Avaya reports first quarter fiscal 2021 financial results

• Guidance raised reflecting improved performance across key business metrics.
• Total revenue increased 4% year-over-year to $743 million.
• Avaya OneCloud ARR increased 38% sequentially to $262 million.
• Cloud, alliance partner and subscription revenue grew to 34%.

Avaya Holdings Corporation (NYSE: AVYA) today reported financial results for the first quarter of fiscal 2021 ended 31 December 2020.

First quarter financial highlights

• Revenues of $743 million;
• OneCloud ARR was $262 million, up 38% sequentially;
• CAPS (cloud, alliance partner and subscription) revenue was 34%, up from 18% a year ago;
• Software and services were 88% of revenue, up from 86% a year ago;
• Recurring revenue was 65%, up from 59% a year ago;
• GAAP operating income was $62 million; non-GAAP operating income was $163 million;
• GAAP net loss was $4 million; non-GAAP net income was $85 million;
• Adjusted EBITDA was $190 million, 25.6% of revenue;
• Ending cash and cash equivalents were $750 million; and
• GAAP loss per share of $0.06; non-GAAP earnings per share of $0.90.

“We are pleased to report first quarter results that exceeded expectations across all key metrics. Navigating a very challenging business environment, we emerged from 2020 even stronger. This success reflects the significant progress we continue to make on our transformation into an enterprise leader in cloud-based communications and collaboration solutions,” said Jim Chirico, President and CEO of Avaya. “The investments we have made in the business are generating strong traction across all segments in which we operate and, as a result, we are increasing our guidance for revenue, ARR, profitability and CFFO for the fiscal year.”

Additional first quarter fiscal 2021 highlights

• Total contract value (TCV) of $2.2B*;
• Avaya OneCloud Subscription booked additional TCV of over $180 million during the December quarter;
• Added over 1 600 new logos;
• Significant large deal activity with 119 deals over $1 million TCV, 14 over $5 million, 6 over $10 million and 3 over $25 million; and
• Avaya Cloud Office launched in Austria, Belgium, Germany, Italy, and Spain.

The company is launching a Term Loan Amendment transaction today to extend the maturity of its outstanding Tranche B Term Loans due December 2024 to September 2027. In connection with the Amendment, the company will make a $100 million prepayment of the existing Tranche B Term Loans.

• Prodec Networks, which has historically been focused on their on-prem IP Office and Aura solutions to address their needs within the public sector and enterprise space, continues to invest heavily in its UCaaS strategy using Avaya Cloud Office to deliver effective, easy to manage communication tools for home workers based on their forecasted growth for organisations migrating to the cloud.
• DB Systel UK, the UK IT arm of the second largest global transportation company, based in Europe, signed a three-year ACO deal that will initially cover several hundred users. Their key criteria were flexibility, ease of use and simple deployment in order to serve their customers globally.
• Engagent Health adopted Avaya OneCloud CCaaS across locations to meet existing needs and facilitate ambitious growth plans that will see them increase their contact centre capacity by over five times in 2021. This customer also chose Avaya Cloud Office to communicate internally to solve client and customer problems in real-time while executive management and multiple global operation centres share information quickly through one simple, mobile, easy-to-use solution.
• Cenlar, the nation’s leading loan servicing provider, concluded that Avaya offered a more comprehensive and integrated private cloud UC/CC solution able to meet their performance requirements and address future expansion plans as they migrated away from their on-prem UC and CC deployment.
• United BioSource (UBC), a leading provider of pharmaceutical support services, will deploy our AI-based Avaya Conversational Intelligence cloud service into their on-site contact centre as a hybrid enhancement. Initial use cases include natural language processing to extract key phrases from patient statements related to medications.
• Nebraska Medicine adopted Avaya OneCloud CPaaS across its organisation to manage the enormous change in patient interactions because of the pandemic. Menus are easily being altered based on the changing environment and are providing direction on COVID-19 testing, vaccine administration and proactive appointment management.
• In choosing Avaya OneCloud CPaaS, Ingolstadt Clinic, one of the largest hospitals in Bavaria, Germany, extended their long-term relationship with Avaya to create a highly-available and secure communications platform that would digitise processes and enable over 3 500 staff to work with each other, their partners and their patients while they are in physically separate locations.
• Avaya Spaces was chosen by Dubai World Trade Centre to be the work-stream collaboration platform enabling blended conference experiences, beginning with Gitex Technology Week in December 2020. Gitex is the largest technology event of its kind, and the only one to go live in 2020. In a truly global event, over 30 000 virtual attendees used Spaces to engage with 350 technology experts representing 30 countries.
• The Contact Company, a longstanding UK-based customer, decided to use Avaya OneCloud Subscription as it provides them with the flexible consumption and commercial model they require to enable 1 500 agents to work remotely, as well as from two campus sites to serve their large customer base.

Business highlights

• Avaya earned the Frost & Sullivan Award for Excellence in Healthcare Solutions.
• Avaya named one of 2021 America’s Most Responsible Companies by Newsweek magazine based on key performance indicators derived from CSR Reports, Sustainability Reports, and Corporate Citizenship Reports, as well as an independent survey of US residents.
• TrustRadius recognised Avaya with the 2020 Tech Cares Award for going above and beyond to provide global communities, clients and frontline workers with support during the COVID-19 crisis.
• Avaya Spaces placed in leaders' category in IDC MarketScape: European Collaboration Tools for Education 2020 Vendor Assessment.

Financial outlook – 2Q fiscal 2021 – unless otherwise noted, values reflect 31 January 2021 FX rates.

• Revenue of $710 million to $725 million;
• GAAP operating income of $35 million to $50 million; GAAP operating margin of 5% to 7%;
• Non-GAAP operating income of $135 million to $150 million; non-GAAP operating margin of 19% to 21%;
• Adjusted EBITDA of $160 million to $175 million; Adjusted EBITDA margin of 23% to 24%; and
• Non-GAAP EPS of $0.70 to $0.82.

Financial outlook – fiscal year 2021 – unless otherwise noted, values reflect 31 January 2021 FX rates.

• Revenue of $2.90 billion to $2.94 billion;
• CAPS revenue growth of ~$300 million, which will represent between 35% and 40% of Avaya's total revenue in FY21;
• OneCloud ARR expected to be $415 million to $425 million by year end FY21;
• GAAP operating income of $151 million to $191 million; GAAP operating margin of 5% to 7%;
• Non-GAAP operating income of $578 million to $618 million; non-GAAP operating margin of 20% to 21%;
• Adjusted EBITDA of $680 million to $720 million; Adjusted EBITDA margin of 23% to 24%;
• Non-GAAP EPS of $3.05 to $3.37;
• Cash flow from operations of 3% to 4% of revenue; and
• Approximately 83 million to 86 million weighted average shares outstanding.

Investor enquiries
Michael McCarthy
(919) 425 8330
mikemccarthy@avaya.com

Media enquiries
Alex Alias
(669) 242 8034
alalias@avaya.com