Cloud for SMEsTechnology For SMEs

Avaya Reports Fourth Quarter and Fiscal 2020 Financial Results

Sharing is caring!

Avaya Holdings Corp. (NYSE: AVYA) reported financial results for the fourth quarter and fiscal year ended September 30, 2020.

Fourth Quarter Financial Highlights

  • Revenues of $755 million
  • GAAP Operating income was $74 million; Non-GAAP Operating income was $170 million
  • GAAP Net income was $37 million
  • Adjusted EBITDA was $200 million, 26.4% of revenue
  • Software and services were 88% of revenue, up 5 points year-over-year
  • Recurring revenue was 63%, up 5 points year-over-year
  • CAPS (Cloud, Alliance Partner and Subscription) revenue increased to 33% from 30% in the prior quarter
  • Ending 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.”

  • 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.

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.”

Additional Fourth Quarter Fiscal 2020 Highlights

  • Total Contract Value (TCV) of $2.1B*
  • Added over 1,500 new logos
  • Significant large deal activity with 135 deals over $1 million, 17 over $5 million, and 4 over $10 million
  • Avaya 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.

Customer Highlights

  • One 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 Highlights

  • The 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&D 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 million
  • GAAP 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 billion
  • GAAP 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 FY21
  • Newly introduced key performance indicator, OneCloud ARR, will roughly double by year end FY21
  • Adjusted 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 revenue
  • Approximately 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.

SMEStreet Edit Desk

SMEStreet Edit Desk is a small group of excited and motivated journalists and editors who are committed to building MSME ecosystem through valuable information and knowledge spread.

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Back to top button
%d bloggers like this: