SANTA CLARA, Calif., Jan 29, 2009 /PRNewswire-FirstCall via COMTEX/ -- 8x8, Inc.
(Nasdaq: EGHT), provider of 8x8 Virtual Office and Packet8
(http://www.packet8.net) broadband business, residential, video and mobile
communications services, today announced financial operating results for its
third fiscal quarter ended December 31, 2008.
Revenues for the third quarter of fiscal 2009 were $16.2 million, compared
with $15.8 million for the same period of fiscal 2008 and $16.4 million for
the previous quarter. 8x8 business services revenue grew to 66% of total
revenue in the third quarter of fiscal 2009 compared with 48% of total revenue
in the same period of fiscal 2008 and 60% of total revenue in the previous
quarter. Sequentially, 8x8 Virtual Office revenue grew 41% from the same
period of fiscal 2008 and 8% from the previous quarter. Overall gross margin
for the third quarter of fiscal 2009 was 67%, compared with 65% for the same
period of fiscal 2008.
GAAP net income for the quarter was $180,000 or $0.00 per share, compared
with net income of $1.4 million, or $0.02 per share, for the same period in
fiscal 2008 and net income of $44,000, or $0.00 per share, for the previous
quarter. Cash and investments increased to $16.2 million in the third quarter
of fiscal 2009 from $15.8 million in the second quarter and $14.3 million in
the same period of fiscal 2008. This represents the seventh consecutive
quarter of increased cash and investments and a total increase of $1.6 million
year to date.
During the third quarter of fiscal 2009, the Company increased its
business communications services customer base by 962 net new customers and
now provides service to 14,706 business customers.
"We are very pleased to report the seventh consecutive quarterly increase
in our cash and investment balances and the fifth consecutive quarter of net
income," said 8x8 Chairman & CEO Bryan R. Martin. "In addition, during the
December quarter, the Company organically added more new business customers
than ever before, with over 2,400 gross additions. On a percentage basis, we
also experienced our lowest business churn in more than 18 months, a metric
that we have been focused on improving." Martin continued, "While our overall
revenue growth does not yet reflect the Company's strategic shift in focus
from residential to business services, our underlying business services
results, which now represent approximately two-thirds of our revenues, clearly
indicate that our strategy is succeeding. We continue to feel optimistic that
this strategy will deliver value to both our customers and shareholders
despite the current macro-economic conditions."
On Tuesday, January 27, 2009, 8x8, Inc.'s Board of Directors passed a
resolution to immediately vest all outstanding employee stock options, the
majority of which are currently below the exercise price, so as to accelerate
the recognition of approximately $2.4 million to $2.6 million of outstanding,
future stock compensation expense into the Company's fourth fiscal quarter,
ending March 31, 2009, and substantially eliminate all FAS-123® stock
compensation expenses resulting from past stock option grants from the
Company's 2010 fiscal year.
"For the last three quarters ended December 31, 2008, the Company's net
income has been reduced by approximately $0.8 million due to recognition of
stock compensation charges for employee stock options that are currently below
their exercise price," said Martin. "In other words, 8x8's net income of $1.4
million for the three quarters ended December 31, 2008 would have been
approximately 56% higher without these charges."
Q3FY'09 Business Highlights:
-
Added 962 net new businesses to end the quarter with over 14,700
customers subscribing to 8x8 business communications services
- Organically added a record number of new, gross business customers
during the quarter
- Significantly improved business customer churn compared to the year ago
quarter -- from 3.3% in Q3 FY2008 to 2.9% in Q3 FY2009
- Continued expansion of quota-carrying direct sales force from 43 to 56
agents; direct sales accounted for 84% of new business sales during the
quarter
- Expanded U.S. regional sales presence with appointment of Northeast and
Southeast Regional Sales Managers and opening of New York sales office
- Increased business services revenue to 66% of total revenue -- up from
48% in the year ago period, and 6% sequentially
- Added $423,000 in cash and investments quarter over quarter and $1.9
million year over year to the Company's balance sheet for the Company's
seventh consecutive quarter of increasing cash and investments
- Increased working capital year to date by $2.4 million to $8.6 million
and increased stockholder equity by $2.5 million to $10.3 million over
the same period
Management will host a conference call to discuss these results and other
matters related to the Company's business today, January 29, 2009, at 4:30
p.m. ET. To access the call, dial 888-679-8033 (domestic) or 617-213-4846
(International), passcode 16191335. A digital replay of the call will be
available for one week following the live broadcast at
888-286-8010 (domestic) or 617-801-6888 (International), passcode 60893757. A
webcast of this conference call will also be available for a limited time at
the 8x8 Investor Relations website at: 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 company information, visit 8x8's web site at
http://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 VoIP 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.
8x8, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts; unaudited)
Three Months Ended Nine Months Ended
December 31, December 31,
2008 2007 2008 2007
Service revenues $14,366 $14,426 44,288 $41,109
Product revenues 1,837 1,378 4,621 4,205
Total revenues 16,203 15,804 48,909 45,314
Operating expenses:
Cost of service revenues 3,699 4,364 11,535 12,780
Cost of product revenues 1,681 1,175 4,786 5,210
Research and development 1,183 1,081 3,674 3,164
Selling, general and
administrative 9,562 9,604 27,980 28,573
Total operating expenses 16,125 16,224 47,975 49,727
Income (loss) from operations 78 (420) 934 (4,413)
Other income, net 74 1,361 266 1,654
Income on change in fair value of
warrant liability 66 448 325 2,098
Income (loss) before provision
for income taxes 218 1,389 1,525 (661)
Provision for income taxes 38 - 113 -
Net income (loss) $180 $1,389 1,412 $(661)
Net income (loss) per share:
Basic $0.00 $0.02 $0.02 $(0.01)
Diluted $0.00 $0.02 $0.02 $(0.01)
Weighted average number of
shares:
Basic 62,332 61,927 62,236 61,857
Diluted 62,394 62,113 62,428 61,857
8x8, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)
December 31, March 31,
2008 2008
ASSETS
Current assets
Cash and cash equivalents $16,195 $11,185
Short-term investments - 3,382
Accounts receivable, net 698 1,807
Inventory 1,901 1,539
Other current assets 1,314 1,492
Total current assets 20,108 19,405
Property and equipment, net 1,814 2,010
Other assets 11 136
Total assets $21,933 $21,551
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $3,992 $4,885
Accrued compensation 1,435 1,048
Accrued warranty 327 314
Deferred revenue 3,212 3,139
Other accrued liabilities 2,552 3,872
Total current liabilities 11,518 13,258
Other liabilities 56 109
Fair value of warrant liability 10 335
Total liabilities 11,584 13,702
Total stockholders' equity 10,349 7,849
Total liabilities and
stockholders' equity $21,933 $21,551
8x8, Inc.
Selected Operating Statistics
FQ308 FQ408 FQ109 FQ209 FQ309
Gross business customer
additions (1) 1,924 2,162 2,398 3,324 2,437
Gross business customer
cancellations (less
cancellations within 30 days
of sign-up) 949 1,138 1,098 1,187 1,224
Business customer churn (less
cancellations within 30 days
of sign-up) (2) 3.3% 3.6% 3.2% 3.1% 2.9%
Total business customers (3) 10,007 10,845 11,898 13,744 14,706
Business customer average
service revenue per customer
(4) $233 $229 $237 $220 $208
Revenue from business
customers (in '000s) $7,542 $8,111 $9,077 $9,826 $10,614
Revenue from residential and
video customers (in '000s) $8,182 $7,685 $7,192 $6,356 $5,572
Revenue from technology
licensing (in '000s) $80 $536 $12 $243 $17
Total Revenue $15,804 $16,332 $16,281 $16,425 $16,203
Percentage of revenue from
business customers 47.7% 49.7% 55.8% 59.8% 65.5%
Percentage of revenue from
residential and video
customers 51.8% 47.0% 44.1% 38.7% 34.4%
Percentage of revenue from
technology licensing 0.5% 3.3% 0.1% 1.5% 0.1%
Total Revenue 100.0% 100.0% 100.0% 100.0% 100.0%
Overall service margin 70% 74% 75% 73% 74%
Overall product margin 15% -23% -13% -10% 9%
Overall gross margin 65% 67% 68% 65% 67%
Total (business, residential
and video) subscriber
acquisition cost per service
(5) $129 $155 $162 $163 $135
Business subscriber
acquisition cost per service
(6) $161 $158 $171 $171 $141
Average number of services
subscribed to per business
customer 7.3 7.2 7.1 6.9 6.6
Business customer subscriber
acquisition cost (7) $1,177 $1,135 $1,217 $1,174 $933
Residential lines in service 112,229 107,260 100,937 93,865 86,992
Total (business, residential
and video) customer churn
(less cancellations within
30 days of sign-up) (8) 3.8% 4.0% 3.5% 4.2% 3.9%
(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 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.
SOURCE 8x8, Inc.
http://www.8x8.com