Good evening. My name is Karina, and I'll be your conference operator today. At this time, I would like to welcome everyone to the 8x8, Inc. Fiscal First Quarter 2020 Earnings Conference Call. I will now turn the call over to Victoria Hyde-Dunn, Head of Investor Relations.

Thank you. Good afternoon, and welcome to 8x8's first fiscal 2020 earnings conference call. Joining me today are Vik Verma, Chief Executive Officer; and Steven Gatoff, Chief Financial Officer. During today's call, Vik will begin with business highlights of our first quarter performance. Following this, Steven will provide details on our financial results and guidance. After these prepared remarks, we look forward to taking your questions. Before we get started, just a reminder that our discussion today includes forward-looking statements about 8x8’s future business, product and growth strategies that are pursuant to the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. We caution you not to put undue reliance on these forward-looking statements as they involve risks and uncertainties that may cause actual results to vary materially from the forward-looking statements as described in our risk factors and our reports filed with the SEC. Any forward-looking statements made on this call reflect our analysis as of today and we have no plans or duty to update them. In addition, some financial measures that will be discussed on this call together with year-over-year comparisons, in some cases, were not prepared in accordance with U.S. Generally Accepted Accounting Principles or GAAP. A reconciliation of non-GAAP measures to the closest comparable GAAP measures is provided with our earnings press release and PowerPoint presentation deck, which are available on our Investor Relations Web site. Additionally, we will be discussing new annual recurring revenue and annual average service revenue per customer metrics. The new metrics are discussed in the press release and included in a financial and operating metrics worksheet that is posted on our Investor Relations Web site. With that, let me turn the call over to Vik.

Thank you, Victoria. Good afternoon and thank you everyone for joining us today as we review our first quarter results. I would like to share three points about the quarter that highlight both our business performance and the capabilities of a cloud technology platform that we are using to disrupt the $60 billion market for voice, chat, video, team messaging, contact center and now enterprise class API solutions. First, midmarket and enterprise customers continue to drive strong revenue growth with an increasing contribution from our channel partners. As a reminder from our last call, customer segments are not based on how much revenue we get from them but rather based on industry convention in which midmarket is defined as businesses with revenue greater than 50 million and less than 1 billion and enterprise customers has businesses with revenue greater than 1 billion. Combined, midmarket and enterprise ARR grew at a healthy rate of 39% year-over-year and was one of the factors why we were able to beat the high end of our guidance. Second, we continue to differentiate 8x8 with the pace of our innovation. We had four major new service announcements, more evidence that our one technology platform is delivering both velocity and innovation and clear differentiation from a shared data model that provides cross platform analytics. My third point centers around our recent acquisition of Wavecell. We have invested hundreds of millions of R&D dollars over many years into building, transforming and integrating a fully owned technology platform for global voice, contact center, video and team messaging. With Wavecell, we round out our framework with enterprise class CPaaS APIs. We have now fully realized our vision of one complete cloud based technology platform that combines the simplicity of pre-packaged solutions with the power and flexibility of enterprise class…

Thanks, Vik. Good afternoon, everyone. We appreciate you joining us. I’d like to cover four topics today. First, review our Q1 fiscal 2020 financial results and business metrics. Second, discuss the Wavecell acquisition. Third, share some insights on how we’re managing and balancing our growth portfolio. And fourth, provide our financial outlook for Q2 and fiscal 2020. We’ll of course wrap up by opening the call to your questions. I’m starting with our Q1 financial results. As Vik mentioned, we had a strong start to fiscal 2020, with our investments in demand-gen and pipeline-build bearing fruit, channel delivering another strong growth quarter and bookings coming in from a nice blend of new logo generation and existing customer expansion. As a result, total revenue for the first quarter of fiscal 2020 grew to $96.7 million, up 16.2% year-over-year. Service revenue came in at $92.4 million, an increase of 18.2% year-over-year. While large enterprise deals continue to be a bit lumpy quarter-to-quarter, this key segment delivered strong revenue growth in aggregate and on a revenue-per-customer basis. This was evidenced in both the land-and-expand dynamic with these larger accounts, and the favorable impact of both the multi-product nature and increasing usage of our cloud platform among customers. Our international operations also generated nice revenue growth and contribution in Q1, coming in at approximately 13% of service revenue, and that, despite a weaker British pound that negatively impacted service revenue growth by about 50 basis points in the quarter. Non-GAAP pre-tax loss for Q1 was approximately $14 million, meaningfully better than our May outlook and driven by a mix of the timing of certain expenses and rigor in our expense management in both program and headcount spend. On the OpEx front, our increased go-to-market spend that we talked a lot about on our last…

[Operator Instructions]. Our first question comes from Matt VanVliet with Stifel.

Hi. Thanks for taking my question. I really appreciate it. I guess looking at the very much improved channel performance in the quarter, it’s been a big focus of yours and you mentioned about six months ago you made some changes. But curious on how you’d place the mix between the improving performance between some of the recent changes, some of the programs put in place a little over a year ago and then some of it just being the time that it takes to build up those pipelines and sales cycles for the channel partners?

Thanks. So it’s a combination of all of the above. Channel, we were a little late to the party, as you know, and we started to take the channel seriously about a year, year and a half ago. Had a few missteps but I think corrected that. And two quarters does not a trend make, but I’m pretty happy with 90% odd year-over-year growth. And I think we’re just barely scratching the surface. 9 out of our top 10 deals came from the channel and we are increasingly seeing the channel liking this idea of this one platform approach that we have got, because once you train somebody on the whole platform they can upsell everything from there. They can literally go into a classic land and expand model and the channel is ideal for that. They can start with selling essentially an X Series they can sell and then upgrade to X8, which is our contact center. We are launching stand-alone video meetings starting late fall. They’ll be able to sell that. We obviously have the ability also to sell stand-alone contact center and then analytics on top of that. So it’s a process. The team has done a great job. Coverage has improved. And I think we have finally cracked the formula, so now it’s a question of time and just keep executing at those kind of rates.

And then, Steven, could you maybe help us narrow it down a little bit more in terms of the guidance being raised about 20 million, how much of that contribution is going to be some additional upside from the organic business and the booking trends that you saw in the first quarter versus the expectations for contributions from Wavecell?

Yes, the increase is from both candidly. It’s both, our confidence in the core business and the growth we see through the rest of the year, the increasing growth as well as obviously the contribution of Wavecell. And so we wanted to provide you with that math, which is why we disclosed the acquisition multiple so that you all had a sense of what their calendar '19 revenue was like, and so that now you have the numbers to model that out.

All right, great. Thank you.

Sure.

Our next question comes from Nandan Amladi from Guggenheim Partners.

Hi. Good afternoon. Thanks for taking my question. So Vik mentioned this on the previous question too, but two quarters into major changes in the channel. What do you think is left to do? Is there anything that from just a channel development perspective that you still need to implement?

No, actually it’s more execution. If you think about it, the company has gone through a massive amount of change over the last few years. We introduced X Series as a bundled offering to the channel around the July timeframe and we are starting to get that moving in the right direction. We went through an upgrade of the entire team. We have dramatically improved coverage, leadership, et cetera. We have started what is call an Elev8 Program where we are going in subagent by subagent and training them. So I think now it’s much more of we know the formula. It is all about enablement, execution and literally keep on executing, keep adding coverage, keep increasing the level of knowledge the different channel partners have to our product and little by little keep adding additional products that they can upsell. As you know, we started out with the X Series but we also started to include now stand-alone contact center where they can sell just stand-alone contact center by sub. That’s seen quite a bit of uptick very quickly, because I think we have positioned our contact center stand-alone to be something competitive with the leaders in the industry and we’re starting to see good progress there. We are going to be introducing meetings in the late fall timeframe. And the initial response to CPaaS has been extremely positive because CPaaS allows you to customize our platform, increase the level of integration to back office systems as well as provide end users with bite size pieces of this various technology. That is tailor made for the channel that has spent all this time building customer intimacy and the ability to go in and keep adding more and more features to the channel. So for us it literally comes down to execution.

And just related to that question, as you begin to sell into larger enterprises, how much of the emphasis will be a channel driven versus direct selling?

I think our focus initially is channel first, but I am a big fan of diversification, so we will continue to put emphasis on direct demand generation. As you know that was another area where we had a few missteps. We have now put in pace our outbound demand generation activity. Our Web site has dramatically improved. So we’re starting to see even demand generation from direct have a nice uptick, channel has had a nice uptick. And so we see a good mix of channel as well as a direct demand generation and we see all of this coming together to keep driving enhanced bookings.

Thank you.

Our next question comes from Will Power with Baird.

Great. Thanks. I guess a couple of questions. I just want to come back to Wavecell first. I wonder if you could provide any further color on how we think about the growth opportunity there. I know you provided some color on calendar '19 contribution, but what does the growth rate look like there and what do you expect going forward? And the second part of Wavecell, just any thoughts on how quickly that could be introduced to the U.S. and other markets and maybe any breakdown on SMS versus voice there?

Sure. Thanks, Will. So we [indiscernible] provide you the numbers. It’s obviously very early on in the journey for us. And so we have been fairly conservative in the approach with how we’re setting out guidance for that business. It’s a pretty cool business at the core. It’s super strategic obviously for what we’re doing. And so we will update you gladly as we report out this first quarter of having them [ph], meaning Q2 by where we have the business as part of ours where we can provide a little bit more informed view on what that growth profile looks like in the bigger portfolio.

And what I can add is more the cross sell opportunities. The reason we did this Wavecell acquisition it’s been a technology we have been looking for, for the last two plus years and I always start with the technology, because in the end if the technology is great everything else eventually takes care of itself. As an added benefit, we love the fact that in essence they have penetrated a lot of the fast moving, fast growing unicorns over in Asia Pacific in logistics, in fintech, et cetera, and they’ve gotten as well as in the right sharing, so they’ve positioned themselves extremely well. And then what we noticed more and more is our core customers have always been looking for customization and bite size pieces on top of our core voice offering. We used to do that with pure professional service engagements. Now we’re able to do it literally with APIs out-of-the-box. So we closed the acquisition and within 48 hours, some of our largest customers and you know who they are were reaching out to us to start projects on how you can add additional capabilities to their core either contact center or UCaaS offering that they have from 8x8. Surprisingly, one of Wavecell’s customers right of the bat also reached out because they have – it’s an insurance adjuster. They basically are using video at the very end on cell phones to help with insurance adjustment. They wanted to then tie in the customer support agents in so in essence using an X Series type platform, so in essence you can do real time claims assessment. So you can see how CCaaS and CPaaS are just kind of starting to merge together and it’s always been our vision. All of these things will come together and the reason the timing for us was right is we have spent the last few years integrating our platform. So Wavecell will not be run as a stand-alone bite size acquisition just selling pure SMS, two factor authentication or whatever. It’s an API framework for our entire platform and we see massive cross sell opportunities on both sides.

Okay. Thank you.

Thanks, Will.

Our next question comes from Rich Valera with Needham & Company.

Thank you. With respect to Wavecell I’m wondering if you can give any color on how their OpEx breakout relative to your sort of proportions on the OpEx lines? And do you see any opportunities for synergies or OpEx savings down the road?

Yes, to the discussion earlier is part of the portfolio and we talked about a balanced portfolio and investing for growth and investing for efficiency. And there is a lot of both with this asset. And so there is a tremendous amount of overlap on the go-to-market side and so there is a bunch of efficiency and synergy there. There is also a lot of engineering cost redeployment. So it’s not a question of we acquired Wavecell and now we have to go spend ton more money, it’s really the money that we would have spent in various capacities in R&D as well as go-to-market now integrate quite well from an OpEx standpoint. That’s why the litmus test on that, if you will, is when you look at our full year guidance, a very small single digit $1 million of incremental investment is what we would see from our own run rate. So that’s the sanity check on that, if you will. From a margin profile and OpEx profile, we talked about this a little bit in the prepared comments. But at the core there are very different services that CPaaS provides, right. There’s the core SMS messaging services that have its gross margin profile, there are at a higher value applications services that sit on top of that. And so that range of gross margin contribution is in the 18% to 22% zip code, like the rest of this space.

Got it. And then just to follow up on the contribution expected from Wavecell from a revenue perspective, you’ve pointed out that you’ve given the kind of sub 4x multiple and we obviously know the valuation, so I would have expected kind of a low $30 million annualized run rate there. And if you prorate that for say eight and a half months, you’d get kind of a low $20 million expected contribution, which is a little more than what you’re raising your guidance by. So I’m just trying to reconcile that with your comments that you’re raising both the organic and the inorganic components of the guidance?

Sure. Your numbers makes sense, so that’s not off the reservation. And we would offer that there is a dynamic of the numbers that they have provided and that the transaction was executed on. There’s how we run the business. And then as we said, we’re being fairly thoughtful and mindful insofar as how we set guidance for our own business let alone for something that we just acquired and thinking multiple quarters out. And so it’s really just a sense of being fairly thoughtful and responsible candidly so we don’t get out over our skis on something that’s brand new.

Fair enough. Okay. Thanks for taking my questions.

Sure. Thanks, Rich.

Our next question comes from Meta Marshall with Morgan Stanley.

Great. Thanks. Maybe turning to kind of the context in our commentary around the 30% of bookings from contact center or having some element. I guess does that mean that 30% of new bookings bought like an X8 license or 30% of deals have X8 kind of as a portion of them, just how to think of that factor? And then maybe second question from me --

Go ahead.

Go ahead and I’ll ask the second question in the follow up.

No, 30% off a bookings by value isn’t directly attributed. This is for midmarket and enterprise is directly attributed to contact center. Contact center is starting to become a bigger and bigger piece of our business. The part that’s the most exciting, Meta, and you’ve been with us on our journey. We launched the X Series, X Series when you have X8 which is – we have a certain value ascribed to contact center, certain value ascribed to the voice base. So the part I’m talking about is the stuff that’s ascribed to contact center. But we’re also seeing stand-alone contact center uptick as well. So both of those things reinforce each other. Keep in mind contact center stand-alone is a relatively new introduction for us, but we’re seeing again good acceleration on that. We brought a sales team onboard over the last few – actually last four, five months from several competitors as well as a product marketing team and we’re starting to see as I said uptick on both stand-alone as well as on combo deals, but contact center is going to be a very appreciable part of our business going forward.

Okay. And then maybe just a second question just on what is the difference between ARR and kind of service revenue, because it seems as if ARR is a little bit lower than the service revenue, just help me reconcile that piece?

Yes, sure. So ARR is our book of business, right, so that’s a point in time value of the recurring revenue measure for our customers as of a given point, for example, as of June. Service revenue is a period concept is that’s the revenue that we took in on the P&L over that period. And so ARR – your ARR is basically your leading indicator a bit, right. ARR grew about 21% and service revenue also includes other components beyond subscription. So there’s a little bit usage revenue, there’s a little bit of professional services revenue in there as well.

Okay, got it. Thank you.

Yes, sure.

Your next question comes from Josh Nichols with B. Riley.

Thanks for taking my question. I did want to ask two things. One, the company has obviously been investing a lot of growth. Can you talk about the target year-over-year headcount increases going forward, obviously not including the acquisitions but just organic growth from here? And given that you’re increasing the pro forma pre-tax loss expectation for the year to 54 million although you beat for the first quarter, could you walk us through how that’s going to translate to free cash flow and your expectations for the year?

Sure. So the high level point of view on our headcount is we’re growing and we’ll continue to grow headcount at a lower rate than our other expenses. And so there is some investment you’ve seen in the last few months, particularly this quarter. It is the largest component of our OpEx, something like 70% of our OpEx are headcount costs. So it’s something that we can control very closely. But basically we’re starting to see leverage in the last, gosh, probably 18 months something like 60% of our company, the employee base has been here for 18 months or less. And so you’ve seen a big increase in headcount over the last 18 months and that rate is now declining meaningfully so that it’s much less than the overall expense increase and it’s much less than the revenue growth rate. So you’re starting to see leverage on the people side of the business, full stop. On free cash flow and what that means, yes, we manage our cash very frugally. It’s an important aspect of the business and obviously a stockholder value. And so we see that metric dovetailing with our point of view and our desire to manage to break even. And so that should be something that goes part and parcel with that.

I guess what I’m really trying to get a hand on is you’ve targeted being breakeven next year on a pro forma pre-tax basis, right. That just seems like it could be a bit of a stretch given the guide for the pre-tax loss is up pretty significantly quarter-over-quarter for the September expectation, although you’re talking about getting some increasing leverage on the operating line. And then just looking on the cash flow perspective, you’ve had about a $14 million pre-tax loss, but you burn through about $30 million of cash in the quarter and how that’s going to flow through in the next 6 to 12 months?

Yes, so one correction is we guided on a non-GAAP basis to breakeven by the end of next year on 2021. And look, we have confidence in the leverage that we’re seeing right now in the model and so we don’t see – I would differentiate guidance from how we run the business, right. And so we’ve messaged that we have confidence in our ability to drive leverage and we just messaged that for our expectations right now for Q2 coming out of Q1 where you’ll see an improved sales efficiency as well as operating efficiency and lower ratios and therefore lower burn, and we see that continuing quarter-to-quarter. So that’s something that we feel confident about and that we do not draw a direct line with guidance. Our guidance approach on the bottom line builds in an appropriate comfort zone and variability certainly on a brand new business that we just acquired, for example.

Okay. I guess it’s fair to say then so you’re guiding to non-GAAP profitability next year, but there are a lot of non-GAAP costs as far as deferred commission, right, capitalization of cost. So you expect cash flow to probably continue to be negative through next year. Is that a fair assumption?

Yes, that’s right. We said non-GAAP breakeven by the end of next year and the non-GAAP costs are some odds and ends, but it’s mostly amortization and SBC [ph].

Great. Thanks a lot.

Yes, sure.

Your next question comes from Tim Horan with Oppenheimer.

Thanks, guys. Can you talk about just customer awareness at this point of all the new products out there? Obviously CPaaS was really new, but we’ve had some major company become public in the collaboration space and the video conferencing space, major improvements in contact center. And I guess ultimately what I’m trying to get at is what percentage do you think you have with your enterprise or midmarket total cloud communication spend at this point and where do you think it can kind of go?

I didn’t understand the last part, but let me address the gist of the question. Our timing on our acquisitions frankly, if I may say so myself, has been brilliant. We acquired Sameroom which is essentially a chat function which interoperates with 24 odd collaboration platform literally out-of-the-box a couple of years ago and it is now totally integrated with our products. It’s a huge – the team messaging aspect of it is a huge differentiator for us and we are finding customers increasingly using it more and more. The second part of it, contact center as you know we did three acquisitions in contact center. Contact center has now become a very big part of our business as we indicated. For our midmarket and enterprise business, 30% of bookings are coming from contact center. And both stand-alone and on a combined basis we see that as a – and we’re winning, I can’t remember the exact number, but I think 7 out of 10 deals or something like that had contact center in it. Now we’re starting to see a big shift in video. As you know, we acquired Jitsi from Atlassian about October, November of last year. We are launching it or just launched it a few days ago. Bundled is part of our X Series and also is part of our Express. That’s starting to have quite a bit of impact and we’re hearing more and more from customers. We’ll be launching that stand-alone by late fall timeframe. So we’ll have both contribution, one, as a way to protect the overall pricing power of our X Series because it’s bundled in but also as a stand-alone product that we can sell on itself and since it’s all on one platform, you get double leverage essentially from it. And then as I indicated over time we start to see the ability to then offer not just the Express piece which we just launched also which is for our low-end SMB business and basically the micro SMB business which is fully automated and that has bundled meetings in it. So all of these growth vectors are just starting to happen. So if I were to stage it, I would say the majority of our business in the past has been UCaaS. Increasingly, CCaaS is becoming a bigger and bigger portion of our business. Collaboration is built into all our UCaaS and we’re seeing pretty significant adoption, particularly from enterprise customers. We’re now starting to see the beginnings of adoption of a video meeting solution, the 8x8 Meetings solution that we just launched. And then we anticipate that Express will help us increase the efficiency of our SMB CAC quite dramatically because it’s complete self service. It’s launched on our ecommerce platform and there will be no essentially chat support, et cetera, and it’s intended for 5, 10-seat type low end SMB businesses that are just starting out.

Very helpful. Thank you.

The next question comes from George Sutton with Craig-Hallum.

Thank you. I want to go back to Rich’s question because I think that’s really the key question. Relative to guidance and the contribution from the acquisition, is there not some deferred revenue you’re losing as a result of the acquisition because that would answer that question a little bit more cleanly?

There is no deferred revenue that we are losing at all. It’s a usage-based model and that was not part of the calculus in the acquisition.

Okay. One other question relative to your mission to do the stand-alone video collaboration in the fall, I’m just curious how that’s being funded? How are you going to market there? Who you’re viewing as the competition?

So, I’ll do it in a couple of ways. One, it’s funded as part – remember, I have one platform. The whole idea of having one platform is it’s one engineering team and so we are able to have our engineers work interoperability on all of our various capabilities and a lot of the services in that one platform are shared. The way we’ll be going to market initially is we’re bundling it as part of our X Series. We just launched that over the last few weeks. We are also going to market with it as part of our Express, which is our ecommerce solution. I want to see how both of those go out. And then depending on that, we will either go to market with it using our ecommerce platform as a stand-alone meeting solution or as a stand-alone meeting solution that will have either our in-site sales or our field sales. That’s why I keep hammering this concept of one platform because it gives us ultimate flexibility. With one platform you can bundle it as part of our X Series, you can sell it through your in-site sales, your channel sales, your field sales or you can sell it through your ecommerce platform as stand-alone. What we’re trying to do and put the focus on is the customer. The way our customers want to buy is the way we want to sell them. What’s increasingly starting to happen and I think you have your finger on the pulse of the industry, I think as we check around with certain analysts that have had early looks at 8x8 Meetings, they’re pretty impressed with the overall product and how effective it is and we’re starting to see large enterprise customers saying, hey, we’ve got your UCaaS solution. Can you just give us essentially the meeting solution and we can have that on and use it to replace WebEx? I see the primary competitors we have are no secret. It’s primary the legacy guys, right. So it’s the Avaya, the Cisco, the Mitel, the ShoreTel and whatever Tel there is. It’s also increasingly people like WebEx and Cisco where we see them as legacy vendors. We obviously see cloud vendors such as RingCentral and Five9 in contact all the time. And every once in a while we’ll see Zoom. But the target initially for our meetings will be people like WebEx and then GoToMeeting and then eventually people like Zoom, but we’re not – we’ll take our time over the full process. And initially as I said, we would start with a bundled solution.

Okay. Hopeful clarity. Thank you.

Our next question comes from James Breen with William Blair.

Thanks for taking the questions. Just with respect to Wavecell, obviously we know the products that you’re getting and how you’re going to integrate that in. Is there some expertise you’re getting also behind the scenes you can talk about in terms of – because of their geographic location and just from a sales perspective and as respect within Asia? Thanks.

So I’ll the lead on that one. So a couple of things. One, they have an incredible team that has carrier relations with I think about 190 carriers. They have built an amazing telco network and the ability to do seamless messaging all over the world these guys are excellent at. That’s one aspect of it. All of them have been in this industry. This is a 9 or 10-year old company that we have been tracking for some time. Second, what they have is a lot of ability to work with customers where they do essentially design wins and they embed their product in. Some of their customers, for example, have used them not just for initially SMS but now are starting to use them for voice and video, which we see as a huge opportunity for upsell with us. Third, they have a local presence in Singapore as well as Philippines and Hong Kong and Japan and a few other local markets; Indonesia, Malaysia, et cetera. And we have already an installed base of customers that are global that maybe [indiscernible] is based in either U.S. or UK or Australia that have headquarters all over the place. And it was quite interesting how several of them essentially see both Wavecell as an opportunity for additions to their product and we also have, as I indicated, Wavecell customers who see the ability for UCaaS and CCaaS. And particularly our UCaaS solution, the 8x8 Express which is the ecommerce solution we see great opportunities to go global with it because it’s a completely seamless solution. And so the intent is over time we’re testing it out in the U.S. initially but launch that all over the world and we will now have an installed footprint all over the world. And if you think about it, we have become a truly global company. We have, what, 900,000 employees in the U.S. We have people in Australia and Asia Pacific area. We now have people in Singapore. We also have about 500 people in – sorry, I said 900,000. We have about 900 to 1,000 employees – I’m not quite there yet. So we have between 900 to 1,000 employees in the U.S., about 500 plus employees between UK and Europe. We now have a pretty appreciable 70, 80 employees in Asia Pacific region plus ANZ. We have really built a global footprint. And with the kind of carrier relationships that Wavecell has, we truly have a really differentiated offering, particularly SMS. 8x8 is the best global voice company. Add that with a great SMS network, you really have something powerful.

And the investments that you’re making in the channel that you’ve made over the last 12 months or so, will those overlap into the Wavecell territories? Is there sort of a different group of channel partners that you have to deal with there?

Both actually. Some channel partners have actually a presence in that part, some don’t. So there will be some overlap. The most immediate overlap is we see the ability for channel partners that are existing channel partners in U.S. and UK to be able to sell Wavecell services on top of the 8x8 UCaaS platform. We also have as I indicated partners in Australia, so there’s a tight integration between the partners in Australia and all of Asia Pacific, so we see opportunities for growth there as well.

Great. Thank you.

Our next question comes from Mike Latimore with Northland Capital.

Thanks. I guess first on Wavecell, have they historically mainly sold to developers or are their channels more diverse than that? And then I guess given their usage models, is there any seasonality in their business throughout the year?

So I’ll take that one. So one, Wavecell is primarily sold to enterprises. They are not about a developed community which if you think back to some of my own views, that is totally aligned with our vision. We see API as a logical extension of SaaS as a way to customize and as a way to go to local markets. And so what Wavecell has done is they have traditionally worked with enterprises to embed their solution as part of a larger solution that the enterprise is offering. One of their customers, for example, does ride sharing and is one the most prominent ride sharing companies in that part of the world. They provide essentially SMS. Now there’s a logical extension of voice and other capabilities like video that you can add to that. So again, their APIs are geared more towards the enterprise as opposed to the developer community and that will remain our focus. Our focus is the ability to work with enterprise to create applications that we can embed into larger applications as well as the framework that we can use to take our core UCaaS, CCaaS offerings plus the X Series and be able to provide customization and additional features on top of that. So again, the focus is not on the developer community. The focus is on professional services organizations.

And then to your question on seasonality, there is some at the customer level. There are some verticals that they have some special TAM that have seasonality naturally, but the portfolio effect kicks in. So from an aggregate level when you look at the revenue stream, there’s not a tremendous amount of seasonality.

Got it. And then just last on the deployment cycles, especially with your X Series. How have they been sort of trending over the last year?

Getting faster. The X Series, as you know, it was a difficult birth but once we got passed it, once we got it introduced to the channel partners, once our own deployment team got much more comfortable with it, it is definitely accelerating time to revenue across the board. So that’s a good sign. So it’s been a long journey bundling everything into the X and completely operating the platform was a nontrivial amount of work, but I think it’s been good and we’re seeing revenue acceleration there. With regard to Wavecell also I think we see an opportunity because we have one platform, the KPI framework was applied to the entire platform and you won’t run Wavecell as a stand-alone. It will have a stand-alone core part of the business, but the real value will be how it tightly integrates as an API framework for the entire consolidated platform that 8x8 has built together.

All right. Thanks.

Our next question comes from Jonathan Kees with Summit Insights Group.

Great. Thanks for taking my questions. Vik, I think I’m going to tag on to what you just talked about in terms of how the Wavecell is going to be tightly integrated with the network. I guess I’m just curious in terms of the timeframe in terms of this integration not just from the network. It has its own cloud network and this is the course that you just referenced. What is the timeframe you think in terms of integrating that onto your cloud network? And in terms of the platform in general, you’re talking about your engineers being able to work on multiple products, being able to interoperate in terms of their functionality. You’ve already also talked about sales. Some of the sales seems already in channel already also being able to sell Wavecell on top of your UCaaS. Just trying to get a sense in terms of the integration from both a technical level as well as the engineering level and in the total sales in channel level?

Okay, let’s break it out into different. The integration will happen incrementally over the course of the year. To give you one interesting anecdote, one of our customer had a need on top of our UCaaS platform and I’m sure you can guess the type of customer, but he wanted to sent alerts out to people on shared office spaces. Our engineers were able to put together a demo for them in 48 hours using Wavecell on top of our core offering. So portions of it will work – the integration will happen over time, but portions of it will work. The classic model we will follow is exactly how we have – the model we have followed for all the various technologies we have acquired over the years. I’ll take the last two. Sameroom, which was essentially a collaboration engine was embedded into both our mobile app as well as into our desktop app and now is part and parcel of everything that has ever shipped to anybody at all time and customers of every size. And so COLLABOR8, which is our team messaging capability is now completely embedded. Video that is just starting to happen. It started to happen – now video is you recall was acquired in I think October, November of last year and already the video has been embedded into our core virtual office desktop app and it’s also been embedded into our core virtual office mobile app. It’s now part of our integrated Express solution and it’s also integrated about new X Series sales on a case by case basis, and as I said that is being sold by the exact same sales team. We will make a determination on stand-alone meetings where it will be sold by the exact same sales team or we will use the ecommerce platform that we are testing essentially with our Express offering to also additionally add meetings to that same ecommerce platform. With regard to Wavecell, I think we will essentially assist them in – they got some amazing high growth ecommerce, fintech, logistics players that are household names in Asia Pacific. They’ve done a phenomenal job of embedding their solution into several of these. And as these companies are growing, Wavecell grows with them. We will be working with them to add not just SMS messaging but voice and other capabilities right off the bat. Several of Wavecell customers now want contact center solutions because that’s a logical extension to essentially a CPaaS application. That’s easy for us to do. Our contact center works globally and that’s why the stand-alone contact center is so valuable because that can be immediately sold as an addendum to Wavecell. So it will happen, as I said, over time as I said incrementally over the course of the year, but I think in about a year or so it will be fully integrated.

Great. That’s helpful. And if I can, one other question. In terms of your deal strategy and maybe I can step back and ask that about your deals in general. You’ve had a large amount of stand-alone contact center sales and that’s a positive surprise and that’s certainly a trend that it would be encouraging to see continuing. Wavecell already has that. You’re talking about video coming out in the fall as a stand-alone product. I guess what are you – do you have a change in terms of deal strategy or are you looking at profitable deals or are you looking at just get the footprint in and then profitability in the mid to long term --

I’ll break it into --

Okay.

Yes, so let’s walk through. We’ve had the same vision and so I think you have the benefit of us never having changed our strategy with regard to what we think the customers want. The strategy has been this creation of one platform with the ultimate mix or match. I can sell you the entire suite of products bundled in an X Series or I can sell you elements of it stand-alone, and that has always been. So now the great thing is when you do development for stand-alone, it applies to the bundle and vice-versa. When you do anything that changes, say, for example, single sign on or data layer or security or reliability for the platform, it applies to every individual component as well as to the bundle. So the way we are going to market is we launched X Series in the July timeframe. We’re getting that out there. We’re starting to see traction across the board with X Series. And over time, over the next 18 months or so our entire platform will be on the same common platform. Then, what we have done is once X Series is launched, we took a component of X Series which is contact center and we launched that stand-alone. Then, we took a portion of X Series, essentially tightened it all up so it was very easy and self service and launched that as 8x8 Express. We will take a portion of X Series, which is our meeting solution and we will launch that essentially as stand-alone and it has already been launched as bundled. So the intent is essentially a land and expand model, which is classic for every SaaS company and it’s the same common sales team that sells all our products and will be the same channel that we’ll use to go to market with all our products. So that’s fundamentally how we believe we’re going to drive very significant leverage in the model. That’s where we’ve had this one platform strategy because all the work that you do for one element or for the platform applies equally for everything. And then because you own your own technology, you can split it up and sell it and you also maintain pricing leverage because in essence you can deflate cost between different elements and always ensure the customer is getting full value.

Okay, great. Thank you.

Our final question comes from Ryan Koontz with Rosenblatt Securities.

Thanks. My question has been answered already. I appreciate it.

All right. Thank you.

I would like to thank everyone for joining today’s conference call. You may now disconnect.