8x8, Inc. (NASDAQ:EGHT), a provider of cloud-based unified
communications, contact center and collaboration solutions, today
reported financial results for the second quarter fiscal 2015 ended
September 30, 2014.
Second Quarter Fiscal 2015 Financial Highlights:
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Total revenue for the quarter increased 29% year-over-year to $39.6
million.
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Service revenue for the quarter increased 30% year-over-year to 36.1
million.
-
New monthly recurring revenue (MRR) sold by channel and mid-market
sales increased 59% year-over-year, representing 44% of new MRR sold
in the quarter, compared with 33% in the same period last year.
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Average monthly service revenue per business customer increased 12% to
a record $299, compared with $268 in the same period last year.
“Our differentiated cloud communications portfolio and increasing
penetration in the mid- market enabled 8x8 to deliver another solid
quarter of record revenue and profitable growth,” stated 8x8 CEO Vik
Verma. “The productivity advantages businesses are deriving from our
combined cloud telephony, unified communications and contact center
suite of services are measurable, and our ability to rapidly deploy
large distributed enterprises on a global basis is unparalleled in our
industry. The investments we have been making in the business are
further separating us from our competition.”
Mr. Verma continued, “Given our continued strong results this quarter
and visibility into the second half of our fiscal year, we are
increasing our annual guidance for revenue growth to approximately 26%
and now expect non-GAAP net income as a percentage of revenue in the 8 –
10% range for fiscal 2015.”
Additional Second Quarter Results:
-
GAAP net income for the second quarter of fiscal 2015 was $1.3
million, or $0.01 per diluted share, compared with GAAP net income of
$2.2 million, or $0.03 per diluted share, in the second quarter of
fiscal 2014.
-
Non-GAAP net income was $4.3 million, $0.05 per diluted share, or 11%
of revenue, compared with $4.1 million, $0.05 per diluted share, for
the same period last year.
-
Service margin was 79%, compared with 81% in the same period a year
ago; overall gross margin was 72%, compared with 71% in the same year
ago period.
-
Monthly business service revenue churn was 0.9%, compared with 1.2% in
the same period last year.
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Cash, cash equivalents and investments were $185.6 million in the
second quarter of fiscal 2015; cash flow from operating activities
was $8.6 million year to date.
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Ended the quarter with 40,434 business customers, compared with 34,674
customers in the same period a year ago.
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Recognized as a “Leader” in Gartner's August 2014 “Magic Quadrant for
Unified Communications as a Service (UCaaS), Multiregional” for the
third consecutive year.
-
Released Virtual Contact Center 8.1 upgrade with enhanced customer
engagement capabilities.
-
Awarded three new patents related to communications technologies; 96
U.S. patents awarded to date.
-
Announced the appointment of Mary Ellen Genovese as Chief Financial
Officer on October 7, 2014.
Conference Call Information:
Management will host a conference call to discuss these results and
other matters related to the Company’s business today, October 22, 2014,
at 4:30 pm ET. The call is accessible via the following numbers and
webcast links:
Dial In:
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(877) 843-0417, domestic
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(408) 427-3791, international
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Replay:
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(855) 859-2056, domestic (Conference ID #13248971)
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(404) 537-3406, international (Conference ID #13248971)
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Webcast:
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http://investors.8x8.com
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Participants should plan to dial in or log on ten minutes prior to the
start time. A telephonic replay of the call will be available three
hours after the conclusion of the call until midnight October 28, 2014.
The webcast will be archived on 8x8’s website for a period of one year.
For additional information, visit http://investors.8x8.com.
8x8 also reported, in accordance with NASDAQ Listing Rule 5635(c)(4),
that employment inducement awards were granted to 12 new employees in
connection with their recent hiring. The employees received restrictive
stock units for 32,602 shares of the Company's Common Stock, subject to
their continued employment and other conditions.
About 8x8, Inc.
8x8, Inc. (NASDAQ:EGHT) is the trusted provider of secure and reliable
cloud-based unified communications and virtual contact center solutions
to more than 40,000 small, midsize and distributed enterprise
organizations operating in over 40 countries across six continents.
8x8's out-of-the-box cloud solutions replace traditional on-premise PBX
hardware and software-based systems with a flexible and scalable
Software as a Service (SaaS) alternative, encompassing cloud business
phone service, contact center solutions, and web conferencing. For
additional information, visit www.8x8.com,
or www.8x8.com/UK or connect with
8x8 on Google+, Facebook, LinkedIn and Twitter.
Non-GAAP Measures
The Company has provided in this release financial information that has
not been prepared in accordance with Generally Accepted Accounting
Principles (GAAP). Management uses these non-GAAP financial measures
internally in analyzing our financial results and believes they are
useful to investors, as a supplement to GAAP measures, in evaluating the
Company’s ongoing operational performance. Management believes that the
use of these non-GAAP financial measures provides an additional tool for
investors to use in evaluating 8x8’s ongoing operating results and
trends and in comparing financial results with other companies in the
industry, many of which present similar non-GAAP financial measures to
investors.
Non-GAAP financial measures should not be considered in isolation from,
or as a substitute for, financial information prepared in accordance
with GAAP. Investors are encouraged to review the reconciliation of
these non-GAAP financial measures to their most directly comparable GAAP
financial measures below. A reconciliation of non-GAAP financial
measures to their most directly comparable GAAP measures has been
provided in the financial statement tables included below in this press
release.
Non-GAAP net income and non-GAAP net income per
share
We have defined non-GAAP net income as net income for GAAP plus non-cash
tax adjustments, stock-based compensation, amortization of acquired
intangible assets, acquisition-related costs, gain on patent sale, gain
on disposal of discontinued operations and management transition. We
have excluded gain on patent sale and gain on disposal of discontinued
operations because we consider these to have been isolated transactions
and believe these are not reflective of our ongoing operations, and this
reduces comparability of periodic operating results when these are
included. Non-cash tax adjustments represent the differences between the
amount of taxes we expect to pay and our GAAP tax provision each period.
We have excluded stock-based compensation expense because it relies on
valuations based on future events, such as the market price of our
common stock, that are difficult to predict and are affected by market
factors that are largely not within the control of management.
Amortization of acquired intangible assets is excluded because it is a
non-cash expense that we do not consider part of ongoing operations when
assessing our financial performance, as it relates to accounting for
certain purchased assets. We have excluded acquisition-related expenses
and management transition expenses because these expenses are difficult
to predict and are often one-time. We define non-GAAP net income per
share as non-GAAP net income divided by the weighted-average diluted
shares outstanding. We define non-GAAP net income percentage of revenue
as non-GAAP net income divided by revenue. The GAAP and non-GAAP
weighted average number of diluted shares to calculate GAAP and non-GAAP
earnings per share are the same. We believe that such exclusions
facilitate comparisons to our historical operating results and to the
results of other companies in the same industry, and provides investors
with information that we use in evaluating management’s performance on a
quarterly and annual basis.
Forward Looking Statements
This news release contains "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995 and
Section 21E of the Securities Exchange Act of 1934. These statements
include, without limitation, information about future events based on
current expectations, potential product development efforts, near and
long-term objectives, potential new business, strategies, organization
changes, changing markets, future business performance and outlook. Such
statements are predictions only, and actual events or results could
differ materially from those made in any forward-looking statements due
to a number of risks and uncertainties. Actual results and trends may
differ materially from historical results or those projected in any such
forward-looking statements depending on a variety of factors. These
factors include, but are not limited to, market acceptance of new or
existing services and features, success of our efforts to target
mid-market and larger distributed enterprises, changes in the
competitive dynamics of the markets in which we compete, customer
cancellations and rate of churn, impact of current economic climate and
adverse credit markets on our target customers, our ability to scale our
business, our reliance on infrastructure of third-party network services
providers, risk of failure in our physical infrastructure, risk of
failure of our software, our ability to maintain the compatibility of
our software with third-party applications and mobile platforms,
continued compliance with industry standards and regulatory
requirements, risks relating to our strategies and objectives for future
operations, including the execution of integration plans and realization
of the expected benefits of our acquisitions, the amount and timing of
costs associated with recruiting, training and integrating new
employees, introduction and adoption of our cloud communications and
collaboration services in markets outside of the United States, and
general economic conditions that could adversely affect our business and
operating results. For a discussion of such risks and uncertainties,
which could cause actual results to differ from those contained in the
forward-looking statements, see “Risk Factors” in the Company’s reports
on Forms 10-K and 10-Q, as well as other reports that 8x8, Inc. files
from time to time with the Securities and Exchange Commission. All
forward-looking statements are qualified in their entirety by this
cautionary statement, and 8x8, Inc. undertakes no obligation to update
publicly any forward-looking statement for any reason, except as
required by law, even as new information becomes available or other
events occur in the future.
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8x8, Inc.
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME
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(In thousands, except per share amounts; unaudited)
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Three Months Ended
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Six Months Ended
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September 30,
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September 30,
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2014
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2013
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2014
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2013
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Service revenue
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$
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36,121
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$
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27,826
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$
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70,397
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$
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54,325
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Product revenue
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3,477
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2,989
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7,114
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5,741
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Total revenue
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39,598
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30,815
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77,511
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60,066
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Operating expenses (1):
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Cost of service revenue
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7,505
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5,209
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14,502
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9,995
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Cost of product revenue
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3,762
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3,783
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7,731
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7,130
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Research and development
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3,496
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2,640
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6,902
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4,976
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Sales and marketing
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19,440
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13,745
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38,600
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26,817
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General and administrative
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3,893
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3,125
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7,771
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5,897
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Gain on patent sale
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(1,000
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)
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-
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(1,000
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-
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Total operating expenses
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37,096
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28,502
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74,506
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54,815
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Income from operations
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2,502
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2,313
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3,005
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5,251
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Other income, net
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200
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1
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377
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16
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Income from continuing operations before provision for income taxes
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2,702
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2,314
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3,382
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5,267
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Provision for income taxes
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1,411
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826
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2,083
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1,787
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Income from continuing operations
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1,291
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1,488
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1,299
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3,480
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Income from discontinued operations, net of income tax provision
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-
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154
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-
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301
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Gain on disposal of discontinued operations, net of income tax
provision of $463
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-
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589
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-
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589
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Net Income
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$
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1,291
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$
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2,231
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$
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1,299
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$
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4,370
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Income per share - continuing operations:
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Basic
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$
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0.01
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$
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0.02
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$
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0.01
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$
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0.05
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Diluted
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$
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0.01
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$
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0.02
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$
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0.01
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$
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0.05
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Income per share - discontinued operations:
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Basic
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$
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-
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$
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0.01
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$
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-
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$
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0.01
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Diluted
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$
|
-
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$
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0.01
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$
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-
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$
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0.01
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Net income per share:
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Basic
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$
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0.01
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$
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0.03
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$
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0.01
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$
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0.06
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Diluted
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$
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0.01
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|
$
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0.03
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$
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0.01
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$
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0.06
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Weighted average number of shares:
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Basic
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89,073
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72,970
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88,861
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72,788
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Diluted
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91,615
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76,232
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|
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91,568
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76,035
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(1) Amounts include stock-based compensation expense, as follows:
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Three Months Ended
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Six Months Ended
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September 30,
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September 30,
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2014
|
|
|
2013
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|
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2014
|
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2013
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Cost of service revenue
|
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$
|
160
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|
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$
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68
|
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$
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275
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|
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$
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136
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Cost of product revenue
|
|
|
-
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|
|
|
-
|
|
|
-
|
|
|
|
-
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Research and development
|
|
|
315
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|
|
|
141
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|
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629
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|
|
295
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Sales and marketing
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|
|
910
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|
|
393
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|
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1,654
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|
|
|
740
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General and administrative
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|
|
623
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|
|
|
504
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|
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1,297
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|
|
|
842
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|
|
$
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2,008
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|
|
$
|
1,106
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$
|
3,855
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|
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$
|
2,013
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|
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8x8, Inc.
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CONDENSED CONSOLIDATED BALANCE SHEETS
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(In thousands, unaudited)
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|
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|
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September 30,
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March 31,
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2014
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2014
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ASSETS
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Current assets
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Cash and cash equivalents
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$
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56,048
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$
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59,159
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Short-term investments
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129,519
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47,181
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Accounts receivable, net
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7,266
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|
5,503
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Inventory
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|
|
754
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811
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Deferred tax assets
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1,732
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|
2,065
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Other current assets
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|
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3,247
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|
|
2,214
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Total current assets
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198,566
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116,933
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Long-term investments
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-
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72,021
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Property and equipment, net
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9,555
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7,711
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Intangible assets, net
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|
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13,826
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15,095
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Goodwill
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38,114
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38,461
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Deferred tax assets, non-current
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46,128
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47,797
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Other assets
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|
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1,144
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|
|
1,185
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Total assets
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|
$
|
307,333
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$
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299,203
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current liabilities
|
|
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Accounts payable
|
|
$
|
8,898
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$
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6,789
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Accrued compensation
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5,500
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4,583
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Accrued warranty
|
|
|
538
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|
|
660
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Deferred revenue
|
|
|
1,522
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|
|
1,857
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Other accrued liabilities
|
|
|
3,891
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|
|
4,232
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Total current liabilities
|
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|
20,349
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|
18,121
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Other liabilities
|
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|
2,532
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|
|
2,904
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Total liabilities
|
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22,881
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|
21,025
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Total stockholders' equity
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284,452
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|
|
278,178
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Total liabilities and stockholders' equity
|
|
$
|
307,333
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$
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299,203
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|
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|
|
|
|
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8x8, Inc.
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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(In thousands, unaudited)
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|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
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September 30,
|
|
|
|
2014
|
|
|
2013
|
Cash flows from operating activities:
|
|
|
|
|
|
|
Net income
|
|
$
|
1,299
|
|
|
$
|
4,370
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
Depreciation
|
|
|
1,576
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|
|
|
1,287
|
|
Amortization of intangible assets
|
|
|
1,133
|
|
|
|
671
|
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Amortization of capitalized software
|
|
|
170
|
|
|
|
37
|
|
Net Accretion of discount and amortization of premium on
marketable securities
|
|
|
428
|
|
|
|
-
|
|
Gain on disposal of discontinued operations
|
|
|
-
|
|
|
|
(589
|
)
|
Stock-based compensation
|
|
|
3,855
|
|
|
|
2,013
|
|
Deferred income tax provision
|
|
|
2,002
|
|
|
|
1,589
|
|
Other
|
|
|
115
|
|
|
|
390
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
Accounts receivable, net
|
|
|
(1,883
|
)
|
|
|
(1,179
|
)
|
Inventory
|
|
|
29
|
|
|
|
91
|
|
Other current and noncurrent assets
|
|
|
(608
|
)
|
|
|
(431
|
)
|
Deferred cost of goods sold
|
|
|
(340
|
)
|
|
|
(6
|
)
|
Accounts payable
|
|
|
980
|
|
|
|
22
|
|
Accrued compensation
|
|
|
918
|
|
|
|
17
|
|
Accrued warranty
|
|
|
(122
|
)
|
|
|
100
|
|
Accrued taxes and fees
|
|
|
249
|
|
|
|
(166
|
)
|
Deferred revenue
|
|
|
(564
|
)
|
|
|
961
|
|
Other current and noncurrent liabilities
|
|
|
(607
|
)
|
|
|
(166
|
)
|
Net cash provided by operating activities
|
|
|
8,630
|
|
|
|
9,011
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
(2,553
|
)
|
|
|
(1,445
|
)
|
Cost of capitalized software
|
|
|
(181
|
)
|
|
|
(473
|
)
|
Proceeds from maturity of investments
|
|
|
21,600
|
|
|
|
-
|
|
Sales of investments - available for sale
|
|
|
25,537
|
|
|
|
-
|
|
Purchase of investments - available for sale
|
|
|
(57,854
|
)
|
|
|
-
|
|
Net cash used in investing activities
|
|
|
(13,451
|
)
|
|
|
(1,918
|
)
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
Capital lease payments
|
|
|
(81
|
)
|
|
|
(10
|
)
|
Repurchase of common stock
|
|
|
(80
|
)
|
|
|
(257
|
)
|
Proceeds from issuance of common stock under employee stock plans
|
|
|
1,699
|
|
|
|
2,214
|
|
Net cash provided by financing activities
|
|
|
1,538
|
|
|
|
1,947
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash
|
|
|
172
|
|
|
|
-
|
|
Net (decrease) increase in cash and cash equivalents
|
|
|
(3,111
|
)
|
|
|
9,040
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at the beginning of the period
|
|
|
59,159
|
|
|
|
50,305
|
|
Cash and cash equivalents at the end of the period
|
|
$
|
56,048
|
|
|
$
|
59,345
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8x8, Inc.
|
Selected Operating Statistics (1)
|
|
|
Three Months Ended
|
|
|
Sept. 30, 2013
|
|
Dec. 31, 2013
|
|
March 31, 2014
|
|
June 30, 2014
|
|
Sept. 30, 2014
|
|
|
|
|
|
|
|
|
|
|
|
Total business customers (2)
|
|
|
34,674
|
|
|
|
36,753
|
|
|
|
37,933
|
|
|
|
39,340
|
|
|
|
40,434
|
|
Business customer average monthly service revenue per customer (3)
|
|
$
|
268
|
|
|
$
|
274
|
|
|
$
|
287
|
|
|
$
|
293
|
|
|
$
|
299
|
|
Monthly business service revenue churn
|
|
|
1.2
|
%
|
|
|
1.5
|
%
|
|
|
1.2
|
%
|
|
|
0.4
|
%
|
|
|
0.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Overall service margin
|
|
|
81
|
%
|
|
|
81
|
%
|
|
|
79
|
%
|
|
|
80
|
%
|
|
|
79
|
%
|
Overall product margin
|
|
|
-27
|
%
|
|
|
-34
|
%
|
|
|
-23
|
%
|
|
|
-9
|
%
|
|
|
-8
|
%
|
Overall gross margin
|
|
|
71
|
%
|
|
|
71
|
%
|
|
|
70
|
%
|
|
|
71
|
%
|
|
|
72
|
%
|
|
|
|
|
|
|
|
|
|
|
|
(1) Selected operating statistics table include continuing
operations and excludes dedicated server hosting business sold
September 30, 2013.
|
(2) Business customers are defined as customers paying for service.
Customers that are currently in the 30-day trial period are
considered to be customers that are paying for service. Customers
subscribing to Virtual Office Solo, DNS or Cloud VPS services are
not included as business customers.
|
(3) 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8x8, Inc.
|
RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME
|
AND NON-GAAP NET INCOME PER SHARE
|
(In thousands, except per share amounts; unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
|
Net income
|
|
$
|
1,291
|
|
|
$
|
2,231
|
|
|
$
|
1,299
|
|
|
$
|
4,370
|
|
Gain on patent sale
|
|
|
(1,000
|
)
|
|
|
-
|
|
|
|
(1,000
|
)
|
|
|
-
|
|
Gain on disposal of discontinued operations
|
|
|
-
|
|
|
|
(589
|
)
|
|
|
-
|
|
|
|
(589
|
)
|
Non-cash tax adjustments
|
|
|
1,392
|
|
|
|
716
|
|
|
|
2,002
|
|
|
|
1,589
|
|
Amortization of acquired intangible assets
|
|
|
566
|
|
|
|
331
|
|
|
|
1,133
|
|
|
|
671
|
|
Stock-based compensation expense
|
|
|
2,008
|
|
|
|
1,106
|
|
|
|
3,855
|
|
|
|
2,013
|
|
Acquisition related expenses
|
|
|
-
|
|
|
|
143
|
|
|
|
-
|
|
|
|
143
|
|
Management transition
|
|
|
-
|
|
|
|
133
|
|
|
|
-
|
|
|
|
133
|
|
Non-GAAP net income
|
|
$
|
4,257
|
|
|
|
4,071
|
|
|
$
|
7,289
|
|
|
$
|
8,330
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
91,615
|
|
|
|
76,232
|
|
|
|
91,568
|
|
|
|
76,035
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income per share - Diluted
|
|
$
|
0.01
|
|
|
$
|
0.03
|
|
|
$
|
0.01
|
|
|
$
|
0.06
|
|
Gain on patent sale
|
|
|
(0.01
|
)
|
|
|
-
|
|
|
|
(0.01
|
)
|
|
|
-
|
|
Gain on disposal of discontinued operations
|
|
|
-
|
|
|
|
(0.01
|
)
|
|
|
-
|
|
|
|
(0.01
|
)
|
Non-cash tax adjustments
|
|
|
0.02
|
|
|
|
0.01
|
|
|
|
0.02
|
|
|
|
0.02
|
|
Amortization of acquired intangible assets
|
|
|
-
|
|
|
|
-
|
|
|
|
0.01
|
|
|
|
0.01
|
|
Stock-based compensation expense
|
|
|
0.03
|
|
|
|
0.02
|
|
|
|
0.05
|
|
|
|
0.03
|
|
Acquisition related expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Management transition
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Non-GAAP net income per share - Diluted
|
|
$
|
0.05
|
|
|
$
|
0.05
|
|
|
$
|
0.08
|
|
|
$
|
0.11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income percentage of revenue
|
|
|
3
|
%
|
|
|
7
|
%
|
|
|
2
|
%
|
|
|
7
|
%
|
Gain on patent sale
|
|
|
-2
|
%
|
|
|
-
|
|
|
|
-1
|
%
|
|
|
-
|
|
Gain on disposal of discontinued operations
|
|
|
-
|
|
|
|
-2
|
%
|
|
|
-
|
|
|
|
-1
|
%
|
Non-cash tax adjustments
|
|
|
4
|
%
|
|
|
2
|
%
|
|
|
2
|
%
|
|
|
3
|
%
|
Amortization of acquired intangible assets
|
|
|
1
|
%
|
|
|
1
|
%
|
|
|
1
|
%
|
|
|
1
|
%
|
Stock-based compensation expense
|
|
|
5
|
%
|
|
|
4
|
%
|
|
|
5
|
%
|
|
|
4
|
%
|
Acquisition related expenses
|
|
|
-
|
|
|
|
1
|
%
|
|
|
-
|
|
|
|
-
|
|
Management transition
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Non-GAAP net income percentage of revenue
|
|
|
11
|
%
|
|
|
13
|
%
|
|
|
9
|
%
|
|
|
14
|
%
|
Copyright Business Wire 2014