$723 million Q4 FY19 GAAP revenue; $2.887
billion FY19 GAAP revenue
83.8% of GAAP revenue from software and
services, 58.9% of GAAP recurring revenue in FY19
352 deals signed with a TCV greater than $1
million, 40 over $5 million and 9 over $10 million in FY19
Avaya Holdings Corp. (NYSE: AVYA) today reported financial
results for the fourth quarter and fiscal year ended September 30,
2019.
GAAP
Non-GAAP (1)
(In millions, except percentages)
Q4 2019
Q3 2019
Q4 2018
Q4 2019
Q3 2019
Q4 2018
Revenue
$
723
$
717
$
735
$
726
$
720
$
770
Gross margin
54.2
%
54.4
%
53.1
%
60.6
%
60.8
%
63.4
%
Operating margin
7.2
%
(85.5
)%
1.5
%
22.7
%
20.1
%
20.4
%
GAAP
Non-GAAP (1)
(In millions, except percentages)
FY19
FY18
FY19
FY18
Revenue
$
2,887
$
2,851
$
2,908
$
3,057
Gross margin
54.6
%
52.8
%
61.4
%
62.5
%
Operating margin
(16.4
)%
(3.1
)%
21.6
%
20.8
%
"Avaya made significant progress positioning the company for
future growth and accelerating our relevance in cloud during fiscal
2019,” stated Jim Chirico, president and CEO of Avaya. “Notably, we
grew our public cloud seats by approximately 160% year over year;
we launched ReadyNow, an enterprise-class private cloud solution,
and have already booked $90 million of total contract value; we
announced a Microsoft partnership to bring our next generation
CCaaS to market on Azure; and we recently closed our strategic
partnership for UCaaS with RingCentral. The investments across our
portfolio, especially in contact center, cloud, services and AI,
have materially strengthened our position and solidified our
platform for future growth.”
Mr. Chirico added, “Successfully concluding the strategic review
process provided a decisive go forward path and, as a result, we
announced three important initiatives to accelerate growth and
deliver shareholder value. First, the partnership with RingCentral
is a game changer for Avaya and is expected to fundamentally change
the industry landscape. Second, we expect to begin to execute
against our previously announced $500 million stock repurchase
program shortly, and third, we have already completed the pay down
of $250 million of debt that will result in significant annual
interest expense savings and further enhance our balance
sheet.”
Fourth Quarter Fiscal 2019 Financial
Results(1)
- On October 1, 2018, Avaya adopted the new revenue recognition
standard, Accounting Standards Codification 606 ("ASC 606"), using
the modified retrospective transition method. Accordingly, results
for reporting periods beginning after September 30, 2018 are
presented under ASC 606 while prior period financial information
has not been adjusted and continues to be reported in accordance
with GAAP that existed prior to the adoption of ASC 606 ("ASC
605").
- GAAP revenue for the fourth quarter of fiscal 2019 was $723
million, $6 million higher than the third quarter of fiscal 2019,
and $12 million lower than the fourth quarter of fiscal 2018 ended
September 30, 2018. Non-GAAP revenue for the fourth quarter of
fiscal 2019 was $726 million, $6 million higher than the prior
quarter, and $44 million lower than the fourth quarter of fiscal
2018.
- GAAP gross margin for the fourth quarter of fiscal 2019 was
54.2% compared to 54.4% for the third quarter of fiscal 2019 and
53.1% for the fourth quarter of fiscal 2018. Non-GAAP gross margin
was 60.6%, compared to 60.8% for the third quarter of fiscal 2019
and 63.4% for the fourth quarter of fiscal 2018.
- GAAP operating income for the fourth quarter of fiscal 2019 was
$52 million, compared to an operating loss of $613 million for the
third quarter of fiscal 2019, and operating income of $11 million
for the fourth quarter of fiscal 2018. Non-GAAP operating income(1)
for the fourth quarter of fiscal 2019 was $165 million, compared to
$145 million for the prior quarter, and $157 million for the fourth
quarter of fiscal 2018.
- GAAP net loss for the fourth quarter of fiscal 2019 was $34
million, compared to net loss of $633 million for the third quarter
of fiscal 2019, and net income of $268 million for the fourth
quarter of fiscal 2018.
- Adjusted EBITDA(1) was $184 million or 25.3% of non-GAAP
revenue, compared to adjusted EBITDA of $167 million, or 23.2% of
non-GAAP revenue, for the third quarter of fiscal 2019 and $178
million, or 23.1% of non-GAAP revenue, for the fourth quarter of
fiscal 2018.
- Cash provided by operating activities for the fourth quarter of
fiscal 2019 was $66 million, compared to $52 million during the
third quarter of fiscal 2019 and $25 million during the fourth
quarter of fiscal 2018. Cash provided by operating activities for
fiscal 2019 was $241 million.
- At the end of the fourth quarter of fiscal 2019, cash and cash
equivalents totaled $752 million, compared to $729 million at the
end of the third quarter of fiscal 2019 and $700 million at the end
of the fourth quarter of fiscal 2018.
Fourth Quarter Fiscal 2019 Business
Metrics(1)
- Total Contract Value (TCV) of $2.4 billion*
- 83% of non-GAAP revenue was Software & Services
- 61% of non-GAAP product revenue was Software
- 58% of non-GAAP revenue was Recurring
- Added approximately 1,600 new logos
- Large deal activity with 109 deals over $1 million, 14 over $5
million, and 3 over $10 million
- Generated $66 million in cash flow from operations, $37 million
in free cash flow(1)
(1) Non-GAAP revenue, Non-GAAP gross margin, Non-GAAP operating
margin, Non-GAAP operating income and adjusted EBITDA are not
measures calculated in accordance with generally accepted
accounting principles in the U.S. (“GAAP”). 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.
Fourth Quarter Fiscal 2019 Company
Highlights
- Public cloud seats increased approximately 160%
year-over-year.
- Avaya will adopt hybrid cloud solutions from IBM to help expand
Avaya’s ReadyNow private cloud unified communications and contact
center offerings internationally.
- Avaya expands ReadyNow into the EMEA and APAC regions.
- Avaya launched its new Avaya IX Subscription program targeted
at customers looking for flexible consumption-based pricing
alternatives to traditional perpetual models when consuming Avaya’s
world-class communications and collaboration solutions. The Avaya
IX Subscription program will also facilitate customers’ transition
to cloud.
- Avaya and Tenfold, the world’s leading provider of next
generation CTI solutions, announced a strategic partnership to
enable joint clients to improve their customer experience, increase
productivity of their sales and service teams, and operationalize
AI with richer contextual customer data to drive predictive
engagement.
- TMC, a global, integrated media company, recognized three of
Avaya’s offerings for their innovation and leadership in the UC and
Contact Center markets.
The Avaya IX Collaboration Unit, an open
“all-in-one” next-generation huddle-room video conferencing
solution, was named a TMC 2019 Communications Solutions Products of
the Year Award. An all-in-one collaboration device that does not
require a laptop connection, it sits on top of the video screen,
has integrated microphones, and provides a wide field of view which
is important for huddle spaces that are typically not very deep but
can be very wide.
Avaya’s Mobile Experience was named a 2019
Communications Solutions Products of the Year Award winner. Avaya
Mobile Experience is an Avaya owned and operated cloud-based
service that supports the advancement of a business’ digital
transformation to become more mobile-centric. Avaya Mobile
Experience helps enable omni-channel interactions with smartphone
users, reducing the time callers spend on legacy voice interactions
with an organization’s contact center.
The Avaya OneCloud™ unified communications
and contact center platform was named a 2019 Communications
Solutions Products of the Year Award. Avaya OneCloud helps meet the
business needs for a cloud solution that delivers flexible
features, functions, and value-without any compromise for
small-medium businesses (SMB), mid-market or large enterprise
organizations featuring public, private and hybrid cloud
options.
Fiscal 2019 Financial
Highlights
- GAAP revenue: $2.887 billion; Non-GAAP revenue: $2.908
billion
- GAAP gross margin: 54.6%; Non-GAAP gross margin: 61.4%
- GAAP operating margin: -16.4%; Non-GAAP operating margin:
21.6%
- Adjusted EBITDA: $706 million; Adjusted EBITDA margin:
24.3%
- Cash flow from operations: $241 million, Free cash flow: $128
million
Financial Outlook - Q1 Fiscal 2020
under ASC 606
- GAAP revenue of $698 million to $718 million; Non-GAAP revenue
of $700 million to $720 million
- This non-GAAP revenue figure reflects a constant currency
decline in September 30th 2019 FX rates of -6% to -3%
- GAAP operating income of $2 million to $12 million; GAAP
operating margin of 0% to 2%
- Non-GAAP operating income of $145 million to $155 million;
non-GAAP operating margin of ~21%
- Adjusted EBITDA of $165 million to $175 million; Adjusted
EBITDA margin of ~24%
Financial Outlook - Fiscal Year 2020
under ASC 606
- GAAP revenue of $2.81 billion to $2.89 billion; Non-GAAP
revenue of $2.82 billion to $2.90 billion
- This non-GAAP revenue figure reflects a constant currency
decline in September 30th 2019 FX rates 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 $610 million;
non-GAAP operating margin of 20% to 21%
- Adjusted EBITDA $650 million to $700 million; Adjusted EBITDA
margin of 23% to 24%
- Cash flow from operations of ~5% of non-GAAP revenue
- Excluding Q1 FY20 one time strategic process fees: ~7%
- Approximately 95 to 100 million weighted average shares
outstanding; ending share count of approximately 80 to 85 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 November 20, 2019. Actual results may differ
materially from Avaya’s outlook as a result of, among other things,
the factors described under “Forward-Looking Statements” below.
Conference Call and Webcast
Avaya will host a live webcast and conference call to discuss
its financial results at 8:30 AM Eastern Time on November 20, 2019.
To access the live conference call by phone, listeners should dial
+1-833-224-0545 in the U.S. or Canada and +1-647-689-4064 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 +1-800-585-8367 in the U.S. or Canada
and +1-416-621-4642 for international callers, using the conference
access code: 6257079.
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)
Successor
Predecessor
Non-GAAP Combined(1)
Three months ended September
30, 2019
Three months ended September
30, 2018
Fiscal year ended September
30, 2019
Period from December 16, 2017
through September 30, 2018
Period from October 1, 2017
through December 15, 2017
Fiscal year ended September
30, 2018
REVENUE
Products
$
314
$
325
$
1,222
$
989
$
253
$
1,242
Services
409
410
1,665
1,258
351
1,609
723
735
2,887
2,247
604
2,851
COSTS
Products:
Costs
113
115
442
372
84
456
Amortization of technology intangible
assets
44
43
174
135
3
138
Services
174
187
696
597
155
752
331
345
1,312
1,104
242
1,346
GROSS PROFIT
392
390
1,575
1,143
362
1,505
OPERATING EXPENSES
Selling, general and administrative
240
275
1,001
888
264
1,152
Research and development
50
62
204
172
38
210
Amortization of intangible assets
40
41
162
127
10
137
Impairment charges
—
—
659
—
—
—
Restructuring charges, net
10
1
22
81
14
95
340
379
2,048
1,268
326
1,594
OPERATING INCOME (LOSS)
52
11
(473
)
(125
)
36
(89
)
Interest expense
(60
)
(57
)
(237
)
(169
)
(14
)
(183
)
Other income (expense), net
6
3
41
35
(2
)
33
Reorganization items, net
—
—
—
—
3,416
3,416
(LOSS) INCOME BEFORE INCOME TAXES
(2
)
(43
)
(669
)
(259
)
3,436
3,177
(Provision for) benefit from income
taxes
(32
)
311
(2
)
546
(459
)
87
NET (LOSS) INCOME
$
(34
)
$
268
$
(671
)
$
287
$
2,977
$
3,264
(LOSS) EARNINGS PER SHARE
Basic
$
(0.31
)
$
2.44
$
(6.06
)
$
2.61
$
5.19
Diluted
$
(0.31
)
$
2.41
$
(6.06
)
$
2.58
$
5.19
Weighted average shares outstanding
Basic
111.2
110.0
110.8
109.9
497.3
Diluted
111.2
111.4
110.8
111.1
497.3
(1)
See "Use of non-GAAP (Adjusted) Financial
Measures" below.
Avaya Holdings Corp.
Condensed Consolidated Balance
Sheets (Unaudited)
(In millions, except per share
and shares amounts)
September 30, 2019
September 30, 2018
ASSETS
Current assets:
Cash and cash equivalents
$
752
$
700
Accounts receivable, net
314
377
Inventory
63
81
Contract assets
187
—
Contract costs
114
—
Other current assets
115
170
TOTAL CURRENT ASSETS
1,545
1,328
Property, plant and equipment, net
255
250
Deferred income taxes, net
35
29
Intangible assets, net
2,891
3,234
Goodwill, net
2,103
2,764
Other assets
121
74
TOTAL ASSETS
$
6,950
$
7,679
LIABILITIES
Current liabilities:
Debt maturing within one year
$
29
$
29
Accounts payable
291
266
Payroll and benefit obligations
116
145
Contract liabilities
472
484
Business restructuring reserves
33
51
Other current liabilities
158
148
TOTAL CURRENT LIABILITIES
1,099
1,123
Non-current liabilities:
Long-term debt, net of current portion
3,090
3,097
Pension obligations
759
671
Other post-retirement obligations
200
176
Deferred income taxes, net
72
140
Business restructuring reserves
36
47
Other liabilities
394
374
TOTAL NON-CURRENT LIABILITIES
4,551
4,505
TOTAL LIABILITIES
5,650
5,628
Commitments and contingencies
—
—
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value;
55,000,000 shares authorized, no shares issued or outstanding at
September 30, 2019 and 2018
—
—
Common stock, $0.01 par value; 550,000,000
shares authorized; 111,046,085 shares issued and 111,033,405
outstanding at September 30, 2019; 110,218,653 shares issued and
110,012,790 shares outstanding at September 30, 2018
1
1
Additional paid-in capital
1,761
1,745
(Accumulated deficit) retained
earnings
(289
)
287
Accumulated other comprehensive (loss)
income
(173
)
18
TOTAL STOCKHOLDERS' EQUITY
1,300
2,051
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY
$
6,950
$
7,679
Avaya Holdings Corp.
Condensed Statements of Cash
Flows
(Unaudited; in
millions)
Successor
Predecessor
Non-GAAP Combined(1)
Fiscal year ended September
30, 2019
Period from December 16, 2017
through September 30, 2018
Period from October 1, 2017
through December 15, 2017
Fiscal year ended September
30, 2018
Net cash provided by (used for):
Operating activities
$
241
$
202
$
(414
)
$
(212
)
Investing activities
(124
)
(199
)
(13
)
(212
)
Financing activities
(61
)
273
(102
)
171
Effect of exchange rate changes on cash,
cash equivalents, and restricted cash
(4
)
(7
)
(2
)
(9
)
Net increase (decrease) in cash, cash
equivalents, and restricted cash
52
269
(531
)
(262
)
Cash, cash equivalents, and restricted
cash at beginning of period
704
435
966
966
Cash, cash equivalents, and restricted
cash at end of period
$
756
$
704
$
435
$
704
(1)
See "Use of non-GAAP (Adjusted) Financial
Measures" below.
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 the combined twelve
month period ending September 30, 2018 and financial measures
labeled as “non-GAAP” or “adjusted.”
Although GAAP requires that we report on our results for the
periods October 1, 2017 through December 15, 2017 (the
"Predecessor" period) and December 16, 2017 through September 30,
2018 (the "Successor" period) separately, management reviews the
Company’s operating results for the twelve months ended September
30, 2018 by combining the results of these periods because such
presentation provides the most meaningful comparison of our
results. The Company cannot adequately benchmark the operating
results of the 289-day period ended September 30, 2018 against any
of the previous or succeeding periods reported in its condensed
consolidated financial statements and does not believe that
reviewing the results of this period in isolation would be useful
in identifying any trends regarding the Company’s overall
performance. Management believes that key performance metrics such
as revenue, gross margin and operating income, among others, when
combined for the twelve months ended September 30, 2018 provide
meaningful comparisons to other periods and are useful in
identifying current business trends.
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.
In addition, we present the liquidity measures of free cash flow
and adjusted cash flow. Free cash flow is calculated by subtracting
capital expenditures from Net cash provided by operating
activities. We believe free cash flow is a measure often used by
analysts and investors to compare the cashflow and liquidity of
companies in the same industry. Adjusted cash flow is defined as
cash flow from operations adjusted to remove one-time anticipated
payments in connection with our strategic process in Q1 fiscal
2020. We provide guidance regarding Adjusted cash flow because we
believe it provides a more meaningful way to analyze period over
period results.
The presentation of these non-GAAP financial measures is not
intended to be considered in isolation from, as substitute for, or
superior to, the financial information prepared and presented in
accordance with GAAP and may be different from the non-GAAP
financial measures used by other companies. In addition, these
non-GAAP measures have limitations in that they do not reflect all
of the amounts associated with the Company’s results of operations
as determined in accordance with GAAP.
We do not provide a forward-looking reconciliation of expected
first quarter and full year of fiscal 2020 non-GAAP revenue,
non-GAAP gross margin, non-GAAP operating expenses, non-GAAP
operating income, non-GAAP operating margin, adjusted EBITDA or
adjusted cash flow 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 present Successor, Predecessor and combined
results and reconcile historical GAAP measures to non-GAAP
measures.
Avaya Holdings Corp.
Supplemental Schedules of
Non-GAAP Adjusted EBITDA
(Unaudited; in
millions)
Successor
Predecessor
Non-GAAP Combined (1)
Three months ended September
30, 2019
Three months ended September
30, 2018
Fiscal year ended September
30, 2019
Period from December 16, 2017
through September 30, 2018
Period from October 1, 2017
through December 15, 2017
Fiscal year ended September
30, 2018
Net (loss) income
$
(34
)
$
268
$
(671
)
$
287
$
2,977
$
3,264
Interest expense
60
57
237
169
14
183
Interest income
(3
)
(3
)
(14
)
(5
)
(2
)
(7
)
Provision for (benefit from) income
taxes
32
(311
)
2
(546
)
459
(87
)
Depreciation and amortization
108
120
443
384
31
415
EBITDA
163
131
(3
)
289
3,479
3,768
Impact of fresh start accounting
adjustments
(2
)
29
5
196
—
196
Restructuring charges, net
10
1
22
81
14
95
Advisory fees
8
3
11
18
3
21
Acquisition-related costs
1
4
9
15
—
15
Reorganization items, net
—
—
—
—
(3,416
)
(3,416
)
Non-cash share-based compensation
6
6
25
19
—
19
Impairment charges
—
—
659
—
—
—
Loss on sale/disposal of long-lived
assets, net
—
—
—
4
1
5
Resolution of certain legal matters
—
—
—
—
37
37
Change in fair value of Emergence Date
Warrants
(1
)
8
(29
)
17
—
17
(Gain) loss on foreign currency
transactions
—
(4
)
8
(28
)
—
(28
)
Pension/OPEB/nonretirement postemployment
benefits and long-term disability costs
—
—
—
—
17
17
Gain on investments
(1
)
—
(1
)
—
—
—
Adjusted EBITDA
$
184
$
178
$
706
$
611
$
135
$
746
Avaya Holdings Corp.
Supplemental Schedules of
Non-GAAP Revenue
(Unaudited; in
millions)
Three Months Ended
Three Months Ended Sept. 30,
2018 (4)
Change
Three Months Ended
Sept. 30, 2019
Adj. for Fresh Start
Accounting
Non- GAAP Sept. 30,
2019
Amount
Pct.
Pct., net of fx impact
June 30, 2019 (1)
Mar. 31, 2019 (2)
Dec. 31, 2018 (3)
Revenue by Segment
Products & Solutions
$
315
$
—
$
315
$
336
$
(21
)
(6
)%
(5
)%
$
298
$
289
$
326
1
Services
411
—
411
434
(23
)
(5
)%
(5
)%
422
425
422
Unallocated amounts
(3
)
3
—
—
—
n/a
n/a
—
—
—
Total revenue
$
723
$
3
$
726
$
770
$
(44
)
(6
)%
(5
)%
$
720
$
714
$
748
Revenue by Geography
U.S.
$
392
$
1
$
393
$
417
$
(24
)
(6
)%
(6
)%
$
394
$
378
$
401
International:
EMEA
183
1
184
202
(18
)
(9
)%
(7
)%
183
189
200
APAC - Asia Pacific
85
1
86
81
5
6
%
9
%
85
80
79
Americas International
63
—
63
70
(7
)
(10
)%
(9
)%
58
67
68
Total International
331
2
333
353
(20
)
(6
)%
(4
)%
326
336
347
Total revenue
$
723
$
3
$
726
$
770
$
(44
)
(6
)%
(5
)%
$
720
$
714
$
748
(1) - (4) Reconciliation of Non-GAAP measures above:
(1) Q319 Non-GAAP
Results
(2) Q219 Non-GAAP
Results
Three Months Ended
Three Months Ended
June 30, 2019
Adj. for Fresh Start
Accounting
Non-GAAP June 30, 2019
Mar. 31, 2019
Adj. for Fresh Start
Accounting
Non-GAAP Mar. 31, 2019
Revenue by Segment
Products & Solutions
$
298
$
—
$
298
$
289
—
$
289
Services
422
—
422
425
—
425
Unallocated amounts
(3
)
3
—
(5
)
5
—
Total revenue
$
717
$
3
$
720
$
709
$
5
$
714
Revenue by Geography
U.S.
$
392
$
2
$
394
$
375
$
3
$
378
International:
EMEA
183
—
183
188
1
189
APAC - Asia Pacific
85
—
85
79
1
80
Americas International
57
1
58
67
—
67
Total International
325
1
326
334
2
336
Total revenue
$
717
$
3
$
720
$
709
$
5
$
714
(3) Q119 Non-GAAP
Results
(4) Q418 Non-GAAP
Results
Three Months Ended
Three Months Ended
Dec. 31, 2018
Adj. for Fresh Start
Accounting
Non-GAAP Dec. 31, 2018
Sept. 30, 2018
Adj. for Fresh Start
Accounting
Non-GAAP Sept. 30,
2018
Revenue by Segment
Products & Solutions
$
326
$
—
$
326
$
336
$
—
$
336
Services
422
—
422
434
—
434
Unallocated amounts
(10
)
10
—
(35
)
35
—
Total revenue
$
738
$
10
$
748
$
735
$
35
$
770
Revenue by Geography
U.S.
$
394
$
7
$
401
$
393
$
24
$
417
International:
EMEA
199
1
200
196
6
202
APAC - Asia Pacific
78
1
79
78
3
81
Americas International
67
1
68
68
2
70
Total International
344
3
347
342
11
353
Total revenue
$
738
$
10
$
748
$
735
$
35
$
770
Avaya Holdings Corp.
Supplemental Schedules of
Non-GAAP Reconciliations
(Unaudited; in
millions)
Three Months Ended
Sept. 30, 2019
June 30, 2019
March 31, 2019
Dec. 31, 2018
Sept. 30, 2018
Reconciliation of Non-GAAP Gross Profit
and Non-GAAP Gross Margin
Gross Profit
$
392
$
390
$
386
$
407
$
390
Items excluded:
Amortization of technology intangible
assets
44
43
44
43
43
Adj. for fresh start accounting
4
5
9
19
54
Non-cash share-based compensation
—
—
—
—
1
Non-GAAP Gross Profit
$
440
$
438
$
439
$
469
$
488
GAAP Gross Margin
54.2
%
54.4
%
54.4
%
55.1
%
53.1
%
Non-GAAP Gross Margin
60.6
%
60.8
%
61.5
%
62.7
%
63.4
%
Reconciliation of Non-GAAP Operating
Income
Operating Income (Loss)
$
52
$
(613
)
$
38
$
50
$
11
Items excluded:
Amortization of intangible assets
84
84
85
83
84
Adj. for fresh start accounting
4
4
12
20
48
Restructuring charges, net
10
1
4
7
1
Advisory fees
8
1
1
1
3
Acquisition-related costs
1
1
4
3
4
Non-cash share-based compensation
6
8
5
6
6
Impairment charges
—
659
—
—
—
Non-GAAP Operating Income
$
165
$
145
$
149
$
170
$
157
GAAP Operating Margin
7.2
%
-85.5
%
5.4
%
6.8
%
1.5
%
Non-GAAP Operating Margin
22.7
%
20.1
%
20.9
%
22.7
%
20.4
%
Avaya Holdings Corp.
Supplemental Schedules of
Non-GAAP Reconciliation of Gross Profit and Gross Margin by
Portfolio
(Unaudited; in
millions)
Three months ended
Sept. 30, 2019
June 30, 2019
March 31, 2019
Dec. 31, 2018
Sept. 30, 2018
Reconciliation of Non-GAAP Gross Profit
and Non-GAAP Gross Margin - Products
Revenue
$
314
$
297
$
287
$
324
$
325
Costs
113
109
105
115
115
Amortization of technology intangible
assets
44
43
44
43
43
GAAP Gross Profit
157
145
138
166
167
Items excluded:
Amortization of technology intangible
assets
44
43
44
43
43
Adj. for fresh start accounting
2
2
2
5
16
Non-GAAP Gross Profit
$
203
$
190
$
184
$
214
$
226
GAAP Gross Margin
50.0
%
48.8
%
48.1
%
51.2
%
51.4
%
Non-GAAP Gross Margin
64.4
%
63.8
%
63.7
%
65.6
%
67.3
%
Reconciliation of Non-GAAP Gross Profit
and Non-GAAP Gross Margin - Services
Revenue
$
409
$
420
$
422
$
414
$
410
Costs
174
175
174
173
187
GAAP Gross Profit
235
245
248
241
223
Items excluded:
Adj. for fresh start accounting
2
3
7
14
38
Non-cash share-based compensation
—
—
—
—
1
Non-GAAP Gross Profit
$
237
$
248
$
255
$
255
$
262
GAAP Gross Margin
57.5
%
58.3
%
58.8
%
58.2
%
54.4
%
Non-GAAP Gross Margin
57.7
%
58.8
%
60.0
%
60.4
%
60.4
%
Avaya Holdings Corp.
Reconciliation of ASC 606 to
ASC 605 GAAP results
Three months ended September
30, 2019
(Unaudited; in
millions)
Q4 FY19 results under ASC
606
ASC 606 Impact
Q4 FY19 results under ASC
605
REVENUE
Products
$
314
$
(26
)
$
288
Services
409
(16
)
393
723
(42
)
681
COSTS
Products:
Costs
113
(6
)
107
Amortization of technology intangible
assets
44
—
44
Services
174
(5
)
169
331
(11
)
320
GROSS PROFIT
392
(31
)
361
OPERATING EXPENSES
Selling, general and administrative
240
(1
)
239
Research and development
50
—
50
Amortization of intangible assets
40
—
40
Restructuring charges, net
10
—
10
340
(1
)
339
OPERATING INCOME
52
(30
)
22
Interest expense
(60
)
—
(60
)
Other income, net
6
—
6
LOSS BEFORE INCOME TAXES
(2
)
(30
)
(32
)
Provision for income taxes
(32
)
15
(17
)
NET LOSS
$
(34
)
$
(15
)
$
(49
)
Avaya Holdings Corp.
Supplemental Schedules of Free
Cash Flow
(Unaudited; in
millions)
Three months ended
Sept. 30, 2019
June 30, 2019
March 31, 2019
Dec. 31, 2018
Sept. 30, 2018
Net cash provided by operating
activities
$
66
$
52
$
37
$
86
$
25
Less:
Capital expenditures
29
37
26
21
25
Free cash flow
$
37
$
15
$
11
$
65
$
—
Source: Avaya Newsroom
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191120005249/en/
Media Inquiries: Alex Alias 669-242-8034
alalias@avaya.com Investor Inquiries: Michael McCarthy
919-425-8330 mikemccarthy@avaya.com
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