Avaya Reports Third Fiscal Quarter 2015 Financial Results

04 Aug 2015
  • Revenue of $999 million
  • Operating Income of $84 million, Non-GAAP Operating Income(1) of $161 million
  • Adjusted EBITDA(1) of $207 million, 20.7% of revenue
 
Santa Clara, Calif. — Tuesday, August 4, 2015 – Avaya reported financial results for the third fiscal quarter ended June 30, 2015.
 
Total revenue for the quarter was $999 million, up $4 million compared to the prior quarter. On a year-over-year basis revenue was down $55 million compared to the third quarter of fiscal 2014. After adjusting for fluctuations in foreign exchange rates, total revenue for the quarter was up 1 percent sequentially and down 2 percent year-over-year.  The sequential change was in line with recent seasonal patterns.
 
For the quarter, adjusted EBITDA(1) was $207 million which compares to adjusted EBITDA of $208 million for the prior quarter and $223 million for the third quarter of fiscal 2014. GAAP operating income was $84 million and non-GAAP operating income was $161 million which compares to non-GAAP operating income of $162 million for the prior quarter and $180 million for the third quarter of fiscal 2014.  The company was free cash flow positive for the quarter, with cash and cash equivalents totaling $328 million as of June 30, 2015.  
 
“Avaya revenue for the fiscal third quarter was up sequentially.  Revenue of $999 million was one million dollars below our expected range.  Non-GAAP product gross margins remained healthy, free cash flow was positive for the third consecutive quarter, and we executed a successful debt refinancing to reduce near term debt maturities.  Customers again recognized Avaya with an increase in our net promoter score.  This metric has reached best-in-class level and continues to trend upward,” said Kevin Kennedy, president and CEO.  “In the second half of the calendar year, Avaya will continue to address our cost structure while driving our sales and marketing transformation to build momentum in cloud, networking and midmarket, as well as in our market-leading team and customer engagement solutions.”
 
Third Fiscal Quarter Highlights 
  • Product book-to-bill for the quarter was slightly below 1.0.  Bookings for product and one-time services were 6% below the prior year in constant currency
  • The total future contracted value for private cloud and managed services increased 17% from the third quarter of fiscal 2014 in constant currency, ending the quarter at over $800 million
  • Revenue was $999 million.  Compared to the prior quarter, this was up by $4 million and was up by $6 million at constant currency.  Revenue was $55 million below the third quarter of fiscal 2014, of which $36 million was due to changes in exchange rates
  • Gross margin was 58.5% compared to 59.5% for the prior quarter and 57.6% for the third quarter of fiscal 2014  
  • Non-GAAP gross margin was 59.5% compared to 60.2% for the prior quarter and 59.2% for the third quarter of fiscal 2014 
  • Operating income was $84 million which compares to operating income of $83 million for the prior quarter and operating income of $48 million for the third quarter of fiscal 2014
  • Non-GAAP operating income was $161 million compared to non-GAAP operating income of $162 million for the prior quarter and $180 million for the third quarter of fiscal 2014
  • Adjusted EBITDA was $207 million or 20.7% of revenue compared to $208 million or 20.9% of revenue for the prior quarter and $223 million or 21.2% of revenue for the third quarter of fiscal 2014
  • For the third fiscal quarter, percentage of revenue by geography was: U.S. – 54%; EMEA – 26%; Asia-Pacific – 11%; Americas International – 9%

Conference Call and Webcast
Avaya will host a conference call to discuss its financial results and Q&A at 2:00 p.m. PDT on August 4, 2015.  On the call will be Kevin Kennedy, president and CEO, and Dave Vellequette, CFO. The call will be moderated by John Nunziati, senior director of investor relations.
 
To join the live webcast and view supplementary materials, listeners should access the investor page of Avaya’s website (www.avaya.com/investors).  To access the live webcast by phone, dial 877-876-9177 in the U.S. or Canada and 785-424-1666 for international callers, using the conference ID:  AVQ315.  Listeners should access the webcast or the call 10-15 minutes before the start time to ensure they are connected prior to the start time.   
 
Following the live webcast, a replay can be accessed at the website noted above.  The replay will be available beginning at 5:00 p.m. PDT on August 4, 2015 through September 4, 2015, by dialing 800-688-4915 within the United States or 402-220-1319 outside the United States.  
 
 
 
About Avaya
Avaya is a leading provider of solutions that enable customer and team engagement across multiple channels and devices for better customer experience, increased productivity and enhanced financial performance. Its world-class contact center and unified communications technologies and services are available in a wide variety of flexible on-premise and cloud deployment options that seamlessly integrate with non-Avaya applications. The Avaya Engagement Environment enables third parties to create and customize business applications for competitive advantage.  Avaya’s fabric-based networking solutions help simplify and accelerate the deployment of business critical applications and services. For more information please visit www.avaya.com.
 
 
Certain statements contained in this press release may be forward-looking statements. These statements may be identified by the use of forward-looking terminology such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," "plan," "potential," "predict," "should" or "will" or other similar terminology.  We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these are reasonable, such forward looking statements involve known and unknown risks and uncertainties, many of which are beyond our control. These and other important factors may cause our actual results to differ materially from any future results expressed or implied by these forward-looking statements. For a list and description of such risks and uncertainties, please refer to Avaya's filings with the SEC that are available at www.sec.gov. Avaya disclaims any intention or obligation to update or revise any forward-looking statements.
 
 
 
[1] Refer to Supplemental Financial Information accompanying this press release for a reconciliation of GAAP to non-GAAP numbers and for reconciliation of adjusted EBITDA for the second quarter of fiscal 2015 see our Form 8-K filed with the SEC on May 7, 2015 at www.sec.gov
 

Jeremiah Glodoveza

+1 408-496-3190

jglodoveza@avaya.com

John Nunziati

Avaya Investor Relations

+1 408-562-3780

jfnunziati@avaya.com