Avaya Reported Revenues of $721 Million in 3rd Quarter FY2020

Avaya Holdings Corp. (NYSE: AVYA) today reported financial results for the third quarter ended June 30, 2020.

Third Quarter Financial Highlights:

• 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.”

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 capacity 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.

• 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)

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.