Total Revenue Increases 25% YoY to a Record
$60.0 Million
Service Revenue from Midmarket and Enterprise
Customers Increases 44% YoY
GAAP Net Loss of ($0.5 Million); Non-GAAP Net
Income of $5.4 Million
Cash Flow from Operations of $6.5 Million
8x8, Inc. (NASDAQ:EGHT), the leading provider of Enterprise
Communications as a Service (ECaaS), today reported record
financial results for the first quarter of fiscal 2017 ended June
30, 2016.
First Quarter Fiscal 2017 Financial
Highlights:
- Total revenue of $60.0 million, a 25%
year-over-year increase; service revenue of $55.3 million, a 25%
year-over-year increase.
- Service revenue from mid-market and
enterprise customers grew 44% year-over-year and represents 52% of
the Company’s total service revenue.
- New monthly recurring revenue (MRR)
sold to mid-market and enterprise customers and by channel sales
teams increased 62% year-over-year and accounted for 58% of total
MRR booked in the quarter.
- GAAP net loss was ($0.5 million), or
($0.01) per diluted share.
- Non-GAAP net income was $5.4 million,
or $0.06 per diluted share.
- GAAP gross margin was 74%, compared
with 73% in the same period last year; non-GAAP gross margin was
75%, compared with 74% in the same period last year.
- GAAP service margin was 81%, compared
with 81% in the same period last year; non-GAAP service margin was
83%, compared with 82% in the same period last year.
“8x8’s fiscal 2017 is off to a great start with a 25%
year-over-year increase in total revenue to a record $60 million,
driven largely by the continued adoption of our global cloud
communications and collaboration services by midmarket and
enterprise customers,” said 8x8 CEO Vik Verma. “The move to the
cloud for enterprise communications is no longer a matter of if but
when, and I’m very pleased with the progress we’ve made
establishing 8x8 as the premiere provider of the industry’s most
secure, reliable and integrated pure-cloud solutions
available.”
Additional First Quarter and
Year-to-Date Highlights:
- Average monthly service revenue per
business customer was $399, compared with $353 in the same year ago
period.
- Gross monthly revenue churn on an
organic basis was 0.5%, compared with 1.0% in the same period last
year.
- Cash generated from operating
activities was $6.5 million, compared with $4.7 million in the same
period last year.
- Cash, cash equivalents and investments
were $167 million at June 30, 2016, compared with $157 million on
June 30, 2015.
- Jeff Romano appointed Senior Vice
President of Global Services and Support to lead global deployment,
professional services, program management and customer
support.
- Expansion of international footprint
announced with three new datacenters, localization for six
additional languages and two new customer support centers.
- Three new communications patents
granted for a total of 121 awarded patents.
8x8 reaffirmed its guidance for fiscal 2017 of annual revenue of
$249.0 million to $253.0 million and full year non-GAAP net income
in the range of $16.0 million to $20.0 million, representing
non-GAAP net income as a percent of revenue of 6.5% to 8.0%.
8x8 also announced that on July 18, 2016, it awarded 29 new
employees restricted stock units (RSUs) representing an aggregate
of 145,940 shares of the Company's common stock, and an option to
purchase 36,160 shares of common stock at an exercise price of
$15.18 under the 8x8 "2013 New Employee Inducement Incentive Plan."
These equity awards were approved by the 8x8 Board of Directors
Compensation Committee and were granted as an inducement to the new
employees entering into employment with 8x8, in accordance with
Nasdaq Market Place Rule 5635(c)(4). Each of the awards is subject
to vesting pursuant to the terms of the award agreements, which
include that the recipient be employed through each vesting
date.
Conference Call
Information:
Management will host a conference call to discuss these results
and other matters related to the Company’s business today, July 21,
2016 at 4:30 pm ET. The call is accessible via the following
numbers and webcast links:
Dial In: (877) 843-0417, domestic (408)
427-3791, international Replay: (855) 859-2056, domestic
(Conference ID #42326861) (404) 537-3406, international (Conference
ID #42326861) Webcast:
http://investors.8x8.com
Participants should plan to dial in or log on ten minutes prior
to the start time. A telephonic replay of the call will be
available three hours after the conclusion of the call until July
28, 2016. The webcast will be archived on 8x8’s website for a
period of one year. For additional information, visit
http://investors.8x8.com.
About 8x8, Inc.
8x8, Inc. (NASDAQ:EGHT) is the trusted provider of secure
and reliable enterprise cloud communications solutions to more than
45,000 businesses operating in over 100 countries across six
continents. 8x8's out-of-the-box cloud solutions replace
traditional on-premises PBX hardware and software-based systems
with a flexible and scalable Software as a Service (SaaS)
alternative, encompassing cloud business phone service, contact
center solutions, and conferencing. For additional information,
visit www.8x8.com, www.8x8.com/UK or connect with 8x8
on LinkedIn, Twitter, Google+ and Facebook.
Non-GAAP Measures
The Company has provided in this release financial information
that has not been prepared in accordance with Generally Accepted
Accounting Principles (GAAP). Management uses these non-GAAP
financial measures internally in analyzing our financial results
and believes they are useful to investors, as a supplement to GAAP
measures, in evaluating the Company’s ongoing operational
performance. Management believes that the use of these non-GAAP
financial measures provides an additional tool for investors to use
in evaluating 8x8’s ongoing operating results and trends and in
comparing financial results with other companies in the industry,
many of which present similar non-GAAP financial measures to
investors.
Non-GAAP financial measures should not be considered in
isolation from, or as a substitute for, financial information
prepared in accordance with GAAP. Investors are encouraged to
review the reconciliation of these non-GAAP financial measures to
their most directly comparable GAAP financial measures. This
reconciliation has been provided in the financial statement tables
included below in this press release.
Non-GAAP Net Income and Non-GAAP Net
Income Per Share
We have defined non-GAAP net income as net income for GAAP plus
non-cash tax adjustments, stock-based compensation, amortization of
acquired intangible assets, and acquisition-related costs. Non-cash
tax adjustments represent the difference between the amount of
taxes we expect to pay and our GAAP tax provision each period. We
have excluded stock-based compensation expense because it relies on
valuations based on future events, such as the market price of our
common stock, that are difficult to predict and are affected by
market factors that are largely not within the control of
management. Amortization of acquired intangible assets is excluded
because it is a non-cash expense that we do not consider part of
ongoing operations when assessing our financial performance, as it
relates to accounting for certain purchased assets. We have
excluded acquisition-related expenses because these expenses are
difficult to predict and are often one-time. We define non-GAAP net
income per share as non-GAAP net income divided by the
weighted-average diluted shares outstanding. We define non-GAAP net
income percentage of revenue as non-GAAP net income divided by
revenue. The GAAP and non-GAAP weighted average number of diluted
shares to calculate GAAP and non-GAAP earnings per share are the
same. We believe that such exclusions facilitate comparisons to our
historical operating results and to the results of other companies
in the same industry, and provides investors with information that
we use in evaluating management’s performance on a quarterly and
annual basis.
Forward Looking
Statements
This news release contains "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995
and Section 21E of the Securities Exchange Act of 1934. These
statements include, without limitation, information about future
events based on current expectations, potential product development
efforts, near and long-term objectives, potential new business,
strategies, organization changes, changing markets, future business
performance and outlook. Such statements are predictions only, and
actual events or results could differ materially from those made in
any forward-looking statements due to a number of risks and
uncertainties. Actual results and trends may differ materially from
historical results or those projected in any such forward-looking
statements depending on a variety of factors. These factors
include, but are not limited to, market acceptance of new or
existing services and features, success of our efforts to target
mid-market and larger distributed enterprises, changes in the
competitive dynamics of the markets in which we compete, customer
cancellations and rate of churn, impact of current economic climate
and adverse credit markets on our target customers, our ability to
scale our business, our reliance on infrastructure of third-party
network services providers, risk of failure in our physical
infrastructure, risk of failure of our software, our ability to
maintain the compatibility of our software with third-party
applications and mobile platforms, continued compliance with
industry standards and regulatory requirements, risks relating to
our strategies and objectives for future operations, including the
execution of integration plans and realization of the expected
benefits of our acquisitions, the amount and timing of costs
associated with recruiting, training and integrating new employees,
introduction and adoption of our cloud communications and
collaboration services in markets outside of the United States,
risks regarding compliance with regulations in the United States
and foreign jurisdictions in which our services are provided, and
general economic conditions that could adversely affect our
business and operating results. For a discussion of such risks and
uncertainties, which could cause actual results to differ from
those contained in the forward-looking statements, see “Risk
Factors” in the Company’s reports on Forms 10-K and 10-Q, as well
as other reports that 8x8, Inc. files from time to time with the
Securities and Exchange Commission. All forward-looking statements
are qualified in their entirety by this cautionary statement, and
8x8, Inc. undertakes no obligation to update publicly any
forward-looking statement for any reason, except as required by
law, even as new information becomes available or other events
occur in the future.
8x8, Inc. CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (In thousands, except per share amounts;
unaudited) Three Months Ended June
30, 2016 2015 Service revenue $ 55,296 $
44,168 Product revenue 4,745 3,724 Total revenue
60,041 47,892 Operating expenses: Cost of
service revenue (1) 10,235 8,459 Cost of product revenue 5,505
4,382 Research and development (2) 6,710 5,080 Sales and marketing
(3) 31,691 23,824 General and administrative (4) 6,801 6,068
Total operating expenses 60,942 47,813 Income
(loss) from operations (901 ) 79 Other income, net 410 234
Income (loss) from operations before provision for income
taxes (491 ) 313 Provision for income taxes 37 785
Net loss $ (528 ) $ (472 ) Net loss per share: Basic $ (0.01
) $ (0.01 ) Diluted $ (0.01 ) $ (0.01 ) Weighted average
number of shares: Basic 89,434 88,233 Diluted 89,434 88,233
(1)(2)(3)(4) - See reconciliation of GAAP measures to non-GAAP
measures.
8x8, Inc. RECONCILIATION OF SELECTED
GAAP MEASURES TO NON-GAAP MEASURES (In thousands,
unaudited)
(1) Amounts include amortization of
acquired intangible assets and stock-based compensation as
follows:
Three Months Ended June 30, 2016
2015 GAAP cost of service revenue $ 10,235 $ 8,459
Amortization of acquired intangible assets (593 ) (206 )
Stock-based compensation expense (360 ) (219 ) Non-GAAP cost of
service revenue $ 9,282 $ 8,034
Non-GAAP cost of service revenue as a
percentage of service revenue
16.8 % 18.2 %
(2) Amounts include stock-based
compensation and acquisition related expenses as follows:
Three Months Ended June 30, 2016 2015
GAAP research and development $ 6,710 $ 5,080 Stock-based
compensation expense (887 ) (531 ) Acquisition related expenses -
(5 ) Non-GAAP research and development $ 5,823 $
4,544
Non-GAAP research and development as a
percentage of total revenue
9.7 % 9.5 %
(3) Amounts include amortization of
acquired intangible assets, stock-based compensation, and
acquisition related expenses as follows:
Three Months Ended June 30, 2016 2015
GAAP sales and marketing $ 31,691 $ 23,824 Amortization of acquired
intangible assets (367 ) (340 ) Stock-based compensation expense
(1,915 ) (1,197 ) Acquisition related expenses - (27 )
Non-GAAP sales and marketing $ 29,409 $ 22,260
Non-GAAP sales and marketing as a
percentage of total revenue
49.0 % 46.5 %
(4) Amounts include stock-based
compensation and acquisition related expenses as follows:
Three Months Ended June 30, 2016 2015
GAAP general and administrative $ 6,801 $ 6,068 Stock-based
compensation expense (1,889 ) (1,075 ) Acquisition related expenses
- (890 ) Non-GAAP general and administrative $ 4,912
$ 4,103
Non-GAAP general and administrative as a
percentage of total revenue
8.2 % 8.6 %
8x8, Inc. CONDENSED CONSOLIDATED
BALANCE SHEETS (In thousands, unaudited)
June 30, March 31, 2016 2016
ASSETS Current assets: Cash and cash equivalents $ 27,466 $
33,576 Short-term investments 139,607 129,274 Accounts receivable,
net 11,538 11,070 Inventory 463 520 Deferred income taxes - 5,382
Other current assets 5,813 6,078
Total current assets
184,887 185,900 Property and equipment, net 13,015 12,375
Intangible assets, net 19,531 21,464 Goodwill 45,931 47,420
Non-current deferred income taxes 47,018 43,189 Other assets 3,751
3,104 Total assets $ 314,133 $ 313,452
LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $
12,649 $ 10,954 Accrued compensation 9,631 10,063 Accrued warranty
340 326 Accrued outside commissions 2,070 2,186 Deferred revenue
2,120 1,925 Other accrued liabilities 8,616 9,280 Total current
liabilities 35,426 34,734 Other liabilities 1,727 3,412
Total liabilities 37,153 38,146 Total stockholders' equity
276,980 275,306 Total liabilities and stockholders' equity $
314,133 $ 313,452
8x8, Inc. CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (In thousands, unaudited)
Three Months Ended June 30, 2016
2015 Cash flows from operating activities: Net
loss $ (528 ) $ (472 )
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation 1,471 993 Amortization of intangible assets 960 546
Amortization of capitalized software 146 456
Net accretion of discount and amortization
of premium on marketable securities
100 236 Stock-based compensation expense 5,051 3,022 Deferred
income tax (benefit) provision (44 ) 476 Other 190 74 Changes in
assets and liabilities: Accounts receivable, net (1,043 ) (612 )
Inventory 53 88 Other current and noncurrent assets (508 ) (470 )
Deferred cost of goods sold (120 ) (53 ) Accounts payable 1,137 933
Accrued compensation (354 ) 725 Accrued warranty 14 3 Accrued taxes
240 492 Deferred revenue 211 (704 ) Accrued outside commissions
(116 ) 199 Other current and noncurrent liabilities (324 ) (1,272 )
Net cash provided by operating activities 6,536 4,660
Cash flows from investing activities: Purchases of
property and equipment (1,604 ) (1,073 ) Acquisition of businesses,
net of cash acquired - (23,434 ) Cost of capitalized software (707
) (471 ) Proceeds from maturity of investments 17,025 7,820 Sales
of investments - available for sale 15,324 22,620 Purchase of
investments - available for sale (42,625 ) (34,409 ) Net cash used
in investing activities (12,587 ) (28,947 )
Cash flows
from financing activities: Capital lease payments (182 ) (54 )
Payment of contingent consideration and escrow (200 ) - Repurchase
of common stock (629 ) (25 ) Proceeds from issuance of common stock
under employee stock plans 1,039 336 Net cash
provided by financing activities 28 257 Effect of exchange
rate changes on cash (87 ) 218 Net decrease in cash and cash
equivalents (6,110 ) (23,812 ) Cash and cash equivalents,
beginning of the period 33,576 53,110 Cash and cash
equivalents, end of the period $ 27,466 $ 29,298
8x8, Inc. Selected Operating Statistics
Three Months Ended June 30, Sept.
30, Dec. 31, Mar. 31,
June 30, 2015 2015
2015 2016
2016 Business customer average monthly service
revenue per customer (1) $ 353 $ 360 $ 369 $ 385 $ 399 Monthly
business service revenue churn (2)(3) 1.0 % 0.7 % 1.2 % 0.4 % 0.5 %
Overall service margin 81 % 80 % 80 % 81 % 81 % Overall
product margin -18 % -15 % -21 % -18 % -16 % Overall gross margin
73 % 73 % 72 % 72 % 74 % (1) Business customer average
monthly service revenue per customer is service revenue from
business customers in the period divided by the number of months in
the period divided by the simple average number of business
customers during the period. (2) Business customer service revenue
churn is calculated by dividing the service revenue lost from
business customers (after the expiration of 30-day trial) during
the period by the simple average of business customer service
revenue during the same period and dividing the result by the
number of months in the period. (3) Excludes DXI business customer
service revenue churn for all periods presented.
8x8,
Inc. RECONCILIATION OF NET LOSS TO NON-GAAP NET INCOME
AND NON-GAAP NET INCOME PER SHARE (In thousands, except
per share amounts; unaudited) Three Months
Ended June 30, 2016 2015 Net loss $
(528 ) $ (472 ) Adjustments: Non-cash tax adjustments (44 ) 476
Amortization of acquired intangible assets 960 546 Stock-based
compensation expense 5,051 3,022 Acquisition related expenses -
922 Non-GAAP net income $ 5,439 $ 4,494
Reconciliation between GAAP and non-GAAP
weighted average shares used in computing basic and diluted net
loss per share:
Denominator for basic calculation 89,434 88,233 Effect of dilutive
securities: Employee stock options 1,528 1,709 Employee restricted
purchase rights 1,602 834 Denominator for diluted
calculation 92,564 90,776 GAAP net loss per
share - Diluted $ (0.01 ) $ (0.01 ) Adjustments: Non-cash tax
adjustments - 0.01 Amortization of acquired intangible assets 0.01
0.01 Stock-based compensation expense 0.06 0.03 Acquisition related
expenses - 0.01 Non-GAAP net income per share -
Diluted $ 0.06 $ 0.05 GAAP net loss as
a percentage of total revenue -1 % -1 % Adjustments: Non-cash tax
adjustments 0 % 1 % Amortization of acquired intangible assets 2 %
1 % Stock-based compensation expense 8 % 6 % Acquisition related
expenses 0 % 2 %
Non-GAAP net income as a percentage of
total revenue
9 % 9 %
8x8, Inc. RECONCILIATION OF GAAP GROSS
MARGIN TO NON-GAAP GROSS MARGIN (In thousands,
unaudited) Three Months Ended June
30, 2016 2015 GAAP gross margin $ 44,301 $
35,051 Adjustments: Amortization of acquired intangible assets 593
206 Stock-based compensation expense 360 219 Non-GAAP
gross margin $ 45,254 $ 35,476 GAAP gross
margin as a percentage of total revenue 74 % 73 % Adjustments:
Amortization of acquired intangible assets 1 % 0 % Stock-based
compensation expense 0 % 1 %
Non-GAAP gross margin as a percentage of
total revenue
75 % 74 %
8x8, Inc. RECONCILIATION OF GAAP SERVICE
MARGIN TO NON-GAAP SERVICE MARGIN (In thousands,
unaudited) Three Months Ended June
30, 2016 2015 GAAP service margin $ 45,061
$ 35,709 Adjustments: Amortization of acquired intangible assets
593 206 Stock-based compensation expense 360 219
Non-GAAP service margin $ 46,014 $ 36,134 GAAP
service margin as a percentage of service revenue 81 % 81 %
Adjustments: Amortization of acquired intangible assets 1 % 0 %
Stock-based compensation expense 1 % 1 %
Non-GAAP service margin as a percentage of
service revenue
83 % 82 %
8x8, Inc. RECONCILIATION OF GAAP INCOME
(LOSS) FROM OPERATIONS TO NON-GAAP INCOME FROM
OPERATIONS (In thousands, unaudited)
Three Months Ended June 30, 2016
2015 GAAP income (loss) from operations $ (901 ) $ 79
Adjustments: Amortization of acquired intangible assets 960 546
Stock-based compensation expense 5,051 3,022 Acquisition related
expenses - 922 Non-GAAP income from operations $
5,110 $ 4,569 GAAP income or loss from
operations as a percentage of total revenue -2 % 0 % Adjustments:
Amortization of acquired intangible assets 2 % 1 % Stock-based
compensation expense 9 % 7 % Acquisition related expenses 0 % 2 %
Non-GAAP income from operations as a percentage of total revenue 9
% 10 %
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160721006253/en/
8x8, Inc.Investor Contact:Joan Citelli,
408-654-0970joan.citelli@8x8.comorMedia Contact:Neha
Mirchandani, 669-256-5095neha.mirchandani@8x8.com
8x8 (NYSE:EGHT)
Historical Stock Chart
From Apr 2024 to May 2024
8x8 (NYSE:EGHT)
Historical Stock Chart
From May 2023 to May 2024