AVYA - Avaya: Near-Term Balance Sheet Catalyst Could Send Shares Higher

• Avaya Holdings is a large unified communications and contact center as a service provider undergoing a business model transformation to the cloud and an Annual Recurring Revenue (“ARR”) model.
• ARR has scaled dramatically since it was first offered in early 2020 and is on pace to end the calendar year 2022 at $1 billion or more.
• The transition from one-time perpetual sales impacted near-term revenue and cash flow but yielded stickier revenue and more predictable cash flow over time while also ostensibly stressing the balance sheet.
• Avaya shares sold off dramatically in May as a result of bankruptcy fears regarding a June 2023 $350 million bond maturity. The company launched a $500 million offering which should close soon and cause liquidity fears to subside, yielding upside to the stock.

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