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FOR IMMEDIATE RELEASE
8x8, Inc. Announces Second Quarter Fiscal 2018 Financial Results
Mid-Market/Enterprise Service Revenue Increases 28%, Grows to 58% of Total Service Revenue
GAAP Net Loss of $546K; Non-GAAP Pre-Tax Income of $4.2 Million
SAN JOSE, Calif. - October 26, 2017 -- 8x8, Inc. (NASDAQ:EGHT), the leading provider of truly unified communications, today reported financial results for the second quarter of fiscal 2018 ended September 30, 2017.
"8x8's financial results for the second quarter of fiscal 2018 demonstrate the continued strength of our core business and the impact of our competitive differentiation in the enterprise segment, illustrated by the 13 large enterprise deals, including one with a total contract value of approximately $7 million, closed during the quarter. Our technology ownership, integrated services platform, unparalleled quality of service and global service delivery capabilities are the primary reasons 8x8 continues to be a leading choice by a growing number of enterprise customers," said 8x8 CEO Vik Verma. "With our compelling suite of services and world class sales and marketing leadership teams now in place, 8x8 is well poised to accelerate our market position and revenue growth in fiscal 2019 and beyond."
Second Quarter Financial Results:
- Adjusting for the exclusion of the discontinued, non-core DXI business segment, service revenue increased 19%.
- Service revenue from mid-market and enterprise customers increased 28% YoY and represented 58% of the Company's total service revenue.
- On an adjusted basis as above, service revenue from mid-market and enterprise customers increased 28%.
- Total revenue increased 15% YoY to $72.5 million.
- On an adjusted basis as above, total revenue increased 16%.
- GAAP gross margin was 75%, compared with 74% in the same period last year.
- GAAP service margin was 81%, compared with 81% in the same period last year.
- Non-GAAP gross margin was 77%, compared with 75% in the same period last year.
- Non-GAAP service margin was 83%, compared with 83% in the same period last year.
- GAAP net loss was $546K, ($0.01) per diluted share.
- Non-GAAP net income was $2.7 million, 4% of revenue, or $0.03 per diluted share.
- Non-GAAP pre-tax income was $4.2 million, 6% of revenue, or $0.04 per diluted share.
- Cash generated from operating activities was $5.0 million.
- Repurchased approximately 1.1 million shares of common stock at an average price of $13.23 per share, for a total of $14.1 million, under the Company's approved stock buyback program.
- Cash, cash equivalents and investments were $167 million at September 30, 2017, compared with $170 million at September 30, 2016.
Additional Business Metrics and Highlights:
- Grew second quarter fiscal 2018 average monthly service revenue (ARPU) per mid-market and enterprise customer to $4,697, compared with $4,351 in the same period last year; grew overall ARPU to $442, compared with $409 in the same period last year.
- Achieved gross monthly business service revenue churn on an organic basis of 0.4%, compared with 0.6% in the same period a year ago.
- Named a Leader for the sixth consecutive year in the Gartner 2017 Unified Communications as a Service (UCaaS) Magic Quadrant.
- Named a Challenger for the second year in the Gartner 2017 Contact Center as a Service (CCaaS) Magic Quadrant.
- Announced several key strategic senior leadership appointments to both marketing and sales organizations to align with newly established Small Business & eCommerce and Mid-market/Enterprise business units.
- Launched new 8x8 Virtual Office Editions suite of services including Virtual Office X8, the industry's most unified offering that weaves together communications, collaboration and contact center capabilities in a single, cost-effective, truly unified solution.
- Awarded seven new communications patents for a total of 144 patents awarded to date.
Mr. Verma added, "Given our recent realignment of the business and new additions to the sales and marketing executive leadership team, we feel it is prudent to reset the bar on our revenue expectations for fiscal 2018 while maintaining our commitment to achieving 25% service revenue growth exiting fiscal 2019."
For the full fiscal 2018 year, 8x8 has revised its revenue outlook and maintains its previous non-GAAP pre-tax income guidance:
Non-GAAP Pre-tax Income:
- Non-GAAP pre-tax income of approximately $9 million, or 3% of revenue.
- The Company's estimated non-GAAP effective tax rate is expected to be approximately 36%.
- The Company's cash taxes are expected to be less than $1 million for the full year.
The Company does not reconcile its forward-looking non-GAAP net income to the corresponding GAAP measures of GAAP net income (loss) due to the significant variability of, and difficulty in making accurate forecasts and projections with regards to, the various expenses we exclude. For example, although future hiring and retention needs may 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. Similarly, acquisition and other expenses are difficult to predict as they depend on future events. The actual amounts of these excluded items could have a significant impact on the Company's GAAP net income (loss). Accordingly, management believes that reconciliations of this forward-looking non-GAAP financial measure to the corresponding GAAP measure is not available without unreasonable effort.
8x8 also announced that on October 24, 2017, it awarded restricted stock units (RSUs) to acquire an aggregate of 306,415 shares of the Company's common stock to 42 new employees under the 8x8, Inc. 2017 New Employee Inducement Incentive Plan, adopted by the Board of Directors on the same date. In addition, two newly hired senior vice presidents received performance share units (PSUs) representing the right to receive, at target, up to an aggregate of 82,307 shares of common stock (based on the performance of 8x8's common stock relative to the Russell 2000 during specified measurement periods). These equity awards were approved unanimously by the independent directors of the Board of Directors, and each award was granted as an inducement material to the recipient's entering into employment with 8x8, in accordance with Nasdaq Market Place Rule 5635(c)(4). Each of the awards is subject to vesting pursuant to the terms of the plan and the recipient's award agreement, including a requirement that the recipient be employed through each vesting date. Other terms of the RSU and PSU awards are substantially the same as those applicable to RSUs and PSUs previously granted by the Company in the current fiscal year.
Conference Call Information:
Management will host a conference call to discuss these results and other matters related to the Company's business today, October 26, 2017 at 4:30 pm ET. The call is accessible via the following numbers and webcast links:
(877) 843-0417, domestic (408) 427-3791, international
(855) 859-2056, domestic (Conference ID #93371947)
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 November 2, 2017. The webcast will be archived on 8x8's website for a period of one year. For additional information, visit http://investors.8x8.com.
About 8x8, Inc.
8x8, Inc. (EGHT), the leading provider of truly unified cloud communications, powers over a million business users worldwide. 8x8's suite of products seamlessly weaves together unified cloud communications, messaging, meeting and contact center solutions so today's modern organization can communicate at the speed of employee and customer expectations. 8x8 uniquely combines one unified management platform, one seamless communications experience for employees and customers, and one real-time data analytics platform for constant learning and improvement. For additional information, visitwww.8x8.com, or connect with 8x8 on LinkedIn, Twitter, Google+
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