Avaya Announces Q3 2017 Financial Results

Avaya Announces Q3 2017 Financial Results

Avaya reported financial results for the third fiscal quarter ended June 30, 2017.

Total revenue for the third quarter was $803 million, down $1 million compared to the prior quarter and down $79 million year-over-year primarily as a result of lower demand for products and services primarily due to extended procurement cycles resulting from the chapter 11 filing. Non-GAAP gross margin was 61.6%, which compares to 60.6% for the prior quarter and 62.4% for the third quarter of fiscal 2016. GAAP operating loss was $44 million, inclusive of $52 million of goodwill impairment and $53 million of costs in connection with certain legal matters, which compares to operating income of $64 million for the prior quarter and $58 million for the third quarter of fiscal 2016. Non-GAAP operating income was $156 million which compares to $148 million for the prior quarter and $180 million for the third quarter of fiscal 2016. For the third quarter, adjusted EBITDA(1) was $204 million or 25.4% of revenue, a record percentage of revenue for a third fiscal quarter, and compares to adjusted EBITDA of $199 million for the prior quarter and $223 million for the third quarter of fiscal 2016.

Cash provided by operating activities was $72 million for the third fiscal quarter 2017, compared to $97 million during the second fiscal quarter 2017 and $23 cash used from operations during the third fiscal quarter 2016. Cash and cash equivalents totaled $729 million as of June 30, 2017.

“The support of our amended Plan of Reorganization by a majority of holders of our first lien debt and the settlement reached with the U.S. Pension Benefit Guaranty Corporation gives us a clear and viable path to emerge from chapter 11 this fall,” said Kevin Kennedy, president and CEO.

“As we work through our debt restructuring, Avaya continues to transform into a leading provider of software and services focused on delivering cloud-based business communications and innovative next-generation workflow automation solutions with world-class customer satisfaction. In addition, we continue to build momentum with our newest generation of solutions including Avaya Oceana™, Avaya Equinox™, Avaya Breeze™, Zang™ Office and Zang Spaces,” continued Mr. Kennedy.

Third Fiscal Quarter Highlights

  • Filed an amended plan of reorganization, with emergence from chapter 11 expected this fall
  • Signed over 2,400 major customer contracts since filing for chapter 11 through June 30, 2017
  • Over 3,000 attendees at Avaya Engage Mexico and an additional 3,700 watched via live streaming
  • Closed on sale of the Networking business to Extreme Networks on July 14
  • Total bookings for the third fiscal quarter increased 3% from the prior quarter and were 12% below the prior year in constant currency, reflecting extended procurement cycles resulting from the chapter 11 filing
  • Software and services accounted for approximately 79% of total revenue in third quarter 2017
  • Recurring revenue represented 58% of total revenue, a company record, up from 55% year-over-year, in constant currency
  • Net Promoter Score of 49 for customer satisfaction driven by industry-leading service and support
  • Product revenue of $345 million decreased 1% from the prior quarter and 13% year-over-year, service revenue of $458 million was slightly higher sequentially and decreased 5% year-over-year, each in constant currency
  • For the third fiscal quarter, percentage of revenue by geography was: 

- U.S. - 54%

- EMEA - 25%

- Asia-Pacific - 11%

- Americas International - 10%

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