Avaya Inc

Avaya — Q3 FY2022 Earnings Presentation

26 slides from Avaya's earnings presentation, Aug 9, 2022

  1. Slide 1: Investor Presentation 3Q FY22

    © 2022 Avaya Inc. All rights reserved Investor Presentation 3Q FY22 August 9, 2022 Exhibit 99.2

  2. Slide 2: Cautionary Note Regarding Preliminary Financial Information

    2© 2022 Avaya Inc. All rights reserved Cautionary Note Regarding Preliminary Financial Information All financial results for the third quarter ended June 30, 2022 and related comparisons to prior periods included in this presentation are preliminary, have not been reviewed or audited, are based upon

  3. Slide 3: Cautionary Note Regarding Forward-Looking Statements

    3© 2022 Avaya Inc. All rights reserved Cautionary Note Regarding Forward-Looking Statements This presentation contains certain “forward-looking statements.” All statements other than statements of historical fact are "forward-looking" statements for purposes of the U.S. federal and state securities

  4. Slide 4: Use of non-GAAP (Adjusted) Financial Measures

    4© 2022 Avaya Inc. All rights reserved Use of non-GAAP (Adjusted) Financial Measures The information furnished in this presentation includes non-GAAP financial measures that differ from measures calculated in accordance with generally accepted accounting principles in the United States of America (“

  5. Slide 5: Avaya's 3Q22 at a Glance

    5© 2022 Avaya Inc. All rights reserved $54M Adj. EBITDA(1)* ~100M Unified Communications Lines(3) ~190 Countries(3) ~6M Contact Center Seats(3) (1) For and as of 3Q FY22 ending June 30, 2022. (2) See Appendix for further definition and information on OneCloud ARR metric. $577M Revenue(1) >$200M FY22

  6. Slide 6: Q3 Revenue vs Guidance Bridge

    © 2022 Avaya Inc. All rights reserved 6 Q3 Revenue vs Guidance Bridge

  7. Slide 7: OneCloud ARR Mix has a Strong Enterprise Bias

    7© 2022 Avaya Inc. All rights reserved ARR Mix from Larger Customers > $5m ARR % > $1m ARR % > $100k ARR % —% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ▪ ~30% ARR from $5M+ customers ▪ ~60% ARR from $1M+ customers ▪ ~95% ARR from $100K+ customers ▪ ~60% ARR from Contact Center customers OneCloud ARR

  8. Slide 8: OneCloud ARR and CAPS Continue to Grow at a Significant Rate

    8© 2022 Avaya Inc. All rights reserved FY19 15% FY20 26% 3Q20 30% 3Q21 40% 3Q22 53% $35 $47 $69 $113 $191 $262 $344 $425 $530 $620 $750 $838 OneCloud ARR >$1M ARR 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 CAPS as % Revenue(1) See Appe

  9. Slide 9: 3Q FY22 Financial Highlights

    9© 2022 Avaya Inc. All rights reserved $838M OneCloud ARR(1) 53% Cloud, Alliance Partner & Subscription Revenue 51% Non-GAAP Gross Margin* $2,259M Remaining Performance Obligations (Revenue Backlog) $577M Revenue Revenue 62% Software Revenue (1) See Appendix for further definition and information on

  10. Slide 10: Debt Maturity Profile

    © 2022 Avaya Inc. All rights reserved 10 Debt Maturity Profile

  11. Slide 11: Appendix

    © 2022 Avaya Inc. All rights reserved Appendix

  12. Slide 12: 3Q FY22 Update

    12© 2022 Avaya Inc. All rights reserved 3Q Financial Notes$M 3Q22 2Q22 3Q21 Revenue $ 577 $ 716 $ 732 Non-GAAP Gross Margin* 51.0 % 56.7 % 61.5 % Non-GAAP Operating Expense* (% of revenue) 47.5 % 40.6 % 41.5 % Non-GAAP Operating Margin* 3.5 % 16.1 % 19.9 % Adjusted EBITDA* $ 54 $ 145 $ 173 Adjusted

  13. Slide 13: Quarterly Income Statement

    © 2022 Avaya Inc. All rights reserved 13 Revenue: 3Q22 2Q22 3Q21 Product $ 169 $ 223 $ 254 Services 408 493 478 Total Revenue $ 577 $ 716 $ 732 GAAP Gross Margin: Product 23.1 % 30.9 % 44.5 % Services 53.9 % 61.3 % 61.5 % GAAP Total Gross Margin 44.9 % 51.8 % 55.6 % GAAP Operating Margin (234.5) % 3

  14. Slide 14: Quarterly Non-GAAP Income Statement Information

    © 2022 Avaya Inc. All rights reserved 14 Revenue*: 3Q22 2Q22 3Q21 Product $ 169 $ 223 $ 254 Services 408 493 478 Total Revenue $ 577 $ 716 $ 732 Non-GAAP Gross Margin*: Product 43.8 % 46.6 % 61.4 % Services 53.9 % 61.3 % 61.5 % Non-GAAP Total Gross Margin* 51.0 % 56.7 % 61.5 % Non-GAAP Operating Mar

  15. Slide 15: Quarterly Revenue by Region

    © 2022 Avaya Inc. All rights reserved 15 Quarterly Revenue by Region (All dollars amounts are in millions) Revenue 3Q22 2Q22 3Q21 U.S. $ 316 $ 422 $ 418 EMEA 148 175 181 APAC 63 67 72 AI 50 52 61 Total $ 577 $ 716 $ 732 % of Total Revenue U.S. 55 % 59 % 57 % EMEA 26 % 25 % 25 % APAC 11 % 9 % 10 % AI

  16. Slide 16: Balance Sheet and Operating Metrics

    © 2022 Avaya Inc. All rights reserved 16 Balance Sheet and Operating Metrics (Dollars in millions unless indicated otherwise, Balance sheet items as of the end of the period indicated) 3Q22 2Q22 3Q21 Total Cash and Cash Equivalents $ 217 $ 324 $ 562 Cash (used for) provided by Operations $ (85) $ (2

  17. Slide 17: What is OneCloud ARR?

    17© 2022 Avaya Inc. All rights reserved What is OneCloud ARR? • A baseline for expected cloud revenue over the next 12 months What's Included: • OneCloud Subscription, ACO Recurring, CCaaS, SpacesTM, CPaaS, DaaS, Private Cloud What's Excluded: • Maintenance, Managed Services, ACO One Time Payment 3Q

  18. Slide 18: Subscription Revenue & Cash Dynamics

    18© 2022 Avaya Inc. All rights reserved Subscription Revenue & Cash Dynamics Avaya is transforming our business by shifting to a Subscription Licensing Model Subscription Contracts have different Cash Flow dynamics when compared to a Perpetual License Model (the primary former model that Avaya sold

  19. Slide 19: Subscription Revenue, ARR & Cash Dynamics

    © 2022 Avaya Inc. All rights reserved 19 Subscription Revenue, ARR & Cash Dynamics (1)The figures provided herein are for illustrative purposes only and should not be construed as any indication of the actual historical rate or future rate of new bookings or revenue, either on an absolute or relativ

  20. Slide 20: Non-GAAP Reconciliation Adjusted EBITDA

    20© 2022 Avaya Inc. All rights reserved Three months ended, (In millions) June 30, 2022 Mar. 31, 2022 June 30, 2021 Net (loss) income $ (1,408) $ (1) $ 43 Interest expense 54 54 54 Interest income (1) (1) — Provision for (benefit from) income taxes 14 (13) (46) Depreciation and amortization 103 99 1

  21. Slide 21: Non-GAAP Reconciliation Adjusted EBITDA (fiscal years)

    21© 2022 Avaya Inc. All rights reserved Successor Predecessor Non-GAAP Combined Fiscal years ended September 30, Period from December 16, 2017 through September 30, 2018 Period from October 1, 2017 through December 15, 2017 Fiscal year ended September 30, 2018(In millions) 2021 2020 2019 Net (loss)

  22. Slide 22: Non-GAAP Net Income Reconciliation

    22© 2022 Avaya Inc. All rights reserved Three months ended, June 30, 2022 Mar. 31, 2022 Dec. 31, 2021 Sept. 30, 2021 June 30, 2021 GAAP Net (Loss) Income $ (1,408) $ (1) $ (66) $ 6 $ 43 Non-GAAP Adjustments: Impact of fresh start accounting (1) 1 — — — 1 Restructuring charges, net (2) 12 3 7 13 5 Ad

  23. Slide 23: Non-GAAP Reconciliation Gross Margin and Operating Income

    23© 2022 Avaya Inc. All rights reserved Non-GAAP Reconciliation Gross Margin and Operating Income Three months ended, (In millions) June 30, 2022 Mar. 31, 2022 Dec. 31, 2021 Sept. 30, 2021 June 30, 2021 Reconciliation of Non-GAAP Gross Profit and Non-GAAP Gross Margin Gross Profit $ 259 $ 371 $ 369

  24. Slide 24: Non-GAAP Reconciliation Operating Expenses

    24© 2022 Avaya Inc. All rights reserved Non-GAAP Reconciliation Operating Expenses Three months ended, (In millions) June 30, 2022 Mar. 31, 2022 June 30, 2021 Reconciliation of Non-GAAP Operating Expenses Operating Expenses $ 1,612 $ 348 $ 366 Items excluded: Adj. for fresh start accounting 1 — 1 Am

  25. Slide 25: Non-GAAP Reconciliation Revenue and Gross Margin

    25© 2022 Avaya Inc. All rights reserved Non-GAAP Reconciliation Revenue and Gross Margin Successor Predecessor Non-GAAP Combined Fiscal year ended September 30, 2019 Period from December 16, 2017 through September 30, 2018 Period from October 1, 2017 through December 15, 2017 Fiscal year ended Septe

  26. Slide 26: Non-GAAP Reconciliation Product and Services Gross Margins

    26© 2022 Avaya Inc. All rights reserved Non-GAAP Reconciliation Product and Services Gross Margins Three months ended, (In millions) June 30, 2022 Mar. 31, 2022 Dec. 31, 2021 Sept. 30, 2021 June 30, 2021 Reconciliation of Non-GAAP Gross Profit and Non-GAAP Gross Margin - Products & Solutions Revenue

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