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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 September 30, 2022
OR
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
eght-20220930_g1.jpg
8x8, INC.
(Exact name of Registrant as Specified in its Charter)
Delaware77-0142404
(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 classTrading SymbolName of each exchange on which registered
COMMON STOCK, PAR VALUE $.001 PER SHAREEGHTNew York Stock Exchange
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 filerAccelerated 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 October 31, 2022 was 111,688,301.


8X8, INC.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2022
Page

















1

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; whether we will increase research and development spending relative to fiscal 2022; reduce unit costs and improve gross profit margin, operating margin or drive sustained 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; the impact of the COVID-19 pandemic; 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, including the impacts of the COVID-19 pandemic;
the impact of cost increases and general inflationary pressures, as well as supply chain shortages and disruptions, on our operating expenses, including for bandwidth and labor;
risks related to our new secured term loan due 2027 and new convertible senior notes due 2028, including the impact of increased interest expense and timing of any future repayments or refinancing on our stock price;
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 ("APIs");
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 remaining convertible senior notes due 2024 and the related capped call transactions, including the timing of any future repayment; and
potential future intellectual property infringement claims and other litigation that could adversely impact our business and operating results.
2

Please refer to the "Risk Factors" section of our annual report on Form 10-K for the fiscal year ended March 31, 2022 (the "Form 10-K"), as modified by the "Risk Factors" section of this Quarterly Report, 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 2023 refers to the fiscal year ended March 31, 2023). Unless the context requires otherwise, references to "we," "us," "our," "8x8," and the "Company" refer to 8x8, Inc. and its consolidated subsidiaries.
All dollar amounts within this Quarterly Report are in thousands of United States Dollars ("Dollars") unless otherwise noted.
3

PART I. Financial Information
ITEM 1. Financial Statements
8X8, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, 2022March 31, 2022
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents$100,512 $91,205 
Restricted cash, current511 8,691 
Short-term investments30,411 44,845 
Accounts receivable, net58,345 57,400 
Deferred sales commission costs, current36,350 35,482 
Other current assets37,537 37,999 
Total current assets263,666 275,622 
Property and equipment, net68,717 79,016 
Operating lease, right-of-use assets54,201 63,415 
Intangible assets, net117,490 128,213 
Goodwill262,393 266,867 
Restricted cash, non-current818 818 
Long-term investments 2,671 
Deferred sales commission costs, non-current71,647 75,668 
Other assets, non-current17,009 17,978 
Total assets$855,941 $910,268 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable$43,844 $49,721 
Accrued compensation32,923 36,319 
Accrued taxes31,579 32,573 
Operating lease liabilities, current12,648 15,485 
Deferred revenue, current30,860 34,262 
Other accrued liabilities17,131 23,167 
Total current liabilities168,985 191,527 
Operating lease liabilities, non-current68,437 74,518 
Convertible senior notes286,682 447,452 
Term loan230,049  
Deferred revenue, non-current10,465 11,430 
Other liabilities, non-current6,541 2,975 
Total liabilities 771,159 727,902 
Commitments and contingencies (Note 6)
Stockholders' equity:
Preferred stock  
Common stock111 118 
Additional paid-in capital867,063 956,599 
Accumulated other comprehensive loss(24,944)(7,913)
Accumulated deficit(757,448)(766,438)
Total stockholders' equity84,782 182,366 
Total liabilities and stockholders' equity$855,941 $910,268 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4

8X8, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands except per share amounts)
 Three Months Ended September 30,Six Months Ended September 30,
 2022202120222021
Service revenue$178,556 $142,376 $357,717 $280,172 
Other revenue8,833 9,181 17,292 19,712 
Total revenue187,389 151,557 375,009 299,884 
Operating expenses:
Cost of service revenue51,038 47,198 104,585 93,208 
Cost of other revenue11,000 12,269 24,126 26,015 
Research and development36,019 28,498 70,974 53,890 
Sales and marketing80,487 76,726 164,014 152,641 
General and administrative33,835 24,023 63,054 50,114 
Total operating expenses212,379 188,714 426,753 375,868 
Loss from operations(24,990)(37,157)(51,744)(75,984)
Other income (expense), net13,950 (4,934)15,066 (9,757)
Loss before provision for income taxes(11,040)(42,091)(36,678)(85,741)
Provision for income taxes599 233 1,004 489 
Net loss$(11,639)$(42,324)$(37,682)$(86,230)
Net loss per share: 
Basic and diluted$(0.10)$(0.38)$(0.32)$(0.78)
Weighted average number of shares:
Basic and diluted116,013 112,422 117,857 111,180 


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5

8X8, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited, in thousands)
 Three Months Ended September 30,Six Months Ended September 30,
2022202120222021
Net loss$(11,639)$(42,324)$(37,682)$(86,230)
Other comprehensive income (loss), net of tax
Unrealized loss on investments in securities(5)(15)(99)(48)
Foreign currency translation adjustment(8,548)(2,149)(16,932)(1,866)
Comprehensive loss$(20,192)$(44,488)$(54,713)$(88,144)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6

8X8, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited, in thousands)

 Common StockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Total
 SharesAmount
Balance at March 31, 2022117,863 $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 withholding1,796 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 at June 30, 2022119,659 $120 $895,602 $(16,391)$(745,809)$133,522 
Issuance of common stock under stock plans, less withholding1,047 1 (1)— —  
ESPP share issuance419 — 1,648 — — 1,648 
Stock-based compensation expense— — 24,936 — — 24,936 
Shares repurchase(10,695)(11)(60,203)— — (60,214)
Shares issued for debt issuance1,015 1 5,081 — — 5,082 
Unrealized investment loss— — — (5)— (5)
Foreign currency translation adjustment— — — (8,548)— (8,548)
Net loss— — — — (11,639)(11,639)
Balance at September 30, 2022111,445 $111 $867,063 $(24,944)$(757,448)$84,782 

 Common StockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Total
 SharesAmount
Balance at March 31, 2021109,135 $109 $755,643 $(4,193)$(591,055)$160,504 
Issuance of common stock under stock plans, less withholding1,562 2 3,438 — — 3,440 
Stock-based compensation expense— — 36,508 — — 36,508 
Unrealized investment loss— — — (33)— (33)
Foreign currency translation adjustment— — — 283 — 283 
Net loss— — — — (43,906)(43,906)
Balance at June 30, 2021110,697 $111 $795,589 $(3,943)$(634,961)$156,796 
Issuance of common stock under stock plans, less withholding2,721 $2 $6,758 $— $— $6,760 
Stock-based compensation expense— — 33,483 — — 33,483 
Issuance of common stock related to acquisition(1)— — — — — 
Unrealized investment loss— — — (15)— (15)
Foreign currency translation adjustment— — — (2,149)— (2,149)
Net loss— — — — (42,324)(42,324)
Balance at September 30, 2021113,416 $113 $835,830 $(6,107)$(677,285)$152,551 





The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7

8X8, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 Six Months Ended September 30,
20222021
Cash flows from operating activities:  
Net loss$(37,682)$(86,230)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation5,624 5,771 
Amortization of intangible assets10,723 2,551 
Amortization of capitalized internal-use software costs11,494 14,713 
Amortization of debt discount and issuance costs2,000 8,855 
Amortization of deferred sales commission costs18,839 16,857 
Allowance for credit losses1,781 645 
Operating lease expense, net of accretion5,925 6,795 
Impairment of right-of-use assets2,424  
Stock-based compensation expense52,435 72,422 
Gain on debt extinguishment (16,106) 
Gain on remeasurement of warrants(1,293) 
Other(192)853 
Changes in assets and liabilities:
Accounts receivable(4,579)(1,100)
Deferred sales commission costs(13,834)(23,489)
Other current and non-current assets1,223 (835)
Accounts payable and accruals(14,733)(9,860)
Deferred revenue(4,367)1,183 
Net cash provided by operating activities19,682 9,131 
Cash flows from investing activities:
Purchases of property and equipment(1,845)(2,358)
Capitalized internal-use software costs(4,328)(11,613)
Purchases of investments(27,669)(56,049)
Sales of investments 8,296 10,299 
Proceeds from maturities of investments 36,641 30,967 
Acquisition of business(1,250) 
Net cash provided by (used in) investing activities9,845 (28,754)
Cash flows from financing activities:
Finance lease payments (8)
Tax-related withholding of common stock (128)
Proceeds from issuance of common stock under employee stock plans1,713 10,328 
Net proceeds from term loan232,861  
Repayment and exchange of convertible senior notes(190,553) 
Repurchase of common stock(60,214) 
Net cash (used in) provided by financing activities(16,193)10,192 
Effect of exchange rate changes on cash(12,207)(111)
Net increase (decrease) in cash, cash equivalents and restricted cash1,127 (9,542)
Cash, cash equivalents and restricted cash, beginning of year100,714 121,172 
Cash, cash equivalents and restricted cash, end of year$101,841 $111,630 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
8


Supplemental and non-cash disclosures:
For the years ended September 30,
20222021
Income taxes paid$1,167 $578 
Interest paid$3,404 $906 
Warrants issued in connection with term loan$5,915 $ 
Shares issued in connection with term loan and convertible senior notes$5,082 $ 

Reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheets:
 As of September 30,
20222021
Cash and cash equivalents$100,512 $102,989 
Restricted cash, current511 8,179 
Restricted cash, non-current818 462 
Total cash, cash equivalents and restricted cash$101,841 $111,630 



The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
9

8X8, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 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, 2022, and notes thereto included in the Form 10-K. There were no material changes during the three and six months ended September 30, 2022, 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, 2023.
All dollar amounts herein are in thousands of United States Dollars ("Dollars") unless otherwise noted.
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.
OUT OF PERIOD ADJUSTMENTS
During the six months ended September 30, 2022, the Company recorded out of period adjustments of approximately $3.6 million including $2.4 million in subscription revenue related to two contracts with customers which was deferred in previous years, and $1.2 million of excess amounts reserved against bad debt during the fourth quarter of fiscal 2022. The impact of these adjustments was a $2.4 million increase in service revenue and decrease in contract assets, and a $1.2 million decrease in provision for bad debts and reduction in reserves.
RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS
In August 2020, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. Effective April 1, 2022, the Company adopted ASU 2020-06 using a modified retrospective approach. Adoption of the new standard resulted in a decrease to accumulated deficit of $46.7 million, a decrease to additional paid-in capital of $92.8 million, and an increase to convertible senior notes, net of $46.2 million.
10

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, and in January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848), which refines the scope of Topic 848 and clarifies some of its guidance. Effective April 1, 2022, the Company adopted ASU 2020-04 on a prospective basis. The impact of the adoption was immaterial to the Company's consolidated financial statements.
Other 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.
2. REVENUE RECOGNITION
Disaggregation of Revenue
The Company disaggregates its revenue by geographic region. See Note 11. Geographical Information.
Contract Balances
The following table provides amounts of receivables, contract assets, and deferred revenue from contracts with customers:
 September 30, 2022March 31, 2022
Accounts receivable, net$58,345 $57,400 
Contract assets, current12,344 10,514 
Contract assets, non-current12,155 15,171 
Deferred revenue, current30,860 34,262 
Deferred revenue, non-current10,465 11,430 
Contract assets, current, contract assets, non-current, deferred revenue, current and deferred revenue, non-current are recorded on the Condensed Consolidated Balance Sheets in Other current assets, Other assets, and Other liabilities, non-current, respectively.
During the six months ended September 30, 2022, the Company recognized revenues of approximately $24.9 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 September 30, 2022 was approximately $715.0 million. This amount excludes contracts with an original expected length of less than one year. The Company expects to recognize revenue on approximately 80% of the remaining performance obligations over the next 36 months and approximately 20% over the remainder of the contract 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 and six months ended September 30, 2022 was $9.6 million and $18.8 million, respectively. Amortization of deferred sales commission costs for the three and six months ended September 30, 2021 was $8.6 million and $16.9 million, respectively. There were no material write-offs during the three and six months ended September 30, 2022 and 2021.
11

3. FAIR VALUE MEASUREMENTS
Cash, cash equivalents, and available-for-sale investments were as follows:
As of September 30, 2022Amortized
Costs
Gross
Unrealized
Gain
Gross
Unrealized
Loss
Estimated
Fair Value
Cash and
Cash
Equivalents
Restricted Cash
(Current & Non-current)
Short-Term
Investments
Long-Term
Investments
Cash$88,288 $— $— $88,288 $88,288 $ $— $— 
Level 1:
Money market funds2,184 — — 2,184 2,184  — — 
Treasury securities     
Subtotal90,472   90,472 90,472    
Level 2:
Certificate of deposit1,329   1,329  1,329   
Commercial paper18,460  (22)18,438 10,040 8,398  
Corporate debt22,211 (198)22,013 22,013  
Subtotal42,000  (220)41,780 10,040 1,329 30,411  
Total assets$132,472 $ $(220)$132,252 $100,512 $1,329 $30,411 $ 
As of March 31, 2022Amortized
Costs
Gross
Unrealized
Gain
Gross
Unrealized
Loss
Estimated
Fair Value
Cash and
Cash
Equivalents
Restricted Cash
(Current & Non-current)
Short-Term
Investments
Long-Term
Investments
Cash$70,095 $— $— $70,095 $70,095 $ $— $— 
Level 1:
Money market funds12,865 — — 12,865 12,865  — — 
Treasury securities4,573  (7)4,566   4,566  
Subtotal87,533  (7)87,526 82,960  4,566  
Level 2:
Certificate of deposit9,509   9,509  9,509   
Commercial paper23,950  (34)23,916 800  16,471  
Corporate debt27,442  (163)27,279 7,445  23,808 2,671 
Subtotal60,901  (197)60,704 8,245 9,509 40,279 2,671 
Total assets$148,434 $ $(204)$148,230 $91,205 $9,509 $44,845 $2,671 
Certificate of deposit represents the Company's letters of credit securing leases for office facilities, the balance of which is included in Restricted cash, current and Restricted cash, non-current on the Company's Consolidated Balance Sheet.
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 September 30, 2022, 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 September 30, 2022, the Company did not record any allowance for credit losses on its investments.
As of September 30, 2022 and March 31, 2022, the estimated fair value of the Company's Notes was $246.6 million and $470.5 million, respectively, which was determined based on the closing price for the Notes on the last trading day of the reporting period and is considered to be Level 2 in the fair value hierarchy due to limited trading activity of the Notes. See Note 7, Convertible Senior Notes, Term Loan and Capped Calls.
The following table presents additional information about valuation techniques and inputs used for the Warrants (See Note 7, Convertible Senior Notes, Term Loan and Capped Calls) that are measured at fair value and categorized within Level 3 as of September 30, 2022 (fair value amounts in thousands):

Fair ValueValuation TechniqueUnobservable InputsInputs value
12

Warrants$4,621Black-Scholes option-pricing modelStock volatility68.8 %
Risk-free rate4.1 %
Expected term5.0 years

As of September 30, 2022 and March 31, 2022, the estimated fair value of the Company's 2024 Notes was $76 million and $470.5 million, respectively. As of September 30, 2022, the estimated fair value of the Company’s 2028 Notes (refer to Note 7 - Convertible Senior Notes, Term Loan and Capped Calls) was $170.6 million. The fair value of the 2024 Notes and 2028 Notes was determined based on the closing price for the 2024 Notes and 2028 Notes, respectively, on the last trading day of the reporting period and is considered to be Level 2 in the fair value hierarchy due to limited trading activity of the 2024 Notes and 2028 Notes. As of September 30, 2022, the estimated fair value of the Company’s Term Loan was $211.2 million. The fair value of the Company’s Term Loan was estimated based on the quoted market prices for the same issues or on the current rates offered for debt of similar remaining maturities.

4. INTANGIBLE ASSETS AND GOODWILL
The carrying value of intangible assets consisted of the following:
 September 30, 2022March 31, 2022
Gross
Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Technology$46,700 $(24,334)$22,366 $46,727 $(19,852)$26,875 
Customer relationships105,814 (10,840)94,974 105,827 (4,889)100,938 
Trade names and domains578 (428)150 583 (183)400 
Total acquired identifiable intangible assets$153,092 $(35,602)$117,490 $153,137 $(24,924)$128,213 
As of September 30, 2022, the weighted average remaining useful life for technology, customer relationships, and trade names and domains was 2.8 years, 8.3 years, and 0.6 years, respectively; and the annual amortization of intangible assets, based upon existing intangible assets and current useful lives, is estimated to be as follows:
 Amount
2023$10,378 
202420,395 
202519,095 
202613,895 
202711,757 
Thereafter41,970 
Total$117,490 
The following table provides a summary of the changes in the carrying amounts of goodwill:
 Amount
Balance at March 31, 2022$266,867 
Adjustments related to Fuze acquisition(754)
Foreign currency translation(3,720)
Balance at September 30, 2022$262,393 
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5. LEASES
Operating Leases
The following table provides balance sheet information related to operating leases:
 September 30, 2022March 31, 2022
Assets
Operating lease, right-of-use assets$54,201 $63,415 
Liabilities
Operating lease liabilities, current$12,648 $15,485 
Operating lease liabilities, non-current68,437 74,518 
Total operating lease liabilities$81,085 $90,003 
The components of lease expense were as follows:
Three Months Ended September 30,Six Months Ended September 30,
2022202120222021
Operating lease expense2,804 $3,336 5,925 $6,795 
Variable lease expense1,493 $757 3,080 $1,507 
Cash outflows from operating leases$4,669 $4,254 $9,505 $8,454 
Short-term lease expense was immaterial during the three months ended September 30, 2022 and 2021.
The following table presents supplemental lease information:
September 30, 2022March 31, 2022
Weighted average remaining lease term7.2 years7.4 years
Weighted average discount rate4.0%4.0%
The following table presents maturity of lease liabilities under the Company's non-cancellable operating leases as of September 30, 2022:
2023$9,314 
202414,064 
202512,930 
202611,833 
202710,748 
Thereafter35,467 
Total lease payments94,356 
Less: imputed interest(13,271)
Present value of lease liabilities$81,085 
6. COMMITMENTS AND CONTINGENCIES
Indemnifications
In the normal course of business, the Company may agree to indemnify other parties, including customers, lessors, and parties to other transactions with the Company with respect to certain matters, such as breaches of representations or covenants or intellectual property infringement or other claims made by third parties. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. In addition, the Company has entered into indemnification agreements with its officers and directors.
It is not possible to determine the maximum potential amount of the Company's exposure under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically, payments made by the Company under these agreements have not had a material impact on
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the Company's operating results, financial position, or cash flows. Under some of these agreements, however, the Company's potential indemnification liability may not have a contractual limit.
Operating Leases
The Company's lease obligations consist of the Company's principal facility and various leased facilities under operating lease agreements. See Note 5. Leases for more information on the Company's leases and the future minimum lease payments.
Purchase Obligations
The Company's purchase obligations include contracts with third-party customer support vendors and third-party network service providers. These contracts include minimum monthly commitments and the requirements to maintain the service level for several months.
Legal Proceedings
The Company may be involved in various claims, lawsuits, investigations, and other legal proceedings, including intellectual property, commercial, regulatory compliance, securities, and employment matters that arise in the normal course of business. The Company determines whether an estimated loss from a contingency should be accrued by assessing whether a loss is deemed probable and can be reasonably estimated. The Company regularly evaluates current information to determine whether any accruals should be adjusted and whether new accruals are required. Actual claims could settle or be adjudicated against the Company in the future for materially different amounts than the Company has accrued due to the inherently unpredictable nature of litigation. Legal costs are expensed as incurred.
The Company believes it has recorded adequate provisions for any such lawsuits and claims and proceedings as of September 30, 2022. The Company believes that damage amounts claimed in these matters are not meaningful indicators of potential liability. Some of the matters pending against the Company involve potential compensatory, punitive, or treble damage claims or sanctions, that, if granted, could require the Company to pay damages or make other expenditures in amounts that could have a material adverse effect on its Consolidated Financial Statements. Given the inherent uncertainties of litigation, the ultimate outcome of the ongoing matters described herein cannot be predicted, and the Company believes it has valid defenses with respect to the legal matters pending against it. Nevertheless, the Consolidated Financial Statements could be materially adversely affected in a particular period by the resolution of one or more of these contingencies.
Wage and Hour Litigation. On September 21, 2020, the Company received a copy of a letter filed by a former employee, Plaintiff Denise Rivas, with the California Labor and Workforce Development Agency (“LWDA”) providing notice of the Plaintiff’s intent to bring a Private Attorney General Act (“PAGA”) claim, on behalf of the Company’s non-exempt employees based in California, for alleged California wage and hour practices violations. On September 25, 2020, the Plaintiff filed a separate class action complaint (the “Class Complaint”) in Santa Clara County Superior Court against the Company in which she alleges 10 causes of action, on behalf of herself and all of the Company’s non-exempt employees based in California for the last four years, related to violations of California state wage and hour practices and the federal Fair Credit Reporting Act. The Class Complaint was served on the Company on September 29, 2020. On October 28, 2020, the Company filed a general denial of all claims and asserted various affirmative defenses. On October 29, 2020, the Company removed the matter to Federal Court. On December 1, 2020, Plaintiff filed a companion PAGA lawsuit complaint (the “PAGA Complaint”) in Santa Clara County Superior Court against the Company, in which she alleges 6 violations of California state wage and hour practices for all of the Company's current and former non-exempt employees based in California from September 16, 2019 to the present. The PAGA Complaint was served on the Company on December 11, 2020. On January 26, 2021, the Company filed a general denial of all claims and asserted various affirmative defenses to the PAGA Complaint. Both actions were scheduled for a joint mediation in September 2021, and discovery was stayed in both actions pending completion of the mediation. A joint mediation f