UPDATE: Avaya Holdings (AVYA) Misses Q1 EPS by $1.28, Revenues Beat; Offers Q2 Revenues Below Consensus, Offers FY20 Revenue Outlook
Avaya Holdings (NYSE: AVYA) reported Q1 EPS of ($0.54), $1.28 worse than the analyst estimate of $0.74. Revenue for the quarter came in at $715 million versus the consensus estimate of $710.75 million.
First Quarter Financial Highlights
- GAAP Operating income was $15 million; Non-GAAP Operating income was $151 million
- Adjusted EBITDA was $174 million
- CFFO was 2% of revenue, and 8% of revenue when adjusted for one-time strategic deal payments
- Cloud, Alliance Partner & Subscription revenue was 18% of revenue
- Repurchased $132 million of common stock, or 10.7 million shares, at an average price of $12.27 per share
"Our solid operational execution resulted in revenues and adjusted EBITDA above the mid-point of our guidance for the quarter," stated Jim Chirico, President and CEO of Avaya. He added, “At the same time, we continued to strengthen our position in public, private, and hybrid cloud communications markets, including our newest cloud-based UCaaS offering, Avaya Cloud Office, which is on schedule for introduction at the end of March. The increased breadth and depth in our portfolio enable us to deliver innovative and tailored solutions using consumption models, such as subscription, that facilitates our customers transition to the cloud using Avaya technology."
Mr. Chirico concluded, "During the quarter, we made substantial progress in returning capital to our shareholders. In early November, we paid down $250 million in long-term debt and by the end of December, we repurchased nearly 11 million shares using approximately $132 million of the $500 million program approved by our Board.”
GUIDANCE:
Avaya Holdings sees Q2 2020 revenue of $675-700 million, versus the consensus of $702.66 million.
Avaya Holdings sees FY2020 revenue of $2.54-2.92 billion, versus the consensus of $2.85 billion.
Financial Outlook - 2Q Fiscal 2020 - unless otherwise noted, values reflect December 31st, 2019 FX rates
- GAAP revenue of $673 million to $698 million; Non-GAAP revenue of $675 million to $700 million
- This non-GAAP revenue figure reflects a constant currency decline of (5)% to (2)%
- GAAP operating income of $22 million to $32 million; GAAP operating margin of 3% to 5%
- Non-GAAP operating income of $116 million to $126 million; non-GAAP operating margin of 17% to 18%
- Adjusted EBITDA of $140 million to $150 million; Adjusted EBITDA margin of ~21%
Financial Outlook - Fiscal Year 2020 - unless otherwise noted, values reflect December 31st, 2019 FX rates
- GAAP revenue of $2.83 billion to $2.91 billion; Non-GAAP revenue of $2.84 billion to $2.92 billion
- This non-GAAP revenue figure reflects a constant currency decline of (2)% to 0%
- GAAP operating income of $130 million to $180 million; GAAP operating margin of 5% to 6%
- Non-GAAP operating income of $560 million to $600 million; non-GAAP operating margin of 20% to 21%
- Adjusted EBITDA $650 million to $700 million; Adjusted EBITDA margin of 23% to 24%
- CFFO of ~5% of revenue, and ~7% of revenue when adjusted for one-time strategic deal payments
- Approximately 93 million to 97 million weighted average shares outstanding; ending share count of approximately 80 million to 83 million shares
- Cash requirements for restructuring pension & OPEB, cash taxes, capital spending and net cash interest payments for fiscal year 2020 are expected to be:
- Restructuring: $35 million to $40 million
- Pension/OPEB: ~$55 million
- Cash Taxes: $65 million to $75 million
- Capital Expenditures: ~$120 million
- Net Cash Interest Payments: $190 million to $195 million
For earnings history and earnings-related data on Avaya Holdings (AVYA) click here.