8x8(US:EGHT)2025-02-05 21:12Revenue Performance - Service revenue for the three months ended December 31, 2024, was $173.459 million, a decrease of $1.610 million or 0.9% compared to the same period in 2023[114]. - The percentage of service revenue to total revenue increased to 97.0% for the three months ended December 31, 2024, compared to 96.7% in the same period of 2023[114]. - Revenue from subscriptions decreased by $4.3 million primarily due to a decline in revenue from customers on the Fuze platform, partially offset by a $2.7 million increase in platform usage revenue[115]. - Service revenue decreased by $6.8 million, or 1.3%, for the nine months ended December 31, 2024 compared to the same period in 2023, driven by a decline in subscription revenue of $13.9 million[116]. - Other revenue decreased by $4.5 million, or 21.3%, for the nine months ended December 31, 2024, primarily due to lower professional service and product revenue of $2.7 million and $1.8 million, respectively[119]. - Other revenue represented 3.1% of total revenue for the nine months ended December 31, 2024, down from 3.9% in the same period of 2023[117]. Financial Performance - The company reported a net income of $3.022 million for the three months ended December 31, 2024, compared to a net loss of $14.543 million in the same period of 2023[102]. - The gross profit margin for the three months ended December 31, 2024, was 67.7%, slightly down from 69.0% in the same period of 2023[102]. - Interest expense decreased by $4.2 million, or 41.8%, for the three months ended December 31, 2024, compared to the same period in 2023, primarily due to the extinguishment of the 2022 Term Loan and decreased interest rates[140]. - For the nine months ended December 31, 2024, interest expense decreased by $6.5 million, or 21.4%, compared to the same period in 2023, attributed to similar factors as the quarterly results[141]. - The provision for income taxes increased by $0.4 million for the three months ended December 31, 2024, compared to the same period in 2023, driven by higher estimated cash taxes[146]. Cost Management - Cost of service revenue increased by $5.9 million, or 4.1%, for the nine months ended December 31, 2024, primarily due to an increase of $12.2 million in costs to deliver subscription and platform usage services[122]. - Research and development expenses decreased by $9.0 million, or 8.8%, for the nine months ended December 31, 2024, primarily due to decreases in stock-based compensation and other costs[129]. - Sales and marketing expenses decreased by $6.6 million, or 3.2%, for the nine months ended December 31, 2024, primarily due to decreases in stock-based compensation and channel commissions[132]. - General and administrative expenses decreased by $17.7 million, or 22.9%, for the nine months ended December 31, 2024, primarily due to a decrease associated with legal and regulatory matters[136]. - Cost of other revenue decreased by $1.0 million, or 4.3%, for the nine months ended December 31, 2024, primarily due to lower product costs associated with IP telephone hardware[125]. - Cost of service revenue as a percentage of service revenue increased to 28.8% for the nine months ended December 31, 2024, compared to 27.3% in the same period of 2023[120]. Strategic Initiatives - The company aims to increase service revenue through new customer acquisition, cross-selling additional products, and geographic expansion outside the United States[103]. - The company continues to focus on innovation, particularly in its platform and contact center as-a-service offerings, to attract and retain mid-market and enterprise customers[100]. - The company has expanded its customer success organization and invested in back-office process improvements to enhance operational efficiency[101]. - The company plans to maintain a high level of investment in engineering to deliver product innovation across its Platform for CX[99]. Debt and Cash Management - Cash and cash equivalents totaled $104.2 million as of December 31, 2024, down from $116.3 million as of March 31, 2024[149]. - Net cash provided by operating activities decreased by $8.7 million to $57.7 million for the nine months ended December 31, 2024, mainly due to increased cash paid to suppliers and employees[152]. - The company entered into a new term loan credit agreement with a principal amount of up to $200.0 million maturing on August 15, 2027[154]. - The 2024 Term Loan was fully drawn on August 5, 2024, to repay the outstanding principal and interest of the 2022 Term Loan, totaling $225.0 million[155]. - As of December 31, 2024, the remaining principal amount of the 2024 Term Loan after payments is $167.0 million[157]. - The company utilized proceeds from the 2022 Credit Agreement to fund the cash portion of an exchange involving approximately $403.8 million principal amount of 0.50% convertible senior notes due 2024 for cash plus approximately $201.9 million of 4.00% convertible senior notes due 2028[159]. - The company repurchased approximately $60.0 million of its common stock in conjunction with the convertible notes exchange[159]. Accounting and Compliance - The company's consolidated financial statements are prepared in accordance with U.S. GAAP, with no significant changes to critical accounting policies during the nine months ended December 31, 2024[162]. - The company has made estimates and judgments affecting reported amounts of assets, liabilities, revenue, and expenses based on historical experience and reasonable assumptions[161]. - The company continues to evaluate its critical accounting policies and estimates on an ongoing basis[161]. - There have been no material changes in the company's exposures to market risk since March 31, 2024[163].