investor day...using any touchpoint converged / seamless across channels context aware and...

© 2018 Avaya Inc. All rights reserved.

Investor Day

December 12, 2018


Forward-looking StatementsCautionary note regarding forward-looking statements

This presentation contains certain “forward-looking statements.” All statements other than statements of historical fact are “forward-looking” statements for purposes of the U.S. federal and state securities laws. These statements may be identified by the use offorward looking terminology such as "anticipate," "believe," "continue," "could," "estimate," “model,” "expect," "intend," "may," "might," “target,” “our vision,” "plan," "potential," "preliminary," "predict," "should," "will," or “would” or the negative thereof or other variations thereof or comparable terminology, and include, but are not limited to, the outlook for fiscal year 2019 and the Company’s long-term targets. The company has based these forward-looking statements on its current expectations, assumptions, estimates and projections. While the company believes these expectations, assumptions, estimates and projections are reasonable,such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond its control, that may cause its actual results, performance or achievements to differ materially from any future results,performance or achievements expressed or implied by these forward looking statements. For a list and description of such risks and uncertainties, please refer to Amendment No. 3 to the company’s Registration Statement on Form 10 and subsequent Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission (the “SEC”), that are available at www.sec.gov. The company cautions you that the list of important factors included in the company’s SEC filings may not contain all of the material factors that are important to you. The company undertakes no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

2


Use of non-GAAP (Adjusted) Financial MeasuresThis presentation should be read in conjunction with our fourth quarter fiscal 2018 earnings press release issued on December 4, 2018. Within this presentation, we refer to certain non-GAAP financial measures, such as non-GAAP revenue, non-GAAP operating income, EBITDA and adjusted EBITDA, that involve adjustments to GAAP measures. Reconciliations between our non-GAAP financial measures and the most closely comparable GAAP financial measures are included in the Appendix to this presentation.

EBITDA is defined as net income (loss) before income taxes, interest expense, interest income and depreciation and amortization. Adjusted EBITDA is EBITDA further adjusted to exclude certain charges and other adjustments described in our SEC filings and the tables below.

We believe that including supplementary information concerning adjusted EBITDA is appropriate because it serves as a basis for determining management and employee compensation and it is used as a basis for calculating covenants in our credit agreements. In addition, we believe adjusted EBITDA provides more comparability between our historical results and results that reflect purchase accounting and our current capital structure. We also present EBITDA and adjusted EBITDA because we believe analysts and investors utilize these measures in analyzing our results. Accordingly, adjusted EBITDA measures our financial performance based on operational factors that management can impact in the short-term, such as our pricing strategies, volume, costs and expenses of the organization and it presents our financial performance in a way that can be more easily compared to prior quarters or fiscal years.

EBITDA and adjusted EBITDA have limitations as analytical tools. EBITDA measures do not represent net income (loss) or cash flow from operations as those terms are defined by GAAP and do not necessarily indicate whether cash flows will be sufficient to fund cash needs. However, these terms are not necessarily comparable to other similarly titled captions of other companies due to the potential inconsistencies in the method of calculation. Adjusted EBITDA excludes the impact of earnings or charges resulting from matters that we consider not to be indicative of our ongoing operations. In particular, our formulation of adjusted EBITDA allows adjustment for certain amounts that are included in calculating net income (loss), however, these are expenses that may recur, may vary and are difficult to predict.

We do not provide a forward-looking reconciliation of expected fiscal 2019 adjusted EBITDA, non-GAAP operating income or non-GAAP revenue guidance as the amount of significance of special items required to develop meaningful comparable GAAP financial measures cannot be estimated at this time without unreasonable efforts. These special items could be meaningful.

3


12:30 – 1:00 PM Overview and Agenda for Growth Jim Chirico

1:00 - 1:20 PM Innovating the Core Chris McGugan

1:20 - 1:50 PM Emerging Technologies and Innovation Laurent Philonenko

1:50 – 2:20 PM Cloud Gaurav Passi

Break

2:30 – 3:00 PM Customer Panel MetLife, NYC 311, U.S. Bank

3:00 - 3:30 PM GTM for Growth Dino Di Palma

3:30 - 4:00 PM Financial Model Pat O'Malley

4:00 – 4:30 PM Closing and Q&A

4:30 – 5:30 PM Demos and Cocktails

Agenda

4

© 2018 Avaya Inc. All rights reserved.© 2018 Avaya Inc. All rights reserved.

SVP, Solutions and Technology

SVP, Innovation

President, Americas Sales and Global Accounts

President, Cloud Business Group

SVP and Chief Financial Officer

Chris McGugan

Laurent Philonenko

Gaurav Passi

Dino Di Palma

Pat O’Malley

CEO and President

Jim Chirico

© 2018 Avaya Inc. All rights reserved. 5

© 2018 Avaya Inc. All rights reserved.© 2018 Avaya Inc. All rights reserved.© 2018 Avaya Inc. All rights reserved. 6

SVP, Global Business Operations

Fred Hayes

President, Avaya International

NidalAbou-Ltaif

SVP, Chief Administrative Officer and General Counsel

ShefaliShah

SVP, Corporate Strategy and Development

Nikos Nikolopoulos

President, Avaya Services

Ed Nalbandian

Head of Global Marketing

Becky Carr

VP Business Operations

David Austin


Jim ChiricoPresident and CEO

Investor Day


January 17, 2018


Avaya elevates communications to the next generation of engagement, connecting organizations to their customers, workforce and communities with secure, intelligent experiences that matter

Vision

Avaya is a transformative force in digital communications software, services and devices, designed for businesses of all sizes. Through our open, converged and innovative solutions, Avaya is taking intelligent experiences to new heights for our customers, partners, and their customers - in the cloud, on-premise, or hybrid

Mission

9


Our Strategy

Innovatingour core

Creating Long-term sustainable value

Bringing emerging technologies to market

Investing and delivering acomprehensive Cloud portfolio

10


C o r e C l o u d

I n n o v a t i o nS e r v i c e s


FY18 • Stability• Momentum

• Growth • Acceleration

• Industry Leadership

FY19

FY21C l o u d R e v e n u e

FY15 FY16 FY17 FY18

11


100,000+seat implementations

World-class Services

Global and Scalable

175+ countries

15M calls 4M agent interactions

13

Every minute:


Long-term Value Creation


114


Customer-led


215


Convergence


316


Software and services

82%

Recurring

57%

High-marginsoftware

60%

Total contract value

$2.4B

Gross margin

63%

Cloud

11%

Public Cloud seat growth

300%

Revenue

FY18 Establishing Momentum


Customer Led: Providing What Customers Want

7,000

440+ 15

54New logos

over $1M

over $10M

Net Promoter ScoreProduct revenue from new products

37%

55 over $5M

Deals

18

*

* Represents Q4 FY18 metric


FY18 Key Accomplishments


Strengthened foundation for growth

Made strategic investments

Upheld best-in-classbusiness model

Focused on customer

19


Growth Pillars


FY19 4

20


1 Innovating Our Core


Modernize and monetize our base

Solutions that are secure, scalable and reliable

Seamless, simple and integrated

Focused on user experience

21


2 Bringing Emerging Technologies to Market

Artificial Intelligenceand Mobility

Driving new opportunities for our customers

Disruptive products in market

At the forefront ofnext generation

Accelerating adoption

22


3 Delivering Breadth and Depth of Cloud


Cloud first

Investing across the portfolio

Public / Private / Hybrid

Aggressively pursuing Midmarket

Building Cloud ecosystem


4 Providing High-valueServices


Service offerings include: support, managed and professional services

Global scale

Unmatched expertise

Drives significant value for customers

24


Why AvayaWhy we are winningWhat is different

25


Pure-play UC / CC company#1

UC lines139M

CC Users5.5M

Global customers130K

Fortune 10090%

World’s Largest Installed Base

26


Seat contact centers

50,000Countries

175Seat UC implementations

100,000multiple

Delivering Large, Scalable Solutions

multiple

27


Convergence


#1

CC#2

UC#1UC & CC

28


Market Coverage

• Global reach and vertical practices with SIs & SPs

• Channel network, agents, storefront, inside sales 4,700

• Strategic alliances

• Geo-based sales organization 2,000

• Global direct account teams - top accounts

• Consultative services 1,200 professionals

• Cloud sales and customer success

29


ServicesCapabilities


Professional

Support

Managed


3.3xNet-debt /

Adj. EBITDA

25% EBITDAmargin

Generate

8-10% of revenue

in cash

Financial Strength and Flexibility

Resources to invest

Liquidity

Strong balance sheet

Highly profitable

$700MCash Balance


Moving Ahead

Sustaining our industry-leading business model

Increasing our investment in technology and talentTaking cloud to market aggressively

Driving the business to 2 – 4% CAGR with 25% of our revenue coming from cloud

32

Expanding partner ecosystem


Innovating Our Core

Chris McGuganSolutions and Technology


Trusted Partner of World’s Largest Enterprises

Airlines Services Companies

Automotive Manufacturers

InsuranceCompanies

Hotel Groups

Banks

CC / UCGartner Magic

Quadrant Leader

$2.7Brevenue

17 / 9years

World’s largest

installed base

145M

Source: Avaya Management estimates

10 of the Top 10


Product revenue

growth in FY18

lines


Adaptable solutions

Enable the digital workplace

Communicate / collaborate using any touchpoint

Converged / seamless across channels

Context aware and anticipatory

Best-of-breed flexibility

Tailored / optimized to company-specific processes

Rapidly extendible, keeping up with the ‘speed of business’

Interoperability, flexibility, customization

Unified Communications Portfolio

Ease of use

Multipledeployment / consumptionoptions

Calling Messaging

Team Collaboration

Meetings

Simple, empowering experiences

139 Million Lines in Service35


Adaptable solutions

Simple, empowering experiences

Facilitate digital transformation

Exceed customer expectations and Increase agent performance

Offer choice of deployment and consumption options

Deliver world-class services and support

Any touch point

All channels

Context-aware and anticipatory

Best-of-breed flexibility

Tailored to your business

Extensible

Self-service Assisted Service

Artificial Intelligence

Performance Management

Contact Center Portfolio

Powering the World’s Largest Contact Centers36


Driving customer journey transformations

1,200 technical professionals with 1,000 technical certifications

Reference architectures

Agile Development

Services Portfolio

Consulting

Enterprise Cloud and Managed

Design and Implementation

Industry-leading enterprise Cloud, managed and support services

3,000 technical professionals / 20 global centers / 16 languages

Advanced automation / AI

Single global delivery model

Highest Renewal Rate in 2 years

Unmatched in Scale, Breadth and Depth

Support

37


Looking for a trusted partner

Simplicity

Single platform

Modernizing existing investments

Convergence is a Key Differentiator


UCApps

CCApps


FY18 InvestmentRoadmap

Refreshed and Expanded Device Portfolio

Added Intelligent Self-Service, Smart Routing, Conversational Intelligence, Agent Guidance; expanded A.I.Connect ecosystem

Aura 8.0 including AWS, Azure and Google Cloud

IP Office Converged

Modern Workspaces for Elite customers

Converged UC / CC Platform

New AI Capabilities

Expanded IaaS Deployments

Equinox and Team Spaces

Single platform

Expanded Workforce Optimization Portfolio

Omnichannel improvements

Open SIP

Vertical Consulting Offers

Healthcare, Hospitality

Customer Management Platform

Self-service analytics and reporting

39


FY18 Key Highlights

Financial

#$150M Total Contract Value; highest in 2 years

60% Product revenue from software

3Consecutive quarters of product and 1x bookings growth

$60M Competitive wins in Q4

100% Omnichannel growth

8% Professional services growth

$150M Investment in the core

Endpoints

Collaboration

12,000 Converged customers

100,000+ Developer ecosystem

Open SIP phones

New product line

Launched

New release

Technology

40

98+% High retention rates


FY19 Executing on Customer-Led PrioritiesM

idm

arke

t

Pay per use

Integrated mobile

experience

Self-service support

Soft phonesS

MB

Ente

rpri

se Best of suite ↓

Single platform

Convergence: CC + UC +

Collaboration

Enterprise grade moves downstream

Emerging technologies /

AI +++

High-touch + self-services

Vertical specialization

Managed / multi-vendor / hybrid Cloud


FY19 InvestmentRoadmap

• SMB Bundles• Mobile Experience• Mobile Identity• Next-gen Digital• Cloud Migration Tools• Unified Workspaces

w/Analytics• WFO in the Cloud

• Headsets• Huddle Rooms• Device as a Service• Open SIP• AI on Multimedia

Devices

Unified Communications

Contact Center

DevicesArtificial Intelligence

• SMB Bundles• Device as a Service• Open SIP• Spaces & Meeting

Convergence• Cloud Migration Tools• SIP Trunking

42

• Conversational Intel, Self-service bots


Product + Services

Cloud

89%

11%

FY18( Re v e n u e )

Product + Services

Cloud

75%

25%

FY21( Re v e n u e )

Our Core is a Significant Opportunity

Source: Avaya Management estimates 43


Core is Strategic, Relevant and Wide Ranging

This is just a sampling of Avaya’s Development partners. For a complete list visit avaya.com/devconnect

Broad enterprise ecosystem

CRMintegrations

AI integrations

Business / vertical integrations

Snap-ins

Analytics engines

CCintegrations

44

http://avaya.com/devconnect


InnovationStrategy

Laurent PhilonenkoSVP Innovation


Differentiates Avaya

Focuses on next-gen solutions

Delivers high-value solutions

Maintains innovation pipeline

Innovation Incubator

46


Current Massive Opportunities

Creating unrivalled customer experiences

Changing the game in contact centers

Artificial IntelligenceMobility

47


Leading Through Innovation

AI and Mobility

Significant Customer

Value Creation

Opportunities

FocusedInvestment

Contact Center and

Cloud

Long-term value creation

Convergence of technologies

Customer-led


Selected as AI supplier for a G8 government (voice applications, predictive insights)

Bots for bank customer service

Voice applications for police force

Insights for large TMT company

Mobility application at Software company

Pipeline validates strategy

Customer-LedMomentum100+ opportunities

Case-based approach


AI + Mobility Transforming Contact Centers

Effortless self-service

Predictiverouting

Agent augmentation

Interaction insights

Market Reality

"IVR Hell"

Skills & queues FIFO per queue

Classroom and self training, knowledge

base, peers

Operational KPIs

Avaya's Innovation

Conversationalself-service

Optimize agent –customer pairing

Coach agents in real-time

Customer behaviors and intents

Mobility No mobile context Dedicated mobile capabilities


Software company

TMT company

800# Cost reduction~$2B US

spend

Digital experience / Secure identity

Fraud management

~$10B spend

Future applications

5G

Location

Advanced audio

Financial dataprovider

Retailbank

Insurance company

Public services company

Mobility: Unique, Patented Value Proposition for a Large Market

FY21 Objective

>$100MSaaS

Live CustomersNo Competition

51


Customers Demand Avaya Mobile Identity

• Voice – facial biometrics

• Blockchain-like storage• Quantum safe

• User-controlled identity

Nearly 1B individualcybercrime victims

US fraud losses totaled $16.7B in 2017

49% of companies are victims of fraud and economic crime –up from 36%

Problem Solution

• State of the art cryptography

52


Leading the AI RaceLive Customers –Modernizing the Base

Large Market: • AI software $26B in 2021• Unique IP and partnerships• Broadest solution set

Avaya FY21 Objective

AVAbots

>$100MSaaS

Predictiverouting

Conversationintelligence Insights



Effortless Self Service

PredictiveRouting

Agent Augmentation

Interaction Insights

Our AI CapabilitiesCover the Entire CC Scope Today

AVA: virtual assistant

Predictive Insights: customer handling

Behavioral Pairing: agent optimization

Real Time Transcription: core to productivity

Intent Detection: better response

Agent Coaching: real-time, not offline

Call Summarization: save agent work

Automated Quality Monitoring: productivity



Avaya AI Ecosystem – AI ConnectAttracts the Best On the Avaya Platform

All trademarks identified by the ®, ™, or ℠ are registered trademarks, trademarks, or service marks respectively, of Avaya Inc. Other trademarks are the property of their respective owners.

www.avaya.com/aiconnect


The OpportunityGrowth and differentiationin large new markets

Revenue acceleration objective in FY21: >$200M for AI + Mobility

Value creation for customers and Avaya

Additional adjacencies

Drive modernizationof the base

56


CloudStrategy

Gaurav PassiCloud


Why I Joined Avaya

Huge Loyal Base

Customers and partners

Domain Expertise

Decades of deep understanding of UC, CC markets

Wherewithal

Best positioned for Cloud / digital transformation



Cloud seats3.5M

Customers3,600

Did You Know?

FY18 Cloudsubscription revenue

$330M

Customers with ARR >$1M

64Avaya Cloud



Key Takeaways

Doubling down on Cloudwe are now a Cloud-first company

Battlefield is Up-market (MM – ENT): Pure Cloud players not ready for Up-market

Entering into a new era of strategic Cloud partnerships

Avaya is a trusted partner for Enterprises for decades; we are now going to aggressively compete in Midmarket

1

2

3

4

5

Leadership positionrequires additional investment


Avaya Base

Support and Services

4,700

2,000

3,000

1,500

10

Channel Partners

SalesProfessionals

R&D

Worldwide DataCenters



Avaya Base


4,700

2,000

3,000

1,500

10

Channel Partners

SalesProfessionals

R&D

Worldwide Data Centers


10k agents >10k employees

1k – 10k agents>5k employees

250 – 1k agents>1k employees

50 – 250 agents <1k employees

<50 agents<500 employees

SM

BM

MEN

T –

LG E

NT

70

CC UC


Avaya Base

5.5M CC Agents; 139M UC Lines


4,700

2,000

3,000

1,500

10

Channel Partners

SalesProfessionals

R&D

Worldwide Data Centers

130,000 Customers in 175 Countries

Source: Avaya Management estimates from billing and contracting systems

80%10k agents >10k employees

1k – 10k agents>5k employees

250 – 1k agents>1k employees

50 – 250 agents <1k employees

<50 agents<500 employees

SM

BM

MEN

T –

LG E

NT

CC UC

71


Midmarket to Enterprise: The BattlegroundSegments

SMB

MM

ENT -LG ENT

TAM, Value

LOW

HIGH

Cloud Adoption

HIGH

LOW

High degree of scalability and customizationSecurity (e.g., HIPAA, PCI, CPNI)Complex integrationsRich / Advanced featuresOmnichannel / AIHigh maintenance and support SLAs

Low costBasic integrated suiteFast and easy setup

Ease of installationMinimal support and on-site dependency

Customer NeedsAvaya Base

72


Avaya Base on Digital Transformation

73


Pure Cloud players not ready for Up-market

Enterprises don’t want to invest in Data Centers

Data Security

SecureCloud

Converged Services& Maintenance

Global Presence

Trusted Advisor

Omnichannel

AI | Mobility

Digital Transformation

What We’re Hearing From Customers

PaySubscription

Expansion

OPEX Model

74


Enterprise-grade functionalityoffered public, private or hybrid

Hybrid option: Practical path for large migrations

Customized solution to maintain user experience / business workflows

Single global delivery model

How We’re Meeting Enterprise Requirements

$330M(FY18 Rev)

On-premise vs. Hosted UC:Which is right for your business?

or or ?



Trusted and Scalable

Why We Win vs. Cloud

Competitors

Up Market

A Single, Integrated Communications Platform

All Cloud Options

Enterprise Features

Full Application Suite

76


Unified Communications TAM

$64B

Source: Avaya Global Market Demand Forecast, Avaya Management estimates, Gartner, MZA Limited, Synergy Research Group, Company Filings and News ReportsNote: TAM is for 2021

450MLines

Total Market

Contact Center TAM

$32B13.5M

Agents

Total Market

The Opportunity

77


What Additional Investment Can Yield

$0.0

$2.5

$5.0

$7.5

$10.0

$12.5

$15.0

$17.5

$20.0

1% 3% 5% 20% 40% 60% 80%

Avaya Installed Customer Base Conversion to Cloud

Ava

ya C

lou

d O

pp

ort

un

ity

$B

Cloud Revenue

Opportunity

1% of Installed Base =

$250M in Revenue



Cloud Journey Requires Additional Investment

• CCaaS

• Integration

• Digital

• Portfolio Simplification & Expansion

• Storefront

• Midmarket

• International

Intelligent Experience Centers

Building Customer Success Cloud LeadershipFY18: 11% FY21: 25%FY19: 12 - 14%

Source: Avaya Management estimatesNote: Percentages based on % of total revenue, pricing shown is illustrative only 79


Portfolio Investment

Meetings

Collaboration

Phone

Devices

CRM Integrations

Omni Desktop

Management Tools

Artificial Intelligence

Avaya Cloud

Voice, Video, Text

80


Storefront and Services

Note: Pricing shown is illustrative only 81

Avaya Cloud

Voice, Video, Text


UCaaS - Phone

82

Avaya Cloud

Voice, Video, Text


UCaaS - Meetings

83

Avaya Cloud

Voice, Video, Text


UCaaS - Collaboration

84

Avaya Cloud

Voice, Video, Text


CCaaS – Omni Desktop

85

Avaya Cloud

Voice, Video, Text


CCaaS – CRM Integration

86

Avaya Cloud

Voice, Video, Text


42,000 New Seats On CCaaS (Spoken)

1000 seats; scaling to 5000

Work-from Home-agents

VoC score increased by 8.5%

Ramping 1500 seats; 30K full ramp

Reliability across global contact centers

Reduced labor with conversation center

6300 seats; 25K full ramp

Security & compliance

Platform reliability

Large TMT Company


Vision FY21: 25% in Cloud

Secure Our BaseDominate Enterprise

• Big Advantage with no CAC

• Competition needs heavy investment

Aggressively Compete in MidmarketPortfolio Simplification

• Storefront

• Invest in Direct (Inside Sales)

• Arm Channel

InternationalExpansion

• Germany

• Next: India and Japan

Strategic Cloud Ecosystem

Joint

• Salesforce

• Google

• Verint

• Others

Offers

Strategic Investments

• CCaaS: Spoken

• Additional Investments

• Innovation: AI, Mobility

89


Short Break


Customer Panel

Dino Di PalmaAmericas Sales and Global Accounts


GTM for Growth

Dino Di PalmaAmericas Sales and Global Accounts


Market opportunity1

Where we are today 2

How we are transitioning our GTM strategy for success3

Where we are focused for growth 4

Why we win5

Key Messages

102


LARGE TAM

$105BContact Center

(CC)Unified Communication

(UC)Communications Platform

as a Service (CPaaS)+ +

$32B $64B $8BSource: Avaya Global Market Demand ForecastNote: TAM is for 2021; Totals may not add up due to rounding 103


Market Coverage

• Global reach and vertical practices with SIs & SPs

• Channel network, agents, storefront, inside sales 4,700

• Strategic alliances

• Geo-based sales organization 2,000

• Global direct account teams - top accounts

• Consultative services 1,200 professionals

• Cloud sales and customer success

104


GTM Strategy – Customer Segmentation

Global AVAYA Top 50

Large Enterprise 10,000+

Enterprise 1,000-10,000

Midmarket 250-1,000

SMB <250

SEGMENTS CLOUD OPTIONS COVERAGE

Leading customers through their Digital Transformation

Services

Public Cloud

Fiel

d sa

les

Sto

refr

ont

Mas

ter

agen

ts

Insi

de s

ales

SP

sell-

thru

SI

sell-

thru

Cha

nnel

par

tner

s

Private and

Hybrid

105


The End-to-end Customer Journey

Avaya Field Sales / SESolution Architect

(or Partner)

EndpointDelivery

ProfessionalServices

Avaya CustomerSuccess

(or Partner)

AutomatedProvisioning

Direct /Partner – Enterprise

Agent /Master Agent

Storefront SMB: Avaya Inside SalesMM: Avaya Field Sales / SE


EndpointDelivery

Avaya CustomerSuccess

Retail – Midmarket

Partner Avaya PartnerSuccess


EndpointDelivery

Partner Customer Success

Avaya Field Sales

Wholesale / SP – SMB

Customer

Customer

Customer

106


Playbook 1Customer

segmentation

2Cloud sales

motion

3Channel

ecosystem

4Vertical strategy

5Sales and marketing

enablement

6Services

and customer success

107

© 2018 Avaya Inc. All rights reserved. LOGOS

LOGOSGlobal

Customers

Largest Installed Customer Base in the Industry

130K

of Fortune 100

90%

UC Lines139M

CC Agents

5.5M

Enterprise / Midmarket

~80%

SMB

~20%

Customer Segments

Source: Avaya Management estimatesNote: Customer breakout based on number of lines with the customer (Enterprise / Middle Market >250 Lines, SMB <250)


Omnichannel

Mobile Experience

AI

Analytics

Innovation Sales Motion to Enable Transformation

Cloud

109

Growth Drivers


Our Channel

Ecosystem

Channel today

>4,700 Partners worldwide

Coverage and service in SMB and MM

Early enterprise success

Now delivering enterprise wins

US based with international locations

Larger partners have begun to sell ACP

Channel sales motion shifting

Move to cloud has started

Provide acceleration

Customer success for top partners

Virtual support/ vertical partner focus

For FY19

Master agent program

Global expansion for hosted

Next generation eCommerce

More offers in partner program

110


Cloud Transformation Strategic AlliancesDevices

Midmarket, enterprise and federal sell-thru initiatives with tier

1 SP’s

Digital transformation practice alignment

with SI and consultant ecosystem

Adoption/sales via Open SIP,

DaaS and DPFF

‘Big Friend’ partnerships with independent

(aligned) sales motions

Service Provider / System Integrator

111


Vertical Market Opportunity

Healthcare Hospitality Public Safety and Emergency Services

Financial and Insurance

$6B $4B $3B $11B

Source: Avaya Global Market Demand ForecastNote: TAM is for 2021 112


Customer Success

Success Factors• Enterprise practice with

2,000 service people globally

• Unique per segment sharing common goals

• Customer retention and expansion

• Shared responsibility

Onboard

Initial deployment

and onboarding Training and

first applicationExpectation

management and continuous engagement

Natural outcome

Enable

Communicate

Renew

New tech and departmental

expansion

Expand

113


WhyWe Win

• Global Coverage

• Loyal customer base

• One of the largest channel ecosystems

• Multiple cloud deployment options

• Enhanced CX / Innovation

• Services Expertise

114


FinancialModel

Pat O’MalleyFinance


27%Expand Adj. EBITDA margin

2 - 4%Revenue CAGR

50%Increase investments in Cloud & Innovation over 3 years

11 - 13%Improve cash from operations (% of revenue)

Key Goals to Drive Long-term Value


Long-term Targets

Revenue

Profitability

Innovate our core to modernize installed baseGrow Cloud & Innovation #25 - 30% of total revenueDrive consultative services to 3 - 5% CAGR

Expand gross margins to 63 - 65%Increase software and services mix to 88 - 90%Grow recurring revenueDrive productivity and operational efficiencies

Cash Flow and Balance Sheet

Improve cash from operations to 11 - 13% of revenue to:• Fund investments• Reduce debt• Return capital to shareholders

Continue strengthening balance sheet and reduce cost of capital

121


24.4% Adj. EBITDA margin; best-in-class business model

62.5% Gross margin record

Established foundation for revenue momentum by investing in core, cloud, innovation and professional services

Stabilized revenue

$150MIncrease in TCV to $2.4B+

122

FY18 Significant Achievements


FY18 Accomplishments

RevenueGrowth

BusinessMomentum

34%

$150M

165%

312%

11%57%

7,000

440

62.5%3.3x

$700M

Product revenue from new products

#TCV @ $2.4B+

Growth in Cloud MRR Midmarket / SMB MRQ

Growth in UCaaS / CCaaS Seats

Cloud % Revenue

Recurring% Revenue

New logos

Deals > $1M

Gross margin

Net debt / Adj. EBITDA

Cash and cash equivalents

82% Software and Services% Revenue

24.4% Adj. EBITDA margin

Operations and Balance Sheet

© 2018 Avaya Inc. All rights reserved. MRQ = Most Recent QuarterMRR = Monthly Recurring Revenue

3% CC product revenue growth

123(Amounts are non-GAAP)


Financial Transformation

% Recurring revenue

48%57%

71%

82%

% Revenue from software and

services

Non-GAAPgross margin %

61% 63%

AdjustedEBITDA margin %

22%

24%

% Product revenue from

software

42%

58%

+11 pts +9 pts +2 pts +2 pts+16 pts


FY15 FY18 FY15 FY18 FY15 FY18 FY15 FY18 FY15 FY18

% Cloud and Innovation revenue

7%11%

FY15 FY18

+4 pts

Note: FY15 financials based on reported metrics; Numbers may not add up due to rounding 124


FY19 Key Objectives

8 - 10% of RevenueCash from Operations

25 - 26% Adj. EBITDA marginExpand best-in-class business model

12 - 14% Cloud % of revenue, ~1% Innovation % of revenue

Revenue Growth

$225M Increase R&D investment withfocus on Cloud and Innovation


F Y 1 8

A C T U A L

F Y 1 9

O U T L O O K

Non-GAAP Revenue*Annual growth

$3.057B $3.05 - 3.15B+0 - +3%

% Software and services 82.2% 83 – 85%

% Recurring revenue 57.4% 58 – 59%

% Cloud revenue 11% 12 – 14%

% Innovation revenue - ~1%

Non-GAAP Gross margin % 62.5% 62 – 63%

R&D % of product revenue 15.2% 15 – 16%

Adj. EBITDA margin % 24.4% 25 – 26%

Cash from operations % revenue** 6.8% 8 – 10%

FY19 Outlook

* based on September 30th, 2018 currency rates ** normalized for restructuring related items and PBGC pension settlement payment 126


Growth Driven by Product and Cloud & Innovation

47% 45 – 47%

42% 42 – 44%

11% 12 – 14%

FY18A FY19E

Product

Services

Cloud & Innovation

$3.057B $3.05 - 3.15B

Note: Totals may not add up due to rounding


38% 35 – 36%

9% 10 – 11%

30% 30 – 31%

12% 12 – 13%

11% 12 – 14%

FY18A FY19E

Growth Momentum Across Business

APS

Maintenance and other services

$3.057B $3.05 - 3.15B

CC

UC

Cloud & Innovation

Note: Totals may not add up due to rounding


FY18 Actual

FY19Outlook

Long-term Targets

Non-GAAP revenue $3.057B $3.05 - 3.15B 2 - 4% CAGR

% Software and services 82.2% 83 - 85% 88 - 90%

% Recurring revenue 57.4% 58 - 59% 63 - 65%

% Cloud revenue 11% 12 - 14% 21 - 25%

% Innovation revenue - ~1% 4 - 6%

Non-GAAP Gross margin % 62.5% 62 - 63% 63 - 65%

R&D $198M $225M $275 – 300M

Adj. EBITDA margin % 24.4% 25 - 26% ~27%

Cash from Operations* % Revenue 7% 8 - 10% 11 - 13%

* Net Cash interest includes payments classified as Adequate payment protectionNote: Long term targets represent 3+ years financial model* FY18 Cash from operations normalized for restructuring related items and PBGC pension settlement payment

Long-termTargets


48%

57%64%

61%63%

64%

22%

24%

27%

Business Model Transformation

%Recurring revenue

71%

82%89%

%Revenue from software and

services

Non-GAAP Gross margin %

AdjustedEBITDA

margin %

42%

58%

77%

%Product Revenue from software

FY15 FY18 LT

+7 pts +7 pts +19 pts +2 pts +3 pts

Note: LT represents mid-point of Long-term Target model

FY15 FY18 LT7%

11%

28%

% Cloud & Innovation

revenue

+17 pts

FY15 FY18 LTFY15 FY18 LTFY15 FY18 LTFY15 FY18 LT

130


11% 12 – 14% 25 – 31%

42% 42 – 44%35 – 37%

47% 45 – 47% 39 - 41%

FY18A FY19E FY21LT Target

Long-term Revenue Target

* Excluding divested networking revenue ** '19- 23 CAGR© 2018 Avaya Inc. All rights reserved.

$3.057B $3.05 - 3.15B2% - 4% CAGR

Services

Product

Cloud & Innovation

Note: Totals may not add up due to rounding 131


Compelling Cloud EconomicsWin-Win for Customers and Avaya

Note: Unit prices above reflect illustrative blended examples. UC license revenues include attached devices/hardware. Cloud revenues reflect illustrative conversion of UC/CC customer to Avaya public and private cloud offers.

Cloud conversion offers compelling benefits:

Scalable, feature-rich UCaaS / CCaaS for customers within OpEx model

Reduce customer upfront costs and eliminate redundant IT resources

Stickier, predictable revenue stream for Avaya

Enhances lifetime customer value with typical 6-12 month payback

On Premise Cloud

License (1x)

Prof Services

(1x)

Maintenance(MRR)

3 Year Revenue

Cloud MRR

3 YearRevenue

Payback (mths)

UCaaS $138 $25 $2.25 $244 $18 $630 11

CCaaS $260 $133 $7.25 $654 $70 $2,520 7

132


Long-term Gross Margin Targets

* Excluding divested networking revenue ** '19- 23 CAGR© 2018 Avaya Inc. All rights reserved. Note: Graph represents total GM% and $s.

Services

Private Cloud

64% 62 – 64% 60 – 63%

37% 41 – 43% 47 – 49%32% 47 – 49% 75 – 80%

67% 67 – 68% 65 – 69%

63% 62 – 63%

FY18A FY19E FY21

Product

LT Targets

Public Cloud

63 – 65%

133

Higher mix of SW driving product GM%Cloud GM% increasing with volume/scaleMaintaining services GM%


Long-term R&D TargetIncreasing R&D spend

* Excluding divested networking revenue ** '19- 23 CAGR

Increased R&D investment• FY18 R&D expense of $198M

• Increasing to ~$225M in FY19 and LT target of $275M-$300M (17%-18% of product and Cloud revenue)

R&D Investment focused on growth• Investment in Cloud, AI, mobility

and new product offerings

• LT target: 60% of R&D investment on new product offering including Cloud, AI, mobility and innovation (FY18: 35%; FY16: 11%)


R&D(% of product and Cloud revenue)

15.2% ~16% 17 – 18%

FY18A FY19E FY21LT Target

Note: Graph represents total R&D% and $s. 134


• Net Cash interest includes payments classified as adequate payment protection

• Pension settlement payment to PBGC not included within Pension & Post Retirement payments

Cash Requirements$M

Restructuring

Pension & Post Retirement

Net Cash Interest

CapEx & Capital Lease (<3% Revenue)

Cash Taxes

421 428 355

270 204 212 207

148 161

62

130

65 55 53

90 121

78 54

68 49 27

140 119

83 90

97 99 99

56 51

33 29

81 95 99

855 880

611 573 515 510 485

FY15 A FY16 A FY17 A FY18 A FY19 E FY20 E FY21 E

135

© 2018 Avaya Inc. All rights reserved. Note: FY18A includes $39 million in US Pension catch up contributions

Assets and Liabilities ($M)

Book Balances as of 9/30/18 Assets Liabilities Net

US Pension $881 $(1,050) $(169)

OPEB $178 $(368) $(190)

German Pension $3 $(499) $(496)

Other Non-US Pension $11 $(37) $(26)

Total $1,073 $(1,954) $(881)

Pension and OPEBCurrent US pension net liability is $169M

Total net pension and OPEB net liability is $881M

Approximately 95% of foreign pension obligations are related to German plans

German plans are primarily “pay as you go” with no investments held or obligations to pre-fund with annual cash flow of $21M to $25M per year

26

2523 24

12

1414 14

130

65 55 53

FY18A FY19E FY20E FY21E

OPEBNon-US Pension

Contribution

US Pension Contribution

Expected Contributions

136


Capital Allocation Priorities

Priority uses of cash will evolve as business continues to generate healthy cash flow

DividendsShare repurchase

Enhance shareholder returns

R&D investmentsAssess M&A opportunities

Fund and de-risk pensionReduce term debt

Focus on technologies that create customer value

Strengthen balance sheetImprove credit ratingReduce cost-of-capital

CAPITAL ALLOCATIONS PLAYBOOK

137

RETURN CAPITALDE-LEVERINVESTING IN GROWTH


Q&A


Appendix


Successor Predecessor Successor Predecessor

(In millions)

Three months ended

September 30, 2018

Three months ended

June 30,2018

Three months ended

September 30, 2017

Period from December 16,

2017through

September 30, 2018

Period fromOctober 1, 2017

throughDecember 15,

2017

Fiscal year ended

September 30, 2017

Net income (loss) $ 268 $ (88) $ 27 $ 287 $ 2,977 $ (182)

Interest expense 57 56 17 169 14 246

Interest income (3) (1) (2) (5) (2) (4)

(Benefit from) provision for income taxes (311) 20 6 (546) 459 (16)

Depreciation and amortization 120 119 63 384 31 326

EBITDA 131 106 111 289 3,479 370

Impact of fresh start accounting adjustments 29 54 — 196 — —

Restructuring charges, net 1 30 8 81 14 30

Advisory fees 3 3 3 18 3 85

Acquisition-related costs 4 4 — 15 — 1

Reorganization items, net — — 21 — (3,416) 98

Non-cash share-based compensation 6 7 1 19 — 11

Impairment of indefinite-lived intangible assets — — — — — 65

Goodwill impairment — — — — — 52

Impairment of long-lived asset — — — — — 3

Loss on sale/disposal of long-lived assets, net — 2 — 4 1 —

Gain on sale of Networking business — — (2) — — (2)

Resolution of certain legal matters — — 64 — 37 64

Change in fair value of Emergence Date Warrants 8 (6) — 17 — —

Gain on foreign currency transactions (4) (25) (1) (28) — (2)

Pension/OPEB/nonretirement postemployment benefits and long-term disability costs — — 20 — 17 90

Other — — — — — 1

Adjusted EBITDA $ 178 $ 175 $ 225 $ 611 $ 135 $ 866

Non-GAAP ReconciliationAdjusted EBITDA


Non-GAAP ReconciliationGAAP to Non-GAAP Results

Successor Predecessor FY17

Period from Dec. 16, 2017

throughSept. 30,

2018

Period fromOct. 1, 2017

throughDec. 15, 2017

Combined Results

Adj. for Fresh Start Accounting

Amortization of Intangible

AssetsRestructuring Charges, net

Acquisition Costs

Share-based Comp

Advisory Fees

Other Costs, net

Non-GAAP Results

GAAP Results

Non-GAAP Results

Revenue

Products $ 989 $ 253 $ 1,242 $ 63 $ — $ — $ — $ — $ — $ — $ 1,305 $ 1,437 $ 1,437

Services 1,258 351 1,609 143 — — — — — — 1,752 1,835 1,835

2,247 604 2,851 206 — — — — — — 3,057 3,272 3,272

Costs

Products:

Costs 372 84 456 (21) — — — — — — 433 499 499Amortization of technology intangible assets 135 3 138 — (138) — — — — — — 20 —

Services 597 155 752 (37) — — — (1) — — 712 745 745

1,104 242 1,346 (58) (138) — — (1) — — 1,145 1,264 1,244

GROSS PROFIT 1,143 362 1,505 264 138 — — 1 — — 1,912 2,008 2,028

OPERATING EXPENSES

Selling, general and administrative 888 264 1,152 16 — — (15) (17) (21) — 1,077 1,261 1,100

Research and development 172 38 210 (11) — — — (1) — — 198 225 225

Amortization of intangible assets 127 10 137 — (137) — — — — — — 204 —Impairment of indefinite-lived intangible assets — — — — — — — — — — — 65 —

Goodwill impairment — — — — — — — — — — — 52 —

Restructuring charges, net 81 14 95 — — (95) — — — — — 30 —

1,268 326 1,594 5 (137) (95) (15) (18) (21) — 1,275 1,837 1,325

OPERATING (LOSS) INCOME (125) 36 (89) 259 275 95 15 19 21 — 637 171 703

Interest expense (169) (14) (183) — — — — — — — (183) (246) (246)

Other income (expense), net 35 (2) 33 — — — — — — (18) 15 (25) (31)

Reorganization items, net — 3,416 3,416 — — — — — — — — (98) —

(LOSS) INCOME BEFORE INCOME TAXES $ (259) $ 3,436 $ 3,177 $ 259 $ 275 $ 95 $ 15 $ 19 $ 21 $ (18) $ 469 $ (198) $ 426


FY'18 NotesNon GAAP Revenue 3,057

Cash Flow from Operations (212)

Adjustments / NormalizationAdvisor Fees (c11 specific) 77 Cash paymentsTreatment of pmts into escrow (advisor fees) 76 Offset amount within investing activities (restricted cash)Payment to PBGC 340 One time settlement payment relating to APPSEPension catch up payments 39 Catch up payments required relating to 'payment freeze' during C11Adequate Protection Payments (111) Shown within financing activities

Adjusted Cash From Operations (FY'18) 209 %age revenue 6.8%

Adjusted Cash From Operations FY’18

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