10-K/A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K/A
Amendment No. 1

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 31, 2016

Commission file number 000-21783

8x8, Inc.
(Exact name of Registrant as Specified in its Charter)

 

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

2125 O'Nel Drive
San Jose, CA    95131
(Address of Principal Executive Offices including Zip Code)

(408) 727-1885
(Registrant's Telephone Number, Including Area Code)

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

Title of each class
COMMON STOCK, PAR VALUE $.001 PER SHARE Name of each exchange on which registered
NASDAQ Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES    x        NO    ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES    ¨        NO    x

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    x        NO    ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).     YES  x     NO  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K, or any amendment to this Form 10-K.    ¨

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

Large accelerated filer    x Accelerated filer    ¨ Non-accelerated filer    ¨
(Do not check if a smaller reporting company) Smaller reporting company    ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
YES    ¨        NO    x

Based on the closing sale price of the Registrant's common stock on the NASDAQ Capital Market System on September 30, 2015, the aggregate market value of the voting stock held by non-affiliates of the Registrant was $715,364,941. For purposes of this disclosure, shares of common stock held by officers and directors of the Registrant and beneficial owners of more than 5% of the outstanding shares of common stock who the Registrant believes may be affiliates, if any, have been excluded as shares that might be deemed to be held by affiliates. The determination of affiliate status for this purpose is not necessarily a conclusive determination for any other purpose.

The number of shares of the Registrant's common stock outstanding as of May 27, 2016 was 89,370,746.

DOCUMENTS INCORPORATED BY REFERENCE

Items 10, 11, 12, 13 and 14 of Part III incorporate information by reference from the Proxy Statement to be filed within 120 days of March 31, 2016 for the 2016 Annual Meeting of Stockholders.

EXPLANATORY NOTE

The sole purpose of this Amendment No. 1 to our Annual Report on Form 10-K for the fiscal year ended March 31, 2016, as filed with the Securities and Exchange Commission on May 31, 2016, is to furnish corrected interactive data files as Exhibit 101 to the Form 10-K. Exhibit 101.

No other changes have been made to the Form 10-K other than those described above. This Amendment No. 1 does not reflect subsequent events occurring after the original filing date of the Form 10-K or modify or update in any way disclosures made in the Form 10-K.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant, 8x8, Inc., a Delaware corporation, has duly caused this Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Jose, State of California, on July 1, 2016.

		8X8, INC.
		By: /s/ MARY ELLEN GENOVESE Mary Ellen Genovese Chief Financial Officer (Principal Financial and Accounting Officer)
Signature	Title		Date
/s/ *                                         Vikram Verma	Chief Executive Officer (Principal Executive Officer)		July 1, 2016
/s/ MARY ELLEN GENOVESE Mary Ellen Genovese	Chief Financial Officer and Secretary (Principal Financial and Accounting Officer)		July 1, 2016
/s/ *                                         Bryan R. Martin	Chairman and Chief Technology Officer		July 1, 2016
/s/ *                                         Guy L. Hecker, Jr.	Director		July 1, 2016
/s/ *                                         Eric Salzman	Director		July 1, 2016
/s/ *                                         Ian Potter	Director		July 1, 2016
/s/ *                                         Jaswinder Pal Singh	Director		July 1, 2016
/s/ *                                         Vladimir Jacimovic	Director		July 1, 2016
*By: MARY ELLEN GENOVESE Mary Ellen Genovese Attorney-in-fact

EXHIBITS

Exhibit Number	Description of Document
31.1	Certification of Chief Executive Officer of the Registrant pursuant to Rule 13a-14
31.2	Certification of Chief Financial Officer of the Registrant pursuant to Rule 13a-14
32.1*	Certification of Chief Executive Officer of the Registrant pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*	Certification of Chief Financial Officer of the Registrant pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definitions Document
101.LAB	XBRL Taxonomy Label Linkbase Document
101.PRE	XBRL Taxonomy Presentation Linkbase Document
	* Previously filed

EX-31

Exhibit 31.1

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Vikram Verma, certify that:

1. I have reviewed this annual report on Form 10-K of 8x8, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

1. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
2. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
3. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
4. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

1. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
2. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

July 1, 2016

/s/ VIKRAM VERMA
Vikram Verma
Chief Executive Officer

EX-31

Exhibit 31.2

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, MaryEllen Genovese, certify that:

1. I have reviewed this annual report on Form 10-K of 8x8, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

1. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
2. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
3. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
4. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

1. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
2. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

July 1, 2016

/s/ MARYELLEN GENOVESE
MaryEllen Genovese
Chief Financial Officer and Secretary

XML

Document and Entity Information - USD ($)

12 Months Ended

Mar. 31, 2016

May 27, 2016

Sep. 30, 2015

Document And Entity Information

Entity Registrant Name

8X8 INC /DE/

Entity Central Index Key

0001023731

Document Type

10-K/A

Document Period End Date

Mar. 31, 2016

Amendment Flag

true

Amendment Description

The sole purpose of this Amendment No. 1 to our Annual Report on Form 10-K for the fiscal year ended March 31, 2016, as filed with the Securities and Exchange Commission on May 31, 2016, is to furnish corrected interactive data files as Exhibit 101 to the Form 10-K. Exhibit 101.

No other changes have been made to the Form 10-K other than those described above. This Amendment No. 1 does not reflect subsequent events occurring after the original filing date of the Form 10-K or modify or update in any way disclosures made in the Form 10-K.

Current Fiscal Year End Date

--03-31

Is Entity a Well-known Seasoned Issuer?

Yes

Is Entity a Voluntary Filer?

No

Is Entity's Reporting Status Current?

Yes

Entity Filer Category

Large Accelerated Filer

Entity Public Float

$ 715,364,941

Entity Common Stock, Shares Outstanding

89,370,746

Document Fiscal Period Focus

FY

Document Fiscal Year Focus

2016

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CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2016	Mar. 31, 2015
Current assets:
Cash and cash equivalents	$ 33,576	$ 53,110
Short-term investments	129,274	123,984
Accounts receivable, net	11,070	6,642
Inventory	520	704
Deferred cost of goods sold	634	428
Deferred tax asset	5,382	4,454
Other current assets	5,444	2,274
Total current assets	185,900	191,596
Property and equipment, net	12,375	10,248
Intangible assets, net	21,464	12,260
Goodwill	47,420	36,887
Non-current deferred tax asset	43,189	43,169
Other assets	3,104	1,464
Total assets	313,452	295,624
Current liabilities:
Accounts payable	10,954	7,775
Accrued compensation	10,063	5,741
Accrued warranty	326	339
Accrued taxes	5,200	2,800
Accrued outside commissions	2,186	442
Deferred revenue	1,925	1,768
Other accrued liabilities	4,080	2,965
Total current liabilities	34,734	21,830
Non-current liabilities	3,258	1,352
Non-current deferred revenue	154	231
Total liabilities	38,146	23,413
Commitments and contingencies (Note 7)
Stockholders' equity:
Preferred stock, $0.001 par value: Authorized: 5,000,000 shares; Issued and outstanding: no shares at March 31, 2016 and 2015	0	0
Common stock, $0.001 par value: Authorized: 200,000,000 shares; Issued and outstanding: 89,213,205 shares and 88,065,528 shares at March 31, 2016 and 2015, respectively	89	88
Additional paid-in capital	389,260	378,971
Accumulated other comprehensive loss	(4,184)	(2,109)
Accumulated deficit	(109,859)	(104,739)
Total stockholders' equity	275,306	272,211
Total liabilities and stockholders' equity	$ 313,452	$ 295,624

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 31, 2016	Mar. 31, 2015
Stockholders' equity:
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value per share	$ 0.001	$ 0.001
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	89,213,205	88,065,528
Common stock, shares outstanding	89,213,205	88,065,528

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CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2014
Consolidated Statements Of Operations
Service revenue	$ 192,241	$ 148,208	$ 116,607
Product revenue	17,095	14,205	11,990
Total revenue	209,336	162,413	128,597
Operating expenses:
Cost of service revenue	37,078	29,701	22,445
Cost of product revenue	20,168	15,863	15,170
Research and development	24,040	15,118	11,633
Sales and marketing	109,379	80,667	60,906
General and administrative	25,745	18,182	15,368
Gain on patent sale	0	(1,000)	0
Total operating expenses	216,410	158,531	125,522
Income (loss) from operations	(7,074)	3,882	3,075
Other income, net	1,107	833	742
Income (loss) from continuing operations before provision (benefit) for income taxes	(5,967)	4,715	3,817
Provision (benefit) for income taxes	(847)	2,789	2,219
Income (loss) from continuing operations	(5,120)	1,926	1,598
Income from discontinued operations, net of income tax provision	0	0	320
Gain on disposal of discontinued operations, net of income tax provision of $456	0	0	596
Net income (loss)	$ (5,120)	$ 1,926	$ 2,514
Income (loss) per share - continuing operations:
Basic	$ (0.06)	$ 0.02	$ 0.02
Diluted	(0.06)	0.02	0.02
Income per share - discontinued operations:
Basic	0.00	0.00	0.01
Diluted	0.00	0.00	0.01
Net income (loss) per share:
Basic	(0.06)	0.02	0.03
Diluted	$ (0.06)	$ 0.02	$ 0.03
Weighted average number of shares:
Basic	88,477	89,071	78,310
Diluted	88,477	91,652	81,658

XML

CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2014
Consolidated Statements Of Operations
Discontinued Operation, Tax Effect of Income from Disposal of Discontinued Operations	$ 0	$ 0	$ 456

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME - USD ($) $ in Thousands	12 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2014
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ (5,120)	$ 1,926	$ 2,514
Other comprehensive loss, net of tax
Unrealized gain (loss) on investments in securities	(50)	(26)	(41)
Foreign currency translation adjustment	(2,025)	(2,513)	507
Comprehensive (loss) income	$ (7,195)	$ (613)	$ 2,980

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Common Stock	Additional Paid-In Capital	Accumulated other Comprehensive Income (Loss)	Accumulated Deficit	Total
Beginning balance, amount at Mar. 31, 2013	$ 72	$ 246,176	$ (36)	$ (109,179)	$ 137,033
Beginning balance, shares at Mar. 31, 2013	72,108,980
Issuance of common stock under stock plans	$ 2	5,165	0	0	5,167
Issuance of common stock under stock plans, shares	2,091,435
Issuance of common stock, net of issuance costs	$ 14	125,736	0	0	125,750
Issuance of common stock, net of issuance costs, shares	14,375,000
Repurchase of common stock	$ 0	(489)	0	0	(489)
Repurchase of common stock, shares	(50,400)
Stock-based compensation expense	$ 0	7,595	0	0	7,595
Income tax benefit from stock-based compensation	0	142	0	0	142
Unrealized investment gain (loss)	0	0	(41)	0	(41)
Foreign currency translation adjustment	0	0	507	0	507
Net income (loss)	0	0	0	2,514	2,514
Ending balance, amount at Mar. 31, 2014	$ 88	384,325	430	(106,665)	278,178
Ending balance, shares at Mar. 31, 2014	88,525,015
Issuance of common stock under stock plans	$ 2	4,525	0	0	4,527
Issuance of common stock under stock plans, shares	2,043,781
Cost of issuance of common stock	$ 0	(8)	0	0	(8)
Repurchase of common stock	$ (2)	(19,369)	0	0	(19,371)
Repurchase of common stock, shares	(2,503,268)
Stock-based compensation expense	$ 0	9,347	0	0	9,347
Income tax benefit from stock-based compensation	0	151	0	0	151
Unrealized investment gain (loss)	0	0	(26)	0	(26)
Foreign currency translation adjustment	0	0	(2,513)	0	(2,513)
Net income (loss)	0	0	0	1,926	1,926
Ending balance, amount at Mar. 31, 2015	$ 88	378,971	(2,109)	(104,739)	272,211
Ending balance, shares at Mar. 31, 2015	88,065,528
Issuance of common stock under stock plans	$ 2	5,386	0	0	5,388
Issuance of common stock under stock plans, shares	2,218,470
Cost of issuance of common stock	$ 0	(3)	0	0	(3)
Issuance of common stock for acquisition of businesses, net of issuance costs	$ 0	0	0	0	0
Issuance of common stock for acquisition of businesses, net of issuance costs, shares	352,044
Repurchase of common stock	$ (1)	(11,652)	0	0	(11,653)
Repurchase of common stock, shares	(1,422,837)
Stock-based compensation expense	$ 0	16,334	0	0	16,334
Income tax benefit from stock-based compensation	0	224	0	0	224
Unrealized investment gain (loss)	0	0	(50)	0	(50)
Foreign currency translation adjustment	0	0	(2,025)	0	(2,025)
Net income (loss)	0	0	0	(5,120)	(5,120)
Ending balance, amount at Mar. 31, 2016	$ 89	$ 389,260	$ (4,184)	$ (109,859)	$ 275,306
Ending balance, shares at Mar. 31, 2016	89,213,205

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2014
Cash flows from operating activities:
Net income	$ (5,120)	$ 1,926	$ 2,514
Adjustments to reconcile net income to net cash provided by operating activites:
Depreciation	4,994	3,540	2,567
Amortization of intangibles	3,557	2,232	1,643
Impairment of long-lived assets	640	0	0
Amortization of capitalized software	456	341	147
Net accretion of discount and amortization of premium on marketable securities	740	896	114
Gain on disposal of discontinued operations	0	0	(596)
Gain on escrow settlement	0	0	(565)
Stock-based compensation	16,334	9,347	7,595
Tax benefit from stock-based compensation	(224)	(151)	(142)
Deferred income tax (benefit) provision	(1,493)	2,390	2,266
Other	533	256	650
Changes in assets and liabilities:
Accounts receivable, net	(4,539)	(1,529)	(1,575)
Inventory	136	52	(276)
Other current and non-current assets	(1,432)	(196)	(488)
Deferred cost of goods sold	(224)	(207)	163
Accounts payable	2,473	610	(1,237)
Accrued compensation	3,566	1,632	488
Accrued warranty	(13)	(321)	208
Accrued taxes	2,292	490	276
Accrued outside commissions	1,744	(5)	202
Deferred revenue	(273)	(1,065)	681
Other current and non-current liabilities	(580)	1,002	282
Net cash provided by operating activities	23,567	21,240	14,917
Cash flows from investing activities:
Acquisitions of property and equipment	(4,894)	(5,826)	(2,853)
Cost of capitalized software	(2,095)	(724)	(755)
Purchase of investments - available for sale	(126,723)	(106,021)	(141,604)
Sales of investments - available for sale	56,302	36,764	24,219
Proceeds from maturities of investments	64,361	63,546	0
Acquisition of businesses, net of cash acquired	(23,246)	0	(18,474)
Proceeds from disposition of discontinued operations, net of transaction costs	0	0	3,000
Net cash used in investing activities	(36,295)	(12,261)	(136,467)
Cash flows from financing activities:
Capital lease payments	(446)	(149)	(85)
Payment of contingent consideration	(200)	0	0
Repurchase of common stock	(11,653)	(19,371)	(489)
Tax benefit from stock-based compensation expense	224	151	142
Proceeds from issuance of common stock, net of issuance costs	0	0	125,750
Proceeds from issuance of common stock under employee stock plans	4,827	4,455	5,167
Net cash (used in) provided by financing activities	(7,248)	(14,914)	130,485
Effect of exchange rate changes on cash	442	(114)	(81)
Net (decrease) increase in cash and cash equivalents	(19,534)	(6,049)	8,854
Cash and cash equivalents,beginning of year	53,110	59,159	50,305
Cash and cash equivalents, end of year	33,576	53,110	59,159
Supplemental and non-cash disclosures:
Acquisition of property and equipment, net in connection with acquisitions of businesses	1,453	0	956
Acquisition of capital lease in connection with acquisitions of businesses	1,332	0	216
Equipment acquired under capital leases	573	0	0
Cash paid for interest	44	5	5
Cash paid for income taxes	$ 445	$ 159	$ 427

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THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES - Note 1

12 Months Ended

Mar. 31, 2016

Notes to Financial Statements

THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES - Note 1

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 provider of cloud-based, enterprise-class software solutions that transform the way businesses communicate and collaborate globally. The Company's comprehensive software platform brings together the power of cloud, mobile, collaboration, video and data science technologies to enhance the way employees communicate with each other, and how they connect and interact with their customers. The Company's integrated, "pure-cloud" offering combines global voice, conferencing, messaging and video with integrated workflows and big data analytics on a single platform to enable increased team productivity, better customer engagement and real-time insights into business performance. Since fiscal 2004, substantially all of our revenue has been generated from the sale, license and provision of communications services. Prior to fiscal 2003, our focus was on our Voice over Internet Protocol semiconductor business.

The Company's fiscal year ends on March 31 of each calendar year. Each reference to a fiscal year in these notes to the consolidated financial statements refers to the fiscal year ended March 31 of the calendar year indicated (for example, fiscal 2016 refers to the fiscal year ended March 31, 2016).

Common Stock Offering

In November 2013, the Company completed an underwritten registered offering of common stock in which it sold 14,375,000 shares for total cash proceeds of approximately $125.8 million, net of issuance costs of $0.6 million. The shares issued in the offering had been registered under a shelf registration statement previously filed with the Securities and Exchange Commission relating to up to $250,000,000 of the Company's securities. A member of the Company's board of directors participated in the offering and purchased 30,000 shares at the public offering price.

Acquisitions

In November 2013, the Company entered into a share purchase agreement with the shareholders and option holders of Voicenet Solutions Limited, a provider of cloud communications and collaboration services in the United Kingdom.

In May 2015, the Company entered into a share purchase agreement with the shareholders of DXI Limited, API Telecom Limited, Easycallnow Limited and RAS Telecom Limited, a provider of in cloud-based outbound and blended contact center solutions,

In June 2015, the Company entered into an asset purchase agreement with the shareholder of Quality Software Corporation and other parties affiliated with the shareholder and Quality Software Corporation, a developer of cloud-native quality management capabilities and analytics.

See Note 13 for further discussion.

Reclassification

Certain amounts previously reported within the Company's consolidated balance sheets and statements of cash flows have been reclassified to conform to the current period presentation. The reclassifications had no impact on the Company's previously reported net income (loss), cash flows, or basic or diluted net income per share amounts.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of 8x8 and its subsidiaries. All material intercompany accounts and transactions have been eliminated.

USE OF ESTIMATES

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and equity and 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 on-going basis, the Company evaluates its estimates, including, but not limited to, those related to bad debts, returns reserve for expected cancellations, valuation of inventories, income and sales tax, and litigation and other contingencies. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities, and equity that are not readily apparent from other sources. Actual results could differ from those estimates under different assumptions or conditions.

REVENUE RECOGNITION

Service and Product Revenue

The Company recognizes service revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, price is fixed or determinable and collectability is reasonably assured. The Company defers recognition of service revenues in instances when cash receipts are received before services are delivered and recognizes deferred revenues ratably as services are provided.

The Company recognizes revenue from product sales for which there are no related services to be rendered upon shipment to customers provided that persuasive evidence of an arrangement exists, the price is fixed or determinable, title has transferred, collection of resulting receivables is reasonably assured, there are no customer acceptance requirements, and there are no remaining significant obligations. Gross outbound shipping and handling charges are recorded as revenue, and the related costs are included in cost of goods sold. Reserves for returns and allowances for customer sales are recorded at the time of shipment. In accordance with the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 605, Revenue Recognition, the Company records shipments to distributors, retailers, channel partners, and resellers, where the right of return exists, as deferred revenue. The Company defers recognition of revenue on product sales to distributors, retailers, channel partners, and resellers until the products have been sold to the end customer.

The Company records revenue net of any sales and service related taxes and mandatory government charges that are billed to its customers. The Company believes this approach results in consolidated financial statements that are more easily understood by users.

Under the terms of the Company's typical subscription agreement, new customers can terminate their service within 30 days of order placement and receive a full refund of fees previously paid. The Company has determined that it has sufficient history of subscriber conduct to make a reasonable estimate of cancellations within the 30-day trial period. Therefore, the Company recognizes new subscriber revenue that is fixed or determinable and that are not contingent on future performance or future deliverables in the month in which the new order was shipped, net of an allowance for expected cancellations.

Multiple Element Arrangements

ASC 605-25, Revenue Recognition - Multiple Element Arrangements, requires that revenue arrangements with multiple deliverables be divided into separate units of accounting if the deliverables in the arrangement meet specific criteria.  The provisioning of the 8x8 cloud service with the accompanying 8x8 IP telephone constitutes a revenue arrangement with multiple deliverables.  For arrangements with multiple deliverables, the Company allocates the arrangement consideration to all units of accounting based on their relative selling prices. In such circumstances, the accounting principles establish a hierarchy to determine the relative selling price to be used for allocating arrangement consideration to units of accounting as follows: (i) vendor-specific objective evidence of fair value ("VSOE"), (ii) third-party evidence of selling price ("TPE"), and (iii) best estimate of the selling price ("BESP").

VSOE generally exists only when the Company sells the deliverable separately, on more than a limited basis, at prices within a relatively narrow range.  When VSOE cannot be established, the Company attempts to establish the selling price of deliverables based on relevant TPE. TPE is determined based on manufacturer's prices for similar deliverables when sold separately, when possible. When the Company is unable to establish selling price using VSOE or TPE, it uses a BESP for the allocation of arrangement consideration. The objective of BESP is to determine the price at which the Company would transact a sale if the product or service was sold on a stand-alone basis. BESP is generally used for offerings that are not typically sold on a stand-alone basis or for new or highly customized offerings. The Company determines BESP for a product or service by considering multiple factors including, but not limited to:

• the price list established by its management which is typically based on general pricing practices and targeted gross margin of products and services sold; and
• analysis of pricing history of new arrangements, including multiple element and stand-alone transactions.

In accordance with the guidance of ASC 605-25, when the Company enters into revenue arrangements with multiple deliverables the Company allocates arrangement consideration, including activation fees, among the 8x8 IP telephones and subscriber services based on their relative selling prices. Arrangement consideration allocated to the IP telephones that is fixed or determinable and that is not contingent on future performance or future deliverables is recognized as product revenues during the period of the sale less the allowance for estimated returns during the 30-day trial period. Arrangement consideration allocated to subscriber services that is fixed or determinable and that is not contingent on future performance or future deliverables is recognized ratably as service revenues as the related services are provided, which is generally over the initial contract term.

DEFERRED COST OF GOODS SOLD

Deferred cost of goods sold represents the cost of products sold for which the end customer or distributor has a right of return. The cost of the products sold is recognized contemporaneously with the recognition of revenue, when the subscriber has accepted the service.

CASH, CASH EQUIVALENTS AND INVESTMENTS

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Management determines the appropriate categorization of its investments at the time of purchase and reevaluates the classification at each reporting date. The cost of the Company's investments is determined based upon specific identification.

The Company's investments are comprised of mutual funds, commercial paper, corporate debt, municipal securities, asset backed securities, mortgage backed securities, agency bonds, international government securities, certificates of deposit and money market funds. At March 31, 2016 and 2015, all investments were classified as available-for-sale and reported at fair value, based either upon quoted prices in active markets, quoted prices in less active markets, or quoted market prices for similar investments, with unrealized gains and losses, net of related tax, if any, included in other comprehensive income (loss) and disclosed as a separate component of consolidated stockholders' equity. Realized gains and losses on sales of all such investments are reported within the caption of other income, net in the consolidated statements of operations and computed using the specific identification method. The Company classifies its investments as current based on the nature of the investments and their availability for use in current operations. The Company's investments in marketable securities are monitored on a periodic basis for impairment. In the event that the carrying value of an investment exceeds its fair value and the decline in value is determined to be other-than-temporary, an impairment charge is recorded and a new cost basis for the investment is established. These available-for-sale investments are primarily held in the custody of a major financial institution.

ACCOUNTS RECEIVABLE ALLOWANCE

The Company estimates the amount of uncollectible accounts receivable at the end of each reporting period based on the aging of the receivable balance, current and historical customer trends, and communications with its customers.  Amounts are written off only after considerable collection efforts have been made and the amounts are determined to be uncollectible.

INVENTORY

Inventory is stated at the lower of standard cost, which approximates actual cost using the first-in, first-out method, or market. Any write-down of inventory to the lower of cost or market at the close of a fiscal period creates a new cost basis that subsequently would not be marked up based on changes in underlying facts and circumstances. On an on-going basis, the Company evaluates inventory for obsolescence and slow-moving items. This evaluation includes analysis of sales levels, sales projections, and purchases by item, as well as raw material usage related to the Company's manufacturing facilities. If the Company's review indicates a reduction in utility below carrying value, it reduces inventory to a new cost basis. If future demand or market conditions are different than the Company's current estimates, an inventory adjustment may be required, and would be reflected in cost of goods sold in the period the revision is made.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method. Estimated useful lives of three years are used for equipment and software and five years for furniture and fixtures. Amortization of leasehold improvements is computed using the shorter of the remaining facility lease term or the estimated useful life of the improvements.

Maintenance, repairs and ordinary replacements are charged to expense. Expenditures for improvements that extend the physical or economic life of the property are capitalized. Gains or losses on the disposition of property and equipment are recorded in the Consolidated Statements of Operations.

Construction in progress primarily relates to costs to acquire or internally develop software for internal use not fully completed as of March 31, 2016.

ACCOUNTING FOR LONG-LIVED ASSETS

The Company reviews the recoverability of its long-lived assets, such as property and equipment, definite lived intangibles or capitalized software, when events or changes in circumstances occur that indicate that the carrying value of the asset or asset group may not be recoverable. Examples of such events could include a significant disposal of a portion of such assets, an adverse change in the market involving the business employing the related asset or a significant change in the operation or use of an asset. The assessment of possible impairment is based on the Company's ability to recover the carrying value of the asset or asset group from the expected future pre-tax cash flows (undiscounted and without interest charges) of the related operations. If these cash flows are less than the carrying value of such asset, an impairment loss is recognized for the difference between estimated fair value and carrying value. The measurement of impairment requires management to estimate future cash flows and the fair value of long-lived assets. See Note 5 for further discussion on impairment charges incurred as of March 31, 2016.

GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and intangible assets with indefinite useful lives are not amortized. Goodwill represents the excess fair value of consideration transferred over the fair value of net assets acquired in business combinations. The carrying value of goodwill and indefinite lived intangible assets are not amortized, but are tested annually for impairment and more often if there is an indicator of impairment. The Company has determined that it has two reporting units, and allocates goodwill to the reporting units for the purposes of the annual test for impairment.

The Company's annual goodwill impairment test is performed on January 1 each year. No goodwill impairment charges were recorded in the periods presented.

Intangible assets with finite useful lives are amortized on a straight-line basis over the periods benefited. Amortization expense for the customer relationship intangible asset is included in sales and marketing expenses. Amortization expense for technology is included in cost of service revenue.

WARRANTY EXPENSE

The Company accrues for estimated product warranty cost upon revenue recognition. Accruals for product warranties are calculated based on the Company's historical warranty experience adjusted for any specific requirements.

RESEARCH, DEVELOPMENT AND SOFTWARE COSTS

The Company accounts for software to be sold or otherwise marketed in accordance with ASC 985-20, Costs of Software to be Sold, Leased or Marketed (ASC 985-20) which requires capitalization of certain software development costs subsequent to the establishment of technological feasibility. The Company defines establishment of technological feasibility as the completion of a working model. Software development costs for software to be sold or otherwise marketed incurred prior to the establishment of technological feasibility are included in research and development and are expensed as incurred. Software development costs incurred subsequent to the establishment of technological feasibility through the period of general market availability of the product are capitalized, if material.

In fiscal 2016 and 2015, the Company capitalized approximately $0 of software development costs in accordance with ASC 985-20. At March 31, 2016 and 2015, total capitalized software development costs included in other long-term assets was approximately $0 and $1.0 million, respectively, and accumulated amortization costs related to capitalized software was approximately $0 million and $0.5 million, respectively.

The Company accounts for computer software developed or obtained for internal use in accordance with ASC 350-40, Internal Use Software (ASC 350-40), which requires capitalization of certain software development costs incurred during the application development stage. In fiscal 2016, the Company capitalized $3.4 million in accordance with ASC 350-40, of which $0.8 million is classified as property and equipment and $2.1 million is classified as other long-term assets. In fiscal 2015, the Company capitalized $1.5 million in accordance with ASC 350-40, of which $0.8 million is classified as property and equipment and $0.7 million is classified as other long-term assets. At March 31, 2016, total capitalized software development costs included in property and equipment and other long-term assets was approximately $1.2 and $2.5 million, respectively, and accumulated amortization costs related to capitalized software was approximately $0.2 million and $0, respectively.

ADVERTISING COSTS

Advertising costs are expensed as incurred and were $8.5 million, $6.8 million and $7.3 million for the years ended March 31, 2016, 2015 and 2014, respectively.

FOREIGN CURRENCY TRANSLATION

The Company has determined that the functional currencies of all its foreign subsidiaries are the subsidiary's local currency. The Company believes this most appropriately reflects the current economic facts and circumstances of the Company's subsidiaries operations. The assets and liabilities of the subsidiaries are translated at the applicable exchange rate as of the end of the balance sheet period and revenue and expenses are translated at an average rate over the period presented. Resulting currency translation adjustments are recorded as a component of accumulated other comprehensive income or loss within the stockholder's equity in the consolidated balance sheets.

BUSINESS SEGMENTS

The Company has two reportable segments, Americas and Europe. The Company's chief operating decision makers, the Chief Executive Officer, Chief Financial Officer, and Chief Technology Officer, evaluate performance of the Company and makes decisions regarding allocation of resources based on geographical results (see Note 12).

SUBSCRIBER ACQUISITION COSTS

Subscriber acquisition costs are expensed as incurred and include the advertising, marketing, promotions, commissions, rebates and equipment subsidy costs associated with the Company's efforts to acquire new subscribers.

INCOME TAXES

Income taxes are accounted for using the asset and liability approach. Under the asset and liability approach, a current tax liability or asset is recognized for the estimated taxes payable or refundable on tax returns for the current year. A deferred tax liability or asset is recognized for the estimated future tax effects attributed to temporary differences and carryforwards. If necessary, the deferred tax assets are reduced by the amount of benefits that, based on available evidence, is more likely than not expected to be realized.

CONCENTRATIONS

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents, investments and trade accounts receivable. The Company has cash equivalents and investment policies that limit the amount of credit exposure to any one financial institution and restrict placement of these funds to financial institutions evaluated as highly credit- worthy. The Company has not experienced any material losses relating to its investment instruments.

The Company sells its products to business customers and distributors. The Company performs ongoing credit evaluations of its customers' financial condition and generally does not require collateral from its customers. At March 31, 2016 and 2015, no customer accounted for more than 10% of accounts receivable.

The Company purchases all of its hardware products from suppliers that manufacturers the hardware directly. The inability of any supplier to fulfill supply requirements of the Company could materially impact future operating results, financial position or cash flows. If any of these suppliers fail to perform on their obligations to the Company, such failure to fulfill supply requirements of the Company could materially impact future operating results, financial position and cash flows.

The Company also relies primarily on third party network service providers to provide telephone numbers and PSTN call termination and origination services for its customers. If these service providers failed to perform their obligations to the Company, such failure could materially impact future operating results, financial position and cash flows.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal market or the most advantageous market in which it would transact.

The accounting guidance for fair value measurement requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs are inputs that reflect the assumptions market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company's assumptions about the factors that market participants would use in valuing the asset or liability developed based on the best information available in the circumstances.

The standard establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value by requiring that the most observable inputs be used when available. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is as follows:

• Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
• Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets).
• Level 3 applies to assets or liabilities for which fair value is derived from valuation techniques in which one or more significant inputs are unobservable, including the Company's own assumptions.

The estimated fair value of financial instruments is determined by the Company using available market information and valuation methodologies considered to be appropriate. The carrying amounts of the Company's cash and cash equivalents, accounts receivable and accounts payable approximate their fair values due to their short maturities. The Company's investments are carried at fair value.

ACCOUNTING FOR STOCK-BASED COMPENSATION

The Company accounts for its employee stock options, stock purchase rights, restricted stock units and restricted performance stock units granted under the 1996 Stock Plan, 1996 Director Option Plan, the 2006 Stock Plan, the 2003 Contactual Plan, the 2012 Equity Incentive Plan, the 2013 New Employee Inducement Incentive Plan and stock purchase rights under the 1996 Employee Stock Purchase Plan (collectively "Equity Compensation Plans") under the provisions of ASC 718 - Stock Compensation. Under the provisions of ASC 718, stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as an expense over the employee's requisite service period (generally the vesting period of the equity grant), net of estimated forfeitures.

To value option grants, stock purchase rights and restricted stock units under the Equity Compensation Plans for stock-based compensation the Company used the Black-Scholes option valuation model. Fair value determined using the Black-Scholes option valuation model varies based on assumptions used for the expected stock prices volatility, expected life, risk-free interest rates and future dividend payments. For fiscal years 2016, 2015 and 2014, the Company used the historical volatility of its stock over a period equal to the expected life of the options. The expected life assumptions represent the weighted-average period stock-based awards are expecting to remain outstanding. These expected life assumptions were established through the review of historical exercise behavior of stock-based award grants with similar vesting periods. The risk-free interest is based on the closing market bid yields on actively traded U.S. treasury securities in the over-the-counter market for the expected term equal to the expected term of the option. The dividend yield assumption is based on the Company's history and expectation of future dividend payout. Compensation expense for stock-based payment awards is recognized using the straight-line single-option method and includes the impact of estimated forfeitures.

The Company issued restricted performance stock units (PSUs) to a group of executives with vesting that is contingent on both market performance and continued service during the fiscal year ended March 31, 2016:

• These PSUs vest (1) 50% on September 22, 2017 and (2) 50% on September 27, 2018, in each case subject to performance of the Company's common stock relative to the Russell 2000 Index during the period from grant date through such vesting date. A 2x multiplier will be applied to the total shareholder returns (TSR) for each 1% of positive or negative relative TSR, and the number of shares earned will increase or decrease by 2% of the target numbers. In the event 8x8's common stock performance is below negative 30%, relative to the benchmark, no shares will be issued.

The Company issued restricted (PSUs) to a group of executives with vesting that is contingent on both market performance and continued service. For the market-based restricted performance stock units issued during the fiscal year ended March 31, 2015:

• the number of shares of the Company's stock to be received at vesting if applicable service requirements are also met will range from 0% to 100% of the target amount based total shareholder return ("TSR"), which compares the performance of the price per share of the Company's common stock with the NASDAQ Composite Index ("Index") for the three performance periods ending March 31, 2016, March 31, 2017 and March 31, 2018, for the fiscal year ended March 31, 2015; and for the three performance periods ending March 31, 2015, March 31, 2016 and March 31, 2017 for the fiscal year ended March 31, 2014, in the following manner: where in each such measurement period, (1) if the performance return on the price per share of the Company's common stock exceeds the performance return on the NASDAQ Composite Index, (which shall be determined by subtracting the percentage return on the NASDAQ Composite Index from the percentage return on the price per share of the Common Stock), then all of the TSR Performance Shares for such measurement period will be deemed earned and will vest; (2) if the performance return on the price per share of Common Stock is more than 50% lower than the performance return on the NASDAQ Composite Index, then none of the TSR Performance Shares for such measurement period will be deemed earned and will vest; and (3) if the performance return on the price per share of Common Stock is between 0% and 50% lower than the performance return on the NASDAQ Composite Index, then the number of TSR Performance Shares deemed earned and vesting for such measurement period will be reduced by 2% for each 1% by which the performance return on the NASDAQ Composite Index exceeds the performance return on the Common Stock, (4) if the performance return on the price per share of Common Stock is between 0% and 50% higher than the performance return on the NASDAQ Composite Index, then the number of TSR Performance Shares deemed earned and vesting for such measurement period will increase by 2% for each 1% by which the performance return on the Common Stock exceeds the performance return on the NASDAQ Composite Index, and
• the number of shares of the Company's stock to be received at vesting will range from 0% or 100% of the target amount based on four tranches, with each tranche vesting at the later of (a) the satisfaction of the applicable service-based vesting requirement for that tranche, and (b) on the first date that the average stock price of the Company's common stock for a consecutive 30 trading day period exceeds 150% of the grant date stock price. The minimum service vesting requirement for each tranche is as follows:

Tranche 1: One year following the date of the grant

Tranche 2: Two years following the date of the grant

Tranche 3: Three years following the date of the grant

Tranche 4: Four years following the date of the grant

Market-based restricted performance stock units are valued using a Monte Carlo simulation model on the date of grant. Fair value determined using the Monte Carlo simulation model varies based on the assumptions used for the expected stock price volatility, the correlation coefficient between the Company and the NASDAQ Composite Index, risk-free interest rates, and future dividend payments.

In October 2013, the board of directors approved the modification of unvested stock options to purchase 74,479 shares of common stock and unvested stock purchase rights totaling 37,000 shares of common stock held by the Company's president upon his resignation. The options held by the Company's president upon his resignation, taken as a whole, had a weighted average exercise price of $4.05 per share and range from $2.72 to $5.87 per share, and a weighted average remaining vesting term of 0.5 years. Approximately $1.1 million of the $7.6 million of stock-based compensation charge in fiscal year 2014 applied to the options held by the former president of the Company and was recorded in general and administrative expenses.

COMPREHENSIVE INCOME (LOSS)

Comprehensive income (loss), as defined, includes all changes in equity (net assets) during a period from non-owner sources. The difference between net income (loss) and comprehensive (loss) income is due to foreign currency translation adjustments and unrealized gains or losses on investments classified as available-for-sale.

NET INCOME (LOSS) PER SHARE

Basic net income (loss) per share is computed by dividing net income (loss) available to common stockholders (numerator) by the weighted average number of vested, unrestricted common shares outstanding during the period (denominator). Diluted net income per share is computed on the basis of the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding stock options and employee restricted purchase rights.

DEFERRED RENT

In April 2012, the Company entered into an 87-month lease agreement for its new headquarters. Under the terms of the lease agreement:

• the Company received a three month rent holiday from rental payments;
• base rent is $130,821 for the 15 months after the rent holiday; and
• rent expense increases 3% each year thereafter.

In the second quarter of fiscal 2013, the Company received a $1.7 million allowance for reimbursement for the cost of tenant improvements that the Company included in cash flows from operating activities. In accordance with the guidance in ASC 840-20, Leases, the Company accounts for its headquarters facility operating lease as follows:

Rent Holidays. The Company recognizes the related rent expense on a straight-line basis at the earlier of the first rent payment or the date of possession of the leased property. The difference between the amounts charged to expense and the rent paid is recorded as deferred lease incentives and amortized over the lease term.

Rent Escalations. The Company recognizes escalating rent provisions on a straight-line basis over the lease term. The difference between the amounts charged to expense and the rent paid is recorded as deferred lease incentives and amortized over the lease term.

Tenant Improvement Allowance. The tenant improvement allowance is deferred and amortized on a straight-line basis over the life of the lease as a reduction to rent expense.

In January 2016, the Company entered into a 48-month lease for additional office space near the Company's US headquarters. In April 2016, the lease was amended for actual move in date. Base rent begins at $105,628 and increases 3% each year thereafter. Future minimum annual lease payments under this lease is included in "Leases" in Note 7.

At March 31, 2016, total deferred rent included in other accrued liabilities and non-current liabilities was $0.3 million and $1.0 million, respectively. At March 31, 2015, total deferred rent included in other accrued liabilities and non-current liabilities was $0.3 million and $1.3 million, respectively.

RECENT ACCOUNTING PRONOUNCEMENTS

In April 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. This ASU changes the requirements for reporting discontinued operations in FASB ASU 205-20, such that a disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity's operations and financial results. This ASU requires an entity to present, for each comparative period, the assets and liabilities of a disposal group that includes a discontinued operation separately in the asset and liability sections, respectively, of the statement of financial position, as well as additional disclosures about discontinued operations. Additionally, the ASU requires disclosures about a disposal of an individually significant component of an entity that does not qualify for discontinued operations presentation in the financial statements and expands the disclosures about an entity's significant continuing involvement with a discontinued operation. The accounting update is effective for annual periods beginning on or after December 15, 2014. We adopted this pronouncement for our fiscal year beginning April 1, 2015, and there was no effect on our consolidated financial statements.

In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory, (Topic 330), which amends the guidelines for the measurement of inventory. Under the amendments, an entity should measure inventory valued using a first-in, first-out or average cost method at the lower of cost and net realizable value. Net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This amendment is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently assessing the impact of this pronouncement to its consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard will become effective for the Company on April 1, 2018. The standard permits the use of either the retrospective or cumulative effect transition method. The Company has not yet selected a transition method. The Company is currently assessing the impact of this pronouncement to its consolidated financial statements.

In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. Topic 805 requires an acquirer to retrospectively adjust provisional amounts recognized in a business combination during the measurement period. To simplify the accounting for adjustments made to provisional amounts, the amendment requires that the acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amount is determined. The acquirer is required to also record, in the same period's financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. In addition, an entity is required to present separately on the face of the income statement or disclose in the notes to the financial statements the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date.

The amendments are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The amendments should be applied prospectively to adjustments to provisional amounts that occur after the effective date with earlier application permitted for financial statements that have not been issued. The Company is currently assessing the impact of this pronouncement to its consolidated financial statements.

In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes, (Topic 740), which amends the current requirement for organizations to present deferred tax assets and liabilities as current and noncurrent in a classified balance sheet. Under the amendment, an entity will be required to classify all deferred tax assets and liabilities as noncurrent.

This amendment is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently assessing the impact of this pronouncement to its consolidated financial statements.

In February 2016, the FASB issued 2016-02, Leases (Topic 842). Topic 842 requires companies to generally recognize on the balance sheet operating and financing lease liabilities and corresponding right-of-use assets. The update also requires qualitative and quantitative disclosures designed to assess the amount, timing, and uncertainty of cash flows arising from leases.  The update requires the use of a modified retrospective transition approach, which includes a number of optional practical expedients that entities may elect to apply.

This amendment is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently assessing the impact of this pronouncement to its consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"), which is intended to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows.

The amendment is effective for annual periods beginning after December 15, 2016, including interim periods within those fiscal years. Early application is permitted.  The Company is currently assessing the impact of this pronouncement to its consolidated financial statements.

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FAIR VALUE MEASURESMENTS - Note 2

12 Months Ended

Mar. 31, 2016

Cash and Cash Equivalents [Abstract]

FAIR VALUE MEASURESMENTS - Note 2

2. FAIR VALUE MEASURESMENTS

Cash, cash equivalents, available-for-sale investments, and contingent consideration were (in thousands):

				Gross		Gross				Cash and
		Amortized		Unrealized		Unrealized		Estimated		Cash		Short-Term
As of March 31, 2016		Costs		Gain		Loss		Fair Value		Equivalents		Investments
Cash	$	18,596	$	-	$	-	$	18,596	$	18,596	$	-
Level 1:
Money market funds		14,980		-		-		14,980		14,980		-
Mutual funds		2,000		-		(187)		1,813		-		1,813
Subtotal		35,576		-		(187)		35,389		33,576		1,813
Level 2:
Commercial paper		6,794		2		-		6,796		-		6,796
Corporate debt		85,164		78		(28)		85,214		-		85,214
Municipal securities		1,007		-		(1)		1,006		-		1,006
Asset backed securities		24,614		7		(11)		24,610		-		24,610
Mortgage backed securities		2,045		-		(17)		2,028		-		2,028
Agency bond		6,805		1		-		6,806		-		6,806
International government securities		1,000		1		-		1,001		-		1,001
Subtotal		127,429		89		(57)		127,461		-		127,461
Total assets	$	163,005	$	89	$	(244)	$	162,850	$	33,576	$	129,274
Level 3:
Contingent consideration	$	-	$	-	$	-	$	341	$	-	$	-
Total liabilities	$	-	$	-	$	-	$	341	$	-	$	-

				Gross		Gross				Cash and
		Amortized		Unrealized		Unrealized		Estimated		Cash		Short-Term
As of March 31, 2015		Costs		Gain		Loss		Fair Value		Equivalents		Investments
Cash	$	24,734	$	-	$	-	$	24,734	$	24,734	$	-
Level 1:
Money market funds		28,376		-		-		28,376		28,376		-
Mutual funds		2,000		-		(107)		1,893		-		1,893
Subtotal		55,110		-		(107)		55,003		53,110		1,893
Level 2:
Commercial paper		9,043		1		-		9,044		-		9,044
Corporate debt		75,284		57		(10)		75,331		-		75,331
Municipal securities		5,435		2		(1)		5,436		-		5,436
Asset backed securities		21,503		4		(5)		21,502		-		21,502
Mortgage backed securities		5,822		-		(52)		5,770		-		5,770
Agency bond		4,201		3		-		4,204		-		4,204
International government securities		800		4		-		804		-		804
Subtotal		122,088		71		(68)		122,091		-		122,091
Total	$	177,198	$	71	$	(175)	$	177,094	$	53,110	$	123,984

Contractual maturities of investments as of March 31, 2016 are set forth below (in thousands):

		Estimated
		Fair Value
Due within one year	$	71,071
Due after one year		58,203
Total	$	129,274

Contingent Consideration and Escrow Liability

The Company's contingent consideration liability and escrow liability, included in other accrued liabilities and noncurrent liabilities on the consolidated balance sheets, was associated with the Quality Software Corporation (QSC) acquisition made in the first quarter of fiscal 2016. Amounts held in escrow were measure at fair value using present value computations. The contingent consideration was measured at fair value using a probability weighted average of the potential payment outcomes that would occur should certain contract milestones be reached. There is no market data available to use in valuing the contingent consideration; therefore, the Company developed its own assumptions related to the achievement of the milestones to evaluate the fair value of the liability. As such, the contingent consideration is classified within Level 3 as described below.

The items are classified as Level 3 within the valuation hierarchy, consisting of contingent consideration and escrow liability related to the QSC acquisition, were valued based on an estimate of the probability of success of the milestones being achieved and present value computations, respectively. The table below presents a roll-forward of the contingent consideration and escrow liability valued using a Level 3 input (in thousands):

		Years Ended March 31,
		2016		2015
Balance at beginning of period	$	-	$	-
Purchase price contingent consideration		541		-
Contingent consideration payments		(200)		-
Balance at end of period	$	341	$	-

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INVENTORIES - Note 3

12 Months Ended

Mar. 31, 2016

Notes to Financial Statements

INVENTORIES - Note 3

3. INVENTORIES

Components of inventories were as follows (in thousands):

		March 31,
		2016		2015
Work-in-process	$	76	$	169
Finished goods		444		535
	$	520	$	704

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PROPERTY AND EQUIPMENT - Note 4

12 Months Ended

Mar. 31, 2016

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT - Note 4

4. PROPERTY AND EQUIPMENT

Property and equipment consisted of the following (in thousands):

		March 31,
		2016		2015
Machinery and computer equipment	$	20,040	$	16,099
Furniture and fixtures		1,067		759
Licensed software		6,350		4,696
Leasehold improvements		3,865		3,812
Construction in progress		967		942
		32,289		26,308
Less: accumulated depreciation and amortization		(19,914)		(16,060)
	$	12,375	$	10,248

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INTANGIBLE ASSETS - Note 5

12 Months Ended

Mar. 31, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

INTANGIBLE ASSETS - Note 5

5. INTANGIBLE ASSETS

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

		March 31, 2016						March 31, 2015
		Gross						Gross
		Carrying		Accumulated		Net Carrying		Carrying		Accumulated		Net Carrying
		Amount		Amortization		Amount		Amount		Amortization		Amount
Technology	$	18,640	$	(4,622)	$	14,018	$	8,242	$	(2,905)	$	5,337
Customer relationships		9,993		(4,847)		5,146		9,686		(3,720)		5,966
Trade names/domains		2,205		-		2,205		957		-		957
In-process research and development		95		-		95		-		-		-
Total acquired identifiable intangible assets	$	30,933	$	(9,469)	$	21,464	$	18,885	$	(6,625)	$	12,260

At March 31, 2016, annual amortization of intangible assets, based upon our existing intangible assets and current useful lives, is estimated to be the following (in thousands):

		Amount
2017	$	3,845
2018		3,577
2019		3,327
2020		3,327
2021		2,936
Thereafter		2,152
Total	$	19,164

Impairment of Long-Lived Assets

During the year ended March 31, 2016, the Company decided to end-of-life its hosted virtual desktop service (Zerigo). The Company evaluated long-lived assets related to Zerigo including the technology, customer relationships, and trade name intangible assets for impairment. The Company determined it was appropriate to record an impairment charge equal to the remaining value of the impaired long-lived assets in the third fiscal quarter. The impairment recorded during the fiscal year was $0.6 million, of which $0.4 million and $0.2 million was recorded in cost of service and sales and marketing, respectively, in the consolidated statements of operations. Revenues and net income (loss) from Zerigo were not material for all periods presented.

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GOODWILL - Note 6

12 Months Ended

Mar. 31, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL - Note 6

6. GOODWILL

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

		Americas		Europe		Total
Balance as of March 31, 2014	$	23,940	$	14,521	$	38,461
Foreign currency translation		-		(1,574)		(1,574)
Balance as of March 31, 2015		23,940		12,947		36,887
Additions due to acquisitions		1,789		10,125		11,914
Foreign currency translation		-		(1,381)		(1,381)
Balance as of March 31, 2016	$	25,729	$	21,691	$	47,420

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COMMITMENTS AND CONTINGENCIES - Note 7

12 Months Ended

Mar. 31, 2016

Notes to Financial Statements

COMMITMENTS AND CONTINGENCIES - Note 7

7. COMMITMENTS AND CONTINGENCIES

Guarantees

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 the Company's operating results, financial position or cash flows. Under some of these agreements, however, the Company's potential indemnification liability might not have a contractual limit.

Product Warranties

The Company accrues for the estimated costs that may be incurred under its product warranties upon revenue recognition. Changes in the Company's product warranty liability, which is included in cost of product revenues in the consolidated statements of operations were as follows (in thousands):

		Years Ended March 31,
		2016		2015		2014
Balance at beginning of year	$	339	$	660	$	452
Accruals for warranties		355		185		953
Settlements		(303)		(364)		(745)
Changes in estimate		(65)		(142)		-
Balance at end of year	$	326	$	339	$	660

Leases

The Company's operating lease obligations consist of the Company's principal facility and various leased facilities under operating lease agreements, which expire on various dates from fiscal 2017 through fiscal 2021. The Company leases its headquarters facility in San Jose, California under an operating lease agreement that expires in October 2019.

At March 31, 2016, future minimum annual lease payments under non-cancelable operating leases were as follows (in thousands):

Year ending March 31:
2017	$	3,663
2018		3,552
2019		3,645
2020		2,862
2021 and Thereafter		283
Total	$	14,005

Rent expense for the years ended March 31, 2016, 2015 and 2014 was $2.1 million, $1.8 million and $1.5 million, respectively.

Capital Leases

The Company has non-cancelable capital lease agreements for office and computer equipment bearing interest at various rates. At March 31, 2016, future minimum annual lease payments under non-cancelable capital leases were as follows (in thousands):

Year ending March 31:
2017	$	608
2018		540
2019		349
Total minimum payments		1,497
Less: Amount representing interest		(93)
		1,404
Less: Short-term portion of capital lease obligations		(588)
Long-term portion of capital lease obligations	$	816

Capital leases included in computer and office equipment were approximately $1.6 million and $0.5 million at March 31, 2016 and 2015, respectively. Total accumulated amortization was approximately $0.1 million and $0.3 million at March 31, 2016 and 2015, respectively. Amortization expense for assets recorded under capital leases is included in depreciation expense.

Minimum Third Party Customer Support Commitments

In the third quarter of 2010, the Company amended its contract with one of its third party customer support vendors containing a minimum monthly commitment of approximately $0.4 million effective April 1, 2010. As the agreement requires a 150-day notice to terminate, the total remaining obligation under the contract was $2.2 million at March 31, 2016.

Minimum Third Party Network Service Provider Commitments

The Company entered into contracts with multiple vendors for third party network service which expire on various dates in fiscal 2017 through 2018. At March 31, 2016, future minimum annual payments under these third party network service contracts were as follows (in thousands):

Year ending March 31:
2017	$	2,572
2018		891
Total minimum payments	$	3,463

Legal Proceedings

The Company, from time to time, is involved in various legal claims or litigation, including patent infringement claims that can arise in the normal course of the Company's operations. Pending or future litigation could be costly, could cause the diversion of management's attention and could upon resolution, have a material adverse effect on the Company's business, results of operations, financial condition and cash flows.

On February 22, 2011, the Company was named a defendant in Bear Creek Technologies, Inc. v. 8x8, Inc. et al., along with 20 other defendants. On August 17, 2011, the suit was dismissed without prejudice as to the Company under Rule 21 of the Federal Rules of Civil Procedure. On August 17, 2011, Bear Creek Technologies, Inc. refiled its suit against the Company in the United States District Court for the District of Delaware. Further, on November 28, 2012, the U.S. Patent & Trademark Office initiated a Reexamination proceeding with a Reexamination Declaration explaining that there is a substantial new question of patentability, based on four separate grounds and affecting each claim of the patent which is the basis for the complaint filed against us.  On March 26, 2013, the USPTO issued a first Office Action in the Reexamination, with all claims of the '722 patent being rejected on each of the four separate grounds raised in the Request for Reexamination.  On July 10, 2013, the Company filed an informational pleading in support of and joining a motion to stay the proceeding in the District Court; the District Court granted the motion on July 17, 2013, based on the possibility that at least one of the USPTO rejections will be upheld and considering the USPTO's conclusion that Bear Creek's patent suffers from a defective claim for priority.  On March 24, 2014, the USPTO issued another Office Action in which the rejections of the claims were maintained.  On August 15, 2014, the USPTO issued a Right of Appeal Notice, as the USPTO maintained all rejections of the patent claims. 

On September 15, 2014, Bear Creek Technologies, Inc. filed a Notice of Appeal of this decision with the Patent Trial and Appeal Board. The case is currently on appeal. The Company believes that it has meritorious defenses to these claims and is presenting a vigorous defense, but the Company cannot estimate potential liability in this case at this early stage of litigation.

On April 16, 2015, the Company was named as a defendant in Slocumb Law Firm v. 8x8, Inc. The Slocumb Law Firm has alleged that it purchased certain business services from the Company that did not perform as advertised or expected, and has asserted causes of actions for fraud, breach of contract, violations of the Alabama Deceptive Trade Practices Act and negligence. On May 7, 2015, the Company filed a motion with the U.S. District Court for the Middle District of Alabama, seeking an order compelling the Slocumb Law Firm to arbitrate its claims against the Company in Santa Clara County, California pursuant to a clause mandating arbitration of disputes set forth in the terms and conditions to which Slocumb Law Firm agreed in connection with its purchase of business services from the Company. No briefing schedule or hearing date for the motion has been set as of this time. Discovery has not yet commenced in the case. The Company intends to vigorously defend against Slocumb Law Firm's claims.

State and Municipal Taxes

From time to time, the Company has received inquiries from a number of state and municipal taxing agencies with respect to the remittance of taxes. Several jurisdictions currently are conducting tax audits of the Company's records. The Company collects or has accrued for taxes that it believes are required to be remitted. The amounts that have been remitted have historically been within the accruals established by the Company.

Regulatory

VoIP communication services, like the Company's, are subject to less regulation at the federal level than traditional telecommunication services and states are pre-empted from regulating such services. Many regulatory actions are underway or are being contemplated by federal and state authorities, including the FCC, and state regulatory agencies. The FCC initiated a notice of public rule-making in early 2004 to gather public comment on the appropriate regulatory environment for IP telephony which would include the services we offer. In November 2004, the FCC ruled that the VoIP service of a competitor and "similar" services are jurisdictionally interstate and not subject to state certification, tariffing and other legacy telecommunication carrier regulations.

The effect of any future laws, regulations and the orders on the Company's operations, including, but not limited to, the 8x8 service, cannot be determined. But as a general matter, increased regulation and the imposition of additional funding obligations increases the Company's costs of providing service that may or may not be recoverable from the Company's customers which could result in making the Company's services less competitive with traditional telecommunications services if the Company increases its retail prices or decreases the Company's profit margins if it attempts to absorb such costs.

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STOCKHOLDERS' EQUITY - Note 8

12 Months Ended

Mar. 31, 2016

Equity [Abstract]

STOCKHOLDERS' EQUITY - Note 8

8. STOCKHOLDERS' EQUITY

1996 Stock Plan

In June 1996, the Company's board of directors adopted the 1996 Stock Plan ("1996 Plan"). A total of 12,035,967 shares were reserved for issuance under the 1996 Plan prior to its expiration in June 2006. As of March, 31, 2016, there are no shares available for future grants under the 1996 Plan. The 1996 Plan provided for granting incentive stock options to employees and nonstatutory stock options to employees, directors or consultants. The stock option price of incentive stock options granted could not be less than the determined fair market value at the date of grant. Options generally vested over four years and had a ten-year term.

1996 Director Option Plan

The Company's 1996 Director Option Plan ("Director Plan") was adopted in June 1996 and became effective in July 1997. A total of 1,650,000 shares of common stock were reserved for issuance under the Director Plan prior to its expiration in June 2006. As of March 31, 2016 there are no shares available for future grants under the Director Plan. The Director Plan provided for both discretionary and periodic grants of nonstatutory stock options to non-employee directors of the Company (the "Outside Directors"). The exercise price per share of all options granted under the Director Plan was equal to the fair market value of a share of the Company's common stock on the date of grant. Options generally vested over a period of four years. Options granted to Outside Directors under the Director Plan had a ten year term, or shorter upon termination of an Outside Director's status as a director.

2006 Stock Plan

In May 2006, the Company's board of directors approved the 2006 Stock Plan ("2006 Plan").  The Company's stockholders subsequently adopted the 2006 Plan in September 2006, and the 2006 Plan became effective in October 2006.  The Company reserved 7,000,000 shares of the Company's common stock for issuance under this plan. As of March 31, 2016, 1,238 shares remained available for future grants under the 2006 Plan.  The 2006 Plan provides for granting incentive stock options to employees and nonstatutory stock options to employees, directors or consultants.  The stock option price of incentive stock options granted may not be less than the fair market value on the effective date of the grant. Other types of options and awards under the 2006 Plan may be granted at any price approved by the administrator, which generally will be the compensation committee of the board of directors. Options generally vest over four years and expire ten years after grant.  In 2009, the 2006 Plan was amended to provide for the granting of stock purchase rights. The 2006 Plan expires in May 2016.

2003 Contactual Plan

In the second fiscal quarter of 2012, the Company assumed the Amended and Restated Contactual, Inc. 2003 Stock Option Plan (the "2003 Contactual Plan") and registered an aggregate of 171,974 shares of the Company's common stock that may be issued upon the exercise of stock options previously granted under the 2003 Contactual Plan and assumed by the Company when it acquired Contactual. No new stock options or other awards can be granted under 2003 Contactual Plan.

2012 Equity Incentive Plan

In June 2012, the Company's board of directors approved the 2012 Equity Incentive Plan ("2012 Plan").  The Company's stockholders subsequently adopted the 2012 Plan in July 2012, and the 2012 Plan became effective in August 2012.  The Company reserved 4,100,000 shares of the Company's common stock for issuance under this plan. In August 2014, the 2012 Plan was amended to allow for an additional 6,800,000 shares reserved for issuance. As of March 31, 2016, 3,164,029 shares remained available under the 2012 Plan.  The 2012 Plan provides for granting incentive stock options to employees and nonstatutory stock options to employees, directors or consultants, and granting of stock appreciation rights, restricted stock, restricted stock units and performance units, qualified performance-based awards and stock grants. The stock option price of incentive stock options granted may not be less than the fair market value on the effective date of the grant. Other types of options and awards under the 2012 Plan may be granted at any price approved by the administrator, which generally will be the compensation committee of the board of directors. Options, restricted stock and restricted stock units generally vest over four years and expire ten years after grant. The 2012 Plan expires in June 2022.

2013 New Employee Inducement Incentive Plan

In September 2013, the Company's board of directors approved the 2013 New Employee Inducement Incentive Plan ("2013 Plan").  The Company reserved 1,000,000 shares of the Company's common stock for issuance under this plan. In November 2014, the 2013 Plan was amended to allow for an additional 1,200,000 shares reserved for issuance. In July 2015, the Plan was amended to allow for an additional 1,200,000 shares reserved for issuance. As of March 31, 2016, 700,021 shares remained available for future grants under the 2013 Plan.  The 2013 Plan provides for granting nonstatutory stock options, stock appreciation rights, restricted stock, restricted stock and performance units and stock grants solely to newly hired employees as a material inducement to accepting employment with the Company. Options are granted at market value on the grant date under the 2013 Plan, unless determined otherwise at the time of grant by the administrator, which generally will be the compensation committee of the board of directors. Options, generally expire ten years after grant. The 2013 Plan expires in September 2023.

Stock-Based Compensation

The following table summarizes stock-based compensation expense (in thousands):

		Years Ended March 31,
		2016		2015		2014
Cost of service revenue	$	1,159	$	692	$	372
Cost of product revenue		-		-		-
Research and development		2,914		1,495		967
Sales and marketing		6,133		3,748		2,217
General and administrative		6,128		3,412		4,039
Total stock-based compensation expense
related to employee stock options
and employee stock purchases, pre-tax		16,334		9,347		7,595
Tax benefit		-		-		-
Stock based compensation expense related to
employee stock options and employee
stock purchases, net of tax	$	16,334	$	9,347	$	7,595

Stock Options, Stock Purchase Right and Restricted Stock Unit Activity

Stock Option activity under all the Company's stock option plans since March 31, 2013, is summarized as follows:

			Weighted
			Average
			Exercise
	Number of		Price
	Shares		Per Share
Outstanding at March 31, 2013	5,991,544	$	2.52
Granted	1,465,400		9.66
Exercised	(1,283,470)		2.75
Canceled/Forfeited	(171,092)		5.25
Outstanding at March 31, 2014	6,002,382		4.14
Granted	1,110,466		7.29
Exercised	(1,326,385)		1.87
Canceled/Forfeited	(458,556)		6.06
Outstanding at March 31, 2015	5,327,907		5.19
Granted	723,776		8.63
Exercised	(1,162,175)		2.56
Canceled/Forfeited	(96,242)		8.06
Outstanding at March 31, 2016	4,793,266	$	6.29
Vested and expected to vest at March 31, 2016	4,793,266	$	6.29
Exercisable at March 31, 2016	2,950,697	$	4.99

Stock Purchase Right activity since March 31, 2013 is summarized as follows:

				Weighted
			Weighted	Average
			Average	Remaining
	Number of		Grant-Date	Contractual
	Shares		Fair Value	Term (in Years)
Balance at March 31, 2013	958,575	$	4.11	2.52
Granted	22,380		9.69
Vested	(392,844)		3.25
Forfeited	(98,484)		5.18
Balance at March 31, 2014	489,627		4.83	1.93
Granted	31,432		7.88
Vested	(223,360)		3.98
Forfeited	(73,864)		5.39
Balance at March 31, 2015	223,835		5.92	1.50
Granted	-		-
Vested	(115,789)		5.32
Forfeited	(25,875)		7.40
Balance at March 31, 2016	82,171	$	6.30	0.76

Restricted Stock Unit activity since March 31, 2013 is summarized as follows:

			Weighted	Weighted Average
	Number of		Average Grant	Remaining Contractual
	Shares		Date Fair Value	Term (in Years)
Balance at March 31, 2013	25,000	$	6.91	2.47
Granted	1,291,200		9.11
Vested	(133,000)		9.49
Forfeited	(48,344)		9.61
Balance at March 31, 2014	1,134,856		9.00	2.00
Granted	1,965,786		6.68
Vested	(187,788)		9.54
Forfeited	(214,168)		8.30
Balance at March 31, 2015	2,698,686		7.33	1.88
Granted	2,681,997		8.78
Vested	(589,788)		7.79
Forfeited	(246,096)		8.15
Balance at March 31, 2016	4,544,799	$	8.08	1.67

Significant option groups outstanding at March 31, 2016 and related weighted average exercise price, contractual life, and aggregate intrinsic value information for 8x8, Inc.'s stock option plans are as follows:

	Options Outstanding						Options Exercisable
			Weighted	Weighted					Weighted
			Average	Average					Average
			Exercise	Remaining		Aggregate			Exercise		Aggregate
			Price	Contractual		Intrinsic			Price		Intrinsic
	Shares		Per Share	Life (Years)		Value	Shares		Per Share		Value
$ 0.55 to $ 1.27	1,079,767	$	1.13	1.7	$	9,589,205	1,079,767	$	1.13	$	9,589,205
$ 1.33 to $ 6.86	1,500,242	$	5.77	7.0		6,368,920	1,000,701	$	5.27		4,744,126
$ 7.52 to $ 8.93	996,150	$	8.29	9.1		1,723,062	184,115	$	8.14		345,844
$ 9.21 to $ 9.74	983,835	$	9.62	7.5		384,463	603,302	$	9.63		232,944
$ 10.50 to $ 11.26	233,272	$	10.95	8.5		-	82,812	$	11.10		-
	4,793,266				$	18,065,650	2,950,697			$	14,912,119

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the aggregate difference between the closing stock price of the Company's common stock on March 31, 2016 and the exercise price for in-the-money options) that would have been received by the option holders if all in-the-money options had been exercised on March 31, 2016.

The total intrinsic value of options exercised in the years ended March 31, 2016, 2015 and 2014 was $9.2 million, $8.1 million and $8.2 million, respectively. As of March 31, 2016, there was $34.8 million of unamortized stock-based compensation expense related to unvested stock options and awards which is expected to be recognized over a weighted average period of 2.59 years.

Unamortized stock-based compensation expense related to shares issued as part of the DXI acquisition (see Note 13) was approximately $1.8 million, which will be recognized over a weighted average period of 3.17 years.

Cash received from option exercises and purchases of shares under the Equity Compensation Plans for the years ended March 31, 2016, 2015 and 2014 were $4.8 million, $4.5 million and $5.2 million, respectively. The total tax benefit attributable to stock options exercised in the year ended March 31, 2016, 2015 and 2014 was $224,000, $151,000 and $142,000, respectively.

1996 Employee Stock Purchase Plan

The Company's 1996 Stock Purchase Plan ("Employee Stock Purchase Plan") was adopted in June 1996 and became effective upon the closing of the Company's initial public offering in July 1997. The Company suspended the Employee Stock Purchase Plan in 2003 and reactivated the Employee Stock Purchase Plan in fiscal 2005. Under the Employee Stock Purchase Plan, 500,000 shares of common stock were initially reserved for issuance. At the start of each fiscal year, the number of shares of common stock subject to the Employee Stock Purchase Plan increases so that 500,000 shares remain available for issuance. During fiscal 2016, 2015 and 2014, 365,555, 282,062 and 301,303 shares, respectively, were issued under the Employee Stock Purchase Plan. In May 2006, the Company's board of directors approved a ten-year extension of the Employee Stock Purchase Plan. Stockholders approved a ten-year extension of the Employee Stock Purchase Plan at the 2006 Annual Meeting of Stockholders held September 18, 2006. The Employee Stock Purchase Plan is effective until August 2017.

The Employee Stock Purchase Plan permits eligible employees to purchase common stock through payroll deductions at a price equal to 85% of the fair market value of the common stock at the beginning of each two year offering period or the end of a six month purchase period, whichever is lower. When the Employee Stock Purchase Plan was reinstated in fiscal 2005, the offering period was reduced from two years to one year. The contribution amount may not exceed ten percent of an employee's base compensation, including commissions, but not including bonuses and overtime. In the event of a merger of the Company with or into another corporation or the sale of all or substantially all of the assets of the Company, the Employee Stock Purchase Plan provides that a new exercise date will be set for each option under the plan which exercise date will occur before the date of the merger or asset sale.

Assumptions Used to Calculate Stock-Based Compensation Expense

The fair value of each of the Company's option grants has been estimated on the date of grant using the Black-Scholes pricing model with the following assumptions:

		Years Ended March 31,
		2016		2015		2014
Expected volatility		53%		61%		64%
Expected dividend yield		-		-		-
Risk-free interest rate		1.5% to 1.8%		1.4% to 1.9%		0.7% to 2.2%
Weighted average expected option term		5.4 years		6.0 years		6.1 years
Weighted average fair value of options granted	$	4.17	$	4.14	$	5.70

The estimated fair value of stock purchase rights granted under the Employee Stock Purchase Plan was estimated using the Black-Scholes pricing model with the following weighted-average assumptions:

		Years Ended March 31,
		2016		2015		2014
Expected volatility		43%		49%		40%
Expected dividend yield		-		-		-
Risk-free interest rate		0.39%		0.12%		0.09%
Weighted average expected rights term		0.83 years		0.80 years		0.75 years
Weighted average fair value of rights granted	$	3.25	$	2.52	$	2.83

Stock Repurchases

In February 2015, the Company's board of directors authorized the Company to purchase up to $20.0 million of its common stock from time to time until February 29, 2016 (the "2015 Repurchase Plan"). Share repurchases, if any, will be funded with available cash. Repurchases under the Repurchase Plan may be made through open market purchases at prevailing market prices or in privately negotiated transactions. The timing, volume and nature of share repurchases are subject to market prices and conditions, applicable securities laws and other factors, and are at the discretion of the Company's management. Share repurchases under the Repurchase Plan may be commenced, suspended or discontinued at any time. This tranche of shares authorized for repurchase expired in February 2016.

In October 2015, the Company's board of directors authorized the Company to purchase an additional $15.0 million of its common stock from time to time until October 20, 2016 under the 2015 Repurchase Plan. The remaining authorized repurchase amount at March 31, 2016 was approximately $15.0 million.

The stock repurchase activity as of March 31, 2016 is summarized as follows:

			Weighted
			Average
	Shares		Price		Amount
	Repurchased		Per Share		Repurchased(1)
Balance as of March 31, 2014	-				-
Repurchase of common stock
under 2015 Repurchase Plan	2,488,215	$	7.38	$	19,200,393
Balance as of March 31, 2015	2,488,215		7.38		19,200,393
Repurchase of common stock
under 2015 Repurchase Plan	1,392,135		8.02		11,164,329
Balance as of March 31, 2016	3,880,350	$	7.83	$	30,364,722
(1) Amount excludes commission fees.

The total purchase prices of the common stock repurchased and retired were reflected as a reduction to consolidated stockholders' equity during the period of repurchase.

In fiscal 2016, 2015 and 2014, the Company also withheld 30,702, 15,053, and 50,400 shares, respectively, shares related to tax withholdings on restricted stock awards with a total price of $0.5 million, $0.1 million, and $0.5 million, respectively.

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INCOME TAXES - Note 9

12 Months Ended

Mar. 31, 2016

Notes to Financial Statements

INCOME TAXES - Note 9

9. INCOME TAXES

For the years ended March 31, 2016, 2015 and 2014, the Company recorded a (benefit) provision for income taxes of approximately ($0.8) million, $2.8 million and $2.2 million, respectively. The provision in each year was attributable to federal and state current and deferred taxes.  The components of the consolidated (benefit) provision for income taxes for fiscal 2016, 2015 and 2014 consisted of the following (in thousands):

		March 31,
Current:		2016		2015		2014
Federal	$	97	$	92	$	-
State		551		457		276
Foreign		71		1		-
Total current tax provision		719		550		276
Deferred
Federal	$	95	$	2,602	$	1,578
State		(854)		(363)		365
Foreign		(807)		-		-
Total deferred tax (benefit) provision		(1,566)		2,239		1,943
Income tax (benefit) provision	$	(847)	$	2,789	$	2,219

The Company's income (loss) from continuing operations before income taxes included $6.9 million, $3.5 million and $0.8 million of foreign subsidiary loss for the fiscal years ended March 31, 2016, 2015 and 2014, respectively. TheCompany is permanently reinvesting the earnings of its profitable foreign subsidiaries. The company intends to reinvest these profits in expansion of overseas operations. If the Company were to remit these earnings, the tax impact would be immaterial.

Deferred tax assets were comprised of the following (in thousands):

		March 31,
Current deferred tax assets		2016		2015
Net operating loss carryforwards	$	2,739	$	2,179
Inventory valuation		14		14
Reserves and allowances		2,740		2,394
Net current deferred tax assets		5,493		4,587
Net operating loss carryforwards		38,449		44,228
Research and development and other credit carryforwards		7,106		5,414
Stock-based compensation		5,577		3,164
Fixed assets and intangibles		(6,160)		(4,869)
Net non-current deferred tax assets		44,972		47,937
Valuation allowance		(3,760)		(4,901)
Total	$	46,705	$	47,623

As of March 31, 2016 and 2015, management assessed the realizability of deferred tax assets based on the available evidence, including a history of taxable income and estimates of future taxable income. At March 31, 2016, management evaluated the need for a valuation allowance and determined that a valuation allowance of approximately $3.8 million was needed. At March 31, 2015, management evaluated the need for a valuation allowance and determined that a valuation allowance of approximately $4.9 million was needed. The net change in the valuation allowance for the years ended March 31, 2015 and 2014 was a decrease of $1.1 million and an increase of $0.7 million, respectively.

At March 31, 2016, the Company had net operating loss carryforwards for federal and state income tax purposes of approximately $137.9 million and $38.7 million, respectively, which expire at various dates between 2017 and 2036. The net operating loss carryforwards include approximately $40.7 million resulting from employee exercises of non-qualified stock options or disqualifying dispositions of incentive stock options, the tax benefits of which, when realized, will be accounted for as an addition to additional paid-in capital rather than as a reduction of the provision for income taxes. In addition, at March 31, 2016, the Company had research and development credit carryforwards for federal and California tax reporting purposes of approximately $4.5 million and $6.2 million, respectively. The federal income tax credit carryforwards will expire at various dates between 2021 and 2036, while the California income tax credits will carry forward indefinitely. A reconciliation of the Company's provision (benefit) for income taxes to the amounts computed using the statutory U.S. federal income tax rate of 34% is as follows (in thousands):

		Years Ended March 31,
		2016		2015		2014
Tax provision at statutory rate	$	(2,029)	$	1,599	$	1,285
State income taxes before valuation allowance,
net of federal effect		9		269		196
Foreign tax rate differential		(769)		-		-
Research and development credits		(1,253)		(725)		(1,534)
Change in valuation allowance		(1,555)		(1,480)		1,264
Compensation/option differences		(471)		(331)		(264)
Non-deductible compensation		944		746		605
Acquisition costs		230		-		230
Expiring CA NOLs		1,626		1,484		240
Foreign loss not benefited		2,342		1,192		271
Other		79		35		(74)
Total income tax provision	$	(847)	$	2,789	$	2,219

The Company recognizes the tax benefit from uncertain tax positions if it is more likely than not that the tax positions will be sustained on examination by the tax authorities, based on the technical merits of the position. The tax benefit is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

		Unrecognized Tax Benefits
		2016		2015		2014
Balance at beginning of year	$	2,420	$	2,165	$	3,024
Gross increases - tax position in prior period		82		27		-
Gross decreases - tax position in prior period		-		-		(1,081)
Gross increases - tax positions related to the current year		379		228		222
Balance at end of year	$	2,881	$	2,420	$	2,165

At March 31, 2016, the company had a liability for unrecognized tax benefits of $2.9 million, all of which, if recognized, would decrease the company's effective tax rate. The Company does not expect its unrecognized tax benefits to change significantly over the next 12 months.

The Company files U.S. federal and state income tax returns in jurisdictions with varying statutes of limitations. The Company has not been under examination by income tax authorities in federal, state or other foreign jurisdictions. The 1997 through fiscal 2016 tax years generally remain subject to examination by federal and most state tax authorities.

The Company's policy for recording interest and penalties associated with tax examinations is to record such items as a component of operating expense income before taxes. During the fiscal year ended March 31, 2016, 2015 and 2014, the Company did not recognize any interest or penalties related to unrecognized tax benefits.

Utilization of the Company's net operating loss 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. Such an annual limitation could result in the expiration or elimination of the net operating loss and tax credit carryforwards before utilization. The Company has performed an analysis of its changes in ownership under Section 382 of the Internal Revenue Code. The Company currently believes that the Section 382 limitation will not limit utilization of the carryforwards prior to their expiration, with the exception of certain acquired loss and tax credit carryforwards of Contactual, Inc.

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EMPLOYEE BENEFIT PLAN - Note 10

12 Months Ended

Mar. 31, 2016

Postemployment Benefits [Abstract]

EMPLOYEE BENEFIT PLAN - Note 10

10. EMPLOYEE BENEFIT PLAN

401(k) Savings Plan

In April 1991, the Company adopted a 401(k) savings plan (the "Savings Plan") covering substantially all of its U.S. employees. Eligible employees may contribute to the Savings Plan from their compensation up to the maximum allowed by the Internal Revenue Service. In January 2007, the Company reactivated the employer matching contribution. The matching contribution is 100% of each employee's contributions in each year, not to exceed $1,500 per annum. The matching expense in 2016, 2015 and 2014 was $0.9 million, $0.7 million and $0.4 million, respectively. The Savings Plan does not allow employee contributions to be invested in the Company's common stock.

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NET INCOME (LOSS) PER SHARE - Note 11

12 Months Ended

Mar. 31, 2016

Notes to Financial Statements

NET INCOME (LOSS) PER SHARE - Note 11

11. NET INCOME (LOSS) PER SHARE

The following is a reconciliation of the weighted average number of common shares outstanding used in calculating basic and diluted net income (loss) per share (in thousands, except share and per share data):

		Years Ended March 31,
		2016		2015		2014
		(In Thousands, Except Per Share Amounts)
Numerator:
Income (loss) from continuing operations	$	(5,120)	$	1,926	$	1,598
Income from discontinued operations, net
of income tax provision		-		-		916
Net income (loss) available to common stockholders	$	(5,120)	$	1,926	$	2,514
Denominator:
Common shares		88,477		89,071		78,310
Denominator for basic calculation		88,477		89,071		78,310
Employee stock options		-		2,088		2,927
Employee restricted purchase rights		-		493		421
Denominator for diluted calculation		88,477		91,652		81,658
Income (loss) per share - continuing operations:
Basic	$	(0.06)	$	0.02	$	0.02
Diluted	$	(0.06)	$	0.02	$	0.02
Income per share - discontinued operations:
Basic	$	0.00	$	0.00	$	0.01
Diluted	$	0.00	$	0.00	$	0.01
Net income (loss) per share:
Basic	$	(0.06)	$	0.02	$	0.03
Diluted	$	(0.06)	$	0.02	$	0.03

The following shares attributable to outstanding stock options and restricted stock purchase rights were excluded from the calculation of diluted earnings per share because their inclusion would have been antidilutive (in thousands):

	Years Ended March 31,
	2016	2015	2014
Common stock options	2,193	1,812	750
Stock purchase rights	50	57	18
	2,243	1,869	768

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SEGMENT REPORTING - Note 12

12 Months Ended

Mar. 31, 2016

Segment Reporting [Abstract]

SEGMENT REPORTING - Note 12

12. SEGMENT REPORTING

ASC 280, Segment Reporting, establishes annual and interim reporting standards for an enterprise's business segments and related disclosures about its products, services, geographic areas and major customers. Under ASC 280, the method for determining what information to report is based upon the way management organizes the operating segments within the Company for making operating decisions and assessing financial performance.

The Company manages its operations primarily on a geographic basis. The Chief Executive Officer, the Chief Financial Officer, and the Chief Technology Officer or the Company's Chief Operating Decision Makers (CODMs), evaluate performance of the Company and make decisions regarding allocation of resources based on geographic results. The Company's reportable segments are the Americas and Europe. The Americas segment is primarily North America. The Europe segment is primarily the United Kingdom. Each operating segment provides similar products and services.

The Company's CODMs evaluate the performance of its operating segments based on revenues and net income. Revenues are attributed to each segment based on the ordering location of the customer or ship to location. The Company does not allocate research and development, sales and marketing, general and administrative, amortization expense, stock-based compensation expense, and commitment and contingencies for each segment as management does not consider this information in its evaluation of the performance of each operating segment. The Company's revenue distribution by geographic region (based upon the destination of shipments and the customer's service address) was as follows:

	Years Ended March 31,
	2016	2015	2014
Americas (principally US)	87%	92%	97%
Europe	12%	7%	2%
Asia Pacific	1%	1%	1%
	100%	100%	100%

Geographic area data is based upon the location of the property and equipment and is as follows (in thousands):

		March 31,
		2016		2015
Americas (principally US)	$	9,165	$	8,348
Europe		2,642		1,411
Asia-Pacific		568		489
	$	12,375	$	10,248

The following table provides financial information by segment (in thousands):

		Years Ended March 31,
		2016		2015		2014
Americas (principally US):
Net Revenue	$	185,241	$	150,764	$	125,270
Net Income	$	940	$	5,433	$	3,296
Europe (principally UK):
Net Revenue	$	24,095	$	11,649	$	3,327
Net loss	$	(6,060)	$	(3,507)	$	(782)

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ACQUISITION - Note 13

12 Months Ended

Mar. 31, 2016

Business Combinations [Abstract]

ACQUISITION - Note 13

13. ACQUISITION

Voicenet Solutions Limited

On November 11, 2013, the Company entered into a share purchase agreement with the shareholders and optionholders of Voicenet Solutions Limited ("Voicenet"), a provider of cloud communications and collaboration services in the United Kingdom. The total consideration transferred for Voicenet was approximately $19.3 million. The Company recorded $2.9 million of net tangible assets, $4.1 million in current and non-current liabilities, $6.4 million of identifiable intangible assets, based on their estimated fair values, and $14.1 million of residual goodwill.

DXI Group Limited

On May 26, 2015, the Company entered into a share purchase agreement with the shareholders of DXI Limited, and its wholly owned subsidiaries, (collectively, DXI) for the purchase of the entire share capital of DXI. The transaction closed effective May 29, 2015 and was not subject to regulatory approvals. The total aggregate purchase price was approximately $22.5 million, consisting of $18.7 million in cash paid to the DXI shareholders at closing, and $3.8 million in cash deposited into escrow to be held for two years as security against indemnity claims made by the Company after the closing date. Approximately 352,000 shares of common stock valued at approximately $3.0 million were issued only to former management shareholders of DXI as part of the share purchase agreement and are subject to certain restrictions, including a four-year annual vesting requirement based on the continued employment of such shareholders. The shares are considered post-acquisition compensation and are not included in the consideration transferred. The value of the shares will be amortized over the vesting period of forty-eight months. The shares are further subject to indemnity claims asserted by the Company prior to vesting. Vesting of the shares is subject to acceleration in the event of the shareholder's death or disability, or upon an employment termination without adequate cause, as provided in the share purchase agreement. The cash escrow also applies only to the management shareholders of DXI and is to be released in annual installments over two years. The share purchase agreement contains representations and warranties by the management shareholders that are customary in the UK for transactions of this size and nature. The Company also awarded restricted stock units representing the right to receive approximately 53,000 shares of common stock that were valued at approximately $482,000 to certain continuing employees of DXI, which will be amortized as stock-based compensation over the requisite service period.

The Company recorded the acquired tangible and identifiable intangible assets and liabilities assumed based on their estimated fair values. The excess of the consideration transferred over the aggregate fair values of the assets acquired and liabilities assumed is recorded as goodwill. The amount of goodwill recognized is primarily attributable to the expected contributions of the entity to the overall corporate strategy in addition to synergies and acquired workforce of the acquired business. The finite-lived intangible assets consist of the following: customer relationships, with an estimated weighted-average useful life of two and five years; and developed technology, with an estimated weighted-average useful life of six years. The indefinite lived intangible asset consisted of a tradename. The fair value assigned to identifiable intangible assets acquired was based on estimates and assumptions made by management using various income approach methods. Intangible assets are amortized on a straight-line basis.

The fair values of the assets acquired and liabilities assumed are as follows (in thousands):

		Fair Value
Assets acquired:
Cash	$	1,318
Current assets		2,016
Property and equipment		1,453
Intangible assets		13,374
Total assets acquired		18,161
Liabilities assumed:
Current liabilities and non-current liabilities		(5,734)
Total liabilities assumed		(5,734)
Net identifiable assets acquired		12,427
Goodwill		10,125
Total consideration transferred	$	22,552

None of the goodwill recognized is expected to be deductible for income tax purposes.

DXI contributed revenue of approximately $10.0 million and a net loss of approximately ($3.2) million for the period from the date of acquisition to March 31, 2016. Total acquisition related costs were approximately $0.9 million. which were included in general and administrative expenses. The Company determined that it is impractical to include pro forma information given the difficulty in obtaining the historical financial information of DXI. Inclusion of such information would require the Company to make estimates and assumptions regarding DXI's historical financial results that we believe may ultimately prove inaccurate.

In the second quarter of fiscal 2016, the Company updated its analysis of the valuation of the assets and liabilities acquired, which resulted in an increase of approximately $1.1 million to goodwill, a decrease in intangible assets of approximately $1.3 million, and a decrease to current and non-current liabilities of $0.2 million, compared with the preliminary estimates recorded for the first quarter of fiscal 2016. The impact of the change in preliminary values on the first quarter of fiscal 2016 statement of operations was not material. Therefore, no measurement period adjustment was required.

Quality Software Corporation

On June 3, 2015, the Company entered into an asset purchase agreement with the shareholder of QSC and other parties affiliated with the shareholder and QSC for the purchase of certain assets as per the purchase agreement. The total aggregate fair value of the consideration was approximately $2.9 million, which $2.2 million was paid in cash to the QSC shareholder at closing. As part of the aggregate purchases price, there is also $0.5 million in contingent consideration payable subject to attainment of certain revenue and product release milestones for the acquired business, and $0.3 million in cash held by the Company in escrow to be retained for two years as security against indemnity claims made by the Company after the closing date. The preliminary fair value of the contingent consideration and escrow amounts was $0.7 million at the acquisition date.

The Company recorded the acquired identifiable intangible assets and liabilities assumed based on their estimated fair values. The excess of the consideration transferred over the aggregate fair values of the assets acquired and liabilities assumed is recorded as goodwill. The amount of goodwill recognized is primarily attributable to the expected contributions of the entity to the overall corporate strategy in addition to synergies and acquired workforce of the acquired business. The finite-lived intangible assets consist of the following: customer relationships, with an estimated weighted-average useful life of five years; and developed technology, with an estimated weighted-average useful life of six years. The indefinite lived intangible asset consisted of in-process research and development and a tradename. The fair value assigned to identifiable intangible assets acquired was based on estimates and assumptions made by management using various income approach methods. Intangible assets are amortized on a straight-line basis.

The fair values of the assets acquired and liabilities assumed are as follows (in thousands):

		Fair Value
Assets acquired:
Intangible assets	$	1,100
Goodwill		1,789
Total consideration transferred	$	2,889

QSC's contributions to revenue and income for the period from the date of acquisition to March 31, 2016 were not material. Total acquisition related costs were approximately $0.1 million, which were included in general and administrative expenses. The Company determined that the acquisition was not deemed to be a material business combination and it is impractical to include such pro forma information given the difficulty in obtaining the historical financial information of QSC. Inclusion of such information would require the Company to make estimates and assumptions regarding QSC's historical financial results that we believe may ultimately prove inaccurate.

In the fourth quarter of fiscal 2016, the Company updated its analysis of the valuation of the assets and liabilities acquired, which resulted in an increase of approximately $125,000 to goodwill, and a decrease in intangible assets of approximately $125,000, compared with what was recorded for the third quarter of fiscal 2016. The impact of the change in preliminary values on the first quarter of fiscal 2016 statement of operations was not material. Therefore, no measurement period adjustment was required.

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GAIN ON SETTLEMENT OF ESCROW CLAIM - Note 14

12 Months Ended

Mar. 31, 2016

Other Income and Expenses [Abstract]

GAIN ON SETTLEMENT OF ESCROW CLAIM - Note 14

14. GAIN ON SETTLEMENT OF ESCROW CLAIM

In December 2013, the Company settled an escrow claim for indemnification with the sellers of Contactual, Inc. Under the terms of the settlement, the Company recorded a gain of $0.6 million in other income, net, in the consolidated statement of operations for the year ended March 31, 2014. Under the terms of the Contactual merger agreement and the escrow agreement, each indemnifying seller paid his, her or its pro rata share of the obligations owed to the Company on January 29, 2014. Upon receipt of the cash on January 29, 2014, the Company released the remaining escrow account balance to the sellers of Contactual Inc.

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PATENT SALE - Note 15

12 Months Ended

Mar. 31, 2016

Notes to Financial Statements

PATENT SALE - Note 15

15. PATENT SALE

In June 2012, the Company entered into a patent purchase agreement and sold a family of patents to a third party for approximately $12.0 million plus a future payment of up to a maximum of $3.0 million based on future license agreements entered into by the third party purchaser. In August 2014 and February 2013, the third party entered into two separate license agreements with its customers; therefore, the Company earned an additional $1.0 million each under the patent purchase agreement for fiscal 2015 and 2013. Under the terms and conditions of the patent purchase agreement, the Company has retained certain limited rights to continue to use the patents. The patent purchase agreement contains representations and warranties customary for transactions of this type.

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DISCONTINUED OPERATIONS - Note 16

12 Months Ended

Mar. 31, 2016

Discontinued Operations - Note 16

DISCONTINUED OPERATIONS - Note 16

16. DISCONTINUED OPERATIONS

On September 30, 2013, the Company completed the sale of its dedicated server hosting business to IRC Company, Inc. ("IRC") and, as a result, no longer provides dedicated server hosting services. In the transaction, IRC purchased 100% of the stock of Central Host, Inc., which had been wholly owned by the Company and all of the assets specific to the dedicated server hosting business.

The Company sold its dedicated server hosting business for total consideration of $3.0 million in cash, which was received on October 1, 2013.

The dedicated server hosting business has been reported as discontinued operations. The results of operations of these discontinued operations are as follows:

		Years Ended March 31,
		2016		2015		2014
Revenue	$	-	$	-	$	1,430
Operating expense		-		-		922
Income before income taxes		-		-		508
Provision for income taxes		-		-		188
Income from discontinued operations		-		-		320
Gain on disposal of discontinued operations,
net of income tax provision of $456		-		-		596

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CONSOLIDATED QUARTERLY FINANCIAL DATA (Unaudited) - Note 17

12 Months Ended

Mar. 31, 2016

Consolidated Quarterly Financial Data

CONSOLIDATED QUARTERLY FINANCIAL DATA (Unaudited) - Note 17

17. CONSOLIDATED QUARTERLY FINANCIAL DATA (UNAUDITED)

In thousands, except per share data amounts:

		QUARTER ENDED
		March 31,		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Sept. 30,		June 30,
		2016		2015		2015		2015		2015		2014		2014		2014
Service revenue	$	52,174	$	48,948	$	46,951	$	44,168	$	40,009	$	37,802	$	36,121	$	34,276
Product revenue		5,160		4,220		3,991		3,724		3,521		3,570		3,477		3,637
Total revenue		57,334		53,168		50,942		47,892		43,530		41,372		39,598		37,913
Operating expenses:
Cost of service revenue		9,720		9,713		9,186		8,459		7,655		7,544		7,505		6,997
Cost of product revenue		6,103		5,087		4,596		4,382		4,173		3,959		3,762		3,969
Research and development		6,110		6,404		6,446		5,080		4,348		3,868		3,496		3,406
Sales and marketing		31,240		27,585		26,730		23,824		21,508		20,559		19,440		19,160
General, and administrative		7,132		6,888		5,657		6,068		5,794		4,617		3,893		3,878
Gain on patent sale		-		-		-		-		-		-		(1,000)		-
Total operating expenses		60,305		55,677		52,615		47,813		43,478		40,547		37,096		37,410
Income (loss) from operations		(2,971)		(2,509)		(1,673)		79		52		825		2,502		503
Other income, net		397		272		204		234		210		246		200		177
Income (loss) from
operations before provision
(benefit) for income taxes		(2,574)		(2,237)		(1,469)		313		262		1,071		2,702		680
Provision (benefit) for
income taxes (1)		(1,498)		(557)		423		785		79		627		1,411		672
Net income (loss)	$	(1,076)	$	(1,680)	$	(1,892)	$	(472)	$	183	$	444	$	1,291	$	8
Net income (loss) per share:
Basic	$	(0.01)	$	(0.02)	$	(0.02)	$	(0.01)	$	0.00	$	0.01	$	0.01	$	0.00
Diluted	$	(0.01)	$	(0.02)	$	(0.02)	$	(0.01)	$	0.00	$	0.01	$	0.01	$	0.00
Shares used in per share calculations:
Basic		88,888		88,289		88,557		88,233		88,950		89,594		89,073		88,592
Diluted		88,888		88,289		88,557		88,233		91,266		91,974		91,615		91,445

(1) Comparability affected by the decrease in fiscal 2016 and 2015 in the valuation allowance related to the deferred tax asset which resulted in a decrease in the provision for income taxes of $1.1 million and $1.5 million, in the fourth quarter of fiscal 2016 and 2015, respectively.

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Schedule II Valuation and Qualifying Accounts

12 Months Ended

Mar. 31, 2016

Chedule Ii Valuation And Qualifying Accounts

Schedule of Valuation and Qualifying Accounts Disclosure

SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(in thousands)

		Balance at		Additions				Balance
		Beginning		Charged to				at End
Description		of Year		Expenses		Deductions (a)		of Year
Total Allowance for Doubtful Accounts:
Year ended March 31, 2014:	$	327	$	571	$	(432)	$	466
Year ended March 31, 2015:	$	466	$	279	$	(329)	$	416
Year ended March 31, 2016:	$	416	$	509	$	(339)	$	586

(a) The deductions related to allowance for doubtful accounts represent accounts receivable which are written off.

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Mar. 31, 2016

Notes to Financial Statements

Company

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 provider of cloud-based, enterprise-class software solutions that transform the way businesses communicate and collaborate globally. The Company's comprehensive software platform brings together the power of cloud, mobile, collaboration, video and data science technologies to enhance the way employees communicate with each other, and how they connect and interact with their customers. The Company's integrated, "pure-cloud" offering combines global voice, conferencing, messaging and video with integrated workflows and big data analytics on a single platform to enable increased team productivity, better customer engagement and real-time insights into business performance. Since fiscal 2004, substantially all of our revenue has been generated from the sale, license and provision of communications services. Prior to fiscal 2003, our focus was on our Voice over Internet Protocol semiconductor business.

Fiscal Period

The Company's fiscal year ends on March 31 of each calendar year. Each reference to a fiscal year in these notes to the consolidated financial statements refers to the fiscal year ended March 31 of the calendar year indicated (for example, fiscal 2016 refers to the fiscal year ended March 31, 2016).

Reclassification

Certain amounts previously reported within the Company's consolidated balance sheets and statements of cash flows have been reclassified to conform to the current period presentation. The reclassifications had no impact on the Company's previously reported net income (loss), cash flows, or basic or diluted net income per share amounts.

Principles of Consolidation

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of 8x8 and its subsidiaries. All material intercompany accounts and transactions have been eliminated.

Use of Estimates

USE OF ESTIMATES

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and equity and 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 on-going basis, the Company evaluates its estimates, including, but not limited to, those related to bad debts, returns reserve for expected cancellations, valuation of inventories, income and sales tax, and litigation and other contingencies. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities, and equity that are not readily apparent from other sources. Actual results could differ from those estimates under different assumptions or conditions.

Service Revenue

Service Revenue

The Company recognizes service revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, price is fixed or determinable and collectability is reasonably assured. The Company defers recognition of service revenues in instances when cash receipts are received before services are delivered and recognizes deferred revenues ratably as services are provided.

Under the terms of the Company's typical subscription agreement, new customers can terminate their service within 30 days of order placement and receive a full refund of fees previously paid. The Company has determined that it has sufficient history of subscriber conduct to make a reasonable estimate of cancellations within the 30-day trial period. Therefore, the Company recognizes new subscriber revenue that is fixed or determinable and that are not contingent on future performance or future deliverables in the month in which the new order was shipped, net of an allowance for expected cancellations.

Product Revenue

Product Revenue

The Company recognizes revenue from product sales for which there are no related services to be rendered upon shipment to customers provided that persuasive evidence of an arrangement exists, the price is fixed or determinable, title has transferred, collection of resulting receivables is reasonably assured, there are no customer acceptance requirements, and there are no remaining significant obligations. Gross outbound shipping and handling charges are recorded as revenue, and the related costs are included in cost of goods sold. Reserves for returns and allowances for customer sales are recorded at the time of shipment. In accordance with the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 605, Revenue Recognition, the Company records shipments to distributors, retailers, channel partners, and resellers, where the right of return exists, as deferred revenue. The Company defers recognition of revenue on product sales to distributors, retailers, channel partners, and resellers until the products have been sold to the end customer.

The Company records revenue net of any sales and service related taxes and mandatory government charges that are billed to its customers. The Company believes this approach results in consolidated financial statements that are more easily understood by users.

Under the terms of the Company's typical subscription agreement, new customers can terminate their service within 30 days of order placement and receive a full refund of fees previously paid. The Company has determined that it has sufficient history of subscriber conduct to make a reasonable estimate of cancellations within the 30-day trial period. Therefore, the Company recognizes new subscriber revenue that is fixed or determinable and that are not contingent on future performance or future deliverables in the month in which the new order was shipped, net of an allowance for expected cancellations.

Revenue Recognition for Multiple Element Arrangements

Multiple Element Arrangements

ASC 605-25, Revenue Recognition - Multiple Element Arrangements, requires that revenue arrangements with multiple deliverables be divided into separate units of accounting if the deliverables in the arrangement meet specific criteria.  The provisioning of the 8x8 cloud service with the accompanying 8x8 IP telephone constitutes a revenue arrangement with multiple deliverables.  For arrangements with multiple deliverables, the Company allocates the arrangement consideration to all units of accounting based on their relative selling prices. In such circumstances, the accounting principles establish a hierarchy to determine the relative selling price to be used for allocating arrangement consideration to units of accounting as follows: (i) vendor-specific objective evidence of fair value ("VSOE"), (ii) third-party evidence of selling price ("TPE"), and (iii) best estimate of the selling price ("BESP").

VSOE generally exists only when the Company sells the deliverable separately, on more than a limited basis, at prices within a relatively narrow range.  When VSOE cannot be established, the Company attempts to establish the selling price of deliverables based on relevant TPE. TPE is determined based on manufacturer's prices for similar deliverables when sold separately, when possible. When the Company is unable to establish selling price using VSOE or TPE, it uses a BESP for the allocation of arrangement consideration. The objective of BESP is to determine the price at which the Company would transact a sale if the product or service was sold on a stand-alone basis. BESP is generally used for offerings that are not typically sold on a stand-alone basis or for new or highly customized offerings. The Company determines BESP for a product or service by considering multiple factors including, but not limited to:

• the price list established by its management which is typically based on general pricing practices and targeted gross margin of products and services sold; and
• analysis of pricing history of new arrangements, including multiple element and stand-alone transactions.

In accordance with the guidance of ASC 605-25, when the Company enters into revenue arrangements with multiple deliverables the Company allocates arrangement consideration, including activation fees, among the 8x8 IP telephones and subscriber services based on their relative selling prices. Arrangement consideration allocated to the IP telephones that is fixed or determinable and that is not contingent on future performance or future deliverables is recognized as product revenues during the period of the sale less the allowance for estimated returns during the 30-day trial period. Arrangement consideration allocated to subscriber services that is fixed or determinable and that is not contingent on future performance or future deliverables is recognized ratably as service revenues as the related services are provided, which is generally over the initial contract term.

Deferred Cost of Goods Sold

DEFERRED COST OF GOODS SOLD

Deferred cost of goods sold represents the cost of products sold for which the end customer or distributor has a right of return. The cost of the products sold is recognized contemporaneously with the recognition of revenue, when the subscriber has accepted the service.

Cash, Cash Equivalents and Investments

CASH, CASH EQUIVALENTS AND INVESTMENTS

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Management determines the appropriate categorization of its investments at the time of purchase and reevaluates the classification at each reporting date. The cost of the Company's investments is determined based upon specific identification.

The Company's investments are comprised of mutual funds, commercial paper, corporate debt, municipal securities, asset backed securities, mortgage backed securities, agency bonds, international government securities, certificates of deposit and money market funds. At March 31, 2016 and 2015, all investments were classified as available-for-sale and reported at fair value, based either upon quoted prices in active markets, quoted prices in less active markets, or quoted market prices for similar investments, with unrealized gains and losses, net of related tax, if any, included in other comprehensive income (loss) and disclosed as a separate component of consolidated stockholders' equity. Realized gains and losses on sales of all such investments are reported within the caption of other income, net in the consolidated statements of operations and computed using the specific identification method. The Company classifies its investments as current based on the nature of the investments and their availability for use in current operations. The Company's investments in marketable securities are monitored on a periodic basis for impairment. In the event that the carrying value of an investment exceeds its fair value and the decline in value is determined to be other-than-temporary, an impairment charge is recorded and a new cost basis for the investment is established. These available-for-sale investments are primarily held in the custody of a major financial institution.

ACCOUNTS RECEIVABLE ALLOWANCE

ACCOUNTS RECEIVABLE ALLOWANCE

The Company estimates the amount of uncollectible accounts receivable at the end of each reporting period based on the aging of the receivable balance, current and historical customer trends, and communications with its customers.  Amounts are written off only after considerable collection efforts have been made and the amounts are determined to be uncollectible.

INVENTORY

INVENTORY

Inventory is stated at the lower of standard cost, which approximates actual cost using the first-in, first-out method, or market. Any write-down of inventory to the lower of cost or market at the close of a fiscal period creates a new cost basis that subsequently would not be marked up based on changes in underlying facts and circumstances. On an on-going basis, the Company evaluates inventory for obsolescence and slow-moving items. This evaluation includes analysis of sales levels, sales projections, and purchases by item, as well as raw material usage related to the Company's manufacturing facilities. If the Company's review indicates a reduction in utility below carrying value, it reduces inventory to a new cost basis. If future demand or market conditions are different than the Company's current estimates, an inventory adjustment may be required, and would be reflected in cost of goods sold in the period the revision is made.

Property and Equipment

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method. Estimated useful lives of three years are used for equipment and software and five years for furniture and fixtures. Amortization of leasehold improvements is computed using the shorter of the remaining facility lease term or the estimated useful life of the improvements.

Maintenance, repairs and ordinary replacements are charged to expense. Expenditures for improvements that extend the physical or economic life of the property are capitalized. Gains or losses on the disposition of property and equipment are recorded in the Consolidated Statements of Operations.

Construction in progress primarily relates to costs to acquire or internally develop software for internal use not fully completed as of March 31, 2016.

Accounting for Long-Lived Assets

ACCOUNTING FOR LONG-LIVED ASSETS

The Company reviews the recoverability of its long-lived assets, such as property and equipment, definite lived intangibles or capitalized software, when events or changes in circumstances occur that indicate that the carrying value of the asset or asset group may not be recoverable. Examples of such events could include a significant disposal of a portion of such assets, an adverse change in the market involving the business employing the related asset or a significant change in the operation or use of an asset. The assessment of possible impairment is based on the Company's ability to recover the carrying value of the asset or asset group from the expected future pre-tax cash flows (undiscounted and without interest charges) of the related operations. If these cash flows are less than the carrying value of such asset, an impairment loss is recognized for the difference between estimated fair value and carrying value. The measurement of impairment requires management to estimate future cash flows and the fair value of long-lived assets. See Note 5 for further discussion on impairment charges incurred as of March 31, 2016.

Goodwill and Other Intangible Assets

GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and intangible assets with indefinite useful lives are not amortized. Goodwill represents the excess fair value of consideration transferred over the fair value of net assets acquired in business combinations. The carrying value of goodwill and indefinite lived intangible assets are not amortized, but are tested annually for impairment and more often if there is an indicator of impairment. The Company has determined that it has two reporting units, and allocates goodwill to the reporting units for the purposes of the annual test for impairment.

The Company's annual goodwill impairment test is performed on January 1 each year. No goodwill impairment charges were recorded in the periods presented.

Intangible assets with finite useful lives are amortized on a straight-line basis over the periods benefited. Amortization expense for the customer relationship intangible asset is included in sales and marketing expenses. Amortization expense for technology is included in cost of service revenue.

Warranty Expense

WARRANTY EXPENSE

The Company accrues for estimated product warranty cost upon revenue recognition. Accruals for product warranties are calculated based on the Company's historical warranty experience adjusted for any specific requirements.

Research, Development and Software Costs

RESEARCH, DEVELOPMENT AND SOFTWARE COSTS

The Company accounts for software to be sold or otherwise marketed in accordance with ASC 985-20, Costs of Software to be Sold, Leased or Marketed (ASC 985-20) which requires capitalization of certain software development costs subsequent to the establishment of technological feasibility. The Company defines establishment of technological feasibility as the completion of a working model. Software development costs for software to be sold or otherwise marketed incurred prior to the establishment of technological feasibility are included in research and development and are expensed as incurred. Software development costs incurred subsequent to the establishment of technological feasibility through the period of general market availability of the product are capitalized, if material.

In fiscal 2016 and 2015, the Company capitalized approximately $0 of software development costs in accordance with ASC 985-20. At March 31, 2016 and 2015, total capitalized software development costs included in other long-term assets was approximately $0 and $1.0 million, respectively, and accumulated amortization costs related to capitalized software was approximately $0 million and $0.5 million, respectively.

The Company accounts for computer software developed or obtained for internal use in accordance with ASC 350-40, Internal Use Software (ASC 350-40), which requires capitalization of certain software development costs incurred during the application development stage. In fiscal 2016, the Company capitalized $3.4 million in accordance with ASC 350-40, of which $0.8 million is classified as property and equipment and $2.1 million is classified as other long-term assets. In fiscal 2015, the Company capitalized $1.5 million in accordance with ASC 350-40, of which $0.8 million is classified as property and equipment and $0.7 million is classified as other long-term assets. At March 31, 2016, total capitalized software development costs included in property and equipment and other long-term assets was approximately $1.2 and $2.5 million, respectively, and accumulated amortization costs related to capitalized software was approximately $0.2 million and $0, respectively.

Advertising Costs

ADVERTISING COSTS

Advertising costs are expensed as incurred and were $8.5 million, $6.8 million and $7.3 million for the years ended March 31, 2016, 2015 and 2014, respectively.

Foreign Currency Translation

FOREIGN CURRENCY TRANSLATION

The Company has determined that the functional currencies of all its foreign subsidiaries are the subsidiary's local currency. The Company believes this most appropriately reflects the current economic facts and circumstances of the Company's subsidiaries operations. The assets and liabilities of the subsidiaries are translated at the applicable exchange rate as of the end of the balance sheet period and revenue and expenses are translated at an average rate over the period presented. Resulting currency translation adjustments are recorded as a component of accumulated other comprehensive income or loss within the stockholder's equity in the consolidated balance sheets.

Business Segments

BUSINESS SEGMENTS

The Company has two reportable segments, Americas and Europe. The Company's chief operating decision makers, the Chief Executive Officer, Chief Financial Officer, and Chief Technology Officer, evaluate performance of the Company and makes decisions regarding allocation of resources based on geographical results (see Note 12).

Subscriber Acquisition Costs

SUBSCRIBER ACQUISITION COSTS

Subscriber acquisition costs are expensed as incurred and include the advertising, marketing, promotions, commissions, rebates and equipment subsidy costs associated with the Company's efforts to acquire new subscribers.

Income Taxes

INCOME TAXES

Income taxes are accounted for using the asset and liability approach. Under the asset and liability approach, a current tax liability or asset is recognized for the estimated taxes payable or refundable on tax returns for the current year. A deferred tax liability or asset is recognized for the estimated future tax effects attributed to temporary differences and carryforwards. If necessary, the deferred tax assets are reduced by the amount of benefits that, based on available evidence, is more likely than not expected to be realized.

Concentrations

CONCENTRATIONS

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents, investments and trade accounts receivable. The Company has cash equivalents and investment policies that limit the amount of credit exposure to any one financial institution and restrict placement of these funds to financial institutions evaluated as highly credit- worthy. The Company has not experienced any material losses relating to its investment instruments.

The Company sells its products to business customers and distributors. The Company performs ongoing credit evaluations of its customers' financial condition and generally does not require collateral from its customers. At March 31, 2016 and 2015, no customer accounted for more than 10% of accounts receivable.

The Company purchases all of its hardware products from suppliers that manufacturers the hardware directly. The inability of any supplier to fulfill supply requirements of the Company could materially impact future operating results, financial position or cash flows. If any of these suppliers fail to perform on their obligations to the Company, such failure to fulfill supply requirements of the Company could materially impact future operating results, financial position and cash flows.

The Company also relies primarily on third party network service providers to provide telephone numbers and PSTN call termination and origination services for its customers. If these service providers failed to perform their obligations to the Company, such failure could materially impact future operating results, financial position and cash flows.

Fair Values of Financial Instruments

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal market or the most advantageous market in which it would transact.

The accounting guidance for fair value measurement requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs are inputs that reflect the assumptions market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company's assumptions about the factors that market participants would use in valuing the asset or liability developed based on the best information available in the circumstances.

The standard establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value by requiring that the most observable inputs be used when available. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is as follows:

• Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
• Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets).
• Level 3 applies to assets or liabilities for which fair value is derived from valuation techniques in which one or more significant inputs are unobservable, including the Company's own assumptions.

The estimated fair value of financial instruments is determined by the Company using available market information and valuation methodologies considered to be appropriate. The carrying amounts of the Company's cash and cash equivalents, accounts receivable and accounts payable approximate their fair values due to their short maturities. The Company's investments are carried at fair value.

Accounting for Stock-Based Compensation

ACCOUNTING FOR STOCK-BASED COMPENSATION

The Company accounts for its employee stock options, stock purchase rights, restricted stock units and restricted performance stock units granted under the 1996 Stock Plan, 1996 Director Option Plan, the 2006 Stock Plan, the 2003 Contactual Plan, the 2012 Equity Incentive Plan, the 2013 New Employee Inducement Incentive Plan and stock purchase rights under the 1996 Employee Stock Purchase Plan (collectively "Equity Compensation Plans") under the provisions of ASC 718 - Stock Compensation. Under the provisions of ASC 718, stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as an expense over the employee's requisite service period (generally the vesting period of the equity grant), net of estimated forfeitures.

To value option grants, stock purchase rights and restricted stock units under the Equity Compensation Plans for stock-based compensation the Company used the Black-Scholes option valuation model. Fair value determined using the Black-Scholes option valuation model varies based on assumptions used for the expected stock prices volatility, expected life, risk-free interest rates and future dividend payments. For fiscal years 2016, 2015 and 2014, the Company used the historical volatility of its stock over a period equal to the expected life of the options. The expected life assumptions represent the weighted-average period stock-based awards are expecting to remain outstanding. These expected life assumptions were established through the review of historical exercise behavior of stock-based award grants with similar vesting periods. The risk-free interest is based on the closing market bid yields on actively traded U.S. treasury securities in the over-the-counter market for the expected term equal to the expected term of the option. The dividend yield assumption is based on the Company's history and expectation of future dividend payout. Compensation expense for stock-based payment awards is recognized using the straight-line single-option method and includes the impact of estimated forfeitures.

The Company issued restricted performance stock units (PSUs) to a group of executives with vesting that is contingent on both market performance and continued service during the fiscal year ended March 31, 2016:

• These PSUs vest (1) 50% on September 22, 2017 and (2) 50% on September 27, 2018, in each case subject to performance of the Company's common stock relative to the Russell 2000 Index during the period from grant date through such vesting date. A 2x multiplier will be applied to the total shareholder returns (TSR) for each 1% of positive or negative relative TSR, and the number of shares earned will increase or decrease by 2% of the target numbers. In the event 8x8's common stock performance is below negative 30%, relative to the benchmark, no shares will be issued.

The Company issued restricted (PSUs) to a group of executives with vesting that is contingent on both market performance and continued service. For the market-based restricted performance stock units issued during the fiscal year ended March 31, 2015:

• the number of shares of the Company's stock to be received at vesting if applicable service requirements are also met will range from 0% to 100% of the target amount based total shareholder return ("TSR"), which compares the performance of the price per share of the Company's common stock with the NASDAQ Composite Index ("Index") for the three performance periods ending March 31, 2016, March 31, 2017 and March 31, 2018, for the fiscal year ended March 31, 2015; and for the three performance periods ending March 31, 2015, March 31, 2016 and March 31, 2017 for the fiscal year ended March 31, 2014, in the following manner: where in each such measurement period, (1) if the performance return on the price per share of the Company's common stock exceeds the performance return on the NASDAQ Composite Index, (which shall be determined by subtracting the percentage return on the NASDAQ Composite Index from the percentage return on the price per share of the Common Stock), then all of the TSR Performance Shares for such measurement period will be deemed earned and will vest; (2) if the performance return on the price per share of Common Stock is more than 50% lower than the performance return on the NASDAQ Composite Index, then none of the TSR Performance Shares for such measurement period will be deemed earned and will vest; and (3) if the performance return on the price per share of Common Stock is between 0% and 50% lower than the performance return on the NASDAQ Composite Index, then the number of TSR Performance Shares deemed earned and vesting for such measurement period will be reduced by 2% for each 1% by which the performance return on the NASDAQ Composite Index exceeds the performance return on the Common Stock, (4) if the performance return on the price per share of Common Stock is between 0% and 50% higher than the performance return on the NASDAQ Composite Index, then the number of TSR Performance Shares deemed earned and vesting for such measurement period will increase by 2% for each 1% by which the performance return on the Common Stock exceeds the performance return on the NASDAQ Composite Index, and
• the number of shares of the Company's stock to be received at vesting will range from 0% or 100% of the target amount based on four tranches, with each tranche vesting at the later of (a) the satisfaction of the applicable service-based vesting requirement for that tranche, and (b) on the first date that the average stock price of the Company's common stock for a consecutive 30 trading day period exceeds 150% of the grant date stock price. The minimum service vesting requirement for each tranche is as follows:

Tranche 1: One year following the date of the grant

Tranche 2: Two years following the date of the grant

Tranche 3: Three years following the date of the grant

Tranche 4: Four years following the date of the grant

Market-based restricted performance stock units are valued using a Monte Carlo simulation model on the date of grant. Fair value determined using the Monte Carlo simulation model varies based on the assumptions used for the expected stock price volatility, the correlation coefficient between the Company and the NASDAQ Composite Index, risk-free interest rates, and future dividend payments.

In October 2013, the board of directors approved the modification of unvested stock options to purchase 74,479 shares of common stock and unvested stock purchase rights totaling 37,000 shares of common stock held by the Company's president upon his resignation. The options held by the Company's president upon his resignation, taken as a whole, had a weighted average exercise price of $4.05 per share and range from $2.72 to $5.87 per share, and a weighted average remaining vesting term of 0.5 years. Approximately $1.1 million of the $7.6 million of stock-based compensation charge in fiscal year 2014 applied to the options held by the former president of the Company and was recorded in general and administrative expenses.

Comprehensive Income (Loss)

COMPREHENSIVE (LOSS) INCOME

Comprehensive income (loss), as defined, includes all changes in equity (net assets) during a period from non-owner sources. The difference between net income (loss) and comprehensive (loss) income is due to foreign currency translation adjustments and unrealized gains or losses on investments classified as available-for-sale.

Net Income (Loss) Per Share

NET INCOME (LOSS) PER SHARE

Basic net income (loss) per share is computed by dividing net income (loss) available to common stockholders (numerator) by the weighted average number of vested, unrestricted common shares outstanding during the period (denominator). Diluted net income per share is computed on the basis of the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding stock options and employee restricted purchase rights.

Deferred Rent

DEFERRED RENT

In April 2012, the Company entered into an 87-month lease agreement for its new headquarters. Under the terms of the lease agreement:

• the Company received a three month rent holiday from rental payments;
• base rent is $130,821 for the 15 months after the rent holiday; and
• rent expense increases 3% each year thereafter.

In the second quarter of fiscal 2013, the Company received a $1.7 million allowance for reimbursement for the cost of tenant improvements that the Company included in cash flows from operating activities. In accordance with the guidance in ASC 840-20, Leases, the Company accounts for its headquarters facility operating lease as follows:

Rent Holidays. The Company recognizes the related rent expense on a straight-line basis at the earlier of the first rent payment or the date of possession of the leased property. The difference between the amounts charged to expense and the rent paid is recorded as deferred lease incentives and amortized over the lease term.

Rent Escalations. The Company recognizes escalating rent provisions on a straight-line basis over the lease term. The difference between the amounts charged to expense and the rent paid is recorded as deferred lease incentives and amortized over the lease term.

Tenant Improvement Allowance. The tenant improvement allowance is deferred and amortized on a straight-line basis over the life of the lease as a reduction to rent expense.

In January 2016, the Company entered into a 48-month lease for additional office space near the Company's US headquarters. In April 2016, the lease was amended for actual move in date. Base rent begins at $105,628 and increases 3% each year thereafter. Future minimum annual lease payments under this lease is included in "Leases" in Note 7.

At March 31, 2016, total deferred rent included in other accrued liabilities and non-current liabilities was $0.3 million and $1.0 million, respectively. At March 31, 2015, total deferred rent included in other accrued liabilities and non-current liabilities was $0.3 million and $1.3 million, respectively.

Recent Accounting Pronouncements

RECENT ACCOUNTING PRONOUNCEMENTS

In April 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. This ASU changes the requirements for reporting discontinued operations in FASB ASU 205-20, such that a disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity's operations and financial results. This ASU requires an entity to present, for each comparative period, the assets and liabilities of a disposal group that includes a discontinued operation separately in the asset and liability sections, respectively, of the statement of financial position, as well as additional disclosures about discontinued operations. Additionally, the ASU requires disclosures about a disposal of an individually significant component of an entity that does not qualify for discontinued operations presentation in the financial statements and expands the disclosures about an entity's significant continuing involvement with a discontinued operation. The accounting update is effective for annual periods beginning on or after December 15, 2014. We adopted this pronouncement for our fiscal year beginning April 1, 2015, and there was no effect on our consolidated financial statements.

In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory, (Topic 330), which amends the guidelines for the measurement of inventory. Under the amendments, an entity should measure inventory valued using a first-in, first-out or average cost method at the lower of cost and net realizable value. Net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This amendment is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently assessing the impact of this pronouncement to its consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard will become effective for the Company on April 1, 2018. The standard permits the use of either the retrospective or cumulative effect transition method. The Company has not yet selected a transition method. The Company is currently assessing the impact of this pronouncement to its consolidated financial statements.

In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. Topic 805 requires an acquirer to retrospectively adjust provisional amounts recognized in a business combination during the measurement period. To simplify the accounting for adjustments made to provisional amounts, the amendment requires that the acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amount is determined. The acquirer is required to also record, in the same period's financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. In addition, an entity is required to present separately on the face of the income statement or disclose in the notes to the financial statements the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date.

The amendments are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The amendments should be applied prospectively to adjustments to provisional amounts that occur after the effective date with earlier application permitted for financial statements that have not been issued. The Company is currently assessing the impact of this pronouncement to its consolidated financial statements.

In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes, (Topic 740), which amends the current requirement for organizations to present deferred tax assets and liabilities as current and noncurrent in a classified balance sheet. Under the amendment, an entity will be required to classify all deferred tax assets and liabilities as noncurrent.

This amendment is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently assessing the impact of this pronouncement to its consolidated financial statements.

In February 2016, the FASB issued 2016-02, Leases (Topic 842). Topic 842 requires companies to generally recognize on the balance sheet operating and financing lease liabilities and corresponding right-of-use assets. The update also requires qualitative and quantitative disclosures designed to assess the amount, timing, and uncertainty of cash flows arising from leases.  The update requires the use of a modified retrospective transition approach, which includes a number of optional practical expedients that entities may elect to apply.

This amendment is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently assessing the impact of this pronouncement to its consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"), which is intended to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows.

The amendment is effective for annual periods beginning after December 15, 2016, including interim periods within those fiscal years. Early application is permitted.  The Company is currently assessing the impact of this pronouncement to its consolidated financial statements.

Indemnifications

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 the Company's operating results, financial position or cash flows. Under some of these agreements, however, the Company's potential indemnification liability might not have a contractual limit.

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Fair Value Measurements (Tables)

12 Months Ended

Mar. 31, 2016

Fair Value Measurements Tables

Fair Value Measurements, Recurring and Nonrecurring (Tables)

Cash, cash equivalents, available-for-sale investments, and contingent consideration were (in thousands):

				Gross		Gross				Cash and
		Amortized		Unrealized		Unrealized		Estimated		Cash		Short-Term
As of March 31, 2016		Costs		Gain		Loss		Fair Value		Equivalents		Investments
Cash	$	18,596	$	-	$	-	$	18,596	$	18,596	$	-
Level 1:
Money market funds		14,980		-		-		14,980		14,980		-
Mutual funds		2,000		-		(187)		1,813		-		1,813
Subtotal		35,576		-		(187)		35,389		33,576		1,813
Level 2:
Commercial paper		6,794		2		-		6,796		-		6,796
Corporate debt		85,164		78		(28)		85,214		-		85,214
Municipal securities		1,007		-		(1)		1,006		-		1,006
Asset backed securities		24,614		7		(11)		24,610		-		24,610
Mortgage backed securities		2,045		-		(17)		2,028		-		2,028
Agency bond		6,805		1		-		6,806		-		6,806
International government securities		1,000		1		-		1,001		-		1,001
Subtotal		127,429		89		(57)		127,461		-		127,461
Total assets	$	163,005	$	89	$	(244)	$	162,850	$	33,576	$	129,274
Level 3:
Contingent consideration	$	-	$	-	$	-	$	341	$	-	$	-
Total liabilities	$	-	$	-	$	-	$	341	$	-	$	-

				Gross		Gross				Cash and
		Amortized		Unrealized		Unrealized		Estimated		Cash		Short-Term
As of March 31, 2015		Costs		Gain		Loss		Fair Value		Equivalents		Investments
Cash	$	24,734	$	-	$	-	$	24,734	$	24,734	$	-
Level 1:
Money market funds		28,376		-		-		28,376		28,376		-
Mutual funds		2,000		-		(107)		1,893		-		1,893
Subtotal		55,110		-		(107)		55,003		53,110		1,893
Level 2:
Commercial paper		9,043		1		-		9,044		-		9,044
Corporate debt		75,284		57		(10)		75,331		-		75,331
Municipal securities		5,435		2		(1)		5,436		-		5,436
Asset backed securities		21,503		4		(5)		21,502		-		21,502
Mortgage backed securities		5,822		-		(52)		5,770		-		5,770
Agency bond		4,201		3		-		4,204		-		4,204
International government securities		800		4		-		804		-		804
Subtotal		122,088		71		(68)		122,091		-		122,091
Total	$	177,198	$	71	$	(175)	$	177,094	$	53,110	$	123,984

Contractual maturities of investments as of March 31, 2016 are set forth below (in thousands):

		Estimated
		Fair Value
Due within one year	$	71,071
Due after one year		58,203
Total	$	129,274

Rollforward of contingent consideration liabilities (Tables)

The table below presents a roll-forward of the contingent consideration and escrow liability valued using a Level 3 input (in thousands):

		Years Ended March 31,
		2016		2015		2014
Balance at beginning of period	$	-	$	-	$	-
Purchase price contingent consideration		541		-		-
Contingent consideration payments		(200)		-		-
Balance at end of period	$	341	$	-	$	-

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Inventory (Tables)

12 Months Ended

Mar. 31, 2016

Inventory Tables

Inventory (Tables)

Components of inventories were as follows (in thousands):

		March 31,
		2016		2015
Work-in-process	$	76	$	169
Finished goods		444		535
	$	520	$	704

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Property and Equipment (Tables)

12 Months Ended

Mar. 31, 2016

Property And Equipment Tables

Components of Property, Plant and Equipment

Property and equipment consisted of the following (in thousands):

		March 31,
		2016		2015
Machinery and computer equipment	$	20,040	$	16,099
Furniture and fixtures		1,067		759
Licensed software		6,350		4,696
Leasehold improvements		3,865		3,812
Construction in progress		967		942
		32,289		26,308
Less: accumulated depreciation and amortization		(19,914)		(16,060)
	$	12,375	$	10,248

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Intangible Assets (Tables)

12 Months Ended

Mar. 31, 2016

Intangible Assets Tables

Carrying values of intangible assets

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

		March 31, 2016						March 31, 2015
		Gross						Gross
		Carrying		Accumulated		Net Carrying		Carrying		Accumulated		Net Carrying
		Amount		Amortization		Amount		Amount		Amortization		Amount
Technology	$	18,640	$	(4,622)	$	14,018	$	8,242	$	(2,905)	$	5,337
Customer relationships		9,993		(4,847)		5,146		9,686		(3,720)		5,966
Trade names/domains		2,205		-		2,205		957		-		957
In-process research and development		95		-		95		-		-		-
Total acquired identifiable intangible assets	$	30,933	$	(9,469)	$	21,464	$	18,885	$	(6,625)	$	12,260

Finite-lived intangible assets - future amortization expense

At March 31, 2016, annual amortization of intangible assets, based upon our existing intangible assets and current useful lives, is estimated to be the following (in thousands):

		Amount
2017	$	3,845
2018		3,577
2019		3,327
2020		3,327
2021		2,936
Thereafter		2,152
Total	$	19,164

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Goodwill (Tables)

12 Months Ended

Mar. 31, 2016

Goodwill Tables

Carrying amounts of goodwill

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

		Americas		Europe		Total
Balance as of March 31, 2014	$	23,940	$	14,521	$	38,461
Foreign currency translation		-		(1,574)		(1,574)
Balance as of March 31, 2015		23,940		12,947		36,887
Additions due to acquisitions		1,789		10,125		11,914
Foreign currency translation		-		(1,381)		(1,381)
Balance as of March 31, 2016	$	25,729	$	21,691	$	47,420

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Commitments And Contingencies (Tables)

12 Months Ended

Mar. 31, 2016

Commitments And Contingencies Tables

Product warranties

Changes in the Company's product warranty liability, which is included in cost of product revenues in the consolidated statements of operations were as follows (in thousands):

		Years Ended March 31,
		2016		2015		2014
Balance at beginning of year	$	339	$	660	$	452
Accruals for warranties		355		185		953
Settlements		(303)		(364)		(745)
Changes in estimate		(65)		(142)		-
Balance at end of year	$	326	$	339	$	660

Future minimum annual operating lease payments

At March 31, 2016, future minimum annual lease payments under non-cancelable operating leases were as follows (in thousands):

Year ending March 31:
2017	$	3,663
2018		3,552
2019		3,645
2020		2,862
2021 and Thereafter		283
Total	$	14,005

Future annual lease payments under noncancelable capital leases

At March 31, 2016, future minimum annual lease payments under non-cancelable capital leases were as follows (in thousands):

Year ending March 31:
2017	$	608
2018		540
2019		349
Total minimum payments		1,497
Less: Amount representing interest		(93)
		1,404
Less: Short-term portion of capital lease obligations		(588)
Long-term portion of capital lease obligations	$	816

Minimum third party network service provider commitments

At March 31, 2016, future minimum annual payments under these third party network service contracts were as follows (in thousands):

Year ending March 31:
2017	$	2,572
2018		891
Total minimum payments	$	3,463

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Distribution of Stock-Based Compensation Plan Expense (Tables)

12 Months Ended

Mar. 31, 2016

Distribution Of Stock-based Compensation Plan Expense Tables

Schedule Of Stock-Based Compensation Expense By Statement Of Operations Line Item

The following table summarizes stock-based compensation expense (in thousands):

		Years Ended March 31,
		2016		2015		2014
Cost of service revenue	$	1,159	$	692	$	372
Cost of product revenue		-		-		-
Research and development		2,914		1,495		967
Sales and marketing		6,133		3,748		2,217
General and administrative		6,128		3,412		4,039
Total stock-based compensation expense
related to employee stock options
and employee stock purchases, pre-tax		16,334		9,347		7,595
Tax benefit		-		-		-
Stock based compensation expense related to
employee stock options and employee
stock purchases, net of tax	$	16,334	$	9,347	$	7,595

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Stock-Based Compensation And Employee Purchase Plan (Tables)

12 Months Ended

Mar. 31, 2016

Employee Stock Purchase Plan

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

The estimated fair value of stock purchase rights granted under the Employee Stock Purchase Plan was estimated using the Black-Scholes pricing model with the following weighted-average assumptions:

		Years Ended March 31,
		2016		2015		2014
Expected volatility		43%		49%		40%
Expected dividend yield		-		-		-
Risk-free interest rate		0.39%		0.12%		0.09%
Weighted average expected rights term		0.83 years		0.80 years		0.75 years
Weighted average fair value of rights granted	$	3.25	$	2.52	$	2.83

Option Grants

Disclosure Of Share-Based Compensation Arrangements By Share-Based Payment Award

Stock Option activity under all the Company's stock option plans since March 31, 2013, is summarized as follows:

			Weighted
			Average
			Exercise
	Number of		Price
	Shares		Per Share
Outstanding at March 31, 2013	5,991,544	$	2.52
Granted	1,465,400		9.66
Exercised	(1,283,470)		2.75
Canceled/Forfeited	(171,092)		5.25
Outstanding at March 31, 2014	6,002,382		4.14
Granted	1,110,466		7.29
Exercised	(1,326,385)		1.87
Canceled/Forfeited	(458,556)		6.06
Outstanding at March 31, 2015	5,327,907		5.19
Granted	723,776		8.63
Exercised	(1,162,175)		2.56
Canceled/Forfeited	(96,242)		8.06
Outstanding at March 31, 2016	4,793,266	$	6.29
Vested and expected to vest at March 31, 2016	4,793,266	$	6.29
Exercisable at March 31, 2016	2,950,697	$	4.99

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

The fair value of each of the Company's option grants has been estimated on the date of grant using the Black-Scholes pricing model with the following assumptions:

		Years Ended March 31,
		2016		2015		2014
Expected volatility		53%		61%		64%
Expected dividend yield		-		-		-
Risk-free interest rate		1.5% to 1.8%		1.4% to 1.9%		0.7% to 2.2%
Weighted average expected option term		5.4 years		6.0 years		6.1 years
Weighted average fair value of options granted	$	4.17	$	4.14	$	5.70

Stock Purchase Rights

Disclosure Of Share-Based Compensation Arrangements By Share-Based Payment Award

Stock Purchase Right activity since March 31, 2013 is summarized as follows:

			Weighted	Weighted
			Average	Average
			Grant-Date	Remaining
	Number of		Fair Market	Contractual
	Shares		Value	Term (in Years)
Balance at March 31, 2013	958,575	$	4.11	2.52
Granted	22,380		9.69
Vested	(392,844)		3.25
Forfeited	(98,484)		5.18
Balance at March 31, 2014	489,627		4.83	1.93
Granted	31,432		7.88
Vested	(223,360)		3.98
Forfeited	(73,864)		5.39
Balance at March 31, 2015	223,835		5.92	1.50
Granted	-		-
Vested	(115,789)		5.32
Forfeited	(25,875)		7.40
Balance at March 31, 2016	82,171	$	6.30	0.76

Restricted Stock Units

Disclosure Of Share-Based Compensation Arrangements By Share-Based Payment Award

Restricted Stock Unit activity since March 31, 2013 is summarized as follows:

			Weighted	Weighted Average
	Number of		Average Grant	Remaining Contractual
	Shares		Date Fair Value	Term (in Years)
Balance at March 31, 2013	25,000	$	6.91	2.47
Granted	1,291,200		9.11
Vested	(133,000)		9.49
Forfeited	(48,344)		9.61
Balance at March 31, 2014	1,134,856		9.00	2.00
Granted	1,965,786		6.68
Vested	(187,788)		9.54
Forfeited	(214,168)		8.30
Balance at March 31, 2015	2,698,686		7.33	1.88
Granted	2,681,997		8.78
Vested	(589,788)		7.79
Forfeited	(246,096)		8.15
Balance at March 31, 2016	4,544,799	$	8.08	1.67

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Stock Options Outstanding And Exercisable (Tables)

12 Months Ended

Mar. 31, 2016

Stock Options Outstanding And Exercisable Tables

Summary Of Outstanding And Exercisable Stock Options

Significant option groups outstanding at March 31, 2016 and related weighted average exercise price, contractual life, and aggregate intrinsic value information for 8x8, Inc.'s stock option plans are as follows:

	Options Outstanding						Options Exercisable
			Weighted	Weighted					Weighted
			Average	Average					Average
			Exercise	Remaining		Aggregate			Exercise		Aggregate
			Price	Contractual		Intrinsic			Price		Intrinsic
	Shares		Per Share	Life (Years)		Value	Shares		Per Share		Value
$ 0.55 to $ 1.27	1,079,767	$	1.13	1.7	$	9,589,205	1,079,767	$	1.13	$	9,589,205
$ 1.33 to $ 6.86	1,500,242	$	5.77	7.0		6,368,920	1,000,701	$	5.27		4,744,126
$ 7.52 to $ 8.93	996,150	$	8.29	9.1		1,723,062	184,115	$	8.14		345,844
$ 9.21 to $ 9.74	983,835	$	9.62	7.5		384,463	603,302	$	9.63		232,944
$ 10.50 to $ 11.26	233,272	$	10.95	8.5		-	82,812	$	11.10		-
	4,793,266				$	18,065,650	2,950,697			$	14,912,119

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Stock Repurchases (Tables)

12 Months Ended

Mar. 31, 2016

Stock Repurchases Tables

Stock Repurchases [Table Text Block]

The stock repurchase activity as of March 31, 2016 is summarized as follows:

			Weighted
			Average
	Shares		Price		Amount
	Repurchased		Per Share		Repurchased(1)
Balance as of March 31, 2014	-				-
Repurchase of common stock
under 2015 Repurchase Plan	2,488,215	$	7.38	$	19,200,393
Balance as of March 31, 2015	2,488,215		7.38		19,200,393
Repurchase of common stock
under 2015 Repurchase Plan	1,392,135		8.02		11,164,329
Balance as of March 31, 2016	3,880,350	$	7.83	$	30,364,722
(1) Amount excludes commission fees.

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Income Taxes (Tables)

12 Months Ended

Mar. 31, 2016

Income Taxes Tables

Components of tax provision

The components of the consolidated (benefit) provision for income taxes for fiscal 2016, 2015 and 2014 consisted of the following (in thousands):

		March 31,
Current:		2016		2015		2014
Federal	$	97	$	92	$	-
State		551		457		276
Foreign		71		1		-
Total current tax provision		719		550		276
Deferred
Federal	$	95	$	2,602	$	1,578
State		(854)		(363)		365
Foreign		(807)		-		-
Total deferred tax (benefit) provision		(1,566)		2,239		1,943
Income tax (benefit) provision	$	(847)	$	2,789	$	2,219

Schedule of tax effects of temporary differences that give rise to deferred tax assets and liabilities

Deferred tax assets were comprised of the following (in thousands):

		March 31,
Current deferred tax assets		2016		2015
Net operating loss carryforwards	$	2,739	$	2,179
Inventory valuation		14		14
Reserves and allowances		2,740		2,394
Net current deferred tax assets		5,493		4,587
Net operating loss carryforwards		38,449		44,228
Research and development and other credit carryforwards		7,106		5,414
Stock-based compensation		5,577		3,164
Fixed assets and intangibles		(6,160)		(4,869)
Net non-current deferred tax assets		44,972		47,937
Valuation allowance		(3,760)		(4,901)
Total	$	46,705	$	47,623

Reconciliation of U.S. statutory income tax rate to company's effective tax rate

A reconciliation of the Company's provision for income taxes to the amounts computed using the statutory U.S. federal income tax rate of 34% is as follows (in thousands):

		Years Ended March 31,
		2016		2015		2014
Tax provision at statutory rate	$	(2,029)	$	1,599	$	1,285
State income taxes before valuation allowance,
net of federal effect		9		269		196
Foreign tax rate differential		(769)		-		-
Research and development credits		(1,253)		(725)		(1,534)
Change in valuation allowance		(1,555)		(1,480)		1,264
Compensation/option differences		(471)		(331)		(264)
Non-deductible compensation		944		746		605
Acquisition costs		230		-		230
Expiring CA NOLs		1,626		1,484		240
Foreign loss not benefited		2,342		1,192		271
Other		79		35		(74)
Total income tax provision	$	(847)	$	2,789	$	2,219

Reconciliation of beginning and ending amount of unrecognized tax benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

		Unrecognized Tax Benefits
		2016		2015		2014
Balance at beginning of year	$	2,420	$	2,165	$	3,024
Gross increases - tax position in prior period		82		27		-
Gross decreases - tax position in prior period		-		-		(1,081)
Gross increases - tax positions related to the current year		379		228		222
Balance at end of year	$	2,881	$	2,420	$	2,165

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Net Income Per Share (Tables)

12 Months Ended

Mar. 31, 2016

Net Income Per Share Tables

Net Income Per Share

The following is a reconciliation of the weighted average number of common shares outstanding used in calculating basic and diluted net income per share (in thousands, except share and per share data):

		Years Ended March 31,
		2016		2015		2014
		(In Thousands, Except Per Share Amounts)
Numerator:
Income (loss) from continuing operations	$	(5,120)	$	1,926	$	1,598
Income from discontinued operations, net
of income tax provision		-		-		916
Net income (loss) available to common stockholders	$	(5,120)	$	1,926	$	2,514
Denominator:
Common shares		88,477		89,071		78,310
Denominator for basic calculation		88,477		89,071		78,310
Employee stock options		-		2,088		2,927
Employee restricted purchase rights		-		493		421
Denominator for diluted calculation		88,477		91,652		81,658
Income (loss) per share - continuing operations:
Basic	$	(0.06)	$	0.02	$	0.02
Diluted	$	(0.06)	$	0.02	$	0.02
Income per share - discontinued operations:
Basic	$	0.00	$	0.00	$	0.01
Diluted	$	0.00	$	0.00	$	0.01
Net income (loss) per share:
Basic	$	(0.06)	$	0.02	$	0.03
Diluted	$	(0.06)	$	0.02	$	0.03

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

The following shares attributable to outstanding stock options and restricted stock purchase rights were excluded from the calculation of diluted earnings per share because their inclusion would have been antidilutive (in thousands):

	Years Ended March 31,
	2016	2015	2014
Common stock options	2,193	1,812	750
Stock purchase rights	50	57	18
	2,243	1,869	768

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Segment Information (Tables)

12 Months Ended

Mar. 31, 2016

Segment Information Tables

Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas

The Company's revenue distribution by geographic region (based upon the destination of shipments and the customer's service address) was as follows:

	Years Ended March 31,
	2016	2015	2014
Americas (principally US)	87%	92%	97%
Europe	12%	7%	2%
Asia Pacific	1%	1%	1%
	100%	100%	100%

Geographic area data is based upon the location of the property and equipment and is as follows (in thousands):

		March 31,
		2016		2015
North America	$	9,165	$	8,348
Europe		2,642		1,411
Asia-Pacific		568		489
	$	12,375	$	10,248

The following table provides financial information by segment (in thousands):

		Years Ended March 31,
		2016		2015		2014
Americas (principally US):
Net Revenue	$	185,241	$	150,764	$	125,270
Net Income	$	940	$	5,433	$	3,296
Europe (principally UK):
Net Revenue	$	24,095	$	11,649	$	3,327
Net loss	$	(6,060)	$	(3,507)	$	(782)

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Acquisitions (Tables)

12 Months Ended

Mar. 31, 2016

DXI

Schedule of Purchase Price Allocation

The fair values of the assets acquired and liabilities assumed are as follows (in thousands):

		Fair Value
Assets acquired:
Cash	$	1,318
Current assets		2,016
Property and equipment		1,453
Intangible assets		13,374
Total assets acquired		18,161
Liabilities assumed:
Current liabilities and non-current liabilities		(5,734)
Total liabilities assumed		(5,734)
Net identifiable assets acquired		12,427
Goodwill		10,125
Total consideration transferred	$	22,552

QSC

Schedule of Purchase Price Allocation

The fair values of the assets acquired and liabilities assumed are as follows (in thousands):

		Fair Value
Assets acquired:
Intangible assets	$	1,100
Goodwill		1,789
Total consideration transferred	$	2,889

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Discontinued Operations (Tables)

12 Months Ended

Mar. 31, 2016

Discontinued Operations Tables

Schedule of Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures

The dedicated server hosting business has been reported as discontinued operations. The results of operations of these discontinued operations are as follows:

		Years Ended March 31,
		2016		2015		2014
Revenue	$	-	$	-	$	1,430
Operating expense		-		-		922
Income before income taxes		-		-		508
Provision for income taxes		-		-		188
Income from discontinued operations		-		-		320
Gain on disposal of discontinued operations,
net of income tax provision of $456		-		-		596

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Quarterly Financial Data (Unaudited) (Tables)

12 Months Ended

Mar. 31, 2016

Consolidated Quarterly Financial Data

Quarterly Financial Data (Unaudited)

In thousands, except per share data amounts:

		QUARTER ENDED
		March 31,		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Sept. 30,		June 30,
		2016		2015		2015		2015		2015		2014		2014		2014
Service revenue	$	52,174	$	48,948	$	46,951	$	44,168	$	40,009	$	37,802	$	36,121	$	34,276
Product revenue		5,160		4,220		3,991		3,724		3,521		3,570		3,477		3,637
Total revenue		57,334		53,168		50,942		47,892		43,530		41,372		39,598		37,913
Operating expenses:
Cost of service revenue		9,720		9,713		9,186		8,459		7,655		7,544		7,505		6,997
Cost of product revenue		6,103		5,087		4,596		4,382		4,173		3,959		3,762		3,969
Research and development		6,110		6,404		6,446		5,080		4,348		3,868		3,496		3,406
Sales and marketing		31,240		27,585		26,730		23,824		21,508		20,559		19,440		19,160
General, and administrative		7,132		6,888		5,657		6,068		5,794		4,617		3,893		3,878
Gain on patent sale		-		-		-		-		-		-		(1,000)		-
Total operating expenses		60,305		55,677		52,615		47,813		43,478		40,547		37,096		37,410
Income (loss) from operations		(2,971)		(2,509)		(1,673)		79		52		825		2,502		503
Other income, net		397		272		204		234		210		246		200		177
Income (loss) from
operations before provision
(benefit) for income taxes		(2,574)		(2,237)		(1,469)		313		262		1,071		2,702		680
Provision (benefit) for
income taxes (1)		(1,498)		(557)		423		785		79		627		1,411		672
Net income (loss)	$	(1,076)	$	(1,680)	$	(1,892)	$	(472)	$	183	$	444	$	1,291	$	8
Net income (loss) per share:
Basic	$	(0.01)	$	(0.02)	$	(0.02)	$	(0.01)	$	0.00	$	0.01	$	0.01	$	0.00
Diluted	$	(0.01)	$	(0.02)	$	(0.02)	$	(0.01)	$	0.00	$	0.01	$	0.01	$	0.00
Shares used in per share calculations:
Basic		88,888		88,289		88,557		88,233		88,950		89,594		89,073		88,592
Diluted		88,888		88,289		88,557		88,233		91,266		91,974		91,615		91,445

(1) Comparability affected by the decrease in fiscal 2016 and 2015 in the valuation allowance related to the deferred tax asset which resulted in a decrease in the provision for income taxes of $1.1 million and $1.5 million, in the fourth quarter of fiscal 2016 and 2015, respectively.

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Valuation and Qualifying Accounts (Tables)

12 Months Ended

Mar. 31, 2016

Valuation And Qualifying Accounts Tables

Schedule of Valuation Allowance for Impairment of Recognized Servicing Assets [Table Text Block]

SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(in thousands)

		Balance at		Additions				Balance
		Beginning		Charged to				at End
Description		of Year		Expenses		Deductions (a)		of Year
Total Allowance for Doubtful Accounts:
Year ended March 31, 2014:	$	327	$	571	$	(432)	$	466
Year ended March 31, 2015:	$	466	$	279	$	(329)	$	416
Year ended March 31, 2016:	$	416	$	509	$	(339)	$	586

(a) The deductions related to allowance for doubtful accounts represent accounts receivable which are written off.

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Description of the Business (Narrative) (Details)	12 Months Ended
	Mar. 31, 2016
Description Of Business Narrative Details
Year Founded	1987
Entity Incorporation, Date of Incorporation	Dec. 31, 1996
Entity Incorporation, State Country Name	Delaware
Fiscal Year End Date	--03-31

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Software Development Costs (Narrative) (Details) - USD ($) $ in Millions	12 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Software Development Costs
Software costs capitalized during the period	$ 0.0	$ 0.0
Total capitalized software costs	0.0	1.0
Accumulated software costs amortization	0.0	0.5
Software Development
Software costs capitalized during the period	3.4	1.5
Property and equipment	1.3	0.8
Long-term assets charged to other assets	$ 2.1	$ 0.7

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Significant Accounting Policies (Advertising Costs) (Narrative) (Details) - USD ($) $ in Millions	12 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2014
Significant Accounting Policies Advertising Costs Narrative Details
Advertising expense	$ 8.5	$ 6.8	$ 7.3

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Significant Accounting Policies (Deferred Rent) (Narrative) (Details) - USD ($)
$ in Millions

12 Months Ended

Mar. 31, 2016

Mar. 31, 2015

Significant Accounting Policies Deferred Rent Narrative Details

April 2012 lease agreement terms

In April 2012, the Company entered into an 87-month lease agreement. Under the terms of the lease agreement:

• the Company received a three month rent holiday from rental payments before;
• base rent is $130,821 for the 15 months after the rent holiday; and
• rent expense increases 3% each year thereafter.

In the second quarter of fiscal 2013, the Company received a $1.7 million allowance for reimbursement for the cost of tenant improvements that the Company included in cash flows from operating activities.

Term of contract

7 years 3 months

Tenant improvement allowance

$ 1.7

Deferred rent recorded in other accrued liabilities

$ 0.3

0.3

Deferred rent recorded in other non-current liabilities

$ 1.0

$ 1.3

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Service and Product Revenue (Narrative) (Details)	Mar. 31, 2016
Service And Product Revenue Narrative Details
Trial period offered with all new services, days	30

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Cash, Cash Equivalents and Investments with Hierarchy (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2013
Amortized Costs	$ 163,005	$ 177,198
Gross Unrealized Gains	89	71
Gross Unrealized Loss	(244)	(175)
Estimated Fair Value	162,850	177,094
Cash and cash equivalents	33,576	53,110	$ 59,159	$ 50,305
Short-term marketable investments	129,274	123,984
Liabilities, Fair Value Disclosure	341	0	$ 0
Aavailable-for-sale investments due within one year	71,071
Aavailable-for-sale investments due after one year	58,203
Level 1
Amortized Costs	35,576	55,110
Gross Unrealized Gains	0	0
Gross Unrealized Loss	(187)	(107)
Estimated Fair Value	35,389	55,003
Cash and cash equivalents	33,576	53,110
Short-term marketable investments	1,813	1,893
Level 2
Amortized Costs	127,429	122,088
Gross Unrealized Gains	89	71
Gross Unrealized Loss	(57)	(68)
Estimated Fair Value	127,461	122,091
Cash and cash equivalents	0	0
Short-term marketable investments	127,461	122,091
Level 3
Amortized Costs	0
Gross Unrealized Gains	0
Gross Unrealized Loss	0
Estimated Fair Value	341
Cash and cash equivalents	0
Short-term marketable investments	0
Liabilities, Fair Value Disclosure	341
Cash
Amortized Costs	18,596	24,734
Gross Unrealized Gains	0	0
Gross Unrealized Loss	0	0
Estimated Fair Value	18,596	24,734
Cash and cash equivalents	18,596	24,734
Short-term marketable investments	0	0
Money Market Funds | Level 1
Amortized Costs	14,980	28,376
Gross Unrealized Gains	0	0
Gross Unrealized Loss	0	0
Estimated Fair Value	14,980	28,376
Cash and cash equivalents	14,980	28,376
Short-term marketable investments	0	0
Mutual Funds | Level 1
Amortized Costs	2,000	2,000
Gross Unrealized Gains	0	0
Gross Unrealized Loss	(187)	(107)
Estimated Fair Value	1,813	1,893
Cash and cash equivalents	0	0
Short-term marketable investments	1,813	1,893
Commercial Paper | Level 2
Amortized Costs	6,794	9,043
Gross Unrealized Gains	2	1
Gross Unrealized Loss	0	0
Estimated Fair Value	6,796	9,044
Cash and cash equivalents	0	0
Short-term marketable investments	6,796	9,044
Corporate Debt | Level 2
Amortized Costs	85,164	75,284
Gross Unrealized Gains	78	57
Gross Unrealized Loss	(28)	(10)
Estimated Fair Value	85,214	75,331
Cash and cash equivalents	0	0
Short-term marketable investments	85,214	75,331
Municipal Securities | Level 2
Amortized Costs	1,007	5,435
Gross Unrealized Gains	0	2
Gross Unrealized Loss	(1)	(1)
Estimated Fair Value	1,006	5,436
Cash and cash equivalents	0	0
Short-term marketable investments	1,006	5,436
Asset-backed Securities | Level 2
Amortized Costs	24,614	21,503
Gross Unrealized Gains	7	4
Gross Unrealized Loss	(11)	(5)
Estimated Fair Value	24,610	21,502
Cash and cash equivalents	0	0
Short-term marketable investments	24,610	21,502
Mortgage backed Securities | Level 2
Amortized Costs	2,045	5,822
Gross Unrealized Gains	0	0
Gross Unrealized Loss	(17)	(52)
Estimated Fair Value	2,028	5,770
Cash and cash equivalents	0	0
Short-term marketable investments	2,028	5,770
Agency Bond | Level 2
Amortized Costs	6,805	4,201
Gross Unrealized Gains	1	3
Gross Unrealized Loss	0	0
Estimated Fair Value	6,806	4,204
Cash and cash equivalents	0	0
Short-term marketable investments	6,806	4,204
International Government Securities | Level 2
Amortized Costs	1,000	800
Gross Unrealized Gains	1	4
Gross Unrealized Loss	0	0
Estimated Fair Value	1,001	804
Cash and cash equivalents	0	0
Short-term marketable investments	1,001	$ 804
Contingent Consideration | Level 3
Amortized Costs	0
Gross Unrealized Gains	0
Gross Unrealized Loss	0
Estimated Fair Value	341
Cash and cash equivalents	0
Short-term marketable investments	0
Liabilities, Fair Value Disclosure	$ 341

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Fair Value Measurements (Contingent Consideration Liability) (Details) - USD ($) $ in Thousands	12 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Contingent consideration liabilities [Roll Forward]
Contingent considerations, beginning of period	$ 0	$ 0
Purchase price contigent consideration	541	0
Contingent consideration payments	(200)	0
Contingent consideration, end of period	$ 341	$ 0

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Inventory (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Mar. 31, 2015
Inventory Details
Work-in-process	$ 76	$ 169
Finished goods	444	535
Inventory, net	$ 520	$ 704

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Property and Equipment (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Mar. 31, 2015
Property And Equipment Details
Machinery and computer equipment	$ 20,040	$ 16,099
Furniture and fixtures	1,067	759
Licensed software	6,350	4,696
Leasehold improvements	3,865	3,812
Construction in progress	967	942
Gross	32,289	26,308
Less: accumulated depreciation and amortization	(19,914)	(16,060)
Net	$ 12,375	$ 10,248

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Intangible Assets Schedule Of Intangibles (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Mar. 31, 2015
Gross Carrying Amount	$ 30,933	$ 18,885
Accumulated Amortization	(9,469)	(6,625)
Net Carrying Amount	21,464	12,260
Technology
Gross Carrying Amount	18,640	8,242
Accumulated Amortization	(4,622)	(2,905)
Net Carrying Amount	14,018	5,337
Customer relationships
Gross Carrying Amount	9,993	9,686
Accumulated Amortization	(4,847)	(3,720)
Net Carrying Amount	5,146	5,966
Trade names/domains
Gross Carrying Amount	2,205	957
Accumulated Amortization	0	0
Net Carrying Amount	2,205	957
In-process research and development
Gross Carrying Amount	95	0
Accumulated Amortization	0	0
Net Carrying Amount	$ 95	$ 0

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Intangible Assets Schedule Of Future Amortization Of Intangibles (Details) $ in Thousands	Mar. 31, 2016 USD ($)
Intangible Assets Schedule Of Future Amortization Of Intangibles Details
2017	$ 3,845
2018	3,577
2019	3,327
2020	3,327
2021	2,936
Thereafter	2,152
Total	$ 19,164

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Changes in Carrying Amount of Goodwill by Location (Detail) - USD ($) $ in Thousands	12 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Goodwill, beginning balance	$ 36,887	$ 38,461
Additions due to acquisitions	11,914
Foreign currency translation	(1,381)	(1,574)
Goodwill, ending balance	47,420	36,887
Americas
Goodwill, beginning balance	23,940	23,940
Additions due to acquisitions	1,789
Foreign currency translation		0
Goodwill, ending balance	25,729	23,940
Europe
Goodwill, beginning balance	12,947	14,521
Additions due to acquisitions	10,125
Foreign currency translation	(1,381)	(1,574)
Goodwill, ending balance	$ 21,691	$ 12,947

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Commitments and Contingencies (Product Warranties) (Details) - USD ($) $ in Thousands	12 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2014
Commitments And Contingencies Product Warranties Details
Balance at beginning of year	$ 339	$ 660	$ 452
Accruals for warranties	355	185	953
Settlements	(303)	(364)	(745)
Changes in estimate	(65)	(142)	0
Balance at end of year	$ 326	$ 339	$ 660

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Commitments and Contingencies (Operating Leases) (Details) $ in Thousands	Mar. 31, 2016 USD ($)
Year ending March 31:
2017	$ 3,663
2018	3,552
2019	3,645
2020	2,862
2021 and Thereafter	283
Total	$ 14,005

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Commitments and Contingencies (Capital Leases) (Details) $ in Thousands	Mar. 31, 2016 USD ($)
Year ending March 31:
2017	$ 608
2018	540
2019	349
Total minimum payments	1,497
Less: Amount representing interest	(93)
Total payments, net of interest	1,404
Less: Short-term portion of capital lease obligations	(588)
Long-term portion of capital lease obligations	$ 816

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Commitments and Contingencies (Service Provider Contracts) (Details) $ in Thousands	Mar. 31, 2016 USD ($)
Year ending March 31:
2017	$ 2,572
2018	891
Total minimum payments	$ 3,463

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Commitments and Contingencies (Leases - Rent Expense) (Narrative) (Details) - USD ($) $ in Millions	12 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2014
Commitments And Contingencies Leases - Rent Expense Narrative Details
Rent expense	$ 2.1	$ 1.8	$ 1.5

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Commitments and Contingencies (CustomerSupport Commitments) (Narrative) (Details) $ in Millions	Mar. 31, 2016 USD ($)	Mar. 31, 2015 USD ($)
Commitments And Contingencies Customersupport Commitments Narrative Details
Third party customer support vendor minimum monthly commitment	$ 0.4
Third party customer support vendor maximum obligation	$ 2.2
Advance termination notice required, days	150
Property and equipment under capital lease	$ 1.6	$ 0.5
Accumulated depreciation related to assets under capital lease	$ 0.1	$ 0.3

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Stockholders' Equity Stock-Based Compensation Expense By Statement Of Operations (Details) - USD ($) $ in Thousands	12 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2014
Stock-based employee compensation expense related to employee stock options and employee stock purchases, pre tax	$ 16,334	$ 9,347	$ 7,595
Tax benefit	0	0	0
Stock-based employee compensation expense related to employee stock options and employee stock purchases, net of tax	16,334	9,347	7,595
Cost of service revenue
Stock-based employee compensation expense related to employee stock options and employee stock purchases, pre tax	1,159	692	372
Cost of product revenue
Stock-based employee compensation expense related to employee stock options and employee stock purchases, pre tax	0	0	0
Research and development
Stock-based employee compensation expense related to employee stock options and employee stock purchases, pre tax	2,914	1,495	967
Sales and marketing
Stock-based employee compensation expense related to employee stock options and employee stock purchases, pre tax	6,133	3,748	2,217
General and administrative
Stock-based employee compensation expense related to employee stock options and employee stock purchases, pre tax	$ 6,128	$ 3,412	$ 4,039

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Stockholders' Equity Option Activity (Details) - $ / shares	12 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2014
Stockholders Equity Option Activity Details
Balance at beginning of period	5,327,907	6,002,382	5,991,544
Granted	723,776	1,110,466	1,465,400
Exercised	(1,162,175)	(1,326,385)	(1,283,470)
Cancelled/forfeited	(96,242)	(458,556)	(171,092)
Balance at end of period	4,793,266	5,327,907	6,002,382
Options, Vested and expected to vest	4,793,266
Options, Exercisable at end of period	2,950,697
Weighted-average exercise price of options outstanding, at beginning of period	$ 5.19	$ 4.14	$ 2.52
Weighted-average exercise price of options granted during period	8.63	7.29	9.66
Weighted-average exercise price of options exercised during the period	2.56	1.87	2.75
Weighted-average exercise price of options forfeited, cancelled or expired during the period	8.06	6.06	5.25
Weighted-average exercise price of options outstanding at end of period	6.29	$ 5.19	$ 4.14
Options, Vested and Expected to Vest, Weighted Average Exercise Price	6.29
Weighted-Average Exercise Prices, Exercisable at end of period	$ 4.99

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Stockholders' Equity Stock Purchase Right Activity (Details) - $ / shares	12 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2013
Stockholders Equity Stock Purchase Right Activity Details
Balance at beginning of year	223,835	489,627	958,575
Granted	0	31,432	22,380
Vested	(115,789)	(223,360)	(392,844)
Forfeited	(25,875)	(73,864)	(98,484)
Balance at end of year	82,171	223,835	489,627	958,575
Weighted-average grant date fair value, beginning balance	$ 5.92	$ 4.83	$ 4.11
Weighted-average grant date fair value of restricted stock rights granted	0	7.88	9.69
Weighted-average grant date fair value, released during period	5.32	3.98	3.25
Weighted-average grant date fair value, forfeited during period	7.40	5.39	5.18
Weighted-average grant date fair value, ending balance	$ 6.30	$ 5.92	$ 4.83	$ 4.11
Weighted-average remaining contractual term, in years, ending balance	1 year 241 days	1 year 317 days	1 year 335 days	2 years 187 days

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Stockholders' Equity Restricted Stock Unit Activity (Details)	12 Months Ended
	Mar. 31, 2016 $ / shares shares	Mar. 31, 2015 $ / shares shares	Mar. 31, 2014 $ / shares shares	Mar. 31, 2013
Stockholders Equity Restricted Stock Unit Activity Details
Balance at beginning of period | shares	2,698,686	1,134,856	25,000
Granted | shares	2,681,997	1,965,786	1,291,200
Vested | shares	(589,788)	(187,788)	(133,000)
Forfeited | shares	(246,096)	(214,168)	(48,344)
Balance at end of period | shares	4,544,799	2,698,686	1,134,856
RSU weighted-average remaining contractual term, in years	1.67	1.88	2.00	2.47
Beginning of period, weighted-average purchase price | $ / shares	$ 7.33	$ 9.00	$ 6.91
Granted, weighted-average purchase price | $ / shares	8.78	6.68	9.11
Vested, weighted-average purchase price | $ / shares	7.79	9.54	9.49
Forfeited, weighted-average purchase price | $ / shares	8.15	8.30	9.61
End of period, weighted-average purchase price | $ / shares	$ 8.08	$ 7.33	$ 9.00

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Stockholder's Equity Stock Options Outstanding And Exercisable (Details) - USD ($)	12 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2013
Options Outstanding, Number of Shares	4,793,266	5,327,907	6,002,382	5,991,544
Options Outstanding, Weighted-Average Exercise Price Per Share	$ 6.29	$ 5.19	$ 4.14	$ 2.52
Options Exercisable, Number of Shares	2,950,697
Options Exercisable, Weighted-Average Exercise Price Per Share	$ 4.99
$0.55 - $1.27
Range of Exercise Prices, Minimum	0.55
Range of Exercise Prices, Maximum	$ 1.27
Options Outstanding, Number of Shares	1,079,767
Options Outstanding, Weighted-Average Exercise Price Per Share	$ 1.13
Options Outstanding, Weighted-Average Remaining Contractual Term (in years)	1 year 252 days
Options Outstanding, Aggregate Intrinsic Value	$ 9,589,205
Options Exercisable, Number of Shares	1,079,767
Options Exercisable, Weighted-Average Exercise Price Per Share	$ 1.13
Options Exercisable, Aggregate Intrinsic Value	$ 9,589,205
$1.33 - $6.86
Range of Exercise Prices, Minimum	$ 1.33
Range of Exercise Prices, Maximum	$ 6.86
Options Outstanding, Number of Shares	1,500,242
Options Outstanding, Weighted-Average Exercise Price Per Share	$ 5.77
Options Outstanding, Weighted-Average Remaining Contractual Term (in years)	7 years
Options Outstanding, Aggregate Intrinsic Value	$ 6,368,920
Options Exercisable, Number of Shares	1,000,701
Options Exercisable, Weighted-Average Exercise Price Per Share	$ 5.27
Options Exercisable, Aggregate Intrinsic Value	$ 4,744,126
$7.52 - $8.93
Range of Exercise Prices, Minimum	$ 7.52
Range of Exercise Prices, Maximum	$ 8.93
Options Outstanding, Number of Shares	996,150
Options Outstanding, Weighted-Average Exercise Price Per Share	$ 8.29
Options Outstanding, Weighted-Average Remaining Contractual Term (in years)	9 years 36 days
Options Outstanding, Aggregate Intrinsic Value	$ 1,723,062
Options Exercisable, Number of Shares	184,115
Options Exercisable, Weighted-Average Exercise Price Per Share	$ 8.14
Options Exercisable, Aggregate Intrinsic Value	$ 345,844
$9.21 - $9.74
Range of Exercise Prices, Minimum	$ 9.21
Range of Exercise Prices, Maximum	$ 9.74
Options Outstanding, Number of Shares	983,835
Options Outstanding, Weighted-Average Exercise Price Per Share	$ 9.62
Options Outstanding, Weighted-Average Remaining Contractual Term (in years)	7 years 180 days
Options Outstanding, Aggregate Intrinsic Value	$ 384,463
Options Exercisable, Number of Shares	603,302
Options Exercisable, Weighted-Average Exercise Price Per Share	$ 9.63
Options Exercisable, Aggregate Intrinsic Value	$ 232,944
$10.50 - $11.26
Range of Exercise Prices, Minimum	$ 10.50
Range of Exercise Prices, Maximum	$ 11.26
Options Outstanding, Number of Shares	233,272
Options Outstanding, Weighted-Average Exercise Price Per Share	$ 10.95
Options Outstanding, Weighted-Average Remaining Contractual Term (in years)	8 years 180 days
Options Outstanding, Aggregate Intrinsic Value	$ 0
Options Exercisable, Number of Shares	82,812
Options Exercisable, Weighted-Average Exercise Price Per Share	$ 11.10
Options Exercisable, Aggregate Intrinsic Value	$ 0
$0.55 - $11.26
Range of Exercise Prices, Minimum	$ 0.55
Range of Exercise Prices, Maximum	$ 11.26
Options Outstanding, Number of Shares	4,793,266
Options Outstanding, Aggregate Intrinsic Value	$ 18,065,650
Options Exercisable, Number of Shares	2,950,697
Options Exercisable, Aggregate Intrinsic Value	$ 14,912,119

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Stockholder's Equity Assumptions Used In Black-Scholes Model (Details) - $ / shares	12 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2014
Option Grants
Expected volatility	53.00%	61.00%	64.00%
Expected dividend yield	0.00%	0.00%	0.00%
Risk-free interest rate, minimum	1.50%	1.40%	0.70%
Risk-free interest rate, maximum	1.80%	1.90%	2.20%
Weighted average expected option term, in years	5 years 144 days	6 years	6 years 36 days
Weighted average fair value of options granted, per share	$ 4.17	$ 4.14	$ 5.70
Employee Stock Purchase
Expected volatility	43.00%	49.00%	40.00%
Expected dividend yield	0.00%	0.00%	0.00%
Risk-free interest rate	0.39%	0.12%	0.09%
Weighted average expected option term, in years	299 days	288 days	270 days
Weighted average fair value of options granted, per share	$ 3.25	$ 2.52	$ 2.83

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Stockholders' Equity (Narrative) (Details) - USD ($)	12 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2014
Cash received from option exercises and purchases of shares under the Purchase Plans	$ 4,800,000	$ 4,500,000	$ 5,200,000
Stock-Based Awards
Total intrinsic value of options exercised	9,200,000	$ 8,100,000	8,200,000
Unamortized stock-based compensation expense related to unvested stock awards	34,800,000
Weighted average period of recognition for unrecognized compensation costs (in years)		2 years 212 days
Tax benefit attributable to stock options exercised	$ 224,000	$ 151,000	$ 142,000
Employee Stock Purchase Plan
Employee Stock Purchase Plan Shares Issued	365,555	282,062	301,303
Percentage of market value price of common stock under Employee Stock Purchase Plan		85.00%
Maximum contribution percentage amount of employee's base compensation		10.00%

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Stockholders' Equity Repurchases of Common Shares (Detail) - USD ($)		12 Months Ended
		Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2014
Stock repurchased and retired during period, value		$ (11,653,000)	$ (19,371,000)	$ (489,000)
Stock repurchased and retired at end of period, shares		3,880,350	2,488,215
Stock repurchased and retired at end of period, weighted average price per share		$ 7.83	$ 7.38
Stock repurchased and retired at end of period, value		$ 30,364,722	$ 19,200,393
February 2015
Stock repurchased and retired during period, shares		1,392,135	2,488,215
Stock repurchased and retired during period, value	[1]	$ 11,164,329	$ 19,200,393
Stock repurchased, weighted average price per share		$ 8.02	$ 7.38
Stock repurchase program, authorized amount		$ 20,000,000
Stock repurchase program expiration date		Oct. 20, 2016	Feb. 29, 2016
October 2015
Stock repurchase program, authorized amount		$ 15,000,000
Total Plan 2015
Stock repurchase program, remaining authorized repurchase amount		$ 15,000,000

[1] Amount excludes commission fees.

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Inome Taxes (Income Tax Provision) (Detail) - USD ($) $ in Thousands	3 Months Ended										12 Months Ended
	Mar. 31, 2016	[1]	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	[1]	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2014
Current:
Federal											$ 97	$ 92	$ 0
State											551	457	276
Foreign											71	1	0
Total current income tax provision											719	550	276
Deferred:
Federal											95	2,602	1,578
State											(854)	(363)	365
Foreign											(807)	0	0
Total deferred tax provision											(1,566)	2,239	1,943
Income tax provision	$ (1,498)		$ (557)	$ 423	$ 785	$ 79		$ 627	$ 1,411	$ 672	$ (847)	$ 2,789	$ 2,219

[1] Comparability affected by the decrease in fiscal 2016 and 2015 in the valuation allowance related to the deferred tax asset which resulted in a decrease in the provision for income taxes of $1.1 million and $1.5 million, in the fourth quarter of fiscal 2016 and 2015, respectively.

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Income taxes (Deferred Tax Assets) (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Mar. 31, 2015
Current deferred tax assets
Net operating loss carryforwards	$ 2,739	$ 2,179
Inventory valuation	14	14
Reserves and allowances	2,740	2,394
Net current deferred tax assets	5,493	4,587
Net operating loss carryforwards	38,449	44,228
Research and development and other credit carryforwards	7,106	5,414
Stock-based compensation	5,577	3,164
Fixed assets and intangibles	(6,160)	(4,869)
Net non-current deferred tax assets	44,972	47,937
Valuation allowance	(3,760)	(4,901)
Total	$ 46,705	$ 47,623

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Income Taxes (Reconciliation of Taxes Provided to Federal Statutory Rate) (Details) - USD ($) $ in Thousands	3 Months Ended										12 Months Ended
	Mar. 31, 2016	[1]	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	[1]	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2014
Income Taxes Reconciliation Of Taxes Provided To Federal Statutory Rate Details
Tax provision at statutory rate											$ (2,029)	$ 1,599	$ 1,285
State income taxes before valuation allowance, net of federal effect											9	269	196
Foreign tax rate differential											(769)	0	0
Research and development credits											(1,253)	(725)	(1,534)
Change in valuation allowance											(1,555)	(1,480)	1,264
Compensation/option differences											(471)	(331)	(264)
Non-deductible compensation											944	746	605
Acquisition costs											230	0	230
Expiring CA NOLs											1,626	1,484	240
Foreign loss not benefited											2,342	1,192	271
Other											79	35	(74)
Total income tax provision	$ (1,498)		$ (557)	$ 423	$ 785	$ 79		$ 627	$ 1,411	$ 672	$ (847)	$ 2,789	$ 2,219

[1] Comparability affected by the decrease in fiscal 2016 and 2015 in the valuation allowance related to the deferred tax asset which resulted in a decrease in the provision for income taxes of $1.1 million and $1.5 million, in the fourth quarter of fiscal 2016 and 2015, respectively.

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Income Taxes (Unrecognized Tax Benefits) (Details) - USD ($) $ in Thousands	12 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2014
Income Taxes Unrecognized Tax Benefits Details
Balance at beginning of year	$ 2,420	$ 2,165	$ 3,024
Gross increases - tax position in prior period	82	27	0
Gross decreases - tax position in prior period	0	0	(1,081)
Gross increases - tax positions related to the current year	379	228	222
Balance at end of year	$ 2,881	$ 2,420	$ 2,165

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Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended								12 Months Ended
	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2014
Numerator:
Income from continuing operations									$ (5,120)	$ 1,926	$ 1,598
Income from discontinued operations, net of income tax provision									0	916	489
Net income available to common stockholders	$ (1,076)	$ (1,680)	$ (1,892)	$ (472)	$ 183	$ 444	$ 1,291	$ 8	$ (5,120)	$ 1,926	$ 2,514
Denominator:
Common shares	88,888	88,289	88,557	88,233	88,950	89,594	89,073	88,592	88,477	89,071	78,310
Denominator for basic calculation	88,888	88,289	88,557	88,233	88,950	89,594	89,073	88,592	88,477	89,071	78,310
Employee stock options									0	2,088	2,927
Employee stock purchase rights									0	493	421
Denominator for diluted calculation	88,888	88,289	88,557	88,233	91,266	91,974	91,615	91,445	88,477	91,652	81,658
Income per share - continuing operations:
Basic									$ (0.06)	$ 0.02	$ 0.02
Diluted									(0.06)	0.02	0.02
Income per share - discontinued operations:
Basic									0.00	0.00	0.01
Diluted									0.00	0.00	0.01
Net income per share:
Basic	$ (0.01)	$ (0.02)	$ (0.02)	$ (0.01)	$ 0.00	$ 0.01	$ 0.01	$ 0.00	(0.06)	0.02	0.03
Diluted	$ (0.01)	$ (0.02)	$ (0.02)	$ (0.01)	$ 0.00	$ 0.01	$ 0.01	$ 0.00	$ (0.06)	$ 0.02	$ 0.03

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Net Income Per Share Options and Rights Excluded (Details) - shares shares in Thousands	12 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2014
Anti-dilutive shares	2,243	1,869	768
Employee stock options
Anti-dilutive shares	2,193	1,812	750
Stock purchase rights
Anti-dilutive shares	50	57	18

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Segment Reporting Revenue and Property and Equipment by Geographic Area (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2014
Geographic Areas, Revenue from External Customers									100%	100%	100%
Number of customers at more than 10% of revenue									0	0	0
Geographic Areas, Long-Lived Assets	$ 12,375				$ 10,248				$ 12,375	$ 10,248
Net income (loss)	(1,076)	$ (1,680)	$ (1,892)	$ (472)	183	$ 444	$ 1,291	$ 8	$ (5,120)	$ 1,926	$ 2,514
Americas
Geographic Areas, Revenue from External Customers									87%	92%	97%
Geographic Areas, Long-Lived Assets	9,165				8,348				$ 9,165	$ 8,348
Net revenue									185,241	150,764	$ 125,270
Net income (loss)									$ 940	$ 5,433	$ 3,296
Europe
Geographic Areas, Revenue from External Customers									12%	7%	2%
Geographic Areas, Long-Lived Assets	2,642				1,411				$ 2,642	$ 1,411
Net revenue									24,095	11,649	$ 3,327
Net income (loss)									$ (6,060)	$ (3,507)	$ (782)
Asia Pacific
Geographic Areas, Revenue from External Customers									1%	1%	1%
Geographic Areas, Long-Lived Assets	$ 568				$ 489				$ 568	$ 489

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Acquisitions (Purchase Information) (Details) - USD ($)
$ in Thousands

1 Months Ended

11 Months Ended

Jun. 30, 2015

May 31, 2015

Nov. 30, 2013

Voicenet

Effective date of purchase agreement

Nov. 11, 2013

Business Acquisition, Description of Acquired Entity

On November 11, 2013, the Company entered into a share purchase agreement with the shareholders and optionholders of Voicenet Solutions Limited ("Voicenet"), a provider of cloud communications and collaboration services in the United Kingdom.

Assets acquired:

Property and equipment

$ 2,900

Intangible assets

6,400

Total assets acquired

9,300

Liabilities assumed:

Current and non-current liabilities

(4,100)

Total liabilities assumed

(4,100)

Net identifiable assets acquired

6,400

Goodwill

14,100

Total consideration transferred

$ 19,300

DXI

Effective date of purchase agreement

May 26, 2015

Business Acquisition, Description of Acquired Entity

On May 26, 2015, the Company entered into a share purchase agreement with the shareholders of DXI Limited, and its wholly owned subsidiaries, (collectively, DXI) for the purchase of the entire share capital of DXI. The transaction closed effective May 29, 2015 and was not subject to regulatory approvals.

Assets acquired:

Cash

$ 1,318

Current assets

2,016

Property and equipment

1,453

Intangible assets

13,374

Total assets acquired

18,161

Liabilities assumed:

Current and non-current liabilities

(5,734)

Total liabilities assumed

(5,734)

Net identifiable assets acquired

12,427

Goodwill

10,125

Total consideration transferred

$ 22,552

QSC

Effective date of purchase agreement

Jun. 03, 2015

Business Acquisition, Description of Acquired Entity

On June 3, 2015, the Company entered into an asset purchase agreement with the shareholder of QSC and other parties affiliated with the shareholder and QSC for the purchase of certain assets as per the purchase agreement.

Assets acquired:

Intangible assets

$ 1,100

Total assets acquired

1,100

Liabilities assumed:

Goodwill

1,789

Total consideration transferred

$ 2,889

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Patent Sale (Narrative) (Details) - USD ($) $ in Millions	1 Months Ended
	Jun. 30, 2012	Mar. 31, 2016
Patent Sale Narrative Details
Sale of patents	$ 12.0
Future maximum patent license collection	$ 3.0	$ 1.0

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Discontinued Operations (Details) - USD ($) $ in Thousands	12 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2014
Results of Operations
Revenue	$ 0	$ 0	$ 1,430
Operating expense	0	0	922
Income before income taxes	0	0	508
Provision for income taxes	0	0	188
Income from discontinued operations	0	0	320
Gain on disposal of discontinued operations. net of income tax provision of $456k	0	0	596
Income tax provision on gain on disposal	$ 0	$ 0	$ 456

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Consolidated Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended										12 Months Ended
	Mar. 31, 2016		Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015		Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2014
Quarterly Financial Data Details
Service revenue	$ 52,174		$ 48,948	$ 46,951	$ 44,168	$ 40,009		$ 37,802	$ 36,121	$ 34,276	$ 192,241	$ 148,208	$ 116,607
Product revenue	5,160		4,220	3,991	3,724	3,521		3,570	3,477	3,637	17,095	14,205	11,990
Total revenue	57,334		53,168	50,942	47,892	43,530		41,372	39,598	37,913	209,336	162,413	128,597
Operating expenses:
Cost of service revenue	9,720		9,713	9,186	8,459	7,655		7,544	7,505	6,997	37,078	29,701	22,445
Cost of product revenue	6,103		5,087	4,596	4,382	4,173		3,959	3,762	3,969	20,168	15,863	15,170
Research and development	6,110		6,404	6,446	5,080	4,348		3,868	3,496	3,406	24,040	15,118	11,633
Sales and marketing	31,240		27,585	26,370	23,824	21,508		20,559	19,440	19,160	109,379	80,667	60,906
General and administrative	7,132		6,888	5,657	6,068	5,794		4,617	3,893	3,878	25,745	18,182	15,368
Gain on patent sale	0		0	0	0	0		0	(1,000)	0	0	(1,000)	0
Total operating expenses	60,305		55,677	52,615	47,813	43,478		40,547	37,096	37,410	216,410	158,531	125,522
Income (loss) from operations	(2,971)		(2,509)	(1,673)	79	52		825	2,502	503	(7,074)	3,882	3,075
Other income, net	397		272	204	234	210		246	200	177
Income (loss) from continuing operations before provision (benefit) for income taxes	(2,574)		(2,237)	(1,469)	313	262		1,071	2,702	680	(5,967)	4,715	3,817
Provision (benefit) for income taxes (1)	(1,498)	[1]	(557)	423	785	79	[1]	627	1,411	672	(847)	2,789	2,219
Net income (loss)	$ (1,076)		$ (1,680)	$ (1,892)	$ (472)	$ 183		$ 444	$ 1,291	$ 8	$ (5,120)	$ 1,926	$ 2,514
Net income (loss) per share:
Basic	$ (0.01)		$ (0.02)	$ (0.02)	$ (0.01)	$ 0.00		$ 0.01	$ 0.01	$ 0.00	$ (0.06)	$ 0.02	$ 0.03
Diluted	$ (0.01)		$ (0.02)	$ (0.02)	$ (0.01)	$ 0.00		$ 0.01	$ 0.01	$ 0.00	$ (0.06)	$ 0.02	$ 0.03
Shares used in per share calculations:
Basic	88,888		88,289	88,557	88,233	88,950		89,594	89,073	88,592	88,477	89,071	78,310
Diluted	88,888		88,289	88,557	88,233	91,266		91,974	91,615	91,445	88,477	91,652	81,658

[1] Comparability affected by the decrease in fiscal 2016 and 2015 in the valuation allowance related to the deferred tax asset which resulted in a decrease in the provision for income taxes of $1.1 million and $1.5 million, in the fourth quarter of fiscal 2016 and 2015, respectively.

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Schedule II Valuation and Qualifying Accounts (Details) - USD ($) $ in Thousands		12 Months Ended
		Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2014
Total Allowance for Doubtful Accounts
Balance at Beginning of Year		$ 416	$ 466	$ 327
Additions Charged to Expenses		509	279	571
Deductions	[1]	(339)	(329)	(432)
Balance At End of Year		$ 586	$ 416	$ 466

[1] The deductions related to allowance for doubtful accounts represent accounts receivable which are written off.