Two Factors Hindering Avaya’s Growth

CEO Chirico opens up on growth drivers

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Avaya earnings
CPaaSUnified CommunicationsLatest News

Published: May 13, 2022

Tom Wright

Managing Editor

Avaya is being restricted by two key factors after seeing growth stall for a second consecutive quarter, its CEO has said.

Sales for the vendor’s Q2 were $716m, down three percent from the same quarter last year.

Chief Exec Jim Chirico said the vendor’s top line has been hampered by “two temporary dynamics”.

The first is a delay in several deals, including a huge $400m CCaaS deal with a financial Institution that Avaya revealed in February.

“It is significant, not just because of the size of the deal, one of the largest in the history of the company, but also because it leverages a significant number of our latest innovations, including AI, biometric security and advanced analytics and represents a displacement of several incumbent competitors,” Chirico said.

“Because of the nature of the CCaaS deal, we were unable to recognize revenue we had assumed would be realized in Q1, which will now materialize beginning in the second half of FY ’22.”

Chirico said the second factor was continuing lockdowns, particularly in the US and western Europe. He added that deal approvals and contract activities stalled with many customers.

“What’s important to note is that these deals were not lost, and projects have not been canceled, but we did see a number of deals slip by a few weeks, many of which have since been closed,” the CEO explained.

“While it is not unusual to see deals push and pull at any given quarter, the magnitude in Q1 was amplified.”

Avaya revealed it signed more than 100 deals with a total contact value of $1m in Q1, hitting this milestone for the seventh quarter in a row. Cloud bookings grew 31 percent year on year.

Chirico said that Avaya remains on course to hit its target of $1bn annualised recurring revenue (ARR) by the end of 2022. He revealed that the vendor’s current ARR of $750m sees its contact centre business contribute 60 percent.

The vendor has been on a cloud journey that has seen recurring revenue becoming an increasingly important driver of growth.

Avaya recently announced that its entire OneCloud portfolio is now available on Microsoft Azure.

 

 

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