Shares of Extreme Networks experienced a significant drop in premarket trading on Wednesday due to disappointing guidance and ongoing supply-chain challenges. The cloud-networking company's stock plummeted by 17% to $13.75, while Nasdaq Composite futures were down 1.1%.
According to FactSet, Extreme Networks anticipates total net revenue between $200 million and $210 million for the third fiscal quarter ending on March 31. However, this is significantly lower than the $321 million expected by Wall Street analysts. In addition, the company expects an adjusted per-share loss ranging from 17 cents to 22 cents, while analysts estimated earnings of 28 cents.
Moving forward to the fourth quarter ending on June 30, Extreme Networks projects revenue to reach a range of $265 million to $275 million. Despite this increase, it falls well below the expected $355 million predicted by analysts.
CEO Ed Meyercord acknowledged the ongoing impact of supply chain constraints, which have affected the networking industry and caused a decrease in inventory purchases by distributors and partners. Meyercord remains optimistic, stating that he expects a normalization of revenue and earnings in the fourth quarter as the industry moves past the COVID-induced era of supply chain constraints.
In the fiscal second quarter, Extreme Networks reported revenue of $296.4 million, reflecting a 6.9% decline compared to the previous year. Despite this decrease, it slightly exceeded analysts' expectations of $295.6 million. The adjusted earnings of 24 cents per share also surpassed estimates by 1 cent.
Written by Emily Dattilo
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