© 2022 Avaya Inc. All rights reserved Investor Presentation 1Q FY22 February 9, 2022 Exhibit 99.2
2© 2022 Avaya Inc. All rights reserved Cautionary Note Regarding Forward-Looking Statements This presentation 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. Avaya Holdings Corp. (the "Company") has based these forward-looking statements on its current expectations, assumptions, estimates and projections. These statements, including the Company’s outlook, do not include the potential impact of any business combinations, asset acquisitions, divestitures, strategic investments or other strategic transactions completed after the date hereof. 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. Risks and uncertainties that may cause these forward- looking statements to be inaccurate include, among others, termination or modification of current contracts which could impair attainment of our OneCloud ARR metric; the duration, severity and impact of the coronavirus pandemic ("COVID-19"), including the emergence of new variants, governmental and business responses to COVID-19 and changes in infection rates, and the impact the pandemic and such responses have on our business, financial performance, liquidity and other factors discussed in the Company's Annual Report on Form 10-K and subsequent quarterly reports on Form 10-Q filed with the Securities and Exchange Commission (the "SEC"). These risks and uncertainties may cause the Company’s 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 presentation 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 website at investors.avaya.com. None of the information included on the Company's website is incorporated by reference in this presentation.
3© 2022 Avaya Inc. All rights reserved Use of non-GAAP (Adjusted) Financial Measures The information furnished in this presentation includes non-GAAP financial measures that differ from measures calculated in accordance with generally accepted accounting principles in the United States of America (“GAAP”). 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 in the Appendix hereto. 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 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. Adjusted EBITDA excludes the impact of earnings or charges resulting from matters that we do not consider indicative of our ongoing operations but that still affect our net income. 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. In addition, these terms are not necessarily comparable to other similarly titled captions of other companies due to the potential inconsistencies in the method of calculation. We also present the measures non-GAAP gross margin, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income and non-GAAP earnings per share 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 in the Appendix to this presentation that resulted from matters that we consider not to be indicative of our ongoing operations. The company presents constant currency information to provide a framework to assess how the company’s underlying businesses performance excluding the effect of foreign currency rate fluctuations. To present this information for current and comparative prior period results for entities reporting in currencies other than U.S. dollars, the amounts are converted into U.S. dollars at the exchange rate in effect on the last day of the company's prior fiscal year (i.e. September 30, 2021), unless otherwise noted. In addition, we present the liquidity measure of free cash flow. Free cash flow is calculated by subtracting capital expenditures from Net cash provided by operating activities. We believe free cash flow is a measure often used by analysts and investors to compare the cash flow and liquidity of companies in the same industry. 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. The Appendix to this presentation includes tables that reconcile historical GAAP measures to non-GAAP measures.
4© 2022 Avaya Inc. All rights reserved $129M Adj. EBITDA(1)* ~100M Unified Communications Lines(3) ~190 Countries(3) ~6M Contact Center Seats(3) (1) For and as of 1Q FY22 ending December 31, 2021. (2) See Appendix for further definition and information on OneCloud ARR metric. $713M Revenue(1) >$200M FY22 R&D Investment(4) • Avaya is a leading pure-play Unified Communications & Collaboration and Contact Center software company with ~90,000 global customers(3) • Avaya serves 90% of the largest US companies(1) • Major strategic partnerships broaden project portfolio Avaya's 1Q22 at a Glance (3) For and as of FY21 ending September 30, 2021. (4) Expected FY22 spend on Research and Development. * For a reconciliation of GAAP to non-GAAP financial information, please see the Appendix of this presentation. 44% Cloud, Alliance Partner & Subscription Revenue(1) $620M OneCloud ARR(1)(2) 62% Software Revenue(1) 66% Recurring Revenue(1)
© 2022 Avaya Inc. All rights reserved 5 Global and Enterprise Experts Trailing Twelve Months 6,200+ new logos 400+ deals over $1M TCV(1) 60+ deals over $5M TCV 20+ deals over $10M TCV 3 deals over $25M TCV (1) TCV is defined as the value of all active ratable contracts that have not been recognized as revenue, including both billed and unbilled backlog.
© 2022 Avaya Inc. All rights reserved 6 Transformation <$200M OneCloud ARR Invest, reskill, stabilize Software, SaaS, Cloud Growth and Relevance $500M to $1B OneCloud ARR Execute, reposition, focus Strategic cloud platform OneCloud in Motion $2B+ OneCloud ARR Scale, simplify, accelerate Leading cloud company A Different Company
© 2022 Avaya Inc. All rights reserved 7
© 2022 Avaya Inc. All rights reserved 8 ESG - Enhancing Sustainable Value in an Evolving Landscape Environment • ISO 14001 Certified Design for Environment Management System ◦ Improving Energy Efficiency ▪ Increasing energy responsible devices ◦ Reducing Single Use Plastic • Climate Risk Disclosures • Annual CDP Reporting • Setting New Emission Reduction Target Social • Human Capital ◦ Diversity Equity Inclusion & Belonging ◦ Learning & Development ◦ Talent Acquisition / Retention ◦ Health Safety & Wellness • Community Engagement • Responsible Supply Chain Management Governance • Board Committee Monitors ESG Performance • Tone at the Top Culture • Robust Risk Management Framework • Cybersecurity Program based on ISO 27001/2 Ratings Commitments Recognition As of 3 February 2022
© 2022 Avaya Inc. All rights reserved 9 Catalysts to Fuel the Journey
© 2022 Avaya Inc. All rights reserved Financial Overview
11© 2022 Avaya Inc. All rights reserved $620M OneCloud ARR(1) 44% Cloud, Alliance Partner & Subscription Revenue 58% Non-GAAP Gross Margin* $2.3B Remaining Performance Obligations $713M Revenue Revenue 62% Software Revenue (1) See Appendix for further definition and information on OneCloud ARR metric. * For a reconciliation of GAAP to non-GAAP financial information, please see the Appendix of this presentation. 1Q FY22 Financial Highlights 66% Recurring Revenue
© 2022 Avaya Inc. All rights reserved 12 $129M 18% of Revenue Adj. EBITDA(1)* $354M Cash Balance(1) 3.7x Net-debt / Adj. EBITDA(2) (1) For and as of 1Q FY22 ending December 31, 2021. (2) Net-debt / Adj. EBITDA as of December 31, 2021, defined as short term debt and long term debt less cash and cash equivalents, divided by Trailing Twelve Months (TTM) Adjusted EBITDA.* *For a reconciliation of GAAP to non-GAAP financial information, please see the Appendix of this presentation. $(111)M (16)% of Revenue Cash Used For Operations(1) Profit & Liquidity Profile
© 2022 Avaya Inc. All rights reserved 13 • Transforming the business to a recurring revenue and software-oriented model, including the introduction of ARR • Achieved 44% CAPS as % of revenue • Investing substantially in R&D and Go-To-Market to address the growing Cloud-First TAM (1) FY18* FY19* FY20 FY21 Q1'FY22 Revenue YoY Growth(2) (2)% (4)% —% +2% (4)% OneCloud ARR N/A $35M $191M $530M $620M Revenue from Software and Services 82% 83% 88% 88% 86% Revenue from Software 50% 52% 61% 64% 62% Recurring Revenue 57% 58% 63% 66% 66% Revenue from CAPS 14% 15% 26% 40% 44% Adjusted EBITDA Margin* 24% 24% 25% 24% 18% (1) and (2), please see the Business Model Transformation Appendix of this presentation. * For a reconciliation of GAAP to non-GAAP financial information, please see the Appendix of this presentation. Business Model Transformation
14© 2022 Avaya Inc. All rights reserved FY19 15% FY20 26% 1Q20 18% 1Q21 34% 1Q22 44% OneCloud ARR Growth ($M) $35 $47 $69 $113 $191 $262 $344 $425 $530 $620 OneCloud ARR >$1M ARR 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 $0 $100 $200 $300 $400 $500 $600 $700 CAPS as % Revenue(1) See Appendix for further definition and information on OneCloud ARR metric. All Other CAPS FY21 40% Cloud & ARR Progress (1) FY19 calculated with Non-GAAP Revenue; FY20, FY21. and 1Q22 calculated with GAAP revenue. * For a reconciliation of GAAP to non-GAAP financial information, please see the Appendix of this presentation.
15© 2022 Avaya Inc. All rights reserved ARR Mix from Larger Customers 17% 59% 95% > $5m ARR % > $1m ARR % > $100k ARR % —% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ▪ ARR build so far shows clear enterprise bias: ▪ ~20% ARR from $5M+ customers ▪ ~60% ARR from $1M+ customers ▪ ~95% ARR from $100K+ customers OneCloud ARR is the True Gauge of Our Progress Q1 FY22
16© 2022 Avaya Inc. All rights reserved Total Revenue ($M) FY20A FY21A FY22E $2,500 $2,600 $2,700 $2,800 $2,900 $3,000 $3,100 CAPS Revenue ($M) FY20A FY21A FY22E $400 $600 $800 $1,000 $1,200 $1,400 $1,600 OneCloud ARR - Exiting FY ($M) FY20A FY21A FY22E $— $200 $400 $600 $800 $1,000 FY22 Growth YoY: As Reported: + 0%-2% Constant Currency(1): + 1%-2% (1)Unless otherwise noted, values reflect January 31, 2022 FX rates. Transformational KPIs FY22 Growth YoY: ~20% FY22 Growth YoY: ~72%
17© 2022 Avaya Inc. All rights reserved 2.5x ~$550M Low to Mid BB/Ba ~$400M Minimum ~$250-300M Net Leverage(1) Cash Balance Minimum Liquidity (Cash + ABL Revolver Availability) Senior Secured Debt Rating(2) (1) Net Leverage defined as Debt minus Cash and Cash equivalents divided by LTM Adj. EBITDA* (2) A securities rating is not a recommendation to buy, sell or hold securities and may be revised or withdrawn at any time. * For a reconciliation of GAAP to non-GAAP financial information, please see the Appendix of this presentation. Financial Policy & Capital Allocation Prioritized net leverage improvement M&A focusing on strategically aligned tuck-ins Limited use of share buybacks until leverage close to target range Long-Term Targets
© 2022 Avaya Inc. All rights reserved Appendix
19© 2022 Avaya Inc. All rights reserved $592 $483 $476 $397 $397 270 194 191 187 188 126 59 42 43 37 77 47 34 23 20 90 127 108 117 112 29 56 101 27 40 Net cash interest payments Pension & OPEB Restructuring payments Capex Tax payments FY18A FY19A FY20A FY21A FY22E Note: Net Cash Interest Payments includes interest payments on long-term debt and payments classified as adequate protection payments in connection with Chapter 11 proceedings, net of interest income; Pension settlement payments to PBGC in connection with Chapter 11 proceedings not included within Pension & Post Retirement payments. Calculations may not foot due to rounding ($M) Significant Uses of Cash
20© 2022 Avaya Inc. All rights reserved 1Q Financial Highlights $M 1Q22 4Q21 1Q21 Revenue $ 713 $ 760 $ 743 Non-GAAP Gross Margin* 57.6 % 60.4 % 61.8 % Non-GAAP Operating Expense* (% of revenue) 43.3 % 41.3 % 39.8 % Non-GAAP Operating Margin* 14.3 % 19.1 % 21.9 % Adjusted EBITDA* $ 129 $ 179 $ 190 Adjusted EBITDA Margin* 18.1 % 23.6 % 25.6 % • Continued large deal activity with 108 deals over $1 million, 9 over $5 million, 6 over $10 million and 2 over $25 million • Remaining Performance Obligations (RPO) of $2.3B • Added over 1,400 new logos • Cash used for Operations was $111 million * For a reconciliation of GAAP to non-GAAP financial information, please see the Appendix of this presentation. 1Q FY22 Update • In Ontario, Canada, McMaster University has chosen Avaya OneCloud to extend our long-running partnership for a further five years. McMaster, with over 35,000 students and 10,000 staff, chose Avaya’s leading cloud solution to address the simultaneous challenges of increasing digital engagement across seven unique contact centers, reducing handling times and abandoned interactions, and improving analytics and workforce agility. • Ascension, the largest non-profit hospital system in the US, signed a five year contract to standardize on Avaya across 110 hospitals with options to include clinics and professional offices in the future. • Cupola Teleservices (Cupola), one of the Middle East’s largest BPOs and outsourced contact center service providers, has joined the growing list of Avaya Experience Builders around the world. Cupola chose Avaya OneCloud CCaaS and Avaya Spaces Learning as the basis for their new customer onboarding and agent training. In a competitive bid, we successfully beat Genesys to deliver a cloud solution that will streamline technology and processes, reduce costs, and significantly improve user and customer experience. This three year deal will enable Cupola to better serve their government and private sector customers across the region and beyond. • In Brazil, we are very pleased that the ANA-National Water Agency has chosen Avaya OneCloud UCaaS as its only consolidated platform. In an expanded public competitive assessment, the customer chose to build its communications network using Avaya technology, replacing Ericsson's legacy systems in the process. This three-year agreement will enable the Agency to reduce costs, as it delivers significant improvements in user experience, processes, and transaction times. • When it comes to Experiences that Matter, Kingsborough Community College, a City University of NY school, takes it so seriously that the management created a task force to improve student experiences. We worked with our partners to deploy an AI Chatbot solution built on Avaya OneCloud CPaaS that is available 24x7 to respond to inquiries and deliver valuable information. It also includes full reporting and analytics, which is changing the way they are serving and communicating with current and prospective students, parents and constituents. • Aragon Recognizes Avaya as a Market Leader in the Team Collaboration Globe, 2022. With leadership in four Aragon Globe reports – Team Collaboration, UC, Video Conferencing, and Intelligent Contact Center, Avaya is one of the only vendors in the industry that provides customers and end users a true, Total Experience with expertise across the entire landscape. • Avaya was selected as a high performer in 2021 Frost & Sullivan Radar for Cloud Meetings & Team Collaboration Services Market. • Third (of 18 vendors) in the Ventana Research Agent Management Value Index 2022 Vendor and Product Assessment.
© 2022 Avaya Inc. All rights reserved 21 Revenue: 1Q22 4Q21 1Q21 Product $ 231 $ 246 $ 266 Services 482 514 477 Total Revenue $ 713 $ 760 $ 743 GAAP Gross Margin: Product 33.8 % 40.2 % 44.4 % Services 60.4 % 61.5 % 62.5 % GAAP Total Gross Margin 51.8 % 54.6 % 56.0 % GAAP Operating Margin (0.1) % 4.3 % 8.3 % Quarterly Income Statement (Amounts are GAAP and dollars in millions)
© 2022 Avaya Inc. All rights reserved 22 Revenue*: 1Q22 4Q21 1Q21 Product $ 231 $ 246 $ 266 Services 482 514 477 Total Revenue $ 713 $ 760 $ 743 Non-GAAP Gross Margin*: Product 51.9 % 58.1 % 60.5 % Services 60.4 % 61.5 % 62.5 % Non-GAAP Total Gross Margin* 57.6 % 60.4 % 61.8 % Non-GAAP Operating Margin* 14.3 % 19.1 % 21.9 % Adjusted EBITDA* $ 129 $ 179 $ 190 Adjusted EBITDA* % 18.1 % 23.6 % 25.6 % *Revenue information presented is GAAP revenue; all other information is non-GAAP. For a reconciliation of GAAP to non-GAAP financial information, please see the Appendix of this presentation. Quarterly Non-GAAP Income Statement Information (All dollars amounts are in millions)
© 2022 Avaya Inc. All rights reserved 23 Quarterly Revenue by Region (All dollars amounts are in millions) Revenue 1Q22 4Q21 1Q21 U.S. 375 $ 459 $ 414 EMEA 192 169 195 APAC 81 73 75 AI 65 59 59 Total $ 713 760 $ 743 % of Total Revenue U.S. 53 % 60 % 56 % EMEA 27 % 22 % 26 % APAC 11 % 10 % 10 % AI 9 % 8 % 8 % Total 100 % 100 % 100 %
© 2022 Avaya Inc. All rights reserved 24 Balance Sheet and Operating Metrics (Dollars in millions unless indicated otherwise, Balance sheet items as of the end of the period indicated) 1Q22 4Q21 1Q21 Total Cash and Cash Equivalents $ 354 $ 498 $ 750 Cash (used for) provided by Operations $ (111) $ (5) $ 48 Capital Expenditures and Capitalized Software $ 27 $ 28 $ 27 Days Sales Outstanding (DSO)(1) 60 52 52 Inventory Turns 14.6 13.1 13.5 Headcount (as of the end of the period indicated) 8,060 8,063 8,227 Trailing Twelve Month Revenue ($K) / Employee (Headcount as of the end of the period indicated) $ 365 $ 369 $ 353 (1)1Q22, 4Q21 and 1Q21 include $71M, $76M and $139M AR/contract liability netting impact when calculating DSOs.
25© 2022 Avaya Inc. All rights reserved What is OneCloud ARR? • A baseline for expected cloud revenue over the next 12 months What's Included: • OneCloud Subscription, ACO Recurring, CCaaS, SpacesTM, CPaaS, DaaS, Private Cloud What's Excluded: • Maintenance, Managed Services, ACO One Time Payment 1Q22 17% Growth QoQ ~60% of ARR from customers paying over $1M annually Customer Experience & Contact Center stronger contributor than UCC within ARR Avaya OneCloud ARR
26© 2022 Avaya Inc. All rights reserved Subscription Revenue & Cash Dynamics Avaya is transforming our business by shifting to a Subscription Licensing Model Subscription Contracts have different Cash Flow dynamics when compared to a Perpetual License Model (the primary former model that Avaya sold under) Subscription-based software generally relates to a monthly or annual licensing model, allowing users to pay a per-user fee over a pre-determined time period (pay over time). Customers typically pay a subscription fee monthly or annually and are entitled to use the software only during the subscription term, unlike a perpetual license, which requires a customer to pay the entire cost of the license upfront, allowing the customer to use the software indefinitely.
© 2022 Avaya Inc. All rights reserved 27 Subscription Revenue, ARR & Cash Dynamics
28© 2022 Avaya Inc. All rights reserved Business Model Transformation Appendix (1) FY18 and FY19 calculated with Non-GAAP Revenue*; FY20, FY21, and 1Q22 calculated with GAAP Revenue. (2) FY18 revenue growth not adjusted for constant currency; FY19, FY20, FY21, and 1Q22 revenue growth on a constant currency basis using foreign exchange rates as of September 30th of the respective comparison period. The Company presents constant currency information to provide a framework to assess the Company's performance excluding the effect of foreign currency rate fluctuations. Revenues exclude discontinued operations for the divestiture of the Company's Networking business in a transaction completed in FY17. * For a reconciliation of GAAP to non-GAAP financial information, please see the Appendix of this presentation.
29© 2022 Avaya Inc. All rights reserved Three months ended, (In millions) Dec. 31, 2021 Sept. 30, 2021 Dec. 31, 2020 Net (loss) income $ (66) $ 6 $ (4) Interest expense 54 53 56 Provision for income taxes 18 7 10 Depreciation and amortization 104 111 103 EBITDA 110 177 165 Restructuring charges (1) 7 13 4 Acquisition-related costs — 1 — Share-based compensation 14 14 14 Pension and post-retirement benefit costs (1) — — Change in fair value of Emergence Date Warrants (1) (26) 5 Loss on foreign currency transactions — — 2 Adjusted EBITDA 129 179 190 Adjusted EBITDA Margin 18.1 % 23.6 % 25.6 % (1) Restructuring charges represent employee separation costs and facility exit costs (excluding the impact of accelerated depreciation expense) related to the Company's restructuring programs. Non-GAAP Reconciliation Adjusted EBITDA
30© 2022 Avaya Inc. All rights reserved Successor Predecessor Non-GAAP Combined Fiscal years ended September 30, Period from December 16, 2017 through September 30, 2018 Period from October 1, 2017 through December 15, 2017 Fiscal year ended September 30, 2018(In millions) 2021 2020 2019 Net (loss) income $ (13) $ (680) $ (671) $ 287 $ 2,977 $ 3,264 Interest expense 222 226 237 169 14 183 Interest income (1) (6) (14) (5) (2) (7) Provision for (benefit from) income taxes 15 62 2 (546) 459 (87) Depreciation and amortization 425 423 443 384 31 415 EBITDA 648 25 (3) 289 3,479 3,768 Impact of fresh start accounting adjustments (1) 2 1 5 196 — 196 Restructuring charges (2) 28 20 22 81 14 95 Advisory fees (3) — 40 11 18 3 21 Acquisition-related costs 3 — 9 15 — 15 Reorganization items, net — — — — (3,416) (3,416) Share-based compensation 55 30 25 19 — 19 Loss on sale/disposal of long-lived assets, net — — — 4 1 5 Resolution of certain legal matters — — — — 37 37 Impairment charges — 624 659 — — — Pension/OPEB/nonretirement postemployment benefits and long-term disability costs (1) — — — 17 17 Gain on post-retirement plan settlement (14) — — — — — Change in fair value of Emergence Date Warrants 1 3 (29) 17 — 17 (Gain) loss on foreign currency transactions (3) 16 8 (28) — (28) Gain on investments in equity and debt securities, net (4) — (49) (1) — — — Adjusted EBITDA $ 719 $ 710 $ 706 $ 611 $ 135 $ 746 Adjusted EBITDA Margin 24.2 % 24.7 % 24.5 % 27.2 % 22.4 % 26.2 % Non-GAAP Reconciliation Adjusted EBITDA cont'd (1) The impact of fresh start accounting adjustments in connection with the Company's emergence from bankruptcy. (2) Restructuring charges represent employee separation costs and facility exit costs (excluding the impact of accelerated depreciation expense) related to the Company's restructuring programs, net of sublease income. (3) Advisory fees represent costs incurred to assist in the assessment of strategic and financial alternatives to improve the Company's capital structure. (4) Realized and unrealized gains on investments in equity securities, net of impairment of investments in debt securities.
31© 2022 Avaya Inc. All rights reserved Three months ended, Dec. 31, 2021 Sept. 30, 2021 June 30, 2021 Mar. 31, 2021 Dec. 31, 2020 GAAP Net (Loss) Income $ (66) $ 6 $ 43 $ (58) $ (4) Non-GAAP Adjustments: Impact of fresh start accounting — — 1 1 — Restructuring charges, net (1) 7 13 5 7 4 Acquisition-related costs — 1 2 — — Share-based compensation 14 14 14 13 14 Pension and post-retirement benefit costs (1) — (1) — — Gain on post-retirement plan settlement — — — (14) — Change in fair value of Emergence Date Warrants (1) (26) — 22 5 (Gain) loss on foreign currency transactions — — (4) (1) 2 Amortization of intangible assets 82 84 83 82 83 Income tax expense effects (2) 5 (18) (70) 20 (19) Non-GAAP Net Income $ 40 $ 74 $ 73 $ 72 $ 85 Dividends and accretion to preferred stockholders $ (1) $ (1) $ (1) $ (1) $ (1) Undistributed Non-GAAP Income 39 73 72 71 84 Percentage allocated to common stockholders (3) 91.3 % 91.2 % 91.3 % 91.3 % 91.2 % Numerator for Non-GAAP diluted earnings per common share $ 36 $ 67 $ 66 $ 65 $ 77 Diluted Weighted Average Shares - GAAP 84.7 86.9 88.0 84.6 83.8 Share adjustment (4) 1.9 — (0.2) 2.7 1.4 Diluted Weighted Average Shares - Non-GAAP 86.6 86.9 87.8 87.3 85.2 GAAP (Loss) Earnings per Share - Diluted $ (0.79) $ 0.06 $ 0.43 $ (0.70) $ (0.06) Non-GAAP Earnings per Share - Diluted $ 0.42 $ 0.77 $ 0.75 $ 0.74 $ 0.90 (1) Restructuring charges, net represent employee separation costs and facility exit costs related to the Company's restructuring programs, net of sublease income. (2) The Company’s calculation of non-GAAP income taxes reflects a 25% fixed non-GAAP effective tax rate based on a blended U.S. federal and state tax rate, given the Company’s operating structure. The non-GAAP effective tax rate may differ significantly from the GAAP effective tax rate. The non-GAAP effective tax rate could be subject to change for a number of reasons, including but not limited to, changes resulting from tax legislation, material changes in revenues or expenses and other significant events. The Company will continuously assess its estimated non-GAAP effective tax rate in connection with its calculation of non-GAAP net income and non-GAAP net income per diluted share in future periods. (3) The Company's preferred shares are participating securities, which requires the application of the two-class method to calculate diluted earnings per share. Under the two-class method, undistributed earnings are allocated to common stock and participating securities according to their respective participating rights in undistributed earnings. The percentage allocated to common stockholders reflects the proportion of weighted average common stock outstanding to the weighted average of common stock and common stock equivalents (preferred shares). (4) In periods with a GAAP net loss, the share adjustment reflects the dilutive impact of certain securities, which are excluded from the computation of diluted GAAP loss per share as their effect would be anti-dilutive. In periods during which our convertible notes have a dilutive impact on GAAP diluted shares outstanding, the share adjustment also includes the impact of our bond hedge transaction which is anti-dilutive in diluted GAAP earnings per share but is expected to mitigate the dilutive effect of our convertible notes and therefore are included in the calculations of non-GAAP diluted shares outstanding. Non-GAAP Reconciliation Net Income (Loss) and Earnings (Loss) per Share
32© 2022 Avaya Inc. All rights reserved Non-GAAP Reconciliation Gross Margin and Operating Income Three months ended, (In millions) Dec. 31, 2021 Sept. 30, 2021 June 30, 2021 Mar. 31, 2021 Dec. 31, 2020 Reconciliation of Non-GAAP Gross Profit and Non-GAAP Gross Margin Gross Profit $ 369 $ 415 $ 407 $ 412 $ 416 Items excluded: Adj. for fresh start accounting — — — 1 — Amortization of technology intangible assets 42 44 43 43 43 Non-GAAP Gross Profit $ 411 $ 459 $ 450 $ 456 $ 459 GAAP Gross Margin 51.8 % 54.6 % 55.6 % 55.8 % 56.0 % Non-GAAP Gross Margin 57.6 % 60.4 % 61.5 % 61.8 % 61.8 % Reconciliation of Non-GAAP Operating Income Operating (Loss) Income $ (1) $ 33 $ 41 $ 44 $ 62 Items excluded: Adj. for fresh start accounting — — 1 1 — Amortization of intangible assets 82 84 83 82 83 Restructuring charges, net 7 13 5 8 4 Acquisition-related costs — 1 2 — — Share-based compensation 14 14 14 13 14 Non-GAAP Operating Income $ 102 $ 145 $ 146 $ 148 $ 163 GAAP Operating Margin (0.1) % 4.3 % 5.6 % 6.0 % 8.3 % Non-GAAP Operating Margin 14.3 % 19.1 % 19.9 % 20.1 % 21.9 %
33© 2022 Avaya Inc. All rights reserved Non-GAAP Reconciliation Operating Expenses Three months ended, (In millions) Dec. 31, 2021 Sept. 30, 2021 Dec. 30, 2020 Reconciliation of Non-GAAP Operating Expenses Operating Expenses $ 370 $ 382 $ 354 Items excluded: Amortization of intangible assets 40 40 40 Restructuring charges, net 7 13 4 Acquisition-related costs — 1 — Share-based compensation 14 14 14 Non-GAAP Operating Expenses $ 309 $ 314 $ 296 Non-GAAP Operating Expense % 43.3 % 41.3 % 39.8 %
34© 2022 Avaya Inc. All rights reserved Non-GAAP Reconciliation Revenue and Gross Margin Successor Predecessor Non-GAAP Combined Fiscal year ended September 30, 2019 Period from December 16, 2017 through September 30, 2018 Period from October 1, 2017 through December 15, 2017 Fiscal year ended September 30, 2018 (In millions) Reconciliation of Non-GAAP Revenue Revenue $ 2,887 $ 2,247 $ 604 $ 2,851 Adj. for fresh start accounting 21 206 — 206 Non-GAAP Revenue $ 2,908 $ 2,453 $ 604 $ 3,057 Reconciliation of Non-GAAP Gross Profit and Non- GAAP Gross Margin Gross Profit $ 1,575 $ 1,143 $ 362 $ 1,505 Items excluded: Adj. for fresh start accounting 37 264 — 264 Amortization of technology intangible assets 174 135 3 138 Loss on disposal of long-lived assets — 4 — 4 Share-based compensation — 1 — 1 Non-GAAP Gross Profit $ 1,786 $ 1,547 $ 365 $ 1,912 GAAP Gross Margin 54.6 % 50.9 % 59.9 % 52.8 % Non-GAAP Gross Margin 61.4 % 63.1 % 60.4 % 62.5 %
35© 2022 Avaya Inc. All rights reserved Non-GAAP Reconciliation Product and Services Gross Margins Three months ended, (In millions) Dec. 31, 2021 Sept. 30, 2021 June 30, 2021 Mar. 31, 2021 Dec. 31, 2020 Reconciliation of Non-GAAP Gross Profit and Non-GAAP Gross Margin - Products & Solutions Revenue $ 231 $ 246 $ 254 $ 226 $ 266 Costs 111 103 98 92 105 Amortization of technology intangible assets 42 44 43 43 43 GAAP Gross Profit 78 99 113 91 118 Items excluded: Amortization of technology intangible assets 42 44 43 43 43 Non-GAAP Gross Profit $ 120 $ 143 $ 156 $ 134 $ 161 GAAP Gross Margin 33.8 % 40.2 % 44.5 % 40.3 % 44.4 % Non-GAAP Gross Margin 51.9 % 58.1 % 61.4 % 59.3 % 60.5 % Reconciliation of Non-GAAP Gross Profit and Non-GAAP Gross Margin - Services Revenue $ 482 $ 514 $ 478 $ 512 $ 477 Costs 191 198 184 191 179 GAAP Gross Profit 291 316 294 321 298 Items excluded: Adj. for fresh start accounting — — — 1 — Non-GAAP Gross Profit $ 291 $ 316 $ 294 $ 322 $ 298 GAAP Gross Margin 60.4 % 61.5 % 61.5 % 62.7 % 62.5 % Non-GAAP Gross Margin 60.4 % 61.5 % 61.5 % 62.9 % 62.5 %
36© 2022 Avaya Inc. All rights reserved Three Months Ended (In millions) Dec. 30, 2021 Sept. 30, 2021 June 30, 2021 Mar. 31, 2021 Dec. 31, 2020 Net cash (used for) provided by operating activities $ (111) $ (5) $ 11 $ (24) $ 48 Less: Capital expenditures 27 28 25 26 27 Free cash flow $ (138) $ (33) $ (14) $ (50) $ 21 Free Cash Flow Net-Debt / Adjusted EBITDA Dec. 31, 2021 Debt maturing within one year $ — Long-term debt, net of current portion 2,820 Less: Cash and cash equivalents 354 Net-debt $ 2,466 Adjusted EBITDA (TTM) $ 658 Net-debt / Adjusted EBITDA 3.7 x Non-GAAP Reconciliation Supplemental Schedules