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Avaya Reports First Quarter Fiscal 2020 Financial Results

02-10-2020

$715 million 1Q FY20 GAAP revenue; $717 million 1Q FY20 Non-GAAP revenue

Cloud, Alliance Partner & Subscription revenue was 18%

Repurchased 10.7 million shares of stock and paid down $250 million of long-term debt

SANTA CLARA, Calif.--(BUSINESS WIRE)-- Avaya Holdings Corp. (NYSE: AVYA) today reported financial results for the first quarter ended December 31, 2019.

First Quarter Financial Highlights

  • GAAP Operating income was $15 million; Non-GAAP Operating income was $151 million
  • Adjusted EBITDA was $174 million
  • CFFO was 2% of revenue, and 8% of revenue when adjusted for one-time strategic deal payments
  • Cloud, Alliance Partner & Subscription revenue was 18% of revenue
  • Repurchased $132 million of common stock, or 10.7 million shares, at an average price of $12.27 per share

"Our solid operational execution resulted in revenues and adjusted EBITDA above the mid-point of our guidance for the quarter," stated Jim Chirico, President and CEO of Avaya. He added, “At the same time, we continued to strengthen our position in public, private, and hybrid cloud communications markets, including our newest cloud-based UCaaS offering, Avaya Cloud Office, which is on schedule for introduction at the end of March. The increased breadth and depth in our portfolio enable us to deliver innovative and tailored solutions using consumption models, such as subscription, that facilitates our customers transition to the cloud using Avaya technology."

Mr. Chirico concluded, "During the quarter, we made substantial progress in returning capital to our shareholders. In early November, we paid down $250 million in long-term debt and by the end of December, we repurchased nearly 11 million shares using approximately $132 million of the $500 million program approved by our Board.”

Financial Results for the First Quarter

 

 

GAAP

 

Non-GAAP (1)

(In millions, except percentages)

 

1Q20

 

4Q19

 

1Q19

 

1Q20

 

4Q19

 

1Q19

Revenue

 

$

715

 

 

$

723

 

 

$

738

 

 

$

717

 

 

$

726

 

 

$

748

 

Gross margin

 

55.1

%

 

54.2

%

 

55.1

%

 

61.4

%

 

60.6

%

 

62.7

%

Operating income

 

$

15

 

 

$

52

 

 

$

50

 

 

$

151

 

 

$

165

 

 

$

170

 

Net (loss) income

 

$

(54

)

 

$

(34

)

 

$

9

 

 

 

n/a

 

 

 

n/a

 

 

n/a

 

 

 

1Q20

 

4Q19

 

1Q19

Adjusted EBITDA(1)

 

$

174

 

 

$

184

 

 

$

189

 

Adjusted EBITDA margin(1)

 

24.3

%

 

25.3

%

 

25.3

%

Cash provided by operations

 

$

12

 

 

$

66

 

 

$

86

 

Cash and cash equivalents

 

$

766

 

 

$

752

 

 

$

743

 

Additional Key Performance Metrics

  • Revenue year-over-year decline of 3%; non-GAAP revenue year-over-year decline of 4% in constant currency(1)
  • Total Contract Value (TCV) of $2.3 billion*
  • 86% of non-GAAP revenue was Software & Services
  • 65% of non-GAAP product revenue was Software
  • 59% of non-GAAP revenue was Recurring
  • Added approximately 1,300 new logos
  • Large deal activity with 68 deals over $1 million, 6 over $5 million, and 3 over $10 million

(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.

* We define TCV as the value of all active ratable contracts that have not been recognized as revenue, including both billed and unbilled backlog.

Business Highlights

  • Avaya added several new well-recognized and respected industry leaders to strengthen the company’s position in the market as a leader in enterprise communications and accelerate the company’s momentum as it executes on its strategy and transformation to the cloud. They include Anthony Bartolo, executive vice president, Products and Solutions; Simon Harrison, Chief Marketing Officer; Jon Brinton, vice president, North America Channel Sales; and William Madison, vice president North America Cloud Sales. Each of these leaders brings with them significant strategic and operational expertise along with proven track records in their respective disciplines.
  • Avaya was recognized with two Frost & Sullivan awards:
    • 2019 Customer Value Leadership Award for Customer Journey Intelligence, recognizing the advanced AI and other Customer Journey Intelligence innovations that have been built into Avaya’s broad, industry-leading portfolio of customer and employee engagement solutions.
    • 2019 North America Product Leadership Award in the enterprise safety solutions market for Public Safety Solutions.
  • Avaya IX™ Workspaces was named as a 2019 Contact Center Technology Award winner, presented by CUSTOMER magazine. Avaya IX Workspaces helps to improve agent productivity and the overall customer experience by integrating multiple applications into a single agent desktop and by empowering customer support personnel to personalize the customer experience by enabling them to view and interact with customer journey details.
  • Google Cloud Contact Center (CC) AI capabilities are now integrated with Avaya IX Contact Center solutions and is now available for customers globally. The powerful combination of Avaya AI conversation services and Google Cloud CC AI are providing a better experience for clients by seamlessly blending automated and assisted experiences throughout a customer’s interaction with the contact center.

Financial Outlook - 2Q Fiscal 2020 - unless otherwise noted, values reflect December 31st, 2019 FX rates

  • GAAP revenue of $673 million to $698 million; Non-GAAP revenue of $675 million to $700 million
    • This non-GAAP revenue figure reflects a constant currency decline of (5)% to (2)%
  • GAAP operating income of $22 million to $32 million; GAAP operating margin of 3% to 5%
  • Non-GAAP operating income of $116 million to $126 million; non-GAAP operating margin of 17% to 18%
  • Adjusted EBITDA of $140 million to $150 million; Adjusted EBITDA margin of ~21%

Financial Outlook - Fiscal Year 2020 - unless otherwise noted, values reflect December 31st, 2019 FX rates

  • GAAP revenue of $2.83 billion to $2.91 billion; Non-GAAP revenue of $2.84 billion to $2.92 billion
    • This non-GAAP revenue figure reflects a constant currency decline of (2)% to 0%
  • GAAP operating income of $130 million to $180 million; GAAP operating margin of 5% to 6%
  • Non-GAAP operating income of $560 million to $600 million; non-GAAP operating margin of 20% to 21%
  • Adjusted EBITDA $650 million to $700 million; Adjusted EBITDA margin of 23% to 24%
  • CFFO of ~5% of revenue, and ~7% of revenue when adjusted for one-time strategic deal payments
  • Approximately 93 million to 97 million weighted average shares outstanding; ending share count of approximately 80 million to 83 million shares
  • Cash requirements for restructuring pension & OPEB, cash taxes, capital spending and net cash interest payments for fiscal year 2020 are expected to be:
    • Restructuring: $35 million to $40 million
    • Pension/OPEB: ~$55 million
    • Cash Taxes: $65 million to $75 million
    • Capital Expenditures: ~$120 million
    • Net Cash Interest Payments: $190 million to $195 million

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 February 10, 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 February 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: 13698454.

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. 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. These factors are 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”), and may cause its 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
December 31,

 

2019

 

2018

REVENUE

 

 

 

Products

$

298

 

 

$

324

 

Services

417

 

 

414

 

 

715

 

 

738

 

COSTS

 

 

 

Products:

 

 

 

Costs

104

 

 

115

 

Amortization of technology intangible assets

43

 

 

43

 

Services

174

 

 

173

 

 

321

 

 

331

 

GROSS PROFIT

394

 

 

407

 

OPERATING EXPENSES

 

 

 

Selling, general and administrative

283

 

 

257

 

Research and development

52

 

 

53

 

Amortization of intangible assets

41

 

 

40

 

Restructuring charges, net

3

 

 

7

 

 

379

 

 

357

 

OPERATING INCOME

15

 

 

50

 

Interest expense

(58

)

 

(60

)

Other income, net

14

 

 

22

 

(LOSS) INCOME BEFORE INCOME TAXES

(29

)

 

12

 

Provision for income taxes

(25

)

 

(3

)

NET (LOSS) INCOME

$

(54

)

 

$

9

 

(LOSS) EARNINGS PER SHARE

 

 

 

Basic

$

(0.54

)

 

$

0.08

 

Diluted

$

(0.54

)

 

$

0.08

 

Weighted average shares outstanding

 

 

 

Basic

109.0

 

 

110.3

 

Diluted

109.0

 

 

111.2

 

Avaya Holdings Corp.

Condensed Consolidated Balance Sheets (Unaudited)

(In millions, except per share and shares amounts)

 

 

December 31,
2019

 

September 30,
2019

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

766

 

 

$

752

 

Accounts receivable, net

281

 

 

314

 

Inventory

61

 

 

63

 

Contract assets

207

 

 

187

 

Contract costs

123

 

 

114

 

Other current assets

204

 

 

115

 

TOTAL CURRENT ASSETS

1,642

 

 

1,545

 

Property, plant and equipment, net

254

 

 

255

 

Deferred income taxes, net

34

 

 

35

 

Intangible assets, net

2,809

 

 

2,891

 

Goodwill, net

2,107

 

 

2,103

 

Operating lease right-of-use assets

188

 

 

 

Other assets

127

 

 

121

 

TOTAL ASSETS

$

7,161

 

 

$

6,950

 

LIABILITIES

 

 

 

Current liabilities:

 

 

 

Debt maturing within one year

$

 

 

$

29

 

Accounts payable

272

 

 

291

 

Payroll and benefit obligations

123

 

 

116

 

Contract liabilities

487

 

 

472

 

Operating lease liabilities

51

 

 

 

Business restructuring reserve

29

 

 

33

 

Other current liabilities

204

 

 

158

 

TOTAL CURRENT LIABILITIES

1,166

 

 

1,099

 

Non-current liabilities:

 

 

 

Long-term debt, net of current portion

2,877

 

 

3,090

 

Pension obligations

759

 

 

759

 

Other post-retirement obligations

199

 

 

200

 

Deferred income taxes, net

65

 

 

72

 

Contract liabilities

381

 

 

78

 

Operating lease liabilities

143

 

 

 

Business restructuring reserve

31

 

 

36

 

Other liabilities

301

 

 

316

 

TOTAL NON-CURRENT LIABILITIES

4,756

 

 

4,551

 

TOTAL LIABILITIES

5,922

 

 

5,650

 

Commitments and contingencies

 

 

 

Preferred stock, $0.01 par value; 55,000,000 shares authorized at December 31, 2019 and September 30, 2019

 

 

 

Convertible Series A, 125,000 shares issued and outstanding at December 31, 2019 and no shares issued and outstanding at September 30, 2019

126

 

 

 

STOCKHOLDERS' EQUITY

 

 

 

Common stock, $0.01 par value; 550,000,000 shares authorized; 100,505,954 shares issued and outstanding at December 31, 2019; and 111,046,085 shares issued and 111,033,405 shares outstanding at September 30, 2019

1

 

 

1

 

Additional paid-in capital

1,618

 

 

1,761

 

Accumulated deficit

(343

)

 

(289

)

Accumulated other comprehensive loss

(163

)

 

(173

)

TOTAL STOCKHOLDERS' EQUITY

1,113

 

 

1,300

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

7,161

 

 

$

6,950

 

Avaya Holdings Corp.

Condensed Statements of Cash Flows

(Unaudited; in millions)

 

 

 

 

Three months ended
December 31,

 

 

2019

 

2018

Net cash provided by (used for):

 

 

 

 

Operating activities

 

$

12

 

 

$

86

 

Investing activities

 

268

 

 

(22

)

Financing activities

 

(271

)

 

(18

)

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

 

5

 

 

(3

)

Net increase in cash, cash equivalents, and restricted cash

 

14

 

 

43

 

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

 

756

 

 

704

 

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

 

$

770

 

$

747

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. 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 for assessing how the Company’s underlying businesses performance excluding the effect of foreign currency rate fluctuations. To present this information current and comparative prior period results for entities reporting in currencies other than U.S. dollars 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 a measure often 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 second quarter and full year of fiscal 2020 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
December 31,

 

2019

 

2018

Net (loss) income

$

(54

)

 

$

9

 

Interest expense

58

 

 

60

 

Interest income

(3

)

 

(3

)

Provision for income taxes

25

 

 

3

 

Depreciation and amortization

107

 

 

117

 

EBITDA

133

 

 

186

 

Impact of fresh start accounting adjustments

 

 

3

 

Restructuring charges, net of sublease income

1

 

 

7

 

Advisory fees

39

 

 

1

 

Acquisition-related costs

 

 

3

 

Share-based compensation

6

 

 

6

 

Change in fair value of Emergence Date Warrants

3

 

 

(18

)

Loss on foreign currency transactions

4

 

 

1

 

Gain on marketable securities

(12

)

 

 

Adjusted EBITDA

$

174

 

 

$

189

 

Avaya Holdings Corp.

Reconciliation of Non-GAAP Revenue

(Unaudited; in millions)

 

 

 

Three Months Ended

 

Three
Months
Ended
Dec. 31,
2018 (4)

 

Change

 

Three Months Ended

 

 

Dec. 31,
2019

 

Adj. for
Fresh Start
Accounting

 

Non-
GAAP
Dec. 31,
2019

 

 

Amount

 

Pct.

 

Pct. in
Constant
Currency*

 

Sept. 30,
2019 (1)

 

June 30,
2019 (2)

 

Mar. 31,
2019 (3)

Revenue by Segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Products & Solutions

 

$

298

 

 

$

 

 

$

298

 

 

$

326

 

 

$

(28

)

 

(9

)%

 

(9

)%

 

$

315

 

 

$

298

 

 

$

289

 

Services

 

419

 

 

 

 

419

 

 

422

 

 

(3

)

 

(1

)%

 

%

 

411

 

 

422

 

 

425

 

Unallocated amounts

 

(2

)

 

2

 

 

 

 

 

 

 

 

n/a

 

n/a

 

 

 

 

 

 

Total revenue

 

$

715

 

 

$

2

 

 

$

717

 

 

$

748

 

 

$

(31

)

 

(4

)%

 

(4

)%

 

$

726

 

 

$

720

 

 

$

714

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue by Geography

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

$

394

 

 

$

1

 

 

$

395

 

 

$

401

 

 

$

(6

)

 

(1

)%

 

(1

)%

 

$

393

 

 

$

394

 

 

$

378

 

International:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EMEA

 

186

 

 

1

 

 

187

 

 

200

 

 

(13

)

 

(7

)%

 

(6

)%

 

184

 

 

183

 

 

189

 

APAC - Asia Pacific

 

77

 

 

 

 

77

 

 

79

 

 

(2

)

 

(3

)%

 

(3

)%

 

86

 

 

85

 

 

80

 

Americas International

 

58

 

 

 

 

58

 

 

68

 

 

(10

)

 

(15

)%

 

(12

)%

 

63

 

 

58

 

 

67

 

Total International

 

321

 

 

1

 

 

322

 

 

347

 

 

(25

)

 

(7

)%

 

(7

)%

 

333

 

 

326

 

 

336

 

Total revenue

 

$

715

 

 

$

2

 

 

$

717

 

 

$

748

 

 

$

(31

)

 

(4

)%

 

(4

)%

 

$

726

 

 

$

720

 

 

$

714

 

* 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) Q419 Non-GAAP Results

 

(2) 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

 

 

 

 

(3) Q219 Non-GAAP Results

 

(4) Q119 Non-GAAP Results

 

 

Three Months Ended

 

Three Months Ended

 

 

Mar. 31, 2019

 

Adj. for Fresh
Start
Accounting

 

Non-GAAP
Mar. 31, 2019

 

Dec. 31, 2018

 

Adj. for Fresh
Start
Accounting

 

Non-GAAP
Dec. 31, 2018

Revenue by Segment

 

 

 

 

 

 

 

 

 

 

 

 

Products & Solutions

 

$

289

 

 

$

 

 

$

289

 

 

$

326

 

 

$

 

 

$

326

 

Services

 

425

 

 

 

 

425

 

 

422

 

 

 

 

422

 

Unallocated amounts

 

(5

)

 

5

 

 

 

 

(10

)

 

10

 

 

 

Total revenue

 

$

709

 

 

$

5

 

 

$

714

 

 

$

738

 

 

$

10

 

 

$

748

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue by Geography

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

$

375

 

 

$

3

 

 

$

378

 

 

$

394

 

 

$

7

 

 

$

401

 

International:

 

 

 

 

 

 

 

 

 

 

 

 

EMEA

 

188

 

 

1

 

 

189

 

 

199

 

 

1

 

 

200

 

APAC - Asia Pacific

 

79

 

 

1

 

 

80

 

 

78

 

 

1

 

 

79

 

Americas International

 

67

 

 

 

 

67

 

 

67

 

 

1

 

 

68

 

Total International

 

334

 

 

2

 

 

336

 

 

344

 

 

3

 

 

347

 

Total revenue

 

$

709

 

 

$

5

 

 

$

714

 

 

$

738

 

 

$

10

 

 

$

748

 

Avaya Holdings Corp.

Reconciliation of Non-GAAP Gross Margin and Operating Income

(Unaudited; in millions)

 

 

 

Three Months Ended

 

 

Dec. 31,

2019

 

Sept. 30,

2019

 

June 30,
2019

 

March 31,
2019

 

Dec. 31,
2018

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

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

$

394

 

 

$

392

 

 

$

390

 

 

$

386

 

 

$

407

 

Items excluded:

 

 

 

 

 

 

 

 

 

 

Amortization of technology intangible assets

 

43

 

 

44

 

 

43

 

 

44

 

 

43

 

Adj. for fresh start accounting

 

3

 

 

4

 

 

5

 

 

9

 

 

19

 

Non-GAAP Gross Profit

 

$

440

 

 

$

440

 

 

$

438

 

 

$

439

 

 

$

469

 

GAAP Gross Margin

 

55.1

%

 

54.2

%

 

54.4

%

 

54.4

%

 

55.1

%

Non-GAAP Gross Margin

 

61.4

%

 

60.6

%

 

60.8

%

 

61.5

%

 

62.7

%

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Operating Income

 

 

 

 

 

 

 

 

 

 

Operating Income (Loss)

 

$

15

 

 

$

52

 

 

$

(613

)

 

$

38

 

 

$

50

 

Items excluded:

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

84

 

 

84

 

 

84

 

 

85

 

 

83

 

Adj. for fresh start accounting

 

4

 

 

4

 

 

4

 

 

12

 

 

20

 

Restructuring charges, net

 

3

 

 

10

 

 

1

 

 

4

 

 

7

 

Advisory fees

 

39

 

 

8

 

 

1

 

 

1

 

 

1

 

Acquisition-related costs

 

 

 

1

 

 

1

 

 

4

 

 

3

 

Share-based compensation

 

6

 

 

6

 

 

8

 

 

5

 

 

6

 

Impairment charges

 

 

 

 

 

659

 

 

 

 

 

Non-GAAP Operating Income

 

$

151

 

 

$

165

 

 

$

145

 

 

$

149

 

 

$

170

 

GAAP Operating Margin

 

2.1

%

 

7.2

%

 

-85.5

%

 

5.4

%

 

6.8

%

Non-GAAP Operating Margin

 

21.1

%

 

22.7

%

 

20.1

%

 

20.9

%

 

22.7

%

Avaya Holdings Corp.

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

(Unaudited; in millions)

 

 

 

Three months ended

 

 

Dec. 31,

2019

 

Sept. 30,

2019

 

June 30,
2019

 

March 31,
2019

 

Dec. 31,
2018

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

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

298

 

 

$

314

 

 

$

297

 

 

$

287

 

 

$

324

 

Costs

 

104

 

 

113

 

 

109

 

 

105

 

 

115

 

Amortization of technology intangible assets

 

43

 

 

44

 

 

43

 

 

44

 

 

43

 

GAAP Gross Profit

 

151

 

 

157

 

 

145

 

 

138

 

 

166

 

Items excluded:

 

 

 

 

 

 

 

 

 

 

Amortization of technology intangible assets

 

43

 

 

44

 

 

43

 

 

44

 

 

43

 

Adj. for fresh start accounting

 

 

 

2

 

 

2

 

 

2

 

 

5

 

Non-GAAP Gross Profit

 

$

194

 

 

$

203

 

 

$

190

 

 

$

184

 

 

$

214

 

GAAP Gross Margin

 

50.7

%

 

50.0

%

 

48.8

%

 

48.1

%

 

51.2

%

Non-GAAP Gross Margin

 

65.1

%

 

64.4

%

 

63.8

%

 

63.7

%

 

65.6

%

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

417

 

 

$

409

 

 

$

420

 

 

$

422

 

 

$

414

 

Costs

 

174

 

 

174

 

 

175

 

 

174

 

 

173

 

GAAP Gross Profit

 

243

 

 

235

 

 

245

 

 

248

 

 

241

 

Items excluded:

 

 

 

 

 

 

 

 

 

 

Adj. for fresh start accounting

 

3

 

 

2

 

 

3

 

 

7

 

 

14

 

Non-GAAP Gross Profit

 

$

246

 

 

$

237

 

 

$

248

 

 

$

255

 

 

$

255

 

GAAP Gross Margin

 

58.3

%

 

57.5

%

 

58.3

%

 

58.8

%

 

58.2

%

Non-GAAP Gross Margin

 

58.7

%

 

57.7

%

 

58.8

%

 

60.0

%

 

60.4

%

Avaya Holdings Corp.

Free Cash Flow

(Unaudited; in millions)

 

 

 

Three months ended

 

 

Dec. 31,
2019

 

Sept. 30,
2019

 

June 30,
2019

 

March 31,
2019

 

Dec. 31,
2018

Net cash provided by operating activities

 

$

12

 

 

$

66

 

 

$

52

 

 

$

37

 

 

$

86

 

Less:

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

26

 

 

29

 

 

37

 

 

26

 

 

21

 

Free cash flow

 

$

(14

)

 

$

37

 

 

$

15

 

 

$

11

 

 

$

65

 

Source: Avaya Newsroom

Media Inquiries:
Alex Alias
669-242-8034
alalias@avaya.com

Investor Inquiries:
Michael McCarthy
919-425-8330
mikemccarthy@avaya.com

Source: Avaya Holdings Corp.

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