Avaya Reports First Quarter Fiscal 2019 Financial Results
Montag, 11.02.19 13:30
SANTA CLARA, Calif. –
Avaya Holdings Corp. (NYSE: AVYA) today reported financial results for
the first quarter ended December 31, 2018.
(In millions, except percentages)
“We demonstrated another quarter of operational excellence, setting
records across several key performance metrics. However, our revenue was
impacted by a few discrete items versus our outlook, which included the
federal government shutdown. That said, our product portfolio has never
been stronger, and our cloud solutions continue to win the support of
our customers, who are choosing Avaya for the innovative solutions that
we are bringing to market,” said Jim Chirico, President and CEO of Avaya.
First Quarter Fiscal 2019 Financial Results:
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 is not adjusted
and continues to be reported in accordance with GAAP that existed
prior to the adoption of ASC 606 (“ASC 605”).
GAAP revenue was $738 million, $3 million higher than the fourth
quarter of fiscal 2018, and $14 million lower than the Combined first
quarter of fiscal 2018(1) ended December 31, 2017. Non-GAAP
revenue(2) was $748 million, $22 million lower than the
fourth quarter of fiscal 2018, and $27 million lower than the Combined
first quarter of fiscal 2018.
GAAP gross margin was 55.1% compared to 53.1% for the fourth quarter
of fiscal 2018 and 58.5% for the Combined first quarter of fiscal 2018(1).
Non-GAAP gross margin(2) was 62.7%, compared to 63.4% for
the fourth quarter of fiscal 2018 and 62.6% for the Combined first
quarter of fiscal 2018.
GAAP operating income was $50 million, compared to GAAP operating
income of $11 million for the fourth quarter of fiscal 2018 and $38
million for the Combined first quarter of fiscal 2018(1).
Non-GAAP operating income(2) was $170 million, compared to
$157 million for the fourth quarter of fiscal 2018, and $172 million
for the Combined first quarter of fiscal 2018.
GAAP net income was $9 million, compared to $268 million for the
fourth quarter of fiscal 2018, and $3,214 million for the Combined
first quarter of fiscal 2018(1).
Adjusted EBITDA(2) was $189 million or 25.3% of non-GAAP
revenue, compared to adjusted EBITDA of $178 million, or 23.1% of
non-GAAP revenue, for the fourth quarter of fiscal 2018 and $206
million, or 26.6% of non-GAAP revenue, for the Combined first quarter
of fiscal 2018.
Cash provided by operating activities was $86 million, compared to
cash provided by operating activities of $25 million for the fourth
quarter of fiscal 2018 and cash used for operating activities of $374
million for the Combined first quarter of fiscal 2018(1).
At the end of the first quarter of fiscal 2019, cash and cash
equivalents totaled $743 million, compared to $700 million at the end
of the fourth quarter of fiscal 2018 and $417 million at the end of
the Combined first quarter of fiscal 2018.
(1) Due to the company’s emergence from Chapter 11
proceedings during the first quarter of fiscal 2018 and adoption of
fresh start accounting effective on December 15, 2017, the results for
the first quarter fiscal year 2018 are required by GAAP to be presented
separately as the predecessor period from October 1, 2017 through
December 15, 2017 (the “Predecessor” period) and the successor period
from December 16, 2017 through December 31, 2017 (the “Successor”
period). The application of fresh start accounting results in a new
basis of accounting, making the results of the Predecessor period not
comparable to the results of the Successor period. Where applicable we
have, however, combined results of the Predecessor and Successor periods
for discussion purposes as we believe it provides the most meaningful
basis to analyze our period over period results. Refer to the
Supplemental Financial Information accompanying this press release for
more information, including a reconciliation of combined results to our
Predecessor and Successor results.
(2) Non-GAAP revenue, Non-GAAP gross margin, Non-GAAP
operating margin, Non-GAAP operating income and adjusted EBITDA are not
measures calculated in accordance with generally accepted accounting
principles in the U.S. (“GAAP”). Refer to the Supplemental Financial
Information accompanying this press release for more information,
including a reconciliation of these measures to the most closely
comparable measure calculated in accordance with GAAP.
Note: We define the midmarket as firms with between 250 and 1,000
agents for CC and between 1,000 and 5,000 employees for UC
First Quarter Fiscal 2019 Business Metrics
Total Contract Value increased 8% year-over-year to $2.4 billion
83% of Non-GAAP revenue was Software & Services
61% of Non-GAAP product revenue was Software
57% of Non-GAAP revenue was Recurring
Added approximately 1,600 new logos
Generated $65 million in free cash flow*
*Note: We define free cash flow as cash flow from operating activities
less capital expenditures
First Quarter Fiscal 2019 Company Highlights
Introduced new Private Cloud Solutions for Unified Communications and
Launched a new online storefront that simplifies access to UCaaS and
Announced a new Device-as-a-Service (DaaS) offering
Delivered public safety breakthrough with next generation location
reporting solutions for emergency responders
Enhanced channel partner program with increased focus on solution
selling, simplification, and cloud offerings
Expanded Avaya A.I. Connect ecosystem with new partners and offers
using AI and machine learning technologies for Unified Communications
and Contact Center
Extended Workforce Engagement Management (WEM) with Verint Systems for
the new Avaya OneCloud WEM
Won the 2018 Aragon Research Innovation Award for Artificial
Intelligence (AI) in People-Centric Collaboration
Financial Outlook - Q2 Fiscal 2019 under ASC 606
Our financial outlook reflects the adoption of ASC 606, which became
effective for Avaya on October 1, 2018. Avaya has adopted ASC 606 using
the modified retrospective transition method.
GAAP revenue of $730-$760 million; non-GAAP revenue of $740-$765
GAAP operating margin of 5.5-8.0% of revenue; non-GAAP operating
margin of 21.5-22.5%
GAAP operating income of $40-$60 million, non-GAAP operating income of
Cash taxes of approximately $30 million, +/- $3 million
Adjusted EBITDA of $178-$191 million, or adjusted EBITDA margin of
24.0-25.0% of non-GAAP revenue
Approximately 111 million shares outstanding
Financial Outlook - Fiscal 2019 under ASC 606
GAAP revenue of $3.01-$3.12 billion, non-GAAP revenue of $3.05-$3.15
GAAP and non-GAAP R&D of $220-$225 million; 15-16% of non-GAAP product
Operating income of $200-$280 million, non-GAAP operating income of
$675-$730 million; 22-23% of non-GAAP revenue
Adjusted EBITDA $763-$819 million, or 25-26% of non-GAAP revenue
Approximately 113 million shares outstanding
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
February 11, 2019. 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 webcast and conference call to discuss its financial
results and Q&A at 8:30 AM ET/5:30 AM PT on February 11, 2019. On the
call will be Jim Chirico, President and CEO, and Pat O’Malley, Senior
Vice President and CFO. The call will be moderated by Mike McCarthy,
Vice President of Investor Relations.
To join the financial results live webcast and view supplementary
materials including an earnings presentation and CFO commentary,
listeners should access the investor page of Avaya’s website https://investors.avaya.com.
Following the live webcast, a replay will be available in the event
archives at the same web address for a period of one year.
To access the financial results call live by phone, dial +1-866-393-4306
in the U.S. or Canada and +1-734-385-2616 for international callers.
Listeners should access the webcast or the call 10-15 minutes before the
start time to ensure they are able to connect.
A replay of the financial results live conference call will be available
for two business days soon after the call by phone by dialing
+1-855-859-2056 in the U.S. or Canada and +1-404-537-3406 for
international callers, using the conference access code: 3187748.
Links to this financial results press release and accompanying slides
are available on the investor page of Avaya’s website https://investors.avaya.com.
Businesses are built on the experiences they provide, and every day
millions of those experiences are built by Avaya (NYSE: AVYA). For over
one hundred years, we’ve enabled organizations around the globe to win -
by creating intelligent communications experiences for customers and
employees. Avaya builds open, converged and innovative solutions to
enhance and simplify communications and collaboration - in the cloud,
on-premise or a hybrid of both. To grow your business, we’re committed
to innovation, partnership, and a relentless focus on what’s next. We’re
the technology company you trust to help you deliver Experiences that
Matter. Visit us at www.avaya.com.
This document 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 and include, but are not limited to, the outlook
for the second quarter of fiscal 2019 and fiscal year 2019, including
the expected impact of the adoption of ASC 606. The company has based
these forward-looking statements on its current expectations,
assumptions, estimates and projections. 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. These factors are discussed in the Company's Annual Report on
Form 10-K filed with the Securities and Exchange Commission (the “SEC”),
and may cause its 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 December 31, 2018
Period from December 16, 2017 through December
Period from October 1, 2017 through December
Three months ended December 31, 2017
Amortization of technology intangible assets
Selling, general and administrative
Research and development
Amortization of intangible assets
Restructuring charges, net
Other income (expense), net
Reorganization items, net
INCOME (LOSS) BEFORE INCOME TAXES
(Provision for) benefit from income taxes
Avaya Holdings Corp.
Condensed Consolidated Balance Sheets (Unaudited)
(In millions, except per share and shares amounts)
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