Avaya Holdings (AVYA) Misses Q3 EPS by 71c, Revenues Beat; Offers 4Q & FY20 Revenue Guidance Above Consensus

Avaya Holdings (NYSE: AVYA) reported Q3 EPS of $0.08, $0.71 worse than the analyst estimate of $0.79. Revenue for the quarter came in at $721 million versus the consensus estimate of $686.74 million.

Third Quarter Financial Highlights

• Revenues of $721 million
• 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.”

GUIDANCE:

Avaya Holdings sees Q4 2020 revenue of $720-740 million, versus the consensus of $694.13 million.

Avaya Holdings sees FY2020 revenue of $2.84-2.86 billion, versus the consensus of $2.78 billion.

Financial Outlook - 4Q Fiscal 2020 - unless otherwise noted, values reflect June 30th, 2020 FX rates.

• GAAP revenue of $719 million to $739 million; Non-GAAP revenue of $720 million to $740 million
• GAAP operating income of $51 million to $71 million; GAAP operating margin of ~7% to 10%
• Non-GAAP operating income of $146 million to $166 million; non-GAAP operating margin of ~20% to 22%
• Adjusted EBITDA of $170 million to $190 million; Adjusted EBITDA margin of ~24% to 26%

Financial Outlook - Fiscal Year 2020 - unless otherwise noted, values reflect June 30th, 2020 FX rates.

• GAAP revenue of $2.84 billion to $2.86 billion; Non-GAAP revenue of $2.84 billion to $2.86 billion
• GAAP operating loss of $478 million to $458 million; GAAP operating margin of ~(17)% to (16)%
• Non-GAAP operating income of $585 million to $605 million; non-GAAP operating margin of ~21%
• Cash flow from operations is expected to be ~4% of full year GAAP revenue
• Adjusted EBITDA of $680 million to $700 million; Adjusted EBITDA margin of ~24%
• Weighted shares outstanding are expected to be ~93 million and total shares outstanding are expected to be ~83 million

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

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