Timothy Horan: Very helpful. Thank you.
Ed Meyercord: And I was thinking we’ve been here before. We’ve seen this happen before. It’s a quarter – a quarter two, a few quarter phenomenon, but it will pass. We’ve factored all this into our revised outlook for the year and for the quarter.
Timothy Horan: Thank you.
Operator: One moment for our next question. Our next question comes from Dave Kang with B. Riley. Your line is open.
Dave Kang: Thank you. Good morning. I may have missed it, but were product orders up or down or any color on that?
Kevin Rhodes: So Dave, we haven’t really quoted any dollar amount for orders from one quarter to another. We have tended to say that orders have been up sequentially or down sequentially, et cetera. And in our second quarter, we had a softer quarter because of what we just discussed around the pushing out of some of those orders. And as you think about it, a first quarter order that pushes out, you’re obviously not shipping it. And it may get done in Q2. So I would say yes we had a softer orders quarter in Q1 than we expected, and that’s it reflected in our Q2 guidance.
Dave Kang: And do you expect similar trends in fiscal second quarter, or you think they’re going to rebound?
Kevin Rhodes: We’re – we right now, I would say our visibility into the second quarter is stronger than it was in the first quarter from a orders perspective. But we’re not done with the quarter yet. And so, I don’t know whether at the end of the year, we’ll have the same phenomenon that we had in September with orders pushing again. So that’s the challenge, if you will we have right now from a visibility perspective, the macroeconomic is, are these sales cycles going to continue to elongate? Are things going to continue to push where you can’t ship it in the quarter? That’s the phenomenon.
Ed Meyercord: Yes, Kevin, I’ll jump in and say that from a revenue perspective the impact on revenue, we feel like we hit bottom in the December quarter with product orders being up – with being up slightly. But again, a lot of those orders now in our environment, will spill into the March quarter orders that they come in at the end of the quarter usually don’t get shipped and wind up shipping in the following quarter. So that – does that answer your question, Dave?
Dave Kang: Yes. Yes. And my follow-up is regarding your competitors, previously you said you don’t typically run into Juniper and Arista. Juniper and Arista seems like their enterprise business has been growing nicely in recent quarters. Are you seeing them more in your end markets?
Kevin Rhodes: Yes. We see – we never see Arista. Their enterprise market is very different than our enterprise market. I think that’s an extension of maybe the large financials and some of the other larger, an extension of their cloud data center business with larger customers. But in our market it would be very unusual for us to see Arista. As it relates to Juniper, we see them more frequently. And Juniper is investing in the enterprise market, I think more heavily in the verticals where we play. I think if you read the tea leaves [ph] on what Juniper said, I think they’re calling the same high single digit growth from a demand perspective that we are in the near term. From a revenue perspective, they’re still unloading a lot of backlog.
Dave Kang: Got it. Thank you.
Operator: One moment for our next question. Our next question comes from Christian Schwab with Craig-Hallum. Your line is open.
Christian Schwab: Hey, great. Thanks for taking my question. So the – is it safe to assume that backlog is probably almost back to a somewhat normalized level since the conversation is returning to kind of pre-COVID conversation, talking about a funnel and a pipeline versus previous conversations of a backlog driving material growth for a material period of time. Is that fair?
Ed Meyercord: Christian, I think it’s fair to say that the – our backlog as it relates to distribution is normalized. But we still have a fair amount of customer backlog that’s out there. And yes, I can give an example of like Kroger, we had a very large win with Kroger. They’re deploying to all their stores. They don’t necessarily want all the equipment upfront at once. They want to time that with their deployment. So we have customer request dates, very specific customer request dates. That is one of – from one example of many. And what we’ve said and what continues to be the case is that we see the normalization of our backlog at the end of fiscal – Q4 of this fiscal year.
Christian Schwab: That’s right. That’s right. Yes. And just to follow up on that, the push outs that you were talking about at quarter end, is that direct customer push outs or was that unanticipated distribution channel push outs? Those are customer…
Ed Meyercord: Those are customer, yes.
Christian Schwab: That’s what I thought. Okay. Great. And then my last question, a return to 15% top line growth in 2025 with 30% of your revenue recurring seems like a really strong growth rate for products. So I’m trying to figure out or back into, what you guys’ growth assumptions for industry growth is versus market share gains to attain that growth objective?
Kevin Rhodes: Well, a couple things. I mean, one, we’ll go through the long range model next Tuesday, right at our investor conference. So we can talk a little bit more about 2025 then. Right now we’re not guiding for 2025. I think the biggest point is that recurring revenue will continue to grow. You’re seeing subscriptions grow 30% right now. And so we have to – that’s the gift that keeps on giving over the next several years. We think this is an air pocket, as we mentioned earlier. And so we think that there will be demand coming back towards the end of this year into 2025. So that should normalize and we still have a good – like we talked about pipeline and we have a building pipeline. And so that gives us confidence as well that this is a macroeconomic issue for a period of time and hopefully will abate here within this year.
And then 2025 should be a normal, more spending – normalized spending year. At least that’s the visibility we have right now into 2025.
Ed Meyercord: And Christian, I point out, we – a lot of our confidence comes from funnel and we mentioned that we have double-digit funnel growth in terms of the year-over-year opportunities. And so, a lot of the opportunities that are getting pushed out, will come to fruition in addition to new demand. So there’s a combination of our core business where we’re taking share. If Cisco is a market proxy in terms of what they’re calling, it’s kind of low single digit when we take share the function is how much share a point of market share is over 20% growth for Extreme because of our relative size. And that’s in the core business. And I also mentioned, we have invested and we’ve just rolled out and we’re the early stage of ramping a managed services platform.
