AVYA - Earnings call transcript Q2 2018

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Operator

Good morning. My name is Matthew and I will be your conference operator today. At this time, I'd like to welcome everyone to the Second Quarter Fiscal 2018 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator Mr. Director Relations, Senior your may conference. of Schuman, you Investor begin Peter

Peter Schuman

and Welcome of fiscal earnings this O'Malley, on Avaya's call. you, for referenced our to Thank Matthew. on are GC QX our commentary CFO; Shefali our Investor the here the and and CAO slides and and call. SEC Jim President accessible year CFO CEO; website. call SVP Pat The website are our today's and page Shah, release, Chirico, investor XXXX investor

may non-GAAP forecasts, statements will current that release that and based we differ on reconciliation earnings and is forward-looking now facts XX make and assumptions, obligation guidance materially. could reiterate are We President to otherwise non-GAAP with and CEO. is over all our our Avaya's today. not GAAP risks including risks is the found on and sequential the be XX-Q, website. forward-looking cause financial SEC, the the or recent or may Form A revise reference Jim? measures our to no numbers Investor and specifically to slides, call update statements available that circumstances It uncertainties to hand change. undertake most will and expectations, the and event of in subject I subsequent our in page noted. earnings Jim filings Chirico, Form policy and reference release remain to Information of results to in uncertainties note such measures year-over-year comparisons actual We our included except and and about

Jim Chirico

results today's as growth actions ahead thank excited yielding and results pace quarter fast strategy call. strong QX I'm full are our our share Thank you, to evidence public that Peter. our moving Good everyone, a first a and record-setting These we're schedule company. and you at positive of performance. is during that drove for morning, joining

to transform journey our continuing the are We company.

momentum We building being by aggressive. are

are and focus a on proceeding with performance We disciplined execution.

even and I'm pleased people with We our are investments And making we're the in early in innovation. are. though where we necessary transformation,

revenues our Excluding This representing years. of headwinds earnings, X% What first were straight our $XXX our stability. we've six year-on-year the more of historically sequential declines. I'm fifth Networking seasonal increase QX revenue the in consistent experienced proud in made is exceptional revenue business, represents non-GAAP resulting to X% even that million. quarter

me quarter. Let some share the from relevant highlights

just performance, record XX% continue of We is to business and six services, quarters. revenue which our increase strengthen the over XX% driving a software last and solidify in

recurring plan, same revenues metrics. new levels records of also and $XXX,XXX increase gross They of XX.X%; non-GAAP of We have drove margin record for XX% quarter XX.X%, employee. and of people the we demonstrating per in right place. in We the system of include: non-GAAP XX%, margin second management operating an operating set the period, over productivity

quarter-over-quarter and $X improve We traction We which one distribution new theatres. channel improved to XX% across XXX partners, X% also quarter deals ecosystem. over over Channel year-over-year. a all Revenues increase X% XX% roughly year-over-year. increase XXX closed a continues is over our and through to signed adding million,

indicators out levels. the sales inventory health including channel channel positive, Additional and in remain

new key our one, solutions; and from quarter-over-quarter gains, revenues, I'll with And with certainly double-digit and professional focus our or not strategy last, to new approximately and areas. Cloud and and for new ahead center segments. consecutive products year-over-year. offers enterprise quarter-over-quarter grew share significant revenues up product We're on Number thirdly, second, a least, more but driven Market in contact in recurring increasing demand XX% strategic introductions midmarket Our several services; third is performance and for innovation. both XX% services showed MRR, quarter, forging This cloud; our strength by for the solutions impressive X% year-over-year. our with improvements moment. XX% monthly

to cloud a be differentiator. one-size-fits-all successful. And a Cloud, on will First our not approach are comprehensive solutions proven

the is cloud, Cloud include revenue way XX% MRR grew SMB, from that as quarter-over-quarter our offerings hybrid, well cloud governmental all a Midmarket agencies. clear enterprises, hold. of up Cloud as Our large and quarter-over-quarter, grew enterprise grew to percent revenue. private, public as indications XX% total MRR transformation taking

Master own others industry's a Intelisys, as leading agents also seat announced new We program. significant and several pipeline. the Master agents stage Cloud. Avaya Agents for will Master selling growth cloud they onboard set in We launched their distributor Jenne the Agent the with as

BPO, end-market our for and recognition, we for represents appointed Finally Avaya a global BPO practice. leader In Cloud. it significant a

APAC announced center solutions. BPOs also our a available in leverages own for operations. our the majority Communications a combined our region, acquisition June be of BPO and capabilities We contact cloud have Spoken This where with will solution solution

that traction, millions Alorica contract a of global their dollar their hundreds and customers. across XXX,XXX closed largest for evidence of operations clients deliver their world's we the to with contact transition As will compelling multiyear, experience one multimillion end contract center of Under customer agents BPOs. of

and services, quality the the highest to available flexible to in delivering continue invest Turning most we industry. UC services and in processes in talent automation CC the

These long-term and best contracts we've services Professional increase value-added a is quarters. succeeding revenue bookings level. the Managed a important XX% maintenance and and these in of business performance this and grew XX% quarter-over-quarter. services Professional more two contract this and validate An quarter-over-quarter. XX% consultative growth was highest partner by a our sign year-over-year. a services years. improved clear quarter-over-quarter And increase service our in Our over than recovery bookings quarter offerings. signified XX% six increased confidence. in the seen that increased X% are a services our value large X% part This to driven of levels also with annual results customer bookings quarter-over-quarter in year-over-year strategy in

We contact space. center are number one in the

and drive customer for clients. value Our technology improved experience focused investments on in provide solutions CC are our that

experience. called the success pleased overall are newest multichannel a Adoption We and by taking We're hold. customer significant unlocking simple performances opportunities offering that is enhance providing multichannel path CC to also improved with migration our Oceana. of the agents'

there are quarter growth. than sequential Oceana bookings times QX, Oceana XXX% new deals. representing were greater This XX over three a over

of pipeline. our Switching I Although, QX. year-on-year. doing are revenues year-on-year sharing declined invest, There XXXX. to previously structure a me capital few investments and also which both growth on QX our and leveraging grew large quarter-over-quarter we sequentially contact new details to solutions. recognized bookings, clear let was CC a products related improved was minutes in increased since our the average how that which X% gears, largest fiscal contract in spend innovation and center to deal X% the fuel size discussed was in

we've Excluding investments last invested in excess Networking, million approximately in last just quarter-over-quarter, an just X% increased we and of year. $XXX in technology

During AI, multichannel, and we several new cloud, and said, I products messaging, of this period, solutions new significant products launched quarter-over-quarter, mobility, endpoints. as And revenues video, contact showed new XX% in year-on-year. and center conferencing, from XX% growth

on XXX and total calls. me we solution cost for Avaya launched a solution for of Let numbers inbound minute numbers. incoming as This called automatically them from changing a Mobile mobile contact reduces mobile-to-mobile detects calls game treats the mobility, spend centers expense Experience. This

for agent. personalized In addition, significant the number contact more of in the the with from artificial caller launched centers. experiences world solutions We three benefits intelligence a also of

implemented AI application, being to with languages Ava. we of the connects center Ava and framework messaging the it's and with any announced infrastructure. customers. processing natural time uses today, that allows bots already operate in in to is First, Ava XX is it real available contact availability language nearly several

IntelligentWire acquisition. calls. we productivity. and with Secondly, the transcription real This announced automatically dialogue time IntelligentWire, and of availability Spoken and offers significant for that agent offering time saves contact center came increases summarizes

focused UC, expanded range trends. organizations announcements. Avaya key applications of solution for endpoint on market solution and also phones, increases pair the a is to are cloud that dollars We with businesses that to callers specific billions for ready. redesign already drives analysis received customer growth We're customer new to a and customer entry customers user which our a our that Afiniti. to services respond of the made This also voice agent of future drive and with major major [ph] us called in profitability productivity. moods This We strategic programmable in Edison launched business, devices new number track proven data agent with our signed fiscal quickly Afiniti a and SIP Blockchain of improvement to we We This we a In first better covident line enables more the solution model. like XXXX. that also delivering this Open and Avaya needs. I'd Award Happiness our experience meet joined helps signed partnership a add quarter best level quickly Index, growth enables a globally. also positions investments technology new their for of to android to video

addition, emergency Spoken and of strategic safety. launched In which drive the includes and of We various vertical solutions installed customers a And base legacy facilitate we continue transition include to the services program through that health Afiniti. we to accelerated and and loyalty introductions customers partnerships, cloud. partners innovation acquisitions hospitality, for to care, public

We transform to customer value. to are the consistently business differentiation create businesses and help to exploring new ways experience

more you'll on calls in hearing to the this much So front be come.

of business our our maintain execution model. noted leading EBITDA strengthen our envelope committed. As before, approximately XX% continue as we I focus to margin We industry

levels, the team We cash any goes the quarter-over-quarter in returning our to of new We $XXX worldwide Maintenance quarter X%. support serve the Xx working list for XX% thank cash and are in ample especially business services to a greater logos the connects. on, transform renewals and increased transformation by from year-over-year, our second strong each clients and measure with X% quarter. than in to to historical and quarter. the over over member way Avaya double-digits. excluding grew Cloud generating I'd [ph] in are Networking. million the product to high like generating just operations businesses on and added cash X,XXX and flow passionately to for mid Bookings

we're direct to for on in revenue stage teams' is set XXXX XXXX results for win, Our a The The beyond. clear. the the to and is and growth We fiscal reflection started. and fiscal are track transformation remain objectives getting evidence of our just progressing. commitment achieve

details Pat? Pat, for Now, our quarter let through financial the and the you outlook. will me it to over turn take who

Patrick O'Malley

fiscal effects to XX.X% Thank related the year you, website, in XXXX. was fiscal in as the revenue to on fiscal points, aid percentage reflects in today, same and year X% currency, business Non-GAAP our and that was year million SG&A relations reference above result declined addition slightly the improvements, product prior $XXX business. for XXXX emergence. of the X% during to improved QX revenue the $X of and some sequentially. ongoing structure running and expenses issued grew that year seasonal well understanding year anticipated XXXX to R&D QX margin $XXX the At of and year-over-year QX and offset calendar of cost due year-over-year higher foreign compared and revenue excluding period benefits XXXX, XXXX financial highlight a The to was now XXXX second was improved during expense planning mix mostly from mix. X% the that Non-GAAP a better by lower has declined gross in related year basis be QX Non-GAAP points I'll year-over-year lower increased The was productive. a our to former are costs more obligations operating $X and QX lower fiscal million sequential from reflect fiscal by non-GAAP result, the QX and exchange of and fiscal the structure tax QX sale the results compared business XXX year million result volumes. year basis. than fiscal on make productivity the rates. Networking reflecting SG&A Any are year after Please fiscal up was additional combined plus product from $X XXXX. higher a XXXX. exit fiscal slides fiscal earnings XXXX, reductions to and higher than basis will of Revenue Avaya's constant Avaya's administrative Jim. sequentially higher Networking results year-over-year increase call compensation employee of approximately results. year million we QX XX gross QX CFO of from XXXX. the along start decreased expenses, the by quarter record $XX points at part and margin million XX Avaya million result SG&A commentary of posted your non-GAAP to in this Compared have of also investor higher note release to with been continued generally Networking year QX financial

million commitment level of fiscal expect to totaled costs continue to Non-GAAP some fiscal fiscal start year on XXXX. before QX GAAP million an of for expense customer million products our XXXX. from enable year remain excluding fiscal of year for quarter an operating and base $XXX and for or a year, $XXX to R&D $XX expand year We or our XXXX. and increase of Adjusted that million was revenue the non-GAAP and for represented year increased year-over-year was Non-GAAP XX.X% fiscal largely continued R&D QX percentage a drive increase be record but revenue expense will EBITDA business these The innovation result. fiscal is $X XXXX. Networking allows in non-GAAP $X spend of of second to the QX complete income XX.X% growth top-line technology R&D us the XXXX. million revenue,

With XXX were million. points had benefit to taxes going XXX an basis we during additional acquisition of to appropriately new year offset lose fiscal rate XXXX, $X forward, Taxes, business scales of the we EBITDA that adjusted until Cash costs. quarter QX X.X%. tax effective about the this current the will Spoken, on

we effective model. point, provide of a of for not tax until fiscal Given rate. measure Therefore, accounting, tax the our should our long-term beginning fresh our effective long-term year fair of rate effect that effective XXXX quarter, year effect will tax cash more each is tax of fiscal indicative At XXXX. the a rate start our be

credits, cash about XXXX to XXXX. of $XX U.S. year year $X Due approximately tax quarter not a expect million taxpayer we year. foreign this fiscal operating We million and loss to are of for each of remainder only fiscal pay in taxes taxes expect the

the of to required million, $XX million full on and Turning $XXX of million to basis, that deferred the sales fresh fiscal loan in million, of basis to of a on start to same use pension sequential to by of compared of and QX go and increase roll this in revenue cash the XXXX. by start forward as the fresh $XX a intangible equivalents interest up XX cash and would in $XX Depreciation cash payments XX, netting million at and XXXX, reported receivable the approach a XXXX, basis. XX of will for result the $XXX $XX assets basis accounting, sheet, XX, includes we of QX increase of depreciation which acquisition fiscal provided days as primarily prior days start payments $XXX fiscal XXXX, the sequential operating reported. as year result based end which charges, million in their from Accounts at of non-GAAP approximately on principal accounting of the and accounting, have quarters. AR been compared QX effects million a from of fresh for approximately XX as XXXX QX equivalents $XXX year the were days, Spoken through cash fixed balance values sequential quarter subsequent during XXXX activities Communications, is offset $XX The using of change term and contributions. The was revenue amortization a the million QX was million primarily March is $XX versus quarter. of and cash the fiscal Days restructuring year due approach on fiscal a XXXX. $XXX year outstanding end December million On it totaled in to $XXX sequential continue impact million amortization million we fair approximately

years, for assets. depreciation with and higher the the underlying level aligned next as expect of few this impact We has fresh consistent the start to at be accounting fixed amortization

while year at improved demand a bookings the XXXX, business, X%. QX Looking increased by a sequential basis X% for indicators on fiscal Networking on year-over-year excluding bookings basis

the in Excluding a on as year, was while million prior X% Networking $XXX the of model. a the XXXX, a lower Networking million during quarter. XXXX year-over-year, of increasing Service and remainder saw to a from sequential $X a result more from result of basis down $XX the a as $XX continued currency, revenue maintenance less revenue million improved fiscal customer bookings consumption business, of constant basis. of in QX models X% sequential OpEx the million with sale the from QX of decline fiscal business, revenue service the the We immediately stabilization only CapEx of a shift preceding on

highlighted, Distribution Networking has many Jim the sequential of revenue strong our and As improvement highlighting channel, million of year-over-year, X% $XXX revenue excluding to gains product of was lower this our and have posted service part of grew channel the components X% sequentially. business. the reported

product and channel of to more As product when distributor two-thirds to we total than recognized our is a revenue. for revenue the reminder, sell-in account continues

the I increase to to efficiency Before to financial organization. productivity discuss committed of the I'd continue we outlook, like remain operational and the mention,

support software services continuing while focused product our additional to structure a invest Moving maintaining we driving cost in forward company, and and portfolio improvements, satisfaction. on outstanding are customer as and

to R&D, and million; to Finally, we $XX XX% into are $XXX to to or now net diluted of adjusted continued of in targeting the Revenue the operating non-GAAP our operating XXX forecast loss million GAAP EBITDA $XXX million. fiscal loss Adjusted $XXX million. sales are Cash million $XXX $XX of taxes includes $XX QX investments OPEB of revenue Taking cash be: $XXX $XX tools shares interest of we following people, the interest margin enablement, to Total a $X the for million improve for of million $XXX loss restructuring, million $XXX million, in acquisition, and acquisition future year growth. that $XX million; to operating $X.XX taxes of expected income XX% This stronger additional GAAP XX% operating XXXX. requirements $X ongoing impact efforts EBITDA million non-GAAP pension Spoken, GAAP of capital CapEx non-GAAP financial Spoken non-GAAP operating million; for of consideration X% and million Avaya's of $XX of to $XXX revenue; and outstanding. of expense and million; model are per revenue, efficiencies, building share. of year of restructuring Avaya's supports XX% X.X% million profit million, non-GAAP OPEB, of spending cash revenue. $X.XX pension third fiscal expense approximately to cash approximately XXXX to taxes, $XX million; to million. to investment approximately

Turning fiscal year to the outlook. XXXX

fiscal are only XXXX year as year the will March We full update acquisition provided million $XX of XXXX X, call. a previously result to by the a we our QX the for previous fiscal fiscal EBITDA decreased earnings Spoken. XXXX have of on year is year The be outlook

turn to additional over it like to I'd Now Jim for some remarks.

Jim Chirico

you, Pat. Thank

Let before ahead company. for We're few outstanding me the our focus execution thoughts of over turn Q&A. drove it our on and an plan, performance share for we QX

our more which as in past We customers quarter. the were and all-time both are this delivering high revenues, resulting a service, technology, more in software wanted, recurring way

and support. and and XXXX. year you driving for following results Q&A. end closing, board, it to partners thanking leveraging positive priorities, to dedication our people playing With building innovation, focused the focus our on In transforming over offence, to the that, like and fiscal continue now setting company, in I'd momentum, for we financial on growth are the in across that enhancing Matt, I'll begin strategic by customers their investing to the We turn and flexibility. employees, our and stage

Operator

[Operator first comes Cowen. question line Instructions] the from Vitanza Our Lance with

open. is line Your

Lance Vitanza

acquisition. for limit focus to one, on thanks guys, Hey, Hard but me question. the to Spoken taking just it let the

done, the them follow-up done. XX% that stands. already it with makes And So I that faster, I if XX% the any you integration working and Is where were easier, can. wondering a acquisition. then I'm have before any if process

Jim Chirico

This thanks. Lance, is hey, Yeah, Jim.

working because developing been have We they platform. doing, was what actually with the were Avaya they Spoken, purpose-built were what for

other. as number thirdly, a all So from actually we a sense it made market out, a fronts, secondly, of technology first from to perspective; pointed knew you time integration perspective; on of each

Cloud completed. As is the we and are as place. integration we in organizations roadmap that to defined. further are where for we're And of with level improvements enhancements continue our are execution. out platforms build the integration, continuing The far as The on

are the and went in teams fairness, now the So the resources with all Avaya say combining as smoothly Spoken I that working would together integration one. where

might deployment in as As I forward. accelerate our cloud to to Canada add folks continue technologies our newer Zang well going of

Lance Vitanza

Okay.

Patrick O'Malley

model. this And, we We that we one I'd XX the acquisition add that Lance, that synergies and when I - that when would to months get just bit talked the when we made - of more add color. talked the make - to accretive about make to had to product XX rolling to we about

So we still believe that.

Jim the As are integration is the aligned. organizations said, -

to as that. you time. now If top-line these says purpose-built, It But should to do see customer XX know start through of that deploy actually we getting meaningful months. a the be but as XX but little synergies have and bit the so, takes easier, existing that's start And we of sooner, little seems organizations. things, in we as one given a this still our it certainly base, great, Jim that could to that integrate we

Lance Vitanza

Okay.

then, suggest the So million the $XX in that closed so transaction you does the mean, reduction that guidance, I that March. to then,

or so XXXX in of X.X So the it's number. time about months

$XX million? on the the does about So you I'm suggest sort may more that think Spoken therefore, trying of burn annual quarter reported. And then had to that impact that rate guess, the it that just I like is the at have

Patrick O'Malley

quarter. million, $X significant had on million the to $X $X had it million about just it quarter million, so we and this some in only $X So wasn't change,

the consideration true $X.X for on you million, GAAP it's all have like the operational there. more, would Now, million. have $X But because

say million nothing that - on. you to could million, year. imply full I going That $XX So a accelerate would would is for $XX

get you start as revenue update seeing it over rolled some that's, year It's getting significant. our there, this We'll revenue but So could and guide. it's you'll see, not didn't we customers top-line little muscle through we're putting the period, manifest into extra that a and through the But of itself them make synergies rest P&L. a and of some gets super-charged. for sure

And we those feel XX numbers comfortable could that comfortable to the so up. and we do with XX freed be months like with feel this

million, So that'd I if and less should goes less model really fine. get wouldn't as be fiscal go but $XX that's all on. But drag you now the have right think we XXXX I

Lance Vitanza

Okay, you. thank

Jim Chirico

Sure, thanks.

Operator

comes question of next Our from Lenschow line Barclays. the Raimo with

Your open. is line

Mohit Gogia

Thank dialing guys. Thanks my in for taking for you. Raimo. question Gogia It's Mohit

wanted innovation. evolving just I how contact product positioned improve the market going offerings, why is center your - competitive be of the in Jim, understand forward. its - take share, it you how its see going on to So, continuing landscape And sort to so to take

their [ph] center move seen So into contact APN center vendors have which at recently Connect another [ph], the contact Twilio non-traditional low-code conference. announced contact non-traditional some center. market. vendor we entering offering into saw We is Enterprise

was just for going the an why you influx Avaya how in to to and how question. market seen maintain non-traditional Thanks space, vendors forward? have this as of in So position positioned its taking is my do we think I curious

Jim Chirico

Yeah, you sure, very thank much.

you take to I need of a at sort segments. it think look by

excited, high We're can to I sure a obviously fuel demand. sign. which see are starting we kind innovation continues first, end, starting is some bookings. positive to we end, us customer meet to competition that So get do our our your think at make increase, see funnel strong high at of the first

And and with partnering still on provides our to the that through top out Oceana in build extremely voices think building we of product either technologies, new with that landscape line, profit the I opportunity really are that multichannel space. real center. market and the that agree differentiator bring and center continue to cost opportunity center, differentiated a or continue to some changing like a productivity, to just and really the world we can of others think capabilities, in folks Afiniti not mobility that and we're through a then to with a I leverage to certainly us mature contact EZ, competitive and To bringing the degree AI be continue don't to coupled of solutions the in from TCO, share. being one number gained we and and remain have, being

I think we're positioned continuing number at look to our expand there and well to continue position ways to one that. we're

think are On space, get center bit the cloud from a you sort little mid-market contact will which is a perspective, if more starting of to I we spot. in good

We have and We space. we'll see to that remain competitive center solutions increasing. in be announcing a number contact of our revenues

generating BPOs BPOs. part significant on XX half day. largest believe deals. the We're And we're our just but funnel days is we're ago, significant really of in is for seeing I better and I mentioned, I last number The with product hold. As in bookings, not least, cusp is new of large year-on-year of up. met I up take adoption just was XX up. with traction the Oceana finally a to Singapore of starting a what

marketplace. flew of in amount excitement. in. term we there understand While They they and of that I to And were Singapore all is out lack a to would we're significant our down say build really for looking double technology better forward

which is competition the forward, one space, consolidating, in CC see you as to into more think we with the the space, is we whether space, So, well move of sort yeah, is quote platform space, midmarket are competitors, UC fierce, I do SMB I they get we're you're think as move the compete unquote, of forward. common go reasons why seeing CCS, I positioned platform. But

certainly quite So our strong. innovation pipeline is

Mohit Gogia

Thank you.

Operator

of Our with next line Capital. question Mike Latimore from comes Northland the

Your line is open.

Mike Latimore

a Thanks there. Nice lot. great. quarter Yeah,

- seasonal quarter. talked normal In of patterns sort terms March of the about in the you revenue

down a too? the to typically a normal kind there little March What being booking of quarter? Do grow said X% sequentially you sequential is pattern - in X% think I bit sequentially. they decline or

Jim Chirico

Mike. to pretty Jim. This hand They much go Yeah. hand, is

well. they're sequentially down So as

There is for that reverse trend of taking heel our we've not of we company we extension an second fact and hold, last has the And the is a long certainly with have lot lot very quarter. our to distributors system. the our products The that. new A friction years effort Avaya. been worked least of partners, have. associated partners. with quarter a that XX into on community. that sort and our hard Achilles' They close the the we and lot at And was spend hard time of We've least fact and that worked of here. been with long but potential this products the obviously partner able of partners, now back in that But we're or as always of business well, and with amount been put are the both then I've noise going services with

So it's we're I a the sort forward completely past. reasons quarter, looking go-to-market in believe had in second we that in to of one has the here and motion corner move years move And different future. the company as that's sort of turned we the into of

Mike Latimore

percent did Cloud? in just grew And just of think want I Cloud, on double-digit. you then then Great. was that you to And that. that second, say what I clarify said revenue

Jim Chirico

It's overall points so company. from roughly percent of as the revenue for in grew up XX%, or Cloud quarter. X the about a previous X%

seats to and now We're north it grow. well of growing. X continues So million

quarter of quarter on up percent around so. overall, right X% it's revenue, but - of revenue, So XX%

Mike Latimore

it. it, I Yeah, got you. Thank I got

Operator

next of Khorsand with Hamed Our the Financial. BWS from line comes question

open. Your line is

Hamed Khorsand

changed? the quantify these morning. customer bit talk your approach Are has new about you that and good base of could could route? some bit want strategy are what more the Or more detail, about to logos you and the enterprise just how you SMB a Hey, forward. a it are going just here If get and Hi, to provide you market customers? like they if X,XXX little try changed go provide kind on details little has more you

Jim Chirico

the so obviously Yes, channel. are the driven by X,XXX

then, obviously quarter. the channel associated those over with as we I are Some of on grew quarter partners XXX partners. said, And channel

space large say, would I look, portion more SMB, you midmarket those of If are a your obviously. of

that much haven't be certain than cloud extremely more space before. more looking the very we to all space fairness past. importantly, I competitive, in have where we in are played, in disruptive SMB the believe We fairness in can within penetrate we be

roll that So to we're beginning out.

it's an think for I opportunity clearly us.

we been of presence. through and early, sure SMB it's is partners. midmarket. of But make smaller that a certainly Most have most that driven the has we'll of your sort strong So channel to that in but focused

Hamed Khorsand

customer just adding, hey, these up then as and actually signing And channel that partners just of again? far new activity onboard just channel channel some from a you are seeing saying, coming Okay. Are you're that partner? follow-up, are partners we're they the sort as

Jim Chirico

roughly Well, know, more. about, don't quarter or X,XXX a I of we've adding last four quarters been partners just north for the a channel

you enablement off is required if one to up will. sign speed get an there them you as So process, that's to

particular signed the quarter, So and we ones signed, we QX indeed QX have in But generating generate this all revenue. in that didn't the up revenue. our fairness, ones are our

in fill the suggests that pipeline will. if you X,XXX So to it's continues a -

so forth. from get So they'll process, or up process, so XX certification to XX anywhere takes so days through start. Typically, on and it the enablement them to

in little the future this of stage, very as but revenues for quarter, I building setting that growth. was the So said, pipeline

Patrick O'Malley

for see enablement it's strong so to it's reach maybe not [ph] If partner, an you actively not is We we or some because time. or and up and someone - stiction revenue of the Yeah, traction, channel going manage don't we that. that's sign really to go getting this out you partners long the want Pat. and generate whether

a have tail are But in analysis there with that. well costs Jim do we these. as startup So as said,

And current but monitor - We're we couldn't get up beyond health actually of then one of obviously running. our generating. two and reach, you to them and start got all quarters And the to partners. they so,

Hamed Khorsand

Thank Okay. you.

Operator

And our of next line question comes from with the Invesco. Jost Rob

Your line is open.

Robert Jost

thanks. here. got looks what a pieces Hey, bit that was you me And the the of I through It get exchange. of And wanted if that. could from noise I start benefit benefit moving EBITDA the was with a wondering the all foreign you some to like to of net kind of ForEx? help from

Patrick O'Malley

was million and hit the SG&A we $X was through it lot the if a on of bit a the of benefit. actually sales given lot overseas we even we're had sales it you actually we And have and we So team had had a look - that, marketing top-line and take expense drag a net quarter. OpEx went other a through to million, P&L. this the $X un-hedged, - it, almost the income/expense. the the of But net But

Robert Jost

of of Okay. the versus has your talk SMB win-rates your bit other, the particularly Cloud a - can on how That's space? been you on then really some about And helpful. kind strategy, how

Jim Chirico

Jim, - is actually We Rob. this

space - partner. actually through most driven SMB it hard, because is we So on it's of the pretty

actually So front space, We because SMB that distributor distributor, don't certainly of me, report we rates. of in a through we driven lot rate, on I win/loss is have bit more don't Obviously, go, direct. that. a But the for have partners. actually win

track at we So necessarily don't it level. that

Patrick O'Malley

to that's up, well, up Agents give be space Jim that served sign And - well there. been mentioned, some Master As signing effectively we've will because to that as as those. a - that we the starting insight we've very been our onboarding us that's

we're Cloud early the obviously, innings of the transition into we - well the SMB. us in So is as believe

there, As Jim that and earlier have game said, but think there. the in offering growth competitive has offering for it's expand. we been obviously, But a we us there will

Master working that. Agents we should more with expect see So by enabling the to partners, and of our

Jim Chirico

prem have on as The in we one thing I that growth are can in both add and and seats. I to mentioned our seen is cloud -

increased. they've So

Secondly…

Robert Jost

That's helpful.

Jim Chirico

aggressive a financial decision. can playing of to going our as you that tell said, are advantage Secondly, I we're a bit I mentioned, more - to, flexibility. mostly the offence, take that's I we become price as going

So deals on we lose going are not based price. to

that we other make an is that. So have of that sure we few one take own Then actually to our advantage endpoints. we we're of the the have are point going advantage, actually because

are capability, do promos endpoints. to of the announcements. our some the will, some We're own you and taking leverage, of because we So manufacture opportunity our taking if we

more more as opportunity to believe and we advantage a competitive that's going So become there. we for the us, have of because

we So saw now I of seats. advantage whole refreshed come profits will that we a on continue we as as to But of said, gaining space. And that take margin. endpoints have to that as And line record as that. sure I We mentioned. far make just we more announced we're

about we're opportunity So, we're us. but - early, there the excited it's for

Robert Jost

it. Got Thanks.

Operator

questions time. There are more over at to I'll this Peter. no turn the call back

Peter Schuman

Matthew. you, Thank

fiscal joining and on During TMT York at this XXXX, welcome the Bond May & York always our New XX. Company the quarter the Conference contact for Barclays Loan any Syndicated be call. today's XXX-XXX-XXXX in in & Conference at New Springs with investors the concludes City, at In Avaya Thank May on its will XX Cowen questions High Investor third meantime, you Colorado you're Yield meeting us and to arise. department Relations that

Jim Chirico

Thank you.

Operator

you. concludes your today's Ladies quarterly earnings that and gentlemen, Thank Thank participation. for call. you

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Avaya (AVYA) 10 May 182018 Q2 Earnings call transcript