Extreme Networks, Inc. (EXTR) Q4 2019 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen and welcome to the Extreme Networks Q4 FY '19 Financial Results Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this call is being recorded. I would now like to turn the call over to Stan Kovler, Head of Investor Relations. You may begin.

Thank you, Operator. Welcome to the Extreme Networks fourth quarter fiscal 2019 earnings conference call. I'm Stan Kovler, Executive Director of Investor Relations and Strategic Development. With me today are Extreme Networks' President and CEO, Ed Meyercord; and CFO, Rémi Thomas. We just distributed a press release and filed an 8-K detailing Extreme Networks' fourth quarter fiscal 2019 financial results. For your convenience, a copy of the press release, which includes our GAAP to non-GAAP reconciliations and our fiscal year '19 Q4 financial results presentation are both available in the Investor Relations section of our Web site at extremenetworks.com. I would like to remind you that during today's call, our discussion may include forward-looking statements about Extreme Networks' future business, financial, operational results, acquired technologies, products, operations, pricing, changes to our supply chain, the impact of tariffs, pending acquisition of Aerohive Networks, and digital transformation initiatives. 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 in our risk factors in our reports 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 Extreme Networks President and CEO, Ed Meyercord.

Thank you, Stan, and thank you all for joining us this morning. Today, we announced Q4 results at the high-end of our expectations, our revenue of $252 million above our guidance range of $240 million to $250 million. We're inching closer and closer to our 60% gross margin goal at over 59% ahead of history, and non-GAAP earnings of $0.06 per share at the high-end of our guidance range. For fiscal '19, we achieved $1 billion in revenue, improved our gross margin despite headwinds from tariffs, and finished off our year by taking action to improve our cost structure heading into fiscal '20. We also generated $82 million in free cash flow in fiscal '19, paid down $20 million of debt and ended the year with $170 million cash balance. We're on track with our pending acquisition of Aerohive having already received U.S. and German antitrust approvals, and see clear line of sight towards closing the transaction shortly after our tender offer, which is currently set to expire on August 8. We reorganized our software engineering team under new leadership to combine with a DevOps Cloud management team from Aerohive to hit the ground running. Our intent is to bring cloud management to our entire portfolio of Enterprise Wi-Fi, network switching, and software to accelerate pitcher velocity. We are exiting fiscal '19 with the knowledge and confidence that our solutions are winning in the marketplace. Last year, we had over 110 customers investing more than $1 million worth of Extreme products and services. In Q4 alone, we closed 23 deals of $1 million or more, up from 17 in Q3. We're winning larger deals and see this trend continuing, based on the growth of these large software-driven opportunities in our pipeline. In Q4, our Smart OmniEdge Solutions drove performance and highlighted early success of our product cycle that will continue to ramp over the next nine to 12 months. Our total Smart OmniEdge product bookings grew 4% year-over-year, and 27% quarter-over-quarter. Specifically, we saw success in education, government, healthcare, retail, and wins in hospitality with Wi-Fi 6 leading the way along with our new X465 Switch Extended Edge Switching Extreme Cloud appliance and associated software. We also released several new products in our Automated Campus portfolio, such as the 32/100 and 48/25 solutions that drove double-digit year-over-year growth in the Americas. Our Agile Data Center business continue to benefit from strong momentum, and our SLX 9640 border routing solution and customers migrating to the SLX platform from the BDX and MLX platforms. Q4 was a difficult comparison quarter outside of our service provider federal and OEM segments, but we finished the year at the high-end of our previously-guided run rate of a $162 million to $180 million in revenue for this business. Our software business grew for a $6.25 million in a row, up 7% year-over-year, and 22% quarter-over-quarter. We received overwhelmingly positive feedback for all our solutions, pillars at our Connect User Conference in May in Nashville, where attendance doubled year-over-year. Last year, customers who attended the conference increased their investments in Extreme by over 10%, and those who participated in technical sessions increased their spending with Extreme by 64% year-over-year. From a vertical standpoint, we experienced a strong rebound in the education vertical and lots of success in the government and healthcare verticals. In retail, we are seeing lots of large opportunities going into fiscal '20 that are now focused on switching, validating the strategic rationale of our acquisitions. The biggest customers we've picked up from the Zebra acquisition close to three years ago were wireless-only and are now embracing our switching portfolio. Heading into fiscal '20, we continue to expect to see growth in our education vertical based on strong e-rate wins and higher ed coming through in fiscal '20. Our e-rate bookings grew three times quarter-over-quarter, while business outside of e-rate such as higher ed also grew strongly. In EMEA, service revenue growth drove stability and margins, while challenges in Germany and Southern Europe were offset by strong new logo additions of approximately 20% above corporate average of 15% in year-over-year growth in wireless. APJC revenue fell 25% year-over-year on a tough comparison quarter and lumpy deals. However, we made progress in diversifying our business outside of traditional datacenter customers in regions such as Japan, by expanding our enterprise customer base. Our tariff mitigation plans in the U.S. are on track. Today, we move 90% of our product manufacturing to Taiwan and other TAA compliant countries for products bound for the U.S. Our Taiwan standard costs are 4% to 5% higher than in China. We estimate that tariffs at a greater than a 1 percentage point headwind to gross margin following the increase from 10% to 25% in the quarter. We expect a 60 basis point decrease in our tariff impact next quarter owing to our move to TAA compliant countries. I'd like to elaborate on a few customer wins we highlighted in our press release. Our SLED team in the U.S. which is State, Local and Education vertical led the way in Q4 two top deals and SLED drove $10 million in business alone. We won both of these educations and government campus refreshes with integrated solutions across our technology solutions pillars with end-to-end wireless campus core and data center switching with XMC riding on top. We won these in head-to-head competition with Cisco and HPE. Leeds Beckett University, a top university in the UK is upgrading its campus network with Extreme's Smart OmniEdge solutions serving 25,000 students and 3,000 staff across 85 buildings and sports facilities featuring new Wi-Fi 6 run over our automated campus network where our Extreme Fabric Connect enabled automatic configuration of the new access points. The extreme management center application will provide single pane of glass management across the two networks. We were also selected by the Houston Dynamo Major League Soccer and Houston Dash, the National Women's Soccer League to provide high density professional grade Wi-Fi connectivity in their home field BBVA stadium. The solution includes ExtremeMobility featuring Wi-Fi 6 access points, Extreme Management Center and ExtremeAnalytics Software. This new network will enable mobile ticketing and improved social media connectivity for fans today and soon fans will be able to wirelessly order food from concessions and engage an augmented and virtual reality experiences that will bring fans even closer to the field. As far as our own digital transformation initiatives are concerned, we are increasing automation and productivity and our operations across the board. Our new channel self-serviced tools, like our full solutions catalog came online in May for coding and configuration by partners. We expect to drive 25% of our business in the form of frictionless transactions within the next two quarters. Nearly three quarters of our discount approvals are now auto-approved and we have cut down the processing time in half our remaining transactions. This means nearly 30% of our transactions were touchless in Q4, up over two times from Q3. Net-net we're putting more time back into the field so they can focus on selling and driving productivity. We initiated a restructuring program at the end of fiscal Q4 that we expect to produce $24 million to $27 million of annualized cost savings largely in OpEx. We're aligning our cost structure and upgrading our IT platforms to accommodate the Aerohive acquisition. The acquisition of Aerohive has built significant enthusiasm with our customers, partners and field teams who are interested in cloud-managed enterprise. The merger will make Extreme a technology leader in cloud-managed Wi-Fi with advanced artificial intelligence and machine learning capabilities. This accelerates our strategy of adding more applications and micro services in the cloud to serve our customers. We also aim to leverage Aerohive's ML and AI platform honed across a user base of 10,000 customers who use this technology today. Looking ahead, we're adding conservatism to our forecast to account for customers and partner evaluation of overlapping products in our Smart OmniEdge Wi-Fi portfolio and the new cloud-managed Wi-Fi from Aerohive. Also we continue to see challenging macroeconomic trends in both EMEA and typical seasonality in fiscal Q1 results. With that our outlook for core Extreme in fiscal '20 is to grow in the low single-digits to over $1 billion in revenue and we continue to target 60% gross margin. And the Aerohive acquisition will accelerate revenue growth to the low teens and boost gross margins given their mid 60% run rate. We believe the investments we have made in our digital transformation will pave the way for productivity gains and operating efficiency. The combination of growth, increased gross margins and operating efficiencies allows us to target a 15% operating margin exiting fiscal '20. I also want to note that our balance sheet remains strong with the $170 million in gross cash, $181 million in debt from net debt of just $9 million. I'm confident in the Extreme team and our ability to improve execution and operational efficiency as we move forward, especially as we enter in the next chapter of our corporate transformation with a pending acquisition of Aerohive. With that, I will turn the call over to our CFO, Rémi Thomas. Rémi Thomas: Thanks, Ed. As Ed noted, our revenues of $252.4 million, declined 9% year-over-year and grew 1% quarter-over-quarter and came in above the high-end of our guidance non-GAAP earnings per share was $0.06 at the high end of our range. EPS benefited from the gross margin of 59.2% towards the high-end of our range and offset by higher than expected operating expenses. Our product revenue of $189.5 million declined 14% year-over-year and was down just 1% quarter-over-quarter. Our book-to-bill ratio was close to 1.1, with product bookings up 16% quarter-over-quarter and flat year-over-year. Our Smart OmniEdge switching business grew year-over-year and quarter-over-quarter while our wireless business recovered sequentially, but still face difficult year-over-year comparisons in certain verticals, such as retail, transportation, logistics. Services revenue grew 10% year-over-year and 5% quarter-over-quarter. The year-over-year growth was largely driven by the deferred revenue add-backs of $5.1 million from prior acquisitions. On a like-for-like basis, services revenue grew 2.7% year-over-year, reflecting the positive impact of continued growth in multi-year bookings we've seen over the past several quarters. Our services bookings grew 6% year-over-year and 13% quarter-over-quarter with strength in renewals and new service attached. During the quarter, the Americas contributed 64% to total revenue, EMEA 28% and APAC closed out the remaining 8%. Globally, education was our top performing vertical with bookings at a strong 30% year-over-year and 123% quarter-over-quarter on strength across each of the K-12 E-rates and higher add sub-segments. Government was a close second and grew a healthy 11% year-over-year including both state, local and federal government in the U.S. and internationally. The next largest verticals were healthcare, which also grew a strong 295 year-over-year and to a lesser extent manufacturing followed by retail to round out the top five. Non-GAAP gross margin was 59.2% compared to 57.6% in the year ago quarter and 57.6% in Q3. The sequential improvement is attributable to the services gross margin recovering 220 basis point quarter-over-quarter to 61.6% and product gross margin increasing 130-basis point quarter-to-quarter to 58.4%. We estimate that tariffs had an adverse impact of 110 basis points to total company gross margin in Q4 and 150-basis point on product gross margin consistent with our estimate entering the quarter. The sequential improvements in our product gross margin can be attributed to the impact of lower standard cost due to our product refresh and procurement savings, a positive mix shift to the U.S. and better pricing offset by the impact of tariffs. Q4 non-GAAP operating expenses of $136.8 million were up from $132.9 million in the year ago quarter and from A $130.6 million in Q3. The sequential increase in non-GAAP operating expenses was mainly due to higher sales and marketing expense with higher sales commissions in the U.S. Higher R&D expense was mainly due to work on new product introductions we expect to release in the next one to two quarters and ahead of our planned restructuring at quarter. We kept G&A expenses in check. As a result, our operating margin of 4.9% compares to 9.8% in the year ago quarter and 5.6% in Q3. As a reminder, most of the restructuring we announced a quarter run related to OpEx cost savings that will flow through to our P&L over the course of fiscal 2020 with a step up in operating margin for the second-half of the year. Free cash flow of $18.9 million grew from $12.8 million in Q3 and from just $2.4 million in the year ago quarter. For fiscal 2019, we generated total free cash flow of $82 million versus in the outflow of $21.4 million in fiscal 2018. Our total cash balance at the end of Q4 was $169.9 million, up from $156.8 million at the end of Q3. DSO of 63 days, fell 6 days year-over-year and grew 8 days quarter-over-quarter. On a sequential basis, the strong collections drove DSO lower. Our cash conversion cycle stood at 61 days compared to 66 days a year ago, but up only marginally from 60 days in Q3. Now, turning to guidance, as Ed mentioned, we're adding conservatism to our forecast to account for overlapping products in our Smart OmniEdge Wi-Fi portfolio, continued challenging macroeconomic trends in EMEA and typical seasonality in our fiscal Q1. With that in mind we expect extreme standalone total Q1 revenue to be in the range of $235 million to $245 million. Q1 GAAP gross margin is anticipated to be in the range of 55.1% to 57.2% and non-GAAP gross margin in the range of 57.5% to 59.5%. We estimate that tariffs will have an impact of about 60 basis points on our overall gross margin for fiscal Q1, mainly related to the transition of manufacturing to Taiwan. Q1 operating expenses are expected to be in the range of $140.2 million to $145.8 million on a GAAP basis and $126 million to $131.6 million on a non-GAAP basis. The sequential decrease in OpEx is primarily related to lower sales commission and OpEx savings as a result of the restructuring actions taken at the end of Q4. Q1 GAAP earnings are expected to be in the range of a net loss of $15.8 million to $10.6 million or a loss of $0.13 to $0.09 per share. We're still evaluating the impact of our integration costs following the pending acquisition of Aerohive and we'll be in a better position to refine those estimates post-closing. Non-GAAP net income is expected to be in the range of $4 million to $9.2 million or $0.03 to $0.07 per diluted share. Assuming a mid-quarter close for the Aerohive Networks' acquisition we assume a $15 million contribution to revenue with a 68.6% gross margin on both the GAAP and non-GAAP basis from Aerohive. We assume a GAAP Aerohive operating expenses will be $17.7 million and non-GAAP operating expense will be $12 million resulting in a 49.2% GAAP operating loss margin and 11.4% non-GAAP operating loss margin. With incremental interest expense of $2 million for the past year, this results in a GAAP loss per share contribution of $0.08 and a non-GAAP loss per share contribution of $0.03 to Extreme earnings. In Q4, we expect average shares outstanding to be approximately $118.9 million on a GAAP basis and $121.6 million on a non-GAAP basis, excluding the impact of any shares we may repurchase. With that, I will now turn it over to the Operator to begin the question-and-answer session.

[Operator Instructions] Our first question comes from Eric Martinuzzi of Lake Street. Your line is open.

Yes. I was curious to know if you've got any plan or what are your plans are as far as educating the channel, obviously you're looking at some disruption here with the addition of the Aerohive product, but what steps have you taken thus far to get that locked and loaded post close?

So, what we're doing right now is -- there's a lot of work going on as far as our product roadmap going forward and I think the teams are doing a pretty nice job with that. As I mentioned, one of the things that we've done is we've reorganized. So, your software engineering team is moving under new leadership and then we're going to put the DevOps Cloud team from Aerohive under that same group as we go forward, and we're in the process of mapping out that product roadmap. What we would normally do in this situation, particularly in this quarter, let's say, business as usual, and then -- but we will expect some people to sort of pause a bit to evaluate the new technologies. And then, we'll be providing a very clear guidance. We are enabling both our field as well as our partners on the Aerohive platform. So, there is that initiative, and at the same time, we will be enabling and educating the Aerohive partners and field on our switching portfolio. So, there's a natural fit in the channel, and what we've heard is there's a lot of demand within our channel for cloud-managed platform. Interestingly, a lot of our partners are very familiar with the Aerohive platform, and had some concerns about their viability. So, now that they're with Extreme, they're really excited to be able to sell that. There is some overlap in the channel with our partners who are selling both, and then on the Aerohive side, there's a very clear opportunity for us to add switching, they have a very limited switching portfolio and obviously that's one of our strength. So right now, the teams are working on clarifying the future roadmap. That'll take us a little bit of time. At the same time, we have initiatives for both the channel and our field teams to get educated on the technologies.

Okay. Second question has to do for the fiscal 2020 outlook. Obviously your guidance here for Q1 on the legacy business is relatively flat year-on-year, and yet you're talking about full-year of low single-digits. Does that anticipate a recovery in your European business?

It does. A lot of what's happened with the macro issues in Europe, and specifically in Germany, and what we call our "Dark Region," have been what opportunity is pushing out. So we don't see opportunities going away. We see them being more delayed, and we fully expect that to come back because there's clearly demand for networking and there is clearly growth in networking with the solutions that we're selling in that market.

Okay. And then last question for me, on the anticipated revenue contribution from Aerohive in your fiscal Q1. I think you said $15 million basically a half quarter contribution. If I look at their business a year ago in their September quarter they did $33 million. I'm wondering, if you could explain that delta there between - because it looks like they're just their June quarter was kind of flat year-on-year and yet based on your implied full quarter contribution it would seem like they would be down year-on-year in September.

Why not let Rémi pick up that one? Rémi Thomas: Yes. So we're basically, obviously looking in detail at the business. One factor that you need to take into account is a deferred revenue haircut and so that's factored in and then obviously there's when the company has been acquired there is always a bit of a transition happening. And then you don't necessarily know the exact number of days we have in the quarter, but when we take their outlook, which actually north of $33 million for this quarter factoring the pro rata take into account the deferred revenue haircut will be around roughly $15 million.

Understand. Thanks for the explanation and thanks for taking my questions.

Thanks, Eric. Rémi Thomas: Thanks, Eric.

Our next question comes from Paul Silverstein of Cowen. Your line is open.

Guys, can you hear me?

Yes. We can hear you. How are you doing, Paul?

I'm good, and yourself? If I could just take you back to the previous question, so looking at the first quarter guidance organic and taking into account your comments for the year the discrepancy growth is that entirely due to the macro in particular to Europe or there any other issues?

We're also being a little bit conservative on the Wi-Fi business because we're putting together two Wi-Fi companies and our experience although we don't see a huge amount of overlap in the customer base but there's overlap in the product portfolio. When you combine two Wi-Fi companies together you typically would expect a bit of revenue dis-synergies and so the outlook for the year includes the expectation that at least for Q1 and Q2 we'll not see a recovery in EMEA and we do expect to see an improvement in the second-half. And then around the consolidation of the Wi-Fi portfolio, there will be bit of a revenue dis-synergies in Wi-Fi revenues; those are the two factors that we take into account to guide for this sort of low single digit organic growth for Extreme Core.

But Rémi, the discrepancy between the -- look at the organic on the, on the quarter for the first quarter versus your growth outlook for the year, if I just think organically I just want to make sure that that's entirely due to the micro or that's also wireless LAN. Because I would think that the wireless LAN side, I appreciate your comments about the revenues to synergy is no different than any other deal. But I trust Wi-Fi 6 should be a rising tide. I recognize products just coming out from you and others. But I trust that should be a rising tide over the next 12 months and you also benefit from it no different than your competitors. Rémi Thomas: That's correct, although the contribution from Wi-Fi 6 in Q1 would be still a low percentage of total Wi-Fi revenue.

Right. So we -- again, just focusing on the discrepancy between Q1 guidance relatively flat organically, the 235 to 245, 240 midpoint versus your commentary about the growth for the year. That's all macro or that's also the wireless LAN, this synergies or is there other stuff in there? Rémi Thomas: That's macro, that's the Wi-Fi and that's the product cycle. So we are seeing already a good momentum in Smart OmniEdge switching which really drove the revenue performance in Q4. We do expect to see good momentum in Automated Campus and Data Center as we hit Q2 and Q3 and specifically in Data Center there's a number of releases, SLX, which is the next generation platform that should drive a stronger growth in that specific business compared to what we see in Q1.

All right. But at the rest -- stating the obvious, given you're counting on the macro situation in Europe, those pushed out deals, you're counting on those coming in and being able to recognize them throughout the year to hit the guidance. Does that go without saying?

Yes. I think that's fair, Paul. The other thing I would mention is we've made a lot of acquisitions. Our team has done a fabulous job as far as integrating and we've learned a lot. One of the things we learned is that there is we will have some of our customers that want to look at the Aerohive platform and so there could be some delays in some of the opportunities that we're looking at as people want to evaluate the Aerohive platform. The other thing that we commented in this release is the fact that we integrate cross-selling opportunity and what we're seeing today in retail that were so encouraged about is the massive switching opportunity that we have with the former Zebra customers which is that 50% of the Fortune 50, a lot of the large retailers, transportation logistics companies, the logos. It's just it takes a little bit longer than you might expect. So we want to be conservative on cross-sell but we do believe that there's a pretty significant cross-sell opportunity.

Okay. One last question for me and I hope I'm not confusing you with someone else but I think last quarter you've cited the UK as well as Germany as being the primary drivers or among the primary drivers of some weakness. I'm not sure you mentioned -- I heard you mentioned Southern Europe and Germany. I didn't hear any reference to the UK. Did UK resolve itself in particular your reference UK relative to Brexit not surprisingly. But would that not an issue this quarter?

Yes. It was not an issue and when we talk about Brexit, Germany there -- in Europe their largest export market is the UK. And so, the manufacturing sectors in Germany with a slowdown and export business affects the dark region for us. So even though it's a Brexit event it's really affecting dark more than in the U.K.; the strength for us in education and healthcare and across our verticals in the UK. The UKI and Benelux markets for us have been very resilient, particularly at the Edge and then our automated campus offerings.

Great. I'll pass it on. Thanks guys.

Okay. Thank you, Paul.

Our next question comes from Christian Schwab of Craig-Hallum. Your line is open.

Yes, great. Thanks for taking my question. So, we did $989 million roughly, so we were just in the standalone business, we're not looking for much growth in 2018 to 2020 and now we're going to layer on Aerohive will have some of the synergies and deferred revenue haircut for this year and then but as we look to -- let's get beyond 2020 if we can for a minute or I'd like to. We'll have all of our cost savings done in the core business to drive it to 15% operating margins. Rémi, I think you've mentioned in the past you would hope to get Aerohive's business to similar margins actually this year, which sets up [Technical Difficulty] really good earnings regardless of any top line growth. The next question I really have though is as you look at your business on a combined business and through a series of numerous acquisitions that create scale. What are you guys thinking about as far as a top line growth objective on a multi-year basis? Rémi Thomas: Yes. I think we've -- Christian, it's a good question. Longer term, we're not satisfied with low single digit growth. And I would gradually step that up for us and I think it's going to take us a while to see how the portfolio matures. Obviously cloud managed networking and then shrink it down to the wireless LAN application, cloud-managed wireless LAN is the fastest growing segment at that marketplace and we think customer adoption is going to increase where these customers are going to start looking at cloud management as a tool not just for wireless LAN but across their switching portfolio and frankly across the enterprise. We think we're -- we're as well-positioned or better position than anyone else in the industry to deliver on this. So if -- you know, depending on how that trend in the industry plays out, we are going to be a very strong competitor to everyone else in the industry and we think with the third-generation cloud that we have the dev-ops team that we're bringing over and the investments that we're going to be making there, we're going to be able to roll out more features, micro services, connect to our switching portfolio and provide that cloud management experience for enterprise better than anyone else. So, depending on how this trend catches and depending on how this plays out, we would expect even higher growth. These things, as you know, take time. It's also a function of cross-sell and how we do across the cross-selling platform which is obviously another catalyst for growth. And then we just have built-in growth from that deferred revenue coming back from a recurring revenue perspective.

Right, in 2021, what -- can you remind us on a combined basis - I think before you talked about roughly 18% of your revenue being Wi-Fi. So we could just, add on Aerohive to come up with a percentage of revenue that could grow very strongly. Is that fair? Rémi Thomas: That is the correct number.

Perfect. And then my last question, it has to do with customer adoption of Wi-Fi 6. I understand a pause in the channel or customer base regarding platform comparisons between yours and theirs, but is there any update on the sales cycle of Wi-Fi 6 and when would you anticipate that sales cycle to begin to shrink and more meaningful customer adoption to begin? Do you have any thoughts there?

Yes, I think we've -- Wi-Fi 6 for us was probably one of our most successful new product introductions in the company. A lot of that has to do with how we've changed that process inside of Extreme and the pre-marketing that we're doing and the building a pipeline before the products are G8. So from that standpoint it's been a very successful product launch and it's gaining a lot of momentum and some of the customer highlights that we're pointing out, we're seeing I mentioned leads back at university, I mentioned the stadium when the Titans which we didn't talk about in its release Wi-Fi 6, The Houston Dynamo, Major League Soccer the BBVA stadium in Houston. So I guess I would say as we're seeing around the world and within our target markets we're seeing the adoption of Wi-Fi 6 gain momentum pretty significantly.

Great. No other questions. Thanks, guys.

Okay. Rémi Thomas: Christian you mentioned our revenue was $988 million, it was $996 million, please don't take $8 million from us, we worked really hard to get that revenue.

Sorry, I was just looking at my last note, but thank you, Rémi.

[Operator Instructions] Our next question comes from Paul Silverstein of Cowen. Your line is open.

Appreciate you answering the follow-up. Guys, can you also just repeat the bookings numbers? I think you gave it regionally. I see it from a revenue perspective EMEA and APAC were both down meaningfully on a year-over-year and on a sequential basis. And I think you already addressed EMEA in your previous comments, but can you talk about what you're seeing from a bookings looking forward in those regions? What the trends are and issues if any? Rémi Thomas: Sure. So we don't typically disclose our blocking. So I was happy to get the product book to bill of one and comment on trends, but we're not…

Yes. Well Rémi, just to be clear, so putting aside the exact bookings numbers, what accounts rate that was down 38% year-over-year and 39% sequentially? EMEA was down 30% year-over-year and 22% sequentially. When you look beyond as opposed to looking backwards, you look forward what's going on? Rémi Thomas: I'm going to round some of the percentage and give you trends, but the America enjoys a sequential recovery in bookings that was in the mid-30, so very strong performance. EMEA was close to 10%. APAC was mid-to-high single-digit recovery. And we did see a drop in our service provider that we and which we treat as a fourth region in bookings. And that's -- that's a more lumpy business because it's essentially driven by -- our job there is not, so whether we get a big deal and we got a huge deal in Q3, but we don't - you see lumpiness that that business was down 15% to 20% in bookings and the overall number was a 16% sequential increase that I mentioned with book-to-bill at 1.1%.

Great. All right, well, I'll take the rest offline. I appreciate it. Thank you for that color. Rémi Thomas: Thanks, Paul.

Thanks, Paul.

There are no other further questions. I'd like to turn the call back over to Ed Meyercord for any closing remarks.

Okay. Well, thank you everyone if you join us on the call today. As always, I want to thank the Extreme employees, it's a very busy time for all of us at Extreme. Given at the end of our fiscal year, given the moves that we've taken inside the company to restructure and then the fact that we're moving so quickly down the path of acquiring Aerohive and you people have been working really hard and we're really excited about what all this brings for the new Extreme. We're looking forward to sharing updates about our investments in the new software platform and cloud platform as well as the upgrading our new products at several investor conferences. We have Oppenheimer, Jefferies, Citi Global Tech and D.A. Davidson coming up during the quarter and we hope to see you there. So, thanks again and have a great day.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone have a great day.