Oct 28, 2009 (GlobeNewswire via COMTEX News Network) --
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
SUNNYVALE, Calif., Oct. 28, 2009 (GLOBE NEWSWIRE) -- 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 jointly bid 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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