EX-99.1 3 exh99-1.htm PRESS RELEASE May 21, 2009 8K Exhibit 99.1

For Immediate Release

8x8, Inc. Announces 2009 Fiscal Year End Operating Results

Company reports record quarter of organic business customer additions
and 38% year over year increase in business service revenue

SANTA CLARA, CA -- May 21, 2009 -- 8x8, Inc. (Nasdaq: EGHT), provider of Internet Protocol (IP) communications solutions for business and residential users, today announced financial operating results for its fiscal fourth quarter and year ended March 31, 2009.

Total revenue for the fiscal year ended March 31, 2009 was $64.7 million compared with $61.6 million for fiscal 2008, a 5% year over year increase. 8x8 business services revenue grew 38% year over year, from $29.1 million in fiscal 2008 to $40.2 million in fiscal 2009, and accounted for 62% of the company's overall revenue in fiscal 2009. A GAAP net loss of $2.5 million or ($0.04) per share was reported for fiscal 2009 compared with GAAP net income of $30,000, or $0.00 per share, in fiscal 2008. The loss for fiscal 2009 resulted from a series of write-offs and charges incurred in the Company's fourth fiscal quarter.

8x8 reported a GAAP net loss for the fourth quarter of fiscal 2009 of $3.9 million or ($0.06) per share, compared with net income of $691,000 or $0.01 per share for the same period of fiscal 2008 and net income of $180,000 or $0.00 per share for the previous quarter. The net loss included the following charges:

-

2,399,000 FAS-123(R) charge related to the acceleration of substantially all unvested employee and director stock options in January 2009;

-

$543,000 inventory write-off of 8x8's older Virtual Office analog telephone equipment;

-

$339,000 royalty license expense;

-

$226,000 reserve for uncollected royalty revenue; and

-

$145,000 write-off of a legacy billing system.

During the fourth quarter of fiscal 2009, 8x8 added a record number of organic, new business customers, increasing its business communications services subscriber base by 1,307 net new business customers compared to 838 in the same period last year and 962 in the third quarter. This increase resulted from the combination of 2,792 gross new business customer additions, and an improvement in business customer churn to 2.7% compared to 3.6% in the same period last year and 2.9% in the prior quarter. 8x8 ended the fourth quarter with a total of 16,013 business customers.

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Revenue for the fourth quarter of fiscal 2009 was $15.8 million compared with $16.3 million for the same period of fiscal 2008 and $16.2 million for the previous quarter. The decrease in overall revenue for the quarter was attributable to the continued decline of residential service revenue, a reduction in revenue due to uncollected licensing revenue from one large customer, and an increase in upfront equipment subsidies to new business customers which resulted in the addition of a record number of business customers during the quarter. 8x8 business service revenue grew to 68% of total revenue in the fourth quarter of fiscal 2009, compared with 50% of total revenue in the same period of fiscal 2008 and 66% of total revenue in the previous quarter. Residential and video service revenue declined 6% in the fourth quarter of fiscal 2009 to $5.2 million from $5.6 million in the prior quarter.

Cash and investments increased to $16.4 million in the fourth quarter of fiscal 2009 from $16.2 million in the previous quarter and $14.6 million in the same period of fiscal 2008. This represents the eighth consecutive quarter of increased cash and investments and a total increase of $1.8 million since the end of fiscal 2008.

"During the fourth quarter of fiscal 2009, 8x8 witnessed the highest demand for our money-saving hosted IP telephony solutions than ever before," said 8x8 Chairman & CEO Bryan Martin. "While our overall revenue for the quarter declined slightly, we are encouraged by the record number of new business subscribers to our services and believe this is a leading indicator of increasing monthly recurring business service revenue in the quarters to come."

"To reduce future expense, the Company accelerated FAS-123(R) charges related to unvested employee stock options, which accounted for the majority of the Company's net loss in the fourth quarter. Substantially all of these employee stock option shares are underwater, and there were no modifications to the price or other terms of these options," Martin continued. "Although this decision contributed to a net loss, following a string of five profitable quarters, we believe that 8x8 is now well positioned to maximize its earnings per share going into fiscal 2010, which began on April 1, 2009, and to leverage our increased cash balances to accelerate the pace of our technology development related to new IP communications services and delivery platforms."

Q4FY'09 Business Highlights:

  • Added a record number (1,307) of net new business subscribers to end the quarter with over 16,000 customers subscribing to 8x8 business communications services
  • Organically added a record number of new, gross business customers during the quarter

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  • Improved business churn to 2.7%, compared with 3.6% in the same period last year and 2.9% in the prior quarter
  • Appointed telecom industry veteran Debbie Jo Severin as Chief Marketing Officer/VP Marketing
  • Continued expansion of quota-carrying direct sales force from 56 at the end of the third quarter to 63 at the end of the fourth quarter; direct sales accounted for 96% of new monthly recurring revenue added during the fourth quarter
  • Increased business service revenue to 68% of total revenue - up from 50% in the same period last year and 66% in the prior quarter
  • Added $181,000 in cash and investments quarter over quarter and $1.8 million year over year to the Company's balance sheet, marking the Company's eighth consecutive quarter of increasing cash and investments
  • Accelerated the recognition of $2.4 million of outstanding, future stock compensation expense into the fourth fiscal quarter, eliminating substantially all FAS-123(R) stock compensation expenses from the Company's 2010 fiscal year.

Management will host a conference call to discuss these results and other matters related to the Company's business today, May 21, 2009, at 4:30 p.m. EDT. The call is accessible via the following numbers and webcast link:

Dial In:

(888) 397-5338, domestic
(719) 457-2630, international

Replay:

(888) 203-1112, passcode 4712725, domestic
(719) 457-0820, passcode 4712725, international

Webcast:

http://investors.8x8.com/

About 8x8, Inc.

8x8, Inc. (Nasdaq: EGHT) offers voice, video and mobile communications solutions for business and residential customers. These solutions leverage existing broadband Internet connections and cellular networks to deliver advanced features and digital quality phone service at a fraction of the cost of legacy, copper wire alternatives. Businesses of any size, configuration or geographic location can benefit from the cost, performance and operational advantages of VoIP technology. All 8x8 communications solutions carry little or no upfront investment, no maintenance or upgrade fees and no change in user behavior. For additional information, visit www.8x8.com.

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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, customer acceptance and demand for our products and services, the reliability of our services, the prices for our services, customer renewal rates, customer acquisition costs, actions by our competitors, including price reductions for their telephone services, potential federal and state regulatory actions, compliance costs, potential warranty claims and product defects, our needs for and the availability of adequate working capital, our ability to innovate technologically, the timely supply of products by our contract manufacturers, potential future intellectual property infringement claims that could adversely affect our business and operating results, and our ability to retain our listing on the NASDAQ Capital Market. 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.

NOTE: 8x8, the 8x8 logo, and 8x8 Virtual Office are trademarks of 8x8, Inc. All other trademarks are the property of their respective owners.

# # #

INVESTOR RELATIONS CONTACT:
Joan Citelli
jcitelli@8x8.com
(408) 687-4320


8x8, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts; unaudited)
                         
      Three Months Ended     Twelve Months Ended
      March 31,
    March 31,
      2009
    2008
    2009
    2008
Service revenues   $ 14,198    $ 15,068    $ 58,486    $ 56,177 
Product revenues     1,567 
    1,264 
    6,188 
    5,469 
          Total revenues     15,765 
    16,332 
    64,674 
    61,646 
                         
Operating expenses:                        
     Cost of service revenues (1)      4,179      3,891      15,714      16,671 
     Cost of product revenues (1)      2,349      1,552      7,135      6,762 
     Research and development (1)      1,538      1,171      5,212      4,335 
     Selling, general and administrative (1)      11,700 
    9,023 
    39,680 
    37,596 
          Total operating expenses      19,766 
    15,637 
    67,741 
    65,364 
Income (loss) from operations      (4,001)     695      (3,067)     (3,718)
Other income (loss), net      32      (48)     298      1,606 
Income (loss) on change in fair value of warrant liability     (11)
    44 
    314 
    2,142 
Income (loss) before provision for income taxes     (3,980)     691      (2,455)     30 
Provision (benefit) for income taxes     (68)
   
    45 
   
Net income (loss)    $ (3,912)
  $ 691 
  $ (2,500)
  $ 30 
                         
Net income (loss) per share:                        
Basic   $ (0.06)   $ 0.01    $ (0.04)   $ 0.00 
Diluted   $ (0.06)   $ 0.01    $ (0.04)   $ 0.00 
                         
Weighted average number of shares:                        
Basic     62,568      62,019      62,317      61,897 
Diluted     62,568      62,148      62,317      62,112 
                         
                         
(1) Amounts include stock-based compensation expense, as follows:
      Three Months Ended     Twelve Months Ended
      March 31,
    March 31,
      2009
    2008
    2009
    2008
     Cost of service revenues   $ 200    $ 19    $ 216    $ 33 
     Cost of product revenues     31          47      18 
     Research and development     405      71      542      255 
     Selling, general and administrative     1,789 
    219 
    2,490 
    966 
    $ 2,425 
  $ 314 
  $ 3,295 
  $ 1,272 

8x8, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)
             
             
      March 31,     March 31,
      2009
    2008
ASSETS            
Current assets            
     Cash and cash equivalents   $ 16,376   $ 11,185
     Short-term investments         3,382
     Accounts receivable, net      414     1,807
     Inventory      2,297     1,539
     Other current assets      841
    1,492
          Total current assets     19,928     19,405
Property and equipment, net      1,485     2,010
Other assets      443
    136
               Total assets   $ 21,856
  $ 21,551
             
LIABILITIES AND STOCKHOLDERS' EQUITY            
Current liabilities            
     Accounts payable    $ 4,810   $ 4,885
     Accrued compensation      1,264     1,048
     Accrued warranty      328     314
     Deferred revenue      2,254     3,139
     Other accrued liabilities      3,858
    3,872
          Total current liabilities      12,514     13,258
             
Other liabilities       291     109
Fair value of warrant liability     21
    335
          Total liabilities      12,826     13,702
             
Total stockholders' equity     9,030
    7,849
               Total liabilities and stockholders' equity   $ 21,856
  $ 21,551

8x8, Inc.
Selected Operating Statistics
                     
      FQ108 FQ208 FQ308 FQ408 FQ109 FQ209 FQ309 FQ409
Gross business customer additions (1)     1,746  1,872  1,924  2,162  2,398  3,324  2,437  2,792 
Gross business customer cancellations (less cancellations within 30 days of sign-up)     876  849  949  1,138  1,098  1,187  1,224  1,245 
Business customer churn (less cancellations within 30 days of sign-up) (2)     3.8% 3.3% 3.3% 3.6% 3.2% 3.1% 2.9% 2.7%
Total business customers (3)     8,160  9,111  10,007  10,845  11,898  13,744  14,706  16,013 
                     
Business customer average monthly service revenue per customer (4)     $ 247  $ 234  $ 233  $ 229  $ 237  $ 220  $ 208  $ 202 
                     
Revenue from business customers (in '000s)     $ 6,444  $ 6,953  $ 7,542  $ 8,111  $ 9,077  $ 9,826  $ 10,614  $ 10,728 
Revenue from residential and video customers (in '000s)     $ 8,181  $ 7,793  $ 8,182  $ 7,685  $ 7,192  $ 6,356  $ 5,572  $ 5,236 
Revenue from technology licensing (in '000s)     $ 117 
$ 22 
$ 80 
$ 536 
$ 12 
$ 243 
$ 17 
$ (199)
     Total Revenue     $ 14,742 
$ 14,768 
$ 15,804 
$ 16,332 
$ 16,281 
$ 16,425 
$ 16,203 
$ 15,765 
                     
Percentage of revenue from business customers     43.7% 47.1% 47.7% 49.7% 55.8% 59.8% 65.5% 68.1%
Percentage of revenue from residential and video customers     55.5% 52.8% 51.8% 47.0% 44.1% 38.7% 34.4% 33.2%
Percentage of revenue from technology licensing      0.8%
0.1%
0.5%
3.3%
0.1%
1.5%
0.1%
-1.3%
     Total Revenue     100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
                     
Overall service margin     70% 67% 70% 74% 75% 73% 74% 71%
Overall product margin     -4% -77% 15% -23% -13% -10% 9% -50%
     Overall gross margin     64% 52% 65% 67% 68% 65% 67% 59%
                     
Total (business, residential and video) subscriber acquisition cost per service (5)     $ 138  $ 99  $ 129  $ 155  $ 162  $ 163  $ 135  $ 119 
Business subscriber acquisition cost per service (6)     $ 141  $ 142  $ 161  $ 158  $ 171  $ 171  $ 141  $ 118 
Average number of services subscribed to per business customer     7.0  7.2  7.3  7.2  7.1  6.9  6.6  6.6 
Business customer subscriber acquisition cost (7)     $ 991  $ 1,028  $ 1,177  $ 1,135  $ 1,217  $ 1,174  $ 933  $ 785 
                     
Residential lines in service     100,571  117,338  112,229  107,260  100,937  93,865  86,992  81,569 
Total (business, residential and video) customer churn (less cancellations
within 30 days of sign-up)
(8)
    4.6% 3.9% 3.8% 4.0% 3.5% 4.2% 3.9% 3.5%

(1)

Includes 1,154 "Find me, Follow me" and 40 8x8 Virtual Office customers acquired in the second quarter of fiscal 2009 from Avtex Solutions, LLC ("Avtex").

(2)

Business customer churn is calculated by dividing the number of business customers that terminated (after the expiration of the 30 day trial) during that period by the simple average number of business customers during the period and dividing the result by the number of months in the period. The simple average number of business customers during the period is the number of business customers on the first day of the period plus the number of business customers on the last day of the period divided by two.

(3)

Business customers are defined as customers paying for service. Prior to April 1, 2008, 8x8 included customers in the business customer count that were using the service as a trial or evaluation and not yet paying for service. The numbers in this table prior to and after April 1, 2008, only include business customers that are paying for service. Customers that have prepaid for their first month of service and are currently in the 30 day trial period are considered to be customers that are paying for service.

(4)

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.

(5)

Total (business, residential and video) subscriber acquisition cost per service is defined as the combined costs of advertising, marketing, promotions, commissions and equipment subsidies during the period divided by the number of gross services added during the period.

(6)

Business subscriber acquisition cost per service is defined as the combined costs of advertising, marketing, promotions, commissions and equipment subsidies for business services sold during the period divided by the number of gross business services added during the period. The addition of 1,154 Avtex customers that migrated to 8x8 in the second fiscal quarter of 2009 but subscribed to "Find me, Follow me" services rather than 8x8 Virtual Office service, and the $79,230 in expense related to the acquisition of these 1,154 customers, is excluded from this calculation.

(7)

Business customer subscriber acquisition cost is business subscriber acquisition cost per service times the average number of services subscribed to per business customer.

(8)

Total (business, residential and video) customer churn is calculated by dividing the number of services terminated (after the expiration of the 30 day trial) during that period by the simple average number of services during the period and dividing the result by the number of months in the period.



The following information was filed by 8X8 Inc (EGHT) on Thursday, May 21, 2009 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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