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 June 30, ~~2020~~2021

☐ 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 001-38312

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)

675 Creekside Way

Campbell,, CA95008

(Address of principal executive offices)

(~~408~~) (408) 727-1885

(Registrant's telephone number, including 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 ~~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 ~~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 ~~July 29, 2020~~August 2, 2021 was ~~104,234,242.~~

112,033,014.

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8X8, INC

INDEX TO QUARTERLY REPORT ON FORM 10-Q

FOR THE ~~QUARTERLY PERIOD~~QUARTER ENDED JUNE 30, ~~2020~~

~~TABLE OF CONTENTS~~

2021



	Page ~~No.~~
Forward-Looking Statements and Risk Factors		2
PART I. FINANCIAL INFORMATION		43
Item 1. Financial Statements (unaudited):		43
Condensed Consolidated Balance Sheets ~~at June 30, 2020 and March 31, 2020~~		43
Condensed Consolidated Statements of Operations ~~for the three months ended June 30, 2020 and 2019~~		54
Condensed Consolidated Statements of Comprehensive Loss ~~for the three months ended June 30, 2020 and 2019~~		65
Condensed Consolidated Statements of Stockholders' Equity ~~for the three months ended June 30, 2020 and 2019~~		76
Condensed Consolidated Statements of Cash Flows ~~for the three months ended June 30, 2020 and 2019~~		87
Notes to Unaudited Condensed Consolidated Financial Statements		108
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		2017
Item 3. Quantitative and Qualitative Disclosures About Market Risk		2723
Item 4. Controls and Procedures		2724
PART II. OTHER INFORMATION		2925
Item 1. Legal Proceedings		2925
Item 1A. Risk Factors		2925
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		2925
Item 3. Defaults Upon Senior Securities		2925
Item 4. Mine Safety Disclosures		3025
Item 5. Other Information		3025
Item 6. Exhibits		3126
Signature		3227

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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:

•the impact of economic downturns on us and our customers, including the impacts of the COVID-19 pandemic;

•customer cancellations and rate of customer churn;

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

•customer acceptance and demand for our new and existing cloud communication and collaboration services and features, including voice, contact center, video, messaging, and communication ~~APIs;~~application programming interfaces ("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 ~~products and~~ 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 and privacy 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;~~globally;

•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 ~~(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;~~future;

~~Table of Contents~~•

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

~~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, ~~2020~~2021, 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 ~~2021~~2022 refers to the fiscal year ~~ended~~ending on March 31, ~~2021)~~2022). Unless the context requires otherwise, references to "we," "us," "our," "8x8" and the "Company" refer to 8x8, Inc. and its consolidated subsidiaries.

All dollar amounts within this Quarterly Report are in thousands of U.S. Dollars ("dollars") unless otherwise noted.

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

8X8, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(~~In thousands, unaudited)~~Dollars in thousands)


	June 30, 2021		March 31, 2021
	(unaudited)		(audited)
ASSETS
Current assets:
Cash and cash equivalents	$	109,288	$	112,531
Restricted cash, current	8,179		8,179
Short-term investments	31,231		40,337
Accounts receivable, net	49,755		51,150
Deferred sales commission costs, current	31,711		30,241
Other current assets	36,066		34,095
Total current assets	266,230		276,533
Property and equipment, net	90,776		93,076
Operating lease, right-of-use assets	63,402		66,664
Intangible assets, net	15,845		17,130
Goodwill	131,599		131,520
Restricted cash, non-current	462		462
Long-term investments	12,712		0
Deferred sales commission costs, non-current	74,394		72,427
Other assets	20,238		20,597
Total assets	$	675,658	$	678,409

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	33,233	$	31,236
Accrued compensation	27,876		29,879
Accrued taxes	11,321		12,129
Operating lease liabilities, current	12,792		12,942
Deferred revenue, current	21,985		20,737
Other accrued liabilities	13,995		14,455
Total current liabilities	121,202		121,378
Operating lease liabilities, non-current	79,403		82,456
Convertible senior notes, net	312,828		308,435
Other liabilities, non-current	5,429		5,636
Total liabilities	518,862		517,905
Commitments and contingencies (Note 7)	0		0
Stockholders' equity:
Common stock	111		109
Additional paid-in capital	795,589		755,643
Accumulated other comprehensive loss	(3,943)		(4,193)
Accumulated deficit	(634,961)		(591,055)
Total stockholders' equity	156,796		160,504
Total liabilities and stockholders' equity	$	675,658	$	678,409

June 30, 2020 March 31, 2020
ASSETS

Current assets:

Cash and cash equivalents $ 116,690
$ 137,394
Restricted cash, current 10,376
10,376
Short-term investments 40,580
33,458
Accounts receivable, net 40,572
37,811
Deferred sales commission costs, current 24,247
22,444
Other current assets 35,336
35,679
Total current assets 267,801
277,162
Property and equipment, net 96,112
94,382
Operating lease, right-of-use assets 76,054
78,963
Intangible assets, net 21,773
24,001
Goodwill 128,980
128,300
Restricted cash, non-current 8,641
8,641
Long-term investments 9,965
16,083
Deferred sales commission costs, non-current 58,535
53,307
Other assets 20,232
19,802
Total assets $ 688,093
$ 700,641
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 39,342
$ 40,261
Accrued compensation 27,764
22,656
Accrued taxes 9,220
10,251
Operating lease liabilities, current 9,989
5,875
Deferred revenue, current 8,352
7,105
Other accrued liabilities 26,873
37,277
Total current liabilities 121,540
123,425
Operating lease liabilities, non-current 87,884
92,452
Convertible senior notes, net 295,662
291,537
Other liabilities, non-current 4,141
2,496
Total liabilities 509,227
509,910
Commitments and contingencies (Note 8)

Stockholders' equity:
Common stock 104
103
Additional paid-in capital 657,014
625,474
Accumulated other comprehensive loss (10,869 ) (12,176 )
Accumulated deficit (467,383 ) (422,670 )
Total stockholders' equity 178,866
190,731
Total liabilities and stockholders' equity $ 688,093
$ 700,641

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

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8X8, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(InUnaudited, dollars and shares in thousands except per share ~~amounts; unaudited)~~amounts)


	Three Months Ended June 30,
		2021		2020
Service revenue		$	137,796	$	114,183
Other revenue		10,531		7,624
Total revenue		148,327		121,807
Operating expenses:
Cost of service revenue		46,010		40,996
Cost of other revenue		13,746		11,137
Research and development		25,392		21,494
Sales and marketing		75,915		60,150
General and administrative		26,091		25,790
Total operating expenses		187,154		159,567
Loss from operations		(38,827)		(37,760)
Other expense, net		(4,823)		(3,925)
Loss before provision for income taxes		(43,650)		(41,685)
Provision for income taxes		256		228
Net loss		$	(43,906)	$	(41,913)

Net loss per share:
Basic and diluted		$	(0.40)	$	(0.40)
Weighted-average common shares outstanding:
Basic and diluted		109,925		103,607

Three Months Ended June 30,
2020 2019
Service revenue $ 114,183
$ 89,839
Other revenue 7,624
6,836
Total revenue 121,807
96,675
Operating expenses:
Cost of service revenue 40,996
25,300
Cost of other revenue 11,137
12,391
Research and development 21,494
18,331
Sales and marketing 60,150
53,599
General and administrative 25,790
19,607
Total operating expenses 159,567
129,228
Loss from operations (37,760 ) (32,553 )
Other income (expense), net (3,925 ) (1,564 )
Loss before provision for income taxes (41,685 ) (34,117 )
Provision for income taxes 228
148
Net loss $ (41,913 ) $ (34,265 )
Net loss per share:
Basic and diluted $ (0.40 ) $ (0.36 )
Weighted-average common shares outstanding:
Basic and diluted 103,607
96,429

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

~~Table of Contents~~

~~8X8, INC.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS~~

~~(In thousands, unaudited)~~

Three Months Ended June 30,
2020 2019
Net loss $ (41,913 ) $ (34,265 )
Other comprehensive income (loss), net of tax
Unrealized gain on investments in securities 422
121
Foreign currency translation adjustment 885
(652 )
Comprehensive loss $ (40,606 ) $ (34,796 )

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

~~Table of Contents~~

~~8X8, 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
Shares Amount
Balance at March 31, 2020 103,178,621
$ 103
$ 625,474
$ (12,176 ) $ (422,670 ) $ 190,731
Adjustment to opening balance for change in accounting principle —
—
—
—
(2,800 ) (2,800 )
Issuance of common stock under stock plans, less withholding 688,414
1
(67 ) —
—
(66 )
Stock-based compensation expense —

23,118
—
—
23,118
Issuance of common stock related to acquisition —
—
8,489
—
—
8,489
Unrealized investment gain —

422
—
422
Foreign currency translation adjustment —

885
—
885
Net loss —

(41,913 ) (41,913 )
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, 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.

CONDENSED CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~COMPREHENSIVE LOSS

(~~In thousands, unaudited)~~Unaudited, dollars in thousands)


	Three Months Ended June 30,
		2021		2020
Net loss		$	(43,906)	$	(41,913)
Other comprehensive income (loss), net of tax
Unrealized (loss) gain on investments in securities		(33)		422
Foreign currency translation adjustment		283		885
Comprehensive loss		$	(43,656)	$	(40,606)

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

~~Table of Contents~~

~~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.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited, dollars and shares in thousands)


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total
	Shares	Amount
Balance at Balance at March 31, 2021	109,135	$	109	$	755,643	$	(4,193)	$	(591,055)	$	160,504
Issuance of common stock under stock plans, less withholding	1,562	2		3,438		—		—		3,440
Stock-based compensation expense	—	—		36,508		—		—		36,508
Unrealized investment gain (loss)	—	—		—		(33)		—		(33)
Foreign currency translation adjustment	—	—		—		283		—		283
Net loss	—	—		—		—		(43,906)		(43,906)
Balance at Balance at June 30, 2021	110,697	$	111	$	795,589	$	(3,943)	$	(634,961)	$	156,796


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total
	Shares	Amount
Balance at Balance at March 31, 2020	103,179	$	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	688	1		(67)		—		—		(66)
Stock-based compensation expense	—	—		23,118		—		—		23,118
Issuance of common stock related to acquisition	—	—		8,489		—				8,489
Unrealized investment gain	—	—		—		422		—		422
Foreign currency translation adjustment	—	—		—		885		—		885
Net loss	—	—		—		—		(41,913)		(41,913)
Balance at Balance at June 30, 2020	103,867	$	104	$	657,014	$	(10,869)	$	(467,383)	$	178,866

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

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8X8, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, dollars in thousands)


	Three Months Ended June 30,
	2021		2020
Cash flows from operating activities:
Net loss	$	(43,906)	$	(41,913)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation	2,922		2,823
Amortization of intangible assets	1,285		2,228
Amortization of capitalized internal-use software costs	7,243		6,217
Amortization of debt discount and issuance costs	4,393		4,126
Amortization of deferred sales commission costs	8,245		6,138
Allowance for credit losses	383		1,742
Operating lease expense, net of accretion	3,459		3,750
Stock-based compensation expense	36,587		22,779
Other	713		602
Changes in assets and liabilities:
Accounts receivable	924		(3,428)
Deferred sales commission costs	(11,615)		(13,186)
Other current and non-current assets	(2,550)		(3,025)
Accounts payable and accruals	(5,063)		(519)
Deferred revenue	1,012		2,416
Net cash provided by (used in) operating activities	4,032		(9,250)

Cash flows from investing activities:
Purchases of property and equipment	(878)		(2,453)
Capitalized internal-use software costs	(6,546)		(8,866)
Purchases of investments	(28,721)		(17,156)
Sales of investments	10,299		0
Proceeds from maturities of investments	14,700		16,575

Net cash used in investing activities	(11,146)		(11,900)

Cash flows from financing activities:
Finance lease payments	(4)		(67)
Tax-related withholding of common stock	(99)		(69)
Proceeds from issuance of common stock under employee stock plans	3,538		2
Net cash provided (used in) by financing activities	3,435		(134)

Effects of currency exchange rates on cash, cash equivalent, and restricted cash	436		580
Net decrease in cash, cash equivalents, and restricted cash	(3,243)		(20,704)
Cash, cash equivalents, and restricted cash at the beginning of the period	121,172		156,411
Cash, cash equivalents, and restricted cash at the end of the period	$	117,929	$	135,707

Supplemental information:
Cash paid for income taxes	$	337	$	165


Reconciliation of cash, cash equivalents, and restricted cash at the end of the period:
Cash and cash equivalents	$	109,288	$	116,690
Restricted cash, current	8,179		10,376
Restricted cash, non-current	462		8,641
Total cash, cash equivalents, and restricted cash	$	117,929	$	135,707

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.1996.

The Company is a leading ~~cloud provider of enterprise~~ Software-as-a-Service ("SaaS") provider of contact center, voice, video, chat, and enterprise-class API solutions powered by one global cloud communications ~~solutions that enable businesses of all sizes to communicate~~platform. 8x8 empowers workforces worldwide by connecting individuals and teams so they can collaborate faster and work smarter across voice, video meetings, chat, and 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 andfrom anywhere. 8x8 provides real-time business analytics and ~~other services. Substantially~~intelligence giving its customers unique insights across all interactions and channels on our platform so they can support a distributed and hybrid working model while delighting their end-customers and accelerating their business. A majority of all revenue 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 delivery of 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 2021 refers to the fiscal year ending March 31, 2021).

~~The~~ accompanying ~~interim~~ condensed consolidated financial statements are unaudited and have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and regulations of the Securities and Exchange Commission ~~(SEC)~~("SEC") regarding interim financial reporting. ~~The March 31, 2020 year-end condensed consolidated balance sheet data~~Accordingly, certain information and disclosures normally included in ~~this document were derived from audited~~our annual consolidated financial statements ~~and does not include all of the disclosures required by GAAP.~~prepared in accordance with GAAP have been condensed or omitted. 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, ~~2020~~2021, and notes thereto included in the Company's fiscal ~~2020 annual report~~2021 Annual Report on Form ~~10-K.~~10-K ("Form 10-K"). There ~~have been~~were no material changes induring the three months ended June 30, 2021, to our significant accounting policies as described in the Company's ~~annual report on~~ Form 10-K for the fiscal 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).~~ 2021.

The ~~results of operations and cash flows for the interim periods included in these~~unaudited condensed consolidated financial statements ~~are not necessarily indicative~~include the accounts of the ~~results to be expected for any future periods or the entire fiscal year.~~Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The Company conducts its operations through one reportable segment.

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 the Company's financial position, results of operations, and cash flows for the periods presented. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for any subsequent quarter or for the entire year ending March 31, 2022.

USE OF ESTIMATES

The preparation of the condensed consolidated financial statements in conformity with 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.~~date. On an ongoing basis, the Company evaluates its estimates, including, but not limited to, those related to allowance for credit losses, ~~returns~~ reserve for expected customer credits or cancellations, fair value of and/or evaluation for impairment of goodwill and ~~intangible~~other long-lived assets, capitalization of internally developed software, benefit period for deferred sales commission costs, stock-based compensation expense, ~~incremental borrowing~~discount rate used to calculate operating lease liabilities, income and sales tax liabilities, fair value of convertible senior notes, litigation, and other contingencies. The Company bases its estimates on known facts and circumstances, historical experience, and various other assumptions. Actual results could differ from those estimates under different assumptions or conditions.

~~Table of Contents~~

~~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.

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

RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

~~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 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 2016-13 on a modified retrospective basis as of April 1, 2020 through a cumulative-effect adjustment to the Company's beginning accumulated deficit balance; the impact of the adoption was not material to 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 FASB issued ASU 2018-13,~~ ~~Fair Value Measurement~~ (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, which is fiscal 2021 for the Company. ~~The Company adopted ASU 2018-13 in the first quarter of fiscal 2021, and the impact of the adoption was immaterial to 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, which is fiscal 2021 for the Company; early adoption is permitted. The Company adopted this guidance on a prospective basis effective April 1, 2020. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements.

~~RECENT ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED~~

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), which ~~enhances~~enhanced and ~~simplifies~~simplified 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 interim-period accounting for enacted changes in tax law. The amendment ~~will be~~was effective for public companies with fiscal years beginning after December 15, 2020, which is fiscal 2022 for the Company. The adoption of this guidance in the first quarter of the Company's fiscal 2022 did not have a material impact on the Company's financial statements.

RECENT ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED

In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40), which simplifies accounting for convertible instruments by eliminating two of the three accounting models available for convertible debt instruments and convertible preferred stock. The guidance also addresses how convertible instruments are accounted for in the diluted earnings per share calculation. The guidance is effective for fiscal years beginning after December 15, 2021, which is fiscal 2023 for the Company; early adoption is permitted. The Company is currently assessing the impact of this pronouncement to its consolidated financial statements.

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3. REVENUE RECOGNITION

Disaggregation of Revenue

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

12. ~~Table of Contents~~Geographical Information.

Contract Balances

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


	June 30, 2021		March 31, 2021
Accounts receivable, net	$	49,755	$	51,150
Contract assets, current	$	12,324	$	12,840
Contract assets, non-current	$	18,269	$	17,987
Deferred revenue, current	$	21,985	$	20,737
Deferred revenue, non-current	$	2,813	$	2,999

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~~contract assets, non-current, ~~net~~ and deferred revenue, non-current are recorded on the Condensed Consolidated Balance Sheets in ~~other~~Other current assets ~~other~~, Other assets, and ~~other~~Other liabilities, non-current, respectively.

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

June 30, 2020 March 31, 2020 Change
Contract assets $ 25,522
$ 24,123
$ 1,399
Deferred revenue $ 10,631
$ 8,224
$ 2,407

~~The change~~Contract assets represent recognition of revenue that has not yet been billed; the net decrease in contract assets was primarily driven by the ~~recognition~~billing of revenue ~~that has not yet been billed,~~previously recognized. The net ~~of amounts billed during the period and reserve for current estimate of credit losses. The~~ increase in deferred revenue was due to billings in advance of performance obligations being ~~satisfied, net of revenue recognized for services rendered during the period. Revenue of $3.7 million was recognized during~~satisfied. During the three months ended June 30, ~~2020,~~2021, the Company recognized revenues of approximately $7.6 million, which was ~~offset by additional deferrals during~~included in the deferred revenue balance at the beginning of the period.

Remaining Performance Obligations

The Company's subscription terms typically range from one to five years. Contract revenue from remaining performance obligations that had not yet been recognized as of June 30, ~~2020 that has not yet been recognized~~2021, was approximately ~~$290.0 million from remaining performance obligations.~~$530.0 million. This amount excludes contracts with an original expected length of less than one ~~year or less.~~year. The Company expects to recognize revenue on ~~most~~approximately 75% of the remaining performance obligations over the next 36 ~~months.~~months and approximately 25% thereafter.

Deferred Sales Commission Costs

Amortization of deferred sales commission costs for the three months ended June 30, 2021 and 2020, was $8.2 million and $6.1 million, respectively. There were no material write-offs of deferred sales commission costs during the three months ended June 30, 2021 and 2020.

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4. FAIR VALUE MEASUREMENTS

~~Cash,~~The following tablse presents estimated fair values of cash, cash equivalents, restricted cash, and available-for-sale ~~investments were as follows (in thousands):~~investments:


June 30, 2021	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	$	39,480	$	—	$	—	$	39,480	$	39,480	$	0	$	—	$	—
Level 1:
Money market funds	67,108		—		—		67,108		67,108		—		—		—

Subtotal	106,588		0		0		106,588		106,588		0		0		0
Level 2:
Certificate of deposit	8,641		—		—		8,641		—		8,641		—		0
Municipal bonds	700		—		—		700		700		—		—		—
Commercial paper	15,120		2		0		15,122		2,000		—		13,122		—
Corporate debt	30,796		30		(5)		30,821		0		—		18,109		12,712
Subtotal	55,257		32		(5)		55,284		2,700		8,641		31,231		12,712
Total assets	$	161,845	$	32	$	(5)	$	161,872	$	109,288	$	8,641	$	31,231	$	12,712


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
March 31, 2021																		March 31, 2021	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	$	34,028	$	—	$	—		$	34,028	$	23,652	$	10,376	$	—	$	—	Cash	$	39,070	$	—	$	—	$	39,070	$	39,070	$	0	$	—	$	—
Level 1:																		Level 1:
Money market funds	88,638		—		—			88,638		88,638		—		—		—		Money market funds	67,712		—		—		67,712		67,712		—		—		—
Treasury securities	11,686		89		—			11,775		—		—		11,775		—		Treasury securities	6,177		17		0		6,194		—		—		6,194		0
Subtotal	134,352		89		—			134,441		112,290		10,376		11,775		—		Subtotal	112,959		17		0		112,976		106,782		0		6,194��		0
Level 2:																		Level 2:
Certificate of deposit	8,641		—		—			8,641		—		8,641		—		—		Certificate of deposit	8,641		—		—		8,641		—		8,641		—		—
Commercial paper	9,395		1		—			9,396		4,400		—		4,996		—		Commercial paper	17,656		42		0		17,698		700		—		16,998		—
Corporate debt	33,629		152		(7		)	33,774		—		—		23,809		9,965		Corporate debt	22,193		1		0		22,194		5,049		—		17,145		0
Subtotal	51,665		153		(7		)	51,811		4,400		8,641		28,805		9,965		Subtotal	48,490		43		0		48,533		5,749		8,641		34,143		0
Total assets	$	186,017	$	242	$	(7	)	$	186,252	$	116,690	$	19,017	$	40,580	$	9,965	Total assets	$	161,449	$	60	$	0	$	161,509	$	112,531	$	8,641	$	40,337	$	0

~~Table of Contents~~

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

~~Certificate~~Certificates of deposit ~~represents~~represent the Company's ~~letter~~letters of ~~credits~~credit securing leases for office facilities, ~~and~~ the ~~balance~~balances of which isare included in ~~restricted~~Restricted cash, current and Restricted cash, non-current in on the Company's ~~condensed consolidated balance sheet.~~Condensed Consolidated Balance Sheets.

The Company considers its investments as available to support its current operations and it has classified all investments as available-for-sale securities. AsThe Company does not intend to sell any of ~~June 30, 2020, for~~its investments that ~~were~~are in unrealized loss positions ~~the Company does not have the intent to sell any~~and, as of ~~these investments, and~~June 30, 2021, 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.~~bases.

The Company regularly reviews the changes to the rating of its securities at the individual security level by rating agencies ~~as well as~~and reasonably monitors the surrounding economic conditions to assess the risk of expected credit losses. As of June 30, ~~2020,~~2021, the Company did not have any risk of expected credit ~~losses.~~losses on its investments.

As of June 30, ~~2020,~~2021 and March 31, 2021, the estimated fair value of the Company's outstanding convertible senior notes ~~(the "Notes"~~("Notes") was ~~$326.3~~$450.7 million and $502.9 million, respectively, which was determined based on the closing price for the Notes on the last trading day of the reporting period and is ~~considered to be~~categorized within Level 2 inof the fair value 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”), See Note 8, Convertible Senior Notes 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”)Capped Call. This 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 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 $117.1 million was comprised of $72.8 million in cash and $44.3 million in shares of common stock of the Company, of which $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 holdback amounts are eligible to be released in 12 months from the date of the Transaction and the remainder in 18 months from the date of the Transaction. The holdback cash of $10.4 million is recorded in restricted cash, current and other accrued liabilities, respectively, in the Company's condensed consolidated balance sheet. The holdback shares of $8.5 million is included in additional paid-in capital in the Company's condensed consolidated balance sheet. Additionally, in connection with the 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 three years from the acquisition date.

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

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

The acquisition has been accounted for as a business combination under the acquisition method and, accordingly, the total purchase price is allocated to the tangible and intangible assets acquired and the liabilities assumed based on their estimated fair value on the 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 value of the acquired intangible assets acquired are as follows (in thousands):~~

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

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

Intangible Assets

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


	June 30, 2020							March 31, 2020								June 30, 2021						March 31, 2021
	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	$	33,942	$	(17,747	)	$	16,195	$	33,932	$	(16,312	)	$	17,620	Developed technology	$	27,231	$	(15,793)	$	11,438	$	33,960	$	(21,458)	$	12,502
Customer relationships	11,395		(5,817		)	5,578		11,409		(5,412		)	5,997		Customer relationships	6,428		(2,021)		4,407		11,969		(7,341)		4,628
Trade and domain names	985		(985		)	—		983		(599		)	384		Trade and domain names	83		(83)		0		988		(988)		0
Total acquired identifiable intangible assets	$	46,322	$	(24,549	)	$	21,773	$	46,324	$	(22,323	)	$	24,001	Total acquired identifiable intangible assets	$	33,742	$	(17,897)	$	15,845	$	46,917	$	(29,787)	$	17,130

During the three months ended June 30, 2021, the Company determined certain of its fully amortized intangible assets were no longer in use. As a result, the Company wrote off $6.7 million in gross carrying value of developed technology, $5.5 million of customer relationships, and $0.9 million of trade and domain names. Such intangibles had been fully amortized in prior periods, thus there was no net impact to the Company's financial statements.

As of June 30, ~~2020,~~2021, the weighted average remaining useful life ~~for~~of developed technology and customer relationships was ~~4.8~~4.4 years and ~~5.7~~5.0 years, respectively.

AtAs of June 30, ~~2020,~~2021, the expected future amortization expense of ~~these~~the intangible assets iswas as ~~follows (in thousands):~~

Remainder of 2021 $ 4,643
2022 4,708
2023 3,156
2024 2,851
2025 2,851
Thereafter 3,564
Total $ 21,773

follows:


Remainder of fiscal 2022	$	4,388
Fiscal 2023	2,904
Fiscal 2024	2,851
Fiscal 2025	2,851
Fiscal 2026	2,851
Thereafter	0
Total	$	15,845

~~Table of Contents~~Goodwill

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

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

goodwill:

~~Deferred Sales Commission Costs~~


Balance at March 31, 2021	$	131,520
Foreign currency translation adjustments	79
Balance at June 30, 2021	$	131,599

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.

7.6. 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.~~

The following table provides balance sheet information related to ~~leases as~~the Company's operating leases:


	June 30, 2021		March 31, 2021
Assets
Operating lease, right-of-use assets	$	63,402	$	66,664

Liabilities
Operating lease liabilities, current	$	12,792	$	12,942
Operating lease liabilities, non-current	79,403		82,456
Total operating lease liabilities	$	92,195	$	95,398

Table of ~~June 30, 2020 (in thousands):~~Contents

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

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

The following table presents the components of lease expense ~~were as follows (in thousands):~~and cash outflows from operating leases:

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


	Three Months Ended June 30,
		2021		2020
Operating lease expense		$	3,459	$	3,750
Variable lease expense		$	750	$	782
Cash outflows from operating leases		$	4,200	$	2,054

Short-term lease expense was immaterial for the three months ended June 30, ~~2020~~2021 and ~~2019.~~

~~Operating cash flow from operating lease was $2.1 million and $2.3 million, respectively, for the three months ended June 30, 2020 and 2019.~~2020.

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



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

June 30, 2021

March 31, 2021

Weighted average remaining lease term

8.2 years

8.4 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 June 30, ~~2020 (in thousands):~~2021:


Remainder of fiscal 2022	$	12,175
Fiscal 2023	15,170
Fiscal 2024	11,851
Fiscal 2025	11,514
Fiscal 2026	10,513
Thereafter	47,693
Total lease payments	108,916
Less: imputed interest	(16,721)
Present value of lease liabilities	$	92,195

157. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

~~Table~~The Company may be involved in various claims, lawsuits, investigations and other legal proceedings, including intellectual property, commercial, regulatory compliance, securities and employment matters that arise in the normal course of ~~Contents~~

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

~~Lease Assignment~~

~~In the fourth quarter of fiscal 2018,~~business. The Company determines whether an estimated loss from a contingency should be accrued by assessing whether a loss is deemed probable and can be reasonably estimated. The Company regularly evaluates current information to determine whether any accruals should be adjusted and whether new accruals are required. Actual claims could settle or be adjudicated against the Company ~~entered into a 132-month lease agreement (the "Agreement") with CAP Phase I, a Delaware limited liability company (the "Landlord"), to rent approximately 162,000 square feet of office space~~ in ~~a new building in San Jose, California. The lease term began on January 1, 2019. On April 30, 2019,~~the future for materially different amounts than the Company has accrued due to the ~~Company's rapid growth and greater than anticipated future space needs, the Company entered into an assignment and assumption (the "Assignment")~~inherently unpredictable nature of the Agreement with the Landlord, and Roku Inc., a Delaware corporation ("Roku"), whereby the Company assigned to Roku the Agreement. Pursuant to the 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. litigation. Legal costs are expensed as incurred.

The Company ~~also expects to receive the reimbursement of base rent~~believes it has recorded adequate provisions for any such lawsuits and ~~direct expenses from Roku by the end of the Company’s fiscal year ending March 31, 2022 in accordance with the Assignment.~~

~~The obligations related to the Agreement are not included in the right-of-use asset or lease liabilities~~claims and proceedings as of June 30, ~~2020.~~2021. The ~~remaining obligations~~Company believes that damage amounts claimed in these matters are not meaningful indicators of potential liability. Some of the matters pending against the Company involve potential compensatory, punitive or treble damage claims or sanctions, that, if granted, could require the Company to pay damages or make other expenditures in amounts that could have a material adverse effect on its Consolidated Financial Statements. Given the inherent uncertainties of litigation, the ultimate outcome of the ongoing matters described herein cannot be predicted, and the Company believes it has valid defenses with respect to the legal matters pending against it. Nevertheless, the Consolidated Financial Statements could be materially adversely affected in a particular period by the resolution of one or more of these contingencies.

Wage and Hour Litigation. On September 21, 2020, the Company received a copy of a letter filed by a former employee, Plaintiff Denise Rivas, with the California Labor and Workforce Development Agency (“LWDA”) providing notice of the Plaintiff’s intent to bring a Private Attorney General Act (“PAGA”) claim, on behalf of the Company’s non-exempt employees based in California, for alleged California wage and hour practices violations. On September 25, 2020, the Plaintiff filed a separate class action complaint (“Class Complaint”) in Santa Clara County Superior Court against the Company in which she alleges 10 causes of action, on behalf of herself and all of the Company’s non-exempt employees based in California for the last four years, related to ~~the Assignment~~violations of ~~$6.9 million~~California state wage and hour practices and the ~~termination fee~~federal Fair Credit Reporting Act. The Class Complaint was served on the Company on September 29, 2020. On October 28, 2020, the Company filed a general denial of ~~$0.8 million are recorded~~all claims and asserted various affirmative defenses. On October 29, 2020, the Company removed the matter to Federal Court. On December 1, 2020, Plaintiff filed a companion PAGA lawsuit complaint (“PAGA Complaint”) in ~~other accrued liabilities~~Santa Clara County Superior Court against the Company, in which she alleges 6 violations of California state wage and ~~other liabilities, non-current, respectively, in~~hour practices for all of the Company's ~~condensed consolidated balance sheet.~~current and former non-exempt employees based in California from September 16, 2019 to the present. The ~~expected receivable~~PAGA Complaint was served on

Table of ~~$6.9 million~~Contents

the Company on December 11, 2020. On January 26, 2021, the Company filed a general denial of all claims and asserted various affirmative defenses to the PAGA Complaint. Both actions are scheduled for a joint mediation in September 2021, and discovery is ~~recorded~~stayed in ~~other current assets in~~both actions pending completion of the ~~Company's condensed consolidated balance sheet.~~

~~8. COMMITMENTS AND CONTINGENCIES~~mediation.

Other Commitments, Indemnifications, and Contingencies

State and Local Taxes and Surcharges. From time to time, the Company ~~receives~~has received inquiries from ~~federal and various~~a number of state and ~~municipal~~local taxing agencies with respect to the remittance of sales, use, telecommunications, excise, ~~payroll,~~ and income taxes. Several jurisdictions currently are ~~currently~~ 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~~accrual when facts relating to specific exposures warrant such adjustment. ~~The~~During the second quarter of fiscal 2019, the Company ~~continues to conduct~~conducted a periodic review of the taxability of ~~certain of~~ its services and determined that certain services may be subject to sales, use, telecommunications or other similar indirect taxes in certain jurisdictions. Accordingly, the Company recorded contingent indirect tax liabilities. As of June 30, ~~2020~~2021 and March 31, ~~2020,~~2021, the Company had accrued contingent indirect tax liabilities of ~~$4.5 million.~~$2.8 million and $3.1 million, respectively.

~~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 June 30, 2020, the Company does not 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.~~

9.8. CONVERTIBLE SENIOR NOTES AND CAPPED ~~CALL~~CALLS

Convertible Senior Notes

In February 2019, the Company issued $287.5 million aggregate principal amount of 0.50% convertible senior notes (the "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~~$75.0 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.~~Initial Notes. Immediately after giving effect to the issuance of the Additional Notes, the Company ~~has~~had $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~~August 1, ~~2020.~~2019. The Notes will mature on February 1, 2024, unless earlier repurchased, redeemed, or converted.

Each $1,000 principal amount of the Notes ~~are~~is 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~~Prior to the close of business on the business day immediately preceding October 1, 2023, the Notes will be convertible only under the following circumstances:

1.At any time during any calendar quarter commencing after the fiscal quarter ending on June 30, 2019 (and only during such calendar quarter), if the last reported sale price of the Common Stock for at ~~certain times~~least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

2.During the 5 business day period immediately after any 10 consecutive trading day period (the measurement period), if the trading price per $1,000 principal amount of the Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the common stock on each such trading day and ~~upon~~the conversion rate on each such trading day;

3.If the Company calls any or all of the Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or

4.Upon the occurrence of ~~certain~~specified corporate events (as set forth in the ~~future. Further, on~~indenture governing the Notes).

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 months ended June 30, ~~2020,~~2021, the conditions allowing holders of the Notes to convert were not met.

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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,~~Notes; equal in right of payment with the Company’s existing and future liabilities that are not so ~~subordinated,~~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,~~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 following table presents the net carrying amount of the liability component of the ~~Notes was as follows (in thousands):~~

June 30, 2020 March 31, 2020
Principal $ 362,500
$ 362,500
Unamortized debt discount (65,919 ) (69,987 )
Unamortized issuance costs (919 ) (976 )
Net carrying amount $ 295,662
$ 291,537

Notes:

~~Interest~~


	June 30, 2021		March 31, 2021
Principal	$	362,500	$	362,500
Unamortized debt discount	(48,990)		(53,323)
Unamortized issuance costs	(682)		(742)
Net carrying amount	$	312,828	$	308,435

The following table presents interest expense related to the ~~Notes was as follows (in thousands):~~Notes:

Three Months Ended June 30,
2020 2019
Contractual interest expense $ 453
$ 359
Amortization of debt discount 4,068
3,146
Amortization of issuance costs 57
26
Total interest expense $ 4,578
$ 3,531


	Three Months Ended June 30,
		2021		2020
Contractual interest expense		$	453	$	453
Amortization of debt discount		4,332		4,068
Amortization of issuance costs		61		57
Total interest expense		$	4,846	$	4,578

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 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 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.~~9. STOCK-BASED COMPENSATION

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


	Three Months Ended June 30,
		2021		2020
Cost of service revenue		$	1,968	$	1,814
Cost of other revenue		1,071		787
Research and development		8,698		6,545
Sales and marketing		14,326		5,739
General and administrative		10,524		7,894
Total		$	36,587	$	22,779

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 June 30,
2020 2019
Stock options outstanding at the beginning of the period: 2,274
3,114
Options granted —
—
Options exercised (1 ) (124 )
Options forfeited (14 ) (16 )
Options outstanding at the end of the period: 2,259
2,974
Weighted-average fair value of grants during the period $ —
$ —
Total intrinsic value of options exercised during the period $ 5
$ 1,402
Weighted-average remaining recognition period (in years) 1.73
2.46

Stock awards outstanding at the beginning of the period: 9,191
7,820
Stock awards granted 1,304
1,147
Stock awards vested (721 ) (329 )
Stock awards canceled and forfeited (331 ) (445 )
Stock awards outstanding at the end of the period: 9,443
8,193
Weighted-average fair value of grants during the period $ 19.22
$ 22.40
Weighted-average remaining recognition period (in years) 1.76
2.11

Total unrecognized compensation expense at period-end $ 116,957
$ 109,422

Stock ~~Repurchases~~Options

~~In May 2017, the Company's board~~The following table presents stock option activity (shares in thousands):


	Number of Shares	Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at March 31, 2021	1,813	$	9.46	2.86 years	$	41,673
Granted	0	0
Exercised	(391)	9.04
Canceled/Forfeited	(9)	21.85
Outstanding at June 30, 2021	1,413	$	9.50	2.61 years	$	25,806

Vested and expected to vest at June 30, 2021	1,411	$	9.48	2.60 years	$	25,788
Exercisable at June 30, 2021	1,373	$	9.19	2.48 years	$	25,498

The total intrinsic value 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 June 30, 2020 was approximately $7.1 million. There were 0 stock repurchases under the 2017 Repurchase Planoptions exercised during the three months ended June 30, 2021 and 2020, was $9.1 million and ~~2019.~~less than $0.1 million, respectively.

As of June 30, 2021, there was $0.3 million of total unrecognized compensation cost related to stock options, which is expected to be recognized over a weighted average period of approximately 0.9 years.

~~11.~~Restricted Stock Units (RSUs)

The following table presents RSU activity (shares in thousands):


	Number of Shares	Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at March 31, 2021	8,646	$	19.27	1.85 years	$	280,467
Granted	3,466	26.36
Vested and released	(969)	20.07
Forfeited	(317)	19.71
Outstanding at June 30, 2021	10,826	$	21.45	2.05 years	$	300,524

As of June 30, 2021, there was $165.1 million of total unrecognized compensation cost related to RSUs.

Performance Stock Units (PSUs)

The Company has granted PSUs to certain of its executives with vesting that is contingent on continued service and either Company or market performance. PSUs issued in June 2021 consist of three tranches: the first tranche vests on the 1st anniversary and is based on the Non-GAAP Gross Profit of the Company; the remaining two tranches vest on the 2nd and 3rd anniversaries, respectively, and are based on the Total Shareholder Return ("TSR") of the Company, as measured relative to a specified market index during the specified periods. For the first tranche, a range of 90% to 110% attainment of the target Non-GAAP Gross Profit over the vesting period will result in a range from 0% to 200% of the target number of shares being earned. For the awards based on TSR, a 2x multiplier will be applied for each percentage point of positive or negative relative TSR over the specified vesting periods, such that the number of shares of common stock earned will increase or decrease by 2% of the target number of shares, subject to a maximum of 200% of the target number of shares. In the event that the Company’s relative TSR performance is less than negative 30%, relative to the specified index, 0 shares will be earned for the applicable performance period. The amount of compensation expense is based on how many shares are probable to be earned for the applicable performance period.

The first tranche was valued at $25.78 per share based on the closing price of the Company's common stock on the grant date.

The second and third tranches were valued at $33.32 and $34.48, respectively, per share as determined by Monte Carlo simulations using a volatility factor of 58.7% and a risk-free rate of 0.3%.

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The following table presents PSU activity (shares in thousands):


	Number of Shares	Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at March 31, 2021	1,576	$	27.33	1.24 years	$	51,116
Granted	465	27.92
Granted for performance achievement1	20	27.92
Vested and released	(206)	16.12
Forfeited	(198)	24.61
Outstanding at June 30, 2021	1,657	$	30.56	1.43 years	$	46,012

1 Represents additional PSUs awarded as a result of the achievement of performance goals above the performance targets established at grant.

As of June 30, 2021, there was $32.3 million of total unrecognized compensation cost related to PSUs.

Employee Stock Purchase Plan (ESPP)

As of June 30, 2021, there was approximately $0.6 million of unrecognized cost related to employee stock purchases. This cost is expected to be recognized over a weighted average period of 0.1 years. As of June 30, 2021, a total of 2,865,669 shares were available for issuance under the ESPP.

Salary and Bonus Stock Program

In March 2021, the Company offered its employees an opportunity to receive a portion of their base cash salary and/or cash bonus for fiscal 2022 in shares of the Company's common stock. Participants that choose to receive stock in place of base cash salary will be subject to reduced cash payroll starting July 2021 through March 2022. The number of shares received by the employee is based on the lower of the closing price of the common stock as of one of two specified look-back dates.

The estimated fair value of the shares issued has two components: 1) the value of the base cash salary and/or cash bonus opted to be received as shares, and 2) the grant date fair value of the look-back feature. The estimated fair value of the stock awards will be recognized in stock based compensation expense over the requisite service period of the participants, which may differ from the period in which their original cash compensation is earned. The look-back features are valued as options using the Black-Scholes model, applied to the total number of shares would have been granted under the program based on the closing price of our common stock on the grant date.

The following table presents the estimated fair value on the date of grant of each of the look-back features and the assumptions used in the Black-Scholes pricing model:


Fair value of look-back options	$4.64		-	$8.24
Valuation assumptions:
Expected volatility	58.7%
Risk-free interest rates	0.06	%	-	0.07%
Expected terms (in years)	0.38		-	1.21
Dividend rate	0%

The risk-free rates were determined based on published treasury rates over terms consistent with those of the share exchange program. The volatility rate was determined based on historic volatility of the Company's stock and is consistent with the rate used for valuation of the PSU awards granted in June 2021.

As of June 30, 2021, there was $8.8 million of total unrecognized compensation cost related to the stock exchange program.

Stock Repurchases

There were 0 stock repurchases during the three months ended June 30, 2021 and June 30, 2020.

10. INCOME TAXES

The Company's effective tax rate was ~~(0.5)~~(0.6)% and ~~(0.4)~~(0.5)% for the three months ended June 30, 2021 and 2020, ~~and 2019.~~respectively. 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~~maintains against its deferred tax assets. The effective tax rate is calculated by dividing the Provision for income ~~tax~~taxes by the Loss before provision ~~by net loss before~~for income ~~tax expense.~~taxes.

~~12.~~

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11. NET LOSS PER SHARE

The following table ~~summarizes~~presents the ~~computation~~weighted average number of common shares outstanding used in calculating basic and diluted net loss per share ~~(in~~(dollars in thousands, except ~~share and~~ per share ~~data)~~data):

Three Months Ended June 30,
2020 2019
Numerator:
Net loss available to common stockholders $ (41,913 ) $ (34,265 )
Denominator:
Common shares - basic and diluted 103,607
96,429
Net loss per share
Basic and diluted $ (0.40 ) $ (0.36 )


	Three Months Ended June 30,
		2021		2020
Net loss		$	(43,906)	$	(41,913)
Weighted average common shares outstanding - basic and diluted		109,925		103,607

Net loss per share:
Basic and diluted		$	(0.40)	$	(0.40)

The following potentially dilutive common 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)~~(shares in thousands):

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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


	Three Months Ended June 30,
		2021	2020
Stock options		1,413	2,259
Restricted stock units		12,483	9,443
Potential shares attributable to the ESPP		444	582
Total potential anti-dilutive shares		14,340	12,284

~~13.~~

12. GEOGRAPHICAL INFORMATION

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


	Three Months Ended June 30,					Three Months Ended June 30,
Revenue by geographic area:	2020		2019		Revenue by geographic area:		2021		2020
United States	$	93,244	$	83,249	United States		$	103,658	$	93,244
International	28,563		13,426		International		44,669		28,563
Total revenue	$	121,807	$	96,675	Total revenue		$	148,327	$	121,807


Property and equipment by geographic area:	June 30, 2021		March 31, 2021
United States	$	85,928	$	87,945
International	4,848		5,131
Total property and equipment, net	$	90,776	$	93,076

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

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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~~Annual Report on Form 10-K ("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."~~2021.

BUSINESS OVERVIEW

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

Our customers ~~range~~represent companies ranging from small businesses to large multinational 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 (which we define as customers that generate $25K to $100K ARR) and enterprise (which we define as customers that generate more than $100K ARR) customer categories. See “Key Business Metrics” section below for our definition and discussion of ARR.

We have a portfolio of ~~cloud-based~~SaaS 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 subscriptions to our communication services ~~subscriptions and~~as well as from our customer's usage of certain of our platform ~~usage.~~services. We generate other revenues from the sales and rentals of office phones and other hardware 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 enterprise-grade voice, unified communications, video meetings, team collaboration, and contact center functionalities from a single platform. The continued increase in demand for an integrated UCaaS and CCaaS solution led us to introduce eXperience Communications as a Service ("XCaaS"), a deployment model that erases boundaries between UCaaS and CCaaS, delivered through our differentiated single platform.

We also offer standalone SaaS services for contact center and video meetings ~~and~~as well as enterprise communication ~~APIs. Through~~APIs for SMS, messaging, voice, and video APIs through our ~~July 2019 acquisition of Wavecell Pte. Ltd., an Asia-based~~ global ~~communication~~communications platform as a service ("CPaaS") ~~provider of SMS, messaging, voice and video APIs to enterprises, we expanded our API offerings both geographically and in scope.~~. We expect to continue ~~integrating~~developing and enhancing these services ~~into~~on 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 our legacy products. We are migrating these customers from our legacy solutions to our 8x8 X Series product suite, and we intend to accelerate the pace of customer migrations in fiscal 2021. These migrations may require us to incur professional services and related engineering costs. While we may not be able to recover these costs from our 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

In the first quarter of fiscal ~~2021,~~2022, our ~~total~~ service revenue grew ~~27.1%~~approximately 21% year-over-year to ~~$114.2~~$137.8 million. We continued to show an increase in our ~~average annualized service revenue per customer,~~total ARR, which grew to ~~$7,883~~$536 million in the first quarter of fiscal ~~2021, compared with $7,069~~2022, from $432 million in the same period ofin fiscal ~~2020, as we are selling more~~2021, driven by the growth in sales to mid-market and enterprise customers. ~~Service revenue~~ARR from mid-market and enterprise customers represented ~~45%~~68% of total ~~service revenue~~ARR in the first quarter of fiscal 2022, and grew 48% over the prior year. We also increased the number of deals where customers purchase our integrated communications and contact center solutions, which we have referred to as bundled deals; 55% of our new bookings greater than $12,000 of annualized recurring revenue were from customers that selected bundled UCaaS and CCaaS, as34% compared to ~~51% one year ago.~~the same period in fiscal 2021.

Our continued business focus is on achieving improved operating efficiencies while delivering revenue growth. ~~In fiscal 2020, we continued to make important investments in our products and technology platform, and focused~~We focus on key areas of spend in our go-to-market ~~strategy.~~strategy and improving gross margin and operating margin through increased spend discipline. Additionally, we ~~looked~~look to drive improved efficiencies in our ~~small business~~ customer acquisition and operations, and are focused on expanding our business upmarket with mid-market and enterprise customers. We believe that this approach ~~and execution~~ will enable the Company to grow and capture market share during this phase of industry 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.~~cashflow improvement.

~~In the remainder of fiscal 2021, we~~We plan to continue making investments in activities to acquire more customers, including ~~global expansion and~~ investing in our ~~direct~~ marketing efforts, internal and field sales ~~force, e-commerce,~~capacity, and ~~outbound marketing efforts.~~research and development. 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 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~~continues to 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.~~2021. In an effort to contain the spread of COVID-19 ~~or slow~~and its ~~spread,~~variants, governments around the world have enacted various measures, ~~some of which have been subsequently rescinded or modified,~~ including orders to close at times 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~~has spent significant ~~amount of~~ time working from home ~~with many of our offices around the world remaining closed~~ and travel ~~being~~has been 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

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will negatively impact ~~certain~~

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business activity across the globe, ~~to date,~~ it ~~has~~is not ~~resulted~~clear what its potential effects, including the availability and effectiveness of vaccines, now and in ~~as significant a negative impact~~the future, and current and future variants of the virus, will be on our business, ~~as initially anticipated. We continue to proactively and closely monitor~~including the ~~health of~~effects on our customers, suppliers or vendors, or on our financial results.

KEY BUSINESS METRIC

Our management periodically reviews certain key business metrics in order to evaluate our operations, allocate resources, and ~~suppliers~~drive financial performance in our business.

Annualized Recurring Subscriptions and ~~other impacts~~Usage (“ARR”)

Our management reviews Annualized Recurring Subscriptions and Usage (“ARR”) and believes it may be useful to investors in order to evaluate trends in future revenues of the ~~pandemic~~Company. Our management believes revenues are an important indicator for measuring the overall performance of the business. Our management uses trends in ARR to ~~determine whether risks~~assess our on-going operations, allocate resources, and drive the financial performance of ~~loss~~the business. We define Annualized Recurring Subscriptions and Usage, or ARR, as equal to the sum of the most recent month of (i) recurring subscription amounts and (ii) platform usage charges for all CPaaS customers (subject to a minimum billings threshold for a period of at least six consecutive months), multiplied by 12. We are not aware of any uniform standards for calculating ARR and caution that our presentation may not be consistent with that of other ~~negative impacts upon~~companies. For example, to the extent our ~~business exist. The effects~~ARR is used to evaluate trends in future revenue, such an evaluation would assume a sustained level of ~~COVID-19 have also been considered~~usage from existing customers which may fluctuate in ~~management's judgments around credit loss impairments.~~future periods.

COMPONENTS OF RESULTS OF OPERATIONS

Service Revenue

Service revenue consists of communication services subscriptions, platform usage revenue, and related fees from our UCaaS, CCaaS, XCaaS, and CPaaS offerings. We plan to continue ~~to drive~~driving 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 ~~partnerships~~acquisitions of technologies and ~~other business development.~~businesses.

Other Revenue

Other revenue consists of revenues from professional services, primarily in support of deployment of our solutions and/or platform, and revenues from sales and rentals of IP telephones in conjunction with our cloud telephony ~~service~~, ~~and revenues from professional services, primarily in support of deployment of our solutions and/or platform.~~service. 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 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~~platform related capitalized internal-use software, ~~and other costs such as customer service, 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.~~operations, and other costs such as customer service, and technical support costs. We allocate overhead costs such as IT and facilities to cost of service revenue, as well as to each of the operating expense categories, generally based on relative headcount. Our IT costs include costs for IT infrastructure and personnel. Facilities costs primarily consist of office leases and related expenses.

Cost of Other Revenue

Cost of other revenue consists primarily of direct and indirect costs associated with the purchasing of IP telephones as well as the scheduling, shipping and 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, third-party development, software and ~~related work~~, equipment costs necessary for us to conduct our product, ~~and~~ platform development and engineering efforts, and allocated IT and facilities costs.

Sales and Marketing

Sales and marketing expenses consist primarily of personnel and related ~~overhead~~ costs, sales commissions, including those to the channel, trade shows, advertising and other marketing, demand generation, ~~channel costs,~~ promotional expenses, and allocated IT and facilities costs.

General and Administrative

General and administrative expenses consist primarily of personnel and related costs, ~~overhead costs~~,professional services fees, ~~human resources, legal, employee recruiting, general management,~~corporate administrative costs, tax and regulatory fees, and allocated IT and facilities costs.

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

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

Provision for Income Taxes

Provision for income taxes consists primarily of foreign income taxes and 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.~~("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

Service revenue

June 30,
Service revenue 2020 2019 Change
(dollar amounts in thousands)
Three months ended $ 114,183
$ 89,839
$ 24,344
27.1 %
Percentage of total revenue 93.7 % 92.9 %


	2021			2020			Change



Three Months Ended June 30,	$	137,796		$	114,183		$	23,613	20.7	%
Percentage of total revenue	92.9		%	93.7		%

Service revenue increased for the three months ended June 30, ~~2020~~2021, as compared ~~with~~to the ~~same period of the previous fiscal year~~three months ended June 30, 2020, primarily due to a net increase in our ~~subscriber~~customer base, expanded offerings to existing customers, and growth in related usage; service revenue from new customers was primarily driven by global sales of ~~standalone~~XCaaS, and ~~bundled~~our standalone UCaaS and CCaaS ~~deals globally~~offerings to our mid-market and enterprise customers. ~~Increase~~The increase in service revenue 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 ~~expanding~~diverse platform offering as our business continues to expand globally and ~~across broader~~deeper into our customer categories.

Other revenue

June 30,
Other revenue 2020 2019 Change
(dollar amounts in thousands)
Three months ended $ 7,624
$ 6,836
$ 788
11.5 %
Percentage of total revenue 6.3 % 7.1 %


	2021			2020			Change



Three Months Ended June 30,	$	10,531		$	7,624		$	2,907	38.1	%
Percentage of total revenue	7.1		%	6.3		%

Other revenue increased ~~during~~for the three months ended June 30, 2021, as compared to the three months ended June 30, 2020, ~~compared with the same period in the prior fiscal year~~ primarily due to ~~an increase in~~increased professional services revenue resulting from the overall growth in our business and ~~subscriber base.~~ customer base, partially offset by a decrease in product revenue as a result of a shift toward our hardware rental program and soft phone usage.

We expect other revenue to grow over time ~~at a rate lower than~~as our ~~service revenue~~customer base grows, particularly in mid-market and enterprise, as we focus on delivering ~~higher margin~~enhanced platform offerings to existing and new customers.

No customer represented greater than 10% of the Company's total revenue for the three months ended June 30, ~~2020~~2021 or ~~June 30, 2019.~~2020.

Cost of Revenue

June 30,
Cost of service revenue 2020 2019 Change
(dollar amounts in thousands)
Three months ended $ 40,996
$ 25,300
$ 15,696
62.0 %
Percentage of service revenue 35.9 % 28.2 %

~~The increase in cost~~Cost of service revenue


	2021			2020			Change



Three Months Ended June 30,	$	46,010		$	40,996		$	5,014	12.2	%
Percentage of service revenue	33.4		%	35.9		%

Cost of service revenue increased for the three months ended June 30, 2021, as compared to the three months ended June 30, 2020, ~~from the same period in the prior fiscal year was~~yet decreased as a percentage of service revenue, primarily ~~attributable~~due to ~~a $13.0~~increases of:

•$5.9 million ~~increase~~ in communication infrastructure costs incurred to deliver our services ~~primarily due to~~resulting from growth in usage across our platform including those in connection with ~~CPaaS, a $2.0~~CPaaS;

•$0.7 million ~~increase~~ in amortization of capitalized ~~software, a $0.8~~internal-use software; and

•$0.2 million ~~increase~~ in stock-based compensation ~~expense, and a $0.2 million increase in facilities related expenses.~~ expense.

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These increases were partially offset by ~~a decrease of $0.3~~decreases of:

•$1.1 million in employee and consulting related ~~expenditures.~~expenditures; and

•$0.4 million in depreciation and amortization of intangible assets.

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

Cost of other revenue

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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 %


	2021			2020			Change



Three Months Ended June 30,	$	13,746		$	11,137		$	2,609	23.4	%
Percentage of other revenue	130.5		%	146.1		%

Cost of other revenue increased for the three months ended June 30, ~~2020 decreased~~2021, as compared to the ~~same period in the prior fiscal year~~three months ended June 30, 2020, primarily due to ~~a decrease~~an increase in ~~cost of products for various reasons including lower~~ hardware shipment ~~volume,~~volume.

Cost of other revenue as a percentage of other revenue decreased, due to improved pricing and ~~a shift to~~an increase in our hardware rental ~~program, which has better margins than hardware sales.~~revenue. We expect that Other revenue margin will vary period over period.

Operating Expenses

Research and development

June 30,
Research and development 2020 2019 Change
(dollar amounts in thousands)
Three months ended $ 21,494
$ 18,331
$ 3,163
17.3 %
Percentage of total revenue 17.6 % 19.0 %


	2021			2020			Change



Three Months Ended June 30,	$	25,392		$	21,494		$	3,898	18.1	%
Percentage of total revenue	17.1		%	17.6		%

Research and development expenses increased for the three months ended June 30, ~~2020 increased~~2021, as compared to the ~~same prior year period~~three months ended June 30, 2020, primarily due to ~~a $2.7~~increases of:

•$2.2 million ~~increase~~ in stock-based compensation ~~expense, a $0.7~~expense;

•$1.5 million ~~increase~~from less capitalized internal-use software costs;

•$0.5 million in employee and consulting related ~~expenditures, and a $0.4~~expenditures;

•$0.5 million ~~increase~~ in public cloud ~~expenses.~~ expenses; and

•$0.3 million in amortization of capitalized internal-use software.

These increases were partially offset by a decrease of ~~$0.5~~$0.7 million in ~~travel related~~facility and overhead 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.

Sales and marketing

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 %


	2021			2020			Change



Three Months Ended June 30,	$	75,915		$	60,150		$	15,765	26.2	%
Percentage of total revenue	51.2		%	49.4		%

Sales and marketing expenses increased for the three months ended June 30, ~~2020 increased over~~2021, as compared to the ~~same prior year period~~three months ended June 30, 2020, primarily due to ~~a $4.7~~increases of:

•$8.6 million increase in 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 $1.8 million increase in stock-based compensation ~~expense, a $1.2~~expense; and

•$6.8 million ~~increase~~ in ~~marketing software~~internal and ~~application related expenditures, and a $0.6 million increase in amortization of intangible assets.~~ external sales commissions.

These increases were partially offset by a net decrease of ~~$4.4~~$0.1 million in marketing program and public cloud expenses ~~as we~~due to gained efficiencies in lead generation and brand awareness, ~~and a $2.4 million decrease of~~ travel related ~~costs.~~costs, and employee and consulting related expenditures.

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 will increase in absolute dollars in future periods and vary from period-to-period as a percentage of revenue.

June 30,
General and administrative 2020 2019 Change
(dollar amounts in thousands)
Three months ended $ 25,790
$ 19,607
$ 6,183
31.5 %
Percentage of total revenue 21.2 % 20.3 %

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General and administrative


	2021			2020			Change



Three Months Ended June 30,	$	26,091		$	25,790		$	301	1.2	%
Percentage of total revenue	17.6		%	21.2		%

General and administrative expenses increased for the three months ended June 30, ~~2020 increased~~2021, as compared to the ~~same prior year period~~three months ended June 30, 2020, primarily due to ~~a $3.8~~increases of:

•$2.6 million ~~increase~~ in stock-based compensation ~~expense, a $1.3~~expense;

•$0.8 million ~~higher allowance for credit losses recognized~~in contract termination costs; and

•$0.5 million in facility related costs.

These increases were partially ~~in response to external market factors and uncertainties in connection with the COVID-19 pandemic, a $1.3~~offset by decreases of:

•$2.0 million ~~increase~~ in legal and ~~tax related costs,~~regulatory costs;

•$1.0 million of lower allowances for credit losses; and ~~a $0.7~~

•$0.4 million ~~increase~~ in employee and consulting related expenditures. ~~These increases were partially offset by a $1.2 million decrease in contract termination costs.~~

We expect to continue improving our cost structure and achieve operational efficiencies, and therefore also expect that general and administrative expenses as a percentage of 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~~


	2021			2020			Change



Three Months Ended June 30,	$	4,823		$	3,925		$	898	22.9	%
Percentage of total revenue	3.3		%	3.2		%

The change in Other expense, net for the three months ended June 30, 2021, as compared to the three months ended June 30, 2020, ~~over the same prior year period~~was primarily due to ~~a decrease of $1.6 million in interest income, a $1.0 million increase~~increased expenses related to ~~contractual interest expense, amortization of debt discount, and amortization of issuance costs associated with our convertible Initial and Additional Notes issued~~fluctuations in ~~February 2019 and November 2019, respectively. The increase in the net expense was partially offset by a $0.2 million change in other income.~~foreign exchange rates.

With the recognition of interest expense and amortization of debt discount and issuance costs in connection with our convertible senior notes, we expect ~~the~~Other expense, net ~~of other income and expense~~ to ~~continue to be~~remain in a net expense position ~~in future periods.~~for the foreseeable future.

Provision for income taxes

June 30,
Provision for income taxes 2020 2019 Change
(dollar amounts in thousands)
Three months ended $ 228
$ 148
$ 80
54.1 %
Percentage of loss before provision for income taxes (0.5 )% (0.4 )%


	2021			2020			Change



Three Months Ended June 30,	$	256		$	228		$	28	12.3	%
Percentage of total revenue	0.2		%	0.2		%

~~For~~There was not a material change to our Provision for income taxes for the three months ended June 30, ~~2020~~2021 and ~~June 30, 2019, we recorded income tax expense of $0.2 million and $0.1 million, respectively, resulting in effective tax rates of (0.5)% and (0.4)%, respectively.~~no material changes are anticipated for the foreseeable future.

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 June 30, ~~2020,~~2021, we had ~~$167.2~~$153.2 million of cash, cash equivalents, and investments. In addition, as of June 30, 2021, we had ~~$19.0 million as restricted cash, which includes~~ $8.6 million in restricted cash in support of ~~letter~~letters of ~~credits~~credit securing leases for office ~~facilities, and $10.4 million held in escrow for our acquisition~~facilities. As of ~~Wavecell, in July 2019, pursuant to the terms of the acquisition agreement. By comparison, at~~ March 31, ~~2020,~~2021, we had ~~$186.9~~$152.9 million of cash, cash equivalents, and investments ~~as well as $19.0~~and $8.6 million asof restricted cash.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") was passed into law, ~~and~~which 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~~reduced cash usage by ~~over $4~~approximately $5.0 million ~~throughout fiscal 2021. The amounts deferred~~through March 31, 2021, of which approximately $2.5 million will be remitted to tax authorities during the third quarter of fiscal 2022 and the remaining amount due will be remitted in the third quarter of 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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2023.

In ~~June 2020,~~March 2021, the Company offered its employees a limited opportunity to receive a portion of their fiscal 2022 cash salary and/or cash bonus 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 the remainder of fiscal ~~2021. Currently,~~2022 and approximately $4 million during the ~~Company does not expect to offer this program beyond~~first quarter of fiscal ~~2021.~~2023.

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.

Period-over-Period Changes

Net cash ~~used in~~provided by operating activities for the three months ended June 30, ~~2020~~2021, was $4.0 million, as compared with net cash used of $9.3 million ~~compared with $20.5 million for~~in the three months ended June 30, ~~2019.~~2020. Cash provided by/used in operating activities ~~has historically been~~is affected by:

•the ~~amount of~~ net ~~income or~~ loss;

~~the amount~~

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•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;~~compensation; and

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

During the three months ended June 30, ~~2020,~~2021, net cash ~~used in~~provided by operating activities was primarily related to non-cash operating expenses, including:

•stock-based compensation expense of $36.6 million;

•depreciation and amortization of $11.5 million;

•amortization of the debt discount of $4.4 million; and

•operating lease expenses of $3.5 million.

These amounts were partially offset by:

•the net loss of ~~$41.9 million,~~ $43.9 million; and

•net cash ~~outflow~~outflows 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$8.2 million.

Net cash used in investing activities was $11.1 million in the three months ended June 30, 2021, as compared with $11.9 million in the three months ended June 30, ~~2020, compared with $11.2 million provided by investing activities in three months ended June 30, 2019.~~2020. The cash used in investing activities during the three months ended June 30, ~~2020~~2021, was primarily related ~~to purchases of $2.5 million of property and equipment,~~ to:

•capitalized ~~internal~~internal-use software development costs of ~~$8.9 million,~~$6.5 million; and, ~~$0.6 million of purchase~~

•purchases of investments ~~net~~of $28.7 million, partially offset by $25.0 million of proceeds from maturities and sales of investments.

Net cash ~~used in~~provided by financing activities was $3.4 million in the three months ended June 30, 2021, as compared with $0.1 million in the three months ended June 30, ~~2020, compared with $1.4 million~~2020. Cash provided by ~~financing activities in the three months ended June 30, 2019. Cash used in~~ financing activities for the three months ended June 30, ~~2020~~2021 was primarily related to ~~repurchases~~the proceeds from exercises of ~~our common~~ stock ~~related to shares withheld for payroll taxes and payments for finance lease obligations.~~options.

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 June 30, ~~2020~~2021, to our critical accounting policies and estimates previously disclosed in our Form 10-K for the fiscal year ended March 31, ~~2020.~~2021.

~~RECENTLY ADOPTED~~NEW ACCOUNTING PRONOUNCEMENTS

~~See Item 1~~For a discussion of ~~Part I, "Notes~~recently adopted accounting pronouncements and recent accounting pronouncements not yet adopted, refer to Note 2, Summary of Significant Accounting Policies, in the Notes to Unaudited Condensed Consolidated Financial Statements ~~- Note 2 - Summary of Significant Accounting Policies."~~included in this Quarterly Report.

~~RECENT ACCOUNTING PRONOUNCEMENTS~~

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

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Fluctuation Risk

We had cash, cash equivalents, restricted cash, and investments totaling ~~$167.2~~$161.9 million as of June 30, ~~2020.~~2021. Cash equivalents and investments were invested primarily in money market funds, 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, while limiting the amount of 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.

~~The~~As of June 30, 2021, the Company ~~issued~~had $362.5 million or aggregate principal amount of convertible senior notes ofoutstanding, which ~~the~~had an estimated fair value ~~as of June 30, 2020~~ was ~~$326.3~~$450.7 million. The fair value of the convertible senior notes is subject to interest rate risk, market risk, and other factors due to the conversion feature. The fair value of the convertible senior notes will generally increase as our common stock price increases and will generally decrease as our common stock price 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

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of operations due to the fixed nature of the debt obligation. Additionally, we carry the convertible senior notes at face value less unamortized discount on our consolidated balance sheets, and we present the fair value for required disclosure purposes only.

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 revaluation of certain cash balances, accounts receivable balances, and intercompany balances that are denominated in these currencies impact our 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 atfor the three months ended June 30, ~~2020.~~2021. 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 June 30, ~~2020.~~2021.

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

~~Table of Contents~~

During the first quarter of fiscal year ~~2021,~~2022, 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. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information set forth in Note 8,7, Commitments and Contingencies, under the heading “Legal Proceedings” ofin the Notes to Unaudited Condensed Consolidated Financial Statements ~~under ITEM 1. FINANCIAL STATEMENTS of PART I~~included in this Quarterly Report is incorporated by reference in response to this item.

ITEM 1A. RISK FACTORS

~~Except as disclosed below, there~~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, ~~2020.~~2021.

~~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 reputation may suffer. We may also be required to make modifications to our data practices that could have an adverse impact on 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 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

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

~~Table of Contents~~

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS



Exhibit Number		Description
3.1		Restated Certificate of Incorporation of Registrant, dated August 22, 2012 (incorporated by reference to Exhibit 3.1 to the Annual Report on Form 10-K filed May 27, 2013).
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.+~~2017 Executive Change-In-Control and Severance Policy as filed herewith.*
~~10.2~~31.1		~~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 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 June 30, ~~2020,~~2021, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of June 30, ~~2020~~2021 and March 31, ~~2020;~~2021; (ii) Condensed Consolidated Statements of Operations for the three months ended June 30, ~~2020~~2021 and ~~2019;~~2020; (iii) Condensed Consolidated Statements of Comprehensive Loss for the three months ended June 30, ~~2020~~2021 and ~~2019;~~2020; (iv) Condensed Consolidated Statements of Stockholders' Equity for the three months ended June 30, ~~2020~~2021 and ~~2019;~~2020; (v) Condensed Consolidated Statements of Cash Flows for the three months ended June 30, ~~2020~~2021 and ~~2019;~~2020; 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: August ~~4, 2020~~

5, 2021


			8X8, INC.

			~~8X8, INC.~~

	By: /s/ Samuel Wilson
			Samuel Wilson
			Chief Financial Officer (Principal Financial ~~Accounting~~ and Duly Authorized Officer)



	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



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



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



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



Remainder of 2021	$	4,643
2022	4,708
2023	3,156
2024	2,851
2025	2,851
Thereafter	3,564
Total	$	21,773



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



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



	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		)%