Q3 2022 Extreme Networks Inc Earnings Call
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Good day, and thank you for Sandy by welcome to the extreme networks third quarter fiscal year 2022 financial results call. At this time all participants in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During the session you will need to press star one on your telephone.
Please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today, Dan Colbert, Vice President of corporate strategy and Investor Relations. Please go ahead.
Thank you operator welcome to the extreme networks third quarter fiscal 'twenty two earnings conference call I'm, staying Colbert Vice President of corporate strategy and Investor Relations with me today are extreme networks' president and CEO admire cord and CFO Remi Thomas We just distributed a press release and filed an 8-K.
Detailing extreme networks' 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 extreme Networks' Dot com.
I would like to remind you that during today's call. Our discussion may include forward looking statements about extremes 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 by our risk factors in our 10-K report for the period ended June 30th 2021 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.
Now I will turn the call over to extremes, president and CEO admire cord.
Thank you Stan and thank you all for joining us this morning.
Q3 was characterized by strong double digit bookings.
And the fifth consecutive quarter of double digit revenue growth that led to record quarterly bookings and revenue. We achieved these results despite industry wide supply chain challenges.
We built an incremental $130 million in product backlog, which now sits at over $425 million, we see strong demand as we turned the corner into Q4 and fiscal 'twenty three for both our enterprise and <unk> solutions.
A record 45 customers place orders of more than $1 million and our product book to Bill was over 1.4 as demand continues to exceed supply.
Our competitive position in the industry has never been stronger and we're taking share.
Sierra games equates to a large impact on extreme stopped line.
Q3 marks the fifth consecutive quarter of double digit product revenue growth led by the strength of cloud sales of our universal switching hardware platforms and adoption of our Wi Fi six access points. We expect this level of organic growth to continue.
SaaS AAR was $97 million this quarter up 54% year over year, 10% quarter over quarter, driven by strong execution keep in mind. This was a practice approximately $40 million when we acquired arrow I've, two and a half years ago.
We have 13% share and hold the number two position in cloud networking and we continue to gain momentum thanks to new bookings and strong renewals.
As we look for new ways to drive better outcomes for our customers and build on our vision of the infinite enterprise, we have extended beyond the campus to support a distributed environment at the Wan edge. This will provide the next wave of growth in our subscription business and support our long term subscription growth outlook.
A 25% to 35%.
And our service provider business, we are on pace to exceed our prior 20 million dollar growth expectation for fiscal 'twenty two.
With our cloud native infrastructure solution. We're in the early stages of a significant ramp as next generation <unk> networks are being deployed by global service providers given the strength of our vendor relationship. We've added new use cases that we expect to accelerate future growth.
We have complete visibility into our product backlog more than half of which consists of our latest generation products <unk>.
Extremes product lead times are among the lowest in the industry and our order validation process confirms the absence of duplicate orders. In addition, we have significant backlog of subscriptions and service revenue that will be recognized when supply chain constraints ease.
The industry wide global supply chain environment became more challenging this quarter due to constraints on secondary and tertiary components supply.
We shifted our strategy to deal directly with these vendors. This has allowed us to strengthen our supply chain position as we are now getting committed quantities and secure shifting.
With respect to tier one suppliers our relationship with Broadcom is paying dividends in the form of product availability.
While we expect to continue building backlog for the next several quarters, we anticipate the book to Bill ratio to come down throughout the next fiscal year.
Based on the lead times and vendor commitments, we're getting from our suppliers. We expect this June quarter will be our low watermark in revenue and we see stepped up supply increases throughout fiscal 'twenty three.
We expect to be in a position to begin releasing backlog by June of next year.
Extreme has focused on finding new ways to deliver better outcomes for our customers.
This quarter, we helped established one of the largest existing cloud managed network infrastructures.
<unk>, Sweden, transforming the municipality into a smart city.
The new secure Wi Fi fixed network delivers reliable coverage improved network capacity and faster data speeds across the city services, while automating and simplifying network management for the team.
We are helping customers modernize their networks by delivering secure cloud driven connectivity beyond the campus to the Wan edge and tethered together disparate devices and services that enable remote workplaces distance learning telemedicine and more.
Extremes customers are able to unlock data from previously untapped network insights into location App usage and workflow patterns. This is a unique differentiator for us.
Doing so our customers provide a more personal experience for their own end user while improving operating efficiency. The best examples of this capability and usage are within the sports and entertainment vertical however, more and more of extremes customers are also embracing these data capabilities.
For segments like manufacturing or smart cities insights from networking data can help them reduce their carbon footprint by ensuring energy efficient network usage further analyst analytics can optimize.
Which tests, our dress and when location based insights specific to people devices and available resources or track.
Lastly, as products such as co pilot exit public beta at the end of this fiscal year customers can fully leverage prior network investments benefit from advances in AI ml and reduced staff time on management and more.
And campus networking the success of our 54 'twenty product launch drove strong growth during the quarter in the value tier along with the recently introduced 50 320.
Our new Wi Fi six eap's drove over 10% of all wireless revenue in just two quarters. We strongly believe the extremes first to market move and Wi Fi six he is leading us to win in the market transition adoption of <unk> 16 wireless will also drive multi gig switching demand in the future.
Sure.
As of this week extreme cloud SD Wan is available for quoting and will become generally available in may a quarter ahead of our initial goal. It combines industry, leading capabilities of extreme cloud IQ and feature rich SD Wan from eponym.
Into a single subscription.
This is another proof point of our strategy to have our entire enterprise portfolio now inclusive of SD Wan Holy Man extra Max IQ.
So in summary.
With the strength of bookings from our market share gains in the enterprise and SP markets.
The normalization of book to Bill and the releasing of our backlog, we expect unprecedented acceleration.
Revenue cash flow and earnings growth.
Through fiscal 'twenty five.
I hope to see everybody at our upcoming Investor day on May 18th where we will discuss extremes cloud expansion. Our go to market strategy detailed plans to drive supply and provide an updated long term model for the company and with that I'll turn the call over to our CFO Remi Thomas.
Thanks, Ed as Ed noted fiscal 'twenty two continues to be an exceptional year for extreme and we're executing well across the board Q3 total revenues $286 million grew 13% year over year strong demand for our wired and wireless portfolio drove year over year revenue growth.
12% for product and 13% for services and subscription.
Book to Bill was at 143, and the $425 million of backlog. We are currently carrying is over two times larger than our product revenue. This quarter services book to Bill was also high at 121 as we show on page five of our quarterly earnings deck we.
We saw another strong quarter of SaaS subscription bookings with year over year growth of eight 5% SaaS annual recurring revenue SaaS E. R. R reached $97 million up 54% year over year, and 10% quarter over quarter.
Historical <unk> data can be found on page 15 of the Q3 earnings deck posted on our website.
SaaS deferred revenue was $143 million at the end of Q3 up 44% year over year, and 5% quarter over quarter non-GAAP earnings per share was 21.
Up from 16 in the year ago quarter, and flat from last quarter on a geographic basis and looking at total company revenue EMEA enjoyed the strongest year over year growth in revenue followed by Americas, While APAC revenue was most constrained by supply chain.
From a vertical standpoint, and looking at total company bookings the highest year over year growth came from sports and entertainment manufacturing government and health care, all of which grew strong double digits year over year.
Turning to product trends wireless bookings were exceptional both year over year and sequentially, but revenue was constrained by supply chain challenges a wide business maintains very strong and consistent double digit growth in bookings and revenue for the fifth quarter in a row.
Services and subscription revenue reached a new high at $87 1 million up 13% from the year ago quarter and down 3% sequentially driven my maintenance, primarily due to a few numbers of days in the quarter overall growth was largely driven by the strength of cloud subscriptions.
Total Q3 recurring revenue, including maintenance managed services and subscription rose to $81 $3 million or 28% of total company revenue down from 30% last quarter.
The growth of cloud subscription and service renewals drove the total deferred revenue sitting on our balance sheets to $372 million up 17% year over year and flat sequentially.
Our non-GAAP gross margin came in at 58% at the midpoint of our guidance the year over year and sequential decline in the company's gross margin was drive driven for the most part by highest supply chain and freight costs, partially offset by the price increases we implemented in October .
Favorable mix and internal productivity gains gross margin would have been at least 500 basis points higher if not for additional expedite fees and higher freight cost Q.
Q3, non-GAAP operating expenses were $130 million up from $127 3 million in the year ago quarter and from $126 8 million in Q2, reflecting higher R&D expenses and sales and marketing spending from the acquisition of Ipanema.
Opex as a percentage of revenue was 45, 5% well ahead of the long term target range of 46% to 49% we set at our Investor day last year.
All in all we delivered an operating margin of 12, 5% up one two percentage points from 11, 3% in the year ago quarter and down slightly from 13, 1% in Q2.
Net debt remained at $149 million flat from Q2 and was impacted by an increase in receivables from our distributors due to billings linearity this quarter now.
Now turning to guidance.
We reiterate our outlook for fiscal 'twenty chew up double digit revenue growth and a 10% to 15% operating margin for Q4, we expect revenue to be in the range of $265 million to $275 million.
Q4, non-GAAP gross margin is anticipated to be in the range of 57% to 59% as we expect elevated expedite fees and freight costs continued to impact our business Q.
Q4, non-GAAP operating expenses are expected to be in the range of $126 $9 million to $139 million.
Q4, non-GAAP earnings are anticipated to be in the range of $16 seven to $23 $9 million or 12 to 18 cents per diluted share give.
Given the confidence in our marketing company trends.
Along with our record backlog our visibility has strengthened with respect to top line. As a result, we expect revenue growth to accelerate to range of 10% to 15% for fiscal 'twenty, three and to the mid teens range through fiscal 'twenty five we anticipate that the reduction in expedite and shipping fees combined with the full.
Impact of our recent pricing actions will lead to some gross margin recovery in fiscal year 'twenty three.
Existing the year above 60% looking out at fiscal 'twenty five we expect gross margin to increase to a range of 64 to 66, 66% on a non-GAAP basis.
I will provide further commentary on this outlook at our upcoming Investor day on May 18th with that I will now turn it over to the operator to begin the question and answer session.
Thank you as a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound key.
Our first question comes from Alex Henderson with Needham Your line is open.
Great. Thank you very much and Oh.
All I can say is wow, that's a that's a.
Big acceleration congratulations.
So I am a little.
Concerned about what's going on in China right now.
Massive lockdowns in.
In large portions of the country.
Over 400 million people currently locked in their apartments.
I've got to believe that that's going to have some impact.
The supply chain, but not yet I would think it would take.
A quarters for that to fully manifest out too.
People can you talk to your exposure to <unk>.
China, whether that'd be in parts or whether the bean chips or any other.
Elements and to what extent you feel.
That could that supply chain challenge into the outlook.
Sure.
Thanks, Alex.
This is Ed.
Yes. The answer is we have factored that into our outlook and we are very much whereas as you know this is something that given the fact that our top line is being driven by supply.
And we'll be really throughout fiscal 'twenty three.
It's all hands on deck 24, seven as far as how we manage.
Well imagine supply chain, what I mentioned.
Big change for US first of all I'll say that as it relates to broadcom and that chipset.
Shared this before.
We are not constrained and we.
Yes.
Confident in our outlook.
The issue has been with secondary and tertiary component part providers historically, we relied on Oems.
The fourth quarter.
We moved aggressively to establish direct relationships with these providers and so now where we are in the process of.
Securing.
Ship dates and quantities out into the future.
And I would say that's the main driver of our competence. We are very much aware of what's going on over in China and the Lockdowns there.
And we rely on our suppliers to provide us with that feedback in terms of.
How they feel.
Yes, their competence levels, so and that's how we that's how we built our forecast.
Obviously in the near term we are confident around Q4, and what we're guiding there as we mentioned we think it's the low moderate low watermark and we have confidence.
Stepping through this in fiscal 'twenty three so yes, we're mindful that we're aware of it it's top of mind for everyone throughout our entire supply chain.
It's something that we have.
We considered in our outlook.
As you look out to that FY 'twenty three guide I assume then that.
Really it's very heavily back half loaded.
Got it.
More of the March and June quarters of FY 'twenty three.
Provided the growth is that a fair assessment in terms of the slope of the year.
Yes, we are.
Assuming that we're stepping out of it I'll, let remi come in but it is as I mentioned, it's very supply chain oriented so.
We have visibility to a quarterly step.
Then.
Based on a few of our largest tier two and three component providers.
We see relief in the second half of our fiscal and I called out in my comments June is when we expect to be in a position.
To begin to release backlog.
Alright, and just one last question then I'll cede the floor on the pricing side of the equation.
It looks like Cisco is.
Increased prices somewhere in the 10% to 15% vicinity in the campus as much as 20% plus in the.
The data center.
And it does also look like they're subsidizing and attack into the cloud from the enterprise.
Making their parts.
Their supply availability skewed towards their largest customers, which does seem to me to open a significant opportunity for you guys.
Okay.
First of all the data points that I, just threw out consistent with what youre seeing.
Do you think that there is.
Increased share gain because of the.
The orientation to competing with Arista combined with.
Focusing on the largest accounts, creating an opportunity for share gains can you talk to that issue.
I think that's a contributing factor Alex and I think.
I would agree with your numbers, obviously, there's not a precise science behind it but 10% to 15% for enterprise in terms of what we see makes sense, we tend to price just below the Cisco umbrella.
And we've been able to raise price as well, which has helped us offset the increased cost of supply chain, but to your point the prioritization of larger customers.
And also larger partners out in the channel have been opening up interesting opportunities for us.
With direct end user projects as well as.
Taking share out of the channel community. So.
I think I think your assessment is on I can't really comment on whether or not there's a subsidy of enterprise to fund data center, we're not really playing up in that data center space. So that's hard for me to comment on but I can tell you that we're clearly taking share from Cisco is the largest player in our space.
They have been raising price and they are supply chain constrained.
And I think to the extent that we're able to.
Benefit despite our own constraints I think it's a very fair assessment.
Congratulations on a really great execution.
You guys really have set it up.
Thanks Al.
Okay.
Thank you and our next question comes from Eric Martin Newsy with Lake Street. Your line is open.
Yes, I wanted to focus on the outlook for Q4 for looking here at the midpoint of.
$270 million on the top line.
Would be down year on year versus Q4.
$278 million, a year ago, and I'm, just wondering given the outlook.
Outlook for 2023, what sort of I know you're going to comment more on it at your analyst day, but.
What does that say about the first half.
FY 'twenty three.
I'll comment and Remy light you follow me, but as I just mentioned to Alex.
It's all driven by supply chain. So this is all the work that our teams have been doing.
On many fronts.
Highlighted.
Our shift in strategy to go direct to the tier two and tier threes theres been a lot of work, establishing those connections relationships and as I mentioned.
Accordingly.
The secure ship dates and desired quantities.
Working directly with them on getting that that has been very helpful. Our teams are getting.
Much more savvy in terms of how to get that supply and that's that's the main driver of the other thing that we do is we look at.
We look at reengineering, how do we swap out components and parts normally we would do that more from a cost perspective and trying to drive margins.
Here I would say, we had 10 X the volume of our supply chain operations teams working with our engineering teams to swap out components to fine.
To find parts, where we need them and it's a very tactical exercise, but the teams have been doing a great job on that so it's the combination of a lot of different tactical initiatives that are giving us confidence in calling the.
The number which is which is supply chain driven.
As we mentioned, we're still looking and we expect to build backlog obviously in this quarter and then throughout fiscal 'twenty three but the change in the book to Bill we do see that beginning to come down. So is this year as you look out and you look at all of the backlog we built this year.
We expect that backlog number they'd be lower next year and then therefore.
Matt.
Along with even if you assumed a flat bookings number, but and we're taking share and we're growing in terms of the bookings line.
Just that change in book to Bill in the change in the backlog outlook creates significant growth for extreme so that's kind of what we are.
That's what we're gearing up for and then when you move further out.
Contemplate a release of backlog.
That's where the growth numbers really really take off so that.
Near term it is.
All very much supply chain oriented.
I mentioned some of the initiatives.
Longer term, there's other factors that come into play not to mention this growth in subscription.
And we expect that those growth rates to continue.
Amy do you want to add anything to what I'm sure.
Yes, just to just to put a little color behind what I. Just said so Q4 is really the only quarter, where because of the supply chain constraints, we see a slight year over year decline of $2 70, and then as you think about entering fiscal 'twenty three I'd say Q1 should be in the mid single digit year over year growth.
Q2, you'll see a mid to high single digit growth Q3.
We'll be comfortably above $300 million and with a nominal almost double digit growth and then you're going to see an acceleration in Q4 one.
Supply chain concerns really finally complete these up.
And you should see strong very strong double digit growth in that fiscal Q4 of next year. So this is the ramp as we as we see it with the $300 million Mark being crossed.
Around Q2.
Okay, and then just looking backwards here in the March quarter.
You talked a little bit about the.
A R spike the DSO increase there.
What do you believe was behind the linearity that you saw versus a year ago.
Yes, it's usually we have a split which I havent really communicated in our revenue from.
For product in the quarter, there's a normal ramp, but we do have shipments in January and February and based on our payment terms quite often we will be able to collect on.
On those those shipments.
Had very very low shipments in the first couple of months of the year a lot of the shipments were in the third month and so we were not able to have a pool of receivable as high as we would normally do which is why you saw that increase of about $30 million.
Okay. Thank you for taking my questions.
Thank you Eric.
Thank you. Our next question comes from Dave Kang with B Riley.
Your line is open.
Thank you. Good morning, My first question is regarding.
The supply chain situation as far as the intensity of the situation is the June quarter the peak.
Yes, and then that's it.
Call it the low watermark for revenue, but for us it's the peak constraints.
And some of that also has to do with we had a lot of projects.
With some of our low running supply.
In the March quarter that we were able to unlock.
But.
Our outlook now is that that it is.
So we are peaking here.
As we establish and we'd look to build the secondary component parts.
And you're guiding gross margin to 58%. So it sounds like 58% is the bottom and then we should see.
Some kind of modest increase improvement.
Beyond beyond June quarter.
That's right and I'll, let remi, if you want to add any other color commentary.
Yes, because because of the.
The historical strength of our backlog.
Some of the orders that we have yet to delivered.
We're booked prior to certain price increase so it takes a while as we released the backlog to get the full benefit of the price increase and so you're going to see that coming through the next couple of quarters in the meantime, however.
We still have a high level of expedite fees and freight cost.
Got it and then Ed you talked about 445 G. You mentioned about you use cases could you provide more color are we talking about your customers or.
It's the existing we have we always talk about two large customers as it relates to our.
Our cloud native infrastructure service, which is the biggest opportunity we have that growth vector.
With that large Swedish <unk>.
Manufacturer and that is.
We've done very well with them and.
Their annual vendor review, we were named as one of their top three.
I can also tell you from a supply chain perspective, that's part of our portfolio that is less constrained and so we've been able to fill demand and we've been able to take share from some of the larger competitors that we go up against inside of that account.
So.
That's.
That's put us in a really good stat and it's very much of a partnership and yes, they've opened the door to us to some very large new opportunities.
We believe based on our overall market share within the accounts, we're still a very small players call. It sub 10% players. So they have opened up some new.
Opportunities for us and new use cases for us.
And we will be investing in them.
And we think that will only help build on the on the growth that we're experiencing right now a lot of their customers are moving from proof of concept. So we look at our funnel and you see this big growth a proof of concept and then you see through that you see now people starting to roll out in UC deployments.
And now at this phase where those early proof of concepts are starting to deploy and so we're starting to see that ramp.
Im not at Liberty to comment yet on the other use cases that we're working with them on but we are.
We're excited that they've chosen us to work with them on them and we're excited about what it means for us for future growth and then to build on the momentum that we have with CNS.
And my final question is are you as far as <unk> revenue is concerned are you still on track to do 20 million. This fiscal year, and then $50 million to $100 million next fiscal year.
Yeah.
No what we've said about next fiscal year.
But we are absolutely on track.
To exceed the $20 million increase that that we guided to for this year. So.
For our <unk> DSP.
We are on track that's very healthy.
And then I.
I believe we've said 50 to 100 over time, and we feel very confident of that.
Im not I don't know if we gave that 100 number for fiscal 'twenty Ricky but.
Out in the future that is clearly in a high growth vector for us inside of extreme.
Thank you.
Thank you. Our next question comes from Christian Schwab with Craig Hallum. Your line is open.
Great. Thanks for taking my.
My questions.
So really strong outlook.
Can you explain.
Youre very optimistic topline growth expectations I can understand as we kind of go throughout this year as supply chain loosens up and then you begin to.
<unk> worked through backlog, but can you can you talk about.
The verticals that you believe are going to be driving such strong top line growth expectations.
Following fiscal year 'twenty three.
Yeah, that's great question Christian Thanks for asking.
So we see strength in terms of bookings across all verticals.
We feel some of it may be driven by customers getting in line because of the longer lead times and sometimes getting ahead of the of the price decrease but if I look at education government healthcare manufacturing sports Entertainment.
We've been really enjoying unabated strong growth in bookings over the past few quarters. So that's the first driver of this and and you know based on the pipe and the funnel that we see for next year, we don't really see.
And you slow down the.
The other side of the equation is the backlog I mean, three years ago, we would start the quarter Christian with anywhere between 20 to $30 million to $40 million in product backlog, which is basically you know.
10% to 20% of the product revenue, we would generate in that quarter right now, we're north of $425 million, which is which is more than two quarters of product revenue.
When you.
Continue to see the trend in bookings and obviously the year over year growth for bookings will will no doubt decline, but you combine that with our ability, which really accelerated as a fiscal 'twenty three and specifically in Q4.
To release that backlog the combination of both is what drives us to mid teens growth.
I mean, what were your lead times.
When you had $20 million to $40 million in backlog and what are you currently quoted lead time.
The lead time at the time were measured in weeks today. They are measured in months and it really depends on the skus, but but that's how you should be thinking about this.
And unfortunately, it's not two months.
In many cases several months.
Okay and then my last question is just to follow up on what you said a few minutes ago you talked about.
Customer order patterns given lead times.
This increases.
Yes.
Let the channel or your leading customers know that you know in an organized fashion in a way that a.
Yes.
Another price increases coming their way.
We did yes.
Okay typically noted by our distributors.
Now large business partners.
About a month ahead of any price increase.
Great Alright, perfect no other questions. Thanks, guys.
Thank you Christian.
Thank you and again, if you would like to ask a question press. The Star then the one key on your Touchtone telephone.
And it looks like we have a follow up from Alex Henderson with Needham Your line is open.
Great. Thanks.
One or two.
Focusing on the June quarter, not so much on in terms of revenue, but rather in terms of the.
The expectations around the book to Bill and whether you'll be building backlog again in the June quarter It sounds like.
Even though you're finally lapping the very strong order growth from last year that.
Might actually have booking their orders up again I would assume that the at a minimum your book to bill will be above one but.
Well orders will actually be up.
Yes.
I'll jump in and then you follow but but the answer is yes, I mean book to Bill will definitely be over one.
In the quarter from a bookings perspective.
We had an incredible march quarter, some of that due to a price increase and then.
Some of that due to just whats going on in supply chain and demand and then a lot of that is just how we're executing in the marketplace and.
That is continuing so we see strength in the bookings continue to build this quarter and as we look forward and our funnel of opportunities.
That continues to grow at a really nice clip as well so.
The outlook for bookings remains very strong we will absolutely build backlog.
In the June quarter.
Based on the supply chain constraints, so I think Alex as Youre looking out the over 425 today, we will definitely.
Continuing to expand not only in the June quarter, but we expect for the next several quarters to go forward based on strength of demand and bookings.
Just to be clear here. So there's a difference between the book to Bill in the end.
The year over year order rate because your book to bill could be above one and your orders decline year over year.
Are you, saying that you believe that your orders will actually be up year over year against that one I think was about 30% order growth last year, if I remember correctly.
Alex told bookings are expected to be slightly up including services and subscription on a year over year basis in Q4, yes.
Wow.
Oh.
That's great. So then at the year over year starts to flatten out and decline them against the comps in the back half of the calendar year.
With a book to Bill still solidly above one.
I think the book to Bill will be above one.
In the first half of fiscal 'twenty, three although the year over year compare and some quarters will be tough to beat.
Okay.
Makes good sense.
Going back to the pricing.
Stuff.
You say that you would notify you of dealers a month in advance have you notify your dealers have additional price increase.
We've notified of this six of the most recent price increase but we haven't really officially.
Said, one it took place in the extent, but Ed earlier mentioned that we keep ourselves.
Below Cisco.
So it's not the 10% to 15%.
You quoted Alex.
It's a lower price increase but we just did one.
But I'm just I'm a little confused so you did one in the March quarter that we know about right.
<unk> already done have you announced another one that hasnt actually been implemented yet.
We announced one in the March quarter.
But it was just effective in April .
And we have not announced any anything else, we're trying to stay competitive in the marketplace.
Perfect.
That's the clarification I was looking for.
So going back into the vertical for a second.
Can you just remind us what's going on with the rate.
Frankly, it's hard to keep track of it.
And the <unk>.
2022 season was just completed.
And extreme networks actively participated in that season, and we want our fair share.
And the overall filings are looking like they will be growth on a year over year basis in terms of what.
The total spend for E rate is going to be.
Alright, and then one last question if I could.
If I've mentioned on their call that the.
Starting in February .
There was.
Hey.
Slowdown in the number of deals that were closed even though their pipeline was quite strong.
And then it got a little bit worse in the March timeframe.
Have you seen any change in EMEA as a result of the war in terms of ordering rates are.
Not so much in terms of the pipeline, but rather the closure rate.
In our case, we haven't if anything we saw higher conversion rates. So in other words the.
Close one ratio on a pipe was higher in March.
Because of what I just mentioned earlier this season customers wanting to get ahead of a price increase.
And outside of the small business that we do in Russia, and Ukraine, we haven't seen any sign of slowdown because of the situation in eastern Europe , if anything things accelerated for us in March.
Perfect. Thank you.
Thank you and I'm showing no other questions in the queue I'd like to turn the call back to Ed My record for closing remarks.
Okay. Thank you Catherine and thanks, everybody for joining us today.
So wanted to shout out to extreme employees just in <unk>.
Incredible quarter on the execution front, both on the demand side.
Well as delivering on supply in a challenging environment.
For all of our investors were hoping to see you at Investor Day, we'll be in New York City.
Major League baseball headquarters very fun venue.
And importantly, we have a lot of confidence in.
And the demand side and demand Gen side of the equation.
As far as bookings in terms of <unk>.
This higher growth software subscription services and solutions that we're building on as far as Wan edge.
How we're building on that.
We will go into deep detail and provide lots of color on supply chain and finally, we have details on our long term model that Randy has built.
We want to share with everyone. So hopefully it will be able to clear the calendar to join us there.
And we are also in other industrial conferences, so again.
Thank you for your time, we appreciate your participation have a great day.
This concludes today's conference call. Thank you for participating you may now disconnect everyone have a great day.
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