Exhibit 99.1
Cautionary Statement on Financial Measures Non-GAAP Measures: In preparing the accompanying information, the Company has excluded, where applicable, the impact of certain Non-GAAP costs as listed at the end of this presentation. The Company believes these Non-GAAP measures provide both management and investors with additional insight into its current operations, the trends affecting the Company and the Company's marketplace performance. Management believes these items allow readers to better correlate the Company's operating activities with the Company's ability to generate cash from operations. Accordingly, management uses these Non-GAAP measures along with comparable GAAP information when evaluating the Company’s historical performance and future business activities. The Company’s Non-GAAP measures may be different than those used by other companies and should be considered in conjunction with, and not as a substitute for, the Company’s financial information presented in accordance with GAAP. Please refer to our press release dated June 26, 2019, which is posted under SEC Filings on the “Investor Relations” section of our website for the required reconciliation to the most comparable GAAP financial measures.
Additional Information and Where to Find It The description contained herein is for informational purposes only and is not a recommendation, an offer to buy or the solicitation of an offer to sell any shares of Aerohive’s common stock. The tender offer for the outstanding shares of Aerohive’s common stock described in this report has not commenced. At the time the tender offer is commenced, Extreme will file or cause to be filed a Tender Offer Statement on Schedule TO with the SEC and Aerohive will file a Solicitation/Recommendation Statement on Schedule 14D-9 with the SEC related to the tender offer. The Tender Offer Statement (including an Offer to Purchase, a related Letter of Transmittal and other tender offer documents) and the Solicitation/Recommendation Statement will contain important information that should be read carefully before any decision is made with respect to the tender offer. Those materials will be made available to Aerohive’s stockholders at no expense to them. In addition, all of those materials (and any other documents filed with the SEC) will be available at no charge on the SEC’s website at www.sec.gov. Cautionary Statement Regarding Forward-Looking Statements Certain statements in this communication may constitute “forward-looking statements”. Forward-looking statements may be typically identified by such words as “may,” “will,” “could,” “should,” “expect,” “anticipate,” “plan,” “likely,” “believe,” “estimate,” “project,” “intend,” and other similar expressions. These forward-looking statements are subject to known and unknown risks and uncertainties that could cause our actual results to differ materially from the expectations expressed in the forward-looking statements. Although Extreme and Aerohive believe that the expectations reflected in the forward-looking statements are reasonable, any or all of such forward-looking statements may prove to be incorrect. Consequently, no forward-looking statements may be guaranteed and there can be no assurance that the actual results or developments anticipated by such forward looking statements will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, Extreme, Aerohive or their respective businesses or operations. Factors which could cause actual results to differ from those projected or contemplated in any such forward-looking statements include, but are not limited to, the following factors: (1) the risk that the conditions to the closing of the transaction are not satisfied, including the risk that Purchaser may not receive sufficient number of shares tendered from Aerohive stockholders to complete the tender offer; (2) litigation relating to the transaction; (3) uncertainties as to the timing of the consummation of the transaction and the ability of each of Aerohive and Extreme to consummate the transaction; (4) risks that the proposed transaction disrupts the current plans and operations of Aerohive or Extreme; (5) the ability of Aerohive to retain and hire key personnel; (6) competitive responses to the proposed transaction; (7) unexpected costs, charges or expenses resulting from the transaction; (8) potential adverse reactions or changes to business relationships resulting from the announcement or completion of the transaction; (9) Extreme’s ability to achieve the growth prospects and synergies expected from the transaction, as well as delays, challenges and expenses associated with integrating Aerohive with its existing businesses; and (10) legislative, regulatory and economic developments. The foregoing review of important factors that could cause actual events to differ from expectations should not be construed as exhaustive and should be read in conjunction with statements that are included herein and elsewhere, including the risk factors included in Aerohive’s recent Quarterly Report on Form 10-Q, Extreme’s most recent Quarterly Report on Form 10-Q, and Aerohive’s and Extreme’s more recent reports filed with the SEC. Aerohive and Extreme can give no assurance that the conditions to the transaction will be satisfied. Neither Aerohive nor Extreme or its subsidiaries undertakes any intent or obligation to publicly update or revise any of these forward looking statements, whether as a result of new information, future events or otherwise, except as required by law. Aerohive is responsible for information in this Current Report on Form 8-K concerning Aerohive, and Extreme is responsible for information in this Current Report on Form 8-K concerning Extreme or its subsidiaries. Extreme’s Quarterly Report on Form 10-Q filed on May 10, 2019 and other filings with the SEC (which may be obtained for free at the SEC’s website at http://www.sec.gov) discuss some of the important risk factors that may affect Extreme’s business, results of operations and financial condition. Extreme undertakes no intent or obligation to publicly update or revise any of these forward looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Presenters David Flynn President & CEO Aerohive Networks Remi Thomas CFO Extreme Networks Ed Meyercord President & CEO Extreme Networks
Timing and Expected Financial Impact Target to complete the deal in FQ1’20 Scales business to >$1.1B revenue run rate exiting FY20 Accelerates path to >60% gross margin and 15% operating margin combined exiting FY20 ~30% of Revenue from recurring Services on a pro-forma run-rate basis We expect the deal to be accretive to Non-GAAP starting in FY20 We expect consolidated Debt / EBITDA leverage to remain <3x following this acquisition Portfolio of Aerohive’s $79M deferred revenue balance affected by purchase accounting Extreme Networks Announces Intent to Acquire Aerohive Networks Transaction Structure Extreme commences a tender offer to purchase 100% of the outstanding shares of common stock of Aerohive at a price of $4.45 per share in cash Funding the acquisition from a combination of available cash and committed debt financing Key Highlights Extreme Networks, has entered into a definitive agreement to acquire Aerohive Networks, Inc., enhancing Extreme’s technology leadership in Cloud, AI/ML, and establishes a proven and mature Cloud Services Platform for Extreme’s customers Approvals Process Approved by Extreme and Aerohive Boards of Directors Subject to regulatory approvals
Transition Business and portfolio to sustainable, subscription-oriented Cloud Based solutions Change Mix of Revenue: ~30% from recurring services Drive Growth Digital Transformation of Our Platform to drive automation of internal processes OS focus on Place in Network (Use Case) Standardize Distribution and Channel Verticalize GTM Stratify Portfolio Right Size Business Focus on Enterprise Networking Strengths: Single Pane of Glass Mgmt Customer Intimacy Evolution of Extreme Networks Invest in Scale / Breadth of Portfolio to $1B Business Value Acquisitions: WLAN (Zebra), Campus Fabric (Avaya), Data Center (Brocade) Drive GM improvements Invest in Insource Support Automation Management Across Portfolio Moving into Phase 4 of Our Transformation Scale and Profitability FY15 – FY16 FY17 – FY18 FY19 – FY20 FY20 – Beyond Stabilize Scale Build Invest
Extreme + Aerohive Drives Scale and Market Visibility Pre-Merger Post-Merger + Number of Customers >30K >30K > Approximately 60K(1) Partners 6,000 5,623 >11,000(1) Scale Full suite of networking solutions Cloud and enterprise Wi-Fi End-to-end platform at the intersection of network, security and cloud Core Capabilities End to End Network Management Wi-Fi, 802.11ax Better competitive positioning in the market against end-to-end vendors Go-To-Market Strategy Channel partners and direct sales Channel and partnerships (Dell) Bifurcated sales channels to diverse customer base Geographic Focus US (55%), EMEA (34%), APAC (11%) US (52%), EMEA (39%), APAC (9%) Increased density of US/ EMEA footprint Customer Focus Enterprise, Datacenter and Cloud Enterprise Increased penetration into Enterprise Cross-sell / Up-sell Continued Progress from Prior M&A Limited Meaningful New Opportunities FY20E Revenue / Op Mgn >$1B / <$10% >$150M / Breakeven >$1.1B / >15% Op Mgn(2) Note: $Millions, except per share values. Estimates based on Wall Street Consensus. Extreme fiscal year basis, ending June 30. Does not account for duplicate customers. Assumes deferred revenue purchase accounting adjustment for Aerohive upon acquisition of ~30% of Deferred revenue balance and other product overlap dis-synergies
Creates #3 Vendor in Enterprise WLAN (Extreme + Aerohive) Wi-Fi Global Market Share Cisco/Meraki 43.7% HPE/Aruba 14.5% Extreme 2.7% Aerohive 2.3% Mist <1% Extreme + Aerohive 5% Source: Dell’Oro Group Aerohive is the #2 provider of Cloud-managed networking equipment in terms of revenue. -IHS Markit
Campus Networking Data Center Networking Edge/Campus/ Software Management Edge/Campus Networking Wireless Networking Native Cloud Networking Platform Integrated Our Acquisitions Into One Portfolio Previous Consolidations Today
Aerohive Overview 2nd Largest Cloud SAAS Networking* * Validated by 650 Group Architectural and Technology Advantages Unique amd Complementary Technologies GLOBAL CLOUD FOOTPRINT ML/AI ANALYTICS CONTROLLER-LESS 802.11ax PRIVATE CLIENT GROUPS & PPSK ENTERPRISE PLUGGABLE CLOUD NAC SD-WAN UNIQUE TECHNOLOGIES Microservices Cloud-Management architecture Native ML/AI Cloud-Management architecture ML/AI-driven Network, Client, and Security 360 views ML/AI-driven Proactive Problem Resolution Full-Stack Cloud-Management at the Edge EMERGING BENEFITS NETWORK 360 ML/AI-DRIVEN Market Leadership in 802.11ax Access Points SECURITY 360 ML/AI-DRIVEN
Builds on Existing Customer Markets: Cross Sell Retail Assisted Living (Healthcare) Retail Banking Key SLED Customers Quick Serve Restaurants
Next Generation Cloud Tech that Scales API API Hardware Centric 1st Generation HMOP HMOL Hardware and Software Centric 2nd Generation HMNG Public Software Centric 3rd Generation HMNG Public HMNG Private 15,000 Devices 150,000 Clients ~100,000 Devices ~1,000,000 Clients 1,000,000+ Devices 10,000,000+ Clients Management Server Management Cluster with APIs Management Cloud with APIs & Data Lake
Expands Addressable Market into Fast-Growing SD-WAN Segment Source: Dell’Oro Group, IDC, company reports
From “Value” Acquisition to Tuck-in Technology at Scale Acquired Product Family Post-Acquisition Gross Margin CQ1’19 Exit Rate Gross Margin Zebra Mid-40s Mid-50s Avaya Mid-40s High-50s / Low-60s Brocade Low-50s High-50s / Low-60s Heritage Extreme Low-50s High-50s Current Extreme Total Headed to >60% Aerohive Low-60s 62.5% Total Post Next M&A Extreme Accelerates Path to >60%
Accelerates Revenue Run Rate Strengthens Financial Position and Outlook Post Deal Combined Operating Margin $1.1B+ >$150M Cash on Hand & 3X Debt EBITDA >60%* Gross Margins ~30% Software & Services Recurring Revenue >15%* Capital Return Balanced Opportunistic Investments *Exiting FY’20
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