Extreme Networks Inc (NASDAQ: EXTR)

Sector: Technology Industry: Communication Equipment CIK: 0001078271
Market Cap 1.99 Bn
P/B 20.75
P/E 217.71
P/S 1.63
ROIC (Qtr) 8.14
Div Yield % 0.00
Rev 1y % (Qtr) 13.81
Total Debt (Qtr) 212.12 Mn
Debt/Equity (Qtr) 2.21

About

Extreme Networks Inc. (EXTR) is a prominent player in the networking solutions industry, offering a comprehensive range of products and services designed to cater to the diverse needs of businesses worldwide. The company specializes in the design, development, and manufacture of wired, wireless, and software-defined wide area-network (SD-WAN) infrastructure equipment, software, and cloud-based network management solutions. With a significant global presence, Extreme Networks boasts a customer base of over 50,000 spanning various industries, including...

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Price action

Investment thesis

Bull case

  • Strong operating cash flow of 148.05M provides robust 0.70x coverage of total debt 212.12M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 219.79M provide 7.57x coverage of short-term debt 29.04M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 764.13M provides 3.60x coverage of total debt 212.12M, indicating robust asset backing and low credit risk.
  • Operating cash flow of 148.05M provides exceptional 10.32x coverage of interest expenses 14.34M, showing strong debt service capability.
  • Robust free cash flow of 121.74M exceeds capital expenditure of 26.31M by 4.63x, indicating strong organic growth funding capability.

Bear case

  • Operating cash flow of 148.05M barely covers its investment activities of (26.31M), with a coverage ratio of -5.63, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (26.31M) provide weak support for R&D spending of 227.40M, which is -0.12x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Operating cash flow of 148.05M provides insufficient coverage of deferred revenue obligations of 642.89M, which is 0.23x, raising concerns about future service delivery capabilities.
  • The company's operating cash flow of 148.05M shows concerning coverage of stock compensation expenses of 85.77M, with a 1.73 ratio indicating potential earnings quality issues.
  • Operating earnings of 36.40M show weak coverage of depreciation charges of 29.95M, with a 1.22 ratio indicating high capital intensity and potential reinvestment needs.

Product and Service Breakdown of Revenue (2025)

Geographical Breakdown of Revenue (2025)

Peer comparison

Companies in the Communication Equipment
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 CSCO Cisco Systems, Inc. 425.48 Bn 43.28 8.76 28.09 Bn
2 MSI Motorola Solutions, Inc. 71.64 Bn 127.93 11.87 9.81 Bn
3 CIEN Ciena Corp 38.46 Bn 311.86 8.06 1.58 Bn
4 LITE Lumentum Holdings Inc. 38.36 Bn 152.48 18.22 3.32 Bn
5 UI Ubiquiti Inc. 37.65 Bn 42.36 12.67 0.11 Bn
6 HPE Hewlett Packard Enterprise Co 30.92 Bn 12.11 1.03 22.37 Bn
7 ASTS AST SpaceMobile, Inc. 27.86 Bn -91.70 1,503.54 0.72 Bn
8 ZBRA Zebra Technologies Corp 12.90 Bn 25.19 2.45 2.32 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.73 2.55
EV to Cash from Ops. EV/CFO 13.67 10.31
EV to Debt EV to Debt 9.54 31.95
EV to EBIT EV/EBIT 55.60 87.00
EV to EBITDA EV/EBITDA 32.00 10.88
EV to Free Cash Flow [EV/FCF] EV/FCF 16.62 62.78
EV to Market Cap EV to Market Cap 1.02 1.09
EV to Revenue EV/Rev 1.66 38.48
Price to Book Value [P/B] P/B 20.75 3.65
Price to Earnings [P/E] P/E 217.71 21.22
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 0.61
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 -24.04
Dividend per Basic Share Div per Share (Qtr) 0.00 0.23
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 4.73
Interest Coverage Int. cover (Qtr) 2.54 -11.69
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -28.40 -57.98
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 29.04 465.23
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 1.58
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 114.50 72.41
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 195.73 -8.57
EBIT Growth (1y) % EBIT 1y % (Qtr) 136.46 69.66
EBT Growth (1y) % EBT 1y % (Qtr) 118.88 -70.46
EPS Growth (1y) % EPS 1y % (Qtr) 107.53 8.86
FCF Growth (1y) % FCF 1y % (Qtr) 450.32 10.52
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 29.09 38.81
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.04 0.75
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.03
Cash Ratio Cash Ratio (Qtr) 0.39 1.35
Current Ratio Curr Ratio (Qtr) 0.95 2.84
Debt to Equity Ratio Debt/Equity (Qtr) 2.21 0.47
Interest Cover Ratio Int Coverage (Qtr) 2.54 -11.69
Times Interest Earned Times Interest Earned (Qtr) 2.54 -11.69
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 5.40 -41.21
EBIT Margin % EBIT Margin % (Qtr) 2.98 -52.62
EBT Margin % EBT Margin % (Qtr) 1.81 -59.46
Gross Margin % Gross Margin % (Qtr) 61.30 38.49
Net Profit Margin % Net Margin % (Qtr) 0.70 -60.82