- Service Revenue and Total Revenue increased 18%
year-over-year
- GAAP and non-GAAP gross and operating margins at multi-year
highs
- Cash flow from operations increased 72% year-over-year to $15.5
million
- Repurchased and extinguished $21.8 million in aggregate
principal amount of the 2024 convertible senior notes
8x8, Inc. (NASDAQ: EGHT), a leading integrated cloud
communications platform provider, today reported financial results
for the third quarter of fiscal 2023 ended December 31, 2022.
Third Quarter Fiscal 2023 Financial
Results:
- Total revenue increased 18% year-over-year to $184.4 million,
including Fuze revenue of $26.5 million.
- Service revenue increased 18% year-over-year to $175.8 million,
including Fuze revenue of $26.5 million.
- GAAP operating loss was $18.1 million, compared to operating
loss of $37.6 million in the third quarter of fiscal 2022.
- Non-GAAP operating profit was $18.3 million, an increase of
485% compared to non-GAAP operating profit of $3.1 million in the
third quarter of fiscal 2022.
"We continued to invest in innovation while reducing our service
delivery costs and increasing operational efficiency across the
organization," said Samuel Wilson, 8x8 Interim CEO. "As a result,
customer retention was at its highest level in several years, GAAP
and non-GAAP operating margins were at multi-year highs, and we
generated strong operating cash flow.”
“I believe our industry is at an inflection point. With our
increased focus and investment in research and development, we have
the opportunity to leverage our XCaaS first-mover advantage,
accelerate CCaaS innovation, and become a true leader across
customer experience communications,” added Wilson.
Third Quarter Fiscal 2023 Financial
Metrics and Recent Business Highlights:
Financial Metrics
- Annual Recurring Subscriptions and Usage Revenue (ARR):
- Total ARR grew to $698 million, an increase of 22% from the end
of the same period last year.
- Enterprise ARR of $400 million increased 30% year-over-year and
represented 57% of total ARR.
- 1,309 customers generated ARR greater than $100,000, compared
to 907 at the end of the third quarter of fiscal 2022.
- GAAP gross margin was 69%, compared to 62% in the same period
last year. Non-GAAP gross margin was 72%, compared to 65% in the
same period last year.
- GAAP service revenue gross margin was 73%, compared to 67% in
the same period last year. Non-GAAP service gross margin was 76%,
compared to 70% in the same period last year.
- Cash provided by operating activities was $15.5 million for the
third quarter, compared to $9.0 million in the third quarter of
fiscal 2022.
- The company repurchased $21.8 million in aggregate principal of
the 2024 senior convertible notes during the quarter.
- Cash, cash equivalents, restricted cash and investments were
$131.7 million on December 31, 2022, compared to $145.6 million on
March 31, 2022.
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 8x8 continues to drive innovation and
improve customers’ experiences across the company’s modern
microservices-based XCaaS platform. In the third quarter of fiscal
2023, the company:
- Released more than 1,000 updates utilizing Continuous
Integration/Continuous Deployment (CI/CD) methods.
- Achieved near perfect XCaaS platform uptime with fewer than 10
customer-identified defects.
- Expanded access to all digital channel details and attachments
in 8x8 Quality Management and Speech Analytics, enabling
comprehensive evaluation of customer engagement across all
interactions.
- Launched the 8x8 Customer Labs open beta program, an innovative
early-access program that engages customers to guide 8x8 XCaaS
product direction, deliver feedback, and measure usability of new
products and features before release.
- Launched the new Mobile Admin composed experience, allowing
system administrators to simplify access to common operational
tasks and facilitate immediate visibility into incidents and
updates using an Android or iOS device.
- Added full PSTN support in Ecuador and Slovakia, extending
industry leadership in global coverage to 58 countries.
- Migrated CPaaS voice-masking services to 8x8's managed
platform, enabling a richer feature set and increased
reliability.
Industry Recognition 8x8 continues to be recognized for
its leadership and innovation worldwide. Awards and recognition in
the third fiscal quarter of 2023 included:
- Named a Leader in the 2022 Gartner® Magic Quadrant™ for Unified
Communications as a Service, Worldwide. This is the eleventh
consecutive year 8x8 has been recognized as a Leader in this
report.
- Recognized as a Winner in the 2022 CRN Tech Innovator Awards in
the Unified Communications & Collaboration Software category
for 8x8 Conversation IQ.
- Awarded Best Channel Ecosystem by the UC Today UC Partner
Awards 2022.
Leadership Updates
- Appointed Samuel C. Wilson, most recently the Company’s Chief
Financial Officer, as interim Chief Executive Officer.
- Appointed Kevin Kraus, most recently the Senior Vice President
of Finance at the Company, as interim Chief Financial Officer.
- Appointed Laurence Denny, formerly Chief Compliance Officer,
Deputy General Counsel, and Assistant Corporate Secretary, as Chief
Legal Officer and Corporate Secretary.
Fourth Quarter and Updated Fiscal 2023
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 and foreign current exchange rates
prevailing as of the announcement date of the prior quarters'
financial results. The Company emphasizes that these expectations
are subject to various important cautionary factors referenced in
the section entitled "Forward-Looking Statements" below.
Fourth Quarter Fiscal 2023 Ending March 31, 2023
- Service revenue in the range of $175 million to $178 million,
representing year-over-year growth of approximately 2% at the
midpoint.
- Total revenue in the range of $184 million to $187 million,
representing year-over-year growth of approximately 2% at the
midpoint.
- Non-GAAP operating margin of approximately 10%.
Fiscal Year 2023 Ending March 31, 2023
- Service revenue in the range of $708.5 million to $711.5
million, representing year-over-year growth of 18% at the
midpoint.
- Total revenue in the range of $743.4 million to $746.4 million,
representing year-over-year growth of approximately 17% at the
midpoint.
- Non-GAAP operating margin of approximately 7.5%.
The Company does not reconcile its forward-looking estimates of
non-GAAP operating margin 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. Foreign
currency exchange fluctuations may negatively impact our guidance.
The actual amounts of these excluded items could have a significant
impact on the Company's GAAP operating margin. 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. 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 February 1, 2023, at 1:30 p.m. Pacific Time (4:30 p.m.
Eastern Time). The conference call will last approximately 60
minutes and is accessible via the following numbers and webcast
link:
Dial In: 1-844-200-6205 (U.S.) or 1-929-526-1599
(International)
Passcode 943979
Webcast: https://investors.8x8.com/events-and-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,
operational and economic impacts of the COVID-19 pandemic, the
impact of foreign currency exchange rate and interest rate
fluctuations, new debt, interest expense, and our ability to repay
our remaining outstanding convertible senior notes due 2024, new
product innovations and integrations, the future impact of the
Fuze, Inc. acquisition on our operations and financial results,
market demand for our products, channel and e-commerce growth,
sales and marketing activities, strategic partnerships, business
strategies, customer acquisition and support costs, customer churn,
future operating performance and efficiencies, 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, including from the COVID-19 pandemic; ongoing
volatility and conflict in the political environment, including
Russia's invasion of Ukraine; risks related to our new secured term
loan and outstanding convertible senior notes due in 2024 and 2028;
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 ("APIs"), 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 (VARs), e-commerce, 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,
earnings, 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 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.
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 December
31,
Nine Months Ended December
31,
2022
2021
2022
2021
Service revenue
$
175,765
$
149,396
$
533,482
$
429,568
Other revenue
8,635
7,478
25,927
27,190
Total revenue
184,400
156,874
559,409
456,758
Cost of revenue and operating
expenses:
Cost of service revenue
47,335
48,763
151,920
141,971
Cost of other revenue
10,176
11,071
34,302
37,086
Research and development
38,791
27,911
109,765
81,801
Sales and marketing
79,021
76,797
243,035
229,438
General and administrative
27,158
29,950
90,212
80,064
Total operating expenses
202,481
194,492
629,234
570,360
Loss from operations
(18,081
)
(37,618
)
(69,825
)
(113,602
)
Other income (expense), net
(7,912
)
(5,866
)
7,154
(15,623
)
Loss from operations before provision for
income taxes
(25,993
)
(43,484
)
(62,671
)
(129,225
)
Provision for income taxes
37
87
1,041
576
Net loss
$
(26,030
)
$
(43,571
)
$
(63,712
)
$
(129,801
)
Net loss per share:
Basic and diluted
$
(0.23
)
$
(0.38
)
$
(0.55
)
$
(1.16
)
Weighted average number of shares:
Basic and diluted
113,201
113,510
116,298
111,960
SUPPLEMENTAL DETAILS - OTHER
INCOME (EXPENSE), NET
Three Months Ended December
31,
Nine Months Ended December
31,
2022
2021
2022
2021
Interest expense
$
(7,607
)
$
(486
)
$
(13,115
)
$
(1,359
)
Amortization of debt discount and issuance
cost
(1,136
)
(4,925
)
(3,136
)
(13,389
)
Gain (loss) on warrants remeasurement
(771
)
—
522
—
Gain on debt extinguishment
2,144
—
18,250
—
Gain (loss) on sale of assets
1,757
(5
)
1,826
(5
)
Gain (loss) on foreign exchange
(2,616
)
(493
)
1,984
(747
)
Other income (expense)
317
43
823
(123
)
Other income (expense), net
$
(7,912
)
$
(5,866
)
$
7,154
$
(15,623
)
8x8, Inc.
CONSOLIDATED BALANCE
SHEETS
(Unaudited, in
thousands)
December 31, 2022
March 31, 2022
ASSETS
Current assets
Cash and cash equivalents
$
92,960
$
91,205
Restricted cash, current
511
8,691
Short-term investments
37,445
44,845
Accounts receivable, net
53,811
57,400
Deferred sales commission costs,
current
37,401
35,482
Other current assets
32,449
37,999
Total current assets
254,577
275,622
Property and equipment, net
60,915
79,016
Operating lease, right-of-use assets
55,269
63,415
Intangible assets, net
112,236
128,213
Goodwill
265,578
266,867
Restricted cash, non-current
818
818
Long-term investments
—
2,671
Deferred sales commission costs,
non-current
70,530
75,668
Other assets
16,184
17,978
Total assets
$
836,107
$
910,268
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities
Accounts payable
$
40,632
$
49,721
Accrued compensation
29,797
36,319
Accrued taxes
31,079
32,573
Operating lease liabilities, current
12,537
15,485
Deferred revenue, current
34,207
34,262
Other accrued liabilities
16,517
23,167
Total current liabilities
164,769
191,527
Operating lease liabilities,
non-current
68,358
74,518
Convertible senior notes
264,443
447,452
Term loan
231,202
—
Deferred revenue, non-current
10,480
11,430
Other liabilities, non-current
6,828
2,975
Total liabilities
746,080
727,902
Stockholders' equity:
Common stock
113
118
Additional paid-in capital
888,123
956,599
Accumulated other comprehensive loss
(14,731
)
(7,913
)
Accumulated deficit
(783,478
)
(766,438
)
Total stockholders' equity
90,027
182,366
Total liabilities and stockholders'
equity
$
836,107
$
910,268
8x8, Inc.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited, in
thousands)
Nine Months Ended December
31,
2022
2021
Cash flows from operating
activities:
Net loss
$
(63,712
)
$
(129,801
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation
8,056
8,488
Amortization of intangible assets
15,954
3,630
Amortization of capitalized software
16,397
21,968
Impairment of capitalized software
3,729
—
Amortization of debt discount and issuance
costs
3,136
13,780
Amortization of deferred sales commission
costs
28,533
25,603
Allowance for credit losses
1,984
748
Operating lease expense, net of
accretion
8,667
10,162
Stock-based compensation expense
73,516
106,159
Gain on debt extinguishment
(18,250
)
—
Gain on remeasurement of warrants
(522
)
—
Impairment of right-of-use assets
2,424
—
Gain on sale of assets
(1,826
)
—
Other
(65
)
1,305
Changes in assets and liabilities:
Accounts receivable, net
(236
)
1,553
Deferred sales commission costs
(23,473
)
(34,685
)
Other current and non-current assets
4,715
476
Accounts payable and accruals
(22,858
)
(13,210
)
Deferred revenue
(1,005
)
1,978
Net cash provided by operating
activities
35,164
18,154
Cash flows from investing
activities:
Purchases of property and equipment
(2,685
)
(2,915
)
Proceeds from sale of intangible
assets
1,000
—
Cost of capitalized software
(6,768
)
(15,582
)
Purchases of investments
(42,899
)
(65,141
)
Sales of investments
8,296
11,799
Proceeds from maturity of investments
44,739
41,717
Acquisition of businesses
(1,250
)
—
Net cash provided by (used in) investing
activities
433
(30,122
)
Cash flows from financing
activities:
Finance lease payments
—
(12
)
Tax-related withholding of common
stock
—
(310
)
Proceeds from issuance of common stock
under employee stock plans
1,710
10,637
Repayment and exchange of senior
convertible notes
(211,786
)
—
Repurchase of common stock
(60,214
)
(44,976
)
Net proceeds from term loan
234,015
134,620
Net cash (used in) provided by financing
activities
(36,275
)
99,959
Effect of exchange rate changes on
cash
(5,747
)
(170
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
(6,425
)
87,821
Cash, cash equivalents and restricted
cash, beginning of period
100,714
121,172
Cash, cash equivalents and restricted
cash, end of period
$
94,289
$
208,993
8x8, Inc.
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
(Unaudited, in thousands,
except per share amounts)
Three Months Ended December
31,
Nine Months Ended December
31,
2022
2021
2022
2021
Costs of Revenue:
GAAP cost of service revenue
$
47,335
$
48,763
$
151,920
$
141,971
Amortization of acquired intangible
assets
(2,125
)
(858
)
(6,634
)
(2,968
)
Stock-based compensation expense and
related employer payroll taxes
(2,148
)
(2,345
)
(7,301
)
(6,911
)
Legal and regulatory costs
(85
)
—
(85
)
—
Severance, transition and contract
termination costs
(348
)
(100
)
(1,526
)
(152
)
Non-GAAP cost of service revenue
$
42,629
$
45,460
$
136,374
$
131,940
Non-GAAP service margin (as a percentage
of service revenue)
$
133,136
75.7
%
$
103,936
69.6
%
$
397,108
74.4
%
$
297,628
69.3
%
GAAP cost of other revenue
$
10,176
$
11,071
$
34,302
$
37,086
Stock-based compensation expense and
related employer payroll taxes
(902
)
(1,286
)
(2,986
)
(3,793
)
Severance, transition and contract
termination costs
(517
)
102
(1,294
)
(102
)
Non-GAAP cost of other revenue
$
8,757
$
9,887
$
30,022
$
33,191
Non-GAAP other margin (as a percentage of
other revenue)
$
(122
)
(1.4
)%
$
(2,409
)
(32.2
)%
$
(4,095
)
(15.8
)%
$
(6,001
)
(22.1
)%
Non-GAAP gross margin (as a percentage of
revenue)
$
133,014
72.1
%
$
101,527
64.7
%
$
393,013
70.3
%
$
291,627
63.8
%
Operating Expenses:
GAAP research and development
$
38,791
$
27,911
$
109,765
$
81,801
Stock-based compensation expense and
related employer payroll taxes
(7,183
)
(8,711
)
(23,149
)
(27,870
)
Severance, transition and contract
termination costs
(4,896
)
(124
)
(5,040
)
(227
)
Non-GAAP research and development (as a
percentage of revenue)
$
26,712
14.5
%
$
19,076
12.2
%
$
81,576
14.6
%
$
53,704
11.8
%
GAAP sales and marketing
$
79,021
$
76,797
$
243,035
$
229,438
Amortization of acquired intangible
assets
(3,106
)
(221
)
(9,319
)
(661
)
Stock-based compensation expense and
related employer payroll taxes
(6,653
)
(11,855
)
(21,816
)
(40,143
)
Severance, transition and contract
termination costs
(2,351
)
(81
)
(3,072
)
(1,234
)
Non-GAAP sales and marketing (as a
percentage of revenue)
$
66,911
36.3
%
$
64,640
41.2
%
$
208,828
37.3
%
$
187,400
41.0
%
GAAP general and administrative
$
27,158
$
29,950
$
90,212
$
80,064
Stock-based compensation expense and
related employer payroll taxes
(4,354
)
(10,193
)
(19,040
)
(31,520
)
Acquisition and integration costs
(555
)
(5,504
)
(2,733
)
(5,523
)
Legal and regulatory costs
(57
)
696
212
2,545
Severance, transition and contract
termination costs
(1,130
)
(271
)
(3,579
)
(1,456
)
Non-GAAP general and administrative (as a
percentage of revenue)
$
21,062
11.4
%
$
14,678
9.4
%
$
65,072
11.6
%
$
44,110
9.7
%
Non-GAAP Operating Expenses (as a
percentage of revenue)
114,685
62.2
%
98,394
62.7
%
355,476
63.5
%
285,214
62.4
%
Operating Profit (Loss):
GAAP loss from operations
$
(18,081
)
$
(37,618
)
$
(69,825
)
$
(113,602
)
Amortization of acquired intangible
assets
5,231
1,079
15,953
3,629
Stock-based compensation expense and
related employer payroll taxes
21,240
34,390
74,292
110,237
Acquisition and integration costs
555
5,504
2,733
5,523
Legal and regulatory costs
142
(696
)
(127
)
(2,545
)
Severance, transition and contract
termination costs
9,242
474
14,511
3,171
Non-GAAP operating profit (as a percentage
of revenue)
$
18,329
9.9
%
$
3,133
2.0
%
$
37,537
6.7
%
$
6,413
1.4
%
Other Income (Expenses):
GAAP other income (expense), net
$
(7,912
)
$
(5,866
)
$
7,154
$
(15,623
)
Amortization of debt discount and issuance
cost
1,136
4,924
3,136
13,780
Gain on debt extinguishment
(2,144
)
—
(18,250
)
—
Loss (gain) on warrants remeasurement
771
—
(522
)
—
Gain on sale of assets
(1,757
)
—
(1,826
)
—
Sublease Income
(116
)
(116
)
(348
)
(271
)
Non-GAAP other income (expense), net (as a
percentage of revenue)
$
(10,022
)
(5.4
)%
$
(1,058
)
(0.7
)%
$
(10,656
)
(1.9
)%
$
(2,114
)
(0.5
)%
Net Income (Loss):
GAAP net loss
$
(26,030
)
$
(43,572
)
$
(63,712
)
$
(129,801
)
Amortization of acquired intangible
assets
5,231
1,079
15,953
3,629
Stock-based compensation expense and
related employer payroll taxes
21,240
34,390
74,292
110,237
Acquisition and integration costs
555
5,504
2,733
5,523
Legal and regulatory costs
142
(696
)
(127
)
(2,545
)
Severance, transition and contract
termination costs
9,242
474
14,511
3,171
Amortization of debt discount and issuance
cost
1,136
4,924
3,136
13,780
Gain on debt extinguishment
(2,144
)
—
(18,250
)
—
Loss (gain) on warrants remeasurement
771
—
(522
)
—
Gain on sale of assets
(1,757
)
—
(1,826
)
—
Sublease income
(116
)
(116
)
(348
)
(271
)
Non-GAAP net income (as a percentage of
revenue)
$
8,270
4.5
%
$
1,987
1.3
%
$
25,840
4.6
%
$
3,723
0.8
%
Shares used in computing per share
amounts:
Basic
113,201
113,510
116,298
111,960
Diluted
113,711
115,704
117,384
116,687
GAAP net loss per share - Basic and
Diluted
$
(0.23
)
$
(0.38
)
$
(0.55
)
$
(1.16
)
Non-GAAP net income per share - Basic
$
0.07
$
0.02
$
0.22
$
0.03
Non-GAAP net income per share -
Diluted
$
0.07
$
0.02
$
0.22
$
0.03
8x8, Inc.
SELECTED OPERATING
METRICS
(Unaudited, in millions,
except number of enterprise customers)
Fiscal 2022
Fiscal 2023
Q1
Q2
Q3
Q4 (5)
Q1
Q2
Q3
TOTAL ARR (1)
$
536
$
553
$
572
$
687
$
688
$
692
$
698
Growth % (YoY)
24
%
18
%
16
%
33
%
28
%
25
%
22
%
ARR BY CUSTOMER SIZE
ENTERPRISE (2)
$
262
$
282
$
307
$
393
$
403
$
401
$
400
% of Total ARR
49
%
51
%
54
%
57
%
59
%
58
%
57
%
Growth % (YoY)
40
%
33
%
30
%
55
%
54
%
42
%
30
%
Total number of Enterprise Customers
824
871
907
1,258
(6)
1,277
1,291
1,309
MID-MARKET (3)
$
103
$
103
$
102
$
128
$
125
$
127
$
130
% of Total ARR
19
%
19
%
18
%
19
%
18
%
18
%
19
%
Growth % (YoY)
22
%
14
%
9
%
31
%
22
%
23
%
27
%
SMALL BUSINESS(4)
$
172
$
167
$
162
$
166
$
159
$
164
$
168
% of Total ARR
32
%
30
%
28
%
24
%
23
%
24
%
24
%
Growth % (YoY)
7
%
2
%
(1
)%
(1
)%
(7
)%
(2
)%
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.
(5)
Includes Fuze.
(6)
Previously reported enterprise
customer count of 1,320 for Q4'22 was adjusted to eliminate double
counting of subsidiaries.
Selected operating metrics presented in this
table have not been derived from financial measures that have been
prepared in accordance with US 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/20230131006200/en/
8x8, Inc. Investor Relations: Kate Patterson 1-408-763-8175
katherine.patterson@8x8.com Media: John Sun 1-408-692-7054
john.sun@8x8.com
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