Avaya (AVYA) To Report Q1 Earnings: What's In The Cards?

Avaya Holdings Corp. (NYSE:AVYA) is set to report first-quarter fiscal 2020 results on Feb 10.

For the quarter, the company expects non-GAAP revenues in the range of $700-$720 million.

The Zacks Consensus Estimate for revenues is currently pegged at $710 million, indicating a decline of 3.8% from the figure reported in the year-ago quarter.

The consensus mark for first-quarter fiscal 2020 earnings has been steady at 72 cents over the past 30 days. The estimate indicates a year-over-year decline of 8.9%.

Notably, the company’s earnings missed the Zacks Consensus Estimate in three of the trailing four quarters and matched the same in one. It has negative earnings surprise of 25.16% on average.

Let’s see how things have shaped up for this announcement.

Factors to Consider

Avaya’s first-quarter fiscal 2020 results are likely to benefit from its strategic partnership with RingCentral (NYSE:RNG) for an UCaaS solution, as well as its partnerships with Amazon (NASDAQ:AMZN) , Alphabet’s (NASDAQ:GOOGL) Google division, IBM (NYSE:IBM), and Verint among others.

These partnerships have expanded Avaya’s cloud, services and artificial intelligence (AI) capabilities and positioned it well to deliver unique and differentiated solutions. This is likely to have driven top-line growth during the quarter.

Moreover, the company’s investments in developing its cloud capabilities have made it well positioned to address the strong enterprise demand for cloud. The expansion of ReadyNow, Avaya’s private cloud solution, into the EMEA and APAC regions is expected to have contributed to Avaya’s growth during the quarter.

Notably, Avaya had booked $90 million of total contract value for ReadyNow by November, 2019.

The company also launched the IX-CC, its own Contact Center-as-a-Service platform, which is expected to have driven subscription growth during the quarter.

However, the declining trend in the company’s professional services segment is likely to have hurt growth during the first quarter of fiscal 2020.

Further, the shift in Avaya’s unified communications (UC) business in the mid-market to cloud-based offerings is expected to have been a headwind.

Zacks Rank

Avaya currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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