$EXTR stockholders filed a claim against Extreme Networks for hiding that its backlog fell faster than expected due to pandemic over-ordering.
After the financial results on January 31, 2024, $EXTR dropped by over 60% from its peak.
Extreme Networks investors can join this case to be notified about potential recovery.
In July 2022, Extreme reported steady revenue and a record backlog, predicting strong growth for FY23.
However, by January 25, 2023, the company announced CFO Thomas's departure and a drop in backlog to $542M, with updated clearance timelines.
By August 24, 2023, Extreme’s backlog had fallen to $267.3 million.
After this news, $EXTR fell by 9% the next day.
Then, on November 1, 2023, Extreme announced that slower backlog clearance would reduce revenue growth, predicting backlog levels of $75M to $100M by FY24's end.
On this news, $EXTR dropped by 13%.
Then, on January 31, 2024, Extreme reported weak 2Q24 results, with a 7% drop in revenue and a 37% drop in product revenue.
They noted that their backlog had normalized and planned to cut channel inventory, which would impact demand.
As a result, $EXTR dropped more than 60% from its peak.
Based on these events, $EXTR investors filed a claim against Extreme Networks, accusing the company of the following:
Extreme’s backlog dropped faster than expected because clients over-ordered during the pandemic.
The company misled investors about backlog growth and revenue, hiding a decline in actual demand and earnings.
Considering all the representations, investors suspect Extreme Networks hid that its backlog dropped faster than expected due to pandemic over-ordering, masking a decline in real demand.