The market for cloud software solutions is subject to rapid technological change, and we depend on new product and service introductions in order to maintain and grow our business.

We operate in an emerging market that is characterized by rapid changes in customer requirements, frequent introductions of new and enhanced products and services, and continuing and rapid technological advancement. To compete successfully in this emerging market, we must continue to design, develop, manufacture, and sell highly scalable new and enhanced cloud software solutions products and services that provide higher levels of performance and reliability at lower cost. If we are unable to develop new products and services that address our customers' needs, to deliver our cloud software solution applications in one seamless integrated service offering that addresses our customers' needs, or to enhance and improve our products and services in a timely manner, we may not be able to achieve or maintain adequate market acceptance of our services.

Our ability to grow is also subject to the risk of future disruptive technologies. If new technologies emerge that are able to deliver communications and collaboration solutionssolution services at lower prices, more efficiently, more conveniently, or more securely, such technologies could adversely impact our ability to compete.

We may have difficulty attracting or retaining senior management and other personnel with the industry experience and technical skills necessary to support our growth.

Companies in the cloud communications industry compete aggressively for top talent in all areas of business, but particularly in senior management, sales and marketing, professional services, and engineering, where employees with industry experience, technical knowledge and specialized skill sets are particularly valued. Demand can be expected to increase if cloud communications continues to gain a greater share of the global communications market. Some of our competitors may respondare responding to these competitive pressures by increasing employee compensation, paying more on average than we pay for the same position.position or offering more attractive equity compensation. Any such disparity in compensation could make us less attractive to candidates as a potential employer, which in turn may make it more difficult for us to hire and retain qualified employees.employees, including the hiring of senior executives such as a permanent CEO and CFO. Training an individual who lacks prior cloud communications experience to be successful in a sales or technical role can take months or even years.

If an employee of 8x8 leaves to work for a competitor, not only are we impacted by the loss of the individual resource, but we also face the risk that the individual will share our trade secrets with the competitor in violation of theirhis or her contractual and legal obligations to us. Our competitors have in the past and may in the future target their hiring efforts on a particular department, and if we lose a group of employees to a competitor over a short time period, our day-to-day operations may be impaired. While we may have remedies available to us through litigation, theythese would likely take significant time and expense and divert management attention from other areas of the business.

If we increase employee compensation (beyond levels that reflect customary performance-based and/or cost-of-living adjustments) in response to competitive pressures, we may sustain greater operating losses than we predicted in the near term, and we may not achieve profitability within the timeframe we had expected, or at all. In addition, we may need to issue equity at increased levels, now and in the future, to attract and retain key employees and executives, including weighting a greater percentage of our employeesemployees' total compensation in the form of equity as opposed to cash, which will have the adverse effect of increasing dilution for our stockholders.

We also face challenges building and training an integrated sales force capablemay not realize all of addressing the services and featuresanticipated benefits of the acquisition of Fuze, Inc.

The success of our comprehensive service suite, as well as a staffacquisition of expert engineering and customer support personnel capable of addressing the full range of implementation and configuration issues that tend to arise more frequently with larger customers. Also, we have only limited experienceFuze, Inc. ("Fuze") will depend, in developing and managing sales channels and distribution arrangements for larger businesses. If we fail to effectively execute the sale, configuration and ongoing support of our services to mid-market and larger enterprises, our results of operations and our overall ability to grow our customer base could be materially and adversely affected.

We cannot assure you that any of the foregoing factors will not have made reductions inan adverse effect on our workforce duringbusiness, financial condition, and prospects. Acquisitions involve risks, including inaccurate assessment of undisclosed, contingent, or other liabilities or problems. Following the fourth quartercompletion of fiscal 2020 andthe acquisition, the surviving corporation possesses not only all of the assets, but also all of the liabilities, of Fuze. It is possible that undisclosed, contingent, or other liabilities or problems may be required to make further reductionsarise in the future in response to changes in the economic environment, our industry and demand, including as a result of any negative economic conditions caused by the COVID-19 pandemic. Reductions in our workforcewhich we

were previously unaware. These undisclosed liabilities could adversely impact our future sales and ability to provide services or recruit necessary employees in the future. In addition to being costly, such reductions may lead to additional attrition and loss of necessary human resources. While workforce reductions are expected to reduce our operating costs, we cannot be certain that these efforts will be successful or that we will not be required to implement additional actions to structurehave an adverse effect on our business, to operate in a cost-effective manner in the future.financial condition, and prospects.

Taxing authorities may successfullyhave asserted, or could in the future assert, that we should have collected or in the future should collect sales and use, value added, or similar taxes, including whereon similar services fromfor which our competitors may not be subject to the same obligations to collect taxes from customers, andobligations. As a result, we could be subject to liability with respect to past or future sales, which have and could adversely affect our business.

The applicability of state and local taxes, fees, surcharges or similar taxes to our services is complex, ambiguous, and subject to interpretation and change. In the United States, for example, we collect state and local taxes, fees, and surcharges based on our understanding of the applicable laws in the relevant jurisdiction. The taxing authorities may challenge our interpretation of the laws and may assess additional taxes, penalties, and interests, which could have adverse effects on the results of operations and, to the extent we pass these through to our customers, demand for our services. Additionally, the applicability of sales and use, value added, or similar taxes may differ between services such as unified communication, voice, video, contact center, and platform communications suchso that the obligations to collect taxes from customers may vary between services and between companies such that we may be obligated to collect taxes at a higher rate that other services from our competitors, thereby impacting

Our ability to use our net operating losses or research tax credits to offset future taxable income may beis subject to certain limitations.

As of March 31, 2020,2023, we had federal net operating loss (“NOL”) carryforwards of $1,199.1 million, of which $361.0 million are related to years prior to fiscal 2019 and later of approximately $280.5 million which carryforward indefinitely and carryforwards related to prior years of $156.3 million which begin to expire in 2021.2034. The remaining $838.1 million carry forward indefinitely. As of March 31, 2020,2023, the Company also had state net operating loss carryforwards, $203.7 million,the majority of which will expire at various dates between 20292024 and 2037.2042. We also had research and development credit carryforwards for federal and California tax purposes of approximately $12.9$18.5 million and $14.1$21.8 million, respectively. The federal income tax credit carryforwards related to research and development will expire at various dates between 2021the calendar years 2024 and 2036,2042, while the California income tax credits will carry forward indefinitely. Utilization of our NOL and tax credit carryforwards can become subject to a substantial annual limitation due to the ownership change limitations provided by Section 382 of the Internal Revenue Code and similar state provisions. A Section 382 ownership change generally occurs if one or more stockholders or groups of stockholders who own at least 5% of the stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. Similar rules may apply under state tax laws. Such an ownership change, or any future ownership change, could have a material effect on our ability to utilize the net operating lossNOL or research credit carryforwards. In addition, under the Tax Cuts and Jobs Act, or the Tax Act, the amount of NOLs that we are permitted to deduct in any taxable year is limited to 80% of the taxable income in such year. Under the CARES Act, this 80% limitation has been eliminated for tax years beginning before January 1, 2021. There is a risk that due to changes under the Tax Act, regulatory changes, or other unforeseen reasons, the existing NOLs could expire or otherwise be unavailable to offset future income tax liabilities, which could have a material impact on our net income (loss) in future periods.

If our platform or services experience significant or repeated disruptions, outages, or failures due to defects, bugs, vulnerabilities, or similar software problems, or if we fail to determine the cause of any disruption or failure and correct it promptly, we could lose customers, become subject to service performance or warranty claims, or incur significant costs, reducing our revenuesrevenue and adversely affecting our operating results.

Our customers use our communications services to manage important aspects of their businesses, and any errors, defects, outages, or disruptions to our service or other performance problems with our service, could hurt our reputation and may damage our customers' businesses, any of which may result in our granting of credits to customers that in turn would reduce our revenue. Our services and the systems infrastructure underlying our cloud communications platform incorporate software that is highly technical and complex. Our software has contained, and may now or in the future contain, undetected errors, bugs, or vulnerabilities to hackers, which have caused, and may in the future cause, temporary service outages or other disruptions for some customers. Some errors in our software code may not be discovered until after the code has been released. Any errors, bugs, or vulnerabilities discovered in our code after release could result in damage to our reputation, loss of customers, loss of revenue, or liability for service credits or damages, any of which could adversely affect our business and financial results. We implement bug fixes and upgrades as part of our regularly scheduled system maintenance, which may lead to system downtime. Even if we are able to implement the bug fixes and upgrades in a timely manner, any history of defects, or the loss, damage, or inadvertent release of confidential customer data, could cause our reputation to be harmed, and customers may elect not to purchase or renew their agreements with us and subject us to service performance credits, warranty claims or increased insurance costs. The costs associated with any material defects or errors in our software or other performance problems may be substantial and could materially adversely affect our operating results.

Our physical infrastructure is concentrated in a few facilities (i.e., data centers and public cloud providers), and any failure in our physical infrastructure or service outages could lead to significant costs and/or disruptions and could reduce our revenue, harm our business reputation and have a material adverse effect on our financial results.

Our leased network and data centers, as well as public cloud infrastructure, are subject to various points of failure. Problems with cooling equipment, generators, uninterruptible power supply, routers, switches, or other equipment, whether or not within our control, could result in service interruptions for our customers as well as equipment damage. Because our services do not require geographic proximity of our data centers to our customers, our infrastructure is consolidated into a few large data center facilities. Any failure or downtime in one of our data center facilities could affect a significant percentage of our customers. While our data center facilities are currently operating as essential businesses exempt from current shelter-in-place orders, further tightening of business closure orders or social distancing or COVID-19 outbreaks could negatively impact these facilities. The total destruction, closure, or severe impairment of any of our data center facilities could result in significant downtime of our services and the loss of customer data. Because our ability to attract and retain customers depends on our ability to provide customers with highly reliable service, even minor interruptions in our service could harm our reputation. Additionally, in connection with the expansion or consolidation of our existing data center facilities from time to time, there is an increased risk that service interruptions may occur as a result of server relocation or other unforeseen construction-related issues.

We have experienced interruptions in service in the past. While we have not experienced a material increase in customer attrition following these events, theThe harm to our reputation is difficult to assess.assess but has resulted and may result in the future in customer attrition. We have taken and continue to take steps to improve our infrastructure to prevent service interruptions, including upgrading our electrical and mechanical infrastructure. However, service interruptions continue to be a significant risk for us and could have a material adverse impact on our business.

Any future service interruptions could:

We may be required to transfer our servers to new data center facilities or public cloud load to a different public cloud provider in the event that we are unable to renew our agreement or leases on acceptable terms, or at all, or the owners of the facilities decide to close their facilities, and we may incur significant costs and possible service interruption in connection with doing so. In addition, any financial difficulties, such as bankruptcy or foreclosure, faced by our third-party data center operators, or any of the service providers with which we or they contract, may have negative effects on our business, the nature and extent of which are difficult to predict. Additionally, ifIf our data centers or our public cloud providers are unable to keep up with our increasing needs for capacity, our ability to grow our business could be materially and adversely impacted.

We may not be able to scale our business efficiently or quickly enough to meet our customers' growing needs, leading to increased customer churn and damage to reputation and brand, each of which could harm our operating results.

As usage of our cloud software solutions by mid-market and larger enterprises expands and as customers continue to integrate our services across their enterprises, we are required to devote additional resources to improving our application architecture, integrating our products and applications across our technology platform, integrating with third-party systems, and maintaining infrastructure performance. As a result of the COVID-19 pandemic, we have seen increased usage of our services from our existing customers and may see further increases in usage from existing and new customers in the future if remote working trends continue to increase as a result of the COVID-19 pandemic or otherwise. To the extent we increase our customer base and as our customers gain more experience with our services, the number of users and transactions managed by our services, the amount of data transferred, processed, and stored by us, the number of locations where our service is being accessed, and the volume of communications managed by our services have in some cases, and may in the future, expand rapidly. For example, during fiscal 2020, we launched our 8x8 free Video Meetings, alongside our existing Jitsi open source video meetings platform, which together now have more than 20 million monthly active users as of May 2020. However, we can't predict if the

Because our long-term growth strategy involves continued expansion outside the United States, our business will be susceptible to risks associated with international operations.

An important component of our growth strategy involves the further expansion of our operations and customer base internationally. We have formed several subsidiaries outside the United States, including a Romanian subsidiary in Romania that contributes significantly to our research and development efforts. WeAdditionally, through acquisitions, we have also acquired UK-based companies,expanded into the United Kingdom, the EU, and more recently, a Singapore-based company with operations in Southeast Asia. The risks and challenges associated with sales and other operations outside the United States are different in some ways from those associated with our operations in the United States, and we have a limited history addressing those risks and meeting those challenges. Our current international operations and future initiatives, including Southeast Asia, will involve a variety of risks, including:

We have limited experience in operating our business internationally, which increases the risk that any potential future expansion efforts that we may undertake will not be successful. We expect to invest substantial time and resources to expand our international operations. If we are unable to do this successfully and in a timely manner, our business and operating results could be materially adversely affected.

We face risks related to acquisitions now (such as our acquisition of Wavecell Pte. Ltd. in fiscal 2020) and in the future that may divert our management's attention, result in dilution to our stockholders, and consume resources that are necessary to sustain and grow our existing business.

Although we have acquired several small companies and business units in recent years, including Fuze, we have limited experience with purchasing and integrating other businesses. We may not be able to identify suitable acquisition candidates in the future or negotiate and complete acquisitions on favorable terms.

If appropriate opportunities present themselves, we may decide to acquire such companies or their products, technologies or assets. Acquisitions involve numerous risks, and there is no guarantee that we will ultimately strengthen our competitive position or achieve other benefits expected from the transaction. Among other risks we may encounter in connection with acquisitions:

In addition, we may have to pay cash, incur debt, or issue equity securities to pay for any such acquisition, each of which could affect our financial condition or the value of our capital stock. The sale of equity to finance any such acquisitions could result in dilution to our stockholders. If we incur more debt, it would result in increased fixed obligations and could also subject us to covenants or other restrictions that would impede our ability to flexibly operate our business.

As a result of these potential problems and risks, among others, businesses that we may acquire or invest in may not produce the revenue, competitive advantages, or business synergies that we anticipate, and the results and effects of any such acquisition may not be favorable enough to justify the amount of consideration we pay or the other investments we make in the acquired business.

General and administrative expenses fordecreased both in dollars and as a percentage of revenue in fiscal 2020 from2023, as compared to fiscal 2019 was2022, primarily due to a $20.4decreases of $17.7 million increase in advertising and marketing expenses, a $16.1 million increase in payroll and related expenses from expansion of our sales force, an $8.3 million increase in stock-based compensation expenses a $7.2and $13.2 million increase in commission expenses, a $5.3 million increase in amortization of deferred sales commissions, a $1.5 million increase in recruiting and outside services, a $1.3 million increase in licenses and fees, and a $0.9 million increase in depreciation and amortization of intangibles.

For the year ended March 31, 2020 and 2019,2023, we recorded an income tax expenseprovision of $0.8$2.8 million and $0.6 million, respectively, mostly relatedcompared to the current tax liabilities of profitable foreign subsidiaries and state minimum taxes. For the 12 months ended March 31, 2018, we recorded an income tax expensebenefit of $66.3$0.4 million mostly relatedin fiscal 2022, primarily due to higher state and foreign income taxes. The higher state taxes were a result of change in U.S. tax laws requiring the recordingcapitalization and amortization of aresearch and development costs, and the limitation of certain state net operating loss carryforwards that can be utilized to offset the additional taxable income. The higher foreign income taxes reflect the inclusion of the full valuation allowance established against our deferred tax assets inyear operational results of the quarter ended December 31, 2017.foreign Fuze subsidiaries.

We record deferred taxes based on differences between the financial statement basis and tax basis of assets and liabilities and available tax loss and credit carryforwards. In evaluating our ability to utilize our deferred tax assets, we consider available evidence, both positive and negative, in determining future taxable income on a jurisdiction-by-jurisdiction basis. We record a valuation allowance against deferred tax assets if, based on the weight of the evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. A significant item of objective negative evidence considered was the historical three-yearWe continue to remain in a cumulative pretax loss reached in fiscal 2018. As a result, we recordedposition, and therefore, continue to maintain a full valuation allowance against our U.S. deferred tax assets in the period ended December 31, 2017,United States, United Kingdom, and continued to record valuation allowance against our deferred tax assets generated thereafter. We also continue to maintain a valuation allowance against our U.K deferred tax assets as well as the recently acquired Singapore deferred tax assets.

As of March 31, 2020,2023, we had $170.9$137.6 million of cash and cash equivalents and short-term investments. In addition, we had $19.0$1.3 million in restricted cash of which $8.6 million in support of letterletters of creditscredit securing leases for office facilities in California and New Yorkcertain equipment.

We believe that our existing cash, cash equivalents and investment balances and our anticipated cash flows from operations will be sufficient to meet our working capital, expenditure, and expenditurecontractual obligation requirements for the next 12 months.months and the foreseeable future. Although we believe we have adequate sources of liquidity overfor the next 12 months and the foreseeable future the success of our operations, the global economic outlook, and the pace of sustainable growth in our markets, in each case, in light of the market volatility and uncertainty as a result of the ongoing impact of the COVID-19 pandemic and Russia's invasion of Ukraine, among other factors, could impact our business and liquidity.

Net cash used inprovided by operating activities for fiscal 20202023 was $93.9$48.8 million, as compared with $14.9to $34.7 million for fiscal 2019.2022. Cash used in or provided by operating activities is primarily affected by:

In fiscal 2020,2023, net cash used inprovided by operating activities was primarily related$48.8 million, reflecting an adjustment of $183.9 million in non-cash charges to theour net loss, including stock-based compensation expense of $172.4$89.5 million, net cash outflow from sales commissions paymentsdepreciation and recognitionamortization of $52.3 million, amortization of deferred sales commissions of $26.9$38.2 million, operating lease expenses of $12.0 million, and other smalleramortization of debt discount of $4.3 million, These adjustments for non-cash charges were partially offset by $62.0 million of working capital changes, which were partially offsetincluding deferrals of sales commissions of $31.1 million and $24.4 million in accounts payable. In fiscal 2022, net cash provided by operating activities was a result of an adjustment of non-cash charges, such as stock-based compensation expense of $70.9$133.3 million, amortization of capitalized internal-use software costs of $19.0$28.9 million, amortization of debt discount of $14.0$20.4 million, and operating lease expenses of $15.0$13.5 million.

Net cash provided by investing activities of $10.9was $6.1 million in fiscal 2023, as compared to $160.0 million net cash used in fiscal 2022. Cash provided in investing activities during fiscal 2019, compared with $7.32023 primarily related to net purchases of $21.2 million of investments, capitalized internal-use software development costs of $11.9 million, and purchases of property and equipment of $3.0 million. Cash used in investing activities infor fiscal 2018,2022 was primarily related to $51.2the acquisition of Fuze for $125.4 million of proceeds from sales and maturitiesnet purchase of investments net of purchases of investments. This was partially offset by $9.1 million of property and equipment investments and capitalized internal software development costs of $25.6$10.1 million.

Net cash used in financing activities was $37.8 million in fiscal 2023, as compared to $105.4 million cash provided by financing activities was $72.1 millionused in fiscal 2020, compared with $249.22022. The cash used in financing activities in fiscal 2023 was primarily driven by $217.3 million of net repayment of the 2024 Notes and $60.2 million of shares repurchased, which were substantially offset by $234.8 million of net proceeds from the Term Loan. Cash provided by financing activities in fiscal 2019. The cash provided2022 was primarily driven by financing activities in fiscal 2020 was primarily$134.6 million of net proceeds from the issuance of convertible debt of $73.92024 Notes and $16.1 million and $14.3 million from the issuance of common stock under employee stock purchase plans.plans and employee option exercises. These inflows were partially offset by $9.3the $45.0 million in capped call transactions, and $6.6 million paid to settle payroll tax obligations for employee equity awards.