NEW YORK--(BUSINESS WIRE)--Faruqi & Faruqi, LLP, a leading national securities law firm, is investigating potential claims against Extreme Networks, Inc. (“Extreme Networks” or the “Company”) (NASDAQ: EXTR) and reminds investors of the October 15, 2024 deadline to seek the role of lead plaintiff in a federal securities class action that has been filed against the Company.
Faruqi & Faruqi is a leading national securities law firm with offices in New York, Pennsylvania, California and Georgia. The firm has recovered hundreds of millions of dollars for investors since its founding in 1995. See www.faruqilaw.com.
As detailed below, the complaint alleges that the Company and its executives violated federal securities laws by making false and/or misleading statements and/or failing to disclose that among other things, Extreme Networks was suffering from adverse client demand trends as its clients had ordered more product from Extreme Networks than needed in the wake of the COVID-19 pandemic and that Extreme Networks was increasingly offsetting these adverse organic demand trends with the fulfillment of backlog orders in a manner that materially exceeded the proportion represented to investors.
The Extreme Networks class action lawsuit further alleges that on January 25, 2023, Extreme Networks announced the resignation of defendant Rémi Thomas, Extreme Networks’ CFO, and also revealed that compared to the first quarter of 2023, Extreme Networks’ backlog had fallen to $542 million, its Product Book to Bill Ratio had fallen from 1.3x to 0.9x, and its Service Book to Bill Ratio had fallen from 1.4x to 1.2x.
On this news, Extreme Networks’ share price declined by nearly 15%, according to the complaint.
Then, on August 24, 2023, Extreme Networks disclosed that its backlog stood at just $267.3 million, revealing a roughly $245 million decline year-over-year and a $275.7 million decline during the prior six months, according to the Extreme Networks class action lawsuit.
On this news, Extreme Networks’ share price declined by approximately 9%, according to the complaint.
Thereafter, on November 1, 2023, Extreme Networks further revealed that working through its backlog was resulting in an “air pocket of demand” among end customers that resulted in “more tempered” revenue growth outlook of “mid-to-high single digits” for fiscal year 2024, and that Extreme Networks was now expecting normalized backlog of between $75 million to $100 million “by the end of Q4 fiscal ’24,” according to the Extreme Networks class action lawsuit.
On this news, Extreme Networks’ share price declined by approximately 13%, according to the complaint.
Next, the Extreme Networks class action lawsuit alleges that on January 8, 2024 Extreme Networks provided a business update lowering its second quarter of 2024 and long-term revenue outlooks.
On this news, Extreme Networks’ share price declined by approximately 7%, according to the complaint.
Finally, on January 31, 2024, Extreme Networks disclosed: that its revenues for the second quarter of 2024 were $296.4 million, down 7% year-over-year; that it had generated just $186.6 million in product revenue, a decline of 37% year-over-year; that its product backlog had already normalized during the quarter; and that Extreme Networks made the “conscious decision to put channel digestion behind [it] in the March quarter,” leading to a “$40 million to $50 million reduction in channel inventory in the third quarter” that would result in “[d]emand . . . be[ing] masked by inventory flowing out of the channel,” according to the complaint. Rather than increasing revenues as previously represented, Extreme Networks also provided new guidance that revealed Extreme Networks was in fact on track to suffer lower revenues in fiscal year 2024 and, in a related earnings call, defendant Edward B. Meyercord III, Extreme Networks’ President and CEO, acknowledged that Extreme Networks’ “baseline business” was on track to achieve only about $1.1 billion in annual revenues, according to the Extreme Networks class action lawsuit.
On this news, Extreme Networks’ share price declined by approximately 24% over three trading days, according to the complaint.
The court-appointed lead plaintiff is the investor with the largest financial interest in the relief sought by the class who is adequate and typical of class members who directs and oversees the litigation on behalf of the putative class. Any member of the putative class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member. Your ability to share in any recovery is not affected by the decision to serve as a lead plaintiff or not.
Faruqi & Faruqi, LLP also encourages anyone with information regarding Extreme Networks’ conduct to contact the firm, including whistleblowers, former employees, shareholders and others.
To learn more about the Extreme Networks class action, go to www.faruqilaw.com/EXTR or call Faruqi & Faruqi partner Josh Wilson directly at 877-247-4292 or 212-983-9330 (Ext. 1310).
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