eght-20220630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


			FORM			10-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

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________to _________

Commission file number 001-38312

8x8, INC.

(Exact name of Registrant as Specified in its Charter)


Delaware			77-0142404
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification Number)

675 Creekside Way

Campbell, CA 95008

(Address of principal executive offices)

(408) 727-1885

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of the Registrant's Common Stock outstanding as of July 25, 2022 was 119,964,673.

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8X8, INC.

INDEX TO QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2022


			Page
Forward-Looking Statements and Risk Factors			2
PART I. FINANCIAL INFORMATION			4
Item 1. Financial Statements (unaudited):			4
Condensed Consolidated Balance Sheets			4
Condensed Consolidated Statements of Operations			5
Condensed Consolidated Statements of Comprehensive Loss			6
Condensed Consolidated Statements of Stockholders' Equity			7
Condensed Consolidated Statements of Cash Flows			8
Notes to Unaudited Condensed Consolidated Financial Statements			10
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			22
Item 3. Quantitative and Qualitative Disclosures About Market Risk			27
Item 4. Controls and Procedures			28
PART II. OTHER INFORMATION			28
Item 1. Legal Proceedings			28
Item 1A. Risk Factors			28
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			28
Item 3. Defaults Upon Senior Securities			29
Item 4. Mine Safety Disclosures			29
Item 5. Other Information			29
Item 6. Exhibits			3 0
Signature			31

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Forward-Looking Statements and Risk Factors

Statements contained in this quarterly report on Form 10-Q, or this "Quarterly Report", regarding our expectations, beliefs, estimates, intentions or strategies are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 ( the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. For example, words such as "may," "will," "should," "estimates," "predicts," "potential," "continue," "strategy," "believes," "anticipates," "plans," "expects," "intends," and similar expressions are intended to identify forward-looking statements. These forward-looking statements include, but are not limited to, statements regarding: industry trends; our number of customers; service revenue; cost of service revenue; research and development expenses; whether we will increase research and development spending relative to fiscal 2022; reduce unit costs and improve gross profit margin, operating margin or drive sustained growth and increasing profitability and cash flow; hiring of employees; sales and marketing expenses; and general and administrative expenses in future periods; and the impact of the COVID-19 pandemic. You should not place undue reliance on these forward-looking statements. Actual results and trends may differ materially from historical results and those projected in any such forward-looking statements depending on a variety of factors. These factors include, but are not limited to:

•the impact of economic downturns on us and our customers, including the impacts of the COVID-19 pandemic;

•the impact of cost increases and general inflationary pressure on our operating expenses, including for bandwidth and labor;

•customer cancellations and rate of customer churn;

•the impact of Russia’s invasion of Ukraine and any macro-economic impact that may have;

•customer acceptance and demand for our new and existing cloud communication and collaboration services and features, including voice, contact center, video, messaging, and communication application programming interfaces ("APIs");

•competitive market pressures, and any changes in the competitive dynamics of the markets in which we compete;

•the quality and reliability of our services;

•our ability to scale our business;

•customer acquisition costs;

•our reliance on a network of channel partners to provide substantial new customer demand;

•timing and extent of improvements in operating results from increased spending in marketing, sales, and research and development;

•the amount and timing of costs associated with recruiting, training, and integrating new employees and retaining existing employees;

•our reliance on infrastructure of third-party network service providers;

•risk of failure in our physical infrastructure;

•risk of defects or bugs in our software;

•risk of cybersecurity breaches;

•our ability to maintain the compatibility of our software with third-party applications and mobile platforms;

•continued compliance with industry standards and regulatory and privacy requirements, globally;

•introduction and adoption of our cloud software solutions in markets outside of the United States;

•risks that any reduction in spending may not achieve the desired result or may result in a reduction in revenue;

•risks relating to the acquisition and integration of businesses we have acquired or may acquire in the future, including most recently, Fuze, Inc.;

•risks related to our senior convertible notes and the related capped call transactions, including the impact any refinancing thereof could have on our stock price; and

•potential future intellectual property infringement claims and other litigation that could adversely impact our business and operating results.

Please refer to the "Risk Factors" section of our annual report on Form 10-K for the fiscal year ended March 31, 2022 (the "Form 10-K"), as modified by the "Risk Factors" section of this Quarterly Report, and subsequent Securities and Exchange Commission ("SEC") filings for additional factors that could materially affect our financial performance. All forward-looking statements included in this Quarterly Report are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. Readers are urged to carefully review and consider the various disclosures made in this Quarterly Report, which attempts to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations, and prospects.

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Our fiscal year ends on March 31 of each calendar year. Each reference to a fiscal year in this Quarterly Report refers to the fiscal year ended March 31 of the calendar year indicated (for example, fiscal 2023 refers to the fiscal year ended March 31, 2023). Unless the context requires otherwise, references to "we," "us," "our," "8x8," and the "Company" refer to 8x8, Inc. and its consolidated subsidiaries.

All dollar amounts within this Quarterly Report are in thousands of United States Dollars ("Dollars") unless otherwise noted.

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PART I. Financial Information

ITEM 1. Financial Statements

8X8, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)


	June 30, 2022		March 31, 2022
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	92,686	$	91,205
Restricted cash, current	590		8,691
Short-term investments	48,945		44,845
Accounts receivable, net	55,441		57,400
Deferred sales commission costs, current	36,510		35,482
Other current assets	38,545		37,999
Total current assets	272,717		275,622
Property and equipment, net	73,876		79,016
Operating lease, right-of-use assets	59,859		63,415
Intangible assets, net	122,737		128,213
Goodwill	265,029		266,867
Restricted cash, non-current	818		818
Long-term investments	—		2,671
Deferred sales commission costs, non-current	76,083		75,668
Other assets, non-current	18,028		17,978
Total assets	$	889,147	$	910,268

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	42,584	$	49,721
Accrued compensation	33,713		36,319
Accrued taxes	31,864		32,573
Operating lease liabilities, current	14,424		15,485
Deferred revenue, current	34,064		34,262
Other accrued liabilities	18,767		23,167
Total current liabilities	175,416		191,527
Operating lease liabilities, non-current	71,806		74,518
Convertible senior notes, net	494,444		447,452
Deferred revenue, non-current	11,023		11,430
Other liabilities, non-current	2,936		2,975
Total liabilities	755,625		727,902
Commitments and contingencies (Note 6)
Stockholders' equity:
Preferred stock	—		—
Common stock	120		118
Additional paid-in capital	895,602		956,599
Accumulated other comprehensive loss	(16,391)		(7,913)
Accumulated deficit	(745,809)		(766,438)
Total stockholders' equity	133,522		182,366
Total liabilities and stockholders' equity	$	889,147	$	910,268

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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8X8, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands except per share amounts)


	Three Months Ended June 30,
	2022		2021
Service revenue	$	179,161	137,796
Other revenue	8,459		10,531
Total revenue	187,620		148,327
Operating expenses:
Cost of service revenue	53,547		46,010
Cost of other revenue	13,126		13,746
Research and development	34,955		25,392
Sales and marketing	83,527		75,915
General and administrative	29,219		26,091
Total operating expenses	214,374		187,154
Loss from operations	(26,754)		(38,827)
Other income (expense), net	1,116		(4,823)
Loss before provision for income taxes	(25,638)		(43,650)
Provision for income taxes	405		256
Net loss	$	(26,043)	$	(43,906)

Net loss per share:
Basic and diluted	$	(0.22)	$	(0.40)
Weighted average number of shares:
Basic and diluted	119,721		109,925

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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8X8, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited, in thousands)


	Three Months Ended June 30,
	2022		2021
Net loss	$	(26,043)	$	(43,906)
Other comprehensive income (loss), net of tax
Unrealized loss on investments in securities	(94)		(33)
Foreign currency translation adjustment	(8,384)		283
Comprehensive loss	$	(34,521)	$	(43,656)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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8X8, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited, in thousands)


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total
	Shares	Amount
Balance at March 31, 2022	117,863	$	118	$	956,599	$	(7,913)	$	(766,438)	$	182,366
Adjustment related to adoption of ASU 2020-06	—	—		(92,832)		—		46,672		(46,160)
Issuance of common stock under stock plans, less withholding	1,796	2		63		—		—		65
Stock-based compensation expense	—	—		31,807		—		—		31,807
Unrealized investment loss	—	—		—		(94)		—		(94)
Foreign currency translation adjustment	—	—		(35)		(8,384)		—		(8,419)
Net loss	—	—		—		—		(26,043)		(26,043)
Balance at June 30, 2022	119,659	$	120	$	895,602	$	(16,391)	$	(745,809)	$	133,522


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total
	Shares	Amount
Balance at March 31, 2021	109,135	$	109	$	755,643	$	(4,193)	$	(591,055)	$	160,504
Issuance of common stock under stock plans, less withholding	1,562	2		3,438		—		—