Service Revenue Increases 23%
Mid-Market and Enterprise Service Revenue
Increases 36%
GAAP Net Loss of ($1.3 Million); Non-GAAP Net
Income of $5.8 Million
Cash from Operating Activities of $8.8
Million
8x8, Inc. (NASDAQ:EGHT), the leading provider of Enterprise
Communications as a Service (ECaaS), today reported financial
results for the third quarter of fiscal 2017 ended December 31,
2016.
Third Quarter Fiscal 2017 Financial
Results:
- Service revenue grew 23% year-over-year
to $60.1 million; total revenue grew 20% year-over-year to $63.7
million.
- GAAP gross margin was 77%, compared
with 72% in the same period last year; non-GAAP gross margin was
79%, compared with 75% in the same period last year.
- GAAP service margin was 83%, compared
with 80% in the same period last year; non-GAAP service margin was
84%, compared with 83% in the same period last year.
- GAAP net loss was ($1.3 million), or
($0.01) per diluted share; non-GAAP net income was $5.8 million, or
$0.06 per diluted share.
- Cash generated from operating
activities was $8.8 million, compared with $8.3 million in the same
period last year.
- Cash, cash equivalents and investments
were $173 million at December 31, 2016, compared with $155 million
at December 31, 2015.
“Our financial results for the third quarter of fiscal 2017 were
very strong with solid revenue growth and increasing gross and
non-GAAP net income margins. Adjusting for constant currency and
the discontinued segment of our UK business which we previously
reported, service revenue increased 28% and total revenue increased
24%,” said 8x8 CEO Vik Verma. “We are continuing to see enterprise
customers transition their communications infrastructure to the
cloud, evidenced this quarter by the addition of two new enterprise
logos, including one Fortune 50 corporation.”
“As we prepare for our next phase of growth, we are focused on
enhancing our global systems and worldwide customer support
organization to better serve the needs of our multinational
customers,” Verma continued. “We are also further expanding the
breadth and capabilities of our platform with a new, recently
completed technology acquisition in the collaboration space that
will be unveiled in March at the Enterprise Connect
Conference.”
Additional Third Quarter and
Year-to-Date Highlights:
- Service revenue from mid-market and
enterprise customers grew 36% year-over-year and represents 55% of
the Company’s total service revenue.
- New monthly recurring revenue (MRR)
sold to mid-market and enterprise customers and by channel sales
teams accounted for 60% of total new MRR booked in the
quarter.
- Average monthly service revenue (ARPU)
per business customer grew to $414, compared with $369 in the same
year ago period; ARPU per mid-market and enterprise customer grew
to $4,412, compared with $4,017 in the same year ago period.
- Gross monthly revenue churn was 1.0%,
compared with 1.2% in the same period last year.
- New enterprise Master Service Agreement
signed with a Fortune 50 health care corporation to provide
services to up to 10,000 users in 450 medical offices.
- New enterprise agreement signed with a
national retail chain for over 10,000 seats across 3500
locations.
- 2.0 Global Channel Program and new
PartnerConnect Channel Portal launched.
- New channel partners Telarus,
LANtelligence and PERRY proTECH in North America, and Great
Outcomes in NZ added.
- Acquired a small, innovative technology
company in the collaboration space, completed in early
January.
- Three new patents awarded related to
technology innovations enabling seamless global enterprise
communications and enhanced contact center user experience for a
total of 128 awarded patents to date.
- Virtual Office Pro acknowledged with
PCMag Editors' Choice Award.
- Virtual Contact Center acknowledged
with TMC's Customer Experience Innovation Award.
8x8 maintained its annual guidance of revenue for fiscal 2017 in
the range of $251.0 million to $254.0 million and raised non-GAAP
net income guidance to a range of $18.0 to $20.0 million,
representing non-GAAP net income as a percent of revenue of 7.0% to
8.0%, from previously issued non-GAAP net income guidance in the
range of $16.0 million to $20.0 million.
Conference Call
Information:
Management will host a conference call to discuss these results
and other matters related to the Company’s business today, January
25, 2017 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 #46149120) (404)
537-3406, international (Conference ID #46149120) 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
February 1, 2017. 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, impairment of long-lived 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 estimates and assumptions
about future events, such as our future common stock price and the
duration of employee service, as well as valuations that are
affected by market factors largely outside management’s control.
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
impairment of long-lived assets because we consider it to be an
isolated transaction and believe it is not reflective of our
ongoing operations, and it reduces comparability of periodic
operating results when it is included. 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 EndedDecember 31,
Nine Months EndedDecember 31, 2016 2015
2016 2015 Service revenue $ 60,149 $ 48,948 $ 173,162
$ 140,068 Product revenue 3,527 4,220 13,738
11,935 Total revenue 63,676 53,168 186,900
152,003 Operating expenses: Cost of service
revenue (1) 10,525 9,713 31,597 27,359 Cost of product revenue
4,240 5,087 15,527 14,065 Research and development (2) 7,095 6,404
20,310 17,930 Sales and marketing (3) 35,667 27,585 101,049 78,138
General and administrative (4) 7,852 6,888 21,400
18,614 Total operating expenses 65,379 55,677
189,883 156,106 Loss from operations (1,703 )
(2,509 ) (2,983 ) (4,103 ) Other income, net 408 272
1,209 710 Loss from operations before provision
(benefit) for income taxes (1,295 ) (2,237 ) (1,774 ) (3,393 )
Provision (benefit) for income taxes 30 (557 ) 52 651
Net loss $ (1,325 ) $ (1,680 ) $ (1,826 ) $ (4,044 )
Net loss per share: Basic $ (0.01 ) $ (0.02 ) $ (0.02 ) $ (0.05 )
Diluted $ (0.01 ) $ (0.02 ) $ (0.02 ) $ (0.05 ) Weighted
average number of shares: Basic 90,774 88,289 90,062 88,812 Diluted
90,774 88,289 90,062 88,812 (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, impairment of long-lived assets, and stock-based
compensation as follows:
Three Months EndedDecember 31, Nine Months
EndedDecember 31, 2016 2015 2016
2015 GAAP cost of service revenue $ 10,525 $ 9,713 $ 31,597
$ 27,359 Amortization of acquired intangible assets (543 ) (618 )
(1,697 ) (1,451 ) Impairment of long-lived assets - (440 ) - (440 )
Stock-based compensation expense (538 ) (346 ) (1,338 ) (828 )
Non-GAAP cost of service revenue $ 9,444 $ 8,309 $
28,562 $ 24,640
Non-GAAP cost of service revenue as a
percentage of service revenue
15.7 % 17.0 % 16.5 % 17.6 %
(2)
Amounts include stock-based compensation
and acquisition related expenses as follows:
Three Months EndedDecember 31, Nine Months
EndedDecember 31, 2016 2015 2016
2015 GAAP research and development $ 7,095 $ 6,404 $ 20,310
$ 17,930 Stock-based compensation expense (1,061 ) (850 ) (2,811 )
(2,107 ) Acquisition related expenses - - - (5
) Non-GAAP research and development $ 6,034 $ 5,554 $
17,499 $ 15,818
Non-GAAP research and development as a
percentage of total revenue
9.5 % 10.4 % 9.4 % 10.4 %
(3)
Amounts include amortization of acquired
intangible assets, impairment of long-lived assets, stock-based
compensation, and acquisition related expenses as follows:
Three Months EndedDecember 31, Nine Months
EndedDecember 31, 2016 2015 2016
2015 GAAP sales and marketing $ 35,667 $ 27,585 $ 101,049 $
78,138 Amortization of acquired intangible assets (330 ) (384 )
(1,044 ) (1,114 ) Impairment of long-lived assets (15 ) (200 ) (15
) (200 ) Stock-based compensation expense (2,452 ) (1,689 ) (6,118
) (4,308 ) Acquisition related expenses - - -
(27 ) Non-GAAP sales and marketing $ 32,870 $ 25,312
$ 93,872 $ 72,489
Non-GAAP sales and marketing as a
percentage of total revenue
51.6 % 47.6 % 50.2 % 47.7 %
(4)
Amounts include stock-based compensation,
and acquisition related expenses as follows:
Three Months EndedDecember 31, Nine Months
EndedDecember 31, 2016 2015 2016
2015 GAAP general and administrative $ 7,852 $ 6,888 $
21,400 $ 18,614 Stock-based compensation expense (2,020 ) (1,778 )
(5,363 ) (3,959 ) Acquisition related expenses (78 ) - (78 )
(1,011 ) Non-GAAP general and administrative $ 5,754 $ 5,110
$ 15,959 $ 13,644
Non-GAAP general and administrative as a
percentage of total revenue
9.0 % 9.6 % 8.5 % 9.0 %
8x8, Inc.CONDENSED
CONSOLIDATED BALANCE SHEETS(In thousands, unaudited)
December 31,2016 March 31,2016
ASSETS Current assets Cash and cash equivalents $ 33,457 $
33,576 Short-term investments 139,194 129,274 Accounts receivable,
net 13,069 11,070 Inventory 572 520 Deferred tax assets - 5,382
Other current assets 6,191 6,078 Total current assets 192,483
185,900 Property and equipment, net 15,224 12,375 Intangible
assets, net 16,726 21,464 Goodwill 44,327 47,420 Non-current
deferred tax asset 48,443 43,189 Other assets 6,645 3,104 Total
assets $ 323,848 $ 313,452
LIABILITIES AND STOCKHOLDERS'
EQUITY Current liabilities Accounts payable $ 12,537 $ 10,954
Accrued compensation 12,022 10,063 Accrued warranty 290 326 Accrued
outside commissions 2,843 2,186 Deferred revenue 2,089 1,925 Other
accrued liabilities 8,710 9,280 Total current liabilities 38,491
34,734 Other liabilities 3,082 3,412 Total liabilities
41,573 38,146 Total stockholders' equity 282,275 275,306
Total liabilities and stockholders' equity $ 323,848 $ 313,452
8x8, Inc.CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS(In thousands, unaudited) Nine
Months EndedDecember 31, 2016 2015 Cash
flows from operating activities: Net loss $ (1,826 ) $ (4,044 )
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation 4,463 3,598 Amortization of intangible assets 2,741
2,565 Impairment of long-lived assets 15 640 Amortization of
capitalized software 442 456
Net accretion of discount and amortization
of premium on marketable securities
228 584 Stock-based compensation expense 15,630 11,202 Deferred
income tax (benefit) provision (104 ) 361 Other 574 467 Changes in
assets and liabilities: Accounts receivable, net (3,267 ) (3,138 )
Inventory (87 ) (122 ) Other current and noncurrent assets (1,065 )
(1,699 ) Deferred cost of goods sold (86 ) (156 ) Accounts payable
1,732 418 Accrued compensation 2,146 3,351 Accrued warranty (36 )
(17 ) Accrued taxes (21 ) 1,837 Deferred revenue 168 (427 ) Accrued
outside commissions 657 256 Other current and noncurrent
liabilities (84 ) (748 ) Net cash provided by operating activities
22,220 15,384
Cash flows from investing
activities: Purchases of property and equipment (6,509 ) (3,295
) Purchase of businesses, net of cash acquired - (23,434 ) Cost of
capitalized software (3,939 ) (1,275 ) Proceeds from maturity of
investments 47,625 38,451 Sales of investments - available for sale
34,821 43,934 Purchase of investments - available for sale (92,647
) (90,025 ) Net cash used in investing activities (20,649 ) (35,644
)
Cash flows from financing activities: Capital lease
payments (460 ) (321 ) Payment of contingent consideration (300 )
(200 ) Repurchase of common stock (2,828 ) (11,628 ) Proceeds from
issuance of common stock under employee stock plans 2,694
2,848 Net cash used in financing activities (894 ) (9,301 )
Effect of exchange rate changes on cash (796 ) 317
Net decrease in cash and cash equivalents (119 ) (29,244 )
Cash and cash equivalents, beginning of period 33,576 53,110
Cash and cash equivalents, end of period $ 33,457 $
23,866
8x8,
Inc.Selected Operating Statistics Three Months
Ended
Dec. 31,2015
Mar. 31,2016
Jun. 30,2016
Sept. 30,2016
Dec. 31,2016
Business customer average monthly service revenue per
customer (1) $ 369 $ 385 $ 399 $ 409 $ 414 Monthly business service
revenue churn (2)(3) 1.2% 0.4% 0.5% 0.6% 1.0% Overall
service margin 80% 81% 81% 81% 83% Overall product margin -21% -18%
-16% -6% -20% Overall gross margin 72% 72% 74% 74% 77% (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 INCOME (LOSS) TO NON-GAAP NET
INCOMEAND NON-GAAP NET INCOME PER SHARE(In thousands,
except per share amounts; unaudited) Three Months
EndedDecember 31, Nine Months EndedDecember
31, 2016 2015 2016 2015 Net loss $
(1,325 ) $ (1,680 ) $ (1,826 ) $ (4,044 ) Adjustments: Non-cash tax
adjustments 49 (326 ) (104 ) 361 Amortization of acquired
intangible assets 873 1,002 2,741 2,565 Stock-based compensation
expense 6,071 4,663 15,630 11,202 Acquisition related expenses 78 -
78 1,043 Impairment of long-lived assets 15 640 15
640 Non-GAAP net income $ 5,761 $ 4,299
$ 16,534 $ 11,767
Reconciliation between GAAP and non-GAAP
weighted average shares used in computing basic and diluted net
loss per share:
Denominator for basic calculation 90,774 88,289 90,062 88,812
Effect of dilutive securities: Employee stock options 1,792 1,614
1,702 1,595 Employee restricted purchase rights 1,407 1,303 1,723
1,048 Employee stock plan purchases 9 14 8 10
Denominator for diluted calculation 93,982 91,220
93,495 91,465 GAAP net loss per share -
Diluted $ (0.01 ) $ (0.02 ) $ (0.02 ) $ (0.05 ) Adjustments:
Non-cash tax adjustments - - - 0.01 Amortization of acquired
intangible assets 0.01 0.01 0.03 0.03 Stock-based compensation
expense 0.06 0.05 0.17 0.12 Acquisition related expenses - - - 0.01
Impairment of long-lived assets - 0.01 - 0.01
Non-GAAP net income per share - Diluted $ 0.06 $ 0.05
$ 0.18 $ 0.13 GAAP net income or
loss as a percentage of total revenue -2 % -3 % -1 % -3 %
Adjustments: Non-cash tax adjustments 0 % -1 % 0 % 0 % Amortization
of acquired intangible assets 1 % 2 % 2 % 2 % Stock-based
compensation expense 10 % 9 % 8 % 7 % Acquisition related expenses
0 % 0 % 0 % 1 % Impairment of long-lived assets 0 % 1 % 0 % 1 %
Non-GAAP net income as a percentage of
total revenue
9 % 8 % 9 % 8 %
8x8, Inc.RECONCILIATION OF GAAP
GROSS MARGIN TO NON-GAAPGROSS MARGIN(In thousands,
unaudited) Three Months
EndedDecember 31, Nine Months EndedDecember
31, 2016 2015 2016 2015 GAAP gross
margin $ 48,911 $ 38,368 $ 139,776 $ 110,579 Adjustments:
Amortization of acquired intangible assets 543 618 1,697 1,451
Impairment of long-lived assets - 440 - 440 Stock-based
compensation expense 538 346 1,338 828 Non-GAAP gross margin $
49,992 $ 39,772 $ 142,811 $ 113,298 GAAP gross margin as a
percentage of total revenue 77% 72% 75% 73% Adjustments:
Amortization of acquired intangible assets 1% 1% 1% 1% Impairment
of long-lived assets 0% 1% 0% 0% Stock-based compensation expense
1% 1% 0% 1% Non-GAAP gross margin as a percentage of total
revenue 79% 75% 76% 75%
8x8,
Inc.RECONCILIATION OF GAAP SERVICE MARGIN TO
NON-GAAPSERVICE MARGIN(In thousands, unaudited)
Three Months EndedDecember
31, Nine Months EndedDecember 31, 2016
2015 2016 2015 GAAP service margin $ 49,624 $
39,235 $ 141,565 $ 112,709 Adjustments: Amortization of acquired
intangible assets 543 618 1,697 1,451 Impairment of long-lived
assets - 440 - 440 Stock-based compensation expense 538 346 1,338
828 Non-GAAP service margin $ 50,705 $ 40,639 $ 144,600 $ 115,428
GAAP service margin as a percentage of service revenue 83%
80% 82% 80% Adjustments: Amortization of acquired intangible assets
1% 1% 1% 1% Impairment of long-lived assets 0% 1% 0% 0% Stock-based
compensation expense 0% 1% 1% 1% Non-GAAP service margin as a
percentage of service revenue 84% 83%
84% 82%
8x8,
Inc.RECONCILIATION OF GAAP INCOME (LOSS) FROM OPERATIONS TO
NON-GAAPINCOME FROM OPERATIONS(In thousands,
unaudited) Three Months EndedDecember 31,
Nine Months EndedDecember 31, 2016 2015
2016 2015 GAAP loss from operations $ (1,703 ) $
(2,509 ) $ (2,983 ) $ (4,103 ) Adjustments: Amortization of
acquired intangible assets 873 1,002 2,741 2,565 Stock-based
compensation expense 6,071 4,663 15,630 11,202 Acquisition related
expenses 78 - 78 1,043 Impairment of long-lived assets 15
640 15 640 Non-GAAP income from operations $
5,334 $ 3,796 $ 15,481 $ 11,347
GAAP loss from operations as a percentage of total revenue -3 % -5
% -2 % -3 % Adjustments: Amortization of acquired intangible assets
1 % 2 % 2 % 2 % Stock-based compensation expense 10 % 9 % 8 % 7 %
Acquisition related expenses 0 % 0 % 0 % 1 % Impairment of
long-lived assets 0 % 1 % 0 % 0 % Non-GAAP income from operations
as a percentage of total revenue 8 % 7 % 8 % 7 %
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170125006165/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 Mar 2024 to Apr 2024
8x8 (NYSE:EGHT)
Historical Stock Chart
From Apr 2023 to Apr 2024