8x8, Inc.
Jul 29, 2009

8x8, Inc. Announces First Quarter Fiscal 2010 Results

Company Reports Profitable Quarter and Record Number of Sales to New Business Customers; Announces Stock Repurchase Program

SANTA CLARA, Calif., Jul 29, 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 the first quarter of fiscal 2010 ended June 30, 2009.

Net income for the quarter was $414,000, or $0.01 per share, compared to net income of $1.2 million, or $0.02 per share, for the same period of fiscal 2009 and a net loss of $3.9 million or ($0.06) per share, for the previous quarter.

During the first quarter of fiscal 2010, 8x8 recorded new sales to 2,907 business customers, up from a previous record of 2,792 businesses in the prior quarter, and increased its business customer subscriber base by 1,253 net new business customers, compared to 1,053 in the same period last year and 1,307 in the previous quarter. Business customer churn remained stable sequentially at 2.7%, compared to a churn rate of 3.2% in the same period last year. 8x8 ended the first quarter of fiscal 2010 with 17,266 business customers.

Total revenue for the first quarter of fiscal 2010 was $15.6 million, compared to $16.3 million for the same period of fiscal 2009 and $15.8 million for the previous quarter. Revenue from business customers grew to 69% of total revenue in the first quarter of fiscal 2010 compared to 56% of total revenue in the same period of fiscal 2009 and 68% of total revenue in the previous quarter. Gross margin for the first quarter of fiscal 2010 was 66% compared to 68% for the same period of fiscal 2008 and 59% for the previous quarter.

The Company reported cash and investments of $15.5 million in the first quarter of fiscal 2010 compared to $14.8 million in the same period of fiscal 2009 and $16.4 million in the previous quarter.

In addition to its first quarter fiscal 2010 operating results, 8x8 also announced that its board of directors has authorized the Company to repurchase up to $2.0 million of its outstanding common stock from time to time until July 28, 2010. Share repurchases, if any, will be funded with available cash. Repurchases of the Company's common stock may be made through open market purchases at prevailing market prices or in privately negotiated transactions. The timing, volume and nature of share repurchases are subject to market prices and conditions, applicable securities laws and other factors, and are at the discretion of the Company's management. Share repurchases may be commenced, suspended or discontinued at any time.

"Demand for our hosted IP telephony solutions continues to grow, surpassing last quarter's record number of sales to new business subscribers," said 8x8 Chairman and CEO Bryan Martin. "This accelerating growth indicates our strategy of minimizing the upfront cost of entry for small businesses is working, making our services even more compelling in today's tenuous economic climate. We expect to report increased revenue and net income next quarter as a result of this strategy."

Q1FY'10 Business Highlights:



 * Surpassed the previous quarter's record sales to new business
   customers with a new record of 2,907 gross new businesses.

 * Reduced business customer subscriber acquisition costs by 48% to
   $638 in the first quarter of fiscal 2010 from $1,217 in the same
   period last year.

 * Rolled out co-branded Internet protocol business phones nationwide
   at Office Depot retail store locations.

 * The number of lines and services purchased by new business
   customers during the quarter set a record number of 27,937, or an
   average of 9.6 per new business customer.

 * Business customer churn declined to 2.7% vs. 3.2% in the same
   period last year, despite continued challenges in the overall
   economic climate for small businesses.

 * Increased revenue from business customers to 69% of total revenue --
   up from 56% in the same period last year.

Management will host a conference call to discuss these results and other matters related to the Company's business today, July 29, 2009, at 4:30 p.m. EDT. The call is accessible via the following numbers and webcast links:



 Dial In:  (888) 569-5033, domestic
           (719) 325-2122, international
 Replay:   (888) 203-1112, passcode 4277733, domestic
           (719) 457-0820, passcode 4277733, international
 Webcast:  http://investors.8x8.com/
 Additional presentation materials:
 http://virtualmeeting.8x8.com/Q1FY2010Earnings

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 INCOME
         (In thousands, except per share amounts; unaudited)

                                                    Three Months Ended
                                                         June 30,
                                                    ------------------
                                                      2009      2008
                                                    --------  --------
 Service revenues                                   $ 14,520  $ 15,019
 Product revenues                                      1,038     1,262
                                                    --------  --------
  Total revenues                                      15,558    16,281
                                                    --------  --------

 Operating expenses:
  Cost of service revenues                             3,501     3,814
  Cost of product revenues                             1,821     1,432
  Research and development                             1,237     1,192
  Selling, general and administrative                  8,573     8,751
                                                    --------  --------
   Total operating expenses                           15,132    15,189
                                                    --------  --------
 Income from operations                                  426     1,092
 Other income, net                                        12        85
 Income (loss) on change in fair value of warrant
  liability                                               (7)       69
                                                    --------  --------
 Income before provision for income taxes                431     1,246
 Provision for income taxes                               17        58
                                                    --------  --------
 Net income                                         $    414  $  1,188
                                                    ========  ========

 Net income per share:
  Basic                                             $   0.01  $   0.02
  Diluted                                           $   0.01  $   0.02

 Weighted average number of shares:
  Basic                                               62,688    62,096
  Diluted                                             62,766    62,192


                              8x8, Inc.
                CONDENSED CONSOLIDATED BALANCE SHEETS
                      (In thousands, unaudited)

                                                   June 30,  March 31,
                                                     2009      2009
                                                  ---------  ---------
 ASSETS
 Current assets
  Cash and cash equivalents                       $  15,485  $  16,376
  Accounts receivable, net                              415        414
  Inventory                                           2,589      2,297
  Other current assets                                  771        841
                                                  ---------  ---------
   Total current assets                              19,260     19,928
 Property and equipment, net                          1,533      1,485
   Other assets                                         430        443
                                                  ---------  ---------
    Total assets                                  $  21,223  $  21,856
                                                  =========  =========

 LIABILITIES AND STOCKHOLDERS' EQUITY
 Current liabilities
  Accounts payable                                $   5,404  $   4,810
  Accrued compensation                                1,331      1,264
  Accrued warranty                                      373        328
  Deferred revenue                                    1,490      2,254
  Other accrued liabilities                           2,920      3,858
                                                  ---------  ---------
   Total current liabilities                         11,518     12,514
                                                  ---------  ---------

  Other liabilities                                     187        291
  Fair value of warrant liability                        27         21
                                                  ---------  ---------
    Total liabilities                                11,732     12,826

 Total stockholders' equity                           9,491      9,030
                                                  ---------  ---------
    Total liabilities and stockholders' equity    $  21,223  $  21,856
                                                  =========  =========


                              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     FQ110
                        -----     -----     -----     -----     -----

 Gross business
  customer
  additions(1)           2,398     3,324     2,437     2,792     2,907
 Gross business
  customer
  cancellations (less
  cancellations within
  30 days of sign-up)    1,098     1,187     1,224     1,245     1,371
 Business customer
  churn (less
  cancellations within
  30 days of
  sign-up)(2)              3.2%      3.1%      2.9%      2.7%      2.7%
 Total business
  customers(3)          11,898    13,744    14,706    16,013    17,266

 Business customer
  average monthly
  service revenue per
  customer(4)         $    237  $    220  $    208  $    202  $    196

 Revenue from business
  customers (in
  '000s)              $  9,077  $  9,826  $ 10,614  $ 10,728  $ 10,722
 Revenue from
  residential and
  video customers
  (in '000s)          $  7,192  $  6,356  $  5,572  $  5,236  $  4,811
 Revenue from
  technology licensing
  (in '000s)          $     12  $    243  $     17  $   (199) $     25
                      -------------------------------------------------
  Total Revenue       $ 16,281  $ 16,425  $ 16,203  $ 15,765  $ 15,558
                      =================================================
 Percentage of revenue
  from business
  customers               55.8%     59.8%     65.5%     68.1%     68.9%
 Percentage of revenue
  from residential and
  video customers         44.1%     38.7%     34.4%     33.2%     30.9%
 Percentage of revenue
  from technology
  licensing                0.1%      1.5%      0.1%    -1.3%       0.2%
                      -------------------------------------------------
  Total Revenue          100.0%    100.0%    100.0%    100.0%    100.0%
                      =================================================

 Overall service
  margin                    75%       73%       74%       71%       76%
 Overall product
  margin                   -13%      -10%        9%      -50%      -75%
  Overall gross margin      68%       65%       67%       59%       66%

 Total (business,
  residential and
  video) subscriber
  acquisition cost per
  service(5)          $    162  $    163  $    135  $    119  $    108
 Business subscriber
  acquisition cost per
  service(6)          $    171  $    171  $    141  $    118  $     93
 Average number of
  services subscribed
  to per business
  customer                 7.1       6.9       6.6       6.6       6.9
 Business customer
  subscriber
  acquisition cost(7) $  1,217  $  1,174  $    933  $    785  $    638

 Residential lines in
  service              100,937    93,865    86,992    81,569    74,809
 Total (business,
  residential and
  video) customer
  churn (less
  cancellations within
  30 days of
  sign-up)(8)              3.5%      4.2%      3.9%      3.5%      3.7%



 (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
          (408) 687-4320
          jcitelli@8x8.com

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