Avaya Inc

Avaya — Q1 2016 Earnings Presentation

18 slides from Avaya's earnings presentation, Feb 8, 2016

1. Slide 1: Avaya Q1 Fiscal Year 2016 Earnings Call

   Avaya Q1 Fiscal Year 2016 Earnings Call February 8, 2016

2. Slide 2: Forward Looking Statements

   Forward Looking Statements Certain statements contained in this presentation may be forward-looking statements, including statements about our future financial and operational performance, planned and unrealized future savings, as well as statements about our future growth plans and drivers. These s

3. Slide 3: Fiscal Q1 2016 Financial Highlights

   Fiscal Q1 2016 Financial Highlights (Amounts are non-GAAP, comparisons in constant currency)  Revenue of $958 million, down $45 million from the prior quarter in constant currency 4% lower sequentially and 7% lower than Q1 FY’15 on a normalized basis* Q1 ‘15 adjusted for recognition of aged backlog

4. Slide 4: Quarterly Income Statement

   Quarterly Income Statement (All amounts non-GAAP and dollars in millions) < ------------------ As Reported ------------------ > Revenue: FQ1 2016 FQ4 2015 FQ1 2015 Product $464 $499 $549 Services $494 $509 $530 Total Revenue $958 $1,008 $1,079 Gross Margin: Product 64.7% 65.3% 63.0% Services 58.1% 5

5. Slide 5: Quarterly Income Statement – Constant Currency Comparison

   Quarterly Income Statement – Constant Currency Comparison (All amounts non-GAAP and dollars in millions) As Reported In Constant Currency Revenue: FQ1 2016 FQ4 2015 FQ1 2015 Product $464 $495 $538 Services $494 $508 $513 Total Revenue $958 $1,003 $1,051 Gross Margin: Product 64.7% 65.1% 62.8% Servic

6. Slide 6: Quarterly Revenue by Geographic Region

   Quarterly Revenue by Geographic Region (All amounts non-GAAP and dollars in millions) < ------------------ As Reported ------------------ > Revenue FQ1 2016 FQ4 2015 FQ1 2015 U.S. $528 $562 $572 EMEA $239 $243 $301 APAC $106 $113 $101 AI $85 $90 $105 Total $958 $1,008 $1,079 % of Total Revenue U.S.

7. Slide 7: Quarterly Revenue by Geographic Region Constant Currency Comparison

   Quarterly Revenue by Geographic Region Constant Currency Comparison (All amounts non-GAAP and dollars in millions) As Reported In Constant Currency Revenue FQ1 2016 FQ4 2015 FQ1 2015 U.S. $528 $562 $572 EMEA $239 $241 $287 APAC $106 $112 $98 AI $85 $88 $94 Total $958 $1,003 $1,051 % of Total Revenue

8. Slide 8: Q1 FY '16 Financial Summary

   Q1 FY ‘16 Financial Summary Q1’16 ($M, as reported) Q1’15 Q4’15 Q1’16 Non-GAAP  Revenue down sequentially Actual Actual Actual  YoY increase in gross margin, Revenue $1,079 $1,008 $958 operating margin & EBITDA % Gross Margin % 60.1% 62.0% 61.3%  EBITDA performance upside Oper Expense % 42.3% 42.

9. Slide 9: Balance Sheet and Operating Metrics

   Balance Sheet and Operating Metrics (Dollars in millions, Balance sheet items as of the end of the period indicated) FQ1 2016 FQ4 2015 FQ1 2015 Total Cash and Cash $344 $323 $328 Equivalents Cash from Operations $55 $30 $64 Capital Expenditures and $26 $32 $33 Capitalized Software Days Sales Outstan

10. Slide 10: Debt Profile

    Debt Profile ($ in Billions, by calendar year) $4.0 Overall Weighted Average Interest Rate 7.3% $3.5 $3.0 $2.5 $2.1 $2.0 Today $1.5 2/8/16 $1.3 $1.4 $1.0 $0.6 $0.5 $0.5 $0.0 2016 2017 2018 2019 2020 2021  $344M Cash Balance as of 12/31/15  Over $500M in liquidity (including cash & revolver capacit

11. Slide 11: Fiscal Q2 2016 Financial Outlook

    Fiscal Q2 2016 Financial Outlook (As Delivered 02/08/2016) Revenue Adjusted for Constant Currency As of 02/05/16 ($M) As Reported In Constant Currency Q2 FY ’15 $995 $981 Q1 FY ’16 $958 $950  Given our current visibility, our backlog, and the potential continued headwinds from macroeconomic and cur

12. Slide 12: Upcoming Events

    Upcoming Events (See www.avaya.com/investors for additional details)  Tuesday, March 1, 2016 – JP Morgan 2016 Global High Yield & Leveraged Finance Conference – Miami, FL – Presenter: – Dave Vellequette, CFO – Presentation Time: 10:20 AM EST – Webcast Access: http://jpmorgan.metameetings.com/confbo

13. Slide 13: Normalization for PS Aged Backlog

    Normalization for PS Aged Backlog  H2 FY‘14: professional services management identified $48M of aged professional services projects in backlog  Q4 FY‘14: $31M aged projects recognized for revenue; Q1 FY‘15: $17M aged projects recognized for revenue ($M) Q4 Q1 FY ’14 FY ’15 Reported Revenue $1,126

14. Slide 14: Pension & Other Post-Retirement Benefits Trend ($M)

    Pension & Other Post-Retirement Benefits Trend ($M) Cash Effect (1) FY’13 FY’14 Q1’15 Q2’15 Q3’15 Q4’15 FY’15 Q1’16 US Pension 108 160 15 25 26 29 95 20 Non-US 25 27 4 13 4 4 25 3 Pension OPEB 52 45 9 3 4 12 28 10 Total Cash 185 232 28 41 34 45 148 33 Contributions P&L Effect (1) FY’13 FY’14 Q1’15 Q

15. Slide 15: Non-GAAP Reconciliation

    Non-GAAP Reconciliation Adjusted EBITDA Avaya Inc. S upplemental S chedule of Non-GAAP Adjusted EBITDA (Unaudited; in millions) Three months ended December 31, 2015 2014 Net (loss) income $ (27) $ 3 Interest expense 118 112 Provision for income taxes 4 3 Depreciation and amortization 93 94 EBITDA 18

16. Slide 16: Non-GAAP Reconciliation

    Non-GAAP Reconciliation Gross Margin and Operating Income Avaya Inc. S upplemental S chedules of Non-GAAP Reconciliations (Unaudited; in millions) Three Months Ended Dec. 31, Mar. 31, June 30, S ept. 30, Dec. 31, 2014 2015 2015 2015 2015 Reconciliation of Non-GAAP Gross Profit and Non-GAAP Gross Mar

17. Slide 17: Non-GAAP Reconciliation

    Non-GAAP Reconciliation Product and Services Gross Margins Avaya Inc. S upplemental S chedules of Non-GAAP Reconciliation of Gross Profit and Gross Margin by Portfolio (Unaudited; in millions) Three Months Ended Dec. 31, Mar. 31, June 30, S ept. 30, Dec. 31, 2014 2015 2015 2015 2015 Reconciliation o

18. Slide 18: Avaya – Engage The Power of We

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