- Service Revenue increased 25% year-over-year
- Gross margin as a percent of revenue increased 6 percentage
points and gross profit increased more than 35% from prior
year
- Cash flow from operations up 171% to $13.8 million
- Enterprise ARR increased 42% year-over-year to $401
million
8x8, Inc. (NYSE: EGHT), a leading integrated cloud
communications platform provider, today reported financial results
for the second quarter of fiscal 2023 ended September 30, 2022.
Second Quarter Fiscal 2023 Financial
Results:
- Total revenue increased 24% year-over-year to $187.4 million,
including Fuze revenue of $28.4 million.
- Service revenue increased 25% year-over-year to $178.6 million,
including Fuze revenue of $27.9 million.
- GAAP operating loss was $25.0 million, compared to operating
loss of $37.2 million in the second quarter of fiscal 2022.
- Non-GAAP operating profit was $9.1 million, an increase of 368%
compared to non-GAAP operating profit of $1.9 million in the second
quarter of fiscal 2022.
"Our second quarter results reflected our increased emphasis on
profitability and cash flow generation. Non-GAAP gross margin was
above 70% and non-GAAP operating profit and operating cash flow
exceeded our expectations," said Dave Sipes, 8x8 Chief Executive
Officer. "As a result, we are once again raising our non-GAAP
operating margin targets for the year and believe we have line of
sight to double-digit operating margins on a non-GAAP basis in
fiscal 2024."
"We believe we can achieve these results while continuing to
invest in innovation on our XCaaS platform and providing an
outstanding customer experience that enables our customers to make
every interaction an opportunity to delight. Our unified XCaaS
platform delivers this advantage to customers at a lower total cost
of ownership," added Sipes.
Second Quarter Fiscal 2023 Financial Metrics and Recent
Business Highlights:
Financial Metrics
- Annual Recurring Subscriptions and Usage Revenue (ARR):
- Total ARR grew to $692 million, an increase of 25% from the end
of the same period last year.
- Enterprise ARR of $401 million increased 42% year-over-year and
represented 58% of total ARR.
- 1,291 customers generated ARR greater than $100,000, compared
to 871 at the end of the second quarter of fiscal 2022.
- GAAP gross margin was 67%, compared to 61% in the same period
last year. Non-GAAP gross margin was 70%, compared to 64% in the
same period last year.
- GAAP service revenue gross margin was 71%, compared to 67% in
the same period last year. Non-GAAP service gross margin was 74%,
compared to 69% in the same period last year.
- Cash provided by operating activities was $13.8 million for the
second quarter, compared to $5.1 million in the second quarter of
fiscal 2022.
- Cash, cash equivalents, restricted cash and investments were
$132.3 million on September 30, 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 Highlights
- Released an update to the 8x8 XCaaS™ (eXperience Communications
as a Service™) platform. Highlights included:
- A new 8x8 phone app for Microsoft Teams, providing customers
with additional options for enabling cost-effective PSTN calling in
the Teams apps.
- Full cloud PSTN support extended to 56 countries and
territories, now including Estonia and Lithuania.
- Expanded customer experience analytics with new visual
interaction flow diagrams, enhanced reporting into digital
interactions and new advanced search and filter capabilities.
- 8x8 Work is now Chrome Enterprise recommended for the
Communications solution track, ensuring that 8x8 Work is optimized
for ChromeOS environments. With this, organizations that
standardize on ChromeOS have the peace of mind to deploy the 8x8
XCaaS platform across all users, from the contact center to the
front desk.
Industry Recognition
- Singapore's Cyber Security Agency (CSA) recognized 8x8 CPaaS
for its strong cybersecurity practices with the Cyber Trust mark
certification, one of the first companies to be awarded the
certification.
- Recognized in the 2022 Gartner® Magic Quadrant™ for Contact
Center as a Service for the eighth year in a row.
- Awarded a Gold Stevie® Award in the Customer Service Executive
of the Year category and a Silver Stevie® Award in the Customer
Service Department of the Year category in The 19th Annual
International Business Awards®.
- Received the Comms Council UK Awards 2022 for Best ITSP Large
Enterprise and Best Innovation for 8x8 Agent Workspace.
- Awarded the 2022 Best Overall Supplier for Canada by
Telarus.
- Recognized as the Top International Vendor and Fifth Top
Overall Vendor by Avant Special Forces.
Corporate Highlights
- The Company retired approximately $404 million in aggregate
principal amount of its convertible notes due in 2024 in exchange
for the issuance of $202 million new senior convertible notes due
in 2028 and $182 million in cash out of the proceeds from a $250
million term loan due in 2027.
- Concurrent with the convertible notes exchange, the company
repurchased 10.7 million shares of its common stock for
approximately $60 million.
- Subsequent to the debt exchange, the Company repurchased $6
million aggregate principal amount of its convertible senior notes
due 2024 in an open market transaction. Following the convertible
debt exchange and repurchase, approximately $90 million in
aggregate principal amount of the convertible senior notes due 2024
remains outstanding.
“By simultaneously executing a term loan, convertible debt
exchange, and share repurchase, we extended the maturity of more
than 80 percent of our 2024 convertible debt while limiting the
potential dilutive impact to existing shareholders," said Sam
Wilson, 8x8 Chief Financial Officer. "These transactions further
strengthen our already solid financial foundation, which includes
more than $130 million in cash and investments. Our emphasis on
profitability is generating increased cash flow, and we believe we
will have more than sufficient resources to fund our operations and
repurchase the remaining $90 million in aggregate principal amount
of the 2024 Notes on or before maturity."
Leadership Update
The company announced the appointment of Jeanette Winters as
Chief Human Resources Officer of 8x8. Dr. Winters holds a doctorate
in Public Administration from University of Southern California and
has more than 25 years experience leading corporate talent
management, diversity and inclusion, organizational development,
and enterprise learning functions at global Fortune 500
organizations, including Intel, American Express, Pitney Bowes and
Amgen. Immediately prior to her appointment at 8x8, Dr. Winters was
chief talent officer and managing partner at Winters Advisory
Group, an HR consultancy, and served as 8x8's Interim Chief Human
Resources Officer.
Dr. Winters was granted restricted stock units (RSUs) for up to
100,000 of the company’s common stock and performance stock units
(PSUs) for up to 200,000 shares of the company’s common stock. The
RSUs and PSUs will vest over periods of three years, subject to Dr.
Winters' continuing employment or other association with 8x8 or any
of its subsidiaries and, in the case of the PSUs, subject to the
achievement of certain performance criteria. The awards were
approved by a majority of 8x8’s independent directors as material
inducements to Dr. Winters' hiring, in accordance with New York
Stock Exchange Rule 303A.08 and 8x8’s 2017 New Employee Inducement
Incentive Plan.
Third 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.
Third Quarter Fiscal 2023 Ending
December 31, 2022
- Service revenue in the range of $178 million to $180 million,
representing year-over-year growth of approximately 20% at the
midpoint.
- Total revenue in the range of $185 million to $188 million,
representing year-over-year growth of approximately 19% at the
midpoint.
- Non-GAAP operating margin in the range of 5.0 to 5.8%.
Fiscal Year 2023 Ending March 31,
2023
- Service revenue in the range of $712 million to $720 million,
representing year-over-year growth of 19% at the midpoint.
- Total revenue in the range of $745 million to $755 million,
representing year-over-year growth of approximately 18% at the
midpoint.
- Non-GAAP operating margin of approximately 5.5%, with a goal of
exiting fiscal 2023 with non-GAAP operating margin of at least
6.5%.
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. 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.
Conference Call Information:
Management will host a conference call to discuss earnings
results on October 27, 2022, 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: 602771
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. (NYSE: 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.
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 Gross Margin
Non-GAAP Service Revenue Gross Margin (and as a percentage of
Service Revenue) and Non-GAAP Other Revenue Gross Margin (and 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 Gross Margin (and as a percentage
of Revenue) is computed as Revenue less Non-GAAP Cost of Service
Revenue and Non-GAAP Cost of Other Revenue divided by 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 Gross Margins performance as
compared to prior periods and trends.
Non-GAAP Operating Expenses
Non-GAAP Operating Expenses includes Non-GAAP Research and
Development, Non-GAAP Sales and Marketing, and Non-GAAP General and
Administrative, 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: acquisition and
integration expenses, certain severance, transition and contract
termination costs, debt amortization expense, gain 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, debt amortization expense, gain 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 September
30,
Six Months Ended September
30,
2022
2021
2022
2021
Service revenue
$
178,556
$
142,376
$
357,717
$
280,172
Other revenue
8,833
9,181
17,292
19,712
Total revenue
187,389
151,557
375,009
299,884
Cost of revenue and operating
expenses:
Cost of service revenue
51,038
47,198
104,585
93,208
Cost of other revenue
11,000
12,269
24,126
26,015
Research and development
36,019
28,498
70,974
53,890
Sales and marketing
80,487
76,726
164,014
152,641
General and administrative
33,835
24,023
63,054
50,114
Total operating expenses
212,379
188,714
426,753
375,868
Loss from operations
(24,990
)
(37,157
)
(51,744
)
(75,984
)
Other income (expense), net
13,950
(4,934
)
15,066
(9,757
)
Loss from operations before provision for
income taxes
(11,040
)
(42,091
)
(36,678
)
(85,741
)
Provision for income taxes
599
233
1,004
489
Net loss
$
(11,639
)
$
(42,324
)
$
(37,682
)
$
(86,230
)
Net loss per share:
Basic and diluted
$
(0.10
)
$
(0.38
)
$
(0.32
)
$
(0.78
)
Weighted average number of shares:
Basic and diluted
116,013
112,422
117,857
111,180
8x8, Inc.
CONSOLIDATED BALANCE
SHEETS
(Unaudited, in
thousands)
September 30, 2022
March 31, 2022
ASSETS
Current assets
Cash and cash equivalents
$
100,512
$
91,205
Restricted cash, current
511
8,691
Short-term investments
30,411
44,845
Accounts receivable, net
58,345
57,400
Deferred sales commission costs,
current
36,350
35,482
Other current assets
37,537
37,999
Total current assets
263,666
275,622
Property and equipment, net
68,717
79,016
Operating lease, right-of-use assets
54,201
63,415
Intangible assets, net
117,490
128,213
Goodwill
262,393
266,867
Restricted cash, non-current
818
818
Long-term investments
—
2,671
Deferred sales commission costs,
non-current
71,647
75,668
Other assets
17,009
17,978
Total assets
$
855,941
$
910,268
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities
Accounts payable
$
43,844
$
49,721
Accrued compensation
32,923
36,319
Accrued taxes
31,579
32,573
Operating lease liabilities, current
12,648
15,485
Deferred revenue, current
30,860
34,262
Other accrued liabilities
17,131
23,167
Total current liabilities
168,985
191,527
Operating lease liabilities,
non-current
68,437
74,518
Convertible senior notes
286,682
447,452
Term loan
230,049
—
Deferred revenue, non-current
10,465
11,430
Other liabilities, non-current
6,541
2,975
Total liabilities
771,159
727,902
Stockholders' equity:
Common stock
111
118
Additional paid-in capital
867,063
956,599
Accumulated other comprehensive loss
(24,944
)
(7,913
)
Accumulated deficit
(757,448
)
(766,438
)
Total stockholders' equity
84,782
182,366
Total liabilities and stockholders'
equity
$
855,941
$
910,268
8x8, Inc.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited, in
thousands)
Six Months Ended September
30,
2022
2021
Cash flows from operating
activities:
Net loss
$
(37,682
)
$
(86,230
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation
5,624
5,771
Amortization of intangible assets
10,723
2,551
Amortization of capitalized software
11,494
14,713
Amortization of debt discount and issuance
costs
2,000
8,855
Amortization of deferred sales commission
costs
18,839
16,857
Allowance for credit losses
1,781
645
Operating lease expense, net of
accretion
5,925
6,795
Stock-based compensation expense
52,435
72,422
Gain on debt extinguishment
(16,106
)
—
Gain on remeasurement of warrants
(1,293
)
—
Impairment of right-of-use assets
2,424
—
Other
(192
)
853
Changes in assets and liabilities:
Accounts receivable, net
(4,579
)
(1,100
)
Deferred sales commission costs
(13,834
)
(23,489
)
Other current and non-current assets
1,223
(835
)
Accounts payable and accruals
(14,733
)
(9,860
)
Deferred revenue
(4,367
)
1,183
Net cash provided by operating
activities
19,682
9,131
Cash flows from investing
activities:
Purchases of property and equipment
(1,845
)
(2,358
)
Cost of capitalized software
(4,328
)
(11,613
)
Purchases of investments
(27,669
)
(56,049
)
Sales of investments
8,296
10,299
Proceeds from maturity of investments
36,641
30,967
Acquisition of businesses
(1,250
)
—
Net cash provided by (used in) investing
activities
9,845
(28,754
)
Cash flows from financing
activities:
Finance lease payments
—
(8
)
Tax-related withholding of common
stock
—
(128
)
Proceeds from issuance of common stock
under employee stock plans
1,713
10,328
Repayment and exchange of senior
convertible notes
(190,553
)
—
Repurchase of common stock
(60,214
)
—
Net proceeds from term loan
232,861
—
Net cash (used in) provided by financing
activities
(16,193
)
10,192
Effect of exchange rate changes on
cash
(12,207
)
(111
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
1,127
(9,542
)
Cash, cash equivalents and restricted
cash, beginning of period
100,714
121,172
Cash, cash equivalents and restricted
cash, end of period
$
101,841
$
111,630
8x8, Inc.
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
(Unaudited, in thousands,
except per share amounts)
Three Months Ended September
30,
Six Months Ended September
30,
2022
2021
2022
2021
Costs of Revenue:
GAAP cost of service revenue
$
51,038
$
47,198
$
104,585
$
93,208
Amortization of acquired intangible
assets
(2,140
)
(1,044
)
(4,509
)
(2,110
)
Stock-based compensation expense and
related employer payroll taxes
(2,457
)
(2,526
)
(5,153
)
(4,566
)
Severance, transition and contract
termination costs
(281
)
(57
)
(1,178
)
(52
)
Non-GAAP cost of service revenue
$
46,160
$
43,571
$
93,745
$
86,480
Non-GAAP service margin (as a percentage
of service revenue)
$
132,396
74.1
%
$
98,805
69.4
%
$
263,972
73.8
%
$
193,692
69.1
%
GAAP cost of other revenue
$
11,000
$
12,269
$
24,126
$
26,015
Stock-based compensation expense and
related employer payroll taxes
(937
)
(1,372
)
(2,084
)
(2,507
)
Severance, transition and contract
termination costs
(244
)
(188
)
(777
)
(204
)
Non-GAAP cost of other revenue
$
9,819
$
10,709
$
21,265
$
23,304
Non-GAAP other margin (as a percentage of
other revenue)
$
(986
)
(11.2
)%
$
(1,528
)
(16.6
)%
$
(3,973
)
(23.0
)%
$
(3,592
)
(18.2
)%
Non-GAAP gross margin (as a percentage of
revenue)
$
131,410
70.1
%
$
97,277
64.2
%
$
259,999
69.3
%
$
190,100
63.4
%
Operating Expenses:
GAAP research and development
$
36,019
$
28,498
$
70,974
$
53,890
Stock-based compensation expense and
related employer payroll taxes
(7,773
)
(10,086
)
(15,966
)
(19,159
)
Severance, transition and contract
termination costs
(107
)
(42
)
(144
)
(103
)
Non-GAAP research and development (as a
percentage of revenue)
$
28,139
15.0
%
$
18,370
12.1
%
$
54,864
14.6
%
$
34,628
11.5
%
GAAP sales and marketing
$
80,487
$
76,726
$
164,014
$
152,641
Amortization of acquired intangible
assets
(3,107
)
(221
)
(6,213
)
(440
)
Stock-based compensation expense and
related employer payroll taxes
(6,883
)
(13,588
)
(15,163
)
(28,288
)
Severance, transition and contract
termination costs
(330
)
(531
)
(721
)
(1,153
)
Non-GAAP sales and marketing (as a
percentage of revenue)
$
70,167
37.4
%
$
62,386
41.2
%
$
141,917
37.8
%
$
122,760
40.9
%
GAAP general and administrative
$
33,835
$
24,023
$
63,054
$
50,114
Stock-based compensation expense and
related employer payroll taxes
(6,763
)
(10,423
)
(14,686
)
(21,327
)
Acquisition and integration costs
(1,554
)
(19
)
(2,178
)
(19
)
Legal and regulatory costs
207
1,317
269
1,849
Severance, transition and contract
termination costs
(1,694
)
(314
)
(2,449
)
(1,185
)
Non-GAAP general and administrative (as a
percentage of revenue)
$
24,031
12.8
%
$
14,584
9.6
%
$
44,010
11.7
%
$
29,432
9.8
%
Non-GAAP Operating Expenses (as a
percentage of revenue)
122,337
65.3
%
95,340
62.9
%
240,791
64.2
%
186,820
62.3
%
Operating Profit (Loss):
GAAP loss from operations
$
(24,990
)
$
(37,157
)
$
(51,744
)
$
(75,984
)
Amortization of acquired intangible
assets
5,247
1,265
10,722
2,550
Stock-based compensation expense and
related employer payroll taxes
24,813
37,995
53,052
75,847
Acquisition and integration costs
1,554
19
2,178
19
Legal and regulatory costs
(207
)
(1,317
)
(269
)
(1,849
)
Severance, transition and contract
termination costs
2,656
1,132
5,269
2,697
Non-GAAP operating profit (as a percentage
of revenue)
$
9,073
4.8
%
$
1,937
1.3
%
$
19,208
5.1
%
$
3,280
1.1
%
Other Income (Expenses):
GAAP other income (expense), net
$
13,950
$
(4,934
)
$
15,066
$
(9,757
)
Debt amortization expense
1,169
4,462
2,000
8,856
Gain on debt extinguishment
(16,106
)
—
(16,106
)
—
Gain on warrants remeasurement
(1,293
)
—
(1,293
)
—
Sublease Income
(116
)
(116
)
(232
)
(155
)
Non-GAAP other income (expense), net (as
a
percentage of revenue)
(2,396
)
(1.3
)%
(588
)
(0.4
)%
(565
)
(0.2
)%
(1,056
)
(0.4
)%
Net Income (Loss):
GAAP net loss
(11,639
)
(42,324
)
(37,682
)
(86,230
)
Amortization of acquired intangible
assets
5,247
1,265
10,722
2,550
Stock-based compensation expense and
related employer payroll taxes
24,813
37,995
53,052
75,847
Acquisition and integration costs
1,554
19
2,178
19
Legal and regulatory costs
(207
)
(1,317
)
(269
)
(1,849
)
Severance, transition and contract
termination costs
2,656
1,132
5,269
2,697
Debt amortization expense
1,169
4,462
2,000
8,856
Gain on debt extinguishment
(16,106
)
—
(16,106
)
—
Gain on warrants remeasurement
(1,293
)
—
(1,293
)
—
Sublease income
(116
)
(116
)
(232
)
(155
)
Non-GAAP net income (as a percentage of
revenue)
6,078
3.2
%
1,116
0.7
%
17,639
4.7
%
1,735
0.6
%
Shares used in computing per share
amounts:
Basic
116,013
112,422
117,857
111,180
Diluted
116,186
116,375
118,936
116,687
GAAP net loss per share - Basic and
Diluted
(0.10
)
(0.38
)
(0.32
)
(0.78
)
Non-GAAP net income per share - Basic
$
0.05
$
0.01
$
0.15
$
0.02
Non-GAAP net income per share -
Diluted
$
0.05
$
0.01
$
0.15
$
0.01
8x8, Inc.
SELECTED OPERATING
METRICS
(Unaudited, in millions,
except number of enterprise customers)
Fiscal 2022
Fiscal 2023
Q1
Q2
Q3
Q4 (5)
Q1
Q2
TOTAL ARR (1)
$
536
$
553
$
572
$
687
$
688
$
692
Growth % (YoY)
24
%
18
%
16
%
33
%
28
%
25
%
ARR BY CUSTOMER SIZE
ENTERPRISE (2)
$
262
$
282
$
307
$
393
$
403
$
401
% of Total ARR
49
%
51
%
54
%
57
%
59
%
58
%
Growth % (YoY)
40
%
33
%
30
%
56
%
54
%
42
%
Total number of Enterprise Customers
824
871
907
1,258
(6)
1,277
1,291
MID-MARKET (3)
$
103
$
103
$
102
$
128
$
125
$
127
% of Total ARR
19
%
19
%
18
%
19
%
18
%
18
%
Growth % (YoY)
22
%
14
%
9
%
31
%
22
%
23
%
SMALL BUSINESS(4)
$
172
$
167
$
162
$
166
$
159
$
164
% of Total ARR
32
%
30
%
28
%
24
%
23
%
24
%
Growth % (YoY)
7
%
2
%
(1
) %
(1
) %
(7
) %
(2
) %
(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/20221027006002/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
8x8 (NYSE:EGHT)
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