Avaya ups Q2 revenue outlook amid contact center as a service, collaboration, and cloud demand

Avaya said it signed 119 deals in the first quarter with a total contract value of more than $1 million.

Avaya gains traction, leverages its enterprise footprint

Avaya said its second quarter sales will be stronger than expected due to strong demand for its Avaya OneCloud and Cloud Office services.

The company projected second quarter revenue of $710 million to $725 million with non-GAAP earnings of 70 cents a share to 82 cents a share. Wall Street was expecting earnings of 84 cents a share on revenue of $705.2 million.

For fiscal 2021, Avaya is projecting revenue between $2.9 billion to $2.94 billion with non-GAAP earnings of $3.05 a share to $3.37 a share.

Jim Chirico, CEO of Avaya, said the company's early investments in cloud and collaboration tools are starting to pay off.

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On a conference call with analysts, Chirico said:

Our success is not just from activating our massive base. In fact, Q1, we signed over 1,600 new logos, displacing a significant number of competitors. What's especially noteworthy is the mix shift to new logos consisting of cloud and subscription. In Q1, 40% of new logos were cloud and subscription, an increase of 29% from the prior quarter. Our ability to sign new customers in a highly competitive market underscores the advancements we made and our investments in new solutions will continue to contribute in a bigger way each and every quarter.

Chirico added that Avaya OneCloud, which can run on public, private, and hybrid clouds, and contact center software saw strong demand as both play a key role in digital transformation and remote work efforts. He also said contact center as service efforts are also seeing good traction.

CCaaS was a major growth driver. And our new public CCaaS offering is live now in the U.S., U.K. and Ireland. And we are rolling it out to more than a dozen countries throughout the year. We also continued to expand the solution by adding omnichannel and AI capabilities that are reshaping agent and customer experience.

Avaya's CCaaS can utilize Avaya's conversational AI as well as tools from AWS and Google.

The better-than-expected revenue outlook landed amid mixed first quarter results. Avaya reported a fiscal first quarter net loss of $4 million, or 6 cents a share, on revenue of $743 million. Non-GAAP earnings for the quarter were 90 cents a share.

Wall Street was looking for first quarter earnings of 95 cents a share on revenue of $723.7 million.

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Avaya said it signed 119 deals in the first quarter with a total contract value of more than $1 million. Of those deals, 14 were greater than $5 million, and six were more than $10 million. Three deals topped $25 million in total contract value.