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8x8, Inc. Stock Price: Quote, Forecast, Splits & News (EGHT)

Finance

Company Profile

New

8x8, Inc. Price & Performance (EGHT)

Stock Performance

Updated Mar 19, 5:14 PM UTC

EGHT:NYSE

$2.23USD

0.45% · $0.01

Open

$2.25

High

$2.30

Low

$2.22

Market Cap

$293.68M

P/E Ratio

-6.2

Volume

164.22K

Year High

$3.52

Year Low

$1.51

News & Market Insights

8x8's Stock Faces Persistent Challenges Amid Revenue Concerns
Mar 13, 2025
Shares of 8x8, Inc. (NASDAQ:EGHT) have plummeted 26% over the past month, reflecting ongoing investor unease. Despite a low price-to-sales ratio of 0.4x, the company's revenue decline of 2.2% over the last year and modest future growth projections of 0.5% have kept optimism subdued, especially compared to industry growth expectations.12
Healthcare Innovation: 8x8 Enhances Patient Management Efficiency
8x8, Inc. has introduced a new EHR-compliant solution that significantly improves healthcare operations. The integration reportedly saves up to six hours daily in patient management, marking a notable advancement in efficiency. This development highlights 8x8's focus on leveraging technology to address critical operational challenges in the healthcare sector.3
AI Milestone: 8x8's CPaaS Hits Half a Billion Monthly Interactions
today
8x8, Inc.'s AI-powered Communications Platform as a Service (CPaaS) has reached a significant milestone, achieving half a billion interactions monthly. This surge underscores growing customer adoption of AI-driven self-service solutions, positioning the company as a key player in the evolving communications technology landscape.4

What's Happening

Peers

Earnings

Report Date

Feb 4, 2025

Reported Revenue

178.9M

Avg 1d Change

17.47%

Report Period

Q3 2025

Reported EPS

0.04

Implied Move 1d

19.45%

Transcript

2m 38s

At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. Now it's my pleasure to turn the call over to the Vice President of Investor Relations, Kate Patterson. Please proceed. Thank you. Good afternoon, everyone. Today's agenda will include a review of our results for the with Samuel Wilson our Chief Executive Officer and Kevin Krause, our Chief Financial Officer. Following our prepared remarks, there will be a question and answer session. Before we get started, let me remind you that our discussion today includes forward looking statements about future financial performance including investments in innovation and our focus on profitability and cash flow, as well as statements regarding our business, products and growth strategies. We caution you not to put undue reliance on these forward looking statements as they involve risks and uncertainties that may cause actual results to vary materially from forward looking statements as described in our risk factors in our reports filed with the SEC. Any forward looking statements made on this call and in the presentation slides reflect our analysis as of today and we have no plans or obligations to update them.

4m 5s

All financial metrics that will be discussed on this call are non GAAP unless otherwise noted. These non GAAP metrics together with year over year comparisons in some cases were not prepared in accordance with U. S. Generally Accepted Accounting Principles or GAAP. A reconciliation of these non GAAP metrics to the closest comparable GAAP metric is provided in our earnings release and the earnings presentation slides, which are available on 8x8 Investor Relations website at investors.8x8.com. With that, I'll turn the call over to Samuel Wilson. Good afternoon, everyone, and thank you for joining us on today's earnings call. It's my pleasure to share our results, progress and vision for the future. Our story is 1 of continued transformation. We delivered solid results and made strides in executing our broader strategic initiatives. We achieved service revenue above the midpoint of our guidance range even with an FX headwind of more than $2,000,000 from last quarter. Operating margin was also above the midpoint. The quality of the earnings remained high and we generated record cash flow from operations We used the excess cash to further reduce our debt by $33,000,000 in the the quarter and another $15,000,000 in Our results for the quarter show both resilience and opportunity as we navigate a rapidly evolving landscape.

5m 27s

Signs of our progress on our CX transformation journey were evident in various operational metrics as well. New product MRR increased more than 60% year over year, reflecting strong growth in AI based intelligent customer assistance, secure payments and video elevation, our video enabled solution for field service The number of customers with 3 or more products continued to increase. The average monthly recurring revenue of customers with 3 or more products is more than 3 times the MRR of 2 product customers and retention is higher. For these reasons, we've made cross sell a high priority at 8x8. We continue to expand our presence internationally. Especially in Asia Pac region as we expand our platform as a service offerings. The region even booked its largest deal ever with a well known auto manufacturer. We closed the largest follow on deal in our history When a major U. S. Retailer chose 8x8 for their new contact center, and expanded their UCaaS commitment. This customer is in the process of evaluating additional products. Customer satisfaction remains high. This is 8x8 reflected in our own customer satisfaction surveys, which shows CSAT scores in the mid to high 90% range, Finally, our platform and our reputation as an innovator in CX are rapidly gaining increased visibility with customers and industry analysts.

7m 4s

Our peer review scores on Gartner's insights reflect our strong product portfolio and continue to increase as the number of reviews have grown. Our UC and CC score are now both 4.4 on a scale of 1 to 5. Also, as our market presence continues to grow, we are frequently included on the shortlist of companies to watch. For example, in an article in CX Today, Liz Miller of Constellation Research and Zias Karavala of ZK Research named 8x8 as 1 of 10 innovative global vendors differentiating within the contact center as a service space. Our Platform as a Service API offerings are also receiving accolades. In a Channel Futures article of the top 20 CPaaS vendors to know, Forrester's Craig LaCARE counted 8x8 among its top pure play CPaaS [indiscernible] We continue to receive more formal awards and recognition as well we included in our earnings presentation. This quarter, I want to call out our inclusion in Newsweek, Annual Excellence 1000 Index. Inclusion is based on wide ranging criteria from employee and customer reviews to R and D spending to governance and ethical We are honored to be included as 8x8 social responsibility and sustainability. All in all, these results and awards highlight our disciplined execution and progress towards our strategic initiatives We outlined a bold plan to transform 8x8 into a CX leader have made huge progress.

8m 49s

Our acquisition of Fuse played a key role in jump starting our journey. We have also made substantial headway with Fuse integration during the quarter and have clear path to platform shutdown. Priority number 1 was fixing the financial model. And building a strong balance sheet.

9m 6s

We reduced our costs, increased our cash flow and returned value to our investors through debt reduction. We have now been generating cash for sixteen quarters and have made 10 debt repayments reducing our total debt including convertible debt from a peak of $5.48,000,000 dollars in August 2022 8x8, to approximately $3.54,000,000 dollars today, 35% less in just over two years. Priority number 2 was accelerate innovation. As a technology company, this is the only way to drive durable growth. We increased investment in R and D and sharpened our focus to designing a CX platform for small and medium sized enterprises This doesn't mean we can't handle thousands of concurrent users in our contact center and we have customers that size. But this is the market segment where we can differentiate the most by delivering on simplicity, eliminating complexity and reducing technology risk. We set our sights on going beyond core contact center functionality to a flexible CX platform with plug and play tools that reduce customer integration burden. Based on our feedback from agents, supervisors, and system administrators, we prioritize investments in reliability, ease of use, security and compliance and seamless multichannel communication. We also embedded artificial intelligence across the platform to enhance data analytics, call transcription, meeting summarizations, and a host of other core platform services.

10m 45s

We began building an ecosystem of carefully curated technology partners for best in class solutions Applied AI solutions that are tightly integrated with our platform to deliver native like user experience. Our R and D organization's exceptional work delivering hundreds of releases per month has allowed us to enhance our platform, substantially over the past few years. These enhancements have significantly improved usability, leveraged AI driven automation, increased security and directly addressed our customers' most pressing pain points. We deliver better outcomes allowing our customers to achieve our recent platform announcements in our winter software release included self-service or agent assisted secure payments integrated directly into the contact center, AI powered directory to quickly route calls using a natural sounding voice bot that's and AI based tools to help agents quickly assess and share knowledge based We continue to expand our technology partner ecosystem giving customers the flexibility to choose the best add ons for their use cases. CallCabinet, a leader in compliance, call recording and analytics is the most recent addition to our SellWhip tier. With direct integration across 8x8 work, and 8x8 contact center, CallCabinet becomes the only compliant call for Microsoft Teams Operator Connect offering. Our platform approach is resonating with customers.

12m 26s

For example, a world leader in flooring and sports surfaces chose 8x8 unified platform for CX over several competitors shown in the Leaders Quad A Canadian based leader in insurance and benefit consulting, chose 8x8's platform for CX including UC, CC, and Engage for its high quality service, upgrade flexibility and French language support. A leading FinTech company delivering secure and innovative payment solutions chose 8x8 SMS and WhatsApp business solutions to power multichannel customer engagement. Deciding factors were our global reach, built in security and compliance and a dedicated support team with deep platform as a service expertise. In addition to highlighting the strength of our product portfolio, these multi product wins show significant progress we've made transforming our go to market strategies.

13m 29s

As the green shoots of increased ramping our sales capabilities and launching new marketing programs to raise our visibility. In Nov. 0, we unveiled the next evolution of our brand, More than a refreshed look and feel, this brand signals the next chapter in 8x8's CX transformation. The response from customers, partners and industry influence has been overwhelmingly positive. We've included a sampling of social posts and feedback in the earnings presentation. The solid financial foundation and a powerful CX platform designed to deliver business impact for our customers the building blocks are in place. As we approach our focus is clear. Accelerate our transformation. To do this, we plan to 1, improve our sales execution. 2, scale our proven successes [indiscernible] differentiate our solutions 4, continue to optimize our cost structures and 5, shut down the Fuse platform by the end of the calendar year. Executing transformations of this magnitude are seldom linear. And we know there will be bumps along the way. We are still working through the revenue headwinds of the Fuse customer upgrades to our platform and the market dynamics are fluid. Especially in UCaaS. While this winds the range of near term outcomes, I remain confident in our future success.

15m 7s

As I visit our offices, customers and partners around the world, I see a powerful new energy at 8x8. Fueled by a common vision and a strategy aligned on our mission. Solve customer problems. It's an exciting time for us and I want to express my gratitude and appreciation To all of our employees, partners and investors for our progress so far. I look forward to sharing our future success with all of you. I now turn the call over to Kevin. Thanks, Sam. Good afternoon, everyone, and thank you for joining us today for our earnings call.

15m 46s

This quarter marked another period of strong execution across our business.

15m 50s

Including record communications platform usage revenue, solid profit margins and record cash flow from operations. Represents our 6 of positive cash flow from operations and non GAAP operating profit. We continued our disciplined approach to debt reduction. Repaying $33,000,000 of our term loan debt during the quarter and an additional $15,000,000 in January 2025. Including this latest prepayment, we have now reduced the principal value of our debt by $194,000,000 or approximately 35% since the peak in August 2022 8x8. The press release and trended financial results on our Investor Relations website provide a detailed view of our performance. But I will highlight a few key points on today's call. Before continuing, I would like to remind you that unless otherwise noted, I will be discussing non GAAP metrics except for revenue and cash flow. For the total revenue was $17,890,000,0.0 near the midpoint of our guidance range. Service revenue totaled $17,350,000,0.0 exceeding the midpoint of our guidance by $1,000,000 Subscription and usage based service revenue on the 8x8 platform continued to grow both sequentially and year over year. Growth was offset by the anticipated decline in revenue from customers still on the Fuse platform During we made continued progress upgrading Fuse customers to the 8x8 platform.

17m 43s

Reducing the remaining Fuse base to approximately 5% of service revenue. Compared to 7% in the prior quarter and 11% in We remain on track to complete these upgrades by the end of calendar year 2025 which will simplify our operations and strengthen customer engagement. Our multi product strategy continues to drive results with committed monthly recurring revenue from since the start of the fiscal year. This growth highlights the effectiveness of our strategy to deepen customer engagement by offering comprehensive suite of solutions fostering stronger customer relationships, improving retention and unlocking additional value for both our customers and our business. These results underscore the resilience of our underlying business despite facing approximately $220,000,0.0 in foreign exchange headwinds relative to our expectations at the beginning of the quarter. Without this FX headwind, total revenue would have been near the high end of our guidance range and service revenue would have exceeded it. Gross margin for the quarter was 69.5%, within our guidance range and impacted by the revenue mix as lower margin platform usage revenue was approximately 13% of total revenue up sequentially and year over year. The underlying gross margin of our subscription based business remained healthy and consistent with recent quarters.

19m 28s

Operationally, our spending level remained consistent with earlier quarters and our business model continues to benefit from a natural FX hedge where the impact of foreign exchange on revenue is largely offset by a corresponding opposite impact on expenses. As a result, we delivered an operating margin of 10.7% during the quarter, slightly above the midpoint of our guidance. Stock based compensation expense for was 5.3% of total revenue. Near the multiyear low of 5.2% recorded last quarter. This reflects our commitment to managing this expense we responsibly and reducing shareholder dilution over time. Our continued focus in this area has allowed us to achieve GAAP operating profitability for the second consecutive quarter, a milestone that underscores our financial discipline. As part of this effort, we have shifted toward primarily cash compensation for the majority of employees which is reflected in our non GAAP operating income. Turning to the balance sheet and cash flow. We ended with $10,460,000,0.0 in cash, cash equivalents and restricted cash, down approximately $13,000,000 from due to the $33,000,000 term loan repayment I mentioned The balance sheet includes $1,650,000,0.0 in current term loan liability. Net of unamortized discounts and issuance costs. This represents a principal balance of $17,000,000 the minimum required payments for the next twelve months.

21m 13s

With the $15,000,000 prepayment we just made in Jan. 0, our remaining current liability is effectively $2,000,000 Our net debt to trailing twelve months EBITDA ratio has decreased to approximately 2.6 times. Down from over 6 times in giving us greater flexibility to pursue strategic opportunities. Additionally, stockholders' equity increased for the third consecutive quarter, reflecting continued progress in strengthening our financial position. Our remaining performance obligation remains steady at $800,000,000 representing a year over year increase of 4.6%. This growth reflects the strength of our multiyear customer contract backlog and provides a strong foundation for future revenue visibility. We are particularly proud of generating $2,720,000,0.0 8x8 operating cash flow this quarter. A record for us.

22m 18s

This achievement demonstrates our ability to generate strong returns while maintaining a disciplined and efficient operating model. However, while this milestone reflects our strong is important to recognize the cash flow performance does fluctuate investment timing and other factors.

22m 41s

We remain committed to prudent financial management to sustain long term growth and value creation. As we look ahead, our cost structure remains stable and we continue to invest in innovation and customer success. We believe our target cost structure with R and D at approximately 15% of revenue sales and marketing between 3334% of revenue and G and A between 1011% of revenue, provides the right balance of investment to drive growth while maintaining profitability. With this context, we are providing the following guidance for Service revenue is expected to be in the range of 100 and and $70,000,000 to $175,000,000 Total revenue is expected to be between $175,000,000 and $181,000,000 Please note that the total revenue and service revenue reduction due to foreign exchange rates since we gave our prior guidance is approximately $230,000,0.0 This means that on a constant currency basis, our service revenue guidance standpoint remains about the same as the guidance midpoint we provided last quarter. Operating margin is expected to be in the range of 9 Please remember that our includes seasonally higher expenses as certain employer taxes and benefits restart in Jan. 0. For the full fiscal year 2025, we are guiding as follows.

24m 20s

Service revenue is expected to be between $69,130,000,0.0 and $69,630,000,0.0 Total revenue is anticipated to be between $7.13,000,000 dollars and $7.19,000,000 dollars 8x8 is approximately $450,000,0.0 This means that on a constant currency basis, our full year service revenue guidance midpoint remains about the same as the guidance midpoint we provided last quarter. Full year operating margin is projected between 10.711% 8x8. Translating to non GAAP operating income of approximately $7,750,000,0.0 at the midpoint of our full year revenue and operating margin guidance. We expect interest expense including amortization of debt issuance costs to be about $530,000,0.0 in based upon current interest rates and our outstanding debt balance. We expect cash paid for interest 8x8 be as cash interest on the 2028 convertible debt is due semiannual [indiscernible] These interest amounts assume approximately 7.3% on the term loan or SOFR plus 3%. Putting all of this together, we expect fully diluted non GAAP earnings per share to be in the range of $0,.35 to $0,.37 the year. We anticipate full year cash flow from operations to be between $61,000,000 and $65,000,000 an increased range compared to our prior comments. Note that cash flow from operations typically decreases in fiscal due to the timing of seasonally increased employer expenses and cash paid for interest.

26m 20s

While we are not providing guidance for I want to point out that we plan to make strategic While these investments are expected to result in a lower non GAAP operating margin compared to are essential to strengthening our market position We believe that by enhancing our commercial capabilities, we will be well positioned to capture new opportunities improve customer relationships and drive growth over time. In closing, I remain confident in our vision and strategy as we navigate the path to sustainable profitable growth. While challenges may arise along the way, the progress we continue to make reinforces my belief that we are taking the right steps to achieve our long term goals. I am deeply grateful to the 8x8 team for their hard work and dedication in delivering these strong results. And I look forward to sharing our progress in the quarters ahead.

27m 29s

Operator, we are now ready to take questions.

27m 32s

Thank you so much. And as a reminder, to ask the questions, simply press 1 on your telephone and wait And it's from the line of Josh Nichols with B. Riley. Please proceed.

27m 55s

Yes. Thanks for taking my question. Great to see the record operating cash flow and it looks like the company is making some some good progress towards getting back to growth. On that front, I just had a question. You look take out the FX impact, it looks like with service revenue been up quarter over quarter, but also year over year and then looking at the service revenue guide, is that 8x8 effectively flat year over year or maybe up a little bit? I assume that that also includes a little bit of FX headwinds. If you exclude that, it would maybe be little bit more of a material amount. Is that Accurate?

28m 31s

Hey, Josh. Yes, we this is Kevin. We do see $230,000,0.0 or so of FX headwind in our relative to what we guided last quarter. So that would imply a roughly a raise to guidance for the full year by the way. And kind of flat quarter over quarter as you say.

28m 56s

Got it. And then, just touching a little bit on some of the AI and other offerings, very good growth. You're seeing I think you mentioned like 60% growth there. Any opportunity to quantify? I know that was still relatively low base and low mid single digits. Is that beginning to ramp up? And when you think about next fiscal year without talking about guidance specifically, Does that position you in the situation combined with the runoff of the remaining fuse business to to service revenue growth that's pretty consistent throughout the year or maybe accelerating towards the back half?

29m 38s

All right, Josh. I think it's a great question. The new product revenue, the AI stuff still single digit millions. The quarter, It's growing very rapidly, but it's still not quite enough to move the needle overall. Our goal next year is growth at some point throughout the year. There are a lot of moving pieces. I've been surprised by the FX kind of tailwind headwind, tailwind headwind phenomena we've been dealing with a little bit. That's causing a little bit of the rounding errors and some of the things going on around that along with just the industry dynamics in general. So it's certainly our goal to return to growth without getting into guidance and all of those other things. It will be a combination of new product growth, multiproduct customers having higher retention rates, and continuing to just add new customers into the mix.

30m 32s

Thanks. And then last question for me. I think you talked about before some conferences. So just like ex fuse that the company would be getting to maybe like low to mid single digit growth. It seems like that transition and runoff continues to be on track for the end of this calendar year. What else has to be done overall? And any potential thoughts on like, I'll say the savings when you not running 2 platforms parallel to each other anymore?

31m 2s

Yes. So okay. And you've I'm sorry, you asked me that last question. I didn't really do answering it, so I apologize. Yes, we're still on track to run down Fuse I think we're down to 5% of revenue. And as you can see the trend, we're really pushing hard to get that done. It is absolutely our objective to shut down the Fuse platform at the end of this fiscal year. My mandate to the teams is eleven fifty nine on PM on we turn off the Fuse platform. In terms of savings, hard savings probably mid single digit millions. Of dollars. There's an intangible savings that's a little bit harder to measure which is maintaining security compliance, maintaining HIPAA qualifications, maintaining software upgrades and OS upgrades and all those kinds of things that are a little bit harder to quantify other than the cost savings of AWS for running the platform or whatever the case may be. And so if you want to take a rough guess, I'd probably double that in my mind in terms of hard cost savings. When it comes once Fuse is behind us. And I think running off the Fuse platform will definitely help in terms of getting the growth next year.

32m 15s

Appreciate the context. Thanks.

32m 18s

Thanks, Josh. Thank you. 1 moment for our next question. And it's from the line of Ryan Kuntz with Needham and Company. Please proceed. [indiscernible] Sam, you mentioned in your prepared comments just some turbulence the UC space. Can you expand on that kind of where you feel like we are in in saturation kind of where pricing has been headed and what 8x8 competitive environment has been Thanks.

32m 44s

Yes. So I think last quarter, on UC, I'm going to broaden your question here in a second. But on UC, we did see a little bit of aggressiveness on pricing.

32m 54s

Not unheard of. I would say it's pretty typical in the calendar quarter of the year because some of the companies have fiscal year ends and they could always get a little more aggressive at the end of the year.

33m 6s

Obviously, this is something the industry analysts, you, the financial analysts have been talking about for a while. So I wouldn't say it was anything bizarre or crazy. I think for us, I just want to switch sort of broaden the question slightly for us, because you asked about the market. But for us, I think what matters a lot more is we saw more deals last quarter that were contact center led that really are viewing UC as just an add on or condiment, if you will, to the CX sale.

33m 36s

Our CX messaging is really resonating. We're seeing us land with more consider Platform Win 3 plus products. And you see it typically 1 of those.

33m 47s

To deal with those. And we've got engaged in other things. And so I think we're really well positioned to deal with anything around price [indiscernible] In that area. I think I gave a good answer and if I didn't ask me a follow-up.

34m

That was great. Comment briefly on the international opportunity, how you size that up? These days? What your thoughts are?

34m 6s

Man, I love the international opportunity of 8 by right? I mean, we see the CPaaS business doing fantastic. The platform usage business doing fantastic and we've been bringing that around the world Our presence in Europe is growing and I really love that. And honestly, there's just less I don't want to make struggling for words here, Ryan, for a second.

34m 29s

There's less irrational behavior because we don't have this post COVID We raised a bunch of money. We're some startup and we're just going to willy nilly throw pricing or free professional services or contract buyouts any of that other ridiculous stuff that we typically see sometimes in The United States.

34m 46s

Yes. And still Western Europe is still an area you plan to expand in? Yes, sir. Got it. All right. Thanks. Thanks, Tim.

34m 55s

Thank you so much. 1 moment for our next question. And it's from the line of Siti Panigari. With Mizuho. Please proceed. Hey, thanks. It's Chad on for Citi.

35m 7s

Just wondering if you can talk about what you're hearing from customers in their appetite for AI products and if that's differing sort of at the low end versus the high end? And any updates you can share around whether these guys are using AI to complement existing agent functions or starting to see any reduction in the human agent?

35m 28s

Okay, Chad. Quite a big question there. So I may ask a couple of small follow ups along the way. So when you talk low end versus high end, I presume you mean customers or by customer size or sort of where you're at? Correct. And so okay, what I would say is like our target market is that upper small business to low end enterprise. What they love is that we give best in breed AI capabilities. We're talking Gartner Magic Quadrant leading bot which most of our competitors do not offer. Natively integrated into our contact center space, natively integrated into our integrated into our UC natively integrated into Gage, so it works absolutely fantastic. And we're really focused on solving those CX problems. And when you do that, AI plays a pretty pivotal role inside of that. In terms of the low end, so let's say small businesses, those kinds of things, I don't see it as much. Where we see a lot of interest and I'm going to be a little bit cautious here, there's a little bit overlap between the things. We see a lot of interest is around things like digital messaging, SMS, 2 way communications with the contact center using WhatsApp, appointment reminders, those kinds of things.

36m 44s

Now where all the overlap starts to occur is when you start looking things like at our appointment management for healthcare, remote you're starting to bring multiple solutions together. So I mentioned, I've been talking about bots a little bit. But our voice bot is just on fire. I mean, it's been amazing at how fast that's grown. And it can speak 50 plus languages and 91 accents, I think I said in my prepared remarks.

37m 13s

And I think that's super important because a little bit we're starting to see a little overlap between large businesses and small businesses. We start getting into self-service and those kinds of things, particularly around contact center. So we're doing some amazing stuff around self-service payments highly secure payments where you can do Apple Pay, 100% self-service, those kinds of things. PCI compliance through a voice spot, dealing with an agent if there's a problem in the payment, those kinds of things. Those solutions really, really, really across the board horizontally high demand for. [indiscernible] I get asked this question a lot and I'm going to tell you a little bit of what I see and a little bit of what I think.

38m 2s

What I see is it's hard to see. I mean people just ask us for X number of agents for contact center. Many of our agents they have, etcetera. And so in real time today, do I see AI replacing agents here, there and everywhere? And a few select cases sure, but nothing major, no big trend. I absolutely believe that AI will replace some agent capability over time. It's what technology has done well in my entire career. Which is to replace human labor with machines effectively. And so I absolutely think that's going to case. However, the reason we've built the company the way we have is our average revenue per customer at the places that deploy AI at the places they deploy these next generation technologies, is actually up substantially even if our let's say our per seat count is flat to even down a few.

39m 3s

That's super helpful. I'll pass it on. Thank you. Thanks, Chad.

39m 7s

Thank you. Our next question is from the line of Peter Levine with Evercore.

39m 15s

Thanks guys for A few maybe I'll start with you Kev. Your last question around the margin outlook for sorry.

39m 31s

Would be lower given some of the strategic opportunities you guys are investing from on the go to market front? You maybe just maybe help us understand like what that translates to top line? Like is there a calculated ROI that you're expecting And then can you maybe just caveat that with what you think that will translate to growth?

39m 51s

Yes. So I'll take the first part of that and Kevin will put in some finer points because to be fair, I'm going to dodge part of your question because I really don't want to give guidance out an entire year in front of when I'm supposed to. And also, it's not quite as clean as maybe it looks in a spreadsheet. So do we have an ROI to our operating income investments or operating investments. Absolutely. Am I going to share that with you? No, I am not. Because if I share with you, I'm sharing it with every competitor currently listening on this call right now and I'm not doing that. I'm not a nice guy. And so what I'll tell you is yes, there's a calculation We monitor it very carefully. The hard part, and I know you have a ton of experience with this, Peter, is The timing variable, timing aspect of the investments is always the difficult thing. For the financial model and sort of what we're going through, right? So if you go back in time, go back to and we really focused on ramping up cash flows paying off debt. We paid off 35% of the debt.

40m 54s

We've made 10 separate payments to pay off debt. We've really been focused on that. I am our EBITDA to net debt ratio is fine. The bank's are happy. Everyone's happy. And so we're really focused now getting kind of back on offense and driving more growth And we are making selective investments Definitely the right thing to do given the market opportunity, our competitive position, really impressed where the innovation is right now. Those kinds of things. How quickly and exactly to 3 decimal places that much sales or bookings or revenue that will lead We'll keep that internal to us right now. Kevin, do you want to add about?

41m 31s

Yes. I will say that it's not just about investment and we're doing various things, but we're also focused on improving the efficiency of our but which we won't divulge in the call.

41m 48s

As Sam said, but we're also focused on our operational excellence internally in the company. So That is also another lever for growth over the long term. So I'll that's the color I would add.

42m

Yes.

42m

And actually, Kevin raised a really great point. Just to put a fine point we are investing in AI to use internally. I think we tend to see getting these calls get viewed as a company that sells AI, which we absolutely do. Across the platform growing very rapidly We're also a buyer of AI to actually improve how we provide CX, how we engage with the customer, how efficient we can be internally. Some investments we're making internally to our company also and that cost us dollars Great for the color. Last question [indiscernible] Sam, you mentioned in your remarks like customers of 3 products versus customers of 2.

42m 41s

The uplift to the ARR number I forgot like the exact metric you said, but can you maybe talk about like what products are they buying? Meaning like what's driving that massive uptick from like 2 to 3 products customers? And then maybe just outline what is that Yes. Separate product and Yes, no problem. So I think exactly what I said was if you look at the cohort of customers have 2 product 8x8 the cohort of customers have 3 products. The cohort of customers have 3 products is The average deal size is 3 times as much.

43m 11s

Average deal size is 3 times as large.

43m 13s

So it sort of trends it. Okay, what do they buy? I'd love to tell you it's really simple. I'm going to put in a couple [indiscernible] What really works is when you sell on business outcomes and you do some of those things, you start to see it easier to cross off products. So they almost all have UC and CC.

43m 28s

In sort of bucket categories.

43m 30s

After that, the key add ons in my mind are engage, which is kind of contact center for not agents. Fantastic product. Proactive outreach or digital messaging of all sorts and kinds and shapes. And the bots, the intelligent assistants, voice and digital bots, then of course, there's workforce management, there's all kinds of little odds and ends. But those are, I'd say, the big 3. I think what's key though, I really want you to think about is it's really about solving customer problems and the use cases associated with it. If we do something like field service management, we end up selling digital messaging, we sell a bot, we sell video elevation in the contact center, we sell contact center, we sell UC, we sell Engage. They rapidly turn into multi products. Customers very quickly. And it's just a nice way to wrap up solving the customer problems. The thing I want to leave you with is when we sell those multiple products, of course, we get a higher GRR, we get a higher NRR, our financial numbers are better.

44m 32s

But really it's about we solve customer problems better. And when we solve customer problems better, everything else sort of takes care of itself.

44m 41s

Thank you, guys.

44m 43s

Thank you.

44m 45s

Thank you. Our next question is from the line of Catherine Trebnick with Rosenblatt. Please proceed. Hi. Thanks for taking my question. Sam, have you tweaked the go to market at all. You've done really well with the 3 products.

45m 1s

Versus the 2. Anything else we should look at that you fine tuned in terms of your partners or you go to market motion or what your messaging is in the channel? Thanks.

45m 14s

Catherine, that's such a loaded question because I know I know what I think what you're getting at.

45m 22s

Yes.

45m 23s

There was a couple of things we're doing overall. Number 1 is yes, we continue to evolve our sales organization. If you guys are regular purveyors of LinkedIn, you will see that some people have come and gone from our company over time for various reasons. Lot of that is driven by the fact that we're looking more for consultative solution sellers, versus to use an industry vernacular circuit slingers etcetera. So that continues to evolve. I cannot speak highly enough about the work the marketing department has done around rebranding and really branding us as a CX company. And the thing is, it's not just paint on the outside of an old building. This really is as we've launched the products and as we have these solutions, we are a CX company. And this is about highlighting what we truly are to the marketplace That will continue to evolve. As we drive more sort of capabilities around that, etcetera. And then on the partner side, I think that's more of an evolution We continue to invest in our partners. We are a channel centric [indiscernible] mean, majority of our new business through channels to be fair. And so we'll continue to do that.

46m 34s

We continue to evolve and terms of the right tools and capabilities and those kinds of things to support our channel partners and their success.

46m 43s

All right. And then you added a transformational leader to the team and any organization that he specifically look at, in detail? Can you give us some details Yes. So I had a chance I've known Joel for several years now.

47m 2s

And So if you're familiar with Joel's work, I'm just going to assume for everybody for a second you're familiar with Joel's work and try But he is a phenomenal leader. He's a former military guy like me. So we speak a common language. But the big thing for me is he brings a lot of AI skills and capabilities into the company. And this is about using intelligence, artificial intelligence inside of ourselves to drive more insights and better decision making inside of our company. And Joel is really heading that up to transform as a company how we deliver our products and services, how we build our products and services to our customers, super important. And Kate pinged me, but I should use this forum because it's the right thing to do. I'd really like to call out Michelle Paytage for being recognized as a channel chief by CRM Magazine. She is phenomenal. And so As Kate pings me, I get a chance to use your question to highlight what a wonderful channel chief she is. Yes, I know. She started last year. I think I met her at Channel Partners.

48m 7s

Thanks.

48m 8s

Yes. She came to us, I think, from Twilio, if memory serves me. I hired her out of and she's been absolutely phenomenal for us as a channel team. All right. Thanks, Sam.

48m 17s

Thank you. For all the competitors, you can't hire her, that's a no.

48m 23s

Thank you. And our next question is from Meta Marshall with Morgan Stanley. Please proceed.

48m 29s

Great. Thanks. Maybe first, you commented on CPaaS being strong internationally. Just wanted to get a sense of traction that you were getting in The U. S. Or where you were kind of finding markets that were more attractive there? And then second, over time, you've commented on customers wanting more kind of a la carte kind of packages put together. Just wondering if you're kind of seeing any Consistency form around like whether people want more consumption based pricing or whether they're kind of want a la carte or whether we'll stick to this kind of per seat model that we've been in? That's it. Okay. So, Meta, thank you for the question. So, yes, So last quarter, the quarter before we as customers.

49m 21s

In The United States 8x8.

49m 23s

We're still having a few growing pains as we ramp our CPaaS business in The United States, but I'm pretty happy where it's at. And this is regular SMS, WhatsApp, voice, all those kinds of capabilities in The U. S. Still really small. I mean, it's not a huge number of customers, but we've got them. The folks are working out. They're happy. The referenceable, good CSAT scores, those kinds of things. So steps in the right direction. In terms of the evolution of pricing and packaging, it's a great question. And it's certainly 1 that we spend a lot of time thinking about. I fundamentally believe if you look at a lot of the AI technologies and even the CPaaS technologies, these are all sold on a consumption basis, right? So if you look at how OpenAI can charge some stuff they charge for tokenization, our bots, we charge per interaction. For digital messaging, we charge per message, those kinds of things. I think certainly those types of pricing models will continue to grow. I'm not sure that it will ever work on sort of per agent basis. I know that some people have tried contact center on a per interaction basis and the feedback I've heard from customers is pretty universally negative.

50m 31s

And so there is some fine line there. I think the key is building the products and the underlying systems that can kind of support a multitude of models that meet the customer where they are, not where we want them to be, if that makes any sense.

50m 49s

Yeah. No, that makes sense. Appreciate it.

50m 52s

Thank you, Mira. Thank you. 1 moment for our next question, please. And it's from the line of Ryan McWilliams with Barclays.

51m 5s

And Sam, for the record, for an earlier question, I think you're a nice guy. I'm going to lay yourself short. Just on the macro since the election, any differences by smaller or larger customers since the presidential election? Or any differences by geo in terms of customer purchasing?

51m 23s

It's funny you asked me this. I was hoping I wasn't going to get this question. And the reason I was hoping I was going to get this asked question is I don't have a good answer right So let me tell you a bit of what we're seeing and you guys can be smarter than me and draw some conclusions. If you look at 2024, I think there was a record number of bankruptcies because probably was the record, but fourteen year high than ever bankruptcies. And we have seen some customers have to move to things like cash revenue recognition because they're currently going through bankruptcy proceedings and those kinds not like we're untouched. Not a material number. I'm not phased by it, but it's clearly within. Now on the other hand, I've talked about this in the past, is 1 of the numbers I use is our credit card default rates. As a really sensitive indicator. That there's something going on in the small business base and sort of those basic mom and pop economics. And so far there, it's been been steady as she goes. No real unusual stuff around credit card default rates etcetera. So it feels like the interest rate stuff that the Fed did bit a little bit, but a bit larger businesses.

52m 34s

Maybe because they were more indebted, more sensitive to interest rates than some of the smaller businesses, which are probably more cash driven. And so I'd say it's a bit of a tale of 2 cities, hence the reason I really didn't want the question. European markets, we see a little bit more Selectivity by specific verticals. So for example, in The UK, Some state and local has seen a reduction in spending why NHS seen an increase in spending, those kinds of things. And so I think it's a little bit of vertical by vertical. In The U. S, I think it's a little bit large versus small. That's my best guess.

53m 13s

Just a quick point of clarification on credit card. We are talking about decline rates from our customers. We got a lot of credit card customers It's not the default rate of yes, the ones where they turn off the credit cards. I appreciate the color.

53m 32s

And then Sam, how do you view Salesforce as a potential part and competitor in the customer service space? Like do you think Well, I'm currently on the Fifth Floor in sales force is on the First Floor right now, so they're a partner. They're a really good partner of ours. [indiscernible] [indiscernible] Like if you can elaborate on that, like how that would work with Age of Force?

53m 58s

Well, I don't want to reveal any future products. Knock on wood, but those are technologies we're looking at. Agentforce, etcetera. We're a large sales force customer and partner. We use them extensively for things like our communities that we deal with customers and those kinds of things. And so I view Salesforce as a great partner and would like to do more with them in the future. I don't really view them as a competitor. Thank you.

54m 30s

Thank you so much. Our next question comes from the line of Michael Fonk with Bank of America. Please proceed.

54m 39s

Hey, good evening, guys. Thank you for the questions.

54m 43s

First 1 was a clarification. So of the 200 basis point reduction in Fuse percentage of revenue going from 7% to 5%, much of that migrated over to your core platform? Was that all lost?

55m

Some migrated. We do have a component of that that gets lost and there's timing effects as well on that Michael. So the average I'll say the average over time that we keep is 60 plus percent of our used base revenue. So that's kind of where we've been, where we expect 8x8 be.

55m 24s

And let me put a finer point on that because 60% sounds like a terrible number and you guys freak out. So let me put a finer point on that. What we see typically with Fuse customers is we see a step down when we migrate them and then their NRR is substantially above corporate average. So what generally ends up happening is they're going through a redeployment process So they'll shrink it down to a smaller size, whatever they need, and then they start adding back in really rapidly. And it's not like we're losing 40% of the revenue to Fuse overnight.

55m 54s

And the other thing is, to add to that, when we do that, we we often and almost always extend the life of extend the contract. So we keep that customer for longer. So in the long term, it's a better deal for 8x8.

56m 12s

Got it. No, thank you. Second 1 is for UCM, more philosophical So The market is seeing 1 thing. If we look at the free cash flow multiple look at EV, the EBITDA it seems to me very different than what you are about stabilizing top line seems to be very different than the improvement in free cash flow, cash from operating activity. Same thing very different when I'm forecasting my own model, So how are you thinking about addressing that number of levers you could pull, I guess, right? I mean, stock repurchase, strategic review, So how do you think about addressing what the market is telling us in your valuation whether free cash flow, EBITDA, And what you believe and I believe is the likely outcome.

57m 3s

Well, it's interesting, Michael, you bring this up, right? So there's obviously I having spent much time on Wall Street also, I could make some comments about Wall Street's predictive capabilities sometimes But let me take a step back. I think at a very basic level, I've tried to be really crystal clear with investors. Our North Star was cash flow from operations per share. And the reason I think about it that way is it's the cash flow that we generate per equity holder. And I think that is if you think about Graham and Dodd and the discounted cash flow and the present value of a business is some of its future cash flows. It's a very pure way to think about how a company should operate and the optionality of a company during uncertain times. So let me further elaborate on that a bit. If you go back two years when I started making the comments that that's our metrics, we've obviously done a lot of things. We've given a lot of cash flow, a record quarter for cash flow from operations. Our stock based compensation is 5.3% of revenue, which I think is one third industry averages or our competitors or those kinds of [indiscernible] And so we're very focused You see it in the fact that some of my competitors have seen declining shareholder equity.

58m 18s

Shareholder equity, while I've seen increasing shareholder equity.

58m 24s

So what I'm trying to drive is the right thing. Now the market rewarding me at any given moment, maybe yes, maybe no. But what that does and I want to take this back into the market environment we've been in. What cash flow does is it buys me the maximum amount of optionality to run this business. I can invest in product development, I can buy other companies, I can buy my own equity, I can continue to pay off debt. Which is primarily what I've chosen to do with all that excess cash flow. Is reduce the debt, thereby further reducing the risk of the company and actually if enterprise value stays unchanged, driving more value of those future cash flows to our equity holders. So what I've really thought about is the market we've been in coming out of COVID is 1 of increased risk, increased competition, startups, let's really focus on derisking the company from a have a fortress balance sheet, drive cash flow, get debt out, it's etcetera. Let's invest in the right areas in innovation and those kinds of things. Now as we look to the future, right, the company has massively reduced the amount of debt it has.

59m 40s

It's massively reduced its leverage ratios, etcetera. It's much less risky. The innovation we've produced has these incredible green shoots in my eyes. What are those green shoots? We invested in it. We built it. It works. We have product market fit. And we're now ramping. And so it's actually okay to take some of that cash flow and now pour it back into growing revenues and growing future cash flows via revenue and those kinds Your last part of your question is, is Wall Street going to reward me for this? I think at some point, they'll recognize it, they'll get around to it, they'll figure it out.

1h 17s

That's the hard part. Always go back to what Ben Graham said to Congress, right? When Congress asked Ben Graham, how does he know stocks are going to go up when they have these type of characteristics, And so what I go back to is the fact that the Street award us at some point, our stock, our capabilities, when they realize that owning a share of 8x8 is an incredibly valuable asset. It's going to get you a stream of future cash flows. It gets you a very profitable business and it gets you all the right things that you want 8x8 characteristic of an equity holder. My simple answer.

1h 55s

Very thorough. Thank you for that, Sam. And thank you again, Kevin. It's my Thank you.

1h 1m 1s

Thanks.

1h 1m 2s

Thank you. 1 moment for our next question, please. And it's from the line of Michael Turrin with Wells Fargo. Please proceed.

1h 1m 12s

Hi. This is Richard Pollard on for Michael. Thanks for taking my question.

1h 1m 17s

So you noted the potential expanding range of near term outcomes around Fuse. And you gave kind of the bread crumb there around that 60% Could you expand on what you hear from that phase as they're going through that decision making process? And what's kind of like the biggest pushback that you have to platform?

1h 1m 43s

Any color around that would be helpful.

1h 1m 45s

Yes.

1h 1m 45s

I think it's just been so we're down to I think maybe around 105 it's only 5% of our revenue, you guys can do track it. So it's coming down.

1h 1m 57s

Those last 5% Not a don't want to make the effort to move not ready for it. Can we holding out for an will you take me to a sports game if I promise to migrate, it could be any of those things, right? So I really it's really just the dogs and cats that are at the end.

1h 2m 18s

We are and we'll get through this committed to migrating every single upgrading every single customer onto the 8x8 platform. And the most interesting is once they're there, they're incredibly happy have a full portfolio of new and exciting products and they're buying those once they get there. So it's really just the blocking and tackling of getting those last customers to move there. And don't over rotate on the 60% number. It just happens to be there's timing and pieces, etcetera, how to think about it. And so I think Kevin just wants to be really sort of specific about it. Okay, great. That's super helpful. And then just another 1 from me. I understand not wanting to divulge too much around the ROI of some of those accelerated investments next year. But I guess is there any specific growth opportunities that you've kind of identified that you really want to go after? Is it just more generalized, hey, our foundations are in a better place, we see potential to drive more growth going forward. So we're going to tap into that.

1h 3m 19s

Okay. So I don't know how to invest in number 2 that you listed. I don't do general investments across whatever, right? We invest on specific projects with specific defined outcomes that's absolutely the case. I absolutely see opportunities in front of us.

1h 3m 34s

To make those investments and get compelling ROI which then drives future cash flows and then go back to Michael's answer I gave a couple of minutes ago.

1h 3m 45s

Okay, great. Appreciate it.

1h 3m 47s

Thanks, Rich. Thank you so much. And as I see no further questions in queue, I will turn the call back to Samuel Wilson for final remarks.

1h 3m 56s

Thank you so much, operator, and thank you for a fantastic call today.

1h 3m 59s

In summary, the was a solid quarter for 8 by 8. While the market dynamics remain challenging, we continue to face headwinds as our transition of fused customers to the 8x8 platform, our focus on disciplined execution, strategic differentiation, operational excellence, positions us well, exceptionally well for the future.

1h 4m 17s

We committed delivering value to our customers, our partners, our shareholders as we drive innovation and transform business communications into intelligent customer experiences And lastly, thank you to you, the analysts who are on the call, you to our investors and thank you to my employees. I love each and every one of you. Thank you for your continued And thank you. And with that, we conclude today's conference call. Thank you all for participating and you may now disconnect.

Key Insights

Financial Performance: EGHT reported service revenue above the midpoint of guidance despite a $2M FX headwind. Operating margin exceeded the midpoint, and the company achieved record cash flow from operations, using excess cash to reduce debt by $33M in the quarter and an additional $15M in January.
Strategic Initiatives: The company continues its CX transformation, with new product MRR growing over 60% YoY, driven by AI-based solutions and secure payments. Multi-product customers show higher retention and revenue, with a focus on cross-selling and international expansion, particularly in the Asia-Pacific region.
Debt Reduction and Financial Stability: EGHT has reduced total debt by 35% since August 2022, with a current net debt-to-EBITDA ratio of approximately 2.6x. The company has generated positive cash flow for 16 consecutive quarters and achieved GAAP operating profitability for the second consecutive quarter.
Guidance: For FY2025, service revenue is expected between $69.13M and $69.63M, with total revenue between $7.13M and $7.19M. Operating margin is projected at 10.7%-11%, with full-year cash flow from operations expected between $61M and $65M.
Product and Market Focus: Investments in R&D are driving innovation in AI, CX platforms, and multi-channel communication tools. The company is targeting small to medium-sized enterprises while expanding internationally and enhancing its partner ecosystem. The Fuse platform transition is on track to complete by the end of the calendar year, with anticipated cost savings and operational efficiencies.

Recent Transcripts

8x8 reports strong Q3 FY25 with record cash flow and progress in CX transformation.

Income Statement

Revenue

	2020	2021	2022	2023	2024
Revenue	$446M	$532M	$638M	$744M	$729M
Cost of Revenue	$201M	$230M	$248M	$241M	$225M
Gross Profit	$245M	$302M	$391M	$502M	$504M
Gross Profit %	55%	57%	61%	68%	69%
R&D Expenses	$78M	$92M	$112M	$146M	$136M

2020

2021

2022

2023

2024

Revenue

$446M

$532M

$638M

$744M

$729M

Cost of Revenue

$201M

$230M

$248M

$241M

$225M

Gross Profit

$245M

$302M

$391M

$502M

$504M

Gross Profit %

55%

57%

61%

68%

69%

R&D Expenses

$78M

$92M

$112M

$146M

$136M

Cash Flow

Net Income

	2020	2021	2022	2023	2024
Net Income	-$172M	-$166M	-$175M	-$73M	-$68M
Dep. & Amort.	$37M	$45M	$49M	$52M	$47M
Def. Tax	$3.5M	$4.5M	$0	$0	$0
Stock Comp.	$71M	$108M	$133M	$90M	$62M
Chg. in WC	-$85M	-$67M	-$46M	-$62M	-$32M

2020

2021

2022

2023

2024

Net Income

-$172M

-$166M

-$175M

-$73M

-$68M

Dep. & Amort.

$37M

$45M

$49M

$52M

$47M

Def. Tax

$3.5M

$4.5M

Stock Comp.

$71M

$108M

$133M

$90M

$62M

Chg. in WC

-$85M

-$67M

-$46M

-$62M

-$32M

Balance Sheet

Cash

	2020	2021	2022	2023	2024
Cash	$137M	$113M	$91M	$111M	$116M
ST Investments	$33M	$40M	$45M	$26M	$1M
Cash & ST Inv.	$171M	$153M	$136M	$138M	$117M
Receivables	$55M	$51M	$57M	$62M	$59M
Inventory	$33M	$38M	$44M	$39M	$0

2020

2021

2022

2023

2024

Cash

$137M

$113M

$91M

$111M

$116M

ST Investments

$33M

$40M

$45M

$26M

$1M

Cash & ST Inv.

$171M

$153M

$136M

$138M

$117M

Receivables

$55M

$51M

$57M

$62M

$59M

Inventory

$33M

$38M

$44M

$39M

Go Deeper

Financial information provided by Financial Modeling Prep. Options data provided by Unusual Whales. Live transcripts provided by Quartr. All data is provided for informational purposes only, and is not intended for trading purposes or financial, investment, tax, legal, accounting or other advice. · See all tickers.

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RelatedRelated
EarningsEarnings
Income StatementIncome Statement
Cash FlowCash Flow
Balance SheetBalance Sheet

Earnings

Report Date

Feb 4, 2025

Reported Revenue

178.9M

Avg 1d Change

17.47%

Report Period

Q3 2025

Reported EPS

0.04

Implied Move 1d

19.45%

Transcript

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This quarter marked another period of strong execution across our business.

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Operator, we are now ready to take questions.

27m 32s

Thank you so much. And as a reminder, to ask the questions, simply press 1 on your telephone and wait And it's from the line of Josh Nichols with B. Riley. Please proceed.

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Appreciate the context. Thanks.

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Yes. So I think last quarter, on UC, I'm going to broaden your question here in a second. But on UC, we did see a little bit of aggressiveness on pricing.

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Our CX messaging is really resonating. We're seeing us land with more consider Platform Win 3 plus products. And you see it typically 1 of those.

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That was great. Comment briefly on the international opportunity, how you size that up? These days? What your thoughts are?

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Yes. And still Western Europe is still an area you plan to expand in? Yes, sir. Got it. All right. Thanks. Thanks, Tim.

34m 55s

Thank you so much. 1 moment for our next question. And it's from the line of Siti Panigari. With Mizuho. Please proceed. Hey, thanks. It's Chad on for Citi.

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39m 3s

That's super helpful. I'll pass it on. Thank you. Thanks, Chad.

39m 7s

Thank you. Our next question is from the line of Peter Levine with Evercore.

39m 15s

Thanks guys for A few maybe I'll start with you Kev. Your last question around the margin outlook for sorry.

39m 31s

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41m 31s

Yes. I will say that it's not just about investment and we're doing various things, but we're also focused on improving the efficiency of our but which we won't divulge in the call.

41m 48s

As Sam said, but we're also focused on our operational excellence internally in the company. So That is also another lever for growth over the long term. So I'll that's the color I would add.

42m

Yes.

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Average deal size is 3 times as large.

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In sort of bucket categories.

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But really it's about we solve customer problems better. And when we solve customer problems better, everything else sort of takes care of itself.

44m 41s

Thank you, guys.

44m 43s

Thank you.

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45m 1s

Versus the 2. Anything else we should look at that you fine tuned in terms of your partners or you go to market motion or what your messaging is in the channel? Thanks.

45m 14s

Catherine, that's such a loaded question because I know I know what I think what you're getting at.

45m 22s

Yes.

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We continue to evolve and terms of the right tools and capabilities and those kinds of things to support our channel partners and their success.

46m 43s

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48m 7s

Thanks.

48m 8s

Yes. She came to us, I think, from Twilio, if memory serves me. I hired her out of and she's been absolutely phenomenal for us as a channel team. All right. Thanks, Sam.

48m 17s

Thank you. For all the competitors, you can't hire her, that's a no.

48m 23s

Thank you. And our next question is from Meta Marshall with Morgan Stanley. Please proceed.

48m 29s

49m 21s

In The United States 8x8.

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50m 49s

Yeah. No, that makes sense. Appreciate it.

50m 52s

Thank you, Mira. Thank you. 1 moment for our next question, please. And it's from the line of Ryan McWilliams with Barclays.

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54m 30s

Thank you so much. Our next question comes from the line of Michael Fonk with Bank of America. Please proceed.

54m 39s

Hey, good evening, guys. Thank you for the questions.

54m 43s

First 1 was a clarification. So of the 200 basis point reduction in Fuse percentage of revenue going from 7% to 5%, much of that migrated over to your core platform? Was that all lost?

55m

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58m 18s

Shareholder equity, while I've seen increasing shareholder equity.

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1h 17s

1h 55s

Very thorough. Thank you for that, Sam. And thank you again, Kevin. It's my Thank you.

1h 1m 1s

Thanks.

1h 1m 2s

Thank you. 1 moment for our next question, please. And it's from the line of Michael Turrin with Wells Fargo. Please proceed.

1h 1m 12s

Hi. This is Richard Pollard on for Michael. Thanks for taking my question.

1h 1m 17s

1h 1m 43s

Any color around that would be helpful.

1h 1m 45s

Yes.

1h 1m 45s

I think it's just been so we're down to I think maybe around 105 it's only 5% of our revenue, you guys can do track it. So it's coming down.

1h 1m 57s

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1h 3m 34s

To make those investments and get compelling ROI which then drives future cash flows and then go back to Michael's answer I gave a couple of minutes ago.

1h 3m 45s

Okay, great. Appreciate it.

1h 3m 47s

Thanks, Rich. Thank you so much. And as I see no further questions in queue, I will turn the call back to Samuel Wilson for final remarks.

1h 3m 56s

Thank you so much, operator, and thank you for a fantastic call today.

1h 3m 59s

1h 4m 17s

Key Insights

Financial Performance: EGHT reported service revenue above the midpoint of guidance despite a $2M FX headwind. Operating margin exceeded the midpoint, and the company achieved record cash flow from operations, using excess cash to reduce debt by $33M in the quarter and an additional $15M in January.
Strategic Initiatives: The company continues its CX transformation, with new product MRR growing over 60% YoY, driven by AI-based solutions and secure payments. Multi-product customers show higher retention and revenue, with a focus on cross-selling and international expansion, particularly in the Asia-Pacific region.
Debt Reduction and Financial Stability: EGHT has reduced total debt by 35% since August 2022, with a current net debt-to-EBITDA ratio of approximately 2.6x. The company has generated positive cash flow for 16 consecutive quarters and achieved GAAP operating profitability for the second consecutive quarter.
Guidance: For FY2025, service revenue is expected between $69.13M and $69.63M, with total revenue between $7.13M and $7.19M. Operating margin is projected at 10.7%-11%, with full-year cash flow from operations expected between $61M and $65M.
Product and Market Focus: Investments in R&D are driving innovation in AI, CX platforms, and multi-channel communication tools. The company is targeting small to medium-sized enterprises while expanding internationally and enhancing its partner ecosystem. The Fuse platform transition is on track to complete by the end of the calendar year, with anticipated cost savings and operational efficiencies.

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