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For Immediate Release
8x8, Inc. Reports Fourth Quarter and Fiscal 2018 Financial Results
Fiscal 2018 Service Revenue Increased 19% year-over-year to $280 million
Fiscal 2018 Mid-Market and Enterprise Service Revenue Grew 29%
SAN JOSE, CA. - May 24, 2018 -- 8x8, Inc. (NYSE:EGHT), a leading provider of cloud phone, meeting, collaboration, and contact center solutions, today reported financial results for the fourth quarter and fiscal full-year ended March 31, 2018.
Fourth Quarter Fiscal 2018 Financial Results:
- Revenue: Service revenue increased 20% year-over-year to $75.3 million. Adjusting for constant currency, service revenue increased 19%. Total revenue increased 19% year-over-year to $79.3 million. Adjusting for constant currency, total revenue increased 18%.
- Service revenue from mid-market and enterprise customers increased 29% year-over-year and represented 60% of total service revenue.
- GAAP net loss was $13.3 million or ($0.14) per diluted share.
- Non-GAAP net loss was $2.9 million or ($0.03) per diluted share.
- Margins: GAAP gross margin was 75%, compared with 77% in the same period last year. Non-GAAP gross margin was 77%, compared with 79% in the same period last year. GAAP service margin was 81%, compared with 83% in the same period last year. Non-GAAP service margin was 83%, compared with 84% in the same period last year.
- Cash generated from operating activities was $2.7 million.
"The fourth quarter was a strong finish to a transformational year at 8x8. Our solid performance reflects successful execution against our strategic initiatives and is validation of the investments we continue to make to accelerate service revenue growth," said Vik Verma, Chief Executive Officer at 8x8, Inc.
Full-Year Fiscal 2018 Financial Results:
- Revenue: Service revenue increased 19% year-over-year to $280.4 million. Adjusting for constant currency and the discontinued revenue from the non-core, voice broadcasting segment of DXI, service revenue increased 19%. Total revenue increased 17% year-over-year to $296.5 million. Adjusting for constant currency and the discontinued revenue from the non-core, voice broadcasting segment of DXI, total revenue increased 17%.
- Service revenue from mid-market and enterprise customers increased 29% year-over-year and represented 58% of total service revenue.
- GAAP net loss was $104.5 million or ($1.14) per diluted share, inclusive of two special items in the third fiscal quarter. The special items were: 1) $71 million of non-cash, non-recurring tax charges as a result of the Tax Cuts and Jobs Act and the Company's decision to record a valuation allowance against its deferred tax assets; and 2) $9 million non-cash, non-recurring impairment of goodwill and other assets related to UK EasyContactNow.
- Non-GAAP net income was $5.9 million, or $0.06 per diluted share, excluding special items.
- Margins: GAAP gross margin was 76%, compared with 75% in the same period last year. Non-GAAP gross margin was 78%, compared with 77% in the same period last year. GAAP service margin was 82% compared with 82% in the same period last year. Non-GAAP service margin was 84%, compared with 84% in the same period last year.
- Cash Flow: Cash generated from operating activities was $22 million. Cash, restricted cash and investments were $160 million at March 31, 2018.
Additional Business Metrics and Highlights:
- More than 50% of new monthly recurring revenue (MRR) booked in the full-year from mid-market and enterprise customers who purchased 8x8's integrated UCaaS and CCaaS solutions.
- Average monthly service revenue by business customer (ARPU): ARPU per mid-market and enterprise customers was $4,899, compared with $4,494 in the same period last year, a 9% year-over-year increase. ARPU per business customer grew to $469, compared with $426 in the same period last year, a 10% increase year-over-year.
- Churn: Gross monthly business service revenue churn on an organic basis was 0.3% during the fourth quarter, compared with 0.7% in the same period a year ago.
- Completed acquisition of MarianaIQ to strengthen AI and Machine Learning capabilities for enterprise communications.
- Synergy Research named 8x8 as the global leader for subscriber seats in the combined mid-market and enterprise segments of the UCaaS market for the twelfth consecutive quarter.
- Leader in the 2017 Gartner Magic Quadrant for Unified Communications as a Service for the sixth consecutive year and Challenger in Magic Quadrant for Contact Center as a Service for the third consecutive year.
- CRN gave the 8x8 Partner Program a 5-Star rating in the 2018 Partner Program Guide.
- Best Communications Provider award at Call & Contact Centre Expo 2018 Awards UK.
- 8x8 was awarded a total of 154 patents through March 31, 2018.
- Share Repurchase: During the full-year, the Company repurchased 1.4 million shares of common stock at an average price of $13.14 per share, for a total of $17.9 million, under the Company's approved share repurchase program.
- Announced upcoming launch of X Series product line at Enterprise Connect in March 2018.
"Our new X Series platform is the culmination of a multi-year process of acquisition and organic investment, and we believe it will be a game changer," continued Vik Verma. "Based on strong market adoption of our unified platform and our increasing capabilities in data analytics and artificial intelligence, including the recent acquisition of MarianaIQ, X Series is uniquely positioned to be the communications engine companies need to fuel their digital transformation efforts for years to come."
"To fully leverage this market opportunity in fiscal 2019 and beyond, we are expanding investments in engineering, marketing, sales, deployment, and customer support. We are adopting this strategy in order to deliver the most comprehensive, integrated system of engagement to the market. We believe strongly this strategy and the investments we are making will drive long-term value creation for our shareholders and customers."
Our financial outlook reflects the adoption of the new ASC 606 revenue recognition standard that is effective for us beginning April 1, 2018. The guidance below includes the expected impact of the adoption of this new standard, which replaced ASC 605. We expect no material difference in revenue between ASC 606 and ASC 605. However, under ASC 606, we estimate that certain sales commission expenses will reduce GAAP and non-GAAP net loss by approximately $11 million to $13 million for the full fiscal year 2019.
Full Year Fiscal 2019 Financial Outlook under ASC 606:
- Service revenue in the range of $333 million to $338 million, representing approximately 19% to 21% year-over-year increase.
- Excluding DXI revenue, service revenue growth in the range of 21% to 22%.
- Total revenue in the range of $347 million to $352 million, representing approximately 17% to 19% year-over-year increase.
- Non-GAAP pre-tax loss in the range of $13 million to $17 million.
First Fiscal Quarter 2019 Financial Outlook:
- Service revenue in the range of $77 million to $78 million, representing approximately 18% to 20% year-over-year increase.
- Excluding DXI revenue, service revenue growth in the range of 20% to 21%.
- Non-GAAP pre-tax loss in the range of $4 million to $5 million.
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, impairments and other non-recurring items are difficult to predict as they may depend on future events and external factors outside the Company's control. 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.
Conference Call Information:
Management will host a conference call to discuss earnings results on May 24, 2018 at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time). The call is accessible via the following numbers and webcast links:
(866) 393-4306 Domestic or (734) 385-2616 International; Conference ID #1568167
(855) 859-2056 Domestic or (404) 537-3406 International; Conference ID #1568167
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 until June 13, 2018. The webcast will be archived on 8x8's website for a period of 30 days. For additional information, visit http://investors.8x8.com.
About 8x8, Inc.
8x8, Inc.(NYSE:EGHT) is a leading provider of cloud phone, meeting, collaboration and contact center solutions with over a million business users worldwide. 8x8 helps enterprises engage at the speed of employee and customer expectations by putting the collective intelligence of the organization in the hands of every employee. For additional information, visit www.8x8.com, or connect with 8x8 on LinkedIn, Twitter
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