Avaya Stock Falls After Q3 Results, Cuts Top End Of FY21 EPS Outlook; Acquires CTIntegrations

Avaya Holdings Corp AVYA reported third-quarter FY21 revenue growth of 2% year-on-year to $732 million, beating the analyst consensus of $730.6 million.
Segments: Revenue from products declined 2.7% Y/Y to $254 million. Services revenue increased 3.9% Y/Y to $478 million.
Annual recurring revenue rose 275% Y/Y to $425 million.
CAPS (Cloud, Alliance Partner, and Subscription) increased 30% Y/Y. Software and services revenue declined 89% Y/Y.
~60% of OneCloud Annual recurring revenue came from customers generating $1 million or more in ARR.
Margins: The non-GAAP gross margin expanded 30 bps to 61.5% as the costs remained flat Y/Y.
Adjusted EBITDA margin contracted 230 bps to 23.6% as the expenses increased 6.4% Y/Y.
Non-GAAP EPS of $0.75 beat the analyst consensus of $0.71.
Avaya generated $11 million in operating cash flow. The company held $562 million in cash and equivalents.
Outlook: Avaya sees Q4 revenue of $720 million - $750 million compared to the analyst consensus of $747.99 million.
It sees an adjusted EBITDA margin of 22% - 23%.
The non-GAAP EPS forecast of $0.66 - $0.78 is below the analyst consensus of $0.79.
Avaya now estimates the ARR to cross the $1 billion mark by CY2022, about a year ahead of schedule.
For FY21, Revenue of $2.930 billion - $2.960 billion (prior $2.920 billion - $2.955 billion), versus the consensus of $2.96 billion.
Non-GAAP EPS of $3.05 - $3.16 (prior $3.02 - $3.20), versus the consensus of $3.16.
Acquisition: Avaya acquired specialized contact center developer CTIntegrations for undisclosed terms.
The transaction closed earlier in August 2021. The deal will not have a material financial impact on the current quarter.
Price action: AVYA shares traded lower by 3.17% at $22.02 on the last check Monday.

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Avaya Stock Falls After Q3 Results, Cuts Top End Of FY21 EPS Outlook; Acquires CTIntegrations

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