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October 2013
8x8, Inc.
Corporate Overview 8x8 November 2013 Roadshow
October 21, 2013
Safe Harbor
This presentation includes forward-looking statements within the meaning of the federal securities laws. These statements relate to, among other things, our business strategy, goals and expectations concerning our market position, the growth of the markets in which we compete and the benefits that our customers will realize from our services. We use the words "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", "predict", "project", "will" and similar terms and phrases to identify forward-looking statements in this presentation. Although we believe the assumptions upon which these forward-looking statements are based are reasonable, any of these assumptions could prove to be inaccurate and the forward-looking statements based on these assumptions could be incorrect. Our operations involve risks and uncertainties, many of which are outside our control, and any one of which, or a combination of which, could materially affect our results of operations and whether the forward-looking statements ultimately prove to be correct. Actual results and trends in the future may differ materially from those suggested or implied by the forward- looking statements depending on a variety of factors including those that are described in greater detail under the heading Risk Factors in our preliminary prospectus supplement and under the heading Managements Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in our Annual Report on form 10-K and Quarterly Reports on 10-Q. All future written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the previous statements. We undertake no obligation to update any forward-looking statements that may be made to reflect events or circumstances that occur, or that we become aware of, after the date of this presentation. This presentation contains certain information that has not been derived in accordance with generally accepted accounting principles (GAAP"). Reconciliations of such information to the most directly comparable information derived in accordance with GAAP are contained in this presentation. This information should not be considered a substitute for any measures derived in accordance with GAAP.
Company Overview
Overview $ Millions Revenue (1)
!! Leader in cloud-based unified communications and collaboration (UCC) !! Cloud Telephony !! Contact Center !! Virtual Meeting !! Virtual Desktop !! Over 35,000 business customers !! 14 consecutive quarters of growth and profitability !! Headquartered in San Jose, CA !! ~400 employees
FY2011
Note: Fiscal year ends in March. (1)! Pro forma for divestiture of dedicated server hosting business sold on September 30, 2013.
FY2012
FY2013
1H FY'14
Investment Highlights
Hardware, Carrier and Sub-Carrier Complexity Long, Complex High-Touch Setup Device Proliferation / BYOD Globally Distributed Workforce Lack of Application Integration
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!! Easy-to-Use !! Enhances Productivity !! Flexible & Scalable !! Cost-Effective !! Rapid Deployment !! Makes Global Local
Virtual Office
Virtual Meeting
Virtual Desktop
Virtual Office !! Business phone service !! Virtual Office Mobile for smartphones and tablets !! Virtual Office Collaboration
Virtual Contact Center !! Skills-based routing !! Multimedia queuing !! Real-time monitoring and reporting
Virtual Meeting !! Unlimited meetings with unlimited durations !! Seamless Virtual Office integration !! Integrated VoIP and chat !! Meeting recording and management
Virtual Desktop !! Enterprise-grade secure H/A cloud infrastructure based on Vblock/VMware !! BYOD client support PC, Mac, iOS, Android !! Instant provisioning, easy management
Integration Manager
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$7.1
$0.7 $0.6 $0.9
Virtual Desktop (1) - $0.1 Virtual Meeting (2) - $0.4 Virtual Call Center (3) - $0.5 Virtual Office (4) - $2.0
$2.9
$4.9
2012
Note: Market figures may not sum due to rounding. (1)! Source: IDC. Worldwide Workspace-as-a-Service; Dec 2012. (2)! Source: Frost & Sullivan. Analysis of the Web Event Services Market; Sep 2012. (3)! Source: Gartner. Contact Center as a Service, North America; June 2012. (4)! Source: TechNavio. Global Unified Communication Market; September 2013.
2016
8x8 Market Penetration
Long-Term
Ability to Execute
Completeness of Vision
Source: Gartner. Magic Quadrant for Unified Communications as a Service, North America; Nov 2013.
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$9,360 / Year
$3,168 / Year
Traditional Provider
Average Customer Services Average Price / Service / Month Average Price / Service / Year Total
Average Customer Services Average Price / Service / Month Average Price / Service / Year Total
Note: Analysis represents an average 8x8 customer with approximately 12 subscription services. (1) Represents an estimated subscription cost for a traditional on-premise telephony provider based on various sources including industry research, Wall Street research and the company.
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!! Intelligent software analytics deliver quality connectivity !! Geographic redundancy / failover provides 99.995% availability !! Able to serve customers requiring compliance with major regulatory standards (e.g. FISMA, HIPAA, HITECH, PCI, DSS, CPNI) !! Seamless abstraction of complex SIP/PSTN gateways !! 90+ awarded patents; 60+ current patents
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!! Resellers include:
!! Low-touch high-skill sales representatives !! No travel policy 100% of sales representatives have never met the customer
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2.0%(3)
SaaS Average
(2)
(1)! Figures as of fiscal year 2012 for BCOV, DWRE, FLTX, MKTG, MKTO, SPSC, RNG,TNGO and as of fiscal year 2013 for BV, EGHT and EOPN. (2)! SaaS Comps include: BCOV, BV, DWRE, EOPN, FLTX, MKTG, MKTO, SPSC, RNG and TNGO. (3)! Excludes one-time tenant improvements on new headquarters.
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Growth Strategy
Expand Globally
Growth
Strategy
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Financial Overview
8x8 Roadshow
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Financial Highlights
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FY2011
1H FY'14
FY2011
FY2012 Service
FY2013 Product
1H FY'14
Note: Fiscal year ends in March. (1)! Pro forma for divestiture of dedicated server hosting business sold on September 30, 2013.
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$263 14.1
14.7
2.3%
2.3% 0.9%
12.2
1.2% 1.2% 1.2%
11.3
11.6
(0.4%)
(0.2%)
$242
Q1'13
Q2'13
Q3'13
Q4'13
Q1'14
Q2'14
Q1'13
Q2'13
Q3'13
Q4'13
Q1'14
Q2'14
Q1'13
Q4'13
Business Customer
(1)! Pro forma for divestiture of dedicated server hosting business sold on September 30, 2013. (2)! Net churn defined as gross churn net of upsell / added services.
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Initial Purchase
Upsell
-2,075% 1,221%
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!! $268(1) ARPU per month, increasing over time !! $173(1) (65%) average contribution margin per month, increasing over time !! Current average tenure of 84.0 months, increasing over time
$2,080
!! 6.6 month payback !! Lifetime value does not account for upsell
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FY2013
24.5% (3)
1H FY2014
21.2%
29.7% (3)
30.8% (3)
24.4%
69.1%
69.4%
71.5%
Percent of Revenue
43.5%
43.9%
44.6%
8.1%
7.8%
8.3%
7.2%
8.2%
9.8%
12.4%
14.1%
13.9%
Note: Fiscal year ending March 31. Business revenues defined as revenues from business customers. (1)! Pro forma for divestiture of dedicated server hosting business sold on September 30, 2013. Sales & Marketing includes customer support & billing services costs of ~15% of revenue. (2)! Calculated as a percentage of pro forma revenue. Pro forma reconciliation can be found in the appendix. (3)! Growth represents partial year impact of Contactual acquisition in September 2011.
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Non-GAAP Reconciliation
FY2012 Revenue Pro Forma Adjustments (1) Pro Forma Revenue Gross Profit Pro Forma Adjustments (1) Pro Forma Gross Profit Pro Forma Gross Margin (2) Sales & Marketing Pro Forma Adjustments (1) Pro Forma Sales & Marketing Pro Forma Sales & Marketing (2) General & Administrative Pro Forma Adjustments (1) Pro Forma General & Administrative Pro Forma General & Administrative (2)
(1)! Pro forma for divestiture of dedicated server hosting business sold on September 30, 2013. (2)! Metrics as a percentage of pro forma revenue.
FY2013 $107,614 (3,828) $103,786 $73,612 (1,555) $72,057 69.4% $46,244 (671) $45,573 43.9% $8,619 (61) $8,558 8.2%
$85,803 (2,430) $83,373 $57,916 (339) $57,577 69.1% $37,980 (1,753) $36,227 43.5% $6,012 (39) $5,973 7.2%
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Non-GAAP Reconciliation
FY2012 Net Income Gain on Patent Sale Loss on Investment Non-Cash Tax Adjustments Amortization Stock-Based Compensation Expense Acquisition Related Expense Facility Exit Expense Non-GAAP Net Income Non-GAAP Net Margin (1) $69,228 356 (62,422) 788 1,506 739 140 10,335 12.4%
1H FY2014 $4,370 (589) 1,589 671 2,013 143 133 8,330 13.9%
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NASDAQ: EGHT
8x8 Roadshow
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