8X8 Inc 10-K for FY2023

8X8 Inc (EGHT)

10-K 2023-05-25 For: 2023-03-31

Added on April 06, 2026

About this 10-K

8X8 Inc filed this 10-K on May 25, 2023, covering the fiscal year ended March 31, 2023 (FY2023).

Headline figures

Fiscal year ended March 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $743.94M; up 16.6% from $638.13M a year earlier
Net loss: $73.14M; compared with a net loss of $175.38M a year earlier
Diluted EPS: -$0.63; compared with -$1.55 a year earlier

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


Title of each class	Trading Symbol	Name of each exchange on which registered
COMMON STOCK, PAR VALUE $.001 PER SHARE	EGHT	Nasdaq Global Select Market


Part I.		Page
Forward-Looking Statements and Risk Factors
Item 1.	Business	3
Item 1A.	Risk Factors	9
Item 1B.	Unresolved Staff Comments	26
Item 2.	Properties	26
Item 3.	Legal Proceedings	26
Item 4.	Mine Safety Disclosures	26
Part II.
Item 5.	Market for Registrant's Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities	27
Item 6.	[Reserved]	29
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	29
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 8.	Financial Statements and Supplementary Data	38
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	70
Item 9A.	Controls and Procedures	70
Item 9B.	Other Information	70
Item 9C	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	70
Part III.
Item 10.	Directors, Executive Officers and Corporate Governance	71
Item 11.	Executive Compensation	71
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	71
Item 13.	Certain Relationships and Related Transactions and Director Independence	71
Item 14.	Principal Accountant Fees and Services	71
Part IV.
Item 15.	Exhibits and Financial Statement Schedules	72
Item 16.	Form 10-K Summary	74
Signatures		76


Risk Factors Summary
Risks Related to our Business and Industry
Risks Related to our Products and Operations
Risks Related to Regulatory Matters
Risks Related to Intellectual Property
Risks Related to our Debt, our Stock, and our Charter
General Risk Factors


	March 31,
	2018		2019		2020		2021		2022		2023
8x8	$	100.00	$	110.68	$	75.95	$	177.75	$	68.99	$	22.85
Russell 2000	100.00		103.16		77.26		148.78		138.70		120.77
Nasdaq Composite	100.00		112.51		112.08		192.82		206.99		177.90
Nasdaq Telecommunications	100.00		120.28		100.30		141.55		132.11		116.04
NYSE Composite	100.00		184.81		149.95		227.10		242.66		223.79


	For the years ended March 31,				Change
	2023		2022			2023 vs 2022
Service revenue	$710,044		$602,357			$	107,687	17.9	%
Percentage of total revenue	95.4	%	94.4	%


			Page
FINANCIAL STATEMENTS:
Reports of Independent Registered Public Accounting Firm (Moss Adams LLP, Campbell, California, PCAOB ID: 659)			39
Consolidated Balance Sheets			40
Consolidated Statements of Operations			42
Consolidated Statements of Comprehensive Loss			43
Consolidated Statements of Stockholders' Equity			44
Consolidated Statements of Cash Flows			45
Notes to Consolidated Financial Statements			47


	As of March 31,
	2023		2022
ASSETS
Current assets:
Cash and cash equivalents	$	111,400	$	91,205
Restricted cash, current	511		8,691
Short-term investments	26,228		44,845
Accounts receivable, net	62,307		57,400
Deferred sales commission costs, current	38,048		35,482
Other current assets	34,630		37,999
Total current assets	273,124		275,622
Property and equipment, net	57,871		79,016
Operating lease, right-of-use assets	52,444		63,415
Intangible assets, net	107,112		128,213
Goodwill	266,863		266,867
Restricted cash, non-current	818		818
Long-term investments	—		2,671
Deferred sales commission costs, non-current	67,644		75,668
Other assets, non-current	15,934		17,978
Total assets	$	841,810	$	910,268

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	46,802	$	49,721
Accrued compensation	29,614		36,319
Accrued taxes	29,570		32,573
Operating lease liabilities, current	11,504		15,485
Deferred revenue, current	34,909		34,262
Convertible senior notes, current	62,932		—
Other accrued liabilities	14,556		23,167
Total current liabilities	229,887		191,527
Operating lease liabilities, non-current	65,623		74,518
Deferred revenue, non-current	10,615		11,430
Convertible senior notes, non-current	196,821		447,452
Term loan	231,993		—
Other liabilities, non-current	6,965		2,975
Total liabilities	741,904		727,902
Commitments and contingencies (Note 6)
Stockholders' equity:
Preferred stock: $0.001 par value, 5,000,000 shares authorized, none issued and outstanding at both March 31, 2023 and 2022	—		—
Common stock: $0.001 par value, 300,000,000 and 200,000,000 shares authorized, 114,659,255 shares and 117,862,807 shares issued and outstanding at March 31, 2023 and 2022, respectively	115		118
Additional paid-in capital	905,635		956,599
Accumulated other comprehensive loss	(12,927)		(7,913)
Accumulated deficit	(792,917)		(766,438)
Total stockholders' equity	99,906		182,366
Total liabilities and stockholders' equity	$	841,810	$	910,268


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total
	Shares	Amount
Balance at March 31, 2020	103,178,621	$	103	$	625,474	$	(12,176)	$	(422,670)	$	190,731
Adjustment to opening balance for change in accounting principle	—	—		—		—		(2,800)		(2,800)
Issuance of common stock under stock plans, less withholding	6,067,672	6		13,263		—		—		13,269
Stock-based compensation expense	—	—		108,417		—		—		108,417
Forfeiture of common stock related to Wavecell acquisition	(111,554)	—		8,489		—		—		8,489
Unrealized investment gain	—	—		—		247		—		247
Foreign currency translation adjustment	—	—		—		7,736		—		7,736
Net loss	—	—		—		—		(165,585)		(165,585)
Balance at March 31, 2021	109,134,739	109		755,643		(4,193)		(591,055)		160,504
Issuance of common stock under stock plans, less withholding	6,969,809	7		15,915		—		—		15,922
Stock-based compensation expense	—	—		132,736		—		—		132,736
Stock-based compensation expense related to Fuze acquisition	53,498	—		828		—		—		828
Forfeiture of common stock related to Wavecell acquisition	(25,536)	—		—		—		—		—
Issuance of common stock related to Fuze acquisition	4,070,355	4		80,852		—		—		80,856
Share Repurchase	(2,340,058)	(2)		(44,974)						(44,976)
Equity component of convertible senior notes, net of issuance cost	—	—		15,599		—		—		15,599
Unrealized investment loss	—	—		—		(571)		—		(571)
Foreign currency translation adjustment	—	—		—		(3,149)				(3,149)
Net loss	—	—		—		—		(175,383)		(175,383)
Balance at March 31, 2022	117,862,807	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	6,498,922	7		4,678		—		—		4,685
Stock-based compensation expense	—	—		92,065		—		—		92,065

Forfeiture of common stock related to Wavecell acquisition	(22,311)	—		—		—		—		—
Repurchase of capped calls	—	—		244		—		—		244
Share repurchases	(10,695,187)	(11)		(60,203)		—		—		(60,214)
Shares issued for debt issuance	1,015,024	1		5,084		—		—		5,085
Dissolution of investment in foreign subsidiary	—	—		—		—		(8)		(8)
Unrealized investment loss	—	—		—		(184)		—		(184)
Foreign currency translation adjustment	—	—		—		(4,830)		—		(4,830)
Net loss	—	—		—		—		(73,143)		(73,143)
Balance at March 31, 2023	114,659,255	$	115	$	905,635	$	(12,927)	$	(792,917)	$	99,906



Effect of exchange rate changes on cash	(5,037)		(585)		1,956
Net decrease in cash, cash equivalents and restricted cash	12,015		(20,458)		(35,239)
Cash, cash equivalents and restricted cash, beginning of year	100,714		121,172		156,411
Cash, cash equivalents and restricted cash, end of year	$	112,729	$	100,714	$	121,172


	March 31, 2023		March 31, 2022
Accounts receivable, net	$	62,307	$	57,400
Contract assets, current	11,581		10,514
Contract assets, non-current	11,141		15,171
Deferred revenue, current	34,909		34,262
Deferred revenue, non-current	10,615		11,430


As of March 31, 2023	Amortized Costs		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Value		Cash and Cash Equivalents		Restricted Cash (Current & Non-current)		Short-Term Investments		Long-Term Investments
Cash	$	95,828	$	—	$	—	$	95,828	$	95,828	$	—	$	—	$	—
Level 1:
Money market funds	8,935		—		—		8,935		8,935		—		—		—
Treasury securities	1,599		4		(1)		1,602		—		—		1,602		—
Subtotal	106,362		4		(1)		106,365		104,763		—		1,602		—
Level 2:
Certificates of deposit	1,329		—		—		1,329		—		1,329		—		—
Commercial paper	8,610		—		(2)		8,608		6,637		—		1,971		—
Corporate debt	22,625		55		(25)		22,655		—		—		22,655		—
Subtotal	32,564		55		(27)		32,592		6,637		1,329		24,626		—
Total assets	$	138,926	$	59	$	(28)	$	138,957	$	111,400	$	1,329	$	26,228	$	—


As of March 31, 2022	Amortized Costs		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Value		Cash and Cash Equivalents		Restricted Cash (Current & Non-current)		Short-Term Investments		Long-Term Investments
Cash	$	70,095	$	—	$	—	$	70,095	$	70,095	$	—	$	—	$	—
Level 1:
Money market funds	12,865		—		—		12,865		12,865		—		—		—
Treasury securities	4,573				(7)		4,566		—		—		4,566		—
Subtotal	87,533		—		(7)		87,526		82,960		—		4,566		—
Level 2:
Certificates of deposit	9,509		—		—		9,509		—		9,509		—		—
Commercial paper	23,950		—		(34)		23,916		7,445		—		16,471		—
Corporate debt	27,442		—		(163)		27,279		800		—		23,808		2,671
Subtotal	60,901		—		(197)		60,704		8,245		9,509		40,279		2,671
Total assets	$	148,434	$	—	$	(204)	$	148,230	$	91,205	$	9,509	$	44,845	$	2,671


	March 31, 2023						March 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Technology	$	46,461	$	(28,361)	$	18,100	$	46,727	$	(19,852)	$	26,875
Customer relationships	105,836		(16,824)		89,012		105,827		(4,889)		100,938
Trade names and domains	584		(584)		—		583		(183)		400

Total acquired identifiable intangible assets	$	152,881	$	(45,769)	$	107,112	$	153,137	$	(24,924)	$	128,213


	Amount
2024	$	20,395
2025	19,095
2026	13,895
2027	11,757
2028 and thereafter	41,970
Total	$	107,112


	For the years ended March 31,
	2023		2022		2021
Service revenue	$	710,044	$	602,357	$	495,985
Other revenue	33,894		35,773		36,359
Total revenue	743,938		638,130		532,344
Operating costs and expenses:
Cost of service revenue	198,871		195,909		180,082
Cost of other revenue	42,604		51,649		50,068
Research and development	146,220		112,387		92,034
Sales and marketing	311,883		314,223		256,231
General and administrative	110,652		118,103		100,078
Total operating costs and expenses	810,230		792,271		678,493
Loss from operations	(66,292)		(154,141)		(146,149)
Other expense, net	(4,044)		(21,629)		(18,593)
Loss before provision for income taxes	(70,336)		(175,770)		(164,742)
Provision for (benefit from) income taxes	2,807		(387)		843
Net loss	$	(73,143)	$	(175,383)	$	(165,585)

Net loss per share:
Basic and diluted	$	(0.63)	$	(1.55)	$	(1.57)
Weighted average number of shares:
Basic and diluted	115,959		113,354		105,700


	For the years ended March 31,
	2023		2022		2021
Interest expense	$	(23,020)	$	(2,271)	$	(1,813)
Amortization of debt discount and issuance costs	(4,254)		(20,404)		(16,898)

Gain on debt extinguishment	18,545		—		—
Gain (loss) on sale of assets	1,821		(68)		(36)

Other income, net	2,864		1,114		154
Other expense, net	$	(4,044)	$	(21,629)	$	(18,593)


	For the years ended March 31,
	2023		2022		2021
Cash flows from operating activities:
Net loss	$	(73,143)	$	(175,383)	$	(165,585)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	10,464		11,374		11,297
Amortization of intangible assets	21,078		8,317		6,886
Amortization of capitalized internal-use software costs	20,739		28,863		26,934
Impairment of capitalized software	3,729
Amortization of debt discount and issuance costs	4,254		20,404		16,898
Amortization of deferred sales commission costs	38,195		34,701		27,817
Allowance for credit losses	1,892		1,974		4,471
Operating lease expense, net of accretion	12,030		13,482		15,210
Stock-based compensation expense	89,536		133,331		107,638
Gain on debt extinguishment	(18,545)		—		—
Gain on remeasurement of warrants	(417)		—		—
Impairment of right-of-use assets	2,651		—		—
Gain on sale of assets	(1,821)		—		—
Other	101		3,726		1,521
Changes in assets and liabilities:
Accounts receivable	(8,450)		6,867		(14,869)
Deferred sales commission costs	(31,086)		(44,224)		(52,960)
Other current and non-current assets	2,150		(4,022)		(3,963)
Accounts payable and accruals	(24,403)		(8,740)		(10,033)
Deferred revenue	(168)		4,010		14,672
Net cash provided by (used in) operating activities	48,786		34,680		(14,066)

Cash flows from investing activities:
Purchases of property and equipment	(2,991)		(4,137)		(6,430)
Proceeds from sale of intangible assets	1,000		—
Capitalized internal-use software costs	(11,896)		(20,370)		(28,816)
Purchases of investments	(53,308)		(83,383)		(52,172)
Sales of investments	8,296		13,299		1,018
Proceeds from maturities of investments	66,199		60,023		60,479
Acquisition of businesses, net of cash acquired	(1,250)		(125,410)		(10,400)
Net cash provided by (used in) investing activities	6,050		(159,978)		(36,321)

Cash flows from financing activities:
Finance lease payments	—		(15)		(78)


2024	$	14,277
2025	13,126
2026	12,026
2027	10,712
2028	10,002
Thereafter	28,659
Total lease payments	88,802
Less: imputed interest	(11,675)
Present value of lease liabilities	$	77,127


	Total
Balance at March 31, 2021	$	131,520
Additions due to acquisitions	136,117
Foreign currency translation	(770)
Balance at March 31, 2022	266,867

Foreign currency translation	(4)
Balance at March 31, 2023	$	266,863


	March 31, 2023
Principal	$	250,000
Unamortized debt discount and issuance costs	(18,007)
Net carrying amount	$	231,993


	Year Ended
	March 31, 2023
Contractual interest expense	$	17,816
Amortization of debt discount and issuance costs	2,012
Total interest expense	$	19,828


	March 31, 2023
Principal	$	201,914
Unamortized debt discount and issuance costs	(5,093)
Net carrying amount	$	196,821


	Year Ended March 31, 2023

Contractual interest expense	$	4,027
Amortization of debt discount and issuance costs	548
Total interest expense	$	4,575


	Years Ended March 31,
		2023		2022		2021
Contractual interest expense		$	1,177	$	2,271	$	1,813
Amortization of debt discount and issuance costs		1,694		20,404		16,898
Total interest expense		$	2,871	$	22,675	$	18,711


	Number of Shares	Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term (in Years)
Balance at March 31, 2020	8,112	$	19.43	1.96
Granted	6,256	18.73
Vested and released	(4,579)	18.90
Forfeited	(1,143)	18.96
Balance at March 31, 2021	8,646	19.27		1.85
Granted	8,333	21.37
Vested and released	(5,146)	19.82
Forfeited	(2,458)	20.85
Balance at March 31, 2022	9,375	20.41		2.11
Granted	13,297	5.71
Vested and released	(5,275)	19.18
Forfeited	(4,404)	12.46
Balance at March 31, 2023	12,993	$	8.56	1.84


Year ended March 31,	Value per Weighted Average Share		Volatility Range				Risk Free Interest Rate Range
2023	$	7.05	51.96	%	—	69.30%	3.15	%	—	4.42	%
2022	$	30.98	58.65	%	—	59.67%	0.34	%	—	0.40	%
2021	$	29.07	55.66	%	—	60.68%	0.15	%	—	0.18	%


	March 31,
Current:	2023		2022		2021
Federal	$	423	$	—	$	—
State	1,331		145		31
Foreign	1,053		721		812
Total current tax provision	2,807		866		843
Deferred
Federal	—		(984)		—
State	—		(269)		—
Foreign	—		—		—
Total deferred tax provision	—		(1,253)		—
Income tax provision (benefit)	$	2,807	$	(387)	$	843


	Revenue for the Years Ended March 31,
	2023		2022		2021
United States	$	536,678	$	443,118	$	390,758
International	207,260		195,012		141,586
Total revenue	$	743,938	$	638,130	$	532,344


	Property and Equipment as of March 31,
	2023		2022
United States	$	54,191	$	73,967
International	3,680		5,049
Total property and equipment, net	$	57,871	$	79,016


Description	Balance at Beginning of Year		Additions Charged to Expenses		Deductions (a)		Balance at End of Year
Total Allowance for Credit Losses:
Year ended March 31, 2021 (b):	$	3,106	$	7,374	$	(2,302)	$	8,178
Year ended March 31, 2022:	$	8,178	$	1,997	$	(3,658)	$	6,517
Year ended March 31, 2023:	$	6,517	$	3,204	$	(4,942)	$	4,779


			8X8, INC.
			By: /s/ Samuel Wilson Samuel Wilson Interim Chief Executive Officer


Signature	Title	Date

/s/ Samuel Wilson Samuel Wilson	Interim Chief Executive Officer and Director (Principal Executive Officer)	May 24, 2023

/s/ Kevin Kraus Kevin Kraus	Interim Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)	May 24, 2023

/s/ Jaswinder Pal Singh Jaswinder Pal Singh	Chairman and Director	May 24, 2023

/s/ Monique Bonner Monique Bonner	Director	May 24, 2023

/s/Todd Ford Todd Ford	Director	May 24, 2023

/s/Alison Gleeson Alison Gleeson	Director	May 24, 2023

/s/ Eric Salzman Eric Salzman	Director	May 24, 2023

/s/ Elizabeth Theophille Elizabeth Theophille	Director	May 24, 2023


Tier	Change-in-Control Benefits	Change-in-Control Severance Benefits	Severance Benefits
Executive	Stock Performance-Based Equity Awards: Performance condition satisfied for 100% of shares subject to a per-share target price no higher than Transaction Price; any service-based vesting applies thereafter TSR Performance-Based Equity Awards: Performance condition satisfied for that number of shares determined by relative appreciation of Company common stock through Change-of-Control date; any service-based vesting applies thereafter	Cash: 100% of Base Salary + 100% of Target Bonus COBRA, Group Benefits and Other Company Sponsored Benefits: 12 months after date of termination Time-Based Equity Awards: 100% acceleration (50% acceleration, if within 12 months of hire date) Performance-Based Equity Awards: 100% acceleration for shares for which performance criteria deemed satisfied as Change- in-Control benefit	Cash: 50% of Base Salary COBRA Benefits: 6 months after date of termination Time-Based Equity Awards: 0% acceleration Performance-Based Equity Awards: 0% acceleration