Avaya Holdings Corp. (NYSE: AVYA) today reported financial results for the third quarter ended June 30, 2020.
Third Quarter Financial Highlights
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
(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
Business Highlights
Financial Outlook - 4Q Fiscal 2020 - unless otherwise noted, values reflect June 30th, 2020 FX rates.
Financial Outlook - Fiscal Year 2020 - unless otherwise noted, values reflect June 30th, 2020 FX rates.
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
|
|
Nine months ended
|
||||||||||||
|
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
|
||||||
|
|
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
|
|
Nine months ended
|
|||||||||||||
|
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,
|
|
Adj. for
|
|
Non-
|
|
June 30,
|
|
Amount |
|
Pct. |
|
Pct. in
|
|
Mar. 31,
|
|
Dec. 31,
|
|
Sept. 30,
|
||||||||||||||||
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
|
|
Non-GAAP
|
|
Dec. 31, 2019 |
|
Adj. for Fresh
|
|
Non-GAAP
|
||||||||||||
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
|
|
Non-GAAP
|
|
June 30, 2019 |
|
Adj. for Fresh
|
|
Non-GAAP
|
||||||||||||
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,
|
|
Mar. 31,
|
|
Dec. 31,
|
|
Sept. 30,
|
|
June 30,
|
||||||||||
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,
|
|
Mar. 31,
|
|
Dec. 31,
|
|
Sept. 30,
|
|
June 30,
|
||||||||||
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,
|
|
Mar. 31,
|
|
Dec. 31,
|
|
Sept. 30,
|
|
June 30,
|
|||||||||||
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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