Fiscal 2015 Revenue of $162.4 Million, Up 26%
Year-Over-Year;Non-GAAP Net Income of $16.2 Million, 10% of
Revenue, or $0.18 per Diluted Share
8x8, Inc. (NASDAQ:EGHT), a leading provider of cloud-based
unified communications and contact center solutions, today
announced fourth quarter and full year fiscal 2015 financial
results for the period ended March 31, 2015.
- Q4 total revenue of $43.5 million, up
22% organically year-over-year.
- Q4 GAAP net income of $183,000, or
$0.00 per diluted share.
- Q4 Non-GAAP net income of $4.9 million,
or $0.05 per diluted share.
- Fiscal 2015 revenue of $162.4 million,
up 26% year-over-year and approximately 20% organically.
- Fiscal 2015 GAAP net income of $1.9
million, $0.02 per diluted share.
- Full year fiscal 2015 non-GAAP net
income of $16.2 million, or $0.18 per diluted share.
“8x8 ended another record quarter and fiscal year with 26%
fiscal 2015 revenue growth and non-GAAP net income of 10% of
revenue,” said 8x8 CEO Vik Verma. “We achieved these objectives
while building a foundation for growth with the expansion of our
senior management team and investments in R&D to capitalize on
the significant and growing market opportunity for cloud
communications solutions that exists worldwide.”
Mr. Verma added, “During fiscal 2015, 8x8 made great progress
enhancing our cloud communications offerings for the mid-market,
solidifying partnerships with industry leading resellers and VARs
and rolling out our services to large distributed organizations. As
a result of our dedicated focus on integrating our telephony and
contact center solutions, optimizing the security and reliability
of our services, expanding globally and providing outstanding
deployment and support, we believe we are ideally positioned to
meet the communications requirements of the highly sought after
mid-size and enterprise segments of the market.”
Fourth Quarter and Year-to-Date
Highlights:
- New monthly recurring revenue (MRR)
sold in the fourth quarter of fiscal 2015 to mid-market customers
and by channel sales teams increased 35% year-over-year.
- Service revenue from mid-market
customers increased 34% year-over-year and now represents 43% of
total service revenue, compared with 39% in the same year ago
period.
- Average monthly service revenue per
business customer increased 11% year-over-year to a record $320,
compared with $287 in the same period last year.
- GAAP service margin was 81%, compared
with 79% in the same period a year ago; overall gross margin was
73%, compared with 70% in the same year ago period.
- Monthly business service revenue churn
was 0.5%, compared with 1.2% in the same period last year.
- Cash, cash equivalents and investments
was $177.1 million in the fourth quarter of fiscal 2015, compared
with $178.4 million in the same period last year; cash flow from
operating activities was $21.2 million year to date;
spent $19.4 million on share repurchase.
- Ended the quarter with 41,621 business
customers, up 10% compared with 37,933 customers in the same period
a year ago.
Additional Year-to-Date Business
Highlights:
- Introduced new “Enterprise Suite” of
services consisting of Virtual Office telephony and UC, Virtual
Office Analytics, “Performance Assured” SLA and “Elite Touch”
customer support.
- Completed senior management team with
the addition of three key executives: Mary Ellen Genovese (CFO),
Enzo Signore (CMO) and Puneet Arora (SVP Global Sales).
- Expanded channel partner program with
addition of Arrow Systems Integration, Intelisys and CDW.
- Announced technology milestone with
awarding of 100th US patent; 104 awarded patents to date.
- Awarded the #1 ranking
in the IHS Infonetics' Annual "Cloud UC Service
Provider North American Scorecard" report for the second
consecutive year.
“We are issuing our guidance for annual revenue of $193 million
- $197 million in fiscal 2016, and we expect non-GAAP net income as
a percentage of revenue in the 6% - 9% range as we continue to
invest in our mid-market and enterprise growth,” said Mr. Verma.
“We look forward to discussing 8x8’s strategy and range of
capabilities to address the mid-market opportunity at our upcoming
Analyst Day on June 4, 2015.”
8x8 also reported, in accordance with NASDAQ Listing Rule
5635(c)(4), that employment inducement awards were granted to 31
new employees in connection with their recent hiring. The employees
received restrictive stock units for 271,654 shares of the
Company's Common Stock and 229,000 options, subject to their
continued employment and other conditions.
Conference Call
Information:
Management will host a conference call to discuss these results
and other matters related to the Company’s business today, May 20,
2015, 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 # 34784282) (404)
537-3406, international (Conference ID # 34784282)
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
midnight May 26, 2015. 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 cloud-based unified communications and virtual contact
center solutions to more than 40,000 businesses operating in over
40 countries across six continents. 8x8's out-of-the-box cloud
solutions replace traditional on-premise 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 web conferencing. For
additional information, visit www.8x8.com, or www.8x8.com/UK or
connect with 8x8 on Google+, Facebook, LinkedIn and Twitter.
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 below. A
reconciliation of non-GAAP financial measures to their most
directly comparable GAAP measures 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, acquisition-related costs, gain on
patent sale, gain on disposal of discontinued operations and
management transition, loss contingency reserve, and gain on escrow
settlement. We have excluded gain on patent sale, gain on disposal
of discontinued operations, loss contingency reserve and gain on
escrow settlement because we consider these to have been isolated
transactions and believe these are not reflective of our ongoing
operations, and this reduces comparability of periodic operating
results when these are included. Non-cash tax adjustments represent
the differences 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 and management transition 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, 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
INCOME (In thousands, except per share amounts;
unaudited) Three Months Ended
Twelve Months Ended March 31, March 31,
2015 2014 2015 2014
Service revenue $ 40,009 $ 32,545 $ 148,208 $ 116,607 Product
revenue 3,521 3,241 14,205 11,990 Total revenue
43,530 35,786 162,413 128,597 Operating
expenses (1): Cost of service revenue 7,655 6,866 29,701 22,445
Cost of product revenue 4,173 3,999 15,863 15,170 Research and
development 4,348 3,332 15,118 11,633 Sales and marketing 21,508
18,038 80,667 60,906 General and administrative 5,794 3,924 18,182
15,368 Gain on patent sale - - (1,000 ) - Total operating
expenses 43,478 36,159 158,531 125,522 Income (loss)
from operations 52 (373 ) 3,882 3,075 Other income, net 210 140
833 742
Income (loss) from continuing operations
before provision for income taxes
262 (233 ) 4,715 3,817 Provision for income taxes 79 1,738
2,789 2,219 Income (loss) from continuing operations 183
(1,971 ) 1,926 1,598
Income from discontinued operations, net
of income tax provision
- 19 - 320
Gain on disposal of discontinued
operations, net of income tax provision of $463
- 7 - 596 Net Income (loss) $ 183 $ (1,945 ) $ 1,926
$ 2,514 Income (loss) per share - continuing
operations: Basic $ 0.00 $ (0.02 ) $ 0.02 $ 0.02 Diluted $ 0.00 $
(0.02 ) $ 0.02 $ 0.02 Income (loss) per share - discontinued
operations: Basic $ 0.00 $ 0.00 $ 0.00 $ 0.01 Diluted $ 0.00 $ 0.00
$ 0.00 $ 0.01 Net income (loss) per share: Basic $ 0.00 $
(0.02 ) $ 0.02 $ 0.03 Diluted $ 0.00 $ (0.02 ) $ 0.02 $ 0.03
Weighted average number of shares: Basic 88,950 88,184 89,071
78,310 Diluted 91,266 88,184 91,652 81,658 (1) Amounts
include stock-based compensation expense, as follows:
Three Months Ended Twelve Months Ended March
31, March 31, 2015 2014 2015
2014 Cost of service revenue $ 216 $ 135 $ 692 $ 372
Cost of product revenue - - - - Research and development 446 333
1,495 967 Sales and marketing 1,128 817 3,748 2,217 General and
administrative 1,068 1,065 3,412 4,039 $ 2,858 $
2,350 $ 9,347 $ 7,595
8x8, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands,
unaudited) March 31, March
31, 2015 2014 ASSETS Current assets
Cash and cash equivalents $ 53,110 $ 59,159 Short-term investments
123,984 47,181 Accounts receivable, net 6,642 5,503 Inventory 704
811 Deferred tax assets 4,454 2,065 Other current assets 2,702
2,214 Total current assets 191,596 116,933 Long-term investments -
72,021 Property and equipment, net 10,248 7,711 Intangible assets,
net 12,260 15,095 Goodwill 36,887 38,461 Non-current deferred tax
asset 43,169 47,797 Other assets 1,464 1,185 Total assets $ 295,624
$ 299,203
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities Accounts payable $ 7,775 $ 6,789 Accrued
compensation 6,183 4,583 Accrued warranty 339 660 Deferred revenue
1,768 1,857 Other accrued liabilities 5,765 4,232 Total current
liabilities 21,830 18,121 Other liabilities 1,583 2,904
Total liabilities 23,413 21,025 Total stockholders' equity
272,211 278,178 Total liabilities and stockholders' equity $
295,624 $ 299,203
8x8, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In
thousands, unaudited) Twelve Months Ended
March 31, 2015 2014 Cash
flows from operating activities: Net income $ 1,926 $ 2,514
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 3,540 2,567 Amortization of intangible assets 2,232
1,643 Amortization of capitalized software 341 147
Net Accretion of discount and amortization
of premium on marketable securities
896 114 Gain on disposal of discontinued operations - (596 ) Gain
on escrow settlement - (565 ) Stock-based compensation 9,347 7,595
Tax benefit from stock-based compensation (151 ) (142 ) Deferred
income tax provision 2,390 2,266 Other 256 650 Changes in assets
and liabilities: Accounts receivable, net (1,529 ) (1,575 )
Inventory 52 (276 ) Other current and noncurrent assets (196 ) (488
) Deferred cost of goods sold (207 ) 163 Accounts payable 605
(1,035 ) Accrued compensation 1,632 488 Accrued warranty (321 ) 208
Accrued taxes and fees 490 276 Deferred revenue (1,065 ) 681
Other current and noncurrent
liabilities
1,002 282 Net cash provided by operating activities
21,240 14,917
Cash flows from investing
activities: Purchases of property and equipment (5,826 ) (2,853
) Acquisition of business, net of cash acquired - (18,474 ) Cost of
capitalized software (724 ) (755 )
Proceeds from disposition of discontinued
operations, net of transaction costs
- 3,000 Proceeds from maturity of investments 63,546 - Sales of
investments - available for sale 36,764 24,219 Purchase of
investments - available for sale (106,021 ) (141,604 ) Net cash
used in investing activities (12,261 ) (136,467 )
Cash
flows from financing activities: Capital lease payments (149 )
(85 ) Repurchase of common stock (19,371 ) (489 ) Tax benefit from
stock-based compensation 151 142 Proceeds from issuance of common
stock, net of issuance costs - 125,750 Proceeds from issuance of
common stock under employee stock plans 4,455 5,167
Net cash (used in) provided by financing
activities
(14,914 ) 130,485 Effect of exchange rate changes on cash
(114 ) (81 ) Net (decrease) increase in cash and cash equivalents
(6,049 ) 8,854 Cash and cash equivalents at the beginning of
the period 59,159 50,305 Cash and cash equivalents at
the end of the period $ 53,110 $ 59,159
8x8, Inc. Selected Operating
Statistics Three Months Ended
March 31,2014
June 30,2014
Sept. 30,2014
Dec. 31,2014
March 31,2015
Total business customers (1) 37,933 39,340 40,434 41,051
41,621 Business customer average monthly service revenue per
customer (2) $ 287 $ 293 $ 299 $ 305 $ 320 Monthly business service
revenue churn (3) 1.2% 0.4% 0.9% 1.0% 0.5% Overall service
margin 79% 80% 79% 80% 81% Overall product margin -23% -9% -8% -11%
-19% Overall gross margin 70% 71% 72% 72% 73% (1) Business
customers are defined as customers paying for service. Customers
that are currently in the 30-day trial period are considered to be
customers that are paying for service. Customers subscribing to
Virtual Office Solo, DNS or Cloud VPS services are not included as
business customers. (2) 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. (3) 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.
8x8, Inc.
RECONCILIATION OF NET INCOME (LOSS) TO NON-GAAP NET INCOME
AND NON-GAAP NET INCOME PER SHARE (In thousands, except
per share amounts; unaudited)
Three Months Ended Twelve Months Ended March
31, March 31, 2015 2014
2015 2014 Net income (loss) $ 183 $
(1,945 ) $ 1,926 $ 2,514 Gain on patent sale - - (1,000 ) - Gain on
escrow settlement - - - (565 ) Gain on disposal of discontinued
operations - (7 ) - (596 ) Non-cash tax adjustments (54 ) 2,179
2,390 2,266 Amortization of acquired intangible assets 545 569
2,232 1,643 Stock-based compensation expense 2,858 2,350 9,347
7,595 Acquisition related expenses 132 26 132 841 Loss contingency
reserve 1,200 - 1,200 - Management transition - 104 -
441 Non-GAAP net income $ 4,864 3,276 $
16,227 $ 14,139 Weighted average number of
shares: Basic 88,950 88,184 89,071 78,310 Weighted average number
of shares: Diluted 91,266
91,525
91,652 81,658 GAAP net income (loss) per share - Diluted $
0.00 $ (0.02 ) $ 0.02 $ 0.03 Gain on patent sale - - (0.01 ) - Gain
on escrow settlement - - - (0.01 ) Gain on disposal of discontinued
operations - - - (0.01 ) Non-cash tax adjustments - 0.02 0.03 0.03
Amortization of acquired intangible assets 0.01 0.01 0.03 0.02
Stock-based compensation expense 0.03 0.03 0.10 0.09 Acquisition
related expenses - - - 0.01 Loss contingency reserve 0.01 - 0.01 -
Management transition - - - 0.01
Non-GAAP net income per share - Diluted $ 0.05 $ 0.04
$ 0.18 $ 0.17 GAAP net income (loss)
percentage of revenue 0 % -5 % 1 % 2 % Gain on patent sale - - -1 %
- Gain on escrow settlement - - - - Gain on disposal of
discontinued operations - - - -1 % Non-cash tax adjustments - 6 % 2
% 2 % Amortization of acquired intangible assets 1 % 2 % 1 % 1 %
Stock-based compensation expense 7 % 6 % 6 % 6 % Acquisition
related expenses - - - 1 % Loss contingency reserve 3 % - 1 % -
Management transition - - - - Non-GAAP
net income percentage of revenue 11 % 9 % 10 % 11 %
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150520006505/en/
Investor Relations:8x8, Inc.Joan Citelli, 408-654-0970
(Investor Relations)Joan.citelli@8x8.com
8x8 (NYSE:EGHT)
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