- Service Revenue of $178 million and Total Revenue of $185
million.
- Cash flow from operations increased 26% year-over-year to $17.5
million.
- Continued momentum in AI-powered solutions, including more than
50% quarter-over-quarter growth in self-service conversations
through 8x8 Intelligent Customer Assistant.
8x8, Inc. (NASDAQ: EGHT), a leading integrated cloud contact
center and unified communications platform provider, today reported
financial results for the second quarter of fiscal 2024 ended
September 30, 2023.
Second Quarter Fiscal 2024 Financial
Results:
- Total revenue of $185.0 million, compared to $187.4 million in
the second quarter of fiscal 2023.
- Service revenue of $177.8 million, compared to $178.6 million
in the second quarter of fiscal 2023.
- GAAP operating loss was $2.6 million, an improvement of 89.7%
compared to GAAP operating loss of $25.0 million in the second
quarter of fiscal 2023.
- Non-GAAP operating profit was $23.8 million, an increase of
162% compared to non-GAAP operating profit of $9.1 million in the
second quarter of fiscal 2023.
- GAAP net loss was $7.5 million compared to GAAP net loss of
$11.6 million in the second quarter of fiscal 2023.
- Non-GAAP net income was $17.1 million, an increase of 181.8%
compared to non-GAAP net income of $6.1 million in the second
quarter of fiscal 2023.
- Adjusted EBITDA was $30.5 million, or 16% of revenue, an
increase of 75% compared to Adjusted EBITDA of $17.4 million, or 9%
of revenue, in the second quarter of fiscal 2023.
“I am pleased to report that we met or exceeded our guidance
ranges for service revenue, total revenue, and operating margin in
the second quarter,” said Samuel Wilson, Chief Executive Officer of
8x8, Inc. “We continue to execute on our innovation-led strategy to
build a durable growth engine for the future while becoming more
efficient in our operations. I believe this is how we will deliver
value to all our stakeholders.
“8x8 is in the early stages of transforming our XCaaS
communications and contact center platform into a complete
AI-powered customer engagement platform and ecosystem. We are
seeing early success with increasing customer adoption of multiple
products in our portfolio and higher customer satisfaction. We
believe the growth in the number of interactions with our
Intelligent Customer Assistant validates our strategy of
approaching the contact center market with a modern, flexible,
AI-powered solution designed for rapid innovation and usability,”
added Wilson.
Second Quarter Fiscal 2024 Financial
Metrics and Recent Business Highlights:
Financial Metrics
- Annual Recurring Subscriptions and Usage Revenue (ARR):
- Total ARR was $707 million, an increase of 2% from the end of
the same period last year.
- Enterprise ARR was $407 million and represented 58% of total
ARR.
- GAAP gross margin was 69%, compared to 67% in the same period
last year. Non-GAAP gross margin was 72%, compared to 70% in the
same period last year.
- GAAP service revenue gross margin was 72%, compared to 71% in
the same period last year. Non-GAAP service revenue gross margin
was 75%, compared to 74% in the same period last year.
- Cash provided by operating activities was $17.5 million for the
second quarter of fiscal 2024, compared to $13.8 million in the
same period last year.
- Cash, cash equivalents, restricted cash and investments were
$149.8 million on September 30, 2023, compared to $139.0 million on
March 31, 2023.
A reconciliation of the non-GAAP measures to the most directly
comparable GAAP measures and other information relating to non-GAAP
measures is included in the supplemental reconciliation at the end
of this release.
Recent Business
Highlights:
Product Innovation
- Expanded AI self-service capabilities with voice interactions
for 8x8 Intelligent Customer Assistant. The addition of voice
expands 8x8 Intelligent Customer Assistant’s powerful,
user-friendly conversational AI self-service capabilities that
enable 8x8 Contact Center customers to create simple to complex
experiences across digital and voice channels.
- Enhanced 8x8 Contact Center with native secure video
interaction functionality. Video escalation allows contact center
agents to elevate customer interactions to video directly within
8x8 Agent Workspace, improving first contact resolution and
customer engagement.
- Announced the 8x8 Omni Shield CPaaS solution to enable
enterprises to proactively safeguard customers against fraudulent
SMS activity. The solution proactively detects and prevents
fraudulent activities through automated fraud alerts, real-time
notifications, live traffic monitoring, and instant phone number
assessments.
- Delivered the next generation of the 8x8 Phone App for
Microsoft Teams and surpassed 400,000 user licenses of 8x8 Voice
for Teams. Built on 8x8's direct routing service, the new app
connects the Public Switched Telephone Network (PSTN) with
Microsoft Teams to provide organizations with the most
cost-effective method to enable native calling in Teams without
additional software, desktop plugins, mobile apps, or requiring per
user Teams Phone licenses.
Industry Recognition
- Ranked as a top 5 provider in the Metrigy 2023 Contact
Center-as-a-Service MetriRank Report, based on market share,
financials, market share momentum, product mix, customer sentiment,
and customer business success.
- Named a Strong Performer in the The Forrester Wave™: Unified
Communications As A Service (UCaaS), 2023 report.
- Named Best Enterprise Service at the 2023 Comms Council UK
Awards.
- Won a Gold Stevie® Award for Technology Team of the Year and a
Bronze Stevie Award for Customer Service Team of the Year in The
20th Annual International Business Awards®.
- Earned awards for 8x8 CCaaS and UCaaS across 24 different
categories in the G2 Fall 2023 Awards.
- Received the 2023 TrustRadius Tech Cares Awards in the UK for
demonstrating exceptional corporate social responsibility.
Corporate ESG and Leadership Updates
- Achieved certification under the ISO 14001 Environmental
Management framework for deployment, operations, and support within
8x8 UK.
- In support of the hybrid workforce model, on October 30, 2023,
the 8x8 Board of Directors approved the cessation of use of
approximately 42% of the Company’s headquarters building in
Campbell, CA. The Company will continue to hold the space available
for sublease and currently estimates it will incur total non-cash
lease impairment charges of between $9.0 million and $10.0 million
in the quarter ending December 31, 2023.
- Enhanced 8x8's Global Governance, Risk, and Compliance (GRC)
program for cybersecurity and data privacy assurance by adding a
top tier Security Incident Event Management system for additional
monitoring of infrastructure security events. 8x8 has been
certified under more than 15 frameworks for cybersecurity, data
privacy, and operations management and continues to expand
compliance and security initiatives worldwide. A complete list of
certifications is available on the company's website at
https://www.8x8.com/why-8x8/security.
- Promoted Jamie Snaddon to VP, Managing Director of EMEA, with
responsibility for 8x8’s growing operations in Europe, the Middle
East, and Africa.
- Appointed Bruno Bertini as Chief Marketing Officer. Bertini is
a recognized growth marketing executive with more than 15 years in
the contact center and customer experience industry.
Third Quarter and Updated Fiscal 2024
Financial Outlook:
Management provides expected ranges for total revenue, service
revenue and non-GAAP operating margin based on its evaluation of
the current business environment. The Company emphasizes that these
expectations are subject to various important cautionary factors
referenced in the section entitled "Forward-Looking Statements"
below.
Third Quarter Fiscal 2024 Ending December 31, 2023
- Service revenue in the range of $173 million to $178
million.
- Total revenue in the range of $180 million to $186
million.
- Non-GAAP operating margin in the range of 11% to 12%.
Fiscal Year 2024 Ending March 31, 2024
- Service revenue in the range of $701 million to $711
million.
- Total revenue in the range of $732.5 million to $742.5
million.
- Non-GAAP operating margin in the range of 12% to 13%.
The Company does not reconcile its forward-looking estimates of
non-GAAP operating margins to the corresponding GAAP measures of
GAAP operating margin due to the significant variability of, and
difficulty in making accurate forecasts and projections with
regards to, the various expenses it excludes. For example, future
hiring and employee turnover may not be reasonably predictable,
stock-based compensation expense depends on variables that are
largely not within the control of nor predictable by management,
such as the market price of 8x8 common stock, and may also be
significantly impacted by events like acquisitions, the timing and
nature of which are difficult to predict with accuracy. The actual
amounts of these excluded items could have a significant impact on
the Company's GAAP operating margins. Accordingly, management
believes that reconciliations of this forward-looking non-GAAP
financial measure to the corresponding GAAP measure are not
available without unreasonable effort. All projections are on a
non-GAAP basis. Additionally, our increased emphasis on
profitability and cash flow generation may not be successful. The
reduction in our total costs as a percentage of revenue may
negatively impact our revenue and our business in ways we don't
anticipate and may not achieve the desired outcome. See the
Explanation of GAAP to Non-GAAP Reconciliation below for the
definition of non-GAAP operating margin.
Conference Call Information:
Management will host a conference call to discuss earnings
results on November 1, 2023, at 2:00 p.m. Pacific Time (5:00 p.m.
Eastern Time). The conference call will last approximately 60
minutes. Participants may:
- Register to participate in the live call at
https://register.vevent.com/register/BIcb5fb502a8844741bf5a5c87d1dcec1c.
- Access the live webcast and replay from the Company’s investor
relations events and presentations page at
https://8x8.gcs-web.com/news-events/events-presentations.
Participants should plan to dial in or log on 10 minutes prior
to the start time. The webcast will be archived on 8x8's website
for a period of at least 30 days. For additional information, visit
http://investors.8x8.com.
About 8x8, Inc.
8x8, Inc. (NASDAQ: EGHT) is transforming the future of business
communications as a leading software as a service provider of 8x8
XCaaS™ (Experience Communications as a Service™), an integrated
contact center, voice communications, video, chat, and SMS solution
built on one global cloud communications platform. 8x8 uniquely
eliminates the silos between unified communications as a service
(UCaaS) and contact center as a service (CCaaS) to power the
communications requirements of all employees globally as they work
together to deliver differentiated customer experiences. For
additional information, visit www.8x8.com, or follow 8x8 on
LinkedIn, Twitter and Facebook.
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. Any
statements that are not statements of historical fact may be deemed
to be forward-looking statements. For example, words such as "may,"
"will," "should," "estimates," "predicts," "potential," "continue,"
"strategy," "believes," "anticipates," "plans," "expects,"
"intends," and similar expressions are intended to identify
forward-looking statements. These forward-looking statements,
include but are not limited to: changing industry trends; the size
of our market opportunity; the potential success and impact of our
investments in AI; our strategic framework; our ability to increase
profitability and cash flow to deleverage our balance sheet and
fund investment in innovation; whether our UC and CC traffic will
increase; our future revenue and growth; whether we can sustain an
increasing pace of innovation; the success of our go to market
engine; our ability to improve G&A synergies; our ability to
enhance shareholder value; and our financial outlook, revenue
growth, and profitability, including whether we will achieve
sustainable growth and profitability.
You should not place undue reliance on such forward-looking
statements. Actual results could differ materially from those
projected in forward-looking statements depending on a variety of
factors, including, but not limited to: a reduction in our total
costs as a percentage of revenue may negatively impact our revenues
and our business; customer adoption and demand for our products may
be lower than we anticipate; the impact of economic downturns on us
and our customers; ongoing volatility and conflict in the political
environment, including Russia's invasion of Ukraine; inflationary
pressures and rising interest rates; competitive dynamics of the
cloud communication and collaboration markets, including voice,
contact center, video, messaging, and communication application
programming interfaces, in which we compete may change in ways we
are not anticipating; impact of supply chain disruptions; third
parties may assert ownership rights in our IP, which may limit or
prevent our continued use of the core technologies behind our
solutions; our customer churn rate may be higher than we
anticipate; our investments in marketing, channel and value-added
resellers, new products, and our acquisition of Fuze, Inc. may not
result in revenue growth; and we may not achieve our target service
revenue growth, or the revenue, operating margin or other amounts
we forecast in our guidance, for a particular quarter or for the
full fiscal year. Our increased emphasis on profitability and cash
flow generation may not be successful. The reduction in our total
costs as a percentage of revenue may negatively impact our revenue
and our business in ways we don't anticipate and may not achieve
the desired outcome.
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.
Explanation of GAAP to Non-GAAP Reconciliation
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 to understand, manage, and evaluate
the business, and to make operating decisions. Management believes
they are useful to investors, as a supplement to GAAP measures, in
evaluating the Company's ongoing operational performance.
Management also believes that some of 8x8’s investors use these
Non-GAAP financial measures as an additional tool in evaluating
8x8's ongoing "core operating performance" in the ordinary,
ongoing, and customary course of the Company's operations. Core
operating performance excludes items that are non-cash, not
expected to recur, or not reflective of ongoing financial results.
Management also believes that looking at the Company’s core
operating performance provides consistency in period-to-period
comparisons and trends.
These Non-GAAP financial measures may be calculated differently
from, and therefore may not be comparable to, similarly titled
measures used by other companies, which limits the usefulness of
these measures for comparative purposes. Management recognizes that
these Non-GAAP financial measures have limitations as analytical
tools, including the fact that management must exercise judgment in
determining which types of items to exclude from the Non-GAAP
financial information. 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
in the table titled "Reconciliation of GAAP to Non-GAAP Financial
Measures." Detailed explanations of the adjustments from comparable
GAAP to Non-GAAP financial measures are as follows:
Non-GAAP Costs of Revenue, Costs of Service Revenue and Costs of
Other Revenue
Non-GAAP Costs of Revenue includes: (i) Non-GAAP Cost of Service
Revenue, which is Cost of Service Revenue excluding amortization of
acquired intangible assets, stock-based compensation expense and
related employer payroll taxes, certain legal and regulatory costs,
and certain severance, transition and contract termination costs;
and (ii) Non-GAAP Cost of Other Revenue, which is Cost of Other
Revenue excluding stock-based compensation expense and related
employer payroll taxes, certain legal and regulatory costs, and
certain severance, transition and contract termination costs.
Non-GAAP Service Revenue Gross Margin, Other Revenue Gross
Margin, and Total Revenue Gross Margin
Non-GAAP Service Revenue Gross Profit and Margin as a percentage
of Service Revenue and Non-GAAP Other Revenue Gross Profit and
Margin as a percentage of Other Revenue are computed as Service
Revenue less Non-GAAP Cost of Service Revenue divided by Service
Revenue and Other Revenue less Non-GAAP Cost of Other Revenue
divided by Other Revenue, respectively. Non-GAAP Total Revenue
Gross Profit and Margin as a percentage of Total Revenue is
computed as Total Revenue less Non-GAAP Cost of Service Revenue and
Non-GAAP Cost of Other Revenue divided by Total Revenue. Management
believes the Company’s investors benefit from understanding these
adjustments and from an alternative view of the Company’s Cost of
Service Revenue and Cost of Other Revenue, as well as the Company's
Service, Other and Total Revenue Gross Margin performance compared
to prior periods and trends.
Non-GAAP Operating Expenses
Non-GAAP Operating Expenses includes Non-GAAP Research and
Development expenses, Non-GAAP Sales and Marketing expenses, and
Non-GAAP General and Administrative expenses, each of which
excludes amortization of acquired intangible assets, stock-based
compensation expense and related employer payroll taxes,
acquisition and integration expenses, and certain severance,
transition and contract termination costs. Management believes that
these exclusions provide investors with a supplemental view of the
Company’s ongoing operational expenses.
Non-GAAP Operating Profit and Non-GAAP Operating Margin
Non-GAAP Operating Profit excludes: amortization of acquired
intangible assets, stock-based compensation expense and related
employer payroll taxes, acquisition and integration expenses,
certain legal and regulatory costs, and certain severance,
transition and contract termination costs from Operating Profit
(Loss). Non-GAAP Operating Margin is Non-GAAP Operating Profit
divided by Revenue. Management believes that these exclusions
provide investors with a supplemental view of the Company’s ongoing
operating performance.
Non-GAAP Other Income (expense), net
Non-GAAP Other Income (expense), net excludes: amortization of
debt discount and issuance cost, gain or loss on debt
extinguishment, gain or loss on remeasurement of warrants, and
sub-lease income from Other Income (expense), net. Management
believes the Company’s investors benefit from this supplemental
information to facilitate comparison of the Company’s other income
(expense), performance to prior results and trends.
Non-GAAP Net Income and Adjusted EBITDA
Non-GAAP Net Income excludes: amortization of acquired
intangible assets, stock-based compensation expense and related
employer payroll taxes, acquisition and integration expenses,
certain legal and regulatory costs, certain severance, transition
and contract termination costs, amortization of debt discount and
issuance cost, gain or loss on debt extinguishment, gain or loss on
remeasurement of warrants, and sub-lease income. Adjusted EBITDA
excludes interest expense, provision for income taxes,
depreciation, amortization of capitalized internal use software,
and other income (expense), net from non-GAAP net income.
Management believes the Company’s investors benefit from
understanding these adjustments and an alternative view of our net
income performance as compared to prior periods and trends.
Non-GAAP Net Income Per Share – Basic and Non-GAAP Net Income
Per Share - Diluted
Non-GAAP Net Income Per Share – Basic is Non-GAAP Net Income
divided by the weighted-average basic shares outstanding. Non-GAAP
Net Income Per Share – Diluted is Non-GAAP Net Income divided by
the weighted-average diluted shares outstanding. Diluted shares
outstanding include the effect of potentially dilutive securities
from stock-based benefit plans and convertible senior notes. These
potentially dilutive securities are excluded from the computation
of net loss per share attributable to common stockholders on a GAAP
basis because the effect would have been anti-dilutive. They are
added for the computation of diluted net income per share on a
non-GAAP basis in periods when 8x8 has net profit on a non-GAAP
basis as their inclusion provides a better indication of 8x8’s
underlying business performance. Management believes the Company’s
investors benefit by understanding our Non-GAAP net income
performance as reflected in a per share calculation as ways of
measuring performance by ownership in the Company. Management
believes these adjustments offer investors a useful view of the
Company’s diluted net income per share as compared to prior periods
and trends.
Management evaluates and makes decisions about its business
operations based on Non-GAAP financial information by excluding
items management does not consider to be “core costs” or “core
proceeds.” Management believes some of its investors also evaluate
our "core operating performance" as a means of evaluating our
performance in the ordinary, ongoing, and customary course of our
operations. Management excludes the amortization of acquired
intangible assets, which primarily represents a non-cash expense of
technology and/or customer relationships already developed, to
provide a supplemental way for investors to compare the Company’s
operations pre-acquisition to those post-acquisition and to those
of our competitors that have pursued internal growth strategies.
Stock-based compensation expense has been excluded because it is a
non-cash expense and relies on valuations based on future
conditions and events, such as the market price of 8x8 common
stock, that are difficult to predict and/or largely not within the
control of management. The related employer payroll taxes for
stock-based compensation are excluded since they are incurred only
due to the associated stock-based compensation expense. Acquisition
and integration expenses consist of external and incremental costs
resulting directly from merger and acquisition and strategic
investment activities such as legal and other professional
services, due diligence, integration, and other closing costs,
which are costs that vary significantly in amount and timing. Legal
and regulatory costs include litigation and other professional
services, as well as certain tax and regulatory liabilities.
Severance, transition and contract termination costs include
employee termination benefits, executive severance agreements,
cancellation of certain contracts, and lease impairments. Debt
amortization expenses relate to the non-cash accretion of the debt
discount.
8x8, INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited, in thousands, except
per share amounts)
Three Months Ended September
30,
Six Months Ended September
30,
2023
2022
2023
2022
Service revenue
$
177,782
$
178,556
$
353,020
$
357,717
Other revenue
7,217
8,833
15,266
17,292
Total revenue
184,999
187,389
368,286
375,009
Operating expenses:
Cost of service revenue
49,144
51,038
95,420
104,585
Cost of other revenue
7,958
11,000
16,356
24,126
Research and development
34,207
36,019
69,499
70,974
Sales and marketing
68,687
80,487
137,191
164,014
General and administrative
27,586
33,835
53,812
63,054
Total operating expenses
187,582
212,379
372,278
426,753
Loss from operations
(2,583
)
(24,990
)
(3,992
)
(51,744
)
Other (expense) income, net
(5,258
)
13,950
(17,732
)
15,066
Loss before (benefit from) provision for
income taxes
(7,841
)
(11,040
)
(21,724
)
(36,678
)
Provision (benefit) for income taxes
(389
)
599
1,055
1,004
Net loss
$
(7,452
)
$
(11,639
)
$
(22,779
)
$
(37,682
)
Net loss per share:
Basic and diluted
$
(0.06
)
$
(0.10
)
$
(0.19
)
$
(0.32
)
Weighted average number of shares:
Basic and diluted
120,757
116,013
118,778
117,857
SUPPLEMENTAL DETAILS - OTHER
(EXPENSE) INCOME, NET
(Unaudited, in thousands)
Three Months Ended September
30,
Six Months Ended September
30,
2023
2022
2023
2022
Interest expense
$
(8,929
)
$
(4,883
)
$
(17,899
)
$
(5,508
)
Amortization of debt discount and issuance
costs
(1,132
)
(1,169
)
(2,240
)
(2,000
)
Gain on warrants remeasurement
2,781
1,293
2,531
1,293
Gain (loss) on debt extinguishment
—
16,106
(1,766
)
16,106
Gain on foreign exchange
1,565
2,124
761
4,600
Other income
457
479
881
575
Other (expense) income, net
$
(5,258
)
$
13,950
$
(17,732
)
$
15,066
8x8, INC.
CONSOLIDATED BALANCE
SHEETS
(Unaudited, in thousands)
September 30, 2023
March 31, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
144,030
$
111,400
Restricted cash, current
521
511
Short-term investments
4,744
26,228
Accounts receivable, net of allowance for
expected credit losses of $3,036 and $3,644 as of September 30,
2023 and March 31, 2023, respectively
61,063
62,307
Deferred sales commission costs,
current
37,610
38,048
Other current assets
33,967
34,630
Total current assets
281,935
273,124
Property and equipment, net
53,508
57,871
Operating lease, right-of-use assets
50,396
52,444
Intangible assets, net
96,914
107,112
Goodwill
265,732
266,863
Restricted cash, non-current
462
818
Deferred sales commission costs,
non-current
60,440
67,644
Other assets, non-current
14,336
15,934
Total assets
$
823,723
$
841,810
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
49,391
$
46,802
Accrued compensation
21,793
29,614
Accrued taxes
35,854
29,570
Operating lease liabilities, current
11,623
11,504
Deferred revenue, current
33,223
34,909
Convertible senior notes, current
63,153
62,932
Other accrued liabilities
14,053
14,556
Total current liabilities
229,090
229,887
Operating lease liabilities,
non-current
61,926
65,623
Deferred revenue, non-current
10,231
10,615
Convertible senior notes
197,303
196,821
Term loan
210,303
231,993
Other liabilities, non-current
4,460
6,965
Total liabilities
713,313
741,904
Stockholders' equity:
Preferred stock: $0.001 par value,
5,000,000 shares authorized, none issued and outstanding as of
September 30, 2023 and March 31, 2023
—
—
Common stock: $0.001 par value,
300,000,000 shares authorized, 121,858,602 shares and 114,659,255
shares issued and outstanding as of September 30, 2023 and March
31, 2023, respectively
122
115
Additional paid-in capital
941,493
905,635
Accumulated other comprehensive loss
(15,509
)
(12,927
)
Accumulated deficit
(815,696
)
(792,917
)
Total stockholders' equity
110,410
99,906
Total liabilities and stockholders'
equity
$
823,723
$
841,810
8x8, INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited, in thousands)
Six Months Ended September
30,
2023
2022
Cash flows from operating
activities:
Net loss
$
(22,779
)
$
(37,682
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation
4,090
5,624
Amortization of intangible assets
10,198
10,723
Amortization of capitalized internal-use
software costs
10,061
11,494
Amortization of debt discount and issuance
costs
2,240
2,000
Amortization of deferred sales commission
costs
20,099
18,839
Allowance for credit losses
993
1,781
Operating lease expense, net of
accretion
5,109
5,925
Impairment of right-of-use assets
—
2,424
Stock-based compensation expense
32,717
52,435
Loss (gain) on debt extinguishment
1,766
(16,106
)
Gain on remeasurement of warrants
(2,531
)
(1,293
)
Other
52
(192
)
Changes in assets and liabilities:
Accounts receivable
299
(4,579
)
Deferred sales commission costs
(12,068
)
(13,834
)
Other current and non-current assets
(1,306
)
1,223
Accounts payable and accruals
(2,934
)
(14,733
)
Deferred revenue
(2,070
)
(4,367
)
Net cash provided by operating
activities
43,936
19,682
Cash flows from investing
activities:
Purchases of property and equipment
(1,558
)
(1,845
)
Capitalized internal-use software
costs
(7,442
)
(4,328
)
Purchases of investments
(6,174
)
(27,669
)
Sales of investments
—
8,296
Maturities of investments
27,909
36,641
Acquisition of businesses, net of cash
acquired
—
(1,250
)
Net cash provided by investing
activities
12,735
9,845
Cash flows from financing
activities:
Proceeds from issuance of common stock
under employee stock plans
2,365
1,713
Repayment of principal on term loan
(25,000
)
—
Net proceeds from term loan
—
232,861
Repayment and exchange of convertible
senior notes
—
(190,553
)
Repurchase of common stock
—
(60,214
)
Net cash used in financing
activities
(22,635
)
(16,193
)
Effect of exchange rate changes on
cash
(1,752
)
(12,207
)
Net increase in cash, cash equivalents and
restricted cash
32,284
1,127
Cash, cash equivalents and restricted
cash, beginning of year
112,729
100,714
Cash, cash equivalents and restricted
cash, end of year
$
145,013
$
101,841
Supplemental disclosures of cash flow
information:
Six Months Ended September
30,
2023
2022
Interest paid
17,799
4,654
Income taxes paid
3,118
1,167
Warrants issued in connection with term
loan
—
5,915
Shares issued in connection with term loan
and convertible senior notes
—
5,082
Three Months Ended September
30,
Six Months Ended September
30,
2023
2022
2023
2022
Costs of Revenue:
GAAP cost of service revenue
$
49,144
$
51,038
$
95,420
$
104,585
Amortization of acquired intangible
assets
(2,118
)
(2,140
)
(4,235
)
(4,509
)
Stock-based compensation expense and
related employer payroll taxes
(1,743
)
(2,457
)
(3,967
)
(5,153
)
Severance, transition and contract
termination costs
(82
)
(281
)
(288
)
(1,178
)
Non-GAAP cost of service revenue
$
45,201
$
46,160
$
86,930
$
93,745
Non-GAAP service margin (as a percentage
of service revenue)
$
132,581
74.6
%
$
132,396
74.1
%
$
266,090
75.4
%
$
263,972
73.8
%
GAAP cost of other revenue
$
7,958
$
11,000
$
16,356
$
24,126
Stock-based compensation expense and
related employer payroll taxes
(468
)
(937
)
(1,119
)
(2,084
)
Severance, transition and contract
termination costs
(28
)
(244
)
(50
)
(777
)
Non-GAAP cost of other revenue
$
7,462
$
9,819
$
15,187
$
21,265
Non-GAAP other margin (as a percentage of
other revenue)
$
(245
)
(3.4
%)
$
(986
)
(11.2
%)
$
79
0.5
%
$
(3,973
)
(23.0
%)
Non-GAAP gross margin (as a percentage of
revenue)
$
132,336
71.5
%
$
131,410
70.1
%
$
266,169
72.3
%
$
259,999
69.3
%
Operating Expenses:
GAAP research and development
$
34,207
$
36,019
$
69,499
$
70,974
Stock-based compensation expense and
related employer payroll taxes
(5,345
)
(7,773
)
(12,783
)
(15,966
)
Acquisition and integration costs
115
—
(98
)
Severance, transition and contract
termination costs
(902
)
(107
)
(1,213
)
(144
)
Non-GAAP research and development (as a
percentage of revenue)
$
28,075
15.2
%
$
28,139
15.0
%
$
55,405
15.0
%
$
54,864
14.6
%
GAAP sales and marketing
$
68,687
$
80,487
$
137,191
$
164,014
Amortization of acquired intangible
assets
(2,982
)
(3,107
)
(5,963
)
(6,214
)
Stock-based compensation expense and
related employer payroll taxes
(4,176
)
(6,883
)
(9,430
)
(15,163
)
Severance, transition and contract
termination costs
(234
)
(330
)
(403
)
(721
)
Non-GAAP sales and marketing (as a
percentage of revenue)
$
61,295
33.1
%
$
70,167
37.4
%
$
121,395
33.0
%
$
141,916
37.8
%
GAAP general and administrative
$
27,586
$
33,835
$
53,812
$
63,054
Stock-based compensation expense and
related employer payroll taxes
(3,695
)
(6,763
)
(7,803
)
(14,686
)
Acquisition and integration costs
(422
)
(1,554
)
(552
)
(2,178
)
Legal and regulatory costs
(3,879
)
207
(5,347
)
269
Severance, transition and contract
termination costs
(388
)
(1,694
)
(934
)
(2,449
)
Non-GAAP general and administrative (as a
percentage of revenue)
$
19,202
10.4
%
$
24,031
12.8
%
$
39,176
10.6
%
$
44,010
11.7
%
Non-GAAP Operating Expenses (as a
percentage of revenue)
$
108,572
58.7
%
$
122,337
65.3
%
$
215,976
58.6
%
$
240,790
64.2
%
Operating Profit (Loss):
GAAP loss from operations
$
(2,583
)
$
(24,990
)
$
(3,992
)
$
(51,744
)
Amortization of acquired intangible
assets
5,100
5,247
10,198
10,723
Stock-based compensation expense and
related employer payroll taxes
15,427
24,813
35,102
53,052
Acquisition and integration costs
307
1,554
650
2,178
Legal and regulatory costs
3,879
(207
)
5,347
(269
)
Severance, transition and contract
termination costs
1,634
2,656
2,888
5,269
Non-GAAP operating profit (as a percentage
of revenue)
$
23,764
12.8
%
$
9,073
4.8
%
$
50,193
13.6
%
$
19,209
5.1
%
Other Income (Expenses):
GAAP other income (expense), net
$
(5,258
)
$
13,950
$
(17,732
)
$
15,066
Amortization of debt discount and issuance
cost
1,132
1,169
2,240
2,000
(Gain) loss on debt extinguishment
—
(16,106
)
1,766
(16,106
)
Gain on warrants remeasurement
(2,781
)
(1,293
)
(2,531
)
(1,293
)
Sublease Income
(117
)
(116
)
(234
)
(232
)
Non-GAAP other (expense) income, net (as a
percentage of revenue)
$
(7,024
)
(3.8
%)
$
(2,396
)
(1.3
%)
$
(16,491
)
(4.5
)%
$
(565
)
(0.2
%)
Net Income (Loss):
GAAP net loss
$
(7,452
)
$
(11,639
)
$
(22,779
)
$
(37,682
)
Amortization of acquired intangible
assets
5,100
5,247
10,198
10,723
Stock-based compensation expense and
related employer payroll taxes
15,427
24,813
35,102
53,052
Acquisition and integration costs
307
1,554
650
2,178
Legal and regulatory costs
3,879
(207
)
5,347
(269
)
Severance, transition and contract
termination costs
1,634
2,656
2,888
5,269
Amortization of debt discount and issuance
cost
1,132
1,169
2,240
2,000
(Gain) loss on debt extinguishment
—
(16,106
)
1,766
(16,106
)
Gain on warrants remeasurement
(2,781
)
(1,293
)
(2,531
)
(1,293
)
Sublease income
(117
)
(116
)
(234
)
(232
)
Non-GAAP net income (as a percentage of
revenue)
$
17,129
9.3
%
$
6,078
3.2
%
$
32,647
8.9
%
$
17,640
4.7
%
Interest expense
8,929
4,883
17,899
5,508
Provision for income taxes
(389
)
599
1,055
1,004
Depreciation
1,964
2,834
4,090
5,624
Amortization of capitalized internal-use
software costs
4,779
5,529
10,061
11,494
Other expense (income), net
(1,905
)
(2,487
)
(1,408
)
(4,943
)
Adjusted EBITDA
$
30,507
16.5
%
$
17,436
9.3
%
$
64,344
17.5
%
$
36,327
9.7
%
Shares used in computing net loss per
share amounts:
Basic
120,757
116,013
118,778
117,857
Diluted
122,624
116,186
120,599
118,936
GAAP net loss per share - Basic and
Diluted
$
(0.06
)
$
(0.10
)
$
(0.19
)
$
(0.32
)
Non-GAAP net income per share - Basic
$
0.14
$
0.05
$
0.27
$
0.15
Non-GAAP net income per share -
Diluted
$
0.14
$
0.05
$
0.27
$
0.15
8x8, INC.
SELECTED OPERATING
METRICS
(Unaudited, in millions, except
number of enterprise customers)
Fiscal 2023
Fiscal 2024
Q1
Q2
Q3
Q4
Q1
Q2
TOTAL ARR (1)
$
688
$
692
$
698
$
703
$
703
$
707
Growth % (YoY)
28
%
25
%
22
%
2
%
2
%
2
%
ARR BY CUSTOMER SIZE
ENTERPRISE (2)
$
403
$
401
$
400
$
405
$
404
$
407
% of Total ARR
59
%
58
%
57
%
58
%
58
%
58
%
Growth % (YoY)
54
%
42
%
30
%
3
%
—
%
1
%
MID-MARKET (3)
$
125
$
127
$
130
$
130
$
132
$
131
% of Total ARR
18
%
18
%
19
%
19
%
19
%
19
%
Growth % (YoY)
22
%
23
%
27
%
2
%
5
%
3
%
SMALL BUSINESS (4)
$
159
$
164
$
168
$
168
$
167
$
170
% of Total ARR
23
%
24
%
24
%
24
%
24
%
24
%
Growth % (YoY)
(7
%)
(2
%)
4
%
1
%
5
%
4
%
(1)
Annualized Recurring Subscriptions and
Usage (ARR) equals the sum of the most recent month of (i)
recurring subscription amounts and (ii) platform usage charges for
all CPaaS customers (subject to a minimum billings threshold for a
period of at least six consecutive months), multiplied by 12.
(2)
Enterprise ARR is defined as ARR from
customers that generate >$100,000 ARR.
(3)
Mid-market ARR is defined as ARR from
customers that generate $25,000 to $100,000 ARR.
(4)
Small business ARR is defined as ARR from
customers that generate <$25,000 ARR.
Selected operating metrics presented in this table have not been
derived from financial measures that have been prepared in
accordance with U.S. Generally Accepted Accounting Principles. 8x8
provides these selected operating metrics to assist investors in
evaluating the Company's operations and assessing its prospects.
8x8’s management periodically reviews the selected operating
metrics to evaluate 8x8’s operations, allocate resources, and drive
financial performance in the business. Management monitors these
metrics together, and not individually, as it does not make
business decisions based upon any single metric. 8x8 is not aware
of any uniform standards for defining these selected operating
metrics and caution that its presentation may not be consistent
with that of other companies. Prior period metrics and customer
classifications have not been adjusted for current period changes
unless noted.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231031896034/en/
8x8, Inc. Media: PR@8x8.com
Investor Relations: Investor.relations@8x8.com
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