Q4 revenues of $755 million - an increase of 4% year over year; FY20 revenue $2,873 million
Cloud, Alliance Partner & Subscription revenue increased 3 points sequentially to 33% of Q4 revenue
Subscription TCV increased $181 million in Q4; Year-to-Date booked ~$400 million of TCV
Signed 135 deals with TCV greater than $1 million, 17 over $5 million and 4 over $10 million in Q4
RALEIGH-DURHAM, N.C. & SYDNEY, AUSTRALIA – Avaya Holdings Corp. (NYSE: AVYA) today reported financial results for the fourth quarter and fiscal year ended
September 30, 2020.Fourth Quarter Financial HighlightsRevenues of $755 millionGAAP Operating income was $74 million; Non-GAAP Operating income was $170 millionGAAP Net income was $37 millionAdjusted EBITDA was $200 million, 26.4% of revenueSoftware and services were 88% of revenue, up 5 points year-over-yearRecurring revenue was 63%, up 5 points year-over-yearCAPS (Cloud, Alliance Partner and Subscription) revenue increased to 33% from 30% in the prior quarterEnding cash and cash equivalents were $727 million
“We closed out a very strong fiscal year with fourth quarter results that exceeded all our guidance metrics and again
delivered sequential and year-over-year growth,” said Jim Chirico, President and CEO of Avaya. “Our performance
throughout the year demonstrates that our investments in innovation and execution of our cloud-first strategy for
enterprises have positioned us in the right place, at the right time. We are enabling new ways of work and collaboration
that are solving organizations’ most pressing business challenges, and our highly differentiated solutions are driving
strong demand across our installed base and attracting new customers."
Mr. Chirico added, "As we closed the September quarter, we completed a refinancing that also significantly strengthened
our balance sheet and financial flexibility. All of this positions us well for continued success in the new fiscal
year.”GAAPNon-GAAP (1)(In millions, except percentages)4Q203Q204Q194Q203Q204Q19Revenue$755$721$723$757$722$726Gross margin55.4%55.1%54.2%61.2%61.1%60.6%Operating income$74$53$52$170$164$165Net income (loss)$37$9$(34)n/an/an/aGAAPNon-GAAP (1)(In millions, except percentages)FY20FY19FY20FY19Revenue$2,873$2,887$2,879$2,908Gross margin55.0%54.6%61.2%61.4%Operating (loss) income$(455)$(473)$610$629Net (loss) income$(680)$(671)n/an/a4Q203Q204Q19Adjusted EBITDA(1)$200$187$184Adjusted EBITDA margin(1)26.4%25.9%25.3%Cash provided by operations$70$45$66Cash and cash equivalents$727$742$752Additional Fourth Quarter Fiscal 2020 HighlightsTotal Contract Value (TCV) of $2.1B*Added over 1,500 new logosSignificant large deal activity with 135 deals over $1 million, 17 over $5 million, and 4 over $10 millionAvaya Cloud Office™ launched in France, Ireland & the Netherlands; enhanced with an Avaya branded unified desktop app, Avaya branded video, network performance and video
quality controls, and adoption and usage analytics.Enhanced CCaaS by adding: audio and video calling via WebRTC to improve remote worker deployment and experience;
WhatsApp and in-app social messaging support, empowering enterprises to interact digitally with customers; enhanced
analytics with increased real-time dashboards to improve management visibility; AI enhancements with the expansion of
Google Dialogflow CX support.Avaya OneCloud™ Subscription booked an additional $181 million of TCV during the September quarter, which stands at
~$400 million booked since its Q1-2020 launch.Consistent with our long-term capital allocation strategy, we took advantage of favorable market conditions to extend
debt maturities and improve financial flexibility. Issued $1 billion in senior notes due 2028, using the net proceeds to
prepay term loans due in 2024 and extended the maturity of $800M of term loans from 2024 to 2027.
(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 HighlightsOne of the top 10 largest banks in the US and an Avaya customer for over 20 years, will use the Avaya OneCloud
Subscription solution to support an increasing population of remote workers and transition over 70,000 users in their
retail branches from using Cisco, to using the Avaya OneCloud Subscription solution.Allina Health, which owns or operates 13 hospitals and more than 90 clinics, will transition over 47,000 unified
communications and contact center seats using Avaya OneCloud Subscription to support their COVID-19 remote agents with
additional entitlements, while also leveraging mobile functionality for their remote workforce.The Art Institutes, a system of private schools throughout the United States, selected Avaya Cloud Office to support
nearly 700 users across its eight campuses. With a five-year agreement, Avaya is supporting multi-location requirements
with increased flexibility, functionality and centralized operations.Connex, one of Avaya’s largest Canadian partners, won over Microsoft Teams with Avaya Cloud Office for their unified
communications and collaboration requirements. They operate across North America, servicing approximately 150,000 users
for more than 75,000 agents.ABM, an international technical professional services firm based in Australia, expanded an initial Avaya Cloud Office
deployment, adding users and new features based on the solution’s ability to support their mobile workforce and
technology roadmap.Australia-based Oban Enterprise Solutions chose Avaya Cloud Office for its flexibility and ability to integrate
third-party applications, as it enables them to offer a complete solution from the front-end through to the back office
and bring many lines of communication to a single platform.A large social services agency based in an East Coast city in the US, selected Avaya OneCloud CCaaS for over 1,000
contact center agents and supervisors. With this offering, the agency can support remote work capabilities, while at the
same time enabling an effective interview management process for callers inquiring about qualification for essential
benefits.A global provider of CRM and BPO services based in CALA, will use an Avaya OneCloud private cloud solution to
consolidate their Avaya and third-party solutions into a single unified framework for more than 7,500 workforce
management and recording licenses, speech analytics, automatic quality management, digital process analytics and
encryption ports. The company will use an Avaya OneCloud private cloud contact center solution for 6,000 agent
positions, providing them with upgraded voice, digital channels and outbound capabilities.A large Middle Eastern-based energy company is now using Avaya Spaces™ to support its employee base, increasing employee
efficiency and collaboration for those working on-site and where local security rules prevented the use of remote
working solutions to connect that staff with remote employees.Business HighlightsThe Avaya Spaces collaboration application was named to the 2020 Gartner Magic Quadrant for Meeting Solutions. Avaya
Spaces was launched this past January and is available in nearly 100 countries to meet the needs of a work-from-anywhere
world with a leading-edge user experience.Avaya was named to the Forbes 2020 list of "World's Best Employers." Companies included on this list are recognized by
their employees based on how the company handles important quality of work and life issues, including gender equality,
social responsibility, image, economic footprint, talent development and COVID-19 response.Stephen Spears joined the company in the newly created role of Chief Revenue Officer.Industry Wired Magazine recognized Avaya as one of the World’s Top 10 Best Contact Center Solution Providers in 2020.Avaya’s OneCloud CCaaS solution was named a 2020 Contact Center Technology Award winner by CUSTOMER magazine. The award
honors a product or service’s ability to help enterprises and outsourced contact centers deliver world class customer
experiences.Avaya was named a 2020 Edison Patent Award Winner for technology improving speech recognition. Nominations are reviewed
by a team of R Council researchers based on a patent’s significance of the problem, utility/socioeconomic value, novelty and
commercial impact.The Technology & Services Industry Association recognized Avaya as a 2020 STAR Award winner for Innovation in Migrating to Selling
Subscription Offers.2020 Avaya was named Contact Center Applications Vendor of the Year by Frost & Sullivan in APAC, highlighting the evolution of the Avaya OneCloud CCaaS platform.2020 Frost & Sullivan Best Practice Award: 2020 Global IP Desktop Phones Product Line Strategy Leadership Award.Aragon recognized Avaya in the UCC market for Avaya OneCloud UCaaS including Avaya Cloud Office and Avaya Spaces.
Stating OneCloud UCaaS makes it easy for people to work together, collaborate, and message each other, Aragon also cited
as strengths, Avaya’s highly reliable UCC platform, cloud and on-premise capabilities, overall user experience, team
collaboration, chatbot support and Partner network and ecosystem.Avaya’s Contact Tracing solutions won a 2020 Pandemic Tech Innovation Award for Exceptional Innovation. The award
recognized hardware, software, devices/peripherals, applications and services that help society and businesses function
effectively in the face of challenges caused by the global COVID-19 pandemic.
Financial Outlook - 1Q Fiscal 2021 - unless otherwise noted, values reflect September 30th, 2020 FX rates.GAAP revenue of $710 million to $730 millionGAAP operating income of $44 million to $59 million; GAAP operating margin of ~6% to 8%Non-GAAP operating income of $140 million to $155 million; non-GAAP operating margin of 20% to 21%Adjusted EBITDA of $165 million to $180 million; Adjusted EBITDA margin of 23% to 25%
Financial Outlook - Fiscal Year 2021 - unless otherwise noted, values reflect September 30th, 2020 FX rates.GAAP revenue of $2.875 billion to $2.925 billionGAAP operating income of $168 million to $218 million; GAAP operating margin of ~6% to 7%Non-GAAP operating income of $558 million to $608 million; non-GAAP operating margin of 19% to 21%CAPS revenue growth of ~$300 million, which will represent between 35 and 40% of Avaya's total revenue in FY21Newly introduced key performance indicator, OneCloud ARR, will roughly double by year end FY21Adjusted EBITDA of $660 million to $710 million; Adjusted EBITDA margin of 23% to 24%Cash flow from operations of 2% to 3% of non-GAAP revenueApproximately 80 million to 85 million weighted average shares outstanding; ending share count of approximately 80
million to 85 million shares
The company has not quantitatively reconciled its guidance for adjusted EBITDA or non-GAAP Operating income to its most
comparable GAAP measure because certain of the reconciling items that impact these metrics 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.
As Avaya’s CAPS metric reflects revenue that is already recognized, management determined that it could help provide
investors with a better view into the performance of the company’s broader-based OneCloud software solutions that are
driving the company’s recurring revenue growth by introducing a new forward-looking metric, Annualized Recurring
Revenue, or OneCloud ARR.
OneCloud ARR will incorporate different components from the OneCloud portfolio that are configured to suit the
operational needs of Avaya’s customers as they transition to cloud-facing recurring revenue consumption models and opex
revenue streams. This metric is similar to what our industry peers report and will reflect only the recurring components
of Avaya’s OneCloud portfolio which includes multiple deployment options based on customer choice. The introduction of
the One Cloud ARR metric, combined with the company’s existing CAPS metric, will provide investors enhanced visibility
into Avaya’s transformational Cloud journey. Quarterly and annual OneCloud ARR for fiscal 2020 are provided in the
slides published on Avaya’s website at www.avaya.com on the Investor Relations page.
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 18, 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 November
18, 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: 13712455.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 act
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