Avaya Holdings Corp (NYSE:AVYA) Q4 2019 Earnings Conference Call - Final Transcript

Nov 20, 2019 • 08:30 am ET

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Avaya Holdings Corp (NYSE:AVYA) Q4 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good morning. My name is Suzanne, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Avaya Holdings' Fourth Quarter Fiscal 2019 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you.

Mr. Michael McCarthy, Vice President, Investor Relations, you may begin your conference.

Executive
Michael W. McCarthy

Thank you, operator. Welcome to Avaya's Q4 Fiscal Year 2019 Investor Call. Jim Chirico, our President and CEO, and Kieran McGrath, our Executive VP and CFO will lead this morning's call and share with you some prepared remarks before taking your questions. Shefali Shah, EVP, Chief Administrative Officer and General Counsel, and Chris McGugan, Chief Technology Officer, are also here for today's call.

The earnings release and investor slides referenced on this morning's call are accessible on the Investor page of our website as well as the 8-K filed today with the SEC, which should aid in your understanding of Avaya's financial results. All reference to financial measures and year-over-year comparisons will be to non-GAAP numbers, except where otherwise noted. We have included reconciliation to such measures to GAAP in the earnings release and investor slides, which are available on the Investor page of our website.

We may make forward-looking statements that are based on current expectations, forecasts, and assumptions, which remain subject to risks, uncertainties that could cause actual results to differ materially. Information about risks and uncertainties may be found in our most recent filings with the SEC, including our Form 10-K and subsequent Form 10-Q reports. It is Avaya's policy not to reiterate guidance and we undertake no obligations to update or revise forward-looking statements in the event of facts or circumstances change, except as otherwise required by law.

I'll now turn the call over to Jim.

Executive
Jim Chirico

Thanks, Mike. Good morning everyone and thank you for joining us. This morning, I'll provide you with my perspective on our performance and strategic priorities; then Kieran will take you through the details of the quarter and our outlook for the fiscal year. We will then open it up for questions.

With that, let me provide a brief summary of the quarter. In Q4, we delivered $726 million of non-GAAP revenue, below our guidance, primarily driven by a delay of the social security administration that was previously discussed. Kieran will provide additional details on SSA. Overall, I'm pleased with our Q4 performance as the rest of the business executed consistent with our expectations. Our revenue profile this quarter reflected a continued shift to a software and cloud-based business. Notably, software and services as a percent of revenue increased to 83% and recurring revenue was 58%.

In Q4, we continued to deliver on our leading business model. Non-GAAP operating income came in at the top of the range at 23%. Adjusted EBITDA was over 25%, up over 200 basis points quarter-over-quarter and year-over-year, further demonstrating that, from a profit perspective,