Avaya Holdings Corp. Debt decreased slightly on 1.8%
11/18/2020 • About Avaya Holdings Corp. (
$AVYA) • By InTwits
Avaya Holdings Corp. reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
- In the last 5 years the company invested considerably less than D&A: $285m vs. $415m
- The company has unprofitable business model: ROIC is -11.3%
- It operates with high leverage: Net Debt/EBITDA is 77.9x while industry average is 18.4x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Avaya Holdings Corp.'s Revenue showed almost no change in FY2020. Annual revenue decline showed slowdown in FY20Q4 - revenue increased on 4.4%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 2.1 pp from -1.0% to 1.0% in FY2020.
Gross Margin showed almost no change in FY2020. SG&A as a % of Revenue increased slightly on 0.59 pp from 34.7% to 35.3% in FY2020.
Net Income margin showed almost no change in FY2020. During FY2016-FY2020 Net Income margin topped in FY2018 at 114% and was declining since that time.
Investments (CAPEX, working capital and M&A)
In FY2020 Avaya Holdings Corp. had CAPEX/Revenue of 3.4%. Avaya Holdings Corp.'s CAPEX/Revenue increased on 3.4 pp from in FY2017 to 3.4% in FY2020. Average CAPEX/Revenue for the last three years was 3.3%. The company has spent a lot to CAPEX (327% of EBITDA) which didn't stop revenue from falling.
Return on investment
The company operates at negative ROIC (-11.3%) and ROE (-88.5%). ROIC decreased slightly on 1.5 pp from -9.7% to -11.3% in FY2020. ROE dropped on 48.5 pp from -40.0% to -88.5% in FY2020.
Leverage (Debt)
Company's Net Debt / EBITDA is 77.9x and Debt / EBITDA is 102.1x. Net Debt / EBITDA jumped77.9x from to 77.9x in FY2020. Debt decreased slightly on 1.8% while cash decreased on 3.3%.
Avaya Holdings Corp. has no short term refinancing risk: cash is higher than short term debt (1,483.7%).
Financial and operational results
FY ended 09/30/2020
Avaya Holdings Corp. ($AVYA) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 3,702 | 3,272 | 2,851 | 2,887 | 2,873 | -0.5% |
| Gross Profit | 2,245 | 1,999 | 1,505 | 1,575 | 1,580 | 0.3% |
| SG&A | 1,413 | 1,282 | 1,152 | 1,001 | 1,013 | 1.2% |
| EBITDA | | | 326 | -30 | 30 | |
| EBIT | | | -89 | | | |
| Interest expence | 471 | | | | | |
| Tax | 11 | -16 | -87 | | | |
| Net Income | -730 | -182 | 3,264 | -671 | -680 | |
| Stock Based Compensation | | | 19 | | | |
Balance Sheet
|
|---|
| Cash | 336 | 876 | 700 | 752 | 727 | -3.3% |
| Accounts Receivable | 584 | 536 | 377 | | | |
| Inventory | 153 | 96 | 81 | | | |
| Accounts Payable | 338 | 282 | 266 | | | |
| Short Term Debt | 6,018 | 725 | 29 | 29 | 49 | 69.0% |
| Long Term Debt | 0 | 0 | 3,097 | 3,090 | 3,015 | -2.4% |
Cash flow
|
|---|
| Capex | | | 74 | 113 | 98 | -13.3% |
| Acquisitions | | | 157 | | | |
Ratios
|
|---|
| Revenue growth | -9.3% | -11.6% | -12.9% | 1.3% | -0.5% | |
| EBITDA growth | | | | -109.2% | -200.0% | |
|
|---|
| Gross Margin | 60.6% | 61.1% | 52.8% | 54.6% | 55.0% | 0.4% |
| EBITDA Margin | | | 11.4% | -1.0% | 1.0% | 2.1% |
| EBIT Margin | | | -3.1% | | |
| SG&A, % of revenue | 38.2% | 39.2% | 40.4% | 34.7% | 35.3% | 0.6% |
| SBC, % of revenue | | | 0.7% | | |
| Net Income Margin | -19.7% | -5.6% | 114.5% | -23.2% | -23.7% | -0.4% |
| CAPEX, % of revenue | | | 2.6% | 3.9% | 3.4% | -0.5% |
|
|---|
| ROIC | -17.0% | | -17.8% | -9.7% | -11.3% | -1.5% |
| ROE | | | | -40.0% | -88.5% | -48.5% |
| Net Debt/EBITDA | | | 7.4x | | 77.9x |
| Interest expence / Average debt | 7.8% | | | | | |
People
|
|---|
| Insider ownership | 1.2% | 1.2% | 1.2% | | | |
Avaya Holdings Corp. ($AVYA) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 715 | 682 | 721 | 755 | | -3.1% | -3.8% | 0.6% | 4.4% |
| EBITDA | 122 | -477 | 176 | 197 | | -26.9% | -409.7% | - | 23.1% |
| Net Income | -54 | -672 | 9 | 37 | | -700.0% | - | - | - |
Balance Sheet
|
|---|
| Cash | 766 | 553 | 742 | 727 | | 3.1% | -24.8% | 1.8% | -3.3% |
| Short Term Debt | 51 | 56 | 107 | 49 | | 75.9% | 93.1% | 269.0% | 69.0% |
| Long Term Debt | 3,020 | 3,024 | 3,031 | 3,015 | | -2.4% | -2.2% | -1.9% | -2.4% |
Ratios
|
|---|
| Gross Margin | 55.1% | 54.4% | 55.1% | 55.4% | | -0.0% | -0.0% | 0.7% | 1.1% |
| EBITDA Margin | 17.1% | -69.9% | 24.4% | 26.1% | | -5.6% | -91.7% | 95.7% | 4.0% |
| Net Income Margin | -7.6% | -98.5% | 1.2% | 4.9% | | -8.8% | -96.7% | 89.5% | 9.6% |
Peers in Application Software
Below we provide Avaya Holdings Corp. benchmarking against other companies in Application Software industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | - | -0.2% | -95.9% | 34.9% | 355,942.4% |
| AudioEye, Inc. ($AEYE) | - | 175.5% | 106.6% | 90.2% | 90.2% |
| Cloudera, Inc. ($CLDR) | - | 57.2% | 42.6% | 28.9% | 65.5% |
| Integrated Ventures Inc ($INTV) | - | - | - | -8.9% | 62.7% |
| Smartsheet Inc. ($SMAR) | - | 64.3% | 66.1% | 59.7% | 52.4% |
| |
|---|
| Median (92 companies) | 12.0% | 15.7% | 15.2% | 19.5% | 14.7% |
|---|
| Avaya Holdings Corp. ($AVYA) | - | -11.6% | -12.9% | 1.3% | -0.5% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Aware, Inc. ($AWRE) | 90.3% | 94.6% | 92.3% | 89.7% | 92.8% |
| Alteryx, Inc. ($AYX) | 81.3% | 83.4% | 91.0% | 90.6% | 91.1% |
| Autodesk, Inc. ($ADSK) | 85.2% | 83.2% | 85.2% | 88.9% | 90.1% |
| Smith Micro Software, Inc. ($SMSI) | 73.2% | 77.9% | 83.5% | 90.9% | 89.9% |
| Cadence Design Systems, Inc. ($CDNS) | 85.9% | 87.8% | 87.9% | 88.6% | 88.6% |
| |
|---|
| Median (89 companies) | 64.2% | 64.6% | 66.0% | 68.4% | 70.6% |
|---|
| Avaya Holdings Corp. ($AVYA) | 60.6% | 61.1% | 52.8% | 54.6% | 55.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | -1,837.2% | -1,118.0% | -40,379.4% | -23,127.1% | 52.2% |
| j2 Global, Inc. ($JCOM) | 41.7% | 36.5% | 35.7% | 38.6% | 40.5% |
| Intelligent Systems Corporation ($INS) | -5.4% | -12.8% | 33.6% | 43.6% | 40.4% |
| Adobe Inc. ($ADBE) | 31.2% | 34.2% | 35.3% | 35.8% | 39.7% |
| SS&C Technologies Holdings, Inc. ($SSNC) | 34.9% | 37.9% | 27.7% | 38.2% | 38.3% |
| |
|---|
| Median (89 companies) | -5.3% | -3.7% | -3.3% | 4.5% | 7.7% |
|---|
| Avaya Holdings Corp. ($AVYA) | - | - | 11.4% | -1.0% | 1.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| MicroStrategy Incorporated ($MSTR) | 0.5% | 0.8% | 1.4% | 2.1% | 234.8% |
| Integrated Ventures Inc ($INTV) | - | - | 199.9% | 15.2% | 27.2% |
| Intelligent Systems Corporation ($INS) | 3.8% | 9.7% | 4.3% | 4.9% | 19.2% |
| LivePerson, Inc. ($LPSN) | 5.5% | 7.9% | 8.8% | 16.3% | 11.4% |
| PROS Holdings, Inc. ($PRO) | 4.7% | 0.8% | 0.7% | 2.1% | 11.3% |
| |
|---|
| Median (87 companies) | 2.9% | 2.3% | 2.4% | 2.9% | 2.5% |
|---|
| Avaya Holdings Corp. ($AVYA) | - | - | 2.6% | 3.9% | 3.4% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | -210.9% | -256.8% | -416.3% | -247.2% | 137.3% |
| Manhattan Associates, Inc. ($MANH) | 99.3% | 102.5% | 80.9% | 71.7% | 53.4% |
| Citrix Systems, Inc. ($CTXS) | 16.1% | 16.7% | 25.2% | 29.8% | 33.5% |
| Sonic Foundry, Inc. ($SOFO) | -18.1% | -50.6% | -786.4% | - | 31.3% |
| Paycom Software, Inc. ($PAYC) | 75.4% | 51.1% | 47.5% | 47.5% | 28.7% |
| |
|---|
| Median (92 companies) | -9.2% | -11.0% | -9.8% | -4.2% | -1.8% |
|---|
| Avaya Holdings Corp. ($AVYA) | -17.0% | - | -17.8% | -9.7% | -11.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Dropbox, Inc. ($DBX) | - | -3.8x | - | 2.4x | 1,341.0x |
| Alteryx, Inc. ($AYX) | - | - | 2.5x | 6.1x | 32.2x |
| Five9, Inc. ($FIVN) | -6.7x | -8.6x | 7.3x | 5.3x | 17.6x |
| Synchronoss Technologies, Inc. ($SNCR) | - | - | - | - | 11.6x |
| Cornerstone OnDemand, Inc. ($CSOD) | - | - | 5.5x | 2.3x | 10.9x |
| |
|---|
| Median (53 companies) | -0.9x | -0.8x | -0.7x | 0.4x | 0.0x |
|---|
| Avaya Holdings Corp. ($AVYA) | - | - | 7.4x | - | 77.9x |
