Avaya

For 2018, Avaya has more than 130,000 customers in 220,000 locations worldwide, including more than 90% of Fortune 100 companies, and the number of end users of our technologies exceeds 100 million. Avaya is also a dedicated provider of unified communications and contact center services in the cloud.

Products and Services

Performance indicators

Main Article: Avaya Financials

2021: Revenue - $2.97 billion, loss - $13 million

At the end of 2021, Avaya earned $2.97 billion in revenue against $2.87 billion a year earlier. Sales of the company's software and equipment during this time decreased from $1.07 billion to $992 million, and revenues from services, on the contrary, increased from $1.8 billion to $1.98 billion.

Avaya's main earnings are still in the American market. The company's revenue in the United States at the end of fiscal 2021 reached $1.7 billion against $1.64 billion a year earlier. In EMEA (Europe, Middle East, Africa) sales increased from $714 million to $732 million. In the Asia-Pacific region, the turnover of the manufacturer of corporate communications increased from $296 million to $297 million. Outside the United States, Avaya's total earnings reached $1.27 billion, an increase from $1.23 billion a year ago.

Avaya remains a loss-making company

Sales of technologies for unified communications and collaboration in fiscal 2021 turned out to be $683 million, which is slightly less than the previous year ($710 million). In the segment of solutions for contact centers, revenue also decreased - from $363 million to $309 million.

Avaya's main income is related to the provision of support services: the corresponding business at the end of 2021 showed an increase to $1.4 billion from $1.24 billion in 2020. In the category of cloud services of the corporate level and management services, a slight decrease in turnover was registered - from $282 million in 2020 to $281 million a year later.

Despite growing sales, Avaya remains a unprofitable company: in 2021, its net losses amounted to $13 million, although in 2020 they were higher and measured at 680 million.

The share of contracts generating recurring revenues in total sales for the 12-month reporting period closed on September 30, 2021 of the calendar year amounted to 66% against 63% a year earlier.^[1]

Business in Russia and CIS

Main article: Avaya Russia and CIS

History

2023

Restructuring and exit from bankruptcy with the transition to the control of former creditors

On May 1, 2023, Avaya Holdings Corp. completed its financial restructuring, emerging from bankruptcy and becoming a private company, Avaya LLC, owned by its former creditors.

Bankruptcy declaration

On February 14, 2023, Avaya Holdings announced it was filing for bankruptcy in court under Chapter 11 of U.S. bankruptcy law, which reserves the company the right to a subsequent restructuring. The American manufacturer of solutions for IP-telephony found itself in a difficult situation, due to which mass layoffs began and the publication of financial statements was postponed.

By filing for bankruptcy, Avaya expects to restructure to reduce its debts by more than 75% - from $3.4 billion to $800 million. To implement the plan, the company entered into an agreement with creditors to provide them with financing in the amount of $780 million. Avaya also announced the desire of investors to provide the company with another $150 million, but the vendor did not disclose the details of this agreement.

Avaya Office

The new capital is expected to provide substantial liquidity to support Avaya in the [restructuring] process and beyond... With substantially improved financial flexibility, the company will be able to accelerate investment in innovative communication products, solutions and services for customers, the company said in a statement.

Avaya expects to complete the reorganization process within 60-90 days. At the same time, employees will continue to receive salaries, customer service and work with partners. Evercore Group serves as Avaya's financial advisor during the restructuring process.

On February 14, 2023, when Avaya filed for bankruptcy, trading in the company's stock was halted. The year before that day, the rate of quotations increased by 40%. According to Barron's, after the restructuring, Avaya ordinary securities are likely to be depreciated.^[2]

2022

The start of mass layoffs to save $250 million a year

On September 6, 2022, it was reported that Avaya Holdings had taken a number of steps to cut costs, including job cuts.

Several employees told the News & Observer they were fired during talks that lasted between 10 and 15 minutes. Messages on online message boards indicate that job cuts at Avaya have been massive.

Avaya begins mass layoffs to save $250 million a year

In a filing with the U.S. Securities and Exchange Commission (SEC), Avaya said it authorized staff cuts that would help increase annual cost cuts by $250 million, allowing the company to hit a higher figure set on July 28, 2022, for cost cuts of $225 million to $250 million.

Avaya expects to incur restructuring costs ranging from $23 million to $26 million before taxes, all of which are expected to be calculated in cash, and almost all of which will be related to severance and termination compensation.

Avaya has not filed a Notice of Employee Termination and Retraining (WARN), according to the North Carolina Department of Commerce. Under federal law, a company must file a WARN notice if it plans to lay off at least 500 employees.

{{quote 'Cost reduction, including through staff cuts, is needed to position Avaya as a more flexible and innovative organization, Avaya CEO Alan Masarek said in a statement. The Company strives to treat its employees with the utmost dignity and respect and uninterrupted provision of outstanding communication solutions and support to our customers. }} In May and August 2022, Avaya missed its quarterly profit target. In August 2022, Avaya notified the SEC that it would delay filing its third-quarter 10-Q financial report, a decision that sent the company's stock price plummeting.^[3]

Alan Masarek is the new CEO of Avaya

On July 28, 2022, communications supplier Avaya Holdings announced the appointment of Alan Masarek as its new president and CEO of the company. Read more here.

2021: Purchase of software developer for CTIntegrations contact centers

In early August 2021, Avaya announced the purchase of CTIntegrations at a price that the companies did not disclose. The deal will allow Avaya to expand the capabilities of its OneCloud product suite, a centerpiece of the company's plan to move to a cloud-centric business model. Read more here.

2020: Free licenses for organizing remote work of operators

On March 26, 2020, Avaya announced the launch of a special offer to effectively organize the remote operation of contact center operators in the context of the COVID-19 virus pandemic.

Avaya customers can request free 90-day licenses that allow them to move operators from the office to a remote format, ensuring the necessary level of employee safety, while still keeping the business running smoothly.

The offer covers all current Avaya contact center platforms.

More than 5 million contact center operators use Avaya software. At the moment, more than 200,000 operators have already been transferred to remote work, "says Jim Chirico, President and CEO of Avaya. - We continue to actively work with organizations around the world to help our customers transition to a flexible remote model while maintaining operational efficiency and a high level of service.

2019

Revenue growth to $2.89 billion

Revenue Avaya in fiscal 2019 reached $2.89 billion against $2.25 billion a year earlier. At the same time, the company became unprofitable, recording an annual net loss of $671 million. In 2018, the net profit of the manufacturer of funds for corporate communications was measured at $287 million.

Avaya earned $1.22 billion on the sale of products in 2019, which significantly exceeds the one-year-old figure of $989 million. The service business also grew at the company - from $1.26 billion to $1.67 billion.

Avaya financials

At the end of 2019, Avaya raised about $1.55 billion in the United States against $1.51 billion a year earlier. Revenues in EMEA countries (Europe, Middle East, Africa) during this time decreased from $769 million to $753 million. In the Asia-Pacific region, turnover tripled and reached $327 million. The total revenue of the company outside the American market turned out to be $1.33 billion, practically unchanged from the value of a year ago.

In 2019, Avaya wrote off $657 million due to impairment in the Products & Solutions division of goodwill, an asset that characterizes the company's intangible advantages over its competitors in the market. This includes business reputation, customer base, personnel qualification, brand, etc.

It follows from the annual accounts that about 83% of Avaya's revenue came from the sale of software and services. Moreover, this figure continues to grow from year to year. Approximately 58% were repetitive, and 60% of revenue was taken by high-margin software products. The share of cloud services in the company's total sales amounted to 11%, the number of cloud clients increased by 160% over the year. Avaya also announced the conclusion of contracts for a total of $2.4 billion for the year.

Revenue from sales of solutions in the field of unified communications in 2019 amounted to $863 million, in the segment of technologies for contact centers - $359 million.^[4]

Avaya and RingCentral announce collaboration

At the end of October 2019, Avaya and RingCentral announced a collaboration in which the latter company will invest $500 million. The deal made the dollar billionaire of Ukrainian-born Vlad Schmunis, who founded RingCentral. Read more here.

Hybrid Cloud Implementation Partnership with IBM

On September 24, 2019, Avaya announced that it had signed a cooperation agreement with IBM, under which Avaya will begin implementing IBM hybrid cloud solutions. With this partnership, Avaya will be able to expand geography and accelerate upgrades to its unified communications and contact center services available in the Avaya ReadyNow cloud.

According to the company, working with IBM to implement a strategy for implementing a hybrid cloud, Avaya solves two problems at once. First, the company plans to modernize its solutions with technologies such as artificial intelligence (AI). Second, Avaya customers can take advantage of IBM's extensive geography and high-performance data centers.

Placing and managing individual services in the private cloud will enable Avaya to build secure, reliable solutions and provide a more efficient service to meet user needs. In addition, the company will be able to access intelligent platforms in order to use them to take customer service to the next level. For example, Avaya will be able to use interfaces Watson API - IBM's cognitive system - to speed up decision-making and improve client experience by integrating AI functions into the service and support process.

Today's companies should be able to create exceptional experiences for their customers, while improving the efficiency of their business. Working together, IBM and Avaya plan to create the most comprehensive contact center solution on the market. It aims to combine Avaya's software and infrastructure with IBM's hybrid cloud, consulting, and implementation services capabilities. We are excited to partner with IBM as part of our strategy to implement a hybrid multi-cloud environment. In addition, the combination of Avaya services and IBM Watson interfaces will help customers make their business smarter. I'm excited to be part of this strategic alliance. narrated by Chris McGugan, Avaya Senior Vice President, Solutions and Technology

The hybrid approach is being approached by those companies that want to modernize their businesses and innovate while maintaining high security standards. narrated by Dennis Kennelly, IBM General Manager Cloud Integrations

As companies like Avaya move along the path of cloud transformation, they need the ability to secure and seamlessly integrate data and workloads across local, private, and public cloud environments across vendors.

2018

13% drop in revenue to $2.9 billion

In fiscal 2018, which ended on September 30, 2018, Avaya's revenue amounted to $2.9 billion, down 13% from the previous year. Excluding currency fluctuations, sales declined 14%. The company's revenue has been falling for several years in a row.

Approximately 82.2% of the company's annual turnover came from software and service sales, and recurring revenues accounted for 57.4% - both of which were a record for a manufacturer of corporate communications solutions.

Avaya financials

In fiscal 2018, Avaya entered into 15 contracts ranging from $10 million, 55 transactions worth $5 million or more, as well as 440 contracts in which customers pledged to pay over $1 million. The total value of the concluded contracts exceeded $2.4 billion, excluding the network business sold to Extreme Networks.

The number of jobs where UCaaS/CCaaS solutions are deployed increased by 312%. Avaya's cloud revenue increased by 11%, which is higher than the growth rate of the 2017 financial year (9%).

In 2018, the company released 117 new products and earned a total of $1.2 billion on products against $1.4 billion a year earlier. Service revenue sank from $1.8 billion to $1.6 billion.

At the end of fiscal year 2018, Avaya made a net profit of almost $3.3 billion, while in 2017 the company had losses measured at $182 million.

By the end of September 2018, Avaya had $700 million in cash and cash equivalents against $876 million over the same period of the previous year. This decline is due to the return of debts, as well as the purchase of Spoken.

Fiscal year 2018 will be remembered for Avaya's return to the stock exchange after 10 years of leaving it. Prior to that, the company declared bankruptcy, but was able to leave it by launching a financial restructuring with the involvement of creditors.^[5]

IPO on the New York Stock Exchange

On January 17, 2018, Avaya became a public company again - for the first time in more than ten. Shares of the business communications systems maker began trading on the New York Stock Exchange (NYSE) under the ticker symbol AVYA.

By the close of the exchange on January 17, 2018, Avaya securities fell by almost 1% relative to the start of trading and stopped at $20.8.

Avaya is back on the exchange

On behalf of our entire team, I want to express my gratitude for the honorable opportunity to solemnly celebrate the day of the start of trading at the NYSE for Avaya, whose activities will never be aimed at achieving the leading role of digital transformation of the industry, "said Avaya CEO and President Jim Chirico.

Avaya, one of the leaders in the global corporate telephony market, is facing growing competition from Cisco and cloud providers. Because of this, Avaya found itself in a difficult financial situation, accumulating huge debts, which Chirico compared to "driving a car with a gearbox put into parking mode."

By converting debt into equity, I can assume that in the next few months we will switch to a new valuable share capital... A lot of people don't know we're a very profitable company. Competitors did a good job while we were under Chapter 11 of the US bankruptcy law, but we have increased the number of customers and are now stronger than ever, "said Jim Chirico.

He added that Avaya intends to make acquisitions on the market. By January 2018, the company's annual cash flow exceeds $300 million. At the same time, the debts are still rather big - about $2.9 billion.

Avaya left the exchange in 2007 when the company was bought by private equity funds Silver Lake Partners and TPG Capital for $8.2 billion.^[6]

2017

The company completed its financial restructuring

On December 19, 2017, Avaya Holdings Corp. announced the completion of its financial restructuring.

This is the beginning of an era in Avaya's history - the company went public, significantly improving its financial performance. As a result of the restructuring process, Avaya reduced its debt burden by $3 billion, while more than $300 million of free cash is on the company's balance sheet. Avaya expects to reduce annual payments by $300 million compared to fiscal year 2016 by reducing the amount of debt servicing and other items of expenses. Avaya has completed the transformation of its business and is now a software development, professional services and cloud solutions company. This allowed for greater operational flexibility for investments in innovation and development of contact center and unified communications industries. Together with the board of directors, we are fully ready to implement the company's development plan and increase its attractiveness to shareholders. Jim Chirico, President and CEO of Avaya

As of December 19, 2017, Avaya takes the necessary actions to be included in the list of traded securities on the ^[7] Stock Exchange. The company expects about 110 million shares outstanding at the end of the procedure.

Exit from bankruptcy proceedings, debt restructuring

On August 9, 2017, it became known about the Avaya agreement with creditors to reduce the debt burden and partially repay debts.

Reuters reported that the company avoided bankruptcy using Art. 11 of the US bankruptcy law. Under this regulation, the company is entitled to a subsequent reorganization to reduce debt and operating costs^[8].

The major lenders approved the reorganization plan proposed by Avaya. But he will have to go through the approval process in court. According to the plan, the company will have to reduce debt obligations by more than $3 billion, transfer part of pension debts to the state pension insurance agency Pension Benefit Guarantee and get out of bankruptcy protection as a public company.

The company's debts to employees with hourly wages - a total ~ $600 million, employees with a fixed salary - $1.24 billion, said Pension Benefit Guarantee. As of June 30, 2016, Avaya's debts exceeded $6 billion, and each year the company is forced to pay $400 million in interest on loans.

Pension Benefit Guarantee agreed to take on these debts in exchange for $300 million and a 7.5% stake in the reorganized Avaya. The market value of the company, taking into account debts and assets, is estimated at $5.7 billion.

Avaya planned to sell the call centers software division. Interest in this business, whose value was estimated at $4 billion, was shown by several companies, including the investment firm Clayton Dubilier & Rice. It was not possible to agree on the terms of the deal with her and Avaya refused to sell the business.

Extreme Networks plans to purchase Avaya's network equipment business for $100 million.

Extreme Networks intends to buy Avaya's network equipment business for $100 million, less than two months after Avaya filed for bankruptcy^[9]

Extreme Networks CEO Ed Meyercord believes the purchase will bring his company over $200 million in annual revenue.

Extreme entered into an agreement with Avaya to acquire its assets, under which Extreme will serve as the top bidder under the sales provisions of Section 363 of the U.S. Bankruptcy Code. Other interested parties will be given the opportunity to submit their proposals before the deadline set by the bankruptcy court expires.

If others are presented that meet the requirements of the offer, an auction process will be held in which the price of $100 million set by the agreement with Extreme will be the minimum starting price for the auction, the press release said.

Start of bankruptcy proceedings

On January 19, 2017, Avaya began bankruptcy proceedings to reduce huge debts. At the same time, the company changed its mind about selling the call centers software business.

Avaya's debt restructuring will proceed under Chapter 11 of the U.S. Bankruptcy Code. The company wanted to solve financial problems during negotiations with creditors, but it was not possible to agree with them. The manufacturer had to pay off its debts by the end of January 2017.

Avaya logo in front of the company's office in Colorado (USA)

The materials provided by Avaya to the bankruptcy court in New York say that the company's debt is $6.3 billion, which is less than the total value of assets ($5.5 billion).

As of the end of September 2016, Avaya had $1.7 billion in pension debt. A Chapter 11 reorganization of the U.S. Bankruptcy Code would allow the company to write off those debts by handing them over to U.S. state pension insurance agency Pension Benefit Guarantee.

Avaya's current capital structure was created 10 years ago, when it was used to support our business model, which involves the company's focus on equipment. Things have changed a lot since then, "says Avaya President and CEO Kevin Kennedy. - Now we need to recapitalize the company thanks to the terms of Avaya's debt obligations and the upcoming repayment of debts.

Citigroup Bank intends to provide Avaya with an additional loan to carry out the reorganization, which will last at least 45-60 days.

Earlier, the media reported that Avaya wants to sell the call centers software business for $4 billion. After the lack of agreements with applicants and the launch of bankruptcy proceedings, the company abandoned this idea, considering it not very profitable for customers and creditors.^[10]

Bankruptcy, according to Chapter 11, should be seen as the last chance to revive Avaya's business. The purpose of such a law in the United States is not to punish an insolvent debtor, but to exempt him from immediate payment of debts (including writing off part of the debt), giving him the opportunity to avoid liquidation and revive business through reorganization (sale of non-core assets, change of management and owners, attracting investors, etc.). Lenders tend to oppose such bankruptcy, fearing that Chapter 11 will only give unclean managers time to plunder the company's assets.

2016: Lenders demand $6bn in debt back

In June 2016, it became known that Avaya owed more than $6 billion to creditors, and they demand that the vendor repay the loans - at least partially. One of the leaders in the corporate telephony market will probably have to sell assets.

According to Bloomberg, citing sources familiar with the situation, on one of the days from June 9 to 12, 2016, Avaya management will hold a personal meeting with representatives of companies that issued loans to the manufacturer.

Creditors demand from Avaya to return $6 billion

The group of first-stage lenders, to which Avaya owed $4.67 billion, included GSO Capital Partners, Apollo Global Management, Davidson Kempner Capital Management and Guggenheim Partners. The second stage of mortgagors, which provided Avaya about $1.38 billion, is headed by Franklin Resources. All these creditors have hired consultants to negotiate with Avaya over halving debt, the source said.

In 2015, Avaya became the leader of the Gartner Magic Quadrant in corporate telephony for the 10th time in a row. However, Avaya's telecom business is having a tough time competing for investor money amid escalating competition for next-generation high-tech assets such as social media, mobile technology and cloud computing.

In May 2016, Avaya asked Goldman Sachs Group and Centerview Partners for help exploring options for the company's financial recovery. Among them, the possibility of selling part of the business began to be considered.

If the company is unable to raise enough cash from the sale of assets, creditors may require other measures aimed at reducing the debt burden, including replacing debt obligations with equity capital.

In February 2016, rating agency Moody's downgraded Avaya's corporate rating from B3 to Caa1 with a negative outlook, attributing its decision to "the continued decline in the company's financial results as well as concerns about the sustainability of the current capital structure." In addition, analysts questioned the vendor's ability to refinance debts in 2017-2018.^[11]

2014: Partnership with Google

On December 12, 2014, Avaya announced that it was working with Google on innovative solutions for corporate contact centers. The collaboration will help combine Avaya's expertise in customer experience management technologies and Google's expertise in web applications and Chromebooks.

Co-development will enable agents and administrators to connect easily and quickly, without the need for employees to be in the office - they can connect from anywhere, which is ideal during periods of maximum load or seasonal demand, and supports business stability, mobility, and remote strategy. Account managers access Avaya's desktop contact center solution using Chromebook netbooks via the WebRTC interface.

The solution does not require downloading software or installing "thick" clients on each manager's work computers: the system provides significant management efficiency and high profitability by quickly accessing the full suite of technologies required to respond to customer requests in real time.

2012

Purchase of Radvision

On March 15, 2012, Avaya announced that it had signed an agreement to acquire Radvision, a developer of video conferencing and telepresence solutions using wireless and IP networks as their data transfer environment. The deal worth $230 million has already been approved by the boards of directors of both companies, following which Radvision investors will receive $11.85 for each share. It will take 90 days to complete all legal formalities.

Avaya intends to offer customers integrated with its own Aura Unified Communications (UC) platform teamwork technologies with support for high-definition video and a variety of mobile devices, including the popular Apple iPad and. Google Android

Delay in IPO exit

Amid growing competition among investors for promising high-tech assets, telecommunications equipment maker Avaya may be out of work. Privately owned Silver Lake and TPG Capital LP, the company announced in 2011 its intention to enter into IPO and thus attract $1 billion in investments, but so far the prospects for this step remain vague. Investors are not showing due attention to Avaya, which may serve as a reason for delaying the public offering until 2013.

The opinion above belongs to the unnamed source. Avaya, Silver Lake and TPG Capital LP all decline to comment on the matter. Initially, the offering was planned to be carried out no later than the first quarter of 2012, but the unstable economic situation and uncertainty in the financial markets in the second half of last year prevented.

It is extremely difficult for the mature telecommunications business of Avaya to compete for investor money amid the rapid growth of social media, the emergence of a variety of software, and the distribution of mobile platforms. As an anonymous source points out, the most attractive companies for investment today are the social network Facebook and a number of developers of promising software, in particular, Palo Alto Networks (PAN), Splunk, Workday.

According to Matthew Schuldt, a portfolio investor in the sector of high-tech companies Fidelity Investments, the venture capital business is currently in its heyday. Over the past six months, his company has endowed a number of startups with the funds necessary for business development, but all of them were related to mobile technology, cloud computing, social networks or IT security. Evan Bauman, co-manager of Legg Mason ClearBridge Aggressive Growth, adds: "We are committed to investing not just in innovative companies, but at the same time targeting large markets." As an example, Bauman cites flash memory, the reliable guarantor of successful sales of which is the growing popularity of smartphones and tablets.

Cost Reduction and Layoff Plan

Avaya will resort to layoffs, intending to reduce its operating costs by between $135 million and $235 million in the next fiscal year from October 1, 2012. The new cost cut will go on top of the $105 million already saved in the current fiscal year and will be achieved "as a result of actions now foreseen, including reductions in indirect costs, supply chain activities, real estate consolidation and ongoing state size management," Avaya said in a late September report on Form 8-K submitted to the U.S. Securities and Exchange Commission (SEC). In general, Avaya reports, until the end of FY 2015. It is planned to achieve cost savings in annual terms in the amount of $400 million.

Avaya does not provide details where this "staff size management" might occur. At this time, the company has about 17 thousand people. worldwide. In June 2011, Avaya submitted a report to the SEC on Form S-1 with the intention of corporatizing, but at the moment, despite occasional rumors, any date seems to be missing. The company has seen significant leadership changes over the past year, including the departure of a number of C-level executives and senior vice presidents, and appointments at the same levels.

2011: IPO Plan

On June 7, 2011, it became known that Avaya plans to soon apply for its own initial placement on the stock exchange, intending to raise $1 billion during the IPO. As part of its IPO, Avaya plans to list about 20% of the shares on the stock exchange. The total value of the company can be estimated at about $5 billion or more.

According to analysts, more accurate figures will depend on market sentiment at the time of placement. As a rule, there is a delay of two to three months or more between applying for an IPO and directly going public. Despite the losses of the previous fiscal year, Avaya owners expect the company's second go-public to go well.

2009: Purchase of part of Nortel assets

On September 14, 2009, Nortel officially announced the completion of the auction for the sale of its Enterprise Solutions division, as well as shares in the public services division of Nortel Government Solutions Incorporated and DiamondWare. Avaya became the new owner of these divisions. Siemens Enterprise Communications also participated in the auction, but Avaya beat it for the price. Avaya paid Nortel $900 million in cash. In addition, another $15 million was spent on the Employee Retention Program of the purchased units.

Frost & Sullivan (2010) estimates that along with the assets purchased from Nortel, Avaya's share of the North American enterprise solutions market will increase from 17-18% to 27%, which will allow the company to outperform Cisco Systems, which now has 21% of the market.

2007: Silver Lake and TPG Capital funds buy back company shares for $8 billion

In 2007, Avaya became a private company again, after its shares were bought out by Silver Lake and TPG Capital funds, which paid about $8 billion for Avaya, using mostly borrowed funds, and until the spring of 2011 managed to pay off part of the debt. Perhaps the funds intended to return their investments earlier, but the possibilities for this almost disappeared after the economic crisis and the subsequent recession.

2000: Separation from Lucent Technologies and IPO conduct

Avaya appeared as a division of the American telecommunications giant AT&T, after which it entered Lucent Technologies, which separated from AT&T. In 2000, Avaya separated from Lucent Technologies and went public in New York.

Notes