Jim Chirico, Avaya CEO, joins Yahoo Finance’s The First Trade with Alexis Christoforous and Brian Sozzi to discuss how the company has transformed to a cloud and software services company, future outlook, collaboration with educational institutes like USC, Berkeley and Virigina Tech, in addition to the major tech names like Ring Central and Google.
BRIAN SOZZI: OK, our next guest thinks the work-from-home trend is here to stay postcoronavirus pandemic. To meet this need, the tech company Avaya has transformed its offerings from hardware to cloud and software services, teaming up with major tech names like Google. Here to discuss the company's plans to move into the future of technology is Jim Chirico, Avaya CEO. Jim, good to see you from the floor of New York Stock Exchange here.
So talk to us about your business. Certainly it's a lot different than it was 20 years ago. How has this work-from-home environment changed your company?
JIM CHIRICO: Yeah, first of all, thank you for having me on. I really appreciate it. Yeah, our company has really transformed. In fact, we've transformed significantly over the last 2 and 1/2 years, the last time I was here on the floor when we went public, and we're really focusing on becoming a cloud and SaaS company.
And as a result of that, we really implemented three key strategies, and that's to grow our cloud and SaaS. And I'm pretty pleased to report that just in the last 12 months we've more than doubled our revenue, close to a billion. 30% of our revenues today are now coming from cloud and SaaS.
We're also growing our business. We're ahead quarter over quarter and year over year revenue growth. And, in fact, 89% of our revenues today are software and services. And more importantly, 65% are recurring revenue. So we have a great book of business going into each and every quarter, and those are up 5% in just the last year.
And then lastly, we've been very profitable. We posted 26% EBIT as percent of revenue. We have close to 3/4 of a billion dollars in cash. So the effort that we've put forth really to transform the company to cloud and SaaS is actually taking hold.
ALEXIS CHRISTOFOROUS: Jim, I know you recently brought on your first-ever chief revenue officer, Stephen Spears, over from SAP. How is that hire going to play with your strategy as the company pivots to cloud and to SaaS?
JIM CHIRICO: Yeah, you know, I think it plays in perfectly. Stephen is obviously a seasoned sales professional. He has tremendous amount of experience in cloud and just further commitment and definition around what we're trying to do from a company.
We're just really in the early innings, and in just the last, say, nine months, we've introduced a CCaaS solution for the cloud. We're a leader in private and hybrid cloud solutions. We have a UCaaS solution that we've partnered with RingCentral to deliver that technology to our partners. We have a video and collaboration portfolio now. So we are expanding significantly in our cloud offers, and I think Stephen's just the right guy to take us to the next step.
BRIAN SOZZI: Jim, we've seen recently a lot of these work-from-home trades just a pure stock-market perspective start to sell off on fears that, as the economy opens, perhaps growth rates in these businesses will slow. Have you seen any slowdown in your business?
JIM CHIRICO: No, we haven't. In fact, our work-from-home solutions are actually continuing to gain momentum. We're doing that, as I said, through our cloud offers, and we also have a subscription offer which is actually doing quite well.
So we're seeing our business continue to gain momentum, and, you know, we're kind of unique. We're not just associated with a particular product. We offer a full breath, a full solution of platforms that folks can deploy, whether it's on legacy solutions or whether it's in the cloud or, as I mentioned, with hybrid.
And we're the largest installed base in the world. We operate in over 180 countries. We have more than 100,000 customers, so extremely diverse, and we're the leader in large enterprises. So we feel pretty comfortable where we are and, more importantly, about the growth opportunities for us in front of us.
ALEXIS CHRISTOFOROUS: Jim, I know among your clients are some big-name companies-- American Express, Apple, Humana-- but you're also dealing with the education side of things. You've got Berkeley, USC, Michigan State as clients as well. What are their needs right now, and how are you helping them?
JIM CHIRICO: Yeah, really the thrust from work from home for us is really focused on three key verticals-- one, government; the second one on health care; and the third on education, as you mentioned.
And we have a new solution that we introduced earlier this year. It's our video collaboration, so kind of brings the best of both worlds, and really fits perfectly in with education. So as universities and elementary schools and, in fact, thousands of schools around the globe are really deploying our Spaces technology because it's more than video-- you establish collaboration rooms, and it's a great way for the students to interact as those rooms stay open basically 24 by 7, a great exchange of ideas. So we're seeing huge success in that product. And as I said, it's deployed globally and not just in the US and some of the large universities, as you mentioned, but across the globe in Europe, Asia, South America, et cetera.