8x8, Inc. Announces Record First Quarter Fiscal 2013 Results
Record revenue of $25.3 million; Non-GAAP net income of $3.4 million, or $0.05
per share;
SUNNYVALE, Calif., Jul 18, 2012 (BUSINESS WIRE) -- --Ranked #1 hosted IP
telephony and unified communications provider by Frost & Sullivan
8x8, Inc. (EGHT), provider of innovative cloud communications and computing
solutions, today announced financial operating results for the first quarter of
fiscal 2013 ended June 30, 2012.
First Quarter Fiscal 2013 Financial Highlights:
-- Total revenue for the quarter increased 36% year over year to a record $25.3
million from $18.5 million in the same period of fiscal 2012.
-- Revenue from business customers increased 46% year over year to a record $24.1
million from $16.4 million in the same period of fiscal 2012.
-- GAAP net income was $8.6 million, or $0.12 per diluted share, compared with
$1.9 million, or $0.03 per share, for the first quarter of fiscal 2012.
-- Non-GAAP net income (as outlined in the reconciliation table below) was $3.4
million, or $0.05 per diluted share, compared with $1.9 million, or $0.03 per
diluted share, for the same period last year.
-- Net cash provided by operating activities increased $14.9 million during the
first quarter of fiscal 2013.
-- Ended the quarter with $38.2 million in cash, cash equivalents and investments
compared with $18.9 million on June 30, 2011.
"8x8's first quarter of fiscal 2013 was marked by some noteworthy
accomplishments, including announcements of several mid-market customers, the
monetization of a family of legacy patents and the achievement of a revenue
milestone. We are now at an annual run rate of over $100 million," said 8x8
Chairman & CEO Bryan Martin. "Additionally, we were very pleased to be ranked the
number one hosted IP telephony and unified communications services provider by
industry research firm Frost & Sullivan in its recently published report."
First Quarter Fiscal 2013 Operating Metrics:
-- Added 1,242 net new business customers during the quarter to end with 29,913
business customers, compared with 28,671 business customers in the prior quarter.
-- Average monthly revenue per business customer was $250, compared with $200 in
the same period last year.
-- Average number of services subscribed to per business customer grew to 10.1
from 8.4 in the same period last year.
-- Business customer churn was 1.7%, compared with 2.1% in the first quarter of
fiscal 2012.
"We continue to see good progress in several key areas of our business including
customer retention, with recorded churn at an all time record low of 1.7%,
average monthly revenue per business customer of $250, which has been growing
steadily for the past four quarters, and the number of services new customers are
signing up for, now at an average of 14.0," Martin added. "With the $12 million
influx to our balance sheet from our recent patent sale on top of our ongoing
cash from operations, the company is experiencing its highest level of liquidity
since it began operating as a service provider and remains committed to executing
its aggressive growth strategy in fiscal 2013 and beyond."
Non-GAAP Measures
We have provided in this release financial information that has not been prepared
in accordance with Generally Accepted Accounting Principles (GAAP). We use these
non-GAAP financial measures internally in analyzing our financial results and
believe they are useful to investors, as a supplement to GAAP measures, in
evaluating our ongoing operational performance. We believe that the use of these
non-GAAP financial measures provides an additional tool for investors to use in
evaluating our ongoing operating results and trends and in comparing our
financial results with other companies in our 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 our 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 loss on
investment, non-cash tax adjustments, stock-based compensation, amortization of
acquired intangible assets, acquisition-related costs, facility exit costs and
gain on patent sale. We have excluded loss on a strategic investment in another
company and gain on patent sale because we consider these to be isolated
transactions and believe these are not reflective of our ongoing operations.
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,
including expenses to exit facilities, 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.
Management will host a conference call to discuss these results and other matters
related to the Company's business today, July 18, 2012, at 4:30 p.m. EDT. 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 #96484745)
(404) 537-3406, international (Conference ID #96484745)
Webcast:http://investors.8x8.com
Supplemental financial slides will be presented through 8x8's Virtual Meeting web
conferencing portal, which can be accessed at:
virtualmeeting.8x8.com 
About 8x8, Inc.
Named #1 provider of hosted IP telephony and unified communications in a July
2012 market research report by Frost & Sullivan, 8x8, Inc. (EGHT) offers a
portfolio of SaaS and IaaS solutions encompassing hosted communications services,
contact center, unified communications, video Web conferencing, managed dedicated
hosting, virtual private servers and more. 8x8 has been delivering cloud services
since 2002 and has garnered a reputation for technological excellence and
outstanding reliability, backed by a commitment to exceptional customer support.
8x8 customers include small to medium-sized businesses, distributed enterprise
organizations and government agencies. For additional information, visit
8x8.com, or connect with 8x8 on Facebook and Twitter.
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.
8x8, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts; unaudited)
Three Months Ended
June 30,
----------------------
20122011
-------------
Service revenues$23,172$ 17,021
Product revenues2,0801,486
-------------
Total revenues25,25218,507
-------------
Operating expenses:
Cost of service revenues5,6863,815
Cost of product revenues2,7102,270
Research and development1,8261,407
Sales and marketing10,5418,184
General and administrative2,0641,225
Gain on patent sale(11,965)-
------- -------
Total operating expenses10,86216,901
-------------
Income from operations14,3901,606
Other income, net820
-------------
Income before provision (benefit) for income taxes14,3981,626
Provision (benefit) for income taxes5,781(321)
------------- -
Net income$8,617$1,947
=============
Net income per share:
Basic$0.12$0.03
Diluted$0.12$0.03
Weighted average number of shares:
Basic70,71762,264
Diluted74,11065,808
8x8, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)
June 30,March 31,
20122012
-----------------
ASSETS
Current assets
Cash and cash equivalents$36,274$22,426
Investments1,9681,942
Accounts receivable, net2,8372,279
Inventory593581
Deferred tax assets1,9527,730
Other current assets946928
-----------------
Total current assets44,57035,886
Property and equipment, net5,2403,820
Intangible assets, net11,26511,622
Goodwill25,15025,150
Deferred tax assets, non-current53,97753,977
Other assets422278
-----------------
Total assets$140,624$130,733
=================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable$6,375$5,476
Accrued compensation3,0833,105
Accrued warranty405387
Deferred revenue708891
Other accrued liabilities2,4092,356
-----------------
Total current liabilities12,98012,215
Other liabilities3968
-----------------
Total liabilities13,01912,283
-----------------
Total stockholders' equity127,605118,450
-----------------
Total liabilities and stockholders' equity$140,624$130,733
=================
8x8, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
Three Months Ended
June 30,
---------------------
20122011
------------
Cash flows from operating activities:
Net income$8,617$1,947
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation505338
Amortization35726
Stock-based compensation556266
Deferred income tax provision (benefit)5,778(336)
Other7560
Changes in assets and liabilities:
Accounts receivable, net(626)(255)
Inventory(19)527
Other current and noncurrent assets(148)60
Deferred cost of goods sold(14)5
Accounts payable(35)(1,085)
Accrued compensation(22)207
Accrued warranty1816
Accrued taxes and fees112123
Deferred revenue(183)(144)
Other current and noncurrent liabilities(45)385
------ -------
Net cash provided by operating activities14,9262,140
------------
Cash flows from investing activities:
Purchases of property and equipment(1,048)(185)
Acquisition of businesses, net of cash acquired-(715)
------------ -
Net cash used in investing activities(1,048)(900)
------ ------- -
Cash flows from financing activities:
Capital lease payments(43)(9)
Repurchase of common stock(74)(1,038)
Proceeds from issuance of common stock under employee stock plans87267
------------
Net cash used in financing activities(30)(780)
------ ------- -
Net increase in cash and cash equivalents13,848460
Cash and cash equivalents at the beginning of the period22,42616,474
------------
Cash and cash equivalents at the end of the period$ 36,274$ 16,934
============
8x8, Inc.
Selected Operating Statistics
Three Months Ended
-----------------------------------------------------------------------------
June 30,Sept. 30,Dec. 31,March 31,June 30,
20112011201120122012
--------------------------------------------------
Gross business customer additions (1)2,8973,1762,8362,8922,943
Gross business customer cancellations (less cancellations within 301,5931,6201,6421,6971,458
days of sign-up)
Business customer churn (less cancellations within 30 days of2.1 %2.1 %2.0 %2.0 %1.7 %
sign-up) (2)
Total business customers (3)25,45526,72727,67728,67129,913
Business customer average monthly service revenue per customer (4)$200$207$239$244$250
Overall service margin78 %77 %77 %76 %75 %
Overall product margin-53 %-45 %-24 %-15 %-30 %
Overall gross margin67 %66 %68 %68 %67 %
Business subscriber acquisition cost per service (5)$89$101$92$99$97
Average number of services subscribed to per business customer8.49.09.49.810.1
Business customer subscriber acquisition cost (6)$743$906$867$965$980
(1) Includes 250 customers acquired directly from our acquisition in the second
fiscal quarter of 2012 from Contactual, Inc. and does not include customers of
Virtual Office Solo or Zerigo, Inc. ("Zerigo").
(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. 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 or Zerigo
services are not included as business customers.
(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) 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.
(6) Business customer subscriber acquisition cost is business subscriber
acquisition cost per service times the average number of services subscribed to
per business customer.
8x8, Inc.
RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME
AND NON-GAAP NET INCOME PER SHARE
(In thousands, except per share amounts; unaudited)
Three Months Ended
June 30,
-----------------------
20122011
-------------
Net income$8,617$1,947
Gain on patent sale(11,965)-
Non-cash tax adjustments5,778(336)
Amortization35726
Stock-based compensation expense556266
Acquisition-related expense-7
Facility exit expense9-
-------------
Non-GAAP net income$3,352$1,910
=============
Weighted average number of shares:
Diluted74,11065,808
GAAP net income per share - Diluted$0.12$0.03
Gain on patent sale(0.16)-
Non-cash tax adjustments0.08(0.01)
Amortization--
Stock-based compensation expense0.010.01
Acquisition-related expense--
Facility exit expense--
-------------
Non-GAAP net income per share - Diluted$0.05$0.03
=============
GAAP net income percentage of revenue34 %11 %
Gain on patent sale-47 %-
Non-cash tax adjustments23 %-2 %
Amortization1 %-
Stock-based compensation expense2 %1 %
Acquisition-related expense--
Facility exit expense--
-------------
Non-GAAP net income percentage of revenue13 %10 %
======= ======= =
SOURCE: 8x8
Investor Relations Contact:
Joan Citelli, 408-654-0970
jcitelli@8x8.com |
