8x8, Inc.
Jan 27, 2010

8x8, Inc. Announces Third Quarter Fiscal 2010 Results

Net Income of $1 Million or $0.02 Per Share; Revenue From Business Customers Grows 19% Year Over Year

SUNNYVALE, Calif., Jan 27, 2010 (GlobeNewswire via COMTEX News Network) -- 8x8, Inc. (Nasdaq:EGHT), provider of innovative business communications solutions, today announced financial operating results for the third quarter of fiscal 2010 ended December 31, 2009.

Net income for the third quarter of fiscal 2010 was $1 million, or $0.02 per share, compared sequentially to net income of $1.3 million, or $0.02 per share, for the previous quarter and $180,000 or $0.00 per share for the same period last year. Net income was negatively impacted by a non-cash expense of approximately $265,000 to account for the change in fair value of the warrant liability resulting from the price appreciation of the Company's common stock during the quarter.

Total revenue for the third quarter of fiscal 2010 was $15.9 million, compared sequentially to $16.0 million for the previous quarter and $16.2 million for the same period of fiscal 2009. Revenue from business customers grew 7% sequentially and 19% compared to the same period a year ago and now accounts for 79% of total revenue, up from 74% of total revenue in the prior quarter and 66% for the same period of fiscal 2009. Revenue from residential customers declined 21% sequentially and 41% compared to the same period a year ago.

During the third quarter of fiscal 2010, the Company improved its gross margin to 68%, compared to 67% in the previous quarter and 67% in the same period of fiscal 2009. Service margins grew to a record 78%, compared to 76% in the prior quarter and 74% for the same period of fiscal 2009. Business customer churn decreased to a record low of 2.4%, compared to a churn rate of 2.7% in the previous quarter and 2.9% for the same period last year. ARPU from business customers increased to $204 in the current quarter from $201 in the second quarter of fiscal 2010 and $208 in the same period last year. 8x8 ended the third quarter of fiscal 2010 with 19,407 business customers.

"Our business customer base and accompanying service revenue showed continued growth in the third fiscal quarter, with gross customer additions at one of the highest levels in the past two years and increased ARPU resulting from the growing popularity of our services in larger, distributed enterprise environments," said 8x8 Chairman & CEO Bryan Martin. "Even with a higher percentage of our business customer churn attributable to financial hardship, we witnessed our lowest overall churn to date."

"The slight decrease in overall revenue for the quarter was due primarily to an higher than expected decline in residential revenue which was impacted by competitive pricing pressures from triple play and free international calling offers," Mr. Martin continued.

Q3FY'10 Business Highlights:

  --  Posted GAAP net income of $1 million compared to $180,000 in the same
      period last year
  --  Reported operating income of $1.3 million compared to $78,000 in the
      same period last year
  --  Reported operating margins of 8% compared to 0% in the same period last
      year
  --  Increased revenue from business customers to 79% of total revenue - up
      from 66% in the same period last year
  --  Reported 7% sequential growth in revenue from business customers and 19%
      compared to the same period a year ago.
  --   Added 2,785 gross new business customers compared to 2,609 in the
      previous quarter and 2,437 in the same period of fiscal 2009
  --  Increased average monthly service revenue per business customer to $204
      - up from $201 in the prior quarter
  --  Reduced business customer churn to a record low of 2.4%, despite an
      increase in cancellations for economic reasons from 45% of total churn
      in the second quarter of fiscal 2010 to 49% of total churn in the third
      quarter of fiscal 2010


During the third quarter of fiscal 2010, 8x8 added $949,000 cash to its balance sheet and ended the quarter with a total of $17.1 million in cash and cash equivalents.

"The Company once again completed the quarter with a significantly higher cash balance which will enable us to more aggressively market our services and/or pursue strategic business opportunities in 2010," said Mr. Martin. "With the prospects in the larger enterprise and government arena that lie ahead, as well and the recent introduction of our new unified communications and mobile offerings, we believe fiscal 2010 will further solidify 8x8's position as the premiere provider of hosted communications services to the business market."

Management will host a conference call to discuss these results and other matters related to the Company's business today, January 27, 2010, at 4:30 p.m. ET. The call is accessible via the following numbers and webcast links:

Dial In: (888) 515-2781, domestic (719) 325-2179, international

Replay: (888) 203-1112, domestic, passcode 1458878 (719) 457-0820, international, passcode 1458878

Webcast: http://investors.8x8.com/

Additional presentation materials: http://virtualmeeting.8x8.com/Q3FY2010Earnings

About 8x8, Inc.

8x8, Inc. (Nasdaq:EGHT) offers integrated voice, video and mobile unified communications solutions for small to medium-sized business and distributed enterprise customers. These solutions leverage existing broadband Internet connections and cellular networks to deliver advanced features and high definition (HD) voice service at a fraction of the cost of legacy alternatives. Businesses of any size, configuration or geographic location can benefit from the cost, performance and operational advantages of 8x8 hosted communications solutions, all of which 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.

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

SOURCE: 8x8 Inc.

CONTACT:  8x8 Inc.
Investor Relations Contact:
Joan Citelli
(408) 654-0970
jcitelli@8x8.com

 

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