8x8(EGHT) - 2021 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for Q2 2021 was $129.1 million, an increase of 80% year-over-year, exceeding guidance of $125.5 million to $126.5 million [39] - Service revenue reached $120.9 million, up 19% year-over-year, surpassing guidance of $117.3 million to $118.3 million [40] - Total ARR at the end of the quarter was $467 million, reflecting a 20% year-over-year growth [40] - Non-GAAP gross margin was 60.9%, driven by product mix and better-than-expected professional services revenue [43] - Non-GAAP pretax loss was $3.3 million, better than the guidance of $7.5 million [50] Business Line Data and Key Metrics Changes - The company saw strong growth in UCaaS, CCaaS, and bundled offerings, with contact center new bookings growing 62% year-over-year [24] - 70% of new bookings were from customers selecting bundled UCaaS and CCaaS solutions, compared to 47% a year ago [24] - The number of customers with ARR greater than $100,000 increased by 25% year-over-year, totaling 670 customers [11] Market Data and Key Metrics Changes - International revenue accounted for 26% of total revenue, up 37% year-over-year, while US revenue was 74%, increasing by 12% year-over-year [40] - The company is experiencing growth across domestic and international markets, particularly in key verticals such as healthcare, manufacturing, public sector, and financial services [14] Company Strategy and Development Direction - The company is focused on its integrated platform strategy, which includes UCaaS, CCaaS, and CPaaS, to meet customer demands for a unified communication solution [19][33] - The migration of legacy customers to the X series platform is ahead of schedule, with over 90% of the customer base now migrated [34] - The company aims to achieve non-GAAP pretax breakeven by the end of Q4 2021 and expects to be cash flow positive in the second half of fiscal 2022 [8][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving profitability and continued growth, citing strong execution and improved operating leverage [9][33] - The company is optimistic about the demand for its integrated platform, especially in light of the ongoing COVID-19 pandemic [4][36] - Management noted that the competitive landscape is evolving, but the strategy of offering a single platform solution has been validated by the market [33] Other Important Information - The company welcomed Steve Seeger as Chief Revenue Officer, who brings over 20 years of experience in revenue leadership roles [31] - The company is focused on continuous improvement in operational efficiencies and cost structure [92] Q&A Session Summary Question: Changes in mid-market enterprise purchasing since COVID - Management noted an increase in combination deals where customers are purchasing multiple solutions, indicating a trend towards larger enterprises selecting integrated communication platforms [66] Question: Success with Microsoft Teams integration - Management confirmed that there has been significant interest and closed deals related to the integration of 8x8 Voice for Microsoft Teams, leading to additional contact center sales [69] Question: Churn rates post-migration to X Series - Management reported lower churn rates for migrated customers compared to legacy customers, indicating successful migration efforts [72] Question: Opportunities for efficiencies within the business - Management highlighted ongoing efforts for continuous improvement in various areas, including professional services and cost structure [92] Question: Revenue reacceleration and confidence in sales - Management expressed confidence in converting the sales pipeline into future revenue, supported by strong recent performance [101]