8x8(EGHT) - 2026 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements Unaudited Q2 2025 financial statements reflect increased revenue, a narrowed net loss, stable assets, and positive operating cash flow Condensed Consolidated Balance Sheets 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) 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 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] - 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] Condensed Consolidated Statements of Cash Flows 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] Notes to Unaudited Condensed Consolidated Financial Statements 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] 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] - 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] - Subsequent to the quarter end, on July 29, 2025, the company prepaid an additional $10.0 million of the 2024 Term Loan[91] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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 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] - 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] - 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] Results of Operations 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 $4.7 million decrease in subscription revenue, mainly from former Fuze customers[121] Operating Expense Comparison (in thousands) | Expense Category | Q1 FY26 (ended June 30, 2025) | Q1 FY25 (ended June 30, 2024) | Change ($) | 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] Liquidity and Capital Resources 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] - 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][151] - The company increased its non-cancellable three-year hosting service contract commitment from $24.1 million to $54.0 million[156] Item 3. Quantitative and Qualitative Disclosures About Market Risk 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] Item 4. Controls and Procedures 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] - 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] PART II. OTHER INFORMATION Item 1. Legal Proceedings 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] Item 1A. Risk Factors 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] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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] Item 5. Other Information 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] - 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] - Company officers have entered into sell-to-cover arrangements to satisfy tax withholding obligations related to the vesting of RSUs and PSUs[173]