Slide 1: Second Quarter Fiscal 2019 Earnings
Second Quarter Fiscal 2019 Earnings October 29, 2018
Slide 2: Forward Looking Statements; Non-GAAP Measures
Forward Looking Statements This presentation includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934. These statements relate to the release of new products, market demand for products, chan
Slide 3: One cloud technology platform
One cloud technology platform phone x meetings x collaboration x contact center 1m+ business users 15 global data centers Serving customers in 150+ countries Global 24/7/365 follow-the-sun customer support 170 patents awarded 3
Slide 4: Q2 Fiscal 2019 Financial Results
Q2 Fiscal 2019 Financial Results SERVICE REVENUE GAAP NON-GAAP Million $81.3 $(21.5) Million Net loss Pre-tax Net ($3.6) 21% million INCREASE* Income ** 75.2% Gross margin 77.2% 30% NOW INCREASE* 61% 80.5% Service 82.6% mid-market/ margin of total enterprise service service revenue revenue *Adjustin
Slide 5: Q2 Fiscal 2019 Business Highlights
Q2 Fiscal 2019 Business Highlights ▪ Continued Success in Mid-Market and Enterprise: – 27 Large Enterprise Deals (>$10,000 in MRR) – more than doubled in new large deals closed year-over-year – Service revenue from customers billing (>$1,000 in MRR) grew 30% year-over-year and represents 61% of tota
Slide 6: Q2 Fiscal 2019 Business Highlights (Cont.)
Q2 Fiscal 2019 Business Highlights (Cont.) ▪ Channel Momentum: – Channel Bookings grew more than 50% year-over-year – 7 of Top 10 Deals Channel Driven – 250+ partners participating in Channel Enablement Program – New partnership with master-agent Planet One ▪ Product Innovation: – Launched the X Ser
Slide 7: 8x8 Technology Platform | Jitsi Acquisition
8x8 Technology Platform | Jitsi Acquisition 8x8 Acquires Jitsi Video Technology & Team from Atlassian ▪ Jitsi’s open source projects allow businesses to easily build and deploy secure video collaboration solutions – Jitsi Videobridge -- high scale video routing technology – Jitsi Meet -- full featur
Slide 8: 8x8 Market Leadership
8x8 Market Leadership Tolly Group 2017 KEK PARTNER PROGRAM GUIDE WINNER 2018 5-Star Rating by CRN of 8x8's Partner Program . : : 8 X 2018 Competitive Superior Voice Quality (Q) Strategy Innovations & Leadership Award, Frost & Sullivan 2018 Winner Call & Contact Center Expo Best Communications Provid
Slide 9: Emergence of the 3rd Wave of Enterprise Communications
Emergence of the 3rd Wave of Enterprise Communications Wave 1 Wave 2 Wave 3 FT On-Premise Point Cloud Products One Cloud Engagement Solution All Customer & Employee Interactions Ventrica Switchboard One System of Intelligence or other Avaya One System of Engagement Systems of Record ● Lower TCO ● Ev
Slide 10: Driving Employee and Customer Interactions, Data & Analytics From One Technology Platform
Driving Employee and Customer Interactions, Data & Analytics From One Technology Platform Robust Reporting & Cloud Quality Omni-Channel Solution Data Analytics Management ● Voice ● Speech analytics ● Easy, out-of-the-box reporting ● Chat ● Collaborative user experience ● Multi-channel coverage ● Ema
Slide 11: Anticipated Market and Built Technology Platform to Capture It
Anticipated Market and Built Technology Platform to Capture It Analytics & Launched Introduced Acquired Quality Introduced Acquired Integration internal Big VO Analytics Software (QM / Script8 MARIANAIQ Data initiative (incl QoS) speech) Introduced chat, Fully integrated Acquired Acquired Collaborat
Slide 12: X Series
X Series More intelligent customer interactions One System of Intelligent ● Integrated voice, email, webchat and social Engagement ● ● Advanced speech and interaction analytics Predictive outbound campaigns ● Quality, collaborative performance mgmt Speed to resolution ● One-click subject matter expe
Slide 13: Investment Summary
Investment Summary • $50+ billion market cloud opportunity according to IDC • Market entering 3rd wave of enterprise communications – moving beyond efficiencies to accelerating revenue growth • Uniquely qualified to capture this opportunity – own core technology platform – cloud phone, contact cente
Slide 14: Q2 Fiscal Year 2019 Financials
Q2 Fiscal Year 2019 Financials
Slide 15: Strong Revenue Growth
Strong Revenue Growth Total Revenue Growth Non-GAAP Pre-Tax Income ($ in millions) as % of Total Revenue ($ in millions) $4.2 $83.2 $85.7 $79.3 5.8% $72.5 $75.6 $1.6 5.8% 2.0% 2Q18 3Q18 4Q18 1Q19 2Q19 -3.7% -4.1% -4.3% ($2.9) ($3.4) ($3.6) 2Q18 3Q18 4Q18 1Q19 2Q19 15
Slide 16: Increasing Average Monthly Service Revenue Per Customer (ARPU)
Increasing Average Monthly Service Revenue Per Customer (ARPU) All Customers Mid-Market/Enterprise Customers $490 $480 $4,988 $4,953 $469 $4,899 $454 $442 $4,765 $4,697 2Q18 3Q18 4Q18 1Q19 2Q19 2Q18 3Q18 4Q18 1Q19 2Q19 16
Slide 17: Consistently Strong Non-GAAP Margins
Consistently Strong Non-GAAP Margins Gross Margin Service Margin 84.5% 83.0% 83.2% 82.7% 82.6% 79.1% 77.0% 76.7% 77.2% 76.2% 2Q18 3Q18 4Q18 1Q19 2Q19 17
Slide 18: Strong Balance Sheet
Strong Balance Sheet Cash Flow From Operations Cash & Investments $167.0 $161.0 $160.4 $152.6 $ in millions $137.0 $5.0 $8.2 $2.7 $0.8 2Q18 3Q18 4Q18 1Q19 -$5.3 2Q19 18
Slide 19: Third Quarter Fiscal 2019 Non-GAAP Financial Outlook
Third Quarter Fiscal 2019 Non-GAAP Financial Outlook Service Revenue $84.5m - $85.5m Service Revenue Growth Y/Y 18% - 19% Service Revenue Growth Y/Y excluding DXI revenue 20% - 21% Non-GAAP Pre-Tax Loss ($5m – $6m) 19
Slide 20: Full-Year Fiscal 2019 Non-GAAP Financial Outlook
Full-Year Fiscal 2019 Non-GAAP Financial Outlook Service Revenue $334m - $338m Service Revenue Growth Y/Y 19% - 21% Service Revenue Growth Y/Y excluding DXI revenue 21% - 22% Total Revenue $347m - $352m Total Revenue Growth Y/Y 17% - 19% Non-GAAP Pre-Tax Loss (~$17m) 20
Slide 21: GAAP to Non-GAAP Reconciliation Tables
GAAP to Non-GAAP Reconciliation Tables
Slide 22: Reconciliation of Selected GAAP Measures to NON-GAAP Measures
Reconciliation of Selected GAAP Measures to NON-GAAP Measures (In Thousands, Unaudited) Three Months Ended Cost of Service Revenue: September 30, 2018 2017 GAAP cost of service revenue $15,866 $12,757 Amortization of acquired intangible assets ($1,111) ($710) Stock-based compensation expense ($638)
Slide 23: Reconciliation of Selected GAAP Measures to NON-GAAP Measures
Reconciliation of Selected GAAP Measures to NON-GAAP Measures (In Thousands, Unaudited) Three Months Ended Sales and Marketing: September 30, 2018 2017 GAAP sales and marketing $55,930 $41,163 Amortization of acquired intangible assets ($314) ($583) Stock-based compensation expense ($3,826) ($2,568)
Slide 24: Reconciliation of Selected GAAP Measures to NON-GAAP Measures
Reconciliation of Selected GAAP Measures to NON-GAAP Measures (In Thousands, Unaudited) Three Months Ended Reconciliation of GAAP Net Loss to Non-GAAP Net Income (Loss): September 30, 2018 2017 GAAP net loss ($21,482) ($546) Adjustments: Amortization of acquired intangible assets $1,425 $1,293 Stock
Slide 25: ASC 606 Reconciliation
ASC 606 Reconciliation
Slide 26: Full-Year Fiscal 2019 Outlook – Impact from ASC606
Full-Year Fiscal 2019 Outlook – Impact from ASC606 • No restatement of prior year information under modified retroactive method Financial Statement • Quarterly disclosures are provided for FY19 comparing results under ASC606 versus ASC605 Revenue • No material differences expected • Large portion of
Slide 27: Reconciliation of ASC 605 to ASC 606 Statement of Operations
Reconciliation of ASC 605 to ASC 606 Statement of Operations Three Months Ended September 30, 2018 ASC 605 Adjustments ASC 606 Service revenue $ 81,543 $ (197) $ 81,346 Product revenue 4,176 160 4,336 Total revenue $ 85,719 $ (37) $ 85,682 Operating expenses: Sales and marketing $ 58,806 $ (2,876) $
Slide 28: From EX to CX: The experience is everything
From EX to CX The experience is everything © 2018 8x8, Inc. All Rights Reserved