Extreme Networks (NASDAQ: EXTR) reported Q2 EPS of $0.13, $0.03 better than the analyst estimate of $0.10. Revenue for the quarter came in at $252.7 million versus the consensus estimate of $244.45 million.

• Revenue $252.7 million, up 9% year-over-year and up 5% quarter-over-quarter.
• GAAP gross margin 55.9% compared to 55.8%, in Q2 last year.
• Non-GAAP gross margin 58.2% compared to 59.4%, in Q2 last year.
• GAAP operating margin 1.9% compared to (13.5)%, in Q2 last year.
• Non-GAAP operating margin 8.0%, compared to 8.8%, in Q2 last year.
• Free Cash Flow* $23.6 million before share buyback and $8.6 million after share buyback.

"We are pleased to report revenue above the high-end of our guidance range and demonstrate sequential growth. Our results were driven by cross-selling and the adoption of our Smart OmniEdge, Automated Campus, and Agile Data Center solutions pillars that make up our end to end software-driven solutions across geographies and industry verticals. We also saw a modest increase in demand during the quarter as a result of our November 1st price increase. Separately, we reaffirmed our commitment to accretive use of our cash by completing $15 million worth of our share repurchase program during the quarter," stated Ed Meyercord, President and CEO of Extreme Networks.

Executive Vice President and CFO Rémi Thomas added, "We are reaffirming our outlook for FY19 to exceed $1 billion in revenue. Following the strong cash flow resulting from exceptional linearity during the quarter and some forward buying that drove outperformance of our second quarter results, we expect our revenue and gross margin for the third quarter to be comparable to our second quarter results. We continue to target improving our net cash position throughout the fiscal year and are in a solid position for growth and continued long-term gross margin improvement."

Meyercord concluded, "Looking ahead, our strong roadmap and improved execution, combined with the digital transformation initiatives we are undertaking internally, will enable us to drive productivity and operational efficiencies in the second half of our fiscal year. We look forward to an in-depth review of our vision, strategy and operating initiatives at our Investor Day conference on February 13, 2019."

GUIDANCE:

Extreme Networks sees Q3 2019 EPS of $0.06-$0.13, versus the consensus of $0.15. Extreme Networks sees Q3 2019 revenue of $247-257 million, versus the consensus of $256.44 million.

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