10-Q

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 June 30, 2013

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).     YES  x     NO  ¨

      Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer    ¨ Accelerated filer    x Non-accelerated filer    ¨
(Do not check if a smaller reporting company) Smaller reporting company    ¨

      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 July 24, 2013 was 72,766,173.

FORM 10-Q     PDF as a courtesy
TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION	Page No.
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets at June 30, 2013 and March 31, 2013	3
Condensed Consolidated Statements of Income for the three            months ended June 30, 2013 and 2012	4
Condensed Consolidated Statements of Comprehensive Income for the three            months ended June 30, 2013 and 2012	5
Condensed Consolidated Statements of Cash Flows for the three            months ended June 30, 2013 and 2012	6
Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3. Quantitative and Qualitative Disclosures About Market Risk	23
Item 4. Controls and Procedures	23
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	24
Item 1A. Risk Factors	24
Item 6. Exhibits	25
Signature	26

2

Part I -- FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

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

		June 30,		March 31,
		2013		2013
ASSETS
Current assets:
Cash and cash equivalents	$	55,915	$	50,305
Short-term investments		1,899		1,964
Accounts receivable, net		3,595		3,880
Inventory		567		511
Deferred cost of goods sold		152		182
Deferred tax asset		5,049		6,096
Other current assets		955		732
Total current assets		68,132		63,670
Property and equipment, net		6,636		6,673
Intangible assets, net		9,854		10,194
Goodwill		25,150		25,150
Non-current deferred tax asset		46,526		46,352
Other assets		983		572
Total assets	$	157,281	$	152,611
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	5,500	$	5,644
Accrued compensation		3,711		3,629
Accrued warranty		474		452
Accrued taxes		2,104		1,912
Deferred revenue		1,609		1,236
Other accrued liabilities		905		862
Total current liabilities		14,303		13,735
Non-current liabilities		1,767		1,817
Other non-current liabilities		21		26
Total liabilities		16,091		15,578
Commitments and contingencies (Note 7)
Stockholders' equity:
Common stock		73		72
Additional paid-in capital		248,258		246,176
Accumulated other comprehensive loss		(101)		(36)
Accumulated deficit		(107,040)		(109,179)
Total stockholders' equity		141,190		137,033
Total liabilities and stockholders' equity	$	157,281	$	152,611

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

3

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

		Three Months Ended
		June 30,
		2013		2012
Service revenue	$	27,252	$	23,172
Product revenue		2,752		2,080
Total revenue		30,004		25,252
Operating expenses:
Cost of service revenue		5,221		5,686
Cost of product revenue		3,347		2,710
Research and development		2,336		1,826
Sales and marketing		13,121		10,541
General and administrative		2,790		2,064
Gain on patent sale		-		(11,965)
Total operating expenses		26,815		10,862
Income from operations		3,189		14,390
Other income, net		15		8
Income before provision for income taxes		3,204		14,398
Provision for income taxes		1,065		5,781
Net income	$	2,139	$	8,617
Net income per share:
Basic	$	0.03	$	0.12
Diluted	$	0.03	$	0.12
Weighted average number of shares:
Basic		72,510		70,717
Diluted		75,756		74,110

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

4

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

		Three Months Ended
		June 30,
		2013		2012
Net income	$	2,139	$	8,617
Other comprehensive income, net of tax
Unrealized gain (loss) on investments in securities		(65)		26
Comprehensive income	$	2,074	$	8,643

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

5

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

		Three Months Ended
		June 30,
		2013		2012
Cash flows from operating activities:
Net income	$	2,139	$	8,617
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation		675		505
Amortization		340		357
Stock-based compensation		907		556
Deferred income tax provision		873		5,778
Other		158		75
Changes in assets and liabilities:
Accounts receivable, net		132		(626)
Inventory		(61)		(19)
Other current and noncurrent assets		(306)		(148)
Deferred cost of goods sold		30		(14)
Accounts payable		(316)		(35)
Accrued compensation		82		(22)
Accrued warranty		22		18
Accrued taxes and fees		192		112
Deferred revenue		373		(183)
Other current and noncurrent liabilities		(7)		(45)
Net cash provided by operating activities		5,233		14,926
Cash flows from investing activities:
Purchases of property and equipment		(466)		(1,048)
Cost of capitalized software		(328)		-
Net cash used in investing activities		(794)		(1,048)
Cash flows from financing activities:
Capital lease payments		(5)		(43)
Repurchase of common stock		(120)		(74)
Proceeds from issuance of common stock under employee stock plans		1,296		87
Net cash provided by (used in) financing activities		1,171		(30)
Net increase in cash and cash equivalents		5,610		13,848
Cash and cash equivalents at the beginning of the period		50,305		22,426
Cash and cash equivalents at the end of the period	$	55,915	$	36,274

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

6

8X8, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

1. DESCRIPTION OF THE BUSINESS

THE COMPANY

8x8, Inc. ("8x8" or the "Company") develops and markets cloud-based business communications services encompassing internally developed Voice over Internet Protocol ("VoIP") technologies. These services enable telephony and video applications as well as web-based conferencing and unified communications capabilities. The Company also provides managed hosting and cloud-based computing services. As of June 30, 2013, the Company had approximately 33,700 business customers.

The Company was incorporated in California in February 1987 and was reincorporated in Delaware in December 1996. The Company's fiscal year ends on March 31 of each calendar year. Each reference to a fiscal year in these notes to the condensed consolidated financial statements refers to the fiscal year ending March 31 of the calendar year indicated (for example, fiscal 2014 refers to the fiscal year ending March 31, 2014).

2. BASIS OF PRESENTATION

The accompanying interim condensed 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, 2013. In the opinion of the Company's management, these 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 and liabilities and disclosure of contingent assets and liabilities at the date of the condensed 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, 2013 year-end condensed consolidated balance sheet data in this document were derived from audited consolidated financial statements and do not include all of the disclosures required by U.S. generally accepted accounting principles. These condensed 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, 2013 and notes thereto included in the Company's fiscal 2013 Annual Report on Form 10-K.

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

Service and Product Revenue

The Company recognizes service revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, price is fixed or determinable and collectability is reasonably assured. The Company defers recognition of service revenues in instances when cash receipts are received before services are delivered and recognizes deferred revenues ratably as services are provided.

The Company recognizes revenue from product sales for which there are no related services to be rendered upon shipment to customers provided that persuasive evidence of an arrangement exists, the price is fixed, title has transferred, collection of resulting receivables is reasonably assured, there are no customer acceptance requirements, and there are no remaining significant obligations. Gross outbound shipping and handling charges are recorded as revenue, and the related costs are included in cost of goods sold. Reserves for returns and allowances for customer sales are recorded at the time of shipment. In accordance with the ASC 985-605, the Company records shipments to distributors, retailers, and resellers, where the right of return exists, as deferred revenue. The Company defers recognition of revenue on sales to distributors, retailers, and resellers until products are resold to the customer.

7

The Company records revenue net of any sales-related taxes that are billed to its customers. The Company believes this approach results in consolidated financial statements that are more easily understood by users. Under the terms of the Company's typical subscription agreement, new customers can terminate their service within 30 days of order placement and receive a full refund of fees previously paid. The Company has determined that it has sufficient history of subscriber conduct to make a reasonable estimate of cancellations within the 30-day trial period. Therefore, the Company recognizes new subscriber revenue in the month in which the new order was shipped, net of an allowance for expected cancellations.

Multiple Element Arrangements

Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 605-25 requires that revenue arrangements with multiple deliverables be divided into separate units of accounting if the deliverables in the arrangement meet specific criteria.  The provisioning of the 8x8 VoIP service with the accompanying 8x8 IP telephone constitutes a revenue arrangement with multiple deliverables.  For arrangements with multiple deliverables, the Company allocates the arrangement consideration to all deliverables based on their relative selling prices. In such circumstances, the accounting principles establish a hierarchy to determine the relative selling price to be used for allocating arrangement consideration to deliverables as follows: (i) vendor-specific objective evidence of fair value ("VSOE"), (ii) third-party evidence of selling price ("TPE"), and (iii) best estimate of the selling price ("BESP").

VSOE generally exists only when the Company sells the deliverable separately, on more than a limited basis, at prices within a relatively narrow range.  When VSOE cannot be established, the Company attempts to establish the selling price of deliverables based on relevant TPE. TPE is determined based on manufacturer's prices for similar deliverables when sold separately, when possible. When the Company is unable to establish selling price using VSOE or TPE, it uses a BESP for the allocation of arrangement consideration. The objective of BESP is to determine the price at which the Company would transact a sale if the product or service was sold on a stand-alone basis. BESP is generally used for offerings that are not typically sold on a stand-alone basis or for new or highly customized offerings. The Company determines BESP for a product or service by considering multiple factors including, but not limited to:

• the price list established by its management which is typically based on general pricing practices and targeted gross margin of products and services sold; and
• analysis of pricing history of new arrangements, including multiple element and stand-alone transactions.

In accordance with the guidance of ASC 605-25, when the Company enters into revenue arrangements with multiple deliverables the Company allocates arrangement consideration, including activation fees, among the 8x8 IP telephones and subscriber services based on the their relative selling prices. Arrangement consideration allocated to the IP telephones is recognized as product revenues during the period of the sale less the allowance for estimated returns during the 30-day trial period. Arrangement consideration allocated to subscriber services is recognized ratably as service revenues as the related services are provided, which is generally over the initial contract term.

No customer represented greater than 10% of the Company's total revenue for the three months ended June 30, 2013 or 2012. Revenue from technology licensing and related software and customers outside the United States was not material for the three months ended June 30, 2013 or 2012.

Deferred Cost of Goods Sold

Deferred cost of goods sold represents the cost of products sold for which the end customer or distributor has a right of return. The cost of the products sold is recognized contemporaneously with the recognition of revenue, when the subscriber has accepted the service.

8

Intangible Assets

Amortization expense for the customer relationship intangible asset is included in sales and marketing expenses. Amortization expense for technology is included in cost of service revenue. The carrying values of intangible assets were as follows (in thousands):

		June 30, 2013						March 31, 2013
		Gross						Gross
		Carrying		Accumulated		Net Carrying		Carrying		Accumulated		Net Carrying
		Amount		Amortization		Amount		Amount		Amortization		Amount
Technology	$	8,242	$	(1,462)	$	6,780	$	8,242	$	(1,256)	$	6,986
Customer relationships		3,305		(1,188)		2,117		3,305		(1,054)		2,251
Trade names/domains		957		-		957		957		-		957
Total acquired identifiable
intangible assets	$	12,504	$	(2,650)	$	9,854	$	12,504	$	(2,310)	$	10,194

At June 30, 2013, 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 2014	$	994
2015		1,325
2016		1,325
2017		1,318
2018		1,070
Thereafter		2,865
Total	$	8,897

Research, Development and Software Costs

The Company accounts for software to be sold or otherwise marketed in accordance with ASC 985-20, Costs of Software to be Sold, Leased or Marketed which requires capitalization of certain software development costs subsequent to the establishment of technological feasibility. The Company defines establishment of technological feasibility as the completion of a working model. Software development costs for software to be sold or otherwise marketed incurred prior to the establishment of technological feasibility are included in research and development and are expensed as incurred. Software development costs incurred subsequent to the establishment of technological feasibility through the period of general market availability of the product are capitalized, if material.

In the first fiscal quarter of 2014, the Company capitalized $0.3 million of software development costs in accordance with ASC 985-20. At June 30, 2013, total capitalized software development costs included in other long-term assets was approximately $0.5 million and there were no accumulated amortization costs related to capitalized software.

9

Stock Purchase Right/Restricted Stock Unit and Option Activity

Stock purchase right activity for the three months ended June 30, 2013 is summarized as follows:

			Weighted	Weighted
			Average	Average
			Grant-Date	Remaining
	Number of		Fair Market	Contractual
	Shares		Value	Term (in Years)
Balance at March 31, 2013	958,575	$	4.11	2.52
Granted	-		-
Released	(85,205)		2.29
Forfeited	(8,750)		5.30
Balance at June 30, 2013	864,620	$	4.27	2.36

Restricted stock unit activity for the three months ended June 30, 2013 is summarized as follows:

				Weighted
			Weighted	Average
			Average	Remaining
	Number of		Purchase	Contractual
	Shares		Price	Term (in Years)
Balance at March 31, 2013	25,000	$	-	2.47
Granted	73,500		-
Released	-		-
Forfeited	-		-
Balance at June 30, 2013	98,500	$	-	2.28

Option activity for the three months ended June 30, 2013 is summarized as follows:

				Weighted
		Shares		Average
	Shares	Subject to		Exercise
	Available	Options		Price
	for Grant	Outstanding		Per Share
Balance at March 31, 2013	3,175,261	5,991,544	$	2.52
Granted - options	(90,000)	90,000		7.56
Stock purchase rights/restricted stock unit (1)	(73,500)	-		-
Exercised	-	(575,570)		2.25
Canceled/forfeited	10,046	(10,046)		3.83
Termination of plans	(1,774)	-		-
Balance at June 30, 2013	3,020,033	5,495,928	$	2.63

(1) The reduction to shares available for grant includes awards granted of 73,500 shares.

10

The following table summarizes the stock options outstanding and exercisable at June 30, 2013:

	Options Outstanding						Options Exercisable
			Weighted	Weighted					Weighted
			Average	Average					Average
			Exercise	Remaining		Aggregate			Exercise		Aggregate
Range of			Price	Contractual		Intrinsic			Price		Intrinsic
Exercise Price	Shares		Per Share	Life (Years)		Value	Shares		Per Share		Value
$0.55 - $1.26	1,760,000	$	1.04	4.4	$	12,676,010	1,760,000	$	1.04	$	12,676,010
$1.27 - $1.77	1,112,961	$	1.49	2.7		7,515,829	1,112,961	$	1.49		7,515,829
$1.78 - $3.35	1,205,402	$	2.61	5.3		6,786,158	880,627	$	2.54		5,021,497
$3.36 - $5.87	1,285,565	$	5.35	8.9		3,711,260	330,931	$	5.16		1,019,054
$5.88 - $7.56	132,000	$	7.03	9.7		159,900	10,749	$	6.47		18,999
	5,495,928				$	30,849,157	4,095,268			$	26,251,389

Stock-based Compensation Expense

As of June 30, 2013, there was $7.1 million of unamortized stock-based compensation expense related to unvested stock awards which is expected to be recognized over a weighted average period of 2.74 years.

To value option grants and stock purchase rights for stock-based compensation, the Company used the Black-Scholes option valuation model. Fair value determined using the Black-Scholes option valuation model varies based on assumptions used for the expected stock price volatility, expected life, risk-free interest rates and future dividend payments. During the three month periods ended June 30, 2013 and 2012, the Company used the historical volatility of the Company's stock over a period equal to the expected life of the options to their fair value. The expected life assumptions represent the weighted-average period the stock-based awards are expected to remain outstanding. These expected life assumptions are established through the review of historical exercise behavior of stock-based award grants with similar vesting periods. The risk-free interest rate is based on the closing market bid yields on actively traded U.S. treasury securities in the over-the-counter market for the expected term equal to the expected term of the option. The dividend yield assumption is based on the Company's history and expectation of future dividend payouts.

The following table summarizes the assumptions used to compute reported stock-based compensation to employees and directors for the three months ended June 30, 2013 and 2012:

		Three Months Ended
		June 30,
		2013		2012
Expected volatility		66%		70%
Expected dividend yield		-		-
Risk-free interest rate		0.73%		0.60%
Weighted average expected option term		4.50 years		4.30 years
Weighted average fair value of options granted	$	3.96	$	2.25

In accordance with ASC 718 - Stock Compensation, the Company recorded $718,000 and $382,000 in compensation expense relative to stock-based awards for the three months ended June 30, 2013 and 2012, respectively.

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Employee Stock Purchase Plan

Under the Company's Employee Stock Purchase Plan, or ESPP, eligible employees can participate and purchase common stock semi-annually through payroll deductions at a price equal to 85% of the fair market value of the common stock at the beginning of each one year offering period or the end of the applicable six month purchase period within that offering period, whichever is lower. The contribution amount may not exceed 10% of an employee's base compensation, including commissions but not including bonuses and overtime. The Company accounts for the ESPP as a compensatory plan and recorded compensation expense of $189,000 and $174,000 for the three months ended June 30, 2013 and 2012, respectively, in accordance with ASC 718.

As of June 30, 2013, there was $186,000 of total unrecognized compensation cost related to employee stock purchases. These costs are expected to be recognized over a weighted average period of 0.5 years.

ASC 718 requires the benefits of tax deductions in excess of recognized compensation costs to be reported as a financing cash flow, rather than as an operating cash flow. The future realization of tax benefits related to stock-based compensation is dependent upon the timing of employee exercises and future taxable income, among other factors. The Company did not realize any tax benefit from the stock-based compensation charges incurred during the three months ended June 30, 2013 and 2012.

The following table summarizes the classification of stock-based compensation expense related to employee stock options and employee stock purchases under ASC 718 among the Company's operating functions for the three months ended June 30, 2013 and 2012 which was recorded as follows (in thousands):

		Three Months Ended
		June 30,
		2013		2012
Cost of service revenues	$	68	$	43
Cost of product revenues		-		1
Research and development		154		95
Sales and marketing		347		316
General and administrative		338		101
Total stock-based compensation expense related to
employee stock options and employee stock purchases, pre-tax		907		556
Tax benefit		-		-
Stock-based compensation expense related to employee
stock options and employee stock purchases, net of tax	$	907	$	556

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3. FAIR VALUE MEASUREMENT

The following tables present the Company's fair value hierarchy for assets and liabilities measured at fair value on a recurring basis at June 30, 2013 and March 31, 2013 (in thousands):

		Quoted Prices
		in Active
		Markets		Other		Significant
		for Identical		Observable		Unobservable		Balance at
		Assets		Inputs		Inputs		June 30,
		(Level 1)		(Level 2)		(Level 3)		2013
Cash equivalents:
Money market funds	$	14,378	$	-	$	-	$	14,378
Short-term investments:
Mutual funds		1,899		-		-		1,899
Total	$	16,277	$	-	$	-	$	16,277

		Quoted Prices
		in Active
		Markets		Other		Significant
		for Identical		Observable		Unobservable		Balance at
		Assets		Inputs		Inputs		March 31,
		(Level 1)		(Level 2)		(Level 3)		2013
Cash equivalents:
Money market funds	$	14,376	$	-	$	-	$	14,376
Short-term investments:
Mutual funds		1,964		-		-		1,964
Total	$	16,340	$	-	$	-	$	16,340

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4. BALANCE SHEET DETAIL

		June 30,		March 31,
		2013		2013
Inventory (in thousands):
Work-in-process	$	23	$	23
Finished goods		544		488
	$	567	$	511

5. NET INCOME PER SHARE

Basic net income per share is computed by dividing net income available to common stockholders (numerator) by the weighted average number of vested, unrestricted common shares outstanding during the period (denominator). Diluted net income per share is computed on the basis of the weighted average number of shares of common stock outstanding plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include shares issuable upon exercise of outstanding stock options and under the ESPP.

		Three Months Ended
		June 30,
		2013		2012
		(in thousands, except per share amounts)
Numerator:
Net income available to common stockholders	$	2,139	$	8,617
Denominator:
Common shares		72,510		70,717
Denominator for basic calculation		72,510		70,717
Employee stock options		2,911		2,759
Stock purchase rights		335		309
Employee stock purchase plan		-		325
Denominator for diluted calculation		75,756		74,110
Net income per share
Basic	$	0.03	$	0.12
Diluted	$	0.03	$	0.12

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

	Three Months Ended
	June 30,
	2013	2012
Employee stock options	935	774
Stock purchase rights	2	3
Total anti-dilutive employee share-based securities	937	777

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6. INCOME TAXES

For the three months ended June 30, 2013, the Company recorded a provision for income taxes of $1.1 million which was primarily attributable to net income from operations. For the three months ended June 30, 2012, the Company recorded a provision for income taxes of $5.8 million which was primarily attributable to net income from operations, including the gain on sale of patents.

The effective tax rate is calculated by dividing the income tax provision by net income before income tax expense.

At March 31, 2013, there was $3.0 million of unrecognized tax benefits that, if recognized, would have affected the effective tax rate. The Company does not believe that there has been any significant change in the unrecognized tax benefits in the three-month period ended June 30, 2013 and does not believe it is reasonably possible that the unrecognized tax benefit will materially change in the next 12 months. To the extent that the unrecognized tax benefits are ultimately recognized they may have an impact on the effective tax rate in future periods.

The Company is subject to taxation in the U.S., California and various other states and foreign jurisdictions in which it has or had a subsidiary or branch operations or it is collecting sales tax. All tax returns from fiscal 1995 to fiscal 2013 may be subject to examination by the Internal Revenue Service, California and various other states. As of July 24, 2013, there were no active federal or state income tax audits. Returns filed in foreign jurisdictions may be subject to examination for the fiscal years 2009 to 2010.

7. COMMITMENTS AND CONTINGENCIES

Guarantees

Indemnifications

In the normal course of business, the Company indemnifies other parties, including customers, lessors and parties to other transactions with the Company, with respect to certain matters. Under these arrangements, the Company typically agrees to hold the other party harmless against losses arising from a breach of representations or covenants, intellectual property infringement or other claims made against certain parties. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. In addition, the Company has entered into indemnification agreements with its officers and directors.

It is not possible to determine the maximum potential amount of the Company's exposure under these indemnification agreements due to the limited history of indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically, payments made by the Company under these agreements have not had a material impact on the Company's operating results, financial position or cash flows. Under some of these agreements, however, the Company's potential indemnification liability might not have a contractual limit.

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Product Warranties

The Company accrues for the estimated costs that may be incurred under its product warranties upon revenue recognition. Changes in the Company's product warranty liability, which is included in cost of product revenue in the condensed consolidated statements of income, were as follows (in thousands):

		Three Months Ended
		June 30,
		2013		2012
Balance at beginning of period	$	452	$	387
Accruals for warranties		177		171
Settlements		(155)		(153)
Balance at end of period	$	474	$	405

Minimum Third Party Customer Support Commitments

In the third quarter of fiscal 2010, the Company amended a contract with one of its third party customer support vendors containing a minimum monthly commitment of approximately $430,000. The agreement requires a 150-day notice to terminate. The total remaining obligation under the amended contract is $2.2 million.

Minimum Third Party Network Service Provider Commitments

The Company entered into contracts with multiple vendors for third party network services that expire on various dates in fiscal 2013 and 2014. At June 30, 2013, future minimum annual payments under these third party network service contracts were as follows (in thousands):

Year ending March 31:
Remaining 2014	$	1,732
2015		1,579
2016		52
Total minimum payments	$	3,363

Legal Proceedings

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

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On February 22, 2011, the Company was named a defendant in a lawsuit, Bear Creek Technologies, Inc. v. 8x8, Inc. et al., along with 20 other defendants. On August 17, 2011, the Company was dismissed without prejudice from this lawsuit under Rule 21 of the Federal Rules of Civil Procedure. On August 17, 2011, the Company was sued again by Bear Creek Technologies, Inc. in the United States District Court for the District of Delaware. The Company believes it has factual and legal defenses to these claims and is presenting a vigorous defense.  Further, on November 28, 2012, the U.S. Patent & Trademark Office initiated a Reexamination proceeding with a Reexamination Declaration explaining that there is a substantial new question of patentability, based on four separate grounds, affecting each claim of the patent which is the basis for the complaint filed against the Company.  On March 26, 2013, the USPTO issued a first Office Action in the Reexamination, with all claims of the '722 patent being rejected on each of the four separate grounds raised in the Request for Reexamination.  On July 10, 2013, the Company filed an informational pleading in support of (and joining) a pending motion to stay the proceeding in the District Court, which granted the motion on July 17, 2013, based on the possibility that at least one of the USPTO rejections will be upheld and considering the USPTO's conclusion that Bear Creek's patent suffers from a defective claim for priority. The Company cannot estimate potential liability in this case at this early stage of litigation.

On October 25, 2011, the Company was named a defendant in a lawsuit, Klausner Technologies, Inc. v. Oracle Corporation et al., along with 30 other defendants. The lawsuit alleges infringement of a patent that is now believed to have expired. On November 1, 2011, Klausner dismissed the Complaint voluntarily and filed new complaints separating the defendants, including a new Complaint against 8x8. The Company believes it has factual and legal defenses to these claims and is presenting a vigorous defense. The Company has filed several motions, including a motion to transfer and a motion to dismiss the complaint on February 23, 2012. On March 21, 2013, the District Court granted 8x8's Motion to Change Venue, and has ordered the transfer of the case to the US District Court for the Northern District of California. The Company has not answered the complaint yet and cannot estimate potential liability in this case at this early stage of the litigation.

State and Municipal Taxes

From time to time, the Company has received inquiries from a number of state and municipal taxing agencies with respect to the remittance of taxes. 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.

8. PATENT SALE

On June 22, 2012, the Company entered into a patent purchase agreement and sold a family of patents to a third party for $12.0 million plus a future payment of up to a maximum of $3.0 million based on future license agreements entered into by the third party purchaser. In the fourth quarter of fiscal 2013, the Company recognized a gain of $1.0 million due to the third party purchaser entering into a license agreement. Under the terms and conditions of the patent purchase agreement, the Company has retained certain limited rights to continue to use the patents. The patent purchase agreement contains representations and warranties customary for transactions of this type.

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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," "estimates," "predicts," "potential," "continue," "strategy," "believes," "anticipates," "plans," "expects," "intends," 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, customer acceptance and demand for our voice over Internet protocol, or VoIP, telephony products and services, the reliability of our services, the prices for our services, customer renewal rates, customer acquisition costs, our ability to compete effectively in the hosted telecommunications services business, actions by our competitors, including price reductions for their telephone services, potential federal and state regulatory actions, compliance costs, potential warranty claims and product defects, our need for and the availability of adequate working capital, our ability to innovate technologically, the timely supply of products by our contract manufacturers, 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 2013 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

We develop and market telecommunications services for Internet protocol, or IP, telephony and video applications as well as contact center, web-based conferencing and unified communications services, and cloud-based computing services. As of June 30, 2013, we had approximately 33,700 business customers. Since fiscal 2004, substantially all of our revenue has been generated from the sale, license and provision of VoIP products, services and technology. Prior to fiscal 2003, our focus was on our VoIP semiconductor business.

Our fiscal year ends on March 31 of each calendar year. Each reference to a fiscal year in this report refers to the fiscal year ending March 31 of the calendar year indicated (for example, fiscal 2014 refers to the fiscal year ending March 31, 2014).

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. Our critical accounting policies and estimates are discussed in our Annual Report on Form 10-K for the fiscal year ended March 31, 2013. As of June 30, 2013, there had been no material changes to our critical accounting policies and estimates.

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SELECTED OPERATING STATISTICS

We periodically review certain key business metrics, within the context of our articulated performance goals, in order to evaluate the effectiveness of our operational strategies, allocate resources and maximize the financial performance of our business. The selected operating statistics include the following:

	Selected Operating Statistics
	June 30,	March 31,	Dec 31,	Sept. 30,	June 30,
	2013	2013	2012	2012	2012
Gross business customer additions (1)	2,702	2,808	2,617	2,915	2,943
Number of new services sold (1)(2)	47,353	50,728	44,391	42,920	41,146
Average number of subscribed services
per new business customer (3)	17.5	18.1	17.0	14.7	14.0
Business subscriber acquisition cost
per service (4)	$ 96	$ 92	$ 98	$ 89	$ 97
Total business customers (5)	33,662	32,535	31,473	30,498	29,913
Average number of subscribed services
per business customer (6)	11.8	11.5	11.2	10.6	10.1
Business customer average monthly
service revenue per customer (7)	$ 268	$ 263	$ 260	$ 256	$ 250
Monthly business customer churn (less
cancellations within 30 days
of sign-up) (8)	1.4%	1.7%	1.6%	2.4%	1.7%
Monthly business service revenue churn	1.2%	1.5%	2.6%	1.0%	2.3%
Overall service margin	81%	80%	78%	76%	75%
Overall product margin	-22%	-17%	-34%	-22%	-30%
Overall gross margin	71%	71%	68%	68%	67%

(1)	Does not include customers of Virtual Office Solo or Zerigo, Inc. ("Zerigo").
(2)	Number of recurring revenue services sold to business customers during the period.
(3)	Number of new services sold divided by gross business customer additions.
(4)	The combined costs of advertising, marketing, promotions, sales commissions and equipment subsidies for new services sold during the period divided by the number of new services sold during the period.
(5)	Business customers are defined as customers paying for service. Customers that are currently in the 30-day trial period are considered to be customers that are paying for service. Customers subscribing to Virtual Office Solo or Zerigo services are not included as business customers.
(6)	The simple average number of subscribed services divided by the simple average number of business customers during the period. The simple average number of subscribed services is the number of subscribed services on the first day of the period plus the number of subscribed services on the last day of the period divided by two. The simple average number of business customers is the number of business customers on the first day of the period plus the number of business customers on the last day of the period divided by two.
(7)	Business customer average monthly service revenue per customer is service revenue from business customers in the period divided by the number of months in the period divided by the simple average number of business customers during the period.
(8)	Business customer churn is calculated by dividing the number of business customers that terminated (after the expiration of the 30-day trial) by the simple average number of business customers and dividing the result by the number of months in the period. In the second quarter of fiscal 2013, an affiliate with 411 business customers representing approximately $9,000 of monthly service revenue cancelled service. Excluding these 411 cancellations, business customer churn (less cancellations within 30 days of sign-up) was 1.9%.

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RESULTS OF OPERATIONS

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

		June 30,				Dollar	Percent
Service revenue		2013		2012		Change	Change
		(dollar amounts in thousands)
Three months ended	$	27,252	$	23,172	$	4,080	17.6%
Percentage of total revenue		90.8%		91.8%

Service revenue consists primarily of revenue attributable to the provision of our 8x8 services and royalties earned under our VoIP technology licenses. We expect that 8x8 service revenues will continue to comprise nearly all of our service revenues for the foreseeable future. 8x8 service revenues increased in the first quarter of fiscal 2014 primarily due to the increase in our business customer subscriber base. Our business subscriber base grew from approximately 30,000 business customers on June 30, 2012, to approximately 33,700 on June 30, 2013. The increase was partially offset by a decrease in customers of our residential services. These changes were consistent with the redirection of our marketing efforts toward our business customer service. We expect the trends to continue in future periods.

		June 30,				Dollar	Percent
Product revenue		2013		2012		Change	Change
		(dollar amounts in thousands)
Three months ended	$	2,752	$	2,080	$	672	32.3%
Percentage of total revenue		9.2%		8.2%

Product revenue consists primarily of revenue from sales of IP telephones attributable to our 8x8 service. Product revenue increased in the first quarter of fiscal 2014 primarily due to an increase in equipment sales to business customers.

No customer represented greater than 10% of our total revenue for the three months ended June 30, 2013 and 2012. Revenue from customers outside the United States was not material for the three months ended June 30, 2013 or 2012.

		June 30,				Dollar	Percent
Cost of service revenue		2013		2012		Change	Change
		(dollar amounts in thousands)
Three months ended	$	5,221	$	5,686	$	(465)	-8.2%
Percentage of service revenue		19.2%		24.5%

The cost of service revenue primarily consists of costs associated with network operations and related personnel, telephony origination and termination services provided by third party carriers and technology license and royalty expenses. Cost of service revenue for the three months ended June 30, 2013 decreased over the comparable period in the prior fiscal year primarily due to a $0.3 million reduction in third party network service expenses, a $0.1 million reduction in license and fee expenses and a $0.1 million reduction in other cost of service expenses.

		June 30,				Dollar	Percent
Cost of product revenue		2013		2012		Change	Change
		(dollar amounts in thousands)
Three months ended	$	3,347	$	2,710	$	637	23.5%
Percentage of product revenue		121.6%		130.3%

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The cost of product revenue consists of costs associated with systems, components, system manufacturing, assembly and testing performed by third-party vendors, estimated warranty obligations and direct and indirect costs associated with product purchasing, scheduling, quality assurance, shipping and handling. The amount of revenue allocated to product revenue based on the relative selling price is less than the cost of the IP phone equipment. The cost of product revenue for the three months ended June 30, 2013 increased over the comparable period in the prior fiscal year primarily due to an increase in equipment shipped to customers.

		June 30,				Dollar	Percent
Research and development		2013		2012		Change	Change
		(dollar amounts in thousands)
Three months ended	$	2,336	$	1,826	$	510	27.9%
Percentage of total revenue		7.8%		7.2%

Historically, our research and development expenses have consisted primarily of personnel, system prototype design, and equipment costs necessary for us to conduct our development and engineering efforts. In the first fiscal quarter of 2014, we capitalized $0.3 million of software development costs in accordance with ASC 985-20. We expensed all other research and development costs as they were incurred. The research and development expenses for the three months ended June 30, 2013 increased over the comparable period in the prior fiscal year primarily due to a $0.2 million increase in payroll and related costs, a $0.2 million consulting and outside service expenses, and a $0.1 million increase in other research and development expenses.

		June 30,				Dollar	Percent
Sales and marketing		2013		2012		Change	Change
		(dollar amounts in thousands)
Three months ended	$	13,121	$	10,541	$	2,580	24.5%
Percentage of total revenue		43.7%		41.7%

Sales and marketing expenses consist primarily of personnel and related overhead costs for sales, marketing, and customer service. 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 the first quarter of fiscal 2014 increased over the same quarter in the prior fiscal year primarily because of a $1.6 million increase in payroll and related costs, a $0.3 million increase in advertising expenses, a $0.1 million increase in bad debt expenses, a $0.1 million increase in travel and meal expenses, a $0.1 million increase in credit card discount fees, a $0.1 million increase in indirect channel commission expenses, a $0.1 million increase in tradeshow expenses and a $0.2 million increase in other sales and marketing expenses.

		June 30,				Dollar	Percent
General and administrative		2013		2012		Change	Change
		(dollar amounts in thousands)
Three months ended	$	2,790	$	2,064	$	726	35.2%
Percentage of total revenue		9.3%		8.2%

General and administrative expenses consist primarily of personnel and related overhead costs for finance, human resources and general management. General and administrative expenses for the first quarter of fiscal 2014 increased over the same quarter in the prior fiscal year primarily because of a $0.6 million increase in payroll and related costs, a $0.2 million increase in rent expenses. The increase in general and administrative expenses was partially offset by a $0.1 million reduction in other general and administrative expenses.

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		June 30,				Dollar	Percent
Gain on patent sale		2013		2012		Change	Change
		(dollar amounts in thousands)
Three months ended	$	-	$	(11,965)	$	11,965	-100.0%
Percentage of total revenue		0.0%		-47.4%

In June 2012, we entered into a patent purchase agreement for the sale of a family of United States patents for $12.0 million in cash. We recognized a $12.0 million gain on this transaction, which has been recorded as a reduction of operating expenses in the consolidated statements of operations. The gain was comprised of the $12.0 million of proceeds, net of transaction costs.

		June 30,				Dollar	Percent
Other income, net		2013		2012		Change	Change
		(dollar amounts in thousands)
Three months ended	$	15	$	8	$	7	87.5%
Percentage of total revenue		0.0%		0.0%

In the three months ended June 30, 2013 and 2012, other income, net primarily consisted of interest income earned on our cash, cash equivalents and investments.

		June 30,				Dollar	Percent
Provision for income tax		2013		2012		Change	Change
		(dollar amounts in thousands)
Three months ended	$	1,065	$	5,781	$	(4,716)	-81.6%
Percentage of income
before provision for income taxes		33.2%		40.2%

For the three months ended June 30, 2013, we recorded a provision for income taxes of $1.1 million which was primarily attributable to net income from operations, reduced by $0.2 million for a true-up of prior period city income tax returns that was treated as a discrete item for the quarter. For the three months ended June 30, 2012, we recorded a provision for income taxes of $5.8 million which was primarily attributable to net income from operations, including the gain on sale of patents.

The effective tax rate is calculated by dividing the income tax provision by net income before income tax expense. We estimate our annual effective tax rate at the end of each quarter. In estimating the annual effective tax rate, we, in consultation with our tax advisors, 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.

Liquidity and Capital Resources

As of June 30, 2013, we had approximately $57.8 million in cash, cash equivalents and short-term investments.

Net cash provided by operating activities for the three months ended June 30, 2013 was approximately $5.2 million, compared with $14.9 million for the three months ended June 30, 2012. The decrease in cash flow was primarily due to a $12.0 million gain on the sale of a patent family in June 2012, net of an increase in service and product revenue in the first three months of fiscal 2013. Cash provided by operating activities has historically been affected by the amount of net income, sales of subscriptions, changes in working capital accounts particularly in deferred revenue due to timing of annual plan renewals, add-backs of non-cash expense items such as the use of deferred tax assets, depreciation and amortization and the expense associated with stock-based awards.

22

Net cash used in investing activities was $0.8 million during the three months ended June 30, 2013, compared with $1.0 million used in investing activities for the three months ended June 30, 2012. The decrease in cash used in investing activities during the three months ended June 30, 2013 is primarily related to a decrease in the purchase of additional equipment ($0.5 million).

Our financing activities for the three months ended June 30, 2013 consisted primarily of cash from the issuance of shares due to exercise of employee stock options ($1.3 million) offset by cash used to repurchase shares of our common stock ($0.1 million).

Contractual Obligations

We lease our headquarters facility in San Jose, California under an operating lease agreement that expires in October 2019. The lease is an industrial net lease with monthly base rent of $130,821 for the first 15 months with a 3% increase each year thereafter, and requires us to pay property taxes, utilities and normal maintenance costs.

We entered into a series of noncancelable capital lease agreements for office equipment bearing interest at various rates. Assets under capital lease at June 30, 2013 totaled $110,000 with accumulated amortization of $73,000.

In the third quarter of 2010, we amended the contract with one of our third party customer support vendors containing a minimum monthly commitment of approximately $430,000. The agreement requires a 150-day notice to terminate. At June 30, 2013, the total remaining obligation under the contract was $2.2 million.

We have entered into contracts with multiple vendors for third party network services. At June 30, 2013, future minimum annual payments under these third party network service contracts were $1,732,000 in 2014, $1,579,000 in 2015 and $52,000 in 2016.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Currency

Our financial market risk consists primarily of risks associated with international operations and related foreign currencies. We derive a portion of our revenue from customers in Europe and Asia. In order to reduce the risk from fluctuation in foreign exchange rates, the vast majority of our sales are denominated in U.S. dollars. In addition, almost all of our arrangements with our contract manufacturers are denominated in U.S. dollars. We have not entered into any currency hedging activities. To date, our exposure to exchange rate volatility has not been significant; however, there can be no assurance that there will not be a material impact in the future.

Investments

We maintain an investment portfolio of various holdings, types and maturities. These marketable securities and investments are generally classified as available for sale and, consequently, are recorded on the balance sheet at fair value with unrealized gains or losses reported as a separate component of accumulated other comprehensive loss. Part of this portfolio includes investments in mutual funds.

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.

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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 June 30, 2013.

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 first quarter of fiscal 2014, 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

Descriptions of our legal proceedings are contained in Part I, Item 1, Financial Statements - Notes to Condensed Consolidated Financial Statements — "Note 7".

ITEM 1A. Risk Factors

We face many significant risks in our business, some of which are unknown to us and not presently foreseen. These risks could have a material adverse impact on our business, financial condition and results of operations in the future. We have disclosed a number of material risks under Part I, Item 1A of our annual report on Form 10-K for the fiscal year ended March 31, 2013, which we filed with the Securities and Exchange Commission on May 28, 2013.

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ITEM 6. EXHIBITS

Exhibit Number	Description
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.      (PDF as a courtesy)
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.      (PDF as a courtesy)
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.      (PDF as a courtesy)
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.      (PDF as a courtesy)
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
*	Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability.

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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: July 26, 2013

8X8, INC. 

(Registrant) 

By: /s/ DANIEL WEIRICH          

Daniel Weirich 

Chief Financial Officer
(Principal Financial and Chief Accounting Officer and Duly Authorized Officer)

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EX-31.1 2 exh31-1.htm CEO 302 CERTIFICATE

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, Bryan R. Martin, 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:

1. 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;
2. 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;
3. 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
4. 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):

1. 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
2. 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.

July 26, 2013

/s/ BRYAN R. MARTIN
Bryan R. Martin
Chairman, Chief Executive Officer and President

EX-31.1

Q1 2014 Exhibit 31.1

EX-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, Daniel Weirich, 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:

1. 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;
2. 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;
3. 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
4. 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):

1. 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
2. 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.

July 26, 2013

/s/ DANIEL WEIRICH
Daniel Weirich
Chief Financial Officer and Secretary

EX-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 June 30, 2013, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Bryan R. Martin, Chairman, Chief Executive Officer and President 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:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ BRYAN R. MARTIN
Bryan R. Martin
Chairman, Chief Executive Officer and President

July 26, 2013

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.

EX-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 June 30, 2013, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Daniel Weirich, Chief Financial Officer and Secretary 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:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ DANIEL WEIRICH
Daniel Weirich
Chief Financial Officer and Secretary

July 26, 2013

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.

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Stock Options Outstanding And Exercisable (Tables)

3 Months Ended

Jun. 30, 2013

Stock Options Outstanding And Exercisable Tables

Summary Of Outstanding And Exercisable Stock Options

The following table summarizes the stock options outstanding and exercisable at June 30, 2013:

	Options Outstanding						Options Exercisable
			Weighted	Weighted					Weighted
			Average	Average					Average
			Exercise	Remaining		Aggregate			Exercise		Aggregate
Range of			Price	Contractual		Intrinsic			Price		Intrinsic
Exercise Price	Shares		Per Share	Life (Years)		Value	Shares		Per Share		Value
$0.55 - $1.26	1,760,000	$	1.04	4.4	$	12,676,010	1,760,000	$	1.04	$	12,676,010
$1.27 - $1.77	1,112,961	$	1.49	2.7		7,515,829	1,112,961	$	1.49		7,515,829
$1.78 - $3.35	1,205,402	$	2.61	5.3		6,786,158	880,627	$	2.54		5,021,497
$3.36 - $5.87	1,285,565	$	5.35	8.9		3,711,260	330,931	$	5.16		1,019,054
$5.88 - $7.56	132,000	$	7.03	9.7		159,900	10,749	$	6.47		18,999
	5,495,928				$	30,849,157	4,095,268			$	26,251,389

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Statement of Comprehensive Income [Abstract]
Net income	$ 2,139	$ 8,617
Other comprehensive income (loss), net of tax
Unrealized gain (loss) on investments in securities	(65)	26
Comprehensive income	$ 2,074	$ 8,643

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NET INCOME PER SHARE - Note 5

3 Months Ended

Jun. 30, 2013

Notes to Financial Statements

NET INCOME PER SHARE - Note 5

5. NET INCOME PER SHARE

Basic net income per share is computed by dividing net income available to common stockholders (numerator) by the weighted average number of vested, unrestricted common shares outstanding during the period (denominator). Diluted net income per share is computed on the basis of the weighted average number of shares of common stock outstanding plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include shares issuable upon exercise of outstanding stock options and under the ESPP.

		Three Months Ended
		June 30,
		2013		2012
		(in thousands, except per share amounts)
Numerator:
Net income available to common stockholders	$	2,139	$	8,617
Denominator:
Common shares		72,510		70,717
Denominator for basic calculation		72,510		70,717
Employee stock options		2,911		2,759
Stock purchase rights		335		309
Employee stock purchase plan		-		325
Denominator for diluted calculation		75,756		74,110
Net income per share
Basic	$	0.03	$	0.12
Diluted	$	0.03	$	0.12

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

	Three Months Ended
	June 30,
	2013	2012
Employee stock options	935	774
Stock purchase rights	2	3
Total anti-dilutive employee share-based securities	937	777

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Basis of Presentation (Service and Product Revenue) (Narrative) (Details)	Jun. 30, 2013
Basis Of Presentation Service And Product Revenue Narrative Details
Trial period offered with all new services, days	30

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Distribution of Stock-Based Compensation Plan Expense (Tables)

3 Months Ended

Jun. 30, 2013

Distribution Of Stock-Based Compensation Plan Expense Tables

Schedule Of Stock-Based Compensation Expense By Statement Of Operations Line Item

The following table summarizes the classification of stock-based compensation expense related to employee stock options and employee stock purchases under ASC 718 among the Company's operating functions for the three months ended June 30, 2013 and 2012 which was recorded as follows (in thousands):

		Three Months Ended
		June 30,
		2013		2012
Cost of service revenues	$	68	$	43
Cost of product revenues		-		1
Research and development		154		95
Sales and marketing		347		316
General and administrative		338		101
Total stock-based compensation expense related to
employee stock options and employee stock purchases, pre-tax		907		556
Tax benefit		-		-
Stock-based compensation expense related to employee
stock options and employee stock purchases, net of tax	$	907	$	556

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Net Income Per Share (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Net Income Per Share Details
Net income available to common stockholders	$ 2,139	$ 8,617
Common shares	72,510	70,717
Denominator for basic calculation	72,510	70,717
Employee stock options	2,911	2,759
Stock purchase rights	335	309
Employee stock purchase plan	0	325
Denominator for diluted calculation	75,756	74,110
Net income per share
Basic	$ 0.03	$ 0.12
Diluted	$ 0.03	$ 0.12

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Basis of Presentation (Goodwill And Other Intangibles Schedule Of Future Amortization Of Intangibles) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013
Basis Of Presentation Goodwill And Other Intangibles Schedule Of Future Amortization Of Intangibles Details
Remaining 2014	$ 994
2015	1,325
2016	1,325
2017	1,318
2018	1,070
Thereafter	2,865
Total	$ 8,897

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Basis of Presentation (Goodwill And Other Intangibles Schedule Of Intangibles) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Mar. 31, 2013
Gross Carrying Amount	$ 12,504	$ 12,504
Accumulated Amortization	(2,650)	(2,310)
Net Carrying Amount	9,854	10,194
Technology
Gross Carrying Amount	8,242	8,242
Accumulated Amortization	(1,462)	(1,256)
Net Carrying Amount	6,780	6,986
Customer relationships
Gross Carrying Amount	3,305	3,305
Accumulated Amortization	(1,188)	(1,054)
Net Carrying Amount	2,117	2,251
Trade names domains
Gross Carrying Amount	957	957
Accumulated Amortization	0	0
Net Carrying Amount	$ 957	$ 957

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Basis of Presentation (Schedule Of Stock-Based Compensation Expense By Statement Of Operations) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Stock-based employee compensation expense related to employee stock options and emolyee stock purchases, pre tax	$ 907	$ 556
Tax benefit	0	0
Stock-based employee compensation expense related to employee stock options and emolyee stock purchases, net of tax	907	556
Cost of service revenues
Stock-based employee compensation expense related to employee stock options and emolyee stock purchases, pre tax	68	43
Cost of product revenues
Stock-based employee compensation expense related to employee stock options and emolyee stock purchases, pre tax	0	1
Research and development
Stock-based employee compensation expense related to employee stock options and emolyee stock purchases, pre tax	154	95
Sales and marketing
Stock-based employee compensation expense related to employee stock options and emolyee stock purchases, pre tax	347	316
General and administrative
Stock-based employee compensation expense related to employee stock options and emolyee stock purchases, pre tax	$ 338	$ 101

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Income Taxes (Narrative) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Jun. 30, 2013	Mar. 31, 2013
Income Taxes Narrative Details
Unrecognized tax benefits	$ 3.0	$ 3.0
Open Tax Year	1995

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Basis of Presentation (Schedule Of Option Activity) (Details) (USD $)	3 Months Ended
	Jun. 30, 2013
Basis Of Presentation Schedule Of Option Activity Details
Balance at March 31, 2013	5,991,544
Granted - options	90,000
Exercised	(575,570)
Cancelled/forfeited	(10,046)
Termination of plans	0
Balance at June 30, 2013	5,495,928
Shares available for grant at March 31, 2013	3,175,261
Change in options available for grant	0
Granted options, shares available for grant	(90,000)
Stock purchase rights/restricted stock unit (1)	(73,500)	[1]
Restricted Stock Units	0
Exercised	0
Cancelled/forfeited shares available for grant	10,046
Cancelled/forfeited - Restricted Stock Units	0
Termination of plans shares available for grant	(1,774)
Shares available for grant, at June 30, 2013	3,020,033
Weighted-average exercise price of options outstanding, at March 31, 2013	$ 2.52
Weighted-average exercise price of options granted during period	$ 7.56
Weighted-average exercise price of stock purchases rights during period	$ 0
Weighted-average exercise price of options exercised during the period	$ 2.25
Weighted-average exercise price of options forfeited, cancelled or expired during the period	$ 3.83
Weighted-average exercise price of options termination of plans during period	$ 0
Weighted-average exercise price of options outstanding at June 30, 2013	$ 2.63

[1] The reduction to shares available for grant includes awards granted of 73,500 shares

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Commitments and Contingencies (CustomerSupport Commitments) (Narrative) (Details) (USD $)	Jun. 30, 2013
Commitments And Contingencies Customersupport Commitments Narrative Details
Third party customer support vendor minimum monthly commitment	$ 430,000
Third party customer support vendor maximum obligation	$ 2,200,000
Advance termination notice required, days	150

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Basis of Presentation (Concentrations) (Narrative) (Details)	3 Months Ended	12 Months Ended
	Jun. 30, 2013	Mar. 31, 2012
Basis Of Presentation Concentrations Narrative Details
Number of customers at more than 10% of revenue	0	0

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DESCRIPTION OF THE BUSINESS - Note 1

3 Months Ended

Jun. 30, 2013

Notes to Financial Statements

DESCRIPTION OF THE BUSINESS - Note 1

1. DESCRIPTION OF THE BUSINESS

THE COMPANY

8x8, Inc. ("8x8" or the "Company") develops and markets cloud-based business communications services encompassing internally developed Voice over Internet Protocol ("VoIP") technologies. These services enable telephony and video applications as well as web-based conferencing and unified communications capabilities. The Company also provides managed hosting and cloud-based computing services. As of June 30, 2013, the Company had approximately 33,700 business customers.

The Company was incorporated in California in February 1987 and was reincorporated in Delaware in December 1996. The Company's fiscal year ends on March 31 of each calendar year. Each reference to a fiscal year in these notes to the condensed consolidated financial statements refers to the fiscal year ending March 31 of the calendar year indicated (for example, fiscal 2014 refers to the fiscal year ending March 31, 2014).

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FAIR VALUE MEASURMENT - Note 3

3 Months Ended

Jun. 30, 2013

Notes to Financial Statements

FAIR VALUE MEASURMENT - Note 3

3. FAIR VALUE MEASUREMENT

The following tables present the Company's fair value hierarchy for assets and liabilities measured at fair value on a recurring basis at June 30, 2013 and March 31, 2013 (in thousands):

		Quoted Prices
		in Active
		Markets		Other		Significant
		for Identical		Observable		Unobservable		Balance at
		Assets		Inputs		Inputs		June 30,
		(Level 1)		(Level 2)		(Level 3)		2013
Cash equivalents:
Money market funds	$	14,378	$	-	$	-	$	14,378
Short-term investments:
Mutual funds		1,899		-		-		1,899
Total	$	16,277	$	-	$	-	$	16,277

		Quoted Prices
		in Active
		Markets		Other		Significant
		for Identical		Observable		Unobservable		Balance at
		Assets		Inputs		Inputs		March 31,
		(Level 1)		(Level 2)		(Level 3)		2013
Cash equivalents:
Money market funds	$	14,376	$	-	$	-	$	14,376
Short-term investments:
Mutual funds		1,964		-		-		1,964
Total	$	16,340	$	-	$	-	$	16,340

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INCOME TAXES - Note 6

3 Months Ended

Jun. 30, 2013

Notes to Financial Statements

INCOME TAXES - Note 6

6. INCOME TAXES

For the three months ended June 30, 2013, the Company recorded a provision for income taxes of $1.1 million which was primarily attributable to net income from operations. For the three months ended June 30, 2012, the Company recorded a provision for income taxes of $5.8 million which was primarily attributable to net income from operations, including the gain on sale of patents.

The effective tax rate is calculated by dividing the income tax provision by net income before income tax expense.

At March 31, 2013, there was $3.0 million of unrecognized tax benefits that, if recognized, would have affected the effective tax rate. The Company does not believe that there has been any significant change in the unrecognized tax benefits in the three-month period ended June 30, 2013 and does not believe it is reasonably possible that the unrecognized tax benefit will materially change in the next 12 months. To the extent that the unrecognized tax benefits are ultimately recognized they may have an impact on the effective tax rate in future periods.

The Company is subject to taxation in the U.S., California and various other states and foreign jurisdictions in which it has or had a subsidiary or branch operations or it is collecting sales tax. All tax returns from fiscal 1995 to fiscal 2013 may be subject to examination by the Internal Revenue Service, California and various other states. As of July 24, 2013, there were no active federal or state income tax audits. Returns filed in foreign jurisdictions may be subject to examination for the fiscal years 2009 to 2010.

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BALANCE SHEET DETAIL - Note 4

3 Months Ended

Jun. 30, 2013

Notes to Financial Statements

BALANCE SHEET DETAIL - Note 4

4. BALANCE SHEET DETAIL

		June 30,		March 31,
		2013		2013
Inventory (in thousands):
Work-in-process	$	23	$	23
Finished goods		544		488
	$	567	$	511

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Commitments and Contingencies (Product Warranties) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Commitments And Contingencies Product Warranties Details
Balance at beginning of period	$ 452	$ 387
Accruals for warranties	177	171
Settlements	(155)	(153)
Balance at end of period	$ 474	$ 405

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Basis of Presentation (Software Development Costs) (Details) (Software Development Costs, USD $) In Millions, unless otherwise specified	3 Months Ended
	Jun. 30, 2013
Software Development Costs
Costs capitalized during the period	$ 0.3
Total costs	0.5
Accumulated amortization	$ 0

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Basis of Presentation (Summary Of Stock Options Outstanding And Exercisable) (Details) (USD $)			3 Months Ended
	Jun. 30, 2013	Mar. 31, 2013	Jun. 30, 2013 $0.55 - $1.26	Jun. 30, 2013 $1.27 - $1.77	Jun. 30, 2013 $1.78 - $3.35	Jun. 30, 2013 $3.36 - $5.87	Jun. 30, 2013 $5.88 - $7.56	Jun. 30, 2013 $0.55 - $7.56	Jun. 30, 2013 $0.55 - $7.56
Range of Exercise Prices, Minimum			$ 0.55	$ 1.27	$ 1.78	$ 3.36	$ 5.88	$ 0.55
Range of Exercise Prices, Maximum			$ 1.26	$ 1.77	$ 3.35	$ 5.87	$ 7.56	$ 7.56
Options Outstanding, Number of Shares	5,495,928	5,991,544	1,760,000	1,112,961	1,205,402	1,285,565	132,000		5,495,928
Options Outstanding, Weighted-Average Exercise Price Per Share	$ 2.63	$ 2.52	$ 1.04	$ 1.49	$ 2.61	$ 5.35	$ 7.03
Options Outstanding, Weighted-Average Remaining Contractual Term (in years)			4 years 4 months 24 days	2 years 8 months 12 days	5 years 3 months 18 days	8 years 10 months 24 days	9 years 8 months 12 days
Options Outstanding, Aggregate Intrinsic Value			$ 12,676,010	$ 7,515,829	$ 6,786,158	$ 3,711,260	$ 159,900		$ 30,849,157
Options Exercisable, Number of Shares			1,760,000	1,112,961	880,627	330,931	10,749		4,095,268
Options Exercisable, Weighted-Average Exercise Price Per Share			$ 1.04	$ 1.49	$ 2.54	$ 5.16	$ 6.47
Options Exercisable, Aggregate Intrinsic Value			$ 12,676,010	$ 7,515,829	$ 5,021,497	$ 1,019,054	$ 18,999		$ 26,251,389

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Balance Sheet Detail (Inventory Components) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Mar. 31, 2013
Balance Sheet Detail Inventory Components Details
Work-in-process	$ 23	$ 23
Finished goods	544	488
Inventory, net	$ 567	$ 511

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CONDENSED CONSOLIDATED STATEMENTS OF INCOME (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Condensed Consolidated Statements Of Income
Service revenue	$ 27,252	$ 23,172
Product revenue	2,752	2,080
Total revenue	30,004	25,252
Operating expenses:
Cost of service revenue	5,221	5,686
Cost of product revenue	3,347	2,710
Research and development	2,336	1,826
Sales and marketing	13,121	10,541
General and administrative	2,790	2,064
Gain on patent sale	0	(11,965)
Total operating expenses	26,815	10,862
Income from operations	3,189	14,390
Other income, net	15	8
Income before provision for income taxes	3,204	14,398
Provision for income taxes	1,065	5,781
Net income	$ 2,139	$ 8,617
Net income per share:
Basic	$ 0.03	$ 0.12
Diluted	$ 0.03	$ 0.12
Weighted average number of shares:
Basic	72,510	70,717
Diluted	75,756	74,110

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Jun. 30, 2013

Notes to Financial Statements

Company

THE COMPANY

8x8, Inc. ("8x8" or the "Company") develops and markets cloud-based business communications services encompassing internally developed Voice over Internet Protocol ("VoIP") technologies. These services enable telephony and video applications as well as web-based conferencing and unified communications capabilities. The Company also provides managed hosting and cloud-based computing services. As of June 30, 2013, the Company had approximately 33,700 business customers.

The Company was incorporated in California in February 1987 and was reincorporated in Delaware in December 1996.

Fiscal Period

The Company's fiscal year ends on March 31 of each calendar year. Each reference to a fiscal year in these notes to the condensed consolidated financial statements refers to the fiscal year ending March 31 of the calendar year indicated (for example, fiscal 2014 refers to the fiscal year ending March 31, 2014).

Basis of Presentation

The accompanying interim condensed 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, 2013. In the opinion of the Company's management, these 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 and liabilities and disclosure of contingent assets and liabilities at the date of the condensed 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, 2013 year-end condensed consolidated balance sheet data in this document were derived from audited consolidated financial statements and do not include all of the disclosures required by U.S. generally accepted accounting principles. These condensed 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, 2013 and notes thereto included in the Company's fiscal 2013 Annual Report on Form 10-K.

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

Service Revenue

The Company recognizes service revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, price is fixed or determinable and collectability is reasonably assured. The Company defers recognition of service revenues in instances when cash receipts are received before services are delivered and recognizes deferred revenues ratably as services are provided.

Product Revenue

The Company recognizes revenue from product sales for which there are no related services to be rendered upon shipment to customers provided that persuasive evidence of an arrangement exists, the price is fixed, title has transferred, collection of resulting receivables is reasonably assured, there are no customer acceptance requirements, and there are no remaining significant obligations. Gross outbound shipping and handling charges are recorded as revenue, and the related costs are included in cost of goods sold. Reserves for returns and allowances for customer sales are recorded at the time of shipment. In accordance with the ASC 985-605, the Company records shipments to distributors, retailers, and resellers, where the right of return exists, as deferred revenue. The Company defers recognition of revenue on sales to distributors, retailers, and resellers until products are resold to the customer.

The Company records revenue net of any sales-related taxes that are billed to its customers. The Company believes this approach results in consolidated financial statements that are more easily understood by users. Under the terms of the Company's typical subscription agreement, new customers can terminate their service within 30 days of order placement and receive a full refund of fees previously paid. The Company has determined that it has sufficient history of subscriber conduct to make a reasonable estimate of cancellations within the 30-day trial period. Therefore, the Company recognizes new subscriber revenue in the month in which the new order was shipped, net of an allowance for expected cancellations.

Revenue Recognition for Multiple Element Arrangements

Multiple Element Arrangements

Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 605-25 requires that revenue arrangements with multiple deliverables be divided into separate units of accounting if the deliverables in the arrangement meet specific criteria.  The provisioning of the 8x8 VoIP service with the accompanying 8x8 IP telephone constitutes a revenue arrangement with multiple deliverables.  For arrangements with multiple deliverables, the Company allocates the arrangement consideration to all deliverables based on their relative selling prices. In such circumstances, the accounting principles establish a hierarchy to determine the relative selling price to be used for allocating arrangement consideration to deliverables as follows: (i) vendor-specific objective evidence of fair value ("VSOE"), (ii) third-party evidence of selling price ("TPE"), and (iii) best estimate of the selling price ("BESP").

VSOE generally exists only when the Company sells the deliverable separately, on more than a limited basis, at prices within a relatively narrow range.  When VSOE cannot be established, the Company attempts to establish the selling price of deliverables based on relevant TPE. TPE is determined based on manufacturer's prices for similar deliverables when sold separately, when possible. When the Company is unable to establish selling price using VSOE or TPE, it uses a BESP for the allocation of arrangement consideration. The objective of BESP is to determine the price at which the Company would transact a sale if the product or service was sold on a stand-alone basis. BESP is generally used for offerings that are not typically sold on a stand-alone basis or for new or highly customized offerings. The Company determines BESP for a product or service by considering multiple factors including, but not limited to:

• the price list established by its management which is typically based on general pricing practices and targeted gross margin of products and services sold; and
• analysis of pricing history of new arrangements, including multiple element and stand-alone transactions.

In accordance with the guidance of ASC 605-25, when the Company enters into revenue arrangements with multiple deliverables the Company allocates arrangement consideration, including activation fees, among the 8x8 IP telephones and subscriber services based on the their relative selling prices. Arrangement consideration allocated to the IP telephones is recognized as product revenues during the period of the sale less the allowance for estimated returns during the 30-day trial period. Arrangement consideration allocated to subscriber services is recognized ratably as service revenues as the related services are provided, which is generally over the initial contract term.

No customer represented greater than 10% of the Company's total revenue for the three months ended June 30, 2013 or 2012. Revenue from technology licensing and related software and customers outside the United States was not material for the three months ended June 30, 2013 or 2012.

Deferred Cost of Goods Sold

Deferred Cost of Goods Sold

Deferred cost of goods sold represents the cost of products sold for which the end customer or distributor has a right of return. The cost of the products sold is recognized contemporaneously with the recognition of revenue, when the subscriber has accepted the service.

Intangible Assets

Intangible Assets

Amortization expense for the customer relationship intangible asset is included in sales and marketing expenses. Amortization expense for technology is included in cost of service revenue.

Research, Development and Software Costs

Research, Development and Software Costs

The Company accounts for software to be sold or otherwise marketed in accordance with ASC 985-20, Costs of Software to be Sold, Leased or Marketed which requires capitalization of certain software development costs subsequent to the establishment of technological feasibility. The Company defines establishment of technological feasibility as the completion of a working model. Software development costs for software to be sold or otherwise marketed incurred prior to the establishment of technological feasibility are included in research and development and are expensed as incurred. Software development costs incurred subsequent to the establishment of technological feasibility through the period of general market availability of the product are capitalized, if material.

In the first fiscal quarter of 2014, the Company capitalized $0.3 million of software development costs in accordance with ASC 985-20. At June 30, 2013, total capitalized software development costs included in other long-term assets was approximately $0.5 million and there were no accumulated amortization costs related to capitalized software.

Accounting for Stock-Based Compensation

Stock-based Compensation Expense

To value option grants and stock purchase rights for stock-based compensation, the Company used the Black-Scholes option valuation model. Fair value determined using the Black-Scholes option valuation model varies based on assumptions used for the expected stock price volatility, expected life, risk-free interest rates and future dividend payments. During the three month periods ended June 30, 2013 and 2012, the Company used the historical volatility of the Company's stock over a period equal to the expected life of the options to their fair value. The expected life assumptions represent the weighted-average period the stock-based awards are expected to remain outstanding. These expected life assumptions are established through the review of historical exercise behavior of stock-based award grants with similar vesting periods. The risk-free interest rate is based on the closing market bid yields on actively traded U.S. treasury securities in the over-the-counter market for the expected term equal to the expected term of the option. The dividend yield assumption is based on the Company's history and expectation of future dividend payouts.

Employee Stock Purchase Plan

Under the Company's Employee Stock Purchase Plan, or ESPP, eligible employees can participate and purchase common stock semi-annually through payroll deductions at a price equal to 85% of the fair market value of the common stock at the beginning of each one year offering period or the end of the applicable six month purchase period within that offering period, whichever is lower. The contribution amount may not exceed 10% of an employee's base compensation, including commissions but not including bonuses and overtime. The Company accounts for the ESPP as a compensatory plan and recorded compensation expense of $189,000 and $174,000 for the three months ended June 30, 2013 and 2012, respectively, in accordance with ASC 718.

ASC 718 requires the benefits of tax deductions in excess of recognized compensation costs to be reported as a financing cash flow, rather than as an operating cash flow. The future realization of tax benefits related to stock-based compensation is dependent upon the timing of employee exercises and future taxable income, among other factors.

Net Income Per Share

NET INCOME PER SHARE

Basic net income per share is computed by dividing net income available to common stockholders (numerator) by the weighted average number of vested, unrestricted common shares outstanding during the period (denominator). Diluted net income per share is computed on the basis of the weighted average number of shares of common stock outstanding plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include shares issuable upon exercise of outstanding stock options and under the ESPP.

Indemnifications

Indemnifications

In the normal course of business, the Company indemnifies other parties, including customers, lessors and parties to other transactions with the Company, with respect to certain matters. Under these arrangements, the Company typically agrees to hold the other party harmless against losses arising from a breach of representations or covenants, intellectual property infringement or other claims made against certain parties. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. In addition, the Company has entered into indemnification agreements with its officers and directors.

It is not possible to determine the maximum potential amount of the Company's exposure under these indemnification agreements due to the limited history of indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically, payments made by the Company under these agreements have not had a material impact on the Company's operating results, financial position or cash flows. Under some of these agreements, however, the Company's potential indemnification liability might not have a contractual limit.

Product Warranties

Product Warranties

The Company accrues for the estimated costs that may be incurred under its product warranties upon revenue recognition.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Cash flows from operating activities:
Net income	$ 2,139	$ 8,617
Adjustments to reconcile net income to net cash provided by operating activites:
Depreciation	675	505
Amortization	340	357
Stock-based compensation	907	556
Deferred income tax provision	873	5,778
Other	158	75
Changes in assets and liabilities:
Accounts receivable, net	132	(626)
Inventory	(61)	(19)
Other current and noncurrent assets	(306)	(148)
Deferred cost of goods sold	30	(14)
Accounts payable	(316)	(35)
Accrued compensation	82	(22)
Accrued warranty	22	18
Accrued taxes and fees	192	112
Deferred revenue	373	(183)
Other current and noncurrent liabilities	(7)	(45)
Net cash provided by operating activities	5,233	14,926
Cash flows from investing activities:
Purchases of property and equipment	(466)	(1,048)
Cost of capitalized software	(328)	0
Net cash used in investing activities	(794)	(1,048)
Cash flows from financing activities:
Capital lease payments	(5)	(43)
Repurchase of common stock	(120)	(74)
Proceeds from issuance of common stock under employee stock plans	1,296	87
Net cash provided by (used in) financing activities	1,171	(30)
Net increase in cash and cash equivalents	5,610	13,848
Cash and cash equivalents at the beginning of the period	50,305	22,426
Cash and cash equivalents at the end of the period	$ 55,915	$ 36,274

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Mar. 31, 2013
Current assets:
Cash and cash equivalents	$ 55,915	$ 50,305
Short-term investments	1,899	1,964
Accounts receivable, net	3,595	3,880
Inventory	567	511
Deferred cost of goods sold	152	182
Deferred tax asset	5,049	6,096
Other current assets	955	732
Total current assets	68,132	63,670
Property and equipment, net	6,636	6,673
Intangible assets, net	9,854	10,194
Goodwill	25,150	25,150
Non-current deferred tax asset	46,526	46,352
Other assets	983	572
Total assets	157,281	152,611
Current liabilities:
Accounts payable	5,500	5,644
Accrued compensation	3,711	3,629
Accrued warranty	474	452
Accrued taxes	2,104	1,912
Deferred revenue	1,609	1,236
Other accrued liabilities	905	862
Total current liabilities	14,303	13,735
Non-current liabilities	1,767	1,817
Other non-current liabilities	21	26
Total liabilities	16,091	15,578
Commitments and contingencies (Note 7)
Stockholders' equity:
Common stock	73	72
Additional paid-in capital	248,258	246,176
Accumulated other comprehensive loss	(101)	(36)
Accumulated deficit	(107,040)	(109,179)
Total stockholders' equity	141,190	137,033
Total liabilities and stockholders' equity	$ 157,281	$ 152,611

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Basis of Presentation (Schedule Of Stock Purchase Right Activity) (Details) (USD $)	3 Months Ended
	Jun. 30, 2013 Percent
Basis Of Presentation Schedule Of Stock Purchase Right Activity Details
Balance at March 31, 2013	958,575
Granted	0
Released	(85,205)
Forfeited	(8,750)
Balance at June 30, 2013	864,620
Weighted-average grant date fair market value, March 31, 2013	$ 4.11
Weighted-average grant date fair market value of restricted stock rights granted	$ 0
Weighted-average grant date fair market value, released during period	$ 2.29
Weighted-average grant date fair market value, forfeited during period	$ 5.30
Weighted-average grant date fair market value, June 30, 2013	$ 4.27
Weighted-average remaining contractual term, in years, March 31, 2013	2 years 6 months 7 days
Weighted-average remaining contractual term, in years, June 30, 2013	2.36

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Description of the Business (Narrative) (Details)	3 Months Ended
	Jun. 30, 2013
Description Of Business Narrative Details
Approximate number of business customers	33700
Entity Incorporation, Date of Incorporation	Dec. 31, 1996
Entity Incorporation, State Country Name	Delaware
Fiscal Year End Date	--03-31

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Patent Sale (Narrative) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Jun. 30, 2013	Mar. 31, 2013	Jun. 30, 2012
Patent Sale Narrative Details
Sale of patents	$ 0	$ 1.0	$ 12.0
Future maximum patent license collection		$ 2.0

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Net Income Per Share (Options and Rights Excluded) (Details) In Thousands, unless otherwise specified	3 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Anti-dilutive shares	937	777
Employee stock options
Anti-dilutive shares	935	774
Stock purchase rights
Anti-dilutive shares	2	3

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Basis of Presentation (Stock Option Narrative) (Details) (USD $)	3 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Stock-based compensation expense	$ 907,000	$ 556,000
Stock-Based Awards
Unamortized stock-based compensation expense related to unvested stock awards	7,100,000
Weighted average period of recognition for unrecognized compensation costs (in years)	2 years 8 months 26 days
Tax benefit attributable to stock options exercised	0	0
Stock-based compensation expense	718,000	382,000
Employee Stock Purchase Plan
Unamortized stock-based compensation expense related to unvested stock awards	186,000
Weighted average period of recognition for unrecognized compensation costs (in years)	0 years 6 months 0 days
Tax benefit attributable to stock options exercised	0	0
Stock-based compensation expense	$ 189,000	$ 174,000

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Fair Value Measurement (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Mar. 31, 2013
Cash equivalents:
Money market funds	$ 14,378	$ 14,376
Short-term investments:
Mutual funds	1,899	1,964
Total	16,277	16,340
Quoted Prices in Active Markets for Identical Assets (Level 1)
Cash equivalents:
Money market funds	14,378	14,376
Short-term investments:
Mutual funds	1,899	1,964
Total	16,277	16,340
Other Observable Inputs (Level 2)
Cash equivalents:
Money market funds	0	0
Short-term investments:
Mutual funds	0	0
Total	0	0
Significant Unobservable Inputs (Level 3)
Cash equivalents:
Money market funds	0	0
Short-term investments:
Mutual funds	0	0
Total	$ 0	$ 0

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PATENT SALE - Note 8

3 Months Ended

Jun. 30, 2013

Notes to Financial Statements

PATENT SALE - Note 8

8. PATENT SALE

On June 22, 2012, the Company entered into a patent purchase agreement and sold a family of patents to a third party for $12.0 million plus a future payment of up to a maximum of $3.0 million based on future license agreements entered into by the third party purchaser. In the fourth quarter of fiscal 2013, the Company recognized a gain of $1.0 million due to the third party purchaser entering into a license agreement. Under the terms and conditions of the patent purchase agreement, the Company has retained certain limited rights to continue to use the patents. The patent purchase agreement contains representations and warranties customary for transactions of this type.

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Basis of Presentation (Schedule Of Restricted Stock Unit Activity) (Details)	3 Months Ended
	Jun. 30, 2013	Mar. 31, 2013
Basis Of Presentation Schedule Of Restricted Stock Unit Activity Details
Balance at March 31, 2013	25,000
Granted	73,500
Released	0
Forfeited	0
Balance at June 30, 2013	98,500
RSU Weighted-average remaining contractual term, in years		2.47
RSU Weighted-average remaining contractual term, in years, end of period	2.28

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Commitments and Contingencies (Service Provider Contracts) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013
Commitments And Contingencies Service Provider Contracts Details
Remaining 2014	$ 1,732
2015	1,579
2016	52
Total minimum payments	$ 3,363

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Stock-Based Compensation And Employee Purchase Plans (Tables)

3 Months Ended

Jun. 30, 2013

Stock Options

Disclosure Of Share-Based Compensation Arrangements By Share-Based Payment Award

Option activity for the three months ended June 30, 2013 is summarized as follows:

				Weighted
		Shares		Average
	Shares	Subject to		Exercise
	Available	Options		Price
	for Grant	Outstanding		Per Share
Balance at March 31, 2013	3,175,261	5,991,544	$	2.52
Granted - options	(90,000)	90,000		7.56
Stock purchase rights/restricted stock unit (1)	(73,500)	-		-
Exercised	-	(575,570)		2.25
Canceled/forfeited	10,046	(10,046)		3.83
Termination of plans	(1,774)	-		-
Balance at June 30, 2013	3,020,033	5,495,928	$	2.63

(1) The reduction to shares available for grant includes awards granted of 73,500 shares.

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

The following table summarizes the assumptions used to compute reported stock-based compensation to employees and directors for the three months ended June 30, 2013 and 2012:

		Three Months Ended
		June 30,
		2013		2012
Expected volatility		66%		70%
Expected dividend yield		-		-
Risk-free interest rate		0.73%		0.60%
Weighted average expected option term		4.50 years		4.30 years
Weighted average fair value of options granted	$	3.96	$	2.25

Stock Purchase Rights

Disclosure Of Share-Based Compensation Arrangements By Share-Based Payment Award

Stock purchase right activity for the three months ended June 30, 2013 is summarized as follows:

			Weighted	Weighted
			Average	Average
			Grant-Date	Remaining
	Number of		Fair Market	Contractual
	Shares		Value	Term (in Years)
Balance at March 31, 2013	958,575	$	4.11	2.52
Granted	-		-
Released	(85,205)		2.29
Forfeited	(8,750)		5.30
Balance at June 30, 2013	864,620	$	4.27	2.36

Restricted Stock Units

Disclosure Of Share-Based Compensation Arrangements By Share-Based Payment Award

Restricted stock unit activity for the three months ended June 30, 2013 is summarized as follows:

				Weighted
			Weighted	Average
			Average	Remaining
	Number of		Purchase	Contractual
	Shares		Price	Term (in Years)
Balance at March 31, 2013	25,000	$	-	2.47
Granted	73,500		-
Released	-		-
Forfeited	-		-
Balance at June 30, 2013	98,500	$	-	2.28

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COMMITMENTS AND CONTINGENCIES - Note 7

3 Months Ended

Jun. 30, 2013

Notes to Financial Statements

COMMITMENTS AND CONTINGENCIES - Note 7

7. COMMITMENTS AND CONTINGENCIES

Guarantees

Indemnifications

In the normal course of business, the Company indemnifies other parties, including customers, lessors and parties to other transactions with the Company, with respect to certain matters. Under these arrangements, the Company typically agrees to hold the other party harmless against losses arising from a breach of representations or covenants, intellectual property infringement or other claims made against certain parties. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. In addition, the Company has entered into indemnification agreements with its officers and directors.

It is not possible to determine the maximum potential amount of the Company's exposure under these indemnification agreements due to the limited history of indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically, payments made by the Company under these agreements have not had a material impact on the Company's operating results, financial position or cash flows. Under some of these agreements, however, the Company's potential indemnification liability might not have a contractual limit.

Product Warranties

The Company accrues for the estimated costs that may be incurred under its product warranties upon revenue recognition. Changes in the Company's product warranty liability, which is included in cost of product revenue in the condensed consolidated statements of income, were as follows (in thousands):

		Three Months Ended
		June 30,
		2013		2012
Balance at beginning of period	$	452	$	387
Accruals for warranties		177		171
Settlements		(155)		(153)
Balance at end of period	$	474	$	405

Minimum Third Party Customer Support Commitments

In the third quarter of fiscal 2010, the Company amended a contract with one of its third party customer support vendors containing a minimum monthly commitment of approximately $430,000. The agreement requires a 150-day notice to terminate. The total remaining obligation under the amended contract is $2.2 million.

Minimum Third Party Network Service Provider Commitments

The Company entered into contracts with multiple vendors for third party network services that expire on various dates in fiscal 2013 and 2014. At June 30, 2013, future minimum annual payments under these third party network service contracts were as follows (in thousands):

Year ending March 31:
Remaining 2014	$	1,732
2015		1,579
2016		52
Total minimum payments	$	3,363

Legal Proceedings

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

On February 22, 2011, the Company was named a defendant in a lawsuit, Bear Creek Technologies, Inc. v. 8x8, Inc. et al., along with 20 other defendants. On August 17, 2011, the Company was dismissed without prejudice from this lawsuit under Rule 21 of the Federal Rules of Civil Procedure. On August 17, 2011, the Company was sued again by Bear Creek Technologies, Inc. in the United States District Court for the District of Delaware. The Company believes it has factual and legal defenses to these claims and is presenting a vigorous defense.  Further, on November 28, 2012, the U.S. Patent & Trademark Office initiated a Reexamination proceeding with a Reexamination Declaration explaining that there is a substantial new question of patentability, based on four separate grounds, affecting each claim of the patent which is the basis for the complaint filed against the Company.  On March 26, 2013, the USPTO issued a first Office Action in the Reexamination, with all claims of the '722 patent being rejected on each of the four separate grounds raised in the Request for Reexamination.  On July 10, 2013, the Company filed an informational pleading in support of (and joining) a pending motion to stay the proceeding in the District Court, which granted the motion on July 17, 2013, based on the possibility that at least one of the USPTO rejections will be upheld and considering the USPTO's conclusion that Bear Creek's patent suffers from a defective claim for priority. The Company cannot estimate potential liability in this case at this early stage of litigation.

On October 25, 2011, the Company was named a defendant in a lawsuit, Klausner Technologies, Inc. v. Oracle Corporation et al., along with 30 other defendants. The lawsuit alleges infringement of a patent that is now believed to have expired. On November 1, 2011, Klausner dismissed the Complaint voluntarily and filed new complaints separating the defendants, including a new Complaint against 8x8. The Company believes it has factual and legal defenses to these claims and is presenting a vigorous defense. The Company has filed several motions, including a motion to transfer and a motion to dismiss the complaint on February 23, 2012. On March 21, 2013, the District Court granted 8x8's Motion to Change Venue, and has ordered the transfer of the case to the US District Court for the Northern District of California. The Company has not answered the complaint yet and cannot estimate potential liability in this case at this early stage of the litigation.

State and Municipal Taxes

From time to time, the Company has received inquiries from a number of state and municipal taxing agencies with respect to the remittance of taxes. 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.

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BASIS OF PRESENTATION - Note 2

3 Months Ended

Jun. 30, 2013

Notes to Financial Statements

BASIS OF PRESENTATION - Note 2

2. BASIS OF PRESENTATION

The accompanying interim condensed 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, 2013. In the opinion of the Company's management, these 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 and liabilities and disclosure of contingent assets and liabilities at the date of the condensed 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, 2013 year-end condensed consolidated balance sheet data in this document were derived from audited consolidated financial statements and do not include all of the disclosures required by U.S. generally accepted accounting principles. These condensed 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, 2013 and notes thereto included in the Company's fiscal 2013 Annual Report on Form 10-K.

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

Service and Product Revenue

The Company recognizes service revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, price is fixed or determinable and collectability is reasonably assured. The Company defers recognition of service revenues in instances when cash receipts are received before services are delivered and recognizes deferred revenues ratably as services are provided.

The Company recognizes revenue from product sales for which there are no related services to be rendered upon shipment to customers provided that persuasive evidence of an arrangement exists, the price is fixed, title has transferred, collection of resulting receivables is reasonably assured, there are no customer acceptance requirements, and there are no remaining significant obligations. Gross outbound shipping and handling charges are recorded as revenue, and the related costs are included in cost of goods sold. Reserves for returns and allowances for customer sales are recorded at the time of shipment. In accordance with the ASC 985-605, the Company records shipments to distributors, retailers, and resellers, where the right of return exists, as deferred revenue. The Company defers recognition of revenue on sales to distributors, retailers, and resellers until products are resold to the customer.

The Company records revenue net of any sales-related taxes that are billed to its customers. The Company believes this approach results in consolidated financial statements that are more easily understood by users. Under the terms of the Company's typical subscription agreement, new customers can terminate their service within 30 days of order placement and receive a full refund of fees previously paid. The Company has determined that it has sufficient history of subscriber conduct to make a reasonable estimate of cancellations within the 30-day trial period. Therefore, the Company recognizes new subscriber revenue in the month in which the new order was shipped, net of an allowance for expected cancellations.

Multiple Element Arrangements

Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 605-25 requires that revenue arrangements with multiple deliverables be divided into separate units of accounting if the deliverables in the arrangement meet specific criteria.  The provisioning of the 8x8 VoIP service with the accompanying 8x8 IP telephone constitutes a revenue arrangement with multiple deliverables.  For arrangements with multiple deliverables, the Company allocates the arrangement consideration to all deliverables based on their relative selling prices. In such circumstances, the accounting principles establish a hierarchy to determine the relative selling price to be used for allocating arrangement consideration to deliverables as follows: (i) vendor-specific objective evidence of fair value ("VSOE"), (ii) third-party evidence of selling price ("TPE"), and (iii) best estimate of the selling price ("BESP").

VSOE generally exists only when the Company sells the deliverable separately, on more than a limited basis, at prices within a relatively narrow range.  When VSOE cannot be established, the Company attempts to establish the selling price of deliverables based on relevant TPE. TPE is determined based on manufacturer's prices for similar deliverables when sold separately, when possible. When the Company is unable to establish selling price using VSOE or TPE, it uses a BESP for the allocation of arrangement consideration. The objective of BESP is to determine the price at which the Company would transact a sale if the product or service was sold on a stand-alone basis. BESP is generally used for offerings that are not typically sold on a stand-alone basis or for new or highly customized offerings. The Company determines BESP for a product or service by considering multiple factors including, but not limited to:

• the price list established by its management which is typically based on general pricing practices and targeted gross margin of products and services sold; and
• analysis of pricing history of new arrangements, including multiple element and stand-alone transactions.

In accordance with the guidance of ASC 605-25, when the Company enters into revenue arrangements with multiple deliverables the Company allocates arrangement consideration, including activation fees, among the 8x8 IP telephones and subscriber services based on the their relative selling prices. Arrangement consideration allocated to the IP telephones is recognized as product revenues during the period of the sale less the allowance for estimated returns during the 30-day trial period. Arrangement consideration allocated to subscriber services is recognized ratably as service revenues as the related services are provided, which is generally over the initial contract term.

No customer represented greater than 10% of the Company's total revenue for the three months ended June 30, 2013 or 2012. Revenue from technology licensing and related software and customers outside the United States was not material for the three months ended June 30, 2013 or 2012.

Deferred Cost of Goods Sold

Deferred cost of goods sold represents the cost of products sold for which the end customer or distributor has a right of return. The cost of the products sold is recognized contemporaneously with the recognition of revenue, when the subscriber has accepted the service.

Intangible Assets

Amortization expense for the customer relationship intangible asset is included in sales and marketing expenses. Amortization expense for technology is included in cost of service revenue. The carrying values of intangible assets were as follows (in thousands):

		June 30, 2013						March 31, 2013
		Gross						Gross
		Carrying		Accumulated		Net Carrying		Carrying		Accumulated		Net Carrying
		Amount		Amortization		Amount		Amount		Amortization		Amount
Technology	$	8,242	$	(1,462)	$	6,780	$	8,242	$	(1,256)	$	6,986
Customer relationships		3,305		(1,188)		2,117		3,305		(1,054)		2,251
Trade names/domains		957		-		957		957		-		957
Total acquired identifiable
intangible assets	$	12,504	$	(2,650)	$	9,854	$	12,504	$	(2,310)	$	10,194

At June 30, 2013, 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 2014	$	994
2015		1,325
2016		1,325
2017		1,318
2018		1,070
Thereafter		2,865
Total	$	8,897

Research, Development and Software Costs

The Company accounts for software to be sold or otherwise marketed in accordance with ASC 985-20, Costs of Software to be Sold, Leased or Marketed which requires capitalization of certain software development costs subsequent to the establishment of technological feasibility. The Company defines establishment of technological feasibility as the completion of a working model. Software development costs for software to be sold or otherwise marketed incurred prior to the establishment of technological feasibility are included in research and development and are expensed as incurred. Software development costs incurred subsequent to the establishment of technological feasibility through the period of general market availability of the product are capitalized, if material.

In the first fiscal quarter of 2014, the Company capitalized $0.3 million of software development costs in accordance with ASC 985-20. At June 30, 2013, total capitalized software development costs included in other long-term assets was approximately $0.5 million and there were no accumulated amortization costs related to capitalized software.

Stock Purchase Right/Restricted Stock Unit and Option Activity

Stock purchase right activity for the three months ended June 30, 2013 is summarized as follows:

			Weighted	Weighted
			Average	Average
			Grant-Date	Remaining
	Number of		Fair Market	Contractual
	Shares		Value	Term (in Years)
Balance at March 31, 2013	958,575	$	4.11	2.52
Granted	-		-
Released	(85,205)		2.29
Forfeited	(8,750)		5.30
Balance at June 30, 2013	864,620	$	4.27	2.36

Restricted stock unit activity for the three months ended June 30, 2013 is summarized as follows:

				Weighted
			Weighted	Average
			Average	Remaining
	Number of		Purchase	Contractual
	Shares		Price	Term (in Years)
Balance at March 31, 2013	25,000	$	-	2.47
Granted	73,500		-
Released	-		-
Forfeited	-		-
Balance at June 30, 2013	98,500	$	-	2.28

Option activity for the three months ended June 30, 2013 is summarized as follows:

				Weighted
		Shares		Average
	Shares	Subject to		Exercise
	Available	Options		Price
	for Grant	Outstanding		Per Share
Balance at March 31, 2013	3,175,261	5,991,544	$	2.52
Granted - options	(90,000)	90,000		7.56
Stock purchase rights/restricted stock unit (1)	(73,500)	-		-
Exercised	-	(575,570)		2.25
Canceled/forfeited	10,046	(10,046)		3.83
Termination of plans	(1,774)	-		-
Balance at June 30, 2013	3,020,033	5,495,928	$	2.63

(1) The reduction to shares available for grant includes awards granted of 73,500 shares.

The following table summarizes the stock options outstanding and exercisable at June 30, 2013:

	Options Outstanding						Options Exercisable
			Weighted	Weighted					Weighted
			Average	Average					Average
			Exercise	Remaining		Aggregate			Exercise		Aggregate
Range of			Price	Contractual		Intrinsic			Price		Intrinsic
Exercise Price	Shares		Per Share	Life (Years)		Value	Shares		Per Share		Value
$0.55 - $1.26	1,760,000	$	1.04	4.4	$	12,676,010	1,760,000	$	1.04	$	12,676,010
$1.27 - $1.77	1,112,961	$	1.49	2.7		7,515,829	1,112,961	$	1.49		7,515,829
$1.78 - $3.35	1,205,402	$	2.61	5.3		6,786,158	880,627	$	2.54		5,021,497
$3.36 - $5.87	1,285,565	$	5.35	8.9		3,711,260	330,931	$	5.16		1,019,054
$5.88 - $7.56	132,000	$	7.03	9.7		159,900	10,749	$	6.47		18,999
	5,495,928				$	30,849,157	4,095,268			$	26,251,389

Stock-based Compensation Expense

As of June 30, 2013, there was $7.1 million of unamortized stock-based compensation expense related to unvested stock awards which is expected to be recognized over a weighted average period of 2.74 years.

To value option grants and stock purchase rights for stock-based compensation, the Company used the Black-Scholes option valuation model. Fair value determined using the Black-Scholes option valuation model varies based on assumptions used for the expected stock price volatility, expected life, risk-free interest rates and future dividend payments. During the three month periods ended June 30, 2013 and 2012, the Company used the historical volatility of the Company's stock over a period equal to the expected life of the options to their fair value. The expected life assumptions represent the weighted-average period the stock-based awards are expected to remain outstanding. These expected life assumptions are established through the review of historical exercise behavior of stock-based award grants with similar vesting periods. The risk-free interest rate is based on the closing market bid yields on actively traded U.S. treasury securities in the over-the-counter market for the expected term equal to the expected term of the option. The dividend yield assumption is based on the Company's history and expectation of future dividend payouts.

The following table summarizes the assumptions used to compute reported stock-based compensation to employees and directors for the three months ended June 30, 2013 and 2012:

		Three Months Ended
		June 30,
		2013		2012
Expected volatility		66%		70%
Expected dividend yield		-		-
Risk-free interest rate		0.73%		0.60%
Weighted average expected option term		4.50 years		4.30 years
Weighted average fair value of options granted	$	3.96	$	2.25

In accordance with ASC 718 - Stock Compensation, the Company recorded $718,000 and $382,000 in compensation expense relative to stock-based awards for the three months ended June 30, 2013 and 2012, respectively.

Employee Stock Purchase Plan

Under the Company's Employee Stock Purchase Plan, or ESPP, eligible employees can participate and purchase common stock semi-annually through payroll deductions at a price equal to 85% of the fair market value of the common stock at the beginning of each one year offering period or the end of the applicable six month purchase period within that offering period, whichever is lower. The contribution amount may not exceed 10% of an employee's base compensation, including commissions but not including bonuses and overtime. The Company accounts for the ESPP as a compensatory plan and recorded compensation expense of $189,000 and $174,000 for the three months ended June 30, 2013 and 2012, respectively, in accordance with ASC 718.

As of June 30, 2013, there was $186,000 of total unrecognized compensation cost related to employee stock purchases. These costs are expected to be recognized over a weighted average period of 0.5 years.

ASC 718 requires the benefits of tax deductions in excess of recognized compensation costs to be reported as a financing cash flow, rather than as an operating cash flow. The future realization of tax benefits related to stock-based compensation is dependent upon the timing of employee exercises and future taxable income, among other factors. The Company did not realize any tax benefit from the stock-based compensation charges incurred during the three months ended June 30, 2013 and 2012.

The following table summarizes the classification of stock-based compensation expense related to employee stock options and employee stock purchases under ASC 718 among the Company's operating functions for the three months ended June 30, 2013 and 2012 which was recorded as follows (in thousands):

		Three Months Ended
		June 30,
		2013		2012
Cost of service revenues	$	68	$	43
Cost of product revenues		-		1
Research and development		154		95
Sales and marketing		347		316
General and administrative		338		101
Total stock-based compensation expense related to
employee stock options and employee stock purchases, pre-tax		907		556
Tax benefit		-		-
Stock-based compensation expense related to employee
stock options and employee stock purchases, net of tax	$	907	$	556

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Basis of Presentation (Schedule Of Assumptions Used to Compute Reported Stock-based Compensation (Details) (USD $)	3 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Basis Of Presentation Schedule Of Assumptions Used To Compute Reported Stock-Based Compensation Details
Expected volatility	66.00%	70.00%
Expected dividend yield	0.00%	0.00%
Risk-free interest rate	0.73%	0.60%
Weighted average expected option term, in years	4 years 6 months 0 days	4 years 3 months 18 days
Weighted average fair value of options granted, per share	$ 3.96	$ 2.25

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Fair Value Measurement (Tables)

3 Months Ended

Jun. 30, 2013

Fair Value Measurement Tables

Fair Value Measurement (Tables)

The following tables present the Company's fair value hierarchy for assets and liabilities measured at fair value on a recurring basis at June 30, 2013 and March 31, 2013 (in thousands):

		Quoted Prices
		in Active
		Markets		Other		Significant
		for Identical		Observable		Unobservable		Balance at
		Assets		Inputs		Inputs		June 30,
		(Level 1)		(Level 2)		(Level 3)		2013
Cash equivalents:
Money market funds	$	14,378	$	-	$	-	$	14,378
Short-term investments:
Mutual funds		1,899		-		-		1,899
Total	$	16,277	$	-	$	-	$	16,277

		Quoted Prices
		in Active
		Markets		Other		Significant
		for Identical		Observable		Unobservable		Balance at
		Assets		Inputs		Inputs		March 31,
		(Level 1)		(Level 2)		(Level 3)		2013
Cash equivalents:
Money market funds	$	14,376	$	-	$	-	$	14,376
Short-term investments:
Mutual funds		1,964		-		-		1,964
Total	$	16,340	$	-	$	-	$	16,340

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Intangible Assets (Tables)

3 Months Ended

Jun. 30, 2013

Intangible Assets Tables

Carrying values of intangible assets

The carrying values of intangible assets were as follows (in thousands):

		June 30, 2013						March 31, 2013
		Gross						Gross
		Carrying		Accumulated		Net Carrying		Carrying		Accumulated		Net Carrying
		Amount		Amortization		Amount		Amount		Amortization		Amount
Technology	$	8,242	$	(1,462)	$	6,780	$	8,242	$	(1,256)	$	6,986
Customer relationships		3,305		(1,188)		2,117		3,305		(1,054)		2,251
Trade names/domains		957		-		957		957		-		957
Total acquired identifiable
intangible assets	$	12,504	$	(2,650)	$	9,854	$	12,504	$	(2,310)	$	10,194

Finite-lived intangible assets - future amortization expense

At June 30, 2013, 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 2014	$	994
2015		1,325
2016		1,325
2017		1,318
2018		1,070
Thereafter		2,865
Total	$	8,897

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Commitments And Contingencies (Tables)

3 Months Ended

Jun. 30, 2013

Commitments And Contingencies Tables

Product warranties

Changes in the Company's product warranty liability, which is included in cost of product revenue in the condensed consolidated statements of income, were as follows (in thousands):

		Three Months Ended
		June 30,
		2013		2012
Balance at beginning of period	$	452	$	387
Accruals for warranties		177		171
Settlements		(155)		(153)
Balance at end of period	$	474	$	405

Minimum third party network service provider commitments

At June 30, 2013, future minimum annual payments under these third party network service contracts were as follows (in thousands):

Year ending March 31:
Remaining 2014	$	1,732
2015		1,579
2016		52
Total minimum payments	$	3,363

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Inventory (Tables)

3 Months Ended

Jun. 30, 2013

Inventory Tables

Inventory (Tables)

Inventory was comprised of the following:

		June 30,		March 31,
		2013		2013
Inventory (in thousands):
Work-in-process	$	23	$	23
Finished goods		544		488
	$	567	$	511

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Document and Entity Information	3 Months Ended
	Jun. 30, 2013	Jul. 24, 2013
Document And Entity Information
Entity Registrant Name	8X8 INC /DE/
Entity Central Index Key	0001023731
Document Type	10-Q
Document Period End Date	Jun. 30, 2013
Amendment Flag	false
Current Fiscal Year End Date	--03-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		72,766,173
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2014

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Net Income Per Share (Tables)

3 Months Ended

Jun. 30, 2013

Net Income Per Share Tables

Net Income Per Share (Tables)

		Three Months Ended
		June 30,
		2013		2012
		(in thousands, except per share amounts)
Numerator:
Net income available to common stockholders	$	2,139	$	8,617
Denominator:
Common shares		72,510		70,717
Denominator for basic calculation		72,510		70,717
Employee stock options		2,911		2,759
Stock purchase rights		335		309
Employee stock purchase plan		-		325
Denominator for diluted calculation		75,756		74,110
Net income per share
Basic	$	0.03	$	0.12
Diluted	$	0.03	$	0.12

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

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

	Three Months Ended
	June 30,
	2013	2012
Employee stock options	935	774
Stock purchase rights	2	3
Total anti-dilutive employee share-based securities	937	777