Financial Performance - Service revenue reached $179 million, a 2.3% year-over-year increase and a 1.6% quarter-over-quarter increase[40] - Total revenue amounted to $184 million, reflecting a 1.7% year-over-year increase and a 1.5% quarter-over-quarter increase[40] - The company's GAAP operating margin was 2.9%, while the non-GAAP operating margin was 9.4%[40] - Positive operating cash flow was generated for the 19th consecutive quarter, reaching $8.8 million[40] Customer & Product Growth - Customers using 3 or more products increased by 11% year-over-year[40] - Revenue from products sold on an as-used basis accounted for 19% of service revenue[38] - Intelligent Customer Assistant (ICA) customer adoption increased by 59% year-over-year[18] - API Messaging Interactions experienced a 181% year-over-year growth[18] Debt Reduction - A $10 million prepayment of principal was made on the Term Loan during Q2 2026[40, 41] - The company has reduced the principal amount of debt by approximately $224 million since August 2022[70] Q3 2026 Guidance - The company projects service revenue to be between $172 million and $177 million, representing a growth rate between -1% and 2% year-over-year[73] - Total revenue is expected to be between $177 million and $182 million, also indicating a growth rate between -1% and 2% year-over-year[73]

Financial Performance - Total revenue for Q2 FY 2026 was $184.1 million, a year-over-year increase from $181.0 million in Q2 FY 2025[5] - Service revenue for Q2 FY 2026 reached $179.1 million, compared to $175.1 million in the same quarter last year[5] - GAAP net income for Q2 FY 2026 was $0.8 million, a significant improvement from a net loss of $14.5 million in Q2 FY 2025[5] - Non-GAAP net income for Q2 FY 2026 was $13.1 million, up from $12.1 million in Q2 FY 2025[5] - Total revenue for Q2 2025 was $184.1 million, a 1.2% increase from $181.0 million in Q2 2024[36] - Service revenue reached $179.1 million, up from $175.1 million year-over-year, indicating a growth of 1.2%[36] - Net income for Q2 2025 was $767,000, a significant improvement from a net loss of $14.5 million in Q2 2024[36] - Basic and diluted net income per share for Q2 2025 was $0.01, compared to a loss of $0.11 per share in Q2 2024[36] - GAAP net income for Q3 2025 was $767, representing 0.4% of total revenue, a significant improvement from a loss of $14,543 in Q3 2024, which was -8.0% of total revenue[43] - Non-GAAP net income for Q3 2025 reached $13,113, or 7.1% of total revenue, compared to $12,099, or 6.7% in Q3 2024[43] Cash Flow and Expenses - Cash flow from operations for Q2 FY 2026 was $8.8 million, down from $12.3 million in Q2 FY 2025[5] - Total operating expenses decreased slightly to $114.0 million from $116.0 million year-over-year[36] - Cash and cash equivalents as of September 30, 2025, were $75.9 million, down from $88.1 million at the end of March 2025[38] - Total assets decreased to $670.8 million from $683.2 million since March 31, 2025[38] - Stockholders' equity increased to $133.2 million from $122.2 million since March 31, 2025[38] - Net cash provided by operating activities for the six months ended September 30, 2025, was $20,708, compared to $30,465 for the same period in 2024, representing a decrease of 32.2%[40] - Cash, cash equivalents, and restricted cash at the end of the period were $76,684, down from $117,867 at the end of the previous year[40] Profitability Metrics - Non-GAAP operating margin for FY 2026 is projected to be between 8.5% and 9.5%[19] - GAAP service revenue margin for the six months ended September 30, 2025, was 68.6%, down from 71.3% in 2024[42] - Non-GAAP gross margin as a percentage of total revenue for the six months ended September 30, 2025, was 66.7%, compared to 70.4% in 2024[42] - Non-GAAP operating profit for the six months ended September 30, 2025, was $33,657, down from $41,648 in 2024, reflecting a decrease of 19.2%[42] - Adjusted EBITDA for Q3 2025 was $22,037, accounting for 12.0% of total revenue, down from $26,650, or 14.7% in Q3 2024[43] Debt and Capital Management - The company has reduced total debt by $224 million, or 41%, since August 2022, reflecting a commitment to disciplined capital management[12] - The company incurred $25,000 in principal repayment on term loans during the six months ended September 30, 2025[40] - The company reported a loss on debt extinguishment of $46 in Q3 2025, compared to a significant loss of $11,996 in Q3 2024[43] Recognition and Innovation - 8x8 was recognized as a leader in the IDC MarketScape for European Contact Center-as-a-Service Applications Software 2025[12] - The company introduced AI-powered features to enhance agent productivity and improve service quality in the contact center[12] Stock-Based Compensation - Stock-based compensation expense for the six months ended September 30, 2025, was $12,671, compared to $23,438 in 2024, indicating a reduction of 46%[42] - Stock-based compensation expense for Q3 2025 was $5,762, down from $9,845 in Q3 2024[43]

Core Insights - UK consumers prefer human support over AI, with 83% favoring real person interactions compared to only 4% for virtual agents or chatbots [2][15][3] - Financial incentives can shift consumer preferences, as over 30% would consider using AI if it resulted in lower prices [4][9] Consumer Preferences - A significant majority (75%) of respondents across the UK prefer human interaction for urgent issues, with no region reporting below 76% support [3] - For non-urgent matters, support for AI increases slightly, indicating a nuanced view on the use of technology [3] Regional Variations - Londoners show the highest price sensitivity, with 45% more likely to accept AI if it reduces costs, followed by Newcastle (39%) and Wales (36%) [5] - In contrast, only 20% of Scots indicated that discounts would influence their preference for AI [5] Demographic Insights - Younger demographics (25-34 years) are more open to hearing a relative's voice in customer interactions, with 48% in favor, while only 12% of those aged 55 and older support this idea [6][8] - Among 16-24 year olds, 7% prefer AI assistance, and 17% have no preference, suggesting a generational divide in attitudes towards AI [8] AI Integration in Customer Experience - The 8x8 platform integrates AI to enhance customer experience, supporting human agents with real-time assistance and workflow automation [10] - The approach emphasizes empowering agents rather than replacing them, aligning with customer expectations for a balanced service model [9]

Core Viewpoint - Investors in the Internet - Software sector should consider 8x8 (EGHT) and Clearwater Analytics (CWAN) as potential value opportunities, with EGHT currently presenting a stronger case for investment [1]. Group 1: Zacks Rank and Earnings Outlook - 8x8 has a Zacks Rank of 2 (Buy), indicating a favorable outlook, while Clearwater Analytics has a Zacks Rank of 3 (Hold), suggesting a less favorable position [3]. - The earnings outlook for 8x8 has likely improved more significantly than that of Clearwater Analytics recently, which is a key consideration for value investors [3]. Group 2: Valuation Metrics - 8x8 has a forward P/E ratio of 6.69, significantly lower than Clearwater Analytics' forward P/E of 31.43, indicating that 8x8 may be undervalued [5]. - The PEG ratio for 8x8 is 0.77, while Clearwater Analytics has a PEG ratio of 1.57, further suggesting that 8x8 offers better value based on expected earnings growth [5]. - 8x8's P/B ratio is 2.22 compared to Clearwater Analytics' P/B of 2.61, reinforcing the notion that 8x8 is more attractively priced relative to its book value [6]. Group 3: Overall Value Grades - Based on various valuation metrics, 8x8 holds a Value grade of A, while Clearwater Analytics has a Value grade of F, indicating a significant disparity in perceived value between the two stocks [6]. - The combination of Zacks Rank and Style Scores suggests that value investors are likely to favor 8x8 over Clearwater Analytics at this time [6].

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)