Q4 2021 Avaya Holdings Corp Earnings Call

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Speaker 1: Greetings and welcome to the Avaya Fiscal 2021 Fourth Quarter Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation of the Avaya Fiscal 2021 Fourth Quarter Earnings Call.

Greetings and welcome to the Avaya fiscal 2021 fourth quarter earnings call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.

Speaker 1: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.

Anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

As a reminder, this conference is being recorded I would now like to turn the conference over to your host Mr. Michael Mccarthy, Vice President of Investor Relations for Avaya. Thank you. Please go ahead.

Speaker 1: I would now like to turn the conference over to your host, Mr. Michael McCarthy, Vice President of Investor Relations for Avaya. Thank you.

Speaker 2: Thank you. Welcome to Avaya's fiscal 2021 Q4 investor call. Jim Cherico, our president and CEO , and Kieran McGrath, our EVP and CFO , will leave this morning's call and share with you some prepared remarks before taking your questions.

Welcome to <unk> fiscal 2021, Q4, Investor call, Jim Charco, our president and CEO and Kieran Mcgrath, our EVP and CFO will lead this morning's call and share with you some prepared remarks before taking your questions.

Speaker 2: Joining them this morning will be Steven Spears, Chief Revenue Officer, Todd Zibby, Senior Vice President of Engineering, and Dennis Kozak, Senior Vice President of Global Change.

Joining them. This morning will be Stephen Spears, Chief revenue officer towards ZB Senior Vice President of Engineering, and Dennis Kozak Senior Vice President of Global Channel the earnings release, and Investor slides, which include highlights of our ESG initiatives and performance referenced on this morning's call are accessible on the industrial page of our website as well as in the 8-K filed today with the.

Speaker 2: The earnings release and investor slides, which include highlights of our ESG initiatives and performance referenced on this morning's call, are accessible on the investor page of our web.

Speaker 2: as well as in the 8K filed today with the SEC. These should aid you in your understanding of revised financial results. All financial metrics referenced on this call are non-GAAP with the exception of revenue. We have included a reconciliation of such non-GAAP metrics to GAAP in the earnings release and organizations.

SEC.

These should aid you in your understanding of our buys financial results all financial metrics referenced on this call are non-GAAP with the exception of revenue. We have included a reconciliation of such non-GAAP metrics to GAAP in the earnings release and Investor slides we.

We may make forward looking statements that are based on current expectations forecasts and assumptions, which remains subject to risks and uncertainties that could cause actual results to differ materially.

Speaker 2: We may make forward-looking statements that are based on current expectations, forecasts, and assumptions which remain subject to risks and uncertainties that could cause actual results to different materials.

Speaker 2: In particular, the global economy continues to be impacted by COVID-19.

In particular, the global economy continues to be impacted by COVID-19, and to the extent of its continued impact on our business will depend on a number of factors that include but may not be limited to the virus and severity and duration. The emergence of new variants changes in infection rates the vaccine participation rate the effectiveness of vaccines and the speed with which.

Speaker 2: And to the extent of its continued impact on our business will depend on a number of factors that include, but may not be limited to, the virus's severity and duration, the emergence of new variants, changes in infection rates, the vaccine participation rate, the effectiveness of vaccines and the speed with which the vaccine can be distributed, as well as regulations and requirements impacting the return to our offices and our ability to visit customer sites and actions taken or not taken by government.

The vaccine can be distributed as well as regulations and requirements impacting the return to our offices and our ability to visit customers sites and actions taken or not taken by governments.

Businesses and consumers in response to the pandemic all of which continue to evolve and remain uncertain at this time.

Speaker 2: businesses and consumers in response to the pandemic, all of which continue to evolve and remain uncertain.

Speaker 2: Information about risks and uncertainties may be found in our most recent filings with the SEC, including our form

Information about risks and uncertainties may be found in our most recent filings with the SEC, including our Form 10-K, its revised policy not to reiterate guidance and we undertake no obligations to update or revise forward looking statements in the event facts or circumstances change, except as otherwise required by law.

Speaker 2: It's a wise policy not to reiterate guidance, and we undertake no obligations to update or revise forward-looking statements in the event facts or circumstances change, except as otherwise required by law.

Speaker 2: Before handing the call over to Jim, I'd like to remind the participants on this morning's call that we'll be hosting an investor day meeting in conjunction with Avaya Engage, which will be held down in Orlando on Tuesday, December 14th.

We're handing the call over to Jim I'd like to remind the participants on this morning's call there will be hosting an investor day meeting in conjunction with Avaya engage which will be held down in Orlando on Tuesday December 14th.

Registration information is available on our website on the Investor Relations page under the events tab members of a bias executive leadership team will be providing updates on the buyers' business strategy technology development roadmap growth opportunities and updated long term financial model I will now turn the call over to Jim.

Speaker 2: Registration information is available on our website on the investor relations page under the events tab. Members of Avaya's executive leadership team will be providing updates on Avaya's business strategy, technology development roadmap, growth opportunities, and updated long-term financial model. I'll now turn the call over to you.

Thanks, Mike.

Speaker 3: Thanks Mike. Good morning everyone and thank you for joining today's call.

Good morning, everyone and thank you for joining today's call.

Our bias fiscal 2021 was a landmark year for the company.

Speaker 3: Avaya's fiscal 2021 was a landmark year for the

What our team accomplished represents a pivotal point in our history and is a defining moment for the company and it will play a central role in our success story.

Speaker 3: What our team accomplished represents a pivotal point in our history.

Speaker 3: and it's a defining moment for the company and it will play a central role in our success story of Avaya as we move forward.

As we move forward.

If you take a step back and put this past year into context.

Speaker 3: If you take a step back and put this past year into context, it is a year.

It is a year marked by many first.

Speaker 3: and the outstanding results we delivered exceeded expectations on most every front.

And the outstanding results, we delivered exceeded expectations I'm most every front.

These results are not only a reflection of how far we've come but importantly reform reinforce the speed at which we are delivering on our value creation strategy.

Speaker 3: These results are not only a reflection of how far we've come, but importantly, reinforce the speed at which we are delivering on our value creation strategy.

Though the company.

Off to a cloud and SaaS business model and remain highly profitable.

Speaker 3: evolve to a cloud and SaaS business model, and remain highly profitable.

Let me start with growth in.

Speaker 3: Q4, we delivered our sixth consecutive quarter of year-over-year revenue growth.

In Q4, we delivered our sixth consecutive quarter of year over year revenue growth.

Revenue was $760 million for.

Speaker 3: For the full year, revenue came in at $2.973 billion.

For the full year revenue came in at 2.973 billion.

Speaker 3: Most impressive is the fact that we reversed a history of annual revenue decline.

Most impressive is the fact that we reversed a history of annual revenue declines.

Speaker 3: delivering year-over-year growth for the fiscal year closing up approximately $100 million.

Delivering year over year growth for the fiscal year closing up approximately $100 million.

A first for a fire.

It marks a real and substantive milestone.

Speaker 3: for the company and I couldn't be prouder of the performance or more thankful for the commitment and loyalty our customers and partners as we've navigated a purposeful and deliberate journey of transformation.

For the company and I couldn't be prouder of the performance or more thankful for the commitment and loyalty our customers and partners as we've navigated a purposeful and deliberate journey of transformation.

Speaker 3: This growth has been fueled by investments we made in talent, go to market, digital initiatives, and our innovation.

This growth has been fueled by investments we've made.

In talent go to market digital initiatives and our innovation engine.

Speaker 3: Especially notable is momentum in the large enterprise segment where for the sixth quarter in a row we signed over 100 deals with a TCV greater than 1 million.

Especially notable as some momentum in the large enterprise segment, where for the sixth quarter in a row, we signed over 100 deals with a T C V greater than $1 million.

This included 18 over 5 million of which seven were over $10 million. Clearly this is a strong proof point that customers have embraced our roadmap and are on board with our strategy.

Speaker 3: This included 18 over 5 million, of which 7 were over 10...

Speaker 3: Clearly, this is a strong proof point that customers have embraced our roadmap and are on board with our strategy.

Speaker 3: In addition, we once again signed over 1600 new logos, reinforcing the competitiveness, differentiation, and value of our solutions.

In addition, we once again signed over 600, new logos reinforcing the competitiveness differentiation.

And value of our solutions.

Most important to note is the fact that none of this would've been possible without the efforts of our global Avaya team there.

Speaker 3: Most important to note is the fact that none of this would have been possible without the efforts of our global Avaya team.

Speaker 3: Their resilience, dedication, and focus on delivering for our customers was outstanding, and I am extremely proud of how the team performed.

Their resilience dedication and focus on delivering for our customers was outstanding and I am extremely proud of how the team performed.

On the cloud front, we continued to exceed expectations across many key metrics a year ago, we introduced avaya want cloud <unk> as the leading indicator of our cloud transition.

Speaker 3: On the cloud front, we continue to exceed expectations across many key metrics.

Speaker 3: A year ago, we introduced the Viya One Cloud ARR as the leading indicator of our cloud transition.

Speaker 3: We finished FY21 with 530 million of ARR.

We finished FY 'twenty, one with $530 million of AAR or.

Speaker 3: That's up 25% sequentially and 177% year over year.

That's up 25% sequentially and 177% year over year.

We grew over $100 million in just the fourth quarter alone.

Speaker 3: We grew over 100 million in just the fourth quarter alone.

Another first for us.

To add some color nearly 20% of our air comes from contracts greater than $5 million and over 60% from contracts greater than $1 million.

Speaker 3: To add some color, nearly 20% of our ARR comes from contracts greater than $5 million and over 60% from contracts greater than $1 million.

Speaker 3: And in total, over 95% of our ARR is from our Enterprise 2nd.

And in total over 95% of our a R. R is from our enterprise segment.

Additionally, 60% of AOR is driven by enterprise contact center and we are converting this highly coveted base rapidly.

Speaker 3: Additionally, 60% of ARR is driven by Enterprise Contact Center, and we are converting this highly coveted base rapidly. We are not following the crowd.

We are not following the crowd.

We have the best of both worlds.

We are operating like a startup.

Speaker 3: but with a significant IP, technology, market share, and the install-based assets of an enterprise leader. This is...

But with a significant IP technology market share and the installed base assets of an enterprise leader.

This is fueling our exponential growth.

Speaker 3: 500 plus million of ARR in 2021, to one billion of ARR in 2022, to two billion in

500, plus million and they are in 2021.

To $1 billion of <unk> in 2022.

Two 2 billion in FY 'twenty four.

Our second key indicator is our caps metrics, which reached 44% of revenue for the quarter up 11 points from the prior year.

Speaker 3: which reads 44% of revenue for the quarter, up 11 points from the prior year, and 14 points to 40...

And 14 points to 40% for the full year.

Capturing means a measure of our highest calorie revenue comprised of cloud alliance partner and subscription.

Speaker 3: CATS remains a measure of our highest-calorie revenue comprised of Cloud, Alliance, Partner, and Subscription.

Speaker 3: I am particularly proud of the growth here as it is a direct reflection of the new of I.

I'm, particularly proud of the growth here is a direct reflection of the new avaya.

The potency of our new innovations and the importance of our go to market ecosystem of partners.

Speaker 3: potency of our new innovations and the importance of our go-to-market ecosystem

Speaker 3: Last on profitability, adjusted EBIT was $179 million for the quarter and $719 million for the full year, both approximately 24% of revenue.

Last time profitability, adjusted EBITDA was $179 million for the quarter and $719 million for the full year.

Both approximately 24% of revenue.

As we committed to the street and to our customers. We've executed on our plans to maintain high profitability, while also investing back significantly into the business and our success shows in the numbers.

Speaker 3: We've executed on our plans to maintain high profitability while also investing back significantly into the business and our success.

<unk> is a very different company today from just four years ago, when we went public.

Speaker 3: Avaya is a very different company today from just four years ago when we went public.

Speaker 3: There has been a tremendous amount of effort and progress made on reshaping the company and transforming our business.

There has been a tremendous amount of effort and progress made on reshaping the company and transforming our business to be the leader in enterprise Communications and collaboration.

Speaker 3: to be the leader in enterprise communications and collaboration.

When we first shared our vision to be the leader in digital transformation for enterprise customers, our Perth was clear.

Speaker 3: When we first shared our vision to be the leader in digital transformation for enterprise customers, our path was clear. To become a customer-led company, one that works for you.

To become a customer led company.

One that works directly with our customers to unlock value.

Speaker 3: to return to being an innovation leader in order to expand our product and service offer.

To return to being an innovation leader in order to expand our product and service offerings.

Speaker 3: and to leverage our vast channel and

And to leverage our vast channel and technology partner ecosystem.

Speaker 3: All with a focus on growing and transforming to a cloud business.

All with a focus on growing and transforming to a cloud business model.

Speaker 3: a measure of our progress to date. As of the end of September , we are approaching 10% of the company's combined UC and CC install base on an Avaya One Cloud solution.

A measure of our progress to date as of the end of September we are approaching 10% of the company's combined UC and cc installed base on an avaya one cloud solution.

Speaker 3: This is consistent with the overall market adoption we are seeing in the enterprise segment and it is clear that the best is yet to come and we are well positioned to believe it.

This is consistent with the overall market adoption, we are seeing in the enterprise segment and it is clear that the best is yet to come and we are well positioned to be leaders.

Our subscription hybrid offer has been a key driver of this transition and represents roughly 80% of our $530 million of L. R.

Speaker 3: Our subscription hybrid offer has been a key driver of this transition and represents roughly 80% of our 530 million of ARR. Customers are committing to three years of their own ownership of ARR.

Customers are committing to three year, plus contracts, which by definition means they're making a commitment to avaya as roadmap to our vision of the composed of both enterprise and to continue their journey in a deliberate and agile way.

Speaker 3: which by definition means they are making a commitment to a via road

Speaker 3: to our vision of the composable enterprise and to continue their journey in a deliberate and agile way.

So those that look at subscription as a simple conversion of traditional maintenance contracts nothing could be further from the truth.

Speaker 3: To those that look at subscription as a simple conversion of traditional maintenance contracts, nothing could be further from the truth.

Speaker 3: Today, Subscription Hybrid includes significant cloud capabilities, such as via spaces.

Today subscription hybrid includes significant cloud capabilities, such as a fire spaces.

Cloud contact center AI.

Speaker 3: Cloud Contact Center AI, Avaya Conversational Intelligence, and our Cloud Notification Service, among others.

Avaya conversational intelligence and our cloud notification service among others and we continue to add additional capabilities, including many from our ecosystem of partners and Furthermore, we are seeing a 15% uplift on average and in many cases, well north of 20% as customers.

Speaker 3: and we continue to add additional capabilities, including many from our ecosystem of partners.

Speaker 3: And furthermore, we are seeing a 15% uplift on average, and in many cases, well north of 20% as customers make the move.

Make the move.

Speaker 3: One example is Wipro, which shows a Viya One Cloud subscription as the next step on their digital transformation journey, because it offers ease of expansion and flexible migration as part of their cloud plans. Wipro's 17,000...

One example is wipro, which shows Avaya one cloud subscription as the next step on their digital transformation journey, because it offers ease of expansion and flexible migration as part of their cloud plants, where pros 17500 users and 3500 agents will benefit from a full solution suite.

Speaker 3: 3500 agents will benefit from a full solution suite which includes multiple ecosystem components from our API exchange marketplace.

Which includes multiple ecosystem components from our API exchange marketplace.

Not only are we converting current customers, but again in Q4, we signed over 150 subscription hybrid deals with new customers.

Speaker 3: But again, in Q4, we signed over 150 subscription hybrid deals with new customers.

Speaker 3: Take Amtrak, which recently chose a via one cloud to deliver advanced quality monitoring and biometrics that will reduce losses from fraud by approximately 50% while improving customer satisfaction. In a highly comp....

Take Amtrak, which recently chose Avaya, one cloud to deliver advanced quality monitoring and biometric that will reduce losses from fraud by approximately 50%, while improving customer satisfaction.

In a highly competitive situation our ability to deliver full cloud capabilities immediately was key to being chosen ahead of the incumbent provider and multiple other competitors.

Speaker 3: Our ability to deliver full cloud capabilities immediately was key to being chosen ahead of the incumbent provider and multiple other competitors.

Speaker 3: Turning to public cloud. Our UCAS and CCAS public cloud offerings continue to gain significant traction as they expand both in terms of capabilities and geographic availability.

Turning to public cloud, our <unk> public cloud offerings continue to gain significant traction as they expand both in terms of capabilities and geographic availability. Our progress is ahead of our expectations and these offers will be major drivers for recurring revenue and profitability going forward.

Speaker 3: Progress is ahead of our expectations, and these offers will be major drivers for recurring revenue and profitability going forward.

First is <unk> over.

Speaker 3: Over the last couple of quarters, we've made significant strides in maturing our CCAS offering in terms of reach, go-to-market scale, and capability.

Over the last couple of quarters, we made significant strides in maturing our <unk> offering in terms of reach go to market scale and capabilities.

Speaker 3: CCAS is now available in 49 countries and will reach 100 countries by the end of 2022.

<unk> is now available in 49 countries and will reach 100 countries by the end of 2022.

Initially offered through our direct sales force. We are now beginning to leverage our expansive channel network by bringing these partners fully online take North America, where we've enabled over 160 of our value added resellers globally, we signed 11 master agents with access to thousands.

Speaker 3: Initially offered through our direct sales force, we are now beginning to leverage our expansive channel network by bringing these partners fully online. Take North America, where we have enabled over 160 of our value-added resells to our entire global economy.

Speaker 3: Globally, we signed 11 master agents with access to thousands of agents as we accelerate around the world.

Agents as we accelerate our efforts to enable the channel.

We are seeing significant signs of momentum with our pipeline more than doubling in just the last quarter.

Speaker 3: We are seeing significant signs of momentum with our pipeline, more than doubling in

Also helping to drive C catch traction as the integration of our offer with a fire cloud office by ring Central We believe this will be an important driver of seek growth in the SMB and mid markets.

Speaker 3: Also hoping to drive CCache traction is the integration of our offer with a Viya Cloud Office by RingCentral.

Speaker 3: We believe this will be an important driver of sea growth in the SMB and mid-market.

One example is a recent win in the Netherlands waste management and recycling company fan happened containers migrated to Avaya, one cloud <unk> and Avaya cloud office reliability.

Speaker 3: One example is a recent win in the Netherlands. Waste management and recycling company Van Happen Containers migrated to a via one cloud CCAS and a via cloud office. Reliability, greatly reduced onsite systems maintenance and platform integration were key drivers for their decision along with integration of other channels, such as WhatsApp and Facebook all integrated.

The reduced onsite systems maintenance and platform integration were key drivers for their decision along with integration of other channels, such as Whatsapp and Facebook all integrated with their CRM.

Another international win was Trans Cosmos, a Japanese based global P. P O.

Speaker 3: Another international win was Trans Cosmos, a Japanese-based global BPO.

They are using our sic has along with Google Cloud contact center AI to compose effortless customer experiences reduce wait times improve efficiencies and all around satisfaction.

Speaker 3: They are using our CCAS along with Google Cloud Contact Center AI to compose effortless customer experiences, reduce wait times, improve efficiencies, and all-around satisfaction.

Speaker 3: The Viya Cloud office continues to perform well, and we saw significant progress during the quarter.

Avaya cloud office continues to perform well and we saw significant progress during the quarter.

Speaker 3: Now available in 13 countries, we continue to add Avaya specific innovations to the platform, along with integration, as I just mentioned, to our own Avaya CCAST solution.

Now available in 13 countries, we continue to add Avaya specific innovations to the platform along with integration as I, just mentioned to our own of ISC caps solution.

We won multiple 1 million T C V deals during the quarter.

Speaker 3: We won multiple 1 million TCV deals during the quarter.

Speaker 3: We grew the number of customers by nearly 25% and total seats by...

We grew the number of customers by nearly 25% and total seats by almost 30%.

Speaker 3: Customers continue to choose Avaya Cloud Office because it combines best in public UCAS with Avaya's enterprise capability.

Customers continue to choose Avaya cloud office, because it combines best and public Ucas with Avaya is enterprise capabilities, one new customer preferred home care of New York, a leading home care agency chose our ucas to replace their existing system with thousands of calls per day, they were experiencing persistent outages.

Speaker 3: One new customer preferred Home Care of New York, a leading home care agency chose our UCAS to replace their existing system.

Speaker 3: With thousands of calls per day, they were experiencing persistent outages that created significant risk for staff and patients.

That created significant risk for staff and patients.

Speaker 3: This led to them to seek a cloud-based solution, and they selected us for over 500 years.

This led to them to seek a cloud based solution and they selected us for over 500 users.

Speaker 3: Their solution includes video conferencing, collaboration, messaging, and calling.

Our solution includes video conferencing collaboration messaging and calling.

On the private cloud front, we continue to see significant adoption as measured by new bookings and Activations T. C V bookings of our Avaya, one cloud private were up over 500% from the prior year.

Speaker 3: On the private cloud front, we continue to see significant adoption as measured by new bookings and activations. TCV bookings of our Avaya One Cloud Private were up over 500% from the prior year, demonstrating the rapid acceleration we are seeing in demand for cloud capabilities delivered in a private cloud.

Administrative the rapid acceleration, we're seeing in demand for our cloud capabilities delivered in a private cloud mode.

While this growth rate will moderate as the denominator grows the right way to think about this is avaya is the only major UC and cc solution provider that can offer public and our private cloud platform delivery models at enterprise scale.

Speaker 3: While this growth rate will moderate as the denominator grows, the right way to think about this is Avaya is the only major UC and CC solution provider that can offer public and or private cloud platform delivery models at enterprise scale. This is a significant difference.

This is a significant differentiator for us.

One example of a recent private cloud win is with Mali, a global automotive supplier with over 70000 employees and 160 production locations.

Speaker 3: One example of a recent private cloud win is with Malay, a global automotive supplier with over 70,000 employees and 160 production locations.

Speaker 3: They were struggling with inconsistent customer and employee experiences while using 19 voice

They were struggling with inconsistent customer and employee experiences, while using 19 voice vendors.

Speaker 3: They chose our private cloud solution and will now consolidate their fragmented base of vendors to a single

They chose our private cloud solution and will now consolidate the fragmented base of vendors to a single Avaya platform.

We will continue to see strong demand for private cloud and expect this to remain a major long term growth driver.

Speaker 3: We will continue to see strong demand for private cloud and expect this to remain a major long-term growth driver.

Before turning it over to Karen.

I just want to thank our partners employees and customers again.

Speaker 3: I just want to thank our partners, employees, and customers again for what was an incredible milestone video for Viya.

For what was an incredible milestone year for Avaya.

With that let me turn it over to Karen.

Thank you Jim.

Speaker 4: Thank you, Jim. Good morning, everyone. As a reminder, with the exception of revenue, unless otherwise stated, all financial metrics referenced on this call are non-GAAP , and the supplementary slides posted on our investor relations website set forth the GAAP to non-GAAP reconciliation.

Good morning, everyone.

As a reminder, with the exception of revenue unless otherwise stated all financial metrics referenced on this call are non-GAAP and the supplementary slides posted on our Investor Relations website set forth the GAAP to non-GAAP reconciliations.

Speaker 4: All figures mentioned in this call are as reported, unless otherwise indicated in constant currency.

All figures mentioned in this call are as reported unless.

Otherwise indicated in constant currency.

I'll start with a few key highlights to punctuate what was a milestone year for Avaya.

Speaker 4: I'll start with a few key highlights that punctuate what was a milestone year for Avaya.

At $2 97 $3 billion in revenue for fiscal 2021 up.

Speaker 4: At $2.973 billion in revenue for fiscal 2021, up 3% year over year, we generated revenue growth for the first time in well over a decade.

Up 3% year over year, we generated revenue growth for the first time in well over a decade.

Highlighting our significant progress, we achieved $530 million or one cloud annual recurring revenue up from $191 million last year significantly exceeding the high end of our guidance range.

Speaker 4: Highlighting our significant progress, we achieved $530 million of one cloud annually recurring revenue, up from $191 million last year, significantly exceeding the high end of our guidance range.

Speaker 4: Most notably, this reference marks the progress of our transition to the cloud and the relevance of our market-leading solutions.

Most notably this reference marks the progress of our transition to the cloud and the relevance of our market leading solutions.

Speaker 4: CAPS, or Cloud Alliance Partner and Subscription, reached the high end of fiscal year guidance at approximately 40% of revenue, up from 26% last year, with the fourth quarter hitting a record of 44% of revenue.

Caps or cloud alliance partner and subscription reached the high end of fiscal year guidance at approximately 40% of revenue up from 26% last year with the fourth quarter hitting a record of 44% of revenue.

Getting deeper into the numbers are one cloud era or metric grew 25% sequentially and is up 177% year on year.

Speaker 4: Getting deeper into the numbers, our one cloud ARR metric grew 25% sequentially and is up 177% year-on-year.

Customers paying greater than $1 million annually continued to be more than 60% of total a R. R.

Speaker 4: customers paying greater than $1 million annually continue to be more than 60% of total ARR.

Speaker 4: Similarly, contact center was again about 60% of total ARR.

Similarly contact center was again about 60% of total a R. R.

In terms of revenue, our fourth quarter generated $760 million, which compares to $755 million in the year ago period, and $732 million in the third quarter.

Speaker 4: In terms of revenue, our fourth quarter generated $760 million, which compares to $755 million in the year-over period, and $732 million in the third quarter.

Speaker 4: For the full fiscal year, we reached $2.973 billion, which compares to $2.873 billion in the year-ago period.

For the full fiscal year, we reached two 973 billion, which compares to 2.8 dollars 73 billion in the year ago period.

Fiscal 2021 revenue does include a $15 million adjustment for the understatement of revenues in prior periods.

Speaker 4: Fiscal 2021 revenue does include a $15 million adjustment for the understatement of revenues in prior periods.

For the fiscal year recurring revenue accounted for 66% of total revenue with software and services accounting for 88%.

Speaker 4: For the fiscal year, recurring revenue accounted for 66% of total revenue, with software and services accounting for 88%.

Turning to margins for the fourth quarter non-GAAP gross margin was 64% compared to 61, 3% in the year ago period, and 61, 5% sequentially.

Speaker 4: Turning to margins, for the fourth quarter, non-GAAP gross margin was 60.4% compared to 61.3% in the year-over period and 61.5% sequentially.

Speaker 4: margin this quarter was reflective of higher contribution from our hardware offer.

<unk> margin this quarter was reflective of higher contribution from our hardware offerings.

For the year the shift between services and product is more pronounced where fiscal year 2021 product margin was 59, 9% compared to 62, 3% in the year ago period, while services margin came in at 62, 1% compared to 67% in the year ago period.

Speaker 4: For the year, the shift between services and product is more pronounced, where fiscal year 2021 product margin was 59.9% compared to 62.3% in the year-ago period, while services margin came in at 62.1% compared to 60.7% in the year-ago period.

Speaker 4: These aggregate to a total non-GAAP gross margin of 61.3% compared to 61.3% for fiscal 2020 or flat year over year.

These aggregate to a total non-GAAP gross margin of 61, 3% compared to 61, 3% for fiscal 2020 or flat year over year.

In terms of total profitability margin and cash flow metrics profit margins continue to reflect the substantial investments in R&D and go to market that we have been communicating all year.

That is putting roughly one point of adjusted EBITDA margin back into the business. We are very pleased with the positive results. These investments are having driving our current and future air our momentum.

Speaker 4: We are very pleased with the positive results these investments are having, driving our current and future AR armament.

Fourth quarter, adjusted EBITDA was $179 million.

Speaker 4: Fourth quarter adjusted EBITDA was $179 million, representing an adjusted EBITDA margin of 23.6%, down 290 basis points year on year, consistent with our plan.

Representing an adjusted EBITDA margin of 23, 6% down 290 basis points year on year consistent with our plan.

Speaker 4: Q4 non-GAAP operating margin was $145 million, representing a non-GAAP operating margin of 19.1%, down 340 basis points year on year.

Q4, non-GAAP operating margin was $145 million, representing a non-GAAP operating margin of 19, 1% down 340 basis points year on year.

Non-GAAP EPS was <unk> 77 cents in the fourth quarter compared to 93 in the year ago period, and 75 sequentially.

Speaker 4: Non-GAP EPS was $0.77 in the fourth quarter compared to $0.93 in the year-over-period and $0.75 sequential.

Summarizing other key performance indicators for our transformational fiscal year 2021.

Speaker 4: Summarizing other key performance indicators for our transformational fiscal year 2021. Adjusted EBITDA was $719 million representing an Adjusted EBITDA margin of 24.2%.

<unk> EBITDA was $719 million, representing an adjusted EBITDA margin of 24, 2%.

Speaker 4: Non-gap EPS was $3.16 for the year up from $3.03 last year

Non-GAAP EPS was $3 16 sites for the year up from $3 <unk> last year.

We ended the fiscal year with a cash balance of $498 million cash.

Speaker 4: Cash flow from operations at 30 million represented 1% of revenue. This was expected and is consistent with our revenue model transformation.

Cash flow from operations at $30 million represented 1% of revenue. This was expected and is consistent with our revenue model transformation.

We should note that during the year, we paid down $100 million of term loan.

Now turning to guidance for <unk>, 'twenty, two and full year fiscal 'twenty two.

Please note that all year on year revenue changes are expressed on a constant currency basis.

<unk> revenue amounts reflect rates as of October 31, 2021.

Speaker 4: In terms of our forward-looking OneCloud ARR metric, we expect to exit fiscal year 2022 between $880 and $910 million. At the midpoint, this represents growth of nearly 70% year-over-year.

In terms of our forward looking one cloud <unk> metric, we expect to exit fiscal year 2020 to between 880 $910 million.

At the midpoint this represents growth of nearly 70% year over year.

This expectation reaffirms the previously communicated target of exiting the 2022 calendar year, with one cloud or at or above $1 billion.

Speaker 4: This expectation reaffirms the previously communicated target of exiting the 2022 calendar year with one cloud ARR at or above $1 billion.

Turning to revenue.

Speaker 4: Turning to revenue, Avaya's business model transformation continues. As such, the mix between point in time and ratable software revenue streams continue to shift increasingly into a larger, more ratable base.

<unk> business model transformation continues as such the mix between point in time and ratable software revenue streams continue to shift increasingly into a larger more ratable base.

Therefore, we expect full year fiscal 2022 revenues of between 2.9, 75, and $3.0 billion to $5 billion.

Speaker 4: Therefore, we expect full year fiscal 2022 revenues of between $2.975 and $3.025 billion.

Representing growth of one 2% as measured in constant currency or zero to 2%, assuming FX rates as of October 31.

Speaker 4: representing growth of 1 to 2% as measured in constant currency or 0 to 2% assuming the FX rate as of October 31st.

We expect Q1 revenue to be between 725 and $745 million.

Speaker 4: We expect Q1 revenue to be between $725 and $745 million.

Speaker 4: Revenue generated from caps for the year is expected to be between 45 and 50% of revenue.

Revenue generated from caps for the year is expected to be between 45 and 50% of revenue.

Speaker 4: At the midpoint, this reflects growth of 20% year over year.

At the midpoint this reflects growth of 20% year over year.

While we are still in the midst of our transition to a recurring cloud software business model I remind investors that we will continue to invest heavily in the capabilities required to support an expanding cloud customer base.

Speaker 4: While we are still in the midst of our transition to a recurring cloud software business model, I remind investors that we will continue to invest heavily in the capabilities required to support an expanding cloud customer base.

Speaker 4: As such, we expect non-GAAP operating margin to be between approximately 19 and 20 percent for the full fiscal year.

As such we expect non-GAAP operating margin to be between approximately 19 and 20% for the full fiscal year.

Speaker 4: Similarly, our adjusted EBITDA should be between $700 and $720 million or approximately 24% of revenue.

Similarly, our adjusted EBITDA should be between 700 and $720 million or approximately 24% of revenue.

Speaker 4: We expect Q1 to closely follow these margin levels with non-gap operating margin between 18 and 19 percent and adjusted EBITDA margin of approximately 23 percent or between $160 and $175 million.

We expect Q1 to closely follow these margin levels with non-GAAP operating margin between 18, and 19% and adjusted EBITDA margin of approximately 23% or between 160 and $175 million.

I'd now like to take a moment to comment on our cash flow trajectory during our revenue model transition to.

Speaker 4: I'd now like to take a moment to comment on our cash flow trajectory during our revenue model transition.

The shift from Capex to Opex contracts has manifested with significant growth of contract assets on the balance sheet, reflecting deferred billings over a multiyear period.

Speaker 4: The shift from capex to opex contracts has manifested with significant growth of contract assets on the balance sheet, reflecting deferred billings over a multi-year period.

Speaker 4: Since the introduction of our OneCloud portfolio of offerings in early 2020, we saw $164 million of growth in contract assets in fiscal 2020 and an additional $239 million in fiscal 2021 to end the year at $606 million.

Since the introduction of our one cloud portfolio of offerings in early 2020, we saw a $164 million of growth in contract out of it.

Assets in fiscal 2020.

And an additional $239 million in fiscal 2021 to end the year at $606 million.

As the mix of our purely ratable cloud contracts reached critical mass or revenue recognition billings and cash flow will more closely align.

We significantly outperformed our fiscal 2021, one cloud annually recurring revenue objectives and as a result Q1 of fiscal 2022, we will see significant cash payouts for bonuses commissions accelerators and incentive multipliers.

Speaker 4: We significantly outperformed our fiscal 2021 One Cloud annually recurring revenue objectives. And as a result, Q1 of fiscal 2022, we will see significant cash payouts for bonuses, commissions, accelerators, and incentive multipliers.

Speaker 4: Therefore, we're expecting Q1 cash flow from operations will be approximately negative 7% of revenue.

Therefore, we are expecting Q1 cash flow from operations will be approximately negative 7% of revenue.

Speaker 4: For the full fiscal year 2022, we expect cash flow from operations will be approximately 1% of revenue, consistent with fiscal 2021.

For the full fiscal year 2022, we expect cash flow from operations will be approximately 1% of revenue consistent with fiscal 2021.

Turning to shares outstanding guidance and earnings per share, we expect our weighted average shares outstanding to be between approximately 88% 90 million shares for fiscal 2022.

Speaker 4: Turning to Shares Outstanding Guidance and Earnings per Share, we expect our weighted average shares outstanding to be between approximately 88 and 90 million shares for fiscal 2022.

Speaker 4: We expect non-GAAP EPS for the fiscal year to be between $2.85 and $3.03. For the first quarter, we expect non-GAAP EPS to be between $0.63 and $0.75.

We expect non-GAAP EPS for the fiscal year to be between $2 85 and $3 <unk>.

For the first quarter, we expect non-GAAP EPS to be between <unk> 63.

75 cents.

Speaker 4: While we will cover our longer-term financial targets in greater detail at our Investor Day, which will be held as part of the Engage User Conference on Tuesday, December 14th, I do want to take this opportunity to also provide an early look beyond fiscal 2022 and towards the fiscal 2023 and 2024 timeframes, referencing slides 16 and 17 in our Investor Day.

While we will cover our longer term financial targets in greater detail at our Investor day, which will be held as part of the engage user conference on Tuesday December 14th I do want to take this opportunity to also provide an early look beyond fiscal 2022 and towards the fiscal 2023 and 2024.

Timeframes referencing slide 16, and 17 in our investor deck.

As we continue to aggressively migrate our customers into our one cloud portfolio, we expect to exited fiscal 2020 for a $2 billion or one cloud annually recurring revenue.

Speaker 4: As we continue to aggressively migrate our customers into our One Cloud portfolio, we expect to exit fiscal 2024 at $2 billion of One Cloud annually recurring revenue.

Speaker 4: This represents an almost four times increase when compared to our fiscal 2021 exit point and is double our calendar year, year end 2022 ARR target.

This represents an almost four times increase when compared to our fiscal 2021 exit point and is double our calendar year year end 2022 <unk> target.

Speaker 4: in fiscal 2023, we expect total revenue to increase by the mid-single digits.

In fiscal 2023, we expect total revenue to increase by the mid single digits.

Speaker 4: and we continue to invest in the business, we expect adjusted EBITDA margins will remain in the 23-24% range.

And we continue to invest in the business, we expect adjusted EBITDA margins will remain in the 23% to 24% range.

<unk> will improve to the mid to high single digits as a percent of revenue as contract assets become billable and more are converted into cash flow.

Speaker 4: CFFO will improve to the mid to high single digits as a percent of revenue as contract assets become billable and more are converted into cash.

Moving to fiscal 2020 for total revenue growth will accelerate by mid to high single digits. This acceleration as a result of our one cloud portfolio, making up the majority of our business in fiscal 2024.

Speaker 4: Moving to fiscal 2024, total revenue growth will accelerate by mid to high single digits. This acceleration is the result of our one cloud portfolio making up the majority of our business in fiscal 2024. We expect adjusted EBITDA dollars will grow while the margin levels remain constant at between 23 and 24 percent as a percent of revenue.

We expect adjusted EBIT dollars will grow while the margin levels remained constant at between 23% and 24% as a percent of revenue.

CFO in fiscal 2024 will increase significantly into the low double digits as a percentage of revenue.

Speaker 4: CFFO in fiscal 2024 will increase significantly into the low double digits as a percentage of revenue.

Speaker 4: Avaya is a very different software company today exiting fiscal 2021. We continue to exceed our own high expectations as demonstrated by the success of ARR and the return to revenue growth.

Avaya is a very different software company today exiting fiscal 2021, we continue to exceed our own high expectations as demonstrated by the success of their ore and the return to revenue growth.

Speaker 4: Through the investments we have made in our OneCloud portfolio, we are confident in the future of Avaya and our ability to deliver on our long-term targets. With that, I'd now like to turn the call back to Avaya.

Through the investments we've made in our one cloud portfolio. We are confident in the future of avaya and their ability to deliver on our long term targets.

With that I'd now like to turn the call back to Jim Jim.

Thank you Karen.

Speaker 3: Looking ahead, there is significant opportunity for VIA. Our business is thriving and continue to grow.

Looking ahead, there is significant opportunity for avaya.

Our business is thriving and continues to gain momentum.

Speaker 3: We are growing ARR at a remarkable pace and transitioning customers to the cloud. Our innovation engine is running strong. And we're.

We are growing a R. R at a remarkable pace and transitioning customers to the cloud.

Our innovation engine is running strong.

And we have an incredible global team and partner community.

Speaker 3: We've invested significantly back in the business and it is paying dividends.

We've invested significantly back in the business and it is paying dividends.

Speaker 3: Investment our enterprise customers are making in Avaya is the single greatest validation that we are accelerating in the right direction

The investment our enterprise customers are making in Avaya is the single greatest validation that we are accelerating in the right direction.

This is why I'm excited for what the future holds and why I'm confident in our ability to drive profitable growth.

Speaker 3: This is why I'm excited for what the future holds and why I'm confident in our ability to drive profitable growth as a leading enterprise cloud.

As a leading enterprise cloud company and we look forward to providing you more details about the opportunities we see ahead.

Speaker 3: and we look forward to providing you more details about the opportunities we see ahead during our investor day in December . KING

During our Investor day in December.

With that operator please.

Please open it up for questions.

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You May press star two if you'd like to remove your question from me Kim for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys in the interest of time, we ask that you each keep to one question and one follow up thank you.

Speaker 1: In the interest of time, we ask that you each keep to one question and one follow-up.

Speaker 1: Our first question comes in line of Ryan McWilliams with Barclays. Please proceed with your questions.

Our first question comes from the line of Ryan Macwilliams with Barclays. Please proceed with your question.

Thanks for taking the question strong one cloud results once again and I thought it was interesting 94% of your one cloud <unk> comes from customers with over 100, K and air are so as your customers are transitioning to subscription are you starting to see early signs of larger customers who are now considering moves.

Speaker 5: Thanks for taking the question strong One Cloud results once again. I thought it was interesting. 94% of your One Cloud ARR comes from customers with over 100k in ARR. So as your customers are transitioning to subscription, are you starting to see early signs of larger customers who are now considering moving from their on prem subscription to cloud solutions?

From their on Prem subscription to cloud solutions.

Hey, Ryan this is Jim good morning, and thank you very much.

Speaker 3: Yeah, Ryan, this is Jim. Good morning. And thank you very much. In fact, you know, we're seeing momentum across the board, be it that in private cloud or public cloud and or the hybrid cloud solutions. As we take a look, as we pointed out, and as you pointed out, 94% are coming from

In fact, we're <unk>.

Seeing momentum across the board be it that in private cloud public cloud <unk>.

The hybrid cloud solutions as.

As we take a look as we pointed out and as you pointed out in 94%.

We're coming from.

Speaker 5: from our large enterprises, we're really pleased with that. More importantly, when you take a look at the performance, you know, 60% of that ARR is greater than 1 million, 20% greater than 5 million.

From our large enterprises, we're really pleased with that more importantly, when you take a look at the performance you know 60% of that business.

Greater than $1 million, 20% greater than $5 million.

Speaker 5: And equally as important, 60% of our ARRs from contact centers. So further fortifying our leadership in large enterprise customers.

And equally as important 60% of our ours from contact center. So further fortifying our leadership in large large enterprise customers and really as I mentioned sort of a validation that our portfolio and our innovation is.

Speaker 5: And really, as I mentioned, sort of a validation that our portfolio and our innovation is lined up where our customers want us to be. So significant content is in subscription.

Wind up where our customers want us to be so.

Significant content is and isn't.

<unk>.

Speaker 5: But really what subscription is, it's really a vehicle for us to deliver our One Cloud solution.

But really what subscription is it's really.

A vehicle for us to deliver our one cloud solutions and Thats exactly what were doing and thats, our ability to consume our solutions being hybrid private or public.

Speaker 5: And that's exactly what we're doing. And that's our ability to consume our solutions, be it hybrid, private, or public. We did reach 530. We're very pleased with that. More than doubling not only subscription, but we also more than doubled our private and public, and we're seeing traction across the board.

Did reached 530, we were very pleased with that more than doubling not only subscription, but we also more than doubled our private and public and we're seeing traction across the board.

Speaker 5: And I think this is extremely important because having the portfolio that we do really provides differentiation.

And I think this is extremely important because having the portfolio that we do.

Really provides differentiation irrelevance.

Speaker 5: where if you were just delivering UCAS or CCAS or hybrid, private, or public, you know, one size does not fit all in today's market. And I hear that consistently from many of the CEOs of the customers that we serve. And it's an important point because operating at the global scale that we do, operating with the largest of large enterprises, if you really want

Where if you were just delivering ucas or <unk> or hybrid private or public one size does not fit all in today's market and I hear that consistently from many of our.

Those are the customers that we serve and it's an important point because operating at the global scale that we do operating with the largest of large enterprises. If you really want to compete and win you need to provide the capabilities that really enable our customers to continue to operate and win in the markets that they serve so.

Speaker 5: We need to provide the capabilities that really enable our customers to continue to operate and win in the markets that they serve. So we're really pleased with the performance across.

We're really pleased with the performance across the board.

Perfect one more for me here and one thing that stuck out to me in the press release was the cash flow from operations guidance for the next two years does your one cloud results add more visibility into your business model going forward and would you mind, just adding maybe a little more color and your confidence in hitting these new CFO targets.

Speaker 6: Perfect. One more from me. Kieran, one thing that stuck out to me in the press release was the cash flow from operations guidance for the next two years. Does your OneCloud results add more visibility into your business model going forward? And would you mind just adding maybe a little more color in your confidence in these new CFO targets? Thanks. Oh, absolutely.

Thanks.

Absolutely. So I mean, it starts very much what you would expect as you see a revenue model transition.

Speaker 4: very much what you would expect as you see a revenue model transition. This is exactly unfolding as we'd expected, and quite frankly, we've looked at a lot of peer companies who've also gone through this model, and they underwent very similar

This is exactly unfolding as we had expected and quite frankly, we looked at a lot of peer companies. We've also gone through this model.

Yes.

Under one very similar.

Speaker 4: very similar cash flow transformation. So from our perspective, you know, the shift from CapEx to the OpEx has increased the working capital requirements. And essentially over the last two years, since we introduced our OneCloud portfolio, we've added over $400 million worth of contract assets.

So pretty similar cash flow transformation.

From our perspective, the shift from Capex to the Opex has increased their working capital requirements and essentially over the last two years since we introduced our one cloud portfolio, we've added over $400 million worth of contract assets essentially deferred accounts receivable. So youre absolutely spot on with your question. It does.

Speaker 4: potentially deferred accounts receivable. So you're absolutely spot on with your question. It does dramatically increase the visibility to what we see. What I look at in 22 is another year as we continue to accelerate the ARR.

Dramatically increased the visibility that's what we see when I look at in 'twenty. Two is another year as we continue to accelerate the IRR. We reached a point as we exit 'twenty two into 'twenty three without suddenly we start to see more of the.

Speaker 4: We reach a point as we exit 22 into 23, where now suddenly we start to see more of the, you know, the requirements for incremental contract assets start to decline.

Clients for incremental.

Contract assets start to decline and stabilize and actually we get mid to high single digits in 'twenty three 'twenty four we actually see even a modest tailwind.

Speaker 4: And actually, we get mid to high single digits in 23. And out in 24, we actually see even a modest tailwind as we've reached and really aligned both billings and new bookings. And essentially, at that time of the year, I would expect to be low double digits, you know, right around 11 to 12% of CFFO, so with a good line of sight.

As we've reached and really aligned both billings and our new bookings and essentially it's that time of the year I would expect to be low double digits right around 11% to 12% of senior folks with good line of sight.

Because your commentary thanks, guys.

Thank you. Our next question comes from the line of George Sutton with Craig Hallum Capital Group. Please proceed with your question.

Speaker 1: Thank you. Our next question comes from the line of George Sutton with Craig Hallam Capital Group. Please proceed with your question.

Thank you nice results so.

Speaker 7: Thank you. Nice results. So I'm interested, Kieran, on the 2024 ARR expectations. When you mentioned that one cloud was 10% of the installed base today, how high would you anticipate that being in 2024 to achieve that ARR number, and how far do you think that ultimately...

I'm interested Karen on the 'twenty 'twenty four in our our expectations. When you mentioned that one club was 10% of the installed base today, how how high would you anticipate that being in 2020 were to achieve that are our number and how far do you think that ultimately goes.

Yes, So obviously George will go through a lot more detail at Investor day, but as I said right now all of our <unk> is one cloud they are as Jim pointed out in his prepared remarks, our subscription hybrid.

Speaker 4: Yes, obviously George will go through a lot more detail at investor day, but as I've said right now, all of our ARR is one cloud ARR. As Jim pointed out in his prepared remarks.

Speaker 4: Our subscription hybrid is a vehicle for delivering cloud content to date.

As a vehicle for delivering.

<unk> cloud content today.

Speaker 4: But I think to the element of your pieces, if we think about where we look at that $2 billion out there, I would see well north of 50%

So the dominance of your piece as we think about where we look at that $2 billion out there I would see well north of 50% of our one cloud you are coming from public and private cloud.

Speaker 4: of our One Cloud ARR coming from public and private cloud out in fiscal 24.

24.

Just a follow up for Jim I'll ask the question everybody on the call wants to ask given the vantage acquisition. This morning can you just give us a forward looking analysis from your seat relative to industry consolidation.

Speaker 7: Just a follow-up for Jim. I'll ask the question Irvin the call wants to ask given the Vonage acquisition this morning Can you just give us a forward-looking? analysis from your seat relative to industry consolidation

Yes, I mean.

It's.

Speaker 5: It's pretty clear that this is a hot space, and there's been a lot of consolidation, as you well know, both papered and yet closed. And I think it just is further proof point that the industry, number one, is not only just consolidating, but it gets to the point where if you take a look at Avaya...

It's pretty clear that this is a this is a hot space and and Theres been a lot of consolidation as you well know.

Both paper and yet.

At close.

And I think it's just as further proof point that the industry.

Number one is not only just consolidated but it gets to the point, where if you take a look at avaya.

Speaker 5: You know, we're the number one provider that offers the complete suite and one size does not fit all.

We're the number one provider that offers the complete suite and one size does not fit all and back to my previous comment.

Speaker 5: And back to my previous comment, one, if you're going to win, and more importantly, win at a global scale, and more importantly, win in where the real value is created, and that's in large, complex enterprises, you have to have the capability to deliver UCAS with CCAS, and you have to have the capability to provide what customers require, hybrid, private, and or public. And I continue to see the,

One youre going to win and more importantly win at a global scale and more importantly, when and where the real value is created and that's in large complex enterprises you have to have the capability to deliver you cash would see cash and you have to have.

The capability to provide what our customers require hybrid private and public.

I continue to see the.

Speaker 5: the marketplace consolidating, but it's really consolidating around this whole platform.

The marketplace consolidating but it's really consolidating around this whole platform and it's really consolidating exactly aligned with our strategy and that sort of this dynamic composer Bowl enterprise and delivered to deliver.

Speaker 5: And it's really consolidating exactly aligned with our strategy. And that's sort of this dynamic, composable enterprise and delivered to deliver, you know, the complete suite, not only from a worker experience, but more importantly, from a, from a customer experience as well. So, you know, we're, uh, it's always exciting to be in a hot space. You know, we think we're

The complete suite not only from a worker experience, but more importantly from a from a customer experience that as well so.

It's always exciting to be in a hot space. We think we're positioned exactly where we need to be and no doubt I believe theres going to continue to be consolidation.

Speaker 5: We're positioned exactly where we need to be. And no doubt, I believe there's going to continue to be consolidation as folks figure out how they can, you know, get that complete platform that Avai is offering into the market today.

Folks figure out how they can get.

Get that complete platform that avaya is offering into the market today.

Great. Thank you.

Okay.

Thank you. Our next question comes from the line of stomach Chatterji with Jpmorgan. Please proceed with your question.

Speaker 1: Thank you. Our next question comes from line of Samik Chatterjee with JP Morgan. Please proceed with your question.

Excuse me.

Speaker 8: Hi, this is Joe Cardoso on for Summit Chatterjee. Just one question for me, and I just wanted to touch on the large deal activity. You've obviously shown great execution relative to driving larger and larger deal activity, particularly over the last two years around those disclosures there. I was just curious if you could provide more color around what's driving that large deal activity.

Hi, This is Joe Cardoso on for stomach cavity.

Just one question for me I, just wanted to touch on the large deal activity.

Obviously, some great execution relative to driving larger and larger deal activity, particularly over the last 10 years around those disclosures. There was just curious if you could provide more color around what's driving that large deal activity and whether youre seeing a majority of that coming from the <unk> side as opposed to the UC side and then additionally.

Speaker 8: and whether, you know, you're seeing a majority of that coming from the CC side as opposed to the UC side. And then, additionally, I was just curious to hear if any of that activity is coming from any of the new logos.

Just curious to hear if any of that activity is coming from any of the new logos are buyers winning or is it or if it's largely being cultivated from the existing customer base. Thank you.

Speaker 8: a buy is winning or if it's largely being cultivated from the existing customer base. Thank you.

Yeah, good morning, and thanks, Yeah.

I think it has to it has to do with this a number of a number of factors. So first and foremost that has a lot to do with what our teams have been doing really to reposition us back as an enterprise enterprise leader in cloud communications.

Speaker 5: I think it has to do with a number of factors. So first and foremost, it has a lot to do with what our teams have been doing, really, to reposition us back as an enterprise leader in cloud and communication.

Speaker 5: And the fact that the acceleration from a digital transformation perspective within the industry

And the fact.

The acceleration from a digital transformation perspective within the industry has opened up opportunities for that fact has pull up those opportunities right in line, but we've been doing over the last three years to four years from our from our strategy. So it's nice to see that our our strategy is turning into execution and frankly.

Speaker 5: has opened up opportunities and for that fact has brought those opportunities right in line with what we've been doing over the last three to four years from our strategy.

Speaker 5: It's nice to see that our strategy is turning into execution, and frankly...

Speaker 5: That's a little bit different from the Avaya of the past. But that's who we are and what we're going to be doing moving forward.

It's a little bit different.

The avaya of the past.

But thats, who we are and what we're going to be doing moving forward and also I think as a vote of confidence in avaya with our large enterprise customers because they are looking to especially in the new work dynamic. They are looking to consolidate a number up there are providers into some into one single trusted provider.

Speaker 5: It also, I think, is a vote of confidence in a vibe with our large enterprise customers.

Speaker 5: because they're looking to, especially in the new work dynamic, they're looking to consolidate a number of their providers into one single trusted provider that again can offer a full portfolio, full suite of solutions because the opportunity to try to integrate a number of

That again can offer a full portfolio of full suite of solutions, because they have the opportunity to try to integrate a number of them.

Specific application simply number one it's not affordable, but secondly, it's extremely complex and doesn't scale for where they need to move within their overall within the overall market.

Speaker 5: Specific applications simply at number one is not affordable. But secondly, it's extremely complex

Speaker 5: and doesn't scale for where they need to move within their overall market.

Speaker 5: So, you know, as a result of that, we're seeing a significant increase in large deals. In fact, our large deal volume in FY21 was well north of 400.

So as a result of that we're seeing a significant increase.

In large deals in fact, our large deal volume in FY 'twenty, one was well north of 400 as we have communicated we were up.

Speaker 5: We were up roughly 15% from where we were in 2020.

Currently 15% from where we were in 2020, but I think they're really punctuate. This is the number of deals greater than 5 million the number of deals greater than $10 million no. One can post the results that we have which again is a real vote of confidence in our customers and then our and our.

Speaker 5: But I think to really punctuate this, is the number of deals greater than 5 million, the number of deals greater than 10 million, no one can post the results that we have, which again, is a real vote of confidence in our customers and in our solutions.

<unk>.

Speaker 5: That we're delivering to the marketplace today. And our expectation is that's going to continue as we go into FY

We are delivering to the marketplace today and our expectation is that's going to continue as we go into FY.

FY 'twenty two.

Speaker 4: Just to follow up, obviously a lot of our new logos, which we've seen an increasing step up actually in our obviously cloud and subscription as well, many of those follow the traditional land adapt, expand, renew. So they're not as big, but actually over the last several quarters, we've actually even seen some of the new logo landing points being quite large as well, which is also a good indication of our presence with the enterprise customers.

Just a follow up obviously, a lot of our new logos, which we've seen an increasing step up actually at our obviously cloud and subscription as well many of those follow the traditional land at depth.

<unk> renew so they're not as big but actually over the last several quarters. We've actually you can see some of the new logo landing points being quite.

We've been quite large as well, which is which is also good.

Good indication of our presence with the enterprise enterprise customers.

Thank you I appreciate the color guys.

Speaker 1: Thank you. Our next question comes from the line of Lance Fotanzo with Cowan & Company.

Thank you. Our next question comes from the line of Lance Vitanza with Cowen and company. Please proceed with your question.

Hi, Thanks, guys and congratulations and I apologize my phone has been cutting in and out but so hopefully that hasn't already been covered but I wanted to talk about the accelerating revenue growth in the model from 'twenty, three 'twenty, four and and just trying to get a better sense on exactly what's driving that trend.

Speaker 9: Hi. Thanks, guys. Congratulations, and I apologize. My phone has been cutting in and out. Hopefully, this hasn't already been covered, but I wanted to talk about the accelerating revenue growth in the model from 2023 to 2024.

Speaker 9: and just try to get a better sense on exactly what's driving that trend.

Speaker 9: You know, is the driver, is it moderating legacy declines just given that the maintenance piece is getting smaller and smaller or is it more accelerating cloud growth and, you know, with respect to.

Is is the driver is it moderating legacy declines just given that the.

Maintenance piece is getting smaller and smaller or where is it more accelerating cloud growth and with respect to is it coming from existing customers or do you see.

Speaker 9: Is it coming from existing customers or do you see the, does the funnel suggests that the acceleration comes from, you know, attracting new customers more so than the existing customers, any color around that would be.

Does the funnel suggests the acceleration comes from.

Tracking new customers more so than the existing customers any color around that would be helpful.

Sure. So Lance this is Karen so we did put in a file in our investor deck, a slide 17, which really tried to illustrate I think exactly the point that you made so as you look out as you look out through time, our on Prem solutions are transforming and they're migrating.

Speaker 4: Sure. So Lance, this is Kieran. So, you know, we did put in a file in our investor deck, a slide 17, which really tried to illustrate, I think,

Speaker 4: exactly the point that you made. So as you look out through time, our on-prem solutions are transforming and they're migrating to the cloud. And we're positioned really to capture that business with our broad One Cloud portfolio. And you can see from the optic on the left-hand side, our on-premise is becoming a smaller and smaller portion of the overall business. And therefore, that 20% reduction becomes less and less of a drag if we move to our transition.

To the cloud.

We're positioned really to capture that business with a broad one planned portfolio as you can see from the optic on the left hand side.

Our on premise is becoming a smaller and smaller portion of the overall business and therefore that 20% reduction becomes less and less of a drag as we move through our transition and frankly to your point. If you look at the extreme right hand side you see the flywheel, that's being created by our one cloud <unk> and that is clearly coming from both the migration of our existing vary.

Speaker 4: And further to your point, if you look at the extreme right-hand side, you see the flywheel that's being created by our OneCloud ARR. And that is clearly coming from both the migration of our existing very strong enterprise customers, but also from this new logo. As you heard Jim reference, another quarter with 1,600 new logos, over 6,000 new logos in the current year. So we obviously expect the bulk of this growth.

Strong enterprise customers, but also from this new logo.

You heard.

Jim referenced another quarter with 600, new logos over 6000, new logos in the current year. So we obviously expect a bulk of this growth to continue to be driven by upselling to our existing enterprise customers or one cloud portfolio a set of offerings, but also we fully expect that new logos are going to play.

Speaker 4: to continue to be driven by upselling to our existing enterprise customers, our one cloud portfolio set of offerings, but also we fully expect that new logos are going to play a meaningful role in that as we go forward.

A meaningful role in that as we go forward.

Okay, and then just if I could get one more in I just wanted to ask you about the Amtrak decision to go with a public cloud solution does that is that in any way a shift in your view in terms of enterprise willingness to engage in public cloud rather than private or hybrid.

Speaker 9: Okay. And then just if I could get one more in. I just wanted to ask you about the Amtrak decision to go with a public cloud solution. Is that in any way a shift in your view in terms of enterprise willingness to engage in public cloud rather than private or hybrid?

Yes.

No.

Speaker 5: I wouldn't consider it so much a shift in that, Lance, to be honest with you. I think it's just sort of a manifestation of the fact of the solutions and the innovation and where the market is going, and the fact, again, in just our overall case study.

I wouldn't consider it so much a shift in Atlanta to be honest with you I think it's just.

Sort of a manifestation of the fact.

The solutions and the innovation and where the market is going.

And the fact again and just our overall capabilities to make sure that we're delivering that sort of agile uniqueness that others can't order to drive these.

Speaker 5: to make sure that we're delivering that sort of agile uniqueness that others can't order to drive these solutions. When you take a look at the content within that solution, biometrics and others, I mean it's pretty sick. It's much different than if you were to go take a look at where the company was say two years ago or three years ago. And I think that's a tribute to the fact of how we've moved from

To drive these solutions when you take a look at the content within that <unk>.

Solution biometrics and others I mean, it's pretty.

It's.

It's much different than if you were to go take a look at where the company was say two years ago or three years ago, and I think thats. It.

Attribute to the fact that we've moved from.

Speaker 5: what was traditionally what I call sometimes around here as a product company.

What was traditionally what I call sometimes around here is a product company to how we move now to being more of a customer a customer led company and really our ability to unlock that value and really create a lens towards lifetime value, which we're doing with our move to cloud and that the stickiness of these.

Speaker 5: to how we've moved now to being more of a customer a customer led company and really our ability to unlock that value and really create a lens towards lifetime value which we're doing with our move to cloud and that the stickiness of these relationships.

Relationships I think is extremely important.

Speaker 5: I think is extremely important, and I think it's showing not only our customers voting with their wallets, but they're buying into our future, and they're building off of our future. And that's why we're winning a number of new deals, but more importantly, as Karen mentioned, we're also really expanding and really monetizing our install base, which obviously is a key to not only the strategy, but the growth of the company.

And I think it's showing not only our customer is voting with their wallets, but they are buying into our future and they are building off of our future.

And that's why we're winning a number of.

A number of new deals.

And but more importantly, as Kieran mentioned, we're also really expanding and really monetizing our installed base, which obviously is a key to that.

The strategy, but the growth of the company.

Thanks, guys Congrats again.

Thanks.

Thank you. Our next question comes from the line of Catherine.

Speaker 1: Thank you. Our next question comes from the line of Catherine Tripnick with Collier Securities.

Calling a securities. Please proceed with your question.

Thank you very much excellent quarter gentlemen.

Speaker 10: Thank you very much. Excellent quarter, gentlemen. I have a question more on, believe it or not, the PBXs.

I have a question more on <unk>.

But theyre not the PB axis Mitel has cloud link and any C. Just.

Offered a bridge connect and the Koreans.

Speaker 10: offered up Bridge Connect. And according to them that, well, might tell so-called link to RingCentral, but at a high level, it looks like the PBX is a slower turn to actually the cloud. And I wanted to get your opinion on what you're seeing there, if you actually think that's the case or not, or how fast that actually traditional legacy PBX customer might actually move to the cloud. Thank you.

Well mitel, so probably ring central but.

At a high level it looks like the P. B acts as a slower turn to actually the cloud and I wanted to get your opinion on what you're seeing there. If you actually think that's the case or not or how fast that actually traditional legacy PBX Scott My actually move to the cloud. Thank you.

Yeah sure Hey, Catharine this is Jim.

Speaker 5: Yeah, sure. Hey, Katzen. This is Jim. I'll turn this over to Dennis Kozak and then maybe add a little bit of color afterwards. Sure. Good morning, Katherine.

I'll turn this over to Dennis Kozak, and then maybe add a little bit of color afterwards sure. Good morning, Catherine So look we see.

Obviously, we've had a lot of success with our value add office business, where we're able to migrate not only our PBX to the cloud, but also a lot of our competitors, including myself.

Speaker 11: You know, obviously we've had a lot of success with our value cloud office business where we're able to migrate.

Speaker 11: not only our PBXs to the cloud, but also a lot of our competitors, including Mitel. But, you know, we do also see, you know, for a PBX that may have been sold in the last

But we do also see for a PBX that may have been solid and the last one to three years customers are initially resistant of doing another upgrade right and so a lot of times, we go in and talk about with Avaya spaces, our ability to bring our messaging and collaboration platform to them on top of IP.

Speaker 11: one to three years, customers are initially resistant of doing another upgrade, right? And so, you know, a lot of times we go in, you know, and talk about what Avaya Space is, you know, our ability to bring our messaging collaboration platform to them, you know, on top of IP Office or on top of Aura. When the customer's ready for a PBX migration, we pitch Avaya Cloud Office.

So on top of or when the customer is ready for a PBX migration, we pitch Avaya cloud office.

Okay. Thank you and is there any way you could give us what the seed.

Speaker 12: OK, thank you. And is there any way you could give us what the CTAS revenue was part of the contribution in the ARR this quarter? You did that last quarter. Yeah, well, our-

Test revenue was part of the ore contribution in the IRR. This quarter, you did that last quarter.

Yes.

<unk>.

For the quarter was $530 million rough.

Speaker 5: Roughly 80% of that was delivered via subscription.

Roughly 80% of that was delivered via subscription.

Speaker 12: So, the private-public piece of our ARR was in, therefore, in the 20-plus percent range. I can tell you that doubled in FY21 and is expected to more than double as a component of ARR as we go through fiscal 22, so becoming a larger and larger component of overall ARR. All right, thank you.

So.

Private public piece of our.

And therefore in the 20 plus percent range I can tell you that doubled in FY 'twenty, one and is expected to more than double as a component of <unk> as we go through fiscal 'twenty, two so it becoming a larger and larger component of overall overall AOR.

Yes.

Alright, Thank you very much congratulations.

You.

Speaker 1: Thank you. Our next question comes from the line of Hamid Khorsand with BWS Financials. Please proceed with your question.

Thank you. Our next question comes from the line of Amit question with Dws financials. Please proceed with your question.

Speaker 13: Good morning. I just want to understand of the logos that you've been continually winning, especially on the cloud side, are they already cloud native or are you bringing them onto the cloud?

Good morning, just wanted to understand these logos that you've continually winning especially on the cloud side or.

Are they already cloud native or are you, bringing them onto the cloud.

Yeah.

Speaker 11: Dennis, do you want to try it out? So a lot of times in our competitive wins, you know, we're usually head-to-head against a cloud provider. Generally speaking, it's usually a premise-based customer of some kind that wants to upgrade to the cloud. And we find that our agents are out there bidding on Viya Cloud Office or our other OneCloud solutions on a pretty regular basis. Occasionally, we are taking part of failed cloud migrations, and we're participating in bringing customers over to Viya Cloud Office.

Dennis you want to.

Yes.

Competitive wins, we usually head to head against a cloud provider generally speaking, it's usually a premise based customer for some time that wants to upgrade to the cloud and we find that our agents are out there bidding on office or other ones have solutions at a pretty regular basis occasionally.

Taking part of sales cloud migration, and we're participating in bringing customers Oliver to buy cloud office.

Speaker 13: And these master agents that you announced that you have 11 new ones, have they been previous via channel partners?

And these master agents that you announced that you would have a lot of new ones.

They've been previous Avaya channel partners.

Speaker 11: Yes, what was in Jim's script today, we talked about the 11 we signed up, adding Avaya OneCloud DCADS to their portfolio.

Yes.

What was in Jim's script today, we talked about the 11, we signed up adding to their portfolio.

So it'll be easy for them to just bring on board in <unk>.

Speaker 13: So it'll be easy for them to bring on board and quickly just start selling.

Quickly just start selling it.

Speaker 11: Right. Absolutely. Yeah. So it's very much like our Avaya cloud office rollout. You know, we go through a very rigorous process to onboard these master agents and their subagents to be able to effectively position our product. So they have to understand how it works, the features, the benefits, the competitive landscape, what's the customer journey look like for a migration from premise to cloud.

Absolutely, yes, so it's just very much like our Avaya cloud office rollout. We go through a very rigorous process to onboard these master agents and their sub agents to be able to effectively positioning our product. So you have to understand how it works. The features the benefits the competitive landscape, what's the customer journey look like from a migration from premise to cloud.

Great.

Speaker 5: I think it's also, this is Jim, I think it's also important to note again that when you take a look at our geographic reach, you know, we now have CCAS, as you just mentioned, in 45 countries. And as I mentioned, we will be expanding that, our CCAS offerings to roughly 100 by the end of the fiscal 22, so by the end of September of next year.

As Jim I think it's also.

Important to note again that when you take a look at our geographic reach we now have seek has has just mentioned in 45 countries and as I mentioned, we will be expanding that our <unk> offering so.

Roughly a 100 by the end of the fiscal 'twenty two so by the end of September of next year.

Speaker 5: We also have 165 partners in North America and roughly 60 partners in international markets enabled now with CCAS to go in and compete and win. So, we're exactly right on track to where we said we would be, and we still remain very confident about the Avaya OneCloud CCAS ARR growth, as I mentioned, more than doubling in FY22.

We also have 165 partners in North America, and roughly 60.

Partners in international markets enabled now would seek has to go in and compete compete and win.

Where exactly right on track to where we said we would be and we still remain very confident.

The <unk> cloud <unk>.

Our growth as I mentioned more than doubling in FY 'twenty two.

Thank you.

Thank you. Our next question comes from the line of a see a merchant.

Speaker 1: Thank you. Our next question comes from line of a CA merchant with the city group. Please pro.

Please proceed with it.

Hi, Thank you and congratulations on a great quarter.

Speaker 14: Hi. Thank you and congratulations on a great quarter. My question is more kind of, you know, on the model and I'm sure more of these details would be shared at the analyst event. But the downtake in margins, you know, looking further out, how confident are you in that downtake in margins to the 23% to 24% on an adjusted EBITDA level? In other words, you know, with all the competition stepping up.

The question is more kind of you know on.

On the model and I'm sure Mark he details will be shared at the analyst event, but.

Yeah I'll take in margin.

Looking further out.

How confident are you in that downtick in margin to the 23% to 24% on an adjusted EBIDTA level.

Whereas you know with all the competition stepping up in the space is there risk that we could see tried their impact to be EBIDTA margins or there is you know significant confidence.

Speaker 14: in this space, is there risk that we could see further impact to these EBITDA margins, or there is significant confidence at these levels?

At these levels. Thank you.

Hi, it's Karen so I'll take that one so clearly as you've seen to date.

Speaker 4: Hi, Asi. It's Karen. So I'll take that one. So clearly, as you've seen to date.

Speaker 4: As we are really working to stand up, you know, first the investment you're seeing right now, heavy from an R&D perspective, clearly go-to-market perspective as well. As we start to sign larger and larger deals and more of them, we're obviously standing up the infrastructure. And what we're really reflecting there as we go out through time is really the scaling of these offerings, and, you know, we're making a really explicit decision here to invest, you know, to drive the top line, to drive the growth.

We are really working to stand up first the investments Youre seeing right now that would be from an R&D perspective, clearly go to market perspective, as well as we start to sign one.

For larger deals and more of them will obviously standing up the infrastructure and what we're really reflecting there as we go out through time.

It's really the scaling of these offerings.

We're making a really explicit decision here to invest to drive the top line and drive the growth from a revenue perspective, and all the rest of that and what we're really seeing here is more service delivery of just scaling type of bedrooms, I feel pretty confident.

Speaker 4: from a revenue perspective and all the rest of that, and what we're really seeing here is more service delivery, just scaling type of actions. I feel pretty confident at this level, obviously if we came in at 24% last year, we're looking to be somewhere around 24% in 22 as well. I think we've built in the appropriate level of, you know,

Obviously it came in at 24% last year, we're looking to be somewhere around 24% in 'twenty two as well I think we built in the appropriate level of <unk>.

<unk> is a if you will and being able to sustain that as we get off which I'm sure.

Speaker 5: if you will, and being able to sustain that as we get up through time. Jim? Yeah, just to add to that, I mean, look, one thing, I've been here 14 years, if one thing this company knows how to do, it's it knows how to execute.

You said to that I mean look one thing I have been here 14 years at one thing this company knows how to do it.

It knows how to execute.

Speaker 5: And as we've said, I think for the last couple of years now, pretty consistently that we're going to invest back in the business and we're going to maintain our EBIT at between 23 and 24 percent. And the team has executed on that flawlessly over the over the last couple of years, even through the.

And as we've said I think for the last couple of years now pretty consistently that.

We're going to invest back in the business and we're going to maintain our EBIT between 23, and 24% and the team has executed on that flawlessly over the over the last couple of years, even through the sort of the heavy lifting of the transition since we've gone public over the last over the last four years, so a real tribute to the team.

Speaker 5: sort of the heavy lift of the transition since we've gone public over the last four years. So a real tribute to the Avay team.

One could say, it's a bit of a downtick, but you know $23 $4 23, 5%.

Speaker 5: you know, versus 24, that's in line with our strategy, it's in line with our expectation. But by no stretch of imagination should someone think that that has any downside risk to it. In fact, we've increased.

Versus 24, that's that's in line with our strategy. It's in line with our expectation, but by no stretch your imagination should some would think that that has any.

The downside downside risks to in fact, we've increased our R&D expenditures in FY 'twenty. One I think we're spending roughly in the neighborhood of about $240 million, we increased significantly in our in our go to market.

K capabilities and we've increased significantly in our systems in order to be cloud ready.

Kind of call. It says we take a look at the company.

Getting us in game shape, and what do I mean by that it's one thing to have the technology to convert and transition of company a cloud it's in.

Speaker 5: convert and transition a company to cloud. It's another to have the intangibles, the infrastructure.

Now that they have the intangibles the infrastructure.

On what you need to do in order to execute in order to really drive that transition to cloud we've invested heavily over the last two years and we have obviously a pretty significant planned to invest again this year and thats to build those.

Intangibles to get this company in game shape. So we can compete and win with the with the competition. So.

We have a very good understanding of where our money is being allocated we have a very good understanding of what it takes for us to.

Speaker 5: where our money is being allocated. We have a very good understanding of what it takes for us to.

Speaker 5: from a strategic positioning perspective.

From a strategic a strategic positioning perspective.

Speaker 5: to be competitive and win in this market. And I would tell you that the team is definitely in game shape in order to win as we go out through the next couple years.

To be competitive and win in this market.

And I would tell you that the team is definitely in game shape in order to win as we go out through the next the next couple of years. So.

Speaker 4: I'm very confident in what we posted and it's exactly in line with what we've had posted and that's a purposeful EBITDA number predicated on the amount of investment required not to move us from the middle of the pack to the front of the pack.

I am very confident in.

What we posted in it's exactly in line, what we've had posted and that's that's a purposeful EBIT number.

Gated on the amount of investment required to move us from the middle of the pack to the front of the pack.

To conclude.

So if there's any surprise and what we've seen is just been actually pick up and the rate and pace of acceleration that we've seen with the <unk> and it's really helping to influence those numbers.

Speaker 4: and the rate and pace acceleration that we've seen with the one cloud ARR that's really helping to influence those numbers. But like I said, I feel pretty confident that that's quite doable.

So I feel pretty confident.

That's quite doable.

Okay, and then if you can talk a little bit about.

The <unk> guide and then the seasonality.

Well the remainder of the year.

I know the comps are a little bit off relative to the prior fiscal year.

You guys had some contracts.

That's probably helped in <unk> 'twenty one.

So if you can just talk a little bit about how we should think about seasonality for.

Fiscal 'twenty two.

Speaker 4: Sure, so with the guidance that we put out there at $7.25 to $7.45 in the first quarter, you know, from a constant currency basis essentially, you know, down 2% to basically flat, it kind of implies that the rest of the year on a constant currency basis is going to go somewhere between 1% and 3% in terms of growth. And what you're starting to see now is, as we start to stand up more of these private

Sure so with the guidance that we put out there at 725 to 745.

In the first quarter from a constant currency basis, essentially down 2% basically flat kind of implies that the rest of the year on a constant currency basis is going to go somewhere between one and 3% in terms of growth and what you're starting to see though is as we start to stand up more of these private cloud.

<unk> offerings.

Speaker 4: Literally, it's rather both revenue, you know, the time to money is a little longer. We start to see the business should become a...

Literally it's ratable revenue the time to money is a little longer we start to see the business should become more.

Speaker 4: a little less cyclical as we go through time and a little bit more, you know, continuous growth. So that's kind of the way we're seeing it right now as we look out.

A little less cyclical as we go through time and a little bit more you know continue.

Continuous growth.

The way, we're seeing it right, though as we look out.

Okay. Thank you.

Yeah.

Speaker 1: Thank you. Our next question comes from the line of Rod Hall with Goldman Sachs.

Thank you. Our next question comes from the line of Rod Hall with Goldman Sachs. Please proceed with your question.

Yes, I think most of my questions have been answered I wanted to come back to this $15 million of adjusted revenue.

Speaker 15: Yeah, thanks. Most of my questions have been answered. I wanted to come back to this $15 million of adjusted revenue. A couple of questions on that one. We're assuming that was all in Q4. Could you guys just confirm whether that's all Q4 or did you adjust prior periods that add into that $15 million?

Couple of questions on that what we're.

We're assuming that was all in Q4 could you guys just confirm whether that's all Q4 or did you adjust prior periods that add into that $15 million.

Speaker 4: Yeah, but the bulk of it was in Q4, but we did take a little in Q3 as well. I mean, it's just essentially, without getting too technical here, we're standing up SAP's RAR module.

Yeah. The bulk of it was in Q4, but we did take a little in Q3 as well I mean, it's just essentially without getting too technical here, we're standing up S&P's <unk> module and the whole system that we were using which was Rev growth was essentially understanding in certain scenarios.

Speaker 4: And the old system that we were using, which was RevProbe, was essentially understating in certain scenarios...

Speaker 4: It was actually understating revenue, which essentially means it wasn't allocating revenue to product It was keeping it on the balance sheet, and we identified a series of instances We went back and looked through time obviously consulted closely with the with our auditors as well And there was never any quarter over the last you know three years since we introduced 606

It was actually understating revenue, which essentially means it wasn't allocating revenue the product it was keeping it on the balance sheet and we identified a series of businesses. We went back and looked through time, obviously consulting closely with the with our auditors as well and there was never any quarter over the last three years since we introduced 606.

Speaker 4: It would have been worth, you know, more than one to two million in any given quarter. So that's essentially what it's all, what it was all related.

Would have been worth.

The $2 million in any given quarter.

So that's essentially what it so it was all related to them, but the bulk of it was in Q4, there was smaller in Q3 as well.

Speaker 4: But the bulk of it was in Q4, but there was a small amount in Q3 as well.

So it's like you're saying like maybe a million dollars in Q3 or something in 2014 in Canada.

Speaker 4: It sounds like you're saying like maybe a million in Q3 or something, 14 in Q4. It was a couple of three million in Q3 and about 12 or 13 in Q4.

It was it was a couple of $3 million in Q3, and about 12 or 13 in Q4.

Okay.

Speaker 15: Okay, and then the other question is, did you guys non gap that out or it's in the non gap numbers? No, it's in our non gap numbers.

Then the other question did you guys non-GAAP that out or it's in the non-GAAP numbers.

No it's in our non-GAAP numbers.

Okay. Okay.

And then when you.

Speaker 15: And then when you, you know, you kind of previewed what you're going to talk about, at least in terms of long-term target.

You've kind of previewed what you're going to talk about at least in terms of long term target.

Speaker 15: the Analysts' Day, I wonder, like, so when we get to the Analysts' Day, what is it that, you know, what do you think needs to be dug into more? Can you maybe elaborate a little bit on?

For the analyst day, I Wonder I'd like so.

So when we get to the analyst day, what is it that you know what do you think needs to be dug into more can you maybe elaborate a little bit on how.

Speaker 4: how you how you think that'll go in terms of detail. I'm not asking you for the detail, but what are the, you know, list of things? So listen, I mean, we've heard our investors, right? Our investors are quite anxious to get a view of the new Avaya where we're going. Right. Obviously, because of COVID, we haven't had a chance to get together for a while. But what we want to really be able to do is, you know, you've already gotten a preview of my numbers. I'll slice them a couple of different ways for you. But I think the real intent here is to look closely.

How do you think that will go in terms of detail I'm not asking you for the detail, but what are the you know.

Oh.

Listen thanks, So listen I mean, we've heard our investors our investors are quite anxious to get a view of the new Avaya, where we're going right. Obviously because of Covid, we haven't had a chance to get together for a while but what we wanted to really be able to do is you've already gotten a preview of my numbers of flight. Some a couple of different ways for you, but I think the real intent here is to look closely.

Speaker 4: at the rest of our business and understand the capabilities that we have with our portfolio, with our go-to-market, and the rate and pace of how we're making the change. I mean, those are the things that Jim and I and the leadership team really want to explore and share in greater detail with you all. But, I mean, the numbers are out there. We feel really confident of them. We'll obviously give a little bit better visibility into the splits.

At the rest of our business and understand the capabilities that we have with our portfolio with our go to market at the rate and pace of how we're making the change I mean, those are the things that Jim and I and the leadership team really what I would for sure in greater detail with you all but I mean, the numbers are out there.

Feel really confident of and we'll obviously give a little bit better visibility into the split.

Speaker 4: between the cloud and the subscription hybrid portion. But, you know, I think we wanted to make sure that at least to date that you had a view beyond fiscal 22 given that we're still in this transition year in 22.

Between the cloud and the subscription hybrid portion, but you know I think we wanted to make sure that at least to date.

You had a view beyond fiscal 'twenty two given that we're still in this transition year in 2002.

Okay, great. Thank you.

Thank you. Our next question comes from the line of meta Marshall with Morgan Stanley. Please proceed with your question.

Speaker 1: Thank you. Our next question comes from line of Meadow Marshall with Morgan Stanley , please proceed.

Speaker 16: Great, thanks. A couple of questions. One, just given kind of the traction that you're seeing in UCAS and CCAS, just

Okay, great. Thanks.

Couple of questions. One just given kind of the traction that you're seeing any caps and see cash just.

Speaker 16: Where are you seeing the most opportunities to expand your partner community, particularly as a lot of these transitions get wrapped up in CRM transitions? And then maybe second, and you'll probably discuss this more at the analyst day, but just, you know, given...

Where are you seeing the most opportunities to expand your partner community.

Particularly as a lot of these transactions get wrapped up in CRM transitions.

And then maybe a second then you'll probably discuss this more at the analyst day, but just given.

Speaker 16: CKAS's evolution to have a lot more AI and analytics capabilities. Just where do you see M&A or is there a need for M&A to kind of help advance that portfolio? Thanks!

This evolution to have a lot more kind of AI and analytics capability is just where do you see M&A.

Hum.

Is there a need for M&A to kind of.

Help advance that portfolio.

Yeah.

Okay. So I'll start with that so certainly in terms of you guys in CCAR right very.

Speaker 11: Okay, so I'll start with that. So certainly, you know, in terms of UCAS and CCAS, right, it's a very competitive landscape, you know, but we find that, you know, a combination of the Abaya brand, the platform, our experience, our ability to execute, we do very, very well only go head to head, you know, we're finding that

A very competitive landscape.

We find that a combination of the Avaya brand the platform our experience our ability to execute we do very very well only go head to head with finding that customers are sending out rfps five six vendors.

Speaker 11: Customers are sending out RFPs to five, six vendors. All agents are responding back with a Viya cloud office. So we're really happy with the take-up rate. The attractiveness of the Viya brand, our partner program, and our ability to support the partners, even with our existing partners that are turned agents and our newly recruited partners, are all seeing traction with the solution. So we're very pleased with that.

All agents are responding back with Avaya cloud office, So we're really happy with the take up rate.

The attractiveness of the Avaya brand, our partner program and our ability to support the partners even with our existing partners that are turned agents that are newly recruited partners are also seeing traction with the solution. So we're very pleased with that.

Yes. This is Jim.

Speaker 5: Yeah, this is Jim. Just on your question about delivering, be it organic or inorganic.

So on your question about delivering be it organic or inorganic.

Speaker 5: solutions to build out sort of our CKAS AI and overall analytics. A couple things on that front. First and foremost, we have

Solutions to build out sort of our CCAR is AI and overall analytics a couple of things on that front first.

First and foremost we have.

Speaker 5: We have a very large ecosystem of.

We have a very large ecosystem.

Of.

Speaker 3: API Exchange Marketplace and a number of folks that are helping us develop.

API exchange marketplace in a number of folks.

That are that are helping us develop.

Solutions.

Speaker 5: Secondly, if you take a look at sort of at a higher level some of the strategic partnerships that we have around that ecosystem.

If you take a look at sort of at a higher level some of the strategic partnerships that we have.

Around that ecosystem with the likes of Google and others.

Speaker 5: the likes of Google and others, it's fairly extensive.

Fairly extensive.

Speaker 5: NVIDIA, the list goes on and on of key partners that we're using to drive solutions.

Okay.

Nvidia the list goes the list goes on and on.

Key partners that we are using to drive solutions.

Speaker 5: back into our product capability.

Back into our into our product capability.

Speaker 5: As far as another we believe to be a real enabler for us to further drive that is really our full suite of CPAS services that we bring to the marketplace.

As far as another we believe to be a real enabler for us to further drive that is really our full suite of <unk> services that we bring to the marketplace and really would see pads really provides us.

Speaker 5: And really what CPaaS really provides us that true capability to drive composable enterprise framework that you'll be hearing more and more about, as you pointed out, Meta.

Capability to drive composed of all enterprise framework.

That youll be hearing more and more of that as you pointed out.

Speaker 5: in our investor in our investor day. And lastly, it's just as far as M&A, you know, we'll keep our eye on the ball. We obviously did a technology talk in here last quarter with CT suite, which provides us some digital capabilities, frankly, that we didn't have within within within the company. But I think we have a pretty defined roadmap of

In our investor in our Investor day.

And lastly is just as far as M&A, we'll keep our eye on the ball.

Obviously did a technology tuck in here last quarter with the <unk> suite, which provides us some digital capabilities frankly that we didnt have with it within within the company.

But I think we have a pretty defined roadmap of <unk>.

Speaker 5: Melding, for lack of a better term, partnership capability via organically driven solutions into the marketplace, coupled with...

<unk> select for better term partnership capability, Avaya organically driven solutions into the marketplace coupled with.

Speaker 5: organic, you know, inorganic M&A solutions to help sort of round that out and deliver the solutions to our to our customers.

Organic inorganic M&A solutions to help sort of round that out and deliver the solutions to our to our customers.

Speaker 5: But you'll hear a lot about our CPaaS capabilities and where we see that. And we've often referred to that as sort of a force multiplier, and we'll get into a lot of detail about the value that brings to Avaya and how that's going to really drive a lot of our growth in our Avaya OneCloud platform.

But you'll hear a lot about our <unk> capabilities, and where we see that and we've often referred to that as sort of a force multiplier and we'll get into a lot of detail about the value that that brings to to avaya and how thats going to really drive a.

Lot of our growth in our in our one cloud platform.

Great. Thanks.

Okay.

Speaker 1: Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. McCarthy for any final

Thank you, ladies and gentlemen that concludes our question and answer session and I will turn the floor back to Mr. Mccarthy for any final comments.

Speaker 2: Thanks, Melissa. And thanks to everyone for joining us this morning for an update on our Q4 results. We're looking forward to speaking to you again at our Investor Day on December 14th. Have a wonderful and Thanksgiving holiday. Take care.

Thanks, Melissa and thanks to everyone for joining us this morning for an update on our Q4 results were looking forward to speaking to you again at our Investor Day on December 14th of a wonderful Thanksgiving holiday.

Take care.

Thank you. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.

Speaker 1: Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your...