Q4 revenues of $755 million - an increase of 4%
year over year; FY20 revenue $2,873 million Cloud, Alliance Partner
& Subscription revenue increased 3 points sequentially to 33%
of Q4 revenue Subscription TCV increased $181 million in Q4;
Year-to-Date booked ~$400 million of TCV Signed 135 deals with TCV
greater than $1 million, 17 over $5 million and 4 over $10 million
in Q4
Avaya Holdings Corp. (NYSE: AVYA) today reported financial
results for the fourth quarter and fiscal year ended September 30,
2020.
Fourth Quarter Financial
Highlights
- Revenues of $755 million
- GAAP Operating income was $74 million; Non-GAAP Operating
income was $170 million
- GAAP Net income was $37 million
- Adjusted EBITDA was $200 million, 26.4% of revenue
- Software and services were 88% of revenue, up 5 points
year-over-year
- Recurring revenue was 63%, up 5 points year-over-year
- CAPS (Cloud, Alliance Partner and Subscription) revenue
increased to 33% from 30% in the prior quarter
- Ending cash and cash equivalents were $727 million
“We closed out a very strong fiscal year with fourth quarter
results that exceeded all our guidance metrics and again delivered
sequential and year-over-year growth,” said Jim Chirico, President
and CEO of Avaya. “Our performance throughout the year demonstrates
that our investments in innovation and execution of our cloud-first
strategy for enterprises have positioned us in the right place, at
the right time. We are enabling new ways of work and collaboration
that are solving organizations’ most pressing business challenges,
and our highly differentiated solutions are driving strong demand
across our installed base and attracting new customers."
Mr. Chirico added, "As we closed the September quarter, we
completed a refinancing that also significantly strengthened our
balance sheet and financial flexibility. All of this positions us
well for continued success in the new fiscal year.”
GAAP
Non-GAAP (1)
(In millions, except percentages)
4Q20
3Q20
4Q19
4Q20
3Q20
4Q19
Revenue
$
755
$
721
$
723
$
757
$
722
$
726
Gross margin
55.4
%
55.1
%
54.2
%
61.2
%
61.1
%
60.6
%
Operating income
$
74
$
53
$
52
$
170
$
164
$
165
Net income (loss)
$
37
$
9
$
(34
)
n/a
n/a
n/a
GAAP
Non-GAAP (1)
(In millions, except percentages)
FY20
FY19
FY20
FY19
Revenue
$
2,873
$
2,887
$
2,879
$
2,908
Gross margin
55.0
%
54.6
%
61.2
%
61.4
%
Operating (loss) income
$
(455)
$
(473
)
$
610
$
629
Net (loss) income
$
(680)
$
(671
)
n/a
n/a
4Q20
3Q20
4Q19
Adjusted EBITDA(1)
$
200
$
187
$
184
Adjusted EBITDA margin(1)
26.4
%
25.9
%
25.3
%
Cash provided by operations
$
70
$
45
$
66
Cash and cash equivalents
$
727
$
742
$
752
Additional Fourth Quarter Fiscal 2020
Highlights
- Total Contract Value (TCV) of $2.1B*
- Added over 1,500 new logos
- Significant large deal activity with 135 deals over $1 million,
17 over $5 million, and 4 over $10 million
- Avaya Cloud Office™ launched in France, Ireland & the
Netherlands; enhanced with an Avaya branded unified desktop app,
Avaya branded video, network performance and video quality
controls, and adoption and usage analytics.
- Enhanced CCaaS by adding: audio and video calling via WebRTC to
improve remote worker deployment and experience; WhatsApp and
in-app social messaging support, empowering enterprises to interact
digitally with customers; enhanced analytics with increased
real-time dashboards to improve management visibility; AI
enhancements with the expansion of Google Dialogflow CX
support.
- Avaya OneCloud™ Subscription booked an additional $181 million
of TCV during the September quarter, which stands at ~$400 million
booked since its Q1-2020 launch.
- Consistent with our long-term capital allocation strategy, we
took advantage of favorable market conditions to extend debt
maturities and improve financial flexibility. Issued $1 billion in
senior notes due 2028, using the net proceeds to prepay term loans
due in 2024 and extended the maturity of $800M of term loans from
2024 to 2027.
(1) Non-GAAP revenue, Non-GAAP gross margin, Non-GAAP operating
margin, Non-GAAP operating income, adjusted EBITDA and constant
currency are not measures calculated in accordance with generally
accepted accounting principles in the U.S. (“GAAP”). Adjusted
EBITDA margin is calculated based on non-GAAP Revenue. Refer to the
"Use of non-GAAP (Adjusted) Financial Measures" below for more
information on the calculation of constant currency. Refer to the
Supplemental Financial Information accompanying this press release
for more information, including a reconciliation of these measures
to the most closely comparable measure calculated in accordance
with GAAP. Unless otherwise noted, all references in this release
to revenue are to GAAP revenue.
* We define TCV as the value of all active ratable contracts
that have not been recognized as revenue, including both billed and
unbilled backlog.
Customer Highlights
- One of the top 10 largest banks in the US and an Avaya customer
for over 20 years, will use the Avaya OneCloud Subscription
solution to support an increasing population of remote workers and
transition over 70,000 users in their retail branches from using
Cisco, to using the Avaya OneCloud Subscription solution.
- Allina Health, which owns or operates 13 hospitals and more
than 90 clinics, will transition over 47,000 unified communications
and contact center seats using Avaya OneCloud Subscription to
support their COVID-19 remote agents with additional entitlements,
while also leveraging mobile functionality for their remote
workforce.
- The Art Institutes, a system of private schools throughout the
United States, selected Avaya Cloud Office to support nearly 700
users across its eight campuses. With a five-year agreement, Avaya
is supporting multi-location requirements with increased
flexibility, functionality and centralized operations.
- Connex, one of Avaya’s largest Canadian partners, won over
Microsoft Teams with Avaya Cloud Office for their unified
communications and collaboration requirements. They operate across
North America, servicing approximately 150,000 users for more than
75,000 agents.
- ABM, an international technical professional services firm
based in Australia, expanded an initial Avaya Cloud Office
deployment, adding users and new features based on the solution’s
ability to support their mobile workforce and technology
roadmap.
- Australia-based Oban Enterprise Solutions chose Avaya Cloud
Office for its flexibility and ability to integrate third-party
applications, as it enables them to offer a complete solution from
the front-end through to the back office and bring many lines of
communication to a single platform.
- A large social services agency based in an East Coast city in
the US, selected Avaya OneCloud CCaaS for over 1,000 contact center
agents and supervisors. With this offering, the agency can support
remote work capabilities, while at the same time enabling an
effective interview management process for callers inquiring about
qualification for essential benefits.
- A global provider of CRM and BPO services based in CALA, will
use an Avaya OneCloud private cloud solution to consolidate their
Avaya and third-party solutions into a single unified framework for
more than 7,500 workforce management and recording licenses, speech
analytics, automatic quality management, digital process analytics
and encryption ports. The company will use an Avaya OneCloud
private cloud contact center solution for 6,000 agent positions,
providing them with upgraded voice, digital channels and outbound
capabilities.
- A large Middle Eastern-based energy company is now using Avaya
Spaces™ to support its employee base, increasing employee
efficiency and collaboration for those working on-site and where
local security rules prevented the use of remote working solutions
to connect that staff with remote employees.
Business Highlights
- The Avaya Spaces collaboration application was named to the
2020 Gartner Magic Quadrant for Meeting Solutions. Avaya Spaces was
launched this past January and is available in nearly 100 countries
to meet the needs of a work-from-anywhere world with a leading-edge
user experience.
- Avaya was named to the Forbes 2020 list of "World's Best
Employers." Companies included on this list are recognized by their
employees based on how the company handles important quality of
work and life issues, including gender equality, social
responsibility, image, economic footprint, talent development and
COVID-19 response.
- Stephen Spears joined the company in the newly created role of
Chief Revenue Officer.
- Industry Wired Magazine recognized Avaya as one of the World’s
Top 10 Best Contact Center Solution Providers in 2020.
- Avaya’s OneCloud CCaaS solution was named a 2020 Contact Center
Technology Award winner by CUSTOMER magazine. The award honors a
product or service’s ability to help enterprises and outsourced
contact centers deliver world class customer experiences.
- Avaya was named a 2020 Edison Patent Award Winner for
technology improving speech recognition. Nominations are reviewed
by a team of R&D Council researchers based on a patent’s
significance of the problem, utility/socioeconomic value, novelty
and commercial impact.
- The Technology & Services Industry Association recognized
Avaya as a 2020 STAR Award winner for Innovation in Migrating to
Selling Subscription Offers.
- 2020 Avaya was named Contact Center Applications Vendor of the
Year by Frost & Sullivan in APAC, highlighting the evolution of
the Avaya OneCloud CCaaS platform.
- 2020 Frost & Sullivan Best Practice Award: 2020 Global IP
Desktop Phones Product Line Strategy Leadership Award.
- Aragon recognized Avaya in the UCC market for Avaya OneCloud
UCaaS including Avaya Cloud Office and Avaya Spaces. Stating
OneCloud UCaaS makes it easy for people to work together,
collaborate, and message each other, Aragon also cited as
strengths, Avaya’s highly reliable UCC platform, cloud and
on-premise capabilities, overall user experience, team
collaboration, chatbot support and Partner network and
ecosystem.
- Avaya’s Contact Tracing solutions won a 2020 Pandemic Tech
Innovation Award for Exceptional Innovation. The award recognized
hardware, software, devices/peripherals, applications and services
that help society and businesses function effectively in the face
of challenges caused by the global COVID-19 pandemic.
Financial Outlook - 1Q Fiscal
2021 - unless otherwise noted, values reflect September
30th, 2020 FX rates.
- GAAP revenue of $710 million to $730 million
- GAAP operating income of $44 million to $59 million; GAAP
operating margin of ~6% to 8%
- Non-GAAP operating income of $140 million to $155 million;
non-GAAP operating margin of 20% to 21%
- Adjusted EBITDA of $165 million to $180 million; Adjusted
EBITDA margin of 23% to 25%
Financial Outlook - Fiscal Year
2021 - unless otherwise noted, values reflect September
30th, 2020 FX rates.
- GAAP revenue of $2.875 billion to $2.925 billion
- GAAP operating income of $168 million to $218 million; GAAP
operating margin of ~6% to 7%
- Non-GAAP operating income of $558 million to $608 million;
non-GAAP operating margin of 19% to 21%
- CAPS revenue growth of ~$300 million, which will represent
between 35 and 40% of Avaya's total revenue in FY21
- Newly introduced key performance indicator, OneCloud ARR, will
roughly double by year end FY21
- Adjusted EBITDA of $660 million to $710 million; Adjusted
EBITDA margin of 23% to 24%
- Cash flow from operations of 2% to 3% of non-GAAP revenue
- Approximately 80 million to 85 million weighted average shares
outstanding; ending share count of approximately 80 million to 85
million shares
The company has not quantitatively reconciled its guidance for
adjusted EBITDA or non-GAAP Operating income to its most comparable
GAAP measure because certain of the reconciling items that impact
these metrics including, provision for income taxes, restructuring
charges, net of sublease income, advisory fees, acquisition-related
costs, change in fair value of warrants and gain (loss) on
marketable securities affecting the period, have not occurred, are
out of the company’s control, or cannot be reasonably predicted.
Accordingly, reconciliations to the nearest GAAP financial measures
are not available without unreasonable effort. Please note that the
unavailable reconciling items could significantly impact the
company’s results.
As Avaya’s CAPS metric reflects revenue that is already
recognized, management determined that it could help provide
investors with a better view into the performance of the company’s
broader-based OneCloud software solutions that are driving the
company’s recurring revenue growth by introducing a new
forward-looking metric, Annualized Recurring Revenue, or OneCloud
ARR.
OneCloud ARR will incorporate different components from the
OneCloud portfolio that are configured to suit the operational
needs of Avaya’s customers as they transition to cloud-facing
recurring revenue consumption models and opex revenue streams. This
metric is similar to what our industry peers report and will
reflect only the recurring components of Avaya’s OneCloud portfolio
which includes multiple deployment options based on customer
choice. The introduction of the One Cloud ARR metric, combined with
the company’s existing CAPS metric, will provide investors enhanced
visibility into Avaya’s transformational Cloud journey. Quarterly
and annual OneCloud ARR for fiscal 2020 are provided in the slides
published on Avaya’s website at www.avaya.com on the Investor
Relations page.
Avaya’s outlook does not include the potential impact of any
business combinations, asset acquisitions, divestitures, strategic
investments, or other significant transactions that may be
completed after November 18, 2020. Actual results may differ
materially from Avaya’s outlook as a result of, among other things,
the factors described under “Forward-Looking Statements” below.
Conference Call and Webcast
Avaya will host a live webcast and conference call to discuss
its financial results at 8:30 AM Eastern Time on November 18, 2020.
To access the live conference call by phone, listeners should dial
+1-877-858-7671 in the U.S. or Canada and +1-201-389-0939 for
international callers. To join the live webcast, listeners should
access the investor page of Avaya's website at https://investors.avaya.com.
Following the live webcast, a replay will be available on the
investor page of Avaya's website for a period of one year. A replay
of the conference call will be available for one week soon after
the call by phone by dialing +1-877-660-6853 in the U.S. or Canada
and +1-201-612-7415 for international callers, using the conference
access code: 13712455.
About Avaya
Businesses are built on the experiences they provide, and every
day millions of those experiences are built by Avaya (NYSE: AVYA).
For over one hundred years, we’ve enabled organizations around the
globe to win - by creating intelligent communications experiences
for customers and employees. Avaya builds open, converged and
innovative solutions to enhance and simplify communications and
collaboration - in the cloud, on-premise or a hybrid of both. To
grow your business, we’re committed to innovation, partnership, and
a relentless focus on what’s next. We’re the technology company you
trust to help you deliver Experiences that Matter. Visit us at
www.avaya.com.
Cautionary Note Regarding Forward-Looking Statements
This release contains certain “forward-looking statements.” All
statements other than statements of historical fact are
“forward-looking” statements for purposes of the U.S. federal and
state securities laws. These statements may be identified by the
use of forward-looking terminology such as "anticipate," "believe,"
"continue," "could,“ "estimate," "expect," "intend," "may,"
"might," “our vision,” "plan," "potential," "preliminary,"
"predict," "should,“ "will," or “would” or the negative thereof or
other variations thereof or comparable terminology. The Company has
based these forward-looking statements on its current expectations,
assumptions, estimates and projections. These statements, including
the Company’s outlook, do not include the potential impact of any
business combinations, asset acquisitions, divestitures, strategic
investments or other strategic transactions completed after the
date hereof. While the Company believes these expectations,
assumptions, estimates and projections are reasonable, such
forward-looking statements are only predictions and involve known
and unknown risks and uncertainties, many of which are beyond its
control. Risks and uncertainties that may cause these
forward-looking statements to be inaccurate include, among others,
the duration, severity and impact of the coronavirus pandemic
(“COVID-19”), as well as governmental and business responses to
COVID-19, and the impact the pandemic and such responses have on
our business, financial performance, liquidity and other factors
discussed in the Company's Annual Report on Form 10-K and
subsequent quarterly reports on Form 10-Q filed with the Securities
and Exchange Commission (the “SEC”). These risks and uncertainties
may cause the Company’s actual results, performance or achievements
to differ materially from any future results, performance or
achievements expressed or implied by these forward-looking
statements. For a further list and description of such risks and
uncertainties, please refer to the Company’s filings with the SEC
that are available at www.sec.gov. The Company cautions you that
the list of important factors included in the Company’s SEC filings
may not contain all of the material factors that are important to
you. In addition, in light of these risks and uncertainties, the
matters referred to in the forward-looking statements contained in
this report may not in fact occur. The Company undertakes no
obligation to publicly update or revise any forward-looking
statement as a result of new information, future events or
otherwise, except as otherwise required by law.
Avaya Holdings Corp.
Condensed Consolidated
Statements of Operations (Unaudited)
(In millions, except per share
amounts)
Three months ended September
30,
Fiscal years ended September
30,
2020
2019
2020
2019
REVENUE
Products
$
269
$
314
$
1,073
$
1,222
Services
486
409
1,800
1,665
755
723
2,873
2,887
COSTS
Products:
Costs
106
113
405
442
Amortization of technology intangible
assets
44
44
174
174
Services
187
174
714
696
337
331
1,293
1,312
GROSS PROFIT
418
392
1,580
1,575
OPERATING EXPENSES
Selling, general and administrative
250
240
1,013
1,001
Research and development
52
50
207
204
Amortization of intangible assets
39
40
161
162
Impairment charges
—
—
624
659
Restructuring charges, net
3
10
30
22
344
340
2,035
2,048
OPERATING INCOME (LOSS)
74
52
(455
)
(473
)
Interest expense
(64
)
(60
)
(226
)
(237
)
Other income, net
7
6
63
41
INCOME (LOSS) BEFORE INCOME TAXES
17
(2
)
(618
)
(669
)
Benefit from (provision for) income
taxes
20
(32
)
(62
)
(2
)
NET INCOME (LOSS)
$
37
$
(34
)
$
(680
)
$
(671
)
EARNINGS (LOSS) PER SHARE
Basic
$
0.40
$
(0.31
)
$
(7.45
)
$
(6.06
)
Diluted
$
0.39
$
(0.31
)
$
(7.45
)
$
(6.06
)
Weighted average shares outstanding
Basic
83.4
111.2
92.2
110.8
Diluted
84.3
111.2
92.2
110.8
Avaya Holdings Corp.
Condensed Consolidated Balance
Sheets (Unaudited)
(In millions, except per share
and shares amounts)
As of September 30,
2020
2019
ASSETS
Current assets:
Cash and cash equivalents
$
727
$
752
Accounts receivable, net
275
314
Inventory
54
63
Contract assets
296
187
Contract costs
115
114
Other current assets
112
115
TOTAL CURRENT ASSETS
1,579
1,545
Property, plant and equipment, net
268
255
Deferred income taxes, net
31
35
Intangible assets, net
2,556
2,891
Goodwill, net
1,478
2,103
Operating lease right-of-use assets
160
—
Other assets
159
121
TOTAL ASSETS
$
6,231
$
6,950
LIABILITIES
Current liabilities:
Debt maturing within one year
$
—
$
29
Accounts payable
242
291
Payroll and benefit obligations
198
116
Contract liabilities
446
472
Operating lease liabilities
49
—
Business restructuring reserves
21
33
Other current liabilities
181
158
TOTAL CURRENT LIABILITIES
1,137
1,099
Non-current liabilities:
Long-term debt, net of current portion
2,886
3,090
Pension obligations
749
759
Other post-retirement obligations
215
200
Deferred income taxes, net
38
72
Contract liabilities
373
78
Operating lease liabilities
129
—
Business restructuring reserves
28
36
Other liabilities
312
316
TOTAL NON-CURRENT LIABILITIES
4,730
4,551
TOTAL LIABILITIES
5,867
5,650
Commitments and contingencies
Preferred stock, $0.01 par value;
55,000,000 shares authorized at September 30, 2020 and 2019
Convertible series A preferred stock;
125,000 shares issued and outstanding at September 30, 2020 and no
shares issued and outstanding at September 30, 2019
128
—
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value; 550,000,000
shares authorized; 83,278,383 shares issued and outstanding at
September 30, 2020; 111,046,085 shares issued and 111,033,405
shares outstanding at September 30, 2019
1
1
Additional paid-in capital
1,449
1,761
Accumulated deficit
(969
)
(289
)
Accumulated other comprehensive loss
(245
)
(173
)
TOTAL STOCKHOLDERS' EQUITY
236
1,300
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY
$
6,231
$
6,950
Avaya Holdings Corp.
Condensed Statements of Cash
Flows
(Unaudited; in
millions)
Fiscal years ended September
30,
2020
2019
Net cash provided by (used for):
Operating activities
$
147
$
241
Investing activities
314
(124
)
Financing activities
(489
)
(61
)
Effect of exchange rate changes on cash,
cash equivalents, and restricted cash
3
(4
)
Net (decrease) increase in cash, cash
equivalents, and restricted cash
(25
)
52
Cash, cash equivalents, and restricted
cash at beginning of period
756
704
Cash, cash equivalents, and restricted
cash at end of period
$
731
$
756
Use of non-GAAP (Adjusted) Financial Measures
The information furnished in this release includes non-GAAP
financial measures that differ from measures calculated in
accordance with generally accepted accounting principles in the
United States of America (“GAAP”), including financial measures
labeled as “non-GAAP” or “adjusted.”
EBITDA is defined as net income (loss) before income taxes,
interest expense, interest income and depreciation and
amortization. Adjusted EBITDA is EBITDA further adjusted to exclude
certain charges and other adjustments described in our SEC filings
and the tables below.
We believe that including supplementary information concerning
adjusted EBITDA is appropriate because it serves as a basis for
determining management and employee compensation and it is used as
a basis for calculating covenants in our credit agreements. In
addition, we believe adjusted EBITDA provides more comparability
between our historical results and results that reflect purchase
accounting and our current capital structure. We also present
adjusted EBITDA because we believe analysts and investors utilize
these measures in analyzing our results. Adjusted EBITDA measures
our financial performance based on operational factors that
management can impact in the short-term, such as our pricing
strategies, volume, costs and expenses of the organization, and it
presents our financial performance in a way that can be more easily
compared to prior quarters or fiscal years.
EBITDA and adjusted EBITDA have limitations as analytical tools.
EBITDA measures do not represent net income (loss) or cash flow
from operations as those terms are defined by GAAP and do not
necessarily indicate whether cash flows will be sufficient to fund
cash needs. Adjusted EBITDA excludes the impact of earnings or
charges resulting from matters that we do not consider indicative
of our ongoing operations but that still affect our net income. In
particular, our formulation of adjusted EBITDA allows adjustment
for certain amounts that are included in calculating net income
(loss), however, these are expenses that may recur, may vary and
are difficult to predict. In addition, these terms are not
necessarily comparable to other similarly titled captions of other
companies due to the potential inconsistencies in the method of
calculation.
We also present the measures non-GAAP revenue, non-GAAP gross
margin, non-GAAP operating income, and non-GAAP operating margin as
a supplement to our unaudited condensed consolidated financial
statements presented in accordance with GAAP. We believe these
non-GAAP measures are the most meaningful for period to period
comparisons because they exclude the impact of the earnings and
charges noted in the applicable tables below that resulted from
matters that we consider not to be indicative of our ongoing
operations.
The company presents constant currency information to provide a
framework to assess how the company’s underlying businesses
performance excluding the effect of foreign currency rate
fluctuations. To present this information for current and
comparative prior period results for entities reporting in
currencies other than U.S. dollars, the amounts are converted into
U.S. dollars at the exchange rate in effect on the last day of the
company’s prior fiscal year (i.e. September 30, 2019).
In addition, we present the liquidity measures of free cash
flow. Free cash flow is calculated by subtracting capital
expenditures from Net cash provided by operating activities. We
believe free cash flow is a measure often used by analysts and
investors to compare the cashflow and liquidity of companies in the
same industry.
The presentation of these non-GAAP financial measures is not
intended to be considered in isolation from, as substitute for, or
superior to, the financial information prepared and presented in
accordance with GAAP and may be different from the non-GAAP
financial measures used by other companies. In addition, these
non-GAAP measures have limitations in that they do not reflect all
of the amounts associated with the Company’s results of operations
as determined in accordance with GAAP.
We do not provide a forward-looking reconciliation of expected
first quarter and full year fiscal 2021 non-GAAP revenue, non-GAAP
gross margin, non-GAAP operating expenses, non-GAAP operating
income, non-GAAP operating margin, or adjusted EBITDA guidance as
the amount and significance of special items required to develop
meaningful comparable GAAP financial measures cannot be estimated
at this time without unreasonable efforts. These special items
could be meaningful.
The following tables reconcile historical GAAP measures to
non-GAAP measures.
Avaya Holdings Corp.
Supplemental Schedules of
Non-GAAP Adjusted EBITDA
(Unaudited; in
millions)
Three months ended,
Fiscal year ended,
September 30, 2020
June 30, 2020
September 30, 2019
September 30, 2020
September 30, 2019
Net income (loss)
$
37
$
9
$
(34
)
$
(680
)
$
(671
)
Interest expense
64
51
60
226
237
Interest income
—
(1
)
(3
)
(6
)
(14
)
(Benefit from) provision for income
taxes
(20
)
20
32
62
2
Depreciation and amortization
104
107
108
423
443
EBITDA
185
186
163
25
(3
)
Impact of fresh start accounting
adjustments
1
1
(2
)
1
5
Restructuring charges
2
14
10
20
22
Advisory fees
—
—
8
40
11
Acquisition-related costs
—
—
1
—
9
Share-based compensation
9
7
6
30
25
Impairment charges
—
—
—
624
659
Change in fair value of Emergence Date
Warrants
3
3
(1
)
3
(29
)
Loss on foreign currency transactions
—
5
—
16
8
Gain on investments in equity and debt
securities, net
—
(29
)
(1
)
(49
)
(1
)
Adjusted EBITDA
$
200
$
187
$
184
$
710
$
706
Avaya Holdings Corp.
Supplemental Schedules of
Non-GAAP Revenue
(Unaudited; in
millions)
Three months ended
Change
Three months ended June 30,
2020(2)
Fiscal year ended September
30, 2020(3)
Fiscal year ended September
30, 2019(4)
Sept. 30, 2020
Adj. for Fresh Start
Accounting
Non-GAAP Sept. 30,
2020
Sept. 30, 2019(1)
Amount
Pct.
Pct., net of fx impact
Revenue by Segment
Products & Solutions
$
269
$
—
$
269
$
315
$
(46
)
(15
)%
(16
)%
$
262
$
1,074
$
1,228
Services
488
—
488
411
77
19
%
18
%
460
1,805
1,680
Unallocated amounts
(2
)
2
—
—
—
n/a
n/a
—
—
—
Total revenue
$
755
$
2
$
757
$
726
$
31
4
%
3
%
$
722
$
2,879
$
2,908
Revenue by Geography
U.S.
$
447
$
1
$
448
$
393
$
55
14
%
14
%
$
415
$
1,643
$
1,566
International:
EMEA
178
1
179
184
(5
)
(3
)%
(7
)%
178
716
756
APAC - Asia Pacific
74
—
74
86
(12
)
(14
)%
(15
)%
76
297
330
Americas International
56
—
56
63
(7
)
(11
)%
(8
)%
53
223
256
Total International
308
1
309
333
(24
)
(7
)%
(9
)%
307
1,236
1,342
Total revenue
$
755
$
2
$
757
$
726
$
31
4
%
3
%
$
722
$
2,879
$
2,908
(1) - (4) Reconciliation of Non-GAAP
measures above:
(1) 4Q19 Non-GAAP
Results
(2) 3Q20 Non-GAAP
Results
Three Months Ended
Three Months Ended
Sept. 30, 2019
Adj. for Fresh Start
Accounting
Non-GAAP Sept. 30,
2019
June 30, 2020
Adj. for Fresh Start
Accounting
Non-GAAP June 30,
2020
Revenue by Segment
Products & Solutions
$
315
$
—
$
315
$
262
$
—
$
262
Services
411
—
411
460
—
460
Unallocated amounts
(3
)
3
—
(1
)
1
—
Total revenue
$
723
$
3
$
726
$
721
$
1
$
722
Revenue by Geography
U.S.
$
392
$
1
$
393
$
415
$
—
$
415
International:
EMEA
183
1
184
178
—
178
APAC - Asia Pacific
85
1
86
75
1
76
Americas International
63
—
63
53
—
53
Total International
331
2
333
306
1
307
Total revenue
$
723
$
3
$
726
$
721
$
1
$
722
(3) FY20 Non-GAAP
Results
(4) FY19 Non-GAAP
Results
Fiscal Year Ended
Fiscal Year Ended
Sept. 30, 2020
Adj. for Fresh Start
Accounting
Non-GAAP Sept. 30,
2020
Sept. 30, 2019
Adj. for Fresh Start
Accounting
Non-GAAP Sept. 30,
2019
Revenue by Segment
Products & Solutions
$
1,074
—
$
1,074
$
1,228
$
—
$
1,228
Services
1,805
—
1,805
1,680
—
1,680
Unallocated amounts
(6
)
6
—
(21
)
21
—
Total revenue
$
2,873
$
6
$
2,879
$
2,887
$
21
$
2,908
Revenue by Geography
U.S.
$
1,640
$
3
$
1,643
$
1,553
$
13
$
1,566
International:
EMEA
714
2
716
753
3
756
APAC - Asia Pacific
296
1
297
327
3
330
Americas International
223
—
223
254
2
256
Total International
1,233
3
1,236
1,334
8
1,342
Total revenue
$
2,873
$
6
$
2,879
$
2,887
$
21
$
2,908
Avaya Holdings Corp.
Supplemental Schedules of
Non-GAAP Reconciliations of Gross Margin and Operating
Income
(Unaudited; in
millions)
Three months ended,
Fiscal year ended,
September 30, 2020
June 30, 2020
September 30, 2019
September 30, 2020
September 30, 2019
Reconciliation of Non-GAAP Gross Profit
and Non-GAAP Gross Margin
Gross Profit
$
418
$
397
$
392
$
1,580
$
1,575
Items excluded:
Adj. for fresh start accounting
1
1
4
7
37
Amortization of technology intangible
assets
44
43
44
174
174
Non-GAAP Gross Profit
$
463
$
441
$
440
$
1,761
$
1,786
GAAP Gross Margin
55.4
%
55.1
%
54.2
%
55.0
%
54.6
%
Non-GAAP Gross Margin
61.2
%
61.1
%
60.6
%
61.2
%
61.4
%
Reconciliation of Non-GAAP Operating
Income
Operating Income (Loss)
$
74
$
53
$
52
$
(455
)
$
(473
)
Items excluded:
Adj. for fresh start accounting
1
1
4
6
40
Amortization of intangible assets
83
83
84
335
336
Restructuring charges, net
3
20
10
30
22
Advisory fees
—
—
8
40
11
Acquisition-related costs
—
—
1
—
9
Share-based compensation
9
7
6
30
25
Impairment charges
—
—
—
624
659
Non-GAAP Operating Income
$
170
$
164
$
165
$
610
$
629
GAAP Operating Margin
9.8
%
7.4
%
7.2
%
(15.8
)%
(16.4
)%
Non-GAAP Operating Margin
22.5
%
22.7
%
22.7
%
21.2
%
21.6
%
Avaya Holdings Corp.
Supplemental Schedules of
Non-GAAP Reconciliation of Gross Profit and Gross Margin by
Portfolio
(Unaudited; in
millions)
Three months ended,
Fiscal year ended,
September 30, 2020
June 30, 2020
September 30, 2019
September 30, 2020
September 30, 2019
Reconciliation of Non-GAAP Gross Profit
and Non-GAAP Gross Margin - Products
Revenue
$
269
$
261
$
314
$
1,073
$
1,222
Costs
106
103
113
405
442
Amortization of technology intangible
assets
44
43
44
174
174
GAAP Gross Profit
119
115
157
494
606
Items excluded:
Adj. for fresh start accounting
(1
)
1
2
1
11
Amortization of technology intangible
assets
44
43
44
174
174
Non-GAAP Gross Profit
$
162
$
159
$
203
$
669
$
791
GAAP Gross Margin
44.2
%
44.1
%
50.0
%
46.0
%
49.6
%
Non-GAAP Gross Margin
60.2
%
60.7
%
64.4
%
62.3
%
64.4
%
Reconciliation of Non-GAAP Gross Profit
and Non-GAAP Gross Margin - Services
Revenue
$
486
$
460
$
409
$
1,800
$
1,665
Costs
187
178
174
714
696
GAAP Gross Profit
299
282
235
1,086
969
Items excluded:
Adj. for fresh start accounting
2
—
2
6
26
Non-GAAP Gross Profit
$
301
$
282
$
237
$
1,092
$
995
GAAP Gross Margin
61.5
%
61.3
%
57.5
%
60.3
%
58.2
%
Non-GAAP Gross Margin
61.7
%
61.3
%
57.7
%
60.5
%
59.2
%
Avaya Holdings Corp.
Supplemental Schedules of Free
Cash Flow
(Unaudited; in
millions)
Three months ended
Sept. 30, 2020
June 30, 2020
March 31, 2020
Dec. 31, 2019
Sept. 30, 2019
Net cash provided by operating
activities
$
70
$
45
$
20
$
12
$
66
Less:
Capital expenditures
26
24
22
26
29
Free cash flow
$
44
$
21
$
(2
)
$
(14
)
$
37
Source: Avaya Newsroom
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201118005455/en/
Media Inquiries: Alex Alias 669-242-8034
alalias@avaya.com
Investor Inquiries: Michael McCarthy 919-425-8330
mikemccarthy@avaya.com
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