8x8, Inc. : UPDATE -- 8x8, Inc. Announces Record Third Quarter Fiscal 2012 Results

SUNNYVALE, Calif., Jan. 18, 2012 (GLOBE NEWSWIRE) -- 8x8, Inc. (Nasdaq:EGHT), provider of innovative business communicationscloud computing solutions, today reported record financial results for the third quarter of fiscal 2012, the period ended December 31, 2011.

Total revenue for the third quarter of fiscal 2012 was $23.3 million, a 31% increase compared to the same period last yeara 17% sequential increase compared to revenue of $19.8 million in the prior quarter. Total revenue from business customers, including hosted communications service revenue as well as cloud data revenue, grew 42% year-over-yearrepresented 93% of total revenue.

Net income for the third quarter grew 73% vs. the same period last year to $2.6 million or $0.04 per share. Operating income was $2.6 million in the third quarter of fiscal 2012, an 80% increase compared to $1.4 million in the same period last year. Depreciation, amortizationstock-based compensation expenses were approximately $385,000, $357,000$418,000, respectively.

Hosted service margin from recurring revenue remained strong at 77%capital expenditures as a percentage of total revenue was 2.3%.

Business customer churn decreased to a record low of 2.0%, compared to a churn rate of 2.2% in the same period last year2.1% in the prior period. The Company ended the quarter with 27,677 business customers. The average new customer added during the December quarter purchased 14.1 services.

"We continue to see robustaccelerating growth in new business revenue, while simultaneously reducing churn,this is contributing to strong overall organic growth across all segments of our business," said 8x8 Chairman & CEO Bryan Martin. "The acquisition of Contactual, which was completed at the end of the September quarter, has rounded out our portfolio of cloud communications services extremely wellnow gives us the ability to better serve the needs of larger customers with both on-sitedistributed call center operations. I am especially encouraged by the momentum we are seeing on the hosting side of our businessthe continued success we are experiencing winning larger businessesgovernment organizations that are moving toward cloud-based solutions."

As of December 31, 2011, the Company had $21.9 million in cash, cash equivalentsinvestments compared to $19.1 million on September 30, 2011.

Q3FY'12 Business Highlights:

• Record overall revenue of $23.3 million, up 31% compared to the same period last year
• 42% year-over -year increase in revenue from business customers representing 93% of total revenue
• Net income of $2.6 million or $0.04 per share, compared to $1.5 million, or $0.02 per share, for the same period last year
• Business customer average service revenue of $239 per month, compared to $207 in the prior quarter
• Average services of 14.1 for new customers9.4 across the entire customer base, compared to 12.49.0, respectively, in the prior quarter
• New monthly recurring revenue (MRR) from 8x8 cloud data services sold during the quarter comprised 10% of total new MRRrepresented 3.2% of total revenue
• Record low churn of 2.0% vs. 2.1% in the prior quarter
• Business subscriber acquisition cost decreased to $92 per service, compared to $101 in the prior quarter$99 in the same period last year
• Launched new Virtual Office Account Manager web portal to streamline subscribers' customizationmanagement of their 8x8 cloud communications services
• Announced partnership with AT&T to deliver AT&T Call International mobile VoIP calling service
• Introduced new Windows Cloud Server hosting solution for businesses on Windows-based networksprovisioned first VBlock customer for our enterprise VMWare-based solution

Management will host a conference call to discuss these resultsother matters related to the Company's business today, January 18, 2012, at 4:30 p.m. ET. The call is accessible via the following numberswebcast links:

About 8x8, Inc.

8x8, Inc. (Nasdaq:EGHT) is a leading provider of cloud communicationscomputing solutions. With a portfolio of SaaSIaaS solutions encompassing hosted communications, contact center, unified communications, video web conferencing, managed dedicated hosting, virtual private serversmore, 8x8 is uniquely positioned as a business' one-stop shop for everything cloud. 8x8 has been delivering cloud services since 2002has garnered a reputation for technological excellenceoutstanding reliability, backed by a commitment to exceptional customer support. 8x8 customers include small to medium sized businesses, distributed enterprise organizationsgovernment agencies. For additional information, visit .

Forward Looking Statements

This news release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995Section 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, nearlong-term objectives, potential new business, strategies, organization changes, changing markets, future business performanceoutlook. Such statements are predictions only,actual events or results could differ materially from those made in any forward-looking statements due to a number of risksuncertainties. Actual resultstrends 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 productsservices, 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 federalstate regulatory actions, compliance costs, potential warranty claimsproduct defects, our needs forthe 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 businessoperating results,our ability to retain our listing on the NASDAQ Capital Market. For a discussion of such risksuncertainties, 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-K10-Q, as well as other reports that 8x8, Inc. files from time to time with the SecuritiesExchange Commission. All forward-looking statements are qualified in their entirety by this cautionary statement,8x8, Inc. undertakes no obligation to update publicly any forward-looking statement for any reason, except as required by law, even as new information becomes available or other events occur in the future.

8x8, Inc. 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		Nine Months Ended
	December 31,		December 31,
	2011	2010	2011	2010
Service revenues	$21,200	$16,664	$56,234	$48,098
Product revenues	2,078	1,114	5,370	3,881
Total revenues	23,278	17,778	61,604	51,979
Operating expenses:
Cost of service revenues	4,890	3,819	12,764	10,790
Cost of product revenues	2,584	1,840	7,467	5,897
Researchdevelopment	1,955	1,131	4,902	3,628
Selling, generaladministrative	11,297	9,570	31,448	27,453
Total operating expenses	20,726	16,360	56,581	47,768
Income from operations	2,552	1,418	5,023	4,211
Other income, net	49	78	58	112
Income on change in fair value of warrant liability	--	--	--	167
Income before provision for income taxes	2,601	1,496	5,081	4,490
Provision (benefit) for income taxes	15	--	(284)	7
Net income	$2,586	$1,496	$5,365	$4,483
Net income per share:
Basic	$0.04	$0.02	$0.08	$0.07
Diluted	$0.04	$0.02	$0.08	$0.07
Weighted average number of shares:
Basic	69,445	63,281	65,165	63,365
Diluted	73,214	66,873	69,013	65,622

8x8, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)
	December 31,		March 31,
	2011		2011
ASSETS
Current assets
Cashcash equivalents	$ 20,004		$ 16,474
Restricted cash	28		--
Investments	1,912		1,927
Accounts receivable, net	1,917		863
Inventory	539		2,105
Other current assets	948		707
Total current assets	25,348		22,076
Propertyequipment, net	3,483		2,398
Other assets	37,776	(1)	2,110
Total assets	$ 66,607		$ 26,584
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$ 4,481		$ 4,551
Accrued compensation	3,296		1,722
Accrued warranty	396		362
Deferred revenue	1,013		835
Other accrued liabilities	3,164		3,214
Total current liabilities	12,350		10,684
Other liabilities	400		39
Total liabilities	12,750		10,723
Total stockholders' equity	53,857		15,861
Total liabilitiesstockholders' equity	$ 66,607		$ 26,584
(1) The year to date change in other assets includes purchase accounting increases to goodwill of $22.7 millionintangibles of $11.2 million from the acquisition of Contactual, Inc.

8x8, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
	Nine Months Ended
	December 31,
	2011	2010
Cash flows from operating activities:
Net income	$ 5,365	$ 4,483
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciationamortization	1,532	960
Stock-based compensation	1,013	228
Change in fair value of warrant liability	--	(167)
Deferred income tax benefit	(336)	--
Other	130	57
Changes in assetsliabilities:
Accounts receivable, net	(642)	(231)
Inventory	1,596	(458)
Other currentnoncurrent assets	405	(75)
Deferred cost of goods sold	(6)	2
Accounts payable	(2,059)	1,272
Accrued compensation	319	239
Accrued warranty	34	86
Accrued taxesfees	(396)	301
Deferred revenue	(75)	(271)
Other currentnoncurrent liabilities	(472)	548
Net cash provided by operating activities	6,408	6,974
Cash flows from investing activities:
Purchases of propertyequipment	(1,743)	(1,891)
Purchases of investment	--	(2,000)
Purchase of strategic investment	--	(315)
Acquisition of businesses, net of cash acquired	(713)	(998)
Sale of propertyequipment	--	2
Net cash used in investing activities	(2,456)	(5,202)
Cash flows from financing activities:
Capital lease payments	(273)	(28)
Repurchase of common stock	(1,038)	(4,026)
Buyback of employee stock options	--	(101)
Proceeds from exercise of warrants	--	880
Proceeds from issuance of common stock, net of issuance costs	(60)	278
Proceeds from issuance of common stock under employee stock plans	949	1,755
Net cash used in financing activities	(422)	(1,242)
Net increase in cashcash equivalents	3,530	530
Cashcash equivalents at the beginning of the period	16,474	18,056
Cashcash equivalents at the end of the period	$ 20,004	$ 18,586

8x8, Inc.
Selected Operating Statistics
	FQ311	FQ411	FQ112	FQ212	FQ312
Gross business customer additions (1)	2,798	3,009	2,897	3,176	2,836
Gross business customer cancellations (less cancellations within 30 days of sign-up)	1,524	1,645	1,593	1,620	1,642
Business customer churn (less cancellations within 30 days of sign-up) (2)	2.2%	2.3%	2.1%	2.1%	2.0%
Total business customers (3)	23,251	24,385	25,455	26,727	27,677
Business customer average monthly service revenue per customer (4)	$ 209	$ 204	$ 200	$ 207	$ 239
Overall service margin	77%	78%	78%	77%	77%
Overall product margin	-65%	-73%	-53%	-45%	-24%
Overall gross margin	68%	67%	67%	66%	68%
Business subscriber acquisition cost per service (5)	$ 99	$ 91	$ 89	$ 101	$ 92
Average number of services subscribed to per business customer	7.8	8.0	8.4	9.0	9.4
Business customer subscriber acquisition cost (6)	$ 768	$ 725	$ 743	$ 906	$ 867
(1) Includes 49250 customers acquired directly from our acquisitions in the first quarter of fiscal 2011second fiscal quarter of 2012 from Central Host, Inc.Contactual, Inc., respectively,does not include customers of Virtual Office Solo or Zerigo, Inc. ("Zerigo").
(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 perioddividing 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. Customers that are currently in the 30 day trial period are considered to be customers that are paying for service. Customers subscribing to Virtual Office Solo or Zerigo services are not included as business customers.
(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) Business subscriber acquisition cost per service is defined as the combined costs of advertising, marketing, promotions, commissionsequipment subsidies for business services sold during the period divided by the number of gross business services added during the period.
(6) Business customer subscriber acquisition cost is business subscriber acquisition cost per service times the average number of services subscribed to per business customer.

CONTACT: Investor Relations Contact:

         Joan Citelli

         [e-mail]

         [phone]

Source: 8x8, Inc.

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