Packet8 profit not due to consumer VoIP

Packet8 residential VoIP service logged a gross churn rate of more than 9 percent during the same period parent company 8x8 cleared its first profit since launching VoIP. 8x8, based in Santa Clara, Calif., posted net income of $508,000 during its first fiscal quarter of 2008, while revenue on residential VoIP declined from the previous quarter by five percent to $7.6 million.

In an earnings call Aug. 2, Packet8 executives reported adding more than 1,000 former SunRocket customers a day since that company suddenly shut down July 16. However, the SunRocket influx started after 8x8's first quarter ended June 30, with Packet8 losing 17,300 residential customers. The number translates into a gross churn of more than 9 percent of the 181,000-subscriber base. A total of 8,300 new subscribers were added, yielding net churn of around 5 percent.

8x8 Chairman and CEO Bryan Martin said churn had slowed in July, and that 19,000 former SunRocketers had signed up for Packet8. Of those, 61 percent had signed up for Packet8's $199 one-year package, and will be locked in for the full amount after 30 days. At 9 percent churn (actual rate could be higher or lower), SunRocket refugees could add around $2 million to 8x8's bottom line over a 12-month period.

The first-quarter profit at 8x8 appears mostly to be related to a series of one-time items, including $573,000 in revenue arising from a change in the company's Universal Service contribution.

For more:
- 8x8's quarterly results announcement is here

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