Extreme Networks, Inc. (EXTR) saw its loss narrow to $6.48 million, or $0.06 a share for the quarter ended Sep. 30, 2016. In the previous year period, the company reported a loss of $11.53 million, or $0.11 a share. On the other hand, adjusted net income for the quarter stood at $7.07 million, or $0.07 a share compared with $6.73 million or $0.07 a share, a year ago.

Revenue during the quarter went down marginally by 1.56 percent to $122.64 million from $124.58 million in the previous year period. Gross margin for the quarter expanded 93 basis points over the previous year period to 53.20 percent. Operating margin for the quarter stood at negative 3.88 percent as compared to a negative 8.67 percent for the previous year period.

Operating loss for the quarter was $4.76 million, compared with an operating loss of $10.80 million in the previous year period.

However, the adjusted operating income for the quarter stood at $8.79 million compared to $7.46 million in the prior year period. At the same time, adjusted operating margin improved 118 basis points in the quarter to 7.17 percent from 5.99 percent in the last year period.

"We are pleased to see the positive impacts of our margin initiatives in our first quarter financial results. Our non-GAAP operating income is up 18% year over year and our product gross margins increased by 200 basis points both annually and sequentially highlighting the progress we are making," stated Ed Meyercord, president and chief executive officer of Extreme Networks. "Revenue in the quarter was impacted by a more disciplined approach to our discounting policies and softness in E-Rate."

For the second-quarter, Extreme Networks expects revenue to be in the range of $148 million to $158 million. The company expects adjusted revenue to be in the range of $148 million to $158 million. The company forecasts net loss to be in the range of $6.40 million to $10.10 million. The company projects adjusted net income to be in the range of $5.70 million to $9.40 million. The company projects diluted loss per share to be in the range of $0.06 to $0.09. On an adjusted basis, the company projects diluted earnings per share to be in the range of $0.05 to $0.09.

The company has spent $1.64 million cash to meet investing activities during the quarter as against cash outgo of $0.63 million in the last year period.

Cash flow from financing activities was $0.17 million for the quarter, down 27.83 percent or $0.06 million, when compared with the last year period.

Cash and cash equivalents stood at $102.26 million as on Sep. 30, 2016, up 24.68 percent or $20.24 million from $82.02 million on Sep. 30, 2015.

Working capital increases sharply
Extreme Networks, Inc. has recorded an increase in the working capital over the last year. It stood at $21.06 million as at Sep. 30, 2016, up 218.03 percent or $14.44 million from $6.62 million on Sep. 30, 2015. Current ratio was at 1.10 as on Sep. 30, 2016, up from 1.03 on Sep. 30, 2015.

Cash conversion cycle (CCC) has decreased to 40 days for the quarter from 95 days for the last year period. Days sales outstanding went up to 60 days for the quarter compared with 57 days for the same period last year.

Days inventory outstanding has decreased to 35 days for the quarter compared with 93 days for the previous year period. At the same time, days payable outstanding was almost stable at 55 days for the quarter, when compared with the previous year period.

Debt comes down
Extreme Networks, Inc. has recorded a decline in total debt over the last one year. It stood at $51.89 million as on Sep. 30, 2016, down 20.48 percent or $13.36 million from $65.25 million on Sep. 30, 2015. Total debt was 14.29 percent of total assets as on Sep. 30, 2016, compared with 16.58 percent on Sep. 30, 2015. Debt to equity ratio was at 0.57 as on Sep. 30, 2016, down from 0.66 as on Sep. 30, 2015.