Good day, ladies and gentlemen, and welcome to the Extreme Networks' Q1 Fiscal Year 2018 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. [Operator Instructions]. As a reminder, this call is being recorded. I would now like to introduce your host for today’s conference, Brandi Piacente, Investor Relations. You may begin.

Thank you, Heather, and welcome to the Extreme Networks' first quarter fiscal 2018 earnings conference call. This conference call is being broadcast live over the Internet and is being recorded on behalf of the company. The recording will be posted on Extreme Networks' Web site for replay shortly after the conclusion of the call. By now you've had a chance to review the company's earnings press release. I would like to remind you that during today's call, management will be making forward-looking statements within the meaning of the Safe Harbor Provision of Federal Securities Laws. These forward-looking statements involve a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated by these statements. These risks include our ability to successfully integrate the recently acquired assets, technologies and operations from Avaya and Brocade into our business and operations, including, but not limited to, the following risks; difficulties we may experience in the retention, assimilation and successful integration of employees and teams, acquired operations, technologies and/or products, unanticipated costs, litigation or other contingent liabilities associated with the acquisitions that could negatively impact our operating results and financial condition, adverse effects on existing business relationships with suppliers and customers, and difficulties we may experience in reaching our aspirational goals related to the acquisitions. For a detailed description of risks and uncertainties, please refer to our most recent reports on Form 10-K, 10-Q and 8-K filed with the SEC. You should not place undue reliance on forward-looking statements, which speak only as of today. We undertake no obligation to update these statements after this call. Throughout this call, we may make reference to both GAAP and non-GAAP financial metrics. Non-GAAP information should be considered a supplement to and not a substitute for, financial statements prepared in accordance with GAAP. Reconciliation of non-GAAP to corresponding GAAP measures can be found in our earnings press release issued today. For your convenience, a copy of the release and supporting financial materials are available on the Investor Relations section of the company's Web site at extremenetworks.com. Now, I will turn the call over to Extreme's President and CEO, Ed Meyercord, for his opening comments.

Thank you, Brandi, and thank you all for joining us this afternoon. Welcome to the new Extreme's Q1 earnings call. Today, we are pleased to announce financial results for fiscal Q1 highlighted by 73% growth in total revenue, our second quarter in a row of organic growth within the core Extreme portfolio, excluding acquisitions, and more than doubling our cash flow and earnings. The new Extreme is taking market share with enterprise customers. Our rapid growth to number three in our target market with over 30,000 customers and over 1 billion in annualized revenue has created a heightened awareness of Extreme in the industry elevating our brand and creating an unprecedented level of new opportunities. Our exclusive focus on delivering end-to-end software-driven networking solutions from the wireless edge into the hybrid cloud data center is a differentiator. And our existing and newly acquired customers will also say our number one ranked customer support distinguishes us and they greatly value our 100% in-source technical service. Our strengthening competitive position is evident in our financial results. Q1 results for fiscal '18 highlight customer demand for our networking technology, the success of our solutions go-to-market strategy and the accretive impact of our acquisitions of Extreme WiNG and Avaya's networking assets that we will refer to as the Extreme Campus Fabric. We delivered non-GAAP earnings per share of $0.16, growth of over 100% compared to the first quarter a year ago marking the 10th consecutive quarter Extreme has met or exceeded our earnings guidance. And for the second quarter in a row, we delivered operating income in excess of 10% and positive GAAP earnings highlighting the benefits of our operating leverage with increased scale. In Q1, we achieved our second quarter in a row of organic revenue growth and our core Extreme portfolio driven…

Thanks, Ed. I will get started with a few highlights from our first quarter of fiscal 2018. In Q1, for the second quarter, we are reporting year-over-year organic revenue growth from our business prior to the acquisitions, and we are pleased to report another quarter of GAAP profit as well. Revenue growth came from solution sales from both wired and wireless products. Our fiscal Q1 of '18 marks the 10th consecutive quarter that we have improved our non-GAAP gross margin and non-GAAP operating income compared to the same quarter year-over-year. This is before adjustments made to the prior year’s financial statements as a result of our adoption of the new ASC 606 revenue recognition guidance, which I will discuss in more detail in a moment. Our non-GAAP gross margin improved 40 basis points year-over-year to 56.7% even after the dilutive effect of the acquired WiNG and Avaya Campus Fabric businesses, which we did not have in Q1 last year. In 2018, we will continue to focus on gross margin and initiatives we put in place in 2017 and we will work to drive continued improvement in all of our products and services, including those recently acquired. Now let’s review the first quarter results, starting with revenue. As of the beginning of the first quarter, July 1, we adopted the ASC 606 revenue recognition guidance. Under the new guidance, we will now recognize revenue when we sell or ship product to our distributors and make an estimate for rebates or potential distributor returns at the time of shipment. Previously, we deferred revenue and accrual of rebates and returns when products shipped to distributors. The adoption of 606 did not require adjustments to our Q1 '18 financial statements; however, we retroactively adjusted our income statement and balance sheet for fiscal years 2016…

Thank you. [Operator Instructions]. Your first question comes from Simon Leopold with Raymond James. Your line is open.

Hi, guys. This is Victor in for Simon. I just want to make sure I’m doing the math correct here. Of the high end of your December guidance for the $246 million, let’s say, you’re expecting about 23 million of Brocade. Is that correct?

Yes, 23 million to 26 million.

Okay. And the large maturity of that difference from your – the run rate of your target is driven by the fact that the January quarters – it’s heavily loaded in the January quarter, is that right?

Yes, the January month would be their heavier month there. Their year-end was October. And that was their heaviest month and that’s – and then January would be their next quarter end and that would be their heavier month of revenue. As we said, we expect to get about 40% or 45% of the revenues.

Right. But 60%-something of the expenses --

Yes, but we anticipate it to be about two-thirds of the expenses because those are pretty linear. We can control some spending but the majority of the expenses are headcount related and we’ve got those people onboard now.

Okay. So does that imply for the March quarter then that it will be heavy – actually that it will be a little bit higher, I guess, then?

It won’t really be higher. It’s probably going to take a while. We think it will probably slowly happen over a couple of years where the data center business linearity starts to follow our linearity. But just for the March quarter we expect it to be very similar to their past linearity. So we would expect January to be 50% or more of the revenues and then February and March would be less. But net-net, it will be a normal quarter for them.

Okay, great. Let me see here. Just really quickly – I’m sorry, it seems that the ASC 606 adjustment doesn’t have too material of an impact from what I’m looking at --?

It doesn’t on the quarter, so we don’t make any adjustments to the current quarter because – and what you do is you go back and you retroactively restate the previous year 2017 and also '16 and you restate those periods as if you had applied the 606 guidance to those years. So then it changes in the year-over-year compares.

Okay. Are you seeing any slowing from Brocade’s core customer base kind of around the acquisition and is there that dynamic where you have a slowing ahead of the acquisition and then resumption in spending when customers become more confident in the product and thus support buying product?

Hi, Victor. This is Ed. Yes, I think it’s fair to say that there is some business slowdown on the Brocade side during the Broadcom-Brocade uncertainty around that acquisition. And then you could say the same thing is true with Avaya as far as them being in a period of bankruptcy. We’ve seen it but we’re encouraged by the pipeline and the opportunities and we think – the partner conference that we just held, we heard a lot of really good things from long-time partners from both of those companies and we expect to see a rebound in buying activities. The customers and partners will want to wait and see what we’re doing with the product portfolio. We’re clearly communicating that we’re going to continue to invest and protect the customers’ investments in their network. So we’re expecting to see business come back in both companies.

Great. I’ll see you for now. Thank you.

Thank you. [Operator Instructions]. And I am showing no further questions at this time. I’d like to turn the call back over to Ed Meyercord for closing remarks.

Well, thank you. Thank you everyone who could join us on the call today. And I also want to thank all the employees of the new Extreme who are listening in. I want to thank them for a job well done. I’m proud of our team for delivering our 10th consecutive quarter of meeting or beating our earnings guidance and more than doubling our cash flow and earnings while closing and integrating our new Campus Fabric acquisition and mending and closing our data center acquisition. It was a very strong quarter. So thank you all for your participation and have a good evening.

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