Disclosures

8x8 Inc.

I, Mike Crawford , certify that this report reflects my personal beliefs about this company and that no portion of my compensation was, is or will be directly or indirectly related to the specific recommendations or views discussed in this report.

Disclosure

  • B. Riley & Co., LLC does and seeks to do business with companies covered in its research reports.
  • A portion of this analyst’s compensation is based on the sales, trading and investment banking activities of B. Riley & Co., LLC.
  • B. Riley & Co., LLC makes a market in the securities of the company covered in this report.
  • This report may be distributed by FBR Capital Markets & Co., an affiliate of B. Riley & Co., LLC and as such constitutes third party research. For additional information, please visit http://www.fbr.com/disclosures.
Disclosure Chart

Initiated Coverage on 01/15/2008 with "Buy" Rating and Price Target of $3.00

Ratings Distribution as of June 23, 2017 % with Investment Banking Relationships
Rating Number of Companies Percent of Total
Buy 148 73.3%
Neutral 53 26.2%
Sell 1 0.5%
Total 202 100%
Ratings Distribution as of October 4, 2016 % with Investment Banking Relationships
Rating Number of Companies Percent of Total
Buy 21 95.5%
Neutral 1 4.5%
Sell 0 0.0%
Total 22 100%

Explanation of B. Riley & Co. LLC's Rating System

  • Buy: We generally expect "Buy" rated stocks to materially outperform both the S&P 500 and Russell 2000 as well as other stocks in their sector. Further, we believe that the potential reward relative to the potential risk is particularly attractive.
  • Neutral: We generally believe "Neutral" rated stocks will perform roughly in line with the S&P 500 and Russell 2000 over the intermediate and long term.
  • Sell: We generally expect "Sell" rated stocks to materially underperform both the S&P 500 and Russell 2000 as well as other stocks in their sector. Further, we believe that the potential reward relative to the potential risk is particularly unattractive.

Risks and Considerations

  • Acquisition/Integration - The Company actively evaluates potential acquisitions as part of its growth strategy. Acquisitions pursued by the Company could be dilutive to financial results and result in a difficult, dilutive or expensive integration.
  • Competition - The industry is highly competitive and many of the Company's competitors have greater resources.
  • Economy - Macro-economic issues such as increasing oil and gas prices and a possible drop in consumer spending could have a negative impact on the Company's business.
  • Financial Results - The Company has raised money via public offerings several times in the past and may need to do so again if it can not sustain positive cash flow.
  • Industry Change - The industry is subject to rapid technological change.
  • Litigation - The Company is at risk of patent lawsuits, although we believe its patent portfolio provides adequate protection.
  • Pricing Pressure - The Company's business could be affected by pricing pressure within the market.
  • General Industry - The Company could miss our estimates and/or their financial guidance.
  • Sales Cycle - The Company's sales cycle could lengthen beyond what is normal.
  • Further Potential Risks - See the Company's SEC filings, particularly its 10-K filing, for a discussion of further potential risks.

Additional Risks and Considerations

    • Accounting Methodologies – The Company’s subscriptions revenue is recognized over the term of the contract, resulting in timing mismatches between customer additions, cancellations and changes and their impact on operating results. This makes it difficult for the Company to rapidly increase its revenue through additional sales in any period. 
    • Competition – There are hundreds of competing providers in the Unified Communication as a Service (UCaaS) market. Mergers and/or acquisitions in the broader cloud communications industry may lead to the emergence of a smaller number of dominant players.
    • Business Retention – The Company’s customers generally do not have long-term contracts with 8x8 and may discontinue their subscriptions after the expiration of their subscription period. A higher rate of customer cancellations would negatively affect the business.
    • Industry Change – The market for cloud software solutions is subject to rapid technological change, and the Company depends on new product and service introductions in order to maintain and grow the business.
    • Financial Results – The Company has a history of losses and there is no assurance of attaining or sustaining future profitability.