Core Viewpoint - The comparison between 8x8 (EGHT) and Adyen N.V. Unsponsored ADR (ADYEY) indicates that EGHT presents a more attractive investment opportunity for value investors at this time [1][3][7]. Valuation Metrics - EGHT has a forward P/E ratio of 6.63, significantly lower than ADYEY's forward P/E of 40.20 [5]. - The PEG ratio for EGHT is 0.76, while ADYEY's PEG ratio stands at 2.19, suggesting EGHT is more favorably valued in terms of expected earnings growth [5]. - EGHT's P/B ratio is 2.2, compared to ADYEY's P/B of 10.85, further indicating EGHT's relative undervaluation [6]. Earnings Outlook - EGHT currently holds a Zacks Rank of 2 (Buy), reflecting an improving earnings outlook, while ADYEY has a Zacks Rank of 4 (Sell) [3][7]. - The positive revisions to earnings estimates for EGHT enhance its attractiveness to investors [3]. Value Grades - Based on various valuation metrics, EGHT has earned a Value grade of A, whereas ADYEY has received a Value grade of F, highlighting the disparity in their investment appeal [6].

Core Insights - The article compares two Internet - Software stocks, 8x8 (EGHT) and Adyen N.V. Unsponsored ADR (ADYEY), to determine which is more attractive to value investors [1] Group 1: Zacks Rank and Earnings Outlook - 8x8 has a Zacks Rank of 2 (Buy), indicating a positive earnings outlook, while Adyen N.V. has a Zacks Rank of 4 (Sell), suggesting a less favorable earnings outlook [3] - The Zacks Rank system favors stocks with positive revisions to earnings estimates, which supports the improving outlook for 8x8 [3] Group 2: Valuation Metrics - 8x8 has a forward P/E ratio of 6.46, significantly lower than Adyen N.V.'s forward P/E of 42.83, indicating that 8x8 may be undervalued [5] - The PEG ratio for 8x8 is 0.74, while Adyen N.V. has a PEG ratio of 2.34, further suggesting that 8x8 offers better value based on expected earnings growth [5] - 8x8's P/B ratio is 2.12 compared to Adyen N.V.'s P/B of 11.56, reinforcing the notion that 8x8 is more attractively priced [6] Group 3: Overall Value Assessment - Based on various valuation metrics, 8x8 holds a Value grade of A, while Adyen N.V. has a Value grade of F, indicating a clear preference for 8x8 among value investors [6]

Core Viewpoint - The article emphasizes the importance of value investing as a successful strategy across various market conditions, highlighting the use of fundamental analysis to identify undervalued stocks [2]. Company Summary - 8x8 (EGHT) is identified as a notable stock with a Zacks Rank of 2 (Buy) and an "A" grade for Value, indicating it is among the best value stocks currently available [3]. - The company has a PEG ratio of 0.64, which is significantly lower than the industry average PEG of 1.69, suggesting that EGHT is undervalued compared to its peers [4]. - Over the past year, EGHT's PEG ratio has fluctuated between a high of 0.79 and a low of 0.33, with a median of 0.51, further supporting the notion of its current undervaluation [4]. - The combination of a strong earnings outlook and favorable valuation metrics positions EGHT as an impressive value stock at this time [5].

Core Viewpoint - The comparison between 8x8 (EGHT) and Adyen N.V. Unsponsored ADR (ADYEY) indicates that EGHT presents a better value investment opportunity based on various financial metrics [1][7]. Valuation Metrics - EGHT has a forward P/E ratio of 5.92, significantly lower than ADYEY's forward P/E of 42.46 [5]. - The PEG ratio for EGHT is 0.68, while ADYEY's PEG ratio stands at 2.12, suggesting that EGHT is more favorably valued in relation to its expected earnings growth [5]. - EGHT's P/B ratio is 1.94, compared to ADYEY's P/B of 11.75, further indicating that EGHT is undervalued relative to its book value [6]. Investment Grades - Both EGHT and ADYEY have a Zacks Rank of 2 (Buy), reflecting positive earnings estimate revisions for both companies [3]. - EGHT holds a Value grade of A, while ADYEY has a Value grade of F, highlighting a significant disparity in their valuation attractiveness [6].

Group 1 - The analyst has maintained a Neutral stance on 8x8 (NASDAQ: EGHT) shares over the past year, noting high volatility but little change in share price since initial coverage [1] - The current market capitalization of 8x8 is $250 million, indicating that shares are considered cheap [1] - The analyst focuses on undercovered companies, with a watchlist of up to 100 companies, primarily in technology, software, electronics, and energy transition sectors [1] Group 2 - The analyst has over 7 years of personal investment experience and a Master's degree in Electrical Engineering, currently working as an automotive battery R&D engineer in Sweden [1] - The write-ups serve as a platform for laying out investment theses and receiving feedback from the investing community [1] - The analysis aims to identify asymmetric investment opportunities to achieve market-beating returns [1]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) Unaudited Q2 2025 financial statements reflect increased revenue, a narrowed net loss, stable assets, and positive operating cash flow [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets slightly increased to **$684.3 million** as of June 30, 2025, while liabilities decreased and stockholders' equity improved Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $81,315 | $88,050 | | Accounts receivable, net | $60,514 | $49,680 | | Goodwill | $274,476 | $271,530 | | **Total assets** | **$684,348** | **$683,177** | | **Liabilities & Equity** | | | | Accounts payable | $42,890 | $45,773 | | Term loan (current & non-current) | $136,343 | $151,174 | | Convertible senior notes, non-current | $199,039 | $198,790 | | **Total liabilities** | **$556,158** | **$560,973** | | **Total stockholders' equity** | **$128,190** | **$122,204** | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) Total revenue increased to **$181.4 million** for Q2 2025, with a turnaround to operating income and a narrowed net loss due to reduced expenses Condensed Consolidated Statement of Operations (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total revenue | $181,361 | $178,147 | | Gross profit | $120,440 | $120,960 | | Income (loss) from operations | $565 | $(1,374) | | Interest expense | $(3,968) | $(9,956) | | Net loss | $(4,315) | $(10,290) | | Net loss per share (Basic and diluted) | $(0.03) | $(0.08) | [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity increased to **$128.2 million** by June 30, 2025, driven by currency adjustments and stock-based compensation, despite a net loss and share repurchases - During the quarter ended June 30, 2025, the company repurchased **1.0 million shares** of common stock for **$1.8 million**[20](index=20&type=chunk) - Stock-based compensation expense for the quarter was **$6.4 million**, compared to **$13.3 million** in the same period of the prior year[20](index=20&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations was **$11.9 million** for Q2 2025, with significant cash usage in financing activities, leading to a **$7.1 million** net decrease in cash and equivalents Summary of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | 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) | $(352) | | **Net increase (decrease) in cash** | **$(7,092)** | **$14,502** | - Financing activities included a **$15.0 million** principal repayment on the term loan and **$1.8 million** for common stock repurchases during the quarter[23](index=23&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, revenue recognition, debt instruments, and share repurchases, highlighting geographic revenue shifts and **$755.0 million** in remaining performance obligations - The company is a SaaS provider of contact center, voice, video, chat, and API solutions, with a majority of revenue from communication services subscriptions and platform usage[25](index=25&type=chunk) Revenue by Geography (in thousands) | Region | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | United States | $113,091 | $122,858 | | United Kingdom | $30,731 | $29,206 | | Other International | $37,539 | $26,083 | | **Total revenue** | **$181,361** | **$178,147** | - As of June 30, 2025, the company had remaining performance obligations of approximately **$755.0 million**, with **83%** expected to be recognized as revenue over the next 24 months[39](index=39&type=chunk) - On April 11, 2025, the company prepaid **$15.0 million** of quarterly principal payments due under the 2024 Term Loan, with a remaining principal of **$137.0 million** as of June 30, 2025[65](index=65&type=chunk) - Subsequent to the quarter end, on July 29, 2025, the company prepaid an additional **$10.0 million** of the 2024 Term Loan[91](index=91&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a **2.0%** service revenue increase, improved operating income from expense reductions, and a strategic focus on AI and global CPaaS expansion, while maintaining sufficient liquidity [Overview](index=22&type=section&id=Overview) 8x8 provides an integrated AI-powered Platform for CX™ combining contact center, business communications, and APIs, targeting mid-market and enterprise clients - 8x8 provides an integrated Platform for CX™ that combines contact center, business communications, and APIs into a single AI-powered system[97](index=97&type=chunk) - The company's strategic focus is on mid-market, small and mid-sized enterprise, and public sector organizations, typically with **500 to 10,000 employees**[98](index=98&type=chunk) - Go-to-market strategy includes direct sales complemented by a partner ecosystem of technology solutions distributors (TSDs), value-added resellers (VARs), and strategic technology partners[99](index=99&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) Total revenue increased **1.8%** to **$181.4 million** for Q2 2025, driven by service revenue growth, while operating expenses decreased and interest expense significantly declined Revenue Comparison (in thousands) | Revenue Type | Q1 FY26 (ended June 30, 2025) | Q1 FY25 (ended June 30, 2024) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Service revenue | $176,308 | $172,801 | $3,507 | 2.0% | | Other revenue | $5,053 | $5,346 | $(293) | (5.5)% | - The increase in service revenue was driven by an **$8.2 million** rise in platform usage revenue, offset by a **$4.7 million** decrease in subscription revenue, mainly from former Fuze customers[121](index=121&type=chunk) Operating Expense Comparison (in thousands) | Expense Category | Q1 FY26 (ended June 30, 2025) | Q1 FY25 (ended June 30, 2024) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Research and development | $28,364 | $32,137 | $(3,773) | (11.7)% | | Sales and marketing | $68,184 | $67,106 | $1,078 | 1.6% | | General and administrative | $23,327 | $23,091 | $236 | 1.0% | - Interest expense decreased by **$6.0 million (60.1%)** YoY, primarily due to a lower interest rate and principal balance on the new 2024 Term Loan[135](index=135&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains sufficient liquidity with **$82.2 million** in cash as of June 30, 2025, managing debt through prepayments and share repurchases Cash Position (in thousands) | Category | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | Cash and cash equivalents | $81,315 | $88,050 | | Restricted cash (current & non-current) | $917 | $1,274 | | **Total** | **$82,232** | **$89,324** | - Net cash from operating activities decreased to **$11.9 million** from **$18.1 million** in the prior year's quarter, due to changes in working capital and timing of payments[146](index=146&type=chunk) - During the quarter, the company made a **$15.0 million** principal repayment on its 2024 Term Loan and repurchased **$1.8 million** of its common stock[146](index=146&type=chunk)[151](index=151&type=chunk) - The company increased its non-cancellable three-year hosting service contract commitment from **$24.1 million** to **$54.0 million**[156](index=156&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes occurred in the company's market risk exposures, including interest rate and foreign currency risks, since March 31, 2025 - There were no material changes in the company's market risk exposures since March 31, 2025[159](index=159&type=chunk) [Item 4. Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of June 30, 2025, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[160](index=160&type=chunk) - No changes occurred in the company's internal control over financial reporting during the quarter that have materially affected or are likely to materially affect it[161](index=161&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) Legal proceedings information is incorporated by reference from Note 7, with the company believing adequate provisions are recorded for existing claims - Details on legal proceedings are located in Note 7 of the financial statements[164](index=164&type=chunk) [Item 1A. Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) Investors should review risk factors detailed in the Annual Report on Form 10-K, as no material changes have occurred since March 31, 2025 - Investors are advised to review the risk factors detailed in the company's Annual Report on Form 10-K[165](index=165&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered equity sales occurred; the company repurchased **1.0 million shares** for **$1.8 million** under its 2017 plan, with **$5.2 million** remaining available Issuer Purchases of Equity Securities (for the three months ended June 30, 2025) | Period | Total Shares Purchased (thousands) | Average Price Paid per Share | Approximate Dollar Value Remaining Under Program (thousands) | | :--- | :--- | :--- | :--- | | April 2025 | — | — | $7,065 | | May 2025 | — | — | $7,065 | | June 2025 | 1,000 | $1.83 | $5,237 | | **Total** | **1,000** | | | - As of June 30, 2025, approximately **$5.2 million** remained available for share repurchases under the 2017 Plan[166](index=166&type=chunk) [Item 5. Other Information](index=32&type=section&id=Item%205.%20Other%20Information) The report discloses officer trading plan activities, including a CFO plan termination, a CLO plan adoption, and sell-to-cover arrangements for equity award tax obligations - CFO Kevin Kraus terminated a Rule 10b5-1 Trading Plan on May 27, 2025[171](index=171&type=chunk) - Chief Legal Officer Laurence Denny adopted a Rule 10b5-1 Trading Plan on June 12, 2025, for the potential sale of up to **20,000 shares**[172](index=172&type=chunk) - Company officers have entered into sell-to-cover arrangements to satisfy tax withholding obligations related to the vesting of RSUs and PSUs[173](index=173&type=chunk)

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]