SEC Filing | 8x8, Inc.

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Q2 2019 DOC

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2018
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________to _________
Commission file number 000-21783

8X8, INC.
(Exact name of Registrant as Specified in its Charter)

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

2125 O'Nel Drive
San Jose, CA 95131
(Address of Principal Executive Offices)

(408) 727-1885
(Registrant's Telephone Number, including Area Code)

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. x 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 x 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 x

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 x

The number of shares of the Registrant's Common Stock outstanding as of November 2, 2018 was 95,371,181.

FORM 10-Q
TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION	Page No.

Item 1. Financial Statements (unaudited):

Consolidated Balance Sheets at September 30, 2018 and March 31, 2018	2

Consolidated Statements of Operations for the three and six months ended September 30, 2018 and 2017	3

Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended September 30, 2018 and 2017	4

Consolidated Statements of Cash Flows for the six months ended September 30, 2018 and 2017	5

Notes to Unaudited Consolidated Financial Statements	6

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	17

Item 3. Quantitative and Qualitative Disclosures About Market Risk	22

Item 4. Controls and Procedures	23

PART II. OTHER INFORMATION

Item 1. Legal Proceedings	23

Item 1A. Risk Factors	23

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	43

Item 5. Other Information	43

Item 6. Exhibits	44

Signature	45

Part I -- FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

8X8, Inc.
CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)

		September 30,		March 31,
		2018		2018
ASSETS
Current assets
Cash and cash equivalents	$	24,677	$	31,703
Short-term investments		104,232		120,559
Accounts receivable, net		18,870		16,296
Deferred sales commission costs		13,656		-
Other current assets		13,889		10,040
Total current assets		175,324		178,598
Property and equipment, net		42,395		35,732
Intangible assets, net		12,162		11,958
Goodwill		39,495		40,054
Restricted cash		8,100		8,100
Deferred sales commission costs, noncurrent		29,229		-
Other assets		2,927		2,767
Total assets	$	309,632	$	277,209

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	27,649	$	23,899
Accrued compensation		17,621		17,412
Accrued taxes		12,438		6,367
Deferred revenue		3,354		2,559
Other accrued liabilities		5,200		6,026
Total current liabilities		66,262		56,263

Other liabilities		4,007		2,172
Total liabilities		70,269		58,435

Commitments and contingencies (Note 6)

Stockholders' equity
Preferred stock, $0.001 par value:
Authorized: 5,000,000 shares;
Issued and outstanding: no shares at September 30, 2018 and 2017		-		-
Common stock, $0.001 par value:
Authorized: 200,000,000 shares;
Issued and outstanding: 94,772,267 shares and 92,847,354 shares
at September 30, 2018 and March 31, 2018, respectively		95		93
Additional paid-in capital		445,103		425,790
Accumulated other comprehensive loss		(7,435)		(5,645)
Accumulated deficit		(198,400)		(201,464)
Total stockholders' equity		239,363		218,774
Total liabilities and stockholders' equity	$	309,632	$	277,209

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

8X8, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts; unaudited)

		Three Months Ended				Six Months Ended
		September 30,				September 30,
		2018		2017		2018		2017
Service revenue	$	81,346	$	68,123	$	159,467	$	133,214
Product revenue		4,336		4,360		9,440		8,367
Total revenue		85,682		72,483		168,907		141,581

Operating expenses:
Cost of service revenue		15,866		12,757		30,945		24,419
Cost of product revenue		5,397		5,098		11,678		9,982
Research and development		13,933		8,311		27,043		16,254
Sales and marketing		55,930		41,163		109,235		82,273
General and administrative		16,543		9,616		27,976		18,572
Total operating expenses		107,669		76,945		206,877		151,500
Loss from operations		(21,987)		(4,462)		(37,970)		(9,919)
Other income, net		635		463		1,354		2,515
Loss before income taxes		(21,352)		(3,999)		(36,616)		(7,404)
Provision (benefit) for income taxes		130		(3,453)		221		(4,689)
Net loss	$	(21,482)	$	(546)	$	(36,837)	$	(2,715)

Net loss per share:
Basic and diluted	$	(0.23)	$	(0.01)	$	(0.39)	$	(0.03)

Weighted-average common shares outstanding:
Basic and diluted		93,831		91,689		93,449		91,667

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

8X8, Inc.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands, unaudited)

		Three Months Ended				Six Months Ended
		September 30,				September 30,
		2018		2017		2018		2017
Net loss	$	(21,482)	$	(546)	$	(36,837)	$	(2,715)
Other comprehensive income (loss), net of tax
Unrealized gain on investments in securities		149		198		262		225
Foreign currency translation adjustment		(379)		1,192		(2,051)		2,983
Comprehensive (loss) income	$	(21,712)	$	844	$	(38,626)	$	493

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

8X8, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)

		Six Months Ended
		September 30,
		2018		2017
Cash flows from operating activities:
Net loss	$	(36,837)	$	(2,715)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation		4,231		3,962
Amortization of intangible assets		2,857		2,815
Amortization of capitalized software		3,749		581
Non-cash lease expenses		2,401		-
Stock-based compensation		19,040		13,008
Deferred income tax benefit		-		(4,862)
Gain on escrow settlement		-		(1,393)
Other		538		761
Changes in assets and liabilities:
Accounts receivable, net		(3,347)		(1,183)
Deferred sales commission costs		(4,675)		-
Other current and noncurrent assets		(1,452)		(3,485)
Accounts payable and accruals		8,131		3,399
Deferred revenue		814		286
Net cash (used in) provided by operating activities		(4,550)		11,174

Cash flows from investing activities:
Purchases of property and equipment		(2,878)		(4,021)
Purchase of business		(2,625)		-
Gain on escrow settlement		-		1,393
Capitalized software development costs		(11,386)		(5,203)
Proceeds from maturity of investments		35,455		45,850
Sales of investments		23,604		13,254
Purchase of investments		(42,437)		(57,561)
Net cash used in investing activities		(267)		(6,288)

Cash flows from financing activities:
Capital lease payments		(525)		(616)
Payment of contingent consideration		-		(150)
Repurchase and tax-related withholding of common stock		(8,183)		(13,842)
Proceeds from issuance of common stock under employee stock plans		6,720		2,788
Net cash used in financing activities		(1,988)		(11,820)

Effect of exchange rate changes on cash		(221)		474
Net decrease in cash and cash equivalents		(7,026)		(6,460)

Cash, cash equivalents and restricted cash at the beginning of period		39,803		41,030
Cash, cash equivalents and restricted cash at the end of period	$	32,777	$	34,570

Supplemental cash flow information
Income taxes paid	$	250	$	174
Interest paid		-		16
Property and equipment acquired under capital leases		-		765

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

8X8, Inc.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS

A provider of enterprise cloud communications solutions, 8x8, Inc. (8x8 or the Company) helps businesses get their employees, customers and applications more connected and productive worldwide. From one technology platform, the Company offers cloud phone, collaboration, conferencing, contact center, data analytics and other services to business customers on a Software-as-a-Service (SaaS) model. The Company's solutions offer a secure, reliable and simplified approach for businesses to transition their legacy, on-premises communications systems to the cloud. The comprehensive solution, built from owned core cloud technologies, enables 8x8 customers to rely on a single provider for their global communications, contact center and customer support requirements. Combining these services allows customers to eliminate information silos and expose vital, real-time communications data spanning multiple services, applications and devices which, in turn, can improve productivity, business performance and customer experience. The Company's customers are spread across more than 150 countries and range from small businesses to large enterprises with more than 10,000 employees.

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 consolidated financial statements refers to the fiscal year ended March 31 of the calendar year indicated (for example, fiscal 2019 refers to the fiscal year ending March 31, 2019).

The accompanying interim consolidated financial statements are unaudited and have been prepared on substantially the same basis as our annual consolidated financial statements for the fiscal year ended March 31, 2018, with the exception of new revenue recognition guidance discussed in the recently adopted accounting principles section below. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (SEC), regarding interim financial reporting.

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

The March 31, 2018 year-end consolidated balance sheet data in this document were derived from audited consolidated financial statements and does not include all of the disclosures required by U.S. generally accepted accounting principles. These 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, 2018 and notes thereto included in the Company's fiscal 2018 Annual Report on Form 10-K.

The results of operations and cash flows for the interim periods included in these consolidated financial statements are not necessarily indicative of the results to be expected for any future period or the entire fiscal year.

The consolidated financial statements include the accounts of 8x8 and its subsidiaries. All material intercompany accounts and transactions have been eliminated.

ACQUISITION

In April 2018, the Company entered into an asset purchase agreement with MarianaIQ, Inc. The total aggregate purchase price consisted of cash paid at closing and cash deposited into escrow to be held for fifteen months as security against indemnity claims made by the Company after the closing date. See Note 11 for additional information.

USE OF ESTIMATES

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, including, but not limited to, those related to bad debts, returns reserve for expected cancellations, income and sales tax liabilities, stock-based compensation, and litigation and other contingencies. The Company bases its estimates on historical experience and on various other assumptions. Actual results could differ from those estimates under different assumptions or conditions.

SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies used in preparation of these consolidated financial statements are disclosed in our Annual Report on Form 10-K for the fiscal year ended March 31, 2018 filed with the SEC on May 30, 2018, and there have been no changes to the Company's significant accounting policies during the three months ended September 30, 2018 except for the accounting policies described below that were updated as a result of adopting Accounting Standards Update (ASU) 2014-9, Revenue from Contracts with Customers: Topic 606 (ASU 2014-9 or ASC 606). ASU 2014-9 also included Subtopic 340-40, Other Assets and Deferred Costs - Contracts with Customers, which sets forth the requirement of deferring incremental costs of obtaining a contract with a customer. All amounts and disclosures set forth herein are in compliance with these standards.

RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

In May 2014, the Financial Accounting Standards Board (FASB) issued ASU 2014-9, which replaces numerous requirements in U.S. GAAP and provide companies with a single revenue recognition model for recognizing revenue from contracts with customers. ASC 606 requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. It defines a five-step process to achieve this core principle and, in doing so, more judgment and estimates are required with the revenue recognition process than were required under the previous guidance (ASC 605).

The new standard permits the use of either the full retrospective or modified retrospective transition method. The Company adopted the new standard effective April 1, 2018 using the modified retrospective method. Under the modified retrospective method, the comparative periods' information is not restated and continues to be reported under the accounting standards in effect in those prior periods. Instead, on April 1, 2018, the Company recognized the cumulative effect of initially applying ASC 606 as an adjustment to the opening balance of accumulated deficit and the corresponding balance sheet accounts, which resulted in a net decrease to accumulated deficit of $39.9 million. The impact on the Company's opening balances primarily relates to the capitalization of additional commission costs under ASC 606 in the amount of $38.2 million. Under ASC 605, the Company expensed all commission costs as incurred. Under ASC 606, the Company defers all incremental commission costs to obtain the contract and amortizes these costs over a benefit period of five years. The remaining $1.7 million impact of adopting the standard relates to revenue being recognized earlier under ASC 606 than it would have been under ASC 605, which resulted in a contract asset as of the adoption date.

See Note 2 for additional disclosure on the impact of adopting this standard.

RECENT ACCOUNTING PRONOUNCEMENTS

In February 2016, the FASB issued ASU 2016-2, Leases (Topic 842), along with amendments issued in 2018, which requires companies to generally recognize on the balance sheet operating and financing lease liabilities and corresponding right-of-use assets. The update also requires qualitative and quantitative disclosures designed to assess the amount, timing, and uncertainty of cash flows arising from leases. The update requires the use of a modified retrospective transition approach, which includes a number of optional practical expedients that entities may elect to apply. This amendment is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently assessing the impact of this pronouncement to its consolidated financial statements.

In June 2018, the FASB issued ASU 2018-7, Compensation-Stock Compensation (Topic 718), which now provides guidance for share-based payments to non-employees, resulting in alignment in accounting for employees and non-employees. The amendment is effective for public companies with fiscal years beginning after December 15, 2018. Early adoption is permitted. The Company is currently assessing the impact of this pronouncement to its consolidated financial statements.

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. Early adoption is permitted. The Company is currently assessing the impact of this pronouncement to its consolidated financial statements.

In August 2018, the FASB issued 2018-15, Intangibles-Goodwill and Other-Internal Use Software (Subtopic 350-40), which reduces complexity for the accounting for the accounting for costs of implementing a cloud computing service arrangement. The amendment is effective for public companies with fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company is currently assessing the impact of this pronouncement to its consolidated financial statements.

2. REVENUE RECOGNITION

Revenue Recognition under ASC 606

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

• Identification of the contract, or contracts, with a customer;
• Identification of the performance obligations in the contract;
• Determination of the transaction price;
• Allocation of the transaction price to the performance obligations in the contract; and
• Recognition of revenue when or as, the Company satisfies a performance obligation.

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

Judgments and Estimates

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

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

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

Service Revenue

Service revenue from subscriptions to the Company's cloud-based technology platform is recognized over time on a ratable basis over the contractual subscription term beginning on the date that the platform is made available to the customer. Payments received in advance of subscription services being rendered are recorded as a deferred revenue. Usage fees, either bundled or not bundled, are recognized when the Company has a right to invoice. Professional services for configuration, system integration, optimization, customer training and/or education are primarily billed on a fixed-fee basis and are performed by the Company directly or, alternatively, customers may also choose to perform these services themselves or engage their own third-party service providers. Professional services revenue is recognized over time, generally as customer sites go live.

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

Product Revenue

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

Contract Assets

Contract assets are recorded for those parts of the contract consideration not yet invoiced but for which the performance obligations are completed. The revenue is recognized when the customer receives services or equipment for a reduced consideration at the onset of an arrangement, for example when the initial month's services or equipment are discounted. Contract assets are included in other current or non-current assets in the consolidated balance sheets, depending on if their reduction is recognized during the succeeding 12-month period or beyond.

Deferred Revenue

Deferred revenues represent billings or payments received in advance of revenue recognition and is recognized upon transfer of control. Balances consist primarily of annual plan subscription services and professional and training services not yet provided as of the balance sheet date. Deferred revenues that will be recognized during the succeeding 12-month period are recorded as current deferred revenues in the consolidated balance sheets, with the remainder recorded as other non-current liabilities in the consolidated balance sheets.

Costs to Obtain a Customer Contract

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

Practical Expedients

The new guidance under ASC 340-40, Other Assets and Deferred Costs - Contracts with Customers, sets forth the requirement of deferring incremental costs of obtaining a contract, typically sales commissions, that were expensed as incurred under the previous guidance. The Company applies a practical expedient that permits to apply Subtopic 340-40 to a portfolio of contracts, instead of on a contract-by-contract basis, as they are similar in their characteristics, and the financial statement effects of applying Subtopic 340-40 to that portfolio would not differ materially from applying it to the individual contracts within that portfolio.

Impact of Adopting ASC 606

The Company recognized the cumulative effect of initially applying ASC 606 as an adjustment to retained earnings in the consolidated balance sheet as of April 1, 2018 (in thousands).

			Adjustments
	Balance at		Due to			Balance at
	March 31, 2018		ASC 606			April 1, 2018
Current assets:
Deferred sales commission costs	$	-	$	11,234	$		11,234
Other current assets	$	10,040	$	1,725	$		11,765
Non-current assets:
Deferred sales commission costs	$	-	$	26,942	$		26,942
Stockholders' Equity
Accumulated deficit	$	(201,464)	$	39,901	$		(161,563)

The following tables summarize the impact of the ASC 606 adoption on the Company's consolidated financial statements for the quarter ended September 30, 2018.

Selected Consolidated Balance Sheet Line Items (in thousands):

	September 30, 2018
					(As Reported)
	ASC 605		Adjustments		ASC 606
Current assets:
Deferred sales commission costs	$	-	$	13,656	$	13,656
Other current assets	$	12,107	$	1,782	$	13,889
Non-current assets:
Deferred sales commission costs	$	-	$	29,229	$	29,229
Stockholders' Equity
Accumulated deficit	$	(243,067)	$	44,667	$	(198,400)

Selected Consolidated Statement of Operations Line Items (in thousands, except per share amounts):

		Three Months Ended September 30, 2018						Six Months Ended September 30, 2018
						(As Reported)						(As Reported)
		ASC 605		Adjustments		ASC 606		ASC 605		Adjustments		ASC 606
Service revenue	$	81,543	$	(197)	$	81,346	$	159,785	$	(318)	$	159,467
Product revenue		4,176		160		4,336		9,187		253		9,440
Total revenue	$	85,719	$	(37)	$	85,682	$	168,972	$	(65)	$	168,907
Operating expenses:
Sales and marketing	$	58,806	$	(2,876)	$	55,930	$	113,910	$	(4,675)	$	109,235
Loss from operations	$	(24,826)	$	2,839	$	(21,987)	$	(42,580)	$	4,610	$	(37,970)
Net loss	$	(24,321)	$	2,839	$	(21,482)	$	(41,447)	$	4,610	$	(36,837)
Net loss per share:
Basic and diluted	$	(0.26)	$	0.03	$	(0.23)	$	(0.44)	$	0.05	$	(0.39)

Selected Consolidated Statements of Cash Flows Line Items (in thousands):

	September 30, 2018
					(As Reported)
	ASC 605		Adjustments		ASC 606
Net loss	$	(41,447)	$	4,610	$	(36,837)
Deferred sales commission costs	$	-	$	(4,675)	$	(4,675)
Other current and noncurrent assets	$	(1,517)	$	65	$	(1,452)
Net cash provided by operating activities	$	(4,550)	$	-	$	(4,550)

Disaggregation of Revenue

The Company disaggregates its revenue by geographic region. See Note 10 for more information.

Contract Balances

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

		September 30, 2018
Accounts receivable, net	$	18,870
Other current assets	$	1,782
Deferred revenue - current	$	3,354
Deferred revenue - noncurrent	$	11

Changes in the contract assets and the deferred revenue balances during the six months ended September 30, 2018 are as follows (in thousands):

	April 1, 2018		September 30, 2018		$ Change
Other current assets	$	1,725	$	1,782	$	57
Deferred revenue	$	2,578	$	3,364	$	786

The change in contract assets was primarily driven by the recognition of revenue that has not yet been billed. The increase in deferred revenues was due to billings in advance of performance obligations being satisfied. During the three and six months ended September 30, 2018, $1.8 million and $3.2 million, respectively, of revenue recognized was included in the deferred revenues balance at the beginning of the period, which was offset by additional deferrals during the period.

Remaining Performance Obligations

The Company's subscription terms typically range from one to four years. Contract revenue as of September 30, 2018, that has not yet been recognized was approximately $140 million. This excludes contracts with an original expected length of one year or less. The Company expects to recognize revenue on the vast majority of the remaining performance obligation over the next 24 months.

3. FAIR VALUE MEASUREMENTS

Cash, cash equivalents, and available-for-sale investments (in thousands):

				Gross		Gross				Cash and
		Amortized		Unrealized		Unrealized		Estimated		Cash		Short-Term
As of September 30, 2018		Costs		Gain		Loss		Fair Value		Equivalents		Investments
Cash	$	16,585	$	-	$	-	$	16,585	$	16,585	$	-
Level 1:
Money market funds		8,092		-		-		8,092		8,092		-
Subtotal		24,677		-		-		24,677		24,677		-
Level 2:
Commercial paper		3,178		-		-		3,178		-		3,178
Corporate debt		69,575		19		(132)		69,462		-		69,462
Municipal securities		5,501		3		-		5,504		-		5,504
Asset backed securities		21,960		6		(59)		21,907		-		21,907
Agency bond		4,221		-		(40)		4,181		-		4,181
Subtotal		104,435		28		(231)		104,232		-		104,232
Total assets	$	129,112	$	28	$	(231)	$	128,909	$	24,677	$	104,232

				Gross		Gross				Cash and
		Amortized		Unrealized		Unrealized		Estimated		Cash		Short-Term
As of March 31, 2018		Costs		Gain		Loss		Fair Value		Equivalents		Investments
Cash	$	16,499	$	-	$	-	$	16,499	$	16,499	$	-
Level 1:
Money market funds		15,204		-		-		15,204		15,204		-
Subtotal		31,703		-		-		31,703		31,703		-
Level 2:
Commercial paper		13,254		-		(8)		13,246		-		13,246
Corporate debt		70,631		6		(296)		70,341		-		70,341
Municipal securities		3,385		3		(1)		3,387		-		3,387
Asset backed securities		27,063		1		(119)		26,945		-		26,945
Agency bond		4,183		-		(35)		4,148		-		4,148
International government securities		2,497		-		(5)		2,492		-		2,492
Subtotal		121,013		10		(464)		120,559		-		120,559
Total assets	$	152,716	$	10	$	(464)	$	152,262	$	31,703	$	120,559

Contractual maturities of investments as of September 30, 2018 are set forth below (in thousands):

		Estimated
		Fair Value
Due within one year	$	49,792
Due after one year		54,440
Total	$	104,232

4. INTANGIBLE ASSETS

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

		September 30, 2018						March 31, 2018
		Gross				Net		Gross				Net
		Carrying		Accumulated		Carrying		Carrying		Accumulated		Carrying
		Amount		Amortization		Amount		Amount		Amortization		Amount
Technology	$	22,902	$	(12,755)	$	10,147	$	19,702	$	(10,535)	$	9,167
Customer relationships		9,464		(7,639)		1,825		9,776		(7,366)		2,410
Trade names/domains		2,108		(1,918)		190		2,108		(1,727)		381
In-process research and development		95		(95)		-		95		(95)		-
Total acquired identifiable intangible assets	$	34,569	$	(22,407)	$	12,162	$	31,681	$	(19,723)	$	11,958

At September 30, 2018, annual amortization of intangible assets, based upon our existing intangible assets and current useful lives, is estimated to be the following (in thousands):

		Amount
Remaining 2019	$	2,699
2020		4,716
2021		2,753
2022		1,766
2023		228
Total	$	12,162

5. GOODWILL

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

		Americas		Europe		Total
Balance at March 31, 2018	$	27,309	$	12,745	$	40,054
Additions due to acquisition		300		-		300
Foreign currency translation		-		(859)		(859)
Balance at September 30, 2018	$	27,609	$	11,886	$	39,495

6. COMMITMENTS AND CONTINGENCIES
Facility and Equipment Leases

The Company leases its headquarter's office space in San Jose, California, and also leases office space under non-cancelable operating leases in various domestic and international locations. During the first quarter of fiscal 2019, as it took control of its new corporate headquarters to begin the build out, the Company began to record additional rent expenses on a straight-line basis. Total rent expense for the three and six months ended September 30, 2018 was $2.6 million and $5.3 million, respectively. Total rent expense for the three and six months ended September 30, 2017 was $1.4 million and $2.8 million, respectively. Future minimum annual lease payments as of September 30, 2018 were as follows (in thousands):

		Amount
Remaining 2019	$	2,937
2020		6,918
2021		8,936
2022		8,826
2023		8,335
Thereafter		54,678
Total	$	90,630

The Company has entered into a series of noncancelable capital lease agreements for data center and office equipment bearing interest at various rates.

Other Commitments, Indemnifications and Contingencies

From time to time, the Company receives inquiries from various state and municipal taxing agencies with respect to the remittance of sales, use, telecommunications, excise, and income taxes. Several jurisdictions currently are conducting tax audits of the Company's records. The Company collects 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 accrual when facts relating to specific exposures warrant such adjustment.

During the second quarter of fiscal 2019, the Company determined that additional sales taxes were probable of being assessed and estimable in multiple states as a result of preliminary findings from current sales and use tax audits. As a result, the Company estimated an incremental sales tax liability of $4.6 million, which was recorded as general and administrative expense in the consolidated statements of operations in the second quarter of fiscal 2019.

Legal Proceedings

The Company, from time to time, is involved in various legal claims or litigation, including patent infringement claims that can arise in the normal course of the Company's operations. Pending or future litigation could be costly, could cause the diversion of management's attention and could upon resolution, have a material adverse effect on the Company's business, results of operations, financial condition and cash flows.

7. STOCK-BASED COMPENSATION

The following tables summarize information pertaining to the stock-based compensation expense from stock options and stock awards (in thousands, except weighted-average grant-date fair value and recognition period):

		Three Months Ended				Six Months Ended
		September 30,				September 30,
		2018		2017		2018		2017
Cost of service revenue	$	638	$	473	$	1,096	$	864
Cost of product revenue		-		-		-		-
Research and development		2,823		1,314		5,017		2,651
Sales and marketing		3,826		2,568		7,672		5,215
General and administrative		2,842		2,302		5,255		4,278
Total	$	10,129	$	6,657	$	19,040	$	13,008

		Six Months Ended
		September 30,
		2018		2017
Stock options outstanding at the beginning of the period:		3,998		4,462
Options granted		195		229
Options exercised		(574)		(329)
Options canceled and forfeited		(97)		(134)
Options outstanding at the end of the period:		3,522		4,228
Weighted-average fair value of grants during the period	$	8.47	$	5.28
Total intrinsic value of options exercised during the period	$	8,525	$	3,537
Weighted-average remaining recognition period at period-end (in years)		2.52		1.95

Stock awards outstanding at the beginning of the period:		5,939		4,950
Stock awards granted		2,112		2,446
Stock awards vested		(1,720)		(1,225)
Stock awards canceled and forfeited		(433)		(272)
Stock awards outstanding at the end of the period:		5,898		5,899
Weighted-average fair value of grants during the period	$	22.01	$	14.09
Weighted-average remaining recognition period at period-end (in years)		2.44		2.75

Total unrecognized compensation expense at period-end	$	79,121	$	63,323

Stock Repurchases

In May 2017, the Company's board of directors authorized the Company to purchase up to $25.0 million of its common stock from time to time under the 2017 Repurchase Plan (the "2017 Plan"). The 2017 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 Plan at September 30, 2018 was approximately $7.1 million. There were no stock repurchases under the 2017 Plan during the six months period ended September 30, 2018.

8. INCOME TAXES

The Company's effective tax rate was (1)% and 86% for the three months ended September 30, 2018 and 2017, respectively. The effective tax rate is calculated by dividing the income tax provision by net income (loss) before income tax expense. The difference in the effective tax rate and the U.S. federal statutory rate was due primarily to the change in pretax profitability, and geographic mix of profits and losses and the full valuation allowance recorded during the third quarter of fiscal year 2018.

9. NET LOSS PER SHARE

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

		Three Months Ended				Six Months Ended
		September 30,				September 30,
		2018		2017		2018		2017
Numerator:
Net loss available to common stockholders	$	(21,482)	$	(546)	$	(36,837)	$	(2,715)

Denominator:
Common shares - basic and diluted		93,831		91,689		93,449		91,667

Net loss per share
Basic and diluted	$	(0.23)	$	(0.01)	$	(0.39)	$	(0.03)

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

	Three Months Ended		Six Months Ended
	September 30,		September 30,
	2018	2017	2018	2017
Stock options	3,522	4,228	3,522	4,228
Stock awards	5,897	5,899	5,897	5,899
Total anti-dilutive shares	9,419	10,127	9,419	10,127

10. SEGMENT REPORTING AND GEOGRAPHICAL INFORMATION

The Company manages its operations primarily on a geographic basis. The Company's reportable segments are the Americas and Europe. The Americas segment is primarily North America. The Europe segment is primarily the United Kingdom.

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

		Revenue for the
		Three Months Ended				Six Months Ended
		September 30,				September 30,
		2018		2017		2018		2017
Americas (principally US)	$	77,100	$	65,121	$	151,965	$	127,526
Europe (principally UK)		8,582		7,362		16,942		14,055
	$	85,682	$	72,483	$	168,907	$	141,581

Revenues are attributed to each segment based on the ordering location of the customer or ship to location. For the three and six months ended September 30, 2018 and 2017, inter-segment revenues of approximately $6.5 million and $13.1 million, and $4.4 million and $6.9 million respectively, were eliminated in consolidation, and have been excluded from the table above.

		Depreciation and Amortization for the
		Three Months Ended				Six Months Ended
		September 30,				September 30,
		2018		2017		2018		2017
Americas (principally US)	$	4,665	$	2,336	$	8,972	$	4,869
Europe (principally UK)		994		1,295		1,865		2,489
	$	5,659	$	3,631	$	10,837	$	7,358

		Net Income (Loss) for the
		Three Months Ended				Six Months Ended
		September 30,				September 30,
		2018		2017		2018		2017
Americas (principally US)	$	(21,237)	$	970	$	(35,586)	$	1,379
Europe (principally UK)		(245)		(1,516)		(1,251)		(4,094)
	$	(21,482)	$	(546)	$	(36,837)	$	(2,715)

		September 30, 2018				March 31, 2018
		Total		Property and		Total		Property and
		Assets		Equipment, net		Assets		Equipment, net
Americas (principally US)	$	265,373	$	34,958	$	240,099	$	27,270
Europe (principally UK)		44,259		7,437		37,110		8,462
	$	309,632	$	42,395	$	277,209	$	35,732

11. ACQUISITIONS
MarianaIQ

On April 12, 2018, the Company entered into an Asset Purchase Agreement with MarianaIQ Inc. (MarianaIQ) for the purchase of certain assets of MarianaIQ. The total aggregate purchase price consisted of cash paid to MarianaIQ at closing, and cash to be held in escrow by the Company for fifteen months, as security against indemnity claims asserted by the Company after the closing date. The escrow amount is recorded as other accrued liabilities on the consolidated balance sheets as of September 30, 2018.

The Company recorded the acquired developed technology as an identifiable intangible asset with an estimated useful life of two years. The fair value of the technology was based on estimates and assumptions made by management using a cost approach method. The intangible asset is amortized on a straight-line basis over two years.

The excess of the consideration transferred over the aggregate fair value of the asset acquired was recorded as goodwill. The amount of goodwill recognized was primarily attributable to the expected contributions of the entity to the overall corporate strategy in addition to the acquired workforce.

The preliminary fair values of the assets acquired are as follows (in thousands):

		Fair Value
Assets acquired:
Intangible assets	$	3,200
Net identifiable assets acquired		3,200
Goodwill		300
Total consideration transferred	$	3,500

MarianaIQ did not contribute materially to revenue or net loss for the period of acquisition to September 30, 2018. Goodwill recognized upon acquisition is expected to be deductible for income tax purposes and is included in the Americas reporting unit (see Note 5). Total acquisition costs were immaterial.

12. SUBSEQUENT EVENTS

On October 26, 2018, the Company entered into an Asset Purchase Agreement with Atlassian Corporation Plc. (Atlassian) through which the Company purchased certain assets from Atlassian relating to the Jitsi open source video communications technology (Jitsi). The Company intends to integrate Jitsi's video collaboration capabilities into 8x8's technology platform to further enhance the Company's video and X Series platform offerings.

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

FORWARD-LOOKING STATEMENTS

This Management Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. 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," "estimate," "predict," "potential," "continue," "strategy," "believe," "anticipate," "plan," "expect," "intend," and similar expressions are intended to identify forward-looking statements. You should not place undue reliance on these forward-looking statements. Actual results and trends may differ materially from historical results or those projected in any such forward-looking statements depending on a variety of factors. These factors include, but are not limited to - market acceptance of new or existing services and features, customer acceptance and demand for our cloud communication and collaboration services, changes in the competitive dynamics of the markets in which we compete, the quality and reliability of our services, customer cancellations and rate of churn, our ability to scale our business, customer acquisition costs, our reliance on infrastructure of third-party network services providers, risk of failure in our physical infrastructure, risk of failure of our software, our ability to maintain the compatibility of our software with third-party applications and mobile platforms, continued compliance with industry standards and regulatory requirements in the United States and foreign countries in which we make our software solutions available, and the costs of such compliance, risks relating to our strategies and objectives for future operations, including the execution of integration plans and realization of the expected benefits of our acquisitions, the amount and timing of costs associated with recruiting, training and integrating new employees, timing and extent of improvements in operating results from increased spending in marketing, sales, and research and development, timing and extent and outcome of sales and utility tax audits, introduction and adoption of our cloud software solutions in markets outside of the United States, risk of cybersecurity breaches, general economic conditions that could adversely affect our business and operating results, implementation and effects of new accounting standards and policies in our reported financial results, and potential future intellectual property infringement claims and other litigation that could adversely affect our business and operating results.

All forward-looking statements included in this report are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. In addition to the factors discussed elsewhere in this Form 10-Q, see the Risk Factors discussion in Item 1A of our 2018 Form 10-K. The forward-looking statements included in this Form 10-Q are made only as of the date of this report, and we undertake no obligation to update the forward-looking statements to reflect subsequent events or circumstances.

BUSINESS OVERVIEW

A provider of enterprise cloud communications solutions, 8x8 helps businesses get their employees, customers and applications more connected and productive worldwide. From one technology platform, we offer cloud phone, collaboration, conferencing, contact center, data analytics and other services to business customers on a Software-as-a-Service (SaaS) model. Our solutions offer a secure, reliable and simplified approach for businesses to transition their legacy, on-premises communications systems to the cloud. Our comprehensive solution, built from core cloud technologies that we own and manage internally, enables 8x8 customers to rely on a single provider for their global communications, contact center and customer support requirements. Combining these services allows our customers to eliminate information silos and expose vital, real-time communications data spanning multiple services, applications and devices which, in turn, can improve productivity, business performance and customer experience. Our customers are spread across more than 150 countries and range from small businesses to large enterprises with more than 10,000 employees. In recent years, we have increased our focus on the mid-market and enterprise customer segments, and in fiscal 2018, we generated a majority of our new services revenue from customers in these business segments.

SUMMARY AND OUTLOOK

In the second quarter of fiscal 2019, our service revenue from mid-market and enterprise customers grew 30% year-over year and represented 61% of total service revenue. Average monthly service revenue per mid-market and enterprise business customer (ARPU) increased 6% to a record $4,988, compared with $4,697 in the same period last year. The increase resulted from our success in selling a greater number of new subscriptions to larger customers.

In July 2018, we announced general availability of the 8x8 X Series -- a single cloud platform which delivers a system of intelligence for voice, video conferencing, contact center, team messaging and collaboration across mobile and desktop devices. The 8x8 X Series is available in the U.S. and U.K. with multiple plans from X1 to X8 to meet different business needs for our small, mid-market and enterprise customers.

In September 2018, we integrated Team Messaging into the 8x8 X Series solution. Team Messaging enables business units, project teams, and internal and external collaborators to share content and communicate as a team by providing instant access for all employees through a direct connection to your global directory. Furthermore, 8x8 Team Messaging allows full interoperability with almost two dozen third-party team messaging platforms, including Slack.

In October 2018, we announced the acquisition of Jitsi, an open source video collaboration technology from Atlassian. Jitsi further extends 8x8's cloud technology platform with highly scalable video routing and interoperability capabilities, all built on industry standards such as webRTC. Jitsi's open-source technology and team of video technology personnel will play a role in leading development of new X Series capabilities, including dedicated video collaboration applications and WebRTC, which will further enhance our 8x8 Meetings solution.

We intend to continue to invest in talent, marketing and demand generation activities, product innovation and the global expansion of the X Series for the remainder of fiscal 2019. We expect our operating expenses to grow materially as we continue to invest in accelerating revenue growth. In achieving these objectives, we face many risks, including those described under "RISK FACTORS", disclosed below and in our Form 10-K for the fiscal year ended March 31, 2018.

RESULTS OF OPERATIONS

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

		September 30,				Dollar	Percent
Service revenue		2018		2017		Change	Change
		(dollar amounts in thousands)
Three months ended	$	81,346	$	68,123	$	13,223	19.4%
Percentage of total revenue		94.9%		94.0%
Six months ended	$	159,467	$	133,214	$	26,253	19.7%
Percentage of total revenue		94.4%		94.1%

Service revenue consists primarily of our cloud communication and collaboration subscription services, and to a lesser extent, usage and professional services fees.

Service revenues increased for the three and six months ended September 30, 2018 compared with the same period of the previous fiscal year primarily due to an increase in our business customer subscriber base (net of customer churn), and an increase in the average monthly service revenue per customer. Average monthly service revenue per customer increased from $442 at September 30, 2017 to $490 at September 30, 2018.

We expect growth in the number of customers and average monthly service revenue per customer to continue for the remainder of fiscal 2019.

		September 30,				Dollar	Percent
Product revenue		2018		2017		Change	Change
		(dollar amounts in thousands)
Three months ended	$	4,336	$	4,360	$	(24)	-0.6%
Percentage of total revenue		5.1%		6.0%
Six months ended	$	9,440	$	8,367	$	1,073	12.8%
Percentage of total revenue		5.6%		5.9%

Product revenue consists of sales of telephones where customers choose to run our cloud communication services on these devices.

Product revenue was flat during the three months ended September 30, 2018 compared with the same period in the prior fiscal year.

Product revenue increased for the six months ended September 30, 2018, respectively, primarily due to an increase in equipment unit sales to customers.

No customer represented greater than 10% of the Company's total revenues for the three months ended September 30, 2018 or 2017.

		September 30,				Dollar	Percent
Cost of service revenue		2018		2017		Change	Change
		(dollar amounts in thousands)
Three months ended	$	15,866	$	12,757	$	3,109	24.4%
Percentage of service revenue		19.5%		18.7%
Six months ended	$	30,945	$	24,419	$	6,526	26.7%
Percentage of service revenue		19.4%		18.3%

The cost of service revenue primarily consists of costs associated with network operations and related personnel, communication origination and termination services provided by third-party carriers, amortization of acquired and internally developed software assets, and technology licenses.

Cost of service revenue for the three months ended September 30, 2018 increased over the same period in the prior fiscal year and faster than revenue growth primarily due to a $1.8 million increase in amortization of intangibles and capitalized software expenses.

Cost of service revenue for the six months ended September 30, 2018 increased over the same period in the prior fiscal year and faster than revenue growth primarily due to a $3.2 million increase in amortization of intangibles and capitalized software expenses, a $0.9 million increase in third-party network services expenses.

We expect cost of service revenue to remain at a similar percentage of service revenue during the remainder of fiscal year 2019.

		September 30,				Dollar	Percent
Cost of product revenue		2018		2017		Change	Change
		(dollar amounts in thousands)
Three months ended	$	5,397	$	5,098	$	299	5.9%
Percentage of product revenue		124.5%		116.9%
Six months ended	$	11,678	$	9,982	$	1,696	17.0%
Percentage of product revenue		123.7%		119.3%

The cost of product revenue consists primarily of telephones, estimated warranty obligations and direct and indirect costs associated with product purchasing, shipping and handling.

The cost of product revenue for the three and six months ended September 30, 2018 increased over the comparable period in the prior fiscal year primarily due to the increase in the number of telephones shipped to customers. The increase in negative margin was due to the consistent practice of discounting of phones in the current period.

		September 30,				Dollar	Percent
Research and development		2018		2017		Change	Change
		(dollar amounts in thousands)
Three months ended	$	13,933	$	8,311	$	5,622	67.6%
Percentage of total revenue		16.3%		11.5%
Six months ended	$	27,043	$	16,254	$	10,789	66.4%
Percentage of total revenue		16.0%		11.5%

Research and development expenses consist primarily of personnel and related costs, consulting, and equipment costs necessary for us to conduct our development and engineering efforts.

The research and development expenses for the three months ended September 30, 2018 increased over the comparable period in the prior fiscal year primarily due to a $1.8 million increase in personnel and related costs (primarily related to a department reclassification from sales and marketing), net of costs capitalized in accordance with accounting standard ASC 350-40, a $1.3 million increase in stock-based compensation expense, a $1.5 million increase in consulting and outside services, as well as other smaller cost increases.

The research and development expenses for the six months ended September 30, 2017 increased over the comparable period in the prior fiscal year primarily due to a $4.2 million increase in personnel and related costs, net of costs capitalized in accordance with ASC 350-40, a $2.8 million increase in consulting and outside services, a $2.2 million increase in stock-based compensation expenses, a $0.7 million increase in purchased software expenses, as well as other smaller cost increases.

We expect research and development expenses to increase as a percentage of total revenue during the remainder of fiscal year 2019 as we continue to invest in our technology platform and product offerings.

		September 30,				Dollar	Percent
Sales and marketing		2018		2017		Change	Change
		(dollar amounts in thousands)
Three months ended	$	55,930	$	41,163	$	14,767	35.9%
Percentage of total revenue		65.3%		56.8%
Six months ended	$	109,235	$	82,273	$	26,962	32.8%
Percentage of total revenue		64.7%		58.1%

Sales and marketing expenses consist primarily of personnel and related costs for sales, marketing, and customer service which includes deployment engineering. Such costs also include outsourced customer service call center operations, sales commissions, as well as trade show, advertising and other marketing and promotional expenses.

Sales and marketing expenses for three months ended September 30, 2018 increased over the comparable period in the prior fiscal year primarily due to a $5.6 million increase in personnel and related costs (partially offset by a department reclassification to research and development), a $3.2 million increase in marketing expenses, a $1.4 million increase in stock-based compensation costs, and a $1.1 million increase in consulting, temporary personnel, and outside services, as well as other smaller cost increases.

Sales and marketing expenses for six months ended September 30, 2018 increased over the comparable period in the prior fiscal year primarily due to a $10.0 million increase in personnel and related costs (partially offset by a department reclassification to research and development), a $4.5 million increase in marketing expenses, a $2.6 million increase in stock-based compensation costs, and a $2.1 million increase in consulting, temporary personnel, and outside services, as well as other smaller cost increases.

We expect sales and marketing expenses to to increase as a percentage of total revenue during the remainder of fiscal year 2019.

		September 30,				Dollar	Percent
General and administrative		2018		2017		Change	Change
		(dollar amounts in thousands)
Three months ended	$	16,543	$	9,616	$	6,927	72.0%
Percentage of total revenue		19.3%		13.3%
Six months ended	$	27,976	$	18,572	$	9,404	50.6%
Percentage of total revenue		16.6%		13.1%

General and administrative expenses consist primarily of personnel and related costs for finance, human resources, legal and general management, as well as professional services fees.

General and administrative expenses for three months ended September 30, 2018 increased over the comparable period in the prior fiscal year primarily due to a $4.6 million increase in sales and use tax expense, $1.2 million increase in rent expense related to our new headquarters, which we started to build out during the first quarter of fiscal 2019, and a $1.1 million increase related to personnel and related costs.

General and administrative expenses for six months ended September 30, 2018 increased over the comparable period in the prior fiscal year primarily due to a $4.9 million increase in sales and use tax expense, a $2.4 million increase in rent expense related to our new headquarters, which we started to build out during the first quarter of fiscal 2019, and a $2.1 million increase related to personnel and related costs.

We expect general and administrative expenses to increase as a percentage of total revenue during the remainder of fiscal year 2019.

		September 30,				Dollar	Percent
Other income, net		2018		2017		Change	Change
		(dollar amounts in thousands)
Three months ended	$	635	$	463	$	172	37.1%
Percentage of total revenue		0.7%		0.6%
Six months ended	$	1,354	$	2,515	$	(1,161)	-46.2%
Percentage of total revenue		0.8%		1.8%

Other income, net, primarily consisted of interest income earned on our cash, cash equivalents and investments, as well as foreign exchange gains or losses. During the first quarter of fiscal year 2018, $1.4 million of the cash held in an escrow fund from our 2015 acquisition of DXI was returned to us and recorded as other income.

		September 30,				Dollar
Provision (benefit) for income tax		2018		2017		Change
		(dollar amounts in thousands)
Three months ended	$	130	$	(3,453)	$	3,583
Percentage of loss before
provision (benefit) for income taxes		-0.6%		86.3%
Six months ended	$	221	$	(4,689)	$	4,910
Percentage of loss before
provision (benefit) for income taxes		-0.6%		63.3%

For the three months ended September 30, 2018, we recorded income tax expense of $0.1 million, related to state minimum taxes and income from our profitable operations. For the three months ended September 30, 2017, we recorded an income tax benefit of $3.4 million, related to the adoption of ASC 2016-09. Our effective tax rate was -1% and 86% for the three months ended September 30, 2018 and 2017, respectively. The change in our effective tax rate was due primarily to the full valuation allowance recorded in fiscal 2018, the change in pretax profitability, and geographic mix of profits and losses.

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

Liquidity and Capital Resources

As of September 30, 2018, we had $137 million in cash, restricted cash, cash equivalents and short-term investments.

Net cash used in operating activities for the six months ended September 30, 2018 was $4.6 million, compared to cash provided by operating activities of $11.2 million for the six months ended June 30, 2017. Cash provided by operating activities has historically been affected by the amount of net income (loss), changes in working capital accounts particularly in the timing and collection of payments, add-backs of non-cash expense items such as deferred taxes, depreciation and amortization, and stock-based compensation.

The net cash used in investing activities for the six months ended September 30, 2018 was $0.3 million, during which we had proceeds from maturity and sale of short-term investments of approximately $16.6 million, net of purchases of short-term investments, capitalized $11.4 million of software costs in accordance with ASC 350-40, invested in $2.6 million in the acquisition of MarianaIQ, and spent $2.9 million on the purchase of property and equipment. The net cash used in investing activities for the six months ended June 30, 2017 was $6.3 million, during which we had proceeds from maturity and sale of short-term investments of $1.5 million, net of purchases of short-term investments. We spent approximately $4.0 million on the purchase of property and equipment, and we capitalized $5.2 million of internal use software. Investing activities also include a gain of $1.4 million from the settlement of an escrow fund from our 2015 acquisition of DXI.

Net cash used in financing activities for the six months ended September 30, 2018 was $2.0 million, which primarily consisted of $6.7 million of cash received from the issuance of common stock under our employee stock plans and $8.2 million of repurchases of our common stock related to shares withheld for payroll taxes. Net cash used in financing activities for the six months ended September 30, 2017 was $11.8 million, which primarily consisted of by $13.8 million of repurchases of our common stock related to shares withheld for payroll taxes, offset by $2.8 million of cash received from the issuance of common stock under our employee stock plans.

Contractual Obligations

There were no significant changes in our commitments under contractual obligations during the six months ended September 30, 2018, as disclosed in the Company's Annual Report on Form 10-K, for the year ended March 31, 2018.

CRITICAL ACCOUNTING POLICIES & ESTIMATES

The discussion and analysis of our financial condition and results of operations are based upon our 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 disclosure of assets and liabilities. On an on-going basis, we evaluate our critical accounting policies and estimates. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

There have been no significant changes during the three months ended September 30, 2018 to our critical accounting policies and estimates previously disclosed in our Form 10-K for the fiscal year ended March 31, 2018, except for our adoption of ASC 606 as discussed in Notes 1 and 2 of the Notes to the Consolidated Financial Statements.

RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

See Item 1 of Part I, "Financial Statements - Note 1 - Basis of Presentation - Recent Adopted Accounting Pronouncements."

RECENT ACCOUNTING PRONOUNCEMENTS

See Item 1 of Part I, "Financial Statements - Note 1 - Basis of Presentation - Recent Accounting Pronouncements."

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Fluctuation Risk

The primary objective of our investment activities is to preserve principal while generating income without significantly increasing risk. Some of the securities in which we invest may be subject to market risk. This means that a change in prevailing interest rates may cause the principal amount of the investment to fluctuate. To minimize this risk, we may maintain our portfolio of cash equivalents and investments in a variety of shorter term securities, including commercial paper, money market funds, debt securities and certificates of deposit. The risk associated with fluctuating interest rates is limited to our investment portfolio and we do not believe that a hypothetical change in interest rates of 100 basis points would have a significant impact on our interest income.

We do not have any outstanding debt instruments other than equipment under capital leases and, therefore, we did not have direct funding exposure to interest rate risks.

Foreign Currency Exchange Risk

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

Gains or losses from the translation of certain cash balances, accounts receivable balances and intercompany balances that are denominated in non-US dollar currencies impact our net income (loss). A hypothetical decrease in all foreign currencies against the US dollar of 10 percent, would not result in a material foreign currency loss on foreign-denominated balances. 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.

To date we have not, but we may in the future, enter into financial instruments to hedge our foreign currency exchange risk.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Effectiveness of Disclosure Controls and Procedures

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

As of the end of the period covered by this Quarterly Report on Form 10-Q, under the supervision of our Chief Executive Officer and our Chief Financial Officer, we evaluated the effectiveness of our Disclosure Controls. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our Disclosure Controls were effective as of September 30, 2018.

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

During the second quarter of fiscal year 2019, 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.

PART II -- OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we become involved in various legal claims and litigation that arise in the normal course of our operations. While the results of such claims and litigation cannot be predicted with certainty, we are not currently aware of any such matters that we believe would have a material adverse effect on our financial position, results of operations or cash flows.

As of September 30, 2018, the Company was not a party in any material litigation matter.

ITEM 1A. RISK FACTORS

The risks and uncertainties described below in this Quarterly Report on Form 10-Q update those risks and uncertainties disclosed in our annual report on Form 10-K for the fiscal year ended March 31, 2018, which we filed with the Securities and Exchange Commission on May 30, 2018. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that adversely affect our business. If any of the risks described below, or others not specified below, materialize, our business, financial condition and results of operations could be materially adversely affected, which may, in turn, adversely impact the trading price of our common stock.

Our success depends on adding new customers, and existing customer growth and renewal of our services.

Our future success depends on our ability to significantly increase revenue generated from sales of our cloud software solutions to business customers, including small and mid-size businesses (SMBs) and mid-market and larger enterprises. To increase our revenue, we must add new customers and encourage existing customers to continue their subscriptions (on terms favorable to us), increase their usage of our services, and/or purchase additional services from us. For customer demand and adoption of our cloud communications solutions to grow, the quality, cost and feature benefits of these services must compare favorably to those of competing services. For example, our cloud unified communications and contact center services must continue to evolve so that high-quality service and features can be consistently offered at competitive prices. As our target markets mature, or as competitors introduce lower cost and/or more differentiated products or services that compete or are perceived to compete with ours, we may be unable to renew or extend our agreements with existing customers or attract new customers, or new business from existing customers, on favorable terms, which could have an adverse effect on our revenue and growth.

The rate at which our existing customers purchase any new or enhanced services we may offer depends on a number of factors, including general economic conditions, the importance of these additional features and services to our customers, the quality and performance of our cloud communications solutions, and the price at which we offer them. If our customers react negatively to our new or enhanced service offerings, such as our recently launched X-Series suite of products, or our efforts to upsell are otherwise not as successful as we anticipate, our business may suffer. Our sales strategies must also continue to evolve and adapt as our market matures, for example through the offering of additional customer self-service tools and automation for the SMB segment and the development of new and more sophisticated sales channels that leverage the strengths of our partners. In addition, marketing and selling new and enhanced features and services may require increasingly sophisticated and costly sales and marketing efforts that may require us to incur additional expenses and negatively impact the results of our operations.

To support the successful marketing and sale of our services to new and existing customers, we must continue to offer high-quality training, implementation, and customer support. Providing these services effectively requires that our customer support personnel have industry-specific technical knowledge and expertise, which may make it difficult and costly for us to locate and hire qualified personnel, particularly in the competitive labor market in Silicon Valley where we are headquartered. Our support personnel also require extensive training on our products, which may make it difficult to scale up our support operations rapidly. The importance of high-quality customer support will increase as we expand our business globally and pursue new mid-market and enterprise customers. If we do not help our customers quickly resolve post-implementation issues and provide effective ongoing support, our ability to sell additional features and services to existing customers will suffer and our reputation may be harmed.

With a large portion of our sales efforts targeted at enterprise customers, our sales cycle may become more time-consuming and expensive, we may encounter pricing pressure and implementation and customization challenges, and we may have to delay revenue recognition for some complex transactions, all of which could harm our business and operating results.

We currently derive a majority of our revenues from sales of our cloud software solutions to mid-market and larger enterprises, and we believe increasing our sales to these customers is key to our future growth. Our sales cycle, which is the time between initial contact with a potential customer and the ultimate sale to that customer, is often lengthy and unpredictable for larger enterprise customers. Many of our prospective enterprise customers do not have prior experience with cloud-based communications and, therefore, typically spend significant time and resources evaluating our solutions before they purchase from us. Similarly, we typically spend more time and effort determining their requirements and educating these customers about the benefits and uses of our solutions. Enterprise customers also tend to demand more customizations, integrations and additional features than SMB customers. As a result, we may be required to divert more sales and engineering resources to a smaller number of large transactions than we have in the past, which means that we will have less personnel available to support other segments or that we will need to hire additional personnel, which would increase our operating expenses.

It is often difficult for us to forecast when a potential enterprise sale will close, the size of the customer's initial service order and the period over which the implementation will occur, any of which may impact the amount of revenue we recognize or the timing of revenue recognition. Enterprise customers may delay their purchases from one quarter to another as they assess their budget constraints, negotiate early contract terminations with their existing providers or wait for us to develop new features. Any delay in closing, or failure to close, a large enterprise sales opportunity in a particular quarter or year could significantly harm our projected growth rates and cause the amount of new sales we book to vary significantly from quarter to quarter. We also may have to delay revenue recognition on some of these transactions until the customer's technical or implementation requirements have been met.

In some cases, we may enter into a contract with a large enterprise customer, such as a preferred vendor agreement, that has little or no minimum purchase commitment but establishes the terms on which the customer's affiliates, clients or franchisees (as the case may be) may order services from us in the future. We may expend significant time and resources becoming a preferred vendor without booking significant sales from the opportunity until months or years after we sign the initial agreement. If we are unsuccessful in selling our services to the prospective purchasers under these agreements, we may not recognize revenue in excess of the expenses we incur in pursuing these opportunities, which could adversely impact our profitability and cash flow.

We face significant risks in implementing and supporting the services we sell to mid-market and larger enterprises and, if we do not manage these efforts effectively, our recurring service revenue may not grow at the rate we expected, and our business and results of operations could be materially and adversely affected.

We have a limited history of selling our services to larger businesses and have experienced, and may continue to experience, new challenges in configuring and providing ongoing support for the solutions we sell to large customers.

Larger customers' networks are often more complex than those of smaller customers, and the configuration of our services for these customers generally require participation from the customer's information technology (IT) team. There is no guarantee that the customer will make available to us the necessary personnel and other resources for a successful configuration of services. The lack of local resources may prevent us from properly configuring our services for the customer, which can in turn adversely impact the quality of services that we deliver over our customers' networks, and/or may result in delays in the implementation of our services. This may create a public perception that we are unable to deliver high quality of service to our customers, which could harm our reputation and make it more difficult to attract new customers and retain existing customers. Moreover, larger customers tend to require higher levels of customer service and individual attention (including periodic business reviews and in-person visits, for example), which may increase our costs for implementing and delivering services. If a customer is unsatisfied with the quality of services we provide or the quality of work performed by us or a third party, we may decide to incur costs beyond the scope of our contract with the customer in order to address the situation and protect our reputation, which may in turn reduce or eliminate the profitability of our contract with the customer. In addition, negative publicity related to our larger customer relationships, regardless of its accuracy, could harm our reputation and make it more difficult for us to compete for new business with current and prospective customers.

We also face challenges building and training an integrated sales force capable of addressing the services and features of our comprehensive product suite, as well as a staff of expert engineering and customer support personnel capable of addressing the full range of implementation and configuration issues that tend to arise more frequently with larger customers. Also, we have only limited experience in developing and managing sales channels and distribution arrangements for larger businesses. If we fail to effectively execute the sale, configuration and ongoing support of our services to mid-market and larger enterprises, our results of operations and our overall ability to grow our customer base could be materially and adversely affected.

Intense competition in the markets in which we compete could prevent us from increasing or sustaining our revenue growth and increasing or maintaining profitability.

The cloud communications industry is competitive, and we expect it to become increasingly competitive in the future. We may also face competition from companies in adjacent or overlapping industries.

In connection with our unified communication services, we face competition from other providers of cloud communication services, such as RingCentral, Fuze, Vonage, Dialpad, Nextiva and Shoretel (acquired by Mitel in 2017). In connection with our cloud contact center services, we face competition from other providers of cloud and premise-based contact center software services, such as NICE/inContact, Five9 and Interactive Intelligence.

In addition, because many of our target customers have historically purchased communications services from incumbent telephone companies along with legacy on-premises communication equipment, we compete with these customers' existing providers. These competitors include, for example, AT&T, CenturyLink, Comcast and Verizon Communications in the United States, as well as local incumbent communications providers in the international markets where we operate, such as Vodafone, Telefonica, Orange, America Movil and Deutsche Telekom, all in conjunction with on-premises hardware solutions from companies like Avaya, Cisco and Mitel. We may face competition from large Internet and cloud service companies such as Google Inc., Amazon Inc., Oracle Corporation and Microsoft Corporation, any of which might launch a new cloud-based business communications service, expand its existing offerings or acquire other cloud-based business communications companies in the future.

Many of our current and potential competitors have longer operating histories, significantly greater resources and brand awareness, and a larger base of customers than we have. As a result, these competitors may have greater credibility with our existing and potential customers. They also may adopt more aggressive pricing policies and devote greater resources to the development, promotion and sale of their products. Our competitors may also offer bundled service arrangements that present a more differentiated or better integrated product to customers. Increased competition could require us to lower our prices, reduce our sales revenue, lower our gross profits and/or cause us to lose market share. In addition, many of our customers are not subject to long-term contractual commitments and have the ability to switch from our services to our competitors' offerings on relatively short notice. Given the significant price competition in the markets for our services, we may be at a disadvantage compared with those competitors who have substantially greater resources than us or may otherwise be better positioned to withstand an extended period of downward pricing pressure. The adverse impact of a shortfall in our revenues may be magnified by our inability to adjust our expenses to compensate for such shortfall. Announcements, or expectations, as to the introduction of new products and technologies by our competitors or us could cause customers to defer purchases of our existing products, which also could have a material adverse effect on our business, financial condition or operating results.

The market for cloud software solutions is subject to rapid technological change, and we depend on new product and service introductions in order to maintain and grow our business, including in particular our recently launched X-Series product line.

We operate in an emerging market that is characterized by rapid changes in customer requirements, frequent introductions of new and enhanced products and services, and continuing and rapid technological advancement. To compete successfully in this emerging market, we must continue to design, develop, manufacture, and sell highly scalable new and enhanced cloud software solutions products and services that provide higher levels of performance and reliability at lower cost. If we are unable to develop new products and services that address our customers' needs, to deliver our cloud software solutions applications in one seamless integrated product offering that addresses our customers' needs, or to enhance and improve our products and services in a timely manner, we may not be able to achieve or maintain adequate market acceptance of our services. Our ability to grow is also subject to the risk of future disruptive technologies. Access and use of our products and services is provided via the cloud, which, itself, has been disruptive to the previous premises-based model.

If new technologies emerge that are able to deliver communications and collaboration solutions services at lower prices, more efficiently, more conveniently or more securely, such technologies could adversely impact our ability to compete.

If we are unable to develop new features and services internally due to factors such as competitive labor markets, high employee turnover, lack of management ability or a lack of other research and development resources, we may miss market opportunities. Further, many of our competitors have historically spent a greater amount of funds on their research and development programs, and those that do not may be acquired by larger companies that would allocate greater resources to our competitors' research and development programs. In addition, there is no guarantee that our research and development efforts will succeed, or that our new products and services will enable us to maintain or grow our revenue or recover our development costs. Our failure to maintain adequate research and development resources, to compete effectively with the research and development programs of our competitors and to successfully monetize our research and development efforts could materially and adversely affect our business and results of operations.

We launched our new product line, branded "X-Series," in June 2018. We market X-Series as an array of packaged offerings (designated X2, X4, etc.), which start at the most basic version of our unified communications solution, and add engagement capabilities at each new level, with the top-tier X-Series packages combining unified communications and contact center services into a single offering. Customer demand for our X-Series product line will depend on a number of factors, including, for example, factors inherent to the product itself, such as quality of service, reliability, feature availability, and ease of use; and factors relating to our ability to implement, support and market and sell the service effectively. More fundamentally, the success of X-Series may depend on whether the market for unified communications, collaborations and contact center services is trending towards convergence of these three solutions into a single system, as we are predicting. We cannot be certain that this market trend will occur according to the timeline we are expecting, or at all. For example, if the various components of our service were to become commoditized and standardized in a way that diminishes the benefits of a single platform for customers, there may be less demand for a unified suite of services like X-Series. Low customer demand could make it more difficult for us to win the business of new customers or gain additional business from existing customers, either of which in turn could cause our service revenue to grow more slowly than we expect, or to remain flat or even decrease in future periods.

We have a history of losses and are uncertain of our future profitability.

We recorded an operating loss of approximately $38 million for the six months ended September 30, 2018 and ended the period with an accumulated deficit of approximately $198 million. We expect to incur operating losses in our current fiscal year as we continue to invest in growth. As we expand our geographic reach and range of service offerings, and further invest in research and development, sales and marketing, and other areas of our business, we will need to increase revenues in order to generate sustainable operating profit. Given our history of fluctuating revenues and operating losses, we cannot be certain that we will be able to achieve or maintain operating profitability on an annual basis or on a quarterly basis in the future.

Our churn rate may increase in future periods due to customer cancellations or other factors, which may adversely impact our revenue or require us to spend more money to grow our customer base.

Our customers may discontinue their subscriptions for our services after the expiration of their initial subscription period, which typically range from one to four years. In addition, our customers may renew for lower subscription amounts or for shorter contract lengths. We may not accurately predict cancellation rates for our customers. Our cancellation rates may increase or fluctuate as a result of a number of factors, including customer usage, pricing changes, number of applications used by our customers, customer satisfaction with our service, the acquisition of our customers by other companies and deteriorating general economic conditions. If our customers do not renew their subscriptions for our service or decrease the amount they spend with us, our revenue will decline and our business will suffer.

Our average monthly business service revenue churn was less than 1% during our two most recent fiscal years. Our method of computing this revenue churn rate may be different from methods used by our competitors and other companies in our industry to compute their publicly disclosed churn rates. As a result, only limited reliance can be placed on our churn rate when attempting to compare it with other companies. Also, our churn rate can vary based on events that may not be indicative of actual trends in our business. Our churn rate could increase in the future if customers are not satisfied with our service. Other factors, including increased competition from other providers of communications and collaborations services, alternative technologies, and adverse business conditions also influence our churn rate.

Because of churn, we must acquire new customers on an ongoing basis to maintain our existing level of customers and revenues. As a result, marketing expenditures are an ongoing requirement of our business. If our churn rate increases, we will have to acquire even more new customers in order to maintain our existing revenues. We incur significant costs to acquire new customers, and those costs are an important factor in determining our net profitability. Therefore, if we are unsuccessful in retaining customers or are required to spend significant amounts to acquire new customers beyond those budgeted, our revenue could decrease and our net loss could increase.

Our rate of customer cancellations may increase in future periods due to a number of factors, some of which are beyond our control, such as the financial condition of our customers or the state of credit markets. In addition, a single, protracted service outage or a series of service disruptions, whether due to our services or those of our carrier partners, may result in a sharp increase in customer cancellations.

Due to the length of our sales cycle, especially in adding new mid-market and larger enterprises as customers, we may also experience delays in acquiring new customers to replace those that have terminated our services. Such delays would be exacerbated if general economic conditions worsen. An increase in churn, particularly in challenging economic times, could have a negative impact on the results of our operations.

We may not be able to scale our business efficiently or quickly enough to meet our customers' growing needs, in which case our operating results could be harmed.

As usage of our cloud software solutions by mid-market and larger enterprises expands and as customers continue to integrate our services across their enterprises, we are required to devote additional resources to improving our application architecture, integrating our products and applications across our technology platform, integrating with third-party systems, and maintaining infrastructure performance. As our customers gain more experience with our services, the number of users and transactions managed by our services, the amount of data transferred, processed and stored by us, the number of locations where our service is being accessed, and the volume of communications managed by our services have in some cases, and may in the future, expand rapidly. In addition, we will need to appropriately scale our internal business systems and our services organization, including customer support and services and regulatory compliance, to serve our growing customer base. Any failure of or delay in these efforts could cause impaired system performance and reduced customer satisfaction. These issues could reduce the attractiveness of our cloud software solutions to customers, resulting in decreased sales to new customers, lower renewal rates by existing customers, the issuance of service credits, or requested refunds, which could hurt our revenue growth and our reputation. These system upgrades and the expansion of our support and services have been and will continue to be expensive and complex, requiring management time and attention and increasing our operating expenses. We could also face inefficiencies or operational failures as a result of our efforts to scale our infrastructure and information technology systems. There are inherent risks associated with upgrading, improving and expanding our information technology systems and we cannot be sure that the expansion and improvements to our infrastructure and systems will be fully or effectively implemented on a timely basis, if at all. These efforts may reduce revenue and our margins and adversely impact our financial results.

To provide our services, we rely on third parties for all of our network connectivity and co-location facilities.

We currently use the infrastructure of third-party network service providers, including the services of Equinix, Inc. and CenturyLink, Inc. in the United States, to provide all of our cloud services over their networks rather than deploying our own network connectivity.

We also rely on third-party network service providers to originate and terminate substantially all of the PSTN calls using our cloud-based services. We leverage the infrastructure of third-party network service providers to provide telephone numbers, PSTN call termination and origination services, and local number portability for our customers rather than deploying our own network throughout the United States and internationally. This decision has resulted in lower capital and operating costs for our business in the short-term, but has reduced our operating flexibility and ability to make timely service changes. If any of these network service providers cease operations or otherwise terminate the services that we depend on, the delay in switching our technology to another network service provider, if available, and qualifying this new service provider could have a material adverse effect on our business, financial condition or operating results. The rates we pay to our network service providers may also increase, which may reduce our profitability and increase the retail price of our service.

There can be no assurance that these service providers will be able or willing to supply cost-effective services to us in the future or that we will be successful in signing up alternative or additional providers. Although we believe that we could replace our current providers, if necessary, our ability to provide service to our subscribers could be impacted during any such transition, which could have an adverse effect on our business, financial condition or results of operations. The loss of access to, or requirement to change, the telephone numbers we provide to our customers also could have a material adverse effect on our business, financial condition or operating results.

Due to our reliance on these service providers, when problems occur in a network, it may be difficult to identify the source of the problem. The occurrence of hardware and software errors, whether caused by our service or products or those of another vendor, may result in the delay or loss of market acceptance of our products and any necessary revisions may force us to incur significant expenses. Under the terms of the "end-to-end" service level commitments that we make for the benefit of qualifying customers, we are potentially at risk for service problems experienced by these service providers. Customers who do not qualify for these enhanced service level commitments may nevertheless hold us responsible for these service issues and seek service credits, early termination rights or other remedies. Accordingly, service issues experienced by our service provider partners may harm our reputation as well as our business, financial condition or operating results.

Internet access providers and Internet backbone providers may be able to block, degrade or charge for access to or bandwidth use of certain of our products and services, which could lead to additional expenses and the loss of users.

Our products and services depend on the ability of our users to access the Internet, and certain of our products require significant bandwidth to work effectively. In addition, users who access our services and applications through mobile devices, such as smartphones and tablets, must have a high-speed connection, such as Wi-Fi, 3G, 4G or LTE, to use our services and applications. Currently, this access is provided by companies that have significant and increasing market power in the broadband and Internet access marketplace, including incumbent telephone companies, cable companies and mobile communications companies. Some of these providers offer products and services that directly compete with our own offerings, which give them a significant competitive advantage. Some of these broadband providers have stated that they may exempt their own customers from data-caps or offer other preferred treatment to their customers. Other providers have stated that they may take measures that could degrade, disrupt or increase the cost of user access to certain of our products by restricting or prohibiting the use of their infrastructure to support or facilitate our offerings, or by charging increased fees to us or our users to provide our offerings, while others, including some of the largest providers of broadband Internet access services, have committed to not engaging in such behavior. These providers have the ability generally to increase their rates, which may effectively increase the cost to our customers of using our cloud software solutions.

On January 4, 2018, the Federal Communications Commission, or FCC, released an order that largely repeals rules that the FCC had in place which prevented broadband internet access providers from degrading or otherwise disrupting a broad range of services provisioned over consumers' and enterprises' broadband Internet access lines. The FCC's order became effective on June 11, 2018. The order has been appealed by numerous parties including: a number of state attorneys' general, public interest groups, associations, and companies. The appeal is before the U.S. Court of Appeals for the District of Columbia. We cannot predict whether the FCC's January 4, 2018, Order will withstand appeal, either in whole or in part, nor when the appeal will be resolved.

Following the adoption of the FCC Order, a number of states have passed laws establishing rules similar to those that existed prior to the effective date of the FCC's January 4, 2018 Order. States have adopted a variety of approaches in attempting to preserve the rules in place prior to the FCC Order. For example, some states have passed narrow laws where rules addressing degradation or otherwise disrupting the provision of broadband internet access services are limited to parties that offer services to government agencies whereas other states have passed laws that apply generally. For example, California passed legislation of general applicability that would prevent providers of broadband internet access services from degrading and disrupting such services when offered to third parties. The law's effective date is January 1, 2019.

There is legal uncertainty as to whether states that have passed such laws have the authority to do so if such laws could be interpreted to conflict with the FCC's January 4, 2018, Order. Due to this legal uncertainty, the U.S. Department of Justice filed a Motion for Preliminary Injunction on September 30, 2018, seeking to prevent California from enforcing its law set to become effective January 1, 2019. In response, California state officials have agreed to delay enforcement of the new law at least until appeal of the FCC's January 4, 2018, Order is resolved by the U.S. Court of Appeals for the District of Columbia Circuit.

Many of the largest providers of broadband services, like cable companies and traditional telephone companies, have publicly stated that they will not degrade or disrupt their customers' use of applications and services, like ours. If such providers were to degrade, impair or block our services, it would negatively impact our ability to provide services to our customers, likely result

in lost revenue and profits, and we would incur legal fees in attempting to restore our customers' access to our services. Broadband internet access providers may also attempt to charge us or our customers additional fees to access services like ours that may result in the loss of customers and revenue, decreased profitability, or increased costs to our offerings that may make our services less competitive. We cannot predict the potential impact of the FCC's January 4, 2018, Order on us at this time.

Our physical infrastructure is concentrated in a few facilities and any failure in our physical infrastructure or services could lead to significant costs and disruptions and could reduce our revenue, harm our business reputation and have a material adverse effect on our financial results.

Our leased network and data centers are subject to various points of failure. Problems with cooling equipment, generators, uninterruptible power supply, routers, switches, or other equipment, whether or not within our control, could result in service interruptions for our customers as well as equipment damage. Because our services do not require geographic proximity of our data centers to our customers, our infrastructure is consolidated into a few large data center facilities. Any failure or downtime in one of our data center facilities could affect a significant percentage of our customers. The total destruction or severe impairment of any of our data center facilities could result in significant downtime of our services and the loss of customer data. Because our ability to attract and retain customers depends on our ability to provide customers with highly reliable service, even minor interruptions in our service could harm our reputation. Additionally, in connection with the expansion or consolidation of our existing data center facilities from time to time, there is an increased risk that service interruptions may occur as a result of server relocation or other unforeseen construction-related issues.

We have experienced interruptions in service in the past. While we have not experienced a material increase in customer attrition following these events, the harm to our reputation is difficult to assess. We have taken and continue to take steps to improve our infrastructure to prevent service interruptions, including upgrading our electrical and mechanical infrastructure. However, service interruptions continue to be a significant risk for us and could materially impact our business.

Any future service interruptions could:

cause our customers to seek service credits, or damages for losses incurred;
require us to replace existing equipment or add redundant facilities;
affect our reputation as a reliable provider of communications services;
cause existing customers to cancel or elect to not renew their contracts; or
make it more difficult for us to attract new customers.

Any of these events could materially increase our expenses or reduce our revenue, which would have a material adverse effect on our operating results.

We may be required to transfer our servers to new data center facilities in the event that we are unable to renew our leases on acceptable terms, or at all, or the owners of the facilities decide to close their facilities, and we may incur significant costs and possible service interruption in connection with doing so. In addition, any financial difficulties, such as bankruptcy or foreclosure, faced by our third-party data center operators, or any of the service providers with which we or they contract, may have negative effects on our business, the nature and extent of which are difficult to predict. Additionally, if our data centers are unable to keep up with our increasing needs for capacity, our ability to grow our business could be materially and adversely impacted.

We depend on third-party vendors for IP phones and software endpoints, and any delay or interruption in supply by these vendors would result in delayed or reduced shipments to our customers and may harm our business.

We rely on third-party vendors for IP phones and software endpoints required to utilize our service. We currently do not have long-term supply contracts with any of these vendors. As a result, most of these third-party vendors are not obligated to provide products or services to us for any specific period, in any specific quantities or at any specific price, except as may be provided in a particular purchase order. The inability of these third-party vendors to deliver IP phones of acceptable quality and in a timely manner, particularly the sole source vendors, could adversely affect our operating results or cause them to fluctuate more than anticipated. Additionally, some of our products may require specialized or high-performance component parts that may not be available in quantities or in time frames that meet our requirements.

If we do not or cannot maintain the compatibility of our communications and collaboration software with third-party applications and mobile platforms that our customers use in their businesses, our revenue will decline.

The functionality and popularity of our cloud software solutions depends, in part, on our ability to integrate our services with third-party applications and platforms, including enterprise resource planning, customer relations management, human capital management and other proprietary application suites. Third-party providers of applications and application programmable interfaces, or APIs, may change the features of their applications and platforms, restrict our access to their applications and platforms or alter the terms governing use of their applications and APIs and access to those applications and platforms in an

adverse manner. Such changes could functionally limit or terminate our ability to use these third-party applications and platforms in conjunction with our services, which could negatively impact our offerings and harm our business. If we fail to integrate our software with new third-party back-end enterprise applications and platforms used by our customers, we may not be able to offer the functionality that our customers need, which would negatively impact our ability to generate revenue and adversely impact our business.

Our services also allow our customers to use and manage our cloud software solutions on smartphones, tablets and other mobile devices. As new smart devices and operating systems are released, we may encounter difficulties supporting these devices and services, and we may need to devote significant resources to the creation, support, and maintenance of our mobile applications. In addition, if we experience difficulties in the future integrating our mobile applications into smartphones, tablets or other mobile devices or if problems arise with our relationships with providers of mobile operating systems, such as those of Apple Inc. or Google Inc., our future growth and our results of operations could suffer.

If the emerging market for cloud communications services does not continue to grow and if we do not increase our market share, our future business could be harmed.

The market for cloud communications services is evolving rapidly and is characterized by an increasing number of market entrants. As is typical of a rapidly evolving industry, the demand for and market acceptance of, cloud communications services is uncertain. Our success will depend to a substantial extent on the widespread adoption of cloud communications services as a replacement for legacy on-premise systems. Many larger organizations have invested substantial technical, personnel and financial resources to integrate legacy on-premise communications systems into their businesses and, therefore, may be reluctant or unwilling to migrate to cloud communications services such as ours. It is difficult to predict client adoption rates and demand for our solution, the future growth rate and size of the cloud communications service market, or the entry of competitive products and services. The expansion of the cloud communications services market depends on a number of factors, including the refresh rate for legacy on-premise systems, cost, performance and perceived value associated with cloud communications services, as well as the ability of providers of cloud communications solutions to address security, stability and privacy concerns. If we or other cloud communications service providers experience security incidents, loss of client data, disruptions in service or other problems, the market for cloud communications services as a whole, including our services, may be harmed. If the demand for cloud communications services fails to develop or develops more slowly than we anticipate, it could significantly harm our business.

Our success in the cloud communications market depends in part on developing and maintaining effective distribution channels. If we fail to develop and maintain these channels, it could harm our ability to increase our revenues.

A portion of our revenue is generated through our direct sales. This channel consists of sales representatives - generally consisting of inside and field-based sales representatives - that market and sell our services products to customers . Our continued success requires continuing to develop and maintain a successful direct sales organization. If we fail to do so, or if our sales agents are not successful in their sales efforts, we may be unable to meet our revenue growth targets.

A portion of our business revenue is generated through indirect channel sales. These channels consist of master agents, independent software vendors (ISVs), system integrators, value-added resellers (VARs), and service providers. We typically contract directly with the end customer and use these channel partners to identify, qualify and manage prospects throughout the sales cycle, although we also have arrangements with a number of partners who resell our services to their own customers, with whom we do not contract or contract only to a limited extent. These channels may generate an increasing portion of our revenue in the future. Our continued success requires continuing to develop and maintain successful relationships with these channel partners. If we fail to do so, or if our channel partners are not successful in their sales efforts, we may be unable to meet our revenue growth targets.

If our software fails due to defects or similar problems, and if we fail to correct any defect or other software problems, we could lose customers, become subject to service performance or warranty claims or incur significant costs.

Our customers use our service to manage important aspects of their businesses, and any errors, defects, disruptions to our service or other performance problems with our service could hurt our reputation and may damage our customers' businesses. Our services and the systems infrastructure underlying our cloud communications platform incorporate software that is highly technical and complex. Our software has contained, and may now or in the future contain, undetected errors, bugs, or vulnerabilities, which have caused, and may in the future cause, temporary service outages for some customers. Some errors in our software code may only be discovered after the code has been released. Any errors, bugs, or vulnerabilities discovered in our code after release could result in damage to our reputation, loss of users, loss of revenue, or liability for damages, any of which could adversely affect our business and financial results. We implement bug fixes and upgrades as part of our regularly scheduled system maintenance, which may lead to system downtime. Even if we are able to implement the bug fixes and upgrades in a timely manner, any history of defects, or the loss, damage or inadvertent release of confidential customer data,

could cause our reputation to be harmed, and customers may elect not to purchase or renew their agreements with us and subject us to service performance credits, warranty claims or increased insurance costs. The costs associated with any material defects or errors in our software or other performance problems may be substantial and could materially adversely affect our operating results.

Vulnerabilities to security breaches, cyber intrusions and other malicious acts could adversely impact our business.

Our operations depend on our ability to protect our network from interruption by damage from unauthorized entry, computer viruses or other events beyond our control. In the past, we may have been subject to denial or disruption of service, or DDOS, and we may be subject to DDOS attacks in the future. We cannot assure you that our backup systems, regular data backups, security protocols, DDOS mitigation and other procedures that are currently in place, or that may be in place in the future, will be adequate to prevent significant damage, system failure or data loss.

Critical to our provision of service is the storage, processing, and transmission of our customers' data, which may include confidential and sensitive information. Customers may use our services to store, process and transmit a wide variety of confidential and sensitive information such as credit card, bank account and other financial information, proprietary information, trade secrets or other data that may be protected by sector-specific laws and regulations like intellectual property laws, laws addressing the protection of personally identifiable information (or personal data in the European Union), as well as the Federal Communications Commission's, or the FCC's, customer proprietary network Information ("CPNI") rules. We may be targets of cyber threats and security breaches, given the nature of the information we store, process and transmit and the fact that we provide communications services to a broad range of businesses.

In addition, we use third-party vendors which in some cases have access to our data and our customers' data. Despite the implementation of security measures by us or our vendors, our computing devices, infrastructure or networks, or our vendors computing devices, infrastructure or networks may be vulnerable to hackers, computer viruses, worms, other malicious software programs or similar disruptive problems due to a security vulnerability in our or our vendors' infrastructure or network, or our vendors, customers, employees, business partners, consultants or other internet users who attempt to invade our or our vendors' public and private computers, tablets, mobile devices, software, data networks, or voice networks. If there is a security vulnerability in our or our vendors' infrastructure or networks that is successfully targeted, we could face increased costs, liability claims, government investigations, fines, penalties or forfeitures, class action litigation, reduced revenue, or harm to our reputation or competitive position.

Depending on the evolving nature of cyber threats, we may have to increase our investment in maintaining the security of our networks and data, and our profitability may be adversely impacted, or we may have to increase the price of our services which may make our offerings less competitive with other communications providers.

If an individual obtains unauthorized access to our network, or if our network is penetrated, our service could be disrupted and sensitive information could be lost, stolen or disclosed which could have a variety of negative impacts, including legal liability, investigations by law enforcement and regulatory agencies, exposure to fines, penalties, or forfeitures, or class action litigation, any of which could harm our business reputation and have a material negative impact on our business. In addition, to the extent we market our services as compliant with particular laws governing data privacy and security, such as Health Insurance Portability and Accountability Act and foreign data protection laws, or provide representations or warranties as to such compliance in our customer contracts, a security breach that exposes protected information may make us susceptible to a number of contractual claims as well as claims related to our marketing. It could also potentially expose us to liability to individuals impacted by such a security breach.

Many governments have enacted laws requiring companies to notify individuals of data security incidents involving certain types of personal data including CPNI. In addition, some of our customers contractually require notification of any data security compromise. Security compromises experienced by our competitors, by our customers or by us may lead to public disclosures, which may lead to widespread negative publicity. Any security compromise in our industry, whether actual or perceived, could harm our reputation, erode customer confidence in the effectiveness of our security measures, negatively impact our ability to attract new customers, cause existing customers to elect not to renew their subscriptions or subject us to third-party lawsuits, regulatory fines or other action or liability, which could materially and adversely affect our business and operating results.

In contracts with larger enterprises, we often agree to assume liability for security breaches in excess of the amount of committed revenue from the contract. In addition, there can be no assurance that any limitations of liability provisions in our contracts for a security breach would be enforceable or adequate or would otherwise protect us from any such liabilities or damages with respect to any particular claim. Also, certain classes of information, like CPNI and information subject to state data breach notification laws in the U.S., or personal data in the European Union, can expose us to liability in the form of fines, penalties and forfeitures, in addition to civil liability, if such data is breached. We cannot be sure that our existing cybersecurity

insurance will continue to be available on acceptable terms or will be available in sufficient amounts to cover one or more large claims, or that the insurer will not deny coverage as to any future claim. The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on our business, financial condition and operating results.

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 are subject to the data privacy and protection laws and regulations adopted by federal, state and foreign governmental agencies, including GDPR. Data privacy and protection is highly regulated 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 storage, use, processing, disclosure, transfer and protection of personal information, including credit card data, 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, 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.

Governmental entities, class action lawyers and privacy advocates are increasingly examining companies' data collection, processing, use, storing, sharing, transferring and transmitting or personal data and data linkable to individuals. Self-regulatory codes of conduct, enforcement actions by regulatory agencies, and lawsuits by private parties could impose additional compliance costs on us, negatively impacting our profitability, as well as subject us to unknown potential liabilities. These evolving laws, rules and practices may also curtail our current business activities which may also result in slimmer profit margins and reduce new opportunities.

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 to 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.

On July 12, 2016, the European Commission adopted the "Privacy Shield" which replaced the European Union ("EU")-U.S. Safe Harbor Framework. We are currently participating in Privacy Shield and we also rely on other methods recognized under relevant EU law to transfer personal data between the EU and the U.S. Additionally, the General Data Protection Regulation ("GDPR") became effective on May 25, 2018, and replaces the Data Protection Directive 95/46/EC. The GDPR imposes new obligations on all companies, including us, and substantially increases potential liability for all companies, including us, for failure to comply with data protection rules.

The regulatory landscape applicable to data transfers between the EU and other countries with similar data protection laws, and the U.S. remains unsettled. There is ongoing litigation in the EU, as well as calls by certain political and governmental bodies in the EU to re-evaluate data transfers between the EU and the U.S., that could negatively impact the existing legally acceptable methods for transferring data between the EU and the U.S. on which we rely as do many other companies. Moreover, while we established alternative methods to transfer data between the EU and U.S. that addressed certain legal uncertainties that previously existed, some independent data regulators have adopted the position that other forms of compliance, including the methods we rely upon now as do many other companies, are also invalid.

Like many other companies, we continue to face uncertainty with respect to the measures we have implemented. Additionally, there is continued uncertainty regarding the legality of transferring certain data between the EU and U.S. caused by: (i) ongoing litigation that could invalidate the existing method that we, along with many other companies, rely upon for compliance with relevant law; and (ii) the possibility that political and other governmental bodies may invalidate the method we, along with many other companies, rely upon to comply with relevant law. We cannot predict how or if this issue will be resolved nor can we evaluate our potential liability at this time.

Although GDPR has already gone into effect, there is still considerable uncertainty as to how to interpret and implement many of its provisions. It is particularly challenging for companies operating in the cloud services space, like us, to interpret and implement the GDPR. If we fail to properly implement the GDPR for any reason, we may be subject to fines and penalties. The GDPR may also change our business operations in ways that we cannot currently predict that could increase our operating costs, decrease our profitability, or result in increased prices for our retail offerings that may make our services less competitive. We cannot evaluate our potential liability at this time.

We could be liable for breaches of security on our website, fraudulent activities of our users, or the failure of third-party vendors to deliver credit card transaction processing services.

A fundamental requirement for operating an Internet-based, worldwide cloud software solutions and electronically billing our customers is the secure transmission of confidential information and media over public networks. Although we have developed systems and processes that are designed to protect consumer information and prevent fraudulent credit card transactions and other security breaches, failure to mitigate such fraud or breaches may subject us to costly breach notification and other mitigation obligations, class action lawsuits, investigations, fines, forfeitures or penalties from governmental agencies that could adversely affect our operating results. The law relating to the liability of providers of online payment services is currently unsettled and states may enact their own rules with which we may not comply. We rely on third-party providers to process and guarantee payments made by our subscribers up to certain limits, and we may be unable to prevent our customers from fraudulently receiving goods and services. Our liability risk will increase if a larger fraction of transactions effected using our cloud-based services involve fraudulent or disputed credit card transactions.

We may also experience losses due to subscriber fraud and theft of service. Subscribers have, in the past, obtained access to our service without paying for monthly service and international toll calls by unlawfully using our authorization codes or by submitting fraudulent credit card information. If our existing anti-fraud procedures are not adequate or effective, consumer fraud and theft of service could have a material adverse effect on our business, financial condition and operating results.

Natural disasters, war, terrorist attacks or malicious conduct could adversely impact our operations and could degrade or impede our ability to offer services.

Our cloud communications services rely on uninterrupted connection to the Internet through data centers and networks. Any interruption or disruption to our network, or the third parties on which we rely, could adversely impact our ability to provide service. Our network could be disrupted by circumstances outside of our control including natural disasters, acts of war, terrorist attacks or other malicious acts including, but not limited to, cyber-attacks. Our headquarters, global networks operations center and one of our third-party data center facilities are located in the San Francisco Bay Area, a region known for seismic activity. Should any of these events occur and interfere with our ability to operate our network even for a limited period of time, we could incur significant expenses, lose substantial amounts of revenue, suffer damage to our reputation, and lose customers. Such an event may also impede our customers' connections to our network, since these connections also occur over the Internet, and would be perceived by our customers as an interruption of our services, even though such interruption would be beyond our control. Any of these events could have a material adverse impact on our business.

Our infringement of a third party's proprietary technology could disrupt our business.

There has been substantial litigation in the communications, cloud communication services, semiconductor, electronics, and related industries regarding intellectual property rights and, from time to time, third parties may claim that we, our customers, our licensees or parties indemnified by us are infringing, misappropriating or otherwise violating their intellectual property rights. Third parties may also claim that our employees have misappropriated or divulged their former employers' trade secrets or confidential information. Our broad range of current and former technology, including IP telephony systems, digital and analog circuits, software, and semiconductors, increases the likelihood that third parties may claim infringement by us of their intellectual property rights.

During our 2017 fiscal year, we were named as defendants in two lawsuits, each brought by a non-practicing entity and alleging infringement of a single patent. During our 2016 fiscal year, we were similarly named as defendants in two lawsuits in which we were alleged to have infringed patents. We were able to settle all four lawsuits relatively quickly, although we have in the past been involved in patent infringement lawsuits that spanned several years. Certain technology necessary for us to provide our services may, in fact, be patented by other parties either now or in the future. If such technology were held under patent by another person, we would have to negotiate a license for the use of that technology, which we may not be able to negotiate at a price that is acceptable or at all. The existence of such a patent, or our inability to negotiate a license for any such technology on acceptable terms, could force us to cease using such technology and offering products and services incorporating such technology.

If we are found to be infringing on the intellectual property rights of any third-party in lawsuits or proceedings that may be asserted against us, we could be subject to monetary liabilities for such infringement, which could be material. We could also be required to refrain from using, manufacturing or selling certain products or using certain processes, either of which could have a material adverse effect on our business and operating results. From time to time, we have received, and may continue to receive in the future, notices of claims of infringement, misappropriation or misuse of other parties' proprietary rights. There can be no assurance that we will prevail in these discussions and actions or that other actions alleging infringement by us of

third-party patents will not be asserted or prosecuted against us. Furthermore, lawsuits like these may require significant time and expense to defend, may divert management's attention away from other aspects of our operations and, upon resolution, may have a material adverse effect on our business, results of operations, financial condition and cash flows.

Inability to protect our proprietary technology would disrupt our business.

We rely, in part, on trademark, copyright, and trade secret law to protect our intellectual property in the United States and abroad. We seek to protect our software, documentation, and other written materials under trade secret and copyright law, which afford only limited protection. We currently have several United States patent applications pending. We cannot predict whether such pending patent applications will result in issued patents, and if they do, whether such patents will effectively protect our intellectual property. The intellectual property rights we obtain may not be sufficient to provide us with a competitive advantage, and could be challenged, invalidated, infringed or misappropriated. We may not be able to protect our proprietary rights in the United States or internationally (where effective intellectual property protection may be unavailable or limited), and competitors may independently develop technologies that are similar or superior to our technology, duplicate our technology or design around any patent of ours.

We attempt to further protect our proprietary technology and content by requiring our employees and consultants to enter into confidentiality and assignment of inventions agreements and third parties to enter into nondisclosure agreements. These agreements may not effectively prevent unauthorized use or disclosure of our confidential information, intellectual property or technology and may not provide an adequate remedy in the event of unauthorized use or disclosure of our confidential information, intellectual property or technology.

Litigation may be necessary in the future to enforce our intellectual property rights, to determine the validity and scope of our proprietary rights or the rights of others, or to defend against claims of infringement or invalidity. Such litigation could result in substantial costs and diversion of management time and resources and could have a material adverse effect on our business, financial condition, and operating results. Any settlement or adverse determination in such litigation would also subject us to significant liability.

We also may be required to protect our proprietary technology and content in an increasing number of jurisdictions, a process that is expensive and may not be successful, or which we may not pursue in every location. In addition, effective intellectual property protection may not be available to us in every country, and the laws of some foreign countries may not be as protective of intellectual property rights as those in the United States. Additional uncertainty may result from changes to intellectual property legislation enacted in the United States and elsewhere, and from interpretations of intellectual property laws by applicable courts and agencies. Accordingly, despite our efforts, we may be unable to obtain and maintain the intellectual property rights necessary to provide us with a competitive advantage.

We may have difficulty attracting or retaining personnel with the technical skills and experience necessary to support our growth.

Companies in the cloud communications industry compete aggressively for top talent in all areas of business, but particularly sales and marketing, professional services and engineering, where employees with industry experience, technical knowledge and specialized skill sets are particularly valued. Demand can be expected to increase if cloud communications continues to gain a greater share of the global communications market. Some of our competitors may respond to these competitive pressures by increasing employee compensation, paying more on average than we pay for the same position. Any such disparity in compensation could make us less attractive to candidates as a potential employer, which in turn may make it more difficult for us to hire and retain qualified employees. Training an individual who lacks prior cloud communications experience to be successful in a sales or technical role can take months or even years.

When an employee of 8x8 leaves to work for a competitor, not only are we impacted by the loss of the individual resource, but we also face the risk that the individual will share our trade secrets with the competitor in violation of their contractual and legal obligations to us. Our competitors have in the past and may in the future target their hiring efforts on a particular department, and if we lose a group of employees to a competitor over a short time period, our day-to-day operations may be impaired. While we may have remedies available to us through litigation, they would likely take significant time and expense and divert management attention from other areas of the business.

If we increase employee compensation (beyond levels that reflect customary performance-based and/or cost-of-living adjustments) in response to competitive pressures, we may sustain greater operating losses than we predicted in the near term, and we may not achieve profitability within the timeframe we had expected, or at all.

Because our long-term growth strategy involves further expansion outside the United States, our business will be susceptible to risks associated with international operations.

An important component of our growth strategy involves the further expansion of our operations and customer base internationally. We have formed several subsidiaries outside the United States, including a Romanian subsidiary that contributes significantly to our research and development efforts. We have also acquired two UK-based companies. The risks and challenges associated with sales and other operations outside the United States are different in some ways from those associated with our operations in the United States, and we have a limited history addressing those risks and meeting those challenges. Our current international operations and future initiatives will involve a variety of risks, including:

localization of our services, including translation into foreign languages and associated expenses;
regulation of our services as traditional telecommunications services, requiring us to obtain authorizations or licenses to operate in foreign jurisdictions, or alternatively preventing us from selling our full suite of services, or any services at all, in such jurisdictions;
changes in a specific country or region's regulatory requirements, taxes, trade laws, or political or economic conditions;
more stringent regulations relating to data security and the unauthorized use of, access to, and transfer of, commercial and personal information, particularly in the EU;
differing labor regulations, especially in the EU and Latin America, where labor laws are generally more advantageous to employees as compared to the United States, including deemed hourly wage and overtime regulations in these locations;
challenges inherent in efficiently managing an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits and compliance programs;
difficulties in managing a business in new markets with diverse cultures, languages, customs, legal systems, alternative dispute systems and regulatory systems;
increased travel, real estate, infrastructure and legal compliance costs associated with international operations;
different pricing environments, longer sales cycles, longer accounts receivable payment cycles and other collection difficulties;
currency exchange rate fluctuations and the resulting effect on our revenue and expenses, and the cost and risk of entering into hedging transactions if we chose to do so in the future;
limitations on our ability to reinvest earnings from operations in one country to fund the capital needs of our operations in other countries;
laws and business practices favoring local competitors or general preferences for local vendors;
limited or insufficient intellectual property protection;
political instability or terrorist activities;
exposure to liabilities under anti-corruption and anti-money laundering laws, including the U.S. Foreign Corrupt Practices Act, the UK Bribery Act 2010 and similar laws and regulations in other jurisdictions; and
adverse tax burdens and foreign exchange controls that could make it difficult to repatriate earnings and cash.

We have limited experience in operating our business internationally, which increases the risk that any potential future expansion efforts that we may undertake will not be successful. We expect to invest substantial time and resources to expand our international operations. If we are unable to do this successfully and in a timely manner, our business and operating results could be materially adversely affected.

Acquisitions may divert our management's attention, result in dilution to our stockholders and consume resources that are necessary to sustain our business.

We have acquired several businesses in recent years. If appropriate opportunities present themselves, we may make additional acquisitions or investments or enter into joint ventures or strategic alliances with other companies. Risks commonly encountered in such transactions include:

the difficulty of assimilating the operations and personnel of the combined companies:
the risk that we may not be able to integrate the acquired services or technologies with our current services, products, and technologies;
the potential disruption of our ongoing business;
the diversion of management attention from our existing business;
the inability of management to maximize our financial and strategic position through the successful integration of the acquired businesses;
difficulty in maintaining controls, procedures, and policies;
the impairment of relationships with employees, suppliers, and customers as a result of any integration;
the loss of an acquired base of customers and accompanying revenue;
the loss of an acquired base of customers and accompanying revenue while trying to transition the customer from the legacy systems to 8x8's technology due to mismatch of the features, usability, packaging, or pricing at the renewal times;

the loss of an acquired base of customers and accompanying revenue due to failure and/or lack of maintenance/support for the legacy services and/or equipment/software/services being end of life;
additional regulatory compliance obligations and costs associated with the acquired operations;
litigation arising from or relating to the transaction;
the assumption of leased facilities, other long-term commitments or liabilities that could have a material adverse impact on our profitability and cash flow; and
the dilution to our existing stockholders from the issuance of additional shares of common stock or reduction of earnings per outstanding share in connection with an acquisition that fails to increase the value of our company.

As a result of these potential problems and risks, among others, businesses that we may acquire or invest in may not produce the revenue, earnings, or business synergies that we anticipate. For example, during our 2018 fiscal year, we discontinued marketing EasyContactNow, which we had acquired through our purchase of DXI Limited in 2015, as a stand-alone product. In addition, there can be no assurance that any potential transaction will be successfully completed or that, if completed, the acquired business or investment will generate sufficient revenue to offset the associated costs or other potential harmful effects on our business.

The United Kingdom's withdrawal from the EU may adversely impact our operations in the United Kingdom and elsewhere.

On June 23, 2016, voters in the United Kingdom approved an advisory referendum to withdraw from the EU. The timing of the proposed exit is scheduled for March 29, 2019, with a transition period expected to run through December 31, 2020. The political uncertainty that it has raised extends to regulatory uncertainty associated with the proposed exit from the EU. Since the vote to withdraw from the EU, negotiations and arrangements between the United Kingdom, the EU and other countries outside of the EU have been, and will continue to be, complex and time consuming. The potential withdrawal could adversely impact our UK subsidiary, 8x8 UK Limited (previously referred to as Voicenet Solutions Ltd.), and add operational complexities that did not previously exist. Currently, the most immediate impact may be to the relevant regulatory regimes under which 8x8 UK Limited operates, including the offering of communications services, as well as to data privacy regulations. The impact on regulatory regimes remains uncertain. For example, while the United Kingdom government has announced its intent to introduce domestic legislation that would largely reconcile United Kingdom domestic law with many EU laws, including the General Data Protection Regulation, it remains unknown what will actually occur it what the departure from the EU may mean with respect to data privacy regulation including its impact on data transfers from the EU to the United Kingdom, and vice versa, as well as data transfers from the United Kingdom to jurisdictions outside of the EU. Additionally, the impending withdrawal of the United Kingdom from the EU has resulted in significant volatility in the international financial currency markets. At this time, we cannot predict the impact that an actual exit from the EU will have on 8x8 UK Limited, the potential collateral impact it may have on our operations elsewhere including the U.S., nor its potential impact on our financial results.

Our future operating results may vary substantially from period to period and may be difficult to predict.

Our historical operating results have fluctuated significantly and will likely continue to fluctuate in the future, and a decline in our operating results could cause our stock price to fall. On an annual and a quarterly basis, there are a number of factors that may affect our operating results, some of which are outside our control. These include, but are not limited to:

changes in market demand;
the timing of customer subscriptions for our cloud software solutions;
customer cancellations;
changes in the competitive dynamics of our market, including consolidation among competitors or customers;
lengthy sales cycles and/or regulatory approval cycles;
new product introductions by us or our competitors;
extent of market acceptance of new or existing services and features;
the mix of our customer base and sales channels;
the mix of services sold;
the number of additional customers, on a net basis;
the amount and timing of costs associated with recruiting, training and integrating new employees;
unforeseen costs and expenses related to the expansion of our business, operations and infrastructure;
continued compliance with industry standards and regulatory requirements;
material security breaches or service interruptions due to cyberattacks or infrastructure failures or unavailability;
introduction and adoption of our cloud software solutions in markets outside of the United States;
changes in the recognition pattern of revenues and operating expenses as a result of new regulations, accounting principles and their interpretations, such as Financial Accounting Standards Board's Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606); and
general economic conditions.

Due to these and other factors, we believe that period-to-period comparisons of our results of operations are not meaningful and should not be relied upon as indicators of our future performance. It is possible that in some future periods our results of operations may be below the expectations of public market analysts and investors. If any of these were to occur, the price of our common stock would likely decline significantly.

In addition, changes in regulatory and accounting principles, and our interpretation of these and judgments used in applying them to our facts and circumstances, could have a material effect on our results of operations and financial condition. We also need to revise our business processes, systems and controls which requires significant management attention and may negatively affect our financial reporting obligations.

Our products must comply with industry standards, FCC regulations, state, local, country-specific and international regulations, and changes may require us to modify existing products and/or services.

In addition to reliability and quality standards, the market acceptance of telephony over broadband IP networks is dependent upon the adoption of industry standards so that products from multiple manufacturers are able to communicate with each other. Our cloud-based communications and collaboration services rely heavily on communication standards such as SIP, MGCP and network standards such as TCP/IP and UDP to interoperate with other vendors' equipment. There is currently a lack of agreement among industry leaders about which standard should be used for a particular application, and about the definition of the standards themselves. These standards, as well as audio and video compression standards, continue to evolve. We also must comply with certain rules and regulations of the FCC regarding electromagnetic radiation and safety standards established by Underwriters Laboratories, as well as similar regulations and standards applicable in other countries. Standards are frequently modified or replaced. As standards evolve, we may be required to modify our existing products or develop and support new versions of our products. We must comply with certain federal, state and local requirements regarding how we interact with our customers, including marketing practices, consumer protection, privacy, and billing issues, the provision of 9-1-1 or other international emergency services, including location data and the quality of service we provide to our customers. The failure of our products and services to comply, or delays in compliance, with various existing and evolving standards could delay or interrupt volume production of our communications and collaboration services, subject us to fines or other imposed penalties, or harm the perception and adoption rates of our service, any of which would have a material adverse effect on our business, financial condition or operating results.

For example:

Regulation of our services as telecommunications services may require us to obtain authorizations or licenses to operate in foreign jurisdictions and comply with legal requirements applicable to traditional telephony providers. Regulators around the world, including those in the European Union generally do not distinguish between our cloud-based communications services and traditional telephony services. By entering additional international markets we may subject ourselves to significant regulation from foreign telecommunications authorities, including obligations to obtain telecommunications licenses and authorizations, complying with consumer protection laws and cooperating with local law enforcement authorities. This regulation impacts our ability to differentiate ourselves from incumbent service providers and imposes substantial compliance costs on us. Regulation restricts our ability to compete and, in some jurisdictions, it may restrict how we are able to expand our service offerings. Moreover, the regulatory environment is constantly evolving and changes to the applicable regulations may have an adverse effect upon our business by imposing additional compliance costs, modifying our technology and operations and in general affecting our profitability.
Reform of federal and state Universal Service Fund programs and payment of regulatory and other fees in international markets, could increase the cost of our service to our customers diminishing or eliminating our pricing advantage. The FCC and a number of states are considering reform or other modifications to Universal Service Fund programs. Furthermore, the FCC has ruled that states can require us to contribute to state Universal Service Fund programs. A number of states already require us to contribute, while others are actively considering extending their programs to include the services we provide. At the same time, foreign regulatory authorities may impose regulatory fees or other contributions on our services. Should the FCC, states or foreign regulators adopt new contribution mechanisms or otherwise modify contribution obligations that increase our contribution burden, we will either need to raise the amount we currently collect from our customers to cover these obligations or absorb the costs, which would reduce our profit margins. We currently pass-through Universal Service Fund contributions and certain other fees to our customers, which may result in our services becoming less competitive as compared to those provided by others.
We may become subject to state regulation for certain service offerings. Certain states take the position that offerings by VoIP providers, like us, are intrastate and therefore subject to state regulation. These states argue that if the beginning and end points of communications are known, and if some of these communications occur entirely within the boundaries of a state, the state can regulate that offering. We believe that the FCC has preempted states from regulating VoIP services like ours in the same manner as providers of traditional telecommunications services. We cannot predict how this issue will be resolved or its impact on our business at this time.

The FCC adopted rules concerning call completion rates to rural areas of the United States. It is possible that we, like other providers in the communications marketplace, may be subject to fines or other enforcement actions should the FCC determine that our call completion rates to rural areas are, or have been, unacceptable.
The FCC and foreign regulators may require providers like us to comply with regulations related to how we present bills to customers. The adoption of such obligations may require us to revise our bills and may increase our costs of providing service which could either result in price increases or reduce our profitability.
There may be risk associated with our ability to comply with U.S. and foreign rules concerning disabilities access requirements and the FCC and foreign regulators may expand disabilities access requirements to additional services we offer. We cannot predict whether we will be subject to additional accessibility requirements or whether any of our service offerings that are not currently subject to disabilities access requirements will be subject to such obligations. It is possible that we, like other providers in the communications marketplace, may be subject to fines or other enforcement actions if we are found not to be in compliance with the FCC's and foreign accessibility requirements.
There may be risks associated with our ability to comply with requirements of the Telecommunications Relay Service and similar foreign statutes. The FCC requires providers of interconnected VoIP services to comply with certain regulations pertaining to people with disabilities and to contribute to the Telecommunications Relay Services fund. We are also required to offer 7-1-1 abbreviated dialing for access to relay services. At the same time, several foreign regulators also mandate accessibility requirements for people with disabilities. It is possible that we, like other providers in the communications marketplace, may be subject to fines or other enforcement actions if we are found not to be in compliance with these requirements, including the FCC's 7-1-1 abbreviated dialing obligations.
There may be risks associated with our ability to comply with the requirements of U.S. and foreign law enforcement agencies. The FCC requires all interconnected VoIP providers to comply with the Communications Assistance for Law Enforcement Act, or CALEA. Similarly, foreign regulatory frameworks require VoIP providers to comply with local assistance to law enforcement laws and cooperation with local authorities in conducting wiretaps, pentraps and other surveillance activities. The FCC and other regulators may allow VoIP providers to comply with CALEA and similar statutes through the use of a service provided by a trusted third-party with the ability to extract call content and call-identifying information from a VoIP provider's network. Regardless of our reliance on a third party for compliance, it is possible that we, like other providers in the communications marketplace, may be subject to fines or other enforcement actions if we are found not to be in compliance with our obligations under CALEA or other similar assistance with law enforcement statutes.
U.S. and foreign regulations may require us to deploy an E-911 or access to emergency service that automatically determines the location of our customers. In 2007, the FCC released a Notice of Proposed Rulemaking, in which it tentatively concluded that all interconnected VoIP providers that allow customers to use their service in more than one location (nomadic VoIP service providers, such as us), must utilize an automatic location technology that meets the same accuracy standards which apply to providers of commercial mobile radio services (mobile phone service providers). Since then, the FCC has been conducting proceedings and inquiries concerning the implementation of such a rule, including possible changes to the manner providers provision E-911 services on mobile applications. At the same time, foreign regulatory authorities, have conducted similar proceedings mandating VoIP providers in the applicable jurisdiction to provide caller location data when completing calls to the local emergency service numbers. The outcome of these proceedings cannot be determined at this time and we may or may not be able to comply with any such obligations that may be adopted. At present, we currently have no means to automatically identify the physical location of one of our customers on the Internet. We cannot guarantee that emergency calling service consistent with the FCC's order and other similar foreign orders will be available to all of our customers, especially those accessing our services from outside of the United States. Compliance with these obligations could result in service price increases and could have a material adverse effect on our business, financial condition or operating results.
The FCC adopted orders reforming the system of payments between regulated carriers that we partner with to interface with the public switch telephone network. The FCC reformed the system under which regulated providers of telecommunications services compensate each other for various types of traffic, including VoIP traffic that terminates on the PSTN and applied new call signaling requirements to VoIP providers and other service providers. The FCC's new rules require, among other things, interconnected VoIP providers, like us, that originate interstate or intrastate traffic destined for the PSTN, to transmit the telephone number associated with the calling party to the next provider in the call path. Intermediate providers must pass calling party number or charge number signaling information they receive from other providers unaltered, to subsequent providers in the call path. While we believe we are in compliance with this rule, to the extent that we pass traffic that does not have appropriate calling party number or charge number information, we could be subject to fines, cease and desist orders, or other penalties. The FCC's Order reforming payments between carriers for various types of traffic may result in increasing the payments we make to underlying carriers to access the PSTN, which may result in us increasing the retail price of our service, potentially making our offering less competitive with traditional providers of telecommunications services, or may reduce our profitability.

Our emergency and E-911 calling services are different from those offered by traditional wireline telephone companies and may expose us to significant liability.

There may be risks associated with limitations associated with E-911 and other emergency dialing with the 8x8 service.

Both our emergency calling service and our E-911 calling service are different, in significant respects, from the emergency calling services offered by traditional wireline telephone companies in the United States and abroad. In each case, the differences may cause significant delays, or even failures, in callers' receipt of the emergency assistance they need.

The FCC may determine that our nomadic emergency calling service does not satisfy the requirements of its VoIP E-911 order because, in some instances, our nomadic emergency calling service requires that we route an emergency call to a national emergency call center instead of connecting our customers directly to a local public-safety answering point through a dedicated connection and through the appropriate selective router. Similarly, foreign telecommunications regulators may determine that our nomadic emergency calling service does not meet applicable local emergency dialing and location requirements.

Delays our customers may encounter when making emergency services calls and any inability of the answering point to automatically recognize the caller's location or telephone number can result in life threatening consequences. Customers may, in the future, attempt to hold us responsible for any loss, damage, personal injury or death suffered as a result of any failure of our E-911 services and other emergency dialing services.

The New and Emerging Technologies 911 Improvement Act of 2008 provides public safety entities, interconnected VoIP providers and others involved in handling 911 calls the same liability protections when handling 911 calls from interconnected VoIP users as from mobile or wired telephone service users. The applicability of the liability protections to our national call center service is unclear at the present time.

Alleged or actual failure of our solutions to comply with regulations governing outbound dialing, including regulations under the Telephone Consumer Protection Act of 1991 and similar foreign statutes, could harm our business, financial condition, results of operations and cash flows.

The legal and contractual environment surrounding calling consumers and wireless phone numbers is complex and evolving. In the United States, two federal agencies, the Federal Trade Commission ("FTC") and the FCC, and various states have enacted laws including, at the federal level, the Telephone Consumer Protection Act of 1991, or TCPA, that restrict the placing of certain telephone calls and texts to residential and wireless telephone subscribers by means of automatic telephone dialing systems, prerecorded or artificial voice messages and fax machines. Internationally, we are also subject to similar laws imposing limitations on marketing calls to wireline and wireless numbers and compliance with do not call rules. These laws require companies to institute processes and safeguards to comply with these restrictions. Some of these laws can be enforced by the FTC, FCC, State Attorneys General, foreign regulators or private party litigants. In these types of actions, the plaintiff may seek damages, statutory penalties, costs and/or attorneys' fees.

It is possible that the FTC, FCC, foreign regulators, private litigants or others may attempt to hold our customers, or us as a software provider, responsible for alleged violations of these laws. In the event that litigation is brought, or fines are assessed, against us, we may not successfully enforce or collect upon any contractual indemnities we may have from our customers. Additionally, any changes to these laws or their interpretation that further restrict calling consumers, any adverse publicity regarding the alleged or actual failure by companies, including our customers and competitors, to comply with such laws, or any governmental or private enforcement actions related thereto, could result in the reduced use of our solution by our clients and potential clients, which could harm our business, financial condition, results of operations and cash flows.

Failure of our back-end information technology systems to function properly could result in significant business disruption.

We rely on IT systems to manage numerous functions of our internal operations, some of which were internally developed IT systems that were not fully integrated among themselves, or with our third-party ERP system. These IT systems require specialized knowledge for which we have to train new personnel, and if we were to experience an unusual increase in attrition of our IT personnel, we may not be adequately equipped to respond to an IT system failure. These IT systems were developed at a time when we provided services primarily to SMB customers and they may not be able to accommodate the requirements of larger enterprises as effectively as more modern and flexible solutions. Continued reliance on these systems may harm us competitively and impede our efforts to sell to larger enterprises.

Although we are in the process of upgrading a number of our IT systems, including our ERP software, our quote-to-cash software and our customer service and support software, we face risks relating to these transitions. For example, we may incur greater costs than we anticipate to train our personnel on the new systems; we may experience more errors in our records during the transition; and we may be delayed in meeting our various reporting obligations. To the extent any of these risks or events impact our customer service, we may experience an increase in customer attrition, which could have a material adverse impact on our results of operations.

Our inability to use software licensed from third parties, or our use of open source software under license terms that interfere with our proprietary rights, could disrupt our business.

Our technology platform incorporates software licensed from third parties, including some software, known as open source software, which we use without charge. Although we monitor our use of open source software, the terms of many open source licenses to which we are subject have not been interpreted by U.S. or foreign courts, and there is a risk that such licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to provide our platform to our customers. In the future, we could be required to seek licenses from third parties in order to continue offering our platform, which licenses may not be available on terms that are acceptable to us, or at all. Alternatively, we may need to re-engineer our platform or discontinue use of portions of the functionality provided by our platform. In addition, the terms of open source software licenses may require us to provide software that we develop using such software to others on unfavorable license terms. Our inability to use third-party software could result in disruptions to our business, or delays in the development of future offerings or enhancements of existing offerings, which could impair our business.

Taxing authorities may successfully assert that we should have collected or in the future should collect sales and use, value added, or similar taxes, and we could be subject to liability with respect to past or future sales, which could adversely affect our business.

The applicability of state and local taxes, fees, surcharges or similar taxes to our services is complex, ambiguous and subject to interpretation and change. In the United States, for example, we collect state and local taxes, fees and surcharges based on our understanding of the applicable laws in the relevant jurisdiction. The taxing authorities may challenge our interpretation of the laws and may assess additional taxes, penalties and interests which could have adverse effects on the results of operations and, to the extent we pass these through to our customers, demand for our services. We currently file more than 1,000 state and municipal tax returns monthly. Periodically, we have received inquiries from state and municipal taxing agencies with respect to the remittance of state or municipal taxes, fees or surcharges. Currently, several jurisdictions are conducting audits of 8x8. As of September 30, 2018, we have accrued for state or municipal taxes, fees or surcharges that we believe are required to be remitted.

We have accrued a contingent liability of approximately $5.7 million as our best estimate of the probable amount of taxes, fees and surcharges that may be imposed by states, municipalities and other taxing jurisdictions on our services to date. Historically, the amounts that have been remitted for uncollected state, municipal and other similar indirect taxes, fees, or surcharges have been within the accruals we established. We adjust our accrual when facts relating to specific exposures warrant such adjustment. This accrued contingent liability is based on our analysis of several factors, including the location where our services are used, our nexus to that jurisdiction for tax purposes, and the taxability of our services under the rules and regulations in each state or municipality (as these may be interpreted by regulatory and judicial authorities from time to time). While we have accrued for these potential liabilities based on our analyses and best estimates at the time, state, municipal and other taxing and regulatory authorities may challenge our position, which could result in us being liable for sales and use taxes, fees, or surcharges, as well as related penalties and interest, above our accrued contingent liability. To the extent we collect or otherwise recover these taxes, fees or surcharges from our customers, our services may become less competitive, our churn rate may increase, and our revenue from new and existing customers may be materially adversely affected.

Our ability to use our net operating losses or research tax credits to offset future taxable income may be subject to certain limitations.

As of March 31, 2018, we had net operating loss ("NOL") carryforwards for federal and state income tax purposes of $157.6 million and $27.5 million, respectively, which expire at various dates between 2029 and 2039. We also had research and development credit carryforwards for federal and California tax purposes of approximately $7.2 million and $9.1 million, respectively. The federal income tax credit carryforwards related to research and development will expire at various dates between 2021 and 2038, while the California income tax credits will carry forward indefinitely. Utilization of our NOL and tax credit carryforwards can become subject to a substantial annual limitation due to the ownership change limitations provided by Section 382 of the Internal Revenue Code and similar state provisions. A Section 382 ownership change generally occurs if one

or more stockholders or groups of stockholders who own at least 5% of the stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. Similar rules may apply under state tax laws. Such an ownership change, or any future ownership change, could have a material effect on our ability to utilize the net operating loss or research credit carryforwards. In addition, under the Tax Cuts and Jobs Act, or the Tax Act, the amount of NOLs that we are permitted to deduct in any taxable year is limited to 80% of the taxable income in such year. There is a risk that due to changes under the Tax Act, regulatory changes, or other unforeseen reasons, the existing NOLs could expire or otherwise be unavailable to offset future income tax liabilities, which could have a material impact on our net income (loss) in future periods.

If we fail to establish and maintain proper and effective internal control over financial reporting, our operating results and our ability to operate our business could be harmed.

The Sarbanes-Oxley Act of 2002 requires, among other things, that we establish and maintain internal control over financial reporting and disclosure controls and procedures. In particular, under the current rules of the Securities and Exchange Commission ("SEC"), we must perform system and process evaluation and testing of our internal control over financial reporting to allow management to report on the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. Our independent registered public accounting firm is also required to report on our internal control over financial reporting. Our and our auditor's testing may reveal deficiencies in our internal control over financial reporting that are deemed to be material weaknesses and render our internal control over financial reporting ineffective. We have incurred and we expect to continue to incur substantial accounting and auditing expense and expend significant management time in complying with the requirements of Section 404. If we are not able to comply with the requirements of Section 404, or if we or our independent registered public accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of our stock could decline and we could be subject to investigations or sanctions by the SEC, The NYSE Stock Market, or other regulatory authorities, or subject to litigation. To the extent any material weaknesses in our internal control over financial reporting are identified in the future, we could be required to expend significant management time and financial resources to correct such material weaknesses or to respond to any resulting regulatory investigations or proceedings.

Changes in financial accounting standards or practices may cause adverse, unexpected financial reporting fluctuations and affect our reported operating results.

The accounting rules and regulations that we must comply with are complex and subject to interpretation by the Financial Accounting Standards Board (the "FASB"), the SEC and various bodies formed to promulgate and interpret appropriate accounting principles. Recent actions and public comments from the FASB and the SEC have focused on the integrity of financial reporting and internal controls. In addition, many companies' accounting policies are being subjected to heightened scrutiny by regulators and the public. Further, the accounting rules and regulations are continually changing in ways that could materially impact our financial statements.

For example, in May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Accounting Standards Codification 606 or ASC 606), which replaces numerous requirements in U.S. GAAP and provide companies with a single revenue recognition model for recognizing revenue from contracts with customers. The impact of adopting the new standard on our total revenues and deferred revenue has not been and is not expected to be material. With the adoption of ASC 606 we also adopted ASC 340-40, Other Assets and Deferred Costs - Contracts with Customers, which requires the deferral of incremental costs of obtaining a customer contract which, under the old guidance, were expensed as incurred. Adoption of the new standard resulted in changes to our accounting policies for revenue recognition and deferred commissions.

We cannot predict the impact of future changes to accounting principles or our accounting policies on our financial statements going forward, which could have a significant effect on our reported financial results and could affect the reporting of transactions completed before the announcement of the change. In addition, if we were to change our critical accounting estimates, including those related to the recognition of subscription revenue and other revenue sources, our operating results could be significantly affected.

We may not be able to secure financing on favorable terms, or at all, to meet our future capital needs.

We may need to pursue financing in the future to make expenditures and/or investments to support the growth of our business (whether through acquisitions or otherwise) and may require additional capital to pursue our business objectives and respond to new competitive pressures, pay extraordinary expenses such as litigation settlements or judgments or fund growth, including through acquisitions. Additional funds, however, may not be available when we need them on terms that are acceptable to us, or at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to grow and support our business and to respond to business challenges could be significantly limited.

Decreasing telecommunications rates and increasing regulatory charges may diminish or eliminate our competitive pricing advantage versus legacy providers.

Decreasing telecommunications rates may diminish or eliminate the competitive pricing advantage of our services, while increased regulation and the imposition of additional regulatory funding obligations at the federal, state, local and foreign level could require us to either increase the retail price for our services, thus making us less competitive, or absorb such costs, thus decreasing our profit margins. International and domestic telecommunications rates have decreased significantly over the last few years in most of the markets in which we operate, and we anticipate these rates will continue to decline in all of the markets in which we do business or expect to do business. Users who select our services to take advantage of the current pricing differential between traditional telecommunications rates and our rates may switch to traditional telecommunications carriers if such pricing differentials diminish or disappear, and we will be unable to use such pricing differentials to attract new customers in the future. Continued rate decreases would require us to lower our rates to remain competitive in the United States and abroad and would reduce or possibly eliminate any gross profit from our services. In addition, we may lose subscribers for our services.

Adverse economic conditions may harm our business.

Our business depends on the overall demand for cloud communications services and on the economic health of our current and prospective customers, which consist primarily of businesses (both for-profit and non-profit). If economic conditions deteriorate globally or in the jurisdictions that account for a material amount of our revenue (in particular, the United States, Europe and Canada, Australia), the size of our target market may decrease, and existing and prospective customers may delay or reduce their cloud communications spending. If our existing and prospective customers experience economic hardship, this could reduce the demand for our cloud services, delay and lengthen sales cycles, force us to lower the prices for our services, and lead to slower growth or even a decline in our revenues, operating results and cash flows.

We currently rely on small and medium-sized businesses for a significant portion of our revenue. Customers in this market generally have more limited financial resources, and may be affected by economic downturns, to a greater extent than larger or more established businesses. If small and medium-sized businesses experience financial hardship as a result of a weak economy, the demand for our services could be materially and adversely affected, and our revenue may not increase from period to period as rapidly as our competitors who have less dependence on sales to these segments, or may even decrease from period to period.

Certain provisions in our charter documents and Delaware law could discourage takeover attempts.

Our restated certificate of incorporation and amended and restated bylaws contain provisions that could have the effect of delaying or preventing changes in control or changes in our management without the consent of our board of directors, including, among other things:

no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;
the ability of our board of directors to issue shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;
the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of our board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors;
a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders;
the requirement that a special meeting of stockholders may be called only by a majority vote of our Board of Directors or by stockholders holdings shares of our common stock representing in the aggregate a majority of votes then outstanding, which could delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors;
the ability of our board of directors, by majority vote, to amend our amended and restated bylaws, which may allow our board of directors to take additional actions to prevent a hostile acquisition and inhibit the ability of an acquirer to amend our amended and restated bylaws to facilitate a hostile acquisition; and
advance notice procedures with which stockholders must comply to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders' meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer's own slate of directors or otherwise attempting to obtain control of us.

We are also subject to certain anti-takeover provisions under the General Corporation Law of the State of Delaware, or the DGCL. Under Section 203 of the DGCL, a corporation may not, in general, engage in a business combination with any holder of 15% or more of its capital stock unless the holder has held the stock for three years or (i) our board of directors approves the transaction prior to the stockholder acquiring the 15% ownership position, (ii) upon consummation of the transaction that resulted in the stockholder acquiring the 15% ownership position, the stockholder owns at least 85% of the outstanding voting stock (excluding shares owned by directors or officers and shares owned by certain employee stock plans) or (iii) the transaction is approved by the board of directors and by the stockholders at an annual or special meeting by a vote of 66 2/3% of the outstanding voting stock (excluding shares held or controlled by the interested stockholder). These provisions in our restated certificate of incorporation and amended and restated bylaws and under Delaware law could discourage potential takeover attempts.

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

None.

ITEM 5. OTHER INFORMATION

On November 5, 2018, the Company entered into a new employment agreement with Mary Ellen Genovese, our former Chief Financial Officer, in connection with her transitional employment as our Managing Director of European Operations, effective November 1, 2018. Pursuant to the employment agreement, Ms. Genovese shall serve as Managing Director of European Operations through May 31, 2019 (during which time she will be based primarily in the United Kingdom), and thereafter to continue to work for the Company on a part-time basis through September 30, 2019. The new employment agreement supersedes her prior offer letter, dated October 6, 2014, as amended, in its entirety.

Ms. Genovese is to be paid a salary of $290,000 per annum in her new role, and she is entitled to participate in the Company's Management Incentive Bonus Plan at an annual target of 50% of her salary while she continues to work for 8x8 on a full-time basis. In the event that Ms. Genovese's employment is terminated by 8x8 without cause prior to September 30, 2019, any unvested shares of common stock subject to her then-outstanding restricted stock unit awards and option awards will vest upon termination to the extent that they would have vested if she had remained employed through September 30, 2019, and, with respect to that portion of her outstanding performance share unit awards that would have vested or expired on or before September 30, 2019, she will be entitled to receive a number of shares of common stock based on a performance period that ends on the date of the termination of her employment.

Pursuant to the offer letter, Ms. Genovese will not receive any additional equity awards in her new position, and she will not be entitled to participate in 8x8's Executive Change-in-Control and Severance Policies. She will be entitled to receive standard health, dental, vision, life and disability benefits for the duration of her employment.

ITEM 6. EXHIBITS

Exhibit Number	Description
10.2	Amended and Restated 2017 Executive Change-In-Control and Severance Policy.
10.37	Employment Agreement dated August 27, 2018, as amended October 23, 2018, between the Company and Matthew Zinn.
10.38	Employment Agreement dated September 25, 2018, as amended October 23, 2018, between the Company and Steven Gatoff.
10.39	Employment Agreement dated November 5, 2018, between the Company and Mary Ellen Genovese.
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.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

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: November 7, 2018

8X8, INC.

(Registrant)

By: /s/ Steven Gatoff

Steven Gatoff

Chief Financial Officer
(Principal Financial and Duly Authorized Officer)

Q2 2019 Exhibit 10.2

Exhibit 10.2

8X8, INC.

2017 EXECUTIVE CHANGE-IN-CONTROL

AND SEVERANCE POLICY

(As Amended and Restated effective January 31, 2019)

Table of Contents

		Page

1.	INTRODUCTION	2
2.	DEFINITIONS	2
3.	CHANGE-IN-CONTROL BENEFITS	5
4.	CHANGE-IN-CONTROL SEVERANCE BENEFITS	6
5.	SEVERANCE BENEFITS NOT IN CONNECTION WITH A CHANGE-IN-CONTROL	6
6.	CONDITIONS FOR PAYMENT OF SEVERANCE	7
7.	COORDINATION WITH OTHER BENEFITS	7
8.	LIMITATION ON BENEFITS	8
9.	ADMINISTRATION	8
10.	AMENDMENT OR TERMINATION	9
11.	NOTICES	9
12.	SECTION 409A	9
13.	MISCELLANEOUS	10

8X8, INC.
2017 EXECUTIVE CHANGE-IN-CONTROL
AND SEVERANCE POLICY

(As Amended and Restated effective January 31, 2019)
1. INTRODUCTION

This 2017 Executive Change-in-Control and Severance Policy (the "Policy") was established by 8x8, Inc., effective as of October 1, 2017, to provide for the payment of certain benefits in connection with certain terminations of an Executive's employment, including in connection with a potential Change-in-Control of the Company. The Policy was subsequently amended and restated effective as of January 31, 2019 (the "Amendment Effective Date").

2. DEFINITIONS

2.1 Administrator . For purposes of this Policy, "Administrator" means the person(s) designated by the Board or the Committee as the administrator of this Policy.

2.2 Board. For purposes of this Policy, the "Board" means the Board of Directors of the Company.

2.3 Cause . For purposes of this Policy, "Cause" means Executive's:

willful failure to attend to Executive's duties that is not cured by Executive within 30 days of receiving written notice from the CEO (or, in the case of the CEO, from the Board) specifying such failure;
material breach of Executive's employment agreement that is not cured by Executive within 30 days of receiving written notice from the CEO (or, in the case of the CEO, from the Board) specifying such breach;
conviction of (or plea of guilty or nolo contendere to) any felony or a misdemeanor involving theft, embezzlement, dishonesty or moral turpitude; or
misconduct resulting in material harm to the Company's business or reputation, including fraud, embezzlement, misappropriation of funds or a material violation of the Executive's Confidential Information, Non-Disclosure and Invention Assignment Agreement.

2.4 Change-in-Control . For purposes of this Policy, "Change-in-Control" means the consummation of any of the following corporate transactions:

an acquisition in one or more related transactions of 45% or more of the Company's common stock or voting securities by a "person" (as defined in Sections 13(d) and 14(d) of the Securities Exchange Act, but excluding the Company, any employee benefit plan of the Company and any corporation controlled by the Company's stockholders) or multiple "persons" acting as a group;
a complete liquidation or dissolution of the Company;

a sale, transfer or other disposition of all or substantially all of the Company's assets; or
a merger, consolidation or reorganization (collectively, a "Business Combination") other than a Business Combination in which (i) the stockholders of the Company receive 50% or more of the stock of the corporation resulting from the Business Combination and (ii) at least a majority of the board of directors of such resulting corporation were incumbent directors of the Company immediately prior to the consummation of the Business Combination and (iii) after which no individual, entity or group (excluding any corporation or other entity resulting from the Business Combination or any employee benefit plan of such corporation or of the Company) who did not own 45% or more of the stock of the resulting corporation or other entity immediately before the Business Combination owns 45% or more of the stock of such resulting corporation or other entity.

2.5 Code . For purposes of this Policy, "Code" means the Internal Revenue Code of 1986, as amended.

2.6 Committee . For purposes of this Policy, "Committee" means the Compensation Committee of the Board.

2.7 Company . For purposes of this Policy, "Company" means 8x8, Inc., a Delaware corporation, and any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of 8x8, Inc.

2.8 Constructive Termination . For purposes of this Policy, "Constructive Termination" means the termination of Executive's employment (a) by the Company other than for Cause or Disability or (b) by the Executive for Good Reason.

2.9 Disability . For purposes of this Policy, "Disability" means a physical or mental impairment for which the Executive qualifies for benefits under the Company's long-term disability program, as it may be amended from time to time.

2.10 Equity Award . For purposes of this Policy, "Equity Award" means each incentive award relating to the Company's common stock (whether stock options, stock appreciation rights, shares of restricted stock, restricted stock units, performance shares, performance units or other similar awards).

2.11 Executive . For purposes of this Policy, "Executive" means any one of the following individuals: (a) the Company's Chief Executive Officer; (b) any employee classified by the Company as an Executive Vice President, including (as of October 23, 2018) the Company's Chief Technology Officer, the Company's Chief Marketing Officer, the Company's Chief Product Officer and the Company's Chief Financial Officer; and (c) any employee classified by the Company as a Senior Vice President.

2.12 Good Reason . For purposes of this Policy, "Good Reason" means the occurrence of any of the following conditions without Executive's written consent, but only if such condition is reported by the Executive within 90 days of Executive's knowledge that such condition has occurred and remains uncured 30 days after written notice from Executive to the Board of said condition:

a material reduction in Executive's then-current base salary or annual target bonus (expressed as a percentage of Executive's then-current base salary), except for a reduction proportionate to reductions concurrently imposed on all other members of the Company's executive management;

in Connection with a Change-in-Control, a material reduction in Executive's then-current base salary or annual target bonus (expressed as a percentage of Executive's then-current base salary);

a material reduction in Executive's then-current employee benefits package, taken as a whole, except for a reduction proportionate to reductions concurrently imposed on all other members of the Company's executive management;

in Connection with a Change-in-Control, a material reduction in Executive's then-current employee benefits package, taken as a whole, both in terms of the amount of benefits provided and the level of Executive's participation relative to other participants;

a material reduction in Executive's responsibilities with respect to the Company's overall operations;

as to the Chief Executive Officer, a requirement for the Chief Executive Officer to report to another officer as opposed to the Company's Board; or a failure to nominate the Chief Executive Officer for election as a Board member if at the proper time for nomination, the Chief Executive Officer is a Board member;

a material breach by the Company of any material provision of Executive's employment agreement;

a requirement that Executive relocate Executive's Company office (i) to a location more than 35 miles from Executive's then-current Company office location, unless such office relocation results in the distance between the new office and Executive's home being closer or equal to the distance between the prior office and Executive's home or (ii) that is more than 50 miles from Executive's home, and such relocation results in the distance between the new office and Executive's home being at least 15 miles further than the distance between the prior office and Executive's home; or

a failure of a successor or transferee to assume the Company's obligations under this Policy.

2.13 In Connection with a Change-in-Control . For purposes of this Policy, a termination of Executive's employment or the occurrence of any other condition will be "in Connection with a Change-in-Control" if Executive's employment terminates or such other condition occurs at any time within three months before, on or within 12 months following a Change-in-Control.

2.14 Transaction Price . For purposes of this Policy, "Transaction Price" means the per share consideration paid pursuant to the transaction(s) constituting the Change-in-Control.

2.15 Stock Performance-Based Equity Award . For purposes of this Policy, "Stock Performance-Based Equity Award" means each Equity Award with vesting conditioned all or in part on the per share fair market value of the Company's common stock exceeding one or more target levels.

2.16 TSR Performance-Based Equity Award . For purposes of this Policy, "TSR Performance-Based Equity Award" means each Equity Award with vesting conditioned all or in part on the relative appreciation of the per share fair market value of the Company's common stock versus one or more other publicly-traded securities.

2.17 Time-Based Equity Award . For purposes of this Policy, "Time-Based Equity Award" means each Equity Award that generally vests based only on Executive's service to the Company over a specified time period.

3. CHANGE-IN-CONTROL BENEFITS

If Executive is either employed at the time of a Change-in-Control or experiences a Constructive Termination in Connection with a Change-in-Control, Executive will receive the following change-in-control benefits from the Company:

3.1 Stock Performance-Based Equity Awards . Executive will be deemed to have satisfied the performance vesting condition for 100% of Company shares covered by Executive's outstanding Stock Performance-Based Equity Award(s) that (i) were granted prior to the Change-in-Control and (ii) have a target Company share price for vesting purposes equal to or less than the Transaction Price. The effective date of the foregoing vesting credit will be the date of the Change-in-Control. Any such Stock Performance-Based Equity Awards will continue to vest in accordance with any service-based vesting condition specified in the award agreement(s), except as otherwise provided by Article 4 of this Policy.

3.2 TSR Performance-Based Equity Awards . Executive will be deemed to have satisfied the performance vesting condition for that percentage of the Company shares covered by Executive's TSR Performance-Based Equity Award determined by applying the formula set forth in the award agreement as if (a) the last day of each performance measurement period specified in such agreement were the date of the Change-of-Control and (b) the fair market value of the Company's common stock on such date were the Transaction Price provided, however, that no vesting credit under this Section 3.2 will apply to Executive's TSR Performance-Based Award(s) first granted after the Change-in-Control. The effective date of the foregoing vesting credit will be the date of the Change-in-Control. Any such TSR Performance-Based Equity Awards will continue to vest in accordance with any service-based vesting condition specified in the award agreement(s), except as otherwise provided by Article 4 of this Policy.

4. CHANGE-IN-CONTROL SEVERANCE BENEFITS

If Executive experiences a Constructive Termination in Connection with a Change-in-Control, Executive will receive the following severance benefits from the Company.

4.1 Earned Amounts . Executive will receive all compensation that is earned but unpaid as of the date of termination, including salary, commissions and accrued but unused paid time off and vacation.

4.2 Cash Severance . Executive will receive a single lump sum severance payment equal to the sum of the percentage of Base Salary and Bonus set forth in the Benefit Schedules applicable to Executive's job title tier. This lump sum payment will be made within 60 days following termination of employment.

4.3 Time-Based Equity Awards . Executive will vest in 100% of Executive's outstanding Time-Based Equity Awards effective as of the Executive's date of termination (or, if later, the date of the Change-in-Control); provided, however, that Executive will vest in only 50% of Executive's outstanding and then unvested Time-Based Equity Awards if the date of termination or the date of the Change-in-Control (whichever is later) is prior to the 12-month anniversary of Executive's date of hire.

4.4 Benefits . For a period of 12 months following the date of termination, (i) Executive will on a monthly basis receive reimbursement of the full premium amount (less withholding taxes) charged under the Consolidated Omnibus Budget Reconciliation Act for continuation of Executive's group health insurance in effect as of the date of termination and (ii) Executive will have the right, on the same basis as other employees of the Company, to participate in and to receive benefits under any Company group medical, dental, life, disability or other group insurance plans, as well as under the Company's, educational assistance and other benefit plans and policies, to the extent such rights are available, or can be secured on commercially reasonable terms, under such plans and policies.

4.5 Performance-Based Equity Awards . Executive will fully vest in all shares covered by outstanding Stock Performance-Based Equity Awards and TSR Performance-Based Equity Awards for which the performance condition was deemed satisfied pursuant to Article 3 of this Policy. Executive will also receive this vesting acceleration benefit upon a Constructive Termination that occurs more than 12 months after a Change-in-Control (i.e., after such termination is no longer considered to be "in connection with a Change-in-Control").

5. SEVERANCE BENEFITS NOT IN CONNECTION WITH A CHANGE-IN-CONTROL

If Executive experiences a Constructive Termination during any time period not addressed by Article 4 of this Policy or terminates due to death or Disability at any time, Executive will receive the following severance benefits from the Company.

5.1 Earned Amounts . Executive will receive all compensation that is earned but unpaid as of the date of termination, including salary, commissions and accrued but unused paid time off and vacation.

5.2 Cash Severance . Executive will receive a single lump sum severance payment equal to the sum of the percentage of Base Salary and Bonus set forth in the Benefit Schedules applicable to Executive's job title tier. This lump sum payment will be made within 60 days following termination of employment.

5.3 Time-Based Equity Awards . Executive will vest in that portion (if any) of Executive's outstanding Time-Based Equity Awards set forth in the Benefit Schedules applicable to Executive's job title tier, effective as of the Executive's date of termination.

5.4 Benefits . For the period set forth in the Benefit Schedules applicable to Executive's job title tier, (i) Executive will receive payment of the full premium amount (less withholding taxes) charged under the Consolidated Omnibus Budget Reconciliation Act for continuation of Executive's group health insurance in effect as of the date of termination and (ii) Executive will have the right, on the same basis as other employees of the Company, to participate in and to receive benefits under any Company group medical, dental, life, disability or other group insurance plans, as well as under the Company's, educational assistance, and other benefit plans and policies, to the extent such rights are available, or can be secured on commercially reasonable terms, under such plans and policies.

5.1 Performance-Based Equity Awards . Executive will receive no acceleration of outstanding Stock Performance-Based Equity Awards and TSR Performance-Based Equity Awards.

6. CONDITIONS FOR PAYMENT OF SEVERANCE

6.1 Release of Claims . The payment of any severance or other benefits pursuant to Articles 3, 4 or 5 of this Policy will be subject to Executive signing and not revoking a release of claims agreement in a form approved by the Company, and such release becoming effective and irrevocable within 60 days of Executive's termination or such earlier deadline required by the release. Any severance amounts or benefits otherwise payable within 60 days of Executive's termination shall be paid on the 60^th day following Executive's termination. If the release does not become effective within the time period set forth above, Executive will forfeit all rights to severance payments and benefits under this Policy.

6.2 Confidentiality . The payment of any severance or other benefits pursuant to Articles 3, 4 or 5 of this Policy will be subject to Executive's adherence to Executive's Confidential Information, Non-Disclosure and Invention Assignment Agreement (and/or any similar agreement as the Company and Executive may enter into from time to time).

7. COORDINATION WITH OTHER BENEFITS

7.1 Sole Severance Benefit . If any severance benefits and payments are payable to an Executive under this Policy, then such amounts will be the only severance benefits and payments that are due to Executive upon Executive's Constructive Termination, unless the Committee or the Board expressly approves any additional or other severance benefits and payments. For avoidance of doubt, from and after the Amendment Effective Date, no Executive shall be eligible for any benefits or payments under the Amended and Restated 2015 Executive Change-in- Control and Severance Policy, which was terminated effective as of the Amendment Effective Date.

7.2 Mitigation . Executive will not be required to mitigate the amount of any payment contemplated by this Policy, nor will any earnings that Executive may receive from any other source reduce any such payment.

8. LIMITATION ON BENEFITS

8.1 Treatment of Parachute Payments . To the extent that any of the payments and benefits provided for in this Policy or otherwise payable to Executive (the "Payments") constitute "parachute payments" within the meaning of Section 280G of the Code, the amount of such Payments shall be either:

the full amount of the Payments, or

a reduced amount that would result in no portion of the Payments being subject to the excise tax imposed pursuant to Section 4999 of the Code (the "Excise Tax"), whichever of the foregoing amounts, taking into account the applicable federal, state, local and foreign income and employment taxes and the Excise Tax, results in the receipt by Executive, on an after-tax basis, of the greatest amount of benefit. In the event that any Excise Tax is imposed on the Payments, Executive will be fully responsible for the payment of any and all Excise Tax, and the Company will not be obligated to pay all or any portion of any Excise Tax.

8.2 Determination of Amounts . All computations and determinations called for by Section 8.1 shall be promptly determined and reported in writing to the Company and the Executive by independent public accountants or other independent advisors selected by the Company and reasonably acceptable to the Executive (the "Accountants"), and all such computations and determinations shall be conclusive and binding upon the Participant and the Company. For the purposes of such determinations, the Accountants may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. The Company and the Executive shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make their required determinations. The Company shall bear all fees and expenses charged by the Accountants in connection with these services.

9. ADMINISTRATION

The Policy will be administered by the Administrator. The Administrator may interpret the Policy, prescribe, amend and rescind rules and regulations under the Policy and make all other determinations necessary or advisable for the administration of the Policy, subject to all of the provisions of the Policy. The Administrator may delegate any of its duties hereunder to such person or persons from time to time as it may designate.

10. AMENDMENT OR TERMINATION

The Board will have the right to amend or terminate this Policy at any time in its sole discretion; provided, however that any amendment or termination reasonably determined to have an adverse effect on the then-eligible Executives (a) must be disclosed to the Executives at least three months prior to taking effect and (b) cannot take effect within three months before, on or within 12 months following any Change-in-Control. Unless earlier terminated, this Policy shall expire automatically on September 30, 2027.

11. NOTICES

11.1 Notice . Notices and all other communications contemplated by this Policy will be in writing and will be deemed to have been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. In the case of Executive, mailed notices will be addressed to him/her at the home address which he/she most recently communicated to the Company in writing. In the case of the Company, mailed notices will be addressed to its corporate headquarters, and all notices will be directed to the attention of the Company's General Counsel.

11.2 Notice of Termination . Any Constructive Termination will be communicated by a notice of termination to the other party hereto given in accordance with Section 11.1 of this Policy. Such notice will indicate the specific termination provision in this Policy relied upon, will set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination under the provision so indicated, and will specify the termination date.

12. SECTION 409A

12.1 General . Any benefits payable under this Policy upon an Executive's termination will be interpreted to require that Executive experiences a "separation from service" (as such term is defined in Treasury regulations issued under Code Section 409A). Further, if Executive is a "specified employee" within the meaning of Code Section 409A at the time of his separation from service (other than due to Executive's death), then the severance benefits payable to Executive under this Policy that are considered deferred compensation under Section 409A and are due to Executive on or within the six-month period following his separation from service will accrue during such six-month period and will become payable (without interest) in a lump sum payment on the earlier of (a) the first payroll date that occurs on or after the date six months and one day following the date of Executive's separation from service and (b) the Executive's death. Each payment and benefit payable under this Policy is intended to constitute a separate payment for purposes of Treasury Regulations 1.409A-2(b)(2).

12.2 Reimbursements . Notwithstanding any other provision herein to the contrary, to the extent that any in-kind benefit or reimbursement arrangement provides for a payment that is considered deferred compensation under Section 409A, then such in-kind benefit or reimbursements will be made in accordance with Treasury Regulations 1.409A-3(i)(1)(iv) including: (a) the amount of such in-kind benefits provided in any calendar year and the amount of such expenses eligible for reimbursement in any calendar year will not affect the in-kind benefits to be provided or expenses eligible for reimbursement in any other calendar year; (b) in no event will any such expenses be reimbursed after the last day of the calendar year following the calendar year in which the Executive incurred such expenses; and (c) in no event will any such right to reimbursement or the provision of any in-kind benefit be subject to liquidation or exchange for another benefit or payment.

12.3 Interpretation . The foregoing provisions are intended to comply with the requirements of Code Section 409A so that none of the severance payments and benefits to be provided hereunder will be subject to the additional tax imposed under Code Section 409A, and any ambiguities herein will be interpreted to so comply. Notwithstanding the foregoing, the Company makes no representations as to the tax compliance or treatment of any benefits payable under this Policy. The Company and Executive agree to work together in good faith to consider amendments to this Policy and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition.

13. MISCELLANEOUS

13.1 Choice of Law . The validity, interpretation, construction and performance of this Policy will be governed by the laws of the State of California (with the exception of its conflict of laws provisions).

13.2 Integration . Unless the Board or the Committee expressly approves any additional or other severance benefits and payments for a particular Executive, this Policy represents the entire agreement and understanding between the parties as to the payment of severance or other benefits if Executive's employment with the Company terminates, including in Connection with a Change-in-Control, and supersedes all prior or contemporaneous agreements and the vesting provisions of any Equity Award, with respect to the subject matter of this Policy.

13.3 Severability . In the event that any provision or any portion of any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable, or void, this Policy will continue in full force and effect without said provision or portion of provision. The remainder of this Policy will be interpreted so as best to effect the intent of the Company and Executive.

13.4 Funding . The Company will not be required to fund or otherwise segregate assets to be used for the payment of any benefits under the Policy. The Company will make such payments only out of its general corporate funds, and therefore its obligation to make such payments will be subject to any claims of its other creditors.

13.5 Withholding . The Company may withhold all applicable taxes from payments or benefit due under this Policy.

8X8, INC.
2017 EXECUTIVE CHANGE-IN-CONTROL
AND SEVERANCE POLICY

(As Amended and Restated as of January 31, 2019)

BENEFIT SCHEDULES AS OF JANUARY 31, 2019

Tier	Change-in-Control Benefits	Change-in-Control Severance Benefits	Severance Benefits
Tier One Chief Executive Officer	Stock Performance-Based Equity Awards: Performance condition satisfied for 100% of shares subject to a per-share target price no higher than Transaction Price; any service-based vesting applies thereafter TSR Performance-Based Equity Awards: Performance condition satisfied for that number of shares determined by relative appreciation of Company common stock through Change-of-Control date; any service-based vesting applies thereafter	Cash: 100% of Base Salary + 100% of target Bonus Benefits: 12 months after date of termination Time-Based Equity Awards: 100% acceleration (50% acceleration, if within 12 months of hire date) Performance-Based Equity Awards: 100% acceleration for shares for which performance criteria deemed satisfied as Change-in-Control benefit	Cash: 150% of Base Salary + prorated % of earned Bonus, based on % of performance period before termination Benefits: 18 months after date of termination Time-Based Equity Awards: 12 months acceleration Performance-Based Equity Awards: 0% acceleration
Tier Two Executive Vice Presidents	See Tier One	Cash: 100% of Base Salary + 0% of Bonus Benefits: 12 months after date of termination Time-Based Equity Awards: 100% acceleration (50% acceleration, if within 12 months of hire date) Performance-Based Equity Awards: 100% acceleration for shares for which performance criteria deemed satisfied as Change-in-Control benefit	Cash: 100% of Base Salary + pro-rated Bonus Benefits: 12 months after date of termination Time-Based Equity Awards: no acceleration Performance-Based Equity Awards: 0% acceleration

S-1

Tier	Change-in-Control Benefits	Change-in-Control Severance Benefits	Severance Benefits
Tier Three Senior Vice Presidents	See Tier One	Cash: 100% of Base Salary + 0% of Bonus Benefits: 12 months after date of termination Time-Based Equity Awards: 100% acceleration (50% acceleration, if within 12 months of hire date) Performance-Based Equity Awards: 100% acceleration for shares for which performance criteria deemed satisfied as Change-in-Control benefit	Cash: 75% of Base Salary + pro-rated Bonus Benefits: 9 months after date of termination Time-Based Equity Awards: no acceleration Performance-Based Equity Awards: 0% acceleration

S-2

Q2 2019 Exhibit 10.37

Exhibit 10.37

August 27, 2018

Matthew Zinn

RE: SVP, General Counsel Position

Dear Matt,

On behalf of 8x8, Inc., a Delaware corporation ("8x8," or the "Company"), I am pleased to offer you the position of Senior Vice President, General Counsel, Chief Privacy Officer and Secretary, beginning on a mutually agreed upon date no later than September 24, 2018. The terms of your employment relationship with the Company will be as set forth below.

Position. You will become Senior Vice President, General Counsel, Chief Privacy Officer and Secretary. As such, you will have responsibilities as determined by your manager, which shall be the Company's Chief Executive Officer, and by the Board of Directors. Your duties and responsibilities are subject to change depending on the needs of the Company.

Compensation.

Base Salary. You will be paid an annualized salary of $360,000, payable in accordance with the Company's standard payroll policies, and subject to required withholding.

Salary Review. Your base salary will be reviewed as part of the Company's normal salary review process.

Expenses. You will be reimbursed for all reasonable and necessary business expenses incurred in the performance of your duties as provided in the Company's Employee Handbook.

Management Incentive Plan. Subject to approval by the Board of Directors, you will be eligible to participate in the Company's Management Incentive Plan (the "MIP"), with an annual bonus target of 50%. Payments are made under the MIP on a quarterly and annual basis, shortly after the completion of the relevant fiscal period, based on the Company's achievement of its performance targets and/or your attainment of your individual objectives, but only if the Company achieves or exceeds a minimum revenue-based target for the fiscal period. Your participation in the MIP would commence on your employment start date, and you would be entitled to a pro rata payment (based on number of days of participation) of any quarterly and annual awards that become payable in respect of the partial period during which you begin participating in the MIP. A copy of the MIP is attached for reference as Exhibit A. Notwithstanding the foregoing, the Company reserves the right to change the terms of the MIP at any time.

8x8, Inc. 2125 O'Nel Drive San Jose, CA 95131 Phone: 408.727.1885 Fax: 408.980.0432

Mr. Matthew Zinn
Page 2

Stock Awards.

Initial Equity Grants. Subject to approval by the Board of Directors, you will receive the following equity awards shortly after the commencement of your employment:

RSUs (restricted stock units) representing rights to acquire a total of 32,820 shares of 8x8's common stock, vesting over a three-year period, with one-third (1/3) of the total number of shares subject to the award vesting on the first anniversary of the grant date, and one-eighth (1/8) of the remaining number of shares vesting on a quarterly basis thereafter, subject to your continued employment or other qualifying association with the Company or any of its subsidiaries;

PSUs (performance share units) representing rights to acquire a total of 25,678 shares of common stock (at target), which vest and may be earned in accordance with the terms and conditions set forth on Exhibit B attached hereto; and

RSUs representing rights to acquire a total of 3,516 shares of common stock, with 100% of the shares vesting one year from the grant date, subject to your continued employment or other association with the Company or any of its subsidiaries.

We expect that each of these awards will be subject to the terms and conditions of the 8x8, Inc. Amended and Restated 2012 Equity Incentive Plan (the "2012 Plan") and an award agreement between the Company and you in the Company's standard form.

Share Retention. You agree to acquire and retain an ownership interest in shares of 8x8 Common Stock whose value equals or exceeds one times (1X) the amount of your base salary as set forth above in paragraph 2(a). For avoidance of doubt, any unvested or unearned shares will not be counted towards this requirement. You will have five years from your start date in which to meet this stock ownership threshold. If at any time thereafter, while you remain employed by the Company, your aggregate share ownership as defined in this paragraph 5 should fall below the threshold, you agree (a) to retain shares as they vest and you acquire them pursuant to any awards granted to you, and (b) not to sell or otherwise transfer any of your shares of 8x8 common stock (other than in satisfaction of withholding requirements as permitted under the 2012 Plan), until your share ownership equals or exceeds the threshold. In the event of a Corporate Transaction (as defined in the 2012 Plan), this paragraph 5 shall cease to apply.

Severance Benefits. You will be entitled to benefits under the 8x8, Inc. 2017 Executive Change-in-Control and Severance Policy (the "Policy") as a Tier Three participant (the Senior Vice President tier), in accordance with the terms thereof. Such benefits include potential vesting acceleration of stock-based compensation and/or cash severance upon the termination of your employment under specified circumstances, including in connection with a Change-in-Control (as defined in the Policy), subject to the terms and conditions of the Policy. A copy of the Policy, as in effect on the date of this offer letter, is attached for reference as Exhibit C. You have proposed several changes to the Policy, which management will raise with the Compensation Committee and Board of Directors for consideration at their next meetings.

Mr. Matthew Zinn
Page 3

Benefits. The Company will make available to you standard vacation, medical and dental insurance benefits. The Company will also make available to you a 401(k) Plan. Medical benefits will start on your date of hire, and dental benefits will start on the first day of the month following your date of hire. You will also be eligible to participate in the Company's Employee Stock Purchase Plan, the offering periods for which commence on February 1^st and August 1^st of each year. A copy of this plan is available at the SEC's website at https://www.sec.gov/Archives/edgar/data/1023731/000113626117000117/exh10-4.htm. A summary of benefits is being provided to you with this letter.

Standard Confidentiality and Inventions Assignment Agreement. Like all Company employees, you will be required to sign the Company's standard form of Confidential Information and Inventions Assignment Agreement (the "Confidentiality Agreement"), which includes provisions relating to the use and disclosure of the Company's proprietary and confidential information, the assignment of inventions, and the solicitation of Company employees, among other provisions.

Compliance with Obligations to Former Employers. During the course of your employment with 8x8, we expect you to comply with any and all duties and obligations you may have to your former employers (including your current employer), including, for example, prohibitions against the use or disclosure of such employer's confidential information, or the solicitation of its employees.

We do not want you to take with you, or to use or disclose during the course of your employment with 8x8, any trade secrets or other confidential or proprietary information of these other companies. Prior to commencing your employment with 8x8, we expect you to return or destroy (as directed by your former employer) any confidential information of your former employer that you may have in your possession or under your control, in accordance with its policies and instructions. You will not need this information to perform your duties at 8x8, and using such information would violate 8x8 policies. 8x8 is hiring you for your talents, skills, general industry knowledge and expertise.

We understand from our discussions with you that working for 8x8 in the role described in this letter will not violate any restrictions against working for competitors or similar covenants to which you may be subject. If this is incorrect, please do not sign this letter and contact us as soon as possible to discuss. We encourage you to consult with a personal attorney if you have any uncertainty in this regard.

At-Will Employment; Employee Handbook. You will be an at-will employee of the Company, meaning that either you or the Company may terminate your employment at any time, without notice, for any reason or no reason, subject to applicable law. You will be expected to review and comply with the policies set forth in the Company's Employee Handbook, which will be made available to you on or around your first day of employment. The Employee Handbook, as amended from time to time, will be a part of the terms of your employment with the Company.

No Outside Consulting. You agree not to serve on the board of directors (or in a comparable supervisory position) of any other organization, nor to perform any outside consulting work for any other person or organization, while you remain employed full-time at the Company, other than with the advance written approval of the Chief Executive Officer. This restriction shall not apply to any positions in which you currently serve and have disclosed in writing to the Company.

Mr. Matthew Zinn
Page 4

Background Check. This offer letter is contingent upon satisfactory results of a background check and reference checks (which you hereby authorize the Company to conduct), and it may be rescinded at any time in the event either such check fails to meet the Company's reasonable and lawful requirements. In addition, this offer letter is contingent on your demonstrating your right to work in the United State in accordance with applicable law.

Expiration Date. You will be deemed to have accepted this offer when the Company receives your signed counterpart to this offer letter. This offer will expire at 5:00pm Pacific Time on Tuesday, August 28, 2018.

Start Date. Your new position will become effective on a mutually agreed upon date no later than Monday, September 24, 2018.

Congratulations on joining the team!

Sincerely,

By: /s/ Vikram Verma
Vikram Verma
Chief Executive Officer

ACCEPTED:

/s/ Matthew Zinn
Matthew Zinn

Date: August 27, 2018

Mr. Matthew Zinn
Exhibits to Offer Letter

Exhibit A

8x8, Inc. Amended and Restated Management Incentive Bonus Plan

[See attached]*

* This document was filed as Exhibit 10.4 to the Registrant's Annual Report on Form 10-K for the fiscal year ended March 31, 2018, filed on May 30, 2018.

Mr. Matthew Zinn
Exhibits to Offer Letter

Exhibit B

PSU Vesting Schedule

PSUs will vest (1) as to 50% of the total number of "on-target" shares, on the second anniversary of the grant date, and (2) as to the remaining 50% of the total number of "on-target" shares, on the third anniversary of the grant date, in each case subject to performance of the Company's Common Stock relative to the Russell 2000 Index during the period from grant date through the applicable vesting date, with 100% of the applicable tranche vesting if the total shareholder return (TSR) of the Company's Common Stock equals the TSR of the Russell 2000 Index over the applicable measurement period. The number of PSUs that vest will be increased (or decreased), relative to target, by 2% for each 1% positive (or negative) difference in the TSR of the Company's Common Stock relative to the TSR of the Russell 2000 Index; provided, however, (1) in the event the TSR of the Company's Common Stock is more than 30% lower than the TSR of the Russell 2000 Index for the applicable measurement period, no PSUs of the applicable tranche shall vest, and (2) in no event will the total number of PSUs that vest in the event of a positive difference in the TSR of the Company's Common Stock relative to the TSR of the Russell 2000 Index exceed 200% of the total number of "on-target" PSUs in the applicable tranche.

TSR shall be determined on a percentage basis based on the change in value of a $100 investment in Company Common Stock and the Russell 2000 Index, respectively, made on the grant date, including deemed reinvestment of dividends. Fair market value of Company Common Stock and the Russell 2000 Index on any particular date shall be the 30-day trading average price for the period prior to and through the date of determination.

In addition and notwithstanding anything herein to the contrary, all vesting is subject to continued employment or other association with the Company or any of its subsidiaries through the end of the applicable measurement period.

Mr. Matthew Zinn
Exhibits to Offer Letter

Exhibit C

8x8, Inc. 2017 Executive Change-in-Control and Severance Policy

[See attached]

* This document was filed as Exhibit 10.3 to the Registrant's Annual Report on Form 10-K for the fiscal year ended March 31, 2018, filed on May 30, 2018.

October 23, 2018

VIA E-MAIL

Mr. Matthew Zinn
E-mail: matthew.zinn@8x8.com

RE: Changes to Your Terms of Employment

Dear Matt,

On behalf of 8x8, Inc., a Delaware corporation ("8x8," or the "Company"), I am pleased to inform you that the Board of Directors has approved the award to you of performance share units ("PSUs") representing rights to acquire a total of 34,313 shares of the Company's common stock (at target). These PSUs were granted in lieu of the PSU award for 25,678 shares of common stock (at target) referenced in your offer letter dated August 27, 2018. All other terms of the PSU award granted to you are consistent with the terms referenced in your offer letter.

In addition, pursuant to the approval of the Board, section 6 of the offer letter between the Company and you dated August 27, 2018 is hereby amended in order to delete the last sentence in that section 6 and to add the following language in its place:

"Notwithstanding the provisions of the Policy (including, without limitation, Section 4.3 thereof and the Benefits Schedule attached thereto), in the event you experience a Constructive Termination in Connection with a Change-in-Control, among other severance benefits you would receive from the Company (as provided in the Policy), you will vest in 100% of your outstanding Time-Based Equity Awards effective as of your date of termination (or, if later, the date of the Change-in-Control), regardless of whether the date of termination or the date of the Change-in-Control (or both) occurs prior to the 12-month anniversary of your date of hire. Subject to and upon your execution of this offer letter, the Policy shall be deemed amended solely to the extent necessary to allow you to receive the vesting benefits described in this paragraph 6, without impacting any benefits to which any other Executive would be entitled, or any other benefits to which you would be entitled, under the Policy. Capitalized terms used and not defined in this paragraph 6 shall have the meanings assigned to them in the Policy."

8x8, Inc. 2125 O'Nel Drive San Jose, CA 95131 Phone: 408.727.1885 Fax: 408.980.0432

Mr. Matthew Zinn
October 23, 2018
Page 2

Sincerely,

8x8, Inc.

By: /s/ Vikram Verma
Vikram Verma
Chief Executive Officer

Acknowledged and Agreed:

/s/ Matthew Zinn
Matthew Zinn

8x8, Inc. 2125 O'Nel Drive San Jose, CA 95131 Phone: 408.727.1885 Fax: 408.980.0432

Q2 2019 Exhibit 10.38

Exhibit 10.38

September 25, 2018

Mr. Steven Gatoff

RE: 8x8, Inc. Executive Vice President, Chief Financial Officer

Dear Steven,

On behalf of 8x8, Inc., a Delaware corporation ("8x8," or the "Company"), I am pleased to offer you the positions of Executive Vice President, Chief Financial Officer and Special Advisor to the CEO. The terms of your employment relationship with the Company will be as set forth below.

Position. You will initially hold the position Executive Vice President, Special Advisor to the CEO, with your employment commencing on a mutually agreed upon date no later than October 15, 2018. In this position, you will have responsibilities as determined by your manager, which shall be the Company's Chief Executive Officer, and you will work closely with the Company's outgoing Chief Financial Officer. Effective as of (a) the first business day following the filing of the Company's Quarterly Report on Form 10-Q for the quarter ending September 30, 3018 or (b) November 5, 2018, whichever is earlier, you will become Executive Vice President, Chief Financial Officer, and you will continue to report to the Company's Chief Executive Officer. In this position, you will have responsibilities determined by your manager and as set forth in the Company's by-laws and other organizational documents. Your duties and responsibilities are subject to change depending on the needs of the Company.

Compensation.

Base Salary. You will be paid an annualized salary of $375,000, payable in accordance with the Company's standard payroll policies, and subject to required withholding.

Salary Review. Your base salary will be reviewed as part of the Company's normal salary review process.

Expenses. You will be reimbursed for all reasonable and necessary business expenses incurred in the performance of your duties as provided in the Company's Employee Handbook.

One-Time Bonus. As promptly as practicable (and in any event within 30 days) following the commencement of your employment, you will be paid a one-time cash bonus of $45,000, subject to applicable taxes and withholdings.

Management Incentive Plan. Commencing on your first day of employment, you will participate in the Company's Management Incentive Bonus Plan (the "MIP"), with a total annual bonus target equal to 60% of your base salary. Payments are made under the MIP on a quarterly and annual basis, shortly after the completion of the relevant fiscal period, based on the Company's achievement of its performance targets and/or your attainment of your individual objectives, and subject to the Company's achievement of minimum financial targets for the fiscal period. Your participation in the MIP would commence on your employment start date, and you would be entitled to a pro rata payment (based on number of days of participation) of any quarterly and annual awards that become payable in

8x8, Inc. 2125 O'Nel Drive San Jose, CA 95131 Phone: 408.727.1885 Fax: 408.980.0432

Mr. Steven Gatoff
September 25, 2018
Page 2

respect of the partial period during which you begin participating in the MIP. A copy of the MIP is attached for reference as Exhibit A. Notwithstanding the foregoing, the Company reserves the right to change the terms of the MIP at any time.

Stock Awards.

Initial Equity Grants. You will receive the following equity awards shortly after the commencement of your employment:

RSUs (restricted stock units) representing rights to acquire a total of 71,232 shares of 8x8's common stock, vesting over a three-year period, with one-third (1/3) of the total number of shares subject to the award vesting on the first anniversary of the grant date, and one-eighth (1/8) of the remaining number of shares vesting on a quarterly basis thereafter, subject to your continued employment or other qualifying association with the Company or any of its subsidiaries; and

PSUs (performance share units) representing rights to acquire a total of 59,076 shares of common stock (at target), which vest and may be earned in accordance with the terms and conditions set forth on Exhibit B attached hereto.

Share Retention. You agree to acquire and retain an ownership interest in shares of 8x8 Common Stock whose value equals or exceeds one times (1X) the amount of your base salary as set forth above in paragraph 2(a). For avoidance of doubt, any unvested or unearned shares will not be counted towards this requirement. You will have five years from your start date in which to meet this stock ownership threshold. If at any time thereafter, while you remain employed by the Company, your aggregate share ownership as defined in this paragraph 5 should fall below the threshold, you agree (a) to retain shares as they vest and you acquire them pursuant to any awards granted to you, and (b) not to sell or otherwise transfer any of your shares of 8x8 common stock (other than in satisfaction of withholding requirements as permitted under the 2012 Plan), until your share ownership equals or exceeds the threshold. In the event of a Corporate Transaction (as defined in the 2012 Plan), this paragraph 5 shall cease to apply.

Severance Benefits. You will be eligible for benefits under the 8x8, Inc. 2017 Executive Change-in-Control and Severance Policy (the "Policy") as a Tier Two participant (the Executive Vice President tier), upon the termination of your employment under specified circumstances, or in connection with a Change-in-Control (as defined in the Policy), subject to the terms and conditions of the Policy and this paragraph 6. A copy of the Policy, as in effect on the date of this offer letter, is attached for reference as Exhibit C. Notwithstanding the provisions of the Policy (including, without limitation, Section 4.3 thereof and the Benefits Schedule attached thereto), in the event you experience a Constructive Termination in Connection with a Change-in-Control, among other severance benefits you would receive from the Company (as provided in the Policy), you will vest in 100% of your outstanding Time-Based Equity Awards effective as of your date of termination (or, if later, the date of the Change-in-Control), regardless of whether the date of termination or the date of the Change-in-Control (or both)

Mr. Steven Gatoff
September 25, 2018
Page 3

occurs prior to the 12-month anniversary of your date of hire. Subject to and upon your execution of this offer letter, the Policy shall be deemed amended solely to the extent necessary to allow you to receive the vesting benefits described in this paragraph 6, without impacting any benefits to which any other Executive would be entitled, or any other benefits to which you would be entitled, under the Policy. Capitalized terms used and not defined in this paragraph 6 shall have the meanings assigned to them in the Policy.

Benefits. The Company will make available to you standard vacation, medical and dental insurance benefits. The Company will also make available to you a 401(k) Plan. Medical benefits will start on your date of hire, and dental benefits will start on the first day of the month following your date of hire. You will also be eligible to participate in the Company's Employee Stock Purchase Plan, the offering periods for which commence on February 1^st and August 1^st of each year. A copy of this plan is available at the SEC's website at https://www.sec.gov/Archives/edgar/data/1023731/000113626117000117/exh10-4.htm. A summary of benefits is being provided to you with this letter.

Standard Confidentiality and Inventions Assignment Agreement. Like all Company employees, you will be required to sign the Company's standard form of Confidential Information and Inventions Assignment Agreement (the "Confidentiality Agreement"), which includes provisions relating to the use and disclosure of the Company's proprietary and confidential information, the assignment of inventions, and the solicitation of Company employees, among other provisions.

Compliance with Obligations to Former Employers. During the course of your employment with 8x8, we expect you to comply with any and all duties and obligations you may have to your former employers (including your current employer), including, for example, prohibitions against the use or disclosure of such employer's confidential information, or the solicitation of its employees.

At-Will Employment; Employee Handbook. You will be an at-will employee of the Company, meaning that either you or the Company may terminate your employment at any time, without notice, for any reason or no reason, subject to applicable law. You will be expected to review and comply with the policies set forth in the Company's Employee Handbook, which will be made available to you on or around your first day of employment.

Mr. Steven Gatoff
September 25, 2018
Page 4

No Outside Consulting. You agree not to serve on the board of directors (or in a comparable managerial or supervisory position) of any other organization, nor to perform any outside consulting work for any other person or organization, while you remain employed full-time at the Company, other than with the advance written approval of the Chief Executive Officer. This restriction shall not apply to any positions in which you currently serve and have disclosed in writing to the Company.

Background Check. This offer letter is contingent upon satisfactory results of a background check and reference checks (which you hereby authorize the Company to conduct), and it may be rescinded at any time in the event either such check fails to meet the Company's reasonable and lawful requirements. In addition, this offer letter is contingent on your demonstrating your right to work in the United State in accordance with applicable law. Subject to your authorization, the Company will begin the background check and reference check process promptly and endeavor to complete it as expeditiously as reasonably practicable.

Acceptance; Expiration. You will be deemed to have accepted this offer when the Company receives your signed counterpart to this offer letter. This offer will expire at 5:00pm Pacific Time on October 10, 2018. Subject to paragraph 12 of this offer letter, this offer will not be revoked by 8x8, and it will remain open until your acceptance or its earlier expiration, in each case as provided in this paragraph 13.

Start Date. Your employment with the Company will commence effective on a mutually agreed upon date no later than October 15, 2018.

Congratulations on joining the team!

Sincerely,

By: /s/ Vikram Verma
Vikram Verma
Chief Executive Officer

ACCEPTED:

/s/ Steven Gatoff
Steven Gatoff

Date: September 25, 2018

Mr. Steven Gatoff
September 25, 2018
Exhibits to Offer Letter

Exhibit A

8x8, Inc. Amended and Restated Management Incentive Bonus Plan

[See attached]*

* This document was filed as Exhibit 10.4 to the Registrant's Annual Report on Form 10-K for the fiscal year ended March 31, 2018, filed on May 30, 2018.

Mr. Steven Gatoff
September 25, 2018
Exhibits to Offer Letter

Exhibit B

PSU Vesting Schedule

Mr. Steven Gatoff
September 25, 2018
Exhibits to Offer Letter

Exhibit C

8x8, Inc. 2017 Executive Change-in-Control and Severance Policy

[See attached]

* This document was filed as Exhibit 10.3 to the Registrant's Annual Report on Form 10-K for the fiscal year ended March 31, 2018, filed on May 30, 2018.

October 23, 2018

VIA E-MAIL

Mr. Steven Gatoff

RE: Performance Share Unit Award

Dear Steven,

On behalf of 8x8, Inc., a Delaware corporation ("8x8," or the "Company"), I am pleased to inform you that the Board of Directors has approved the award to you of performance share units ("PSUs") representing rights to acquire a total of 71,232 shares of the Company's common stock (at target). These PSUs were granted in lieu of the PSU award for 59,076 shares of common stock (at target) referenced in your offer letter dated September 25, 2018. All other terms of the PSU award granted to you are consistent with the terms referenced in your offer letter.

This letter further confirms that your appointment as Chief Financial Officer will be effective as of November 1, 2018.

Sincerely,

By: /s/ Vikram Verma
Vikram Verma
Chief Executive Officer

8x8, Inc. 2125 O'Nel Drive San Jose, CA 95131 Phone: 408.727.1885 Fax: 408.980.0432

Q2 2019 Exhibit 10.39

Exhibit 10.39

November 5, 2018

Mary Ellen Genovese

RE: 8x8, Inc. Managing Director of European Operations

Dear Mary Ellen,

This letter supersedes and replaces in its entirety the employment agreement between you and 8x8, Inc. ("8x8" or "the Company") dated October 6, 2014, as amended to date. This letter confirms that, effective as of November 1, 2018, you ceased serving as the Company's Chief Financial Officer and became the Managing Director of European Operations. The terms of your new employment relationship with the Company, effective as of November 1, 2018, will be as set forth below.

Position. Your position will be Managing Director of European Operations. You will cease to be an Executive Vice President of the Company, but you will continue to report to the Company's Chief Executive Officer. As such, you will have responsibilities as determined by the Company's Chief Executive Officer. You will promptly relocate to the Company's London office and will work from that office until on or around May 31 2019 (but no later than June 14, 2019), at which time you will return to the United States and continue to be employed by the Company on a part-time basis until September 30, 2019. Your duties and responsibilities are subject to change depending on the needs of the Company. Subject to further advice from employment and tax counsel in the United States and United Kingdom, you may become a temporary employee of 8x8 UK Limited for the duration of your employment in the United Kingdom.

Unless you and the Company agree otherwise, you will cease to serve as director of each subsidiary of which you currently serve as a director, other than 8x8 UK Limited. You will remain a director of 8x8 UK Limited until the Company's appointment of a successor, or until your earlier removal or resignation.

Termination Date. Your employment with the Company will terminate on September 30, 2019 (the "Termination Date"), unless you and the Company mutually agree to alter this date, and otherwise subject to the terms and conditions of this offer letter.

Compensation.

Base Salary. You will be paid an annualized salary of $290,000 payable in accordance with the Company's standard payroll policies subject to normal required withholding.

Expenses. You will be provided with a lump-sum payment of $50,000 to offset your housing costs while living in the UK. You will be reimbursed for all reasonable and necessary business expenses incurred in the performance of your duties as provided in the Company's Employee Handbook.

8x8, Inc. 2125 O'Nel Drive San Jose, CA 95131 Phone: 408.727.1885 Fax: 408.980.0432

Management Incentive Plan. You will be eligible to participate in the Company's Management Incentive Plan while you are a full-time employee, with a target annual bonus of 50% of your annual base salary, and otherwise on substantially the same terms as your current participation.

Stock Awards; No Participation in Policies.

You will not be entitled to any additional awards of stock-based compensation, but your existing equity awards will continue to vest subject to your continued employment or other qualifying association with the Company or any of its subsidiaries, in accordance with the terms and conditions of such equity awards, and further subject to this Section 4.

Except as set forth in Section 4(c) below, as of the Effective Date, you shall no longer be eligible to participate in any change-in-control or severance policies or agreements, including but not limited to, the 8x8, Inc. 2015 Amended and Restated Executive Change-in-Control and Severance Policy (Amended and Restated as of October 1, 2017) and the 8x8, Inc. 2017 Executive Change-in-Control and Severance Policy.

Involuntary Termination: In the event that you are subject to an Involuntary Termination (as defined below) prior to the Termination Date, including due to a Change-in-Control, then (to the extent the underlying shares have not vested between the date of this letter and the date of your Involuntary Termination) the RSU awards and options listed on Exhibit A hereto will accelerate and vest as to the number of shares set forth for each award in Exhibit A. With respect to PSUs, the performance period shall be deemed to end on the date of the termination of your employment (the "Involuntary Termination Date"), and you will receive shares of stock based on the Company's performance through the Involuntary Termination Date (i.e., at 100% target, you would receive the number of shares set forth for each award in Exhibit A).

"Involuntary Termination" means without your express written consent, a termination of your employment with the Company without Cause that prevents continued vesting of your unvested equity.

"Cause" means: (i) any act of personal dishonesty taken by you in connection with your responsibilities in your service to the Company which is intended to result in your personal enrichment; (ii) your conviction of a felony; (iii) any act by you that constitutes material misconduct and is injurious to the Company; (iv) any breach of fiduciary duty to the company, (v) a material breach of any agreement with the Company, or (vi) your initiating litigation against the Company (excluding any litigation to enforce the Company's compliance with the terms of this agreement). For purposes of this clause (d), "Company" includes the Company and each of its subsidiaries.

"Change-in-Control" means the consummation of any of the following corporate transactions:

8x8, Inc. 2125 O'Nel Drive San Jose, CA 95131 Phone: 408.727.1885 Fax: 408.980.0432

an acquisition in one or more related transactions of 45% or more of the Company's common stock or voting securities by a "person" (as defined in Sections 13(d) and 14(d) of the Securities Exchange Act, but excluding the Company, any employee benefit plan of the Company and any corporation controlled by the Company's stockholders) or multiple "persons" acting as a group;

a complete liquidation or dissolution of the Company;

a sale, transfer or other disposition of all or substantially all of the Company's assets; or

a merger, consolidation or reorganization (collectively, a "Business Combination") other than a Business Combination in which (i) the stockholders of the Company receive 50% or more of the stock of the corporation resulting from the Business Combination and (ii) at least a majority of the board of directors of such resulting corporation were incumbent directors of the Company immediately prior to the consummation of the Business Combination and (iii) after which no individual, entity or group (excluding any corporation or other entity resulting from the Business Combination or any employee benefit plan of such corporation or of the Company) who did not own 45% or more of the stock of the resulting corporation or other entity immediately before the Business Combination owns 45% or more of the stock of such resulting corporation or other entity.

Benefits. The Company will continue to make available to you standard medical, dental, life and disability insurance benefits, as well a 401(k) Plan, and Employee Stock Purchase Plan.

Standard Confidentiality and Inventions Assignment Agreement. You will remain bound by the Company's standard Confidential Information and Inventions Assignment Agreement (the "Confidentiality Agreement") which you signed on July 1, 2014.

At-Will Employment. You will continue to be an employee-at-will, meaning that either you or the Company may terminate your employment at any time, without notice, for any reason or no reason without further obligation or liability to either party, except as provided in Section 4(c) regarding an Involuntary Termination. Such termination will not affect the parties' respective obligations under the Confidentiality Agreement.

No Outside Consulting. You agree to not sit on any board of directors of, or do any outside consulting work for, any other unaffiliated person or company while employed at the Company other than with the advance written approval of the Chief Executive Officer of the Company.

Please indicate your acceptance by signing and returning a copy of the signed letter to me via DocuSign or email.

8x8, Inc. 2125 O'Nel Drive San Jose, CA 95131 Phone: 408.727.1885 Fax: 408.980.0432

Congratulations on your new assignment!

Sincerely,

By: /s/Vikram Verma
Vikram Verma
Chief Executive Officer

AGREED AND ACCEPTED:

/s/Mary Ellen Genovese
Mary Ellen Genovese

Date: November 6, 2018

8x8, Inc. 2125 O'Nel Drive San Jose, CA 95131 Phone: 408.727.1885 Fax: 408.980.0432

Exhibit A

Grant DateType	Vest Date	Shares to Vest	Notes
9/22/2015	ISO	9/22/2019	10,443
9/22/2015	RSU	9/22/2019	13,923
9/20/2016	RSU	9/20/2019	11,975
9/19/2017	RSU	9/19/2019	16,892
9/20/2016	PSU	9/20/2019	17,838	50% of total award target referenced; actual number of shares subject to performance achievement at the close of the performance period.
9/19/2017	PSU	9/20/2019	27,694	50% of total award target referenced; actual number of shares subject to performance achievement at the close of the performance period.

8x8, Inc. 2125 O'Nel Drive San Jose, CA 95131 Phone: 408.727.1885 Fax: 408.980.0432

Q2 2019 Exhibit 31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Vikram Verma, certify that:

1. I have reviewed this quarterly report on Form 10-Q of 8x8, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

November 7, 2018

/s/ VIKRAM VERMA
Vikram Verma
Chief Executive Officer

Q2 2019 Exhibit 31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Steven Gatoff, certify that:

1. I have reviewed this quarterly report on Form 10-Q of 8x8, Inc.;

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

November 7, 2018

/s/ Steven Gatoff
Steven Gatoff
Chief Financial Officer

Q2 2019 Exhibit 32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S. C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of 8x8, Inc. (the "Company") for the period ended September 30, 2018, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Vikram Verma, Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ VIKRAM VERMA
Vikram Verma
Chief Executive Officer

November 7, 2018

This certification accompanies this Report pursuant to § 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, or otherwise required, be deemed filed by the Company for purposes of § 18 of the Securities Exchange Act of 1934, as amended.

Q2 2019 Exhibit 32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S. C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of 8x8, Inc. (the "Company") for the period ended September 30, 2018, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Steven Gatoff, Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Steven Gatoff
Steven Gatoff
Chief Financial Officer

November 7, 2018