and tertiary component suppliers, and success in the broker market for components. In addition, our teams have been successful in reengineering products to improve lead times for customers. This allowed us to release nearly 20 million in backlog during the quarter. These efforts were enabled by a number of our cross-functional teams working with TODMs and suppliers. we were able to create new products to use and certify them in record time. Our customers recognize this agility, and it's creating new business opportunities for us. As we noted during our investor day in May, we expect to continue to build backlog for the next several quarters, given our outlook for continued bookings growth and the gradual recovery in supply chain. Per the guidance we provided, we expect sequential improvements and our ability to deliver product to customers throughout fiscal 23. Based on the lead times and commitments, we expect backlog will begin to shrink by Q4 of fiscal 23. We have complete visibility into our product backlog and have received negligible cancellations to date of less than 1% of bookings. Our backlog primarily consists of our latest generation universal products, So when we begin to ship product, we will also see an improvement in subscription and services booking that are attached to our wired and wireless products. At Xtreme, we're focused on finding new ways to enable better outcomes for our customers. This quarter, Xtreme helped Unicoop Firenze, an Italian grocer with over 100 locations and over $2 billion in annual turnover, bring next-generation retail experiences to its customers to our extreme cloud SD-WAN solution, lowering costs, simplifying management, and providing ease of deployment. At North Carolina A&T, the nation's largest HBCU serving more than 13,000 students, extreme fabric solutions are being used to expand the campus network and improve the digital learning experience for students while enhancing security. The re-architected environment was created with the help of our award-winning services team. This quarter, we booked the largest network infrastructure as a service deal in extreme history with a U.S. federal customer. Ten million campus switching deal over five years. We leveraged our capital solutions group to deliver a new OPEX-based consumption model for this federal customer. Again, our ability to be flexible with our enterprise customers is an important differentiator for us. In Q4, we continue to expand our universal portfolio with the introduction of the 5720 Universal Switch, designed to support data-heavy applications such as Wi-Fi 6E. We also continue to innovate on best-in-class Wi-Fi 6E and ultra-wide band APs. Xtreme's first-to-market move in Wi-Fi 6E is leading us to win in the market transition. Adoption of 6E wireless We'll also drive multi-gauge switching demand in the future. We yearly double that Wi-Fi 60 revenue during the quarter, sequentially, as we've improved our ability to deliver access points to customers. 60 is now over 25% of our wireless AP revenue. Net-net, I'm incredibly excited to see our team execute at such a high level across the organization, from our product team delivering incredible innovation, to our sales and marketing teams driving demand, our supply chain and ops teams delivering product in a challenging environment, and the cross-functional support from all the other organizations are putting Xtreme in a position for unprecedented growth in top line, cash flow, and earnings in future quarters and years to come. With that, I'll turn the call over to our CFO, Remy Tomas.