Avaya’s efforts to overhaul its portfolio in recent years have paid off and it is now a “cloud-first” company, declared CEO Jim Chirico on a recent earnings call.
The comms and collaboration vendor reported overall revenue rose eight per cent year-on-year to $738m for the three-month period ending 31 March 2021. Adjusted EBTIDA jumped over 18 per cent to $177m.
“As you look at the construct of our revenues, we have seen a meaningful shift over the last four quarters,” Chirico explained on an earnings call with investors.
“Our business continues to outperform our expectations, which is a testament to the strength of our brand, digital capabilities, roadmap and our ability to address the diversity and breadth of requirements that come with servicing global, large scale, complex enterprise customers. If you put this in context, Avaya is now a cloud-first company.”
Avaya’s OneCloud annual recurring revenue (ARR) was up 31 per cent sequentially to $344m.
Chirico emphasised this transition to a subscription-based model during the call, which was backed up by the performance of its CAPS (Cloud, Alliance, Partner and Subscription) unit. CAPS contributed 40 per cent to overall revenue in the second quarter, compared to 23 per cent in the same period last year. Recurring revenue made up two-thirds of Avaya’s overall revenue in the period.
“Today’s market dynamics have accelerated digital transformation efforts, and as a result, we are engaging at significantly more in-depth and strategic conversations with enterprise customers, which is driving growth in larger and longer-term contract commitments,” he stated.
“More importantly, our results represent the significant work undertaken and the strategic investments we have been making over the last several years to reshape our portfolio to be a leader in enterprise communications and collaboration solutions”
Elsewhere, the vendor added 1,500 new logos in the period, and signed 107 deals valued at over $1m – 16 deals of which were worth over $5m, seven greater than $10m and one worth over $25m.
Avaya Cloud Office has now launched in 13 countries, its OneCloud CCaaS offering has been rolled out in 40 territories, prompting Chirico to praise the efforts of its partner community.
“Our international rollout is also progressing well, and the number of partners selling subscription is increasing steadily – I cannot be more delighted with the progress,” he continued.
“It shows the relationship and just how committed we are to our channel and to our partner community. They’re an extension of us and I’ve said many times that when we go to market with our partners, we win. There’s no better force”
Avaya CFO, Kieran McGrath, added that the mixture of partners in its channel has led to a multi-cloud approach and their ability to offer value-add services to Avaya’s products is driving growth.
“We’ve increased the number of selling partners by 40 per cent and that will continue,” he told investors on the same call.
“The mix of partner and the way that they approach the market is changing; more partners are out there to deliver value-added services, such as what microservices they lay on top of our platform.
“As we see this shift to a true multi-cloud hybrid approach, these partners are paying an increasing role in helping deliver those key value messages to the customer.”
Despite this success, Avaya saw its share price plummet as low as 13 per cent in the wake of the results, after it fell short of analysts’ earning targets and gave a lower guidance for Q3 than analysts were expecting.
