UPDATE: Avaya Holdings (AVYA) Reports Q4 Revenues Miss; Offers Q1 & FY20 Revenue Guidance Below Consensus

Avaya Holdings (NYSE: AVYA) reported Q4 revenue for the quarter came in at $726 million versus the consensus estimate of $747.01 million.

"Avaya made significant progress positioning the company for future growth and accelerating our relevance in cloud during fiscal 2019,” stated Jim Chirico, president and CEO of Avaya. “Notably, we grew our public cloud seats by approximately 160% year over year; we launched ReadyNow, an enterprise-class private cloud solution, and have already booked $90 million of total contract value; we announced a Microsoft partnership to bring our next generation CCaaS to market on Azure; and we recently closed our strategic partnership for UCaaS with RingCentral. The investments across our portfolio, especially in contact center, cloud, services and AI, have materially strengthened our position and solidified our platform for future growth.”

Mr. Chirico added, “Successfully concluding the strategic review process provided a decisive go forward path and, as a result, we announced three important initiatives to accelerate growth and deliver shareholder value. First, the partnership with RingCentral is a game changer for Avaya and is expected to fundamentally change the industry landscape. Second, we expect to begin to execute against our previously announced $500 million stock repurchase program shortly, and third, we have already completed the pay down of $250 million of debt that will result in significant annual interest expense savings and further enhance our balance sheet.”

Fourth Quarter Fiscal 2019 Financial Results(1)

• On October 1, 2018, Avaya adopted the new revenue recognition standard, Accounting Standards Codification 606 (\"ASC 606\"), using the modified retrospective transition method. Accordingly, results for reporting periods beginning after September 30, 2018 are presented under ASC 606 while prior period financial information has not been adjusted and continues to be reported in accordance with GAAP that existed prior to the adoption of ASC 606 (\"ASC 605\").
• GAAP revenue for the fourth quarter of fiscal 2019 was $723 million, $6 million higher than the third quarter of fiscal 2019, and $12 million lower than the fourth quarter of fiscal 2018 ended September 30, 2018. Non-GAAP revenue for the fourth quarter of fiscal 2019 was $726 million, $6 million higher than the prior quarter, and $44 million lower than the fourth quarter of fiscal 2018.
• GAAP gross margin for the fourth quarter of fiscal 2019 was 54.2% compared to 54.4% for the third quarter of fiscal 2019 and 53.1% for the fourth quarter of fiscal 2018. Non-GAAP gross margin was 60.6%, compared to 60.8% for the third quarter of fiscal 2019 and 63.4% for the fourth quarter of fiscal 2018.
• GAAP operating income for the fourth quarter of fiscal 2019 was $52 million, compared to an operating loss of $613 million for the third quarter of fiscal 2019, and operating income of $11 million for the fourth quarter of fiscal 2018. Non-GAAP operating income(1) for the fourth quarter of fiscal 2019 was $165 million, compared to $145 million for the prior quarter, and $157 million for the fourth quarter of fiscal 2018.
• GAAP net loss for the fourth quarter of fiscal 2019 was $34 million, compared to net loss of $633 million for the third quarter of fiscal 2019, and net income of $268 million for the fourth quarter of fiscal 2018.
• Adjusted EBITDA(1) was $184 million or 25.3% of non-GAAP revenue, compared to adjusted EBITDA of $167 million, or 23.2% of non-GAAP revenue, for the third quarter of fiscal 2019 and $178 million, or 23.1% of non-GAAP revenue, for the fourth quarter of fiscal 2018.
• Cash provided by operating activities for the fourth quarter of fiscal 2019 was $66 million, compared to $52 million during the third quarter of fiscal 2019 and $25 million during the fourth quarter of fiscal 2018. Cash provided by operating activities for fiscal 2019 was $241 million.
• At the end of the fourth quarter of fiscal 2019, cash and cash equivalents totaled $752 million, compared to $729 million at the end of the third quarter of fiscal 2019 and $700 million at the end of the fourth quarter of fiscal 2018.

Fourth Quarter Fiscal 2019 Business Metrics(1)

• Total Contract Value (TCV) of $2.4 billion*
• 83% of non-GAAP revenue was Software & Services
• 61% of non-GAAP product revenue was Software
• 58% of non-GAAP revenue was Recurring
• Added approximately 1,600 new logos
• Large deal activity with 109 deals over $1 million, 14 over $5 million, and 3 over $10 million
• Generated $66 million in cash flow from operations, $37 million in free cash flow(1)

GUIDANCE:

Avaya Holdings sees Q1 2020 revenue of $700-720 million, versus the consensus of $736.07 million.

Avaya Holdings sees FY2020 revenue of $2.82-2.9 billion, versus the consensus of $2.93 billion.

For earnings history and earnings-related data on Avaya Holdings (AVYA) click here.

You May Also Be Interested In

• Tesla plans 'flying' Roadster stunt at SpaceX Texas site as early as August
• Evogene chairman to address dissident shareholders on results call
• Silexion Therapeutics (SLXN) Tops Q2 EPS by 793c