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8x8, Inc. Reports Fourth Quarter and Fiscal 2022 Financial Results

May 10, 2022
  • Fourth quarter revenue increased 25% year-over-year to $181 million.
  • Fiscal 2022 revenue increased 20% year-over-year to $638 million.
  • Enterprise ARR increased 55% year-over-year to $393 million.
  • Positive operating cash flow of $17 million for fourth quarter and $35 million for fiscal year 2022.

CAMPBELL, Calif.--(BUSINESS WIRE)-- 8x8, Inc. (NYSE: EGHT), a leading integrated cloud communications platform provider, today reported financial results for the fourth quarter and fiscal year 2022 ended March 31, 2022.

Fourth Quarter Fiscal 2022 Financial Results:

  • Total revenue increased 25% year-over-year to $181.4 million, including Fuze revenue of $24.1 million.
  • Service revenue increased 29% year-over-year to $172.8 million, including Fuze revenue of $23.9 million.
  • GAAP operating loss was $40.5 million, compared to a GAAP operating loss of $40.0 million in the fourth quarter fiscal 2021.
  • Non-GAAP operating profit was $4.2 million, compared to non-GAAP operating profit of $0.6 million in fourth quarter fiscal 2021.

Fiscal 2022 Financial Results:

  • Total revenue increased 20% year-over-year to $638.1 million, including Fuze revenue of $24.1 million.
  • Service revenue increased 21% year-over-year to $602.4 million, including Fuze revenue of $23.9 million.
  • GAAP operating loss was $154.1 million, compared to a GAAP operating loss of $146.1 million in fiscal 2021.
  • Non-GAAP operating profit was $10.6 million, or 2% of revenue, compared to a non-GAAP operating loss of $11.1 million in fiscal 2021.

“We improved non-GAAP operating profitability in every quarter of fiscal 2022 and achieved a non-GAAP operating profit for the year,” said Dave Sipes, Chief Executive Officer at 8x8, Inc. “We also made significant progress on our strategic initiatives by strengthening our management team, increasing our enterprise customer base, closing the Fuze acquisition, expanding our global coverage, and accelerating XCaaS innovation.”

“During the fourth quarter, we introduced industry-leading tailored experiences for the modern workplace with 8x8 Agent Workspace for 8x8 Contact Center and 8x8 Conversation IQ. We also extended 8x8 Global Reach, which provides full cloud PSTN support, to 50 countries and territories, including Thailand and Indonesia. Our continued focus on innovation and operational efficiency positions us for long-term success and improved operating results in the future,” Sipes added.

Fourth Quarter Fiscal 2022 Financial Metrics and Recent Business Highlights:

Financial Metrics

  • Annual Recurring Subscriptions and Usage (ARR):
    • Total ARR grew to $687 million, an increase of 33% from the end of the same period last year. 1,320 customers generated ARR greater than $100,000, an increase of 73% from the end of 2021.
  • GAAP gross margin was 62%, compared to 58% in the same period last year. Non-GAAP gross margin was 67%, compared to 61% in the same period last year.
  • GAAP service margin was 69%, compared to 65% in the same period last year. Non-GAAP service margin was 72%, compared to 67% in the same period last year.
  • Cash provided by operating activities was $16.6 million for the fourth quarter, compared to $0.8 million in the fourth quarter of fiscal 2021. For the year, cash provided by operating activities was $34.7 million, compared to $14.1 million cash used by operating activities in fiscal 2021.
  • Cash, restricted cash, and investments totaled $148.2 million on March 31, 2022 and $260.5 million on December 31, 2021.

A reconciliation of the non-GAAP measures to the most directly comparable GAAP measures and other information relating to non-GAAP measures is included in the supplemental reconciliation at the end of this release.

Recent Business Highlights:

Product Innovation Highlights

  • Announced general availability of 8x8 Agent Workspace, a new 8x8 Contact Center composed experience that is transforming the contact center agent role. 8x8 Agent Workspace is a fully browser-based, design-led interface, delivering a tailored and intuitive experience with powerful contact queuing and handling features to enhance productivity and personalize both agent and customer engagement.
  • Introduced 8x8 Conversation IQ, which extends formal contact center capabilities, such as quality management and speech analytics, to all user roles, from the front desk to the back office. 8x8 Conversation IQ applies conversational AI to help organizations uncover insights, foster coaching, and ensure professional engagements deliver consistent experiences across the entire enterprise.
  • Delivered the industry’s first integrated cloud phone and contact center solution that supports the communications and customer engagement requirements of multinational organizations in Indonesia. Increased full cloud PSTN support to 50 countries and territories, representing approximately 85 percent of the world’s GDP.

Industry Recognition

  • Named a winner in the category of Best Innovation in Customer Experience for the Best of Enterprise Connect 2022 awards.
  • Awarded a 5-star rating in the CRN 2022 Partner Program Guide.

First Quarter and Fiscal 2023 Financial Outlook:

Management provides expected ranges for total revenue, service revenue and non-GAAP operating margin based on its evaluation of the current business environment. The Company emphasizes that these expectations are subject to various important cautionary factors referenced in the section entitled "Forward-Looking Statements" below.

First Quarter Fiscal 2023 Ending June 30, 2022

  • Service revenue in the range of $177 million to $180 million, representing year-over-year growth of approximately 30% at the midpoint.
  • Total revenue in the range of $185 million to $188 million, representing year-over-year growth of approximately 26% at the midpoint.
  • Non-GAAP operating margin in the range of 2% to 2.5%.

Fiscal Year 2023 Ending March 31, 2023

  • Service revenue in the range of $740 million to $755 million, representing year-over-year growth of 24% at the midpoint.
  • Total revenue in the range of $775 million to $790 million, representing year-over-year growth of approximately 23% at the midpoint.
  • Non-GAAP operating margin in the range of 2% to 3%.

The Company does not reconcile its forward-looking estimates of non-GAAP operating margin to the corresponding GAAP measures of GAAP operating margin due to the significant variability of, and difficulty in making accurate forecasts and projections with regards to, the various expenses it excludes. For example, future hiring and employee turnover may not be reasonably predictable, stock-based compensation expense depends on variables that are largely not within the control of nor predictable by management, such as the market price of 8x8 common stock, and may also be significantly impacted by events like acquisitions, the timing and nature of which are difficult to predict with accuracy. The actual amounts of these excluded items could have a significant impact on the Company's GAAP operating margin. Accordingly, management believes that reconciliations of this forward-looking non-GAAP financial measure to the corresponding GAAP measure are not available without unreasonable effort. All projections are on a non-GAAP basis. See the Explanation of GAAP to Non-GAAP Reconciliation below for the definition of non-GAAP operating margin.

Conference Call Information:

Management will host a conference call to discuss earnings results on May 10, 2022, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). The conference call will last approximately 60 minutes and is accessible via the following numbers and webcast link:

Dial In: 1-844-200-6205 (U.S.) or 1-929-526-1599 (International)

Passcode 889659

Webcast: https://investors.8x8.com/events-and-presentations

Participants should plan to dial in or log on 10 minutes prior to the start time. The webcast will be archived on 8x8's website for a period of at least 30 days. For additional information, visit http://investors.8x8.com.

About 8x8, Inc.

8x8, Inc. (NYSE: EGHT) is transforming the future of business communications as a leading Software as a Service provider of 8x8 XCaaS™ (eXperience Communications as a Service™), an integrated contact center, voice communications, video, chat, and API solution built on one global cloud communications platform. 8x8 uniquely eliminates the silos between Unified Communications as a Service (UCaaS) and Contact Center as a Service (CCaaS) to power the communications requirements of all employees globally as they work together to deliver differentiated customer experiences. For additional information, visit www.8x8.com, or follow 8x8 on LinkedIn, Twitter and Facebook.

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. Any statements that are not statements of historical fact may be deemed to be forward-looking statements. For example, words such as "may," "will," "should," "estimates," "predicts," "potential," "continue," "strategy," "believes," "anticipates," "plans," "expects," "intends," and similar expressions are intended to identify forward-looking statements. These forward-looking statements, include but are not limited to: changing industry trends, operational and economic impacts of the COVID-19 pandemic, new product innovations and integrations, the future impact of the Fuze, Inc. acquisition on our operations and financial results, market demand for our products, channel and e-commerce growth, sales and marketing activities, strategic partnerships, business strategies, customer acquisition and support costs, customer churn, future operating performance and efficiencies, financial outlook, revenue growth, and profitability.

You should not place undue reliance on such forward-looking statements. Actual results could differ materially from those projected in forward-looking statements depending on a variety of factors, including, but not limited to: customer adoption and demand for our products may be lower than we anticipate; the impact of economic downturns on us and our customers, including from the COVID-19 pandemic, Russia's invasion of Ukraine, and inflationary pressures; rising interest rates; competitive dynamics of the cloud communication and collaboration markets, including voice, contact center, video, messaging, and communication application programming interfaces ("APIs"), in which we compete may change in ways we are not anticipating; impact of supply chain disruptions; third parties may assert ownership rights in our IP, which may limit or prevent our continued use of the core technologies behind our solutions; our customer churn rate may be higher than we anticipate; our investments in marketing, channel and value-added resellers (VARs), e-commerce, new products, and our acquisition of Fuze, Inc. may not result in revenue growth; and we may not achieve our target service revenue growth, or the revenue, earnings, operating margin or other amounts we forecast in our guidance, for a particular quarter or for the full fiscal year.

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.

Explanation of GAAP to Non-GAAP Reconciliation

The Company has provided, in this release, financial information that has not been prepared in accordance with Generally Accepted Accounting Principles (GAAP). Management uses these Non-GAAP financial measures internally to understand, manage, and evaluate the business, and to make operating decisions. Management believes they are useful to investors, as a supplement to GAAP measures, in evaluating the Company's ongoing operational performance. Management also believes that some of 8x8’s investors use these Non-GAAP financial measures as an additional tool in evaluating 8x8's ongoing "core operating performance" in the ordinary, ongoing, and customary course of the Company's operations. Core operating performance excludes items that are non-cash, not expected to recur, or not reflective of ongoing financial results. Management also believes that looking at the Company’s core operating performance provides consistency in period-to-period comparisons and trends.

These Non-GAAP financial measures may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies, which limits the usefulness of these measures for comparative purposes. Management recognizes that these Non-GAAP financial measures have limitations as analytical tools, including the fact that management must exercise judgment in determining which types of items to exclude from the Non-GAAP financial information. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these Non-GAAP financial measures to their most directly comparable GAAP financial measures in the table titled "Reconciliation of GAAP to Non-GAAP Financial Measures". Detailed explanations of the adjustments from comparable GAAP to Non-GAAP financial measures are as follows:

Non-GAAP Costs of Revenue, Costs of Service Revenue and Costs of Other Revenue

Non-GAAP Costs of Revenue includes: (i) Non-GAAP Cost of Service Revenue, which is Cost of Service Revenue excluding amortization of acquired intangible assets, stock-based compensation expense and related employer payroll taxes, certain legal and regulatory costs, and certain severance, transition and contract termination costs; and (ii) Non-GAAP Cost of Other Revenue, which is Cost of Other Revenue excluding stock-based compensation expense and related employer payroll taxes, certain legal and regulatory costs, and certain severance, transition and contract termination costs.

Non-GAAP Service Revenue Gross Margin, Other Revenue Gross Margin, and Gross Margin

Non-GAAP Service Revenue Gross Margin (and as a percentage of Service Revenue) and Non-GAAP Other Revenue Gross Margin (and as a percentage of Other Revenue) are computed as Service Revenue less Non-GAAP Cost of Service Revenue divided by Service Revenue and Other Revenue less Non-GAAP Cost of Other Revenue divided by Other Revenue, respectively. Non-GAAP Gross Margin (and as a percentage of Revenue) is computed as Revenue less Non-GAAP Cost of Service Revenue and Non-GAAP Cost of Other Revenue divided by Revenue. Management believes the Company’s investors benefit from understanding these adjustments and from an alternative view of the Company’s Cost of Service Revenue and Cost of Other Revenue as well as the Company's Service, Other and Gross Margins performance as compared to prior periods and trends.

Non-GAAP Operating Expenses

Non-GAAP Operating Expenses includes Non-GAAP Research and Development, Non-GAAP Sales and Marketing, and Non-GAAP General and Administrative, each of which excludes: amortization of acquired intangible assets, stock-based compensation expense and related employer payroll taxes, acquisition and integration expenses, certain severance, transition and contract termination costs, debt amortization expense, and contract termination costs. Management believes that these exclusions provide investors with a supplemental view of the Company’s ongoing operational expenses.

Non-GAAP Operating Profit (Loss) and Non-GAAP Operating Margin

Non-GAAP Operating Profit (Loss) excludes from Loss from Operations: amortization of acquired intangible assets, stock-based compensation expense and related employer payroll taxes, acquisition and integration expenses, certain legal and regulatory costs, and certain severance, transition and contract termination costs. Non-GAAP Operating Margin is Non-GAAP Operating Profit (Loss) divided by Revenue. Management believes that these exclusions provide investors with a supplemental view of the Company’s ongoing operating performance.

Non-GAAP Other Income (Expense), net

Non-GAAP Other Income (Expense), net excludes: acquisition and integration expenses, certain severance, transition and contract termination costs, debt amortization expense and sub-lease income from Other Income (Expense), net. Management believes the Company’s investors benefit from this supplemental information to facilitate comparison of the Company’s other income performance to prior results and trends.

Non-GAAP Pre-Tax Profit (Loss) and Non-GAAP Net Income (Loss)

Non-GAAP Pre-Tax Profit (Loss) excludes from Net Income (Loss): amortization of acquired intangible assets, stock-based compensation expense and related employer payroll taxes, acquisition and integration expenses, certain legal and regulatory costs, certain severance, transition and contract termination costs, contract termination costs, debt amortization expense, sub-lease income, and the provision for income taxes. Non-GAAP Net Loss includes the impact of the provision for (benefit from) income taxes on Non-GAAP Pre-Tax Profit (Loss). Management believes the Company’s investors benefit from understanding these adjustments and an alternative view of our net income performance as compared to prior periods and trends.

Non-GAAP Pre-Tax Profit (Loss) Per Share – Diluted & Non-GAAP Net Loss Per Share – Basic and Diluted

Non-GAAP Pre-Tax Profit (Loss) Per Share – Diluted is Non-GAAP Pre-Tax Profit (Loss) divided by the weighted-average diluted shares outstanding. Non-GAAP Net Loss Per Share – Basic and Diluted is Non-GAAP Net Loss divided by the weighted-average basic shares outstanding. Diluted shares outstanding include the effect of potentially dilutive securities from stock-based benefit plans and convertible senior notes. These potentially dilutive securities are excluded from the computation of net loss per share attributable to common stockholders on a GAAP basis because the effect would have been anti-dilutive. They are added for the computation of diluted net income per share on a non-GAAP basis in periods when 8x8 has net profit on a non-GAAP basis as their inclusion provides a better indication of 8x8’s underlying business performance. Management believes the Company’s investors benefit by understanding our Non-GAAP pre-tax profit (loss) and Non-GAAP net loss performance as reflected in a per share calculation as ways of measuring performance by ownership in the company. Management believes these adjustments offer investors a useful view of the Company’s diluted net income per share as compared to prior periods and trends.

Management evaluates and makes decisions about its business operations based on Non-GAAP financial information by excluding items management does not consider to be “core costs” or “core proceeds.” Management believes some of its investors also evaluate our "core operating performance" as a means of evaluating our performance in the ordinary, ongoing, and customary course of our operations. Management excludes the amortization of acquired intangible assets, which primarily represents a non-cash expense of technology and/or customer relationships already developed, to provide a supplemental way for investors to compare the Company’s operations pre-acquisition to those post-acquisition and to those of our competitors that have pursued internal growth strategies. Stock-based compensation expense has been excluded because it is a non-cash expense and relies on valuations based on future conditions and events, such as the market price of 8x8 common stock, that are difficult to predict and/or largely not within the control of management. The related employer payroll taxes for stock-based compensation are excluded since they are incurred only due to the associated stock-based compensation expense. Acquisition and integration expenses consist of external and incremental costs resulting directly from merger and acquisition and strategic investment activities such as legal and other professional services, due diligence, integration, and other closing costs, which are costs that vary significantly in amount and timing. Legal and regulatory costs include litigation and other professional services, as well as certain tax and regulatory liabilities. Severance, transition and contract termination costs include employee termination benefits, executive severance agreements, cancellation of certain contracts, and lease impairments. Debt amortization expenses relate to the non-cash accretion of the debt discount. Provision for income taxes are excluded as they are non-operating in nature.

8x8, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share amounts)

 

 

 

 

 

 

 

Three Months Ended

 

Years Ended

 

 

March 31,

 

March 31,

 

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Service revenue

 

$

172,789

 

 

$

133,753

 

 

$

602,357

 

 

$

495,985

 

Other revenue

 

 

8,583

 

 

 

10,966

 

 

 

35,773

 

 

 

36,359

 

Total revenue

 

 

181,372

 

 

 

144,719

 

 

 

638,130

 

 

 

532,344

 

 

 

 

 

 

 

 

 

 

Cost of revenue and operating expenses:

 

 

 

 

 

 

 

 

Cost of service revenue

 

 

53,938

 

 

 

47,239

 

 

 

195,909

 

 

 

180,082

 

Cost of other revenue

 

 

14,563

 

 

 

13,874

 

 

 

51,649

 

 

 

50,068

 

Research and development

 

 

30,586

 

 

 

25,271

 

 

 

112,387

 

 

 

92,034

 

Sales and marketing

 

 

84,785

 

 

 

70,696

 

 

 

314,223

 

 

 

256,231

 

General and administrative

 

 

38,039

 

 

 

27,675

 

 

 

118,103

 

 

 

100,078

 

Total operating expenses

 

 

221,911

 

 

 

184,755

 

 

 

792,271

 

 

 

678,493

 

Loss from operations

 

 

(40,539

)

 

 

(40,036

)

 

 

(154,141

)

 

 

(146,149

)

Other expense, net

 

 

(6,006

)

 

 

(4,821

)

 

 

(21,629

)

 

 

(18,593

)

Loss from operations before provision for income taxes

 

 

(46,545

)

 

 

(44,857

)

 

 

(175,770

)

 

 

(164,742

)

(Benefit from) provision for income taxes

 

 

(962

)

 

 

177

 

 

 

(387

)

 

 

843

 

Net loss

 

$

(45,583

)

 

$

(45,034

)

 

$

(175,383

)

 

$

(165,585

)

 

 

 

 

 

 

 

 

 

Net loss per share:

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.39

)

 

$

(0.42

)

 

$

(1.55

)

 

$

(1.57

)

 

 

 

 

 

 

 

 

 

Weighted average number of shares:

 

 

 

 

 

 

 

 

Basic and diluted

 

 

117,613

 

 

 

107,961

 

 

 

113,354

 

 

 

105,700

 

8x8, Inc.

CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands)

 

 

 

 

 

 

 

March 31, 2022

 

March 31, 2021

ASSETS

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

 

$

91,205

 

 

$

112,531

 

Restricted cash, current

 

 

8,691

 

 

 

8,179

 

Short-term investments

 

 

44,845

 

 

 

40,337

 

Accounts receivable, net

 

 

57,400

 

 

 

51,150

 

Deferred sales commission costs, current

 

 

35,482

 

 

 

30,241

 

Other current assets

 

 

37,999

 

 

 

34,095

 

Total current assets

 

 

275,622

 

 

 

276,533

 

Property and equipment, net

 

 

79,016

 

 

 

93,076

 

Operating lease, right-of-use assets

 

 

63,415

 

 

 

66,664

 

Intangible assets, net

 

 

128,213

 

 

 

17,130

 

Goodwill

 

 

266,867

 

 

 

131,520

 

Restricted cash, non-current

 

 

818

 

 

 

462

 

Long-term investments

 

 

2,671

 

 

 

 

Deferred sales commission costs, non-current

 

 

75,668

 

 

 

72,427

 

Other assets

 

 

17,978

 

 

 

20,597

 

Total assets

 

$

910,268

 

 

$

678,409

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

Current liabilities

 

 

 

 

Accounts payable

 

$

49,721

 

 

$

31,236

 

Accrued compensation

 

 

36,319

 

 

 

29,879

 

Accrued taxes

 

 

32,573

 

 

 

12,129

 

Operating lease liabilities, current

 

 

15,485

 

 

 

12,942

 

Deferred revenue, current

 

 

34,262

 

 

 

20,737

 

Other accrued liabilities

 

 

23,167

 

 

 

14,455

 

Total current liabilities

 

 

191,527

 

 

 

121,378

 

Operating lease liabilities, non-current

 

 

74,518

 

 

 

82,456

 

Convertible senior notes, net

 

 

447,452

 

 

 

308,435

 

Deferred revenue, non-current

 

 

11,430

 

 

 

2,999

 

Other liabilities, non-current

 

 

2,975

 

 

 

2,637

 

Total liabilities

 

 

727,902

 

 

 

517,905

 

Stockholders' equity:

 

 

 

 

Common stock

 

 

123

 

 

 

109

 

Additional paid-in capital

 

 

956,594

 

 

 

755,643

 

Accumulated other comprehensive loss

 

 

(7,913

)

 

 

(4,193

)

Accumulated deficit

 

 

(766,438

)

 

 

(591,055

)

Total stockholders' equity

 

 

182,366

 

 

 

160,504

 

Total liabilities and stockholders' equity

 

$

910,268

 

 

$

678,409

 

8x8, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

 

 

 

 

 

Years Ended March 31,

 

 

 

2022

 

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

Net loss

 

$

(175,383

)

 

$

(165,585

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

Depreciation

 

 

11,374

 

 

 

11,297

 

Amortization of intangible assets

 

 

8,317

 

 

 

6,886

 

Amortization of capitalized software

 

 

28,863

 

 

 

26,934

 

Amortization of debt discount and issuance costs

 

 

20,404

 

 

 

16,898

 

Amortization of deferred sales commission costs

 

 

34,701

 

 

 

27,817

 

Allowance for credit losses

 

 

1,974

 

 

 

4,471

 

Operating lease expense, net of accretion

 

 

13,482

 

 

 

15,210

 

Stock-based compensation expense

 

 

133,331

 

 

 

107,638

 

Other

 

 

3,726

 

 

 

1,521

 

Changes in assets and liabilities:

 

 

 

 

Accounts receivable, net

 

 

6,867

 

 

 

(14,869

)

Deferred sales commission costs

 

 

(44,224

)

 

 

(52,960

)

Other current and non-current assets

 

 

(4,022

)

 

 

(3,963

)

Accounts payable and accruals

 

 

(8,740

)

 

 

(10,033

)

Deferred revenue

 

 

4,010

 

 

 

14,672

 

Net cash provided by (used in) operating activities

 

 

34,680

 

 

 

(14,066

)

Cash flows from investing activities:

 

 

 

 

Purchases of property and equipment

 

 

(4,137

)

 

 

(6,430

)

Cost of capitalized software

 

 

(20,370

)

 

 

(28,816

)

Purchases of investments

 

 

(83,383

)

 

 

(52,172

)

Sales of investments

 

 

13,299

 

 

 

1,018

 

Proceeds from maturity of investments

 

 

60,023

 

 

 

60,479

 

Acquisition of businesses, net of cash acquired

 

 

(125,410

)

 

 

(10,400

)

Net cash used in investing activities

 

 

(159,978

)

 

 

(36,321

)

Cash flows from financing activities:

 

 

 

 

Finance lease payments

 

 

(15

)

 

 

(78

)

Tax-related withholding of common stock

 

 

(310

)

 

 

(69

)

Proceeds from issuance of common stock under employee stock plans

 

 

16,107

 

 

 

13,339

 

Repurchase of common stock

 

 

(44,976

)

 

 

 

Net proceeds from issuance of convertible debt

 

 

134,619

 

 

 

 

Net cash provided by financing activities

 

 

105,425

 

 

 

13,192

 

Effect of exchange rate changes on cash

 

 

(585

)

 

 

1,956

 

Net decrease in cash, cash equivalents and restricted cash

 

 

(20,458

)

 

 

(35,239

)

Cash, cash equivalents and restricted cash, beginning of period

 

 

121,172

 

 

 

156,411

 

Cash, cash equivalents and restricted cash, end of period

 

$

100,714

 

 

$

121,172

 

8x8, Inc.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(Unaudited, in thousands)

 

 

 

 

 

 

 

Three Months Ended

 

Years Ended

 

March 31, 2022

 

March 31, 2021

 

March 31, 2022

 

March 31, 2021

Costs of Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP cost of service revenue

 

$

53,938

 

 

 

 

$

47,239

 

 

 

 

$

195,909

 

 

 

 

$

180,082

 

 

 

Amortization of acquired intangible assets

 

 

(2,159

)

 

 

 

 

(1,074

)

 

 

 

 

(5,127

)

 

 

 

 

(5,117

)

 

 

Stock-based compensation expense and related employer payroll taxes

 

 

(2,252

)

 

 

 

 

(2,280

)

 

 

 

 

(9,163

)

 

 

 

 

(9,206

)

 

 

Legal and regulatory costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(219

)

 

 

Severance, transition and contract termination costs

 

 

(1,459

)

 

 

 

 

(4

)

 

 

 

 

(1,611

)

 

 

 

 

(1,522

)

 

 

Non-GAAP cost of service revenue

 

$

48,068

 

 

 

 

$

43,881

 

 

 

 

$

180,008

 

 

 

 

$

164,018

 

 

 

Non-GAAP service margin (as a percentage of service revenue)

 

$

124,721

 

 

72.2

%

 

$

89,872

 

 

67.2

%

 

$

422,349

 

 

70.1

%

 

$

331,967

 

 

66.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP cost of other revenue

 

$

14,563

 

 

 

 

$

13,874

 

 

 

 

$

51,649

 

 

 

 

$

50,068

 

 

 

Stock-based compensation expense and related employer payroll taxes

 

 

(1,253

)

 

 

 

 

(1,540

)

 

 

 

 

(5,046

)

 

 

 

 

(4,763

)

 

 

Legal and regulatory costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(71

)

 

 

Severance, transition and contract termination costs

 

 

(896

)

 

 

 

 

 

 

 

 

 

(998

)

 

 

 

 

(144

)

 

 

Non-GAAP cost of other revenue

 

$

12,414

 

 

 

 

$

12,334

 

 

 

 

$

45,605

 

 

 

 

$

45,090

 

 

 

Non-GAAP other margin (as a percentage of other revenue)

 

$

(3,831

)

 

(44.6

) %

 

$

(1,368

)

 

(12.5

) %

 

$

(9,832

)

 

(27.5

) %

 

$

(8,731

)

 

(24.0

) %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP gross margin (as a percentage of revenue)

 

$

120,890

 

 

66.7

%

 

$

88,504

 

 

61.2

%

 

$

412,517

 

 

64.6

%

 

$

323,236

 

 

60.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP research and development

 

$

30,586

 

 

 

 

$

25,271

 

 

 

 

$

112,387

 

 

 

 

$

92,034

 

 

 

Stock-based compensation expense and related employer payroll taxes

 

 

(6,243

)

 

 

 

 

(9,412

)

 

 

 

 

(34,113

)

 

 

 

 

(33,261

)

 

 

Legal and regulatory costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(296

)

 

 

Severance, transition and contract termination costs

 

 

(827

)

 

 

 

 

(44

)

 

 

 

 

(1,054

)

 

 

 

 

(888

)

 

 

Non-GAAP research and development (as a percentage of revenue)

 

$

23,516

 

 

13.0

%

 

$

15,815

 

 

10.9

%

 

$

77,220

 

 

12.1

%

 

$

57,589

 

 

10.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP sales and marketing

 

$

84,785

 

 

 

 

$

70,696

 

 

 

 

$

314,223

 

 

 

 

$

256,231

 

 

 

Amortization of acquired intangible assets

 

 

(2,529

)

 

 

 

 

(222

)

 

 

 

 

(3,190

)

 

 

 

 

(1,769

)

 

 

Stock-based compensation expense and related employer payroll taxes

 

 

(8,917

)

 

 

 

 

(12,621

)

 

 

 

 

(49,060

)

 

 

 

 

(35,529

)

 

 

Legal and regulatory costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(369

)

 

 

Severance, transition and contract termination costs

 

 

(2,081

)

 

 

 

 

(251

)

 

 

 

 

(3,315

)

 

 

 

 

(1,232

)

 

 

Non-GAAP sales and marketing (as a percentage of revenue)

 

$

71,258

 

 

39.3

%

 

$

57,602

 

 

39.8

%

 

$

258,658

 

 

40.5

%

 

$

217,332

 

 

40.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP general and administrative

 

$

38,039

 

 

 

 

$

27,675

 

 

 

 

$

118,103

 

 

 

 

$

100,078

 

 

 

Stock-based compensation expense and related employer payroll taxes

 

 

(9,324

)

 

 

 

 

(9,442

)

 

 

 

 

(40,844

)

 

 

 

 

(29,746

)

 

 

Acquisition and integration costs

 

 

(4,194

)

 

 

 

 

(3

)

 

 

 

 

(9,717

)

 

 

 

 

(197

)

 

 

Legal and regulatory costs

 

 

177

 

 

 

 

 

(1,972

)

 

 

 

 

2,722

 

 

 

 

 

(3,683

)

 

 

Severance, transition and contract termination costs

 

 

(2,757

)

 

 

 

 

(1,738

)

 

 

 

 

(4,213

)

 

 

 

 

(7,030

)

 

 

Non-GAAP general and administrative (as a percentage of revenue)

 

$

21,941

 

 

12.1

%

 

$

14,520

 

 

10.0

%

 

$

66,051

 

 

10.4

%

 

$

59,422

 

 

11.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Operating Expenses (as a percentage of revenue)

 

$

116,715

 

 

64.4

%

 

$

87,937

 

 

60.8

%

 

$

401,929

 

 

63.0

%

 

$

334,343

 

 

62.8

%

Other Income (Expenses):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP other expense, net

 

$

(6,006

)

 

 

 

$

(4,821

)

 

 

 

$

(21,629

)

 

 

 

$

(18,593

)

 

 

Debt amortization expense

 

 

6,628

 

 

 

 

 

4,324

 

 

 

 

 

20,408

 

 

 

 

 

16,898

 

 

 

Sublease Income

 

 

(116

)

 

 

 

 

 

 

 

 

 

(387

)

 

 

 

 

 

 

 

Non-GAAP other income (expense), net (as a

percentage of revenue)

 

$

506

 

 

0.3

%

 

$

(497

)

 

(0.3

) %

 

$

(1,608

)

 

(0.3

) %

 

$

(1,695

)

 

(0.3

) %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Profit (Loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP loss from operations

 

$

(40,539

)

 

 

 

$

(40,036

)

 

 

 

$

(154,141

)

 

 

 

$

(146,149

)

 

 

Amortization of acquired intangible assets

 

 

4,688

 

 

 

 

 

1,296

 

 

 

 

 

8,317

 

 

 

 

 

6,886

 

 

 

Stock-based compensation expense and related employer payroll taxes

 

 

27,989

 

 

 

 

 

35,295

 

 

 

 

 

138,226

 

 

 

 

 

112,505

 

 

 

Acquisition and integration costs

 

 

4,194

 

 

 

 

 

3

 

 

 

 

 

9,717

 

 

 

 

 

197

 

 

 

Legal and regulatory costs

 

 

(177

)

 

 

 

 

1,972

 

 

 

 

 

(2,722

)

 

 

 

 

4,638

 

 

 

Severance, transition and contract termination costs

 

 

8,020

 

 

 

 

 

2,037

 

 

 

 

 

11,191

 

 

 

 

 

10,816

 

 

 

Non-GAAP operating profit (loss) (Non-GAAP operating margin)

 

$

4,175

 

 

2.3

%

 

$

567

 

 

0.4

%

 

$

10,588

 

 

1.7

%

 

$

(11,107

)

 

(2.1

) %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-Tax Profit (Loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net loss

 

$

(45,583

)

 

 

 

$

(45,034

)

 

 

 

$

(175,383

)

 

 

 

$

(165,585

)

 

 

Amortization of acquired intangible assets

 

 

4,688

 

 

 

 

 

1,296

 

 

 

 

 

8,317

 

 

 

 

 

6,886

 

 

 

Stock-based compensation expense and related employer payroll taxes

 

 

27,989

 

 

 

 

 

35,295

 

 

 

 

 

138,226

 

 

 

 

 

112,505

 

 

 

Acquisition and integration costs

 

 

4,194

 

 

 

 

 

3

 

 

 

 

 

9,717

 

 

 

 

 

197

 

 

 

Legal and regulatory costs

 

 

(177

)

 

 

 

 

1,972

 

 

 

 

 

(2,722

)

 

 

 

 

4,638

 

 

 

Severance, transition and contract termination costs

 

 

8,020

 

 

 

 

 

2,037

 

 

 

 

 

11,191

 

 

 

 

 

10,816

 

 

 

Debt amortization expense

 

 

6,628

 

 

 

 

 

4,324

 

 

 

 

 

20,408

 

 

 

 

 

16,898

 

 

 

Non-GAAP net income (loss)

 

 

5,759

 

 

 

 

 

(107

)

 

 

 

 

9,754

 

 

 

 

 

(13,645

)

 

 

(Benefit from) provision for income taxes

 

 

(962

)

 

 

 

 

177

 

 

 

 

 

(387

)

 

 

 

 

843

 

 

 

Non-GAAP pre-tax profit (loss) (as a percentage of revenue)

 

$

4,797

 

 

2.6

%

 

$

70

 

 

%

 

$

9,367

 

 

1.4

%

 

$

(12,802

)

 

(2.4

) %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing per share amounts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

117,613

 

 

 

 

 

107,961

 

 

 

 

 

113,354

 

 

 

 

 

105,700

 

 

 

Diluted

 

 

118,556

 

 

 

 

 

119,383

 

 

 

 

 

116,982

 

 

 

 

 

105,700

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net loss per share - Basic and Diluted

 

$

(0.39

)

 

 

 

$

(0.42

)

 

 

 

$

(1.55

)

 

 

 

$

(1.57

)

 

 

Non-GAAP pre-tax profit (loss) per share - Basic

 

$

0.04

 

 

 

 

$

0.00

 

 

 

 

$

0.08

 

 

 

 

$

(0.12

)

 

 

Non-GAAP pre-tax profit (loss) per share - Diluted

 

$

0.04

 

 

 

 

$

0.00

 

 

 

 

$

0.08

 

 

 

 

$

(0.12

)

 

 

Non-GAAP net income (loss) per share - Basic

 

$

0.05

 

 

 

 

$

0.00

 

 

 

 

$

0.09

 

 

 

 

$

(0.13

)

 

 

Non-GAAP net income (loss) per share - Diluted

 

$

0.05

 

 

 

 

$

0.00

 

 

 

 

$

0.08

 

 

 

 

$

(0.13

)

 

 

8x8, Inc.

SELECTED OPERATING AND FINANCIAL METRICS

(Unaudited, in millions)

 

 

Fiscal 2021

 

Fiscal 2022

 

Q1

Q2

Q3

Q4

 

Q1

Q2

Q3

Q4 (5)

TOTAL ARR (1)

$ 432

 

$ 467

 

$ 494

 

$ 518

 

 

$ 536

 

$ 553

 

$ 572

 

$ 687

 

Growth % (YoY)

30

%

20

%

20

%

22

%

 

24

%

18

%

16

%

33

%

 

 

 

 

 

 

 

 

 

 

ARR BY CUSTOMER SIZE

 

 

 

 

 

 

 

 

 

ENTERPRISE (2)

$ 187

 

$ 213

 

$ 236

 

$ 253

 

 

$ 262

 

$ 282

 

$ 307

 

$ 393

 

% of Total ARR

43

%

46

%

48

%

49

%

 

49

%

51

%

54

%

57

%

Growth % (YoY)

54

%

31

%

29

%

34

%

 

40

%

33

%

30

%

55

%

Total # of Enterprise Customers

606

 

670

 

734

 

761

 

 

824

 

871

 

907

 

1,320

 

 

 

 

 

 

 

 

 

 

 

MID-MARKET (3)

$ 84

 

$ 91

 

$ 94

 

$ 97

 

 

$ 103

 

$ 103

 

$ 102

 

$ 128

 

% of Total ARR

20

%

19

%

19

%

19

%

 

19

%

19

%

18

%

19

%

Growth % (YoY)

24

%

25

%

23

%

22

%

 

22

%

14

%

9

%

31

%

 

 

 

 

 

 

 

 

 

 

SMALL BUSINESS (4)

$ 160

 

$ 163

 

$ 165

 

$ 168

 

 

$ 172

 

$ 167

 

$ 162

 

$ 166

 

% of Total ARR

37

%

35

%

33

%

32

%

 

32

%

30

%

28

%

24

%

Growth % (YoY)

12

%

6

%

8

%

7

%

 

7

%

2

%

(1

) %

(1

) %

(1)

Annualized Recurring Subscriptions and Usage (ARR) equals the sum of the most recent month of (i) recurring subscription amounts and (ii) platform usage charges for all CPaaS customers (subject to a minimum billings threshold for a period of at least six consecutive months), multiplied by 12.

(2)

Enterprise ARR is defined as ARR from customers that generate >$100,000 ARR.

(3)

Mid-market ARR is defined as ARR from customers that generate $25,000 to $100,000 ARR.

(4)

Small business ARR is defined as ARR from customers that generate <$25,000 ARR.

(5)

Includes Fuze.

Selected operating and financial metrics presented in this document have not been, and were not derived from financial measures that have been, prepared in accordance with US Generally Accepted Accounting Principles. 8x8 provides these selected operating and key business metrics to assist investors in evaluating the Company's operations and assessing its prospects. 8x8’s management periodically reviews these selected operating and key business metrics to evaluate 8x8’s operations, allocate resources, and drive financial performance in the business. Management monitors these metrics together, and not individually, as it does not make business decisions based upon any single metric. 8x8 is not aware of any uniform standards for defining these selected operating and key business metrics and caution that its presentation may not be consistent with that of other companies; prior period metrics and customer classifications have not been adjusted for current period changes unless noted.

8x8, Inc.
Investor Relations:
Kate Patterson
1-408-763-8175
katherine.patterson@8x8.com

Media:
John Sun
1-408-692-7054
john.sun@8x8.com

Source: 8x8, Inc.

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