BUSINESS COMBINATION

6 Months Ended

Sep. 30, 2019

BUSINESS COMBINATIONS

Wavecell Acquisition

On July 17, 2019, the Company entered into a Share Purchase Agreement (the “Share Purchase Agreement”) with Wavecell Pte. Ltd., a corporation incorporated under the laws of the Republic of Singapore (“Wavecell”), the equity holders of Wavecell (collectively, the “Sellers”), and Qualgro Partners Pte. Ltd., in its capacity as the representative of the equity holders of Wavecell. Pursuant to the Share Purchase Agreement, the Company acquired all of the outstanding shares and other equity interests of Wavecell (the “Transaction”). This acquisition extends 8x8’s technology advantage as a fully-owned, cloud technology platform with unified communications ("UCaaS"), contact center ("CCaaS"), video ("VCaaS") and platform communication APIs ("CPaaS") solutions able to natively offer pre-packaged communications, contact center and video solutions and open APIs to embed these and other communications into an organization’s core business processes.

The total fair value of the purchase consideration of approximately $117.1 million was comprised of approximately $72.8 million in cash and $44.3 million in shares of common stock of the Company, of which approximately $10.4 million in cash and $8.5 million in equity have been heldback to cover potential indemnity claims made by the Company after the closing date. One-third of these heldback amounts are eligible to be released in twelve months from the date of acquisition and the remainder in eighteen months from the date of the acquisition. The heldback cash of $3.5 million and $6.9 million are recorded in restricted cash, current and restricted cash, non-current, respectively and other accrued liabilities and other liabilities, non-current, respectively, in the Company's condensed consolidated balance sheet. The holdback of $8.5 million in equity is included in other liabilities, non-current in the Company's condensed consolidated balance sheet. Additionally, in connection with the acquisition, the Company issued $13.2 million in time-based restricted stock awards and $6.6 million in performance based restricted stock awards all of which vest over the next three years, and which the Company will expense over the same such period.

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



	July 17, 2019
Cash	$	4,473
Accounts receivable	9,438
Intangible assets	21,010
Other assets	787
Goodwill	94,584
Accounts payable	(13,072		)
Deferred revenue	(90		)
Total consideration	$	117,130

The Company will continue to collect information and reevaluate the estimates and assumptions and will record any adjustments to the Company’s preliminary estimates provided that the Company is within the measurement period. The goodwill recognized was primarily attributed to increased synergies that are expected to be achieved from the integration of Wavecell and is not expected to be deductible for income tax purposes. The Company determined the fair values of intangible assets acquired and liabilities assumed with the assistance of third-party valuation consultants. Based on this valuation, the intangible assets acquired are preliminarily (in thousands):



	Fair Value		Useful life (in Years)
Trade and domain names	$	990	3
Developed technology	13,830		7
Customer relationships	6,190		7
Total intangible assets	$	21,010

The Company incurred costs related to this acquisition of approximately $1.6 million during the six months ended September 30, 2019. All acquisition related costs were expensed as incurred and have been recorded in general and administrative expenses in the accompanying consolidated statements of operations.

The revenue and earnings of the acquired business have been included in the Company’s results since the acquisition date and are not material to the Company’s condensed consolidated financial results. Pro forma results of operations for this acquisition have not been presented, as the financial impact to the Company’s condensed consolidated financial statements is not material.