Market Overview

Avaya Reports Third Quarter Fiscal 2020 Financial Results

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GAAP Revenues of $721 million represented year-over-year growth

Revenue from Software and Services was 89%, a new record; Recurring revenue was 64%

Cloud, Alliance Partner & Subscription revenue increased from 23% to 30% of revenue

Booked ~$130 million of Avaya OneCloud Subscription Total Contract Value (TCV)

Avaya Holdings Corp. (NYSE:AVYA) today reported financial results for the third quarter ended June 30, 2020.

Third Quarter Financial Highlights

  • Revenues of $721 million
  • GAAP Operating income was $53 million; Non-GAAP Operating income was $164 million
  • Net income was $9 million
  • Adjusted EBITDA was $187 million, 25.9% of revenue
  • 104 deals signed with a TCV of over $1 million, 7 deals over $10 million TCV
  • Ending cash and cash equivalents were $742 million

Jim Chirico, President and CEO of Avaya stated, "We delivered strong quarterly results exceeding our guidance across all metrics. The company grew sequentially and year over year, which marks a major milestone for Avaya. Software and services as a percent of revenue was 89% - beating the record set this past March; recurring revenue was 64%, up 5 points year-over-year; and our CAPS revenue increased to 30% from 23% in the prior quarter. The strength in our business is a direct result of executing on the deliberate strategy we laid out over two years ago."

Mr. Chirico added, "Response to our Subscription offering continues to be strong, with just over $200 million of TCV having been booked since its launch back in Q1. This offering differentiates Avaya within the enterprise segment and answers a very clear demand from our customers for flexibility, access to our latest innovations and to provide a seamless path to move to the cloud at a time and pace they choose."

Financial Results for the Third Quarter

 

 

GAAP

 

Non-GAAP (1)

(In millions, except percentages)

 

3Q20

 

2Q20

 

3Q19

 

3Q20

 

2Q20

 

3Q19

Revenue

 

$

721

 

 

$

682

 

 

$

717

 

 

$

722

 

 

$

683

 

 

$

720

 

Gross margin

 

55.1

%

 

54.4

%

 

54.4

%

 

61.1

%

 

61.1

%

 

60.8

%

Operating income (loss)

 

$

53

 

 

$

(597

)

 

$

(613

)

 

$

164

 

 

$

125

 

 

$

145

 

Net income (loss)

 

$

9

 

 

$

(672

)

 

$

(633

)

 

n/a

 

 

n/a

 

 

n/a

 

 

 

3Q20

 

2Q20

 

3Q19

Adjusted EBITDA(1)

 

$

187

 

 

$

149

 

 

$

167

 

Adjusted EBITDA margin(1)

 

25.9

%

 

21.8

%

 

23.2

%

Cash provided by operations

 

$

45

 

 

$

20

 

 

$

52

 

Cash and cash equivalents

 

$

742

 

 

$

553

 

 

$

729

 

Additional Key Performance Highlights

  • Total Contract Value (TCV) of $2.2B*
  • Added approximately 900 new logos
  • Large deal activity with 104 deals over $1 million, 14 over $5 million, and 7 over $10 million
  • Avaya Cloud Office launched in Australia, Canada & the UK; enhanced with automated migration tools
  • Enhanced CCaaS offer with addition of digital channels
  • Avaya OneCloud Subscription TCV increased ~$130 million during the June quarter

(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

  • A large US-based retailer signed a new three-year Avaya OneCloud Subscription agreement to fully modernize their Avaya infrastructure which supports 75,000 Unified Communication users and 25,000 Contact Center agents.
  • Vodafone, a long time Avaya customer, signed a new five-year Avaya OneCloud Subscription agreement to address their immediate collaboration and communications challenges responding to COVID-19, as well as to support their long term strategy to modernize their agent and customer experience. By upgrading its communications infrastructure with Avaya OneCloud Subscription to support 4,600 agents, this flexible model is ideal to support Vodafone's digital transformation journey at a time when work from anywhere requirements have become a priority. Leveraging Avaya solutions, Vodafone has stated that its customer service team in the UK was running at full capability despite the pandemic, to serve the consumers and businesses who rely on them.
  • A leading European financial services company is leveraging our Avaya OneCloud Subscription offering to replace their UC and contact center systems. This customer needed to facilitate an enterprise wide systems transformation and wanted the flexibility, access to innovation like Spaces on demand, and the ability to integrate new digital applications that an opex model provides.
  • Closed the first seven-figured TCV deal for Avaya Cloud Office with a government customer based in the United Kingdom.
  • Waldorf Woodlands, a leading family of not-for-profit schools in Kenya that operates from two campus locations, is using Avaya Spaces to provide an immersive virtual learning experience. They are leveraging our cloud-based capability to integrate chat, voice, video, online meetings, content sharing and more, to deliver structured learning to their students through interactive virtual classes.
  • CTIntegrations adopted Avaya OneCloud CPaaS technology for their flagship product, CT Suite, a user-friendly agent desktop and multimodal contact center. APIs from Avaya's CPaaS portfolio enable CT Suite to smoothly deliver proactive SMS messaging to mobile callers so their agents can provide faster service during peak demand periods.
  • Cincinnati Bell is implementing a new Avaya OneCloud CCaaS solution to support nearly 300 agents working remotely. They required a stable and reliable public cloud solution that could be deployed quickly and cost effectively to extend the capabilities of their existing Avaya contact center.

Business Highlights

  • IBM presented Avaya with the 2020 IBM Award for Hybrid Cloud Excellence in recognition for outstanding performance in providing enterprise organizations with a fast, convenient and automated path to a cloud communications solution using Avaya OneCloud ReadyNow.
  • Entry into a new partnership with NVIDIA, a leading graphics processor unit (GPU) design company that has helped to not only redefine modern computer graphics but more recently modern AI capabilities through GPU-enabled deep learning, has enabled Avaya to increase the impact and value of visual, audible and collaborative experiences through our Spaces offering.
  • Aragon Research included Avaya in their Aragon Research Globe for Intelligent Contact Center for 2020, recognizing that Avaya is at the forefront of applying emerging artificial intelligence technologies. In doing so, Aragon highlighted the depth and breadth of Avaya's capabilities, which are both native and the result of strategic partnerships such as Google Contact Center AI, designed to enhance a customer's experience and to help anticipate future customer needs.
  • Frost & Sullivan recognized Avaya with their 2020 North American Growth Innovation Leadership Frost Radar Award for innovative workforce engagement management solutions deployed across its contact center portfolio.

Financial Outlook - 4Q Fiscal 2020 - unless otherwise noted, values reflect June 30th, 2020 FX rates.

  • GAAP revenue of $719 million to $739 million; Non-GAAP revenue of $720 million to $740 million
  • GAAP operating income of $51 million to $71 million; GAAP operating margin of ~7% to 10%
  • Non-GAAP operating income of $146 million to $166 million; non-GAAP operating margin of ~20% to 22%
  • Adjusted EBITDA of $170 million to $190 million; Adjusted EBITDA margin of ~24% to 26%

Financial Outlook - Fiscal Year 2020 - unless otherwise noted, values reflect June 30th, 2020 FX rates.

  • GAAP revenue of $2.84 billion to $2.86 billion; Non-GAAP revenue of $2.84 billion to $2.86 billion
  • GAAP operating loss of $478 million to $458 million; GAAP operating margin of ~(17)% to (16)%
  • Non-GAAP operating income of $585 million to $605 million; non-GAAP operating margin of ~21%
  • Cash flow from operations is expected to be ~4% of full year GAAP revenue
  • Adjusted EBITDA of $680 million to $700 million; Adjusted EBITDA margin of ~24%
  • Weighted shares outstanding are expected to be ~93 million and total shares outstanding are expected to be ~83 million



    The company has not quantitatively reconciled its guidance for adjusted EBITDA to its most comparable GAAP measure because certain of the reconciling items that impact adjusted EBITDA, 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.

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 August 10, 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: 13705768.

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

June 30,

 

Nine months ended

June 30,

 

2020

 

2019

 

2020

 

2019

REVENUE

 

 

 

 

 

 

 

Products

$

261

 

 

$

297

 

 

$

804

 

 

$

908

 

Services

460

 

 

420

 

 

1,314

 

 

1,256

 

 

721

 

 

717

 

 

2,118

 

 

2,164

 

COSTS

 

 

 

 

 

 

 

Products:

 

 

 

 

 

 

 

Costs

103

 

 

109

 

 

299

 

 

329

 

Amortization of technology intangible assets

43

 

 

43

 

 

130

 

 

130

 

Services

178

 

 

175

 

 

527

 

 

522

 

 

324

 

 

327

 

 

956

 

 

981

 

GROSS PROFIT

397

 

 

390

 

 

1,162

 

 

1,183

 

OPERATING EXPENSES

 

 

 

 

 

 

 

Selling, general and administrative

232

 

 

253

 

 

763

 

 

761

 

Research and development

52

 

 

49

 

 

155

 

 

154

 

Amortization of intangible assets

40

 

 

41

 

 

122

 

 

122

 

Impairment charges

 

 

659

 

 

624

 

 

659

 

Restructuring charges, net

20

 

 

1

 

 

27

 

 

12

 

 

344

 

 

1,003

 

 

1,691

 

 

1,708

 

OPERATING INCOME (LOSS)

53

 

 

(613

)

 

(529

)

 

(525

)

Interest expense

(51

)

 

(59

)

 

(162

)

 

(177

)

Other income, net

27

 

 

12

 

 

56

 

 

35

 

INCOME (LOSS) BEFORE INCOME TAXES

29

 

 

(660

)

 

(635

)

 

(667

)

(Provision for) benefit from income taxes

(20

)

 

27

 

 

(82

)

 

30

 

NET INCOME (LOSS)

$

9

 

 

$

(633

)

 

$

(717

)

 

$

(637

)

EARNINGS (LOSS) PER SHARE

 

 

 

 

 

 

 

Basic

$

0.08

 

 

$

(5.70

)

 

$

(7.61

)

 

$

(5.75

)

Diluted

$

0.08

 

 

$

(5.70

)

 

$

(7.61

)

 

$

(5.75

)

Weighted average shares outstanding

 

 

 

 

 

 

 

Basic

83.1

 

 

111.0

 

 

95.1

 

 

110.7

 

Diluted

83.3

 

 

111.0

 

 

95.1

 

 

110.7

 

 

Avaya Holdings Corp.

Condensed Consolidated Balance Sheets (Unaudited)

(In millions, except per share and shares amounts)

 

 

June 30, 2020

 

September 30, 2019

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

742

 

 

$

752

 

Accounts receivable, net

260

 

 

314

 

Inventory

56

 

 

63

 

Contract assets

276

 

 

187

 

Contract costs

124

 

 

114

 

Other current assets

111

 

 

115

 

TOTAL CURRENT ASSETS

1,569

 

 

1,545

 

Property, plant and equipment, net

256

 

 

255

 

Deferred income taxes, net

27

 

 

35

 

Intangible assets, net

2,637

 

 

2,891

 

Goodwill, net

1,477

 

 

2,103

 

Operating lease right-of-use assets

167

 

 

 

Other assets

135

 

 

121

 

TOTAL ASSETS

$

6,268

 

 

$

6,950

 

LIABILITIES

 

 

 

Current liabilities:

 

 

 

Debt maturing within one year

$

50

 

 

$

29

 

Accounts payable

250

 

 

291

 

Payroll and benefit obligations

166

 

 

116

 

Contract liabilities

514

 

 

472

 

Operating lease liabilities

49

 

 

 

Business restructuring reserve

23

 

 

33

 

Other current liabilities

192

 

 

158

 

TOTAL CURRENT LIABILITIES

1,244

 

 

1,099

 

Non-current liabilities:

 

 

 

Long-term debt, net of current portion

2,888

 

 

3,090

 

Pension obligations

734

 

 

759

 

Other post-retirement obligations

194

 

 

200

 

Deferred income taxes, net

55

 

 

72

 

Contract liabilities

336

 

 

78

 

Operating lease liabilities

135

 

 

 

Business restructuring reserve

28

 

 

36

 

Other liabilities

315

 

 

316

 

TOTAL NON-CURRENT LIABILITIES

4,685

 

 

4,551

 

TOTAL LIABILITIES

5,929

 

 

5,650

 

Commitments and contingencies

 

 

 

Preferred stock, $0.01 par value; 55,000,000 shares authorized at June 30, 2020 and September 30, 2019

 

 

 

Convertible Series A, 125,000 shares issued and outstanding at June 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; 82,864,260 shares issued and outstanding at June 30, 2020; and 111,046,085 shares issued and 111,033,405 shares outstanding at September 30, 2019

1

 

 

1

 

Additional paid-in capital

1,441

 

 

1,761

 

Accumulated deficit

(1,006

)

 

(289

)

Accumulated other comprehensive loss

(225

)

 

(173

)

TOTAL STOCKHOLDERS' EQUITY

211

 

 

1,300

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

6,268

 

 

$

6,950

 

 

Avaya Holdings Corp.

Condensed Statements of Cash Flows

(Unaudited; in millions)

 

 

 

Nine months ended

June 30,

 

 

2020

 

2019

Net cash provided by (used for):

 

 

 

 

Operating activities

 

77

 

 

$

175

 

Investing activities

 

340

 

 

(95

)

Financing activities

 

(425

)

 

(51

)

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

 

(2

)

 

1

 

Net (decrease) increase in cash, cash equivalents, and restricted cash

 

(10

)

 

30

 

Cash, cash equivalents, and restricted cash at beginning of period

 

756

 

 

704

 

Cash, cash equivalents, and restricted cash at end of period

 

$

746

 

 

$

734

 

 

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 measure 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 commonly used by analysts and investors to compare the cash flow 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 next quarter 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.

Supplemental Schedules

Avaya Holdings Corp.

Reconciliation of Non-GAAP Adjusted EBITDA

(Unaudited; in millions)

 

 

Three months ended

June 30,

 

Nine months ended

June 30,

 

2020

 

2019

 

2020

 

2019

Net Income (loss)

$

9

 

 

$

(633

)

 

$

(717

)

 

$

(637

)

Interest expense

51

 

 

59

 

 

162

 

 

177

 

Interest income

(1

)

 

(4

)

 

(6

)

 

(11

)

Provision for (benefit from) income taxes

20

 

 

(27

)

 

82

 

 

(30

)

Depreciation and amortization

107

 

 

110

 

 

319

 

 

335

 

EBITDA

186

 

 

(495

)

 

(160

)

 

(166

)

Impact of fresh start accounting adjustments

1

 

 

(2

)

 

 

 

7

 

Restructuring charges

14

 

 

1

 

 

18

 

 

12

 

Advisory fees

 

 

1

 

 

40

 

 

3

 

Acquisition-related costs

 

 

1

 

 

 

 

8

 

Share-based compensation

7

 

 

8

 

 

21

 

 

19

 

Impairment charges

 

 

659

 

 

624

 

 

659

 

Change in fair value of Emergence Date Warrants

3

 

 

(7

)

 

 

 

(28

)

Loss on foreign currency transactions

5

 

 

1

 

 

16

 

 

8

 

Gain on investments in equity and debt securities, net

(29

)

 

 

 

(49

)

 

 

Adjusted EBITDA

$

187

 

 

$

167

 

 

$

510

 

 

$

522

 

 

Avaya Holdings Corp.

Reconciliation of Non-GAAP Revenue

(Unaudited; in millions)

 

 

 

Three Months Ended

 

Change

 

Three Months Ended

 

 

June 30,

2020

 

Adj. for

Fresh Start

Accounting

 

Non-

GAAP

June 30,

2020

 

June 30,

2019 (4)

 

Amount

 

Pct.

 

Pct. in

constant

currency*

 

Mar. 31,

2020 (1)

 

Dec. 31,

2019 (2)

 

Sept. 30,

2019 (3)

Revenue by Segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Products & Solutions

 

262

 

 

$

 

 

$

262

 

 

298

 

 

$

(36

)

 

(12

)%

 

(12

)%

 

$

245

 

 

$

298

 

 

$

315

 

Services

 

460

 

 

 

 

460

 

 

422

 

 

38

 

 

9

%

 

11

%

 

438

 

 

419

 

 

411

 

Unallocated amounts

 

(1

)

 

1

 

 

 

 

 

 

 

 

n/a

 

n/a

 

 

 

 

 

 

Total revenue

 

721

 

 

$

1

 

 

$

722

 

 

720

 

 

$

2

 

 

%

 

%

 

$

683

 

 

$

717

 

 

$

726

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue by Geography

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

415

 

 

$

 

 

$

415

 

 

394

 

 

$

21

 

 

5

%

 

5

%

 

$

385

 

 

$

395

 

 

$

393

 

International:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EMEA

 

178

 

 

 

 

178

 

 

183

 

 

(5

)

 

(3

)%

 

(2

)%

 

172

 

 

187

 

 

184

 

APAC - Asia Pacific

 

75

 

 

1

 

 

76

 

 

85

 

 

(9

)

 

(11

)%

 

(9

)%

 

70

 

 

77

 

 

86

 

Americas International

 

53

 

 

 

 

53

 

 

58

 

 

(5

)

 

(9

)%

 

(3

)%

 

56

 

 

58

 

 

63

 

Total International

 

306

 

 

1

 

 

307

 

 

326

 

 

(19

)

 

(6

)%

 

(4

)%

 

298

 

 

322

 

 

333

 

Total revenue

 

721

 

 

$

1

 

 

$

722

 

 

720

 

 

$

2

 

 

%

 

1

%

 

$

683

 

 

$

717

 

 

$

726

 

* Constant Currency is a non-GAAP financial measure, as noted in "Use of non-GAAP (Adjusted) Financial Measures" above.

(1) - (4) Reconciliation of Non-GAAP measures above:

 

 

(1) Q220 Non-GAAP Results

 

(2) Q120 Non-GAAP Results

 

 

Three Months Ended

 

Three Months Ended

 

 

Mar. 31, 2020

 

Adj. for Fresh

Start

Accounting

 

Non-GAAP

Mar. 31, 2020

 

Dec. 31, 2019

 

Adj. for Fresh

Start

Accounting

 

Non-GAAP

Dec. 31, 2019

Revenue by Segment

 

 

 

 

 

 

 

 

 

 

 

 

Products & Solutions

 

$

245

 

 

$

 

 

$

245

 

 

$

298

 

 

 

 

$

298

 

Services

 

438

 

 

 

 

438

 

 

419

 

 

 

 

419

 

Unallocated amounts

 

(1

)

 

1

 

 

 

 

(2

)

 

2

 

 

 

Total revenue

 

$

682

 

 

$

1

 

 

$

683

 

 

$

715

 

 

$

2

 

 

$

717

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue by Geography

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

$

384

 

 

$

1

 

 

$

385

 

 

$

394

 

 

$

1

 

 

$

395

 

International:

 

 

 

 

 

 

 

 

 

 

 

 

EMEA

 

172

 

 

 

 

172

 

 

186

 

 

1

 

 

187

 

APAC - Asia Pacific

 

70

 

 

 

 

70

 

 

77

 

 

 

 

77

 

Americas International

 

56

 

 

 

 

56

 

 

58

 

 

 

 

58

 

Total International

 

298

 

 

 

 

298

 

 

321

 

 

1

 

 

322

 

Total revenue

 

$

682

 

 

$

1

 

 

$

683

 

 

$

715

 

 

$

2

 

 

$

717

 

 

 

 

(3) Q419 Non-GAAP Results

 

(4) Q319 Non-GAAP Results

 

 

Three Months Ended

 

Three Months Ended

 

 

Sept. 30, 2019

 

Adj. for Fresh

Start

Accounting

 

Non-GAAP

Sept. 30, 2019

 

June 30, 2019

 

Adj. for Fresh

Start

Accounting

 

Non-GAAP

June 30, 2019

Revenue by Segment

 

 

 

 

 

 

 

 

 

 

 

 

Products & Solutions

 

$

315

 

 

$

 

 

$

315

 

 

$

298

 

 

$

 

 

$

298

 

Services

 

411

 

 

 

 

411

 

 

422

 

 

 

 

422

 

Unallocated amounts

 

(3

)

 

3

 

 

 

 

(3

)

 

3

 

 

 

Total revenue

 

$

723

 

 

$

3

 

 

$

726

 

 

$

717

 

 

$

3

 

 

$

720

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue by Geography

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

$

392

 

 

$

1

 

 

$

393

 

 

$

392

 

 

$

2

 

 

$

394

 

International:

 

 

 

 

 

 

 

 

 

 

 

 

EMEA

 

183

 

 

1

 

 

184

 

 

183

 

 

 

 

183

 

APAC - Asia Pacific

 

85

 

 

1

 

 

86

 

 

85

 

 

 

 

85

 

Americas International

 

63

 

 

 

 

63

 

 

57

 

 

1

 

 

58

 

Total International

 

331

 

 

2

 

 

333

 

 

325

 

 

1

 

 

326

 

Total revenue

 

$

723

 

 

$

3

 

 

$

726

 

 

$

717

 

 

$

3

 

 

$

720

 

 

Avaya Holdings Corp.

Reconciliation of Non-GAAP Gross Margin and Operating Income

(Unaudited; in millions)

 

 

 

Three Months Ended

 

 

June 30,

2020

 

Mar. 31,

2020

 

Dec. 31,

2019

 

Sept. 30,

2019

 

June 30,

2019

Reconciliation of Non-GAAP Gross Profit and Non-GAAP Gross Margin

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

$

397

 

 

$

371

 

 

$

394

 

 

$

392

 

 

$

390

 

Items excluded:

 

 

 

 

 

 

 

 

 

 

Amortization of technology intangible assets

 

43

 

 

44

 

 

43

 

 

44

 

 

43

 

Adj. for fresh start accounting

 

1

 

 

2

 

 

3

 

 

4

 

 

5

 

Non-GAAP Gross Profit

 

$

441

 

 

$

417

 

 

$

440

 

 

$

440

 

 

$

438

 

GAAP Gross Margin

 

55.1

%

 

54.4

%

 

55.1

%

 

54.2

%

 

54.4

%

Non-GAAP Gross Margin

 

61.1

%

 

61.1

%

 

61.4

%

 

60.6

%

 

60.8

%

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Operating Income

 

 

 

 

 

 

 

 

 

 

Operating Income (Loss)

 

$

53

 

 

$

(597

)

 

$

15

 

 

$

52

 

 

$

(613

)

Items excluded:

 

 

 

 

 

 

 

 

 

 

Adj. for fresh start accounting

 

1

 

 

 

 

4

 

 

4

 

 

4

 

Amortization of intangible assets

 

83

 

 

85

 

 

84

 

 

84

 

 

84

 

Restructuring charges, net

 

20

 

 

4

 

 

3

 

 

10

 

 

1

 

Advisory fees

 

 

 

1

 

 

39

 

 

8

 

 

1

 

Acquisition-related costs

 

 

 

 

 

 

 

1

 

 

1

 

Share-based compensation

 

7

 

 

8

 

 

6

 

 

6

 

 

8

 

Impairment charges

 

 

 

624

 

 

 

 

 

 

659

 

Non-GAAP Operating Income

 

$

164

 

 

$

125

 

 

$

151

 

 

$

165

 

 

$

145

 

GAAP Operating Margin

 

7.4

%

 

(87.5

)%

 

2.1

%

 

7.2

%

 

(85.5

)%

Non-GAAP Operating Margin

 

22.7

%

 

18.3

%

 

21.1

%

 

22.7

%

 

20.1

%

 

Avaya Holdings Corp.

Reconciliation of Non-GAAP Gross Profit and Gross Margin by Portfolio

(Unaudited; in millions)

 

 

 

Three Months Ended

 

 

June 30,

2020

 

Mar. 31,

2020

 

Dec. 31,

2019

 

Sept. 30,

2019

 

June 30,

2019

Reconciliation of Non-GAAP Gross Profit and Non-GAAP Gross Margin - Products

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

261

 

 

$

245

 

 

$

298

 

 

$

314

 

 

$

297

 

Costs

 

103

 

 

92

 

 

104

 

 

113

 

 

109

 

Amortization of technology intangible assets

 

43

 

 

44

 

 

43

 

 

44

 

 

43

 

GAAP Gross Profit

 

115

 

 

109

 

 

151

 

 

157

 

 

145

 

Items excluded:

 

 

 

 

 

 

 

 

 

 

Amortization of technology intangible assets

 

43

 

 

44

 

 

43

 

 

44

 

 

43

 

Adj. for fresh start accounting

 

1

 

 

1

 

 

 

 

2

 

 

2

 

Non-GAAP Gross Profit

 

$

159

 

 

$

154

 

 

$

194

 

 

$

203

 

 

$

190

 

GAAP Gross Margin

 

44.1

%

 

44.5

%

 

50.7

%

 

50.0

%

 

48.8

%

Non-GAAP Gross Margin

 

60.7

%

 

62.9

%

 

65.1

%

 

64.4

%

 

63.8

%

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Gross Profit and Non-GAAP Gross Margin - Services

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

460

 

 

$

437

 

 

$

417

 

 

$

409

 

 

$

420

 

Costs

 

178

 

 

175

 

 

174

 

 

174

 

 

175

 

GAAP Gross Profit

 

282

 

 

262

 

 

243

 

 

235

 

 

245

 

Items excluded:

 

 

 

 

 

 

 

 

 

 

Adj. for fresh start accounting

 

 

 

1

 

 

3

 

 

2

 

 

3

 

Non-GAAP Gross Profit

 

$

282

 

 

$

263

 

 

$

246

 

 

$

237

 

 

$

248

 

GAAP Gross Margin

 

61.3

%

 

60.0

%

 

58.3

%

 

57.5

%

 

58.3

%

Non-GAAP Gross Margin

 

61.3

%

 

60.0

%

 

58.7

%

 

57.7

%

 

58.8

%

 

Avaya Holdings Corp.

Free Cash Flow

(Unaudited; in millions)

 

 

 

Three Months Ended

 

 

June 30,

2020

 

Mar. 31,

2020

 

Dec. 31,

2019

 

Sept. 30,

2019

 

June 30,

2019

Net cash provided by operating activities

 

$

45

 

 

$

20

 

 

$

12

 

 

$

66

 

 

$

52

 

Less:

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

24

 

 

22

 

 

26

 

 

29

 

 

37

 

Free cash flow

 

$

21

 

 

$

(2

)

 

$

(14

)

 

$

37

 

 

$

15

 

Source: Avaya Newsroom

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