[Once @ 7:33 PM Wed. 02.28.24! Smile…] On Papers That Offer No… Informational Value. Crypto-Edition 2023.

Riot is falling again (another 4%) on the NASDAQ here on Monday — threatening to drop into the $13 something land. Not surprising, if you can do math.

But like Blockworks before it, last Friday — another crypto-booster outlet… this joke of a paper is incapable of any actual financial analysis. It mentions only some stenography from Riot’s presser. Y A W N.

Here’s that silly non-analytical take, from CryptoPotato.

The idea that Riot is again wildly diluting shareholders, only to lose ever more money… is nowhere explored — at either CryptoPotato or Blockworks.

Hilarious. [Very much like the reporting on old Mattersight of a decade past. And some of the current NICE and 8X8 “reporting” as well, this quarter, in truth. Even though it won a Stevie, this week — 8X8 still loses significant amounts, every quarter, for now several years running. Oh well.]

And so, the maximalists… see their investments evaporating before their eyes, as a result.

Out. Next stop? Sub-$10, for Riot — around $3, for 8X8. That’s Condor’s take.

“Just Like… Old Times!” As Was True Last Quarter, Top Line Revenue Is Suffering At 8X8… Form 10-Q Now On File…

Well, not too terribly surprising, as 8X8 says it wants to emphasize profitable growth only — no chasing sales, just for sales’ sake — if the same won’t help it reach GAAP breakeven.

And that is wise.

But the reason this is unsurprising… is that we have argued for about a decade now [right here, on the old eLoyalty / Mattersight / now (sporadic) NICE review blog] that the entire sector is largely unable, globally… to charge a price for the services each of these companies provide… that would allow it to be profitable, consistently.

Said another way, the universe of buyers just doesn’t value a “CRM dashboard” as highly as these companies would hope. Despite all the chatter about AI enhancing this or that portion of the services and software delivered, it still remains a very labor intensive matter to install the suite of applications, and to keep them updated and running.

The entire sales cycle is much more like selling consulting services (a very long lead time to a “yes” and contract signing / checks being issued)… than shrink-wrapped software… let alone a streamed “download anywhere” — use everywhere (automated deployment).

This is true because these tools — at NICE or 8X8 (or previously at Mattersight) must be able to run on dozens of legacy business systems, some approaching two decades now in service (Windows Xp-, or earlier version Apple OS- based).

So — while the press release talks about “customer wins” — the fact is that revenue will keep shrinking, and true GAAP profitability is several years off, even if 8X8 continues to only take higher priced engagements. The base of unprofitable relationships, most long term, is just too large.

And to be fair, that is true at larger NICE as well. Here’s the SEC Form 10-Q and the most relevant bit, below — I’d expect 8X8’s NASDAQ price to decline, tomorrow. In fact, it has broken below $4 in after hours trading on the news.

…In the first quarter of fiscal 2024, our total revenue decreased $4.3 million, or approximately 2% year-over-year, to $183.3 million primarily due to a $3.9 million decrease in our service revenue….

NICE has the advantage of lower overall labor costs, with much of its customer support tele-help sourced out of Southeast Asia.

That may be what 8X8 needs to take a serious look at re-tooling toward.

Onward — just a tough market to be in, world-wide. Out.

The Chief Legal Officer Of 8X8 Has Filed An Intent To Sell Notice, At SEC’s EDGAR Window…

This is not a current sale (yet). It is a Form 144 (filed last night) — notice of intent to possibly sell — in the future.

But it does ALSO disclose that the Chief Legal guy has… an automated plan to sell, when certain NASDAQ price levels are either exceeded, or floors are breached. [Those target levels are never disclosed, at SEC… however.]

Just… “the more you know“… the better your chances of not getting… hood-winked, on a trade.

Onward.

Tangent: “Is There Any Form Of Idiocy… Too Banal, For This Jamoke?”

So… it would be hard to imagine a more insipid… rebrand.

Unless of course, one’s ultimate aim is to make it… irrelevant, in the coming 2024 US election cycle — as he’s realized he cannot control the megaphone, in any manner.

That’s my current bet, with a dash of crypto- / token grift — jauntily splashed, on the sauce plate.

What a tool this feckless putz is.

Out.

A 500 Million Year Old “Dune” Style Sea Worm, With Armor Plated Bristles… Found, In Northern Utah…

About the length of an iPhone, this is one bizarre Cambrian fossil, at right.

It is a wholly unknown type of sea-worm — and you know these sorts of “time out of mind” discoveries, especially in the mountainous West… fire my imaginings — they are thrilling, indeed.

Here’s the bit:

…When she found the fossil, Rhiannon LaVine, a research associate with the KU Biodiversity Institute and Natural History Museum, was part of a team camping and carrying out fieldwork in the High Creek area of the Spence Shale. This is a geologic formation straddling northern Utah and southern Idaho. Since the 1900s, the area has been famed for its abundance of some 90 species of Cambrian trilobites and soft-bodied fossils….

As the discoverer of the new fossil worm and a co-author on the paper describing it, LaVine bestowed the species with its scientific name: Shaihuludia shurikeni. Shai-Hulud is the indigenous name for the worms on the planet Arrakis in the “Dune” novels by Frank Herbert, while “shuriken” is the Japanese word for throwing star, representing the shape of the blade-like chaetae (chaetae are the stiff bristles that characterize many annelids)….

Now you know… and that’s great STEM content, indeed: immortalized in the history of natural science as the discoverer of a new species. Not entirely coincidentally. . . a decade is by no stretch… a half a billion years, but in some ways… it seems vaguely… alike. Smile.

नमस्ते

Tangent: 8X8 NASDAQ Price Back To Where It Was In October 2022…

To be certain, we will elaborate on this overall flattening price trend since mid-last year…

And we will discuss the new executive team appointments… along with rumors that an activist investor is (over the last two months) pushing for a monetizing M&A transaction.

All upon our return from the snow-capped 14,000 footers…

Smile… stay tuned, next week!

Tangent: 8X8 Is Up Nearly 30%, In Under One Month — NICE Is DOWN ~10%…

The below is now over two weeks old, but it remains a nice summary. What is perplexing here is that 8X8 has continued (more or less consistently) to rise through all of May, while NICE has pretty regularly fallen, by about 10 per cent.

8X8 up about 30 per cent on the the NASDAQ? For a company without any GAAP earnings, while one with GAAP earnings (and about a 30 per cent larger recurring revenue base) falls?

That’s a puzzler, indeed.

We waited a day on this, due to other billable commits, but 8×8 has put out its March 31, 2023 quarterly press release disclosures (it will be a bit for the SEC Form 10-K, since it is on a fiscal March 31 year — and so we will have much more then, when the K files). No surprise — it is still losing money on a GAAP basis — but those GAAP losses are for the moment narrowing. Loss was $45 million, but now is about $9.4 million most recently… and that’s encouraging.

The larger concern, I think, is that revenue was light, again this quarter. And the guidance for future revenue was slightly below prior estimates. The company does carry pretty significant debt, so declines in revenue are worrisome — for debt service prospects.

True — NICE saw sequential quarter to quarter slight declines in global revenue (as well), but (at many multiples of 8×8’s size) it continues to be GAAP profitable — and has expanded a positive net margin from around 11.5% to well over 13%. [The GAAP margins at 8×8 remain in the red.]

8×8 is truly trying to get to GAAP profitability, but at about its size, legacy Mattersight never made it once in 20 years of trying. [And so, Mattersight sold to NICE in 2018 for pennies on the dollar.]

The good news is that 8×8 has a very energetic and motivated team — built by great HR / people officer talent.

And still, finding a way to get customers to pay fairly for the value offered… will be a challenge. [Prior quarter (12.31.22) at right.]

But to track how the company does, against the overall market leader — look to NICE’s disclosures. It is out of Israel, while 8×8’s HQ is in the UK (albeit with a US substantial footprint south of the Bay Area).

Now you know. Onward — celebrate all the mommas in your lives, this weekend — and always!

An Intriguing “Echo”: I’m Listening To The GAAP LPS Call Now, But 8X8 Sales Revenue Came Up Short, As Did Its Expense Control… Ouch.

We will aim the readership toward a new blog, since it seems very much like the same old wine… decanted into new bottles, here — at least as of last evening’s GAAP quarterly losses call. Enjoy — and be enlightened. These are very difficult business models to break even on, even at larger scales.

And… the stock is now down around 3% — in after-hours NASDAQ trading, as a result.

It is, in fact, inappropriate to call losses per share (GAAP)… earnings (Non-GAAP), whether per share, or not so — even on a fully-disclosed non-GAAP basis. This quarter, 8X8 ballooned its accumulated deficit by about $18 million… and chewed through another $63.7 million in losses from operations over the last nine months, which is consistent with GAAP loss from operations of ~$18 million — in just the December 31 quarter alone.

Sadly, 8X8 is tonight sounding more than just a little… like the old Mattersight — a company that was in the same vertical, before a “fire sale” acquisition by the larger Israel based NICE, Inc. We’ve seen… this movie, before.

For over 20 years, that company lost money — but touted its “customer wins”. It turned out that customer wins aren’t worth much, if the service / product is not priced (or worse, not valued in the marketplace) at a level that lets it at least cover all expenses — of being in these businesses.

That is the fundamental problem of these call center and voice solution businesses: there is no moat, and many large companies bidding for a set of clients that can afford to shop around for the lowest prices.

In sum, the model with clients is just not… sticky enough.

At this point — despite being much larger than Mattersight ever was — and getting close to being able to challenge NICE on foot-print overall… 8X8 simply cannot reliably be expected to be able to reduce expenses enough, or increase pricing enough… to ever make consistent net GAAP earnings per share.

Thus the “7% Solution” layoffs, just two weeks ago.

In a future post, we will outline why this company’s debt load… is going to make the future here… very, very questionable, even for survival — for more than five years.

We saw it back at Mattersight — as well. And we saw that CEO, Kelly Conway, go on and on about “improving margins” on a non-GAAP basis, and still it was taken off the market at $2 a share — a fire sale (from $22/share just four years earlier) — because… it was (as 8X8 now is!) LOSING MONEY.

In sum — things are going to get significantly worse before they get better (if they ever do), on a GAAP basis. And in the end, stocks are only worth their future GAAP net cash flow, net of all expenses.

Damn. But… the more things change, the more they… stay the same.

This Is The Sort Of Letter Kelly Conway Owed His Employees — At Least Five Times. But He Never Sent It.

Do read it closely, as this small public company (also rarely profitable on a GAAP basis) is at least doing it respectably — and is in the same general market-place / wheelhouse — at least as former CEO Conway claimed to operating from:

Date: January 18, 2023
To: 8×8 Employees
Subject Line: Strategic Alignment

Team 8×8,

Since November, I have been working closely with the Leadership Team and the Board of Directors on our three-year outlook. As part of our plans to forge our XCaaS competitive advantage into a winning strategy, we have identified six areas that will be particularly critical to our success:

• Accelerating our transition to an innovation-led company
• Leveraging our Ideal Customer Profile (ICP)
• Increasing XCaaS win rates and Sales and Marketing productivity
• Maintaining our outstanding UCaaS customer experience
• Establishing CPaaS leadership in APAC
• Increasing profitability to strengthen our financial position and fund growth

Our success depends heavily on the ability to make difficult choices about where to deploy resources in order to create the greatest value. I wish it were never so, but sometimes that includes letting go of people, despite their excellent work, as priorities shift. Regrettably, that is the situation we currently face at 8×8 in order to align with emerging marketplace opportunities. Today we are undergoing a global staff reduction that impacts approximately 7% of our organization subject to regional notice requirements and processes.

I believe this reduction is essential to improve our efficiency and align our resources to the critical areas of focus. Streamlining Sales and Marketing while enhancing Customer Success will feed our primary goal of customer delight and retention. We have a massive opportunity in front of us to leverage our XCaaS first-mover advantage, accelerate CCaaS innovation, and become a true leader across customer experience communications.

I want to emphasize that because this is a strategic reallocation of resources, it will impact teams and regions differently. Conversations with impacted employees are underway and I ask that everyone be respectful of this process and reach out to support impacted employees as they work through this transition. Those of us who remain also have the responsibility to honor our co-workers by becoming a stronger company. The list of priorities above ensures that we will make meaningful change instead of trying to do the same work with fewer people. You have my commitment that rather than haphazardly dropping things into accidental gaps, we will tighten our focus and thoughtfully choose what not to do.

We will go through a strategic deep dive during the February All Hands. I will also host Ask-me-Anything meetings to discuss the organizational changes. Functional leaders will have team meetings that include your HR Business Partner to discuss department level questions. Please share your ideas, questions, and concerns. Facing both the sad news and the next steps together is part of our evolution. As always, thank you for your willingness to meet challenges with professionalism and teamwork. You inspire me to find better solutions.

— Sam

Now you know. I would expect that NICE will downsize (again!) as well — what with Microsoft cutting another 10,000 this morning.

Y I K E S.

So… RingCentral, A NICE “RE-Seller”, May Be Buying 8×8 — To Escape NICE Ineptitude?

Here is a new blog address.

I am unlikely to update there very often — but this one fascinates me, as I respect many of the people at 8×8.

They could turn out ot be a game changer, for RingCentral.

We shall see.