8x8, Inc. (NASDAQ:EGHT) Investor Presentation. 16 th Annual B. Riley & Co. Investor Conference May 12, 2015

Transcription

1 8x8, Inc. (NASDAQ:EGHT) Investor Presentation 16 th Annual B. Riley & Co. Investor Conference May 12, 2015

2 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 Management s 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. 1

3 8x8 Transforms Business Communications Enhance Customer Engagement Improve Workgroup Productivity Free Up IT Resources 8x8 provides SaaS communications solutions that help enterprises intelligently increase workgroup collaboration and improve customer engagement. 100% Cloud. Secure. Reliable. Global.

4 Solutions for Today s Complex Communications Challenges Infrastructure Multiple Locations/Global Operations Presence of Disparate Communications Systems Prevalence of BYOD, Mobile & Distributed Workforce Need for Agility & Flexibility Operational Constrained IT Resources Integration with Business Processes/Applications Need for Disaster Recovery/ Risk Mitigation Customer Engagement Across the Enterprise

5 Integrated Cloud UC & Contact Center One Unified Solution Across Multiple Locations & Geographies Business Telephony & Unified Communications Access to all communications in one integrated solution Business phone, virtual meetings, video conferencing Easily managed and quickly deployed Reduced operating costs Minimal to no capital investment Frees up internal IT resources Contact Center Single, global platform that provides worldwide connections with no voice latency Easy-to-deploy and use Out-of-the-box CRM integrations Multi-channel voice, multi-chat, , fax, and social Effective for workforce optimization and quality management Seamless Integration Management

6 Enterprise Ready Solutions Reliable, global & secure enterprise cloud communications RELIABLE % Uptime Performance Assured SLA SUPERIOR SERVICE Elite Touch Deployment Global Analytics and Dashboards SECURE Secure Data Centers Worldwide HIPAA, FISMA and Safe Harbor Compliance

7 Worldwide Presence Through Global Reach Initiative Flexible capacity to support growth throughout the Enterprise Saskatchewan Canada Ashburn, VA United States London, UK (Europe) Hong Kong (Asia) Santa Clara, CA United States Sydney, Australia Six geographically redundant data centers provide seamless connectivity and built-in disaster recovery

8 Elite Touch Customer Success Customer Problem: Enterprise CXO s want to migrate to the cloud quickly and successfully 8x8 Offer: A comprehensive enterprise success enablement, onboarding and support model Benefits: Industry leading time to value Provides the best fit into the customer s network environment Committed to Exceptional Customer Support

9 The Insights of Real Time Analytics A robust suite of communications analytics and reporting tools that provide intelligent and actionable insights about your business, viewable on any device..

10 Setting the Industry Standard Named a Leader in the Gartner Magic Quadrant for UCaaS for three consecutive years. Winner of Ventana Research 2014 Technology Leadership Award for Aon Hewitt implementation of contact center solution. Ranked highest by Frost & Sullivan in delivering customer value in cloud UC and contact center markets. Ranked #1 on Infonetics Research Sixth Annual North American Business VoIP Service Leadership Scorecard. Winner of Best Midmarket Solution at Midmarket CIO Forum 9

11 8 Reasons Customers Choose 8x8 1 Complete communications portfolio 5 Powerful reporting 2 Superior service with Performance Assured 6 Global Reach 3 Broadest level of security and compliance 7 Financial strength 4 Deep application integration 8 Top industry analyst validation

12 Case Study: ChenMed CHALLENGES SOLUTION OUTCOME Outdated PBX only handled phone calls and routing was forced through Miami HQ for all locations Needed fast deployment HIPAA compliance was critical Virtual Office Pro (full UC suite) 38 locations, seats Deployed in 5 weeks HIPAA compliant solution deployed in 5 weeks to 38 sites, 1,400 users ChenMed to save millions on communications costs Quick expansion as employees are added

13 Case Study: TMW Systems CHALLENGES SOLUTION OUTCOME On premises PBX couldn t run new software, needed expensive upgrade Highly mobile workforce Needed a contact center solution for multiple offices Needed a disaster recovery solution Virtual Office Pro (>1000 Seats) Full unified communications Virtual Contact Center (75 Seats) Unified, national queue Higher call quality Better internal and external customer service Lower costs and a consistent OPEX spend Significantly reduced IT s telecom workload

14 Case Study: Shutterstock CHALLENGES SOLUTION OUTCOME International offices Multiple vendors for telephony plus contact center Complicated billing Complicated management Disaster Recovery Virtual Office and Virtual Contact Center w/salesforce integration Servicing customers in 150 countries in 20 languages with a Global Call Queue Disaster Recovery

15 Effective Two-Tier Go-to Market Model Moving up-market to drive growth and increase average service revenue per customer 3Q FY2014 Revenue by Market Segment 3Q FY2015 Revenue by Market Segment 62% 38% 58% 42% Sales Team SMB Sales Direct, inside sales of <50 employees MRR (1) <$1,000 >$1,000 New MRR (1) as a % of revenue ~56% ~44% Mid-Market & Channel Sales Large customer-focused account executives Communications and contact center experts designing multi-level customer solutions (1) MRR Monthly recurring revenue, Figures as of 3Q FY2015

16 Seizing Multiple Opportunities for Growth New Product / Service Offerings on Integrated Platform Growth Increase Mid-Market / Distributed Enterprise Adoption Expand Global Reach to Serve Distributed and Global Enterprises Capture a Larger Share of Existing Customers Wallets by Upselling Additional Services Strategy Accelerating growth by broadening existing customer relationships, expanding on success in mid-market to move into the enterprise and broadening our presence in existing geographies via acquisitions and partners 18

17 Fueling Growth with Mid-Market Expansion Revenue Non-GAAP Net Income $ millions $ millions as a % of total revenue $128.6 $14.7 $14.1 $68.6 $83.4 $103.8 $7.1 $ % 13.6% 11.0% 10.1% FY2011 FY2012 FY2013 FY2014 FY2011 FY2012 FY2013 FY2014 Successfully Moving Upmarket to Drive Strong Growth

18 Increasing Monthly Recurring ARPU Mid-Market, Enterprise focus should drive even higher ARPU over time 21% Increase $287 $293 $299 $305 $263 $268 $274 $252 $256 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 ARPU Average revenue per user Growing our ARPU each quarter 23

19 Compelling Economics of a Mid-Market Customer Customer Acquisition Cost Customer Contribution ~$200,000 $3,500 (1) ARPU per month, increasing over time 65% average contribution margin per month 14 month payback $27,300 Lifetime value (assuming conservative 1% monthly churn) = ~ 40x that of SMB customer ($31,000) Year 1 Through Year 8 (1) ARPU average revenue per customer, as of Q4 fiscal 2014 Relatively low up-front investment leads to solid contribution margin for a quick payback and significant ROI 22

20 Capital Light Business Model Company s Capital Expenditures Far Lower than SaaS Industry Average % of Revenue (1) 7.6% 4.8% Saas Average Lower capital requirements drive higher gross margins (2) (1) Figures as of fiscal year 2012 for SaaS Comps BCOV, DWRE, FLTX, MKTG, MKTO, SPSC, RNG,TNGO and as of Q3FY15 for EGHT. 16

21 Third Quarter Fiscal 2015 Results Revenue Non-GAAP Net Income (1) Cash & Cash Equivalents $ millions +26% $ millions $ millions $187.9 $32.7 $41.4 $4.1 10% $2.5 $ % FQ FQ New sales from mid-market & channel increased 42% y./y Mid-market service revenue 42% of total vs. 38% in the prior period Business customers up 11.7% to 41,051 FQ FQ Increasing Non-GAAP net income in $ and as a % of total revenue 80% GAAP service margin; 72% overall gross margin 3/31/ /31/2014 Continue to generate strong operating cash flow Strong cash position enabled new $20M share repurchase program in March 2015 No debt (1) Non-GAAP net income as a % of total revenue; refer to table on Slide 24 for reconciliation to GAAP net income

22 Investment Highlights Transforming Business Communications from a Utility to a Business Enabler Ticker Market Cap Corporate Snapshot EGHT $767.6M Shares outstanding 89.9M Fiscal Year End 3/31 FY2014 Revenue $128.6M ARPU $305 FY2014 Non-GAAP EPS $0.17 Cash Balance (12/31/14) Debt Outstanding $0 $187.9M Key Investment Highlights Next-generation, pure cloud communications suite fully-integrated unified communications, contact center and analytics across a single platform Enormous market opportunity ~$40B global PBX replacement market with <10% penetration Strong growth... ~26% revenue growth forecasted in FY2015 Solid profitability five consecutive years of profitability Expansive and diverse customer base 40,000+ customers in 40 countries Proven success moving upmarket Mid-Market and Enterprise customer segment focus provides longer retention, reduced churn and higher ASPs Impeccable service record industry-leading security, compliance and % reliability from internallydeveloped technology platform

23 Delivering Communications for 40,000+ Businesses 8 of our top 10 customers subscribe to both Virtual Office and Virtual Contact Center

24 Non-GAAP Reconciliation 26

25 NASDAQ:EGHT