PART I. FINANCIAL INFORMATION [Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the quarter ended June 30, 2023, detailing the company's financial position, performance, and cash flows [Condensed Consolidated Financial Statements](index=5&type=section&id=Condensed%20Consolidated%20Financial%20Statements) The company's financial statements show a net loss of $15.3 million on total revenues of $183.3 million for the quarter, an improvement from the prior year, alongside increased operating cash flow Condensed Consolidated Statements of Operations (in thousands) | | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | | :--- | :--- | :--- | | **Total revenue** | **$183,287** | **$187,620** | | Total operating expenses | $184,697 | $214,374 | | **Loss from operations** | **$(1,410)** | **$(26,754)** | | Other (expense) income, net | $(12,473) | $1,116 | | **Net loss** | **$(15,327)** | **$(26,043)** | | Net loss per share (Basic and diluted) | $(0.13) | $(0.22) | Condensed Consolidated Balance Sheet Highlights (in thousands) | | June 30, 2023 | March 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $122,229 | $111,400 | | Total current assets | $274,468 | $273,124 | | **Total assets** | **$828,463** | **$841,810** | | Total current liabilities | $236,317 | $229,887 | | **Total liabilities** | **$723,594** | **$741,904** | | **Total stockholders' equity** | **$104,869** | **$99,906** | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | **$26,473** | **$5,841** | | Net cash provided by (used in) investing activities | $6,792 | $(5,841) | | Net cash provided by (used in) financing activities | $(25,000) | $65 | | **Net increase (decrease) in cash** | **$10,483** | **$(6,620)** | [Notes to Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed information on accounting policies, revenue recognition, fair value measurements, debt structure, and stock-based compensation expenses - As of June 30, 2023, the company had approximately **$790.0 million** in remaining performance obligations, with **85%** expected to be recognized as revenue over the next 24 months[40](index=40&type=chunk) Debt Principal Outstanding as of June 30, 2023 (in millions) | Debt Instrument | Principal Amount | | :--- | :--- | | 0.50% Convertible Senior Notes due 2024 | $63.3 | | Senior Secured Term Loan due 2027 | $225.0 | | 4.00% Convertible Senior Notes due 2028 | $201.9 | Stock-Based Compensation Expense (in thousands) | | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | | :--- | :--- | :--- | | Cost of service revenue | $1,686 | $2,664 | | Research and development | $7,632 | $8,044 | | Sales and marketing | $4,649 | $8,107 | | General and administrative | $3,834 | $7,888 | | **Total** | **$18,195** | **$27,814** | - During the quarter, the company entered into a new three-year noncancellable hosting services contract for **$28.1 million**[55](index=55&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's strategic focus on mid-market and enterprise customers, alongside a detailed analysis of financial performance, including revenue trends, operating expenses, and liquidity [Business Overview and Strategy](index=20&type=section&id=OVERVIEW) The company's strategy centers on expanding its mid-market and enterprise customer base through its integrated XCaaS platform, aiming for revenue growth, profitability, and positive cash flow - The company's core offering is the **8x8 XCaaS platform**, which integrates unified communications (UCaaS), contact center (CCaaS), and communication APIs (CPaaS) into a single cloud-based solution[87](index=87&type=chunk) - Strategic focus has shifted towards **mid-market, enterprise, and public sector customers** (typically 500 to 10,000 employees) who are more likely to adopt multiple services from the unified platform[92](index=92&type=chunk) - Key strategic initiatives include reducing service delivery costs, improving sales efficiency by focusing on larger customers, expanding partner programs, and investing in R&D, especially for contact center and AI capabilities[95](index=95&type=chunk)[96](index=96&type=chunk) [Key Business Metrics](index=21&type=section&id=KEY%20BUSINESS%20METRICS) Management's primary metric, Annualized Recurring Revenue (ARR), reached $703.0 million, with mid-market and enterprise customers contributing 76% of the total Annualized Recurring Revenue (ARR) as of June 30, 2023 | Metric | Value | YoY Change | | :--- | :--- | :--- | | **Total ARR** | **$703.0 million** | **+2%** | | ARR from Mid-market & Enterprise | 76% of Total | +1% | | ARR from Enterprise (> $100k) | 58% of Total | N/A | | ARR from Small Business (< $25k) | 24% of Total | N/A | [Results of Operations (Q1 FY2024 vs Q1 FY2023)](index=23&type=section&id=RESULTS%20OF%20OPERATIONS) This section details the company's financial results, showing a decrease in total revenue but significant improvements in operating expenses, leading to a reduced loss from operations Revenue Comparison (in thousands) | Revenue Type | Q1 2024 | Q1 2023 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Service revenue | $175,238 | $179,161 | $(3,923) | (2.2)% | | Other revenue | $8,049 | $8,459 | $(410) | (4.8)% | - The decrease in service revenue was primarily due to lower usage revenue from SMS customers in Southeast Asia[114](index=114&type=chunk) Operating Expense Comparison (in thousands) | Expense Category | Q1 2024 | Q1 2023 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Cost of service revenue | $46,276 | $53,547 | $(7,271) | (13.6)% | | Sales and marketing | $68,505 | $83,527 | $(15,022) | (18.0)% | | General and administrative | $26,226 | $29,219 | $(2,993) | (10.2)% | - The significant decrease in Other (expense) income, net from **$1.1 million income** to **$12.5 million expense** was primarily due to an **$8.5 million increase in interest expense** on the variable-rate term loan, **$3.3 million in foreign exchange losses**, and a **$1.8 million loss on debt extinguishment**[122](index=122&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity position is strong, with $138.2 million in cash and investments, supported by a significant increase in net cash provided by operating activities - As of June 30, 2023, the company held **$138.2 million** in cash, cash equivalents, and investments[125](index=125&type=chunk) Cash Flow from Operations Comparison (in millions) | Period | Net Cash Provided by Operating Activities | | :--- | :--- | | Three months ended June 30, 2023 | $26.5 | | Three months ended June 30, 2022 | $5.8 | - During the quarter, the company made a voluntary repayment of **$25.0 million** on its term loan[133](index=133&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=26&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material changes in its exposures to market risk, including interest rate and foreign currency exchange risks, since the prior fiscal year-end - There have been no material changes in the company's exposures to market risk, including interest rate and foreign currency exchange risks, since March 31, 2023[138](index=138&type=chunk) [Controls and Procedures](index=26&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation by management, the company's disclosure controls and procedures were deemed effective as of June 30, 2023[139](index=139&type=chunk) - No changes occurred in the company's internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[140](index=140&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings and Risk Factors](index=27&type=section&id=Item%201.%20Legal%20Proceedings%20%26%20Item%201A.%20Risk%20Factors) The company refers to Note 5 for legal proceedings and reports no material changes to previously disclosed risk factors - Information regarding legal proceedings is incorporated by reference from Note 5 of the financial statements[143](index=143&type=chunk) - There have been no material changes in the risk factors previously disclosed in the company's Form 10-K for the fiscal year ended March 31, 2023[144](index=144&type=chunk) [Other Information (Items 2-6)](index=27&type=section&id=Other%20Items) This section covers standard disclosures, including no unregistered equity sales, no defaults on senior securities, and no changes in Rule 10b5-1 trading arrangements by directors or officers - The company reported no unregistered sales of equity securities, no defaults upon senior securities, and no applicable mine safety disclosures for the period[145](index=145&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk) - No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement during the reported quarterly period[148](index=148&type=chunk)

[Part I](index=4&type=section&id=Part%20I) [Business](index=5&type=section&id=Item%201.%20Business) 8x8, Inc. provides the XCaaS platform, integrating UCaaS, CCaaS, and CPaaS solutions for over 60,000 global customers - 8x8 is a leading provider of the **XCaaS platform**, integrating UCaaS, CCaaS, and CPaaS solutions on a single global cloud-native communications platform[15](index=15&type=chunk)[16](index=16&type=chunk)[181](index=181&type=chunk) - The company serves over **60,000 customers** and **2.5 million paid business licenses** globally, with no single customer accounting for 10% or more of fiscal 2023 revenue[15](index=15&type=chunk)[31](index=31&type=chunk) - Key solutions like **8x8 Work (UCaaS)**, **8x8 Contact Center (CCaaS)**, and **8x8 CPaaS** are bundled into tiered "X Series" plans[24](index=24&type=chunk)[25](index=25&type=chunk)[27](index=27&type=chunk) - The company faces significant competition from cloud communication providers, internet service vendors, and legacy equipment providers[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk) - As of March 31, 2023, 8x8 had **1,921 full-time employees**, with **65%** located outside the United States[52](index=52&type=chunk) [Risk Factors](index=11&type=section&id=Item%201A.%20Risk%20Factors) The company faces substantial risks including operating losses, intense competition, cybersecurity, debt, and regulatory compliance - The company has a history of losses, with an operating loss of approximately **$66.3 million** in fiscal 2023 and an accumulated deficit of **$792.9 million**[75](index=75&type=chunk) - The business is susceptible to cybersecurity breaches, including a Q2 fiscal 2023 incident where approximately **one terabyte of confidential information** was exfiltrated[127](index=127&type=chunk) - The company has substantial indebtedness, including a **$250.0 million** senior secured term loan and approximately **$265.2 million** in convertible senior notes[146](index=146&type=chunk)[147](index=147&type=chunk)[248](index=248&type=chunk) - International operations, especially in **Romania**, are exposed to risks from the ongoing conflict between Russia and Ukraine[114](index=114&type=chunk)[116](index=116&type=chunk) - The company's ability to use its **$1,199.1 million federal net operating loss** and tax credit carryforwards is subject to limitations due to ownership changes[107](index=107&type=chunk)[427](index=427&type=chunk) [Unresolved Staff Comments](index=28&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - None[162](index=162&type=chunk) [Properties](index=28&type=section&id=Item%202.%20Properties) The company's principal operations are in Campbell, California, with leased offices and data centers globally - The company's main operations are in **Campbell, California**, with significant international leased offices[163](index=163&type=chunk) - 8x8 leases space from third-party data center hosting facilities across the US, South America, Europe, and Asia Pacific[164](index=164&type=chunk) [Legal Proceedings](index=28&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various legal proceedings, with provisions recorded, though outcomes could materially affect financial results - The company is involved in various legal proceedings, with recorded provisions, but ultimate outcomes are uncertain and could materially affect financial results[360](index=360&type=chunk)[361](index=361&type=chunk) [Mine Safety Disclosures](index=28&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[166](index=166&type=chunk) [Part II](index=29&type=section&id=Part%20II) [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=29&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%20and%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on Nasdaq under 'EGHT', has never paid dividends, and repurchased shares in fiscal 2022 - The company's common stock trades under the symbol "**EGHT**" on the Nasdaq Global Select Market[169](index=169&type=chunk) - No cash dividends have ever been paid, and none are planned for the foreseeable future[170](index=170&type=chunk) - In August 2022, the company repurchased **10,695,000 shares** for approximately **$60.0 million** in privately negotiated transactions[176](index=176&type=chunk) - In August 2022, the company issued **1,015,024 shares** of common stock, valued at approximately **$5.1 million**, to settle financial advisory fees[178](index=178&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Fiscal 2023 total revenue grew **16.6%** to **$743.9 million**, driven by the Fuze acquisition and strategic focus on enterprise customers [Results of Operations](index=34&type=section&id=Results%20of%20Operations) Fiscal 2023 total revenue increased **16.6%** to **$743.9 million**, with service revenue up **17.9%**, and operating loss narrowed to **$66.3 million** Fiscal 2023 vs. Fiscal 2022 Revenue | Revenue Type | FY 2023 (in thousands) | FY 2022 (in thousands) | Change (in thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Service Revenue | $710,044 | $602,357 | $107,687 | 17.9% | | Other Revenue | $33,894 | $35,773 | $(1,879) | -5.3% | | **Total Revenue** | **$743,938** | **$638,130** | **$105,808** | **16.6%** | Fiscal 2023 vs. Fiscal 2022 Operating Expenses | Expense Category | FY 2023 (in thousands) | FY 2022 (in thousands) | Change (in thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Cost of Service Revenue | $198,871 | $195,909 | $2,962 | 1.5% | | Research & Development | $146,220 | $112,387 | $33,833 | 30.1% | | Sales & Marketing | $311,883 | $314,223 | $(2,340) | -0.7% | | General & Administrative | $110,652 | $118,103 | $(7,451) | -6.3% | - The increase in service revenue was substantially driven by the **Fuze acquisition**, contributing approximately an **$86.5 million** increase[212](index=212&type=chunk) - Other expense, net decreased by **$17.6 million**, primarily due to an **$18.5 million gain** from debt extinguishment, partially offset by a **$20.7 million increase** in interest expenses[226](index=226&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2023, the company had **$137.6 million** in cash and investments, with net cash from operations at **$48.8 million** Cash and Liquidity | Metric | As of March 31, 2023 (in thousands) | | :--- | :--- | | Cash and cash equivalents | $111,400 | | Short-term investments | $26,228 | | **Total Cash, equivalents, and short-term investments** | **$137,628** | Cash Flow Summary (Fiscal Year 2023 vs 2022) | Cash Flow Activity | FY 2023 (in thousands) | FY 2022 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $48,786 | $34,680 | | Net cash provided by (used in) investing activities | $6,050 | $(159,978) | | Net cash (used in) provided by financing activities | $(37,784) | $105,425 | - In May 2023, the company voluntarily prepaid **$25.0 million** of principal on its senior secured term loan, reducing the outstanding principal to **$225 million**[195](index=195&type=chunk)[436](index=436&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from interest rate and foreign currency fluctuations, with no material impact expected from a 10% adverse change - The company has interest rate risk from its **$250.0 million variable-rate Term Loan** and fixed-rate convertible notes, whose fair value is sensitive to stock price[248](index=248&type=chunk) - Foreign currency risk exists from revenues and expenses in British Pound and Euro, but a hypothetical **10% adverse change** would not result in a material loss[249](index=249&type=chunk)[250](index=250&type=chunk) - The company does not currently use financial instruments for trading, speculative purposes, or to hedge foreign currency exchange risk[247](index=247&type=chunk)[251](index=251&type=chunk) [Financial Statements and Supplementary Data](index=40&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for fiscal 2023, with an unqualified opinion from Moss Adams LLP [Consolidated Balance Sheets](index=43&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2023, total assets were **$841.8 million**, total liabilities **$741.9 million**, and stockholders' equity **$99.9 million** Consolidated Balance Sheet Summary (in thousands) | | March 31, 2023 | March 31, 2022 | | :--- | :--- | :--- | | **Total Assets** | **$841,810** | **$910,268** | | Total Current Assets | $273,124 | $275,622 | | Goodwill | $266,863 | $266,867 | | **Total Liabilities** | **$741,904** | **$727,902** | | Total Current Liabilities | $229,887 | $191,527 | | Convertible senior notes, non-current | $196,821 | $447,452 | | Term loan | $231,993 | $— | | **Total Stockholders' Equity** | **$99,906** | **$182,366** | [Consolidated Statements of Operations](index=45&type=section&id=Consolidated%20Statements%20of%20Operations) For fiscal 2023, total revenue was **$743.9 million**, operating loss narrowed to **$66.3 million**, and net loss improved to **$73.1 million** or **($0.63) per share** Statement of Operations Summary (in thousands, except per share data) | | FY 2023 | FY 2022 | FY 2021 | | :--- | :--- | :--- | :--- | | Total Revenue | $743,938 | $638,130 | $532,344 | | Loss from Operations | $(66,292) | $(154,141) | $(146,149) | | Net Loss | $(73,143) | $(175,383) | $(165,585) | | Net Loss Per Share | $(0.63) | $(1.55) | $(1.57) | - Other expense, net, for fiscal 2023 included a **gain on debt extinguishment of $18.5 million**, significantly reducing the net loss[270](index=270&type=chunk) [Consolidated Statements of Cash Flows](index=48&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For fiscal 2023, net cash from operations was **$48.8 million**, investing activities provided **$6.1 million**, and financing activities used **$37.8 million** Cash Flow Summary (in thousands) | | FY 2023 | FY 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $48,786 | $34,680 | | Net cash provided by (used in) investing activities | $6,050 | $(159,978) | | Net cash (used in) provided by financing activities | $(37,784) | $105,425 | | **Net increase (decrease) in cash** | **$12,015** | **$(20,458)** | [Notes to Consolidated Financial Statements](index=50&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies, the Fuze acquisition, debt instruments including the **$250 million Term Loan**, and the company's **$1.2 billion federal NOLs** - As of March 31, 2023, remaining performance obligations were approximately **$775.0 million**, with **85%** expected to be recognized over 24 months[343](index=343&type=chunk) - In August 2022, the company borrowed **$250.0 million** via a senior secured term loan and issued warrants to purchase **3.1 million shares**[376](index=376&type=chunk)[381](index=381&type=chunk) - The company exchanged **$403.8 million** of its 2024 Notes for cash and **$201.9 million** of new 2028 Convertible Senior Notes, resulting in a **$16.1 million debt extinguishment gain**[385](index=385&type=chunk)[386](index=386&type=chunk) - As of March 31, 2023, the company had federal net operating loss carryforwards of approximately **$1,199.1 million** and maintains a full valuation allowance against U.S. deferred tax assets[422](index=422&type=chunk)[423](index=423&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=73&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[438](index=438&type=chunk) [Controls and Procedures](index=73&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of March 31, 2023 - Management concluded that the company's disclosure controls and procedures were effective as of **March 31, 2023**[440](index=440&type=chunk) - Management's assessment concluded that internal control over financial reporting was effective as of **March 31, 2023**, based on the COSO framework[441](index=441&type=chunk)[442](index=442&type=chunk) - The independent registered public accounting firm, Moss Adams LLP, audited and reported on the effectiveness of internal control over financial reporting[443](index=443&type=chunk) [Other Information](index=73&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[444](index=444&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=73&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - None[445](index=445&type=chunk) [Part III](index=74&type=section&id=Part%20III) [Directors, Executive Officers and Corporate Governance](index=74&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2023 Proxy Statement - Information for this item is incorporated by reference from the forthcoming **2023 Proxy Statement**[449](index=449&type=chunk) [Executive Compensation](index=74&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the 2023 Proxy Statement - Information for this item is incorporated by reference from the forthcoming **2023 Proxy Statement**[451](index=451&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=74&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership and related matters is incorporated by reference from the 2023 Proxy Statement - Information for this item is incorporated by reference from the forthcoming **2023 Proxy Statement**[452](index=452&type=chunk) [Certain Relationships and Related Transactions and Director Independence](index=74&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%20and%20Director%20Independence) Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the 2023 Proxy Statement - Information for this item is incorporated by reference from the forthcoming **2023 Proxy Statement**[453](index=453&type=chunk) [Principal Accountant Fees and Services](index=74&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the 2023 Proxy Statement - Information for this item is incorporated by reference from the forthcoming **2023 Proxy Statement**[454](index=454&type=chunk) [Part IV](index=75&type=section&id=Part%20IV) [Exhibits and Financial Statement Schedules](index=75&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists financial statements, Schedule II - Valuation and Qualifying Accounts, and a comprehensive list of exhibits filed with the 10-K Schedule II: Valuation and Qualifying Accounts (Allowance for Credit Losses) | Fiscal Year Ended | Beginning Balance (in thousands) | Additions Charged to Expenses (in thousands) | Deductions (in thousands) | Ending Balance (in thousands) | | :--- | :--- | :--- | :--- | :--- | | March 31, 2021 | $3,106 | $7,374 | $(2,302) | $8,178 | | March 31, 2022 | $8,178 | $1,997 | $(3,658) | $6,517 | | March 31, 2023 | $6,517 | $3,204 | $(4,942) | $4,779 | [Form 10-K Summary](index=77&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company provides no summary for this item - None[467](index=467&type=chunk)

Financial Highlights - 8x8's total ARR reached $703 million, demonstrating a 2% year-over-year growth[6, 90] - Enterprise ARR accounted for $405 million, reflecting a 3% year-over-year increase[90] - The company's cash and investments amounted to $137.6 million[90] - Non-GAAP operating margin was 13.5% for the quarter ended March 31, 2023[69, 86] - Service revenue for fiscal year 2023 reached $710 million, an 18% year-over-year growth[73] Product and Customer Metrics - 8x8 Voice for MS Teams achieved 60% total ARR[6] - The company has over 2500000 paid business licenses[23, 45] - 8x8 supports full PSTN replacement in 58 countries/territories[6] Debt and Financial Management - The company reduced the principal amount of debt by over 10% since August 2022[107] - 8x8 repurchased an additional $5 million in aggregate principal amount of the 2024 Notes[84] - The company issued approximately $201.9 million aggregate principal amount of 4% convertible senior notes due 2028[154]

Financial Data and Key Metrics Changes - Full year non-GAAP operating profit was $62.3 million, up nearly 500% year-over-year [1][13] - Cash from operations for fiscal 2023 was approximately $49 million, an increase of 41% from fiscal 2022 [2][14] - Total revenue for Q4 was $184.5 million, with service revenue at $176.6 million, both increasing 2% year-over-year [46] Business Line Data and Key Metrics Changes - Service revenue growth was 2% in Q4, with enterprise and XCaaS ARR both up year-over-year, XCaaS increasing in the mid-teens percentage [42] - Fuze accounted for $26.7 million of service revenue in Q4, with its performance exceeding initial expectations [48] - Remaining performance obligation (RPO) was approximately $775 million, up from $750 million in Q3 [50] Market Data and Key Metrics Changes - The CPaaS business saw a year-over-year decline but modestly increased sequentially from Q3 [46] - Customer retention rates were the highest in four years, reflecting strong performance across the customer base [50] Company Strategy and Development Direction - The company is committed to building a sustainable and profitable growth business, with a focus on product innovation and channel go-to-market model [6] - Plans to invest over $100 million annually in R&D for future development, targeting innovations in AI and customer experience [10][43] - The strategy includes leveraging partnerships and focusing on high-quality pipeline opportunities [106][124] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in repaying remaining convertible notes and generating positive cash flow [4][15] - The company anticipates solid profitability to continue throughout fiscal 2024, with gross margin expected to remain consistent [8][62] - Management acknowledged economic headwinds but noted high retention rates and strong collections as positive indicators [68][74] Other Important Information - The company achieved a non-GAAP operating margin of 13.5% in Q4, exceeding the 10% guidance [56] - Total cash, cash equivalents, and restricted cash ended Q4 at approximately $139 million, despite higher cash interest expenses [3] Q&A Session Summary Question: What levels of churn are being seen and how much is attributable to macro factors? - Management noted high retention rates and expects enterprise growth to continue, with new products anticipated to drive revenue acceleration in the back half of the year [85][86] Question: Can you provide insight into customer renewals and any changes due to macro conditions? - Retention rates were at record highs, with no significant changes in renewals attributed to macro conditions [92][93] Question: What initiatives are being taken for sustainable margin expansion? - Continuous improvements in automation and efficiency in sales and marketing are being implemented to maintain or increase operating margins [78] Question: How is the pipeline looking and are there any changes? - Pipeline numbers are positive, suggesting potential revenue reacceleration, although timing remains a factor [105] Question: What is the strategy regarding internal versus external R&D? - The company plans to focus on internal development for core competencies while partnering with specialists for other areas [126][128]

[Forward-Looking Statements and Risk Factors](index=3&type=section&id=Forward-Looking%20Statements%20and%20Risk%20Factors) This section outlines forward-looking statements and various risk factors that could impact the company's actual results [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section identifies forward-looking statements, cautioning that actual results may differ materially due to various factors - Forward-looking statements are identified by words such as 'may,' 'will,' 'should,' 'estimates,' 'predicts,' 'potential,' 'continue,' 'strategy,' 'believes,' 'anticipates,' 'plans,' 'expects,' 'intends,' and similar expressions[8](index=8&type=chunk) - Examples of forward-looking statements include those regarding industry trends, customer numbers, service revenue, cost of service revenue, R&D expenses, gross profit margin, debt and interest expense, hiring, sales and marketing expenses, G&A expenses, impact of COVID-19, and foreign currency/interest rate fluctuations[8](index=8&type=chunk) [Risk Factors](index=3&type=section&id=Risk%20Factors) The company highlights various factors that could cause actual results to differ from projections, including economic downturns, debt, and cybersecurity risks - Key risk factors include economic downturns (including COVID-19 impact), inflationary pressures, supply chain disruptions, increased interest expense from new debt, customer cancellations and churn, and geopolitical volatility (e.g., Russia's invasion of Ukraine)[9](index=9&type=chunk) - Other significant risks involve customer acceptance of new services, competitive market pressures, service quality and reliability, ability to scale, customer acquisition costs, reliance on channel partners, and the timing/extent of operating result improvements from increased spending[9](index=9&type=chunk) - Operational and compliance risks include reliance on third-party infrastructure, physical infrastructure failure, software defects, cybersecurity breaches, compatibility with third-party applications, and global regulatory/privacy compliance[9](index=9&type=chunk) [PART I. Financial Information](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the company's unaudited condensed consolidated financial statements and management's discussion [Item 1. Financial Statements (unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(unaudited):) This section presents the unaudited condensed consolidated financial statements, including balance sheets, operations, and cash flows, with detailed notes [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows decreased total assets and equity, and increased liabilities, due to a new term loan and convertible senior notes changes Condensed Consolidated Balance Sheets | Metric | December 31, 2022 (in thousands) | March 31, 2022 (in thousands) | | :--------------------------------- | :------------------------------- | :------------------------------ | | Cash and cash equivalents | $92,960 | $91,205 | | Total current assets | $254,577 | $275,622 | | Total assets | $836,107 | $910,268 | | Total current liabilities | $164,769 | $191,527 | | Convertible senior notes | $264,443 | $447,452 | | Term loan | $231,202 | — | | Total liabilities | $746,080 | $727,902 | | Total stockholders' equity | $90,027 | $182,366 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The statements of operations show increased total revenue for both periods, with a reduced net loss Condensed Consolidated Statements of Operations | Metric (in thousands, except per share) | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | Nine Months Ended Dec 31, 2022 | Nine Months Ended Dec 31, 2021 | | :-------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Total revenue | $184,400 | $156,874 | $559,409 | $456,758 | | Loss from operations | $(18,081) | $(37,618) | $(69,825) | $(113,602) | | Net loss | $(26,030) | $(43,571) | $(63,712) | $(129,801) | | Net loss per share (Basic and diluted) | $(0.23) | $(0.38) | $(0.55) | $(1.16) | [Condensed Consolidated Statements of Comprehensive Loss](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) The comprehensive loss statements indicate a net loss for both periods, with foreign currency translation adjustments impacting comprehensive income Condensed Consolidated Statements of Comprehensive Loss | Metric (in thousands) | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | Nine Months Ended Dec 31, 2022 | Nine Months Ended Dec 31, 2021 | | :-------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net loss | $(26,030) | $(43,571) | $(63,712) | $(129,801) | | Foreign currency translation adjustment | $10,244 | $895 | $(6,688) | $(971) | | Comprehensive loss | $(15,817) | $(42,739) | $(70,530) | $(130,883) | [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity decreased from **$182,366 thousand** to **$90,027 thousand**, primarily due to ASU 2020-06 adoption, share repurchases, and net losses Condensed Consolidated Statements of Stockholders' Equity | Metric (in thousands) | March 31, 2022 | December 31, 2022 | | :------------------------------------ | :------------- | :---------------- | | Total Stockholders' Equity (Balance) | $182,366 | $90,027 | | Adjustment related to adoption of ASU 2020-06 | $(46,160) | — | | Stock-based compensation expense | — | $77,804 | | Shares repurchase | — | $(60,214) | | Net loss | — | $(63,712) | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities increased, investing activities provided cash, and financing activities used cash due to debt refinancing and share repurchases Cash Flow Summary (Nine Months Ended December 31, in thousands) | Cash Flow Activity | 2022 | 2021 | | :-------------------------------- | :---------- | :---------- | | Net cash provided by operating activities | $35,164 | $18,154 | | Net cash provided by (used in) investing activities | $433 | $(30,122) | | Net cash used in financing activities | $(36,275) | $99,959 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $(6,425) | $87,821 | | Cash, cash equivalents and restricted cash, end of year | $94,289 | $208,993 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes detail the company's business, accounting policies, revenue, fair value, asset changes, lease obligations, and debt and equity activities [1. The Company and Significant Accounting Policies](index=12&type=section&id=1.%20THE%20COMPANY%20AND%20SIGNIFICANT%20ACCOUNTING%20POLICIES) 8x8, Inc. is a leading SaaS provider of cloud communication solutions, adopting ASU 2020-06 on April 1, 2022, impacting its financial statements - 8x8, Inc. is a leading Software-as-a-Service (SaaS) provider of contact center, voice, video, chat, and enterprise-class API solutions powered by one global cloud communications platform[32](index=32&type=chunk) - Effective April 1, 2022, the Company adopted ASU 2020-06 using a modified retrospective approach, resulting in a decrease to accumulated deficit of **$46.7 million**, a decrease to additional paid-in capital of **$92.8 million**, and an increase to convertible senior notes, net of **$46.2 million**[39](index=39&type=chunk) [2. Revenue Recognition](index=13&type=section&id=2.%20REVENUE%20RECOGNITION) The company disaggregates revenue by region, reporting **$750.0 million** in remaining performance obligations, with increased deferred sales commission amortization - Contract revenue from remaining performance obligations not yet recognized was approximately **$750.0 million** as of December 31, 2022. The company expects to recognize approximately **80%** of this over the next **36 months**[45](index=45&type=chunk) Amortization of deferred sales commission costs (in thousands) | Metric (in thousands) | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | Nine Months Ended Dec 31, 2022 | Nine Months Ended Dec 31, 2021 | | :-------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Amortization of deferred sales commission costs | $9,700 | $8,700 | $28,500 | $25,600 | [3. Fair Value Measurements](index=14&type=section&id=3.%20FAIR%20VALUE%20MEASUREMENTS) The company's cash, cash equivalents, and investments totaled **$131,734 thousand**, with fair values disclosed for debt and warrants Asset Category (in thousands) | Asset Category (in thousands) | December 31, 2022 Fair Value | March 31, 2022 Fair Value | | :---------------------------- | :--------------------------- | :-------------------------- | | Cash and Cash Equivalents | $92,960 | $91,205 | | Restricted Cash | $1,329 | $9,509 | | Short-Term Investments | $37,445 | $44,845 | | Long-Term Investments | — | $2,671 | | Total Assets | $131,734 | $148,230 | - As of December 31, 2022, the estimated fair value of the Company's 2024 Notes was **$61.3 million**, 2028 Notes was **$181.2 million**, and Term Loan was **$224.3 million**[53](index=53&type=chunk) Warrants Fair Value and Valuation Inputs (as of December 31, 2022) | Metric | Value | | :-------------- | :-------- | | Fair Value | $5,393 | | Stock volatility | **60.5 %** | | Risk-free rate | **4.0 %** | | Expected term | **4.6 years** | [4. Property and Equipment, Net](index=15&type=section&id=4.%20PROPERTY%20AND%20EQUIPMENT,%20NET) During the three and nine months ended December 31, 2022, the company wrote off **$3.7 million** in net book value of certain internally developed software - During the three and nine months ended December 31, 2022, the Company wrote off certain internally developed software with a net book value of **$3.7 million**[54](index=54&type=chunk) [5. Intangible Assets and Goodwill](index=15&type=section&id=5.%20INTANGIBLE%20ASSETS%20AND%20GOODWILL) The net carrying amount of acquired identifiable intangible assets decreased to **$112,236 thousand**, with goodwill adjusted for the Fuze acquisition and foreign currency translation Acquired Identifiable Intangible Assets (in thousands) | Asset Category | December 31, 2022 Net Carrying Amount | March 31, 2022 Net Carrying Amount | | :---------------------- | :------------------------------------ | :--------------------------------- | | Technology | $20,218 | $26,875 | | Customer relationships | $91,993 | $100,938 | | Trade names and domains | $25 | $400 | | Total | $112,236 | $128,213 | Estimated Annual Amortization of Intangible Assets (in thousands) | Year | Amount | | :-------- | :------- | | 2023 | $5,124 | | 2024 | $20,395 | | 2025 | $19,095 | | 2026 | $13,895 | | 2027 | $11,757 | | Thereafter | $41,970 | | Total | $112,236 | Changes in Goodwill Carrying Amounts (in thousands) | Metric | Amount | | :-------------------------- | :------- | | Balance at March 31, 2022 | $266,867 | | Adjustments (Fuze acquisition) | $(754) | | Foreign currency translation | $(535) | | Balance at December 31, 2022 | $265,578 | [6. Leases](index=16&type=section&id=6.%20LEASES) Operating lease right-of-use assets and liabilities decreased, and operating lease expense also decreased for both periods Operating Lease Balance Sheet Information (in thousands) | Metric | December 31, 2022 | March 31, 2022 | | :---------------------------- | :---------------- | :------------- | | Operating lease, right-of-use assets | $55,269 | $63,415 | | Operating lease liabilities, current | $12,537 | $15,485 | | Operating lease liabilities, non-current | $68,358 | $74,518 | | Total operating lease liabilities | $80,895 | $90,003 | Operating Lease Expense (in thousands) | Metric | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | Nine Months Ended Dec 31, 2022 | Nine Months Ended Dec 31, 2021 | | :-------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Operating lease expense | $2,742 | $3,367 | $8,667 | $10,162 | [7. Commitments and Contingencies](index=17&type=section&id=7.%20COMMITMENTS%20AND%20CONTINGENCIES) The company has various commitments, faces legal proceedings, and has accrued **$16.2 million** for contingent indirect tax liabilities - A wage and hour class action lawsuit (Rivas v. 8x8, Inc.) was preliminarily settled in September 2021, with final court approval granted on November 4, 2022. The company deposited settlement amounts with the administrator on January 17, 2023[65](index=65&type=chunk)[66](index=66&type=chunk) - As of December 31, 2022, the Company had accrued contingent indirect tax liabilities of **$16.2 million**, a slight decrease from **$16.7 million** at March 31, 2022[67](index=67&type=chunk) [8. Convertible Senior Notes, Term Loan and Capped Calls](index=18&type=section&id=8.%20CONVERTIBLE%20SENIOR%20NOTES,%20TERM%20LOAN%20AND%20CAPPED%20CALLS) The company refinanced **$403.8 million** of 2024 Notes with 2028 Notes and cash, funded by a new **$250.0 million** term loan, resulting in a **$16.1 million** debt extinguishment gain - On August 10, 2022, the Company borrowed **$250.0 million** in a senior secured term loan facility (Term Loan) due August 3, 2027, bearing interest at Term SOFR plus **6.50%**[79](index=79&type=chunk) - The company issued detachable warrants to affiliates of Francisco Partners to purchase **3.1 million shares** of common stock with a **five-year** term and an exercise price of **$7.15** per share, classified as liabilities at fair value[85](index=85&type=chunk) - On August 11, 2022, the Company issued **$201.9 million** aggregate principal amount of **4.00%** convertible senior notes due 2028 (2028 Notes) as part of an exchange transaction[87](index=87&type=chunk)[91](index=91&type=chunk) - The Exchange Transaction involved refinancing approximately **$403.8 million** of 2024 Notes for **$201.9 million** in 2028 Notes plus **$181.8 million** in cash, resulting in a **$16.1 million** gain on debt extinguishment[88](index=88&type=chunk)[89](index=89&type=chunk) - The company repurchased an additional **$27.8 million** in aggregate principal amount of 2024 Notes in Q2 and Q3 FY23, bringing the outstanding 2024 Notes to approximately **$68.3 million** as of December 31, 2022[99](index=99&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk) [9. Stock-Based Compensation and Stockholders' Equity](index=22&type=section&id=9.%20STOCK-BASED%20COMPENSATION%20AND%20STOCKHOLDERS'%20EQUITY) The company approved a new 2022 Equity Incentive Plan, reserving **8.0 million shares**, reported decreased stock-based compensation, and repurchased **10.7 million shares** for **$60 million** - The 2022 Equity Incentive Plan was approved, reserving **8.0 million shares** for issuance, with **6.7 million shares** remaining available for future grants as of December 31, 2022[106](index=106&type=chunk) Stock-Based Compensation Expense (in thousands) | Metric (in thousands) | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | Nine Months Ended Dec 31, 2022 | Nine Months Ended Dec 31, 2021 | | :-------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Total | $21,081 | $33,737 | $73,516 | $106,159 | - As of December 31, 2022, there was **$93.4 million** of total unrecognized compensation cost related to RSUs and **$10.6 million** related to PSUs[114](index=114&type=chunk)[116](index=116&type=chunk) - In August 2022, the Company repurchased **10,695,000 shares** of its common stock for approximately **$60 million** in privately negotiated transactions[119](index=119&type=chunk) [10. Income Taxes](index=25&type=section&id=10.%20INCOME%20TAXES) The company's effective tax rate was negative for both periods, primarily due to a full valuation allowance against deferred tax assets and foreign tax liabilities Effective Tax Rate | Period | Effective Tax Rate | | :---------------------------- | :----------------- | | Three Months Ended Dec 31, 2022 | **(0.1)%** | | Three Months Ended Dec 31, 2021 | **(0.2)%** | | Nine Months Ended Dec 31, 2022 | **(1.7)%** | | Nine Months Ended Dec 31, 2021 | **(0.4)%** | [11. Net Loss Per Share](index=25&type=section&id=11.%20NET%20LOSS%20PER%20SHARE) The basic and diluted net loss per share improved to **$(0.23)** for three months and **$(0.55)** for nine months, compared to prior year Net Loss Per Share (Basic and Diluted) | Metric (in thousands, except per share) | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | Nine Months Ended Dec 31, 2022 | Nine Months Ended Dec 31, 2021 | | :-------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net loss per share - basic and diluted | $(0.23) | $(0.38) | $(0.55) | $(1.16) | [12. Geographical Information](index=26&type=section&id=12.%20GEOGRAPHICAL%20INFORMATION) Total revenue increased for both periods, with significant US growth, while property and equipment, net, decreased in both regions Geographical Revenue (in thousands) | Region | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | Nine Months Ended Dec 31, 2022 | Nine Months Ended Dec 31, 2021 | | :------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | United States | $133,891 | $106,849 | $406,543 | $315,114 | | International | $50,509 | $50,025 | $152,866 | $141,644 | | Total revenue | $184,400 | $156,874 | $559,409 | $456,758 | Property and Equipment, Net by Region (in thousands) | Region | December 31, 2022 | March 31, 2022 | | :------------ | :---------------- | :------------- | | United States | $56,998 | $73,967 | | International | $3,917 | $5,049 | | Total | $60,915 | $79,016 | [13. Acquisitions](index=26&type=section&id=13.%20ACQUISITIONS) On January 18, 2022, the company acquired Fuze, Inc. for **$213.8 million** in cash and stock, integrating its operations and revenue into the consolidated financial statements - On January 18, 2022, the Company acquired **100%** of Fuze, Inc. for a total consideration of **$213.8 million**, consisting of **$132.9 million** in cash and **$80.9 million** in common stock[124](index=124&type=chunk) - The results of Fuze, Inc.'s operations, including revenue, have been included in the Company's consolidated financial statements for the three and nine months ended December 31, 2022[124](index=124&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on financial performance, strategic initiatives, and operational results, highlighting revenue growth, profitability, and liquidity [OVERVIEW](index=26&type=section&id=OVERVIEW) 8x8 is a leading SaaS provider of cloud communication solutions, focusing on mid-market and enterprise customers with its integrated XCaaS platform - 8x8 is a leading SaaS provider of voice, video, contact center, and communication APIs powered by a global cloud communications platform[126](index=126&type=chunk) - The company has increased its focus on mid-market and enterprise customer sectors, with its flagship 8x8 XCaaS platform offering unified UCaaS and CCaaS solutions[127](index=127&type=chunk)[129](index=129&type=chunk) [SUMMARY AND OUTLOOK](index=28&type=section&id=SUMMARY%20AND%20OUTLOOK) Total revenue grew **18%** for Q3 FY23 and **22%** for nine months, boosted by Fuze, with a focus on increasing profitability, cash flow, and enterprise ARR through R&D and workforce reductions Total Revenue Growth (YoY) | Period | Total Revenue Growth | Total Revenue Growth (Excluding Fuze) | | :------------------------------------ | :------------------- | :------------------------------------ | | Three Months Ended December 31, 2022 | **18%** | **1%** | | Nine Months Ended December 31, 2022 | **22%** | **4%** | - Annualized Recurring Subscriptions and Usage Revenue (ARR) from mid-market and enterprise customers increased **30%** year-over-year, representing **76%** of total ARR[136](index=136&type=chunk) - The company conducted two workforce reductions in October 2022 and January 2023, involving approximately **300 employees**, primarily in sales, marketing, and G&A, to improve operational efficiency and align resources[140](index=140&type=chunk) - Approximately **two-thirds** of R&D investment is focused on extending contact center capabilities of the XCaaS platform, with plans to reduce unit costs and improve gross profit margin[139](index=139&type=chunk) [IMPACT OF COVID-19](index=28&type=section&id=IMPACT%20OF%20COVID-19) The long-term impact of the COVID-19 pandemic on the company's business and financial results remains uncertain, with a significant portion of the workforce still remote - The full extent of the long-term impact of the COVID-19 pandemic on the business, operations, and financial results is uncertain and depends on evolving factors[141](index=141&type=chunk) - The company's workforce continues to spend significant time working from home, even as travel for employees begins to return to pre-COVID-19 levels[141](index=141&type=chunk) [KEY BUSINESS METRICS](index=29&type=section&id=KEY%20BUSINESS%20METRICS) Management uses Annualized Recurring Subscriptions and Usage Revenue (ARR) as a key business metric to evaluate operations and drive financial performance - Annualized Recurring Subscriptions and Usage Revenue (ARR) is defined as 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**[144](index=144&type=chunk) [COMPONENTS OF RESULTS OF OPERATIONS](index=29&type=section&id=COMPONENTS%20OF%20RESULTS%20OF%20OPERATIONS) This section outlines the primary components of the company's revenue and various operating expenses, including cost of service, R&D, sales and marketing, and G&A - Service revenue consists of communication services subscriptions, platform usage revenue, and related fees from UCaaS, CCaaS, and CPaaS offerings[145](index=145&type=chunk) - Other revenue is generated from professional services (deployment support) and sales/rentals of IP telephones and other hardware equipment[146](index=146&type=chunk) - Operating expenses include Cost of service revenue (network operations, technology licenses, amortization), Cost of other revenue (hardware, professional services personnel), Research and development (personnel, software, equipment), Sales and marketing (personnel, commissions, advertising), and General and administrative (personnel, professional fees, corporate costs)[147](index=147&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk)[151](index=151&type=chunk) [RESULTS OF OPERATIONS](index=30&type=section&id=RESULTS%20OF%20OPERATIONS) The company's results show increased total revenue, driven by the Fuze acquisition, and a reduction in operating loss, with cost of service revenue decreasing as a percentage [Revenue](index=30&type=section&id=Revenue) Service revenue increased significantly for both periods, largely due to the Fuze acquisition and expanded customer deployments Service Revenue (in thousands) | Period | 2022 | 2021 | Change | % Change | | :---------------------------- | :---------- | :---------- | :---------- | :------- | | Three Months Ended December 31 | $175,765 | $149,396 | $26,369 | **17.7 %** | | Nine Months Ended December 31 | $533,482 | $429,568 | $103,914 | **24.2 %** | - Nearly all service revenue growth for the three months ended December 31, 2022, was attributable to the acquisition of Fuze, Inc., which contributed approximately **$26.5 million** and **$83.7 million** in service revenue for the three and nine months, respectively[156](index=156&type=chunk) Other Revenue (in thousands) | Period | 2022 | 2021 | Change | % Change | | :---------------------------- | :-------- | :-------- | :-------- | :------- | | Three Months Ended December 31 | $8,635 | $7,478 | $1,157 | **15.5 %** | | Nine Months Ended December 31 | $25,927 | $27,190 | $(1,263) | **(4.6)%** | [Cost of Revenue](index=31&type=section&id=Cost%20of%20Revenue) Cost of service revenue decreased in dollars and as a percentage for three months, and increased in dollars but decreased as a percentage for nine months, while cost of other revenue decreased for both periods Cost of Service Revenue (in thousands) | Period | 2022 | 2021 | Change | % Change | | :---------------------------- | :---------- | :---------- | :---------- | :------- | | Three Months Ended December 31 | $47,335 | $48,763 | $(1,428) | **(2.9)%** | | Percentage of service revenue | **26.9 %** | **32.6 %** | | | | Nine Months Ended December 31 | $151,920 | $141,971 | $9,949 | **7.0 %** | | Percentage of service revenue | **28.5 %** | **33.0 %** | | | Cost of Other Revenue (in thousands) | Period | 2022 | 2021 | Change | % Change | | :---------------------------- | :-------- | :-------- | :-------- | :------- | | Three Months Ended December 31 | $10,176 | $11,071 | $(895) | **(8.1)%** | | Percentage of other revenue | **117.8 %** | **148.0 %** | | | | Nine Months Ended December 31 | $34,302 | $37,086 | $(2,784) | **(7.5)%** | | Percentage of other revenue | **132.3 %** | **136.4 %** | | | [Operating Expenses](index=31&type=section&id=Operating%20Expenses) Research and development expenses increased significantly due to the Fuze acquisition. Sales and marketing expenses increased in dollars but decreased as a percentage, while G&A expenses saw mixed changes Research and Development Expenses (in thousands) | Period | 2022 | 2021 | Change | % Change | | :---------------------------- | :---------- | :---------- | :---------- | :------- | | Three Months Ended December 31 | $38,791 | $27,911 | $10,880 | **39.0 %** | | Percentage of total revenue | **21.0 %** | **17.8 %** | | | | Nine Months Ended December 31 | $109,765 | $81,801 | $27,964 | **34.2 %** | | Percentage of total revenue | **19.6 %** | **17.9 %** | | | Sales and Marketing Expenses (in thousands) | Period | 2022 | 2021 | Change | % Change | | :---------------------------- | :---------- | :---------- | :---------- | :------- | | Three Months Ended December 31 | $79,021 | $76,797 | $2,224 | **2.9 %** | | Percentage of total revenue | **42.9 %** | **49.0 %** | | | | Nine Months Ended December 31 | $243,035 | $229,438 | $13,597 | **5.9 %** | | Percentage of total revenue | **43.4 %** | **50.2 %** | | | General and Administrative Expenses (in thousands) | Period | 2022 | 2021 | Change | % Change | | :---------------------------- | :---------- | :---------- | :---------- | :------- | | Three Months Ended December 31 | $27,158 | $29,950 | $(2,792) | **(9.3)%** | | Percentage of total revenue | **14.7 %** | **19.1 %** | | | | Nine Months Ended December 31 | $90,212 | $80,064 | $10,148 | **12.7 %** | | Percentage of total revenue | **16.1 %** | **17.5 %** | | | [Other income (expense), net](index=33&type=section&id=Other%20income%20(expense),%20net) Other income (expense), net, shifted from a net expense to a net income for the nine months, primarily driven by a significant gain from debt extinguishment, foreign exchange, and asset sales Other Income (Expense), Net (in thousands) | Period | 2022 | 2021 | Change | % Change | | :---------------------------- | :-------- | :---------- | :---------- | :------- | | Three Months Ended December 31 | $(7,912) | $(5,866) | $(2,046) | **34.9 %** | | Nine Months Ended December 31 | $7,154 | $(15,623) | $22,777 | **(145.8)%** | - The nine-month increase was primarily due to an **$18.2 million** gain from debt extinguishment, **$2.4 million** gain from foreign exchange transactions, **$1.8 million** gain from sale of intangibles, and **$0.5 million** gain on remeasurement of warrants[177](index=177&type=chunk) [Provision for income taxes](index=33&type=section&id=Provision%20for%20income%20taxes) The provision for income taxes remained relatively low and stable for both periods, with no material changes anticipated for the remainder of fiscal 2023 Provision for Income Taxes (in thousands) | Period | 2022 | 2021 | Change | % Change | | :---------------------------- | :------ | :------ | :------ | :------- | | Three Months Ended December 31 | $37 | $87 | $(50) | **(57.5)%** | | Nine Months Ended December 31 | $1,041 | $576 | $465 | **80.7 %** | [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) As of December 31, 2022, the company had **$131.7 million** in cash and investments. Operating cash flow increased, while financing activities used cash due to debt refinancing and share repurchases - As of December 31, 2022, the Company had **$131.7 million** of cash, cash equivalents, and investments[179](index=179&type=chunk) Cash Flow Summary (Nine Months Ended December 31, in thousands) | Cash Flow Activity | 2022 | 2021 | | :-------------------------------- | :---------- | :---------- | | Net cash provided by operating activities | $35,164 | $18,154 | | Net cash provided by (used in) investing activities | $433 | $(30,122) | | Net cash used in financing activities | $(36,275) | $99,959 | [Critical Accounting Policies and Estimates](index=34&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) The company's financial statements rely on management's estimates and judgments, with no significant changes to critical accounting policies other than the adoption of ASU 2020-06 - No significant changes occurred during the three months ended December 31, 2022, to the company's critical accounting policies and estimates previously disclosed in the Form 10-K, other than the adoption of ASU 2020-06[186](index=186&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the company's exposure to market risks, specifically interest rate fluctuation risk on its cash, investments, and debt, and foreign currency exchange risk [Interest Rate Fluctuation Risk](index=34&type=section&id=Interest%20Rate%20Fluctuation%20Risk) The company is exposed to interest rate risk through its **$131.7 million** in cash, cash equivalents, and investments, as well as its outstanding convertible senior notes (**$68.3 million** 2024 Notes, **$201.9 million** 2028 Notes) and a **$250.0 million** term loan - As of December 31, 2022, the company had **$131.7 million** in cash, cash equivalents, and investments, primarily in money market funds, U.S. treasury, commercial paper, and corporate bonds[187](index=187&type=chunk) - The company had **$68.3 million** of 2024 convertible senior notes, **$201.9 million** of 2028 convertible senior notes, and a **$250.0 million** senior secured term loan facility outstanding as of December 31, 2022[188](index=188&type=chunk) [Foreign Currency Exchange Risk](index=35&type=section&id=Foreign%20Currency%20Exchange%20Risk) The company faces foreign currency exchange risk from international operations, primarily invoicing and paying expenses in British pounds and Euros, with immaterial historical impacts - The company operates in international markets, invoicing customers and paying expenses primarily in British pounds and Euros, leading to foreign currency exchange rate risk[189](index=189&type=chunk) - Historically, the impacts of foreign currency fluctuations on revenue and expenses have substantially offset one another, resulting in immaterial effects on operating and net income[189](index=189&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective, excluding Fuze, Inc., with no material changes in internal control, acknowledging inherent limitations [Evaluation of Disclosure Controls and Procedures](index=35&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level, excluding the newly acquired Fuze, Inc - Management concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2022[192](index=192&type=chunk) - The evaluation excluded an assessment of disclosure controls and internal control over financial reporting related to Fuze, Inc., which was acquired on January 18, 2022[192](index=192&type=chunk) [Changes in Internal Control Over Financial Reporting](index=35&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) There were no material changes in the company's internal control over financial reporting during the three months ended December 31, 2022 - During the three months ended December 31, 2022, there was no change in internal control over financial reporting that materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting[193](index=193&type=chunk) [Limitations on the Effectiveness of Controls](index=35&type=section&id=Limitations%20on%20the%20Effectiveness%20of%20Controls) Management acknowledges that no control system can prevent all errors and fraud, providing only reasonable, not absolute, assurance due to inherent limitations - Management does not expect that disclosure controls or internal control over financial reporting will prevent all errors and all fraud, as a control system can provide only reasonable, not absolute, assurance[194](index=194&type=chunk) [PART II. Other Information](index=35&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part provides additional information not covered in the financial statements, including legal proceedings, risk factors, and exhibits [Item 1. Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) This section incorporates by reference information regarding legal proceedings from Note 7, Commitments and Contingencies - Information regarding legal proceedings is incorporated by reference from Note 7, Commitments and Contingencies, in the Notes to Unaudited Condensed Consolidated Financial Statements[195](index=195&type=chunk) [Item 1A. Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) This section highlights the significant risk of cyber intrusions and breaches, noting a recent incident where an unauthorized third party accessed **one terabyte** of confidential information - Cyber intrusions, breaches of networks or systems, and other malicious acts could adversely impact the business, including misappropriating proprietary information or causing service interruptions[197](index=197&type=chunk) - During the second quarter of fiscal 2023, malware was detected on the network, leading to an intrusion. In December 2022 (Q3 FY23), it was learned that the unauthorized third party possessed approximately **one terabyte** of confidential information from back-office servers[198](index=198&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds for the period - There were no unregistered sales of equity securities or use of proceeds to report[201](index=201&type=chunk) [Item 3. Defaults Upon Senior Securities](index=36&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities for the period - There were no defaults upon senior securities[202](index=202&type=chunk) [Item 4. Mine Safety Disclosures](index=36&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Mine Safety Disclosures are not applicable to the registrant[202](index=202&type=chunk) [Item 5. Other Information](index=36&type=section&id=Item%205.%20Other%20Information) The company reported no other information for the period - There is no other information to report[203](index=203&type=chunk) [Item 6. Exhibits](index=37&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Quarterly Report on Form 10-Q, including organizational documents, promotion letters, and certifications - Exhibits include the Certificate of Amendment to the Restated Certificate of Incorporation, Amended and Restated By-Laws, promotion letters for Samuel Wilson and Kevin Kraus, and a separation agreement for David Sipes[206](index=206&type=chunk) - Certifications from the Interim Chief Executive Officer and Interim Chief Financial Officer pursuant to Rule 13a-14 and 18 U.S.C. 1350 are included[206](index=206&type=chunk) - The report also includes financial statements formatted in Inline XBRL, with detailed tags[206](index=206&type=chunk) [Signature](index=39&type=section&id=Signature) The Quarterly Report on Form 10-Q was signed by Suzy Seandel, Principal Accounting Officer and Duly Authorized Officer, on February 6, 2023 - The Quarterly Report on Form 10-Q was signed by Suzy Seandel, Principal Accounting Officer and Duly Authorized Officer, on February 6, 2023[209](index=209&type=chunk)[211](index=211&type=chunk)

8x8, Inc. (NASDAQ:EGHT) Q3 2023 Results Conference Call February 1, 2023 4:30 PM ET Company Participants Kate Patterson - VP of IR Samuel Wilson - Interim CEO Kevin Kraus - Interim CFO Conference Call Participants Matt VanVliet - BTIG Meta Marshall - Morgan Stanley Siti Panigrahi - Mizuho Catharine Trebnick - Roth Capital Partners George Sutton - Craig-Hallum Will Power - Baird Peter Levine - Evercore ISI Ryan Koontz - Needham Ryan MacWilliams - Barclays Austin Williams - Wells Fargo Michael Funk - Bank of ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) The company reported increased revenue and reduced net losses for the quarter, with positive operating cash flow for the six months [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2022 | Mar 31, 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $100,512 | $91,205 | | Total current assets | $263,666 | $275,622 | | Goodwill | $262,393 | $266,867 | | Total assets | $855,941 | $910,268 | | **Liabilities & Equity** | | | | Total current liabilities | $168,985 | $191,527 | | Convertible senior notes | $286,682 | $447,452 | | Term loan | $230,049 | $0 | | Total liabilities | $771,159 | $727,902 | | Total stockholders' equity | $84,782 | $182,366 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2022 | Q2 2021 | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | $187,389 | $151,557 | +23.6% | | Loss from Operations | $(24,990) | $(37,157) | +32.8% | | Net Loss | $(11,639) | $(42,324) | +72.5% | | Net Loss Per Share | $(0.10) | $(0.38) | +73.7% | Six Months Ended Statement of Operations Summary (in thousands, except per share data) | Metric | Six Months 2022 | Six Months 2021 | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | $375,009 | $299,884 | +25.1% | | Loss from Operations | $(51,744) | $(75,984) | +31.9% | | Net Loss | $(37,682) | $(86,230) | +56.3% | | Net Loss Per Share | $(0.32) | $(0.78) | +59.0% | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary for Six Months Ended Sep 30 (in thousands) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $19,682 | $9,131 | | Net cash provided by (used in) investing activities | $9,845 | $(28,754) | | Net cash (used in) provided by financing activities | $(16,193) | $10,192 | | **Net increase (decrease) in cash** | **$1,127** | **$(9,542)** | - Key financing activities for the six months ended Sep 30, 2022, included receiving **$232.9 million** in net proceeds from a new term loan, which was used for a **$190.6 million** repayment and exchange of convertible senior notes and a **$60.2 million** repurchase of common stock[22](index=22&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) - As of September 30, 2022, the company had approximately **$715.0 million** in remaining performance obligations, with about **80%** expected to be recognized as revenue over the next 36 months[37](index=37&type=chunk) - In August 2022, the company borrowed **$250.0 million** via a senior secured term loan facility, issued **$201.9 million** in new 4.00% convertible senior notes due 2028, and exchanged/repurchased a significant portion of its 0.50% convertible senior notes due 2024. This resulted in a debt extinguishment gain of **$16.1 million**[68](index=68&type=chunk)[77](index=77&type=chunk)[79](index=79&type=chunk) - In August 2022, the company repurchased **10,695,000 shares** of its common stock for approximately **$60 million** in privately negotiated transactions[112](index=112&type=chunk) - The acquisition of Fuze, Inc. on January 18, 2022, contributed to the company's financial results for the three and six months ended September 30, 2022[118](index=118&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a 24% revenue increase driven by acquisition, strategic focus on enterprise customers, and capital structure changes [Summary and Outlook](index=29&type=section&id=Summary%20and%20Outlook) Q2 FY2023 Revenue Growth | Metric | Amount | YoY Growth | | :--- | :--- | :--- | | Total Revenue | $187.4M | 24% | | Revenue from Fuze | $28.4M | N/A | | Organic Revenue Growth | N/A | 5% | - Annualized Recurring Subscriptions and Usage Revenue (ARR) from strategic mid-market and enterprise customers increased **37% YoY**, representing **76%** of total ARR. ARR from Small Business customers declined **2% YoY**[128](index=128&type=chunk) - The company is committed to increasing its investment in research and development in fiscal 2023 compared to fiscal 2022 to drive competitive advantage[127](index=127&type=chunk) - In August 2022, the company refinanced approximately **$403.8 million** of its 2024 Notes, took on a new **$250.0 million** term loan, and repurchased **$60.0 million** of its common stock[131](index=131&type=chunk) [Results of Operations](index=32&type=section&id=Results%20of%20Operations) - Service revenue for Q2 FY23 increased by **$36.2 million** YoY, primarily due to the acquisition of Fuze, Inc., which contributed approximately **$27.9 million**. The increase was also driven by growth in UCaaS and CCaaS solutions, partially offset by a decrease in CPaaS usage revenue in the Asia-Pacific region[148](index=148&type=chunk) - Cost of service revenue as a percentage of service revenue improved, decreasing from **33.2%** in Q2 FY22 to **28.6%** in Q2 FY23, indicating better gross margins[152](index=152&type=chunk)[154](index=154&type=chunk) - Sales and marketing expenses increased **4.9%** in absolute dollars but decreased significantly as a percentage of total revenue, from **50.6%** in Q2 FY22 to **43.0%** in Q2 FY23, reflecting improved efficiency[163](index=163&type=chunk) - Other income (expense), net, swung from an expense of **$(4.9) million** in Q2 FY22 to an income of **$14.0 million** in Q2 FY23, primarily due to a **$16.1 million** gain from debt extinguishment[168](index=168&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) - As of September 30, 2022, the company had **$132.3 million** in cash, cash equivalents, and investments. Management believes this is sufficient to meet working capital and expenditure requirements for the next 12 months[171](index=171&type=chunk) - Net cash provided by operating activities for the six months ended September 30, 2022, was **$19.7 million**, a significant improvement compared to **$9.1 million** for the same period in the prior year[172](index=172&type=chunk) - Major financing activities in the period included securing a **$250.0 million** term loan, repaying a significant portion of 2024 convertible notes for **$181.7 million** in cash and **$201.9 million** in new 2028 notes, and repurchasing **$60.2 million** of stock[171](index=171&type=chunk)[174](index=174&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces interest rate, market, and foreign currency risks, with the strong U.S. dollar impacting Q2 FY23 revenues - The company's new **$250.0 million** senior secured term loan bears interest at a variable rate (Term SOFR plus a margin), exposing it to interest rate fluctuations[179](index=179&type=chunk)[194](index=194&type=chunk) - The fair value of the company's convertible senior notes is subject to interest rate and market risk, fluctuating with the company's common stock price[179](index=179&type=chunk) - In Q2 FY23, the strengthening U.S. dollar against the British pound and Euro reduced reported revenues by approximately **$1.0 million**. However, the impact on operating and net income was not material due to the offsetting effect on expenses denominated in those currencies[181](index=181&type=chunk) [Item 4. Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective, excluding the Fuze acquisition, with no material changes to internal controls - The CEO and CFO concluded that as of September 30, 2022, the company's disclosure controls and procedures were effective at a reasonable assurance level[184](index=184&type=chunk) - The assessment of internal controls over financial reporting excluded Fuze, Inc., which was acquired on January 18, 2022, as permitted by SEC guidance for newly acquired businesses[183](index=183&type=chunk)[184](index=184&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[185](index=185&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in a wage and hour class action lawsuit, with a preliminary settlement approved in June 2022 - The company is involved in a wage and hour litigation case (Denise Rivas vs. 8x8, Inc.) filed in September 2020[56](index=56&type=chunk) - A preliminary settlement was reached and received preliminary court approval on June 13, 2022. A motion for final approval was scheduled for November 3, 2022[56](index=56&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from cyber intrusions and its substantial indebtedness of $516.7 million - The company faces significant risk from cyber intrusions. It disclosed that during the second quarter of fiscal 2023, it detected malware on its network that permitted an unauthorized third party to access certain data, but it responded quickly to remove the threat[190](index=190&type=chunk) - The company has a substantial amount of indebtedness, with **$516.7 million** of total long-term debt outstanding as of September 30, 2022[194](index=194&type=chunk) - This high level of debt could make it difficult to satisfy obligations, require a substantial portion of cash flow for debt service, limit flexibility, and place the company at a competitive disadvantage[195](index=195&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=38&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company issued common stock for advisory fees and repurchased 10.7 million shares for $60 million in August 2022 - On August 3, 2022, the company issued **1,015,024 shares** of common stock (approx. **$5.1 million** value) to its financial advisor to settle fees in a private placement, exempt from registration under Section 4(a)(2) of the Securities Act[196](index=196&type=chunk) Common Stock Repurchases (Q2 FY2023) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | August 2022 | 10,695,000 | $5.61 | | **Total** | **10,695,000** | **$5.61** | [Item 6. Exhibits](index=41&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including debt agreements and required CEO/CFO certifications - Key exhibits filed include the Indenture for the 4.00% Convertible Senior Notes due 2028 and the Term Loan Credit Agreement dated August 3, 2022[203](index=203&type=chunk) - The filing includes certifications from the Chief Executive Officer and Chief Financial Officer as required by the Sarbanes-Oxley Act[202](index=202&type=chunk)

Financial Data and Key Metrics Changes - Total revenue for Q2 2023 was $187.4 million, a 24% increase year-over-year, within the guidance range of $185 million to $188 million [28] - Service revenue was $178.6 million, up 25% year-over-year, also in line with guidance [28] - Non-GAAP gross margin was 70.1%, up nearly 600 basis points year-over-year [33] - Non-GAAP operating profit was $9.1 million, reflecting a year-over-year increase but a slight sequential decline [36] Business Line Data and Key Metrics Changes - Enterprise ARR grew more than 40% year-over-year, accounting for 58% of total ARR [10] - XCaaS ARR continued to grow at approximately 40% year-over-year, representing over 35% of total ARR [10] - CPaaS business faced challenges with a sequential decline for the third consecutive quarter, impacted by currency fluctuations and macroeconomic headwinds [11][27] Market Data and Key Metrics Changes - The strengthening dollar negatively impacted total revenue by about $1 million for the quarter [29] - Small business ARR showed modest sequential growth, reflecting good retention and upsell in the U.S. and U.K. [12] Company Strategy and Development Direction - The company is focusing on profitability and cash flow generation, increasing operating margin guidance to above 5% for the year [13] - Continued investment in innovation and customer experience is emphasized, particularly in the contact center and unified communications sectors [9][50] - The company aims to leverage its unified XCaaS platform as a competitive advantage, especially in a cautious spending environment [14] Management's Comments on Operating Environment and Future Outlook - Management noted that while revenue may fluctuate due to foreign exchange, operating income and cash flow remain less impacted [43] - The company is optimistic about achieving double-digit operating margins in fiscal year 2024 through improved efficiency and cost containment [13][45] Other Important Information - The Fuze acquisition has exceeded expectations and contributed positively to operating margins [9] - The company has made significant progress in refinancing its debt, enhancing financial flexibility [39][40] - Cash from operations was approximately $13 million for the quarter, indicating solid cash flow management [41] Q&A Session Summary Question: Can you discuss the slight change in revenue guidance related to FX and CPaaS? - Management confirmed that the change in guidance is primarily due to foreign exchange effects, with CPaaS stabilizing [52][54] Question: How is the channel business shaping up, particularly with XCaaS? - The channel is a significant driver of new business, with over half of new business coming from partners selling XCaaS [59] Question: Are you seeing reductions in headcount within your existing customer base? - Management indicated that while there are occasional reductions during renewals, most enterprise customers have well-structured contracts [66] Question: What trends are seen in the enterprise segment and visibility for the second half of the fiscal year? - The enterprise segment is performing well, with FX being a significant headwind; visibility remains consistent with past performance [72][73] Question: How is the integration of Fuze progressing? - The integration is on track, with plans to launch seamless upgrades to the XCaaS platform early next year [81]

Table of Contents Title of each class Trading Symbol Name of each exchange on which registered COMMON STOCK, PAR VALUE $.001 PER SHARE EGHT New York Stock Exchange UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ ...

8x8, Inc. (NASDAQ:EGHT) Q1 2023 Earnings Conference Call July 27, 2022 4:30 PM ET Company Participants Kate Patterson - Head, Investor Relations David Sipes - Chief Executive Officer Hunter Middleton - Chief Product Officer Samuel Wilson - Chief Financial Officer Conference Call Participants Sitikantha Panigrahi - Mizuho Securities Ryan MacWilliams - Barclays Meta Marshall - Morgan Stanley Matthew VanVliet - BTIG Peter Levine - Evercore ISI James Breen - William Blair Timothy Horan - Oppenheimer Charles Erl ...