Stock Pitch: 8x8, Inc. Finance & Investment Club Telecommunications Sector Kevin Ng – Investment Associate Arlind Hoxha – Investment Asscoiate Fall 2012

2 Company Overview  8x8, Inc. markets and provides telecommunications services for Internet Protocol telephones and video applications mainly for business customers. The company is also expanding its line of services to include –contact center services –web-based conferencing –unified communications services –cloud based computing services  The company uses Voice over Internet Protocol technology which allows customers to place calls through the internet rather than through traditional switching methods that are more costly and harder to implement 8x8 (NASDAQ: EGHT)

3 3 Focusing on Services Has Fueled Revenue Growth  Company is focused on increasing its number of services and retaining customers –The number of services subscribed to per business customer grew to 10.1 in the first quarter of FY13 in comparison to 8.4 in the same period last year –The churn rate fell to a record low of 1.7% in 1Q13, down from 2% at the end of FY12  More services and greater retention have fueled revenue growth –Average revenue per business user grew to a record high of $250 in 1Q13, up from $200 a year earlier 3 year Revenue CAGR = 16.34%

4 4 VoIP Market Growth in the U.S. Small & Medium Businesses (SMB) Large Enterprises Government Sector SMBs allocated 10% of spending to cloud bundles in 2011, expected to increase to 15% by 2015 Expected to grow from 12% market share of sector in 2010, to 32% by 2015 VoIP subscribers are expected to grow from 21 million in 2010 to almost 70 million by 2015 (CAGR of 27%) By 2013, an estimated 79% of U.S. businesses will be using VoIP technologies Strongest penetration rate with over 48% having VoIP in at least one location 40% of surveyed organizations use videoconferencing services or applications Saves money by reducing operating costs over time while boosting the customer experience Simplifies infrastructure and management complexity while being easy to use 41% of SMBs have already switched to VoIP with an additional 20% switching next year

5 5 8x8: Positioned for Market Penetration Small & Medium Businesses (SMB) Large Enterprises 8x8 Dominates the SMB market by providing comprehensive VoIP services Larger competitors cannot focus on advertising VoIP without drawing business away from other segments Offers a full-fledged contact center typically unaffordable for SMBs Cloud communication services can be installed without an IT person and potentially save hundreds of thousands Partnered with Level3 (LVLT) for Networx and WITS 3 Contracts With more than 80 competitors, top market share of Hosted IP lines installed in 2011 (7.9%) Government Sector Competitive advantage in pricing Acquisition of Contactual in 2012 brought in dozens of large enterprises for potential cross-selling services

6 6 Patents and Patent Value Current owns 79 patents valued up to $50 million with more pending Most valuable patents were issued recently can be licensed to companies abroad If liquidated, patents could add $15 to $50 million as a hard asset on balance sheet (12% to 39% increase) Makes it an appealing potential takeover target

7 7 Risks High Probability Litigation (medium severity) Competition (low severity) Decreasing telecommunication rates (low severity) Medium Probability Emergency calls may be delayed or disrupted (medium severity) Regulation changes by the FCC (medium severity) Low Probability Another economic downturn (high severity)

8 8 Conclusion 8x8 could potentially be a good investment because of 1)Revenue growth created by its focus on customers and services 2) The company’s position to take advantage of a growing market 3) Strong patent portfolio which makes the company a takeover target However, the company could be overvalued at a price of 6.36 (as of 10/16)  EV/EBITDA of 41.26x is above the comparable mean and median of 7.85 and 3.76, respectively Company reports earnings on 10/24- do we get in before or after?

9 9 Back Up Slides

10 Industry Breakdown and Summary Industry Breakdown by Market Cap ($BN) Market Share by TTM Revenue Technology $ 119,763.3 (100%) Telecommunications* $ (35%) Communication Services and Equipment $ (3.3%) Business VoIP $1.9(1.6%) *Domestic and Foreign Telecom($908.1 BN), Diversified Communication Services($102.7 BN), Communication Equipment($ BN), Wireless Communications ($ BN)

11 Comparable Company Analysis Company % 52 week high LTM EV ($MM) Debt/Equity LTM EBITDA Margin ROAROE EV / EBITDA Churn Rate EGHT 90.60%$ %89.35%103.76%41.26x1.70% VG 62.50%$ %98.97%312.48%3.76x2.50% CALL 72.04%$ N/A7.90%0.65%N/A33.87xN/A SHOR 70.05%$ %-3.94%-14.22%-42.96x3.10% CBEY 90.58%$ %-1.92%-2.74%3.32x1.50% High 90.60% $ %98.97%312.48%41.26x3.10% Median 72.04% $ %0.65%50.51%3.76x2.10% Mean 77.15% $ %36.62%99.82%7.85x2.20% Low 62.50% $ %-3.94%-14.22%-42.96x1.50%