8X8 generates cash flow early

In its third quarter of fiscal 2007, voice-over-IP provider 8X8 grew its business sector, shrunk its residential growth and met its cash-flow goals three months ahead of schedule.

Bryan Martin, chairman and CEO of 8X8, said reaching this goal was largely the result of limited purchasing. “Cash flow generation is a first and a huge milestone for 8x8,” he said. “We believe we are the first publicly traded pure play VoIP service provider to achieve this accomplishment.”

In the quarter, which ended on December 31, the company generated #13.2 million, same as last quarter. However, compared to last year’s third quarter revenue grew by 56% from $8.5 million.

The company’s net loss was $3.1 million compared with a net loss of $2.7 million last quarter, but down from last $6.8 million loss in the same quarter.

8X8 generated approximately $373,000 in cash during the month of December and burned approximately $2.1 million in the third fiscal quarter, compared to $3.3 million in the prior quarter and $5.2 million in its first quarter.

“We are very pleased that our diversified strategy of focusing on higher-margin business service customers with our unique and patent-protected Packet8 Virtual Office technologies and video communication technologies are yielding these landmark results," Martin said.

The company now has more than 6000 U.S.--based business customers. The focus on this segment with its Packet8 Virtual Office and video solutions helped revenue from these solutions increase sequentially by 30% and 22%, respectively.

Business sales grew to account for 33% of revenue in the quarter. Video solutions accounted for 5%, wholesale 4% and residential services for 58%. That amounts to a 30% increase in Virtual Office revenue, a 22% increase in video revenue and a decline of 11% in residential revenue.

Martin said the company is looking to accelerate its time to profitability. It instituted price increases that Martin said will bring prices more in line with mass-market pricing in the industry and enable the company to invest more money in our R&D efforts for new business, video and other IP communications offerings. “We are one of the only phone companies on the planet who have built out network and service offerings with no debt on our balance sheet,” he said.