Avaya reports rise in revenue, a huge impairment loss, and upcoming strategic move

Avaya reported GAAP revenue was $717 million for its third fiscal quarter of 2019, $8 million higher than the second quarter of fiscal 2019, and $25 million higher than the third quarter of fiscal 2018 ended June 30, 2018. Non-GAAP revenue(1) was $720 million, $6 million higher than the second quarter of fiscal 2019, and $35 million lower than the third quarter of fiscal 2018. GAAP gross margin was 54.4%, compared to 54.4% for the second quarter of fiscal 2019 and 50.9% for the third quarter of fiscal 2018.

During the quarter, Avaya recorded a non-cash goodwill impairment charge of $657 million related to the company’s Products & Solutions segment. The charge was taken after an interim assessment prompted by a sustained decline in the company’s stock price during the period, which the company believes was due to year-todate financial results and revision of fiscal 2019 guidance. The company’s long-term forecast provided at its December 2018 investor day should no longer be relied upon. Management expects to provide an updated longterm outlook upon completion of the company’s review of its strategic alternatives.

Avaya also noted that it expects to provide an update on a potential strategic transaction within the next 30 days to maximize shareholder value. The company has retained J.P. Morgan to advise on a potential sale of the company.