The feeling at Avaya Engage 18 this week has been one of renewal and excitement. The globally-renowned communications company is back on its feet and ready to tackle the contact centre and UC world with a new sense of confidence thanks to thrilling new acquisitions, a collection of new products, and an upgraded financial plan.
Patrick O’Malley took the stage during the week as Chief Financial Officer and Senior Vice President for the company to share his thoughts on how Avaya has evolved in recent months. While Patrick only took the role in October 2017, the transformation he has seen since then has been significant, with the exit from Chapter 11, a listing as a public company, and strategic investments all on the cards.
Moving at Cloud Speed
At the beginning of his keynote speech, O’Malley noted that since he joined in October 2017, Avaya has been on the fast track to success, moving at “cloud speed” as Mercer Rowe had previously said. While he knew Avaya had been going through some challenges before he joined, his due diligence into the company gave him confidence about its future.
“First and foremost, I joined Jim Chirico. People work for people, and he’s an inspirational leader. He’s built a team with amazing talent, and that team has helped to get me up to speed so I could start to make a difference.”
Over the last three months, Avaya has seen some truly phenomenal growth, and all in an environment of significant change. The industry is constantly moving, adding new intelligence to processes, and looking for new ways to boost customer experience.
“We’re in an incredible transformation space right now, and who better than Avaya to lead that? We have an incredible IT portfolio, great engineers, and the best customer base in the world.”
While Patrick acknowledged that Avaya needed to change its capital structure, he also said that by the time he was talking to Jim, the business was already making the necessary changes it needed for success.
Avaya Puts the Past Behind Them
Both Patrick and Avaya believe that the last three months of trading is cause for celebration. Only a week after O’Malley joined, the business sold 2.9 billion in debt, which allowed them to add a new “cornerstone” to their capital structure which meant they could retire their old way of doing business.
“We also had 4 billion dollars of subscriptions, and that told me that we had a lot of confidence in the market, and people who were betting on us to succeed in the long-term.”
Following the exit from Chapter 11, Avaya was ready to firmly put the past behind them with a new structure, a new public face, and an opportunity to get rid of their debt. They now have new flexibility, and an updated board, which O’Malley noted really want Avaya to “win” so that their customers and partners can win too.
“We also announced our Q1 recently, and the success there is a real testament to you. 4 quarters in a row of stable revenue, regardless of Chapter 11 shows that you trusted us to sort our problems out, and that’s what we did.”
What a Difference a Quarter Makes
O’Malley was also positive about the concept of the new Spoken Communications acquisition, which he believes showcases the company’s new focus on being “thoughtful” instead of “cautious”. He noted that Spoken will allow Avaya customers to move into the cloud with a strategy that suits them.
“We’re also creating new business model innovations that make it simpler to get things up and running. Jim said what a difference a year makes, but for me, it’s what a difference a quarter makes.”
When Patrick first started with Avaya they were still coming out of Chapter 11, and there was a lot left to do. Now, he feels as though the energy in the business is growing every day.
“I can’t wait until next year to see how far we go together. My role as a CFO isn’t just about looking at numbers but making sure we have the resources available to make the future a better place for our customers and partners.”
Looking at the world through a financial lens, O’Malley said that Avaya has been going through a journey, away from hardware and into software, and into a more confident capital structure.
“Over the last three years, we’ve generated over $3.6 billion in adjusted EBITDA and 1.7 billion in free cash flow.”
A New Financial Future for Avaya
Avaya’s new liquidity gives them flexibility, and the chance to be a more agile company in the UC space. Jim noted in his keynote speech that the company is going to be ready to jump on opportunities whenever they see them. As O’Malley said:
“We have 300 million in cash flow savings that we’re pushing back into the business to inspire growth. We’re not just investing in new teams and technology, but in our partners and customers too.”
Avaya is looking to the future with a focus on being “customer-led”. Patrick suggested that the business doesn’t just want to be in the pack, they want to lead the pack for customer-enabled products, and the business is already well-positioned as one of the few pure-plays capable of combining UC and CC.
To prepare for the years ahead, Avaya needed to be operationally excellent, the transition from hardware to software, and accelerate innovation – and that’s just what they’ve done.
“You’re now looking at the Avaya of the future. We’re going to be thoughtful, quick, and aggressive.”
