Extreme Networks, Inc.

Good day, and thank you for standing by. Welcome to Xtreme Network's second quarter Fusco Year 2024 Financial Results Conference Call. At this time, all participants are on the 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 1-1 on your telephone. You will then hear an automatic message if the device on your hand is raised. Please note that today's conference is being recorded. I will now hand the conference over to your speaker host. Stan Kovler, Vice President of Corporate Strategy and Investor Relations. Please go ahead.

Thank you, Olivia, and good morning, everyone. Welcome to Xtreme Network's second quarter 2024 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 Executive Vice President and CFO, Kevin Rhodes. 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 GAAP to non-GAAP reconciliations, is available in the investor relations section of our website at XtremeNetworks.com, along with our earnings presentation. Today's call and our discussion may include forward-looking statements based on our current expectations about Xtreme's future business, financial, and operational results, growth expectations and strategies all financial disclosures on this call will be made on a non-gap basis unless stated otherwise 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 these risks are described in our risk factors in the 10k report for the period ended june 30th 2023 and subsequent 10q reports filed with the sec 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. Following our remarks, we will take your questions. 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. Our second quarter results were in line with our previously announced revised Q2 outlook. We did have some highlights in the quarter, SAS ARR grew 37%, which reinforces the value of our differentiated cloud platform. We have 44 customers who spent over a million dollars on extreme solutions, demonstrating both customer retention and our ability to take new logos from larger competitors. And gross profit is 62.5%, showing continued improvements and the benefit of a higher mix of high margin recurring revenue. At a high level, the networking industry is exiting the final stage of the COVID-induced era of supply chain constraints, which has significantly impacted our business. We've made the conscious decision to put channel digestion behind us in the March quarter. Our distributors and partners have lowered inventory purchases, which we expect to accelerate in the third quarter. We expect to emerge in the fourth quarter at a much more normalized level of revenue and earnings. Our bookings trends and funnel of new opportunities are strong indicators of customer demand. While larger deals are still experiencing elongated sales cycles, particularly in North America, we continue to win against the competition on a bookings basis with an uptick in new logos. Our EMEA business has stabilized and grew from the prior year, and APAC bookings continue to grow over the prior year. In addition to sequential and year-on-year funnel growth, we grew the number of transacting partners' accounts and deal volume during the quarter. These trends and the expanded go-to-market opportunities give us confidence that we are positioned for a return to meaningful growth in fiscal 25. We've attracted a growing list of 14 managed service provider partners exiting the second quarter with seven already driving transactions. We're positioned to expand our MSP footprint as partners are drawn to the simplicity of one cloud, the flexibility of our unified hardware, and our unique consumption billing model. We make it simple for these service providers to deliver seamless, high-quality networking experience to their customers. We've also made inroads establishing a private subscription offer through a highly targeted list of large service providers. As noted at our November Investor Day, This market segment opens a $5 billion addressable market. In November, we introduced Extreme Cloud Universal's ETNA, the first network security offering to integrate network application and device access within a single solution. This helps move organizations to a zero-trust policy for all devices across the network. This, combined with our industry-leading Campus Fabric solution, extends our value proposition in helping customers both manage and secure their networks. Yesterday, we launched new Wi-Fi 7 access points and the 4,000 series universal switches designed to help highly distributed enterprise organizations create improved network connectivity, security, and application performance. Both of these new cloud managed platforms leverage AI ops and machine learning to deliver faster remediation, and enhanced network visibility. These new products also integrate well with Xtreme Cloud Universal's ETNA to enhance network security posture. The integration of AI security and analytics into a single platform is a key differentiator for Xtreme as it allows us to bring greater simplicity and flexibility for customers. This is why we continue to enlarge deals with manufacturers like LG Energy Solutions, leading healthcare facilities like NHS Trust Hospitals in the UK, educational institutions like London South Bank University, Leeds Beckett and Kingston Universities, and large venues like Wells Fargo Centre and Canada Life Centre. I've made previously announced leadership changes to streamline and strengthen our go-to-market capabilities. Earlier this month, Norman Rice was appointed as our Chief Commercial Officer and is now focused on driving revenue growth and leading the company's sales, partner, and services organizations. He successfully built our go-to-market sales motions in stadiums and venues, driving large opportunities with Verizon and Kroger, and has been at the forefront of driving our new commercial opportunities with large service providers. He has valuable experience managing revenue operations with deep knowledge of our complex supply chain environment. Our Chief Product and Technology Officer Nabeel Buhari is focused on increasing our SaaS revenue in his newly mentioned role as our GM of our subscription business. We've also deepened our batch of SaaS expertise on the executive team over the past six months with the additions of our new Chief Marketing Officer Monica Kumar in December and CFO Kevin Rose last May. The alignment of the team is crucial to helping accelerate growth and capture more share. The Xtreme brand continues to get elevated in the marketplace through our customer wins and differentiated technology that creates more simplicity and flexibility across complex networking environments. Our promise of one network, one cloud remains a competitive differentiator. One network is underpinned by our universal hardware highlighted by Campus Fabric, which has unparalleled campus security benefits and allows users to segment networks 10 times faster than any competitor. OneCloud offers customers modern networking tools with built-in AI ops, and we're unique because we're the only provider to offer cloud choice, whether that's public, private, hybrid, or edge. We're winning deals based on helping customers find new ways to deliver better outcomes, such as increased IT productivity, reduced stopbacks, or securing their business. The simplicity and flexibility of OneNetwork OneCloud remains a competitive differentiator, particularly in a time when major competitors have created complexity with disjointed solutions and uncertainty in their long-term rationalization of products and solutions. We remain the only pure play networking company with a differentiated and integrated portfolio and a clear roadmap. We believe our exposure to the fastest growing areas of the networking market, share gains, and new go-to-market partnerships provide ample growth opportunities to drive double-digit growth in the long term. We're forecasting market share gains with targeted partners leveraging the strength of our unique solutions for the enterprise. And with that, I'd like to turn the call over to our CFO, Kevin Rhodes, to walk us through the results and guidance.