8x8, Inc. Announces First Quarter Fiscal 2009 Results

Company Reports Third Consecutive Quarter of Net Income

SANTA CLARA, Calif., July 31 /PRNewswire-FirstCall/ -- 8x8, Inc.
(Nasdaq: EGHT), provider of Packet8 (www.packet8.net) business, mobile and
residential communication services, today announced financial results for the
first quarter of fiscal 2009 ended June 30, 2008.
Revenues for the first quarter of fiscal 2009 were $16.3 million, compared
to $14.7 million for the same period of fiscal 2008 and $16.3 million for the
previous quarter. Packet8 business service revenues grew to 56% of total
revenue in the first quarter of fiscal 2009 compared to 44% of total revenue
in the same period of fiscal 2008 and 50% of total revenue in the previous
quarter. Sequentially, business services revenue grew by 12% from the previous
quarter and 41% compared to the same period of fiscal 2008. The Company's
residential and video revenues declined 6% sequentially from the previous
quarter and 12% from the same period of fiscal 2008. Overall gross margin for
the first quarter of fiscal 2009 was 68%, compared to 64% for the same period
of fiscal 2008 and 67% for the previous quarter.
GAAP net income for the quarter increased to $1.2 million, or $0.02 per
share, compared to $508,000, or $0.01 per share, for the same period of fiscal
2008 and $691,000, or $0.01 per share, for the previous quarter. The Company's
cash and investments increased to $14.8 million in the first quarter of fiscal
2009 from $12.2 million in the same period of fiscal 2008 and $14.6 million in
the previous quarter.
During the first quarter of fiscal 2009, the Company increased its
business subscriber base by 1,053 net new customers and now serves more than
12,000 businesses with Packet8 IP communications solutions.
"We are pleased to report our third consecutive quarter of GAAP net income
and fifth consecutive quarter of increased cash and investment balances," said
8x8 Chairman and CEO Bryan R. Martin. "Our continued gross margin expansion
contributed to the doubling of our net income over last quarter and further
strengthened our balance sheet. Even in this difficult economic climate, we
are debt free with income from operations, something many of our prospective
customers consider before making a multi-year decision about who will provide
their phone services." Mr. Martin continued, "With the recent addition of new
IP communications solutions for business, specifically Packet8 Virtual
Trunking and Hosted Key System services, we can now save any business of any
size significant telecommunications costs by leveraging their existing high
speed Internet connection. This enables us to tap into a much broader segment
of the business market from the smallest home office to larger, more
established enterprises."
Management will host a conference call to discuss these results and other
matters related to the Company's business today, July 31, 2008, at 4:30 p.m.
EDT. To access the call, dial 888-713-4215 (domestic) or 617-213-4867
(international). A digital replay of the call will be available for one week
following the live broadcast at 888-286-8010 (domestic) or 617-801-6888
(international). The replay passcode is 41401744. A webcast of this conference
call will also be available for a limited time at the 8x8 Investor Relations
website at: http://investors.8x8.com.
About 8x8, Inc.
8x8, Inc. (Nasdaq: EGHT) offers voice, video and mobile communications
solutions for business and residential customers. Marketed under the Packet8
brand name, these solutions leverage existing broadband Internet connections
and cellular networks to deliver advanced features and digital quality phone
service at a fraction of the cost of legacy, copper wire alternatives.
Businesses of any size, configuration or geographic location can benefit from
the cost, performance and operational advantages of VoIP technology by
selecting the Packet8 solution that best fits their needs, whether it's the
Virtual Office Hosted iPBX phone system, Packet8 Complete Contact Center,
Virtual Trunking IP dial tone solution or Packet8 Hosted Key System service.
All Packet8 communications solutions carry little or no upfront investment, no
maintenance or upgrade fees and no change in user behavior. For additional
company information, visit 8x8's web site at www.8x8.com. For information
about Packet8 products and services, visit www.packet8.net.
Forward Looking Statements
This news release contains "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 include, without limitation,
information about future events based on current expectations, potential
product development efforts, near and long-term objectives, potential new
business, strategies, organization changes, changing markets, future business
performance and outlook. Such statements are predictions only, and actual
events or results could differ materially from those made in any forward-
looking statements due to a number of risks and uncertainties. Actual results
and trends may differ materially from historical results or those projected in
any such forward-looking statements depending on a variety of factors. These
factors include, but are not limited to, customer acceptance and demand for
our VoIP products and services, the reliability of our services, the prices
for our services, customer renewal rates, customer acquisition costs, actions
by our competitors, including price reductions for their telephone services,
potential federal and state regulatory actions, compliance costs, potential
warranty claims and product defects, our needs for and the availability of
adequate working capital, our ability to innovate technologically, the timely
supply of products by our contract manufacturers, potential future
intellectual property infringement claims that could adversely affect our
business and operating results, and our ability to retain our listing on the
NASDAQ Capital Market. For a discussion of such risks and uncertainties, which
could cause actual results to differ from those contained in the forward-
looking statements, see "Risk Factors" in the Company's reports on Forms 10-K
and 10-Q, as well as other reports that 8x8, Inc. files from time to time with
the Securities and Exchange Commission. All forward-looking statements are
qualified in their entirety by this cautionary statement, and 8x8, Inc.
undertakes no obligation to update publicly any forward-looking statement for
any reason, except as required by law, even as new information becomes
available or other events occur in the future.
NOTE: 8x8, the 8x8 logo, Packet8, the Packet8 logo, Packet8 Virtual
Office, Packet8 Softalk, Packet8 Tango and Packet8 Complete Contact Center are
trademarks of 8x8, Inc. All other trademarks are the property of their
respective owners

8x8, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts; unaudited)

Three Months Ended
June 30,
2008 2007
Service revenues $15,019 $13,411
Product revenues 1,262 1,331
Total revenues 16,281 14,742

Operating expenses:
Cost of service revenues 3,814 3,986
Cost of product revenues 1,432 1,383
Research and development 1,192 1,057
Selling, general and administrative 8,751 8,919
Total operating expenses 15,189 15,345
Income (loss) from operations 1,092 (603)
Other income, net 85 132
Income on change in fair value of
warrant liability 69 979
Income before provision for income
taxes 1,246 508
Provision for income taxes 58 -
Net income $1,188 $508

Net income per share:
Basic $0.02 $0.01
Diluted $0.02 $0.01

Weighted average number of shares:
Basic 62,096 61,772
Diluted 62,192 62,080

8x8, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)

June 30, March 31,
2008 2008
ASSETS
Current assets
Cash and cash equivalents $13,034 $11,185
Short-term investments 1,799 3,382
Accounts receivable, net 1,558 1,807
Inventory 1,717 1,539
Other current assets 1,511 1,492
Total current assets 19,619 19,405
Property and equipment, net 1,856 2,010
Other assets 127 136
Total assets $21,602 $21,551

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $5,652 $4,885
Accrued compensation 1,379 1,048
Accrued warranty 316 314
Deferred revenue 2,481 3,139
Other accrued liabilities 1,987 3,872
Total current liabilities 11,815 13,258

Other liabilities 86 109
Fair value of warrant liability 266 335
Total liabilities 12,167 13,702

Total stockholders' equity 9,435 7,849
Total liabilities and
stockholders' equity $21,602 $21,551

SOURCE 8x8, Inc.

Joan Citelli of 8x8, Inc., +1-408-687-4320, jcitelli@8x8.com