UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



	FORM	10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~June 30, ~~2019~~2020

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________to _________

Commission file number ~~000-21783~~001-38312

~~8X8,~~8x8, INC.

(Exact name of Registrant as Specified in its Charter)



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

~~2125 O'Nel Drive~~675 Creekside Way

~~San Jose~~Campbell, CA ~~95131~~95008

(Address of ~~Principal Executive Offices)~~

principal executive offices)

(408) 727-1885

(Registrant's ~~Telephone Number,~~telephone number, including ~~Area Code)~~area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol	Name of each exchange on which registered
COMMON STOCK, PAR VALUE $.001 PER SHARE	EGHT	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ The number of shares of the Registrant's Common Stock outstanding as of ~~October 21, 2019~~July 29, 2020 was ~~100,225,912.~~104,234,242.

Table of Contents

8X8, INC

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2020

TABLE OF CONTENTS



	Page No.
Forward-Looking Statements and Risk Factors	2
PART I. FINANCIAL INFORMATION	34
Item 1. Financial Statements (unaudited):	34
Condensed Consolidated Balance Sheets at ~~September~~June 30, ~~2019~~2020 and March 31, ~~2019~~2020	34
Condensed Consolidated Statements of Operations for the three ~~and six~~ months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019	45
Condensed Consolidated Statements of Comprehensive Loss for the three ~~and six~~ months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019	56
Condensed Consolidated Statements of ~~Stockholders~~Stockholders' Equity for the three ~~and six~~ months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019	67
Condensed Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019	78
Notes to Unaudited Condensed Consolidated Financial Statements	810
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	1920
Item 3. Quantitative and Qualitative Disclosures About Market Risk	2627
Item 4. Controls and Procedures	2627
PART II. OTHER INFORMATION	2729
Item 1. Legal Proceedings	2729
Item 1A. Risk Factors	2729
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	2729
Item 3. Defaults Upon Senior Securities	2729
Item 4. Mine Safety Disclosures	2730
Item 5. Other Information	2730
Item 6. Exhibits	2831
Signature	2932

Table of Contents

Forward-Looking Statements and Risk Factors

Statements contained in this quarterly report on Form 10-Q, or Quarterly Report, regarding our expectations, beliefs, estimates, intentions or strategies are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. For example, words such as "may," "will," "should," "estimates," "predicts," "potential," "continue," "strategy," "believes," "anticipates," "plans," "expects," "intends," and similar expressions are intended to identify forward-looking statements. These forward-looking statements include, but are not limited to, statements regarding: industry trends; our number of customers; average annual service revenue per customer; cost of service revenue and other revenue; research and development expenses; hiring of employees; sales and marketing expenses; and general and administrative expenses in future periods; and the impact of the COVID-19 pandemic. You should not place undue reliance on these forward-looking statements. Actual results and trends may differ materially from historical results and those projected in any such forward-looking statements depending on a variety of factors. These factors include, but are not limited to:

~~market acceptance~~the impact of ~~new or existing services~~economic downturns on us and ~~features we may offer~~our customers, including the impacts of the COVID-19 pandemic;

customer cancellations and rate of customer churn;

benefits that can be realized from ~~time to time;~~legacy products, including reducing the number of supported platforms and improved customer churn;

customer acceptance and demand for our cloud communication and collaboration services, including voice, contact center, video, messaging, and communication APIs;

competitive market pressures, and any changes in the competitive dynamics of the markets in which we compete;

market acceptance of new or existing services and features we may offer from time to time;

the quality and reliability of our ~~services;~~

~~customer cancellations~~products and ~~rate of customer churn;~~services;

our ability to scale our business;

customer acquisition costs;

our reliance on a network of channel partners to provide substantial new customer demand;

upfront investments, including the cost to support new strategic initiatives such as our cloud migration program with value-added resellers ("VAR") and other partners, to acquire more customers may not result in additional revenue from new or existing customers;

timing and extent of improvements in operating results from increased spending in marketing, sales, and research and development;

the amount and timing of costs associated with recruiting, training and integrating new employees and retaining existing employees;

our reliance on infrastructure of third-party network services providers;

risk of failure in our physical infrastructure;

risk of defects or bugs in our software;

risk of cybersecurity breaches;

our ability to maintain the compatibility of our software with third-party applications and mobile platforms;

continued compliance with industry standards and regulatory requirements, including privacy, in the United States and foreign countries in which we make our cloud software and services solutions available, and the costs of such compliance;

introduction and adoption of our cloud software solutions in markets outside of the United States;

risks relating to the acquisition and integration of businesses we have acquired ~~(most recently,~~(for example, Wavecell Pte. Ltd.) or may acquire in the future, particularly if the acquired business operates in a different product market space from us or is based in a region where we do not have significant operations;

~~the amount and timing~~

Table of ~~costs associated with recruiting, training and integrating new employees;~~Contents

~~timing and extent of improvements in operating results from increased spending in marketing, sales, and research and development;~~

~~introduction and adoption of our cloud software solutions in markets outside of the United States;~~

~~risk of cybersecurity breaches;~~

risks related to our senior convertible notes and the related capped call transactions;

~~general economic conditions that could adversely affect our business and operating results;~~

implementation and effects of new accounting standards and policies in our reported financial results; and

potential future intellectual property infringement claims and other litigation that could adversely impact our business and operating results.

Please refer to the "Risk Factors" section of our annual report on Form 10-K for the fiscal year ended March 31, ~~2019,~~2020 as modified by the "Risk Factors" section of this Quarterly Report, and subsequent Securities and Exchange Commission ("SEC") filings for additional factors that could materially affect our financial performance. All forward-looking statements included in this Quarterly Report are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. Readers are urged to carefully review and consider the various disclosures made in this Quarterly Report, which attempts to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.

Our fiscal year ends on March 31 of each calendar year. Each reference to a fiscal year in this Quarterly Report, refers to the fiscal year ended March 31 of the calendar year indicated (for example, fiscal ~~2020~~2021 refers to the fiscal year ended March 31, ~~2020)~~2021). Unless the context requires otherwise, references to "we," "us," "our," "8x8" and the "Company" refer to 8x8, Inc. and its consolidated subsidiaries.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

8X8, ~~Inc.~~INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, unaudited)


	September 30, 2019			March 31, 2019			June 30, 2020			March 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	162,219		$	276,583		$	116,690		$	137,394
Restricted cash, current	3,459			—			10,376			10,376
Short-term investments	29,324			69,899			40,580			33,458
Accounts receivable, net	30,743			20,181			40,572			37,811
Deferred sales commission costs	18,572			15,601
Deferred sales commission costs, current							24,247			22,444
Other current assets	22,803			15,127			35,336			35,679
Total current assets	267,120			397,391			267,801			277,162
Property and equipment, net	64,776			52,835			96,112			94,382
Operating lease, right-of-use assets	78,147			—			76,054			78,963
Intangible assets, net	28,410			11,680			21,773			24,001
Goodwill	131,879			39,694			128,980			128,300
Restricted cash, non-current							8,641			8,641
Long-term investments	20,448			—			9,965			16,083
Restricted cash, non-current	15,558			8,100
Deferred sales commission costs, non-current	42,139			33,693			58,535			53,307
Other assets	18,133			2,965			20,232			19,802
Total assets	$	666,610		$	546,358		$	688,093		$	700,641
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	42,134		$	32,280		$	39,342		$	40,261
Accrued compensation	25,847			18,437			27,764			22,656
Accrued taxes	12,175			13,862			9,220			10,251
Operating lease liabilities, current	5,292			—			9,989			5,875
Deferred revenue	4,270			3,336
Deferred revenue, current							8,352			7,105
Other accrued liabilities	19,329			6,790			26,873			37,277
Total current liabilities	109,047			74,705			121,540			123,425

Operating lease liabilities, non-current	75,221			—			87,884			92,452
Convertible senior notes, net	222,432			216,035			295,662			291,537
Other liabilities, non-current	21,033			6,228			4,141			2,496
Total liabilities	427,733			296,968			509,227			509,910
Commitments and contingencies (Note 8)
Stockholders' equity:
Common stock	100			96			104			103
Additional paid-in capital	575,416			506,949			657,014			625,474
Accumulated other comprehensive loss	(11,140		)	(7,353		)	(10,869		)	(12,176		)
Accumulated deficit	(325,499		)	(250,302		)	(467,383		)	(422,670		)
Total stockholders' equity	238,877			249,390			178,866			190,731
Total liabilities and stockholders' equity	$	666,610		$	546,358		$	688,093		$	700,641

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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8X8, ~~Inc.~~INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts; unaudited)


	Three Months Ended September 30,						Six Months Ended September 30,						Three Months Ended June 30,
	2019			2018			2019			2018			2020			2019
Service revenue	$	104,529		$	81,346		$	196,901		$	159,467		$	114,183		$	89,839
Product revenue	4,988			4,336			9,291			9,440
Other revenue													7,624			6,836
Total revenue	109,517			85,682			206,192			168,907			121,807			96,675
Cost of revenue and operating expenses:
Operating expenses:
Cost of service revenue	43,195			26,202			75,162			50,751			40,996			25,300
Cost of product revenue	6,502			5,397			12,226			11,678
Cost of other revenue													11,137			12,391
Research and development	19,434			14,064			37,765			27,114			21,494			18,331
Sales and marketing	57,895			41,680			111,494			82,175			60,150			53,599
General and administrative	20,435			20,326			40,042			35,159			25,790			19,607
Total operating expenses	147,461			107,669			276,689			$	206,877		159,567			129,228
Loss from operations	(37,944		)	(21,987		)	(70,497		)	$	(37,970	)	(37,760		)	(32,553		)
Other (expense) income, net	(2,732		)	635			(4,296		)	1,354
Other income (expense), net													(3,925		)	(1,564		)
Loss before provision for income taxes	(40,676		)	(21,352		)	(74,793		)	(36,616		)	(41,685		)	(34,117		)
Provision for income taxes	256			130			404			221			228			148
Net loss	$	(40,932	)	$	(21,482	)	$	(75,197	)	$	(36,837	)	$	(41,913	)	$	(34,265	)
Net loss per share:
Basic and diluted	$	(0.42	)	$	(0.23	)	$	(0.77	)	$	(0.39	)	$	(0.40	)	$	(0.36	)
Weighted-average common shares outstanding:
Basic and diluted	98,353			93,831			97,356			93,449			103,607			96,429

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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8X8, ~~Inc.~~INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands, unaudited)


	Three Months Ended September 30,						Six Months Ended September 30,				Three Months Ended June 30,
	2019			2018			2019		2018		2020			2019
Net loss	$	(40,932	)	$	(21,482	)	(75,197	)	(36,837	)	$	(41,913	)	$	(34,265	)
Other comprehensive loss, net of tax
Unrealized gain (loss) on investments in securities	(3		)	149			118		262
Other comprehensive income (loss), net of tax
Unrealized gain on investments in securities											422			121
Foreign currency translation adjustment	(3,253		)	(379		)	(3,905	)	(2,051	)	885			(652		)
Comprehensive loss	$	(44,188	)	$	(21,712	)	(78,984	)	(38,626	)	$	(40,606	)	$	(34,796	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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8X8, ~~Inc.~~INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands, except shares, unaudited)


	Common Stock			Additional Paid-in Capital			Accumulated Other Comprehensive Loss			Accumulated Deficit			Total			Common Stock			Additional Paid-in Capital			Accumulated Other Comprehensive Loss			Accumulated Deficit			Total
	Shares	Amount														Shares	Amount
Balance at March 31, 2019	96,119,888	$	96	$	506,949		$	(7,353	)	$	(250,302	)	$	249,390
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	451,308	1		1,493			—			—			1,494			688,414	1		(67		)	—			—			(66		)
Stock-based compensation expense	—	—		14,059			—			—			14,059			—			23,118			—			—			23,118
Issuance of common stock related to acquisition																—	—		8,489			—			—			8,489
Unrealized investment gain	—	—		—			121			—			121			—						422			—			422
Foreign currency translation adjustment	—	—		—			(652		)	—			(652		)	—						885			—			885
Net loss	—	—		—			—			(34,265		)	(34,265		)	—									(41,913		)	(41,913		)
Balance at June 30, 2019	96,571,196	97		522,501			(7,884		)	(284,567		)	230,147
Issuance of common stock under stock plans, less withholding	1,761,483	2		(790		)	—			—			(788		)
Stock-based compensation expense	—	—		17,867			—			—			17,867
Issuance of common stock related to acquisitions	1,476,009	1		35,838			—			—			35,839
Unrealized investment loss	—	—		—			(3		)	—			(3		)
Foreign currency translation adjustment	—	—		—			(3,253		)	—			(3,253		)
Net loss	—	—		—			—			(40,932		)	(40,932		)
Balance at September 30, 2019	99,808,688	$	100	$	575,416		$	(11,140	)	$	(325,499	)	$	238,877
Balance at June 30, 2020																103,867,035	$	104	$	657,014		$	(10,869	)	$	(467,383	)	$	178,866

Common Stock
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Total
Shares Amount
Balance at March 31, 2018 92,847,354
$ 93
$ 425,790
$ (5,645 ) $ (201,464 ) $ 218,774
Issuance of common stock under stock plans, less withholding 403,377
—
777
—
—
777
Stock-based compensation expense —
—
9,304
—
—
9,304
Unrealized investment gain —
—
—
113
—
113
Foreign currency translation adjustment —
—
—
(1,672 ) —
(1,672 )
Adjustment from adoption of ASU 2016-9 —
—
—
—
39,901
39,901
Net loss —
—
—
—
(15,355 ) (15,355 )
Balance at June 30, 2018 93,250,731
93
435,871
(7,204 ) (176,918 ) 251,842
Issuance of common stock under stock plans, less withholding 1,840,387
1
(596 ) —
—
(595 )
Stock-based compensation expense —
—
9,829
—
—
9,829
Unrealized investment gain —
—
—
149
—
149
Foreign currency translation adjustment —
—
—
(379 ) —
(379 )
Net loss —
—
—
—
(21,482 ) (21,482 )
Balance at September 30, 2018 95,091,118
$ 94
$ 445,104
$ (7,434 ) $ (198,400 ) $ 239,364

~~The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.~~

~~8X8, Inc.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(In thousands, unaudited)~~

Six Months Ended September 30,
2019 2018
Cash flows from operating activities:

Net loss $ (75,197 ) $ (36,837 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 4,599
4,231
Amortization of intangible assets 3,827
2,857
Amortization of capitalized software 8,242
3,749
Amortization of debt discount and issuance costs 6,397
—
Amortization of deferred sales commission costs 8,718
6,664
Operating lease expense, net of accretion 6,234
—
Non-cash lease expenses —
2,401
Stock-based compensation 30,988
19,040
Other 1,634
538
Changes in assets and liabilities:
Accounts receivable, net (2,563 ) (3,347 )
Deferred sales commission costs (20,498 ) (11,339 )
Other current and non-current assets (17,418 ) (1,452 )
Accounts payable and accruals (400 ) 8,131
Deferred revenue 922
814
          Net cash used in operating activities (44,515 ) (4,550 )
Cash flows from investing activities:
Purchases of property and equipment (7,138 ) (2,878 )
Purchase of businesses (58,741 ) (2,625 )
Capitalized software development costs (14,339 ) (11,386 )
Proceeds from maturities of investments 8,545
35,455
Proceeds from sales of investments 30,639
23,604
Purchases of investments (18,890 ) (42,437 )
          Net cash used in investing activities (59,924 ) (267 )
Cash flows from financing activities:
Finance lease payments (227 ) (525 )
Tax-related withholding of common stock (5,426 ) (8,183 )
Proceeds from issuance of common stock under employee stock plans 6,134
6,720
          Net cash provided by (used in) financing activities 481
(1,988 )
Effect of exchange rate changes on cash 511
(221 )
Net decrease in cash and cash equivalents, and restricted cash (103,447 ) (7,026 )
Cash, cash equivalents, and restricted cash at the beginning of the period 284,683
39,803
Cash, cash equivalents, and restricted cash at the end of the period $ 181,236
$ 32,777
Supplemental cash flow information
Income taxes paid $ 361
$ 250
Interest paid 647
—
Right of use assets obtained in exchange for new operating lease liabilities 62,832
—



	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss			Accumulated Deficit			Total
	Shares	Amount		Additional Paid-in Capital		Accumulated Other Comprehensive Loss			Accumulated Deficit			Total
Balance at March 31, 2019	96,119,888	$	96	$	506,949	$	(7,353	)	$	(250,302	)	$	249,390
Issuance of common stock under stock plans, less withholding	451,308	1		1,493		—			—			1,494
Stock-based compensation expense	—	—		14,059		—			—			14,059
Unrealized investment gain	—	—		—		121			—			121
Foreign currency translation adjustment	—	—		—		(652		)	—			(652		)
Net loss	—	—		—		—			(34,265		)	(34,265		)
Balance at June 30, 2019	96,571,196	$	97	$	522,501	$	(7,884	)	$	(284,567	)	$	230,147

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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8X8, ~~Inc.~~INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)



	Three Months Ended June 30,
	2020			2019
Cash flows from operating activities:
Net loss	$	(41,913	)	$	(34,265	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	2,823			2,325
Amortization of intangible assets	2,228			1,524
Amortization of capitalized software	6,217			3,805
Amortization of debt discount and issuance costs	4,126			3,173
Amortization of deferred sales commission costs	6,138			4,189
Allowance for credit losses	1,742			429
Operating lease expense, net of accretion	3,750			2,085
Stock-based compensation	22,779			13,597
Other	602			597
Changes in assets and liabilities:
Accounts receivable, net	(3,428		)	(3,765		)
Deferred sales commission costs	(13,186		)	(8,707		)
Other current and non-current assets	(3,025		)	(5,740		)
Accounts payable and accruals	(519		)	(588		)
Deferred revenue	2,416			832
Net cash used in operating activities	(9,250		)	(20,509		)
Cash flows from investing activities:
Purchases of property and equipment	(2,453		)	(1,984		)
Cost of capitalized software	(8,866		)	(7,738		)
Proceeds from maturities of investments	16,575			4,600
Proceeds from sales of investments	—			29,793
Purchases of investments	(17,156		)	(13,500		)
Net cash (used in) provided by investing activities	(11,900		)	11,171
Cash flows from financing activities:
Finance lease payments	(67		)	(130		)
Tax-related withholding of common stock	(69		)	(23		)
Proceeds from issuance of common stock under employee stock plans	2			1,520
Net cash (used in) provided by financing activities	(134		)	1,367
Effect of exchange rate changes on cash	580			413
Net decrease in cash and cash equivalents, and restricted cash	(20,704		)	(7,558		)
Cash, cash equivalents, and restricted cash at the beginning of the period	156,411			284,683
Cash, cash equivalents, and restricted cash at the end of the period	$	135,707		$	277,125
Supplemental and non-cash disclosures:
Income taxes paid	$	165		$	218

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Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets (in thousands):



	June 30,
	2020		2019
Cash and cash equivalents	$	116,690	$	269,025
Restricted cash, current	10,376		—
Restricted cash, non-current	8,641		8,100
Total cash, cash equivalents, and restricted cash	$	135,707	$	277,125

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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8X8, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. DESCRIPTION OF BUSINESS

8x8, Inc. ("8x8" or the "Company") was incorporated in California in February 1987 and was reincorporated in Delaware in December 1996. The unaudited interim condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The Company conducts its operations through 1 reportable segment.

The Company is a leading cloud provider of enterprise Software-as-a-Service ~~(SaaS)~~("SaaS") communications solutions that enable businesses of all sizes to communicate faster and smarter across voice, ~~contact center,~~ video meetings, ~~messaging,~~chat, and ~~communication APIs,~~contact centers, transforming both employee and customer experiences with communications that work simply, integrate seamlessly, and perform reliably. From one proprietary cloud technology platform, customers have access to unified communications, team collaboration, video conferencing, contact center, data and analytics, ~~communication APIs,~~ and other services. ~~Since fiscal 2004, substantially~~Substantially all revenue ~~has been~~is generated from communication services subscriptions and platform usage. The Company also generates revenue from sales of hardware and professional services, which are complementary to the ~~sale~~delivery of ~~communications services and related hardware. Prior to fiscal 2003, the Company's main business was Voice over Internet Protocol semiconductors.~~our integrated technology platform.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION AND CONSOLIDATION

The Company's fiscal year ends on March 31 of each calendar year. Each reference to a fiscal year in these notes to the condensed consolidated financial statements refers to the fiscal year ended March 31 of the calendar year indicated (for example, fiscal ~~2020~~2021 refers to the fiscal year ending March 31, ~~2020)~~2021).

The accompanying interim condensed consolidated financial statements are unaudited and have been prepared on substantially the same basis as our annual consolidated financial statements for the fiscal year ended March 31, 2019 with the exception of new lease accounting guidance discussed in the recently adopted accounting principles section below. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") ~~have been condensed or omitted pursuant to the rules~~ and regulations of the ~~SEC,~~Securities and Exchange Commission (SEC) regarding interim financial reporting.

In the opinion of the Company's management, these interim condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement of our financial position, results of operations, and cash flows for the periods presented. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from these estimates.

The March 31, ~~2019~~2020 year-end condensed consolidated balance sheet data in this document were derived from audited consolidated financial statements and does not include all of the disclosures required by GAAP. These condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements as of and for the fiscal year ended March 31, ~~2019~~2020 and notes thereto included in the Company's fiscal ~~2019 Annual Report~~2020 annual report on Form 10-K.

There have been no material changes in our significant accounting policies as described in the Company's annual report on Form 10-K for the year ended March 31, 2020 during the three months ended June 30, 2020, except for the accounting policies described below that were updated as a result of adopting Accounting Standards Update ("ASU") 2016-03, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, further amended by various ASUs and ASU 2018-15, Intangibles-Goodwill and Other-Internal Use Software (Subtopic 350-40). The results of operations and cash flows for the interim periods included in these condensed consolidated financial statements are not necessarily indicative of the results to be expected for any future ~~period~~periods or the entire fiscal year.

USE OF ESTIMATES

The preparation of the condensed consolidated financial statements in conformity with ~~accounting principles generally accepted in the United States~~GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and equity, and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, including, but not limited to, those related to ~~bad debts,~~allowance for credit losses, returns reserve for expected cancellations, fair value of and/or evaluation for impairment of goodwill and intangible assets, capitalization of internally developed software, benefit period for deferred sales commission costs, stock-based compensation expense, incremental borrowing rate used to calculate operating lease liabilities, income and sales tax liabilities, ~~stock-based compensation,~~fair value of convertible senior notes, litigation, and other contingencies. The Company bases its estimates on known facts and circumstances, historical experience, and on various other assumptions. Actual results could differ from those estimates under different assumptions or conditions.

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RECLASSIFICATIONS AND OTHER CHANGES

During the fourth quarter of fiscal 2020, the Company determined that presenting service revenue as revenue from the Company's core communication services would provide transparency and clarity to the users of the financial statements. As such, the Company reclassified certain revenue and cost of revenue on its condensed consolidated statement of operations for the three months ended June 30, 2019. The reclassifications did not have any impact on total revenue, consolidated net loss, or cash flows. Professional services revenue and cost of professional services revenue previously reported in service revenue and cost of service revenue are now reported in other revenue and cost of other revenue. Product revenue and cost of product revenue are also now reported in other revenue and cost of other revenue.

~~Certain~~In addition, certain prior year amounts in the ~~statement~~condensed consolidated statements of cash flows have been reclassified to conform with the current year ~~presentation.~~

~~SIGNIFICANT ACCOUNTING POLICIES~~

~~The significant accounting policies used in preparation~~presentation of ~~these condensed consolidated financial statements are disclosed in our Annual Report on Form 10-K~~allowance for the fiscal year ended March 31, 2019 filed with the SEC on May 21, 2019, and there have been no changes to the Company's significant accounting policies during the three and six months ended September 30, 2019 except for the accounting policies described below that were updated as a result of adopting Accounting Standards Update ("ASU") 2016-02, ~~Leases. All amounts and disclosures set forth herein are in compliance with this standard.~~credit losses.

RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

~~Effective~~In June 2016, the FASB issued ASU 2016‑13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, further amended by ASU 2018-19 issued in November 2019, ASU 2019-04 issued in April 1, 2019, ASU 2019-05 issued in May 2019, ASU 2019-10 issued in November 2019, and ASU 2019-11 issued in November 2019, which replaces the existing impairment model with a forward-looking expected loss method. Under this update, on initial recognition and at each reporting period, an entity is required to recognize an allowance that reflects the entity's current estimate of credit losses expected to be incurred over the life of the financial instrument. For trade receivables, loans, and other financial instruments, an entity is required to use a forward-looking expected loss model to recognize credit losses that are probable. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. These changes result in more timely recognition of credit losses. These ASUs are effective for annual and interim periods beginning after December 15, 2019, which is fiscal 2021 for the Company. The Company adopted ASU ~~No. 2016-02 (“ASU 2016-02”),~~ ~~Leases~~ ~~using the~~2016-13 on a modified retrospective transition approach utilizing the effective date as the date of initial application. ASU 2016-02 establishes a new lease accounting model for leases, which requires lessees to recognize right-of-use assets and lease liabilities on the balance sheet, but lease expense will be recognized on the income statement in a manner similar to previous requirements. Prior years presented have not been adjusted for ASU 2016-02 and continue to be reported in accordance with our historical accounting policy.

The new standard provides a number of optional practical expedients in transition. The Company has elected the package of practical expedients permitted under the new lease standard, which among other things, allows the carryforward of the historical lease classification. As a result, there was no impact to opening retained earnings. The new standard also provides a practical expedient for an entity’s ongoing accounting. The Company has elected such practical expedient to not separate lease and non-lease components for all leases. It also made an accounting policy election to not recognize right-of-use assets and lease liabilities on the balance sheet for leases with a term of 12 months or less and will recognize lease payments as an expense on a straight-line basis ~~over the lease term.~~

The adoption of the new lease standard resulted in the recognition of right-of-use assets and lease liabilities of approximately $20.0 million and $21.4 million, respectively, for existing operating leases. The Company does not have significant finance lease right-of-use assets or liabilities. The adoption of the new lease standard did not have a material impact on the Company's accumulated deficit as of April 1, ~~2019. For additional information on leases and~~2020 through a cumulative-effect adjustment to the Company's beginning accumulated deficit balance; the impact of the ~~new lease standard, refer~~adoption was not material to ~~Note 7.~~

~~RECENT ACCOUNTING PRONOUNCEMENTS~~the Company's consolidated financial statements as credit losses are not expected to be significant based on historical collection trends, the financial condition of the Company’s customers, and external market factors, including those related to the COVID-19 pandemic. The Company will continue to actively monitor the impact of the recent COVID-19 pandemic on expected credit losses.

In August 2018, the ~~Financial Accounting Standards Board ("FASB")~~FASB issued ASU 2018-13, Fair Value Measurement ~~(Topic~~(Topic 820), which makes modifications to disclosure requirements on fair value measurements. The amendment is effective for public companies with fiscal years beginning after December 15, ~~2019. Early adoption~~2019, which is ~~permitted.~~ fiscal 2021 for the Company. The Company ~~is currently assessing~~adopted ASU 2018-13 in the first quarter of fiscal 2021, and the impact of ~~this pronouncement~~the adoption was immaterial to ~~its condensed~~the Company's consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal Use Software (Subtopic 350-40), which reduces complexity for the accounting for costs of implementing a cloud computing service arrangement. The amendment is effective for public companies with fiscal years beginning after December 15, ~~2019. Early~~2019, which is fiscal 2021 for the Company; early adoption is permitted. The Company ~~is currently assessing the impact~~adopted this guidance on a prospective basis effective April 1, 2020. The adoption of this ~~pronouncement to its condensed~~guidance did not have a material impact on the Company's consolidated financial statements.

RECENT ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED

In ~~June 2016, the FASB issued ASU 2016‑13,~~ ~~Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments~~, which changes the impairment model for most financial assets. The new model uses a forward‑looking expected loss method, which will generally result in earlier recognition of allowances for losses. In November 2018, the FASB issued ASU 2018‑19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, which clarifies that receivables arising from operating leases are not within the scope of Topic 326, Financial Instruments—Credit Losses. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases. In AprilDecember 2019, the FASB issued ASU ~~2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives~~2019-12, Income Taxes (Topic 740), which enhances and ~~Hedging,~~simplifies various aspects of the income tax accounting guidance, including requirements such as tax basis step-up in goodwill obtained in a transaction that is not a business combination, ownership changes in investments, and Topic 825, Financial Instruments, which clarifies treatment of certain credit losses. In May 2019, the FASB issued ASU 2019-05, Financial Instruments — Credit Losses (Topic 326): Targeted Transition Relief, which permits an entity, upon adoption of ASU 2016-13, to irrevocably elect the fair value option (on an instrument-by-instrument basis)interim-period accounting for ~~eligible financial assets measured at amortized cost basis. These ASUs are~~enacted changes in tax law. The amendment will be effective for ~~annual and interim periods~~public companies with fiscal years beginning after December 15, ~~2019, and~~2020, which is fiscal 2022 for the Company; early adoption is permitted. The Company is currently assessing the impact of this pronouncement to its ~~condensed~~ consolidated financial statements.

3. REVENUE RECOGNITION

~~Revenue Recognition~~

The Company recognizes service revenue, mainly from subscription services to its cloud-based voice, call center, video, collaboration and communication APIs solutions using the five-step model as prescribed by ASC 606:

~~Identification of the contract, or contracts, with a customer;~~

~~Identification of the performance obligations in the contract;~~

~~Determination of the transaction price;~~

~~Allocation of the transaction price to the performance obligations in the contract; and~~

~~Recognition of revenue when or as the Company satisfies a performance obligation.~~

The Company identifies performance obligations in contracts with customers, which may include subscription services and related usage, product revenue and professional services. The transaction price is determined based on the amount the Company expects to be entitled to receive in exchange for transferring the promised services or products to the customer. The transaction price in the contract is allocated to each distinct performance obligation in an amount that represents the relative amount of consideration expected to be received in exchange for satisfying each performance obligation. Revenue is recognized when performance obligations are satisfied. Revenues are recorded based on the transaction price excluding amounts collected on behalf of third parties such as sales and telecommunication taxes, which are collected on behalf of and remitted to governmental authorities. The Company usually bills its customers on a monthly basis. Contracts typically range from annual to multi-year agreements with payment terms of net 30-days or less. The Company occasionally allows a 30-day period to cancel a subscription and return products shipped for a full refund.

~~Judgments and Estimates~~

The estimation of variable consideration for each performance obligation requires the Company to make subjective judgments. The Company has service-level agreements with customers warranting defined levels of uptime reliability and performance. Customers may get credits or refunds if the Company fails to meet such levels. If the services do not meet certain criteria, fees are subject to adjustment or refund representing a form of variable consideration. The Company may impose minimum revenue commitments ("MRC") on its customers at the inception of the contract. Thus, in estimating variable consideration for each of these performance obligations, the Company assesses both the probability of MRC occurring and the collectability of the MRC, of which both represent a form of variable consideration.

The Company enters into contracts with customers that regularly include promises to transfer multiple services and products, such as subscriptions, products, and professional services. For arrangements with multiple services, the Company evaluates whether the individual services qualify as distinct performance obligations. In its assessment of whether a service is a distinct performance obligation, the Company determines whether the customer can benefit from the service on its own or with other readily available resources, and whether the service is separately identifiable from other services in the contract. This evaluation requires the Company to assess the nature of each individual service offering and how the services are provided in the context of the contract, including whether the services are significantly integrated, highly interrelated, or significantly modify each other, which may require judgment based on the facts and circumstances of the contract.

When agreements involve multiple distinct performance obligations, the Company allocates arrangement consideration to all performance obligations at the inception of an arrangement based on the relative standalone selling prices ("SSP") of each performance obligation. Usage fees deemed to be variable consideration meet the allocation exception for variable consideration. Where the Company has standalone sales data for its performance obligations which are indicative of the price at which the Company sells a promised good or service separately to a customer, such data is used to establish SSP. In instances where standalone sales data is not available for a particular performance obligation, the Company estimates SSP by the use of observable market and cost-based inputs. The Company continues to review the factors used to establish list price and will adjust standalone selling price methodologies as necessary on a prospective basis.

~~Service Revenue~~

Service revenue from subscriptions to the Company's cloud-based technology platform is recognized over time on a ratable basis over the contractual subscription term beginning on the date that the platform is made available to the customer. Payments received in advance of subscription services being rendered are recorded as a deferred revenue. Usage fees for our UCaaS and CCaaS offerings, either bundled or not bundled, are recognized as

revenue when earned. Usage fees for our CPaaS offerings are typically invoiced monthly in arrears and recognized as revenues when earned. Professional services for configuration, system integration, optimization, customer training or education are primarily billed on a fixed-fee basis and are performed by the Company directly or, alternatively, customers may also choose to perform these services themselves or engage their own third-party service providers. Professional services revenue is recognized over time as the services are rendered.

When a contract with a customer is signed, the Company assesses whether collection of the fees under the arrangement is probable. The Company estimates the amount to reserve for uncollectible amounts based on the aging of the contract balance, current and historical customer trends, and communications with its customers. These reserves are recorded as operating expenses against the contract asset (Accounts Receivable). In the normal course of business, the Company records revenue reductions for customer credits.

~~Product Revenue~~

The Company recognizes product revenue for telephony equipment at a point in time, when transfer of control has occurred, which is generally upon shipment. Sales returns are recorded as a reduction to revenue estimated based on historical experience.

~~Contract Assets~~

Contract assets are recorded for those parts of the contract consideration not yet invoiced but for which the performance obligations are completed. The revenue is recognized when the customer receives services or equipment for a reduced consideration at the onset of an arrangement, for example, when the initial month's services or equipment are discounted. Contract assets are included in other current or non-current assets in the condensed consolidated balance sheets, depending on if their reduction will be recognized during the succeeding twelve-month period or beyond.

~~Deferred Revenue~~

Deferred revenues represent billings or payments received in advance of revenue recognition and is recognized upon transfer of control. Balances consist primarily of annual plan subscription services and professional and training services not yet provided as of the balance sheet date. Deferred revenues that will be recognized during the succeeding twelve-month period are recorded as current deferred revenues in the condensed consolidated balance sheets, with the remainder recorded as other non-current liabilities in the condensed consolidated balance sheets.

~~Costs to Obtain a Customer Contract~~

Sales commissions and related expenses are considered incremental and recoverable costs of acquiring customer contracts. These costs are capitalized as current or non-current assets and amortized on a straight-line basis over the anticipated benefit period, which is five years. The benefit period was estimated by taking into consideration the length of customer contracts, technology lifecycle, and other factors. This amortization expense is recorded in sales and marketing expense within the Company's condensed consolidated statement of operations.

Disaggregation of Revenue

The Company disaggregates its revenue by geographic region. See Note 13 for more information.

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Contract Balances

The following table provides information about receivables, contract assets, and deferred revenues from contracts with customers (in thousands):

September 30, 2019
Accounts receivable, net $ 30,743
Contract assets $ 13,490
Deferred revenue - current $ 4,270
Deferred revenue - non-current $ 43



	June 30, 2020		March 31, 2020
Accounts receivable, net	$	40,572	$	37,811
Contract assets, current, net	$	11,625	$	10,425
Contract assets, non-current, net	$	13,897	$	13,698
Deferred revenue, current	$	8,352	$	7,105
Deferred revenue, non-current	$	2,279	$	1,119

Contract assets, current and non-current, net and deferred revenue, non-current are recorded in other current assets, other assets, and other liabilities, non-current, respectively.

Changes in the contract assets and ~~the~~ deferred revenue balances during the ~~six~~three months ended ~~September~~June 30, ~~2019~~2020 are as follows (in thousands):


	September 30, 2019		March 31, 2019		$ Change		June 30, 2020		March 31, 2020		Change
Contract assets	$	13,490	$	5,717	$	7,773	$	25,522	$	24,123	$	1,399
Deferred revenue	$	4,313	$	3,342	$	971	$	10,631	$	8,224	$	2,407

The change in contract assets was primarily driven by the recognition of revenue that has not yet been ~~billed.~~billed, net of amounts billed during the period and reserve for current estimate of credit losses. The increase in deferred ~~revenues~~revenue was due to billings in advance of performance obligations being ~~satisfied. Revenues~~satisfied, net of ~~$2.8~~revenue recognized for services rendered during the period. Revenue of $3.7 million ~~were~~was recognized during the ~~six~~three months ended ~~September~~June 30, ~~2019, a portion of which were included in the deferred revenues balance at the beginning of the period,~~2020, which was offset by additional deferrals during the period.

Remaining Performance Obligations

The Company's subscription terms typically range from one to ~~four~~five years. Contract revenue as of ~~September~~June 30, ~~2019~~2020 that has not yet been recognized was approximately ~~$220.0 million.~~$290.0 million from remaining performance obligations. This excludes contracts with an original expected length of one year or less. The Company expects to recognize revenue on most of the remaining performance ~~obligation~~obligations over the next 36 months.

4. FAIR VALUE MEASUREMENTS

Cash, cash equivalents, restricted cash, and available-for-sale investments were as follows (in thousands):


	Amortized		Gross Unrealized					Estimated		Cash and Cash		Short-Term		Long-Term
As of September 30, 2019	Costs		Gain		Loss			Fair Value		Equivalents		Investments
As of June 30, 2020																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	$	25,673	$	—	$	—		$	25,673	$	25,673	$	—	$	—	$	34,028	$	—	$	—		$	34,028	$	23,652	$	10,376	$	—	$	—
Level 1:
Money market funds	132,551		—		—			132,551		132,551		—		—		88,638		—		—			88,638		88,638		—		—		—
Treasury securities	6,578		7		(5		)	6,580		—		—		6,580		11,686		89		—			11,775		—		—		11,775		—
Subtotal	164,802		7		(5		)	164,804		158,224		—		6,580		134,352		89		—			134,441		112,290		10,376		11,775		—
Level 2:
Corporate bonds	37,858		123		(3		)	37,978		—		24,110		13,868
Certificate of deposit																8,641		—		—			8,641		—		8,641		—		—
Commercial paper	5,592		—		—			5,592		3,995		1,597		—		9,395		1		—			9,396		4,400		—		4,996		—
Municipal securities	2,099		19		—			2,118		—		2,118		—
Agency bonds	1,499		—		—			1,499		—		1,499		—
Corporate debt																33,629		152		(7		)	33,774		—		—		23,809		9,965
Subtotal	47,048		142		(3		)	47,187		3,995		29,324		13,868		51,665		153		(7		)	51,811		4,400		8,641		28,805		9,965
Total assets	$	211,850	$	149	$	(8	)	$	211,991	$	162,219	$	29,324	$	20,448	$	186,017	$	242	$	(7	)	$	186,252	$	116,690	$	19,017	$	40,580	$	9,965

Amortized
Gross
Unrealized
Gross
Unrealized
Estimated
Cash and
Cash
Short-Term
As of March 31, 2019 Costs Gain Loss Fair Value Equivalents Investments
Cash $ 25,364
$ —
$ —
$ 25,364
$ 25,364
$ —
Level 1:
Money market funds 251,219
—
—
251,219
251,219
—
     Subtotal 276,583
—
—
276,583
276,583
—
Level 2:
Corporate debt 46,516
51
(29 ) 46,538
—
46,538
Municipal securities 5,511
17
—
5,528
—
5,528
Asset backed securities 13,596
9
(17 ) 13,588
—
13,588
Agency bonds 4,260
—
(15 ) 4,245
—
4,245
     Subtotal 69,883
77
(61 ) 69,899
—
69,899
     Total assets $ 346,466
$ 77
$ (61 ) $ 346,482
$ 276,583
$ 69,899
12

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As of March 31, 2020	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	$	31,378	$	—	$	—		$	31,378	$	21,002	$	10,376	$	—	$	—
Level 1:
Money market funds	110,796		—		—			110,796		110,796		—		—		—
Treasury securities	6,192		116		—			6,308		—		—		—		6,308
Subtotal	148,366		116		—			148,482		131,798		10,376		—		6,308
Level 2:
Certificate of deposit	8,641		—		—			8,641		—		8,641		—		—
Commercial paper	14,979		6		—			14,985		5,596		—		9,389		—
Corporate debt	34,153		32		(341		)	33,844		—		—		24,069		9,775
Subtotal	57,773		38		(341		)	57,470		5,596		8,641		33,458		9,775
Total assets	$	206,139	$	154	$	(341	)	$	205,952	$	137,394	$	19,017	$	33,458	$	16,083

~~Historically,~~Certificate of deposit represents the Company's letter of credits securing leases for office facilities, and the balance of which is included in restricted cash, non-current in the Company's condensed consolidated balance sheet.

The Company ~~had maintained~~considers its investments as available to support its current operations, and it has classified all investments as ~~short-term~~available-for-sale securities. As of June 30, 2020, for investments ~~on its balance sheet, as~~that were in unrealized loss positions, the Company ~~could liquidate~~does not have the intent to sell any of these investments, and has determined that it is not more likely than not that it will be required to sell any of these investments before recovery of the entire amortized cost basis.

The Company regularly reviews the changes to the rating of its securities at ~~any time and~~the individual security level by rating agencies as well as reasonably monitors the surrounding economic conditions to assess the risk of expected credit losses. As of June 30, 2020, the Company did not ~~limit its liquidation~~have any risk of investments by contractual maturity date. Given the recent issuance of the convertible senior notes, and the associated increased cash, cash equivalents and investment balances, the Company expects to hold certain investments for at least 12 months from the reporting date and records these investments in long-term investments in accordance with the contractual maturity dates.

expected credit losses.

As of ~~September~~June 30, ~~2019,~~2020, the estimated fair value of the Company's outstanding convertible senior notes (the ~~Notes)~~"Notes") was ~~$302.7 million. The fair value of the Notes~~$326.3 million, which was determined based on the closing price for the Notes on the last trading day of the reporting period and is considered asto be Level 2 in the fair value ~~hierarchy.~~

hierarchy due to limited trading activity of the Notes.

5. BUSINESS COMBINATIONS

Wavecell Acquisition

On July 17, 2019, the Company entered into a Share Purchase Agreement (the “Share Purchase Agreement”) with Wavecell Pte. Ltd., a corporation incorporated under the laws of the Republic of Singapore (“Wavecell”), the equity holders of Wavecell (collectively, the “Sellers”), and Qualgro Partners Pte. Ltd., in its capacity as the representative of the equity holders of Wavecell. Pursuant to the Share Purchase Agreement, the Company acquired all of the outstanding shares and other equity interests of Wavecell (the “Transaction”). This ~~acquisition~~Transaction extends 8x8’s technology advantage as a fully-owned, cloud technology platform with unified communications as a service ("UCaaS"), contact center as a service ("CCaaS"), video communication as a service ("VCaaS"), and communication platform ~~communication APIs~~as a service ("CPaaS") solutions able to natively offer pre-packaged communications, contact center and video solutions and open APIs to embed these and other communications into an organization’s core business processes.

The total fair value of the purchase consideration of ~~approximately~~ $117.1 million was comprised of ~~approximately~~ $72.8 million in cash and $44.3 million in shares of common stock of the Company, of which ~~approximately~~ $10.4 million in cash and $8.5 million in equity have been heldback to cover potential indemnity claims made by the Company after the closing date. One-third of these ~~heldback~~holdback amounts are eligible to be released in ~~twelve months from the date of acquisition and the remainder in eighteen~~12 months from the date of the ~~acquisition.~~Transaction and the remainder in 18 months from the date of the Transaction. The ~~heldback~~holdback cash of ~~$3.5~~$10.4 million ~~and $6.9 million are~~is recorded in restricted cash, current and ~~restricted cash, non-current, respectively and~~ other accrued liabilities, ~~and other liabilities, non-current,~~ respectively, in the Company's condensed consolidated balance sheet. The holdback shares of $8.5 million ~~in equity~~ is included in ~~other liabilities, non-current~~additional paid-in capital in the Company's condensed consolidated balance sheet. Additionally, in connection with the ~~acquisition,~~Transaction, the Company issued $13.2 million in time-based restricted stock awards and $6.6 million in performance based restricted stock awards, all of which vest over ~~the next~~ three years ~~and which~~from the ~~Company will expense over the same such period.~~acquisition date.

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The major classes of assets and liabilities to which the Company has ~~preliminarily~~ allocated the fair value of purchase consideration were as follows (in thousands):


	July 17, 2019			July 17, 2019
Cash	$	4,473		$	4,473
Accounts receivable	9,438			9,438
Intangible assets	21,010			21,010
Other assets	787			787
Goodwill	94,584			91,060
Accounts payable	(13,072		)	(9,548		)
Deferred revenue	(90		)	(90		)
Total consideration	$	117,130		$	117,130

The ~~Company will continue to collect information~~acquisition has been accounted for as a business combination under the acquisition method and, ~~reevaluate~~accordingly, the ~~estimates and assumptions and will record any adjustments~~total purchase price is allocated to the ~~Company’s preliminary estimates provided that~~tangible and intangible assets acquired and the ~~Company is within~~liabilities assumed based on their estimated fair value on the ~~measurement period.~~acquisition date. The goodwill recognized was primarily attributed to increased synergies that are expected to be achieved from the integration of Wavecell and is not expected to be deductible for income tax purposes.

The ~~Company determined~~value of the ~~fair values of intangible assets~~ acquired ~~and liabilities assumed with the assistance of third-party valuation consultants. Based on this valuation, the~~ intangible assets acquired are ~~preliminarily~~as follows (in thousands):


	Fair Value		Useful life (in Years)	Fair Value		Useful life (in Years)
Trade and domain names	$	990	3	$	990	0.8
Developed technology	13,830		7	13,830		7
Customer relationships	6,190		7	6,190		7
Total intangible assets	$	21,010		$	21,010

The Company incurred costs related to this acquisition of approximately $1.6 million during the six months ended September 30, 2019. All acquisition related costs were expensed as incurred and have been recorded in general and administrative expenses in the accompanying consolidated statements of operations.

The revenue and earnings of the acquired business have been included in the Company’s results since the acquisition date and are not material to the Company’s condensed consolidated financial results. Pro forma results of operations for this acquisition have not been presented, as the financial impact to the Company’s condensed consolidated financial statements is not material.

6. INTANGIBLE ASSETS, GOODWILL, AND ~~GOODWILL~~OTHER ASSETS

The carrying value of intangible assets consisted of the following (in thousands):


	September 30, 2019							March 31, 2019							June 30, 2020							March 31, 2020
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Developed technology	$	33,466	$	(12,706	)	$	20,760	$	25,702	$	(15,409	)	$	10,293	$	33,942	$	(17,747	)	$	16,195	$	33,932	$	(16,312	)	$	17,620
Customer relationships	11,293		(4,534		)	6,759		9,467		(8,080		)	1,387		11,395		(5,817		)	5,578		11,409		(5,412		)	5,997
Trade and domain names	972		(81		)	891		2,108		(2,108		)	—		985		(985		)	—		983		(599		)	384
Total acquired identifiable intangible assets	$	45,731	$	(17,321	)	$	28,410	$	37,277	$	(25,597	)	$	11,680	$	46,322	$	(24,549	)	$	21,773	$	46,324	$	(22,323	)	$	24,001

~~During~~As of June 30, 2020, the ~~six months ended September~~weighted average remaining useful life for technology and customer relationships was 4.8 years and 5.7 years, respectively.

At June 30, ~~2019~~2020, the ~~Company wrote off approximately $11.3 million~~expected future amortization expense of ~~fully amortized~~these intangible assets ~~and the corresponding accumulated amortization.~~

~~At September 30, 2019, annual amortization of intangible assets, based upon our existing intangible assets and current useful lives,~~ is ~~estimated to be the following~~as follows (in thousands):


	Amount
Remaining 2020	$	4,603
2021	6,673
Remainder of 2021			$	4,643
2022	4,896		4,708
2023	3,116		3,156
2024	2,807		2,851
2025			2,851
Thereafter	6,315		3,564
Total	$	28,410	$	21,773

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The following table provides a summary of the changes in the carrying amounts of goodwill (in thousands):

Total
Balance at March 31, 2019 $ 39,694
Additions due to acquisitions 94,584
Foreign currency translation (2,399 )
Balance at September 30, 2019 $ 131,879



Balance at March 31, 2020	$	128,300
Foreign currency translation adjustments	680
Balance at June 30, 2020	$	128,980

Deferred Sales Commission Costs

Amortization of deferred sales commission costs for the three months ended June 30, 2020 and 2019 was $6.1 million and $4.2 million, respectively. There were no material write-offs relative to the costs capitalized during these periods.

7. ~~RIGHT-OF-USE ASSETS AND~~ LEASES

Operating Leases

The Company primarily leases facilities for office and data center space under non-cancellable operating leases for its U.S. and international locations that expire at various dates through 2030. For leases with a term greater than 12 months, the Company recognizes a right-of-use asset and a lease liability based on the present value of lease payments over the lease term. Variable lease payments are not included in the lease payments to measure the lease liability and are expensed as incurred. The Company’s leases have remaining terms of one to eleven years and some of the leases include a Company option to extend the lease term for one to five years, or more, which if reasonably certain to exercise, the Company includes in the determination of lease payments. The lease agreements do not contain any material residual value guarantees or material restrictive covenants.

As most of the Company's leases do not provide a readily determinable implicit rate, the Company uses the incremental borrowing rate at lease commencement, which was determined using a portfolio approach, based on

the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term. The Company uses the implicit rate when a rate is readily determinable. Operating lease expense is recognized on a straight-line basis over the lease term.

Leases with an initial term of 12 months or less are not recognized on the balance sheet and the expense for these short-term leases is recognized on a straight-line basis over the lease term. Common area maintenance fees (or CAMs) and other charges related to these leases continue to be expensed as incurred. The following table provides balance sheet information related to leases as of ~~September~~June 30, ~~2019~~2020 (in thousands):


	September 30, 2019		June 30, 2020		March 31, 2020
Assets
Operating lease, right-of-use assets	$	78,147	$	76,054	$	78,963

Liabilities
Operating lease liabilities, current	$	5,292	$	9,989	$	5,875
Operating lease liabilities, non-current	75,221		87,884		92,452
Total operating lease liabilities	$	80,513	$	97,873	$	98,327

~~During the three and six months ended September 30, 2019, operating~~The components of lease expense were as follows (in thousands):



	Three Months Ended June 30,
	2020		2019
Operating lease expense	$	3,750	$	2,085
Variable lease expense	782		209

Short-term lease expense was ~~approximately $4.2~~immaterial for the three months ended June 30, 2020 and 2019.

Operating cash flow from operating lease was $2.1 million and ~~$6.2~~$2.3 million, ~~respectively. Variable lease cost and short-term lease cost were immaterial during~~respectively, for the three ~~and six~~ months ended ~~September~~June 30, 2020 and 2019.

The following table presents supplemental information for the ~~six~~three months ended ~~September~~June 30, ~~2019~~2020 (in thousands, except for weighted average):

Weighted average remaining lease term 9.1 years
Weighted average discount rate 4.0%
Cash paid for amounts included in the measurement of lease liabilities $ 4,487
Operating cash flow from operating leases $ 4,487



Weighted average remaining lease term		8.8 years
Weighted average discount rate		4.0%

The following table presents maturity of lease liabilities under the Company's non-cancellable operating leases as of ~~September~~June 30, ~~2019~~2020 (in thousands):

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Remaining 2020 $ 5,298
2021 8,103
2022 13,768
2023 11,189
2024 11,224
Thereafter 68,839
Total lease payments $ 118,421
Less: imputed interest (22,486 )
Less: lease incentives receivable (15,422 )
Present value of lease liabilities $ 80,513



Remainder of 2021	$	7,549
2022	16,218
2023	15,079
2024	11,718
2025	11,382
Thereafter	58,074
Total lease payments	$	120,020
Less: imputed interest	(20,501		)
Less: lease incentives receivable	(1,646		)
Present value of lease liabilities	$	97,873

~~The~~Lease Assignment

In the fourth quarter of fiscal 2018, the Company has an operating lease for an office space that has not yet commenced and as such, have not yet been recognized on the Company's condensed consolidated balance sheet as of September 30, 2019. The contractual obligation for this lease is $2.2 million.

~~The Company's~~entered into a 132-month lease agreement (the "Agreement") with CAP Phase I, a Delaware limited liability company (the "Landlord") ~~for the Coleman property is not included~~, to rent approximately 162,000 square feet of office space in ~~the right-of-use assets and operating~~a new building in San Jose, California. The lease ~~liabilities as of September 30,~~term began on January 1, 2019. On April 30, 2019, due to the Company's rapid growth and greater than anticipated future space needs, the Company entered into an assignment and assumption (the "Assignment") of the ~~Company's previously executed lease agreement~~Agreement with the Landlord, and Roku Inc., a Delaware corporation ("Roku"), whereby the Company assigned to Roku ~~this lease that had been executed between~~ the ~~Company and the Landlord on January 23, 2018.~~Agreement. Pursuant to the ~~Agreement,~~Assignment, the Company expects to be released from all of its obligations under the lease and related standby letter of credit by the end of the Company’s fiscal year ending March 31, 2022, or shortly thereafter.

~~On July 3, 2019,~~ The Company also expects to receive the ~~Company entered into a lease for a new company headquarters to~~reimbursement of base rent ~~177,815 square feet~~and direct expenses from Roku by the end of ~~office space as~~ the ~~sole tenant~~Company’s fiscal year ending March 31, 2022 in ~~a new 5-story office building located in Campbell, California.~~accordance with the Assignment.

The obligations related to the Agreement are not included in the right-of-use asset or lease ~~is for a 132-month term, anticipated to begin on January 1,~~liabilities as of June 30, 2020. The Company has the option to extend the lease for 2 additional five-year terms, on substantially the same terms and conditions as the prior term, with the base rent rate adjusted to fair market value at that time. The Company recognized an operating lease right-of-use asset and operating lease liability during second quarter of fiscal 2020, when the Company was given full accessremaining obligations related to the ~~leased property.~~

~~Base rent is approximately $0.7~~Assignment of $6.9 million ~~per month for~~and the ~~first 12 months~~termination fee of ~~the lease, with the rate increasing by approximately 3% on each anniversary of the lease. The Company is responsible for paying its share of building~~$0.8 million are recorded in other accrued liabilities and common area expenses. The Company is entitled to full rent abatement during the first 12 months of the lease term. The Company is also entitled to a tenant improvement allowance of approximately $15.4 million. The Company paid to the landlord a security depositother liabilities, non-current, respectively, in the ~~amount~~Company's condensed consolidated balance sheet. The expected receivable of ~~$2.0~~$6.9 million ~~which may be drawn down~~is recorded in other current assets in the ~~event the Company defaults under the lease. This new lease increased our operating lease right-of-use assets by $56.8 million and our operating lease liabilities by $56.1 million.~~Company's condensed consolidated balance sheet.

8. COMMITMENTS AND CONTINGENCIES

Other Commitments, Indemnifications, and Contingencies

From time to time, the Company receives inquiries from federal and various state and municipal taxing agencies with respect to the remittance of sales, use, telecommunications, excise, payroll, and income taxes. Several jurisdictions are currently ~~are~~ conducting tax audits of the Company's records. The Company collects from its customers or has accrued for taxes that it believes are required to be remitted. The amounts that have been remitted have historically been within the accruals established by the Company. The Company adjusts its accrued taxes when facts relating to specific exposures warrant such adjustment. The Company continues to conduct periodic review of the taxability of certain of its services that may be subject to sales, use, telecommunications or other similar indirect taxes in certain jurisdictions. As of June 30, 2020 and March 31, 2020, the Company had accrued contingent indirect tax liabilities of $4.5 million.

Legal Proceedings

The Company, from time to time, may be involved in a variety of claims, lawsuits, investigations and other proceedings, including patent infringement claims, employment litigation, regulatory compliance matters and contractual disputes, that can arise in the normal course of the Company's operations. The Company accrues a liability when management believes information available prior to the issuance of the financial statements indicates it is probable a loss has been incurred as of the date of the financial statements and the amount of loss can be reasonably estimated. The Company adjusts its accruals to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case. Legal costs are expensed as incurred.

As of ~~September~~June 30, ~~2019,~~2020, the Company ~~has~~does not ~~recorded~~have any material provisions for any such lawsuits, claims and proceedings and believes it is not probable that a loss had been incurred. Litigation is inherently unpredictable and subject to significant uncertainties. While there can be no assurances that favorable final outcomes will be obtained, the Company believes it has valid defenses with respect to legal matters pending against it. Future litigation could be costly to defend, could impose significant burdens on employees and cause the diversion of management's

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attention, and could upon resolution have a material adverse effect on the Company's business, results of operations, financial condition and cash flows.

9. CONVERTIBLE SENIOR NOTES AND CAPPED CALL

Convertible Senior Notes

In February 2019, the Company issued $287.5 million aggregate principal amount of 0.50% convertible senior notes (the ~~"Notes"~~"Initial Notes") due 2024 in a private placement, including the exercise in full of the initial purchasers' option to purchase additional notes. The Initial Notes are senior unsecured obligations of the Company and interest is payable semiannually in arrears on February 1 and August 1 of each year, beginning on August 1, 2019. The Initial Notes will mature on February 1, 2024, unless earlier repurchased, redeemed, or converted. The total net proceeds from the debt offering, after deducting initial purchase discounts, debt issuance costs, and costs of the capped call transactions described below, were approximately $245.8 million.

In November 2019, the Company issued an additional $75 million aggregate principal amount of 0.50% convertible senior notes (the "Additional Notes" and together with the Initial Notes, the "Notes") due 2024 in a registered offering under the same indenture as the Initial Notes.The total net proceeds from the Additional Notes, after deducting underwriting discounts, debt issuance costs, and costs of the capped call transactions described below, were approximately $64.6 million. The Additional Notes constitute a further issuance of, and form a single series with, the Company’s outstanding 0.50% convertible senior notes due 2024 issued in February 2019 in the aggregate principal amount of $287.5 million.Immediately after giving effect to the issuance of the Additional Notes, the Company has $362.5 million aggregate principal amount of convertible senior notes.

The Notes are senior unsecured obligations of the Company and interest is payable semiannually in arrears on February 1 and August 1 of each year, beginning on February 1, 2020. The Notes will mature on February 1, 2024, unless earlier repurchased, redeemed, or converted.

Each $1,000 principal amount of the Notes isare initially convertible into 38.9484 shares of the Company’s common stock, par value $0.001, which is equivalent to an initial conversion price of approximately $25.68 per share. The conversion rate is subject to adjustment upon the occurrence of certain specified events but will not be adjusted for any accrued and unpaid interest. In addition, upon the occurrence of certain corporate events that occur prior to the maturity date or following the Company's issuance of a notice of redemption, in each case as described in the

Indenture, the Company will, in certain circumstances, increase the conversion rate for a holder that elects to convert its Notes in connection with such a corporate event or during the relevant redemption period.

The Notes will be convertible at certain times and upon the occurrence of certain events in the future. Further, on or after October 1, 2023, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their Notes, regardless of the foregoing circumstances.

Upon conversion, the Company will satisfy its conversion obligation by paying or delivering, as the case may be, cash, shares of common stock, or a combination of cash and shares of common stock, at the Company's election. The Company’s current intent is to settle the principal amount of the Notes in cash upon conversion.

During the three ~~and six~~ months ended ~~September~~June 30, ~~2019,~~2020, the conditions allowing holders of the Notes to convert were not met.

The Company may not redeem the Notes prior to February 4, 2022. On or after February 4, 2022, the Company may redeem for cash all or part of the Notes, at the redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if the last reported sale price of the common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides a redemption notice. If a fundamental change (as defined in the indenture governing the notes) occurs at any time, holders of Notes may require the Company to repurchase for cash all or any portion of their Notes at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

The Notes are senior unsecured obligations and will rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the Notes, equal in right of payment with the Company’s existing and future liabilities that are not so subordinated, effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness, and structurally junior to all indebtedness and other liabilities (including trade payables) of current or future subsidiaries of the Company.

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The net carrying amount of the liability component of the Notes was as follows (in thousands):


	September 30, 2019			March 31, 2019			June 30, 2020			March 31, 2020
Principal	$	287,500		$	287,500		$	362,500		$	362,500
Unamortized debt discount	(64,532		)	(70,876		)	(65,919		)	(69,987		)
Unamortized issuance costs	(536		)	(589		)	(919		)	(976		)
Net carrying amount	$	222,432		$	216,035		$	295,662		$	291,537

Interest expense related to the Notes was as follows (in thousands):


					Three Months Ended June 30,
	Three Months Ended September 30, 2019		Six Months Ended September 30, 2019		2020		2019
Contractual interest expense	$	360	$	719	$	453	$	359
Amortization of debt discount	3,198		$	6,344	4,068		3,146
Amortization of issuance costs	27		$	53	57		26
Total interest expense	$	3,585	$	7,116	$	4,578	$	3,531

Capped Call

In connection with the pricing of the Initial Notes and Additional Notes, the Company entered into privately negotiated capped call transactions ("Capped Calls") with certain counterparties. The Capped Calls each have an initial strike price of approximately $25.68 per share, subject to certain adjustments, which corresponds to the initial conversion price of the Notes. The Capped Calls have initial cap prices of $39.50 per share, subject to certain adjustments. The Capped Calls are expected to partially offset the potential dilution to the Company’s Common Stock upon any conversion of the Notes, with such offset subject to a cap based on the cap price. The Capped Calls cover, subject to anti-dilution adjustments, approximately ~~11.2~~14.1 million shares of the Company’s Common Stock. The Capped Calls are subject to adjustment upon the occurrence of specified extraordinary events affecting the Company, including merger events, tender offers and announcement events. In addition, the Capped Calls are subject to certain specified additional disruption events that may give rise to a termination of the Capped Calls, including nationalization, insolvency or delisting, changes in law, failures to deliver, insolvency filings and hedging disruptions.

For accounting purposes, the Capped Calls are separate transactions, and not part of the terms of the Notes. As these transactions meet certain accounting criteria, the Capped Calls are recorded in stockholders' equity and are not accounted for as derivatives. The cost of $33.7 million incurred to purchase the Capped Calls ~~was~~in connection with the Initial Notes and $9.3 million in connection with the Additional Notes were recorded as a reduction to additional paid-in capital and will not be remeasured.

10. STOCK-BASED COMPENSATION

The following tables summarize information pertaining to the stock-based compensation expense from stock options and stock awards (in thousands):



	Three Months Ended June 30,
	2020		2019
Cost of service revenue	$	1,814	$	997
Cost of other revenue	787		734
Research and development	6,545		3,864
Sales and marketing	5,739		3,921
General and administrative	7,894		4,081
Total	$	22,779	$	13,597

Stock options and stock awards activities under the Company's stock plans during three months ended June 30, 2020 and 2019 are summarized as follows (in thousands, except weighted-average grant-date fair value and recognition period):

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Three Months Ended September 30, Six Months Ended September 30,
2019 2018 2019 2018
Cost of service revenue $ 1,939
$ 1,379
$ 3,670
$ 2,405
Research and development 4,217
2,823
8,081
5,017
Sales and marketing 5,340
2,206
9,261
4,604
General and administrative 5,895
3,721
9,976
7,014
Total $ 17,391
$ 10,129
$ 30,988
$ 19,040


	Six Months Ended September 30,						Three Months Ended June 30,
	2019			2018			2020			2019
Stock options outstanding at the beginning of the period:	3,114			3,998			2,274			3,114
Options granted	—			195			—			—
Options exercised	(287		)	(574		)	(1		)	(124		)
Options canceled and forfeited	(39		)	(97		)
Options forfeited							(14		)	(16		)
Options outstanding at the end of the period:	2,788			3,522			2,259			2,974
Weighted-average fair value of grants during the period	$	—		$	8.47		$	—		$	—
Total intrinsic value of options exercised during the period	$	3,726		$	8,525		$	5		$	1,402
Weighted-average remaining recognition period at period-end (in years)	2.32			2.52
Weighted-average remaining recognition period (in years)							1.73			2.46

Stock awards outstanding at the beginning of the period:	7,820			5,939			9,191			7,820
Stock awards granted	5,123			2,112			1,304			1,147
Stock awards vested	(1,945		)	(1,720		)	(721		)	(329		)
Stock awards canceled and forfeited	(663		)	(433		)	(331		)	(445		)
Stock awards outstanding at the end of the period:	10,335			5,898			9,443			8,193
Weighted-average fair value of grants during the period	$	22.35		$	22.01		$	19.22		$	22.40
Weighted-average remaining recognition period at period-end (in years)	2.28			2.44
Weighted-average remaining recognition period (in years)							1.76			2.11

Total unrecognized compensation expense at period-end	$	129,136		$	79,121		$	116,957		$	109,422

Stock Repurchases

In May 2017, the Company's board of directors authorized the Company to purchase up to $25.0 million of its common stock from time to time (the "2017 Repurchase Plan"). The 2017 Repurchase Plan expires when the maximum purchase amount is reached, or upon the earlier revocation or termination by the board of directors. The remaining amount available under the 2017 Repurchase Plan at ~~September~~June 30, ~~2019~~2020 was approximately $7.1 million. There were 0 stock repurchases under the 2017 Repurchase Plan during the three ~~and six~~ months ended ~~September~~June 30, 2020 and 2019.

11. INCOME TAXES

The Company's effective tax rate was ~~-0.6%~~(0.5)% and (0.4)% for the three months ended ~~September~~June 30, ~~2019~~2020 and ~~2018, and -0.5% and -0.6% for the six months ended September 30, 2019 and 2018, respectively.~~2019. The difference in the effective tax rate and the U.S. federal statutory rate was primarily due to the full valuation allowance the Company continues to maintain against its deferred tax assets. The effective tax rate is calculated by dividing the income tax provision by net loss before income tax expense.

12. NET LOSS PER SHARE

The following table summarizes the computation of basic and diluted net loss per share (in thousands, except share and per share data):


	Three Months Ended September 30,						Six Months Ended September 30,						Three Months Ended June 30,
	2019			2018			2019			2018			2020			2019
Numerator:
Net loss available to common stockholders	$	(40,932	)	$	(21,482	)	$	(75,197	)	$	(36,837	)	$	(41,913	)	$	(34,265	)
Denominator:
Common shares - basic and diluted	98,353			93,831			97,356			93,449			103,607			96,429
Net loss per share
Basic and diluted	$	(0.42	)	$	(0.23	)	$	(0.77	)	$	(0.39	)	$	(0.40	)	$	(0.36	)

The following shares attributable to outstanding stock options and stock awards were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive (in thousands):

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Three Months Ended September 30, Six Months Ended September 30,
2019 2018 2019 2018
Stock options 2,788
3,496
2,788
3,496
Stock awards 10,334
5,854
10,334
5,854
Contingently issuable shares (hold-back shares) 350
—
350
—
Potential shares to be issued from ESPP 387
360
387
360
Total anti-dilutive shares 13,859
9,710
13,859
9,710



	Three Months Ended June 30,
	2020	2019
Stock options	2,259	2,974
Stock awards	9,443	8,188
Potential shares to be issued from ESPP	582	636
Total anti-dilutive shares	12,284	11,798

13. GEOGRAPHICAL INFORMATION

The following tables set forth the geographic information for each period (in thousands):


	Three Months Ended September 30,				Six Months Ended September 30,
	2019		2018		2019		2018		Three Months Ended June 30,
Revenue by geographic area:									2020		2019
United States	85,428		74,361		168,676		146,083		$	93,244	$	83,249
International	24,089		11,321		37,516		22,824		28,563		13,426
	$	109,517	$	85,682	$	206,192	$	168,907
Total revenue									$	121,807	$	96,675

September 30, 2019 March 31, 2019
Property and equipment by geographic area:
Americas (principally US) $ 58,574
$ 45,639
Europe (principally UK) 6,202
7,196
$ 64,776
$ 52,835



Property and equipment by geographic area:	June 30, 2020		March 31, 2020
United States	$	89,954	$	87,673
International	6,158		6,709
Total property and equipment, net	$	96,112	$	94,382

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q. As discussed in the section titled “Forward-Looking Statements,” the following discussion and analysis contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and elsewhere in this report, particularly those set forth under the section entitled "Risk Factors" in our annual report on Form 10-K for the fiscal year ended March 31, 2020 as modified by those in Part II, Item 1A of this Quarterly Report on Form 10-Q under the heading "Risk Factors."

BUSINESS OVERVIEW

We are a leading ~~Software-as-a-Service~~software-as-a-service (“SaaS”) provider of voice, video, chat, contact center, and enterprise-class API solutions powered by one global cloud communications platform. From our proprietary cloud technology platform, ~~customers~~organizations across all their locations and employees have access to unified communications, team collaboration, video conferencing, contact center, data and analytics, communication APIs, and other ~~services.~~services, enabling them to be more productive and responsive to their customers.

~~As of September 30, 2019, our~~Our customers range from small businesses to large enterprises and their users are spread across more than 150 countries. In recent years, we have increased our up-market focus on the mid-market and enterprise customer ~~sectors.~~categories.

We have a portfolio of cloud-based offerings that are subscription based, made available at different rates varying by the specific functionalities, services and number of users. We generate service revenue from ~~software service~~communication services subscriptions and platform ~~usage revenue, and professional services revenue.~~usage. We generate ~~product~~other revenues from the ~~sale~~sales and rentals of office phones and other hardware ~~equipment.~~equipment, and professional services. We define a “customer” as one or more legal entities to which we provide services pursuant to a single contractual arrangement. In some cases, we may have multiple billing relationships with a single customer (for example, where we establish separate billing accounts for a parent company and each of its subsidiaries).

Our flagship service is our 8x8 X Series, a next generation suite of unified communications as a service ("UCaaS") and contact center as a service ("CCaaS") solutions, which consist of service plans of increasing functionality

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designated X1, X2, etc., through X8. With 8x8 X Series, we provide ~~both UCaaS~~enterprise-grade voice, unified communications, video meetings, team collaboration, and ~~CCaaS~~contact center functionalities from a single ~~platform, with a single interface, in the high-end set of our service plans (X5 through X8).~~platform. We also offer ~~more basic, cost-efficient UCaaS in X1 through X4~~standalone SaaS services for contact center, video meetings, and a stand-alone CCaaS offering called 8x8 Contact Center. During the second quarter of fiscal 2020, we launched a new automated, self-service, e-commerce offering called 8x8 Express. We also sell platformenterprise communication ~~APIs ("CPaaS") as part of~~APIs. Through our ~~existing and new cloud communication solutions. In~~ July 2019 ~~we acquired~~acquisition of Wavecell Pte. Ltd., an Asia-based global communication platform as a ~~company selling CPaaS~~service ("CPaaS") provider of SMS, messaging, voice and video APIs to enterprises, we expanded our API offerings both geographically and in ~~Asia.~~ scope. We expect to continue integrating these services into our platform, as we believe in the value of the collective solutions.

Prior to the launch of 8x8 X Series in 2018, our customers subscribed to ~~Virtual Office and Virtual Contact Center solutions.~~our legacy products. We ~~have now begun~~are migrating these customers from ~~these~~our legacy solutions to our 8x8 X Series product suite, and we intend to accelerate the pace of customer migrations ~~during the remainder of fiscal 2020 and into~~in fiscal 2021. These migrations may require us to incur professional services ~~costs that~~and related engineering costs. While we may not be able to recover these costs from our ~~customers.~~customers, we believe that we will realize other benefits including reducing the number of platforms that we are required to support and improved customer retention.

SUMMARY AND OUTLOOK

~~Our second~~In the first quarter ~~results illustrate the fundamental strength in~~of fiscal 2021, our ~~cloud communications~~total service revenue ~~which for the quarter was $104.5 million, including revenue from our CPaaS offerings, and reflects growth of 28.5% year-over-year.~~grew 27.1% year-over-year to $114.2 million. We continued to show an increase in our average ~~monthly~~annualized service revenue per customer, ~~("ARPC"),~~which grew to $7,883 in the first quarter of fiscal 2021, compared with $7,069 in the same period of fiscal 2020, as we are selling more to mid-market and enterprise customers.

~~Since~~ Service revenue from mid-market and enterprise customers represented 45% of total service revenue and grew 48% over the ~~beginning~~prior year. We also increased the number of ~~fiscal 2018,~~deals where customers purchase our integrated communications and contact center solutions, which we have ~~de-emphasized profitability~~referred to as ~~a short-term corporate goal~~bundled deals; 55% of our new bookings greater than $12,000 of annualized recurring revenue were from customers that selected bundled UCaaS and ~~have focused instead~~CCaaS, as compared to 51% one year ago.

Our continued business focus is on ~~making investments necessary to accelerate~~achieving improved operating efficiencies while delivering revenue growth. ~~This decision was based,~~In fiscal 2020, we continued to make important investments in ~~part,~~our products and technology platform, and focused on key areas of spend in our ~~belief that the communications market is at an inflection point~~go-to-market strategy. Additionally, we looked to drive efficiencies in ~~the shift of businesses from legacy on-premise solutions to cloud services.~~our small business customer acquisition and operations, and focused on expanding our business upmarket with mid-market and enterprise customers. We believe that this ~~industry trend~~approach and execution will ~~continue in fiscal 2020 and beyond. Accordingly, we believe that it is in~~enable the ~~Company's interest~~Company to ~~continue to invest in our business -- in particular, to further build our technology platform, add new service offerings,~~ grow ~~our international presence and operations, and expand our sales and marketing activities, particularly in the channel--in order to allow us to scale efficiently~~ and capture market share during this phase of industry ~~disruption.~~disruption in a cost-effective way and support the Company in pursuit of its path to profitability and operating cash flow improvement, which we will continue to execute throughout fiscal 2021.

WeIn the remainder of fiscal 2021, we plan to continue making ~~significant~~ investments in activities to acquire more ~~customers. We plan to continue~~customers, including global expansion and investing in our direct marketing efforts, sales force, e-commerce, and outbound marketing efforts. We also intend to continue investing in our indirect channel programs to acquire more third-party selling agents to help sell our solutions, including investments in our value added resellers ("VARs") and master ~~agents.~~agent programs. Should these upfront investments not result in additional revenue from new or existing customers, including as result of adverse impacts from the COVID-19 pandemic, and/or these cost reduction and efficiency efforts do not result in meaningful savings, our operating results may be adversely impacted.

IMPACTS OF COVID-19

The full extent of the impact of the COVID-19 pandemic on our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict, including those set forth under the section entitled "Risk Factors" in our annual report on Form 10-K for the fiscal year ended March 31, 2020 as modified by the "Risk Factors" section of this Quarterly Report. In an effort to contain COVID-19 or slow its spread, governments around the world have enacted various measures, some of which have been subsequently rescinded or modified, including orders to close non-essential businesses, isolate residents to their homes, and practice social distancing. To protect the health and safety of our employees, our workforce continues to spend a significant amount of time working from home with many of our offices around the world remaining closed and travel being curtailed for our employees as well as our customers. These restrictions have altered the ways we conduct sales activities and market to current and prospective customers and how we conduct our ongoing business operations, resulting in reductions in travel related expenses and, by some measures, has resulted in improved employee productivity in certain areas. Small business and mid-size customers have been more impacted by the COVID-19 pandemic than enterprise customers, which has necessitated greater flexibility and responsiveness to our customers evolving needs.Additionally, while our usage revenue from CPaaS grew year-over-year in the first quarter, we did have lower than expected CPaaS usage during the quarter as a result of COVID-related slowdown in APAC; however we observed positive trends toward the end of the quarter. While we anticipate that the global health crisis caused by COVID-19 and the measures enacted to slow its spread will negatively impact certain

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business activity across the globe, to date, it has not resulted in as significant a negative impact on our business, as initially anticipated. We continue to proactively and closely monitor the health of our customers and suppliers and other impacts of the pandemic to determine whether risks of loss or other negative impacts upon our business exist. The effects of COVID-19 have also been considered in management's judgments around credit loss impairments.

COMPONENTS OF RESULTS OF OPERATIONS

Service Revenue

Service revenue consists of ~~software service~~communication services subscriptions, platform usage revenue, and ~~professional services revenue~~related fees from our UCaaS, CCaaS, and CPaaS offerings.

We plan to continue to drive our business to increase service revenue through a combination of increased sales and marketing efforts, geographic expansion of our customer base outside the United States, innovation in product and technology, and through strategic ~~acquisitions of technologies~~partnerships and ~~businesses.~~other business development.

~~Product~~Other Revenue

~~Product~~Other revenue consists primarily of revenues from ~~hardware~~ sales and rentals of IP telephones in conjunction with our cloud telephony ~~service. Product~~service, and revenues from professional services, primarily in support of deployment of our solutions and/or platform. Other revenue is dependent on the number of customers who choose to purchase or rent an IP telephone in conjunction with our service instead of using the solution on their cell phone, computer, or other compatible ~~devices.~~device, and/or choose to engage our services for implementation and deployment of our cloud services.

Cost of Service Revenue

Cost of service revenue consists primarily of costs associated with network operations and related personnel, technology licenses, amortization of internally developed software, and other costs such as customer service, ~~which includes deployment~~ and technical support costs. Cost of service revenue also includes other communication origination and termination services provided by third-party carriers and outsourced customer service call center operations. We ~~expect that~~allocate overhead costs such as IT and facilities to cost of service revenue, ~~will increase in absolute dollars in future periods~~as well as to each of the operating expense categories, generally based on relative headcount. Our IT costs include costs for IT infrastructure and ~~vary from period-to-period as a percentage~~personnel. Facilities costs primarily consist of ~~revenue.~~office leases and related expenses.

Cost of ~~Product~~Other Revenue

Cost of ~~product~~other revenue consists primarily of ~~IP telephones, estimated warranty obligations and~~ direct and indirect costs associated with ~~product~~the purchasing of IP telephones as well as the scheduling, shipping and ~~handling.~~handling, personnel costs and related expenditures incurred in connection with the professional services associated with the deployment and implementation of our products, and allocated IT and facilities costs.

Research and Development

Research and development expenses consist primarily of personnel and related costs, ~~consulting,~~ third-party development and related work ~~and~~, equipment costs necessary for us to conduct our product and platform development and engineering ~~efforts.~~

~~We plan to continue to hire employees to support our research~~efforts, and ~~development efforts to expand the capabilities~~allocated IT and scope of our platform and enhance the user experience. We expect that research and development expenses will increase in absolute dollars in future periods and vary from period-to-period as a percentage of revenue.facilities costs.

Sales and Marketing

Sales and marketing expenses consist primarily of personnel and related overhead costs, sales commissions, trade shows, advertising and other marketing, demand generation, channel costs, promotional expenses, and ~~promotional expenses. We plan to continue to invest in sales~~allocated IT and marketing to attract and retain customers on our platform and increase our brand awareness. We expect that sales and marketing expenses will increase in absolute dollars in future periods and vary from period-to-period as a percentage of revenue.facilities costs.

General and Administrative

General and administrative expenses consist primarily of personnel and related costs, ~~for finance,~~overhead costs, professional services fees, human resources, legal, ~~and~~employee recruiting, general management, ~~as well as professional fees. We expect that our general~~ and ~~administrative expenses will increase in absolute dollars in future periods as we grow our business~~allocated IT and ~~vary from period-to-period as a percentage of revenue.~~

~~General and administrative expenses also include costs for~~ facilities and IT. Our facilities costs primarily include lease and related expenses and IT costs include costs for IT infrastructure and compensation of IT personnel. Facilities and IT costs are allocated to other cost centers based on headcount.costs.

Other Income (Expense) ~~Income,~~, net

Other income (expense) ~~income,~~, net consists primarily of interest expense related to the convertible notes, offset by income earned on our cash, cash equivalents, investments, and ~~investments.~~foreign exchange gain/losses.

Provision for Income Taxes

Provision for income taxes consists primarily of state minimum taxes in the United States. As we expand the scale of our international business activities, any changes in the U.S. and foreign taxation of such activities may increase our overall provision for income taxes in the future. We have a valuation allowance for our U.S. deferred tax assets,

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including federal and state net operating loss carryforwards, or NOLs. We expect to maintain this valuation allowance until it becomes more likely than not that the benefit of our federal and state deferred tax assets will be realized by way of expected future taxable income in the United States.

RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our condensed consolidated financial statements and the notes thereto.

Revenue


	September 30,						Dollar		Percent		June 30,
Service revenue	2019			2018			Change		Change		2020			2019			Change
	(dollar amounts in thousands)										(dollar amounts in thousands)
Three months ended	$	104,529		$	81,346		$	23,183	28.5	%	$	114,183		$	89,839		$	24,344	27.1	%
Percentage of total revenue	95.4		%	94.9		%					93.7		%	92.9		%
Six months ended	$	196,901		$	159,467		$	37,434	23.5	%
Percentage of total revenue	95.5		%	94.4		%

Service revenue increased for the three ~~and six~~ months ended ~~September~~June 30, ~~2019~~2020 compared with the same ~~periods~~period of the previous fiscal year primarily due to ana net increase in our ~~business customer~~ subscriber base, ~~(net of customer churn), an increase~~expanded offerings to existing customers, and growth in ~~the average~~related usage; service revenue from ~~each customer on a monthly basis~~new customers was primarily driven by sales of standalone and bundled UCaaS and CCaaS deals globally to ~~a lesser extent,~~our mid-market and enterprise customers. Increase in service revenue ~~associated~~was also attributable to growth in usage revenue generated by our CPaaS products primarily in the APAC region.

We expect total service revenue to grow over time with our ~~newly acquired CPaaS product~~expanding platform offering as ~~compared~~our business continues to ~~the same prior year period.~~expand globally and across broader customer categories.


	September 30,						Dollar			Percent		June 30,
Product revenue	2019			2018			Change			Change
Other revenue												2020			2019			Change
	(dollar amounts in thousands)											(dollar amounts in thousands)
Three months ended	$	4,988		$	4,336		$	652		15.0	%	$	7,624		$	6,836		$	788	11.5	%
Percentage of total revenue	4.6		%	5.1		%						6.3		%	7.1		%
Six months ended	$	9,291		$	9,440		$	(149	)	(1.6	)%
Percentage of total revenue	4.5		%	5.6		%

~~Product~~Other revenue increased during the three months ended ~~September~~June 30, ~~2019~~2020 compared with the same period in the prior fiscal year primarily due to ~~increased equipment unit sales~~an increase in professional services revenue resulting from the overall growth in our business and subscriber base. We expect other revenue to ~~customers combined with product discounts~~grow over time at a rate lower than our service revenue as we focus on delivering higher margin platform offerings to existing and ~~promotions during the three months ended September 30, 2019.~~new customers.

~~Product revenue remained relatively flat during the six months ended September 30, 2019 compared with the same period in the prior fiscal year.~~

No customer represented greater than 10% of the Company's total revenue for the three ~~and six~~ months ended ~~September~~June 30, ~~2019~~2020 or ~~2018.~~June 30, 2019.

Cost of Revenue


	September 30,						Dollar		Percent		June 30,
Cost of service revenue	2019			2018			Change		Change		2020			2019			Change
	(dollar amounts in thousands)										(dollar amounts in thousands)
Three months ended	$	43,195		$	26,202		$	16,993	64.9	%	$	40,996		$	25,300		$	15,696	62.0	%
Percentage of service revenue	41.3		%	32.2		%					35.9		%	28.2		%
Six months ended	$	75,162		$	50,751		$	24,411	48.1	%
Percentage of service revenue	38.2		%	31.8		%

~~Cost~~The increase in cost of service revenue for the three months ended ~~September~~June 30, ~~2019 increased over~~2020 from the same period in the prior fiscal year ~~period and faster than revenue growth due~~was primarily attributable to ~~increases related to our newly acquired CPaaS products combined with increased overhead allocation expense, as well as~~ a ~~$2.5~~$13.0 million increase in ~~personnel and related~~communication infrastructure costs incurred to deliver our services primarily due to growth in usage across our platform including those in connection with CPaaS, a ~~$2.4~~$2.0 million increase in amortization of ~~intangibles and~~ capitalized software, ~~expenses,~~ a ~~$1.1 million increase in consulting and outside services and a $0.6~~$0.8 million increase in stock-based compensation ~~costs,~~expense, and a $0.2 million increase in facilities related expenses. These increases were partially offset by a decrease of $0.3 million in employee and consulting related expenditures.

We expect that cost of service revenue will increase in absolute dollars in future periods as ~~well as other smaller increases.~~revenue continues to grow.

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	June 30,
Cost of other revenue	2020			2019			Change
	(dollar amounts in thousands)
Three months ended	$	11,137		$	12,391		$	(1,254	)	(10.1	)%
Percentage of other revenue	146.1		%	181.3		%

Cost of service revenue for the six months ended September 30, 2019 increased over the same prior year period and faster than revenue growth due to increases related to our newly acquired CPaaS products combined with increased overhead allocation expense, a $4.8 million increase in personnel and related costs, a $4.1 million increase in amortization of intangibles and capitalized software expenses, and a $1.9 million increase in consulting and outside services and a $1.0 million increase in stock-based compensation costs, as well as other ~~smaller increases.~~

September 30, Dollar Percent
Cost of product revenue 2019 2018 Change Change
(dollar amounts in thousands)
Three months ended $ 6,502
$ 5,397
$ 1,105
20.5 %
Percentage of product revenue 130.4 % 124.5 %
Six months ended $ 12,226
$ 11,678
$ 548
4.7 %
Percentage of product revenue 131.6 % 123.7 %

~~Cost of product~~ revenue for the three ~~and six~~ months ended ~~September~~June 30, ~~2019 increased over~~2020 decreased compared to the same period in the prior fiscal year ~~periods~~ primarily due to ~~the increase~~a decrease in ~~the number~~cost of ~~telephones shipped~~products for various reasons including lower hardware shipment volume, improved pricing, and a shift to ~~customers. The increase in negative margin was due to the product discounts and promotions during the three and six months ended September 30, 2019.~~our hardware rental program, which has better margins than hardware sales.

Operating Expenses


	September 30,						Dollar		Percent		June 30,
Research and development	2019			2018			Change		Change		2020			2019			Change
	(dollar amounts in thousands)										(dollar amounts in thousands)
Three months ended	$	19,434		$	14,064		$	5,370	38.2	%	$	21,494		$	18,331		$	3,163	17.3	%
Percentage of total revenue	17.7		%	16.4		%					17.6		%	19.0		%
Six months ended	$	37,765		$	27,114		$	10,651	39.3	%
Percentage of total revenue	18.3		%	16.1		%

Research and development expenses for the three months ended ~~September~~June 30, ~~2019~~2020 increased compared to the same prior year period primarily due to a $2.7 million increase in stock-based compensation expense, a $0.7 million increase in employee and consulting related expenditures, and a $0.4 million increase in public cloud expenses. These increases were partially offset by a decrease of $0.5 million in travel related costs.

We plan to continue to invest in research and development to support our efforts to expand the capabilities and scope of our platform and to enhance the user experience. While we expect to continue to improve our cost structure and achieve operational efficiencies, we expect that research and development expenses will increase in absolute dollars in future periods as we continue to invest in our development efforts, and vary from period-to-period as a percentage of revenue.



	June 30,
Sales and marketing	2020			2019			Change
	(dollar amounts in thousands)
Three months ended	$	60,150		$	53,599		$	6,551	12.2	%
Percentage of total revenue	49.4		%	55.4		%

Sales and marketing expenses for the three months ended June 30, 2020 increased over the same prior year period primarily due to a ~~$2.4~~$4.7 million increase in ~~personnel~~employee and consulting related expenditures, a $3.1 million increase in channel commissions, a $1.9 million increase in amortization of deferred sales commission costs, a ~~$1.4~~$1.8 million increase in stock-based compensation expense, a $1.2 million increase in marketing software and application related expenditures, and a ~~$0.7~~$0.6 million increase in amortization of ~~capitalized software expenses, as well as other smaller cost increases.~~

Research and development expenses for the six months ended September 30, 2019 increased over the same prior year period primarily due to a $6.4 million increase in personnel and related costs, a $3.1 million increase in stock-based compensation expense, and a $1.2 million increase in amortization of capitalized software expenses, as well as other smaller cost increases.intangible assets. These increases were partially offset by ~~capitalization~~a net decrease of ~~internally developed software~~$4.4 million in marketing program and public cloud expenses as we gained efficiencies in lead generation and brand awareness and a $2.4 million decrease of travel related costs.

September 30, Dollar Percent
Sales and marketing 2019 2018 Change Change
(dollar amounts in thousands)
Three months ended $ 57,895
$ 41,680
$ 16,215
38.9 %
Percentage of total revenue 52.9 % 48.6 %
Six months ended $ 111,494
$ 82,175
$ 29,319
35.7 %
Percentage of total revenue 54.1 % 48.7 %

~~Sales~~We plan to continue investing in sales and marketing to attract and retain customers on our platform and to increase our brand awareness. While we expect to continue to improve our cost structure and achieve operational efficiencies, we expect that sales and marketing expenses ~~for the three months ended September 30, 2019 increased over the same prior year period primarily due to a $10.0 million~~will increase in ~~personnel~~absolute dollars in future periods and ~~related costs,~~vary from period-to-period as a $2.9 million increase in advertising and marketing expenses, a $3.1 million increase in third-party commission expenses, and a $3.1 million increase in stock-based compensation costs, as well as other smaller cost increases. These cost increases were partially offset by $4.3 million commission costs that were capitalized.percentage of revenue.

Sales and marketing expenses for the six months ended September 30, 2019 increased over the same prior year period primarily due to a $11.7 million increase in personnel and related costs, a $9.9 million increase in advertising and marketing expenses, a $5.9 million increase in third-party commission expenses, and a $4.7 million increase in stock-based compensation costs, as well as other smaller cost increases. These cost increases were partially offset by $7.2 million commission costs that were capitalized.


	September 30,						Dollar		Percent		June 30,
General and administrative	2019			2018			Change		Change		2020			2019			Change
	(dollar amounts in thousands)										(dollar amounts in thousands)
Three months ended	$	20,435		$	20,326		$	109	0.5	%	$	25,790		$	19,607		$	6,183	31.5	%
Percentage of total revenue	18.7		%	23.7		%					21.2		%	20.3		%
Six months ended	$	40,042		$	35,159		$	4,883	13.9	%
Percentage of total revenue	19.4		%	20.8		%

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General and administrative expenses for the three months ended ~~September~~June 30, ~~2019~~2020 increased ~~slightly~~ as compared to the same prior year period due to a ~~$3.0 million increase in personnel and related costs, and a $2.2~~$3.8 million increase in stock-based compensation ~~costs.~~expense, a $1.3 million higher allowance for credit losses recognized partially in response to external market factors and uncertainties in connection with the COVID-19 pandemic, a $1.3 million increase in legal and tax related costs, and a $0.7 million increase in employee and consulting related expenditures. These increases were partially offset by a $1.2 million decrease in ~~sales~~contract termination costs.

We expect to continue improving our cost structure and ~~use tax~~achieve operational efficiencies, and therefore also expect that general and administrative expenses as a percentage of ~~$4.5 million that the company recognized in~~total revenue will decline over time.



	June 30,
Other income (expense), net	2020			2019			Change
	(dollar amounts in thousands)
Three months ended	$	(3,925	)	$	(1,564	)	$	(2,361	)	151.0	%
Percentage of total revenue	(3.2		)%	(1.6		)%

Other expense, net of other income increased for the three months ended ~~September~~June 30, ~~2018.~~

~~General and administrative expenses for the six months ended September 30, 2019 increased~~2020 over the same prior year period primarily due to a ~~$6.0 million increase related to personnel and related costs, a $3.0 million increase in stock-based compensation costs, a~~decrease of $1.6 million ~~increase~~ in ~~costs associated with our recent acquisition,~~interest income, a ~~$0.8~~$1.0 million increase in recruiting related expenses, and a $0.7 million increase in lease expenses, as well as other smaller cost increases. These increases were partially offset by a decrease in sales and use tax expenses of $4.5 million that the company recognized in the six months ended September 30, 2018.

September 30, Dollar Percent
Other (expense) income, net 2019 2018 Change Change
(dollar amounts in thousands)
Three months ended $ (2,732 ) $ 635
$ (3,367 ) (530.2 )%
Percentage of total revenue (2.5 )% 0.7 %
Six months ended $ (4,296 ) $ 1,354
$ (5,650 ) (417.3 )%
Percentage of total revenue (2.1 )% 0.8 %

~~Other (expense) income, net changed for the three and six months ended September 30, 2019 over the same prior year periods primarily due to an increase of $3.5 million and $7.1 million, respectively,~~ related to contractual interest expense, amortization of debt discount, and amortization of issuance costs associated with our convertible ~~notes~~Initial and Additional Notes issued in February 2019 and November 2019, respectively. The increase in the ~~fourth quarter of fiscal year 2019. These increases were~~net expense was partially offset by ~~an increase~~a $0.2 million change in other income.

With the recognition of interest ~~income. Refer to Part 1, Note 9~~expense and amortization of ~~Notes to Unaudited Condensed Consolidated Financial Statements. We had no such similar~~debt discount and issuance costs in connection with our convertible senior notes, we expect the ~~same prior year period.~~net of other income and expense to continue to be in a net expense position in future periods.


	September 30,						Dollar		June 30,
Provision for income taxes	2019			2018			Change		2020			2019			Change
	(dollar amounts in thousands)								(dollar amounts in thousands)
Three months ended	$	256		$	130		$	126	$	228		$	148		$	80	54.1	%
Percentage of loss before provision for income taxes	-0.6		%	-0.6		%			(0.5		)%	(0.4		)%
Six months ended	$	404		$	221		183
Percentage of loss before provision for income taxes	(0.5		)%	(0.6		)%

For the three months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~June 30, 2019, we recorded income tax expense of ~~$0.3~~$0.2 million and $0.1 million, respectively. For the six months ended September 30, 2019 and 2018, we recorded income tax expense of $0.4 million and $0.2 million, respectively. These taxes were related to state minimum taxes and income taxes from our foreign operations.

~~Our~~respectively, resulting in effective tax ~~rate was -0.6% for each~~rates of ~~the three months ended September 30, 2019~~(0.5)% and ~~2018, and -0.5% and -0.6% for the six months ended September 30, 2019 and 2018,~~(0.4)%, respectively.

We estimate our annual effective tax rate at the end of each quarter. In estimating the annual effective tax rate, we consider, among other things, annual pre-tax income, permanent tax differences, the geographic mix of pre-tax income and the application and interpretations of existing tax laws. We record the tax effect of certain discrete items, which are unusual or occur infrequently, in the interim period in which they occur, including changes in judgment about deferred tax valuation allowances. The determination of the effective tax rate reflects tax expense and benefit generated in certain domestic and foreign jurisdictions. However, jurisdictions with a year-to-date loss where no tax benefit can be recognized are excluded from the annual effective tax rate.

Liquidity and Capital Resources

As of ~~September~~June 30, ~~2019,~~2020, we had ~~$212.0~~$167.2 million of cash, cash equivalents, and investments. In addition, we had $19.0 million as restricted cash, which includes $8.6 million in support of letter of credits securing leases for office facilities, ~~in California and New York,~~ and $10.4 million held in escrow for our ~~recent~~ acquisition of Wavecell, in July 2019, pursuant to the terms of the acquisition agreement. By comparison, at March 31, ~~2019,~~2020, we had ~~$346.5~~$186.9 million of cash, cash equivalents, and investments as well as ~~a $8.1~~$19.0 million ~~in deposit~~ as restricted cash.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") was passed into law, and amended portions of relevant tax laws and provided relief to certain qualifying entities. In connection with the CARES Act, the Company elected to defer certain employer payroll taxes, which is expected to reduce cash usage by over $4 million throughout fiscal 2021. The amounts deferred will be remitted to tax authorities during the third quarter of fiscal 2022 and fiscal 2023, respectively, when they become due. Other jurisdictions around the world have also provided similar tax relief, which the Company has elected to receive, where applicable; these benefits have a lesser impact to our expected cash flows during fiscal 2021.

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In June 2020, the Company offered its employees a limited opportunity to receive a portion of their cash salary in shares of the Company's common stock. Based on employee elected participation, we expect lower cash usage from payroll compensation of over $4 million during fiscal 2021. Currently, the Company does not expect to offer this program beyond fiscal 2021.

We believe that our existing cash, cash equivalents, and investment balances, and our anticipated cash flows from operations will be sufficient to meet our working capital and expenditure requirements for the next 12 months.

Historically, the Company maintained all investments as short-term investments on its balance sheet, as the Company could liquidate these investments at any time and did not limit its liquidation of investments by contractual maturity date. Given the recent issuance of the convertible senior notes, and the associated increased cash, cash equivalents and investment balances, the Company expects to hold certain investments for at least 12 months from the reporting date and records these investments in long-term investments in alignment with the contractual maturity dates.

Period-over-Period Changes

Net cash used in operating activities for the ~~six~~three months ended ~~September~~June 30, ~~2019~~2020 was ~~$44.5~~$9.3 million, compared with ~~$4.6~~$20.5 million ~~used in operating activities~~ for the ~~six~~three months ended ~~September~~June 30, ~~2018.~~2019. Cash used in operating activities has historically been affected by:

•the amount of net income or loss;

the amount of ~~non-cash expense items such as~~ depreciation and amortization;

the amortization associated with deferred sales commissions, debt discount and issuance costs;

•the expense associated with stock options and stock-based awards; and

changes in working capital accounts, particularly in the timing of collections from receivable and payments of ~~obligations.~~obligations, such as commissions.

During the three months ended June 30, 2020, net cash used in operating activities was primarily related to the net loss of $41.9 million, net cash outflow from sales commissions of $7.0 million, which were partially offset by non-cash charges such as stock-based compensation expense of $22.8 million, depreciation and amortization of intangibles and capitalized software of $11.3 million, amortization of debt discount of $4.1 million, and operating lease expenses of $3.8 million.

Net cash used in investing activities was ~~$59.9~~$11.9 million in the ~~six~~three months ended ~~September~~June 30, ~~2019,~~2020, compared with ~~$0.3~~$11.2 million ~~used in~~provided by investing activities in ~~six~~three months ended ~~September~~June 30, ~~2018.~~2019. The cash used in investing activities during the ~~six~~three months ended ~~September~~June 30, ~~2019~~2020 was ~~primarily~~ related to ~~$57.8 million used in the acquisition of Wavecell, a $0.9 million payment released from escrow held for MarianalQ acquisition in the first quarter of fiscal 2019, combined with~~ purchases of ~~$7.1~~$2.5 million of property and equipment, ~~investments and~~ capitalized internal software development costs of ~~$14.3 million. These amounts were partially offset by $20.3~~$8.9 million, and $0.6 million of ~~proceeds from sales and maturities~~purchase of investments, net of ~~purchases~~proceeds from maturities of investments.

Net cash ~~provided by~~used in financing activities was ~~$0.5~~$0.1 million in the ~~six~~three months ended ~~September~~June 30, ~~2019,~~2020, compared with ~~$2.0~~$1.4 million ~~used~~provided by financing activities in the ~~six~~three months ended ~~September~~June 30, ~~2018. Our~~2019. Cash used in financing activities for the ~~six~~three months ended ~~September~~June 30, ~~2019 provided cash of $6.1 million from the issuance of common stock under employee incentive plans. These inflows were partially offset by $5.4 millionof deemed~~2020 was related to repurchases of our common stock related to shares withheld for payroll taxes ~~combined with $0.2 million in~~and payments for finance lease obligations.

~~Contractual Obligations~~

Payments due by Period
Contractual Obligations Total Less than 1 year 1-3 years 3-5 years More than 5 years
Senior convertible notes $ 287,500
$ —
$ —
$ 287,500
$ —
Interest on senior convertible notes 6,469
1,438
2,875
2,156
—
Operating leases 120,703
8,717
24,867
23,239
63,880
Total Contractual Obligations $ 414,672
$ 10,155
$ 27,742
$ 312,895
$ 63,880

CRITICAL ACCOUNTING POLICIES & ESTIMATES

The discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures of assets and liabilities. On an on-going basis, we evaluate our critical accounting policies and estimates. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

There have been no significant changes during the three months ended ~~September~~June 30, ~~2019~~2020 to our critical accounting policies and estimates previously disclosed in our Form 10-K for the fiscal year ended March 31, ~~2019, except for our adoption of ASU 2016-02 as discussed in Notes 2 and 7 of the Notes to the Unaudited Condensed Consolidated Financial Statements.~~

2020.

RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

See Item 1 of Part I, "Notes to Unaudited Condensed Consolidated Financial Statements - Note 2 - Summary of Significant Accounting ~~Pronouncements.~~Policies."

RECENT ACCOUNTING PRONOUNCEMENTS

See Item 1 of Part I, "Notes to Unaudited Condensed Consolidated Financial Statements - Note 2 - Summary of Significant Accounting ~~Pronouncements.~~Policies."

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Fluctuation Risk

The primary objective of our investment activities is to preserve principal while maximizing income without significantly increasing risk. Some of the securities in which we invest may be subject to market risk. This means that a change in prevailing interest rates may cause the principal amount of the investment to fluctuate. To minimize this risk, we may maintain our portfolio ofWe had cash, cash equivalents, and investments totaling $167.2 million as of ~~short durations~~June 30, 2020. Cash equivalents and investments were invested primarily in ~~a variety of securities, including commercial paper,~~ money market funds, ~~debt~~U.S. treasury, commercial paper, and corporate bonds. Our investment policy is focused on the preservation of capital and supporting our liquidity needs. Under the policy, we invest in highly rated securities, ~~and certificates~~while limiting the amount of ~~deposit.~~credit exposure to any one issuer other than the U.S. government. We do not invest in financial instruments for trading or speculative purposes, nor do we use leveraged financial instruments. We utilize external investment managers who adhere to the guidelines of our investment policy. A hypothetical 10% change in interest rates would not have a material impact on the value of our cash, cash equivalents, or available-for-sale investments.

AsThe Company issued $362.5 million aggregate principal amount of ~~September 30, 2019, we had $222.4 million outstanding on our 0.50%~~ convertible senior notes ~~due 2024.~~of which the estimated fair value as of June 30, 2020 was $326.3 million. The ~~values~~fair value of the ~~Notes are exposed~~convertible senior notes is subject to interest rate ~~risk. Generally,~~risk, market risk and other factors due to the conversion feature. The fair ~~market value of our fixed interest rate Notes will increase as interest rates fall and decrease as interest rates rise. In addition, the fair market~~ value of the ~~Notes is affected by our stock price. The fair market value of the Notes~~convertible senior notes will generally increase as our common stock price increases and will generally decrease as our common stock price ~~declines in value. However,~~declines. The interest and market value changes affect the fair value of the convertible senior notes but do not impact our financial position, cash flows, or results of operations due to the fixed nature of the debt obligation. Additionally, we carry the ~~Notes~~convertible senior notes at face value less unamortized discount on our consolidated balance ~~sheet,~~sheets, and we present the fair value for required disclosure purposes only.

We do not believe that a hypothetical 10% change in interest rates would have a material impact on our interest income or expenses, convertible senior notes, or financial statements for any periods presented.

Foreign Currency Exchange Risk

We have foreign currency risks related to our revenue and operating expenses denominated in currencies other than the U.S. dollar, primarily the British Pound, causing both our revenue and our operating results to be impacted by fluctuations in the exchange rates.

Gains or losses from the ~~translation~~revaluation of certain cash balances, accounts receivable balances, and intercompany balances that are denominated in these currencies impact our ~~other comprehensive income.~~net income (loss). A hypothetical decrease in all foreign currencies against the US dollar of 10%, would not result in a material foreign currency loss on foreign-denominated balances, at ~~September~~June 30, ~~2019.~~2020. As our foreign operations expand, our results may be more impacted by fluctuations in the exchange rates of the currencies in which we do business.

At this time, we do not, but we may in the future, enter into financial instruments to hedge our foreign currency exchange risk.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Effectiveness of Disclosure Controls and Procedures

We maintain disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (Disclosure Controls) that are designed to ensure that information we are required to disclose in reports filed or submitted under the Securities and Exchange Act of 1934 is accumulated and communicated to management, including our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure, and that such information is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

As of the end of the period covered by this Quarterly Report on Form 10-Q, under the supervision of our Chief Executive Officer and our Chief Financial Officer, we evaluated the effectiveness of our Disclosure Controls. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our Disclosure Controls were effective as of ~~September~~June 30, ~~2019.~~2020.

Limitations on the Effectiveness of Controls

Our management, including the Chief Executive Officer and Chief Financial Officer, do not expect that our Disclosure Controls or internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control

system's objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

Changes in Internal Control over Financial Reporting

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During the ~~second~~first quarter of fiscal year ~~2020,~~2021, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART ~~II --~~II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information set forth in Note 8, “Legal Proceedings” of Notes to Unaudited Condensed Consolidated Financial Statements under ITEM 1. FINANCIAL STATEMENTS of PART I is incorporated by reference in response to this item.

ITEM 1A. RISK FACTORS

~~There~~Except as disclosed below, there have been no material changes from the risk factors previously disclosed in our annual report on Form 10-K for the fiscal year ended March 31, ~~2019~~2020.

Failure to comply with laws and contractual obligations related to data privacy and protection could have a material adverse effect on our business, financial condition and operating results.

We process many types of data, including personal data in the course of our business. As such, we are subject to the data privacy and protection laws and regulations adopted by federal, state and foreign governmental agencies, including the European Union’s General Data Protection Regulation ("GDPR") and the California Consumer Privacy Act ("CCPA"). Data privacy and protection is highly regulated in many jurisdictions and may become the subject of additional regulation in the future. For example, lawmakers and regulators worldwide are considering proposals that would require companies, like us, that encrypt users' data to ensure access to such data by law enforcement authorities. Privacy laws restrict our processing of personal information provided to us by our customers as well as data we collect from our customers and employees. We strive to comply with all applicable laws, regulations, policies and legal obligations relating to privacy and data protection. However, if we fail to comply, we may be subject to fines, penalties and lawsuits, statutory damages at both the federal and state levels in the U.S., substantial fines and penalties under the European Union’s GDPR, class action lawsuits, and our ~~quarterly report~~reputation may suffer. We may also be required to make modifications to our data practices that could have an adverse impact on ~~Form 10-Q~~our business, including increasing our operating costs which may cause us to increase our prices making our services less competitive.

While the United Kingdom enacted a Data Protection Act in May 2018 that substantially implements the GDPR and implemented statutory amendments to the Data Protection Act in 2019 that further aligned it with GDPR, the United Kingdom’s exit from the European Union has created regulatory uncertainty such as with respect to the cross-border transfer of data. Such uncertainty may adversely impact the operations of our U.K. subsidiary and add operational complexities that did not previously exist. In addition on July 16, 2020, the Court of Justice of the European Union invalidated the Privacy Shield program. The Privacy Shield program allowed transfers of EU personal data to the U.S. for participating companies consistent with European privacy requirements for transfer of such data to non-EU countries. The Court also raised concerns about transfer of personal data to the ~~quarterly period ended June 30, 2019.~~U.S. under standard contractual clauses but did not invalidate this transfer mechanism. We participate in the Privacy Shield Program and have intra-company standard contractual clauses so we are currently able to transfer consistent with EU privacy requirements despite the Court’s decision. The decision, however, has created uncertainty about data transfer to the U.S. and it is likely that European regulators will provide further guidance on the use of standard contractual clauses for data transfers to the U.S. consistent with the Court’s decision.

We are also subject to the privacy and data protection-related obligations in our contracts with our customers and other third parties. Any failure, or perceived failure, by us to comply with federal, state, or international laws, including laws and regulations regulating privacy, data or consumer protection, or to comply with our contractual obligations related to privacy, could result in proceedings or actions against us by governmental entities, contractual parties or others, which could result in significant liability to us, as well as harm our reputation. Additionally, third parties on which we rely enter into contracts to protect and safeguard our customers' data. Should such parties violate these agreements or suffer a breach, we could be subject to proceedings or actions against us by governmental entities, contractual parties or others, which could result in significant liability to us as well as harm to our reputation.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On July 17, 2019, we issued 2,628,761 shares of our common stock in connection with the purchase of all of the issued and outstanding capital stock held by shareholders of Wavecell Pte. Ltd., a corporation incorporated under the laws of the Republic of Singapore. This transaction was exempt from registration under the Securities Act pursuant to Section 4(a)(2) of the Securities Act and Regulation S.

~~Purchases of Equity Securities.~~

Period (a) Total Number of shares repurchased (1) (b) Average Price Paid Per Share (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (d) Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plans or Programs
July 1, 2019 through July 31, 2019 12,976
$ 25.38
—
$ 7,065,978
August 1, 2019 through August 31, 2019 25,487
$ 25.01
—
$ 7,065,978
September 1, 2019 through September 30, 2019 —
$ —
—
$ 7,065,978

(1) The 38,463 shares purchased represent shares surrendered to the Company to pay the exercise price in connection with the exercise of employee stock options pursuant to the Company's Amended & Restated 2012 Equity Incentive Plan.None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS



Exhibit Number		Description
~~2.1~~3.1		~~Share Purchase Agreement,~~Restated Certificate of Incorporation of Registrant, dated ~~as of July 17, 2019, by and among, 8x8, Inc., Wavecell Pte. Ltd., the Sellers named herein, and Qualgro Partners Pte. Ltd~~August 22, 2012 (incorporated by reference to Exhibit ~~2.1~~3.1 to the Annual Report on Form ~~10-Q~~10-K filed ~~on July 31, 2019)~~May 27, 2013).
10.1*3.2		Amended and Restated By-Laws of 8x8, Inc. (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed July 28, 2015).
4.1		Indenture, dated as of February 19, 2019, between 8x8, Inc. and Wilmington Trust, National Association, as trustee (including form of Note) (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed February 19, 2019).
10.1		8x8, Inc. Amended and Restated 2012 Equity Incentive Plan, effective May 5, 2020.+
10.2		Transition Agreement, between Steven Gatoff and 8x8, Inc., effective June 8, 2020.*+
10.3		Temporary Secondment Agreement, between Samuel Wilson and 8x8, Inc., dated as ~~amended and restated effective August 1, 2019 (incorporated by reference to Form S-8 filed on August 26, 2019).~~of January 13, 2020.*+
31.1		Certification of Chief Executive Officer pursuant to Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Chief Financial Officer pursuant to Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101		The following materials from the 8x8, Inc. Quarterly Report on Form 10-Q for the quarter ended ~~September~~June 30, ~~2019,~~2020, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of ~~September~~June 30, ~~2019~~2020 and March 31, ~~2019;~~2020; (ii) Condensed Consolidated Statements of Operations for the three ~~and six~~ months ended ~~September~~June 30, ~~2019~~2020 and ~~2018;~~2019; (iii) Condensed Consolidated Statements of Comprehensive Loss for the three ~~and six~~ months ended ~~September~~June 30, ~~2019~~2020 and ~~2018;~~2019; (iv) Condensed Consolidated Statements of Stockholders' Equity for the three ~~and six~~ months ended ~~September~~June 30, ~~2019~~2020 and ~~2018;~~2019; (v) Condensed Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~September~~June 30, ~~2019~~2020 and ~~2018;~~2019; and (vi) notes to unaudited condensed consolidated financial statements.
104		Cover Page Interactive Data File, formatted in iXBRL and contained in Exhibit 101.




*	Management contract or compensatory plan or arrangement.
+	Furnished herewith.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: ~~October 30, 2019~~August 4, 2020



	8X8, INC.
	~~(Registrant)~~
	By: /s/ ~~Steven Gatoff~~ Samuel Wilson
	~~Steven Gatoff~~Samuel Wilson
	Chief Financial Officer (Principal Financial, Accounting and Duly Authorized Officer)

2932



Weighted average remaining lease term	9.1 years
Weighted average discount rate	4.0%
Cash paid for amounts included in the measurement of lease liabilities	$	4,487
Operating cash flow from operating leases	$	4,487



Remaining 2020	$	5,298
2021	8,103
2022	13,768
2023	11,189
2024	11,224
Thereafter	68,839
Total lease payments	$	118,421
Less: imputed interest	(22,486		)
Less: lease incentives receivable	(15,422		)
Present value of lease liabilities	$	80,513



	Payments due by Period
Contractual Obligations	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Senior convertible notes	$	287,500	$	—	$	—	$	287,500	$	—
Interest on senior convertible notes	6,469		1,438		2,875		2,156		—
Operating leases	120,703		8,717		24,867		23,239		63,880
Total Contractual Obligations	$	414,672	$	10,155	$	27,742	$	312,895	$	63,880



Period	(a) Total Number of shares repurchased (1)	(b) Average Price Paid Per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plans or Programs
July 1, 2019 through July 31, 2019	12,976	$	25.38	—	$	7,065,978
August 1, 2019 through August 31, 2019	25,487	$	25.01	—	$	7,065,978
September 1, 2019 through September 30, 2019	—	$	—	—	$	7,065,978