After a year of uncertainty and confusion, Avaya have jumped into 2018 head-first, with a positive outlook, and a powerful strategy for success. The company is revitalised after their exit from Chapter 11, and the numbers are looking good from a financial standpoint.
Because of the recent emergence from Chapter 11, the brand was asked to start fresh accounting effective from the 15th of December 2017. As a result, the results for the initial quarter of 2018 were presented separately, including details from the dates between October 1st and the 15th of December 2017, as well as results from between December 16th and December 31st. The nature of the new results makes it difficult to compare Avaya’s performance at the end of 2017 to the results achieved in the same period of 2016, however, some of the most meaningful outcomes include:
- Adjusted EBITDA of $206 million
- Net income of $3,214 million
- Revenue of $752 million
- Non-GAAP revenue of $775 million
A Powerful New Beginning for Avaya
The revenue for the combined period of October 1st, all the way through to the end of December 2017 for Avaya came out at $752 million, which included the $3 million that Avaya received for its former Networking business. In comparison, the revenue for the fourth fiscal quarter of 2017 was approximately $790 million. Some additional highlights from the first quarter combined report include:
- Midmarket and SMB seats on the cloud grew by 41%
- Monthly recurring revenue grew by 39%
- Services and software accounted for 82% of total revenue, compared to 76% in 2017
- Operating income for the first quarter of 2018 was $38 million, compared to $70 million for the first quarter of 2017
- Adjusted EBITDA was $206 million, compared to $238 million for the first quarter of 2017
Importantly, for Avaya, the success of the first quarter wasn’t just about the numbers, but how much they’ve accomplished as a new publicly listed company. The brand has more than 3 million cloud seats today and has launched their own dedicated cloud business Unit this year. They also recently announced their acquisition of Spoken Communications to enhance their CCaaS offering.
Additionally, Avaya has introduced AVA their cloud-based AI solution and achieved record 3,000 attendees at their Avaya Engage 2018 conference.
How Does Avaya Feel About the First Quarter?
According to the CEO of Avaya, Jim Chirico, the first quarter results represent a fantastic start to the fiscal year. The results demonstrate four quarters of revenue stabilisation for the company – which is particularly impressive if you consider the complexity of a Chapter 11 entry and exit.
Chirico noted that Avaya added 1,300 new customers to their network in the first quarter of 2018 and brought 265 partners into their ecosystem. It looks as though everything is heading in the right direction for this brand, as it focuses ever-more heavily on driving momentum in the cloud and software environment. As always, of course, Avaya has big plans for the year ahead. By the end of 2018, they predict:
- GAAP net income of up to $2,950 million
- Revenue of up to $2,900 million and non-GAAP revenue of up to $3,100 million
- Adjusted EBITDA of up to $800 million
- Capital expenditures of up to $75 million
- Up to $175 million of cash interest expenses
- GAAP operating loss of up to 6% of revenue
- Around 110 million shares outstanding
