EX-99.1 2 exh99-1.htm PRESS RELEASE May 20, 2015 Form 8-K Exhibit 99.1

For Immediate Release    

8x8, Inc. Reports Fourth Quarter and
Full Year Fiscal 2015 Results

Fiscal 2015 Revenue of $162.4 Million, Up 26% Year-Over-Year;
Non-GAAP Net Income of $16.2 Million, 10% of Revenue, or $0.18 per Diluted Share

SAN JOSE, Calif. - May 20, 2015 -- 8x8, Inc. (NASDAQ:EGHT), a leading provider of cloud-based unified communications and contact center solutions, today announced fourth quarter and full year fiscal 2015 financial results for the period ended March 31, 2015.

  • Q4 total revenue of $43.5 million, up 22% organically year-over-year.
  • Q4 GAAP net income of $183,000, or $0.00 per diluted share.
  • Q4 Non-GAAP net income of $4.9 million, or $0.05 per diluted share.
  • Fiscal 2015 revenue of $162.4 million, up 26% year-over-year and approximately 20% organically.
  • Fiscal 2015 GAAP net income of $1.9 million, $0.02 per diluted share.
  • Full year fiscal 2015 non-GAAP net income of $16.2 million, or $0.18 per diluted share.

"8x8 ended another record quarter and fiscal year with 26% fiscal 2015 revenue growth and non-GAAP net income of 10% of revenue," said 8x8 CEO Vik Verma. "We achieved these objectives while building a foundation for growth with the expansion of our senior management team and investments in R&D to capitalize on the significant and growing market opportunity for cloud communications solutions that exists worldwide."

Mr. Verma added, "During fiscal 2015, 8x8 made great progress enhancing our cloud communications offerings for the mid-market, solidifying partnerships with industry leading resellers and VARs and rolling out our services to large distributed organizations. As a result of our dedicated focus on integrating our telephony and contact center solutions, optimizing the security and reliability of our services, expanding globally and providing outstanding deployment and support, we believe we are ideally positioned to meet the communications requirements of the highly sought after mid-size and enterprise segments of the market."

Fourth Quarter and Year-to-Date Highlights:

  • New monthly recurring revenue (MRR) sold in the fourth quarter of fiscal 2015 to mid-market customers and by channel sales teams increased 35% year-over-year.
  • Service revenue from mid-market customers increased 34% year-over-year and now represents 43% of total service revenue, compared with 39% in the same year ago period.
  • Average monthly service revenue per business customer increased 11% year-over-year to a record $320, compared with $287 in the same period last year.
  • GAAP service margin was 81%, compared with 79% in the same period a year ago; overall gross margin was 73%, compared with 70% in the same year ago period.

  • Monthly business service revenue churn was 0.5%, compared with 1.2% in the same period last year.
  • Cash, cash equivalents and investments was $177.1 million in the fourth quarter of fiscal 2015, compared with $178.4 million in the same period last year; cash flow from operating activities was $21.2 million year to date; spent $19.4 million on share repurchase.
  • Ended the quarter with 41,621 business customers, up 10% compared with 37,933 customers in the same period a year ago.

Additional Year-to-Date Business Highlights:

  • Introduced new "Enterprise Suite" of services consisting of Virtual Office telephony and UC, Virtual Office Analytics, "Performance Assured" SLA and "Elite Touch" customer support.
  • Completed senior management team with the addition of three key executives: Mary Ellen Genovese (CFO), Enzo Signore (CMO) and Puneet Arora (SVP Global Sales).
  • Expanded channel partner program with addition of Arrow Systems Integration, Intelisys and CDW.
  • Announced technology milestone with awarding of 100th US patent; 104 awarded patents to date
  • Awarded the #1 ranking in the IHS Infonetics' Annual "Cloud UC Service Provider North American Scorecard" report for the second consecutive year.

"We are issuing our guidance for annual revenue of $193 million - $197 million in fiscal 2016, and we expect non-GAAP net income as a percentage of revenue in the 6% - 9% range as we continue to invest in our mid-market and enterprise growth," said Mr. Verma. "We look forward to discussing 8x8's strategy and range of capabilities to address the mid-market opportunity at our upcoming Analyst Day on June 4, 2015."

8x8 also reported, in accordance with NASDAQ Listing Rule 5635(c)(4), that employment inducement awards were granted to 31 new employees in connection with their recent hiring. The employees received restrictive stock units for 271,654 shares of the Company's Common Stock and 229,000 options, subject to their continued employment and other conditions.

Conference Call Information:

Management will host a conference call to discuss these results and other matters related to the Company's business today, May 20, 2015, at 4:30 pm ET. The call is accessible via the following numbers and webcast links:

Dial In:

(877) 843-0417, domestic
(408) 427-3791, international

Replay:

(855) 859-2056, domestic (Conference ID # 34784282)
(404) 537-3406, international (Conference ID # 34784282)

Webcast:

http://investors.8x8.com/

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 May 26, 2015. The webcast will be archived on 8x8's website for a period of one year. For additional information, visit visit http://investors.8x8.com.


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 businesses 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, loss contingency reserve, and gain on escrow settlement. We have excluded gain on patent sale, gain on disposal of discontinued operations, loss contingency reserve and gain on escrow settlement 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.

# # #


Investor Relations Contact:
Joan Citelli
Joan.citelli@8x8.com
(408) 654-0970

 

 

 

 

 


8X8, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts; unaudited)

      Three Months Ended     Twelve Months Ended
      March 31,     March 31,
      2015     2014     2015     2014
Service revenue    $ 40,009    $ 32,545    $ 148,208    $ 116,607 
Product revenue      3,521      3,241      14,205      11,990 
          Total revenue      43,530      35,786      162,413      128,597 
                         
Operating expenses (1):                        
Cost of service revenue      7,655      6,866      29,701      22,445 
     Cost of product revenue      4,173      3,999      15,863      15,170 
     Research and development      4,348      3,332      15,118      11,633 
     Sales and marketing      21,508      18,038      80,667      60,906 
     General and administrative      5,794      3,924      18,182      15,368 
     Gain on patent sale     -       -       (1,000)     -  
          Total operating expenses      43,478      36,159      158,531      125,522 
Income (loss) from operations      52      (373)     3,882      3,075 
Other income, net      210      140      833      742 
Income (loss) from continuing operations before                         
     provision for income taxes     262      (233)     4,715      3,817 
Provision for income taxes     79      1,738      2,789      2,219 
Income (loss) from continuing operations     183      (1,971)     1,926      1,598 
Income from discontinued operations,                         
     net of income tax provision         19          320 
Gain on disposal of discontinued operations,                        
     net of income tax provision of $463                 596 
Net income (loss)   $ 183    $ (1,945)   $ 1,926    $ 2,514 
                         
                         
Income (loss) per share - continuing operations:                        
     Basic   $ 0.00    $ (0.02)   $ 0.02    $ 0.02 
     Diluted   $ 0.00    $ (0.02)   $ 0.02    $ 0.02 
                         
Income (loss) per share - discontinued operations:                        
     Basic   $ 0.00    $ 0.00    $ 0.00    $ 0.01 
     Diluted   $ 0.00    $ 0.00    $ 0.00    $ 0.01 
                         
Net income (loss) per share:                        
     Basic   $ 0.00    $ (0.02)   $ 0.02    $ 0.03 
     Diluted   $ 0.00    $ (0.02)   $ 0.02    $ 0.03 
                         
Weighted average number of shares:                        
     Basic     88,950      88,184      89,071     78,310
     Diluted     91,266      88,184      91,652     81,658
                         
(1) Amounts include stock-based compensation expense, as follows:              
                         
      Three Months Ended     Twelve Months Ended
      March 31,     March 31,
      2015     2014     2015     2014
Cost of service revenue    $ 216    $ 135    $ 692    $ 372 
Cost of product revenue      -       -       -       -  
Research and development     446      333      1,495      967 
Sales and marketing      1,128      817      3,748      2,217 
General and administrative      1,068      1,065      3,412      4,039 
    $ 2,858    $ 2,350    $ 9,347    $ 7,595 

 


8X8, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)

      March 31,
      2015     2014
ASSETS            
Current assets:            
     Cash and cash equivalents   $ 53,110    $ 59,159 
     Short-term investments     123,984      47,181 
     Accounts receivable, net     6,642      5,503 
     Inventory     704      811 
     Deferred tax asset     4,454      2,065 
     Other current assets     2,702      2,214 
          Total current assets     191,596      116,933 
Long-term investments         72,021 
Property and equipment, net     10,248      7,711 
Intangible assets, net     12,260      15,095 
Goodwill     36,887      38,461 
Non-current deferred tax asset     43,169      47,797 
Other assets     1,464      1,185 
               Total assets   $ 295,624    $ 299,203 
             
LIABILITIES AND STOCKHOLDERS' EQUITY            
Current liabilities:            
     Accounts payable   $ 7,775    $ 6,789 
     Accrued compensation     6,183      4,583 
     Accrued warranty     339      660 
     Deferred revenue     1,768      1,857 
     Other accrued liabilities     5,765      4,232 
          Total current liabilities     21,830      18,121 
             
Other liabilities     1,583      2,904 
               Total liabilities      23,413      21,025 
             
Total stockholders' equity     272,211      278,178 
               Total liabilities and stockholders' equity   $ 295,624    $ 299,203 

 


8X8, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)

      Twelve Months Ended
      March 31,
      2015     2014
Cash flows from operating activities:            
Net income   $ 1,926    $ 2,514 
Adjustments to reconcile net income to net cash            
     provided by operating activities:            
          Depreciation     3,540      2,567 
          Amortization of intangible assets     2,232      1,643 
          Amortization of capitalized software     341      147 
          Net accretion of discount and amortization of             
               premium on marketable securities     896      114 
          Gain on disposal of discontinued operations         (596)
          Gain on escrow settlement         (565)
          Stock-based compensation     9,347      7,595 
          Tax benefit from stock-based compensation     (151)     (142)
          Deferred income tax provision     2,390      2,266 
          Other     256      650 
Changes in assets and liabilities:            
          Accounts receivable, net     (1,529)     (1,575)
          Inventory     52      (276)
          Other current and noncurrent assets     (196)     (488)
          Deferred cost of goods sold     (207)     163 
          Accounts payable     605      (1,035)
          Accrued compensation     1,632      488 
          Accrued warranty     (321)     208 
          Accrued taxes and fees     490      276 
          Deferred revenue     (1,065)     681 
          Other current and noncurrent liabilities     1,002      282 
          Net cash provided by operating activities     21,240      14,917 
             
Cash flows from investing activities:            
     Purchases of property and equipment     (5,826)     (2,853)
     Acquisition of business, net of cash acquired         (18,474)
     Cost of capitalized software     (724)     (755)
     Proceeds from disposition of discontinued operations,            
          net of transaction costs         3,000 
     Proceeds from maturity of investments     63,546     
     Sales of investments - available for sale     36,764      24,219 
     Purchase of investments - available for sale     (106,021)     (141,604)
          Net cash used in investing activities     (12,261)     (136,467)
             
Cash flows from financing activities:            
     Capital lease payments     (149)     (85)
     Repurchase of common stock     (19,371)     (489)
     Tax benefit from stock-based compensation     151      142 
     Proceeds from issuance of common stock, net of issuance costs         125,750 
     Proceeds from issuance of common stock under employee stock plans     4,455      5,167 
          Net cash (used in) provided by financing activities     (14,914)     130,485 
             
Effect of exchange rate changes on cash     (114)     (81)
Net (decrease) increase in cash and cash equivalents     (6,049)     8,854 
             
Cash and cash equivalents at the beginning of the period     59,159      50,305 
Cash and cash equivalents at the end of the period   $ 53,110    $ 59,159 

 


8x8, Inc.
Selected Operating Statistics
    Three Months Ended
    March 31,
2014
  June 30,
2014
  Sept. 30,
2014
  Dec. 31,
2014
  March 31,
2015
                     
Total business customers (1)   37,933    39,340    40,434    41,051    41,621 
Business customer average monthly service revenue per customer (2)   $ 287    $ 293    $ 299    $ 305    $ 320 
Monthly business service revenue churn (3)   1.2%   0.4%   0.9%   1.0%   0.5%
                     
Overall service margin   79%   80%   79%   80%   81%
Overall product margin   -23%   -9%   -8%   -11%   -19%
Overall gross margin   70%   71%   72%   72%   73%
                     

 

(1)

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.

(2)

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.

(3)

Business customer service revenue churn is calculated by dividing the service revenue lost from business customers (after the expiration of 30-day trial) during the period by the simple average of business customer service revenue during the same period and dividing the result by the number of months in the period.

 


8x8, Inc.
RECONCILIATION OF NET INCOME (LOSS) TO NON-GAAP NET INCOME
AND NON-GAAP NET INCOME PER SHARE
(In thousands, except per share amounts; unaudited)
                         
      Three Months Ended     Twelve Months Ended
      March 31,     March 31,
      2015     2014     2015     2014
Net income (loss)    $ 183    $ (1,945)   $ 1,926    $ 2,514 
Gain on patent sale      -       -       (1,000)    
Gain on escrow settlement      -       -       -       (565)
Gain on disposal of discontinued operations      -       (7)     -       (596)
Non-cash tax adjustments     (54)     2,179      2,390      2,266 
Amortization of acquired intangible assets     545      569      2,232      1,643 
Stock-based compensation expense      2,858      2,350      9,347      7,595 
Acquisition related expenses     132      26      132      841 
Loss contingency reserve     1,200      -       1,200      -  
Management transition     -       104      -       441 
     Non-GAAP net income    $ 4,864    $ 3,276    $ 16,227    $ 14,139 
                         
Weighted average number of shares:                        
     Basic     88,950      88,184      89,071      78,310 
     Diluted      91,266      91,525      91,652      81,658 
                         
GAAP net income (loss) per share - Diluted   $ 0.00    $ (0.02)   $ 0.02    $ 0.03 
Gain on patent sale              (0.01)     -  
Gain on escrow settlement                  (0.01)
Gain on disposal of discontinued operations                 (0.01)
Non-cash tax adjustments         0.02      0.03      0.03 
Amortization of acquired intangible assets     0.01      0.01      0.03      0.02 
Stock-based compensation expense      0.03      0.03      0.10      0.09 
Acquisition related expenses                 0.01 
Loss contingency reserve     0.01          0.01     
Management transition                 0.01 
Non-GAAP net income per share - Diluted   $ 0.05    $ 0.04    $ 0.18    $ 0.17 
                         
                         
GAAP net income percentage of revenue     0%     -5%     1%     2%
Gain on patent sale              -1%    
Gain on escrow settlement                 
Gain on disposal of discontinued operations                 -1%
Non-cash tax adjustments         6%     2%     2%
Amortization of acquired intangible assets     1%     2%     1%     1%
Stock-based compensation expense      7%     6%     6%     6%
Acquisition related expenses                 1%
Loss contingency reserve     3%         1%    
Management transition                
Non-GAAP net income percentage of revenue     11%     9%     10%     11%

 



The following information was filed by 8X8 Inc (EGHT) on Wednesday, May 20, 2015 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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