Total revenue was $716 million
Avaya OneCloud™ ARR increased 118% year over
year to $750 million
Avaya OneCloud™ ARR increased $130 million
sequentially, a record quarterly contribution
Signed ~100 deals with TCV greater than $1
million for the 8th consecutive quarter
Avaya Holdings Corp. (NYSE: AVYA) today reported financial
results for the second quarter of fiscal 2022 ended March 31,
2022.
Second Quarter Financial
Highlights
- Revenues of $716 million, down 2% year over year in constant
currency
- OneCloud ARR (Annualized Recurring Revenue) was $750 million,
up 21% sequentially and 118% from a year ago
- CAPS (Cloud, Alliance Partner and Subscription) was 54% of
revenue, up from 40% a year ago
- Software and Services were 89% of revenue; Software was 67% of
revenue
- Recurring revenue was 69% of revenue, up from 66% a year
ago
- GAAP Operating income was $23 million and Non-GAAP Operating
income was $115 million
- GAAP Net loss was $1 million and Non-GAAP Net income was $51
million
- Adjusted EBITDA was $145 million, 20% of revenue, down 370
basis points year over year
- GAAP Diluted Loss Per Share of $0.02 and Non-GAAP Diluted
Earnings Per Share of $0.53
- Ending cash and cash equivalents were $324 million
“We drove record growth for Avaya OneCloud ARR with a $130
million quarter over quarter increase and an over $400 million year
over year increase, to $750 million. The path to hit the $1 billion
ARR mark by the end of calendar year 2022 is well paved,” said Jim
Chirico, President and CEO of Avaya. “We are successfully
repositioning the company from our historic one-time revenue model
to a recurring one, in fact 75% of our new bookings were Avaya
OneCloud. Our strategy is clearly taking hold faster than we
anticipated leading to a significant and fundamental shift in our
business.”
GAAP
Non-GAAP (1)
(In millions, except percentages)
2Q22
1Q22
2Q21
2Q22
1Q22
2Q21
Revenue
$
716
$
713
$
738
$
716
$
713
$
738
Gross margin
51.8
%
51.8
%
55.8
%
56.7
%
57.6
%
61.8
%
Operating income (loss)
$
23
$
(1
)
$
44
$
115
$
102
$
148
Net (loss) income
$
(1
)
$
(66
)
$
(58
)
$
51
$
40
$
72
(Loss) earnings per share - Diluted
$
(0.02
)
$
(0.79
)
$
(0.70
)
$
0.53
$
0.42
$
0.74
(In millions, except percentages)
2Q22
1Q22
2Q21
Adjusted EBITDA(1)
$
145
$
129
$
177
Adjusted EBITDA margin(1)
20.3
%
18.1
%
24.0
%
Cash used for operations
$
(2
)
$
(111
)
$
(24
)
Cash and cash equivalents
$
324
$
354
$
593
Additional Second Quarter Fiscal 2022
Highlights
- Remaining Performance Obligations ("RPO") of $2.3 billion
- Added over 1,400 new logos
- Significant large deal activity with 97 deals over $1 million
TCV, 18 over $5 million TCV, 8 over $10 million TCV and 2 over $25
million TCV
- ~20% of OneCloud ARR came from customers generating $5 million
or more in annual recurring revenue
- ~60% of OneCloud ARR came from customers generating $1 million
or more in annual recurring revenue
- ~95% of OneCloud ARR came from customers generating $100,000 or
more in annual recurring revenue
- ~60% of OneCloud ARR came from Contact Center customers
(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 their
most closely comparable measure calculated in accordance with
GAAP.
Customer Highlights
- Westpac, the second largest bank in Australia, has extended
their partnership with Avaya and chose Avaya OneCloud Subscription
for their 9,700+ Contact Center Agents. This three-year deal will
see the bank compose new solutions around the Avaya Media
Processing Core ("MPC"), including the ability to build new
experiences on-demand, and the introduction of AI-based channel
automation that will reduce both the time and cost of change
dramatically. Westpac chose Avaya based on the strength of our
relationship with our partner Optus, the flexibility of our
subscription model, and the intelligent cloud ecosystem they now
have access to.
- Finanz Informatik, the central service provider for savings
banks in Germany, providing data center, applications, networks and
related IT services, has chosen to place the Avaya Media Processing
Core at the heart of its environment, operating a private UC cloud
platform powered by Avaya technology for 313 banks, representing
230,000 seats and 2 million calls per day. The partnership between
Finanz Informatik and Avaya is underpinned by a five-year ARR deal
that utilizes all aspects of Avaya’s expertise. Finanz Informatik
will be able to compose flexible, unique experiences for their
customers wherever and whenever they are needed.
- Carter Machinery, the third largest Caterpillar dealership
network in North America, has selected Avaya Cloud Office, OneCloud
CCaaS, Avaya Devices as a Service, and OneCloud CPaaS Virtual Agent
for a five-year deal that will reach more than 2,000 users spanning
34 sites. This was a competitive new customer win for Avaya,
displacing Cisco. Carter Machinery chose Avaya specifically because
of the strength of its AI, automation, and strong partnership with
ConvergeOne.
- The University of Iowa Hospitals and Clinics chose an Avaya
OneCloud Private Cloud solution after a highly competitive RFP
process. Recognized as one of the best hospitals in the United
States, it is Iowa's only comprehensive academic medical center and
a regional referral center. The solution includes 25,000 UCaaS and
750 CCaaS users and Avaya OneCloud CPaaS (our largest CPaaS deal to
date) to compose superior patient services and communications, a
robust resiliency strategy for the main campus and remote sites,
long-term growth flexibility as well as improved experiences for
its students and employees, staff and trainees.
- Watson Clinic has chosen Avaya Cloud Office to replace an aging
Siemens platform for their 3,600 users across 15 locations. Based
in Lakeland, Florida, Watson Clinic is now in its 9th decade and
serves almost a million patients each year. In a competitive
evaluation, Watson Clinic chose Avaya because of the ease of
centralized management, integration between sites, improved patient
experience, and expansion of channels to include voice, video,
chat, conferencing and file sharing all centralized in one
platform. Additionally, Watson Clinic expects to save over $600,000
because of their implementation.
- Life Insurance Company of Alabama had an end of life/on premise
phone system and chose to move to a public cloud CCaaS solution
integrated with Avaya Cloud Office to solve for their numerous
challenges. Their customer service reps now have full voice and
digital channels to serve policy holders and its agency field force
along with video conferencing and Efax capability. Their agency
field force collaborates with CSRs in-real-time through Avaya Cloud
Office to provide their policy holders and agency field force
superior service. A public cloud solution allows flexibility for
people to work remotely while having access to all the same tools
they would if they were in the office creating improved customer
AND employee experience.
- In Kuwait, the Ministry of State for Communications and
Information Technology has created the Sahel app, leveraging Avaya
technology to create seamless experiences for users across
touchpoints. Sahel is an application that enables citizens and
residents to access government services and complete transactions
easily, quickly, and securely. Sahel integrates seamlessly with
Avaya OneCloud contact center technology, providing a digital
window through which citizens and residents can receive
notifications and announcements from any government agency,
improving the provision of digital services.
- In the UK, a top retail insurer is moving to a cloud-based
system to accelerate their business transformation. They needed to
support at-home agents - but beyond the pandemic, also require a
more flexible solution to solve for increased traffic to over 5,500
agents during peak periods such as storms or other damaging events.
A three-year Avaya OneCloud Private Cloud Solution was selected to
deliver Contact Center Subscription services to this long-time
Avaya customer.
- In Fort Worth, Texas, Cook Children’s Health Care System has
chosen Avaya OneCloud as the ecosystem for their entire enterprise
in a three-year, multi-million dollar deal that covers more than
14,000 seats across central campus sites and 2,700 seats for remote
clinics. In a competitive deal, Cook Children’s chose Avaya because
of the unique way that the Avaya Media Processing Core enables a
hybrid implementation including cloud, and brings together
expertise across the enterprise to provide a better user and
patient experience, and ultimately improve outcomes in a pediatric
health care system.
Business Highlights
- Avaya launched the Avaya Virtual Agent, a ready-to-deploy,
configurable service that delivers the full benefits of virtual,
AI-based communication experiences to businesses – immediately
elevating their customer experience and dramatically reducing the
complexity associated with virtualizing customer interactions.
Avaya Virtual Agent removes this complexity, enabling organizations
to quickly deploy Avaya-designed, pre-built, cloud-based
self-service agents instead of building them from scratch. This
solution leverages the Avaya OneCloud Experience Platform, which
reimagines communications composability, providing customers with
the option of constructing their own workflows or subscribing to
pre-built experiences.
- Avaya also announced we are expanding our strategic partnership
with Microsoft, building on the success of our current CCaaS
go-to-market initiatives. We will add the Avaya OneCloud portfolio
to the Microsoft Azure Marketplace, giving customers the agility to
create communications and collaboration experiences with the
broadest range of options for public, private or hybrid cloud
delivery approaches to fit their needs. Avaya CCaaS customers also
gain access to the power of Nuance’s Contact Center AI technology
integrated with OneCloud. The combined capabilities of Microsoft
and Nuance give our customers flexibility to create and deliver
intelligent, personalized, and impactful consumer interactions with
long-term investment protection and control of their data. This
represents a tremendous opportunity for customers to accelerate
their cloud journey, and for Avaya to expand its go-to-market reach
through collaboratively selling with Microsoft.
- Avaya and Alcatel-Lucent Enterprise (ALE) entered into a
strategic partnership that extends the availability of Avaya’s
OneCloud CCaaS (Contact Center as a Service) composable solutions
to ALE’s global base of customers while also making ALE’s digital
networking solutions available on a global basis to Avaya
customers.
- Frost & Sullivan presented Avaya with the 2022 Competitive
Leadership Award for Best Practices in North American Government
Solutions, citing Avaya’s strong overall performance for
communications, collaboration, and customer experience (CX)
solutions designed for the government vertical as factors in
recognizing Avaya OneCloud.
- Avaya was named the winner of a Gold Stevie Award in the
Emerging Technology category for Avaya OneCloud in The Annual
American Business Awards. The American Business Awards are the
U.S.A.’s premier business awards program. All organizations
operating in the U.S.A. are eligible to submit nominations – public
and private, for-profit and non-profit, large and small.
Financial Outlook - 3Q Fiscal
2022 - unless otherwise noted, values reflect April 30,
2022 FX rates.
- Revenue of $685 million to $700 million
- GAAP operating income of $14 million to $24 million; GAAP
operating margin of 2% to 3%
- Non-GAAP operating income of $111 million to $121 million;
non-GAAP operating margin of 16% to 17%
- Adjusted EBITDA of $140 million to $150 million; Adjusted
EBITDA margin of 20% to 21%
- Non-GAAP Diluted EPS of $0.48 to $0.56
Financial Outlook - Fiscal Year
2022 - unless otherwise noted, values reflect April 30,
2022 FX rates.
- Revenue of $2.815 billion to $2.855 billion
- OneCloud ARR expected to be $940 million to $960 million by
year end FY22
- CAPS revenue will represent between ~47% to 50% of Avaya's
total revenue for FY22
- GAAP operating income of $76 million to $96 million; GAAP
operating margin of ~3%
- Non-GAAP operating income of $466 million to $486 million;
non-GAAP operating margin of ~17%
- Adjusted EBITDA of $580 million to $600 million; Adjusted
EBITDA margin of ~21%
- Non-GAAP Diluted EPS of $2.09 to $2.25
- Cash flow from operations expected to be approximately (7)% of
revenue, as an outcome of the company’s accelerated success in
moving to a recurring revenue model which is resulting in higher
working capital requirements
- Approximately 87 million to 88 million diluted 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 is 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 http://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 the date hereof. 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 May 10, 2022. 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: 13729494.
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 http://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"), the impact of the
Russia/Ukraine conflict on the global economy and our business,
including impacts from related sanctions and export controls
imposed by the U.S., UK and the EU on certain industries and
Russian parties as a result of the conflict, as well as responses
by the governments of Russia or other jurisdictions 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.
Avaya Holdings Corp.
Condensed Consolidated
Statements of Operations (Unaudited)
(In millions, except per share
amounts)
Three months ended
March 31,
Six months ended
March 31,
2022
2021
2022
2021
REVENUE
Products
$
223
$
226
$
454
$
492
Services
493
512
975
989
716
738
1,429
1,481
COSTS
Products:
Costs
119
92
230
197
Amortization of technology intangible
assets
35
43
77
86
Services
191
191
382
370
345
326
689
653
GROSS PROFIT
371
412
740
828
OPERATING EXPENSES
Selling, general and administrative
245
264
507
519
Research and development
60
57
121
112
Amortization of intangible assets
40
39
80
79
Restructuring charges, net
3
8
10
12
348
368
718
722
OPERATING INCOME
23
44
22
106
Interest expense
(54
)
(59
)
(108
)
(115
)
Other income, net
17
1
24
1
LOSS BEFORE INCOME TAXES
(14
)
(14
)
(62
)
(8
)
Benefit from (provision for) income
taxes
13
(44
)
(5
)
(54
)
NET LOSS
$
(1
)
$
(58
)
$
(67
)
$
(62
)
LOSS PER SHARE
Basic
$
(0.02
)
$
(0.70
)
$
(0.81
)
$
(0.76
)
Diluted
$
(0.02
)
$
(0.70
)
$
(0.81
)
$
(0.76
)
Weighted average shares outstanding
Basic
85.6
84.6
85.1
84.2
Diluted
85.6
84.6
85.1
84.2
Avaya Holdings Corp.
Condensed Consolidated Balance
Sheets (Unaudited)
(In millions, except per share
and shares amounts)
March 31, 2022
September 30, 2021
ASSETS
Current assets:
Cash and cash equivalents
$
324
$
498
Accounts receivable, net
315
307
Inventory
49
51
Contract assets, net
640
518
Contract costs
115
117
Other current assets
132
100
TOTAL CURRENT ASSETS
1,575
1,591
Property, plant and equipment, net
301
295
Deferred income taxes, net
31
40
Intangible assets, net
2,078
2,235
Goodwill
1,476
1,480
Operating lease right-of-use assets
118
135
Other assets
245
209
TOTAL ASSETS
$
5,824
$
5,985
LIABILITIES
Current liabilities:
Accounts payable
$
306
$
295
Payroll and benefit obligations
128
193
Contract liabilities
315
360
Operating lease liabilities
44
49
Business restructuring reserves
16
19
Other current liabilities
139
181
TOTAL CURRENT LIABILITIES
948
1,097
Non-current liabilities:
Long-term debt
2,827
2,813
Pension obligations
607
648
Other post-retirement obligations
151
153
Deferred income taxes, net
73
53
Contract liabilities
309
305
Operating lease liabilities
87
102
Business restructuring reserves
19
25
Other liabilities
240
267
TOTAL NON-CURRENT LIABILITIES
4,313
4,366
TOTAL LIABILITIES
5,261
5,463
Commitments and contingencies
Preferred stock, $0.01 par value;
55,000,000 shares authorized at March 31, 2022 and September 30,
2021
Convertible series A preferred stock;
125,000 shares issued and outstanding at March 31, 2022 and
September 30, 2021
131
130
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value; 550,000,000
shares authorized; 85,677,909 shares issued and outstanding at
March 31, 2022; and 84,115,602 shares issued and outstanding at
September 30, 2021
1
1
Additional paid-in capital
1,495
1,467
Accumulated deficit
(1,052
)
(985
)
Accumulated other comprehensive loss
(12
)
(91
)
TOTAL STOCKHOLDERS' EQUITY
432
392
TOTAL LIABILITIES, PREFERRED STOCK AND
STOCKHOLDERS' EQUITY
$
5,824
$
5,985
Avaya Holdings Corp.
Condensed Statements of Cash
Flows
(Unaudited; in
millions)
Six months ended
March 31,
(In millions)
2022
2021
Net cash (used for) provided by:
Operating activities
$
(113
)
$
24
Investing activities
(52
)
(53
)
Financing activities
(8
)
(108
)
Effect of exchange rate changes on cash,
cash equivalents, and restricted cash
(1
)
3
Net decrease in cash, cash equivalents,
and restricted cash
(174
)
(134
)
Cash, cash equivalents, and restricted
cash at beginning of period
502
731
Cash, cash equivalents, and restricted
cash at end of period
$
328
$
597
Avaya Holdings Corp.
Supplemental Schedule of
Revenue by Segment and Geography
(Unaudited; in
millions)
Three months ended
March 31,
Change
Three months ended December
31, 2021
2022
2021
Amount
Pct.
Pct., net of fx impact
Revenue by Segment
Products & Solutions
$
223
$
226
$
(3
)
(1
) %
(1
) %
$
231
Services
493
513
(20
)
(4
) %
(3
) %
482
Unallocated amounts
—
(1
)
1
(1
)
(1
)
—
Total revenue
$
716
$
738
$
(22
)
(3
) %
(2
) %
$
713
Revenue by Geography
U.S.
$
422
$
413
$
9
2
%
2
%
$
375
International:
Europe, Middle East and Africa
175
187
(12
)
(6
) %
(3
) %
192
Asia Pacific
67
77
(10
)
(13
) %
(11
) %
81
Americas International - Canada and Latin
America
52
61
(9
)
(15
) %
(17
) %
65
Total International
294
325
(31
)
(10
) %
(7
) %
338
Total revenue
$
716
$
738
$
(22
)
(3
) %
(2
) %
$
713
(1)
Not meaningful.
Use of non-GAAP (Adjusted) Financial Measures
The information furnished in this release includes non-GAAP
financial measures that differ from measures calculated in
accordance with generally accepted accounting principles in the
United States of America (“GAAP”), including financial measures
labeled as “non-GAAP” or “adjusted.”
EBITDA is defined as net income (loss) before income taxes,
interest expense, interest income and depreciation and
amortization. Adjusted EBITDA is EBITDA further adjusted to exclude
certain charges and other adjustments described in our SEC filings
and the tables below.
We believe that including supplementary information concerning
adjusted EBITDA is appropriate because it serves as a basis for
determining management and employee compensation and it is used as
a basis for calculating covenants in our credit agreements. In
addition, we believe adjusted EBITDA provides more comparability
between our historical results and results that reflect purchase
accounting and our current capital structure. We also present
adjusted EBITDA because we believe analysts and investors utilize
these measures in analyzing our results. Adjusted EBITDA measures
our financial performance based on operational factors that
management can impact in the short-term, such as our pricing
strategies, volume, costs and expenses of the organization, and it
presents our financial performance in a way that can be more easily
compared to prior quarters or fiscal years.
EBITDA and adjusted EBITDA have limitations as analytical tools.
EBITDA measures do not represent net income (loss) or cash flow
from operations as those terms are defined by GAAP and do not
necessarily indicate whether cash flows will be sufficient to fund
cash needs. Adjusted EBITDA excludes the impact of earnings or
charges resulting from matters that we do not consider indicative
of our ongoing operations but that still affect our net income. In
particular, our formulation of adjusted EBITDA allows adjustment
for certain amounts that are included in calculating net income
(loss), however, these are expenses that may recur, may vary and
are difficult to predict. In addition, these terms are not
necessarily comparable to other similarly titled captions of other
companies due to the potential inconsistencies in the method of
calculation.
We also present the measures non-GAAP gross margin, non-GAAP
operating income, non-GAAP operating margin, non-GAAP net income
and non-GAAP earnings per share as a supplement to our unaudited
condensed consolidated financial statements presented in accordance
with GAAP. We believe these non-GAAP measures are the most
meaningful for period to period comparisons because they exclude
the impact of the earnings and charges noted in the applicable
tables below that resulted from matters that we consider not to be
indicative of our ongoing operations.
The Company presents constant currency information to provide a
framework to assess how the company’s underlying businesses
performance excluding the effect of foreign currency rate
fluctuations. To present this information for current and
comparative prior period results for entities reporting in
currencies other than U.S. dollars, the amounts are converted into
U.S. dollars at the exchange rate in effect on the last day of the
company’s prior fiscal year (i.e. September 30, 2021), unless
otherwise noted.
In addition, we present the liquidity measure of free cash flow.
Free cash flow is calculated by subtracting capital expenditures
from Net cash provided by operating activities. We believe free
cash flow is a measure often used by analysts and investors to
compare the cash flow and liquidity of companies in the same
industry.
The presentation of these non-GAAP financial measures is not
intended to be considered in isolation from, as substitute for, or
superior to, the financial information prepared and presented in
accordance with GAAP and may be different from the non-GAAP
financial measures used by other companies. In addition, these
non-GAAP measures have limitations in that they do not reflect all
of the amounts associated with the Company’s results of operations
as determined in accordance with GAAP.
We do not provide a forward-looking reconciliation of expected
third quarter and full year fiscal 2022 non-GAAP gross margin,
non-GAAP operating expenses, non-GAAP operating income, non-GAAP
operating margin, non-GAAP earnings per share or adjusted EBITDA
guidance as the amount and significance of special items required
to develop meaningful comparable GAAP financial measures cannot be
estimated at this time without unreasonable efforts. These special
items could be meaningful.
The following tables reconcile historical GAAP measures to
non-GAAP measures.
Avaya Holdings Corp.
Supplemental Schedules of
Non-GAAP Adjusted EBITDA
(Unaudited; in
millions)
Three months ended,
March 31, 2022
December 31, 2021
March 31, 2021
Net loss
$
(1
)
$
(66
)
$
(58
)
Interest expense
54
54
59
Interest income
(1
)
—
(1
)
(Benefit from ) provision for income
taxes
(13
)
18
44
Depreciation and amortization
99
104
106
EBITDA
138
110
150
Impact of fresh start accounting
adjustments(1)
—
—
1
Restructuring charges(2)
3
7
6
Share-based compensation
14
14
13
Pension and post-retirement benefit
costs
(1
)
(1
)
—
Gain on post-retirement plan
settlement
—
—
(14
)
Change in fair value of Emergence Date
Warrants
(7
)
(1
)
22
Gain on foreign currency transactions
(2
)
—
(1
)
Adjusted EBITDA
$
145
$
129
$
177
(1)
The impact of fresh start
accounting adjustments in connection with the Company's emergence
from bankruptcy.
(2)
Restructuring charges represent
employee separation costs and facility exit costs (excluding the
impact of accelerated depreciation expense) related to the
Company's restructuring programs, net of sublease income.
Avaya Holdings Corp.
Supplemental Schedules of
Non-GAAP Earnings per Share
(Unaudited; in
millions)
Three months ended,
March 31, 2022
December 31, 2021
March 31, 2021
GAAP Net Loss
$
(1
)
$
(66
)
$
(58
)
Non-GAAP Adjustments:
Impact of fresh start accounting
—
—
1
Restructuring charges, net(1)
3
7
7
Share-based compensation
14
14
13
Pension and post-retirement benefit
costs
(1
)
(1
)
—
Gain on post-retirement plan
settlement
—
—
(14
)
Change in fair value of Emergence Date
Warrants
(7
)
(1
)
22
Gain on foreign currency transactions
(2
)
—
(1
)
Amortization of intangible assets
75
82
82
Income tax expense effects(2)
(30
)
5
20
Non-GAAP Net Income
$
51
$
40
$
72
Dividends and accretion to preferred
stockholders
(1
)
(1
)
(1
)
Undistributed Non-GAAP Income
$
50
$
39
$
71
Percentage allocated to common
stockholders(3)
91.3
%
91.3
%
91.3
%
Numerator for Non-GAAP diluted earnings
per common share
$
46
$
36
$
65
Diluted Weighted Average Shares - GAAP
85.6
84.7
84.6
Share adjustment(4)
1.2
1.9
2.7
Diluted Weighted Average Shares -
Non-GAAP
86.8
86.6
87.3
GAAP Loss per Share - Diluted
$
(0.02
)
$
(0.79
)
$
(0.70
)
Non-GAAP Earnings per Share - Diluted
$
0.53
$
0.42
$
0.74
(1)
Restructuring charges, net
represent employee separation costs and facility exit costs related
to the Company's restructuring programs, net of sublease
income.
(2)
The Company’s calculation of
non-GAAP income taxes reflects a 25% fixed non-GAAP effective tax
rate based on a blended U.S. federal and state tax rate, given the
Company’s operating structure. The non-GAAP effective tax rate may
differ significantly from the GAAP effective tax rate. The non-GAAP
effective tax rate could be subject to change for a number of
reasons, including but not limited to, changes resulting from tax
legislation, material changes in revenues or expenses and other
significant events. The Company will continuously assess its
estimated non-GAAP effective tax rate in connection with its
calculation of non-GAAP net income and non-GAAP net income per
diluted share in future periods.
(3)
The Company's preferred shares
are participating securities, which requires the application of the
two-class method to calculate diluted earnings per share. Under the
two-class method, undistributed earnings are allocated to common
stock and participating securities according to their respective
participating rights in undistributed earnings. The percentage
allocated to common stockholders reflects the proportion of
weighted average common stock outstanding to the weighted average
of common stock and common stock equivalents (preferred
shares).
(4)
In periods with a GAAP net loss,
the share adjustment reflects the dilutive impact of certain
securities, which are excluded from the computation of diluted GAAP
loss per share as their effect would be anti-dilutive. In periods
during which our convertible notes have a dilutive impact on GAAP
diluted shares outstanding, the share adjustment also includes the
impact of our bond hedge transaction which is anti-dilutive in
diluted GAAP earnings per share but is expected to mitigate the
dilutive effect of our convertible notes and therefore are included
in the calculations of non-GAAP diluted shares outstanding.
Avaya Holdings Corp.
Supplemental Schedules of
Non-GAAP Reconciliations of Gross Margin and Operating Income
(Loss)
(Unaudited; in
millions)
Three months ended,
March 31, 2022
December 31, 2021
March 31, 2021
Reconciliation of Non-GAAP Gross Profit
and Non-GAAP Gross Margin
Gross Profit
$
371
$
369
$
412
Items excluded:
Adj. for fresh start accounting
—
—
1
Amortization of technology intangible
assets
35
42
43
Non-GAAP Gross Profit
$
406
$
411
$
456
GAAP Gross Margin
51.8
%
51.8
%
55.8
%
Non-GAAP Gross Margin
56.7
%
57.6
%
61.8
%
Reconciliation of Non-GAAP Operating
Income
Operating Income (Loss)
$
23
$
(1
)
$
44
Items excluded:
Adj. for fresh start accounting
—
—
1
Amortization of intangible assets
75
82
82
Restructuring charges, net
3
7
8
Share-based compensation
14
14
13
Non-GAAP Operating Income
$
115
$
102
$
148
GAAP Operating Margin
3.2
%
(0.1
) %
6.0
%
Non-GAAP Operating Margin
16.1
%
14.3
%
20.1
%
Avaya Holdings Corp.
Supplemental Schedules of
Non-GAAP Reconciliation of Gross Profit and Gross Margin by
Portfolio
(Unaudited; in
millions)
Three months ended,
March 31, 2022
December 31, 2021
March 31, 2021
Reconciliation of Non-GAAP Gross Profit
and Non-GAAP Gross Margin - Products & Solutions
Revenue
$
223
$
231
$
226
Costs
119
111
92
Amortization of technology intangible
assets
35
42
43
GAAP Gross Profit
69
78
91
Items excluded:
Amortization of technology intangible
assets
35
42
43
Non-GAAP Gross Profit
$
104
$
120
$
134
GAAP Gross Margin
30.9
%
33.8
%
40.3
%
Non-GAAP Gross Margin
46.6
%
51.9
%
59.3
%
Reconciliation of Non-GAAP Gross Profit
and Non-GAAP Gross Margin - Services
Revenue
$
493
$
482
$
512
Costs
191
191
191
GAAP Gross Profit
302
291
321
Items excluded:
Adj. for fresh start accounting
—
—
1
Non-GAAP Gross Profit
$
302
$
291
$
322
GAAP Gross Margin
61.3
%
60.4
%
62.7
%
Non-GAAP Gross Margin
61.3
%
60.4
%
62.9
%
Avaya Holdings Corp.
Supplemental Schedules of Free
Cash Flow
(Unaudited; in
millions)
Three months ended,
Mar. 31, 2022
Dec. 31, 2021
Sept. 30, 2021
June 30, 2021
Mar. 31, 2021
Net cash (used for) provided by operating
activities
$
(2
)
$
(111
)
$
(5
)
$
11
$
(24
)
Less:
Capital expenditures
25
27
28
25
26
Free cash flow
$
(27
)
$
(138
)
$
(33
)
$
(14
)
$
(50
)
Source: Avaya Newsroom
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220510005634/en/
Media Inquiries: Alex Alias alalias@avaya.com
Investor Inquiries: Tyler Chambers investors@avaya.com
Avaya (NYSE:AVYA)
Historical Stock Chart
From Apr 2024 to May 2024
Avaya (NYSE:AVYA)
Historical Stock Chart
From May 2023 to May 2024