Good day, and thank you for standing by. Welcome to Extreme Networks' Second Quarter Fiscal Year 2024 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please note that today's conference is being recorded. I’ll now hand the conference over to your speaker host, Stan Kovler, Vice President of Corporate Strategy and Investor Relations. Please go ahead.

Thank you, Olivia and good morning, everyone, and welcome to Extreme Networks' second quarter 2024 earnings conference call. I’m Stan Kovler, Vice President of Corporate Strategy and Investor Relations. With me today are Extreme Networks' President and CEO, Ed Meyercord; and Executive Vice President and CFO, Kevin Rhodes. 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 extremenetworks.com along with our earnings presentation. Today's call and our discussion may include forward-looking statements based on our current expectations about Extreme's future business, financial and operational results, growth expectations and strategies. All financial disclosures on this call will be made on a non-GAAP basis unless stated otherwise. 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. These risks are described in our risk factors in our 10-K report for the period ending June 30, 2023 and subsequent 10-Q 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. Following our remarks we will take questions. Now I will take the – I will turn the call over to Extreme's President and CEO, Ed Meyercord.

Thank you, Stan, and thank you all for joining us this morning. Our second quarter results were in line with our previously announced revised Q2 outlook. We did have some highlights in the quarter. SaaS ARR grew 37%, which reinforces the value of our differentiated cloud platform. We have 44 customers who spent over $1 million on Extreme Solutions demonstrating both customer retention and our ability to take new logos from our larger competitors and gross profit is 62.5% showing continued improvements and the benefit of a higher mix of high margin recurring revenue. At a high level, the networking industry is exiting the final stage of the COVID-induced era of supply chain constraints, which has significantly impacted our business. We've made the conscious decision to put channel digestion behind us in the March quarter. Our distributors and partners have lowered inventory purchases, which we expect to accelerate in the third quarter. We expect to emerge in the fourth quarter at a much more normalized level of revenue and earnings. Our bookings trends and funnel of new opportunities are strong indicators of customer demand. While larger deals are still experiencing elongated sales cycles, particularly in North America, we continue to win against the competition on a bookings basis, with an uptick in new logos. Our EMEA business has stabilized and grew from the prior year and APAC bookings continue to grow over the prior year. In addition to sequential and year-on-year funnel growth, we grew the number of transacting partners accounts and deal volume during the quarter. These trends and the expanded go-to-market opportunities give us confidence that we are positioned for a return to meaningful growth of fiscal ‘25. We've attracted a growing list of 14 managed service provider partners exiting the second quarter with seven already driving transactions.…

Thanks, Ed. Despite lower revenue in the second quarter, we improved our gross margins sequentially, and optimized our operating expenses to maintain a healthy operating margin profile. Our EPS was therefore impacted less than our revenue shortfall end of quarter. In the second quarter, we took proactive action that enabled us to protect our profitability, while continuing to invest in our strategic initiatives. We will continue to focus on aligning our cost structure accordingly, as we navigate the second half of our fiscal year. Let me get into the numbers. Second quarter revenue of $296.4 million, fell 7% year-over-year and was in line with our revised outlook. Product revenue of $186.6 million, fell 16.5% year-over-year, reflecting continued channel digestion and elongated sale cycles that are impacting the networking industry. These trends are consistent across both switching and wireless products. Our product backlog has normalized this quarter earlier than we initially anticipated and our bookings approximated our product revenue for the first time in four quarters. In fact, our bookings trends were positive in both EMEA and APAC where each grew double-digits year-over-year. From a vertical perspective, while total bookings fell slightly both quarter-over-quarter and from the prior year, our healthcare, education, manufacturing, and transportation/logistics vertical markets grew from the prior year. We are encouraged by this level of customer activity which informs our view that we will be able to get channel digestion phase behind us as quickly as possible. SaaS ARR and recurring revenue was a bright spot in our quarter. SaaS ARR grew 37% year-over-year to $158 million, driven by the strength of our renewals and activations of previously shipped products. Subscription deferred revenue was up 32% year-over-year to $246 million. As we ship products and backlog, it's generating a tailwind for SaaS growth. Total subscription and support…

Thank you. [Operator Instructions] And our first question coming from the line of Eric Martinuzzi from Lake Street Capital Market. Your line is open.

Yeah. I wanted to address the leadership change here and the -- how we're going to be approaching the channel differently than we were before. If you could talk a little bit about what Norman Rice is going to be doing? I guess, we sort of lost touch with the channel demand, those are my words not yours, but what are we doing to help improve that channel monitoring? What processes or is Norman putting in place?

Yeah. Thanks. Thanks, Eric. One of the first things that Norman has done and with our leadership teams is to stratify our customer base and to split out what is more run rate business in terms of business that's less than 50,000 in order and what that business looks like which is going to be more channel driven and can be impacted more through distributors and marketing activities and to provide more clarity to the project-based business and stratifying that project based business. And I'd say that's a big change that Norman's bringing to the equation. The other thing that I'll mention is that Norman and Kevin, where the architects behind our private subscription offer, which is a channel led initiative that we believe will be disruptive. There's a lot of demand with some of the larger service providers that we're working with, that's building up, and I think you'll start to see and we'll be in a position to announce meaningful deals in the second half of this year. And I also mentioned earlier in my comments about the managed services provider partners that we have who are signing up and it's -- there's the portfolio benefits and our technology benefits along with the unique capability that people are very interested in which is our consumption billing model, which provides for a lot of efficiency for that, that go-to-market motion. So it's the stratification of the opportunities and I'd say a more highly targeted approach to the channel to the core business, along with these targeted new commercial models that we're going to market with. And Norman is very well. He's the best qualified person to lead us on that front.

Okay. And then looking at the guidance here, just a really dramatic reset, I'm wondering was there a prior year outlook because we had a guidance reset coming out of Q1 and now, we've had an even more dramatic reset coming out of Q2. What's the confidence level here? We've got one month under our belts for Q3. Are we seeing any evidence to say things are getting better as far as the sequential step up in Q4.

Yeah, Eric. We commented on the funnel and opportunities specifically, commenting on progress that we've seen in EMEA, in Asia-Pacific, and Kevin also touched on the fact that we're heading into E-Rate season and this looks to be a pretty strong E-Rate season for us. The declines came as we were looking into Q2. Our outlook for Q2 and our plans to take down channel inventory that the reality is, we couldn't take inventory down nearly as much as that we had intended and I would say with the elongated sales cycles and with bookings pushing out the way they did, it only deepened our position in the channel. And we had to make a decision as to whether or not we want to manage this out over time or take it all in one fell swoop. And our view and our perspective is to get it cleaned up and get normalized as we head into Q4 and turn the corner on ‘25. And that’s how we've made the decision that we're making. Demand is obviously going to be masked by inventory flowing out of the channel, and that's a $40 million to $50 million number that you heard Kevin talk about. And as we go into Q4, we do have seasonality and we are expecting more neat normal seasonality as we go into that quarter and we have the E-Rate business and we have a significantly larger funnel and that's what gives us confidence. So we're very focused on the cleanup here this quarter and then delivering and exceeding our outlook for the June quarter.

Thanks for taking my questions.

Thanks, Eric.

Thank you. And our next question coming from the line of Timothy Horan with Oppenheimer. Your line is open.

Thanks guys. Can you just talk about maybe the end user demand? Are customers may be waiting for Wi-Fi 7 or CBRS or further upgrades to Cloud? Just any color what's going on because the step down next quarter's guidance versus what you were thinking six months ago is incredibly dramatic. The channel numbers that you just gave seems only tell part of the story. Thanks.

Yeah, Tim. I think that's -- you're seeing a much more conservative outlook as it relates to demand. Yes, in some cases in the Wi-Fi market there will be some people that are holding off for Wi-Fi 7. We've talked about elongated sales cycles which has been very real in the U.S. where we've had verbal commitments for pretty exciting wins for extreme, but the deals themselves have been pushed out and when we look at deals in our funnel that get to the commit level. We close on those deals it's more of a function of time, so we're looking at this as timing, if you look at and this is why we're providing guidance for Q4, we're confident in the guide and how we're going to come out of this in Q4, but we are setting that base level at a more conservative level than we had in the past. And I'd say, Tim, to your point, I think we're feeling a little bit burned in terms of what we were expecting to close in the funnel. And we've gone back and taken a fresh view of that. And our view is to put it behind us and reset here with a clean path going forward. As we look into fiscal ‘25, there will be some tough comps if we look at the Q1 and Q2, but as we get into calendar ‘25 we see ourselves on a really nice and a very strong footing for driving double-digit growth and resuming where we left off.

And so Wi-Fi 7, can you maybe just talk about how much of an improvement it is, for the customers or your benefits and maybe how does the pricing of the product look like your ability to supply it? And then just lastly on Wi-Fi 7 and it is -- what the competitive environment looks like? And do you think this is one of the things kind of driving the elongated sales cycles are customers waiting for this?

Yeah. I mean I think it's fair to say that, that there are going to be some customers in the marketplace that are waiting on this. The benefit that you have in Wi-Fi 7 is you have -- the different frequency bands and you have, in our case, higher bandwidth, which is important. And then, we're also bringing dual bands in terms of speeds and so there's a lot more flexibility in the solution. So every time you have these upgrades there's higher quality in terms of connectivity. In this case, there's more bandwidth, there's more flexibility in terms of end-user devices that we pick up on different frequencies. And then we have the dual bandwidth capabilities in terms of how we connect to the network. The Wi-Fi 7 for us is cloud managed in addition to our 4000 series switch, which is purely a cloud managed and in this we're bringing some unique capabilities that provide a lot of advantages in terms of how to deploy and run networks, relative to the traditional CLI model where provisioning and network deployments can be done in a much more efficient fashion and a more automated way. So yeah, there are a lot of benefits in what's coming out and our most recent releases. And yeah, in terms of opportunities, it could have an impact.

And when does it start shipping at scale?

We are GA at this point. So I think you would expect to see shipping from Wi-Fi 7 beginning in Q3 and really ramp up -- and begin to ramp in Q4.

Thank you.

Thank you. And our next question coming from the line of David Vogt with UBS. Your line is open. .

Great. Thanks, guys for taking my questions. Maybe to start on the competitive landscape and that dynamic, I think you guys spent a lot of time talking about that taking sort of the inventory, de-stocking, pained short-term. But you also talked about normal seasonality in Q4, talking about gaining share over the long-term. Can you maybe just kind of talk about what you're seeing competitively in the market today that gives you confidence that we can get back to share gains over the intermediate and longer term? And then I have a follow up question as well.

Yeah, Dave. Thanks. So I'll comment on that. What gives us confidence is what we see happening in the market every day. And we've talked about the largest competitor in the space that has a very different cloud solution. And we continue to see the industry moving to cloud and we have a leadership position in cloud. So the largest player in the marketplace has got a very different cloud solution from the traditional enterprise solution. In addition to that, they continue to invest in other markets. And so the level of complexity that we're feeling in the marketplace surrounding the largest competitor is very real and opens up a lot of opportunities. We've talked about some of the larger deals that we're getting into. We continue to move up market and you'll see us continuing to do this with some of the announcements that will come out of Extreme, where in these highly competitive and highly contested processes, we're coming out on top. And so you're seeing the likes of Cisco and HPE and Juniper getting pushed back and Extreme winning and that's part of how we're upleveling our brand. So that's one of the ways that we have confidence relative to the largest player. Everyone is very top of mind. The HP acquisition of Juniper. What that will mean. In our case, it means that one of our competitors will be going away. We see a lot of opportunities certainly over the next couple of years. They're looking to rationalize their product portfolios. This is going to create opportunities. In fact, it already has, where we're already getting calls from customers, direct customers, and end users in the field, as well as partners who are concerned and very unsure about what does that product roadmap look like and what is it going to look like. And this gives us, these just create, they create more opportunities for us.

No. Great. That’s helpful. And maybe just a follow up. You talked about a strong E-Rates easing coming up and getting back to hopefully some degree of normal seasonality by the June quarter. Recognizing that obviously the first half of fiscal ’25 difficult comps on a year-over-year basis. Are you planning for what I would consider to be more normal seasonal behavior on a quarter-over-quarter basis as we get through June going forward or is there still some digestion from whether it's order growth intake, underlying demand/channel digestion that we should expect as we go through the second half of this calendar year into ‘25? And then, just maybe one final one for Kevin if I could slip it in there. You mentioned, obviously, double-digit margins at normalized scale, I think the phrase was. We just want to get some more color on how we're thinking about it, because I know at the Analyst Day, obviously you guys had talked about margins above, let's call it, fiscal ‘22 levels back into mid-teens, but just wanted to get more color on what scale do you need to get to you to get back to margins that are more robust than, let's say, fiscal ’22?

And I'll cover the first part of the question and Kevin I'll let you jump in and cover the second part. We're looking, I think at – yes, more traditional seasonality as you look at the shifts going from Q1 -- Q4 into Q1 to Q2 etc. I think in the core business, the outlier here is going to be some of the new commercial motions that we have that are not likely to be in the same seasonal patterns. So some of the larger deals that traditionally we would not have access to in terms of our private subscription offer for example are not necessarily going to fall into that the traditional seasonal lower the core business. And I'd say the same thing is true with our MSP business is that ramps That's just going to be more of a steady incline than it will be kind of traditional seasonal business. Kevin, do you want to comment on the second part of the question?

Sure. Absolutely happy to. The reason why we gave the fourth quarter outlook is to actually show what we believe will be a more normalized. We do believe we will grow off of Q4, so we're not thinking that, that is like the new number forever because we have these opportunities with MSP and ESPO that will continue to mature and provide further growth in the future. But with Q4 being 10% to 13%, we believe that's a good jumping off point. But we will maintain operating margins in the double-digits throughout this fourth quarter and throughout next year is our plan. In terms of like, how much we can scale from where we were in ‘23 or ’24 in the future, we really have to go and spend a little bit more time looking at where our ’25, ‘26 contributions are going to be to get into that, that the higher realms of mid-teens to high-teens, even to 20% scale beyond that, but we do think it's possible. I mean, we're already showing the discipline that if we need to, we could take costs out of the business to drive and keep our margins at that double-digit level. And what we need to do is, we are focused on that is to continue to scale and grow the business and generate more profitability over time and that's exactly what Ed and I are intending to do is to continue to scale the operating margins over time.

Great. Thanks, guys.

Thank you. [Operator Instructions] Our next question coming from the line of Christian Schwab with Craig-Hallum Capital. Your line is open.

Hey. Good morning, guys. So Ed, now that it's become evident of over earning during supply chain issues, etc., etc., and competitors not having products. When we look at your business and we baseline modest growth before we entered this period and I kind of come up with a number of about $1.1 billion plus or minus is that kind of what you believe the business we're going to be below that run rate, march little bit of above that or kind of in that light and June is – is that kind of our starting from your top line growth initiatives, is that fair or is that, that the way you think about it all?

I think, it's fair. We are going to build out of this. And yeah, what we've said is, and Christian, we use the language kind of more normalized to comment on the June quarter and when you just kind of run the math on some growth on that kind of baseline business, you get to the 1.1. So I think that's a fair assessment. Kevin, I don't know, if you want to add to that or comments.

No. I think you are right, Ed. I mean, with Q4 being at that level and jumping off point there with it being the new normal would continue. We do believe that we will continue to grow the business. We will have a better growth story in the second half of our fiscal year ‘25 than the first half. But in general, yeah, in terms of range $1.1 billion is the new normal about right?

Is Norman's work doing anything about moving to selling product as a service across the board and putting a mechanism in place to be more aggressive in that or is that something you're going to watch some of the other people in the industry do to see if there's a tremendous customer interest?

Yeah. I think you're going to see us be a lot more aggressive and we've -- I mentioned that the triumvirate of Norman stepping in and taking the lead as Chief Commercial Officer. Nabil is our Chief Technology and Chief Product Officer, but he's also running a cross-functional team on SaaS and subscription. And one of the things that you're seeing is really nice growth on the subscription line and really healthy margins on that subscription business. And so as we think about growth we have plans to continue that growth on the subscription line. Also, we have the benefit of gross margins on that. Finally, we made a key hire, Monica Kumar who's come and joined us. I think she's going to be the glue between, our product orgs and our selling orgs and I think we have an opportunity to be much more targeted and I would say much more aggressive in direct outreach to the market more broadly as well as more targeted with the channel, and we have some really interesting growth opportunities in the channel. So, I think this represents a unique opportunity for Extreme to really step up in the marketplace and that's how we see it.

My last question deal with the recent consolidation in this space, you did a big consolidation years ago and extremely confused your customer base about which products you were going to support and which products you were not going to support. So I think with that as a backdrop should set you up to be well positioned to take advantage of what could be potential confusion in the marketplace. Do you think that that will help be a competitive advantage for you to gain share?

We do. It looks like, from the announcement, it looks like HP was very interested in the AI platform that Juniper brings to the equation and that Juniper leadership will be heading the networking side. What does that mean to the massive install base of Aruba and Aruba Technology. It raises a lot of questions And for customers, it raises an awful lot of questions. And keep in mind, Juniper has come at enterprise really from the service provider position. And so in terms of the breadth of their portfolio, they are still miss (ph) this very much kind of driving the efforts. And in terms of the full end-to-end enterprise solution, it's not as robust. And so how that incorporates and how that gets built into the Aruba enterprise solution set, there are a lot of questions out there, and I think that's going to create opportunities for us. And we're very focused on a very clean and simple and flexible solution in terms of our universal hardware, in terms of interfacing with One Cloud. This presents a very fresh alternative and a very clean alternative for customers that are out there. The other thing that you're aware of Christian from our prior M&A activities is that they baked a lot of synergy into the formula. And when you look at $430 million, $450 million of expense coming out of the business, you're talking about thousands of people coming out of that business, and where they come from, and how that plays out again will create disruption. and as I mentioned earlier, we've gotten calls from, we're already getting calls from employees and customers and partners, so we think this will present opportunities potentially hiring opportunities and new growth opportunities for us.

Great. No other questions. Thank you.

Thank you.

Thank you. And our next question coming from the line of Dave Kang with B. Riley. Your line is open.

Thank you. Good morning. My first question is regarding bookings. You reported that Asia and Europe were up double-digits year-over-year, just wondering, if you can provide any color on North America bookings?

I mean the color is, I'd say that's, that's the area where we've been challenged Dave. In terms of the bookings, we were close to a book-to-bill ratio of 1 in the quarter so that was a positive news, but North America was down year-over-year.

Got it. And then, so sounds like the fiscal third quarter, most of the inventory -- excess inventories will be flushed out. So can we expect fiscal fourth quarter to be sort of like a clean channel inventory.

Yes. That's exactly our intent is to get it cleaned and to have, get normalized in the fourth quarter and beyond.

So sounds like...

Yeah. I would just add. We look at obviously normalized backlog has happened quickly and more quickly than originally anticipated and as we look at entering Q4 we look at normalized backlog and normalized channel inventory. So somewhat of a clean slate is, we head into Q4 and turn the quarter into to fiscal ’25.

And based on your fiscal fourth quarter guide -- revenue guide you're implying that orders will be up significantly sequentially from third to fourth quarter, correct?

Yeah. We've got the E-Rate season there. We mentioned that earlier. So we are expecting sequential growth. A, our two strongest quarters in a year are the fourth quarter and the -- second and fourth quarter of our fiscal year. So as we think about the June quarter, you got the E-Rate season there. They've got a stronger pipeline than we have in the third quarter here, and we've got strong E-Rate season coming at us. So we are expecting sequential growth in bookings.

My last question is, Ed, you mentioned that fiscal ‘25, you're expecting meaningful growth. Just wondering, if you can kind of provide additional color. Should we expect like double-digits? Would that be meaningful?

That's correct and that's how we're thinking about it, David. So we looked at that, there's going to be a tough comp in the first quarter, given that we landed it 353 last year, or this, for Q1 of this year. Then, I think you get to the second half as we turn the corner into calendar ‘25. Obviously, we'll have a very much easier comp in Q3. But we expect that our marketing initiatives, our go-to-market initiatives in terms of the core business and then the realization of these new commercial models that are growing, that they haven't really had an impact on our financials yet, that by the time we get to that calendar ‘25 timeframe. You'll start to see a much more meaningful impact of those initiatives coming into play and adding to growth over just what we would consider to be kind of core market growth.

Got it. Thank you.

Thank you. And our next question coming from Alex Henderson with Needham. Your line is open.

So your commentary about $1.1 billion being the run rate revenue number and the guide for the fourth quarter of the fiscal year at 265 to 275 is more normalized. It is a little bit troubling considering in the fourth quarter of 2019, you did $252 million and for the full year 2019, you did roughly $1 billion at $995.8 million and that's 2019 that would put a growth rate to your normalized $1.1 billion of around 2.5% over that time frame. And certainly, you would not say that's a reasonable growth rate. So the question, I have for you is, what is the real normalized number if you were to adjust these numbers to fully normalize the baseline, you say $1.1 billion is normalized but I don't think you believe your 2.5% growth company. So can you please adjust that language a little bit for us, in terms of understanding how much the fourth quarter is still unnormalized as opposed to more normalized? And what would be the run rate of revenue if you had a fully normalized full year? Thank you.

Yeah, Alex. So let me, Kevin, just hit a high level, and then I'll let you come in and fill in. But Alex, we're – obviously, it's a pretty massive reset here in our Q3 with a lot of cleanup involved. We have new teams and we have a new approach that are coming in and looking to sort of build off of a base in resetting the foundation, whether or not it would be normal seasonality going into Q1, or is there still conservatism in that, that Q4 number where you could still see some growth -- sequential growth coming out of that. We wanted to provide the outlook for the -- our fiscal Q4 to provide again what we're calling more normalized. Will that be a fully more normalized bookings number? There I think we need some work on that and we'll definitely be coming back to you with a more refined outlook on how we see the evolution of booking especially considering these other commercial models which quite frankly we have not included in our outlook.

I think that's the key, as I think that the MST model is very nascent very early to ESPO model we have as well the private subscription offers also very early at stages. This is based on the run rate of the existing business and products that we've got ZTNA coming on board, we've got Wi-Fi 7 coming on board, we've got new products, innovations coming out. That will continue to give us that tailwind in the future. Right now, we're just not prepared to go and guide for 2025 or beyond, but wanted to give at least a normalized Q4 at this point.

And Alex, the other comment to make is that we have seen -- earlier we saw Asia-Pacific recovering more quickly. And then, we've seen EMEA come with year-over-year growth that Kevin mentioned. And we just -- we haven't seen it yet in the Americas. And so the timing of that America's recovery to the normal buying cycle and how all of that kicks in from a timing perspective. And we have a lot of large deals that are in the hopper for us. Really exciting from a brand perspective in terms of where we are in these competitive processes. But they're very lumpy, and I think it's a little challenging for the team right now to stick their necks out and call some of these larger deals. If that makes sense.

That's not my problem. My problem is the guide commentary that normalized full year revenue run rate would be at $1.1 billion, which is obviously still incorporating a significant amount of backlog adjustment and the comment that more normalized implies that it's almost normal and it's certainly not in the fourth quarter, so what is the nut that you're assuming for the fourth quarter? What would be fully normalized fourth quarter? You mean can you give us some sense of what more normalized means in terms of the scaling of it?

Yeah. I mean I'm not sure we're there, I'm not sure we're there yet. I mean if we look at a 275 number. Yeah, if we look at a 275 number in Q4 and obviously, there's the math to get to 1.1 when you just roll that over. So there's not, I guess you would say there's not a lot of growth built into that for a normalized fiscal ‘25, Alex.

Well, I mean, you did 253 in fourth quarter of 2019, and now you're telling me 275 is close to normalized? Difficult trying to reconcile those two numbers. Not even close to normalized in that context, so how big is the nut? Are we still absorbing $30 million, $40 million in the June quarter of inventory absorption?

Yeah, Alex. The thing that you're missing I think is the North America is still recovering. It was down year-over-year.

I'm not missing anything, I'm asking what the nut is that you're assuming when you give us the guidance for the fourth quarter in terms of the absorption in the recovery in the environment. How big is that nut?

We're assuming no incremental amount as you say nuts in the fourth quarter. We assume absorption will occur in the third quarter with no more absorption needed in the fourth quarter. What we need to see is, we need to see the market, the entire market is down right now, this is not just an Extreme issue, this is an exogenous issue that's across all IT and all networking. And so where we see and where we hope is that the market starts to come back. And that we will see the North American market come back. And appreciate your points, but we got to get the whole market to come back and spend across the board to help.

Great. Thanks.

Okay.

Thank you. And I will now turn the call back over to Mr. Ed Meyercord for any closing remarks.

Okay. Thank you. Thank you everybody for participating in the call and obviously, we'll have call backs of many of you, and we appreciate all the good questions. I also want to take time to thank our employees and customers and partners who are participating here and for all the work as we're transitioning through this cycle and putting ourselves on more normalized footing as we've been talking about. We are absolutely looking forward to putting this chapter behind us. And we're committed to innovating in the industry and continuing to deliver new solutions, and we're committed to these strategic initiatives that will drive long-term growth for us at Extreme. Thanks everybody and have a good day.

Ladies and gentlemen, that does [indiscernible] conference for today. Thank you for your participation. You may now disconnect.