8x8 2011 Annual Report Download - page 32

when the actual tax benefit realized by the company upon an employee’ s disposition of a share-based award exceeds the
deferred tax asset, if any, associated with the award that the company had recorded. We use the “with and without” approach as
described in ASC 740, in determining the order in which our tax attributes are utilized. The “with and without” approach
results in the recognition of the windfall stock option tax benefits only after all other tax attributes of ours have been
considered in the annual tax accrual computation. Also, we have elected to ignore the indirect tax effects of share-based
compensation deductions in computing our research and development tax and as such, we recognize the full effect of these
deductions in the income statement in the period in which the taxable event occurs.
On January 27, 2009, when our stock price closed at $0.55 per share our board of directors approved the acceleration of
unvested stock options to purchase 3,902,186 shares of common stock. 1,737,509 of these shares are subject to options held by
our executive officers and directors. These options of our executive officers and directors, taken as a whole, have a weighted
average exercise price of $1.06 per share and range from $0.63 to $1.79 per share, and a weighted average remaining vesting
term of 2.85 years. Approximately $1.1 million of the $2.4 million stock-based compensation charge in the fourth quarter of
2009 applies to the options held by our executive officers and directors.
SELECTED OPERATING STATISTICS
We periodically review certain key business metrics, within the context of our articulated performance goals, in order to
evaluate the effectiveness of our operational strategies, allocate resources and maximize the financial performance of our
business. The selected operating statistics include the following:
March 31,
2011
Dec. 31,
2010
Se
p
t. 30,
2010
June 30,
2010
March 31,
2010
Dec. 31,
2009
Se
p
t. 30,
2009
June 30,
2009
March 31,
2009
Gross business customer additions
(1)
3,009 2,798 2,450 2,756 2,875 2,785 2,609 2,907 2,792
Gross business customer
cancellations (less cancellations
within 30 days of sign-up) 1,645 1,524 1,459 1,592 1,616 1,331 1,416 1,371 1,245
Business customer churn (less
cancellations within 30 days
of sign-up) (2) 2.3% 2.2% 2.2% 2.5% 2.7% 2.4% 2.7% 2.7% 2.7%
Total business customers (3) 24,385 23,251 22,167 21,362 20,428 19,407 18,199 17,266 16,013
Business customer average monthly
service revenue per customer (4) 204$ 209$ 209$ 208$ 204$ 204$ 201$ 196$ 202$
Overall service margin 78% 77% 78% 78% 77% 78% 76% 76% 71%
Overall product margin -73% -65% -57% -38% -43% -59% -42% -75% -50%
Overall gross margin 67% 68% 68% 68% 68% 68% 67% 66% 59%
Business subscriber acquisition cost
per service (5) 91$ 99$ 108$ 109$ 97$ 102$ 90$ 93$ 118$
Average number of services subscribed
to per business custome
r
8.0 7.8 7.7 7.5 7.5 7.3 7.1 6.9 6.6
Business customer subscriber
acquisition cost (6) 725$ 768$ 826$ 818$ 723$ 749$ 638$ 638$ 785$
Selected Operating Statistics
30
(1) Includes9hostingcustomersacquiredinthefirstquarteroffiscalfromCentralHost,Inc."CentralHost".
Businesscustomerchurniscalculatedbydividingthenumberofbusinesscustomersthatterminatedaftertheexpirationofthe‐daytrial
duringthatperiodbythesimpleaveragenumberofbusinesscustomersduringtheperiodanddividingtheresultbythenumberofmonthsinthe
period.Thesimpleaveragenumberofbusinesscustomersduringtheperiodisthenumberofbusinesscustomersonthefirstdayoftheperiod
(2)
plusthenumberofbusinesscustomersonthelastdayoftheperioddividedbytwo.
Businesscustomersaredefinedascustomerspayingforservice.Customersthatarecurrentlyinthe‐daytrialperiodareconsideredtobe
(3)
customersthatarepayingforservice.
Businesscustomeraveragemonthlyservicerevenuepercustomerisservicerevenuefrombusinesscustomersintheperioddividedbythe
(4)
numberofmonthsintheperioddividedbythesimpleaveragenumberofbusinesscustomersduringtheperiod.
Businesssubscriberacquisitioncostperserviceisdefinedasthecombinedcostsofadvertising,marketing,promotions,commissionsand
riod.
(5)
equipmentsubsidiesforbusinessservicessoldduringtheperioddividedbythenumberofgrossbusinessservicesaddedduringthepe
Businesscustomersubscriberacquisitioncostisbusinesssubscriberacquisitioncostperservicetimestheaveragenumberofservices
subscribedtoperbusinesscustomer.
(6)