Fourth Quarter Fiscal 2016:

• Revenue of $958 million, exceeding high-end of preliminary results
• Gross margin 60.9%, non-GAAP gross margin 61.8%
• Adjusted EBITDA⁽¹⁾ up sequentially and year-over-year to $284 million, a record 29.6% of revenue

Fiscal Year 2016:

• Revenue of $3,702 million
• Gross margin 60.6%, non-GAAP gross margin a record 61.5%
• Adjusted EBITDA⁽¹⁾ of $940 million, a record 25.4% of revenue
• Free cash flow positive for the year

Santa Clara, Calif., — January 19, 2017 – Avaya reported financial results for the fourth fiscal quarter and fiscal year ended September 30, 2016.

Total revenue for the fourth quarter was $958 million, up $76 million compared to the prior quarter as demand improved for products and services, and decreased $50 million year-over-year, due to lower demand for unified communications hardware. GAAP gross margin was 60.9% for the fourth quarter. Non-GAAP gross margin was 61.8%, which compares to 62.4% for the prior quarter and 62.0% for the fourth quarter of 2015. GAAP operating loss was $428 million, reflecting $542 million of impairment of goodwill and intangibles. Non-GAAP operating income was $229 million which compares to $180 million for the prior quarter and $202 million for the fourth quarter of fiscal 2015. For the quarter, adjusted EBITDA was $284 million or 29.6% of revenue, which compares to adjusted EBITDA of $223 million or 25.3% for the prior quarter, and $246 million or 24.4% for the fourth quarter of fiscal 2015.

For fiscal 2016, Avaya reported revenue of $3,702 million, down 9% compared to fiscal 2015, or down 8% in constant currency. GAAP gross margin for fiscal 2016 was 60.6%. Non-GAAP gross margin was a record 61.5%. GAAP operating loss was $262 million, reflecting $542 million of impairment of goodwill and intangibles. Non-GAAP operating income was $756 million in fiscal 2016 compared to $718 million in fiscal 2015. Fiscal 2016 adjusted EBITDA of $940 million represented a record 25.4% of revenue, and was $40 million higher compared to fiscal 2015. Cash flow from operations was $113 million and free cash flow was $17 million for fiscal year 2016, reflecting one-time payments of approximately $82 million for a legal settlement and advisory fees. Cash and cash equivalents totaled $336 million as of September 30, 2016, an increase of $67 million from the prior quarter and up $13 million from fourth quarter 2015.

“Avaya’s fourth fiscal quarter results reflect the strength of our technology portfolio, with major competitive wins at government agencies and enterprise customers across networking, contact center and private cloud services underpinned by continued transformation of the company to a superior operating model,” said Kevin Kennedy, president and CEO.

“Revenue and adjusted EBITDA exceeded the high end of our preliminary stated range,” continued Mr. Kennedy. “In constant currency, contact center and networking revenue increased double digit percentages from both the prior quarter and year-over-year, while unified communications products declined year-over-year and grew sequentially. Non-GAAP operating income as a percentage of revenue and adjusted EBITDA as a percentage of revenue reached new records for the company for both the quarter and full year 2016 driven by lower operating expenses. Our strategic roadmap is being well received as customers are upgrading to our newest platforms due to our industry leadership position and outstanding customer service as witnessed by Avaya’s fourth quarter Net Promoter Score of 58. As mentioned in our press release today, the decision to restructure through a chapter 11 process reflects the company’s debt structure, as opposed to the strength of Avaya’s operations and business model. Looking forward, we remain committed to improving our operating performance and capital structure while creating value for our customers.”

Fourth Fiscal Quarter Highlights

• Company book-to-bill was greater than 1. Total bookings for the fourth quarter increased 13% from the prior quarter and were 7% below the prior year in constant currency
• Industry leading service and support drives Net Promoter Score of 58 for customer satisfaction
• Estimated total contract value was approximately $3 billion up 6% from the fourth quarter of fiscal 2015 in constant currency. This amount includes $760 million for private cloud and managed services, a 13% increase from the fourth quarter of fiscal 2015 in constant currency
• Product revenue of $469 million increased 18% from the prior quarter and declined 6% year-over-year, service revenue of $489 million grew 1% sequentially and declined 4% year-over-year, each in constant currency
• Cloud and managed services revenue grew 3% year-over-year, contact center product revenue increased 13% year-over-year, and networking improved 31% year-over-year, each in constant currency
• Software and services accounted for 74.1% of total revenue in fourth quarter 2016
• Recurring revenue represented 51.1% of total revenue, up from 49.6% year-over-year, in constant currency
• Gross margin was 60.9% compared to 61.5% for the prior quarter and 61.1% for the fourth quarter of fiscal 2015
• Non-GAAP gross margin was 61.8% compared to 62.4% for the prior quarter and 62.0% for the fourth quarter of fiscal 2015
• Adjusted EBITDA was $284 million or a record 29.6% of revenue compared to $223 million or 25.3% of revenue for the prior quarter and $246 million or 24.4% of revenue for the fourth quarter of fiscal 2015
• For the fourth fiscal quarter, percentage of revenue by geography was: - U.S. – 58%- EMEA – 22%- Asia-Pacific – 11%- Americas International – 9%

Fiscal Year Highlights

• Cloud and managed services revenue grew 5%, and contact center product revenue increased 6% compared to fiscal year 2015, each in constant currency
• Software and services accounted for 74.9% of total revenue in fiscal 2016, up from 71.3% for fiscal 2015
• Recurring revenue represented 52.1% of total revenue for fiscal 2016, up from 48.9% of revenue for fiscal 2015, in constant currency
• Gross margin was 60.6% compared 59.5% for fiscal 2015
• Non-GAAP gross margin was 61.5% compared to 60.5% for fiscal 2015
• Adjusted EBITDA was $940 million or a record 25.4% of revenue compared to $900 million or 22.1% of revenue for fiscal 2015
• For the fiscal year, percentage of revenue by geography in constant currency was: - U.S. – 56%- EMEA – 24%- Asia-Pacific – 11%- Americas International – 9%

Preliminary Fiscal First Quarter 2017 Results

Preliminary unaudited financial results for the fiscal first quarter 2017 ended December 31, 2016:

• Revenue in the range of $870 million to $875 million dollars,
• Non-GAAP gross margin between approximately 61% to 62% of revenue, and
• Adjusted EBITDA in the range of $235 million to $240 million or approximately 27% to 27.4% of revenue, a record for first fiscal quarter results.

The company noted that these financial results for the first fiscal quarter 2017 are preliminary and subject to the completion of its financial closing procedures and review by its independent auditors. There can be no assurance that the company’s final results for the first fiscal quarter will not differ from these preliminary estimates as a result of quarter-end closing, review procedures, or review adjustments, and any such changes could be material.

Conference Call and Webcast

Avaya will not host a conference call and webcast to discuss its Q4 and fiscal year end 2016 financial results. The reporting date for first fiscal quarter 2017 results will be announced separately.

Links to this financial results press release and accompanying slides are all available on the investor page of Avaya’s website (www.avaya.com/investors).