I'll vote for over-valued.

Packet8 had an average of 33,000 subs per day, each generating about $1/day in revenue or a mere $365/yr per sub. With no long term contracts and little barrier to switch to another provider, a 9x annual revenue valuation does not hold up.

If $3M of the $5.6M SG&A went into the acquisition of the 14K added customers, that's a customer acquisition cost in excess of $200 per sub.

If the margin on the service revenue is 30%, then 2 years of service per subscriber are required to return the customer acquisition cost (without factoring in the value of money!)

While this is not clear in their reporting, it also looks like Packet8 takes a loss on the sale of their terminal adapters, assuming that reported product revenue and product costs largely cover the terminal adaptor. That's on top of the cost of customer acquisition. This seems to indicate no real advantage in supplying the terminal adaptor for their service.

Packet 8 is just getting started. They need to continue growing sub base, which if it continues to grow at 50% per quarter, they'll soon have over 200,000 subs, more than enough to make a nice profit

Let's say that Packet 8 can sustain a 50% per quarter subscriber growth rate. In a year they'll reach your 200,000 subscriber mark. Where Packet 8 added 150+ subscribers per day this quarter, they'll have to add 700+ subscribers per day in a few quarters.

With 200,000 subscribers, what is their service revenue? At $1/day/sub, it's $18M. The average service revenue per sub may move lower with more subs paying closer to the $20/month rate.

What is the cost for service? What is the gross profit you're allowing?

Assuming they hold the line on R&D spending, let's assume that is $800K a year from now.

Our SG&A was $5.6M this quarter. In a quarter where 60,000+ customers are acquired, I'm assuming the SG&A will go up.

Does anyone know what Packet 8 pays for a minute of termination and a minute of bandwidth? What does Level 3 charge Packet 8 per sub enrolled in their system?

Looks like Packet 8 did not grow 50% quarter over quarter.

S,G&A went up.

Product losses skyrocketed.

Losses increased.

Cash position improved because 8x8 again diluted shareholders' equity with another float.

Profit picture not good.

Likely this sector is going to turn to "Free Equipment" - sign a firm 2 year contract like Cell Phones... at a 50% savings over land lines, its a bargain. In my opinion, in the Broadband space EGHT has the best equipment and support available in the VOIP space...
I imagine raising capital will not be an in EGHT's case via stock offerings, private placements and or merger/acquisition. Also, there are 13% Short interest inthe stock as a % of float... which will likely get SQUEEZED real soon now.

This sector started with contracts and the marketplace has thrown them out. Moving back to contracts will be a negative differentiator in the consumer's eyes.

Nothing like an investor - or is that a bettor - calling for the short squeeze to save them on a sub-$3 stock.