Dreamstime
stock is falling sharply on Thursday after the provider of business-communications software company announced disappointing guidance for both the June quarter and the fiscal year ending September 2021.
Avaya (ticker: AVYA) stock is down 13% to $25.90 in recent Thursday trading.
Avaya is a company that has had many different owners since it was spun off in 2000 by Lucent Technologies—itself an AT&T (T) spinout. Avaya is now getting some traction in its push into the cloud-based communications services market. But the company’s recovery appears to have hit a few bumps.
For its fiscal second quarter ended March 31, Avaya posted revenue of $738 million, up 8% from a year ago, and above both its guidance range of $716 million to $725 million, and the Street consensus forecast of $718 million. Non-GAAP profits were 74 cents a share, towards the lower end of the guidance range of 70 cents to 82 cents a share, and just shy of the Street consensus at 75 cents. On a GAAP basis, the company lost 70 cents a share in the quarter,
“We drove solid second-quarter results which highlight the company’s continuing momentum,” CEO
Jim Chirico
said in a statement. “I couldn’t be more delighted with our performance, which is why we are again raising guidance across several key financial metrics.”
For the June quarter, Avaya sees revenue of $720 million to $735 million, with non-GAAP per-share profits of 66 cents to 73 cents; previous street consensus called for $730.2 million and 80 cents.
For the full year, Avaya sees revenue of $2.92 billion to $2.955 billion, lifting the range from a previous forecast of $2.9 billion to $2.94 billion. The Street projects revenue of $2.94 billion. The company sees non-GAAP per-share profits of $3.02 to $3.20, shy of the Street consensus estimate for $3.32. Avaya sees adjusted Ebitda (earnings before interest, taxes, depreciation, and amortization) of $696 million to $720 million, narrowing the range from a previous range of $680 million to $720 million.
In an interview with Barron’s Chirico pointed to a higher-than-expected share count for the earnings miss for both the March quarter results and the June quarter guidance.
“We posted a really solid quarter,” he said, pointing to the company’s 31% growth in cloud-based annual recurring revenue, or ARR. He says that Avaya’s push to restructure its business to move toward a subscription model and away from perpetual licenses is paying off. Chriico notes the company had now posted four consecutive quarters with top-line growth.
Write to Eric J. Savitz at eric.savitz@barrons.com
