Extreme Networks Inc (EXTR)

Interest coverage

		Jun 30, 2025	Mar 31, 2025	Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	20,201	-54,411	-104,248	-97,298	-55,149	32,259	125,918	130,889	111,491	83,264	70,748	64,497	64,983	71,856	83,120	71,318	54,820	42,487	-26,900	-33,199
Interest expense (ttm)	US$ in thousands	57,926	33,820	17,000	17,090	16,986	18,495	18,262	17,877	17,385	14,695	13,543	12,735	12,789	14,281	17,081	20,073	22,856	24,698	25,083	25,249
Interest coverage		0.35	-1.61	-6.13	-5.69	-3.25	1.74	6.90	7.32	6.41	5.67	5.22	5.06	5.08	5.03	4.87	3.55	2.40	1.72	-1.07	-1.31

June 30, 2025 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $20,201K ÷ $57,926K
= 0.35

The analysis of Extreme Networks Inc.'s interest coverage ratios from September 2020 through June 2025 indicates notable fluctuations in its ability to meet interest obligations over this period.

Between September 2020 and December 2020, the company exhibited negative interest coverage ratios (-1.31 and -1.07, respectively), suggesting that operating earnings were insufficient to cover interest expenses, potentially due to operational challenges or high interest costs during that time.

From March 2021 onward, a marked improvement is observed, with ratios turning positive and steadily increasing through September 2021 and reaching a peak of 7.32 in September 2023. This trend indicates progressively stronger operating earnings relative to interest obligations, reflecting effective operational performance and improved profitability.

However, in the most recent periods, the ratios decline sharply. From its peak in September 2023 at 7.32, the ratio decreases to 6.90 by December 2023, followed by a precipitous drop to 1.74 in March 2024. Subsequently, the ratios turn negative again, with values of -3.25 in June 2024, -5.69 in September 2024, -6.13 in December 2024, and further nearing -1.61 in March 2025. The projection into June and September 2025 shows a return toward slightly positive territory at 0.35, but overall, the trend reflects fluctuating capacity to cover interest obligations.

The negative interest coverage ratios in the latest periods signify that the company's operating earnings are insufficient to cover interest expenses, indicating potential financial distress or increased leverage. Conversely, the periods of positive ratios suggest phases of improved profitability and operational stability.

In summary, Extreme Networks Inc. experienced a significant recovery in interest coverage from early 2021 through late 2023, but recent data highlights a reversal with deteriorating earnings relative to interest expenses, raising concerns about ongoing financial sustainability and the company's ability to service debt without additional operational improvements or financial restructuring.