Extreme Networks Inc (EXTR)

Cash conversion cycle

		Jun 30, 2025	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021
Days of inventory on hand (DOH)	days	86.88	105.84	58.26	37.25	28.29
Days of sales outstanding (DSO)	days	40.57	29.25	50.63	60.41	56.58
Number of days of payables	days	54.16	38.59	65.26	63.82	51.74
Cash conversion cycle	days	73.29	96.49	43.63	33.85	33.13

June 30, 2025 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 86.88 + 40.57 – 54.16
= 73.29

The cash conversion cycle (CCC) of Extreme Networks Inc. has experienced notable fluctuations from June 30, 2021, through June 30, 2025. As of June 30, 2021, the CCC was approximately 33.13 days, indicating a relatively efficient cycle of converting investments in inventory and receivables into cash. This value increased slightly to 33.85 days by June 30, 2022, reflecting a marginal elongation in the cycle, but remains within a similar continuum.

By June 30, 2023, the CCC expanded to 43.63 days, representing a significant rise of approximately 10 days compared to the previous year, which suggests that the company was experiencing delays or inefficiencies in managing receivables, inventory, or payables, or possibly a combination of these factors. The combination of these elements indicates the company took longer to convert its investments into cash.

The trend accelerated markedly by June 30, 2024, with the CCC reaching approximately 96.49 days. This considerable increase—more than doubling the previous year's cycle—implies a substantial deterioration in operational efficiency. The company was likely facing challenges such as extended receivables collection periods, inventory holding periods, or delayed payments to suppliers.

Subsequently, by June 30, 2025, the CCC decreased to approximately 73.29 days. While this reduction suggests an improvement in the cash conversion efficiency, the cycle remains significantly higher than historical levels observed in 2021 and 2022. This persistent elevation indicates ongoing challenges in working capital management but also reflects some corrective adjustments made to improve cash flow operations.

Overall, the progression of the cash conversion cycle illustrates a period of stability in 2021 and 2022, followed by a marked deterioration in 2023 and 2024, with a subsequent partial recovery in 2025. The extended cycle during 2024 points to potential operational or strategic issues that impacted the company's ability to efficiently convert its investments into cash, emphasizing the importance of continued focus on working capital optimization.