8x8 Value Stock - Dividend - Research Selection

A leading provider of enterprise cloud communications solutions, 8x8 helps businesses get their employees, customers and applications talking, to make people more connected and productive, no matter where they are in the world. From a single, proprietary platform, which we refer to as the 8x8 Communications Cloud™, we offer unified communications, team collaboration, contact center, analytics and other services to our business customers on a Software-as-a Service (SaaS) model.

While organizations of all sizes have started to migrate from legacy, on-premises systems to cloud communications solutions like ours, the adoption of cloud communications by larger businesses has increased markedly in recent years and will, we believe, drive the next phase of cloud communications growth. Small businesses were the first to transition their communications to the cloud several years ago, often based on its cost effectiveness, ease of deployment and inherent flexibility. Now, larger businesses that have adopted cloud-based solutions for other applications and processes are increasingly looking to modernize their communications in a similar fashion. We believe this adoption is being driven by the convergence of several market trends, including the increasing costs of maintaining installed legacy communications systems; the fragmentation resulting from use of multiple on-premises systems, which has worsened as workforces have become more distributed and international; and the proliferation of personal mobile devices in the workplace.

Our solutions offer businesses 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 100 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 2017, we generated a majority of our services revenue from customers in these business segments. We provide most of our communications services on a SaaS model, with monthly billing of service fees and usage charges, under contracts with terms that generally range from one to four years.

Our Industry

Businesses today face increasing cost and complexity with deployments of communications and collaboration solutions. Companies of all sizes are managing a global, distributed, remote and multigenerational workforce that seeks to leverage multiple forms of communication in their day-to-day interactions. The rapid rise of mobile devices in the enterprise has created demand for BYOD (bring your own device) integration as part of s typical business' communications needs. Companies are looking to increase their competitive edge by also integrating their communications with ERP (Enterprise Resource Planning), CRM (Customer Relationship Management), HCM (Human Capital Management) applications and other back-office IT (information technology) systems within their communications infrastructure. Further complicating matters, business users are circumventing their IT departments by using a variety of self-selected third-party tools for team communications and collaboration, driving a shift in the buying center for communications and collaboration from IT to individuals, a phenomenon known in the industry as "shadow IT."

We believe traditional on-premises communications systems are unable to accommodate all of these needs in a cost-efficient manner. In addition to being difficult to deploy and expensive to maintain in multiple locations for a globally distributed workforce, these solutions often fail to provide the mobility, business continuity and integration capabilities required by modern business customers. BYOD demands from employees further complicate the delivery of a company-wide communication system using on-premises equipment. The result is a patchwork of communications systems with security risks that stretch across the organization.

The 8x8 Solution

We offer unified communications, team collaboration, contact center, and analytics in a scalable platform that is used by businesses of all sizes across the globe, and can be accessed utilizing available Internet connections.

The key attributes of the 8x8 Communications Cloud solution include:

- Seamless Communication and Collaboration within a Single Integrated Software Platform.

We believe that seamless, continuous communications and collaboration drives more effective employee and customer engagement and greater business productivity. Our ownership of the core technology underlying each of our offerings enables us to tightly integrate our solutions and provide users with the tools needed to communicate and collaborate with others in an integrated and fluid manner. A single global corporate directory providing presence and click-to-contact functionality across all devices is the hallmark of our platform approach to communications.

- Integrated Unified Communications and Contact Center Solutions.

A feature that we believe is unique to the 8x8 Communications Cloud is the integration of our 8x8 Virtual Office Unified Communications solution with our Virtual Contact Center solution within a single cloud platform. One of the primary benefits of this integration is the unification of contact center agents with the rest of the organization through the global corporate directory - facilitating, for example, the involvement of subject matter experts outside of the call center in customer interactions. In addition to our full-featured Virtual Contact Center solution, we also offer 8x8 ContactNow, an intelligent, scalable and easy-to-use contact center solution for teams.

- Team Collaboration Interoperability.

With the rise in popularity of team collaboration tools, including Slack, HipChat and various other team collaboration environments, we see a growing need for interoperability between these environments to support contextual communications between teams that are utilizing these tools. A recent addition to the 8x8 Communications Cloud, our Sameroom technology enables team-to-team collaboration via interoperability between the most popular of these tools in the market today.

- Big Data and Analytics.

We believe that visibility into communications data and trends helps businesses optimize productivity and customer engagement. To address this need, we have developed a robust suite of web-based tools to help customers make informed business decisions based on underlying communications data. These analytics tools deliver rapid, easy-to-use, customizable insights into the communications information associated with all 8x8 extensions and supported devices in an organization's communications network.

- Global Reach®.

8x8's Global Reach® initiative refers to our global strategy to provide enterprise-grade quality of service, reliability, security and support for our multinational customers. We serve customers operating in over 100 countries, through 12 data centers that cover seven dispersed regions - United States, Canada, United Kingdom, Continental Europe, Singapore/Asia, Australia and Philippines - helping provide superior call quality to customers worldwide.

- Integration with other Business Applications.

Many businesses are faced with customer communication challenges due to gaps in employee communication, poor internal collaboration, and little or no contextual data available at the time of customer contact. Our software uses a combination of open application program interfaces (APIs) and pre-built integrations to enhance functionality with data from other third-party enterprise applications including Salesforce, Microsoft Dynamics, NetSuite, Zendesk, Oracle Sales Cloud and Hubspot. These integrations expose rich communications data to the applications used every day by groups such as sales, marketing, customer service, HR, finance, and more to improve workflows and drive better productivity.

- Customer & Partner APIs.

The 8x8 Communications Cloud offers a number of open APIs that allow customers and partners to expose rich communications data to their existing enterprise applications. These include APIs for direct access to messaging and chat, meetings, interactive voice response (IVR) /auto attendant, short messaging service (SMS), fax, analytics and data extraction, and provisioning and service management.

- Intuitive User Experience.

Because we deliver our software from one integrated platform, we believe our solutions offer a seamless, intuitive communication experience across voice, messaging, collaboration and video. Our web interfaces act as the communications portal for all 8x8 services and provide customers with a familiar and consistent user experience across all endpoints, as well as integration with many commonly used business productivity application, CRM solutions and vertical business applications.

- Rapid Deployment.

Business agility in the global, modern economy is a competitive necessity, and we embrace the notion that communication services should be deployable as quickly as possible. Our services can be generally be provisioned in minutes from web-based administrative tools. We have automated our provisioning, billing and other systems to provide greater speed and flexibility in deployment for our customers. To ensure consistency and quality across our products and customer base, we have developed a deployment methodology, branded as Elite Touch®, that we apply to all of our deployments, from single-site remote implementation to complex deployments involving multiple sites, global implementation and integration with CRM or other back-end systems.

- Committed Service Quality over the Public Internet.

We currently offer qualifying customers a service level agreement (SLA) with commitments regarding "end-to-end" service availability and voice quality, for calls transmitted over the public Internet. This end-to-end SLA provides for at least 99.99% uptime and a voice-quality mean opinion score (MOS) of 3.0 or higher for at least 98% of all calls carried over the network, subject to customary exceptions and conditions, including the customer's implementation of dual diverse connections to the Internet and adherence to our setup guidelines. We are able to provide these commitments because of our proprietary audio technology stack and the geographical and network architecture, designed to optimize the path for voice data across the Internet.

- Emphasis on Security and Compliance.

Security and compliance in this cloud environment is difficult and expensive to achieve. We believe we have created a top-down culture of security and compliance, including a commitment to secure architecture and development. We have also invested heavily in system security and compliance with U.S. federal regulations including FISMA (Federal Information Security Management Act), HIPAA (Health Insurance Portability and Accountability Act), CPNI (Customer Proprietary Network Information), and International Standards such as ISO/IEC 27001, ISO/IEC 9001, the U.K. Government's Cyber Essentials Plus, and the EU-US Privacy Shield Framework.