8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported):  February 11, 2019

AVAYA HOLDINGS CORP.

(Exact Name of Registrant as Specified in its Charter)

Delaware	001-38289		26-1119726
(State or Other Jurisdiction of	(Commission File Number)		(IRS Employer Identification
Incorporation)			Number)
4655 Great America Parkway
Santa Clara, California		95054
(Address of Principal Executive Office)		(Zip Code)

Registrant’s telephone number, including area code:  (908) 953-6000

N/A

(Former Name or Former Address, if Changed Since Last Report)

____________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Item 2.02. Results of Operations and Financial Condition

On February 11, 2019, Avaya Holdings Corp. (the “Company”) issued a press release announcing its financial results for the first quarter of fiscal 2019 ended December 31, 2018.  The full text of the press release and commentary from the Company’s Chief Financial Officer regarding such financial results are furnished as Exhibits 99.1 and 99.2, respectively, and are available on the Company’s investor relations website at https://investors.avaya.com.

This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

(b)      On February 11, 2019, the Company announced that effective February 15, 2019, Patrick J. O’Malley, III will be stepping down as the Company’s Senior Vice President and Chief Financial Officer to become the Company’s Senior Vice President, Growth Initiatives.  Upon such change, Mr. O’Malley will no longer be a Company officer subject to the provisions of Section 16 of the Exchange Act.

(c)       On February 11, 2019, the Company also announced that Kieran J. McGrath will become the Company’s Senior Vice President and Chief Financial Officer, effective February 15, 2019.  Mr. McGrath, who is 59 years old, joined the Company on January 31, 2019 as Senior Vice President, Finance.  Prior to joining the Company, Mr. McGrath served as the Executive Vice President and Chief Financial Officer of CA Technologies, a global leader in software solutions that simplify complex enterprise environments, from November 2016 until November 2018 when that company became a subsidiary of Broadcom Inc.  Prior to that, he served as CA Technologies’ Senior Vice President and interim Chief Financial Officer from July 2016 to November 2016, and as Senior Vice President and Corporate Controller upon joining the company in September 2014 until July 2016.  Prior to that, Mr. McGrath was Vice President, Finance at International Business Machines Corporation, a cognitive solutions and cloud platform company, where he held various senior executive finance positions across the company, including leading the finance department for IBM's Software Group, from January 2009 until August 2014.

            As described above, Mr. McGrath was the Executive Vice President and Chief Financial Officer of CA Technologies during the Company’s fiscal 2018 and the first quarter of fiscal 2019.  During fiscal 2018 and the first quarter of fiscal 2019, the Company purchased goods and services from CA Technologies of approximately $620,000 and $190,000, respectively.

            Mr. McGrath’s fiscal 2019 base salary will be $650,000 and his fiscal 2019 target bonus opportunity is 100% of base salary with a maximum opportunity of 200% of base salary.  His bonus will be determined under the Company’s Executive Annual Incentive Plan, which is described in the Compensation Discussion & Analysis (“CD&A”) in the Company’s Form 10-K/A filed with the Securities and Exchange Commission on January 25, 2019.  In addition, he will receive a monthly housing allowance of $3,000, which arrangement will be reviewed after eighteen months.  In connection with his appointment to the role of Senior Vice President and Chief Financial Officer, Mr. McGrath will receive restricted stock units (“RSUs”) pursuant to the Avaya Holdings Corp. 2017 Equity Incentive Plan with a fair market grant date value of $4,000,000.  These RSUs will vest 33.33% on the first anniversary of the grant date, and 8.33% quarterly thereafter, subject to Mr. McGrath’s employment with the Company on the applicable vesting date. 

Furthermore, Mr. McGrath will be a participant under the Avaya Inc. Involuntary Separation Plan for Senior Executives and the Avaya Inc. Change in Control Severance Plan, each of which is described in the CD&A.

            The full text of the press release announcing the appointments of Mr. O’Malley and Mr. McGrath is filed as Exhibit 99.3 and is available on the Company’s investor relations website at https://investors.avaya.com.

Item 7.01. Regulation FD Disclosure

On February 11, 2019, the Company posted supplementary slides regarding the Company’s financial results for the first quarter of fiscal 2019 ended December 31, 2018 on the Company’s investor relations website at https://investors.avaya.com.  The supplementary slides are furnished as Exhibit 99.4.

This information shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits

(d)    Exhibits

Exhibit	Exhibit Name
99.1	Press Release, dated February 11, 2019, entitled “Avaya Reports First Quarter Fiscal 2019 Financial Results”
99.2	CFO Commentary on First Quarter Fiscal 2019 Financial Results, dated February 11, 2019
99.3	Press Release, dated February 11, 2019, entitled “Avaya Announces Chief Financial Officer Transition”
99.4	Supplementary Slides: Avaya Q1 Fiscal Year 2019 Financial Results – February 11, 2019

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		AVAYA HOLDINGS CORP.
Date: February 11, 2019	By:	/s/ Patrick J. O’Malley, III
	Name:	Patrick J. O’Malley, III
	Title:	Senior Vice President and Chief Financial Officer

EX-99.1

Exhibit 99.1

Media Inquiries:Investor Inquiries:

Alex AliasMichael McCarthy

669-242-8034    919-425-8330

alalias@avaya.commikemccarthy@avaya.com

Avaya Reports First Quarter Fiscal 2019 Financial Results

• GAAP revenue was $738 million; Non-GAAP revenue was $748 million

• GAAP operating margin of 6.8%; Non-GAAP operating margin of 22.7%

• Midmarket cloud revenue grew over 150% year-over-year

• Strong large deal activity with 3 deals over $10 million, 10 over $5 million, and 83 over $1 million

Santa Clara, Calif.,- February 11, 2019 - Avaya Holdings Corp. (NYSE: AVYA) today reported financial results for the first quarter ended December 31, 2018.

	GAAP (1)										Non-GAAP (2)
(In millions, except percentages)		Q1 2019			Q4 2018			Q1 2018			Q1 2019			Q4 2018			Q1 2018
Revenue		$	738		$	735		$	752		$	748		$	770		$	775
Gross margin		55.1		%	53.1		%	58.5		%	62.7		%	63.4		%	62.6		%
Operating margin		6.8		%	1.5		%	5.1		%	22.7		%	20.4		%	22.2		%

“We demonstrated another quarter of operational excellence, setting records across several key performance metrics. However, our revenue was impacted by a few discrete items versus our outlook, which included the federal government shutdown. That said, our product portfolio has never been stronger, and our cloud solutions continue to win the support of our customers, who are choosing Avaya for the innovative solutions that we are bringing to market,” said Jim Chirico, President and CEO of Avaya.

First Quarter Fiscal 2019 Financial Results:

• On October 1, 2018, Avaya adopted the new revenue recognition standard, Accounting Standards Codification 606 ("ASC 606"), using the modified retrospective transition method. Accordingly, results for reporting periods beginning after September 30, 2018 are presented under ASC 606 while prior period financial information is not adjusted and continues to be reported in accordance with GAAP that existed prior to the adoption of ASC 606 (“ASC 605”).

• GAAP revenue was $738 million, $3 millionhigher than the fourth quarter of fiscal 2018, and $14 millionlower than the Combined first quarter of fiscal 2018⁽¹⁾ ended December 31, 2017. Non-GAAP revenue⁽²⁾

was $748 million, $22 millionlower than the fourth quarter of fiscal 2018, and $27 millionlower than the Combined first quarter of fiscal 2018.

• GAAP gross margin was 55.1% compared to 53.1% for the fourth quarter of fiscal 2018 and 58.5% for the Combined first quarter of fiscal 2018⁽¹⁾. Non-GAAP gross margin⁽²⁾ was 62.7%, compared to 63.4% for the fourth quarter of fiscal 2018 and 62.6% for the Combined first quarter of fiscal 2018.

• GAAP operating income was $50 million, compared to GAAP operating income of $11 million for the fourth quarter of fiscal 2018 and $38 million for the Combined first quarter of fiscal 2018⁽¹⁾. Non-GAAP operating income⁽²⁾ was $170 million, compared to $157 million for the fourth quarter of fiscal 2018, and $172 million for the Combined first quarter of fiscal 2018.

• GAAP net income was $9 million, compared to $268 million for the fourth quarter of fiscal 2018, and $3,214 million for the Combined first quarter of fiscal 2018⁽¹⁾.

• Adjusted EBITDA⁽²⁾ was $189 million or 25.3% of non-GAAP revenue, compared to adjusted EBITDA of $178 million, or 23.1% of non-GAAP revenue, for the fourth quarter of fiscal 2018 and $206 million, or 26.6% of non-GAAP revenue, for the Combined first quarter of fiscal 2018.

• Cash provided by operating activities was $86 million, compared to cash provided by operating activities of $25 million for the fourth quarter of fiscal 2018 and cash used for operating activities of $374 million for the Combined first quarter of fiscal 2018⁽¹⁾.

• At the end of the first quarter of fiscal 2019, cash and cash equivalents totaled $743 million, compared to $700 million at the end of the fourth quarter of fiscal 2018 and $417 million at the end of the Combined first quarter of fiscal 2018.

⁽¹⁾ Due to the company’s emergence from Chapter 11 proceedings during the first quarter of fiscal 2018 and adoption of fresh start accounting effective on December 15, 2017, the results for the first quarter fiscal year 2018 are required by GAAP to be presented separately as the predecessor period from October 1, 2017 through December 15, 2017 (the “Predecessor” period) and the successor period from December 16, 2017 through December 31, 2017 (the “Successor” period). The application of fresh start accounting results in a new basis of accounting, making the results of the Predecessor period not comparable to the results of the Successor period. Where applicable we have, however, combined results of the Predecessor and Successor periods for discussion purposes as we believe it provides the most meaningful basis to analyze our period over period results. Refer to the Supplemental Financial Information accompanying this press release for more information, including a reconciliation of combined results to our Predecessor and Successor results.

⁽²⁾ Non-GAAP revenue, Non-GAAP gross margin, Non-GAAP operating margin, Non-GAAP operating income and adjusted EBITDA are not measures calculated in accordance with generally accepted accounting principles in the U.S. (“GAAP”). Refer to the Supplemental Financial Information accompanying this press release for more information, including a reconciliation of these measures to the most closely comparable measure calculated in accordance with GAAP.

Note: We define the midmarket as firms with between 250 and 1,000 agents for CC and between 1,000 and 5,000 employees for UC

First Quarter Fiscal 2019 Business Metrics

• Total Contract Value increased 8% year-over-year to $2.4 billion

• 83% of Non-GAAP revenue was Software & Services

• 61% of Non-GAAP product revenue was Software

• 57% of Non-GAAP revenue was Recurring

• Added approximately 1,600 new logos

• Generated $65 million in free cash flow*

*Note: We define free cash flow as cash flow from operating activities less capital expenditures

First Quarter Fiscal 2019 Company Highlights

• Introduced new Private Cloud Solutions for Unified Communications and Contact Center

• Launched a new online storefront that simplifies access to UCaaS and CCaaS solutions

• Announced a new Device-as-a-Service (DaaS) offering

• Delivered public safety breakthrough with next generation location reporting solutions for emergency responders

• Enhanced channel partner program with increased focus on solution selling, simplification, and cloud offerings

• Expanded Avaya A.I. Connect ecosystem with new partners and offers using AI and machine learning technologies for Unified Communications and Contact Center

• Extended Workforce Engagement Management (WEM) with Verint Systems for the new Avaya OneCloud WEM

• Won the 2018 Aragon Research Innovation Award for Artificial Intelligence (AI) in People-Centric Collaboration

Financial Outlook - Q2 Fiscal 2019 under ASC 606

Our financial outlook reflects the adoption of ASC 606, which became effective for Avaya on October 1, 2018. Avaya has adopted ASC 606 using the modified retrospective transition method.

• GAAP revenue of $730-$760 million; non-GAAP revenue of $740-$765 million

• GAAP operating margin of 5.5-8.0% of revenue; non-GAAP operating margin of 21.5-22.5%

• GAAP operating income of $40-$60 million, non-GAAP operating income of $159-$172 million

• Cash taxes of approximately $30 million, +/- $3 million

• Adjusted EBITDA of $178-$191 million, or adjusted EBITDA margin of 24.0-25.0% of non-GAAP revenue

• Approximately 111 million shares outstanding

Financial Outlook - Fiscal 2019 under ASC 606

• GAAP revenue of $3.01-$3.12 billion, non-GAAP revenue of $3.05-$3.15 billion

• GAAP and non-GAAP R&D of $220-$225 million; 15-16% of non-GAAP product revenue

• Operating income of $200-$280 million, non-GAAP operating income of $675-$730 million; 22-23% of non-GAAP revenue

• Adjusted EBITDA $763-$819 million, or 25-26% of non-GAAP revenue

• Approximately 113 million shares outstanding

Avaya’s outlook does not include the potential impact of any business combinations, asset acquisitions, divestitures, strategic investments, or other significant transactions that may be completed after February 11, 2019. Actual results may differ materially from Avaya’s outlook as a result of, among other things, the factors described under “Forward-Looking Statements” below.

Conference Call and Webcast

Avaya will host a webcast and conference call to discuss its financial results and Q&A at 8:30 AM ET/5:30 AM PT on February 11, 2019. On the call will be Jim Chirico, President and CEO, and Pat O’Malley, Senior Vice President and CFO. The call will be moderated by Mike McCarthy, Vice President of Investor Relations.

To join the financial results live webcast and view supplementary materials including an earnings presentation and CFO commentary, listeners should access the investor page of Avaya’s website https://investors.avaya.com. Following the live webcast, a replay will be available in the event archives at the same web address for a period of one year.

To access the financial results call live by phone, dial +1-866-393-4306 in the U.S. or Canada and +1-734-385-2616 for international callers. Listeners should access the webcast or the call 10-15 minutes before the start time to ensure they are able to connect.

A replay of the financial results live conference call will be available for two business days soon after the call by phone by dialing +1-855-859-2056 in the U.S. or Canada and +1-404-537-3406 for international callers, using the conference access code: 3187748.

Links to this financial results press release and accompanying slides are available on the investor page of Avaya’s website https://investors.avaya.com.

About Avaya

Businesses are built on the experiences they provide, and every day millions of those experiences are built by Avaya (NYSE: AVYA). For over one hundred years, we’ve enabled organizations around the globe to win - by creating

intelligent communications experiences for customers and employees. Avaya builds open, converged and innovative solutions to enhance and simplify communications and collaboration - in the cloud, on-premise or a hybrid of both. To grow your business, we’re committed to innovation, partnership, and a relentless focus on what’s next. We’re the technology company you trust to help you deliver Experiences that Matter. Visit us at www.avaya.com.

Cautionary Note Regarding Forward-Looking Statements

This document contains certain “forward-looking statements.” All statements other than statements of historical fact are “forward-looking” statements for purposes of the U.S. federal and state securities laws. These statements may be identified by the use of forward looking terminology such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," “our vision,” "plan," "potential," "preliminary," "predict," "should," "will," or “would” or the negative thereof or other variations thereof or comparable terminology and include, but are not limited to, the outlook for the second quarter of fiscal 2019 and fiscal year 2019, including the expected impact of the adoption of ASC 606. The company has based these forward-looking statements on its current expectations, assumptions, estimates and projections. While the company believes these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond its control. These factors are discussed in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”), and may cause its actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. For a further list and description of such risks and uncertainties, please refer to the company’s filings with the SEC that are available at www.sec.gov. The company cautions you that the list of important factors included in the company’s SEC filings may not contain all of the material factors that are important to you. In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this report may not in fact occur. The company undertakes no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

Avaya Holdings Corp.

Condensed Consolidated Statements of Operations (Unaudited)

(In millions, except per share amounts)

	Successor						Predecessor			Non-GAAP Combined
	Three months ended December 31, 2018			Period from December 16, 2017 through December 31, 2017			Period from October 1, 2017 through December 15, 2017			Three months ended December 31, 2017
REVENUE
Products	$	324		$	71		$	253		$	324
Services	414			77			351			428
	738			148			604			752
COSTS
Products:
Costs	115			33			84			117
Amortization of technology intangible assets	43			7			3			10
Services	173			30			155			185
	331			70			242			312
GROSS PROFIT	407			78			362			440
OPERATING EXPENSES
Selling, general and administrative	257			50			264			314
Research and development	53			9			38			47
Amortization of intangible assets	40			7			10			17
Restructuring charges, net	7			10			14			24
	357			76			326			402
OPERATING INCOME	50			2			36			38
Interest expense	(60		)	(9		)	(14		)	(23		)
Other income (expense), net	22			(2		)	(2		)	(4		)
Reorganization items, net	—			—			3,416			3,416
INCOME (LOSS) BEFORE INCOME TAXES	12			(9		)	3,436			3,427
(Provision for) benefit from income taxes	(3		)	246			(459		)	(213		)
NET INCOME	$	9		$	237		$	2,977		$	3,214

Avaya Holdings Corp.

Condensed Consolidated Balance Sheets (Unaudited)

(In millions, except per share and shares amounts)

	December 31, 2018			September 30, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	743		$	700
Accounts receivable, net	327			377
Inventory	68			81
Contract assets	120			—
Contract costs	118			—
Other current assets	106			170
TOTAL CURRENT ASSETS	1,482			1,328
Property, plant and equipment, net	239			250
Deferred income taxes, net	28			29
Intangible assets, net	3,149			3,234
Goodwill	2,764			2,764
Other assets	97			74
TOTAL ASSETS	$	7,759		$	7,679
LIABILITIES
Current liabilities:
Debt maturing within one year	$	29		$	29
Accounts payable	295			266
Payroll and benefit obligations	121			145
Contract liabilities	482			484
Business restructuring reserve	50			51
Other current liabilities	152			148
TOTAL CURRENT LIABILITIES	1,129			1,123
Non-current liabilities:
Long-term debt, net of current portion	3,095			3,097
Pension obligations	652			671
Other post-retirement obligations	177			176
Deferred income taxes, net	161			140
Business restructuring reserve	43			47
Other liabilities	370			374
TOTAL NON-CURRENT LIABILITIES	4,498			4,505
TOTAL LIABILITIES	5,627			5,628
Commitments and contingencies
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value; 55,000,000 shares authorized, no shares issued or outstanding at December 31, 2018 and September 30, 2018	—			—
Common stock, $0.01 par value; 550,000,000 shares authorized; 110,708,203 shares issued and 110,695,523 shares outstanding at December 31, 2018; and 110,218,653 shares issued and 110,012,790 shares outstanding at September 30, 2018	1			1
Additional paid-in capital	1,745			1,745
Retained earnings	388			287
Accumulated other comprehensive (loss) income	(2		)	18
TOTAL STOCKHOLDERS' EQUITY	2,132			2,051
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	7,759		$	7,679

Avaya Holdings Corp.

Condensed Statements of Cash Flows

(Unaudited; in millions)

	Successor						Predecessor			Non-GAAP Combined
	Three months ended December 31, 2018			Period from December 16, 2017 through December 31, 2017			Period from October 1, 2017 through December 15, 2017			Three months ended December 31, 2017
Net cash provided by (used for):
Operating activities	$	86		$	40		$	(414	)	$	(374	)
Investing activities	(22		)	(2		)	(13		)	(15		)
Financing activities	(18		)	—			(102		)	(102		)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(3		)	3			(2		)	1
Net increase (decrease) in cash, cash equivalents, and restricted cash	43			41			(531		)	(490		)
Cash, cash equivalents, and restricted cash at beginning of period	704			435			966			966
Cash, cash equivalents, and restricted cash at end of period	$	747		$	476		$	435		$	476

Use of non-GAAP (Adjusted) Financial Measures

The information furnished in this release includes non-GAAP financial measures that differ from measures calculated in accordance with generally accepted accounting principles in the United States of America (“GAAP”), including the combined three month period ending December 31, 2017 and financial measures labeled as “non-GAAP” or “adjusted.”

Although GAAP requires that we report on our results for the periods October 1, 2017 through December 15, 2017 and December 16, 2017 through December 31, 2017, separately, management reviews the company’s operating results for the three months ended December 31, 2017 by combining the results of these periods because such presentation provides the most meaningful comparison of our results. The company cannot adequately benchmark the operating results of the 16-day period ended December 31, 2017 against any of the previous periods reported in its condensed consolidated financial statements and does not believe that reviewing the results of this period in isolation would be useful in identifying any trends regarding the company’s overall performance. Management believes that the key performance metrics such as revenue, gross margin and operating income, among others, when combined for the three months ended December 31, 2017 provide meaningful comparisons to other periods and are useful in identifying current business trends.

EBITDA is defined as net income (loss) before income taxes, interest expense, interest income and depreciation and amortization. Adjusted EBITDA is EBITDA further adjusted to exclude certain charges and other adjustments described in our SEC filings and the tables below.

We believe that including supplementary information concerning adjusted EBITDA is appropriate because it serves as a basis for determining management and employee compensation and it is used as a basis for calculating covenants in our credit agreements. In addition, we believe adjusted EBITDA provides more comparability between our historical results and results that reflect purchase accounting and our current capital structure. We also present EBITDA and adjusted EBITDA because we

believe analysts and investors utilize these measures in analyzing our results. Adjusted EBITDA measures our financial performance based on operational factors that management can impact in the short-term, such as our pricing strategies, volume, costs and expenses of the organization and it presents our financial performance in a way that can be more easily compared to prior quarters or fiscal years.

EBITDA and adjusted EBITDA have limitations as analytical tools. EBITDA measures do not represent net income (loss) or cash flow from operations as those terms are defined by GAAP and do not necessarily indicate whether cash flows will be sufficient to fund cash needs. However, these terms are not necessarily comparable to other similarly titled captions of other companies due to the potential inconsistencies in the method of calculation. Adjusted EBITDA excludes the impact of earnings or charges resulting from matters that we consider not to be indicative of our ongoing operations. In particular, our formulation of adjusted EBITDA allows adjustment for certain amounts that are included in calculating net income (loss), however, these are expenses that may recur, may vary and are difficult to predict.

We also present the measures non-GAAP revenue, non-GAAP gross margin, non-GAAP operating margin and non-GAAP operating income, as a supplement to our unaudited condensed consolidated financial statements presented in accordance with GAAP. We believe these non-GAAP measures are the most meaningful for period to period comparisons because they exclude the impact of the earnings and charges noted in the applicable tables below that resulted from matters that we consider not to be indicative of our ongoing operations.

The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, as substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and may be different from the non-GAAP financial measures used by other companies. In addition, these non-GAAP measures have limitations in that they do not reflect all of the amounts associated with the company’s results of operations as determined in accordance with GAAP.

We do not provide a forward-looking reconciliation of expected second quarter and full year fiscal 2019 adjusted EBITDA, Non-GAAP operating income, Non-GAAP R&D or Non-GAAP revenue guidance as the amount and significance of special items required to develop meaningful comparable GAAP financial measures cannot be estimated at this time without unreasonable efforts. These special items could be meaningful.

The following tables present Successor, Predecessor and combined results and reconcile historical GAAP measures to non-GAAP measures.

Avaya Holdings Corp.

Supplemental Schedules of Non-GAAP Adjusted EBITDA

(Unaudited; in millions)

	Successor						Predecessor			Non-GAAP Combined
	Three months ended December 31, 2018			Period from December 16, 2017 through December 31, 2017			Period from October 1, 2017 through December 15, 2017			Three months ended December 31, 2017
Net income	$	9		$	237		$	2,977		$	3,214
Interest expense	60			9			14			23
Interest income	(3		)	—			(2		)	(2		)
Provision for (benefit from) income taxes	3			(246		)	459			213
Depreciation and amortization	117			22			31			53
EBITDA	186			22			3,479			3,501
Impact of fresh start accounting adjustments	3			27			—			27
Restructuring charges, net	7			10			14			24
Advisory fees	1			8			3			11
Acquisition-related costs	3			—			—			—
Reorganization items, net	—			—			(3,416		)	(3,416		)
Non-cash share-based compensation	6			1			—			1
Loss on sale/disposal of long-lived assets, net	—			—			1			1
Resolution of certain legal matters	—			—			37			37
Change in fair value of Emergence Date Warrants	(18		)	5			—			5
Loss (gain) on foreign currency transactions	1			(2		)	—			(2		)
Pension/OPEB/nonretirement postemployment benefits and long-term disability costs	—			—			17			17
Adjusted EBITDA	$	189		$	71		$	135		$	206

Avaya Holdings Corp.

Supplemental Schedules of Non-GAAP Revenue

(Unaudited; in millions)

	Successor																Successor
	Three Months Ended							Q118 Non-GAAP Combined Results (4)		Change							Three Months Ended
	Dec. 31, 2018			Adj. for Fresh Start Accounting		Non-GAAP Dec. 31, 2018				Amount			Pct.		Pct., net of fx impact		Sept. 30, 2018 (1)		June 30, 2018 (2)		Mar. 31, 2018 (3)
Revenue by Segment
Products & Solutions	$	326		$	—	$	326	$	330	$	(4	)	(1	)%	(1	)%	$	336	$	322	$	317
Services	422			—		422		445		(23		)	(5	)%	(4	)%	434		433		440
Unallocated amounts	(10		)	10		—		—		—			n/a		n/a		—		—		—
Total revenue	$	738		$	10	$	748	$	775	$	(27	)	(2	)%	(1	)%	$	770	$	755	$	757
Revenue by Geography
U.S.	$	394		$	7	$	401	$	425	$	(24	)	(4	)%	(4	)%	$	417	$	399	$	409
International:
EMEA	199			1		200		208		(8		)	(1	)%	—	%	202		202		196
APAC - Asia Pacific	78			1		79		76		3			5	%	8	%	81		86		83
Americas International	67			1		68		66		2			3	%	7	%	70		68		69
Total International	344			3		347		350		(3		)	1	%	3	%	353		356		348
Total revenue	$	738		$	10	$	748	$	775	$	(27	)	(2	)%	(1	)%	$	770	$	755	$	757

	(1) Q418 Non-GAAP Results							(2) Q318 Non-GAAP Results
	Three Months Ended							Three Months Ended
	Sept. 30, 2018			Adj. for Fresh Start Accounting		Non-GAAP Sept. 30, 2018		June 30, 2018			Adj. for Fresh Start Accounting		Non-GAAP June 30, 2018
Revenue by Segment
Products & Solutions	$	336		$	—	$	336	$	322		$	—	$	322
Services	434			—		434		433			—		433
Unallocated amounts	(35		)	35		—		(63		)	63		—
Total revenue	$	735		$	35	$	770	$	692		$	63	$	755
Revenue by Geography
U.S.	$	393		$	24	$	417	$	356		$	43	$	399
International:
EMEA	196			6		202		193			9		202
APAC - Asia Pacific	78			3		81		81			5		86
Americas International	68			2		70		62			6		68
Total International	342			11		353		336			20		356
Total revenue	$	735		$	35	$	770	$	692		$	63	$	755

	(3) Q218 Non-GAAP Results							(4) Q118 Non-GAAP Combined Results
	Three Months Ended							Successor			Predecessor				Q118 Non-GAAP Combined Results
	Mar. 31, 2018			Adj. for Fresh Start Accounting		Non-GAAP Mar. 31, 2018		Period from Dec. 16, 2017 through Dec. 31, 2017			Period from Oct. 1, 2017 through Dec. 15, 2017		Adj. for Fresh Start Accounting
Revenue by Segment
Products & Solutions	$	317		—		$	317	$	77		$	253	—		$	330
Services	440			—		440		94			351		—		445
Unallocated amounts	(85		)	85		—		(23		)	—		23		—
Total revenue	$	672		$	85	$	757	$	148		$	604	$	23	$	775
Revenue by Geography
U.S.	$	354		$	55	$	409	$	81		$	331	$	13	$	425
International:
EMEA	178			18		196		35			166		7		208
APAC - Asia Pacific	80			3		83		17			57		2		76
Americas International	60			9		69		15			50		1		66
Total International	318			30		348		67			273		10		350
Total revenue	$	672		$	85	$	757	$	148		$	604	$	23	$	775

Avaya Holdings Corp.

Supplemental Schedules of Non-GAAP Reconciliations

(Unaudited; in millions)

	Successor															Predecessor			Q118 Non-GAAP Combined Results
	Three Months Ended												Period from Dec. 16, 2017 through Dec. 31, 2017			Period from Oct. 1, 2017 through Dec. 15, 2017
	Dec. 31, 2018			Sept. 30, 2018			June 30, 2018			March 31, 2018
Reconciliation of Non-GAAP Gross Profit and Non-GAAP Gross Margin
Gross Profit	$	407		$	390		$	352		$	323		$	78		$	362		$	440
Items excluded:
Adj. for fresh start accounting	19			54			69			106									35
Amortization of technology intangible assets	43			43			44			41									10
Loss on disposal of long-lived assets	—			—			2			2									—
Non-cash share-based compensation	—			1			—			—									—
Non-GAAP Gross Profit	$	469		$	488		$	467		$	472								$	485
GAAP Gross Margin	55.1		%	53.1		%	50.9		%	48.1		%	52.7		%	59.9		%	58.5		%
Non-GAAP Gross Margin	62.7		%	63.4		%	61.9		%	62.4		%							62.6		%
Reconciliation of Non-GAAP Operating Income
Operating Income (Loss)	$	50		$	11		$	(49	)	$	(89	)	$	2		$	36		$	38
Items excluded:
Adj. for fresh start accounting	20			48			71			107									33
Amortization of intangible assets	83			84			83			81									27
Restructuring charges, net	7			1			30			40									24
Acquisition-related costs	3			4			4			7									—
Loss on disposal of long-lived assets	—			—			2			2									1
Advisory fees	1			3			3			4									11
Non-cash share-based compensation	6			6			7			5									1
Costs in connection with certain legal matters	—			—			—			—									37
Non-GAAP Operating Income	$	170		$	157		$	151		$	157								$	172
GAAP Operating Margin	6.8		%	1.5		%	-7.1		%	-13.2		%	1.4		%	6.0		%	5.1		%
Non-GAAP Operating Margin	22.7		%	20.4		%	20.0		%	20.7		%							22.2		%

Avaya Holdings Corp.

Supplemental Schedules of Non-GAAP Reconciliation of Gross Profit and Gross Margin by Portfolio

(Unaudited; in millions)

	Successor															Predecessor			Q118 Non-GAAP Combined Results
	Three months ended												Period from December 16, 2017 through December 31, 2017			Period from October 1, 2017 through December 15, 2017
	Dec. 31, 2018			Sept. 30, 2018			June 30, 2018			March 31, 2018
Reconciliation of Non-GAAP Gross Profit and Non-GAAP Gross Margin - Products
Revenue	$	324		$	325		$	300		$	293		$	71		$	253		$	324
Costs	115			115			114			110			33			84			117
Amortization of technology intangible assets	43			43			44			41			7			3			10
GAAP Gross Profit	166			167			142			142			31			166			197
Items excluded:
Adj. for fresh start accounting	5			16			24			33									11
Amortization of technology intangible assets	43			43			44			41									10
Loss on disposal of long-lived assets	—			—			1			1									—
Non-GAAP Gross Profit	$	214		$	226		$	211		$	217								$	218
GAAP Gross Margin	51.2		%	51.4		%	47.3		%	48.5		%	43.7		%	65.6		%	60.8		%
Non-GAAP Gross Margin	65.6		%	67.3		%	65.5		%	68.5		%							66.1		%
Reconciliation of Non-GAAP Gross Profit and Non-GAAP Gross Margin - Services
Revenue	$	414		$	410		$	392		$	379		$	77		$	351		$	428
Costs	173			187			182			198			30			155			185
GAAP Gross Profit	241			223			210			181			47			196			243
Items excluded:
Adj. for fresh start accounting	14			38			45			73									24
Loss on disposal of long-lived assets	—			—			1			1									—
Non-cash share-based compensation	—			1			—			—									—
Non-GAAP Gross Profit	$	255		$	262		$	256		$	255								$	267
GAAP Gross Margin	58.2		%	54.4		%	53.6		%	47.8		%	61.0		%	55.8		%	56.8		%
Non-GAAP Gross Margin	60.4		%	60.4		%	59.1		%	58.0		%							60.0		%

Avaya Holdings Corp.

Reconciliation of GAAP to Non-GAAP results

Three months ended December 31, 2018

(Unaudited; in millions)

																												Q118
	GAAP Results			Adj. for Fresh Start Accounting			Amortization of Intangible Assets			Restructuring Charges, net			Acquisition Costs			Share-based Comp			Advisory Fees			Other Costs, net			Non-GAAP Results			GAAP Results			Non-GAAP Results
Revenue
Products	$	324		$	2		$	—		$	—		$	—		$	—		$	—		$	—		$	326		$	324		$	330
Services	414			8			—			—			—			—			—			—			422			428			445
	738			10			—			—			—			—			—			—			748			752			775
Costs
Products:
Costs	115			(3		)	—			—			—			—			—			—			112			117			112
Amortization of technology intangible assets	43			—			(43		)	—			—			—			—			—			—			10			—
Services	173			(6		)	—			—			—			—			—			—			167			185			178
	331			(9		)	(43		)	—			—			—			—			—			279			312			290
GROSS PROFIT	407			19			43			—			—			—			—			—			469			440			485
OPERATING EXPENSES
Selling, general and administrative	257			—			—			—			(3		)	(6		)	(1		)	—			247			314			266
Research and development	53			(1		)	—			—			—			—			—			—			52			47			47
Amortization of intangible assets	40			—			(40		)	—			—			—			—			—			—			17			—
Restructuring charges, net	7			—			—			(7		)	—			—			—			—			—			24			—
	357			(1		)	(40		)	(7		)	(3		)	(6		)	(1		)	—			299			402			313
OPERATING INCOME	50			20			83			7			3			6			1			—			170			38			172
Interest expense	(60		)	—			—			—			—			—			—			—			(60		)	(23		)	(23		)
Other income (expense), net	22			—			—			—			—			—			—			(20		)	2			(4		)	(3		)
Reorganization items, net	—			—			—			—			—			—			—			—			—			3,416			—
INCOME BEFORE INCOME TAXES	$	12		$	20		$	83		$	7		$	3		$	6		$	1		$	(20	)	$	112		$	3,427		$	146

Avaya Holdings Corp.

Reconciliation of ASC 606 to ASC 605 GAAP results

Three months ended December 31, 2018

(Unaudited; in millions)

	Q1 FY19 results under ASC 606		ASC 606 Impact			Q1 FY19 results under ASC 605
REVENUE
Products	$	324	$	22		$	302
Services	414		20			394
	738		42			696
COSTS
Products:
Costs	115		6			109
Amortization of technology intangible assets	43		—			43
Services	173		6			167
	331		12			319
GROSS PROFIT	407		30			377
OPERATING EXPENSES
Selling, general and administrative	257		(8		)	265
Research and development	53		—			53
Amortization of intangible assets	40		—			40
Restructuring charges, net	7		—			7
	357		(8		)	365
OPERATING INCOME	$	50	$	38		$	12

Source: Avaya Newsroom

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EX-99.2

Exhibit 99.2

February 11, 2019

CFO Commentary on First Quarter Fiscal 2019 Financial Results

This document should be read in conjunction with the First Quarter Fiscal 2019 Financial Results and includes a discussion of certain non-GAAP⁽¹⁾ results

First Quarter Fiscal 2019:

On October 1, 2018, Avaya adopted the new revenue recognition standard, Accounting Standards Codification 606 ("ASC 606"), using the modified retrospective transition method. Financial results for periods beginning after September 30, 2018 are presented under ASC 606 while prior period financial information is not adjusted and continues to be reported in accordance with GAAP that existed prior to the adoption of ASC 606 (“ASC 605”).

Income Statement:

Revenue

GAAP revenue was $738 million, compared to $735 million for the fourth quarter of fiscal 2018, and $752 million for the Combined first quarter of fiscal 2018 ended December 31, 2017

• GAAP product revenue was $324 million, compared to $325 millionfor the fourth quarter of fiscal 2018, and $324 million for the Combined first quarter of fiscal 2018 ended December 31, 2017

• GAAP service revenue was $414 million, compared to $410 million for the fourth quarter of fiscal 2018, and $428 million for the Combined first quarter of fiscal 2018 ended December 31, 2017

Non-GAAP revenue was $748 million, compared to $770 million for the fourth quarter of fiscal 2018, and $775 million for the Combined first quarter of fiscal 2018 ended December 31, 2017

• Non-GAAP product revenue was $326 million, compared to $336 millionfor the fourth quarter of fiscal 2018, and $330 million for the Combined first quarter of fiscal 2018 ended December 31, 2017. The decline in product revenue was driven by our ongoing product transition to new endpoints, as well as our strategy to sell more cloud solutions and software/services more broadly

• Non-GAAP service revenue was $422 million, compared to $434 millionfor the fourth quarter of fiscal 2018, and $445 million for the Combined first quarter of fiscal 2018 ended December 31, 2017. The decline in service revenue was driven predominantly by lower maintenance revenue and to a lesser extent, lower professional services revenue

Gross Margin

GAAP gross margin was 55.1%, compared to 53.1% for the fourth quarter of fiscal 2018, and 58.5% for the Combined first quarter of fiscal 2018 ended December 31, 2017

• GAAP product gross margin was 51.2%, compared to 51.4% for the fourth quarter of fiscal 2018, and 60.8% for the Combined first quarter of fiscal 2018 ended December 31, 2017

• GAAP services gross margin was 58.2%, compared to 54.4% for the fourth quarter of fiscal 2018, and 56.8% for the Combined first quarter of fiscal 2018 ended December 31, 2017

Non-GAAP gross margin was 62.7%, compared to 63.4% for the fourth quarter of fiscal 2018, and 62.6% for the Combined first quarter of fiscal 2018 ended December 31, 2017. The improvement in Non-GAAP gross margin over the prior year is the result of productivity gains in our services business, as well as a higher mix of contact center software, partially offset by revenue declines. The decrease compared to last quarter is driven by lower volumes and unfavorable costs in our products due to higher transportation, warehousing and trade tariffs

• Non-GAAP Product gross margin was 65.6%, compared to 67.3% for the fourth quarter of fiscal 2018, and 66.1% for the Combined first quarter of fiscal 2018 ended December 31, 2017. The year-over-year decline is attributable to discounts offset by an improved product mix. The sequential decline reflects unfavorable costs in our products due to higher transportation, warehousing and trade tariffs

• Non-GAAP Services gross margin was 60.4%, compared to 60.4% for the fourth quarter of fiscal 2018, and 60.0% for the Combined first quarter of fiscal 2018 ended December 31, 2017. The year-over-year improvement was primarily the result of productivity gains

Expenses

GAAP operating expense (R&D + SG&A) was $310 million, compared to $337 million for the fourth quarter of fiscal 2018, and $361 million for the Combined first quarter of fiscal 2018 ended December 31, 2017

• GAAP R&D expense was $53 million, compared to $62 million for the fourth quarter of fiscal 2018, and $47 million for the Combined first quarter of fiscal 2018 ended December 31, 2017

• GAAP SG&A expense was $257 million, compared to $275 million for the fourth quarter of fiscal 2018, and $314 million for the Combined first quarter of fiscal 2018 ended December 31, 2017

Non-GAAP operating expenses (R&D + SG&A) was $299 million, compared to $331 million for the fourth quarter of fiscal 2018, and $313 million for the Combined first quarter of fiscal 2018 ended December 31, 2017

• Non-GAAP R&D expense was $52 million, compared to $51 million for the fourth quarter of fiscal 2018, and $47 million for the Combined first quarter of fiscal 2018 ended December 31, 2017. The Non-GAAP R&Dexpense increase reflects our continued commitment to drive innovation in our products and solutions that will allow us to expand our customer base and enable us to achieve our long-term revenue growth objectives

• Non-GAAP SG&Aexpense was $247 million, compared to $280 million for the fourth quarter of fiscal 2018, and $266 million for the Combined first quarter of fiscal 2018 ended December 31, 2017. The decrease compared to last year is primarily the result of lower headcount, while the decrease sequentially is the result of lower variable compensation

Profitability

GAAP operating income was $50 million, compared to operating income of $11 million for the fourth quarter of fiscal 2018, and operating income of $38 million for the Combined first quarter of fiscal 2018 ended December 31, 2017

Non-GAAP operating income was $170 million, compared to operating income of $157 million for the fourth quarter of fiscal 2018, and operating income of $172 million for the Combined first quarter of fiscal 2018 ended December 31, 2017. Our Non-GAAP operating income reflects our continued business optimization efforts which have contributed to the improved efficiency of the company

Adjusted EBITDA was $189 million, compared to $178 million for the fourth quarter of fiscal 2018, and $206 million for the Combined first quarter of fiscal 2018 ended December 31, 2017

Cash Flow

Cash and cash equivalents was $743 million as of December 31, 2018, compared to $700 million as of September 30, 2018 and $417 million as of December 31, 2017. The sequential increase in our cash is the result of positive cash flow from operating activities that was driven by improved working capital, partially offset by capital expenditures. The change in cash and cash equivalents compared to the prior year is primarily due to cash outflows, including emergence payments to the former debt holders, the PBGC and other creditors, and funding of the acquisition of Spoken, offset by net proceeds from the issuance of convertible notes and cash generated from operations

During Q1 FY’19, we paid $48 million in cash interest for our term loan and convertible debt and made cash pension/OPEB payments of $14 million. Additionally, we paid $11 million in cash for restructuring and had approximately $7 million in cash taxes in the quarter

Inventory was $68 million as of December 31, 2018, compared to $81 million as of September 30, 2018. Days of inventory stood at 34 days, compared to 28 days for the fourth quarter of fiscal 2018. This level of inventory represents consistent operating levels

Accounts receivable was $327 million as of December 31, 2018, compared to $377 million as of September 30, 2018. Days sales outstanding (based on non-GAAP revenue) decreased by 4 days compared to Q4 FY’18 and stood at 56 days. Note: Our DSO calculation includes adjustments for AR / contract liability revenue netting and for the impact of fresh start accounting in order to keep our “operational” reporting of DSO consistent with historically reported data

Accounts payable was $295 million as of December 31, 2018, compared to $266 million as of September 30, 2018. Days payable was up significantly from 83 days in Q4 FY’18 to 98 days in Q1 FY’19

Capital expenditures were $21 million in Q1 FY’19, down from $25 million in Q4 FY’18 and up from $15 million in Q1 FY’18

Depreciation and amortization was approximately $117 million, down from $120 million in Q4 FY’18 and up from $53 million during Q1 FY’18. The impact of fresh start accounting required that we increase intangible and fixed assets to their fair values as of December 15, 2017, that impact should decrease over time

Demand Indicators

Total Contract Value (TCV) increased 8% compared to the prior year and now stands at $2.4 billion. We define TCV as the value of all active contracts that have not been recognized as revenue, including both billed and unbilled backlog

Channel

Product revenue to the channel was $226 million. Product revenue to the channel decreased slightly year-over-year and decreased6% sequentially. As a reminder, channel product revenue is recognized when we sell-in to the distributor and continues to account for more than 2/3 of our total product revenue

Distributor reported inventories were $108 million and increased $3 millionfrom Q4 FY’18and decreased $3 million from Q1 FY’18

Financial Outlook

During the past quarter and most recent fiscal year we continued to take steps to improve our capital structure. We remain committed to improving the operational efficiency and productivity of Avaya. We continue to invest in our outstanding product portfolio, customer support and satisfaction continues to improve, and we are building a stronger financial model that supports future growth.

As a reminder, our financial outlook presented below reflects the adoption of the new ASC 606 revenue recognition standard that became effective October 1, 2018 and replaced ASC 605. The net impact of adoption is expected to be a decrease of fiscal 2019 Adjusted EBITDA compared to ASC 605, substantially offset by earlier revenue recognition for certain products and services under ASC 606 and incremental revenue.

Taking into consideration Avaya’s continued investment in R&D, sales enablement, tools and people, and our ongoing efforts to improve Avaya’s operating efficiencies; we are now targeting the following forecast for Q2 Fiscal Year 2019 and Fiscal Year 2019:

Financial Outlook - Q2 Fiscal 2019 under ASC 606

• GAAP revenue of $730-$760 million, non-GAAP revenue of $740-$765 million. As a reminder, Q2 is typically the softest quarter from a sequential growth perspective with our revenue, historically, declining in the low to mid-single digits quarter to quarter

• GAAP operating margin of 5.5-8.0%, non-GAAP operating margin of 21.5-22.5%

• GAAP operating income of $40-$60 million, non-GAAP operating income $159-$172 million

• Cash taxes of $30 million, +/- $3 million

• Adjusted EBITDA of $178-$191 million or adjusted EBITDA margin of 24.0-25.0% of non-GAAP revenue

• Approximately 111 million shares outstanding

Financial Outlook - Fiscal Year 2019 under ASC 606

• GAAP revenue of $3.01-$3.12 billion, non-GAAP revenue of $3.05-$3.15 billion

• GAAP and non-GAAP R&D of $220-$225 million, or 15-16% of product revenue

• Operating income of $200-$280 million, non-GAAP operating income of $675-$730 million or 22-23% of non-GAAP revenue

• Adjusted EBITDA $763-$819 million, or 25-26% of non-GAAP revenue

• Approximately 113 million shares outstanding

• Cloud and innovation 12-14% of non-GAAP revenue

• Recurring revenue 58-59% of non-GAAP revenue

• Software and Services 83-85% of non-GAAP revenue

Total cash requirements for restructuring, pension & OPEB, cash taxes, capital spending and interest expense in the second quarter fiscal 2019 and fiscal year 2019 are expected to be:

Details:Q2’19FY’19

Restructuring: ~$15M$65-$70M

Pension/OPEB: ~$25M$65M

Cash Taxes:      ~$30M +/- $3M$70M +/- $5M

CapEx:              ~$25M$90-$95M

Interest expense:~$50M$200-$205M

Avaya’s outlook does not include the potential impact of any business combinations, asset acquisitions, divestitures, strategic investments, or other significant transactions that may be completed after February 11, 2019. Actual results may differ materially from Avaya’s outlook as a result of, among other things, the factors described under “Forward-Looking Statements” below.

⁽¹⁾ Non-GAAP revenue, Non-GAAP gross margin, Non-GAAP operating margin, Non-GAAP operating income and adjusted EBITDA are not measures calculated in accordance with generally accepted accounting principles in the U.S. (“GAAP”). Refer to the Supplemental Financial Information accompanying this document for more information, including a reconciliation of these measures to the most closely comparable measure calculated in accordance with GAAP.

Cautionary Note Regarding Forward-Looking Statements

This document contains certain “forward-looking statements.” All statements other than statements of historical fact are “forward-looking” statements for purposes of the U.S. federal and state securities laws. These statements may be identified by the use of forward looking terminology such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," “our vision,” "plan," "potential," "preliminary," "predict," "should," "will," or “would” or the negative thereof or other variations thereof or comparable terminology and include, but are not limited to, the outlook for the second quarter 2019 and fiscal year 2019, including the expected impact of the adoption of ASC 606. The company has based these forward-looking statements on its current expectations,

assumptions, estimates and projections. While the company believes these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond its control. These factors are discussed in Amendment No. 3 to the company’s Registration Statement on Form 10, Annual and Quarterly Reports on Form 10-K and 10-Q filed with the Securities and Exchange Commission (the “SEC”), and may cause its actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. For a further list and description of such risks and uncertainties, please refer to the company’s filings with the SEC that are available at www.sec.gov. The company cautions you that the list of important factors included in the company’s SEC filings may not contain all of the material factors that are important to you. In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this report may not in fact occur. The company undertakes no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

Avaya Holdings Corp.

Condensed Consolidated Statements of Operations (Unaudited)

(In millions, except per share amounts)

	Successor						Predecessor
	Three months ended December 31, 2018			Period from December 16, 2017 through December 31, 2017			Period from October 1, 2017 through December 15, 2017
REVENUE
Products	$	324		$	71		$	253
Services	414			77			351
	738			148			604
COSTS
Products:
Costs	115			33			84
Amortization of technology intangible assets	43			7			3
Services	173			30			155
	331			70			242
GROSS PROFIT	407			78			362
OPERATING EXPENSES
Selling, general and administrative	257			50			264
Research and development	53			9			38
Amortization of intangible assets	40			7			10
Restructuring charges, net	7			10			14
	357			76			326
OPERATING INCOME	50			2			36
Interest expense	(60		)	(9		)	(14		)
Other income (expense), net	22			(2		)	(2		)
Reorganization items, net	—			—			3,416
INCOME (LOSS) BEFORE INCOME TAXES	12			(9		)	3,436
(Provision for) benefit from income taxes	(3		)	246			(459		)
NET INCOME	$	9		$	237		$	2,977
NET INCOME PER SHARE
Basic	$	0.08		$	2.16		$	5.19
Diluted	$	0.08		$	2.15		$	5.19
Weighted average shares outstanding
Basic	110.3			109.8			497.3
Diluted	111.2			110.3			497.3

Avaya Holdings Corp.

Condensed Consolidated Balance Sheets (Unaudited)

(In millions, except per share and share amounts)

	December 31, 2018			September 30, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	743		$	700
Accounts receivable, net	327			377
Inventory	68			81
Contract assets	120			—
Contract costs	118			—
Other current assets	106			170
TOTAL CURRENT ASSETS	1,482			1,328
Property, plant and equipment, net	239			250
Deferred income taxes, net	28			29
Intangible assets, net	3,149			3,234
Goodwill	2,764			2,764
Other assets	97			74
TOTAL ASSETS	$	7,759		$	7,679
LIABILITIES
Current liabilities:
Debt maturing within one year	$	29		$	29
Accounts payable	295			266
Payroll and benefit obligations	121			145
Contract liabilities	482			484
Business restructuring reserve	50			51
Other current liabilities	152			148
TOTAL CURRENT LIABILITIES	1,129			1,123
Non-current liabilities:
Long-term debt, net of current portion	3,095			3,097
Pension obligations	652			671
Other post-retirement obligations	177			176
Deferred income taxes, net	161			140
Business restructuring reserve	43			47
Other liabilities	370			374
TOTAL NON-CURRENT LIABILITIES	4,498			4,505
TOTAL LIABILITIES	5,627			5,628
Commitments and contingencies
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value; 55,000,000 shares authorized, no shares issued or outstanding at December 31, 2018 and September 30, 2018	—			—
Common stock, $0.01 par value; 550,000,000 shares authorized; 110,708,203 shares issued and 110,695,523 shares outstanding at December 31, 2018; and 110,218,653 shares issued and 110,012,790 shares outstanding at September 30, 2018	1			1
Additional paid-in capital	1,745			1,745
Retained earnings	388			287
Accumulated other comprehensive (loss) income	(2		)	18
TOTAL STOCKHOLDERS' EQUITY	2,132			2,051
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	7,759		$	7,679

Avaya Holdings Corp.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In millions)

	Successor						Predecessor			Non-GAAP Combined
	Three months ended December 31, 2018			Period from December 16, 2017 through December 31, 2017			Period from October 1, 2017 through December 15, 2017			Three months ended December 31, 2017
Net cash provided by (used for):
Operating activities	$	86		$	40		$	(414	)	$	(374	)
Investing activities	(22		)	(2		)	(13		)	(15		)
Financing activities	(18		)	—			(102		)	(102		)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(3		)	3			(2		)	1
Net increase (decrease) in cash, cash equivalents, and restricted cash	43			41			(531		)	(490		)
Cash, cash equivalents, and restricted cash at beginning of period	704			435			966			966
Cash, cash equivalents, and restricted cash at end of period	$	747		$	476		$	435		$	476

Use of non-GAAP (Adjusted) Financial Measures

The information furnished in this release includes non-GAAP financial measures that differ from measures calculated in accordance with generally accepted accounting principles in the United States of America (“GAAP”), including the combined three month period ending December 31, 2017 and financial measures labeled as “non-GAAP” or “adjusted.”

Although GAAP requires that we report on our results for the periods October 1, 2017 through December 15, 2017 and December 16, 2017 through December 31, 2017, separately, management reviews the company’s operating results for the three months ended December 31, 2017 by combining the results of these periods because such presentation provides the most meaningful comparison of our results. The company cannot adequately benchmark the operating results of the 16-day period ended December 31, 2017 against any of the previous periods reported in its condensed consolidated financial statements and does not believe that reviewing the results of this period in isolation would be useful in identifying any trends regarding the company’s overall performance. Management believes that the key performance metrics such as revenue, gross margin and operating income, among others, when combined for the three months ended December 31, 2017 provide meaningful comparisons to other periods and are useful in identifying current business trends.

EBITDA is defined as net income (loss) before income taxes, interest expense, interest income and depreciation and amortization. Adjusted EBITDA is EBITDA further adjusted to exclude certain charges and other adjustments described in our SEC filings and the tables below.

We believe that including supplementary information concerning adjusted EBITDA is appropriate because it serves as a basis for determining management and employee compensation and it is used as a basis for calculating covenants in our credit agreements. In addition, we believe adjusted EBITDA provides more comparability between our historical results and results that reflect purchase accounting and our current capital structure. We also present EBITDA and adjusted EBITDA because we believe analysts and investors utilize these measures in analyzing our results. Adjusted EBITDA measures our financial

performance based on operational factors that management can impact in the short-term, such as our pricing strategies, volume, costs and expenses of the organization and it presents our financial performance in a way that can be more easily compared to prior quarters or fiscal years.

EBITDA and adjusted EBITDA have limitations as analytical tools. EBITDA measures do not represent net income (loss) or cash flow from operations as those terms are defined by GAAP and do not necessarily indicate whether cash flows will be sufficient to fund cash needs. However, these terms are not necessarily comparable to other similarly titled captions of other companies due to the potential inconsistencies in the method of calculation. Adjusted EBITDA excludes the impact of earnings or charges resulting from matters that we consider not to be indicative of our ongoing operations. In particular, our formulation of adjusted EBITDA allows adjustment for certain amounts that are included in calculating net income (loss), however, these are expenses that may recur, may vary and are difficult to predict.

We also present the measures non-GAAP revenue, non-GAAP gross margin, non-GAAP operating margin and non-GAAP operating income, as a supplement to our unaudited condensed consolidated financial statements presented in accordance with GAAP. We believe these non-GAAP measures are the most meaningful for period to period comparisons because they exclude the impact of the earnings and charges noted in the applicable tables below that resulted from matters that we consider not to be indicative of our ongoing operations.

The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, as substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and may be different from the non-GAAP financial measures used by other companies. In addition, these non-GAAP measures have limitations in that they do not reflect all of the amounts associated with the company’s results of operations as determined in accordance with GAAP.

We do not provide a forward-looking reconciliation of expected second quarter and full year fiscal 2019 adjusted EBITDA, Non-GAAP operating income, Non-GAAP R&D or Non-GAAP revenue guidance as the amount and significance of special items required to develop meaningful comparable GAAP financial measures cannot be estimated at this time without unreasonable efforts. These special items could be meaningful.

The following tables present Successor, Predecessor and combined results and reconcile historical GAAP measures to non-GAAP measures.

Avaya Holdings Corp.

Supplemental Schedules of Non-GAAP Adjusted EBITDA

(Unaudited; in millions)

	Successor						Predecessor
	Three months ended December 31, 2018			Period from December 16, 2017 through December 31, 2017			Period from October 1, 2017 through December 15, 2017
Net income	$	9		$	237		$	2,977
Interest expense	60			9			14
Interest income	(3		)	—			(2		)
Provision for (benefit from) income taxes	3			(246		)	459
Depreciation and amortization	117			22			31
EBITDA	186			22			3,479
Impact of fresh start accounting adjustments	3			27			—
Restructuring charges, net	7			10			14
Advisory fees	1			8			3
Acquisition-related costs	3			—			—
Reorganization items, net	—			—			(3,416		)
Non-cash share-based compensation	6			1			—
Loss on sale/disposal of long-lived assets, net	—			—			1
Resolution of certain legal matters	—			—			37
Change in fair value of Emergence Date Warrants	(18		)	5			—
Loss (gain) on foreign currency transactions	1			(2		)	—
Pension/OPEB/nonretirement postemployment benefits and long-term disability costs	—			—			17
Adjusted EBITDA	$	189		$	71		$	135

Avaya Holdings Corp.

Supplemental Schedules of Non-GAAP Revenue

(Unaudited; in millions)

	Successor																Successor
	Three Months Ended							Q118 Non-GAAP Combined Results (4)		Change							Three Months Ended
	Dec. 31, 2018			Adj. for Fresh Start Accounting		Non-GAAP Dec. 31, 2018				Amount			Pct.		Pct., net of fx impact		Sept. 30, 2018 (1)		June 30, 2018 (2)		Mar. 31, 2018 (3)
Revenue by Segment
Products & Solutions	$	326		$	—	$	326	$	330	$	(4	)	(1	)%	(1	)%	$	336	$	322	$	317
Services	422			—		422		445		(23		)	(5	)%	(4	)%	434		433		440
Unallocated amounts	(10		)	10		—		—		—			n/a		n/a		—		—		—
Total revenue	$	738		$	10	$	748	$	775	$	(27	)	(2	)%	(1	)%	$	770	$	755	$	757
Revenue by Geography
U.S.	$	394		$	7	$	401	$	425	$	(24	)	(4	)%	(4	)%	$	417	$	399	$	409
International:
EMEA	199			1		200		208		(8		)	(1	)%	—	%	202		202		196
APAC - Asia Pacific	78			1		79		76		3			5	%	8	%	81		86		83
Americas International	67			1		68		66		2			3	%	7	%	70		68		69
Total International	344			3		347		350		(3		)	1	%	3	%	353		356		348
Total revenue	$	738		$	10	$	748	$	775	$	(27	)	(2	)%	(1	)%	$	770	$	755	$	757

	(1) Q418 Non-GAAP Results							(2) Q318 Non-GAAP Results
	Three Months Ended							Three Months Ended
	Sept. 30, 2018			Adj. for Fresh Start Accounting		Non-GAAP Sept. 30, 2018		June 30, 2018			Adj. for Fresh Start Accounting		Non-GAAP June 30, 2018
Revenue by Segment
Products & Solutions	$	336		$	—	$	336	$	322		$	—	$	322
Services	434			—		434		433			—		433
Unallocated amounts	(35		)	35		—		(63		)	63		—
Total revenue	$	735		$	35	$	770	$	692		$	63	$	755
Revenue by Geography
U.S.	$	393		$	24	$	417	$	356		$	43	$	399
International:
EMEA	196			6		202		193			9		202
APAC - Asia Pacific	78			3		81		81			5		86
Americas International	68			2		70		62			6		68
Total International	342			11		353		336			20		356
Total revenue	$	735		$	35	$	770	$	692		$	63	$	755

	(3) Q218 Non-GAAP Results							(4) Q118 Non-GAAP Combined Results
	Three Months Ended							Successor			Predecessor				Q118 Non-GAAP Combined Results
	Mar. 31, 2018			Adj. for Fresh Start Accounting		Non-GAAP Mar. 31, 2018		Period from Dec. 16, 2017 through Dec. 31, 2017			Period from Oct. 1, 2017 through Dec. 15, 2017		Adj. for Fresh Start Accounting
Revenue by Segment
Products & Solutions	$	317		—		$	317	$	77		$	253	—		$	330
Services	440			—		440		94			351		—		445
Unallocated amounts	(85		)	85		—		(23		)	—		23		—
Total revenue	$	672		$	85	$	757	$	148		$	604	$	23	$	775
Revenue by Geography
U.S.	$	354		$	55	$	409	$	71		$	331	$	13	$	425
International:
EMEA	178			18		196		42			166		7		208
APAC - Asia Pacific	80			3		83		19			57		2		76
Americas International	60			9		69		16			50		1		66
Total International	321			30		348		77			273		10		350
Total revenue	$	672		$	85	$	757	$	148		$	604	$	23	$	775

Avaya Holdings Corp.

Supplemental Schedules of Non-GAAP Reconciliations

(Unaudited; in millions)

	Successor															Predecessor			Q118 Non-GAAP Combined Results
	Three Months Ended												Period from Dec. 16, 2017 through Dec. 31, 2017			Period from Oct. 1, 2017 through Dec. 15, 2017
	Dec. 31, 2018			Sept. 30, 2018			June 30, 2018			March 31, 2018
Reconciliation of Non-GAAP Gross Profit and Non-GAAP Gross Margin
Gross Profit	$	407		$	390		$	352		$	323		$	78		$	362		$	440
Items excluded:
Adj. for fresh start accounting	19			54			69			106									35
Amortization of technology intangible assets	43			43			44			41									10
Loss on disposal of long-lived assets	—			—			2			2									—
Non-cash share-based compensation	—			1			—			—									—
Non-GAAP Gross Profit	$	469		$	488		$	467		$	472								$	485
GAAP Gross Margin	55.1		%	53.1		%	50.9		%	48.1		%	52.7		%	59.9		%	58.5		%
Non-GAAP Gross Margin	62.7		%	63.4		%	61.9		%	62.4		%							62.6		%
Reconciliation of Non-GAAP Operating Income
Operating Income (Loss)	$	50		$	11		$	(49	)	$	(89	)	$	2		$	36		$	38
Items excluded:
Adj. for fresh start accounting	20			48			71			107									33
Amortization of intangible assets	83			84			83			81									27
Restructuring charges, net	7			1			30			40									24
Acquisition-related costs	3			4			4			7									—
Loss on disposal of long-lived assets	—			—			2			2									1
Advisory fees	1			3			3			4									11
Non-cash share-based compensation	6			6			7			5									1
Costs in connection with certain legal matters	—			—			—			—									37
Non-GAAP Operating Income	$	170		$	157		$	151		$	157								$	172
GAAP Operating Margin	6.8		%	1.5		%	-7.1		%	-13.2		%	1.4		%	6.0		%	5.1		%
Non-GAAP Operating Margin	22.7		%	20.4		%	20.0		%	20.7		%							22.2		%

Avaya Holdings Corp.

Supplemental Schedules of Non-GAAP Reconciliation of Gross Profit and Gross Margin by Portfolio

(Unaudited; in millions)

	Successor															Predecessor			Q118 Non-GAAP Combined Results
	Three months ended												Period from December 16, 2017 through December 31, 2017			Period from October 1, 2017 through December 15, 2017
	Dec. 31, 2018			Sept. 30, 2018			June 30, 2018			March 31, 2018
Reconciliation of Non-GAAP Gross Profit and Non-GAAP Gross Margin - Products
Revenue	$	324		$	325		$	300		$	293		$	71		$	253		$	324
Costs	115			115			114			110			33			84			117
Amortization of technology intangible assets	43			43			44			41			7			3			10
GAAP Gross Profit	166			167			142			142			31			166			197
Items excluded:
Adj. for fresh start accounting	19			16			24			33									11
Amortization of technology intangible assets	43			43			44			41									10
Loss on disposal of long-lived assets	—			—			1			1									—
Non-GAAP Gross Profit	$	214		$	226		$	211		$	217								$	218
GAAP Gross Margin	51.2		%	51.4		%	47.3		%	48.5		%	43.7		%	65.6		%	60.8		%
Non-GAAP Gross Margin	65.6		%	67.3		%	65.5		%	68.5		%							66.1		%
Reconciliation of Non-GAAP Gross Profit and Non-GAAP Gross Margin - Services
Revenue	$	414		$	410		$	392		$	379		$	77		$	351		$	428
Costs	173			187			182			198			30			155			185
GAAP Gross Profit	241			223			210			181			47			196			243
Items excluded:
Adj. for fresh start accounting	14			38			45			73									24
Loss on disposal of long-lived assets	—			—			1			1									—
Non-cash share-based compensation	—			1			—			—									—
Non-GAAP Gross Profit	$	255		$	262		$	256		$	255								$	267
GAAP Gross Margin	58.2		%	54.4		%	53.6		%	47.8		%	61.0		%	55.8		%	56.8		%
Non-GAAP Gross Margin	60.4		%	60.4		%	59.1		%	58.0		%							60.0		%

Avaya Holdings Corp.

Reconciliation of GAAP to Non-GAAP results

Three months ended December 31, 2018

(Unaudited; in millions)

																												Q118
	GAAP Results			Adj. for Fresh Start Accounting			Amortization of Intangible Assets			Restructuring Charges, net			Acquisition Costs			Share-based Comp			Advisory Fees			Other Costs, net			Non-GAAP Results			GAAP Results			Non-GAAP Results
Revenue
Products	$	324		$	2		$	—		$	—		$	—		$	—		$	—		$	—		$	326		$	324		$	330
Services	414			8			—			—			—			—			—			—			422			428			445
	738			10			—			—			—			—			—			—			748			752			775
Costs
Products:
Costs	115			(3		)	—			—			—			—			—			—			112			117			112
Amortization of technology intangible assets	43			—			(43		)	—			—			—			—			—			—			10			—
Services	173			(6		)	—			—			—			—			—			—			167			185			178
	331			(9		)	(43		)	—			—			—			—			—			279			312			290
GROSS PROFIT	407			19			43			—			—			—			—			—			469			440			485
OPERATING EXPENSES
Selling, general and administrative	257			—			—			—			(3		)	(6		)	(1		)	—			247			314			266
Research and development	53			(1		)	—			—			—			—			—			—			52			47			47
Amortization of intangible assets	40			—			(40		)	—			—			—			—			—			—			17			—
Restructuring charges, net	7			—			—			(7		)	—			—			—			—			—			24			—
	357			(1		)	(40		)	(7		)	(3		)	(6		)	(1		)	—			299			402			313
OPERATING INCOME	50			20			83			7			3			6			1			—			170			38			172
Interest expense	(60		)	—			—			—			—			—			—			—			(60		)	(23		)	(23		)
Other income (expense), net	22			—			—			—			—			—			—			(20		)	2			(4		)	(3		)
Reorganization items, net	—			—			—			—			—			—			—			—			—			3,416			—
INCOME BEFORE INCOME TAXES	$	12		$	20		$	83		$	7		$	3		$	6		$	1		$	(20	)	$	112		$	3,427		$	146

Avaya Holdings Corp.

Reconciliation of ASC 606 to ASC 605 GAAP results

Three months ended December 31, 2018

(Unaudited; in millions)

	Q1 FY19 results under ASC 606		ASC 606 Impact			Q1 FY19 results under ASC 605
REVENUE
Products	$	324	$	22		$	302
Services	414		20			394
	738		42			696
COSTS
Products:
Costs	115		6			109
Amortization of technology intangible assets	43		—			43
Services	173		6			167
	331		12			319
GROSS PROFIT	407		30			377
OPERATING EXPENSES
Selling, general and administrative	257		(8		)	265
Research and development	53		—			53
Amortization of intangible assets	40		—			40
Restructuring charges, net	7		—			7
	357		(8		)	365
OPERATING INCOME	$	50	$	38		$	12

EX-99.3

Exhibit 99.3

For media inquiries:

Alex Alias

Avaya Announces Chief Financial Officer Transition

Santa Clara, CA. – February 11, 2018 – Avaya Holdings Corp. (NYSE: AVYA) today announced that Kieran McGrath will assume the role of Senior Vice President and CFO of Avaya effective February 15, 2019 and Pat O’Malley will transition to serve as Senior Vice President, Growth Initiatives. McGrath and O’Malley will both report to Jim Chirico, Avaya President and CEO.

McGrath has thirty-plus years of technology industry financial, operational and transformational experience in software as a service, cloud computing, and technology services. He most recently served as Executive Vice President and CFO at CA Technologies from July 2016 until the company’s acquisition in November 2018. During McGrath’s tenure at CA, the company returned to consecutive years of revenue growth primarily driven by software as a service cloud revenue. Prior to CA, he served in several key finance and operations leadership roles during a lengthy career at IBM, including six years as the Vice President of Finance for the IBM Software Group. McGrath will be responsible for financial governance and management of Avaya's financial operations, including overall responsibility for the controller organization, financial planning, treasury, tax and investor relations.

“Kieran is an outstanding addition to our leadership team, bringing a wealth of experience and proven performance to Avaya as we continue our transformation and invest for our future growth,” said Jim Chirico, Avaya President and CEO. “He is well-known and respected in the financial community and the technology industry and has demonstrated success in leading global organizations. We are pleased to have Kieran at Avaya and are highly confident that his focus will further our objective to drive value for shareholders.”

“I am very excited to be joining the Avaya team and look forward to leading the finance organization in support of Avaya’s transformational journey,” said McGrath.

Joining Avaya in in 2017, O’Malley led the financial transformation of the company as it sought to restructure its financial position and transition to a publicly-traded company. O’Malley oversaw achievement of a number of strategic objectives in 2018, including strengthening the balance sheet, driving revenue stability and investing in innovation while maintaining the company’s industry-leading financial model.

In his new role, O’Malley will be responsible to accelerate strategic, cross-functional initiatives that are fundamental to Avaya’s primary objective of revenue growth in fiscal 2019. 

“Pat has consistently demonstrated superior leadership and done a masterful job managing our transition to a public company,” said Chirico. “He has been instrumental in achieving credibility, predictability and consistency in laying a solid financial foundation for Avaya, and I look forward to the contributions he will make in his new role.”

In addition to its CFO transition, Avaya announced that Laurent Philonenko, Senior Vice President, Innovation, will be departing the company this month to assume the role of Chief Executive Officer for a customer experience management organization that is a business partner to Avaya.

“Laurent has significantly advanced Avaya’s capabilities in bringing new, disruptive solutions to the market, especially in the areas of artificial intelligence, mobility and security,” Chirico said. “While we regret he is

leaving Avaya, a CEO role is a great opportunity for Laurent and we wish him tremendous success. We will build on and extend the Innovation Incubator that Laurent has established here, to continue delivering innovation that enhances our position as a technology leader.”

About Avaya

Businesses are built on the experiences they provide, and every day millions of those experiences are built by Avaya (NYSE:AVYA). For over one hundred years, we’ve enabled organizations around the globe to win – by creating intelligent communications experiences for customers and employees. Avaya builds open, converged and innovative solutions to enhance and simplify communications and collaboration – in the cloud, on-premise or a hybrid of both. To grow your business, we’re committed to innovation, partnership, and a relentless focus on what’s next.

Cautionary Note Regarding Forward-Looking Statements

This document contains certain “forward-looking statements.” All statements other than statements of historical fact are “forward-looking” statements for purposes of the U.S. federal and state securities laws. These statements may be identified by the use of forward looking terminology such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," “our vision,” "plan," "potential," "preliminary," "predict," "should," "will," or “would” or the negative thereof or other variations thereof or comparable terminology and include, but are not limited to, the outlook for the second quarter of fiscal 2019 and fiscal year 2019, including the expected impact of ASC 606. The company has based these forward-looking statements on its current expectations, assumptions, estimates and projections. While the company believes these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond its control. These factors are discussed in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”), and may cause its actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. For a further list and description of such risks and uncertainties, please refer to the company’s filings with the SEC that are available at www.sec.gov. The company cautions you that the list of important factors included in the company’s SEC filings may not contain all of the material factors that are important to you. In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this report may not in fact occur. The company undertakes no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

Source: Avaya Newsroom

###

EX-99.4

TEXT 0 – 0 – 0 204-0-0 127-127-127 17-114-210 80-200-74 86-183-242 247-150-70 Exhibit 99.4 Q1 FISCAL YEAR 2019 FINANCIAL RESULTS February 11, 201911 © 2019 Avaya Inc. All rights reserved © 2018 Avaya Inc. All rights reserved

TEXT 0 – 0 – 0 204-0-0 127-127-127 17-114-210 80-200-74 86-183-242 247-150-70 Forward Looking Statements Cautionary Note Regarding Forward-Looking Statements This document contains certain “forward-looking statements.” All statements other than statements of historical fact are “forward-looking” statements for purposes of the U.S. federal and state securities laws. These statements may be identified by the use of forward looking terminology such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," “our vision,” "plan," "potential," "preliminary," "predict," "should," "will," or “would” or the negative thereof or other variations thereof or comparable terminology and include, but are not limited to, the outlook for the second quarter of fiscal 2019 and fiscal year 2019, including the expected impact of ASC 606. The company has based these forward-looking statements on its current expectations, assumptions, estimates and projections. While the company believes these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond its control. These factors are discussed in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”), and may cause its actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. For a further list and description of such risks and uncertainties, please refer to the company’s filings with the SEC that are available at www.sec.gov. The company cautions you that the list of important factors included in the company’s SEC filings may not contain all of the material factors that are important to you. In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this report may not in fact occur. The company undertakes no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law. These slides, as well as current and historical financial data are available on our web site at investors.avaya.com None of the information included on the website is incorporated by reference in this presentation. © 2019 Avaya Inc. All rights reserved 2

TEXT 0 – 0 – 0 204-0-0 127-127-127 17-114-210 80-200-74 86-183-242 247-150-70 Use of non-GAAP (Adjusted) Financial Measures This presentation should be read in conjunction with our first quarter fiscal 2019 earnings press release issued on February 11, 2019. Within this presentation, we refer to certain non-GAAP financial measures, such as non-GAAP revenue, non-GAAP operating income and adjusted EBITDA, that involve adjustments to GAAP measures. Reconciliations between our non-GAAP financial measures and the most closely comparable GAAP financial measures are included on the last four slides of this presentation. EBITDA is defined as net income (loss) before income taxes, interest expense, interest income and depreciation and amortization. Adjusted EBITDA is EBITDA further adjusted to exclude certain charges and other adjustments described in our SEC filings and the tables below. We believe that including supplementary information concerning adjusted EBITDA is appropriate because it serves as a basis for determining management and employee compensation and it is used as a basis for calculating covenants in our credit agreements. In addition, we believe adjusted EBITDA provides more comparability between our historical results and results that reflect purchase accounting and our current capital structure. We also present EBITDA and adjusted EBITDA because we believe analysts and investors utilize these measures in analyzing our results. Accordingly, adjusted EBITDA measures our financial performance based on operational factors that management can impact in the short-term, such as our pricing strategies, volume, costs and expenses of the organization and it presents our financial performance in a way that can be more easily compared to prior quarters or fiscal years. EBITDA and adjusted EBITDA have limitations as analytical tools. EBITDA measures do not represent net income (loss) or cash flow from operations as those terms are defined by GAAP and do not necessarily indicate whether cash flows will be sufficient to fund cash needs. However, these terms are not necessarily comparable to other similarly titled captions of other companies due to the potential inconsistencies in the method of calculation. Adjusted EBITDA excludes the impact of earnings or charges resulting from matters that we consider not to be indicative of our ongoing operations. In particular, our formulation of adjusted EBITDA allows adjustment for certain amounts that are included in calculating net income (loss), however, these are expenses that may recur, may vary and are difficult to predict. We do not provide a forward-looking reconciliation of expected second quarter of fiscal Q2 and fiscal 2019 adjusted EBITDA, non- GAAP operating income or non-GAAP revenue guidance as the amount of significance of special items required to develop meaningful comparable GAAP financial measures cannot be estimated at this time without unreasonable efforts. These special items could be meaningful. © 2019 Avaya Inc. All rights reserved 3

TEXT 0 – 0 – 0 204-0-0 127-127-127 17-114-210 80-200-74 86-183-242 247-150-70 Fiscal Q1 2019 Highlights (Amounts are non-GAAP)* • Non-GAAP revenue was $748 million, compared to $770 million last quarter and $775 million in the prior year – Software and Services was 83% of total non-GAAP revenue, a record – Software was 61% of Non-GAAP product revenue – Recurring revenue was 57% of total non-GAAP revenue – Cloud was approximately 11% of total non-GAAP revenue • Non-GAAP gross margin was 62.7%, a first quarter record, compared to 63.4% last quarter and 62.6% in the prior year • Non-GAAP operating margin was 22.7%, a first quarter record, compared to 20.4% last quarter and 22.2% in the prior year • Adjusted EBITDA was $189 million, or 25.3% of revenue, compared to $178 million, or 23.1% of revenue, last quarter and $206 million, or 26.6% of revenue, in the prior year • Generated $65 million in free-cash-flow*. Ended the quarter with $743 million in cash and cash equivalents on our balance sheet. • Kieran McGrath to assume role of SVP, CFO. Pat O’Malley to take on newly-created role of SVP, Growth Initiatives. Kieran brings extensive finance leadership, relevant cloud and transformation experience, most recently as EVP, CFO of CA Technologies *Note: We define free cash flow as Cash Flow from Operations less Capital Expenditures *For a reconciliation of non-GAAP to GAAP financial information, please see the last 5 slides of this presentation. © 2019 Avaya Inc. All rights reserved 4

TEXT 0 – 0 – 0 204-0-0 127-127-127 17-114-210 80-200-74 86-183-242 247-150-70 Quarterly Income Statement (Amounts are GAAP and dollars in millions) GAAP Revenue: FQ1 2019 FQ4 2018 FQ1 2018 Product $ 324 $ 325 $ 324 Services $ 414 $ 410 $ 428 GAAP Total Revenue $ 738 $ 735 $ 752 GAAP Gross Margin: Product 51.2% 51.4% 60.8% Services 58.2% 54.4% 56.8% GAAP Total Gross Margin 55.1% 53.1% 58.5% GAAP Operating Margin 6.8% 1.5% 5.1% © 2019 Avaya Inc. All rights reserved 5

TEXT 0 – 0 – 0 204-0-0 127-127-127 17-114-210 80-200-74 86-183-242 247-150-70 Quarterly Income Statement (Amounts are non-GAAP and dollars in millions)* Non-GAAP Revenue: FQ1 2019 FQ4 2018 FQ1 2018 Product $ 326 $ 336 $ 330 Services $ 422 $ 434 $ 445 Non-GAAP Total Revenue $ 748 $ 770 $ 775 Non-GAAP Gross Margin: Product 65.6% 67.3% 66.1% Services 60.4% 60.4% 60.0% Non-GAAP Total Gross Margin 62.7% 63.4% 62.6% Non-GAAP Operating Margin 22.7% 20.4% 22.2% Adjusted EBITDA $ 189 $ 178 $ 206 Adjusted EBITDA % (1) 25.3% 23.1% 26.6% (1) Adjusted EBITDA % is based on non-GAAP Revenue *For a reconciliation of non-GAAP to GAAP financial information, please see the last 5 slides of this presentation. . © 2019 Avaya Inc. All rights reserved 6

TEXT 0 – 0 – 0 204-0-0 127-127-127 17-114-210 80-200-74 86-183-242 247-150-70 Quarterly Revenue by Region (All dollars amounts are non-GAAP in millions)* Revenue FQ1 2019 FQ4 2018 FQ1 2018 U.S. $ 401 $ 417 $ 425 EMEA $ 200 $ 202 $ 208 APAC $ 79 $ 81 $ 76 AI $ 68 $ 70 $ 66 Total $ 748 $ 770 $ 775 % of Total Revenue U.S. 54% 54% 55% EMEA 26% 26% 27% APAC 11% 11% 10% AI 9% 9% 8% Total 100% 100% 100% © 2019 Avaya Inc. All rights reserved *For a reconciliation of non-GAAP to GAAP financial 7 information, please see the last 5 slides of this presentation.

TEXT 0 – 0 – 0 204-0-0 127-127-127 17-114-210 80-200-74 86-183-242 247-150-70 Q1 FY’19 Financial Highlights Notable Q1’19 Stats (non-GAAP): • Total Contract Value increased 8% year-over-year ($M, as reported) FQ1 FQ4 FQ1 to $2.4 billion Non-GAAP 2019 2018 2018 • Strong large deal activity with 3 deals over $10 million, 10 over $5 million, and 83 over $1 million Non-GAAP Revenue $748 $770 $775 • 83% of Non-GAAP revenue was Software & Non-GAAP Gross Margin % 62.7% 63.4% 62.6% Services Non-GAAP Oper. Expense % 40.0% 43.0% 40.4% • 61% of Non-GAAP product revenue was Software • 57% of Non-GAAP revenue was Recurring Non-GAAP Oper. Income % 22.7% 20.4% 22.2% • Added 1,600 new logos Adj. EBITDA $ $189 $178 $206 • Generated $65 million of free cash flow* Adj. EBITDA % 25.3% 23.1% 26.6% • Ended the quarter with $743 million cash & cash equivalents on balance sheet Non-GAAP Revenue per employee** (TTM) Company Highlights $400 • Introduced new Private Cloud Solutions for UC & CC $390 $379 $381 $380 $376 • Announced new online storefront that simplifies access to $366 ) $370 0 0 our UCaaS & CCaaS solutions 0 $360 $ ( $347 • Enhanced our channel partner program with increased $350 $340 $335 focus on solution selling, simplification, and cloud $330 offerings $320 • Expanded our A.I.Connect ecosystem FY14 FY15 FY16 FY17 FY18 Q1 FY19 TTM-Trailing Twelve Months Adjusted EBITDA % is based on non-GAAP Revenue *: We define free cash flow as cash flow from operating activities less capital expenditures © 2019 Avaya Inc. All rights reserved **Headcount as of the end of the period indicated 8 For a reconciliation of non-GAAP to GAAP financial information, please see the last five slides of this presentation.

TEXT 0 – 0 – 0 204-0-0 127-127-127 17-114-210 80-200-74 86-183-242 247-150-70 Balance Sheet and Operating Metrics (Dollars in millions, Balance sheet items as of the end of the period indicated) FQ1 2019 FQ4 2018 FQ1 2018 Total Cash and Cash Equivalents $ 743 $ 700 $ 417 Cash Flow from Operations $ 86 $ 25 $ (374) Capital Expenditures and Capitalized Software $ 21 $ 25 $ 15 Days Sales Outstanding (DSO)* 56 60 56 Inventory Turns 13.3 14.8 11.6 Headcount (as of the end of the period indicated) 7,948 8,061 8,516 Trailing Twelve Month Revenue ($K) / Employee** (Headcount as of the end of the period indicated) $ 381 $ 379 $ 372 *FQ1 2019 & FQ4 2018 includes $95M and $113M AR/contract liability netting impact when calculating DSOs **TTM Revenue ($K) / Employee based on non-GAAP Revenue © 2019 Avaya Inc. All rights reserved 9

TEXT 0 – 0 – 0 204-0-0 127-127-127 17-114-210 80-200-74 86-183-242 247-150-70 Non-GAAP Reconciliation Adjusted EBITDA Successor Predecessor Three months Period from Period from ended December 16, 2017 October 1, 2017 December 31, through through (In millions) 2018 December 31, 2017 December 15, 2017 Net income $ 9 $ 237 $ 2,977 Interest expense 60 9 14 Interest income (3) — (2) Provision for (benefit from) income taxes 3 (246) 459 Depreciation and amortization 117 22 31 EBITDA 186 22 3,479 Impact of fresh start accounting adjustments 3 27 — Restructuring charges, net 7 10 14 Advisory fees 1 8 3 Acquisition-related costs 3 — — Reorganization items, net — — (3,416) Non-cash share-based compensation 6 1 — Loss on sale/disposal of long-lived assets, net — — 1 Resolution of certain legal matters — — 37 Change in fair value of Emergence Date Warrants (18) 5 — Loss (gain) on foreign currency transactions 1 (2) — Pension/OPEB/nonretirement postemployment benefits and long-term disability costs — — 17 Adjusted EBITDA $ 189 $ 71 $ 135 © 2019 Avaya Inc. All rights reserved 10

TEXT 0 – 0 – 0 204-0-0 127-127-127 17-114-210 80-200-74 86-183-242 247-150-70 Non-GAAP Reconciliation Gross Margin and Operating Income Successor Predecessor Three Months Ended Period from Period from Q118 Dec. 16, 2017 Oct. 1, 2017 Non-GAAP Dec. 31, Sept. 30, June 30, March 31, through through Combined (In millions) 2018 2018 2018 2018 Dec. 31, 2017 Dec. 15, 2017 Results Reconciliation of Non-GAAP Gross Profit and Non-GAAP Gross Margin Gross Profit $ 407 $ 390 $ 352 $ 323 $ 78 $ 362 $ 440 Items excluded: Adj. for fresh start accounting 19 54 69 106 35 Amortization of technology intangible assets 43 43 44 41 10 Loss on disposal of long-lived assets — — 2 2 — Non-cash share-based compensation — 1 — — — Non-GAAP Gross Profit $ 469 $ 488 $ 467 $ 472 $ 485 GAAP Gross Margin 55.1% 53.1% 50.9% 48.1% 52.7% 59.9% 58.5% Non-GAAP Gross Margin 62.7% 63.4% 61.9% 62.4% 62.6% Reconciliation of Non-GAAP Operating Income Operating Income (Loss) $ 50 $ 11 $ (49) $ (89) $ 2 $ 36 $ 38 Items excluded: Adj. for fresh start accounting 20 48 71 107 33 Amortization of intangible assets 83 84 83 81 27 Restructuring charges, net 7 1 30 40 24 Acquisition-related costs 3 4 4 7 — Loss on disposal of long-lived assets — — 2 2 1 Advisory fees 1 3 3 4 11 Non-cash share-based compensation 6 6 7 5 1 Costs in connection with certain legal matters — — — — 37 Non-GAAP Operating Income $ 170 $ 157 $ 151 $ 157 $ 172 GAAP Operating Margin 6.8% 1.5% -7.1% -13.2% 1.4% 6.0% 5.1% Non-GAAP Operating Margin 22.7% 20.4% 20.0% 20.7% 22.2% Due to the company’s emergence from Chapter 11 proceedings during the first quarter of fiscal 2018, and adoption of fresh start accounting effective on December 15, 2017, the results for fiscal 2018 are required by GAAP to be presented separately as the predecessor period from October 1, 2017 through December 15, 2017 (inclusive of results prior to October 1, 2017, the “Predecessor” period) and the successor period from December 16, 2017 through December 31, 2017 (the“Successor” period). The application of fresh start accounting results in a new basis of accounting making the results of the Predecessor period not comparable to the results of the Successor period. Where applicable we have, however, combined results of the Predecessor and Successor periods for discussion purposes as we believe it provides the most meaningful basis to analyze our results. © 2019 Avaya Inc. All rights reserved 11

TEXT 0 – 0 – 0 204-0-0 127-127-127 17-114-210 80-200-74 86-183-242 247-150-70 Non-GAAP Reconciliation Product and Services Gross Margins Successor Predecessor Three months ended Period from Period from December 16, October 1, 2017 2017 Q118 through through Non-GAAP Dec. 31, Sept. 30, June 30, March 31, December 31, December 15, Combined (In millions) 2018 2018 2018 2018 2017 2017 Results Reconciliation of Non-GAAP Gross Profit and Non-GAAP Gross Margin - Products Revenue $ 324 $ 325 $ 300 $ 293 $ 71 $ 253 $ 324 Costs 115 115 114 110 33 84 117 Amortization of technology intangible assets 43 43 44 41 7 3 10 GAAP Gross Profit 166 167 142 142 31 166 197 Items excluded: Adj. for fresh start accounting 19 16 24 33 11 Amortization of technology intangible assets 43 43 44 41 10 Loss on disposal of long-lived assets — — 1 1 — Non-GAAP Gross Profit $ 214 $ 226 $ 211 $ 217 $ 218 GAAP Gross Margin 51.2% 51.4% 47.3% 48.5% 43.7% 65.6% 60.8% Non-GAAP Gross Margin 65.6% 67.3% 65.5% 68.5% 66.1% Reconciliation of Non-GAAP Gross Profit and Non-GAAP Gross Margin - Services Revenue $ 414 $ 410 $ 392 $ 379 $ 77 $ 351 $ 428 Costs 173 187 182 198 30 155 185 GAAP Gross Profit 241 223 210 181 47 196 243 Items excluded: Adj. for fresh start accounting 14 38 45 73 24 Loss on disposal of long-lived assets — — 1 1 — Non-cash share-based compensation — 1 — — — Non-GAAP Gross Profit $ 255 $ 262 $ 256 $ 255 $ 267 GAAP Gross Margin 58.2% 54.4% 53.6% 47.8% 61.0% 55.8% 56.8% Non-GAAP Gross Margin 60.4% 60.4% 59.1% 58.0% 60.0% © 2019 Avaya Inc. All rights reserved 12

TEXT 0 – 0 – 0 204-0-0 127-127-127 17-114-210 80-200-74 86-183-242 247-150-70 Non-GAAP Reconciliation GAAP to Non-GAAP Results Q119 Q118 Adj. for Amortization Other Non- Non- GAAP Fresh Start of Intangible Restructuring Acquisition Share-based Advisory Costs, GAAP GAAP GAAP Results Accounting Assets Charges, net Costs Comp Fees net Results Results Results Revenue Products $ 324 $ 2 $ — $ — $ — $ — $ — $ — $ 326 $ 324 $ 330 Services 414 8 — — — — — — 422 428 445 738 10 — — — — — — 748 752 775 Costs Products: Costs 115 (3) — — — — — — 112 117 112 Amortization of technology intangible assets 43 — (43) — — — — — — 10 — Services 173 (6) — — — — — — 167 185 178 331 (9) (43) — — — — — 279 312 290 GROSS PROFIT 407 19 43 — — — — — 469 440 485 OPERATING EXPENSES Selling, general and administrative 257 — — — (3) (6) (1) — 247 314 266 Research and development 53 (1) — — — — — — 52 47 47 Amortization of intangible assets 40 — (40) — — — — — — 17 — Restructuring charges, net 7 — — (7) — — — — — 24 — 357 (1) (40) (7) (3) (6) (1) — 299 402 313 OPERATING INCOME 50 20 83 7 3 6 1 — 170 38 172 Interest expense (60) — — — — — — — (60) (23) (23) Other income (expense), net 22 — — — — — — (20) 2 (4) (3) Reorganization items, net — — — — — — — — — 3,416 — INCOME BEFORE INCOME TAXES $ 12 $ 20 $ 83 $ 7 $ 3 $ 6 $ 1 $ (20) $ 112 $ 3,427 $ 146 © 2019 Avaya Inc. All rights reserved 13

TEXT 0 – 0 – 0 204-0-0 127-127-127 17-114-210 80-200-74 86-183-242 247-150-70 © 2019 Avaya Inc. All rights reserved