Avaya Inc

Avaya — Q4 2015 Earnings Presentation

23 slides from Avaya's earnings presentation, Nov 11, 2015

  1. Slide 1: Avaya Q4 and Fiscal Year 2015 Earnings Call

    Avaya Q4 and Fiscal Year 2015 Earnings Call November 11, 2015

  2. Slide 2: Forward Looking Statements

    Forward Looking Statements Certain statements contained in this presentation are forward-looking statements, including statements regarding our future financial and operating performance, as well as statements regarding our future growth plans and drivers,. These statements may be identified by the

  3. Slide 3: Fiscal Q4 2015 Financial Highlights

    Fiscal Q4 2015 Financial Highlights (Amounts are non-GAAP, comparisons in constant currency)  Revenue of $1,008 million, up $12 million from the prior quarter in constant currency 1% higher sequentially and 5% lower than Q4 FY’14 on a normalized basis* Q4 ‘14 adjusted for recognition of aged backlo

  4. Slide 4: Quarterly Income Statement

    Quarterly Income Statement (All amounts non-GAAP and dollars in millions) As Reported Revenue: FQ4 2015 FQ3 2015 FQ4 2014 Product $499 $494 $579 Services $509 $505 $547 Total Revenue $1,008 $999 $1,126 Gross Margin: Product 65.3% 62.3% 61.8% Services 58.7% 56.6% 57.4% Total Gross Margin 62.0% 59.5%

  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: FQ4 2015 FQ3 2015 FQ4 2014 Product $499 $493 $566 Services $509 $503 $525 Total Revenue $1,008 $996 $1,091 Gross Margin: Product 65.3% 62.4% 61.9% 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 FQ4 2015 FQ3 2015 FQ4 2014 U.S. $562 $538 $588 EMEA $243 $263 $321 APAC $113 $107 $111 AI $90 $91 $106 Total $1,008 $999 $1,126 % of Total Revenue U.S. 56% 54% 52% EMEA 24% 26% 29% APAC 11% 11%

  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 FQ4 2015 FQ3 2015 FQ4 2014 U.S. $562 $538 $588 EMEA $243 $264 $303 APAC $113 $106 $107 AI $90 $88 $93 Total $1,008 $996 $1,091 % of Total Revenu

  8. Slide 8: Q4 FY '15 Financial Summary

    Q4 FY ‘15 Financial Summary ($M, as reported) Q4’15 4Q14 3Q15 4Q15 Non-GAAP  Grew revenue sequentially Actual Actual Actual  Record gross margins Revenue $1,126 $999 $1,008  Strong EBITDA performance Gross Margin % 59.7% 59.5% 62.0%  Executed against Oper Expense % 40.9% 43.3% 42.0% operational

  9. Slide 9: Fiscal 2015 Financial Highlights

    Fiscal 2015 Financial Highlights (Amounts are non-GAAP, comparisons in constant currency)  Revenue of $4,050 million, 4% lower year-over-year, in constant currency $4,081 million, on an as reported basis – Software and Services accounted for over 71% of total revenue – Professional services revenue

  10. Slide 10: Annual Income Statement

    Annual Income Statement (All amounts non-GAAP and dollars in millions) As Reported Revenue: FY 2015 FY 2014 FY 2013 Product $2,029 $2,196 $2,338 Services $2,052 $2,175 $2,241 Total Revenue $4,081 $4,371 $4,579 Gross Margin: Product 63.3% 61.2% 58.9% Services 57.6% 56.5% 54.6% Total Gross Margin 60.5

  11. Slide 11: Annual Income Statement – Constant Currency Comparison

    Annual Income Statement – Constant Currency Comparison (All amounts non-GAAP and dollars in millions) In Constant Currency Revenue: FY 2015 FY 2014 Product $2,018 $2,141 Services $2,032 $2,077 Total Revenue $4,050 $4,218 Gross Margin: Product 63.3% 61.4% Services 57.8% 57.8% Total Gross Margin 60.6%

  12. Slide 12: Annual Revenue by Geographic Region

    Annual Revenue by Geographic Region (All amounts non-GAAP and dollars in millions) As Reported Revenue FY 2015 FY 2014 FY 2013 U.S. $2,203 $2,267 $2,431 EMEA $1,073 $1,234 $1,239 APAC $425 $445 $457 AI $380 $425 $452 Total $4,081 $4,371 $4,579 % of Total Revenue U.S. 54% 52% 53% EMEA 26% 28% 27% APA

  13. Slide 13: Annual Revenue by Geographic Region Constant Currency Comparison

    Annual Revenue by Geographic Region Constant Currency Comparison (All amounts non-GAAP and dollars in millions) In Constant Currency Revenue FY 2015 FY 2014 FY 2013 U.S. $2,202 $2,265 $2,430 EMEA $1,066 $1,154 $1,179 APAC $419 $429 $433 AI $363 $370 $375 Total $4,050 $4,218 $4,417 % of Total Revenue

  14. Slide 14: Balance Sheet and Operating Metrics

    Balance Sheet and Operating Metrics (Dollars in millions, Balance sheet items as of the end of the period indicated) FQ4 2015 FQ3 2015 FQ4 2014 Total Cash and Cash $323 $328 $322 Equivalents Cash from Operations $30 $40 $15 Capital Expenditures and $32 $25 $40 Capitalized Software Days Sales Outstan

  15. Slide 15: 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 11/11/15 $1.3 $1.4 $1.0 $0.6 $0.5 $0.5 $0.0 2015 2016 2017 2018 2019 2020 2021  $323M Cash Balance as of 9/30/15  Over $500M in liquidity (including cash & revolver c

  16. Slide 16: Fiscal Q1 2016 Financial Outlook

    Fiscal Q1 2016 Financial Outlook (As Delivered 11/11/15) Revenue Adjusted for Constant Currency As of 11/10/15 ($M) As Reported In Constant Currency Q1 FY ’15 $1,079 $1,029* Q4 FY ’15 $1,008 $1,002  Given beginning backlog levels, the impact of currency fluctuations on demand, economic volatility i

  17. Slide 17: Upcoming Events

    Upcoming Events (See www.avaya.com/investors for additional details)  Thursday, November 12, 2015 – Avaya 2015 Analyst & Investor Meeting – Santa Clara, CA – Presenters: – Kevin Kennedy, CEO – Jim Chirico, EVP, Business Operations – Dave Vellequette, CFO – Pierre-Paul Allard, SVP Worldwide Sales –

  18. Slide 18: 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

  19. Slide 19: Pension & Other Post-Retirement Benefits Trend ($M)

    Pension & Other Post-Retirement Benefits Trend ($M) Cash Effect (1) FY’13 Q1’14 Q2’14 Q3’14 Q4’14 FY’14 Q1’15 Q2’15 Q3’15 Q4’15 US Pension 108 23 24 59 54 160 15 25 26 29 Non-US 25 5 15 4 3 27 4 13 4 4 Pension OPEB 52 10 11 12 12 45 9 3 4 12 Total Cash 185 38 50 75 69 232 28 41 34 45 Contributions P

  20. Slide 20: Non-GAAP Reconciliation: Adjusted EBITDA

    Non-GAAP Reconciliation Adjusted EBITDA Avaya Inc. S upplemental S chedule of Non-GAAP Adjusted EBITDA (Unaudited; in millions) Three months ended Fiscal year ended S eptember 30, S eptember 30, 2015 2014 2015 2014 Loss from continuing operations $ (73) $ (49) $ (141) $ (293) Interest expense 117 11

  21. Slide 21: Non-GAAP Reconciliation: Gross Margin and Operating Income

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

  22. Slide 22: Non-GAAP Reconciliation: Product and Services Gross Margins

    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 S ept. 30, Dec. 31, Mar. 31, June 30, S ept. 30, 2014 2014 2015 2015 2015 Reconciliation

  23. Slide 23: Avaya Engage: The Power of We

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