eght-20230630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


			FORM			10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________to _________

Commission file number: 001-38312

_________________

8x8, INC.

(Exact name of Registrant as Specified in its Charter)

_________________


Delaware						77-0142404
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification Number)

675 Creekside Way

Campbell, CA 95008


(Address of principal executive offices)

(408) 727-1885


(Registrant's telephone number, including area code)

_________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
COMMON STOCK, PAR VALUE $0.001 PER SHARE	EGHT	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of the Registrant's Common Stock outstanding as of July 25, 2023 was 119,945,713.

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8X8, INC.

INDEX TO QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2023


			Page
Forward-Looking Statements and Risk Factors			2
PART I. FINANCIAL INFORMATION			3
Item 1. Financial Statements (unaudited):			3
Condensed Consolidated Balance Sheets			3
Condensed Consolidated Statements of Operations			4
Condensed Consolidated Statements of Comprehensive Loss			5
Condensed Consolidated Statements of Stockholders' Equity			6
Condensed Consolidated Statements of Cash Flows			7
Notes to Unaudited Condensed Consolidated Financial Statements			9
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			18
Item 3. Quantitative and Qualitative Disclosures About Market Risk			24
Item 4. Controls and Procedures			24
PART II. OTHER INFORMATION			25
Item 1. Legal Proceedings			25
Item 1A. Risk Factors			25
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			25
Item 3. Defaults Upon Senior Securities			25
Item 4. Mine Safety Disclosures			25
Item 5. Other Information			25
Item 6. Exhibits			25
Signature			26

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Forward-Looking Statements and Risk Factors

Statements contained in this quarterly report on Form 10-Q, or this "Quarterly Report", regarding our expectations, beliefs, estimates, intentions or strategies are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 ( the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. For example, words such as "may," "will," "should," "estimates," "predicts," "potential," "continue," "strategy," "believes," "anticipates," "plans," "expects," "intends," and similar expressions are intended to identify forward-looking statements. These forward-looking statements include, but are not limited to, statements regarding: industry trends; our number of customers; service revenue; cost of service revenue; research and development expenses; reducing unit costs and improving gross profit margin, or driving sustainable growth and increasing profitability and cash flow; new debt and interest expense; hiring of employees; sales and marketing expenses; general and administrative expenses in future periods; and the impact of foreign currency exchange rate and interest rate fluctuations. You should not place undue reliance on these forward-looking statements. Actual results and trends may differ materially from historical results and those projected in any such forward-looking statements depending on a variety of factors. These factors include, but are not limited to:

•the impact of economic downturns on us and our customers;

•the impact of cost increases and general inflationary pressures, as well as supply chain shortages and disruptions, on our operating expenses;

•customer cancellations and rate of customer churn;

•ongoing volatility and conflict in the political and economic environment, including the impact of Russia’s invasion of Ukraine and any macro-economic impact that may have;

•customer acceptance and demand for our new and existing cloud communication and collaboration services and features, including voice, contact center, video, messaging, and communication application programming interfaces;

•competitive market pressures, and any changes in the competitive dynamics of the markets in which we compete;

•the quality and reliability of our services;

•our ability to scale our business;

•customer acquisition costs;

•our reliance on a network of channel partners to provide substantial new customer demand;

•timing and extent of improvements in operating results from increased spending in marketing, sales, and research and development;

•the amount and timing of costs associated with recruiting, training, and integrating new employees and retaining existing employees;

•our reliance on infrastructure of third-party network service providers;

•risk of failure in our physical infrastructure;

•risk of defects or bugs in our software;

•risk of cybersecurity breaches;

•our ability to maintain the compatibility of our software with third-party applications and mobile platforms;

•continued compliance with industry standards and regulatory and privacy requirements, globally;

•introduction and adoption of our cloud software solutions in markets outside of the United States;

•risks that any reduction in spending may not achieve the desired result or may result in a reduction in revenue;

•risks relating to the acquisition and integration of businesses we have acquired or may acquire in the future, including most recently, Fuze, Inc.;

•risks related to the fluctuations in the value of the United States Dollar and other currencies that underlie our business transactions;

•risks related to our substantial amount of indebtedness, which could have important consequences to our business;

•potential future intellectual property infringement claims and other litigation that could adversely impact our business and operating results; and

•the current instability in the banking system, which could adversely impact our operations and operating results.

Please refer to the "Risk Factors" section of our annual report on Form 10-K for the fiscal year ended March 31, 2023 (the "Form 10-K") and subsequent Securities and Exchange Commission ("SEC") filings for additional factors that could materially affect our financial performance. All forward-looking statements included in this Quarterly Report are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. Readers are urged to carefully review and consider the various disclosures made in this Quarterly Report, which attempts to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.

Our fiscal year ends on March 31 of each calendar year. Each reference to a fiscal year in this Quarterly Report refers to the fiscal year ended March 31 of the calendar year indicated (for example, fiscal 2024 refers to the fiscal year ended March 31, 2024). Unless the context requires otherwise, references to "we," "us," "our," "8x8," and the "Company" refer to 8x8, Inc. and its consolidated subsidiaries.

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PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

8X8, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands, except share and per share amounts)


	June 30, 2023		March 31, 2023

ASSETS
Current assets:
Cash and cash equivalents	$	122,229	$	111,400
Restricted cash, current	165		511
Short-term investments	15,946		26,228
Accounts receivable, net of allowance for expected credit losses of $3,768 and $3,644 as of June 30, 2023 and March 31, 2023, respectively	64,951		62,307
Deferred sales commission costs, current	38,247		38,048
Other current assets	32,930		34,630
Total current assets	274,468		273,124
Property and equipment, net	54,538		57,871
Operating lease, right-of-use assets	50,438		52,444
Intangible assets, net	102,013		107,112
Goodwill	266,386		266,863
Restricted cash, non-current	818		818

Deferred sales commission costs, non-current	64,699		67,644
Other assets, non-current	15,103		15,934
Total assets	$	828,463	$	841,810

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	42,537	$	46,802
Accrued compensation	26,406		29,614
Accrued taxes	34,102		29,570
Operating lease liabilities, current	11,469		11,504
Deferred revenue, current	40,410		34,909
Convertible senior notes, current	63,039		62,932
Other accrued liabilities	18,354		14,556
Total current liabilities	236,317		229,887
Operating lease liabilities, non-current	62,850		65,623
Deferred revenue, non-current	10,618		10,615
Convertible senior notes	197,048		196,821
Term loan	209,534		231,993
Other liabilities, non-current	7,227		6,965
Total liabilities	723,594		741,904
Commitments and contingencies (Note 5)
Stockholders' equity:
Preferred stock: $0.001 par value, 5,000,000 shares authorized, none issued and outstanding as of June 30, 2023 and March 31, 2023	—		—
Common stock: $0.001 par value, 300,000,000 shares authorized, 119,231,643 shares and 114,659,255 shares issued and outstanding as of June 30, 2023 and March 31, 2023, respectively	119		115
Additional paid-in capital	924,190		905,635
Accumulated other comprehensive loss	(11,196)		(12,927)
Accumulated deficit	(808,244)		(792,917)
Total stockholders' equity	104,869		99,906
Total liabilities and stockholders' equity	$	828,463	$	841,810

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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8X8, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands except per share amounts)


	Three Months Ended June 30,
	2023		2022
Service revenue	$	175,238	$	179,161
Other revenue	8,049		8,459
Total revenue	183,287		187,620
Operating expenses:
Cost of service revenue	46,276		53,547
Cost of other revenue	8,398		13,126
Research and development	35,292		34,955
Sales and marketing	68,505		83,527
General and administrative	26,226		29,219
Total operating expenses	184,697		214,374
Loss from operations	(1,410)		(26,754)
Other (expense) income, net	(12,473)		1,116
Loss before provision for income taxes	(13,883)		(25,638)
Provision for income taxes	1,444		405
Net loss	$	(15,327)	$	(26,043)

Net loss per share:
Basic and diluted	$	(0.13)	$	(0.22)
Weighted average number of shares:
Basic and diluted	116,777		119,721

OTHER (EXPENSE) INCOME, NET DETAILS

(Unaudited, in thousands)


	Three Months Ended June 30,
	2023		2022
Interest expense	$	(8,970)	$	(625)
Amortization of debt discount and issuance costs	(1,108)		(831)
Loss on warrants remeasurement	(250)		—
Loss on debt extinguishment	(1,766)		—

(Loss) gain on foreign exchange	(804)		2,475
Other income	425		97
Other (expense) income, net	$	(12,473)	$	1,116

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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8X8, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited, in thousands)


	Three Months Ended June 30,
	2023		2022
Net loss	$	(15,327)	$	(26,043)
Other comprehensive income (loss), net of tax
Unrealized gain (loss) on investments in securities	290		(94)
Foreign currency translation adjustment	1,441		(8,384)
Comprehensive loss	$	(13,596)	$	(34,521)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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8X8, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited, in thousands)


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total
	Shares	Amount








Balance as of March 31, 2022	117,863	$	118	$	956,599	$	(7,913)	$	(766,438)	$	182,366
Adjustment related to adoption of ASU 2020-06	—	—		(92,832)		—		46,672		(46,160)
Issuance of common stock under stock plans, less withholding	1,796	2		63		—		—		65
Stock-based compensation expense	—	—		31,807		—		—		31,807
Unrealized investment loss	—	—		—		(94)		—		(94)
Foreign currency translation adjustment	—	—		(35)		(8,384)		—		(8,419)
Net loss	—	—		—		—		(26,043)		(26,043)
Balance as of June 30, 2022	119,659	$	120	$	895,602	$	(16,391)	$	(745,809)	$	133,522


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total
	Shares	Amount
Balance as of March 31, 2023	114,659	$	115	$	905,635	$	(12,927)	$	(792,917)	$	99,906

Issuance of common stock under stock plans, less withholding	3,535	3		(3)		—		—		—
Stock-based compensation expense	—	—		18,559		—		—		18,559
Issuance of common stock under stock plans, less withholding, related to Fuze acquisition	1,038	1		(1)		—		—		—
Unrealized investment loss	—	—		—		290		—		290
Foreign currency translation adjustment	—	—		—		1,441		—		1,441
Net loss	—	—		—		—		(15,327)		(15,327)
Balance as of June 30, 2023	119,232	$	119	$	924,190	$	(11,196)	$	(808,244)	$	104,869

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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8X8, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)


	Three Months Ended June 30,
	2023		2022
Cash flows from operating activities:
Net loss	$	(15,327)	$	(26,043)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation	2,126		2,789
Amortization of intangible assets	5,099		5,476
Amortization of capitalized internal-use software costs	5,282		5,964
Amortization of debt discount and issuance costs	1,109		831
Amortization of deferred sales commission costs	10,019		9,166
Allowance for credit losses	490		695
Operating lease expense, net of accretion	2,507		3,121
Stock-based compensation expense	18,195		27,814
Loss on debt extinguishment	1,766		—
Loss on remeasurement of warrants	250		—
Other	(184)		456
Changes in assets and liabilities:
Accounts receivable	(3,397)		(99)
Deferred sales commission costs	(7,209)		(9,246)
Other current and non-current assets	2,327		(692)
Accounts payable and accruals	(2,084)		(13,786)
Deferred revenue	5,504		(605)

Net cash provided by operating activities	26,473		5,841

Cash flows from investing activities:
Purchases of property and equipment	(186)		(971)

Capitalized internal-use software costs	(3,488)		(2,309)
Purchases of investments	(3,093)		(18,838)
Sales of investments	—		1,937
Proceeds from maturities of investments	13,559		15,590
Acquisition of businesses, net of cash acquired	—		(1,250)
Net cash provided by (used in) investing activities	6,792		(5,841)

Cash flows from financing activities:


Proceeds from issuance of common stock under employee stock plans	—		65
Repayments of principal on term loan	(25,000)		—
Net cash provided by (used in) financing activities	(25,000)		65
Effect of exchange rate changes on cash	2,218		(6,685)
Net increase (decrease) in cash, cash equivalents and restricted cash	10,483		(6,620)
Cash, cash equivalents and restricted cash, beginning of year	112,729		100,714
Cash, cash equivalents and restricted cash, end of year	$	123,212	$	94,094

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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8X8, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(Unaudited, in thousands)

Supplemental disclosures of cash flow information:


	Three Months Ended June 30,
	2023		2022



Payables for fixed assets	$	37	$	—

Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheets:


	As of June 30,
	2023		2022
Cash and cash equivalents	$	122,229	$	92,686
Restricted cash, current	165		590
Restricted cash, non-current	818		818
Total cash, cash equivalents and restricted cash	$	123,212	$	94,094

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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8X8, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED

1. THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES

THE COMPANY

8x8, Inc. ("8x8" or the "Company") was incorporated in California in February 1987 and was reincorporated in Delaware in December 1996. The Company trades under the symbol "EGHT" on the Nasdaq Global Select Market.

The Company is a leading Software-as-a-Service ("SaaS") provider of contact center, voice, video, chat, and enterprise-class API solutions powered by one global cloud communications platform. 8x8 empowers workforces worldwide by connecting individuals and teams so they can collaborate faster and work smarter from anywhere. 8x8 provides real-time business analytics and intelligence, giving its customers unique insights across all interactions and channels on its platform, so they can support a distributed and hybrid working model while delighting their end-customers and accelerating their business. A majority of all revenue is generated from communication services subscriptions and platform usage. The Company also generates revenue from sales of hardware and professional services, which are complementary to the delivery of its integrated technology platform.

BASIS OF PRESENTATION AND CONSOLIDATION

The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") and regulations of the Securities and Exchange Commission ("SEC") regarding interim financial reporting. Accordingly, certain information and disclosures normally included in the Company's annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements as of and for the fiscal year ended March 31, 2023 and notes thereto included in the Form 10-K. There were no material changes during the three months ended June 30, 2023 to the Company's significant accounting policies as described in the Form 10-K.

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The Company conducts its operations through one reportable segment.

In the opinion of the Company's management, these condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement of the Company's financial position, results of operations and cash flows for the periods presented. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for any subsequent quarter or for the entire year ending March 31, 2024.

USE OF ESTIMATES

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and equity, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, including, but not limited to, those related to current expected credit losses, returns reserve for expected cancellations, fair value of and/or potential impairment of goodwill and intangible assets, capitalized internal-use software costs, benefit period for deferred commissions, stock-based compensation, incremental borrowing rate used to calculate operating lease liabilities, income and sales tax liabilities, convertible senior notes fair value, litigation, and other contingencies. The Company bases its estimates on known facts and circumstances, historical experience, and various other assumptions. Actual results could differ from those estimates under different assumptions or conditions.

RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

There were no recent accounting pronouncements that were applicable to the Company adopted during the three months ended June 30, 2023.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED

Recent accounting pronouncements that may be applicable to the Company are not expected to have a material impact on its present or future financial statements.

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2. REVENUE RECOGNITION

Disaggregation of Revenue

The Company disaggregates its revenue by geographic region. See Note 10. Geographical Information.

Contract Balances

The following table provides amounts of receivables, contract assets, and deferred revenue from contracts with customers (dollars in thousands):


	June 30, 2023		March 31, 2023
Accounts receivable, net	$	64,951	$	62,307
Contract assets, current (component of Other current assets)	11,989		11,581
Contract assets, non-current (component of Other assets)	10,301		11,141
Deferred revenue, current	40,410		34,909
Deferred revenue, non-current	10,618		10,615

The change in contract assets was primarily driven by the recognition of revenue that has not yet been billed. The increase in deferred revenue was due to billings made in advance of performance obligations being satisfied. During the three months ended June 30, 2023, the Company recognized revenues of approximately $16.9 million that were included in deferred revenue at the beginning of the fiscal year.

Remaining Performance Obligations

The Company's subscription terms typically range from one to five years. Contract revenue from the remaining performance obligations that had not yet been recognized as of June 30, 2023 was approximately $790.0 million. This amount excludes contracts with an original expected length of less than one year. The Company expects to recognize revenue on approximately 85% of the remaining performance obligations over the next 24 months and approximately 15% over the remainder of the subscription period.

For purposes of this disclosure, the Company excludes contracts with an original expected length of less than one year. Since the new and renewal contracts entered into with customers are generally for terms of one year or longer, updating this disclosure to include contracts with a term of one year or more presents a more appropriate measure of the Company's remaining performance obligations.

Deferred Sales Commission Costs

Amortization of deferred sales commission costs for the three months ended June 30, 2023 and 2022 was approximately $10.0 million and $9.2 million, respectively. There were no material write-offs during the three months ended June 30, 2023 and 2022.

3. FAIR VALUE MEASUREMENTS

Cash, cash equivalents, and available-for-sale investments were as follows (dollars in thousands):


As of June 30, 2023	Amortized Costs		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Value		Cash and Cash Equivalents		Restricted Cash (Current & Non-current)		Short-Term Investments
Cash	$	91,556	$	—	$	—	$	91,556	$	91,556	$	—	$	—
Level 1:
Money market funds	22,148		—		—		22,148		21,165		983		—
Treasury securities	3,590		—		(2)		3,588		—		—		3,588
Subtotal	117,294		—		(2)		117,292		112,721		983		3,588
Level 2:
Certificate of deposit	4,290		—		—		4,290		4,290		—		—
Commercial paper	15,357		—		(2)		15,355		5,218				10,137
Corporate debt	2,223				(2)		2,221		—				2,221
Subtotal	21,870		—		(4)		21,866		9,508		—		12,358
Total assets	$	139,164	$	—	$	(6)	$	139,158	$	122,229	$	983	$	15,946

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As of March 31, 2023	Amortized Costs		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Value		Cash and Cash Equivalents		Restricted Cash (Current & Non-current)		Short-Term Investments
Cash	$	95,828	$	—	$	—	$	95,828	$	95,828	$	—	$	—
Level 1:
Money market funds	8,935		—		—		8,935		8,935		—		—
Treasury securities	1,599		4		(1)		1,602		—		—		1,602
Subtotal	$	106,362	$	4	$	(1)	$	106,365	$	104,763	$	—	$	1,602
Level 2:
Certificate of deposit	1,329		—		$	—	1,329		—		1,329		—
Commercial paper	8,610		—		(2)		8,608		6,637		—		1,971
Corporate debt	22,625		55		(25)		22,655		—		—		22,655
Subtotal	32,564		55		(27)		32,592		6,637		1,329		24,626
Total assets	$	138,926	$	59	$	(28)	$	138,957	$	111,400	$	1,329	$	26,228

The restricted cash component of the money market funds is comprised of letters of credit securing leases for certain office facilities.

The Company considers its investments available to support its current operations and has classified investments in debt securities as available-for-sale securities. The Company does not intend to sell any of its investments that are in unrealized loss positions and, as of June 30, 2023, has determined that it is not more likely than not that it will be required to sell any of these investments before recovery of the entire amortized cost basis.

The Company regularly reviews the changes to the rating of its securities at the individual security level by rating agencies and reasonably monitors the surrounding economic conditions to assess the risk of expected credit losses. As of June 30, 2023, the Company did not record any allowance for credit losses on its investments.

The Company uses the Black-Scholes option-pricing valuation model to value its detachable warrants from inception and at each reporting period. Changes in the fair values of the detachable warrants liability are recorded as loss on warrants remeasurement within Other (expense) income, net in the condensed consolidated statements of operations.

The following table presents additional information about valuation techniques and inputs used for the detachable warrants (see Note 6, Convertible Senior Notes and Term Loan) that are measured at fair value and categorized within Level 3 as of June 30, 2023 and March 31, 2023 (dollars in thousands):


	June 30, 2023		March 31, 2023
Estimated fair value of detachable warrants	$	5,748	$	5,497
Unobservable inputs:
Stock volatility	70.0%		67.2%
Risk-free rate	4.2%		3.6%
Expected term	4.1 years		4.4 years

As of June 30, 2023 and March 31, 2023, the estimated fair value of the Company's convertible senior notes due in 2024 was $60.3 million and $57.3 million, respectively, and the estimated fair value of the Company’s convertible senior notes due in 2028 was $192.3 million and $183.0 million, respectively (refer to Note 6, Convertible Senior Notes and Term Loan). The fair value of the convertible senior notes was determined based on the closing price of each of the securities on the last trading day of the reporting period, and each is considered to be Level 2 in the fair value hierarchy due to limited trading activity of the debt instruments. As of June 30, 2023 and March 31, 2023, the carrying value of the Company’s Term Loan approximates its estimated fair value.

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4. INTANGIBLE ASSETS AND GOODWILL

The carrying value of intangible assets consisted of the following (dollars in thousands):


	June 30, 2023						March 31, 2023
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Technology	$	46,451	$	(30,468)	$	15,983	$	46,461	$	(28,361)	$	18,100
Customer relationships	105,826		(19,796)		86,030		105,836		(16,824)		89,012
Trade names and domains	583		(583)		—		584		(584)		—

Total acquired identifiable intangible assets	$	152,860	$	(50,847)	$	102,013	$	152,881	$	(45,769)	$	107,112

As of June 30, 2023, the weighted average remaining useful lives for technology and customer relationships were 2.1 years and 7.4 years, respectively.

The annual amortization of the Company's intangible assets, based upon existing intangible assets and current useful lives, is estimated to be as follows (dollars in thousands):


	Amount
Remainder of 2024	$	15,297
2025	19,095
2026	13,896
2027	11,757
2028	11,044
Thereafter	30,924
Total	$	102,013

The following table provides a summary of the changes in the carrying amounts of goodwill (dollars in thousands):

SEC Form 10-Q filed by 8x8 Inc