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) |
Title of Each Class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock | AVYA | New York Stock Exchange ("NYSE") |
AVAYA HOLDINGS CORP. | |||
Date: August 13, 2019 | By: | /s/ Kieran J. McGrath | |
Name: | Kieran J. McGrath | ||
Title: | Senior Vice President and Chief Financial Officer |
• | GAAP revenue of $717 million; non-GAAP revenue of $720 million |
• | GAAP operating margin of (85.5)%; non-GAAP operating margin of 20.1% |
• | Recorded a non-cash goodwill impairment charge of $657 million |
• | Public cloud seats increased more than 170% year-over-year |
• | Awarded two landmark US Government opportunities in August, including one with the Social Security Administration valued at up to $400 million |
GAAP | Non-GAAP (1) | |||||||||||||||||||||||
(In millions, except percentages) | Q3 2019 | Q2 2019 | Q3 2018 | Q3 2019 | Q2 2019 | Q3 2018 | ||||||||||||||||||
Revenue | $ | 717 | $ | 709 | $ | 692 | $ | 720 | $ | 714 | $ | 755 | ||||||||||||
Gross margin | 54.4 | % | 54.4 | % | 50.9 | % | 60.8 | % | 61.5 | % | 61.9 | % | ||||||||||||
Operating margin | (85.5 | )% | 5.4 | % | (7.1 | )% | 20.1 | % | 20.9 | % | 20.0 | % |
• | 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 has not been adjusted and continues to be reported in accordance with GAAP that existed prior to the adoption of ASC 606 ("ASC 605"). |
• | GAAP revenue was $717 million, $8 million higher than the second quarter of fiscal 2019, and $25 million higher than the third quarter of fiscal 2018 ended June 30, 2018. Non-GAAP revenue(1) was $720 million, $6 million higher than the second quarter of fiscal 2019, and $35 million lower than the third quarter of fiscal 2018. |
• | GAAP gross margin was 54.4%, compared to 54.4% for the second quarter of fiscal 2019 and 50.9% for the third quarter of fiscal 2018. Non-GAAP gross margin(1) was 60.8%, compared to 61.5% for the second quarter of fiscal 2019 and 61.9% for the third quarter of fiscal 2018. |
• | GAAP operating loss was $613 million, primarily as a result of the aforementioned impairment charge, compared to GAAP operating income of $38 million for the second quarter of fiscal 2019 and an operating loss of $49 million for the third quarter of fiscal 2018. Non-GAAP operating income(1) was $145 million, compared to $149 million for the second quarter of fiscal 2019, and $151 million for the third quarter of fiscal 2018. |
• | GAAP net loss was $633 million, primarily as a result of the aforementioned impairment charge, compared to GAAP net loss of $13 million for the second quarter of fiscal 2019, and GAAP net loss of $88 million for the third quarter of fiscal 2018. |
• | Adjusted EBITDA(1) was $167 million or 23.2% of non-GAAP revenue, compared to adjusted EBITDA of $166 million, or 23.2% of non-GAAP revenue, for the second quarter of fiscal 2019 and $175 million, or 23.2% of non-GAAP revenue, for the third quarter of fiscal 2018. |
• | Cash provided by operating activities was $52 million, compared to cash provided by operating activities of $37 million for the second quarter of fiscal 2019 and cash provided by operating activities of $83 million for the third quarter of fiscal 2018. |
• | At the end of the third quarter of fiscal 2019, cash and cash equivalents totaled $729 million, compared to $735 million at the end of the second quarter of fiscal 2019 and $685 million at the end of the third quarter of fiscal 2018. |
• | Total Contract Value (TCV) of $2.4 billion* |
• | 84% of non-GAAP revenue was Software & Services |
• | 60% of non-GAAP product revenue was Software |
• | 59% of non-GAAP revenue was Recurring |
• | Added approximately 1,400 new logos |
• | Generated $52 million in cash flow from operations, $15 million in free cash flow(1) |
• | In August, Avaya was awarded two landmark US Government opportunities. Avaya, along with its service provider partner, was selected by the Social Security Administration to modernize the agency’s UC and CC infrastructure in a 10-year deal valued at up to $400 million. The second is a multi-year award to provide secure FedRamp Certified Cloud services across several agencies that could be worth up to several hundred million dollars. |
• | Avaya was selected by Intel for Intel’s AI Builders Program. Intel and Avaya engineers are now jointly engaged at deep technical levels to improve the performance and scale of Avaya’s AI solutions, such as Avaya Conversational Intelligence, when deployed on Intel hardware. |
• | Announced partnership with Tenfold to help customers integrate their Avaya contact center with leading CRM providers such as Salesforce, Microsoft and ServiceNow. |
• | Announced partnership with Even Flow Distribution, a leading South African based value-added distributor of unified communication, telecom, video conferencing, wireless and networking technology, to bring its solutions to market. Even Flow Distribution will supply and support Avaya’s contact center and unified communications solutions, with a particular focus on Avaya IP Office. |
• | Announced that Avaya IX Workplace unified communications solutions for the enterprise can now deliver emergency data to public safety agencies through an integration with 911 Secure SENTRY™ and RapidSOS. |
• | Announced partnership with Standard Chartered Bank to deliver a multi-year client experience transformation project that will enable the bank to more fully align its services with clients’ fast-paced, digitally connected lives. Using the Avaya OneCloud Private solution enables Standard Chartered Bank to enhance its customers’ experience by using Avaya’s unified communications and contact center solutions being delivered on their own private cloud. |
• | Received the 2019 Contact Center Vendor of the Year Award at the Frost & Sullivan 2019 India ICT Awards. |
• | GAAP revenue of $735 million to $755 million; non-GAAP revenue of $738 million to $758 million |
• | GAAP operating income of $37 million to $52 million; GAAP operating margin of ~5% to ~7% |
• | Non-GAAP operating income of $162 million to $177 million; non-GAAP operating margin of ~22% to ~23% |
• | Adjusted EBITDA of $183 million to $198 million; Adjusted EBITDA margin of ~25% to ~26% |
• | Approximately 111 million weighted average shares outstanding |
• | GAAP revenue of $2.90 billion to $2.92 billion; non-GAAP revenue of $2.92 billion to $2.94 billion |
◦ | Cloud and innovation ~11% of non-GAAP revenue |
• | GAAP operating loss of $488 million to $473 million; GAAP operating margin of ~(17)% to ~(16)% |
• | Non-GAAP operating income of $626 million to $641 million; non-GAAP operating margin of ~21% to ~22% |
• | Adjusted EBITDA of $705 million to $720 million; Adjusted EBITDA margin of ~24% |
• | Cash flow from operations of ~7% of non-GAAP revenue |
• | Approximately 111 million weighted average shares outstanding |
• | Cash requirements for restructuring, pension & OPEB, cash taxes, capital spending and net cash interest payments for fiscal year 2019 are expected to be: |
◦ | Restructuring: $50 million to $55 million |
◦ | Pension/OPEB: ~$65 million |
◦ | Cash Taxes: $55 million to $65 million |
◦ | Capital Expenditures: ~$120 million |
◦ | Net Cash Interest Payments: ~$200 million |
Successor | Predecessor | Non- GAAP Combined(1) | |||||||||||||||||||||||
Three months ended June 30, 2019 | Three months ended June 30, 2018 | Nine months ended June 30, 2019 | Period from December 16, 2017 through June 30, 2018 | Period from October 1, 2017 through December 15, 2017 | Nine months ended June 30, 2018 | ||||||||||||||||||||
REVENUE | |||||||||||||||||||||||||
Products | $ | 297 | $ | 300 | $ | 908 | $ | 664 | $ | 253 | $ | 917 | |||||||||||||
Services | 420 | 392 | 1,256 | 848 | 351 | 1,199 | |||||||||||||||||||
717 | 692 | 2,164 | 1,512 | 604 | 2,116 | ||||||||||||||||||||
COSTS | |||||||||||||||||||||||||
Products: | |||||||||||||||||||||||||
Costs | 109 | 114 | 329 | 257 | 84 | 341 | |||||||||||||||||||
Amortization of technology intangible assets | 43 | 44 | 130 | 92 | 3 | 95 | |||||||||||||||||||
Services | 175 | 182 | 522 | 410 | 155 | 565 | |||||||||||||||||||
327 | 340 | 981 | 759 | 242 | 1,001 | ||||||||||||||||||||
GROSS PROFIT | 390 | 352 | 1,183 | 753 | 362 | 1,115 | |||||||||||||||||||
OPERATING EXPENSES | |||||||||||||||||||||||||
Selling, general and administrative | 253 | 281 | 761 | 613 | 264 | 877 | |||||||||||||||||||
Research and development | 49 | 51 | 154 | 110 | 38 | 148 | |||||||||||||||||||
Amortization of intangible assets | 41 | 39 | 122 | 86 | 10 | 96 | |||||||||||||||||||
Impairment charges | 659 | — | 659 | — | — | — | |||||||||||||||||||
Restructuring charges, net | 1 | 30 | 12 | 80 | 14 | 94 | |||||||||||||||||||
1,003 | 401 | 1,708 | 889 | 326 | 1,215 | ||||||||||||||||||||
OPERATING (LOSS) INCOME | (613 | ) | (49 | ) | (525 | ) | (136 | ) | 36 | (100 | ) | ||||||||||||||
Interest expense | (59 | ) | (56 | ) | (177 | ) | (112 | ) | (14 | ) | (126 | ) | |||||||||||||
Other income (expense), net | 12 | 37 | 35 | 32 | (2 | ) | 30 | ||||||||||||||||||
Reorganization items, net | — | — | — | — | 3,416 | 3,416 | |||||||||||||||||||
(LOSS) INCOME BEFORE INCOME TAXES | (660 | ) | (68 | ) | (667 | ) | (216 | ) | 3,436 | 3,220 | |||||||||||||||
Benefit from (provision for) income taxes | 27 | (20 | ) | 30 | 235 | (459 | ) | (224 | ) | ||||||||||||||||
NET (LOSS) INCOME | $ | (633 | ) | $ | (88 | ) | $ | (637 | ) | $ | 19 | $ | 2,977 | $ | 2,996 | ||||||||||
(LOSS) EARNINGS PER SHARE | |||||||||||||||||||||||||
Basic | $ | (5.70 | ) | $ | (0.80 | ) | $ | (5.75 | ) | $ | 0.17 | $ | 5.19 | ||||||||||||
Diluted | $ | (5.70 | ) | $ | (0.80 | ) | $ | (5.75 | ) | $ | 0.17 | $ | 5.19 | ||||||||||||
Weighted average shares outstanding | |||||||||||||||||||||||||
Basic | 111.0 | 109.8 | 110.7 | 109.8 | 497.3 | ||||||||||||||||||||
Diluted | 111.0 | 109.8 | 110.7 | 111.0 | 497.3 | ||||||||||||||||||||
(1) See "Use of non-GAAP (Adjusted) Financial Measures" below. |
June 30, 2019 | September 30, 2018 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 729 | $ | 700 | |||
Accounts receivable, net | 276 | 377 | |||||
Inventory | 71 | 81 | |||||
Contract assets | 178 | — | |||||
Contract costs | 128 | — | |||||
Other current assets | 149 | 170 | |||||
TOTAL CURRENT ASSETS | 1,531 | 1,328 | |||||
Property, plant and equipment, net | 243 | 250 | |||||
Deferred income taxes, net | 25 | 29 | |||||
Intangible assets, net | 2,978 | 3,234 | |||||
Goodwill, net | 2,105 | 2,764 | |||||
Other assets | 109 | 74 | |||||
TOTAL ASSETS | $ | 6,991 | $ | 7,679 | |||
LIABILITIES | |||||||
Current liabilities: | |||||||
Debt maturing within one year | $ | 29 | $ | 29 | |||
Accounts payable | 292 | 266 | |||||
Payroll and benefit obligations | 126 | 145 | |||||
Contract liabilities | 470 | 484 | |||||
Business restructuring reserve | 36 | 51 | |||||
Other current liabilities | 130 | 148 | |||||
TOTAL CURRENT LIABILITIES | 1,083 | 1,123 | |||||
Non-current liabilities: | |||||||
Long-term debt, net of current portion | 3,091 | 3,097 | |||||
Pension obligations | 619 | 671 | |||||
Other post-retirement obligations | 181 | 176 | |||||
Deferred income taxes, net | 120 | 140 | |||||
Business restructuring reserve | 37 | 47 | |||||
Other liabilities | 390 | 374 | |||||
TOTAL NON-CURRENT LIABILITIES | 4,438 | 4,505 | |||||
TOTAL LIABILITIES | 5,521 | 5,628 | |||||
Commitments and contingencies | |||||||
STOCKHOLDERS' EQUITY | |||||||
Preferred stock, $0.01 par value; 55,000,000 shares authorized, no shares issued or outstanding at June 30, 2019 and September 30, 2018 | — | — | |||||
Common stock, $0.01 par value; 550,000,000 shares authorized; 110,887,967 shares issued and 110,875,287 shares outstanding at June 30, 2019; and 110,218,653 shares issued and 110,012,790 shares outstanding at September 30, 2018 | 1 | 1 | |||||
Additional paid-in capital | 1,756 | 1,745 | |||||
(Accumulated deficit) retained earnings | (255 | ) | 287 | ||||
Accumulated other comprehensive (loss) income | (32 | ) | 18 | ||||
TOTAL STOCKHOLDERS' EQUITY | 1,470 | 2,051 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 6,991 | $ | 7,679 |
Successor | Predecessor | Non-GAAP Combined(1) | |||||||||||||||
Nine months ended June 30, 2019 | Period from December 16, 2017 through June 30, 2018 | Period from October 1, 2017 through December 15, 2017 | Nine months ended June 30, 2018 | ||||||||||||||
Net cash provided by (used for): | |||||||||||||||||
Operating activities | $ | 175 | $ | 177 | $ | (414 | ) | $ | (237 | ) | |||||||
Investing activities | (95 | ) | (192 | ) | (13 | ) | (205 | ) | |||||||||
Financing activities | (51 | ) | 284 | (102 | ) | 182 | |||||||||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | 1 | (5 | ) | (2 | ) | (7 | ) | ||||||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | 30 | 264 | (531 | ) | (267 | ) | |||||||||||
Cash, cash equivalents, and restricted cash at beginning of period | 704 | 435 | 966 | 966 | |||||||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 734 | $ | 699 | $ | 435 | $ | 699 | |||||||||
(1) See "Use of non-GAAP (Adjusted) Financial Measures" below. |
Successor | Predecessor | Non-GAAP Combined | |||||||||||||||||||||||
Three months ended June 30, 2019 | Three months ended June 30, 2018 | Nine months ended June 30, 2019 | Period from December 16, 2017 through June 30, 2018 | Period from October 1, 2017 through December 15, 2017 | Nine months ended June 30, 2018 | ||||||||||||||||||||
Net (loss) income | $ | (633 | ) | $ | (88 | ) | $ | (637 | ) | $ | 19 | $ | 2,977 | $ | 2,996 | ||||||||||
Interest expense | 59 | 56 | 177 | 112 | 14 | 126 | |||||||||||||||||||
Interest income | (4 | ) | (1 | ) | (11 | ) | (2 | ) | (2 | ) | (4 | ) | |||||||||||||
(Benefit from) provision for income taxes | (27 | ) | 20 | (30 | ) | (235 | ) | 459 | 224 | ||||||||||||||||
Depreciation and amortization | 110 | 119 | 335 | 264 | 31 | 295 | |||||||||||||||||||
EBITDA | (495 | ) | 106 | (166 | ) | 158 | 3,479 | 3,637 | |||||||||||||||||
Impact of fresh start accounting adjustments | (2 | ) | 54 | 7 | 167 | — | 167 | ||||||||||||||||||
Restructuring charges, net | 1 | 30 | 12 | 80 | 14 | 94 | |||||||||||||||||||
Advisory fees | 1 | 3 | 3 | 15 | 3 | 18 | |||||||||||||||||||
Acquisition-related costs | 1 | 4 | 8 | 11 | — | 11 | |||||||||||||||||||
Reorganization items, net | — | — | — | — | (3,416 | ) | (3,416 | ) | |||||||||||||||||
Non-cash share-based compensation | 8 | 7 | 19 | 13 | — | 13 | |||||||||||||||||||
Impairment charges | 659 | — | 659 | — | — | — | |||||||||||||||||||
Loss on sale/disposal of long-lived assets, net | — | 2 | — | 4 | 1 | 5 | |||||||||||||||||||
Resolution of certain legal matters | — | — | — | — | 37 | 37 | |||||||||||||||||||
Change in fair value of Emergence Date Warrants | (7 | ) | (6 | ) | (28 | ) | 9 | — | 9 | ||||||||||||||||
Loss (gain) on foreign currency transactions | 1 | (25 | ) | 8 | (24 | ) | — | (24 | ) | ||||||||||||||||
Pension/OPEB/nonretirement postemployment benefits and long-term disability costs | — | — | — | — | 17 | 17 | |||||||||||||||||||
Adjusted EBITDA | $ | 167 | $ | 175 | $ | 522 | $ | 433 | $ | 135 | $ | 568 |
Three Months Ended | Change | Three Months Ended | ||||||||||||||||||||||||||||||||||||
June 30, 2019 | Adj. for Fresh Start Accounting | Non-GAAP June 30, 2019 | Non-GAAP June 30, 2018 (4) | Amount | Pct. | Pct., net of fx impact | Non-GAAP Mar. 31, 2019 (1) | Non-GAAP Dec. 31, 2018 (2) | Non-GAAP Sept. 30, 2018 (3) | |||||||||||||||||||||||||||||
Revenue by Segment | ||||||||||||||||||||||||||||||||||||||
Products & Solutions | $ | 298 | $ | — | $ | 298 | $ | 322 | $ | (24 | ) | (7 | )% | (7 | )% | $ | 289 | $ | 326 | $ | 336 | |||||||||||||||||
Services | 422 | — | 422 | 433 | (11 | ) | (3 | )% | (1 | )% | 425 | 422 | 434 | |||||||||||||||||||||||||
Unallocated amounts | (3 | ) | 3 | — | — | — | n/a | n/a | — | — | — | |||||||||||||||||||||||||||
Total revenue | $ | 717 | $ | 3 | $ | 720 | $ | 755 | $ | (35 | ) | (5 | )% | (3 | )% | $ | 714 | $ | 748 | $ | 770 | |||||||||||||||||
Revenue by Geography | ||||||||||||||||||||||||||||||||||||||
U.S. | $ | 392 | $ | 2 | $ | 394 | $ | 399 | $ | (5 | ) | (1 | )% | (1 | )% | $ | 378 | $ | 401 | $ | 417 | |||||||||||||||||
International: | ||||||||||||||||||||||||||||||||||||||
EMEA | 183 | — | 183 | 202 | (19 | ) | (9 | )% | (6 | )% | 189 | 200 | 202 | |||||||||||||||||||||||||
APAC - Asia Pacific | 85 | — | 85 | 86 | (1 | ) | (1 | )% | 1 | % | 80 | 79 | 81 | |||||||||||||||||||||||||
Americas International | 57 | 1 | 58 | 68 | (10 | ) | (15 | )% | (12 | )% | 67 | 68 | 70 | |||||||||||||||||||||||||
Total International | 325 | 1 | 326 | 356 | (30 | ) | (8 | )% | (6 | )% | 336 | 347 | 353 | |||||||||||||||||||||||||
Total revenue | $ | 717 | $ | 3 | $ | 720 | $ | 755 | $ | (35 | ) | (5 | )% | (3 | )% | $ | 714 | $ | 748 | $ | 770 |
(1) - (4) Reconciliation of Non-GAAP measures above: | ||||||||||||||||||||||||
(1) Q219 Non-GAAP Results | (2) Q119 Non-GAAP Results | |||||||||||||||||||||||
Three Months Ended | Three Months Ended | |||||||||||||||||||||||
Mar. 31, 2019 | Adj. for Fresh Start Accounting | Non-GAAP Mar. 31, 2019 | Dec. 31, 2018 | Adj. for Fresh Start Accounting | Non-GAAP Dec. 31, 2018 | |||||||||||||||||||
Revenue by Segment | ||||||||||||||||||||||||
Products & Solutions | $ | 289 | $ | — | $ | 289 | $ | 326 | $ | — | $ | 326 | ||||||||||||
Services | 425 | — | 425 | 422 | — | 422 | ||||||||||||||||||
Unallocated amounts | (5 | ) | 5 | — | (10 | ) | 10 | — | ||||||||||||||||
Total revenue | $ | 709 | $ | 5 | $ | 714 | $ | 738 | $ | 10 | $ | 748 | ||||||||||||
Revenue by Geography | ||||||||||||||||||||||||
U.S. | $ | 375 | $ | 3 | $ | 378 | $ | 394 | $ | 7 | $ | 401 | ||||||||||||
International: | ||||||||||||||||||||||||
EMEA | 188 | 1 | 189 | 199 | 1 | 200 | ||||||||||||||||||
APAC - Asia Pacific | 79 | 1 | 80 | 78 | 1 | 79 | ||||||||||||||||||
Americas International | 67 | — | 67 | 67 | 1 | 68 | ||||||||||||||||||
Total International | 334 | 2 | 336 | 344 | 3 | 347 | ||||||||||||||||||
Total revenue | $ | 709 | $ | 5 | $ | 714 | $ | 738 | $ | 10 | $ | 748 |
(3) Q418 Non-GAAP Results | (4) 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 |
Three Months Ended | ||||||||||||||||||||
June 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sept. 30, 2018 | June 30, 2018 | ||||||||||||||||
Reconciliation of Non-GAAP Gross Profit and Non-GAAP Gross Margin | ||||||||||||||||||||
Gross Profit | $ | 390 | $ | 386 | $ | 407 | $ | 390 | $ | 352 | ||||||||||
Items excluded: | ||||||||||||||||||||
Adj. for fresh start accounting | 5 | 9 | 19 | 54 | 69 | |||||||||||||||
Amortization of technology intangible assets | 43 | 44 | 43 | 43 | 44 | |||||||||||||||
Loss on disposal of long-lived assets | — | — | — | — | 2 | |||||||||||||||
Non-cash share-based compensation | — | — | — | 1 | — | |||||||||||||||
Non-GAAP Gross Profit | $ | 438 | $ | 439 | $ | 469 | $ | 488 | $ | 467 | ||||||||||
GAAP Gross Margin | 54.4 | % | 54.4 | % | 55.1 | % | 53.1 | % | 50.9 | % | ||||||||||
Non-GAAP Gross Margin | 60.8 | % | 61.5 | % | 62.7 | % | 63.4 | % | 61.9 | % | ||||||||||
Reconciliation of Non-GAAP Operating Income | ||||||||||||||||||||
Operating (Loss) Income | $ | (613 | ) | $ | 38 | $ | 50 | $ | 11 | $ | (49 | ) | ||||||||
Items excluded: | ||||||||||||||||||||
Adj. for fresh start accounting | 4 | 12 | 20 | 48 | 71 | |||||||||||||||
Amortization of intangible assets | 84 | 85 | 83 | 84 | 83 | |||||||||||||||
Impairment charges | 659 | — | — | — | — | |||||||||||||||
Restructuring charges, net | 1 | 4 | 7 | 1 | 30 | |||||||||||||||
Acquisition-related costs | 1 | 4 | 3 | 4 | 4 | |||||||||||||||
Loss on disposal of long-lived assets | — | — | — | — | 2 | |||||||||||||||
Advisory fees | 1 | 1 | 1 | 3 | 3 | |||||||||||||||
Non-cash share-based compensation | 8 | 5 | 6 | 6 | 7 | |||||||||||||||
Non-GAAP Operating Income | $ | 145 | $ | 149 | $ | 170 | $ | 157 | $ | 151 | ||||||||||
GAAP Operating Margin | -85.5 | % | 5.4 | % | 6.8 | % | 1.5 | % | -7.1 | % | ||||||||||
Non-GAAP Operating Margin | 20.1 | % | 20.9 | % | 22.7 | % | 20.4 | % | 20.0 | % |
Three months ended | ||||||||||||||||||||
June 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sept. 30, 2018 | June 30, 2018 | ||||||||||||||||
Reconciliation of Non-GAAP Gross Profit and Non-GAAP Gross Margin - Products | ||||||||||||||||||||
Revenue | $ | 297 | $ | 287 | $ | 324 | $ | 325 | $ | 300 | ||||||||||
Costs | 109 | 105 | 115 | 115 | 114 | |||||||||||||||
Amortization of technology intangible assets | 43 | 44 | 43 | 43 | 44 | |||||||||||||||
GAAP Gross Profit | 145 | 138 | 166 | 167 | 142 | |||||||||||||||
Items excluded: | ||||||||||||||||||||
Adj. for fresh start accounting | 2 | 2 | 5 | 16 | 24 | |||||||||||||||
Amortization of technology intangible assets | 43 | 44 | 43 | 43 | 44 | |||||||||||||||
Loss on disposal of long-lived assets | — | — | — | — | 1 | |||||||||||||||
Non-GAAP Gross Profit | $ | 190 | $ | 184 | $ | 214 | $ | 226 | $ | 211 | ||||||||||
GAAP Gross Margin | 48.8 | % | 48.1 | % | 51.2 | % | 51.4 | % | 47.3 | % | ||||||||||
Non-GAAP Gross Margin | 63.8 | % | 63.7 | % | 65.6 | % | 67.3 | % | 65.5 | % | ||||||||||
Reconciliation of Non-GAAP Gross Profit and Non-GAAP Gross Margin - Services | ||||||||||||||||||||
Revenue | $ | 420 | $ | 422 | $ | 414 | $ | 410 | $ | 392 | ||||||||||
Costs | 175 | 174 | 173 | 187 | 182 | |||||||||||||||
GAAP Gross Profit | 245 | 248 | 241 | 223 | 210 | |||||||||||||||
Items excluded: | ||||||||||||||||||||
Adj. for fresh start accounting | 3 | 7 | 14 | 38 | 45 | |||||||||||||||
Loss on disposal of long-lived assets | — | — | — | — | 1 | |||||||||||||||
Share-based comp | — | — | — | 1 | — | |||||||||||||||
Non-GAAP Gross Profit | $ | 248 | $ | 255 | $ | 255 | $ | 262 | $ | 256 | ||||||||||
GAAP Gross Margin | 58.3 | % | 58.8 | % | 58.2 | % | 54.4 | % | 53.6 | % | ||||||||||
Non-GAAP Gross Margin | 58.8 | % | 60.0 | % | 60.4 | % | 60.4 | % | 59.1 | % |
Q3 FY19 results under ASC 606 | ASC 606 Impact | Q3 FY19 results under ASC 605 | ||||||||||
REVENUE | ||||||||||||
Products | $ | 297 | $ | (26 | ) | $ | 271 | |||||
Services | 420 | (19 | ) | 401 | ||||||||
717 | (45 | ) | 672 | |||||||||
COSTS | ||||||||||||
Products: | ||||||||||||
Costs | 109 | (4 | ) | 105 | ||||||||
Amortization of technology intangible assets | 43 | — | 43 | |||||||||
Services | 175 | (7 | ) | 168 | ||||||||
327 | (11 | ) | 316 | |||||||||
GROSS PROFIT | 390 | (34 | ) | 356 | ||||||||
OPERATING EXPENSES | ||||||||||||
Selling, general and administrative | 253 | (1 | ) | 252 | ||||||||
Research and development | 49 | — | 49 | |||||||||
Amortization of intangible assets | 41 | — | 41 | |||||||||
Impairment charges | 659 | — | 659 | |||||||||
Restructuring charges, net | 1 | — | 1 | |||||||||
1,003 | (1 | ) | 1,002 | |||||||||
OPERATING LOSS | (613 | ) | (33 | ) | (646 | ) | ||||||
Interest expense | (59 | ) | — | (59 | ) | |||||||
Other income, net | 12 | — | 12 | |||||||||
LOSS BEFORE INCOME TAXES | (660 | ) | (33 | ) | (693 | ) | ||||||
Benefit from (provision for) income taxes | 27 | (37 | ) | (10 | ) | |||||||
NET LOSS | $ | (633 | ) | $ | (70 | ) | $ | (703 | ) |
Three months ended | ||||||||||||||||||||
June 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sept. 30, 2018 | June 30, 2018 | ||||||||||||||||
Net cash provided by operating activities | $ | 52 | $ | 37 | $ | 86 | $ | 25 | $ | 83 | ||||||||||
Less: | ||||||||||||||||||||
Capital expenditures | (37 | ) | (26 | ) | (21 | ) | (25 | ) | (18 | ) | ||||||||||
Free cash flow | $ | 15 | $ | 11 | $ | 65 | $ | — | $ | 65 |
OKX=\-W%X& G<>7 /5ST_+K^%?/#,SN78DLQR2>YIH!****8
M'4_#WP]_;_B:(2INM;7$TV>AQT'XFO? ,# KDOAOX?\ [#\,QR3)MN;S$LGJ
M ?NC\OYUUU2 4C,%!). !DFEKCOB7X@_L7PV\$+[;F]S$GJ%_B/Y.I3)FWL,,,CAI#T
M_+K^5<,B-(ZHBEF8X '#M!7P]X