8x8, Inc.
Oct 29, 2009

CORRECTING and REPLACING -- 8x8, Inc. Announces Second Quarter Fiscal 2010 Results

SUNNYVALE, Calif., Oct 29, 2009 (GlobeNewswire via COMTEX News Network) -- In a press release issued yesterday by 8x8, Inc. (Nasdaq:EGHT), under the same headline, please note that the statement "Signed teaming agreement with Level 3 Communications that enables 8x8 to jointly bid on hosted voice services within the federal Networx program, administered by the GSA, and the Washington Interagency Telecommunications Services (WITS3) programs" should read "Signed teaming agreement with Level 3 Communications that enables 8x8 to collaborate on hosted voice services within the federal Networx program, administered by the GSA, and the Washington Interagency Telecommunications Services (WITS3) programs." The corrected version of the news release appears below.



                 Net income of $1.3 million or $0.02 per share;
           Record operating income and operating margin as revenue
                from business customers grows 21% year over year

8x8, Inc. (Nasdaq:EGHT), provider of innovative communications solutions to small businesses, today announced financial operating results for the second quarter of fiscal 2010 ended September 30, 2009.

Net income for the second quarter of fiscal 2010 increased to $1.3 million, or $0.02 per share, compared sequentially to net income of $414,000, or $0.01 per share, for the previous quarter and $44,000 or $0.00 per share for the same period last year.

Total revenue for the second quarter of fiscal 2010 was $16.0 million, an increase of 3% sequentially compared to $15.6 million for the previous quarter and a decrease of 2.4% compared to the $16.4 million for the same period of fiscal 2009. Revenue from business customers grew 10% sequentially and 21% compared to the same period a year ago and now accounts for 74% of overall revenue, up from 69% of total revenue in the prior quarter and 60% for the same period of fiscal 2009. During the second quarter of fiscal 2010, the Company improved its gross margin to 67%, compared to 66% in the previous quarter and 65% in the same period of fiscal 2009. Business customer churn remained stable at 2.7%, compared to a churn rate of 3.1% in the same period last year. 8x8 ended the second quarter of fiscal 2010 with 18,199 business customers.

"The second fiscal quarter resulted in new record levels of both operating income and operating margin, as our operating income of $1.4 million and operating margins of 9% are the highest 8x8 has generated as a publicly traded company," said 8x8 Chairman & Chief Executive Officer Bryan Martin. "Revenue from business customers now accounts for nearly three-quarters of overall revenue. 8x8 is well positioned to continue generating operating income during the second half of this fiscal year. Voice over IP technology continues to receive positive coverage from the media and is becoming increasingly embraced by business customers looking for ways to reduce expenses while enhancing functionality. 8x8 has the ideal solution to meet this growing demand."

Q2FY'10 Business Highlights:



 -- Posted GAAP net income of $1.3 million -- up 223% sequentially from
    the prior quarter and compared to $44,000 for the same period last
    year

 -- Reported record operating income of $1.4 million, up 225% compared
    sequentially to operating income of $426,000 in the first fiscal
    quarter and compared to a loss from operations of $(236,000) in
    the same period last year

 -- Reported record operating margins of 9% compared to 3% in the
    first fiscal quarter and negative 1% in the same period last year

 -- Increased revenue from business customers to 74% of total revenue
    -- up from 69% in the prior quarter

 -- Reported 10% sequential growth in revenue from business customers
    and 21% compared to the same period a year ago.

 -- Increased average monthly service revenue per business customer to
    $201 -- up from $196 in the prior quarter

 -- Reported an increase in lines and services per new business to 9.8
    for the September quarter, vs. 9.6 in the June quarter

 -- Introduced new Virtual Meeting web conferencing service -- first in
    a series of unified communications services to be launched in the
    next six months

 -- Signed teaming agreement with Level 3 Communications that enables
    8x8 to collaborate on hosted voice services within the federal
    Networx program, administered by the GSA, and the Washington
    Interagency Telecommunications Services (WITS3) programs

 -- Maintained business customer subscriber acquisition cost of $638
    in the second quarter

 -- Business customer churn remained stable at 2.7%, despite continued
    challenges in the overall economic climate for small businesses

During the second quarter of fiscal 2010, 8x8 added $636,000 cash to its balance sheet and ended the quarter with a total of $16.1 million in cash and cash equivalents, compared to a total of $15.5 million in the previous quarter and $15.8 million in the same period of fiscal 2009. During the second quarter, the Company repurchased approximately 282,000 shares of its common stock under its share repurchase program, approved by the Board of Directors on July 28, 2009, at a total cost of approximately $212,000. The Company completed the quarter with working capital of $9.0 million and a current ratio of 1.8 to 1.

Mr. Martin continued, "The Company completed the quarter with a significantly strengthened balance sheet which provides us with a competitive advantage in this economy. We were able to add more than $636,000 in cash while simultaneously investing in the growth of our business, relocating our corporate headquarters, and repurchasing approximately $212,000 of our stock."

Management will host a conference call to discuss these results and other matters related to the Company's business today, October 28, 2009, at 4:30 p.m. EDT. The call is accessible via the following numbers and webcast links:



 Dial In:            (888) 300-2343, domestic
                     (719) 457-2703, international
 Replay:             (888) 203-1112, domestic, passcode 8793364
                     (719) 457-0820, international, passcode 8793364
 Webcast:             http://investors.8x8.com/
 Additional
  presentation
  materials:          http://virtualmeeting.8x8.com/Q2FY2010Earnings

About 8x8, Inc.

8x8, Inc. (Nasdaq:EGHT) offers voice, video, mobile and web conferencing 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  Six Months Ended
                                   September 30,      September 30,
                               ------------------- -------------------
                                 2009       2008      2009     2008
                               --------- --------- --------- ---------
 Service revenues              $ 14,838  $ 14,903  $ 29,358  $ 29,922
 Product revenues                 1,189     1,522     2,227     2,784
                               --------- --------- --------- ---------
    Total revenues               16,027    16,425    31,585    32,706
                               --------- --------- --------- ---------

 Operating expenses:
   Cost of service revenues       3,535     4,022     7,036     7,836
   Cost of product revenues       1,686     1,673     3,507     3,105
   Research and development       1,265     1,299     2,502     2,491
   Selling, general and
    administrative                8,156     9,667    16,729    18,418
                               --------- --------- --------- ---------
    Total operating expenses     14,642    16,661    29,774    31,850
                               --------- --------- --------- ---------
 Income (loss) from operations    1,385      (236)    1,811       856
 Other income, net                   31       107        43       192
 Income (loss) on change in
  fair value of warrant
  liability                         (90)      190       (97)      259
                               --------- --------- --------- ---------
 Income before provision for
  income taxes                    1,326        61     1,757     1,307
 Provision (benefit) for income
  taxes                             (10)       17         7        75
                               --------- --------- --------- ---------
 Net income                    $  1,336  $     44  $  1,750  $  1,232
                               ========= ========= ========= =========

 Net income per share:
   Basic                       $   0.02  $   0.00  $   0.03  $   0.02
   Diluted                     $   0.02  $   0.00  $   0.03  $   0.02

 Weighted average number of
  shares:
   Basic                         62,774    62,278    62,728    62,187
   Diluted                       62,873    62,361    62,832    62,277


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

                                           September 30,   March 31,
                                               2009          2009
                                           ------------- -------------

 ASSETS
 Current assets
   Cash and cash equivalents               $     16,121  $     16,376
   Accounts receivable, net                         422           414
   Inventory                                      2,853         2,297
   Other current assets                             869           841
                                           ------------- -------------
     Total current assets                        20,265        19,928
 Property and equipment, net                      1,705         1,485
     Other assets                                   418           443
                                           ------------- -------------
      Total assets                         $     22,388  $     21,856
                                           ============= =============

 LIABILITIES AND STOCKHOLDERS' EQUITY
 Current liabilities
   Accounts payable                        $      4,046  $      4,810
   Accrued compensation                           1,393         1,264
   Accrued warranty                                 370           328
   Deferred revenue                               2,192         2,254
   Other accrued liabilities                      3,240         3,858
                                           ------------- -------------
     Total current liabilities                   11,241        12,514

   Other liabilities                                167           291
   Fair value of warrant liability                  117            21
                                           ------------- -------------
      Total liabilities                          11,525        12,826

 Total stockholders' equity                      10,863         9,030
                                           ------------- -------------
      Total liabilities and  stockholders' $     22,388  $     21,856
                                           ============= =============


                               8x8, Inc.
                     Selected Operating Statistics

                               ---------------------------------------
                                 FQ208     FQ308      FQ408     FQ109
                               --------- --------- --------- ---------
 Gross business customer
  additions (1)                   1,872     1,924     2,162     2,398
 Gross business customer
  cancellations (less
  cancellations within 30 days
  of sign-up)                       849       949     1,138     1,098
 Business customer churn (less
  cancellations within 30 days
  of sign-up) (2)                   3.3%      3.3%      3.6%      3.2%
 Total business customers (3)     9,111    10,007    10,845    11,898

 Business customer average
  monthly service revenue per
  customer (4)                 $    234  $    233  $    229  $    237

 Revenue from business
  customers (in '000s)         $  6,953  $  7,542  $  8,111  $  9,077
 Revenue from residential and
  video customers (in '000s)   $  7,793  $  8,182  $  7,685  $  7,192
 Revenue from technology
  licensing (in '000s)         $     22  $     80  $    536  $     12
                               ---------------------------------------
   Total Revenue               $ 14,768  $  15,804 $  16,332 $  16,281
                               =======================================

 Percentage of revenue from
  business customers               47.1%     47.7%     49.7%     55.8%
 Percentage of revenue from
  residential and video
  customers                        52.8%     51.8%     47.0%     44.1%
 Percentage of revenue from
  technology licensing              0.1%      0.5%      3.3%      0.1%
                               ---------------------------------------
   Total Revenue                  100.0%    100.0%    100.0%    100.0%
                               =======================================

 Overall service margin              67%       70%       74%       75%
 Overall product margin             -77%       15%      -23%      -13%
   Overall gross margin              52%       65%       67%       68%

 Total (business, residential
  and video) subscriber
  acquisition cost per service
  (5)                          $     99  $    129  $    155  $    162
 Business subscriber
  acquisition cost per service
  (6)                          $    142  $    161  $    158  $    171
 Average number of services
  subscribed to per business
  customer                          7.2       7.3       7.2       7.1
 Business customer subscriber
  acquisition cost (7)         $  1,028  $  1,177  $  1,135  $  1,217

 Residential lines in service   117,338   112,229   107,260   100,937
 Total (business, residential
  and video) customer churn
  (less cancellations within 30
  days of sign-up) (8)              3.9%      3.8%      4.0%      3.5%


                     -------------------------------------------------
                       FQ209     FQ309      FQ409    FQ110     FQ210
                     --------- --------- --------- --------- ---------
 Gross business
  customer additions
  (1)                   3,324     2,437     2,792     2,907     2,609
 Gross business
  customer
  cancellations (less
  cancellations
  within 30 days of
  sign-up)              1,187     1,224     1,245     1,371     1,416
 Business customer
  churn (less
  cancellations
  within 30 days of
  sign-up) (2)            3.1%      2.9%      2.7%      2.7%      2.7%
 Total business
  customers (3)        13,744    14,706    16,013    17,266    18,199

 Business customer
  average monthly
  service revenue per
  customer (4)       $    220  $    208  $    202  $    196  $    201

 Revenue from
  business customers
  (in '000s)         $  9,826  $ 10,614  $ 10,728  $ 10,722  $ 11,842
 Revenue from
  residential and
  video customers (in
  '000s)             $  6,356  $  5,572  $  5,236  $  4,811  $  4,168
 Revenue from
  technology
  licensing (in
  '000s)                $ 243  $     17  $   (199) $     25  $     17
                     -------------------------------------------------
   Total Revenue       16,425  $ 16,203  $ 15,765  $ 15,558  $ 16,027
                     =================================================

 Percentage of
  revenue from
  business customers     59.8%     65.5%     68.1%     68.9%     73.9%
 Percentage of
  revenue from
  residential and
  video customers        38.7%     34.4%     33.2%     30.9%     26.0%
 Percentage of
  revenue from
  technology
  licensing               1.5%      0.1%     -1.3%      0.2%      0.1%
                     -------------------------------------------------
   Total Revenue        100.0%    100.0%    100.0%    100.0%    100.0%
                     =================================================

 Overall service
  margin                   73%       74%       71%       76%       76%
 Overall product
  margin                  -10%        9%      -50%      -75%      -42%
   Overall gross
    margin                 65%       67%       59%       66%       67%

 Total (business,
  residential and
  video) subscriber
  acquisition cost
  per service (5)    $    163  $    135  $    119  $    108  $     88
 Business subscriber
  acquisition cost
  per service (6)    $    171  $    141  $    118  $     93  $     90
 Average number of
  services subscribed
  to per business
  customer                6.9       6.6       6.6       6.9       7.1
 Business customer
  subscriber
  acquisition cost
  (7)                $  1,174  $    933  $    785  $    638  $    638

 Residential lines in
  service              93,865    86,992    81,569    74,809    68,682
 Total (business,
  residential and
  video) customer
  churn (less
  cancellations
  within 30 days of
  sign-up) (8)            4.2%      3.9%      3.5%      3.7%      4.3%

 (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.

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

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