Core Viewpoint - 8x8 reported its first-quarter fiscal 2026 results, showing modest revenue growth and ongoing margin pressure as it transitions to a unified platform strategy [1][5][6] Financial Performance - Revenue for Q1 fiscal 2026 was $181.4 million, exceeding analyst expectations of $180.7 million, and reflecting a year-over-year increase of 1.8% from $178.1 million [2][5] - Non-GAAP earnings per share were $0.08, unchanged from the prior year [2] - Service revenue increased to $176.3 million, up 2.0% from $172.8 million in Q1 fiscal 2025 [2] - Non-GAAP operating profit declined by 18.9% to $16.3 million, and adjusted EBITDA fell by 19.8% to $20.7 million [2][6] - Cash flow from operations was positive at $11.9 million but down 34.3% from $18.1 million in the same period last year [2][7] Business Overview and Strategic Focus - The company provides a cloud-based platform for business communications, integrating CCaaS, UCaaS, and CPaaS [3] - Focus on unifying services into a single platform to simplify operations and enhance data-driven insights for mid-market and enterprise customers [4] Product Innovation and Customer Adoption - The integrated Platform for Customer Experience (CX) is central to the company's strategy, featuring AI capabilities for managing customer communications [9] - New features introduced include secure authentication, expanded Microsoft Teams integration, and AI-driven agent support tools [9][10] - Multi-product adoption is increasing, with over half of subscription revenue coming from customers using three or more offerings, reflecting a 13% year-over-year increase [11] Guidance and Future Outlook - For Q2 fiscal 2026, the company expects total revenue between $175 million and $180 million, with service revenue between $170 million and $175 million [13] - Full fiscal 2026 revenue projections are between $706 million and $720 million, with non-GAAP EPS expected to be between $0.28 and $0.33 [14]

Group 1 - 8x8 reported quarterly earnings of $0.08 per share, consistent with the Zacks Consensus Estimate, and the same as the previous year [1] - The company achieved revenues of $181.36 million for the quarter ended June 2025, exceeding the Zacks Consensus Estimate by 2.36%, compared to $178.15 million in the same quarter last year [2] - Over the last four quarters, 8x8 has surpassed consensus EPS estimates two times and revenue estimates two times [2] Group 2 - 8x8 shares have declined approximately 30% since the beginning of the year, while the S&P 500 has gained 7.6% [3] - The company's earnings outlook is crucial for understanding future stock performance, with current consensus EPS estimate at $0.09 for the coming quarter and $0.34 for the current fiscal year [4][7] Group 3 - The Zacks Industry Rank indicates that the Internet - Software sector is in the top 32% of over 250 Zacks industries, suggesting a favorable environment for stocks in this category [8] - Lifeward, another company in the same industry, is expected to report a quarterly loss of $0.25 per share, reflecting a year-over-year change of +50% [9]

Financial Data and Key Metrics Changes - In Q1 2026, total revenue reached $181.4 million, near the high end of guidance, reflecting strong execution across the business [33] - Service revenue was $176.3 million, above the high end of guidance, showing a 2% year-over-year improvement [33] - Gross margin was 67.8%, down year-over-year and sequentially, primarily due to a shift towards usage-based communication platform revenue [34] - Cash flow from operations exceeded $11 million for the quarter, with $82.2 million in cash, cash equivalents, and restricted cash at quarter-end [36] Business Line Data and Key Metrics Changes - Consumption-based revenue, primarily from CPaaS solutions, grew more than 30% year-over-year [14] - Usage-based revenue accounted for approximately 17% of total service revenue, up from 12% in Q1 2025 [33] - Revenue from customers using three or more products now accounts for about one-third of annual subscription revenue [22] Market Data and Key Metrics Changes - Adoption of the intelligent customer assistant rose 75% year-over-year, with voice interactions growing more than 7x year-over-year [18] - 8x8 is recognized as a top five Operator Connect partner worldwide, enhancing visibility in the ecosystem [17] Company Strategy and Development Direction - The company is transitioning from SKU-based selling to outcome-based selling, focusing on solutions rather than features [19] - The product roadmap includes enhancements with AI-enabled tools and a modern intuitive interface to improve customer outcomes [25] - The company is expanding internationally, targeting industries like retail, healthcare, and government [25] Management's Comments on Operating Environment and Future Outlook - Management noted that the headwinds from the Fuse upgrade are receding, with expectations of a 1.5% growth headwind for the next year [50][52] - Despite macro pressures, only 17% of enterprises plan to reduce customer engagement budgets, indicating a strong market for customer experience solutions [9] - The company remains confident in its long-term growth strategy and ability to execute against it, despite anticipated lower gross margins due to the growth of communications platform solutions [40] Other Important Information - The company made a $15 million term loan prepayment during Q1, reducing total debt by 40% since August 2022 [32] - Stock-based compensation as a percentage of revenue was 3.5%, reflecting a downward trend in this expense [36] Q&A Session Summary Question: What does the headwind from the Fuse migration look like? - The Fuse headwind to growth is about 3% in the last quarter, with expectations to retain roughly half of the remaining Fuse revenue as customers migrate to the 8x8 platform [49][50] Question: How do you see the margin profile evolving? - The usage-based margin profile is lower but growing faster, with expectations of a 1% to 2% increase in usage-based revenue per quarter [53][54] Question: How does the company weigh buying versus building in the AI space? - The company prefers building and partnering over buying, focusing on in-house AI development and partnerships with best-in-breed providers [58] Question: Are there any trends in legacy migrations? - The company is seeing a tailwind from legacy vendors facing challenges, which is beneficial for overall industry performance [63] Question: What is the growth outlook for the CPaaS business geographically? - The Asia business is growing rapidly, over 30% year-over-year, with traction also seen in the UK and the US [78]

Q1 2026 Financial Performance - Service revenue reached $1763 million, representing a 2% year-over-year growth[39, 40, 42] - Total revenue amounted to $1814 million, showing a 2% year-over-year increase[39, 40, 42] - GAAP operating margin stood at 03%[39] - Non-GAAP operating margin was 9%[39, 40] - Cash flow from operations was $12 million[39] - Cash, equivalents, and restricted cash totaled $82 million at quarter-end[39] Business Highlights - Voice AI Interactions increased more than 7x from Q1 2025[35] - Annual revenue from customers with 3 or more products now represents more than one-third of annual revenue, excluding consumption revenue[35] Future Guidance - Q2 2026 service revenue is projected to be between $170 million and $175 million, with a growth rate ranging from -29% to 00% year-over-year[61] - Q2 2026 total revenue is expected to be between $175 million and $180 million, with a growth rate ranging from -33% to -06% year-over-year[61] - FY 2026 service revenue is projected to be between $685 million and $700 million, with a growth rate ranging from -11% to 10% year-over-year[63] - FY 2026 total revenue is expected to be between $706 million and $720 million, with a growth rate ranging from -13% to 07% year-over-year[63]

[First Quarter Fiscal 2026 Earnings Release](index=1&type=section&id=First%20Quarter%20Fiscal%202026%20Earnings%20Release) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) 8x8 returned to growth in Q1 FY2026, with total revenue of $181.4 million and a narrowed GAAP net loss Q1 FY2026 Key Financial Metrics (GAAP & Non-GAAP) | Metric | Q1 FY2026 | Q1 FY2025 | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | $181.4M | $178.1M | +1.8% | | Service Revenue | $176.3M | $172.8M | +2.0% | | GAAP Operating Income (Loss) | $0.6M | ($1.4M) | Improved | | Non-GAAP Operating Profit | $16.3M | $20.1M | -18.9% | | GAAP Net Loss | ($4.3M) | ($10.3M) | Improved | | Non-GAAP Net Income | $10.7M | $10.4M | +2.9% | | Adjusted EBITDA | $20.7M | $25.8M | -19.8% | | Cash Flow from Operations | $11.9M | $18.1M | -34.3% | - The company demonstrated disciplined capital allocation by repurchasing **one million shares** for **$1.8 million** and prepaying **$15.0 million** of principal on its 2024 Term Loan during the quarter[6](index=6&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) CEO Samuel Wilson highlighted the platform strategy and AI-driven solutions for long-term shareholder value - The return to growth is seen as validation of the company's platform strategy, with expanded product adoption and accelerated consumption-based revenue[2](index=2&type=chunk) - Management is committed to building a durable business poised for growth, focusing on customer needs around AI implementation and expanding platform capabilities[3](index=3&type=chunk) - 8x8 views itself as uniquely positioned to lead in the intelligent, integrated, and voice-powered customer experience space[3](index=3&type=chunk) [Business Highlights](index=1&type=section&id=Business%20Highlights) [Platform Innovation and Integrations](index=1&type=section&id=Platform%20Innovation%20and%20Integrations) 8x8 introduced AI-driven innovations and platform enhancements to simplify operations and improve efficiency - Launched **8x8 Verif8**, a frictionless, omnichannel One-Time Password (OTP) solution for secure authentication[7](index=7&type=chunk) - Expanded **8x8 Operator Connect for Microsoft Teams** coverage to **50 countries**, providing native PSTN calling[7](index=7&type=chunk)[8](index=8&type=chunk) - Introduced several AI-powered enhancements, including **8x8 Smart Assist** for real-time agent guidance, **Intelligent Customer Assistant Knowledge AI** for transforming static content into dynamic self-service, and smarter, multilingual chat summarization[10](index=10&type=chunk) - Enhanced digital engagement capabilities with native **Viber Messaging** in the contact center, **8x8 Social Connect** for managing social media interactions, and expanded digital channel support for **8x8 Engage**[10](index=10&type=chunk) [Recognition and Awards](index=3&type=section&id=Recognition%20and%20Awards) 8x8 received multiple industry accolades for its UCaaS and CCaaS platforms, user experience, and workplace - 8x8 was recognized for its platform and products through several awards: - **Strong Performer in The Forrester Wave™ for UCaaS Platforms, Q3 2025**. - **TrustRadius Top Rated Awards for UCaaS and CCaaS**. - **Silver in the New York Product Design Awards for 8x8 Supervisor Workspace**. - Named **Best CPaaS Platform by CX Today**[16](index=16&type=chunk) - The company was the sole CCaaS provider recognized in **Newsweek's 2025 Global Most Loved Workplaces**, ranking at **69**[16](index=16&type=chunk) [Financial Outlook](index=3&type=section&id=Financial%20Outlook) [Second Quarter Fiscal Year 2026 Outlook](index=3&type=section&id=Second%20Quarter%20Fiscal%20Year%202026%20Outlook) For Q2 FY2026, 8x8 projects total revenue of $175M-$180M and a non-GAAP operating margin of 8.0%-9.0% Q2 FY2026 Non-GAAP Guidance | Metric | Guidance Range | | :--- | :--- | | Total Revenue | $175M - $180M | | Service Revenue | $170M - $175M | | Non-GAAP Gross Margin | ~66.0% - 68.0% | | Non-GAAP Operating Margin | ~8.0% - 9.0% | | Non-GAAP Net Income per Share, diluted | $0.06 - $0.08 | | Cash Flow from Operations | $3M - $5M | [Full Fiscal Year 2026 Outlook](index=3&type=section&id=Full%20Fiscal%20Year%202026%20Outlook) For FY2026, 8x8 anticipates total revenue of $706M-$720M and a non-GAAP operating margin of 8.5%-9.5% Full FY2026 Non-GAAP Guidance | Metric | Guidance Range | | :--- | :--- | | Total Revenue | $706M - $720M | | Service Revenue | $685M - $700M | | Non-GAAP Gross Margin | 66.0% - 68.0% | | Non-GAAP Operating Margin | 8.5% - 9.5% | | Non-GAAP Net Income per Share, diluted | $0.28 - $0.33 | | Cash Flow from Operations | $35M - $45M | [Financial Statements and Reconciliations](index=8&type=section&id=Financial%20Statements%20and%20Reconciliations) [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q1 FY2026 total revenue was $181.4M, with GAAP operating income of $0.6M and a narrowed net loss of $4.3M Q1 FY2026 Statement of Operations Highlights (in thousands) | Line Item | Q1 FY2026 | Q1 FY2025 | | :--- | :--- | :--- | | Total Revenue | $181,361 | $178,147 | | Gross Profit | $120,440 | $120,960 | | Income (Loss) from Operations | $565 | ($1,374) | | Net Loss | ($4,315) | ($10,290) | | Net Loss Per Share (Basic & Diluted) | ($0.03) | ($0.08) | [Condensed Consolidated Balance Sheets](index=9&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets were $684.3M, with cash at $81.3M after debt and share repurchases Balance Sheet Highlights (in thousands) | Line Item | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | Cash and cash equivalents | $81,315 | $88,050 | | Total Current Assets | $207,980 | $203,866 | | Total Assets | $684,348 | $683,177 | | Total Current Liabilities | $176,439 | $169,244 | | Total Liabilities | $556,158 | $560,973 | | Total Stockholders' Equity | $128,190 | $122,204 | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 FY2026 operating cash flow was $11.9M, with $17.3M used in financing for debt and share repurchases Q1 FY2026 Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 FY2026 | Q1 FY2025 | | :--- | :--- | :--- | | Net cash provided by operating activities | $11,873 | $18,148 | | Net cash used in investing activities | ($4,416) | ($3,130) | | Net cash used in financing activities | ($17,337) | ($352) | | Net (decrease) increase in cash | ($7,092) | $14,502 | [Reconciliation of GAAP to Non-GAAP Financial Measures](index=11&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Financial%20Measures) Q1 FY2026 non-GAAP operating profit was $16.3M and non-GAAP net income was $10.7M, after key adjustments Q1 FY2026 GAAP to Non-GAAP Reconciliation Highlights (in thousands) | Line Item | Q1 FY2026 | Q1 FY2025 | | :--- | :--- | :--- | | **GAAP income (loss) from operations** | **$565** | **($1,374)** | | Amortization of acquired intangible assets | $3,501 | $5,099 | | Stock-based compensation & related taxes | $6,909 | $13,593 | | Severance, transition and contract exit costs | $4,523 | $2,121 | | **Non-GAAP operating profit** | **$16,333** | **$20,110** | | **GAAP net loss** | **($4,315)** | **($10,290)** | | Total adjustments | $15,050 | $20,683 | | **Non-GAAP net income** | **$10,735** | **$10,393** | - Management uses non-GAAP financial measures internally to evaluate the business, believing they are useful to investors for assessing ongoing operational performance by excluding items that are non-cash, not expected to recur, or not reflective of ongoing financial results[26](index=26&type=chunk)

Core Insights - The India Communication Platform as a Service (CPaaS) market is projected to grow from USD 1.03 Billion in 2025 to USD 3.43 Billion by 2031, with a compound annual growth rate (CAGR) of 22.20% [1][16]. Market Drivers - The surge in demand for CPaaS in India is driven by the digitization of various sectors such as retail, healthcare, BFSI, and e-commerce, alongside increased smartphone penetration and internet accessibility [2]. - Digital transformation across Indian enterprises is significantly boosting CPaaS adoption, with organizations integrating real-time communication capabilities to enhance service quality [4]. - Supportive government initiatives like Digital India and the expansion of digital payment systems have further increased the demand for cloud-based communication tools [5]. Market Challenges - The expansion of CPaaS services has raised concerns regarding data privacy and regulatory compliance, particularly with the implementation of the Digital Personal Data Protection Act, 2023 [6][7]. - Ambiguities in regulations concerning data localization and cross-border transfer complicate the operational landscape for CPaaS providers [8]. Market Trends - The integration of artificial intelligence in CPaaS is a key trend, enabling intelligent and conversational interactions through tools like chatbots and voice assistants [9]. - AI-driven communication enhances service consistency and response times in high-volume environments such as retail and banking, while advancements in natural language processing improve accessibility [10]. Key Players - Notable companies in the India CPaaS market include Twilio Inc., Infobip Ltd., Bandwidth Inc., Plivo Inc., Kaleyra Inc., Route Mobile Ltd., Sinch AB, and 8x8, Inc. [14].

Summary of 8x8 (EGHT) 2025 Conference Call Company Overview - **Company**: 8x8, Inc. (EGHT) - **Industry**: Business Communications, specifically focusing on CPaaS (Communications Platform as a Service), UCaaS (Unified Communications as a Service), and CCaaS (Contact Center as a Service) Key Points and Arguments 1. **Recent Earnings and Guidance**: - 8x8 provided guidance for fiscal year 2026, indicating revenue growth expectations of high single digits, around 8% in the coming years [5][7][17] - The CPaaS business is performing better than expected, although there was some disruption in new business generation in March and April due to macroeconomic factors [5][6] 2. **Market Dynamics**: - The voice communications industry is not declining; it is evolving with trends towards omnichannel communication [9][10] - The company has seen growth in international markets, which constitute over a third of its business, while the US market faced challenges [6] 3. **Performance Metrics**: - The core business (excluding Fuse) grew by 4.6% year-over-year, aligning with industry peers [12] - The company has reduced its debt by approximately 40% since acquiring Fuse, which was a $250 million transaction [14][15] 4. **Strategic Focus**: - 8x8 aims to be a global software provider rather than a traditional telecom company, focusing on cloud-based solutions [19][23] - The company is actively looking for acquisition opportunities in the fragmented telecom market to enhance its scale and capabilities [18][24] 5. **AI and Contact Center Solutions**: - 8x8 has been investing in AI since 2019, integrating AI into its products to enhance customer service and operational efficiency [39][40] - The company targets mid-market enterprises that lack in-house development capabilities, providing them with advanced contact center technologies [53] 6. **Competitive Landscape**: - The primary competitors include hyperscalers like Microsoft, Amazon, and Google, as well as traditional telecom companies [75] - 8x8 believes it is well-positioned to capture market share due to its comprehensive product offerings and focus on innovation [78] 7. **Future Outlook**: - The company anticipates continued growth and cash flow generation, with plans for increased R&D spending and potential M&A activities in the future [80][81] - There is a recognition of the need for a shift from on-premise to cloud-based solutions, particularly for AI applications [60][63] Additional Important Insights - **Valuation Concerns**: There is a significant market disconnect regarding 8x8's valuation, which does not reflect its growth potential and innovation capabilities [78][79] - **R&D Strategy**: The company plans to leverage partnerships for R&D to enhance its product offerings without incurring additional debt [83][84] - **Long-term Vision**: 8x8 aims to maintain a low leverage ratio to ensure financial flexibility for innovation and growth [33][34] This summary encapsulates the key insights and strategic direction of 8x8 as discussed in the conference call, highlighting its performance, market positioning, and future growth plans.

Part I [Business](index=4&type=section&id=Item%201.%20Business) 8x8, Inc. is a global provider of an integrated customer experience and business communications platform, combining contact center, unified communications, and communication APIs into a single, AI-powered cloud solution - 8x8 provides an integrated **Platform for CX™** that unifies **CCaaS**, **UCaaS**, and **CPaaS** capabilities into a single, secure, **AI-powered** system[15](index=15&type=chunk)[21](index=21&type=chunk)[27](index=27&type=chunk) - The company's strategic focus is on **mid-market**, **small to mid-sized enterprise**, and **public sector organizations**, typically with **500 to 10,000 employees**[16](index=16&type=chunk)[23](index=23&type=chunk) - Go-to-market strategy includes **direct sales**, **technology solutions distributors (TSDs)**, **value-added resellers (VARs)**, and **strategic technology partners** like Microsoft and Salesforce[17](index=17&type=chunk)[24](index=24&type=chunk)[37](index=37&type=chunk) - As of March 31, 2025, the company holds at least **405 patents** with an additional **90 patent applications** pending, covering various aspects of its technology[42](index=42&type=chunk) - Employee and Customer Overview (Fiscal 2025) | Metric | Value | | :--- | :--- | | **Total Customers** | > 55,000 | | **Countries with Users** | > 160 | | **Single Customer Revenue Concentration** | No single customer > 10% of revenue | | **Full-Time Employees** | 1,942 | | **Employees Outside U.S.** | 67% | [Risk Factors](index=12&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks across its business, operations, and financials, including a history of net losses, intense competition, potential customer churn, and complex regulatory landscapes [Risks Related to Business and Industry](index=13&type=section&id=Risks%20Related%20to%20our%20Business%20and%20Industry) The company has a history of losses, faces intense competition, and is dependent on successful customer migration from acquired platforms like Fuze - The company recorded operating income of **$15.2 million** for fiscal 2025 but has an accumulated deficit of approximately **$887.7 million** and expects to continue incurring operating losses in the near future[84](index=84&type=chunk) - Intense competition exists with cloud service providers (e.g., **RingCentral**, **Zoom**, **Five9**), legacy vendors (e.g., **Avaya**, **Cisco**), and large technology companies (e.g., **Alphabet**, **Amazon**, **Microsoft**)[99](index=99&type=chunk)[100](index=100&type=chunk) - The company is targeting the completion of the **Fuze customer migration** and platform shutdown by **December 31, 2025**, with failure to meet this timeline potentially resulting in increased costs and operational risks[116](index=116&type=chunk) - As of March 31, 2025, the company had federal Net Operating Loss (NOL) carryforwards of **$1,023.8 million** and state NOL carryforwards of **$869.4 million**, the utilization of which is subject to limitations[120](index=120&type=chunk) [Risks Related to Products and Operations](index=19&type=section&id=Risks%20Related%20to%20our%20Products%20and%20Operations) Operational risks include potential service disruptions from software bugs or infrastructure failures, challenges from international expansion, and reliance on third-party network providers - The company's services and infrastructure have contained and may in the future contain **undetected errors, bugs, or vulnerabilities**, which have caused and may cause **temporary service outages**[127](index=127&type=chunk)[129](index=129&type=chunk) - International operations face risks from localization, differing regulations, and geopolitical tensions, with the **Russia-Ukraine conflict** potentially impacting the company's significant engineering and operations presence in **Romania**[133](index=133&type=chunk)[135](index=135&type=chunk) - The company relies on third-party network service providers like **Equinix**, **Amazon Web Services (AWS)**, and **Oracle** for connectivity and cloud services, making it vulnerable to disruptions from these providers[146](index=146&type=chunk) [Risks Related to Regulatory Matters](index=24&type=section&id=Risks%20Related%20to%20Regulatory%20Matters) The company is exposed to significant regulatory risks, including cyber intrusions, evolving global data privacy laws, and extensive telecommunications regulations as a VoIP provider - **Cyberattacks**, including **ransomware**, are increasing in frequency and magnitude, with geopolitical tensions potentially heightening risks of cyber-attacks from **nation-state actors**[152](index=152&type=chunk) - The company is subject to numerous data privacy and protection laws, including the EU's **GDPR**, the UK's Data Protection Act, and various U.S. state laws (e.g., **CCPA/CPRA**), which carry **significant fines** for non-compliance[164](index=164&type=chunk)[170](index=170&type=chunk) - As a provider of interconnected **VoIP services**, the company is subject to extensive regulations from the **FCC** and international bodies concerning **E-911**, **Universal Service Fund** contributions, and **robo-calling**[61](index=61&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk) [Risks Related to Intellectual Property](index=27&type=section&id=Risks%20Related%20to%20Intellectual%20Property) The company faces risks of intellectual property infringement claims, challenges in protecting its proprietary technology, and potential restrictions from open-source software use - The company may face **infringement lawsuits** from third parties, which could result in **monetary liabilities** or require it to stop using certain technologies[174](index=174&type=chunk) - Protection of proprietary technology relies on **patents**, **trademarks**, and **trade secrets**, which may not provide a sufficient competitive advantage and could be challenged or invalidated[175](index=175&type=chunk) - The use of **open-source software** carries the risk that licenses could be construed in a way that imposes **unanticipated restrictions** on the company's platform[178](index=178&type=chunk) [Risks Related to Debt, Stock, and Charter](index=28&type=section&id=Risks%20Related%20to%20our%20Debt%2C%20our%20Stock%2C%20and%20our%20Charter) 8x8 has a substantial debt load requiring significant cash flow for service, and its stock price volatility could jeopardize its Nasdaq listing - Outstanding Debt as of March 31, 2025 | Debt Instrument | Principal Amount Outstanding | | :--- | :--- | | Senior Secured Term Loan (due 2027) | $152.0 million | | 4.00% Convertible Senior Notes (due 2028) | $201.9 million | - The company's ability to make **scheduled debt payments** depends on future performance and cash flow, which are subject to economic and competitive factors beyond its control[183](index=183&type=chunk) - If the company's stock price falls below **$1.00 per share** for an extended period, it could become non-compliant with **Nasdaq's listing requirements**, potentially leading to **delisting**[189](index=189&type=chunk) [General Risk Factors](index=31&type=section&id=General%20Risk%20Factors) The company is exposed to general risks including adverse macroeconomic conditions and potential disruptions from natural disasters - Macroeconomic factors like **inflation**, **rising interest rates**, and **international conflicts** can **reduce demand** for services, **lengthen sales cycles**, and **increase customer churn**[194](index=194&type=chunk) - The company's headquarters and a third-party data center are located in the **San Francisco Bay Area**, a region known for **seismic activity**, posing a risk of disruption from natural disasters[199](index=199&type=chunk) [Unresolved Staff Comments](index=33&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments from the Securities and Exchange Commission - None[201](index=201&type=chunk) [Cybersecurity](index=33&type=section&id=Item%201C.%20Cybersecurity) 8x8 maintains a comprehensive cybersecurity risk management program aligned with the NIST Cybersecurity Framework, overseen by the Board's Technology & Cybersecurity Committee - The company's cybersecurity risk management program is aligned with the **National Institute of Standards and Technology (NIST) Cybersecurity Framework**[203](index=203&type=chunk) - Oversight is provided by the **Board's Technology & Cybersecurity Committee**, which meets quarterly, and the program is led by the **Chief Information Security Officer (CISO)**, who has over **25 years of experience**[206](index=206&type=chunk)[207](index=207&type=chunk) - To date, 8x8 has **not experienced any cybersecurity incidents** that have **materially impacted** its operations or financial condition[205](index=205&type=chunk) [Properties](index=34&type=section&id=Item%202.%20Properties) The company's principal operations are headquartered in Campbell, California, with international leased offices and third-party data center hosting facilities globally - Principal operations are located in **Campbell, California**[210](index=210&type=chunk) - International operations are conducted in leased office spaces, with key locations in the **UK**, **Romania**, **Canada**, **Portugal**, **Singapore**, and the **Philippines**[210](index=210&type=chunk) - The company utilizes **third-party data center hosting facilities** in **North America**, **Europe**, and the **Asia Pacific** region[211](index=211&type=chunk) [Legal Proceedings](index=34&type=section&id=Item%203.%20Legal%20Proceedings) Information regarding legal proceedings is incorporated by reference from Note 7, "Commitments and Contingencies," in the Notes to Consolidated Financial Statements - This section refers to **Note 7** of the financial statements for details on legal proceedings[212](index=212&type=chunk) [Mine Safety Disclosures](index=34&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[213](index=213&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=35&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%20and%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) 8x8's common stock is traded on the Nasdaq Global Select Market under the symbol "EGHT", and the company has a stock repurchase plan but has never paid cash dividends - The company's common stock trades on the **Nasdaq Global Select Market** under the symbol "**EGHT**"[215](index=215&type=chunk) - 8x8 has **never paid cash dividends** and has **no plans** to do so in the foreseeable future[216](index=216&type=chunk) - As of March 31, 2025, approximately **$7.1 million** remained available for stock repurchases under the 2017 Repurchase Plan[222](index=222&type=chunk) [Reserved]](index=36&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In fiscal 2025, 8x8's total revenue decreased by 1.9% to $715.1 million, but the company achieved a significant turnaround in profitability, reporting income from operations of $15.2 million [Results of Operations](index=40&type=section&id=Results%20of%20Operations) For fiscal 2025, total revenue decreased to $715.1 million, but income from operations significantly improved to $15.2 million from a $27.6 million loss in the prior year, driven by cost controls - Fiscal Year 2025 vs. 2024 Key Financial Results (in thousands) | Metric | Fiscal 2025 | Fiscal 2024 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | $715,070 | $728,705 | $(13,635) | (1.9)% | | Service Revenue | $692,923 | $700,579 | $(7,656) | (1.1)% | | **Gross Profit** | $485,272 | $503,800 | $(18,528) | (3.7)% | | **Income (Loss) from Operations** | $15,193 | $(27,603) | $42,796 | N/A | | **Net Loss** | $(27,212) | $(67,592) | $40,380 | N/A | - Service revenue decrease of **$7.7 million** was driven by a **$19.9 million** decline in subscription revenue from the **Fuze platform**, partially offset by a **$12.2 million** increase in platform usage revenue[252](index=252&type=chunk) - General and administrative expenses decreased by **$29.8 million (26.6%)**, primarily due to a **$24.2 million** decrease associated with regulatory and state and local tax matters[258](index=258&type=chunk) - There was **no impairment** of long-lived assets in fiscal 2025, compared to an **$11.0 million impairment charge** in fiscal 2024 related to ceasing use of office space[259](index=259&type=chunk) [Liquidity and Capital Resources](index=42&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2025, the company held $88.1 million in cash and cash equivalents, with net cash provided by operating activities at $63.6 million, and it believes existing cash flows are sufficient for the next twelve months - Cash and Cash Equivalents (in thousands) | Date | Amount | | :--- | :--- | | March 31, 2025 | $88,050 | | March 31, 2024 | $116,262 | - Cash Flow Summary (in thousands) | Cash Flow Activity | Fiscal 2025 | Fiscal 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $63,554 | $78,985 | | Net cash provided by (used in) investing activities | $(16,424) | $8,546 | | Net cash used in financing activities | $(75,106) | $(83,411) | - On August 5, 2024, the company drew **$200.0 million** from a **new Term Loan facility** and used the proceeds to repay the **previous 2022 Term Loan**[271](index=271&type=chunk)[274](index=274&type=chunk) - The company made **three principal prepayments** on the new Term Loan during fiscal 2025, totaling **$48.0 million**[273](index=273&type=chunk) [Critical Accounting Policies and Estimates](index=45&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) The company's critical accounting policies involve significant management judgment and estimates, particularly in revenue recognition, allowance for credit losses, and asset impairment assessments - Key critical accounting policies include **Revenue Recognition**, **Allowance for Credit Losses**, **Acquisitions**, **Capitalized Internal-Use Software Costs**, **Accounting for Long-Lived Assets**, and **Goodwill and Other Intangible Assets**[279](index=279&type=chunk) - **Revenue recognition** requires significant judgment in identifying performance obligations, determining transaction prices, and estimating variable consideration like sales returns and customer credits[280](index=280&type=chunk)[282](index=282&type=chunk) - The company tests **goodwill** for impairment annually and reviews **long-lived assets** for impairment when events indicate their carrying value may not be recoverable, with an impairment of **$11.0 million** for right-of-use assets recorded in fiscal 2024[288](index=288&type=chunk)[289](index=289&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is primarily exposed to interest rate risk on its variable-rate Term Loan and foreign currency exchange risk from international operations - The company is subject to **interest rate risk** on its **variable-rate Term Loan**, which had a principal of **$152.0 million** as of March 31, 2025, where a hypothetical **10% increase** in the variable interest rate would increase annual interest expense by approximately **$1.0 million**[292](index=292&type=chunk) - The company has **foreign currency risks** related to revenue and expenses denominated primarily in the **British Pound** and **Singapore Dollar**[294](index=294&type=chunk) - A hypothetical **10% change** in foreign currency exchange rates would result in a foreign currency translation adjustment of approximately **$13.0 million** within accumulated other comprehensive loss[295](index=295&type=chunk) [Financial Statements and Supplementary Data](index=48&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for the fiscal years ended March 31, 2025, 2024, and 2023, along with the independent auditor's report and detailed notes [Report of Independent Registered Public Accounting Firm](index=49&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Moss Adams LLP issued an unqualified opinion on the consolidated financial statements and the effectiveness of the company's internal control over financial reporting, identifying no critical audit matters - The auditor, **Moss Adams LLP**, provided an **unqualified opinion** on the financial statements and the effectiveness of **internal control over financial reporting**[300](index=300&type=chunk) - The audit determined there were **no critical audit matters**[306](index=306&type=chunk) [Consolidated Financial Statements](index=50&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements show total assets of $683.2 million and total liabilities of $561.0 million as of March 31, 2025, with a net loss of $27.2 million for fiscal 2025 - Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $203,866 | $247,836 | | Total Assets | $683,177 | $755,979 | | Total Current Liabilities | $169,244 | $172,584 | | Total Liabilities | $560,973 | $654,021 | | Total Stockholders' Equity | $122,204 | $101,958 | - Consolidated Statement of Operations Highlights (in thousands) | Account | FY 2025 | FY 2024 | FY 2023 | | :--- | :--- | :--- | :--- | | Total Revenue | $715,070 | $728,705 | $743,938 | | Gross Profit | $485,272 | $503,800 | $502,463 | | Income (Loss) from Operations | $15,193 | $(27,603) | $(66,292) | | Net Loss | $(27,212) | $(67,592) | $(73,143) | | Net Loss Per Share | $(0.21) | $(0.56) | $(0.63) | - Consolidated Statement of Cash Flows Highlights (in thousands) | Account | FY 2025 | FY 2024 | FY 2023 | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $63,554 | $78,985 | $48,786 | | Net cash provided by (used in) investing activities | $(16,424) | $8,546 | $6,050 | | Net cash used in financing activities | $(75,106) | $(83,411) | $(37,784) | [Notes to Consolidated Financial Statements](index=56&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed disclosures on significant accounting policies, revenue, debt, stock-based compensation, income taxes, and commitments, including an FCC investigation settlement - Remaining performance obligations for contract revenue not yet recognized was approximately **$780.0 million** as of March 31, 2025, with **84%** expected to be recognized over the next **24 months**[392](index=392&type=chunk) - The company settled an **FCC investigation** regarding prior period regulatory filings for both 8x8 and Fuze, Inc. by agreeing to a compliance plan and paying a **$0.3 million civil penalty**[420](index=420&type=chunk) - Total stock-based compensation expense was **$39.9 million** in fiscal 2025, a decrease from **$61.9 million** in fiscal 2024[454](index=454&type=chunk) - The company maintains a **full valuation allowance** of **$368.8 million** against its **U.S. deferred tax assets** due to a history of **cumulative losses**[472](index=472&type=chunk) - On **April 11, 2025**, the company prepaid an additional **$15.0 million** of its Term Loan, reducing the outstanding principal to **$137.0 million**[481](index=481&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=82&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports that there were no changes in or disagreements with its accountants on accounting and financial disclosure - None[483](index=483&type=chunk) [Controls and Procedures](index=82&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures and internal control over financial reporting were effective as of March 31, 2025 - Management concluded that disclosure controls and procedures were **effective** as of March 31, 2025[485](index=485&type=chunk) - Management concluded that internal control over financial reporting was **effective** as of March 31, 2025[487](index=487&type=chunk) [Other Information](index=82&type=section&id=Item%209B.%20Other%20Information) This section discloses an executive officer's Rule 10b5-1 trading plan and the board's adoption of an executive bonus plan for fiscal 2026 - An executive officer, **Hunter Middleton**, adopted a **Rule 10b5-1 Trading Plan** on **February 28, 2025**, for the potential sale of up to **232,040 shares**[489](index=489&type=chunk) - The board adopted an executive bonus plan for **fiscal 2026** with semi-annual payouts based on **service revenue**, **non-GAAP operating income**, and **net new annual subscription revenue** targets[490](index=490&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=82&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - None[491](index=491&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=83&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance will be incorporated by reference from the company's definitive proxy statement for its 2025 Annual Meeting of Stockholders - Information required for this item is incorporated by reference from the **2025 Proxy Statement**[494](index=494&type=chunk) [Executive Compensation](index=83&type=section&id=Item%2011.%20Executive%20Compensation) Information relating to executive compensation will be incorporated by reference from the company's definitive proxy statement for its 2025 Annual Meeting of Stockholders - Information required for this item is incorporated by reference from the **2025 Proxy Statement**[497](index=497&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=83&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership and related matters will be incorporated by reference from the company's definitive proxy statement for its 2025 Annual Meeting of Stockholders - Information required for this item is incorporated by reference from the **2025 Proxy Statement**[498](index=498&type=chunk) [Certain Relationships and Related Transactions and Director Independence](index=83&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%20and%20Director%20Independence) Information regarding certain relationships, related transactions, and director independence will be incorporated by reference from the company's definitive proxy statement for its 2025 Annual Meeting of Stockholders - Information required for this item is incorporated by reference from the **2025 Proxy Statement**[499](index=499&type=chunk) [Principal Accountant Fees and Services](index=83&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services will be incorporated by reference from the company's definitive proxy statement for its 2025 Annual Meeting of Stockholders - Information required for this item is incorporated by reference from the **2025 Proxy Statement**[500](index=500&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=84&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the financial statements included under Item 8 and provides a comprehensive list of all exhibits filed with or incorporated by reference into the Form 10-K - This section provides an index to the **financial statements** and a list of all **exhibits** filed with the report[502](index=502&type=chunk)[504](index=504&type=chunk) [Form 10-K Summary](index=86&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable to the company - None[508](index=508&type=chunk)

Core Insights - 8x8, Inc. reported accelerated growth in core service revenue and record cash generation for FY2025, with significant advancements in platform innovation and customer upgrades [2][3] - The company achieved $63.6 million in operating cash flow for FY2025, marking the highest consecutive two-year period of non-GAAP operating cash flow in its history [1][5] Financial Performance - In Q4 FY2025, operating cash flow reached $5.9 million, contributing to a two-year total of over $142 million [1][5] - Year-over-year quarterly service revenue growth accelerated to 4.6% in Q4 FY2025, up from 2.7% in Q3, with annual growth for the segment reaching 2.8% [3][4] - Net debt to trailing twelve-month EBITDA improved to 2.7x, down from over 6x in Q2 2023, with over $209 million in debt principal retired since August 2022 [5][6] Product and Market Strategy - The number of customers using three or more products increased by 13% year-over-year to over 700 in Q4 FY2025, indicating improved customer retention [7][8] - The company introduced AI integrations and saw a 72% surge in Microsoft Teams integration license sales, with over 550,000 cumulative seats deployed [7][9] - 8x8 is the first contact center provider to fully integrate rich communication services, enhancing its competitive differentiation [9][10] Future Outlook - Management projects total revenue for FY2026 to be between $702 million and $724 million, with anticipated non-GAAP operating income of $67.5 million at the midpoint [11] - The company expects to achieve high single-digit service revenue growth and double-digit operating margins by FY2028, with risks from the Fuze platform migration diminishing [11]

Group 1: Earnings Performance - 8x8 reported quarterly earnings of $0.08 per share, matching the Zacks Consensus Estimate, and consistent with earnings from the previous year [1] - The company had revenues of $177.04 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 0.56% and down from $179.41 million a year ago [2] - Over the last four quarters, 8x8 has surpassed consensus EPS estimates two times and topped consensus revenue estimates just once [2][3] Group 2: Stock Performance and Outlook - 8x8 shares have declined approximately 32.2% since the beginning of the year, contrasting with the S&P 500's gain of 1.3% [3] - The future performance of 8x8's stock will largely depend on management's commentary during the earnings call and the company's earnings outlook [4][6] - The current consensus EPS estimate for the upcoming quarter is $0.11 on revenues of $177.61 million, and for the current fiscal year, it is $0.37 on revenues of $716.4 million [7] Group 3: Industry Context - The Internet - Software industry, to which 8x8 belongs, is currently ranked in the top 29% of over 250 Zacks industries, indicating a favorable industry outlook [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact 8x8's stock performance [5]