SANTA CLARA, Calif. (Map) - SANTA CLARA, Calif., Oct. 30 /PRNewswire-FirstCall/ -- 8x8, Inc. (Nasdaq: EGHT), provider of Packet8 (http://www.packet8.net) broadband business, residential, video and mobile communications services, today announced financial operating results for its second fiscal quarter ended September 30, 2008.

Revenues for the second quarter of fiscal 2009 increased to $16.4 million, compared with $14.8 million for the same period of fiscal 2008 and $16.3 million for the previous quarter. 8x8 Virtual Office revenue grew to 60% of total revenue in the second quarter of fiscal 2009 compared with 47% of total revenue in the same period of fiscal 2008 and 56% of total revenue in the previous quarter. Sequentially, 8x8 Virtual Office revenue grew 41% from the same period of fiscal 2008 and 8% from the previous quarter. Overall gross margin for the second quarter of fiscal 2009 was 65%, compared with 52% for the same period of fiscal 2008.

GAAP net income for the quarter was $44,000 or $0.00 per share, compared with a net loss of $2.6 million, or ($0.04) per share, for the same period in fiscal 2008 and net income of $1.2 million, or $0.02 per share, for the previous quarter. The Company's cash and investments increased to $15.8 million in the second quarter of fiscal 2009 from $12.9 million in the same period of fiscal 2008 and $14.8 million in the previous quarter.

During the second quarter of fiscal 2009, the Company increased its 8x8 Virtual Office base by 1,846 net new customers and now provides service to more than 13,700 companies with its business communications solutions.

"8x8's money saving Virtual Office communications services are more critical than ever to businesses," said 8x8 Chairman & CEO Bryan R. Martin. "With nearly $16 million in cash and no debt, the Company remains well positioned in its efforts to transition more and more small businesses away from budget-wasting legacy phone solutions. The potential of our Virtual Office service to cut fixed costs to businesses of any size and drive increased efficiencies and capabilities into the telecommunications infrastructure of these companies is more relevant than ever in this economic environment and we are driving this message home to all prospective customers."

Q2 FY'09 Business Highlights:

-- Added 1,846 net new businesses to end the quarter with over 13,700 companies subscribing to 8x8 Virtual Office services

-- Successfully transitioned approximately 1,000 former business customers and a unified communications technology platform from Avtex, LLC to the 8x8 Virtual Office network

-- Added $938,000 in cash and investments quarter over quarter and $2.9 million year over year to the Company's balance sheet for the Company's sixth consecutive quarter of increasing cash and investments

-- Working capital increased year to date by $2.2 million to $8.3 million and stockholder equity increased by $2.1 million to $10 million over the same period

-- Increased business services revenue to 60% of total revenue -- up from 47% in the year ago period

-- Introduced family of leading edge desktop IP phones and new Hosted Key System services

-- Announced marketing partnership and technology certification with Microsoft's Response Point small business phone system

-- Expanded headcount of inside direct sales force, which accounted for 80% of new business sales during the quarter, by more than 30%

-- Expanded indirect channel network to include more than 30 resellers and VARs

Management will host a conference call to discuss these results and other matters related to the Company's business today, October 30, 2008, at 4:30 p.m. ET. To access the call, dial 888-680-0878 (domestic) or 617-213-4855 (international), passcode 80066242. 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), passcode 69582458. 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. 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 solution that best fits their needs, whether it's the Virtual Office Hosted iPBX phone system, Complete Contact Center, Virtual Trunking IP dial tone solution, Hosted Key System service or Microsoft Response Point/8x8 small business phone system. All 8x8 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 http://www.8x8.com.

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.

8x8, Inc. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts; unaudited) Three Months Ended Six Months Ended September 30, September 30, 2008 2007 2008 2007 Service revenues $14,903 $13,272 29,922 $26,683 Product revenues 1,522 1,496 2,784 2,827 Total revenues 16,425 14,768 32,706 29,510 Operating expenses: Cost of service revenues 4,022 4,430 7,836 8,416 Cost of product revenues 1,673 2,652 3,105 4,035 Research and development 1,299 1,026 2,491 2,083 Selling, general and administrative 9,667 10,050 18,418 18,969 Total operating expenses 16,661 18,158 31,850 33,503 Income (loss) from operations (236) (3,390) 856 (3,993) Other income, net 107 161 192 293 Income on change in fair value of warrant liability 190 671 259 1,650 Income (loss) before provision for income taxes 61 (2,558) 1,307 (2,050) Provision for income taxes 17 - 75 - Net income (loss) $44 $(2,558) 1,232 $(2,050) Net income (loss) per share: Basic $0.00 $(0.04) $0.02 $(0.03) Diluted $0.00 $(0.04) $0.02 $(0.03) Weighted average number of shares: Basic 62,278 61,870 62,187 61,822 Diluted 62,361 61,870 62,277 61,822 8x8, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, unaudited) September 30, March 31, 2008 2008 ASSETS Current assets Cash and cash equivalents $15,772 $11,185 Short-term investments - 3,382 Accounts receivable, net 710 1,807 Inventory 1,753 1,539 Other current assets 1,521 1,492 Total current assets 19,756 19,405 Property and equipment, net 1,770 2,010 Other assets 18 136 Total assets $21,544 $21,551 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $3,769 $4,885 Accrued compensation 1,168 1,048 Accrued warranty 298 314 Deferred revenue 3,646 3,139 Other accrued liabilities 2,559 3,872 Total current liabilities 11,440 13,258 Other liabilities 66 109 Fair value of warrant liability 75 335 Total liabilities 11,581 13,702 Total stockholders' equity 9,963 7,849 Total liabilities and stockholders' equity $21,544 $21,551