8x8, Inc.
May 21, 2009

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, Calif., May 21, 2009 (GlobeNewswire via COMTEX News Network) -- 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.

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

 -- 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.

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 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         5        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
                               --------- --------- --------- ---------
 Gross business customer
  additions (1)                   1,746     1,872     1,924     2,162
 Gross business customer
  cancellations (less
  cancellations within 30 days
  of sign-up)                       876       849       949     1,138
 Business customer churn (less
  cancellations within 30 days
  of sign-up) (2)                   3.8%      3.3%      3.3%      3.6%
 Total business customers (3)     8,160     9,111    10,007    10,845

 Business customer average
  monthly service revenue per
  customer (4)                 $    247  $    234  $    233  $    229

 Revenue from business
  customers (in '000s)         $  6,444  $  6,953  $  7,542  $  8,111
 Revenue from residential and
  video customers (in '000s)   $  8,181  $  7,793  $  8,182  $  7,685
 Revenue from technology
  licensing (in '000s)         $    117  $     22  $     80  $    536
                               ---------------------------------------
   Total Revenue               $ 14,742  $ 14,768  $ 15,804  $ 16,332
                               =======================================

 Percentage of revenue from
  business customers               43.7%     47.1%     47.7%     49.7%
 Percentage of revenue from
  residential and video
  customers                        55.5%     52.8%     51.8%     47.0%
 Percentage of revenue from
  technology licensing              0.8%      0.1%      0.5%      3.3%
                               ---------------------------------------
   Total Revenue                  100.0%    100.0%    100.0%    100.0%
                               =======================================

 Overall service margin              70%       67%       70%       74%
 Overall product margin              -4%      -77%       15%      -23%
   Overall gross margin              64%       52%       65%       67%

 Total (business, residential
  and video) subscriber
  acquisition cost per service
  (5)                          $    138  $     99  $    129  $    155
 Business subscriber
  acquisition cost per service
  (6)                          $    141  $    142  $    161  $    158
 Average number of services
  subscribed to per business
  customer                          7.0       7.2       7.3       7.2
 Business customer subscriber
  acquisition cost (7)         $    991  $  1,028  $  1,177  $  1,135

 Residential lines in service   100,571   117,338   112,229   107,260
 Total (business, residential
  and video) customer churn
  (less cancellations within
  30 days of sign up (8)            4.6%      3.9%      3.8%      4.0%

                               ---------------------------------------
                                 FQ109     FQ209     FQ309     FQ409
                               --------- --------- --------- ---------
 Gross business customer
  additions (1)                   2,398     3,324     2,437     2,792
 Gross business customer
  cancellations (less
  cancellations within 30 days
  of sign-up                      1,098     1,187     1,224     1,245
 Business customer churn (less
  cancellations within 30 days
  of sign-up) (2)                   3.2%      3.1%      2.9%      2.7%
 Total business customers (3)    11,898    13,744    14,706    16,013

 Business customer average
  monthly service revenue per
  customer (4)                 $    237  $    220  $    208  $    202

 Revenue from business
  customers (in '000s)         $  9,077  $  9,826  $ 10,614  $ 10,728
 Revenue from residential and
  video customers (in '000s)   $  7,192  $  6,356  $  5,572  $  5,236
 Revenue from technology
  licensing (in '000s)         $     12  $    243  $     17  $   (199)
                               ---------------------------------------
   Total Revenue               $ 16,281  $ 16,425  $ 16,203  $ 15,765
                               =======================================

 Percentage of revenue from
  business customers               55.8%     59.8%     65.5%     68.1%
 Percentage of revenue from
  residential and video
  customers                        44.1%     38.7%     34.4%     33.2%
 Percentage of revenue from
  technology licensing              0.1%      1.5%      0.1%     -1.3%
                               ---------------------------------------
   Total Revenue                  100.0%    100.0%    100.0%    100.0%
                               =======================================

 Overall service margin              75%       73%       74%       71%
 Overall product margin             -13%      -10%        9%      -50%
   Overall gross margin              68%       65%       67%       59%

 Total (business, residential
  and video) subscriber
  acquisition cost per service
  (5)                          $    162  $    163  $    135  $    119
 Business subscriber
  acquisition cost per service
  (6)                          $    171  $    171  $    141  $    118
 Average number of services
  subscribed to per business
  customer                          7.1       6.9       6.6       6.6
 Business customer subscriber
  acquisition cost (7)         $  1,217  $  1,174  $    933  $    785

 Residential lines in service   100,937    93,865    86,992    81,569
 Total (business, residential
  and video) customer churn
  (less cancellations within
  30 days of sign-up) (8)           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.

This news release was distributed by GlobeNewswire, www.globenewswire.com

SOURCE: 8x8 Inc.

8x8, Inc.
          Investor Relations Contact: 
          Joan Citelli
          jcitelli@8x8.com
          (408) 687-4320

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