Extreme Networks (NASDAQ: EXTR) reported Q2 EPS of $0.13, in-line with the analyst estimate of $0.13. Revenue for the quarter came in at $267.5 million versus the consensus estimate of $273.18 million.

GUIDANCE:

Sees Q3 Non-GAAP EPS of $0.11-$0.15, versus the consensus of $0.18. Sees Q3 revenue $255-$265 million versus the consensus of $275.3 million.

"Our Q2 Non-GAAP EPS of $0.13 was the result of achieving our long-standing Non-GAAP gross margin target of 60% for the first time in Extreme's history and growing operating margin both year-over-year and quarter-over-quarter. We made progress in the integration of Aerohive Networks and in extracting related synergies. Nevertheless, Q2 revenue fell short of our guidance expectations owing to weakness in US public sector and Asia Pacific," stated Ed Meyercord, President and CEO of Extreme Networks.

Meyercord added, "We executed a $30 million accelerated share repurchase program during the quarter, reflecting opportunistic action by our Board of Directors and demonstrating our ongoing commitment to drive shareholder value and minimize dilution from our equity programs. We remain confident in our ability to execute our long-term strategy and will continue to use share repurchases as a vehicle to create value for our shareholders."

Meyercord also announced significant changes to Extreme\'s sales organization. "We are very focused on driving growth in our business through increased efficiency and sales productivity. We\'ve made changes to streamline operations as we head into the second half of 2020. I am confident that these changes, along with the refresh and stratification of our product portfolio, will enhance our go-to-market efforts and allow us to drive further gross margins."

"With our revised guidance we now expect to achieve Non-GAAP operating income margins in the 12-13% range by the end of fiscal year 2020. We expect to attain organic growth and our 15% Non-GAAP long term operating margin target in the second half of calendar year 2020. We are confident in our guidance and the execution of our plan based on the growing strength of our enterprise franchise in the market, the market migration to cloud-based networking and our leadership position, our execution on delivering our cloud platform, growth opportunities with 5G and other ecosystem partners, and a clear path to margin expansion from structurally higher gross margins and expense reductions,\" concluded Meyercord.

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