Record Revenue of $47.9 Million;Non-GAAP Net
Income of $4.5 Million
8x8, Inc. (NASDAQ:EGHT), a provider of cloud-based unified
communications and contact center solutions, today reported
financial results for the first quarter fiscal 2016 ended June 30,
2015.
First Quarter Fiscal 2016 Financial
Highlights:
- Total revenue of $47.9 million,
including a one-time $1.2 million accelerated technology license
payment, increased 26% year over year; service revenue of $44.2
million increased 29% year over year.
- Excluding the one-time technology
license payment:
- Total revenue increased 23% year over year
to $46.7 million.
- Service revenue increased 25% year over
year to $43.0 million.
- Service revenue from midmarket customers
increased 40% year over year, representing 45% of total service
revenue.
- GAAP net loss for the first quarter of
fiscal 2016 was ($472,000), or ($0.01) per diluted share, compared
with GAAP net income of $8,000, or $0.00 per diluted share, in the
first quarter of fiscal 2015.
- Non-GAAP net income was $4.5 million,
$0.05 per diluted share, or 9% of revenue, for the quarter,
compared with $3.0 million, $0.03 per diluted share, for the same
period last year. Non-GAAP net income, excluding the accelerated
technology license payment, was $3.7 million, $0.04 per diluted
share, or 8% of revenue.
- Average monthly service revenue per
business customer increased 20% to $353, compared with $293 in the
same period last year.
“I am pleased to report the completion of a very successful
first quarter start to 8x8’s fiscal 2016,” said 8x8 CEO Vik Verma.
“In addition to closing the acquisitions of DXI and QSC, which both
broaden our geographic footprint in the UK and Europe and expand
our cloud communications portfolio, we posted a 38% increase in new
MRR sold to mid-market customers and by channel sales teams. We
also further enhanced our contact center capabilities with focused
R&D to deliver the most complete platform of cloud-based
communications services available to the enterprise.”
“We are maintaining our previously stated guidance of annual
revenue for fiscal 2016 in the $202 million to $206 million range,
representing a 24% - 27% year over year increase, with non-GAAP net
income as a percentage of revenue of approximately 6% for the full
fiscal year.”
Additional First Quarter and
Year-to-Date Highlights:
- New monthly recurring revenue (MRR)
sold in the first quarter of fiscal 2016 to mid-market customers
and by channel sales teams increased 38% year-over-year.
- GAAP Service margin was 81%, compared
with 80% in the same period a year ago; overall gross margin was
73%, compared with 71% in the same year ago period.
- Monthly business service revenue churn
was 1.0%, compared with 0.4% in the same period last year.
- Cash, cash equivalents and investments
was $157 million in the first quarter of fiscal 2016, compared with
$177.1 million in the previous quarter; cash flow from operating
activities was $4.7 million in the first quarter of
fiscal 2016.
- Acquired privately held DXI Ltd., a
UK-based leader and innovator in cloud-based outbound and blended
contact center solutions.
- Purchased certain assets of privately
held Quality Software Corporation (QSC), an innovative developer of
cloud-native quality management capabilities and analytics.
- Launched first cloud-based,
single-platform Global Contact Center solution.
- Announced Virtual Contact Center
Analytics, a powerful new solution that provides unique insights
into the customer experience, increased contact center efficiencies
and advanced workflow optimization.
- Awarded #1 ranking in the IHS
Infonetics' Annual "Cloud UC Service Provider North American
Scorecard" report for the second consecutive year.
- Awarded three new U.S. patents related
to conference technologies, contact center and communication
technologies during the fiscal first quarter.
Conference Call
Information:
Management will host a conference call to discuss these results
and other matters related to the Company’s business today, July 22,
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 # 68408520) (404) 537-3406, international (Conference ID #
68408520)
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 July 28, 2015. The webcast will be archived on 8x8’s
website for a period of one year. For additional information, visit
http://investors.8x8.com.
8x8 also reported, in accordance with NASDAQ Listing Rule
5635(c)(4), that employment inducement awards were granted to 18
new employees in connection with their recent hiring. The employees
received restrictive stock units (“RSUs”) for 68,170 shares of the
Company’s Common Stock and 50,712 options, subject to their
continued employment and other conditions.
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 and acquisition-related costs. 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 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 (LOSS) (In thousands, except per share amounts;
unaudited) Three Months Ended June 30,
2015 2014 Service revenue $ 44,168 $ 34,276
Product revenue 3,724 3,637 Total revenue 47,892
37,913 Operating expenses (1): Cost of service revenue 8,459
6,997 Cost of product revenue 4,382 3,969 Research and development
5,080 3,406 Sales and marketing 23,824 19,160 General and
administrative 6,068 3,878 Total operating expenses 47,813
37,410 Income from operations 79 503 Other income, net 234
177 Income from operations before provision for income taxes
313 680 Provision for income taxes 785 672 Net income (loss)
$ (472 ) $ 8 Net income (loss) per share: Basic $ (0.01 ) $
0.00 Diluted $ (0.01 ) $ 0.00 Weighted average number of
shares: Basic 88,233 88,592 Diluted 88,233 91,445 (1)
Amounts include stock-based compensation expense, as follows:
Three Months Ended June 30, 2015
2014 Cost of service revenue $ 219 115 Cost of product
revenue - - Research and development 531 314 Sales and marketing
1,197 744 General and administrative 1,075 674 $ 3,022
1,847
8x8, Inc. CONDENSED
CONSOLIDATED BALANCE SHEETS (In thousands, unaudited)
June 30, March 31, 2015
2015 ASSETS Current assets Cash and cash equivalents
$ 29,298 $ 53,110 Short-term investments 127,668 123,984 Accounts
receivable, net 8,041 6,642 Inventory 618 704 Deferred tax assets
3,978 4,454 Other current assets 4,534 2,702 Total current assets
174,137 191,596 Property and equipment, net 11,714 10,248
Intangible assets, net 28,510 12,260 Goodwill 48,039 36,887
Non-current deferred tax asset 43,169 43,169 Other assets 1,463
1,464 Total assets $ 307,032 $ 295,624
LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities Accounts payable $
9,736 $ 7,775 Accrued compensation 7,305 6,183 Accrued warranty 342
339 Deferred revenue 1,514 1,768 Other accrued liabilities 6,791
5,765 Total current liabilities 25,688 21,830 Other
liabilities 4,905 1,583 Total liabilities 30,593 23,413
Total stockholders' equity 276,439 272,211 Total liabilities and
stockholders' equity $ 307,032 $ 295,624
8x8, Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (In thousands, unaudited) Three Months
Ended June 30, 2015 2014
Cash flows from operating activities: Net income (loss) $
(472 ) $ 8
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation 993 755 Amortization of intangible assets 546 567
Amortization of capitalized software 456 85
Net accretion of discount and amortization
of premium on marketable securities
236 192 Stock-based compensation 3,022 1,847 Deferred income tax
provision 476 610 Other 74 9 Changes in assets and liabilities:
Accounts receivable, net (612 ) (402 ) Inventory 88 47 Other
current and noncurrent assets (470 ) (175 ) Deferred cost of goods
sold (53 ) 157 Accounts payable 1,132 988 Accrued compensation 725
674 Accrued warranty 3 (41 ) Accrued taxes and fees 492 128
Deferred revenue (704 ) (352 ) Other current and noncurrent
liabilities (1,272 ) (447 ) Net cash provided by operating
activities 4,660 4,650
Cash flows from
investing activities: Purchases of property and equipment
(1,073 ) (1,026 ) Purchase of businesses, net of cash acquired
(23,434 ) - Cost of capitalized software (471 ) - Proceeds from
maturity of investments 7,820 3,300 Sales of investments -
available for sale 22,620 18,992 Purchase of investments -
available for sale (34,409 ) (30,134 ) Net cash used in investing
activities (28,947 ) (8,868 )
Cash flows from financing
activities: Capital lease payments (54 ) (46 ) Repurchase of
common stock (25 ) (48 ) Proceeds from issuance of common stock
under employee stock plans 336 170 Net cash provided
by financing activities 257 76 Effect of exchange rate
changes on cash 218 56 Net decrease in cash and cash
equivalents (23,812 ) (4,086 ) Cash and cash equivalents at
the beginning of the period 53,110 59,159 Cash and
cash equivalents at the end of the period $ 29,298 $ 55,073
8x8, Inc.
Selected Operating Statistics Three Months Ended
June 30,2014
Sept. 30,2014
Dec. 31,2014
March 31,2015
June 30,2015
Business customer average monthly service revenue per
customer (1) $ 293 $ 299 $ 305 $ 320 $ 353 Monthly business service
revenue churn (2)(3) 0.4 % 0.9 % 1.0 % 0.5 % 1.0 % Overall
service margin 80 % 79 % 80 % 81 % 81 % Overall product margin -9 %
-8 % -11 % -19 % -18 % Overall gross margin 71 % 72 % 72 % 73 % 73
% (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 the period
ending June 30, 2015.
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
June 30, 2015 2014 Net income
(loss) $ (472 ) $ 8 Non-cash tax adjustments 476 610 Amortization
of acquired intangible assets 546 567 Stock-based compensation
expense 3,022 1,847 Acquisition related expenses 922 -
Non-GAAP net income $ 4,494 3,032
Reconciliation between GAAP and non-GAAP weighted average shares
used in computing basic and diluted net income (loss) per share:
Denominator for basic calculation 88,233 88,592 Effect of dilutive
securities: Employee stock options 1,709 2,480 Employee restricted
purchase rights 834 373 Denominator for diluted
calculation 90,776 91,445 GAAP net income
(loss) per share - Diluted $ (0.01 ) $ 0.00 Non-cash tax
adjustments 0.01 0.01 Amortization of acquired intangible assets
0.01 - Stock-based compensation expense 0.03 0.02 Acquisition
related expenses 0.01 - Non-GAAP net income per share
- Diluted $ 0.05 $ 0.03 GAAP net income
(loss) percentage of revenue -1 % 0 % Non-cash tax adjustments 1 %
2 % Amortization of acquired intangible assets 1 % 1 % Stock-based
compensation expense 6 % 5 % Acquisition related expenses 2 % -
Non-GAAP net income percentage of revenue 9 % 8 %
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150722006357/en/
8x8, Inc.Joan Citelli, 408-654-0970Director of Investor
RelationsJoan.citelli@8x8.com
8x8 (NYSE:EGHT)
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