Thank you and welcome everyone to our call. Today, I am joined by 8x8's Chief Executive Officer, Vik Verma and our Chief Financial Officer, Mary Ellen Genovese, to discuss our results for 8x8's second fiscal quarter of 2016 ended September 30, 2015.

If you have not yet seen today's financial results, the press release is available on the Investor's tab of 8x8's website at www.8x8.com. Following our comments, there will be an opportunity for questions.

Before I turn the call over to Vik, I would like to remind all participants that during this conference call, any forward-looking statements are made pursuant to the Safe Harbor provision of the Private Securities and Litigation Reform Act of 1995. Expressions of future goals, including financial guidance and similar expressions.

Including, without limitations, expressions using the terminology may, will, believe, expect, plans, anticipates, predicts, forecasts and expressions which reflect something other than historical fact are indeed to identify forward-looking statements. These forward-looking statements involve a number of risks and uncertainties.

Including factors discussed in the Risk Factors sections of our annual report on Form 10-K, in our quarterly reports on Form 10-Q and in our other SEC filings and Company releases. Our actual results may differ materially from any forward-looking statements due to such risks and uncertainties.

The Company undertakes no obligation to revise or update any forward-looking statements in order to reflect events or circumstances that may arise after this conference call, except as required by law. Thank you.

With that, I'll turn the call over to Vik Verma, Chief Executive Officer of 8x8.

Thank you, Joan and welcome, everyone to 8x8's second quarter of FY '16 earnings call. The Company posted a very strong the second quarter.

Highlighted by a 30% increase in service revenue, a 102% increase in new monthly recurring service revenue sold to mid-market and enterprise customers and by our channel sales team. Solid growth from our SMB group and contracts with three of the largest customer wins in the Company's history.

Total revenue for the second quarter of FY '16 grew 29% year over year to $50.9 million, while service revenue grew 30% year-over-year to $47 million. Non-GAAP net income was $3 million or 6% of revenue.

This is 8x8's 22nd consecutive quarter of profitability on a non-GAAP basis. FY '16 is shaping up to be a pivotal year for 8x8, as we continued in Q2 to witness growing mid-market and enterprise adoption of our services and an influx of large enterprise-qualified opportunities in our pipeline.

This is a trend I believe that is materializing faster than most industry observers expected, as Gartner now estimates the UCaaS market will grow at a rate of 40% to 45% in the large, over 1000 employee big the segment and 25% in the medium, 100 to 999 employee segment, compared with 15% to 20% growth in the small, under 100 employee segment. First, I would like to provide an update on the enterprise opportunities I referenced on our earnings call last quarter.

I am pleased to report that during the second quarter of FY '16, we closed three of the global enterprise prospects that I mentioned had been in trial deployment in various U.S. and international locations.

One of these is a publicly traded $3 billion in revenue global industrial goods and technology company with offices in over 80 countries. After an extensive analysis that spanned criteria such as service breadth and depth, global presence, support, security, reliability and implementation capabilities.

This customer chose to replace their existing premise-based PBX system with 8x8's enterprise communication as a service offering for over 7,000 plus seats deployment. We have already installed our services in their Sydney and Melbourne, Australia offices.

And are planning to roll out our solution at over 100 worldwide locations over the next 12 to 18 months. The next enterprise win in the quarter was NetSuite, the industry's leading provider of cloud-based financials, ERP and omni channel commerce software suites.

NetSuite shows 8x8's enterprise communications as a service offering to address its global communications requirements and standardized its enterprise class business telephony across its worldwide locations. In addition to our international capabilities, 8x8's Elite Touch rapid enterprise on-boarding program served as a critical element for NetSuite's decision.

Our proven Elite Touch methodology helps ensure the fastest time to value, even for customers with large, complex requirements that typically involve multiple sites, global implementations or integration with CRM or other critical backend systems. 8x8 worked with NetSuite to on-board 2,400 employees in nine locations, spanning three countries, including large offices in the Philippines over a record-breaking six-week deployment.

Another key win during the quarter was Regis, a global workplace provider with 2,500 business centers in 106 countries. Regis' communication infrastructure consisted of a variety of disparate unconnected PBX systems with limited features and capabilities.

Regis selected 8x8 to provide a complete cloud telephony, mobile and UC solution that could be deployed globally across all of its locations. Prior to moving to the cloud, Regis was unable to offer tenants a business phone service with key features such as mobility, multi-channel communications and presence-enabled directories.

By selecting 8x8, Regis has ensured its customers will have access to the most advanced enterprise communications as a service tools to increase their business flexibility and productivity. Our initial deployment will cover 140 locations in the U.S., UK and continental Europe to be rolled out over the next six months or so.

What is interesting to note is that these three enterprise customers represented very different industries. One is a global industrial conglomerate, one is an industry-leading SaaS provider and the one is a pioneer of the sharing economy.

Yet all have made the game-changing decision to transition their communications infrastructure to the cloud. Over the past six months, we have seen an acceleration in demand from enterprise customers who are evaluating 8x8, primarily because of three key criteria.

One, our ability to deploy a fully-integrated enterprise communication solution across the globe in a matter of weeks. Two, our superior security, compliance, end-to-end SLA and operations that meet the most stringent global enterprise requirements.

And three, our big data analytics environment. Which provides unprecedented visibility into the communications activity within the enterprise, no matter where employees are located.

This quarter, 6 of our top 10 deals were for a combined virtual office and virtual contact center solution. 5 have a global service requirement and 4 have ordered our analytics solutions in addition to our EC and/or contact center services.

Second, I am very proud of the increasing productivity of our sales and marketing organization. Each of the aforementioned enterprise wins was brought in by a different 8x8 sales team.

One, by our North American enterprise group, one by our UK team and one by a channel partner. As you know, sales and marketing has been a key area of investment for 8x8 and we're beginning to seize some meaningful ROI from this effort.

New monthly recurring revenues sold to mid-market and enterprise customers and by our channel sales team increased 102% year over year and accounted for 58% of total MRR booked in the quarter, compared with 41% of total MRR booked in the same period last year. The channel is shaping up to be a strong contributor to our business, with 5 of our top 10 deals sold in the quarter brought in by our channel partners.

Our SMB sales team also continues to perform well, with over 20% improvement in productivity. Though we're aggressively targeting the mid-market and enterprise segment, SMB remains a key focus of our business.

And these customers will benefit from the enterprise great capabilities and service enhancement we continue to build into our platform. Third, we're making great progress internationally with our expanded footprint in the UK, global deployment capabilities and growing market presence in Australia.

Following our acquisition of DXi systems in May of this year and recently completed integration with 8x8 solutions in the UK, we now have a full service 8x8 UK operations. Consisting of approximately 150 employees, including a highly effective sales organization that is closing very large deals like Regis.

Our multinational customers are keeping our customer support and installation teams busy with the rolling out of our services across their various worldwide locations. In Australia, we signed a new reseller agreement with CSG and are actively engaged in sales and marketing activities to introduce our service to the Australia and New Zealand markets.

In addition, our new Romania-based engineering team is performing exceptionally well and we're looking at expanding that operation with additional engineering, sales and deployment capabilities to support further expansion in Europe. Fourth, our innovative technology continues to bring us recognition with four new patents awarded this quarter.

Including a key geo routing patent that validates the technology 8x8 employs to place or receive calls anywhere around the globe, on any device, with the same call quality as a local call. Leveraging our presence in nine data centers around the globe, we can now host upwards of 10,000 extensions onto a single virtual PBX instance.

Thus providing four five digit dialing, integrated IM and presence and a common directory to all employees. While guaranteeing exceptional quality of service by automatically delivering the communications to the closest data center in the region.

This enables seamless collaboration and communication across the enterprise globally. Some of the fundamental reasons 8x8 can address global enterprise deployments more effectively than our competitors, include a propriety, infinitely scalable technology.

A multi-tenant virtual PBX architecture, our advanced automated geo routing algorithm and our global service delivery capabilities for fully encrypted, secure communications. Fifth, 8x8 received one of the highest marks in our industry this quarter by being named a market leader for the fourth consecutive year in the prestigious Gartner UCaaS magic quadrant.

We received additional validation of our context and our capabilities and market presence through our placement as a challenger in Gartner's first North American contact center as a service magic quadrant. And in another prominent industry report, the Ovum decision matrix for multi-channel cloud contact center solutions.

I would like to note that 8x8 is the only cloud communications provider that has been recognized in both the unified communications as a service and contact center as a service Gartner magic quadrants. We're proud of these accomplishments and thanks to our employees, partners and customers for their ongoing diligence and loyalty.

With that, I'll now turn the call over to Mary Ellen who will provide you additional detail on our financial results.

Thank you, Vik. I want to thank everyone for joining us on the call today.

My prepared remarks will be divided into three sections. First, I will discuss the highlights from our income statement.

Second, key operating metrics for the quarter and third, highlights from the balance sheet. Finally, I will end my prepared remarks with an update on our full-year forecast.

As Vik mentioned, financial results for our second quarter of FY '16 were very strong. With total revenue of $50.9 million, a 29% year-over-year increase and service revenue of $47 million, a year-over-year increase of 30%.

This quarter did not include any material service revenue from the three large enterprise deals Vik spoke about earlier. I would also like to remind you that our last quarter revenue included $1.2 million of accelerated license payment on a technology license agreement and $286,000 of service revenue that we no longer recognize from this agreement.

Service revenue from our mid-market and enterprise customers grew 52% year over year and now represents 48% of the Company's total service revenue. GAAP net loss was $1.9 million or $0.02 per share, non-GAAP net income for the quarter was $3 million or $0.03 per share representing 6% of revenue.

Compared to $4.3 million or $0.05 per share, representing 11% of revenue in the same period a year ago. GAAP gross margin was 73% for the quarter, compared with 72% in the same period a year ago.

This quarter, we had non-cash charges of approximately 200 basis points, primarily due to the amortization of intangibles from our DXi acquisition. On a non-GAAP basis, gross margin was 75% for the quarter.

GAAP service margin was 80%, an increase of 100 basis points from the year-ago quarter. On a non-GAAP basis, service margin was 82%, an increase of 210 basis points year over year.

Operating expenses for the second quarter of FY '16 included a full quarter of R&D, G&A and sales and marketing expenses from our two acquisitions we closed in May and June of 2015. DXi Limited and Quality Software Corporation.

Overall sales and marketing expenses increased sequentially in the second quarter of FY '16 by approximately $3 million, primarily due to our previously planned investment in channel enablement, our enterprise sales team and demand generation. As Vik previously mentioned, these investments are beginning to bear fruit as evidenced by the large enterprise deals closed in the quarter.

In addition, we accrued higher commissions relating to strong bookings in the quarter. Looking ahead, we anticipate sales and marketing expenses to be in the range of 50% to 51% of revenue on a non-GAAP basis for the next couple of quarters.

Our tax provisions for the quarter was $423,000. Our cash taxes for the quarter was approximately $212,000.

Turning our attention to key operating metrics for the quarter, new monthly reoccurring revenue or new MRR, sold to mid-market and enterprise customers and by channel sales teams increased 102% year over year and accounted for 58% of total new MRR booked during the quarter. This compares to 41% of total new MRR in the same year-ago period.

Average revenue per customer across our entire customer base was $360, an increase of 20% compared with the same period a year ago. Monthly business service revenue churn was 0.8%, compared with 0.9% in the same period a year ago.

With our acquisition of DXi which uses a pay-as-you-go model, we may start to see more volatility in our churn, so we continue to guide at 1% total gross churn. Cash, cash equivalents and investments were $149 million at September 30, 2015, compared with $157 million in the previous quarter.

Cash flow from operating activities was $2.5 million in the second quarter. And capital expenditures, including capitalized software, were $1.3 million in the quarter or 2.5% of revenue.

During the quarter, 8x8 repurchased approximately 1.3 million shares of our common stock at an average price of $8.01 per share or $10.6 million under our approved stock repurchase plan. Also, on October 20, 2015, 8 x 8 's Board of Directors approved a new stock repurchase plan, authorizing up to $15 million in new repurchases of the Company's outstanding shares of common stock.

This is in addition to the $5 million remaining at the end of the quarter from the previously approved stock repurchase plan. Since July 2014, the Company has repurchased approximately 3.8 million shares of common stock at an average purchase price of $7.82.

As our revenue this quarter exceeded our expectations, we're revising our guidance for FY '16 from $202 million to $206 million annual revenue. Or 24% to 27% year-over-year growth to $204 million to $206 million in annual, revenue or a 26% to 27% year-over-year growth.

Our guidance for non-GAAP net income for FY '16 remains unchanged at 6% of revenue. For FY '16, we're targeting non-GAAP gross margin in the range of 74% to 75%.

At the operating level, we're forecasting R&D at approximately 10% of revenue. Sales and marketing at approximately 50% of revenue and G&A at approximately 8% to 9% of revenue.

All on a non-GAAP basis. This concludes my prepared remarks and I will now turn the call over to Vik.

Thank you, Mary Ellen. In summary, 8x8 has transformed its business over the past two years, with 48% of our revenue now coming from mid-market and enterprise customers.

Due to the investments we have made in R&D, engineering, network operations, customer support and sales and marketing, we're now optimally positioned to embrace the next wave of adoption we see occurring in midsize and enterprise market. We recognize these are early days in a multi-year adoption cycle.

And step-by-step, with the ongoing dedication and loyalty of our 800 plus employees, over 43,000 customers and our strategic Partners, we intend to remain at the forefront of this industry. Continuing to break new ground with our differentiated enterprise communications as a service solutions.

With that, we will be happy to take on any questions you may have for us today. Operator, please open the line for any questions.

Vik, a question for you on the sales process. How is that changing as you've begun to win these larger deals and the recognition, as you mentioned, from Gartner and Ovum and others?

What is happening there? Because [indiscernible] what have you seen in the enterprise software that as the deals get larger, sales cycles tend to extend.

But in this case, there shouldn't be a reason for them to shrink as well.

Yes and I think, Nandan, if you go back, I am trying to remember who asked this question last time. We had talked about closing one or two of these enterprise deals in this fiscal year and we ended up closing three in this quarter.

What we've have typically found is we have three very distinct and disciplined go-to-market strategies. We make sure that our SMB team is focused and they are doing a bang up job.

We have a mid-market team where increasingly we're finding that mid-market, the smaller mid-market deals can be sold by inside sales team. That one tends to be probably two, three-month sales cycle.

Then we have a smaller team that is going after the larger accounts. We have seen healthy growth in all three of them.

So what we try to do is, it's almost like portfolio management. You have a group of people going after your larger deals which could be - I think in these cases, it was in the four to six-month range, mid-market is two to four months and then SMB is one to two months.

So that's generally been the sales cycle and the idea is to make sure we've managed that portfolio pretty thoughtfully.

One other quick follow up would be on the deployment side. Again, back to the larger deals that you've signed.

Are you constrained at all on your deployment capacity?

I think we will be able to deploy these, but we're definitely seeing market acceleration. So, we're going to have to continue to grow.

We're going to have to continue to make sure that we have all of these various deployment capabilities. As you know, we put a very stringent process together for how we deploy these larger deals and I'll remind you of what I touted.

Just less than six month ago, we closed a, I think it was a 1,400 seat deal domestic U.S.. And I was very proud of the fact that we deployed it in five weeks, that was, I believe and industry record at that time.

Six months later and we just deployed, in six weeks, 2400 seats. I think now they are already up to 2,600 seats.

But in six weeks, we deployed globally, I think in nine locations, 2,400 seats. So our teams are getting more efficient.

That same process that we've put together for domestic large-scale deployments, we're finding that we're being able to make it much more international. We're finding strategic partners, so the intent is, this is a good problem to have.

We're definitely pushing our deployment team, but I'm happy to do that.

Relative to some of these larger wins, I wanted to understand, Vik, if you can give us a sense, is this the tip of an iceberg? Are you seeing these deals getting refilled in your pipeline?

Or could we go through a period where we look back and we say, well that was a great quarter, but not much came after that in the near term?

You are asking me to predict the future, George, but here's the way we would - I think you asked me this same question about whether we were hitting the tipping point. And I said, we had pipeline of approximately ten deals or so and my hope was to close a couple.

And I said I want to make sure we don't close to many, well we closed three. Let's just say that pipeline is much bigger, for larger deals than it was last quarter.

So something is happening. I don't predict tipping points.

I have always found that you can predict tipping points after the fact. But it is very hard to predict them in the future.

But I am pleased with our business, 29% revenue growth, 30% service revenue growth year over year, signature wins, mid-market, as well as channel growing by 102% in terms of new bookings. SMB continued to have solid growth.

These are all good indicators that the market is maturing and it is now starting to become almost cloud first. The more that happens, the better I feel.

But again, hopefully you and I will have a beer probably three or four years from now and we'll talk about how this was the tipping point. But I don't know how to predict it.

Relative to these big deals, Mary Ellen, as I think through and try to model the impact of some of these larger deals, how does that affect your selling costs up front, your implementation versus the revenues you are getting from implementations? Are these neutral in the short term from an operating income perspective?

Are they potentially negative in the short term? If you can help us with that.

There will be a little bit of pre-built, if you will, in our third fiscal quarter as we continue to plan the deployments, especially with Regis and the other large enterprise opportunity that Vik talked about, the 7000 seat opportunity. So we will be building up front.

We will start to deploy most likely at the end of this third fiscal quarter, early part of the fourth fiscal quarter. And so there will be some upfront costs, some of it will become covered by deployment revenue.

From an OI perspective, from a sales perspective, we took all of the commission in this quarter and we still hit our targets of 6% or a little bit less than 6%. So we absolutely believe that we're still focused on growth.

Certainly, we have to build in order to be able to continue to deploy these larger enterprise sales, especially the global deals. We're going to leverage individuals, outside Partners, if you will, in Europe and in Asia to help us to deploy.

And that will keep our costs bearable as opposed to fixed.

Nice job executing on your plan and reaping the results there. I wanted to ask you a couple of things.

One is the DXi quality business, how much did they do this quarter?

Dmitry, this is Mary Ellen. They were right on plan.

So they are doing well and they are meeting our expectations.

Okay, I think the guidance was for about $10 million - I'm sorry - $9 million if I recall for the 10 months since the acquisition. And that is tracking in line, you are saying.

That's tracking a little bit ahead of plan, absolutely.

Ahead of plan, okay. It sounds like you were up organically which is why I asked the question.

So is there a number you want to throw as far as pro forma growth for the quarter, if you include those two acquisitions going back last year?

Yes, remember that, as I mentioned on the call, none of our - the three big deals that Vik talked about, there's no material service revenue in this quarter from them. There is some from NetSuite because we did finish the deployment so quickly at the end of July, so there was some revenue in the August timeframe.

But we don't have those deployments. However, we're still on track on our organic revenue that we were previously, just right around approximately 22%.

And we would expect that as we continue to deploy these larger deals, that we will start to see some acceleration.

Okay, that's the perfect color because in my calculation, your organic growth, excluding DXi quality, would have been somewhere in the 17% to 18%. So you certainly added to it here which is good to see.

It's 22%-ish.

It was 22%.

So from 17% to 18%, if you exclude DXi. We want to make sure that there is no confusion.

Organic growth rate is in the 22%-ish. So we're feeling actually great across the board.

Okay. That's what I thought.

My follow-up real quick on the channel side, and it sounds like you are landing these big channel partners, master agents. I don't want to put words in your mouth, but, Vik, the channel MRR, did that grow faster than your mid-market MRR or in line?

Give us some color around that--

Channel growth is phenomenal, triple digits. And so we're feeling, again, I think we've talked about our channel strategy.

We've only revamped the channel strategy about six, nine months ago, where we did addition by subtraction and started to focus on some key channel partners. It has been very productive.

And 5 out of our 10 top deals came from channel and the new MRR growth on channel is, as I said, triple digits.

I just wanted to ask you about the competitive environment around the large enterprise deals. What were the dynamics there?

How competitive the deals were, what made it for you guys, what type of functionality and what customers liked about your product and solution? So it was interesting.

On all of the larger deals, we primarily saw people like Cisco and Avaya. And there were a few others here, there, everywhere.

But the thing that I was very pleased about, number one, where we were differentiated from cloud as well as everybody else, was this whole global. Where we have this geo routing, we have the nine data centers, we have the know-how how to deploy globally, we know how to get 911 in different countries.

All of those kind of capabilities because what was interesting, the ROI for some of the larger customers were huge. Their current systems - we're able to - and I'm talking about hard costs that they were paying to telcos, we were able to, using our system, show that it would decrease by about 50%.

And they would have significantly enhanced functionality with four-digit dialing across the world, et cetera, et cetera. So number one that differentiated us was global.

Number two was this one-stop shop. I think when we talked about the fact that - I think four or five of those deals included both, our virtual office and virtual contact center.

We also are finding that people like our virtual meeting product. They love the idea of this foundation communications platform and then adding on all of these other capabilities.

So that being able to go to one vendor that basically becomes your communications vendor, with contact center, basically conferencing, collaboration all integrated together. All seamless and all continuous, so you can literally go from a collaboration platform to a communication platform without having to open three different apps was very compelling.

And then the third thing that was very important I think for these guys is reliability, security compliance. This is something and I think we've talked about, the fact that we have engineered our products to be highly reliable, highly compliant, scalable and with built in security.

We're a Company of nerds and this is something we've spent quite a bit of time on. The fourth one which actually was gratifying, was analytics.

People love the idea of a distributed enterprise with 6,000, 8,000, 10,000 employees being able to know about how to they could tie all these employees together. Know about phone usage, communication usage, chat usage which customers are calling in, how many people are making calls outbound, et cetera.

That type of command and control view that analytics provides was a huge differentiator. And as you know, we have released our virtual office analytics already, we're in the process of releasing our virtual contact center analytics and now we're coming up with probably in the January timeframe the line of business analytics.

So I think that foundation of analytics was very key. So those are the four reasons and I of course, I think we were charming and all the other good stuff.

Vik, as a continuation of the discussion, what is the long-term vision of the product, the products you have? Do you feel like you need to add functionality like slack?

It sounds like if it's fitting with all you have, what do you think you can add to make it even more compelling?

We're tightly integrating collaboration, as well as the contact center. I think as you saw our analyst day and you saw how all of these products are coming together.

The next generation of products are literally one click. You will see a very interesting video between us and our competitors, where you will see a little clock and you will be able to go from video, to voice, to chat, literally with one button.

Where I think with competitors, you'll have to open multiple applications. So this really tight integration between communication, collaboration, contact center, customer engagement analytics, we think, is the future.

And we think increasingly, companies will need this on a global basis. And it represents such a dramatic ROI for them just on hard ROI, forget the soft ROI or better communication, better collaboration, less IT, help desk support, dot, dot, dot, just the pure hard-core costs will I think be very compelling.

We think that is the reason why you are starting to see this level of interest from enterprise because if you think about it, just this industry has talking about 1,000 or 2,000 seats as - yes, that's the key milestone. We literally went from there to 7,000, 8,000, 10,000 seats on Regis if it deploys the way we expect it to deploy, could end up being very, very significant.

So we're seeing that acceleration and I think this technology is very compelling from a business productivity case.

Just have a couple questions for you guys. First, just wanted to clarify, I know that there was de minimis revenue contribution from those large record enterprise deals.

Do they completely contribute to MRR or is there a chunk of those deals that are still to come?

So, they are still to come. So Regis didn't contribute to MRR yet because that is in the Q3, Q4.

We closed the deal, we signed the contract and we're off working together in deploying. We deployed a few here in the United States and we're starting to deploy in the UK.

And as we deploy, we will recognize some MRR in the revenue. For NetSuite, that MRR was included in Q2, as well as some of the revenue as I mentioned before.

And then the other deals, but we recognized 2,400, actually now we're at 2,600. That's it.

And we will recognize more from NetSuite as we continue to deploy in their other locations. And then for the other enterprise deal that Vik talked about, the 7,000 plus seat deal, we only booked the minimum required under the contract.

And if they do their full 7,000 which we expect that they will because we have plans - a deployment plan in place to do so, then it will be much more than that.

And is the minimum under the contract, is it less than half of that? Or can you give us a qualitative sense of what the minimum is?

The minimum is quite substantial. But we can keep [indiscernible], yes.

And it was nice to see some of the analytics in your top 10 deals. Could you give us a sense for how much do the analytics layer on to ARPU?

How much are you seeing that layer on to overall pricing? Thanks.

It's hard to say exactly what the analytics part is. But we can tell you that the organic ARPU for the quarter was a $10 increase from the previous quarter.

Some of that of course is the analytics, another part of that is continuing to move up in the market. So, analytics is something that does help us from our new MRR perspective and a revenue perspective.

And as we said, 4 out of our 10 largest deals in the quarter wanted the analytics piece. And we think that's even going to be a bigger mover and shaker as we release the VCC analytics.

So that is going to really help to drive - because 6 out of our 10 deals were combo deals in this past quarter and I think with analytics it's really going to make an even a bigger difference.

Okay, if I could squeeze in one more. I know that you had talked about how you were seeing Cisco and Avaya and some of those large deals.

Where you seeing it all in a more pure cloud guys in those opportunities as well or were left off the table? Thanks.

Actually, the thing that is quite interesting, Mike, if you're not talked about how adoption happens, think about these three customers and they are very interesting. One is a company's name you've heard of which is a diversified $3 billion company with well north of 7000 employees.

Which basically, it's a technology company, but more of - it's been around for a while. You have got NetSuite which is one of the fastest-growing SaaS companies and a pioneer in the space.

And then you have got Regis that's essentially invented this whole sharing economy with this hoteling and we all use Regis facilities. And all of them are going towards the cloud and they are all very diverse.

So depending on which one, some of them had existing cloud vendors for a part of their offices. And that was an interesting trend.

They would have one cloud vendor for one office, one cloud vendor for another one, maybe an on-premise vendor for a third office. And then they would use us because we could do be the one-stop shop across all offices, one cloud vendor.

In one of the activities, all we saw was managed hosting of Cisco and Avaya type platforms. In others, we saw some cloud vendors, but on a localized basis.

One, I think we saw a cloud vendor attempting to be global. So it was diverse.

So that is what I was very proud of the team. And that's why I was very pleased with the four five themes as to why we kept winning these.

I think George asked this question, that pipeline has been replenished in the sense that the total number, I think I told you guys, was approximately 10 or so of these larger deals. I think the pipeline is now much bigger than that and we have already closed three of them.

You cited the Gartner estimates of these large enterprise markets going 40% to 45% and if you take the mid and sub underlying markets maybe growing 20% average. Would imply potential 30% services revenue growth, if you grew in line with those projections.

Yet it seems you might be more comfortable with something closer to 22% or somewhere in between 22% and 30%. Could you just maybe add your color on what you feel these markets are going at compared to what Gartner feels?

But remember, 48% of our market -

48% of our service revenue is mid-market or enterprise and that has grown at 52% year over year. So 48% of our revenue is mid-market or above customers.

And that has grown at 52%. And that's faster than the market.

And then also, given your global reach and potential to benefit from scale and greater channel and distribution. Would you agree with this Elliott assessment that the industry is ripe for consolidation?

And how do you think you might fit into such a scenario there?

One, I have no clue, because an industry that is growing 30% plus, I don't think it's an industry right for consolidation. I think that the target, I think, is the people that are growing at 0% or less.

So from our perspective, we don't view this as impacting us. We love the fact that we're growing the Company 30% year over year on service revenue.

And I think from our perspective, we think we're the first to essentially establish credibility in the enterprise segment for a cloud vendor. So just think about that.

If enterprise sees a 50% of hard savings by going to a single vendor cloud solution globally and enterprise, as we all know, is a pretty big market segment. And 8x8 is the first credible cloud vendor that can provide this on a global basis and has the referenced accounts that are willing to be named.

I think that's a hell of a position to be in. So I like where we're at.

My mind, Vik, is more on the macro. It looks like you've done the right things in terms of investments and that is coming together.

But what would you say were the key tailwinds on a macro level that are converging to start driving the business? Thank you.

I think, Catharine, I think probably the biggest macro tailwind is the fact that they are starting to be more people comfortable with the cloud and candidly more and more people are going cloud first for enterprise. So by definition, if you are an enterprise and you are saying I want to go cloud, by definition, if you are enterprise, more likely than not you are global.

Who are you going to go look for? You are going to look for somebody who can provide this capability globally.

Two, you're going to look for on throat to choke. The so-called Microsoft Office, what is the tailwind for Microsoft Office which killed Lotus and all the rest was Microsoft office bundled everything under Microsoft Office.

So I think those are the two things that we did before anybody else. Where we bundled essentially contact center, collaboration software, communications platform, altogether, one-stop shop.

Which means we can start getting more and more tight integration between them. And two, it's pain and suffering to deploy stuff globally.

I think you know that. Knowing our team regulations in different parts of the world, understanding E911, understanding the taxes, understanding 800 and toll-free numbers all over the world, ensuring you can provide localized support.

These are very painful things to do. And then also ensuring that you can have very good call quality no matter where you are, so positioning your media and having the right algorithms.

These two things we think are critical that we did. But I think the general macro trend is enterprise is going, hmm, cloud seems to now be entering mainstream.

And I can say 50% of my communication is caused by going cloud and a telco, by definition, doesn't give me a global capability because if I go to the local telco, they have a presence in one part of the world and then I've got - but internet is ubiquitous. So if I can get a company that can provide just requires an connectivity all over the world.

And I can go to one vendor and they can give me the contact center, they can give me a virtual meeting, they can give me an office product, they can give me volatility, I think that ends up helping us. Again, lots of work to do, I want to make sure, we're very, very pleased with the quarter, but there are better days ahead.

For us, it's a question of step by step, we keep executing and good things continue to happen. So we take nothing for granted.

Yes and then the second question is. There has been a lot of noise with Microsoft Office 365 and the Skype for business.

I am curious to see, are you, with some of your larger bars, running into any issues with their plans to deploy that? Thank you.

We have not seen them yet. We obviously keep it healthy how our stuff is integrated with the link on premise and we try make sure we do all of the various integrations.

But for these larger ones, we have not seen Microsoft in there. We obviously always stay vigilant.

And I think your note referenced - I think what you talked to all the CIOs at Gartner and they were not looking at them. I think for us, this complexity of a global, single communications platform is non-trivial and I think we're uniquely positioned to provide it.

In terms of these larger deals, should we assume gross margin on these deals? Is it the same as corporate average or could they be a little better because you have more intra-company calls?

How do you think about gross margin on the larger deals?

We're continuing to model them with the same high service gross margins that we have today. We have close to 2,000 mid-market and enterprise customers and that is what we're seeing from them.

So we expect that trend will continue even with these larger deals.

In some of these bigger deals, maybe larger mid-market and the enterprise-level deals, are they actually replacing their WebEx or Citrix GoToMeeting with your web conferencing? Or do they hold onto that web conferencing, that they've used legacy?

Historically, how do they deal with that [indiscernible]?

And you know what? That is the part that I love about our strategy, if I may say so myself.

They are thinking about communications platform as the foundation on which they build. So deploy this and then they again are looking for one vendor and seamlessness between all of these various applications.

So if you think about it, in our system as you'll start to see over the next few months, you will be literally able to go from video, voice, chat, collaboration, sharing, whether it's your iPad, your iPhone, your android phone, your desk phone, your laptop. With literally one, two, three clicks and I think that they view as huge.

In a lot of instances, they have paying very high legacy costs for some of the vendors that you describe. In most instances, they have already started conversations about how to replace that.

So we view that as very, very powerful and we think that's a huge differentiator for us.

And should we think about ARPU in that growing $6 to $8 range again? Is that the right way to think about it?

Yes, I think we consistently have increased greater than $6 to $7. So I think that's probably the right number to look at.

I just had a question about the enterprise deals. Is the pricing per seat similar and it sounds like the gross margin is, but given the volume, do you give up a little it on the price per seat with those larger deals?

So we do have volume pricing. We do price based on the value of the MRR.

Certainly, we're going to price at a lower level to someone who has much higher MRR than a single or two-line customer. Absolutely, there's going to be a little bit of a discount on a high level on the big deals.

But at the end of the day, it's one customer with 7,000 lines as opposed to many, many customers to try to get the 7,000 lines.

Right, okay. And I guess, Vik, you alluded to Regis potentially being a very sizable customer.

What if on a full rollout to 2,500 locations, what kind of line count could Regis be?

I will be very, very happy when it happens. So I don't want to speculate.

But let's just say within the next 12 to 18 months if things go well, it could end up being by far our largest customer. They are great guys.

We're very impressed with the team. They are very organized, very thoughtful, they have a plan.

As I said, we're starting already on I think four locations or so. The intent is to do 140 locations as a first rollout.

They want to move pretty fast. Some good things can happen, but I don't want to give you a sense yet of how big it is going to be.

Let's just say I am pretty happy with that account and it could be transformational.

Again, everybody, thank you all for listening on today's call. We look forward to providing continued updates on our progress at our upcoming investor conferences and meetings.

Again, thank you very much.