Avaya freshly announced its third-quarter results, noting a lot of positive signs of growth. It also said that it had acquired contact center developer CTIntegrations, in a move it hopes will strengthen its Avaya OneCloud platform.
According to the company, this past quarter represents the fifth consecutive quarter of year-over-year revenue growth, Avaya CEO Jim Chirico noted in a statement. He said that the growth - also speaks volumes to what he calls "significant progress we have made on our transformational strategy."
There was once a time where some thought that Avaya would not be around much longer. In 2017, the former legacy player emerged from Chapter 11 bankruptcy, with Chirico noting at the time:
"This is the beginning of an important new chapter for Avaya - in less than a year since the commencement of our Chapter 11 restructuring, Avaya has emerged as a publicly traded company with a significantly strengthened balance sheet."
Not long after this, Avaya began its journey into the cloud, realizing an obvious need to innovate, differentiate, and do so with a sense of urgency. Garnering meaningful partnerships along the way would be one of the many secrets to Avaya's success since restructuring.
Avaya's Transformation by the Numbers
Fast forward; nearly five years later, and the Avaya of today is vastly different from the company of the past. Today, Avaya has high annual recurring revenue (ARR), which indicates progress. And this is a key metric often used by SaaS or subscription businesses with term-based subscription agreements.
According to Avaya's recent Q3 earnings report, that number is up over 275% percent from a year ago, reaching $425 million. Sixty-four percent of these deals have dollar amounts greater than $1 million - giving the organization strong traction among large enterprises.
Having exceeded analyst predictions this time around - Avaya raised its ARR guidance and expects to surpass the $1 billion mark by the end of calendar 2022, noting that it had anticipated this occurring - in actuality, it is happening a year ahead of schedule.
On the heels of the news, I sat down with the man who led Avaya through one of its most turbulent periods, Jim Chirico, to ask him about the implications of all this seemingly good news. I asked him: You expect to hit the one-billion-dollar mark in ARR by EOY: What does reaching this milestone mean to Avaya?
He noted that it means that Avaya's approach to offering multiple cloud models, including public cloud, private cloud, and hybrid cloud, is taking hold.
"We are unique in our ability to deliver a variety of deployment models for our customers because we know one size does not fit all. That is one of the reasons why large enterprises have continued to turn to us as their partner of choice."
Finding a Sweet Spot, In the Cloud
For a while, people thought Avaya might become irrelevant or even cease to exist. This week's results tell a different story of resilience and agility, however. Though the former legacy company did go through turbulent times - it seems today that it has come out on 'top' so to speak.
And the cloud has been a primary ingredient in this success. The star of the Avaya show, one that undoubtedly saved the day as it were - SaaS delivery models, with Chirico noting the area played a big part in Avaya's revival.
"Yes, it has been quite a transformation. Back In 2018, we set a very deliberate, three-pronged strategy to grow the business; move to a Cloud and recurring revenue model company; all while maintaining a highly profitable business model to invest in innovation. In support of that strategy, we have driven increased investment in cloud, artificial intelligence, UCaaS, and especially CCaaS."
Chirico further stated Avaya's progress in realizing that strategy; can be found in the results of this past quarter, telling me that the company has delivered new solutions like Avaya's private cloud offering, Avaya Spaces. There's also Avaya Cloud Office and public-CCaaS, which happen to be principal areas of growth for Avaya as well.
"We have seen significant traction as they enable our customers to adapt and thrive in a new world of work. Avaya Spaces has only been in-market since last year and is available in 100 countries and is a truly immersive workstream collaboration solution that has been a literal lifesaver for organizations throughout the pandemic."
One of the main differentiators for Avaya has been its private cloud offering. The offering enables the customization that is critical to supporting the complex day-to-day needs of its enterprise customers.
If organizations seek a cloud experience - yet still have to adhere to strict regulatory requirements and security policies to meet or merely want/need to operate in a blended/hybrid environment - they can do so with one of the numerous cloud-based Avaya offerings and thanks to the firm's emphasis on platform security and end-user experience.
Strategic Partnerships/Acquisitions for the Win?
Another winning element of the Avaya redemption story is how the company made several strategic partnerships and at least one acquisition since emerging for Chapter 11 bankruptcy. Recently Avaya announced the purchase of CTIntegrations - a buy that Chirico notes; is set to strengthen the Avaya OneCloud platform.
According to him, CT Integrations has long been an Avaya technology partner, so the move just made sense. With a relationship fostered over several years, Chirico told me that the company will; help Avaya in, well - he said it best:
"They help us super-charge our CCaaS contact center in the cloud."
The acquisition, according to Chirico, supports a strategy of catapulting the company's OneCloud platform beyond CCaaS.
"Our customers can take full advantage of our composable cloud platform to leverage the benefits of next-generation cloud, including hybrid cloud," Chirico summarized.
When asked if he thought Avaya competition was worried about moves the company's making - Chirico said; I would have to ask the competition.
"In all seriousness," he continued: "We are focused on executing our strategy and delivering the future digital workplace and the future of customer experience through our Avaya OneCloud platform. We have seen other companies make moves that certainly seem like they are trying to catch up to what we are providing - in terms of an integrated UC and CC portfolio."
He notes that he is not concerned, however, because of Avaya OneCloud. This is the firm's intelligent, composable CCaaS platform, which some see as a collection of apps. Chirico says this is not the case, noting that it is agile, flexible, and enables companies to customize communications to address specific needs.
I would be remiss if I failed to mention the company's 2019 UCaaS partnership with RingCentral, which received a lot of hype at the time. Today - this is an area of steady growth for the company, hinting at leadership having made yet another sound business decision.
A Glimpse into the Avaya Development Roadmap
Looking ahead at Avaya's development roadmap, Chirico told me that Avaya; will continue to drive advancements across the OneCloud platform to strengthen and differentiate its CCaaS and UCaaS offerings. When asked what the future holds for the Avaya development roadmap, Chirico shared:
"A strong focus on how we can leverage our CPaaS capabilities as a force-multiplier driving value for our customers."
He also noted that Avaya plans to deliver more and more artificial intelligence into its core solutions and integrate them into its CPaaS solutions, which he noted; is another consequential differentiator for Avaya. CPaaS makes Avaya agile and quite flexible, too.
Avaya's Agility Saved the Day
Following our chat, I started thinking - how did Avaya get here? Today, the company outperforms some of the very companies that thought Avaya might one day cease to exist. That is not the present reality, though - and I realized that Avaya is a prime example of a company that pushed to stay relevant in the ever-evolving UC landscape.
The company's willingness to embrace the cloud, train its partners to sell/operate in the cloud, and the drive found among its core customer base to adopt cloud communication platforms - all contributed to Avaya's about-face maneuver.
It also goes to show that getting some companies to move away from legacy technology and to adopt cloud-based innovations could actually work with a little effort and a ton of resolve. Or if your company's very existence depends on it.
