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Share Name | Share Symbol | Market | Type |
---|---|---|---|
8x8 Inc | NASDAQ:EGHT | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.465 | 19.87% | 2.805 | 2.80 | 2.81 | 2.88 | 2.42 | 2.42 | 1,685,185 | 16:41:20 |
8x8, Inc. (NASDAQ: EGHT), a leading integrated cloud contact center and unified communications platform provider, today reported financial results for the third quarter of fiscal 2024 ended December 31, 2023.
Third Quarter Fiscal 2024 Financial Results:
“I am pleased to report that we met our guidance ranges for service revenue and total revenue and exceeded our guidance range for non-GAAP operating margin in the third quarter,” said Samuel Wilson, Chief Executive Officer of 8x8, Inc. “Non-GAAP operating margin exceeded our guidance range and cash flow from operations was strong again this quarter.
"At the beginning of this fiscal year we outlined a plan to return $250 million to our investors primarily through debt repayment in fiscal years 2024 through fiscal 2026. We will retire the remaining 2024 Notes upon maturity on February 1, 2024 using $63.3 million of cash out of the $170 million of cash, cash equivalents and investments on the balance sheet as of December 31, 2023. Once the redemption is completed, we will have returned $88.3 million to debt investors since the beginning of fiscal 2024,” added Wilson.
Third Quarter Fiscal 2024 Financial Metrics and Recent Business Highlights:
Financial Metrics
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
Industry Recognition
Corporate ESG and Leadership Updates
Fourth Quarter and Updated Fiscal 2024 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.
Fourth Quarter Fiscal 2024 Ending March 31, 2024
Fiscal Year 2024 Ending March 31, 2024
The Company does not reconcile its forward-looking estimates of non-GAAP operating margins 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 margins. 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. Additionally, our increased emphasis on profitability and cash flow generation may not be successful. The reduction in our total costs as a percentage of revenue may negatively impact our revenue and our business in ways we don't anticipate and may not achieve the desired outcome. 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 January 31, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). The conference call will last approximately 60 minutes. Participants may:
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 https://8x8.gcs-web.com/.
About 8x8, Inc.
8x8, Inc. (NASDAQ: 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 SMS 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; the size of our market opportunity; the potential success and impact of our investments in AI; our strategic framework; our ability to increase profitability and cash flow to deleverage our balance sheet and fund investment in innovation; whether our UC and CC traffic will increase; our future revenue and growth; whether we can sustain an increasing pace of innovation; the success of our go to market engine; our ability to improve G&A synergies; our ability to enhance shareholder value; and our financial outlook, revenue growth, and profitability, including whether we will achieve sustainable 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: a reduction in our total costs as a percentage of revenue may negatively impact our revenues and our business; customer adoption and demand for our products may be lower than we anticipate; the impact of economic downturns on us and our customers; ongoing volatility and conflict in the political environment, including Russia's invasion of Ukraine; inflationary pressures and rising interest rates; competitive dynamics of the cloud communication and collaboration markets, including voice, contact center, video, messaging, and communication application programming interfaces, 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, 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, operating margin or other amounts we forecast in our guidance, for a particular quarter or for the full fiscal year. Our increased emphasis on profitability and cash flow generation may not be successful. The reduction in our total costs as a percentage of revenue may negatively impact our revenue and our business in ways we don't anticipate and may not achieve the desired outcome.
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 Total Revenue Gross Margin
Non-GAAP Service Revenue Gross Profit and Margin as a percentage of Service Revenue and Non-GAAP Other Revenue Gross Profit and Margin 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 Total Revenue Gross Profit and Margin as a percentage of Total Revenue is computed as Total Revenue less Non-GAAP Cost of Service Revenue and Non-GAAP Cost of Other Revenue divided by Total 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 Total Revenue Gross Margin performance compared to prior periods and trends.
Non-GAAP Operating Expenses
Non-GAAP Operating Expenses excludes Costs of Revenue and includes Non-GAAP Research and Development expenses, Non-GAAP Sales and Marketing expenses, and Non-GAAP General and Administrative expenses, each of which excludes amortization of acquired intangible assets, stock-based compensation expense and related employer payroll taxes, acquisition and integration expenses, and certain severance, transition 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 and Non-GAAP Operating Margin
Non-GAAP Operating Profit excludes: 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 from Operating Profit (Loss). Non-GAAP Operating Margin is Non-GAAP Operating Profit 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: amortization of debt discount and issuance cost, gain or loss on debt extinguishment, gain or loss on remeasurement of warrants, 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 (expense), performance to prior results and trends.
Non-GAAP Net Income and Adjusted EBITDA
Non-GAAP Net Income excludes: 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, amortization of debt discount and issuance cost, gain or loss on debt extinguishment, gain or loss on remeasurement of warrants, and sub-lease income. Adjusted EBITDA excludes interest expense, provision for income taxes, depreciation, amortization of capitalized internal use software, and other income (expense), net from non-GAAP net income. 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 Net Income Per Share – Basic and Non-GAAP Net Income Per Share - Diluted
Non-GAAP Net Income Per Share – Basic is Non-GAAP Net Income divided by the weighted-average basic shares outstanding. Non-GAAP Net Income Per Share – Diluted is Non-GAAP Net Income divided by the weighted-average diluted 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 net income 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.
8x8, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share amounts)
Three Months Ended December 31,
Nine Months Ended December 31,
2023
2022
2023
2022
Service revenue
$
175,069
$
175,765
$
528,089
$
533,482
Other revenue
5,937
8,635
21,203
25,927
Total revenue
181,006
184,400
549,292
559,409
Operating expenses:
Cost of service revenue
48,983
47,335
144,403
151,920
Cost of other revenue
7,177
10,176
23,533
34,302
Research and development
32,787
35,062
102,286
106,036
Sales and marketing
66,997
79,021
204,189
243,035
General and administrative
23,419
27,158
77,231
87,788
Impairment of long-lived assets
11,034
3,729
11,034
6,153
Total operating expenses
190,397
202,481
562,676
629,234
Loss from operations
(9,391
)
(18,081
)
(13,384
)
(69,825
)
Other (expense) income, net
(11,310
)
(7,912
)
(29,041
)
7,154
Loss before provision for income taxes
(20,701
)
(25,993
)
(42,425
)
(62,671
)
Provision for income taxes
521
37
1,576
1,041
Net loss
$
(21,222
)
$
(26,030
)
$
(44,001
)
$
(63,712
)
Net loss per share:
Basic and diluted
$
(0.17
)
$
(0.23
)
$
(0.37
)
$
(0.55
)
Weighted average number of shares:
Basic and diluted
122,556
113,201
120,042
116,298
SUPPLEMENTAL DETAILS - OTHER (EXPENSE) INCOME, NET
(Unaudited, in thousands)
Three Months Ended December 31,
Nine Months Ended December 31,
2023
2022
2023
2022
Interest expense
$
(8,878
)
$
(7,607
)
$
(26,777
)
$
(13,115
)
Amortization of debt discount and issuance costs
(1,157
)
(1,136
)
(3,397
)
(3,136
)
Gain (loss) on warrants remeasurement
(1,297
)
(771
)
1,234
522
Gain (loss) on debt extinguishment
—
2,144
(1,766
)
18,250
Gain on sale of assets
—
1,757
—
1,826
Gain (loss) on foreign exchange
(1,841
)
(2,616
)
(1,080
)
1,984
Other income
1,863
317
2,745
823
Other (expense) income, net
$
(11,310
)
$
(7,912
)
$
(29,041
)
$
7,154
8x8, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
December 31, 2023
March 31, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
168,513
$
111,400
Restricted cash, current
356
511
Short-term investments
1,035
26,228
Accounts receivable, net of allowance for expected credit losses of $2,723 and $3,644 as of December 31, 2023 and March 31, 2023, respectively
63,042
62,307
Deferred sales commission costs, current
36,996
38,048
Other current assets
32,528
34,630
Total current assets
302,470
273,124
Property and equipment, net
55,661
57,871
Operating lease, right-of-use assets
38,546
52,444
Intangible assets, net
91,816
107,112
Goodwill
267,453
266,863
Restricted cash, non-current
462
818
Deferred sales commission costs, non-current
56,317
67,644
Other assets, non-current
13,993
15,934
Total assets
$
826,718
$
841,810
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$
49,493
$
46,802
Accrued compensation
20,573
29,614
Accrued taxes
37,781
29,570
Operating lease liabilities, current
11,763
11,504
Deferred revenue, current
32,778
34,909
Convertible senior notes, current
63,260
62,932
Other accrued liabilities
14,878
14,556
Total current liabilities
230,526
229,887
Operating lease liabilities, non-current
59,417
65,623
Deferred revenue, non-current
10,128
10,615
Convertible senior notes
197,561
196,821
Term loan
211,092
231,993
Other liabilities, non-current
8,322
6,965
Total liabilities
717,046
741,904
Stockholders' equity:
Preferred stock: $0.001 par value, 5,000,000 shares authorized, none issued and outstanding as of December 31, 2023 and March 31, 2023
—
—
Common stock: $0.001 par value, 300,000,000 shares authorized, 123,219,383 shares and 114,659,255 shares issued and outstanding as of December 31, 2023 and March 31, 2023, respectively
123
115
Additional paid-in capital
956,005
905,635
Accumulated other comprehensive loss
(9,538
)
(12,927
)
Accumulated deficit
(836,918
)
(792,917
)
Total stockholders' equity
109,672
99,906
Total liabilities and stockholders' equity
$
826,718
$
841,810
8x8, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Nine Months Ended December 31,
2023
2022
Cash flows from operating activities:
Net loss
$
(44,001
)
$
(63,712
)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation
6,133
8,056
Amortization of intangible assets
15,296
15,954
Amortization of capitalized internal-use software costs
14,418
16,397
Impairment of capitalized software
—
3,729
Amortization of debt discount and issuance costs
3,397
3,136
Amortization of deferred sales commission costs
30,150
28,533
Allowance for credit losses
1,663
1,984
Operating lease expense, net of accretion
8,057
8,667
Impairment of right-of-use assets
11,034
2,424
Stock-based compensation expense
46,835
73,516
Loss (gain) on debt extinguishment
1,766
(18,250
)
Gain on remeasurement of warrants
(1,234
)
(522
)
Gain on sale of assets
—
(1,826
)
Other
(570
)
(65
)
Changes in assets and liabilities:
Accounts receivable
(2,188
)
(236
)
Deferred sales commission costs
(17,095
)
(23,473
)
Other current and non-current assets
(586
)
4,715
Accounts payable and accruals
(4,471
)
(22,858
)
Deferred revenue
(2,272
)
(1,005
)
Net cash provided by operating activities
66,332
35,164
Cash flows from investing activities:
Purchases of property and equipment
(2,341
)
(2,685
)
Proceeds from sale of intangible assets
—
1,000
Capitalized internal-use software costs
(10,913
)
(6,768
)
Purchases of investments
(6,174
)
(42,899
)
Sales of investments
—
8,296
Maturities of investments
31,659
44,739
Acquisition of businesses, net of cash acquired
—
(1,250
)
Net cash provided by investing activities
12,231
433
Cash flows from financing activities:
Proceeds from issuance of common stock under employee stock plans
2,365
1,710
Repayment of principal on term loan
(25,000
)
—
Net proceeds from term loan
—
234,015
Repayment and exchange of convertible senior notes
—
(211,786
)
Repurchase of common stock
—
(60,214
)
Net cash used in financing activities
(22,635
)
(36,275
)
Effect of exchange rate changes on cash
674
(5,747
)
Net increase in cash, cash equivalents and restricted cash
56,602
(6,425
)
Cash, cash equivalents and restricted cash, beginning of year
112,729
100,714
Cash, cash equivalents and restricted cash, end of year
$
169,331
$
94,289
Supplemental disclosures of cash flow information:
Nine Months Ended December 31,
2023
2022
Interest paid
24,663
9,063
Income taxes paid
5,444
1,518
Warrants issued in connection with term loan
—
5,915
Shares issued in connection with term loan and convertible senior notes
—
5,082
8x8, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Unaudited, in thousands, except per share amounts)
Three Months Ended December 31,
Nine Months Ended December 31,
2023
2022
2023
2022
Costs of Revenue:
GAAP cost of service revenue (as a percentage of service revenue)
$
48,983
28.0
%
$
47,335
26.9
%
$
144,403
27.3
%
$
151,920
28.5
%
Amortization of acquired intangible assets
(2,118
)
(2,125
)
(6,354
)
(6,634
)
Stock-based compensation expense and related employer payroll taxes
(1,694
)
(2,148
)
(5,661
)
(7,301
)
Legal and regulatory costs
—
(85
)
—
(85
)
Severance, transition and contract exit costs
(444
)
(348
)
(732
)
(1,526
)
Non-GAAP cost of service revenue (as a percentage of service revenue)
$
44,727
25.5
%
$
42,629
24.3
%
$
131,656
24.9
%
$
136,374
25.6
%
GAAP service revenue margin (as a percentage of service revenue)
$
126,086
72.0
%
$
128,430
73.1
%
$
383,686
72.7
%
$
381,562
71.5
%
Non-GAAP service revenue margin (as a percentage of service revenue)
$
130,342
74.5
%
$
133,136
75.7
%
$
396,433
75.1
%
$
397,108
74.4
%
GAAP cost of other revenue (as a percentage of other revenue)
$
7,177
120.9
%
$
10,176
117.8
%
$
23,533
111.0
%
$
34,302
132.3
%
Stock-based compensation expense and related employer payroll taxes
(459
)
(902
)
(1,578
)
(2,986
)
Severance, transition and contract exit costs
(74
)
(517
)
(124
)
(1,294
)
Non-GAAP cost of other revenue
$
6,644
111.9
%
$
8,757
101.4
%
$
21,831
103.0
%
$
30,022
115.8
%
GAAP other revenue margin (as a percentage of other revenue)
$
(1,240
)
(20.9
)%
$
(1,541
)
(17.8
)%
$
(2,330
)
(11.0
)%
$
(8,375
)
(32.3
)%
Non-GAAP other revenue margin (as a percentage of other revenue)
$
(707
)
(11.9
)%
$
(122
)
(1.4
)%
$
(628
)
(3.0
)%
$
(4,095
)
(15.8
)%
GAAP gross margin (as a percentage of total revenue)
$
124,846
69.0
%
$
126,889
68.8
%
$
381,356
69.4
%
$
373,187
66.7
%
Non-GAAP gross margin (as a percentage of total revenue)
$
129,635
71.6
%
$
133,014
72.1
%
$
395,805
72.1
%
$
393,013
70.3
%
Operating Expenses:
GAAP research and development (as a percentage of total revenue) (1)
$
32,787
18.1
%
$
35,062
19.0
%
$
102,286
18.6
%
$
106,036
19.0
%
Stock-based compensation expense and related employer payroll taxes
(5,190
)
(7,183
)
(17,973
)
(23,149
)
Acquisition and integration costs
—
—
(98
)
Severance, transition and contract exit costs (1)
(585
)
(1,167
)
(1,798
)
(1,311
)
Non-GAAP research and development (as a percentage of total revenue)
$
27,012
14.9
%
$
26,712
14.5
%
$
82,417
15.0
%
$
81,576
14.6
%
GAAP sales and marketing (as a percentage of total revenue)
$
66,997
37.0
%
$
79,021
42.9
%
$
204,189
37.2
%
$
243,035
43.4
%
Amortization of acquired intangible assets
(2,982
)
(3,106
)
(8,946
)
(9,319
)
Stock-based compensation expense and related employer payroll taxes
(3,894
)
(6,653
)
(13,324
)
(21,816
)
Severance, transition and contract exit costs
(342
)
(2,351
)
(745
)
(3,072
)
Non-GAAP sales and marketing (as a percentage of total revenue)
$
59,779
33.0
%
$
66,911
36.3
%
$
181,174
33.0
%
$
208,828
37.3
%
GAAP general and administrative (as a percentage of total revenue) (2)
$
23,419
12.9
%
$
27,158
14.7
%
$
77,231
14.1
%
$
87,788
15.7
%
Stock-based compensation expense and related employer payroll taxes
(3,653
)
(4,354
)
(11,456
)
(19,040
)
Acquisition and integration costs
(102
)
(555
)
(654
)
(2,733
)
Legal and regulatory costs
(98
)
(57
)
(5,445
)
212
Severance, transition and contract exit costs (2)
(978
)
(1,130
)
(1,912
)
(1,155
)
Non-GAAP general and administrative (as a percentage of total revenue)
$
18,588
10.3
%
$
21,062
11.4
%
$
57,764
10.5
%
$
65,072
11.6
%
GAAP Operating Expenses (as a percentage of total revenue)
$
123,203
68.1
%
$
141,241
76.6
%
$
383,706
69.9
%
$
436,859
78.1
%
Non-GAAP Operating Expenses (as a percentage of total revenue)
$
105,379
58.2
%
$
114,685
62.2
%
$
321,355
58.5
%
$
355,476
63.5
%
Operating Profit (Loss):
GAAP loss from operations (as a percentage of total revenue)
$
(9,391
)
(5.2
)%
$
(18,081
)
(9.8
)%
$
(13,384
)
(2.4
)%
$
(69,825
)
(12.5
)%
Amortization of acquired intangible assets
5,100
5,231
15,300
15,953
Stock-based compensation expense and related employer payroll taxes
14,890
21,240
49,992
74,292
Acquisition and integration costs
102
555
752
2,733
Legal and regulatory costs
98
142
5,445
(127
)
Severance, transition and contract exit costs (3)
2,423
5,513
5,311
8,358
Impairment of long-lived assets (4)
11,034
3,729
11,034
6,153
Non-GAAP operating profit (as a percentage of total revenue)
$
24,256
13.4
%
$
18,329
9.9
%
$
74,450
13.6
%
$
37,537
6.7
%
Other Income (Expenses):
GAAP other income (expense), net (as a percentage of total revenue)
$
(11,310
)
(6.2
)%
$
(7,912
)
(4.3
)%
$
(29,041
)
(5.3
)%
$
7,154
1.3
%
Amortization of debt discount and issuance cost
1,157
1,136
3,398
3,136
(Gain) loss on debt extinguishment
—
(2,144
)
1,766
(18,250
)
(Gain) loss on warrants remeasurement
1,297
771
(1,234
)
(522
)
Gain on sale of assets
—
(1,757
)
—
(1,826
)
Sublease Income
(120
)
(116
)
(351
)
(348
)
Non-GAAP other (expense) income, net (as a percentage of total revenue)
$
(8,976
)
(5.0
)%
$
(10,022
)
(5.4
)%
$
(25,462
)
(4.6
)%
$
(10,656
)
(1.9
)%
Net Income (Loss):
GAAP net loss (as a percentage of total revenue)
$
(21,222
)
(11.7
)%
$
(26,030
)
(14.1
)%
$
(44,001
)
(8.0
)%
$
(63,712
)
(11.4
)%
Amortization of acquired intangible assets
5,100
5,231
15,300
15,953
Stock-based compensation expense and related employer payroll taxes
14,890
21,240
49,992
74,292
Acquisition and integration costs
102
555
752
2,733
Legal and regulatory costs
98
142
5,445
(127
)
Severance, transition and contract exit costs (3)
2,423
5,513
5,311
8,358
Impairment of long-lived assets (4)
11,034
3,729
11,034
6,153
Amortization of debt discount and issuance cost
1,157
1,136
3,398
3,136
(Gain) loss on debt extinguishment
—
(2,144
)
1,766
(18,250
)
(Gain) loss on warrants remeasurement
1,297
771
(1,234
)
(522
)
Gain on sale of assets
—
(1,757
)
—
(1,826
)
Sublease income
(120
)
(116
)
(351
)
(348
)
Income tax expense effects, net (5)
—
—
—
—
Non-GAAP net income (as a percentage of total revenue)
$
14,759
8.2
%
$
8,270
4.5
%
$
47,412
8.6
%
$
25,840
4.6
%
Interest expense
8,878
7,607
26,777
13,115
Provision for income taxes
521
37
1,576
1,041
Depreciation
2,043
2,432
6,132
8,056
Amortization of capitalized internal-use software costs
4,358
4,904
14,418
16,397
Other expense (income), net
98
2,415
(1,314
)
(2,459
)
Adjusted EBITDA (as a percentage of total revenue)
$
30,657
16.9
%
$
25,665
13.9
%
$
95,001
17.3
%
$
61,990
11.1
%
Shares used in computing net loss per share amounts:
Basic
122,556
113,201
120,042
116,298
Diluted
124,253
113,711
121,874
117,384
GAAP net loss per share - Basic and Diluted
$
(0.17
)
$
(0.23
)
$
(0.37
)
$
(0.55
)
Non-GAAP net income per share - Basic
$
0.12
$
0.07
$
0.39
$
0.22
Non-GAAP net income per share - Diluted
$
0.12
$
0.07
$
0.39
$
0.22
(1)
During the three and nine months ended December 31, 2022, the Company reclassified $3.7 million impairment of capitalized software from research and development expenses to impairment of long-lived assets in the condensed consolidated statement of operations to conform to current period presentation.
(2)
During the three and nine months ended December 31, 2022, the Company reclassified $2.4 million impairment of right-of-use assets from general and administrative expenses to impairment of long-lived assets in the condensed consolidated statement of operations to conform to current period presentation.
(3)
During the three and nine months ended December 31, 2022, the Company reclassified $3.7 million impairment of capitalized software and $6.2 million of impairment of capitalized software and right-of-use assets, respectively, to impairment of long-lived assets in the condensed consolidated statement of operations to conform to current period presentation.
(4)
During the three and nine months ended December 31, 2023, amounts include impairment charges related to partially ceasing use of the Company's Headquarters and an international office space.
(5)
Non-GAAP adjustments do not have a material impact on our federal income tax provision due to past non-GAAP losses.
8x8, INC.
SELECTED OPERATING METRICS
(Unaudited, in millions, except number of enterprise customers)
Fiscal 2023
Fiscal 2024
Q1
Q2
Q3
Q4
Q1
Q2
Q3
TOTAL ARR (1)
$
688
$
692
$
698
$
703
$
703
$
707
$
707
Growth % (YoY)
28
%
25
%
22
%
2
%
2
%
2
%
1
%
ARR BY CUSTOMER SIZE
ENTERPRISE (2)
$
403
$
401
$
400
$
405
$
404
$
407
$
409
% of Total ARR
59
%
58
%
57
%
58
%
58
%
58
%
58
%
Growth % (YoY)
54
%
42
%
30
%
3
%
—
%
1
%
2
%
MID-MARKET (3)
$
125
$
127
$
130
$
130
$
132
$
131
$
129
% of Total ARR
18
%
18
%
19
%
19
%
19
%
19
%
18
%
Growth % (YoY)
22
%
23
%
27
%
2
%
5
%
3
%
(1
)%
SMALL BUSINESS (4)
$
159
$
164
$
168
$
168
$
167
$
170
$
168
% of Total ARR
23
%
24
%
24
%
24
%
24
%
24
%
24
%
Growth % (YoY)
(7
)%
(2
)%
4
%
1
%
5
%
4
%
—
%
(1)
Annualized Recurring Subscriptions and Usage Revenue (ARR) (A) equals the sum of the most recent month of (i) recurring subscription amounts and (ii) platform usage charges for all CPaaS customers that demonstrate consistent monthly usage above a minimum threshold over the prior six-month period, multiplied by 12, and (B) excluding any non-bundled or overage usage fees associated with UCaaS subscriptions.
(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.
Selected operating metrics presented in this table have not been derived from financial measures that have been prepared in accordance with U.S. Generally Accepted Accounting Principles. 8x8 measures the success of our strategy to attract and retain customers, in part, by analyzing trends in ARR and believes ARR may be useful to investors in evaluating our performance. 8x8 believes ARR is a useful indicator for measuring the overall performance of the business because it includes new customer additions, add-on sales, renewals and customer churn within a single metric. 8x8 uses trends in ARR to assess our ongoing operations, allocate resources, and drive the performance of the business. Management monitors these metrics together, and not individually, as it does not make business decisions based upon any single metric. ARR is a performance metric and should be viewed independently of revenue and deferred revenue, and ARR is not intended to be a substitute for, or combined with, any of these items. We caution that our 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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240130701931/en/
8x8, Inc. Media: PR@8x8.com Investor Relations: Investor.relations@8x8.com
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