8x8 Cloud-Enables Regus Re-Invention
UCaaS provider 8x8 lands big deal with workplace provider Regus, and plans to start migration for roughly 2,500 locations.
After the stock market closed on Oct. 5, UCaaS provider 8x8 announced a deal with Regus, a global workplace provider, to deploy 8x8's cloud-based enterprise communications service. As an industry analyst and regular contributor to No Jitter, I am often briefed on such announcements before they are made public. There were no pre-briefings on this news, a signal that the company may have considered it to be "material."
In the world of financial markets, news released by a company that might affect the value of its securities or influence investor decisions is considered material. Material news includes information such as unusual corporate events, unexpected earnings results (whether good or bad), stock splits, etc.
I spoke with 8x8 CMO Enzo Signore about this news, and the first thing I wanted to know was what it is about the announced deal that might make it material? He responded that it is the potential size of the deal. At a very high level, the numbers look like this:
- Regus currently has 2,500 locations and is growing fast.
- The company added 452 locations in 2014, 231 in the first half of 2015, and has plans to finish the year with 600 new locations.
- Each location typically has about 30 tenants, each tenant typically has 1-10 telephone lines, sometimes as many as 20-25.
- Even using a conservative average of 5 users per tenant, the total addressable market in the account is 375,000 users.
No matter what monthly user fee one attaches to that end number, the potential impact on 8x8 revenue is material by any measure.
Note my use of the word "potential." There are no promised minimums, nor a defined pace, for adoption of 8x8 by Regus at this time. In any matter, it is significant that as Regus began looking for a new communications solution, it only evaluated cloud-based solutions. As seen in the graphic below (from Regus's second quarter earnings call in August), Regus is interested in more than just like-for-like dial-tone replacement. It understands that businesses that use virtual office services are looking for more mobile and work anywhere applications -- and 8x8 was chosen with that need in mind.
The initial plan is to start deploying 8x8 in 140 sites in the U.S., U.K., and Europe. These first sites will be new center openings. After that, Regus will start the migration of centers with legacy PBXs, which include Cisco, Avaya, Mitel and Nortel systems.
I asked Signore if there was contact center opportunity with Regus in addition to 8x8's Virtual Office Pro that Regus says it will eventually offer to all customers. Signore said that the contact center opportunity is in the future and could potentially be both sell-to and sell-through. Initially, Regus will use 8x8's Switchboard Pro application to manage live answering of calls to its tenants. Over time, it may consolidate that function, say regionally, using contact center technology. Another opportunity would be to offer tenants their own ability to create and staff small contact centers -- a great two-tier go-to-market model for the 1-5 agent contact center target market.
A material deal? I think so.