Avaya Reports Second Quarter Fiscal 2021 Financial Results

Total revenue increased 8pc YoY to US$738 million as Avaya OneCloudTM ARR increased to US$344 million and CAPS grew to 40pc of revenue

Sydney – Avaya Holdings Corp. (NYSE: AVYA) has reported financial results for the second quarter of fiscal 2021 ended March 31, 2021.

Second Quarter Financial Highlights

· Revenues of $738 million, up 8% from a year ago.

· OneCloud ARR was $344 million, up 31% sequentially.

· CAPS (Cloud, Alliance Partner and Subscription) was 40% of revenue, up from 23% a year ago.

· Software and services were 90% of revenue, up from 88% a year ago.

· Recurring revenue was 66%, up from 64% a year ago.

· GAAP Operating income was $44 million; Non-GAAP Operating income was $148 million.

· GAAP Net loss was $58 million; Non-GAAP Net income was $72 million.

· Adjusted EBITDA was $177 million, 24.0% of revenue, up 220 basis points year over year

· Ending cash and cash equivalents were $593 million

· GAAP Loss Per Share of $0.70; Non-GAAP Earnings Per Share of $0.74

“We drove solid second quarter results which highlight the company’s continuing momentum. But more importantly, they represent the significant work and strategic investments we have been making over the last few years to reshape our company and portfolio to be a leader in enterprise communications and collaboration,” said Jim Chirico, president and CEO of Avaya. “The playbook for our industry is not a secret. It is all about how you execute and I couldn’t be more delighted with our performance, which is why we are again raising guidance across several key financial metrics.”

Additional Second Quarter Fiscal 2021 Highlights

· Total Contract Value (TCV) of $2.1B*.

· Added approximately 1,500 new logos.

· Significant large deal activity with 107 deals over $1 million TCV, 16 over $5 million, 7 over $10 million and 1 over $25 million.

· Avaya Cloud OfficeTM now available in 13 countries.

· Avaya OneCloud CCaaS now available in approximately 40 countries.

· The Company completed a term loan amendment extending the maturity of its outstanding Tranche B Term Loans due December 2024 to December 2027. In connection with the Amendment, the Company made a $100 million prepayment of the existing Tranche B Term Loans.

(1) Non-GAAP gross margin, Non-GAAP operating margin (used below), Non-GAAP operating income, Non-GAAP net income, Non-GAAP earnings per share, adjusted EBITDA, adjusted EBITDA margin and constant currency are not measures calculated in accordance with generally accepted accounting principles in the U.S. (“GAAP”). Refer to the "Use of non-GAAP (Adjusted) Financial Measures" below and the Supplemental Financial Information accompanying this press release for more information on the calculation of constant currency and a reconciliation of these non-GAAP 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.

Customer Highlights

• DHL Supply Chain ("DHL"), based in Singapore, has chosen Avaya OneCloud Subscription to create an innovative, composable contact center solution that will rapidly adapt to their customers’ needs. DHL can assemble intelligent collaboration, contact center and knowledge management capabilities on-demand to significantly reduce time and effort in launching new customer environments. Through the Avaya OneCloud Subscription offering, DHL can introduce automation to hundreds of contact center agents and over 1,000 collaboration users on Avaya Spaces.
• Seine Saint Denis, the host of the 2024 Olympics, adopted Avaya Spaces as their work-from-anywhere collaboration solution for 8,000 users. After testing more than 10 alternative options, they chose Spaces because of its security, scalability, feature-richness and ease of use.
• Qatar Airways, serving customers in over 70 countries in 12 different languages, signed an Avaya OneCloud Private deal to deploy Avaya’s advanced digital engagement, global workforce optimization, and automation, in readiness for Qatar to host the FIFA World Cup in 2022.
• Avaya Spaces has helped Clemson University offer students a more immersive learning experience. Even for Clemson’s hands-on technical courses, the solution’s video and breakout room functionality integrates seamlessly with the experiential content in their learning experience platform for online and hybrid learning that truly supports both teachers and students.
• Clarios, a world leader in advanced energy storage solutions, is deploying Avaya OneCloud Private for 5,000 unified communications users across 22 countries.
• AllOne Health Resources, Inc. ("AllOne") based in Wilkes-Barre, PA signed a 3-year deal, choosing to implement Avaya OneCloud CCaaS and Avaya Cloud Office. This powerful combination will support a diverse workforce that includes in-house doctors, nurses, clinical staff, health counselors and call center agents. AllOne has successfully grown organically and through acquisition and needed a communications platform that would deliver scalability and reliability through the next stage of their growth plans.

Financial Outlook - 3Q Fiscal 2021 - unless otherwise noted, values reflect April 30, 2021 FX rates.

· Revenue of $720 million to $735 million

· GAAP operating income of $10 million to $20 million; GAAP operating margin of 1% to 3%

· Non-GAAP operating income of $133 million to $143 million; non-GAAP operating margin of 19% to 20%

· Adjusted EBITDA of $160 million to $170 million; Adjusted EBITDA margin of 22% to 23%

· Non-GAAP EPS of $0.66 to $0.73

Financial Outlook - Fiscal Year 2021 - unless otherwise noted, values reflect April 30, 2021 FX rates.

· Revenue of $2.920 billion to $2.955 billion

· CAPS revenue will represent between 37% and 40% of Avaya's total revenue guidance for FY21.

· OneCloud ARR expected to be ~$450 million to $460 million by year end FY21

· GAAP operating income of $155 million to $185 million; GAAP operating margin of 5% to 6%

· Non-GAAP operating income of $580 million to $610 million; non-GAAP operating margin of 20% to 21%

· Adjusted EBITDA of $690 million to $720 million; Adjusted EBITDA margin of ~24%

· Non-GAAP EPS of $3.02 to $3.20

· Cash flow from operations of 3% to 4% of revenue

· Approximately 87 million to 89 million weighted average shares outstanding

The company has not quantitatively reconciled its guidance for adjusted EBITDA, non-GAAP Operating income, or non-GAAP EPS to their respective 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 and change in fair value of warrants 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 reported under GAAP.

As Avaya’s CAPS metric reflects revenue that is already recognized, management believes it would be helpful to 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 also providing a forward-looking metric, Annualized Recurring Revenue, or OneCloud ARR.

OneCloud ARR represents our estimate of the annualized revenue run-rate of certain components from active term OneCloud contracts (whether or not terminable) at the end of the reporting period. More specifically, OneCloud ARR includes OneCloud subscription revenue, ACO recurring revenue and revenue from CCaaS, Spaces, CPaaS, DaaS and private cloud, and excludes maintenance, managed services revenue and ACO one-time payments. The One Cloud ARR metric, combined with the company’s CAPS metric, provides investors enhanced visibility into Avaya’s transformational Cloud journey. Per period OneCloud ARR figures 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 May 6, 2021. Actual results may differ materially from Avaya’s outlook as a result of, among other things, the factors described under “Forward- Looking Statements” below.

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About Avaya
Businesses are built by the experiences they provide, and everyday millions of those experiences are delivered by Avaya Holdings Corp. (NYSE: AVYA). Avaya is shaping what's next for the future of work, with innovation and partnerships that deliver game-changing business benefits. Our cloud communications solutions and multi-cloud application ecosystem power personalized, intelligent, and effortless customer and employee experiences to help achieve strategic ambitions and desired outcomes. Together, we are committed to help grow your business by delivering Experiences that Matter. Learn more 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, termination or modification of current contracts which could impair attainment of our OneCloud ARR metric; 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.

Source: Avaya Newsroom

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