Extreme Networks Inc (EXTR)

Return on equity (ROE)

		Jun 30, 2025	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021
Net income	US$ in thousands	-7,467	-85,964	78,074	44,271	1,936
Total stockholders’ equity	US$ in thousands	65,584	25,282	116,752	90,343	54,468
ROE		-11.39%	-340.02%	66.87%	49.00%	3.55%

June 30, 2025 calculation

ROE = Net income ÷ Total stockholders’ equity
= $-7,467K ÷ $65,584K
= -11.39%

The analysis of Extreme Networks Inc.'s return on equity (ROE) over the specified period reveals significant fluctuations and trends that merit careful examination. As of June 30, 2021, the company's ROE was modest at 3.55%, indicating relatively limited profitability in relation to shareholders' equity at that time. This figure demonstrates a conservative level of net income generated for shareholders relative to equity invested.

In the subsequent year, June 30, 2022, the ROE experienced a substantial increase to 49.00%, marking a remarkable improvement in the company's profitability and efficiency in generating net income from shareholders’ equity. This rise suggests a period of operational enhancement, cost management, or other growth factors contributing to increased net earnings relative to equity.

The upward trajectory continued into June 30, 2023, with the ROE reaching 66.87%. This further escalation demonstrates that the company had become markedly more effective at translating equity investments into net income, possibly due to improved margins, strategic initiatives, or favorable market conditions.

However, a dramatic shift occurred by June 30, 2024, when the ROE plummeted to -340.02%. This negative and significantly large ROE indicates a period of substantial net losses, likely due to extraordinary expenses, impairments, or other one-time or structural challenges impacting net income adversely. The severity of this negative ROE underscores a stark deterioration in the company's profitability and suggests critical issues affecting the arms-length relationship between equity and net earnings.

In the following year, June 30, 2025, the ROE somewhat improved to -11.39%. While still negative, this indicates a reduction in net losses relative to equity, possibly signaling a period of recovery or stabilization. Nonetheless, the negative value signifies ongoing challenges in achieving consistent profitability and efficient utilization of shareholders’ equity.

Overall, the trend in ROE over the period reflects considerable volatility, transitioning from modest profitability to peak profitability, followed by a severe downturn and partial recovery. The data points to considerable operational or structural shifts within the company between 2021 and 2025, which have significantly impacted the efficiency of equity utilization and the company's overall financial health during this timeframe.