RingCentral
As businesses adjust to remote and hybrid work models, communication and collaboration tools become even more critical to success. In this setting, unified communications as a service, or UCaaS, enables employees to communicate from any location and any device. It encompasses various communication methods, including voice, video, text, messaging and social media, and is designed to be both cost- and labor-efficient.
RingCentral, which offers enterprise-grade cloud communications, video conferencing and contact center solutions, touts itself as the largest and fastest growing pure-play UCaaS vendor. This week, RingCentral announced two important partnerships—one with AWS, the other with Avaya. Let's dive into those announcements and explore what they mean for RingCentral.
Amazon Web Services answers the call
RingCentral has entered into a strategic collaboration with Amazon Web Services (AWS) to help companies expedite their cloud implementations and transform their customer and employee communications. Under this multi-year partnership, AWS will provide its customers with access to RingCentral MVP (Message Video Phone) and RingCentral Contact Center—unified communications platforms that integrate team messaging and video meetings with a top-performing cloud-based phone system. AWS will also provide customer access to RingCentral's Contact Center solution.
"This announcement with AWS marks the beginning of an important collaboration for RingCentral, whereby we will work together to deliver technologies and innovations that Improve business communications for today's hybrid workforce of both knowledge workers and front liners," said Mo Katibeh, president and chief operating officer at RingCentral. He went on to say that the partnership will match RingCentral's business communication service with "the unmatched security, compute power, data residency and privacy of AWS."
Avaya Cloud Office
Meanwhile, RingCentral and Avaya have extended their multi-year partnership, which now includes minimum seat commitments and a better-aligned incentive structure to accelerate migration to Avaya Cloud Office (ACO). The deal benefits RingCentral because Avaya will be compensated only as ACO seats are sold, with no commissions needing to be prepaid by RingCentral.
The terms of the expanded agreement aim to unlock further opportunities for RingCentral and Avaya to maximize customer value. The partnership has also expanded to include additional go-to-market models that enable Avaya to sell ACO directly to its installed base.
ACO allows companies to connect their office, remote and mobile workers to a single system so they can collaborate from anywhere on any device—without needing to switch back and forth between platforms to get things done. More than 200 third-party apps such as Jira, Marketo and PagerDuty are pre-integrated to help achieve this.
ACO is available in 15 billing countries and can be extended to more than 40 countries through the Global Office feature. The system provides an all-in-one calling, meeting and messaging solution with incoming call numbers (local or toll-free) for over 100 different countries. Operationally, this allows for cross-border communication with employees and customers regardless of device and on a single bill.
The two companies also said that they plan to make additional investments to further differentiate ACO and expand its integration with other Avaya products.
Wall Street's reaction and RingCentral’s optimism
These two important partnership deals on top of a quarterly earnings announcement made for a wild ride this week for RingCentral this week. After the AWS announcement on Wednesday, the stock got a bump—up roughly 7%. However, it then dropped around 20 % after the company provided guidance for 2023 that missed Wall Street’s growth expectations. Avaya's Chapter 11 bankruptcy filing this week likely added to the mixed results for RingCentral, although the two companies seemed to have reached a solid resolution despite Avaya’s restructuring.
Vlad Shmunis, RingCentral's founder, chairman and CEO, explained why he is not worried: "As part of its recapitalization, Avaya is emerging stronger and better positioned to migrate the world's largest on-premises installed base to Avaya Cloud Office by RingCentral, the best UCaaS destination for every Avaya Unified Communications customer."
Shumis was confident in this week's earnings call, stating, “We are in a select category of SaaS companies with over $2 billion of recurring revenue, and our Q4 results reflect our ability to deliver healthy growth and increasing profitability as we continue to scale,” he said. “We are executing well in the current environment given our product leadership, which provides customers with the market's leading UCaaS platform, as well as an integrated CCaaS solution.” (CCaaS means “contact center as a service.”)
Photo 116741782 © Sarayut Thaneerat | Dreamstime.com
Cloudy and mostly sunny outlook ahead
Providing cloud-based communication and collaboration tools to workforces will continue to be a priority for many companies. Employees increasingly demand flexibility and are willing to trade jobs to work for companies that offer it. At the same time, employers benefit from supporting remote work by accessing a wider talent pool. Ultimately, with the cloud's reliability and scalability, employees and customers can collaborate in new ways, empowering a more diverse workforce from nearly anywhere with minimal operational lift.
RingCentral benefits from this trend because it is the market leader in the highly fragmented UCaaS space, where it continues to grow. With the help of channel partnerships like the ones announced this week, RingCentral continues to expand beyond its initial successes in the small and medium business market to serve more and more larger companies.
Final message
RingCentral continues to lead in this space but will need to stay competitive and transparent with its pricing. This is particularly relevant because last year the company changed its SMS overage charges in response to changes in FCC guidelines. In addition, while its videoconferencing features are robust, many of the company's bells-and-whistles features are reserved for higher-paying customers—but that’s not always conveyed clearly. To take one example, RingCentral needs to clarify its webinar pricing at higher attendance levels.
The new partnership with AWS and the now more favorable relationship with Avaya support RingCentral’s strong positioning to execute and deliver healthy growth. However, there is no doubt that 2023 will see many customers that are wary about economic conditions shop around for better deals as they try to reduce costs and the number of vendors they must deal with. Additionally, per-seat pricing models may suffer a bit in larger enterprises that have pink-slipped a significant number of staff.
Even with these challenges—and the bumpy ride taken by its shares this week—RingCentral looks poised to make the most of its new partnerships in 2023 and beyond.
Note: Moor Insights & Strategy writers and editors may have contributed to this article.
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‘The actions we are taking are designed to accelerate our transformation and make Avaya an even stronger partner to our customers and strategic and channel partners,’ Avaya said in a channel and strategic partner FAQ on its bankruptcy filing.
The Chapter 11 Filing
On Feb. 14, Avaya filed for Chapter 11 bankruptcy protection in federal court in Texas. Avaya in its filing listed total assets of between $1 billion and $10 billion and total liabilities of between $1 billion and $10 billion. The company lists its number of creditors as being between 25,001 and 50,000.
Avaya’s “Restructuring Support Agreement,” according to the company, will reduce Avaya’s total debt by more than 75 percent, from approximately $3.4 billion today to approximately $800 million. In addition, Avaya said it has secured committed financing of approximately $780 million. The company said it expects this financial restructuring to be completed within 60 to 90 days. Kirkland & Ellis is serving as legal counsel to Avaya, Evercore Group is serving as financial adviser and AlixPartners is serving as restructuring adviser, Avaya said in a statement issued Tuesday.
Avaya Inc., the veteran unified communications company, said this week that it’s filing for Chapter 11 bankruptcy protection for the second time in its history, while announcing a plan that will slash $2.6 billion of debt from its balance sheet.
The company’s filing in a Texas court revealed that it has agreed a deal with its creditors. It added that the restructuring plan had “overwhelming support” from more than 90% of its secured lenders.
Through the restructuring plan, it will “eliminate more than 75% of its debt,” the company said. As a result, its total liabilities will shrink from $3.4 billion now to about $800 million, allowing it to continue running its business.
Avaya said in its filing that “revenues from capex-based purchases (software license and support and hardware) have continued to decline over the past several years, consistent with industry trends and customers’ preference to shift towards cloud-based solutions.”
The situation grew worse for Avaya when its subscription business first began to slow during fiscal 2022. The company managed to raise $600 million in financing last July, but even with that funding, it was unable to turn things around.
Avaya’s bankruptcy has been an option on the table for some time. Last August, the company warned that it had “substantial doubt” about its ability to continue operating as a going concern, saying it would miss its third-quarter fiscal 2022 revenue targets by some distance.
That came after the company hired Alan Masarek (pictured) as its new chief executive officer in July. He had previously pulled Vonage America LLC from the brink of bankruptcy before going on to sell it to Telefonaktiebolaget LM Ericsson AB.
In a statement announcing the bankruptcy, Masarek said he joined Avaya to strengthen its capital structure and realize its business transformation. “We are excited to move ahead as a well-capitalized company with one of the strongest balance sheets in our industry that includes substantial cash to invest in our own success,” he said of the plan.
Avaya was founded back in 2000 after spinning off from Lucent Technologies Inc. and debuted on the stock market later that year. In 2007 it became a private company in an $8.2 billion deal led by Silver Lake Partners and TPG Capital. That appears to be when its problems started, as it remained a private entity for a full decade until declaring bankruptcy for the first time in January 2017. After emerging from that process, it went public again at the end of the year.
The company is a major player in the unified communications technology business, and it’s also involved in networking. It started out as a provider of communications, and later, networking hardware. But for the last six years has been pushing its cloud contact center and collaboration software.
Enterprises use its software to manage their contact centers and to enable business collaboration. It has established a strategic partnership with RingCentral LLC too, with that company helping to develop and sell its cloud-based offerings. RingCentral is also a major financial backer of Avaya, having invested $500 million in the company in 2019.
Avaya’s bankruptcy highlights the challenges faced by traditional hardware firms as they pivot to selling software-based products as-a-service. It’s a slow process that involves a radical redesign of the company’s core offerings and business model, and clearly it doesn’t always work out as planned.
Hyoun Park, an analyst with Amalgam Insights, told SDxCentral that Avaya also missed a big opportunity when the COVID-19 pandemic helped to accelerate digital transformation. At the time, the collaboration and contact center markets were growing rapidly, but Avaya’s debt obligations “prevented it from executing in these areas,” he said.
Avaya said it believes it will emerge from its latest bankruptcy proceedings in a much healthier state. It said it will exit bankruptcy in 60 to 90 days as a private concern armed with a fresh $780 million in funding that will be used to invest in growing its business.
Most likely, Avaya’s debt restructuring has been in the works for some time, and it could turn out to be a smart move that sets the company up for its next phase of growth, said Liz Miller of Constellation Research Inc.
“Now, arguably, they hit send on that cloud communications strategy a few years too late,” Miller added. “But, they are closing the gap with their Avaya Experience Platform and the Avaya Cloud Office offerings. What we will be keeping an eye on is how they continue to deliver on their announced technology innovations and roadmaps.”
Analysts were divided over the future prospects for Avaya. Charles King of Pund-IT Inc. told SiliconANGLE that in addition to the fresh funding, Avaya possesses some valuable intellectual property assets too, owning more than 4,000 existing and pending technology patents.
“One interpretation of its lenders’ willingness to support the restructuring plan is that they believe Avaya can be rebuilt into a functional, profitable business again,” King said. “Alternatively, it could be that the new funding will enable Avaya to keep operating and support its existing customers and suppliers while its owners look for ways to profitably sell off its assets. Or we could see a combination of both approaches, resulting in Avaya emerging as a leaner and more focused vendor. In any case, the company’s long and strange journey doesn’t appear to be over yet.”
Rob Enderle of the Enderle Group was less convinced about Avaya’s prospects, however. He told SiliconANGLE that Avaya is one of the last surviving remnants of yesteryear’s telecommunications industry and has struggled to reinvent itself for the modern age.
“It has historically been undermarketed, and given the need to change its image from an obsolescent telecom firm to one that is more forward-looking, it continues to struggle to be relevant, which doesn’t bode well for its long-term future,” he said. “Avaya looks like a company that is running out of time.”
Photo: Avaya/Facebook
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New York, New York--(Newsfile Corp. - February 16, 2023) - Faruqi & Faruqi, LLP, a leading national securities law firm, is investigating potential claims against Avaya Holdings Corp. ("Avaya" or the "Company") (NYSE: AVYA) and reminds investors of the March 6, 2023 deadline to seek the role of lead plaintiff in a federal securities class action that has been filed against the Company.
If you suffered losses exceeding $100,000 investing in Avaya stock or options between November 22, 2021 and November 29, 2022 and would like to discuss your legal rights, call Faruqi & Faruqi partner Josh Wilson directly at 877-247-4292 or 212-983-9330 (Ext. 1310). You may also click here for additional information: www.faruqilaw.com/AVYA.
Feb 14 (Reuters) - Avaya Holdings Corp (AVYA.N) has filed for Chapter 11 bankruptcy and secured a financing of $780 million as it restructures its business, the IT firm said on Tuesday.
Avaya said upon completion of the restructuring process it will reduce its total debt by more than 75%, from nearly $3.4 billion to about $800 million.
The new capital is "expected to provide substantial liquidity to support Avaya during the process and beyond," it said.
The cloud communications company added it would continue to serve its customers and partners without interruption and expects to complete the process in 60 to 90 days.
Avaya had said there was substantial doubt about its ability to continue as a going concern in light of a debt maturity in 2023, according to a Wall Street Journal report in December, which cited people familiar with the matter.
Earlier in September, Avaya has also announced restructuring, including job cuts, to reduce costs. Avaya's shares have fallen nearly 99% last year.
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Evercore Group is serving as financial advisor to Avaya for the process.
Reporting by Tiyashi Datta in Bengaluru; Editing by Shailesh Kuber
Our Standards: The Thomson Reuters Trust Principles.
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The UC giant, which is filing for bankruptcy for the second time in six years, listed in its filing unsecured claims valued in millions from the likes of Verint Americas, Microsoft and solution provider giant SHI International. Avaya’s CEO says the company is poised for a ‘transformation.’
Struggling unified communications giant Avaya Holdings Corp. filed for Chapter 11 bankruptcy protection Tuesday in federal court in Texas.
The filing follows months of speculation of a bankruptcy declaration following Avaya’s 2022 cloud subscription accounting problems that led to substantial earnings and revenue target misses.
Durham, N.C.-based Avaya said in a press release that “these actions will not impact the company’s customers, channel and strategic partners, suppliers, vendors or employees.”
[RELATED: Avaya Bankruptcy Filing: 5 Things To Know]
In its bankruptcy court filing, Avaya lists total assets of between $1 billion and $10 billion and total liabilities of between $1 billion and $10 billion. The company lists its number of creditors as being between 25,001 and 50,000.
The firm in the court filing lists the creditors with the largest unsecured claims include Verint Americas in the amount of $22.93 million; Microsoft for $9.01 million; Wistron Corp. for $8.9 million; and solution provider giant SHI International for $7.71 million.
Avaya previously filed for bankruptcy in 2017.
Avaya’s stretch of financial difficulties began in May when the company reported that it had missed its revenue target and posted a considerable earnings miss with revenue that declined 20 percent during the company’s third-quarter 2022, which ended June 30, 2022. The company then made the move to replace Jim Chirico, the company’s CEO since 2018. Alan Masarek was brought on in August as president and CEO after serving as Vonage’s CEO for six years.
“I joined Avaya to help unlock the power of its iconic brand, global customer footprint, massive partner ecosystem, large-scale communications deployments and outstanding team,” Masarek said in a statement published on Tuesday. “Strengthening Avaya’s capital structure is a critical step to fully realize our transformation, and we are excited to move ahead as a well-capitalized company with one of the strongest balance sheets in our industry that includes substantial cash to invest in our own success.”
In late December, Avaya said its stock could be delisted from the New York Stock Exchange because the average closing price of the its common stock was less than $1 over a consecutive 30 trading-day period.
Completing the financial restructuring will reduce the company’s total debt by more than 75 percent, from approximately $3.4 billion today to approximately $800 million, Avaya said. Additionally, Avaya said it has secured committed financing of approximately $780 million.
The financial restructuring will provide the company improved financial flexibility to boost up its investment in communications products, solutions and services for customers, including the Avaya Experience Platform, its cloud-based Contact Center offering, Avaya said.
Avaya’s strategy includes a multistep process of shifting its portfolio and customers entirely to cloud—whether it’s private, multitenant or somewhere in between. It will also include a “cultural revitalization” that will allow Avaya to bring in the right talent for the work ahead, Masarek told CRN in an interview when he joined the company.
The company said it expects this financial restructuring to be completed within 60 to 90 days.
Kirkland & Ellis LLP is serving as legal counsel to Avaya, Evercore Group L.L.C. is serving as financial advisor and AlixPartners LLP is serving as restructuring advisor.
BELMONT, Calif., February 14, 2023--(BUSINESS WIRE)--RingCentral, Inc. (NYSE: RNG), a leading provider of global enterprise cloud communications, video meetings, collaboration, and contact center solutions, today announced an extended and expanded strategic partnership agreement with Avaya Inc., a global provider of solutions to enhance and simplify communications and collaboration. As part of Avaya’s transformation and expedited recapitalization, Avaya Cloud Office by RingCentral ("ACO") remains Avaya’s exclusive multi-tenanted Unified Communications as a Service (UCaaS) solution to Avaya’s customers, including its on-premises installed base totaling tens of millions of users worldwide.
Under the terms of the expanded agreement, RingCentral and Avaya have agreed to extend their multi-year partnership with minimum seat commitments and a better aligned incentive structure intended to drive accelerated migration to ACO. These improvements will unlock further opportunities for RingCentral and Avaya to maximize value for their customers. The partnership has also expanded to include additional go-to-market models that enable Avaya to sell Avaya Cloud Office to its installed base on a direct basis.
"Under our past agreement with Avaya hundreds of thousands of seats have transitioned to ACO. With this new agreement, we expect for this motion to continue and accelerate as new product integrations and sales plays will be enabled," said Vlad Shmunis, founder, chairman and CEO of RingCentral. "As part of its recapitalization, Avaya is emerging stronger and better positioned to migrate the world’s largest on-premises installed base to Avaya Cloud Office by RingCentral, the best UCaaS destination for every Avaya Unified Communications customer."
"Our goal is to serve our customers first and foremost," said Alan Masarek, CEO of Avaya. "Through our extended and expanded partnership with RingCentral, we look forward to empowering our customers in their cloud migration journeys — creating an all win situation for our customers, RingCentral, Avaya, and our channel partners."
To further differentiate ACO, both RingCentral and Avaya will make further product and development investments into ACO, including ACO’s integration with other Avaya products.
"RingCentral and Avaya have a strong playbook for migrating customers to the cloud through ACO," said Elka Popova, vice president of digital transformation at Frost & Sullivan. "Leveraging RingCentral’s integration with Avaya telephony endpoints, and RingCentral’s reputation as a trusted provider of leading cloud communications solutions — together with Avaya’s existing go-to-market strategy and channel community – this partnership offers a compelling path for customers to move to the cloud."
Advisors
Guggenheim Securities, LLC served as financial advisor to RingCentral. Wilson Sonsini Goodrich & Rosati is acting as legal advisor to RingCentral.
About RingCentral
RingCentral, Inc. (NYSE: RNG) is a leading provider of business cloud communications and contact center solutions based on its powerful Message Video Phone™ (MVP®) global platform. More flexible and cost-effective than legacy on-premises PBX and video conferencing systems, RingCentral® empowers modern mobile and distributed workforces to communicate, collaborate, and connect via any mode, device, and device location. RingCentral offers three essential products in its portfolio, including RingCentral MVP®, a Unified Communications as a Service (UCaaS) platform including team messaging, video meetings, and cloud phone system; RingCentral Video®, the company's video meetings solution with team messaging that enables Smart Video Meetings™; and RingCentral Contact Center™ solutions. RingCentral's open platform integrates with leading third-party business applications and allows customers to customize business workflows easily. RingCentral is headquartered in Belmont, California, and has offices worldwide.
Forward Looking Statements
This press release contains "forward-looking statements," including but not limited to, statements regarding RingCentral’s future financial and operating performance, RingCentral’s strategic partnership with Avaya, the marketing and sale of Avaya Cloud Office by RingCentral, the anticipated benefits of and activity under RingCentral’s strategic partnership with Avaya, and the ability to create a long-term growth opportunities for RingCentral. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including risks related to the parties’ ability to perform their obligations under the strategic partnership and related commercial arrangements, the parties ability to successfully develop and execute the envisioned jointly developed programs, technology and automation, the ability to successfully transition customers to Avaya Cloud Office by RingCentral, as well as those risks and uncertainties included under the captions "Risk Factors" and "Management’s Discussion and Analysis of Financial Condition and Results of Operations," in RingCentral’s Form 10-Q for the quarter ended September 30, 2022, filed with the Securities and Exchange Commission; and in other filings RingCentral makes with the Securities and Exchange Commission from time to time.
All forward-looking statements in this press release are based on information available to RingCentral as of the date hereof, and we undertake no obligation to update these forward-looking statements, to review or confirm analysts’ expectations, or to provide interim reports or updates.
© 2023 RingCentral, Inc. All rights reserved. RingCentral, Message Video Phone, MVP, RingCentral MVP, RingCentral Video, RingCentral Contact Center, Smart Video Meetings, and the RingCentral logo are trademarks of RingCentral, Inc.
View source version on businesswire.com: https://www.businesswire.com/news/home/20230213005690/en/
Contacts
Investor Relations Contact:
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650-450-4826
ir@ringcentral.com
PR Contact:
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(650) 562-6545
Mariana.leventis@ringcentral.com
Avaya Holdings (NYSE:AVYA) has filed for Chapter 11 bankruptcy, pursuing a prepackaged plan to cut its debt and shore up the balance sheet as it had signaled in accurate weeks.
The company said its Restructuring Support Agreement has support of more than 90% of its secured lenders, and that the agreement should allow for an expedited restructuring it can complete in 60 to 90 days with no disruption to paying vendors, suppliers or employees.
The move will cut total debt by more than 75% - to about $800M from a current $3.4B. The resulting balance sheet will have less than 1x net leverage, Avaya said.
It's received commitments for $628M in debtor-in-possession financing, including a $500M new-money term loan, and a $128M ABL facility - both of which will roll into exit facilities once the restructuring is complete.
Some in the investor group have committed $150M in additional new-money financing at exit, meaning a total committed financing of $780M.
Avaya also said it has extended and expanded its partnership with RingCentral (NYSE:RNG). It will continue to act as the exclusive sales agent for direct and partner sales of Avaya Cloud Office, and be compensated in cash as those seats are sold.
"Strengthening Avaya’s capital structure is a critical step to fully realize our transformation, and we are excited to move ahead as a well-capitalized company with one of the strongest balance sheets in our industry that includes substantial cash to invest in our own success," said Avaya CEO Alan Masarek.
© Thomson Reuters A arrives at the U.S. District Bankruptcy Court for the Southern District of New York in New York
(Reuters) - Avaya Holdings Corp has filed for Chapter 11 bankruptcy and secured a financing of $780 million as it restructures its business, the IT firm said on Tuesday.
Avaya said upon completion of the restructuring process it will reduce its total debt by more than 75%, from nearly $3.4 billion to about $800 million.
The new capital is "expected to provide substantial liquidity to support Avaya during the process and beyond," it said.
The cloud communications company added it would continue to serve its customers and partners without interruption and expects to complete the process in 60 to 90 days.
Avaya had said there was substantial doubt about its ability to continue as a going concern in light of a debt maturity in 2023, according to a Wall Street Journal report in December, which cited people familiar with the matter.
Earlier in September, Avaya has also announced restructuring, including job cuts, to reduce costs. Avaya's shares have fallen nearly 99% last year.
Evercore Group is serving as financial advisor to Avaya for the process.
(Reporting by Tiyashi Datta in Bengaluru; Editing by Shailesh Kuber)
