Shares of 8x8, Inc. (EGHT) are up more than 50% within the past three months, and since August of 2010 shares are up more than 210%. I've owned it at various times in the past year and I still check EGHT share prices every day on the hour. And yet, I've hesitantly stayed on the sidelines during the most recent run up.
First some basics. 8x8, Inc. offers integrated voice, video and mobile communication solutions for small and medium-sized businesses. In 2002 8x8 entered the VoIP market catering to small and medium-sized business with their cloud based operating system. The company has a market capitalization of $278 million; the 52 week high is $4.61, and the 52 week low is $1.25.
8x8 has had a lot of positive information coming out of the news recently. The company joined the Russell 3000 index on June 28th and the company should gain exposure from institutional investors who use the index as a benchmark for investing.
The company has also remained active in acquiring smaller businesses to broaden their portfolio. In May of 2010, 8x8 purchased Central Host, Inc. and they also just recently purchased Zerigo. Zerigo provided virtual servers and monitoring tools for cloud based operating tools. The Zerigo acquisition looks to be a great investment as 8x8 will now have greatly enhanced cloud hosting services.
It is probably no surprise that there is speculation that the company remains an attractive takeover target. On June 7th, shares jumped nearly 20% minutes before the market closed on rumors that Apple (AAPL) would partake in a partnership or takeover of the company. The rumors were false, but the price run up has still not faded.
What seemed to quietly slip through the news was that 8x8 surpassed 25,000 business customers. The company also continues to grow internally and through acquisition. CEO Bryan Martin recently was interviewed on Bloomberg and stated the company is "profitable and growing aggressively."
Even after the recent run up in share price, 8x8 still looks like an interesting play. We can take a look at some of the highlights of their Q4 earnings report below:
- Revenue from business customers was up 24% yoy.
- The company added 3,009 new business customers in Q4.
- Operating cash flow grew 3.4x yoy.
- Total revenue for fiscal 2011 was $70.2 million, up 10.2% from fiscal 2010.
- Net income in fiscal 2011 was $6.5 million, 67% higher than in fiscal 2010.
What may be the most attractive part of the balance sheet is that the company has no long term debt on the books and $18.4 million in cash and investments, $9 million of which is FCF. 8x8 has a PEG ratio of .8 which would indicate it is not highly overvalued.