Avaya’s Third Quarter Financial Results: All the Crucial Numbers

Everything you need to know about the fiscal third quarter

Unified Communications

Published: August 25, 2017

Rebekah Carter

Things have been looking up for Avaya lately. Not only have their financial quarters been moving along really well, but they’re also well on their way towards an exit from Chapter 11, which is great news for everyone. We’re sure to see even more positive cash flow as Avaya exits their bankruptcy process stronger than ever, but for now, let’s take a look at the results for the fiscal third quarter, which ended on the 30th of June 2017.

The Key Numbers

The total revenue for Avaya’s third quarter measured in at approximately $803 million, which is a reduction of $1 million from the last quarter. Unsurprisingly, the overall revenue isn’t as positive as Avaya might have hoped, with a reduction of around $79 million year-over-year. There’s a good chance that this drop comes from the longer procurement cycles and reduced demand for products that followed the January Chapter 11 filing. With a little luck, it’s just a temporary setback.

Other important numbers include:

The Non-GAAP gross margin fell to 6%, a 1% rise from the 60.6% of the second quarter, but a small drop from the third quarter results for 2016 (62.4%)
GAAP operating loss, on the other hand, was $44 million, compared to operating costs for $64 million in the previous quarter. The $44 million loss includes $53 million in costs connected with Avaya’s various legal pursuits and $52 million in goodwill impairment
The adjusted EBITDA for the third quarter was 25.4% of revenue, or $204 million, which is a record percentage of revenue, compared to an adjusted EBITDA of just $199 million for the previous quarter, and $223 million for the third quarter in 2016

Ultimately, though there have been some losses, there has been a positive cash flow from Avaya operations during the third quarter of this year. The cash provided by Avaya operating activities measured in at $72 million, compared to $97 million in the last quarter.

Looking Forward with Avaya

Some of the highlights that took place for Avaya this quarter included:

Signing more than 2,400 major customer contracts since filing for Chapter 11
Filing an amended plan of action for Chapter 11 emergence this fall
The closed sale of the networking sector to “Extreme Networks” on July 14^th
Services and software accounted for 79% of total revenue
Net promoter score of 49 for customer satisfaction
Recurring revenue representing 58% of total revenue (improvement of 3% year-over-year)

According to Kevin Kennedy, the current CEO and president for Avaya, the business is well on its way towards a positive exit from Chapter 11 bankruptcy. The brand is working through their debt restructuring process with strength and continues to perform as a leading software and services provider in the industry. What’s more, they’re continuing to build on their new product offerings too, which should deliver revenue in the coming years.

The Avaya Story so far: