Avaya (AVYA)

James Chirico President, CEO and Director
Kieran McGrath Executive VP and CFO
Ryan MacWilliams Barclays
George Sutton Craig-Hallum
Hamed Khorsand BWS Financial
Call transcript
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Greetings. Welcome to Avaya's Fiscal 2022 Quarter 2 Investor Call. [Operator Instructions] And please note that this conference is being recorded. I will now turn the conference over to [Ralph Wynn]. Thank you, sir.

begin. may You

Unidentified Company Representative

this Welcome Call. operator. Kieran Fiscal Second before will XXXX our you share Thank prepared some Chirico, to our Investor remarks lead CFO, and Jim Vice your and call President Quarter and Executive with questions. you, taking President Avaya's morning's and McGrath, CEO;

this and accessible initiatives will include website the non-GAAP our are aid highlights X-K today which the with metrics Avaya's morning this as Chief understanding financial financial and them call your of this with should slides referenced These the filed Stephen Spears, referenced are Revenue well as on All our results. investor exception ESG in morning's the of Officer. Investor page in Joining be The of on performance on earnings call release of SEC. revenue.

UK controls economy imposed conflict and expectations, governments Russia of the included materially. have export make the based non-GAAP statements as GAAP the by actual in a earnings metrics and differ by remain well results being responses Russia-Ukraine and and business may sanctions uncertainties to current or global on such and particular, reconciliation the and of the as investor our are by related certain EU that forward-looking a result are impacted We and the other US, industries parties We to could subject slides. the forecasts that to cause recently Russian assumptions, In risks and which release of conflict on jurisdictions. as

a our our are of continues business global control. all of of its on which impact the number COVID-XX and factors, the extent impact to addition, of In will depend on outside continued economy

and in and by update Form most to our factors over no time. these XX-K except the law. will uncertain statements guidance, Form to including risks found the or filings and our to circumstances All I in continue and not this evolve required on XX-Q. quarterly uncertainties obligation recent policy our we event, It with reiterate of SEC, revised be turn may facts otherwise the revise at now is change, undertake to or Information about forward-looking Jim. remain reports as call

James Chirico

everyone Avaya's and pleased quarter morning. today's results Thanks, joining call. Ralph. I'm you to thank for second Hello, report this

begin me continue the as Let driving in exceed strategy and thanking our we've out. laid by global they team implementing to expectations

to model. highlight are OneCloud We delivering to to make of headway a accelerated to our Avaya our transformational of a on It's of at continue important rate number key progress business customers SaaS and solutions transformation. an journey indicators multi-year and significant cloud our the

ARR key end First billion drove record KPI is by for $X this and The Avaya million $XXX path million XXXX million. well of ARR. to We quarter-over-quarter hit year-over-year $XXX calendar year increase industry growth increase $XXX to OneCloud with the is over mark paid.

reached XX% off. us, actions for indicator revenue ago XX% record This our and growing from recurring a Second, are strong a in year QX. that investment paying is focus, a to

reached of recurring time historic as new These onetime repositioning the And metric a up XX% and successfully of and came well. Avaya from are at in record model CAPS positive at first revenue the from a bookings a the services has revenue Fourth, one. to ago. XX% bookings our ended Third, quarter software cloud proved that finally, came had from percent we XX%, year serve private that company we metrics as our OneCloud, XX%. we threshold,

and cloud continues and to continue XX% help their worker customers as had The enterprise our ARR greater faster greater their summarize, contracts hold taking key of Avaya anticipated, ARR experiences. million and companies to metrics. forward digital segment. greater them leading $X recurring shift than to $X our to comes Our strength than of a in look with strategy significant enterprise To fundamental those those initiatives customer business we XX% from success is than $XXX,XXX. our model. transformation push transform fuel of XX% from to enterprise comes in than growth million,

As further once $XX TCV, in with our was approximately proof worth greater X million. we than XX million of than again enterprise million, $XX TCV, signed and we $X X had than greater that one including over deals leadership, million deals XXX greater million, $X over $XX

over faster it's underscores noteworthy rate come We which million haven't this seats how a customers be such in Avaya I at success we predicted. more some discussed a with than booked to short delighted cannot seats X that but we've quarter, in time, we our OneCloud migrating far time.

revenue momentum underlying the and strong, expectations to did business profitability X for our the our meet of primarily very quarter, dynamics. remains due not While

impact a the record Our well, of This revenues. on adoption topline. ARR rapid and customers, is away recurring now from onetime to an point-in-time reflection including shift government our as our revenue had by

and with faster strategy also model, shift business is projected. this our occurring is we While consistent than it

last to look this a solutions at XX% had million on impact quarter. $XX XX% bookings, ago. we for compared OneCloud As this and a came the XX% shift revenue quarter Avaya from year total quarter We estimate

important the As a result there points contracts, in to are of a recurring make. of increase couple

long-term over business life materialize First, contracts. revenue one the isn't lost. and these of It will is

is the consistent business of is indicative this and in strategy shift with growing, accelerated and our cloud healthy Our our obviously and business.

a provide on quarter. impact second impact additional revenue their half has including the reduced beginning outlook customer to on in overhang a the on Ukraine, detail rest base few both Russia. operations topline Europe on is million the create the of moments. war Russia pressure. in Second, in The and sanctions by will $X significant the roughly for and The on dynamics Kieran Avaya

private Avaya Now I'd like measures most hybrid a underlying important overall cloud ARR the metric. whether public delivered our strength key to further is emphasize model. strength or It will performance highlights OneCloud that performance the business. some of our portfolio, in of demonstrate our holistically

and Our XXX% OneCloud XX% sequentially grew ARR is year-over-year. up

quarter. This impressive over better growth this that and logos signed for be is customers no commitment strength proof solutions. yet communication the choice X,XXX There solutions move positioned of them new of underscores we well the the brand digital solutions. Avaya to cloud-based we of our as our is to addition, In again

me because selected integration to for chat wins. in key Siemens Watson couple new XX sites include Clinic, management, the Avaya This centralized channels share of X X,XXX video, aging Let you users serves customer chose of the patients ease locations. Office Cloud based expansion with They Avaya almost across Florida between replace of and a year. an million platform voice, every customer to conferencing. and of

central calls provider UC banks savings They Germany. by support service for platform seats Avaya powered representing Another to chose private in banks, day. a with win the XXX per million was Finance X XXX,XXX cloud Informatica, technology

to their Moving out the technology they a remotely the We same to results building deliver center and we to if OneCloud order we're differentiated up activate to public deployments solution to we solve our have that. legacy contact yield exactly business. of Avaya massive our expect. with They to doing Company approach CCaaS, CCaaS Insurance capabilities expansion geographic while office. having with they Life CCaaS cloud solutions Alabama deliberate to to hybrid a signed is flexibility challenges. continues for capabilities monetize chose in flexibility work move The all allows with or Avaya and tools set numerous and new perfect access in private The of were the solution CCaaS deal for installed enablement winning would example CCaaS to partner of the to public, base, employees

transformation. our their booking We also capability for to along agents CCaaS. momentum we example to effectively to insurer with our work periods. the having to is to One during needed in peak saw strongest the moving QX, In one private at-home requirements, to also continued is quarters support cloud of flex private business business UK top that date. X,XXX had accelerate They the

have business, new talk that You've am X heard partnerships. importance of such needle I we months, be importance signed will market strategic CCaaS offerings. about our in reach movers particular, Avaya's the past and announce me through growth partner to relationships. for to excited X ecosystem our global our the getting real in additional just plans of Both the

Enterprise. teams capabilities offer streams countries. million making as QX. our progress OneCloud of start enablement, and we management, including The touch and this over Avaya fiscal engagement expect us for this CCaaS are our identity revenue to like Alcatel-Lucent to XX security in their great will Through early management base new customers nearly on result global I'd in the First, partnership, as workforce ALE AI, to X on of

Microsoft. with is second The

agreement, this cloud in are to working on may the partnership, which a go-to-market we more As customers X our expansion a press of to platform. focused move announced release, you private just well There with CCaaS. directly beyond pillars rapidly Azure goes key significant to effort have read Microsoft the including

current or marketplace collaboratively either premise-based to Second, Microsoft a And available model. sold joint Azure co-selling customers to efforts Avaya teams. hybrid the pure by CCaaS Microsoft and thirdly, in is sales and cloud move

strategy. it's early overall OneCloud confidence and show relationships strength that these reinforce our like cloud innings, portfolio execute Although global our in successfully ability on Avaya and the the my of to

strategies, While customer communications. of edge organizations, to leading OneCloud believe for CCaaS experience represents indispensable collaboration we the are Avaya digital solutions CPaaS

most applications chose them our capabilities, build XXX deployment the to to provides XXX Clinics and integrate University enable CPaaS deal Avaya significant to addition and capabilities and our Hospitals flexibility platform. customize simplify speed for In CPaaS customers of CPaaS to of differentiated to highly the own users. date, CCaaS And helping customers their XX, and Iowa

will for most we Avaya's ecosystem vital world's enterprises third and brings And than network second competitive table, dealership improve the OneCloud and as provide in reach. CCaaS it to with users flexibility the strategy we to are their The our unlock the fair our helping a global are Avaya, underscores X-year and Virtual more CPaaS Carter largest solutions keys our Carter scale, along Machinery, with Device with Our continued unique integrated our suite of success. employees. Service why complex a They is full differentiation Avaya patient service Agent are at selected brand, have them and to sites. sites robust choosing to displacing to deal these, the value Avaya. for the CPaaS a CPaaS XX installed America. This customers, reach to experiences the and was their Cloud that ability the win Caterpillar say example a leading we North is base. Cisco. global service, our of a partner resiliency we for capabilities explains superior across A to and Add it's provide bring our students in X,XXX customers Office strength to

momentum We have of in confidence increased business. the our

focus on in to impacting long so We to business and doing profitably. innovation, edge, game, drivers competitive committed investing and the continue delivering our are maintaining we growth

let for take Kieran with an turn our update it details the along to the me year. Now over to you guidance through of

Kieran McGrath

morning, Good Jim. everyone. you, Thank

As are all indicated currency. figures this reported in call as unless in a mentioned constant reminder, otherwise

inflection of second significant marked the Our point quarter overall our a transformation. acceleration in

that model. by is ARR expansion XX% second OneCloud revenue One bookings. a first performance for OpEx represented to recurring in our very time cloud our value Avaya's base, further the bookings is rapidly milestone that are marks contract of ever, this represented the quarter rate a positive evidence from For migrating our total This Avaya's total solution outcome over OneCloud customers KPI. the of

million of $XXX a well ARR. record subscription ending in of growth primarily target OneCloud million. XX% are ARR of The was million, of $XXX $XXX new Jim to million $X TCV $XXX ARR a off remarks, XXX% noted calendar driven growth his bookings we represents balance we and This and billion of the achieve generated our year-end positioned sequential of quarter year-over-year. with of As

continue came continue contracts maintenance value subscription realize healthy those those from XX% gain very deals offerings. While we our clients that uplift from to to subscription a on migration, robust OneCloud a as

sequentially XXX was OneCloud and in $XXX for up bookings revenue. especially was to quarter, to significant, of and revenue added in over row, below over X logo private of Shifting XX% Additionally, OneCloud new second due reflecting QX year-over-year. strong the growth quarter subscription we our public a XX% our primary reasons. the guidance million new Equally over customers.

important lost. bookings, First, from the recognized will be in periods. again note quarter. in the this in It's lower subscription to was this record not bookings quarter is it revenue spite subscription that OneCloud revenue of future recognized Instead, of percentage those our

point-in-time In revenue total generated of color. majority the roughly more XXX as Let me taken processed of overwhelming a subscription provide which deals OneCloud little The in quarter. QX, value contract these the point-in-time standard were XX% revenue deals, we the expected contribution, deals. is which current

QX impacted by our a of and $XX model versus in-quarter versus recognition million However, our handful deals guidance. revenue approximately

For X fiscal within The for US funding included to multi-year as limited point-in-time to federal of opposed were This appropriation the example, the we which recognition the X government, eligible the year in that X note impact clauses. impact $XX anniversary. current these deferred experienced contract annually in quarter. revenue recognized the years deals contracts there use of value cases, large upon contract the be annual Please will million license only value. was right to almost half in for the reaching the each these future

Avaya's created was and numbers. have The conflict adverse business sanctions $X in the Europe. in impacted a to Eastern related Eastern second expected more and the second Europe This due revenue Ukraine, by Getting our conditions approximately much significant guidance in QX to announced economic the crisis impact versus the into half our is deeper to to million. impact which revenue

For the and total revenue quarter of down the versus million the period. Cloud currency X% our against CAPS up fiscal contribution Subscription from reported Partner points Alliance revenue, period. represented percentage reported XXXX, XX% XX of as XX% $XXX the in sequentially or million, year-ago Revenue $XXX & X% in and was second constant as in year-ago

revenue. percent quarter, fiscal newest total second and of service of revenue XX% in at came XX% accounted our revenue. Subsequently, total For software KPI, recurring XX%. total for revenue a represented as our revenue, revenue software of Meanwhile,

and up in in Services a while by almost sit second X generated contribution. margins in through impacts. gross portion our our saw year-ago that point quarter XX.X% improved period be by pressured sequentially. metrics, came Product margin the XX.X% to to to to software at within fact non-GAAP the quarter-on-quarter of chain over we was compared larger impacted which Turning down the Hardware The product, were the Services X gross supply point subscription increasing agreements, margins profit revenue margin in XX.X% almost quarter industry-wide of XX.X%, our continue segment. hybrid revenue due last subscription slightly much

margin profitability cash for total and metrics to Turning flow the quarter.

quarter XX%, down XXX Second adjusted margin $XXX of year-on-year, an million, operating basis due margin basis EBITDA to the a points points year-on-year. representing $XXX was previously XX%, was million, primarily down operating Adjusted income representing XXX non-GAAP non-GAAP mentioned EBITDA of from compared negative to sequentially. $X.XX EPS to in was revenue $X.XX margins. second quarter the point-in-time cash period operations gross dynamics the $XXX was and $X contributing balance in ending lower year-ago product Non-GAAP $X.XX and quarter million. million, Cash flow of

quarter, to was from now by and proceeds flexibility, enhance protection aided interest taken of contracts, average profile. X our swap years transition structure maturity to Day, deferred contract where to operations As Avaya and capital flow by discussed in is This cash to subscription to cloud cash most versus CapEx continues from at actions Consistent XXXX cash our to our cover largely years our with rate of a reflect the taken transition by interest Investor in assets, model. upfront over cash contribution our $XXX pay licensing QX for the to collections in strengthen million. impacted improve our the a primarily QX. a the quarterly acceleration, measures to date periods In time which flow customers weighted continues to and be series including grow over recent $XX and strong last at $XXX pool largest billings, represents debt restructuring addition the end billings of at extended million the X.X rate from of XXXX $XXX extended million the of and end rapidly the of an future of financial our for cash Avaya. is The net a resulted the the which additional million

currently are liquidity options We which due address XXXX. in June boost also evaluating to come to convertible notes, and the of

XXXX. that note Please changes and revenue year-on-year April reflecting a guidance. currency of rates to are turning constant XX, basis expressed as Now all all revenue amounts on

represents of ARR the At This XXXX OneCloud at increasing of ARR exiting expect year and year now metric, guidance previously between year or fiscal million year-over-year. target In our XXXX midpoint, OneCloud $XXX XX% calendar million. $X terms the end and billion. this of committed reaffirms the forward-looking we above growth expectation our the to full $XXX are with for

revenue. to Turning

reduction year At We recurring annual this more billion a This the to prior revenue represents minus $X.XXX portfolio, as-reported between X/X declining on shift $X.XXX to includes to crisis minus in minus revenue from of currency also has model can million be of Europe, between the $XXX revenue strengthening full X% X% OneCloud and billion. down guidance. and expect on basis. change dollar. of which constant attributed an accelerating and and year-on-year a X% the to to revenue X/X minus a midpoint, basis the the Eastern our Roughly an US impact be X% in this

fiscal on which $XXX of For decline $XXX basis. revenues the third of an constant year as-reported X% X% down currency anticipate about at of or represents midpoint quarter the a XXXX, million we to million,

Please be EBITDA and fiscal year transition fiscal this an half evidenced adjusted immediate taking actions to XX% to half in our adjust year are point for EBITDA adjusted We percentage our compared from to of year the X margins we to by $XXX expect operating XXXX align EBITDA the adjusted EBITDA our prior margin full midpoint, structure. profit the to improvement first a lower Europe, the operating levels. XXXX. At million. non-GAAP implies impact adjusted from and reduction macroeconomic and velocity guidance, reflecting This approximate is the second the fiscal primarily million reflects increasing guidance OneCloud of that revenue. $XXX $XXX The note given $XXX conditions the XXXX Eastern million full in between and million

operating approximately fiscal We for to year XX%. margin the non-GAAP be expect

approximately XX% is non-GAAP XX%, EBITDA quarter, $XXX and and margin or third between XX% between XX% expected to $XXX between be and the of million and revenue. to our be operating adjusted million For

non-GAAP between year This $X.XX the and $X.XX. prior in expect We the to be $X.XX to full for year. EPS compares

For $X.XX of to revenue in the to $X.XX compares the third This year-ago in negative Due from EPS expect and revenue. full expectation total quarter, to the be primarily OneCloud rapidly our reducing and reduction time to between of sales license year and $X.XX. away we non-GAAP shift received X% year the to be cash EPS combination CFFO with versus period. over non-GAAP accelerating CapEx upfront, are we approximately fiscal of full is for the traditional

maintain cash $XXX would now With in quarter-end range. Jim. back to to $XXX expect the We the to that, balances Jim? I call million turn million to like

James Chirico

Thank you, we Kieran. taking is guidance. reflected that in shift strategy our saw I'll wrap the hold, this this revised progress signifies by second and saying significant half quarter is our

forging ahead, results. is transition tangible solid are Our showing and we

rate We serve future team's and on front our to fortify the pace the to more one moving which I'm invest opportunity predicted have very deliver ability us. are to our of excited in even innovation. as environment excited difficult quickly action to customers continuing taking at are moving the we while this about No to in we're cloud in position. and our about Avaya's could

questions, all questions. sobering. and up who The Operator, has team war. devastation we that open the Russia. partners it open Avaya thoughts our throughout many it out up and those is to truly let's Before are impacted by go prayers Ukraine customers, me by end including for members saying Europe, for let and Russia-Ukraine


Barclays. first from of Our MacWilliams Ryan the Instructions] question [Operator with comes line

Ryan MacWilliams

you're you or Or guidance weaker impacted your in customers of region? headwinds, the potential or into year conversations? are cycles any this customer a some hesitancy in regards mostly was guide to pipeline longer baking sales conservatism full that in on the on seeing Kieran, based EU

Kieran McGrath


mean, sanctioned Russia. I a when you'll We're see queue obviously, tonight. the in big are seeing So our for companies with that we issue hit, starts,

to essentially, So do million in can't Eastern longer like from we a impact it in that investment $XX sanctioned we itself, those SpareBank and well, the foremost, them. we're And attributing in can slowing it's been that there's mostly million that Russia and $XX is just customers, first we're out of is countries European with some as in of we the our year then actually revenue guidance and are and from full reprioritization areas. million of revenue seeing conflict those to Europe, from of about of $XX have customers, business where cycle the coming which the Western of no coming take there some Ukraine, but

change in $XXX So worth of million Russia. of the $XX coming of we revenue is Ukraine that $XX-ish million midpoint put and is of to that it directly conflict million identifiable out, the from

Ryan MacWilliams

And did the Did in close deals you Kieran, quarter. last first in out trend? that results second earnings, that some how see I pushed the this were mentioned you quarter? impact in those And the guess, deals

Kieran McGrath

one our that deal about million $XX about which of our that of defense in actually quarter. closed contractors. had quarter, million was early We pushed We second last large one $X from

had no that quarter. the impact So on


Sutton Our next question Craig-Hallum. George comes with from

George Sutton

things moving dynamics that walk government the quarter-over-quarter dynamic? specifically cloud, that in the I of just more government aggressive business. of One your the think getting that a sounds is does through more you some change change like Can and of to is that the

James Chirico

Yes. is Jim. this George,

We of You're see the pretty to in spot and through continued year. uptick in saw fiscal we we this on. expect go as fact, balance QX, strength a big

wins. mostly frankly, the annual And note X-year pretty we're is other take And TCV. significant fiscal And had the out, of these only allowed really new we deals to are revenue. funding overall number year thing Kieran of pointed as as based So to well. X upon requirements, a obviously, important

based or anniversary come data, due that so that and the So XX% of radical. upon is revenue see will we obviously,

cloud deals. teams nice the So we're a well are as uptick. The the pretty job, doing subscription both, really for excited and it's as way, private by with

Kieran McGrath

this as SLED seeing as well FED And well. both in the as we're in

George Sutton


fiscal us significance to picture in global you announced, could that next partnerships the some I might of Okay. give those if you that And your your X relative wondered year. have

James Chirico


doing we've and ALE fairness, this fourth the believe So I really Microsoft organization to in within our market really thoughtful pace. obviously, and to those CCaaS very are pointed we'll revenue at that at X fiscal quarter solidifies been probably as a out, of both and some bringing work sort ALE see in start R&D year. I of key deals, the

far As with involved frankly. engagement, Microsoft, much as in it's more

So hold go fiscal take my that see year probably into as expectation is really start the you'd we XXXX. to

have both it CCaaS sales as well some as their We around lot solutions. private selling public Microsoft, hosting folks cloud of via a the as work work on guys our as with far those going partnerships and doing with

So even early we're pretty excited we at but outstanding. though it's been very Microsoft, actually engagement the where with are, and the has teaming

attribute So the team a real out to building team the partnership. really Avaya for and Microsoft this

Kieran McGrath

mean I we've Yes. we're that we as George, capabilities accelerate, feel seen. will of very help delivery terms in that strongly they very I really lot us private especially launching think, really large deals that these the cloud of a have

all monetize deals through leveraging to we really us own in-depth So really go knowledge as been think lot our help side that will with they contact big expertise this time center the on these that really -- combined a the have and we've that's of I signing.


Our Vitanza Lance next comes with Cowen. question from

Jonathan Hunter

is on Lance. Jonathan This for

actually noted [raw] recall customers, of improvement in from new -- is logos. in customer first transactions of base, subscription came from is almost quarter, The will. so But comments, bulk on migrations, or my migrations those talked and XXX we're about if from you The How XXX in having you seeing my in we if you the dollars existing our terms comes coming ARR. of wins? much one existing still what the new meaning of

the relatively is adapt, Now of then these logos at many in layer and that renew the you landing size new smaller traditional and a you upsell regard. come difference model

one, quarters seeing we primarily migrations, from quantity is by year, given what So increasing walk the you plan and while outlook company my And is contribution just can dollar within coming to really Understood. converts last the what us that driven new as due thinking your several are it? address the through the over well. is last like overall are the being a and

Kieran McGrath


June had due. with $XXX colleagues obviously, are the aware working in convert. of mean, the we million I that coming 'XX, to well convert we address our So We're banking

But we of the actually point the should several to in think to that months. ABL the have to $XXX convert that leverage doing hand million we prefunding of be or reasonably near out next that convert, million prepayment the the on that. should I also to you in address expect We on act coming will, future just up have we also if it. here also I the also able the $XXX of


Instructions] Our of [Operator with Financial. question comes next Hamed line from the BWS Khorsand

Hamed Khorsand

first the just on question going in that business clarity cloud. this My is into more more model to have you're and ability

projections approach, with sales you're can't outlook? If cloud-first you stable as have faltering why you a going your is quarterly when a always report results. Why

James Chirico

-- me let this So is Jim.

Let me address that.

and the But what's acceleration cloud? a Ukraine on why Kieran question better done pointed of you about how obviously, first, second overall is And in dynamics, going will, the about on, job So as negative think your one first predicting company. couple we the a haven't of revenue more half. to out is going I affecting with performance in had a effect the on if what's that

of customer is our accelerating faster. base, out, address And migration the me second pointed we as dynamic. that's Let that

it's and over hurdle. in the revenue what's you There's the look cloud, private specifically that, a I If We've dig Microsoft take that not, as a accelerating you learned And look on areas is company. the some need and unusual because QX growth both cloud. We QX. in last point-in-time work been really, at private take we the doing in than the at bookings we the look the at And enterprise. contract couple for this driving we in to in times rate mentioned, at we're subscription, and to a activations And optimization that's take quarter had half But that fairness in deals and bookings you that the the and those the magnitude, have you had not this as have And the as that we've we believe recognized the do, of into accelerated more pointed increased. that as look over the obviously, will flexibility solution to in an is When others for was cloud to for contract. lower. second million bringing you of with we part deals record strength subscription. we're move of now that on fairness, quarter. last as the bookings out, and hit $XX of work at as and quarters fairness fact record we increased those to subscription, revenues related growth large

we a quarter. increase pointed in is So not in we the And of but not here, if contract, their not hit just over revenue time. will, saw us time point life in an a point that ratable the decrease, that overall you the bit, significant revenue out rather as first

roughly revenue historically recognize that to have had we So had in the ability XX% around quarter. or so

Going we've need more these that contracts really we've we forward, some taken to the that it the and we're the down, in have as now lower lowered larger aligned to as and and range. larger far percentage of seeing deals percentage what flexibility XX%

recurring moving the the are the in has portfolio increase lost, not revenues had as profile. to that as and just but profile attainment. further overall rebalancing we result of a that lower the continue our a Again, of revenue revenue So percentage Avaya revenues

the enterprise customers, of we it's -- with again, into building a flexibility contracts these our long-term is demand. not more but really loss a reflection of of we're So what

provided the it, and it, you with worked we've repositioned it, that's guidance rebalanced all. update So we've Kieran that to we've taken

Kieran McGrath

this into Jim now, much going and just I just need because pre have been done I and signing. a going more a related And this you're had this I I better what understand, around would think, our know if It's in -- you cloud model I one other back, been we've we arm row subscription point will, us a that, predictable, what built this for is these been easier X If a add where we're deals have get to listen, XXX, realization -- have has transition, have migration quarters maybe that think could has to seen all of that's forward. we've saying. to much longer-term for complication lower that. rates, not now if to you point-in-time we've we

real as private of our well are of business will and I fluctuations. time, these that subscription contracts our public point-in-time think hybrid point more more we significant deals, become to both and start the roll out is through and as signing less see much we'll the ratable they here in and as go cloud, on we

accounting has by. complicated to do getting things, understand but the I a to insight So have this need I into this. job we we that unnecessarily XXX do better live rules that's And think of



you. Thank

Ralph We any session. end have reached the turn of closing for to over back the I like to remarks. now And call question-and-answer the would

Unidentified Company Representative

call. everyone, you, thank conference Well, and all fiscal We second forward look soon, again to quarter us Okay. for great week. speaking our joining morning you for this have with a


This everyone. you, conclude Thank conference. today's does

great your day. may disconnect lines for have your a and Thank participation, You time. at this you