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
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200810005152/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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