Riding the long tail can take you a long way. But when you're ready to join the big leagues, you really need to sign bigger deals.
That's exactly where Internet-based phone service specialist 8x8 (Nasdaq: EGHT) stands today. In the just-reported second quarter, the company recorded revenue of $19.8 million, a 14% year-over-year improvement. Ninety-one percent of the money comes from 26,767 business accounts, which is where 8x8 really wants to succeed -- consumer services are an afterthought nowadays.
It works out to a very modest $673 per business customer, or about $224 per month. We're talking about the small-biz long tail here, folks.
But that's changing, in large part thanks to a quick acquisition. The stock-based pickup of privately held Contactual closed near the end of this quarter, adding a significant software as a service call center platform. And that deal came with some brand name customers: Thanks to Contactual, 8x8 now sells directly to fruit smoothie pioneer Jamba (Nasdaq: JMBA), alternative vacationing expert HomeAway (Nasdaq: AWAY), and even industrial conglomerate giant General Electric (NYSE: GE).
Not bad for a deal that only cost 6.7 million shares, or about $25 million at recent 8x8 share prices. The big-deal nature of Contactual's customer list is already expanding 8x8's revenue per customer by about 10%.
It doesn't end there. CEO Bryan Martin expects to see "many similarly sized names embracing cloud communications in the future." And that's the magic keyword in the 8x8 story: cloud communications.
8x8 stands at the very nexus of two highly investable IT trends: cloud computing and data networking. A traditional phone system of the kind AT&T (NYSE: T) or Verizon (NYSE: VZ) might sell pushes specialized voice traffic over an equally specialized infrastructure, and requires tons of single-use hardware in many places along the way. In the 8x8 model, you're shepherding communications over multipurpose data networks and managing everything in a centralized cloud -- no need for expensive, special hardware in your office.
Learn more about cloud computing from this video, and about high-speed networking in this special report. After you do, you'll come back with a whole new appreciation for the opportunities ahead of 8x8. Both reports are totally free, so what are you waiting for? Get informed right now!
