Avaya Reports Second Fiscal Quarter 2014 Financial Results
06 May 2014
Ongoing improvement in operational execution
Initiated redemption of unsecured notes due in 2015
Second Quarter 2014 Highlights:
Revenue of $1,060 million
Gross Margin of 56.3% of revenue, non-GAAP Gross Margin of 58.6% of revenue
Adjusted EBITDA(1) of $185 million, 17.5% of revenue
Santa Clara, Calif. — Wednesday, May 7, 2014 – Avaya Inc., a global provider of business communications and collaboration systems, software and services, reported results for the second fiscal quarter ended March 31, 2014.
Total revenue for the second quarter was $1,060 million, down 6.3% when compared to the prior quarter. On a year over year basis revenue was down 2.4% compared to the second quarter of fiscal 2013. For the second fiscal quarter, adjusted EBITDA was $185 million which compares to adjusted EBITDA of $237 million for the prior quarter and $167 million for the second quarter of fiscal 2013. GAAP operating income was breakeven and Non-GAAP operating income was $142 million compared to non-GAAP operating income of $193 million for the prior quarter and $108 million for the second quarter of fiscal 2013. Cash and cash equivalents increased $84 million from the prior quarter and totaled $384 million as of March 31, 2014. Subsequent to the end of the second fiscal quarter, the company also announced the redemption of its senior unsecured notes due 2015 for approximately $150 million, representing the aggregate principal amount of those notes, plus accrued and unpaid interest through the May 15, 2014 redemption date.
"Avaya delivered second quarter results which reflected better than recent historical revenue seasonality. While revenue was slightly below our outlook, backlog increased and we demonstrated ongoing improvement in operational execution," said Kevin Kennedy, president and CEO. "We believe the overall market environment continues to provide growth opportunities for Avaya. Our portfolio is aligned to customers' needs and we are tuning our organization to deliver a broad set of products, software, and services."
Second Fiscal Quarter Highlights
Revenue of $1,060 million decreased 6.3% compared to the prior quarter and decreased 2.4% compared to the second quarter of fiscal 2013
Product revenue of $532 million decreased by 7.3% compared to the prior quarter and increased 0.6% compared to the second quarter of fiscal 2013. Product book-to-bill was greater than 1.0
Avaya Global Services revenue of $528 million decreased 5.2% compared to the prior quarter and also decreased 5.2% when compared to the second quarter of fiscal 2013
Gross margin was 56.3% compared to 56.6% for the prior quarter and 53.3% for the second quarter of fiscal 2013. Operating income was breakeven ($0 million) compared to operating income of $87 million for the prior quarter and compared to $12 million for the second quarter of fiscal 2013
Non-GAAP gross margin(1) was 58.6% compared to 58.1% for the prior quarter and 54.6% for the second quarter of fiscal 2013. Non-GAAP operating income was $142 million compared to non-GAAP operating income of $193 million for the prior quarter and $108 million for the second quarter of fiscal 2013
Adjusted EBITDA was $185 million or 17.5% of revenue compared to $237 million or 21.0% of revenue for the prior quarter and $167 million or 15.4% of revenue for the second quarter of fiscal 2013
Second fiscal quarter 2014 non-GAAP gross margin and adjusted EBITDA percentage were record levels in the second quarter of any fiscal year for the company.
Second fiscal quarter 2014 cash and cash equivalents totaled $384 million compared to $300 million for the prior quarter and $302 million for the second quarter of fiscal 2013
For the second fiscal quarter, percentage of revenue by geography was: - U.S. – 50% - EMEA – 29% - Asia-Pacific – 11% - Americas International – 10%.
As previously, disclosed, the IT Professional Services business ("ITPS") was sold on March 31, 2014 and is reported in discontinued operations
The following financial tables are presented in accordance with GAAP, unless otherwise specified: here.
Conference Call and Webcast Avaya will discuss these results at 5:00 a.m. PDT on Wednesday, May 7, 2014 in a live webcast and conference call. To join the webcast, listeners should access the investor page of our website (www.avaya.com/investors). Supplementary materials will be available at the same location. Following the live webcast, a replay will be available at the same web address in our event archives.
To access the webcast by phone, dial 800-882-9327 in the U.S. or Canada and 706-645-9730 for international callers using the conference passcode number of 24442437. To ensure you are connected prior to the start, we suggest you access the website or the call 10-15 minutes before the start time.
For those unable to participate during the live event, a replay of the conference call will be available beginning at 5:00 p.m. PDT on May 7, 2014 through June 7, 2014 by dialing 855-859-2056 or 800-585-8367 within the United States and 404-537-3406 outside the United States. The replay access code is 24442437.
About Avaya Avaya is a global provider of business collaboration and communications solutions, providing unified communications, contact centers, networking and related services to companies of all sizes around the world. 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 first quarter of fiscal 2014 see our Form 8-K/A filed with the SEC on April 25, 2014 at www.sec.gov.
TRIAL AGREEMENT FOR AVAYA COLLABORATORY
v. 1.0 January 27, 2018
"TRIAL CUSTOMER," "YOU", OR "YOUR" AS REFERENCED HEREIN MEANS THE LEGAL ENTITY WHICH IS ACCEPTING THIS TRIAL AGREEMENT, PLACING AN ORDER UNDER THIS TRIAL AGREEMENT, OR IS DOWNLOADING, ACCESSING OR USING THE SOFTWARE AND SERVICES (OR HAS PERMITTED SOMEBODY TO DO SO ON ITS BEHALF).
YOU REPRESENT THAT YOU ARE A CORPORATION, COMPANY OR OTHER BUSINESS ENTITY, AND NOT A CONSUMER, AND THAT YOU HAVE AUTHORIZED THE PERSON ACCEPTING THIS TRIAL AGREEMENT TO BIND YOU TO THIS TRIAL AGREEMENT. THE PERSON ACCEPTING THIS TRIAL AGREEMENT ON YOUR BEHALF REPRESENTS THAT HE OR SHE HAS READ THE TRIAL AGREEMENT DOCUMENTS IN FULL AND HAS FULL LEGAL AUTHORITY TO LEGALLY BIND YOU TO THIS TRIAL AGREEMENT. SUCH PERSONâS ONLINE ACCEPTANCE OF THIS TRIAL AGREEMENT WILL HAVE THE SAME LEGAL EFFECT AS IF YOU WERE PROVIDING A HANDWRITTEN SIGNATURE OF ACCEPTANCE. IF SUCH PERSON DOES NOT HAVE SUCH AUTHORITY OR IF YOU DO NOT WISH TO BE BOUND BY THIS TRIAL AGREEMENT, SELECT THE "I DECLINE" BUTTON AT THE END OF THIS TRIAL AGREEMENT. OTHERWISE, SELECT THE "I ACCEPT" BUTTON AT THE END OF THIS TRIAL AGREEMENT TO SIGNIFY THAT YOU AGREE TO THE TERMS AND CONDITIONS OF THIS TRIAL AGREEMENT. YOU MAY PRINT A COPY OF THIS TRIAL AGREEMENT BY SELECTING THE "PRINT" BUTTON AT THE END OF THIS AGREEMENT. THIS AGREEMENT IS EFFECTIVE AS OF THE DATE YOU EITHER SELECT THE "I ACCEPT" BUTTON OR ACCESS OR USE THE AVAYA SOFTWARE OR HOSTED SERVICES.
YOU RECOGNIZE AND AGREE THAT THE SOFTWARE AND SERVICES ARE FOR BUSINESS USE AND NOT FOR CONSUMERS, AND YOU REPRESENT AND WARRANT THAT YOU WILL USE THE SOFTWARE AND SERVICES FOR BUSINESS PURPOSES ONLY AND NOT FOR PERSONAL, FAMILY, HOUSEHOLD, OR ANY OTHER CONSUMER PURPOSE.
Avaya and its licensors reserve and retain all right, title, and interest in the Hosted Services and any and all software, products and services that are included in the Hosted Services, including, but not limited to, any and all modifications and derivative works made thereto. Avaya hereby grants You a limited, non-exclusive, non-transferable, royalty-free right to access and use the Hosted Services during the Trial Period (defined below) solely for Your internal evaluation purposes only and only for use in a non-production environment. You shall not reverse engineer, decompile, sublicense, lease, assign, copy, modify, merge or transfer the Hosted Services or any Avaya software or code.
Trial Customer may internally trial the non-production version of the Hosted Services from the United States only for a period of up to 90 days from the date when Avaya enables access to the Hosted Services or otherwise makes the Hosted Services or its software available to You, unless that time period is modified in writing by Avaya at its discretion ("Trial Period"). This trial is for Your internal review only, and You may not offer the Hosted Services to any End User or other party during the Trial Period. Upon expiration of the 90 day trial period or any extension thereof, You shall cease use of the Hosted Services, return all software to Avaya, and irretrievably delete all software from your systems. Upon request, a duly authorized representative of Trial Customer will certify such destruction to Avaya. Avaya may share such certification with applicable suppliers whose software is part of the Hosted Services.
Avaya provides the Hosted Services "AS IS" for non-production use only without any warranties, express or implied, and without any promise to enter into a definitive agreement with You for the purchase or license of the Hosted Services. Use of the Hosted Services is at Your own risk, and You understand and agree that if the Hosted Services do not operate as expected, or if Avaya so chooses, Avaya reserves the right to end the Hosted Services trial without liability to Avaya. Either party, without any liability to the other, may terminate this trial early.
AVAYA DISCLAIMS ALL EXPRESS, STATUTORY, IMPLIED OR OTHER WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND NONINFRINGEMENT.
AVAYA AND ITS SUPPLIERS SHALL NOT BE LIABLE FOR ANY INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES IN CONNECTION WITH, ARISING OUT OF OR RELATING TO THIS TRIAL AGREEMENT OR USE OF HOSTED SERVICES, OR FOR THE LOSS OR CORRUPTION OF DATA, INFORMATION OF ANY KIND, BUSINESS, PROFITS, OR OTHER COMMERCIAL LOSS, HOWEVER CAUSED, AND WHETHER OR NOT AVAYA HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.
IN NO EVENT SHALL AVAYA'S OR ITS SUPPLIERâS TOTAL LIABILITY TO TRIAL CUSTOMER IN CONNECTION WITH, ARISING OUT OF OR RELATING TO THIS TRIAL AGREEMENT OR THE HOSTED SERVICES EXCEED FIVE HUNDRED DOLLARS ($500). THE PARTIES AGREE THAT THE LIMITATIONS SPECIFIED IN THIS SECTION WILL APPLY EVEN IF ANY LIMITED REMEDY PROVIDED IN THIS TRIAL AGREEMENT IS FOUND TO HAVE FAILED OF ITS ESSENTIAL PURPOSE.
FOR PURPOSES OF THIS TRIAL: (i) THE HOSTED SERVICES ARE NOT A TELECOMMUNICATIONS SERVICE; (ii) THE HOSTED SERVICES MAY NOT BE CONNECTED TO THE PUBLIC TELEPHONE NETWORK; (iii) THE TRIAL CUSTOMER MAY NOT USE CONFIDENTIAL, PERSONAL, PERSONALLY IDENTIFIABLE, PRIVATE, OR PERSONAL HEALTH INFORMATION WHEN USING THE HOSTED SERVICES; (iv) THE HOSTED SERVICES MAY NOT BE USED FOR ANY HIGH RISK ACTIVITIES; AND, (v) TRIAL CUSTOMER ACKNOWLEDGES AND UNDERSTANDS THAT THE HOSTED SERVICES ARE NOT INTENDED TO SUPPORT OR CARRY EMERGENCY CALLS OR COMMUNICATIONS OF ANY NATURE TO ANY TYPE OF EMERGENCY SERVICES OF ANY KIND, INCLUDING 911 AND E911 SERVICE OR SUCH SIMILAR SERVICES WHICH MAY BE LIMITED OR UNAVAILABLE. AVAYA IS NOT LIABLE IN ANY MANNER FOR TRIAL CUSTOMERâS USE OF THE HOSTED SERVICES IN VIOLATION OF THIS PARAGRAPH.
You shall observe all applicable laws and regulations when accessing and/or using the Hosted Services or any content of the Hosted Services, including, but not limited to, any export and import laws and/or regulations.
Because Avaya provides the Hosted Services to You as a trial, Your feedback will be essential to Avaya. Avaya will contact You periodically for Your feedback and You will provide feedback to Avaya. Any feedback You provide will become the property of Avaya, without any payment or other conditions owed to You. By signing below, You hereby assign to Avaya all right, title, and interest in and to such feedback. Avaya cannot promise to implement any of Your feedback in any future releases of the service.
Avaya and its suppliers reserve and retain all right, title, and interest in the Avaya Hosted Services, trial or otherwise. You must maintain the confidentiality of any information Avaya provides regarding the Hosted Services and any conversations Avaya has or other information Avaya exchanges about the Hosted Services, including Your feedback and comments ("Confidential Information"). You may not disclose to any third party, or provide or enable access to the Hosted Services or any other Confidential Information, by any third party. By signing below, You agree to take all reasonable precautions to protect Avayaâs Confidential Information, and Avaya will also take all reasonable precautions to protect any confidential information You share with us in connection with this Hosted Services, which, at the time of disclosure, is designated as confidential.
YOU SHALL DEFEND, HOLD HARMLESS, AND INDEMNIFY AVAYA AND ITS AFFILATES FROM AND AGAINST ANY DAMAGES AND LOSSES, INCLUDING BUT NOT LIMITED TO COURT COSTS AND ATTORNEYSâ FEES, IN CONNECTION WITH ANY THIRD PARTY CLAIMS OR ACTIONS BROUGHT AGAINST AVAYA AND/OR ITS AFFILIATES AS A RESULT OF OR RELATED TO YOUR USE OF THE HOSTED SERVICES OR ANY FAILURE BY YOU TO COMPLY WITH THIS TRIAL AGREEMENT.