Investors interested in stocks from the Internet - Software sector have probably already heard of 8x8 (EGHT) and F5 Networks (FFIV) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stoc ...

Core Viewpoint - 8x8 (EGHT) has been upgraded to a Zacks Rank 1 (Strong Buy), indicating a positive trend in earnings estimates which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Performance - The Zacks rating system is based on changes in earnings estimates, which are closely correlated with near-term stock price movements [2][4]. - An increase in earnings estimates typically leads to higher fair value calculations by institutional investors, resulting in buying or selling actions that affect stock prices [4]. Company-Specific Insights - For 8x8, the upgrade reflects an improvement in the company's underlying business, suggesting that investor sentiment may drive the stock price higher [5]. - The Zacks Consensus Estimate for 8x8 has increased by 37.9% over the past three months, with expected earnings of $0.36 per share for the fiscal year ending March 2026, unchanged from the previous year [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - Only the top 5% of Zacks-covered stocks receive a "Strong Buy" rating, indicating superior earnings estimate revisions and potential for market-beating returns [9][10].

Core Insights - 8x8 (EGHT) shows a significant improvement in earnings outlook, making it an attractive investment option as analysts continue to raise earnings estimates for the company [1][2] Earnings Estimate Revisions - The upward trend in earnings estimate revisions indicates growing analyst optimism regarding 8x8's earnings prospects, which is expected to positively influence its stock price [2] - The consensus earnings estimate for the current quarter is $0.07 per share, reflecting a 12.5% decrease from the previous year, but has increased by 50% over the last 30 days due to one upward revision [5] - For the full year, the earnings estimate stands at $0.36 per share, showing no year-over-year change, with a positive trend in estimate revisions as one estimate has increased without any negative revisions [6] Zacks Rank and Performance - 8x8 has achieved a Zacks Rank 1 (Strong Buy), indicating strong potential for outperformance based on favorable estimate revisions [7] - Historically, Zacks Rank 1 stocks have generated an average annual return of +25% since 2008, suggesting a strong correlation between earnings estimate revisions and stock performance [3][7] Stock Performance - The stock has gained 36.5% over the past four weeks, driven by solid estimate revisions, indicating strong earnings growth prospects that may further elevate the stock price [8]

Core Viewpoint - Investors are evaluating which stock presents a better value opportunity between 8x8 (EGHT) and F5 Networks (FFIV) [1] Valuation Metrics - 8x8 (EGHT) has a forward P/E ratio of 7.28, significantly lower than F5 Networks (FFIV) at 17.68 [5] - The PEG ratio for EGHT is 1.03, while FFIV has a PEG ratio of 6.08, indicating EGHT's earnings growth is more favorably priced [5] - EGHT's P/B ratio stands at 2.56 compared to FFIV's 4.42, further highlighting EGHT's relative undervaluation [6] Zacks Rank and Earnings Outlook - 8x8 currently holds a Zacks Rank of 1 (Strong Buy), while F5 Networks has a Zacks Rank of 3 (Hold), suggesting a more favorable earnings outlook for EGHT [3] - The Zacks Rank system favors stocks with positive earnings estimate revisions, which supports the notion that EGHT has an improving earnings outlook [2][3] Value Grade Comparison - 8x8 has a Value grade of A, while F5 Networks has a Value grade of D, indicating that EGHT is viewed as a better value investment [6][7] - Stronger estimate revision activity and more attractive valuation metrics for EGHT suggest it is the superior option for value investors at this time [7]

Group 1 - The individual investor focuses on undercovered companies, particularly in technology, software, electronics, and energy transition sectors [1] - The investor has over 7 years of personal capital investment experience across a broad range of global companies [1] - The investor aims to identify asymmetric investment opportunities to achieve market-beating returns through diligent research of small to mid-cap companies [1] Group 2 - The investor holds a Master's degree in Electrical Engineering and works as an automotive battery R&D engineer in Sweden [1] - The write-ups on Seeking Alpha serve as a platform for the investor to present investment theses and receive community feedback [1]

Revenue Performance - Service revenue for the three months ended December 31, 2025, increased by $6.2 million, or 3.6%, compared to the same period in 2024, driven by a $14.0 million increase in platform usage revenue in the Asia-Pacific region [121]. - Subscription revenue decreased by $7.8 million, primarily due to a decline in former Fuze customers [121]. - Service revenue for the nine months ended December 31, 2025, was $535.1 million, reflecting a 2.6% increase from $521.3 million in the same period of 2024 [120]. - Service revenue increased by $13.7 million, or 2.6%, for the nine months ended December 31, 2025, driven by a $34.2 million increase in platform usage revenue, primarily in the Asia-Pacific region [122]. Profitability and Expenses - Gross profit margin for the three months ended December 31, 2025, was 63.9%, down from 67.7% in the same period of 2024 [109]. - Net income for the three months ended December 31, 2025, was $5.1 million, representing 2.8% of total revenue, compared to a net loss of $14.5 million in the same period of 2024 [109]. - Cost of service revenue increased by $20.8 million, or 13.8%, for the nine months ended December 31, 2025, primarily due to a $28.2 million increase in network and carrier service provider costs [128]. - Research and development expenses decreased by $9.8 million, or 10.5%, for the nine months ended December 31, 2025, primarily due to decreases in stock-based compensation and costs to operate data centers [134]. - Sales and marketing expenses decreased by $5.1 million, or 2.6%, for the nine months ended December 31, 2025, primarily due to decreases in channel commissions and stock-based compensation [137]. - General and administrative expenses increased by $6.8 million, or 11.4%, for the nine months ended December 31, 2025, primarily due to increases in legal and regulatory costs [140]. Financing and Cash Flow - Interest expense decreased by $10.3 million, or 43.5%, for the nine months ended December 31, 2025, primarily due to a lower interest rate and principal balance on the 2024 Term Loan [141]. - Other income, net for the nine months ended December 31, 2025, was $1.3 million, a significant improvement from a $10.2 million expense in the same period in 2024, driven by a decrease in loss on debt extinguishment of $12.1 million [145]. - Provision for income taxes decreased by $0.7 million for the nine months ended December 31, 2025, compared to the same period in 2024, primarily due to changes in federal and state tax provisions [148]. - Cash provided by operating activities decreased by $16.3 million to $41.4 million for the nine months ended December 31, 2025, primarily due to reduced net loss and changes in working capital [154]. - Cash used in investing activities increased by $2.6 million to $12.8 million for the nine months ended December 31, 2025, mainly due to increased capitalized internal-use software costs [154]. - Cash used in financing activities decreased by $27.3 million to $31.8 million for the nine months ended December 31, 2025, primarily due to principal repayments for the term loan and share repurchases [154]. - As of December 31, 2025, cash and cash equivalents totaled $86.9 million, a slight decrease from $88.1 million as of March 31, 2025 [150]. - The 2024 Term Loan has an outstanding principal of $122.0 million after repayments, with scheduled remaining principal repayments of $39.5 million in fiscal year 2027 and $82.5 million due before or upon maturity in fiscal year 2028 [159]. - During the nine months ended December 31, 2025, the company repurchased 1.0 million shares of common stock for approximately $1.8 million at an average price of $1.83 per share [152]. - The company anticipates that existing cash and cash flows from operations will be sufficient to meet working capital and contractual obligations for at least the next twelve months [149]. Strategic Initiatives - The company aims to increase service revenue through new customer acquisition, cross-selling, and strategic acquisitions of technologies and businesses [110]. - The focus on mid-market and public sector organizations aligns with the company's strengths in eliminating communication silos and enhancing customer interactions [98]. - The company plans to invest in research and development to enhance its Platform for CX and expand its ecosystem of integrated third-party applications [106]. - The company is enhancing its platform with AI-based capabilities and expanding its Technology Partner Ecosystem to provide tailored solutions [107]. - The company expects variability in results due to factors such as macroeconomic conditions, customer buying behavior, and technological changes [108]. Accounting and Risk Management - 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, 2025 [166]. - There have been no material changes in the company's exposures to market risk since March 31, 2025, including interest rate and foreign currency exchange risks [168]. - The preparation of financial statements requires estimates and judgments that affect reported amounts of assets, liabilities, revenue, and expenses [165].

分组1 - 8x8 reported quarterly earnings of $0.12 per share, exceeding the Zacks Consensus Estimate of $0.09 per share, and showing an increase from $0.11 per share a year ago, resulting in an earnings surprise of +33.33% [1] - The company achieved revenues of $185.05 million for the quarter ended December 2025, surpassing the Zacks Consensus Estimate by 3.04%, and an increase from $178.88 million year-over-year [2] - Over the last four quarters, 8x8 has surpassed consensus EPS estimates two times and topped consensus revenue estimates three times [2] 分组2 - The stock has underperformed, losing about 12.7% since the beginning of the year, while the S&P 500 has gained 1.9% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the coming quarter is $0.06 on revenues of $174.06 million, and for the current fiscal year, it is $0.32 on revenues of $719.11 million [7] 分组3 - The Zacks Industry Rank indicates that the Internet - Software sector is currently in the top 37% of over 250 Zacks industries, suggesting a favorable outlook for stocks in this category [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors or through tools like the Zacks Rank [5][6]

Financial Data and Key Metrics Changes - Total revenue for Q3 2026 was $185 million, with service revenue at $179.7 million, both exceeding guidance by approximately $3 million and growing 3.4% and 3.6% year-over-year respectively [17] - Operating income reached $21.7 million, resulting in an operating margin of 11.7%, significantly above the guidance range of 9%-10% [19] - Net income was $17.1 million with fully diluted EPS of $0.12, which was $0.03 above the high end of guidance [20] Business Line Data and Key Metrics Changes - Usage-based offerings grew nearly 60% year-over-year and now represent over 21% of service revenue, up from approximately 14% in Q3 2025 [17][7] - Service revenue, excluding Fuze customers, rose approximately 6% year-over-year, maintaining a growth rate similar to the previous quarter [17] Market Data and Key Metrics Changes - The company is experiencing a shift in customer preferences from pure SaaS subscriptions to hybrid and tokenized pricing models, which is reflected in the increased consumption of usage-based solutions [8] - Voice AI interactions increased more than 200%, now representing a vast majority of all AI interactions on the platform [7] Company Strategy and Development Direction - The company is focused on operational efficiency, innovation, and distribution, with a multi-product strategy gaining traction among top customers [9] - Investments are being made to enable simplified, consumption-based pricing and AI-driven automations to enhance customer success [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's momentum entering Q4, highlighting the return to top-line growth and the importance of execution in the upcoming quarters [15] - The company acknowledges the competitive landscape and aims to accelerate installed base expansion and drive stronger channel momentum [15] Other Important Information - The completion of the Fuze customer base upgrade to the 8x8 platform marks a significant operational milestone, allowing the company to focus on growth and customer success [13][27] - The company has reduced its debt principal by $224 million, or 41%, since August 2022, leading to a more than 50% reduction in annualized interest expense [20] Q&A Session Summary Question: Insights on fiscal Q4 service revenue guidance considering Fuze headwinds - Management confirmed that the service revenue guidance for Q4, excluding Fuze, implies a year-over-year increase of over 5% [31][32] Question: Operating margin sustainability and targets for 2027 - Management indicated that while gross margins on usage-based business may be structurally lower, operating margins are expected to improve with scale, targeting a return to double-digit operating margins [34][36] Question: Adoption of voice AI and customer interactions - Management noted a significant shift towards production use of voice AI technologies, with customers increasingly adding use cases as they see positive ROI [42][43] Question: Revenue impact from Maven Lab and operational headwinds - Maven Lab had no contribution to revenue for the quarter, and any revenue headwinds were minimal, under $1 million [45][55] Question: Customer projects and monetization strategies - Management discussed the transition from pilot projects to larger scale deployments, emphasizing the importance of micro use cases in driving customer engagement and revenue [63][64]

Financial Data and Key Metrics Changes - Total revenue for Q3 2026 was $185 million, and service revenue was $179.7 million, both exceeding guidance by approximately $3 million, with year-over-year growth of 3.4% and 3.6% respectively [17] - Operating income reached $21.7 million, resulting in an operating margin of 11.7%, significantly above the guidance range of 9%-10% [19] - Net income was $17.1 million, with fully diluted EPS of $0.12, exceeding the high end of guidance by $0.03 [20] Business Line Data and Key Metrics Changes - Usage-based offerings grew nearly 60% year-over-year and now account for over 21% of service revenue, up from approximately 14% in Q3 2025 [17][7] - Service revenue, excluding Fuze customers, rose approximately 6% year-over-year, maintaining a growth rate similar to the previous quarter [17] Market Data and Key Metrics Changes - The company has completed the upgrade of the Fuze customer base to the 8x8 platform, which is expected to improve efficiency and customer satisfaction [18][27] - The increase in consumption of usage-based solutions reflects a broader industry shift towards hybrid and tokenized pricing models [8] Company Strategy and Development Direction - The company is focusing on innovation, operational efficiency, and distribution, with a multi-product strategy gaining traction among top customers [5][9] - The strategic shift towards usage-based revenue models is seen as a future direction, appealing to customers by reducing risk as they adopt new technologies [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's momentum entering Q4, highlighting the return to top-line growth and sustained profitability [15] - The company acknowledges the competitive landscape and aims to accelerate installed base expansion and channel momentum [15] Other Important Information - The company has reduced its debt principal by $224 million since August 2022, resulting in a more than 50% reduction in annualized interest expense [20] - The company expects continued year-over-year growth headwinds related to Fuze churn in fiscal 2027, particularly in the first half [28] Q&A Session Summary Question: Insights on fiscal Q4 service revenue guidance considering Fuze headwinds - Management confirmed that the service revenue guidance for Q4, excluding Fuze, implies over 5% year-over-year growth, consistent with previous quarters [31][32] Question: Operating margin sustainability and targets - Management indicated that while gross margins may trend lower due to the usage-based model, operating margins are expected to remain strong as the business scales [34][36] Question: Adoption of voice AI and customer interactions - Management noted a significant increase in voice AI interactions, with customers moving from pilot projects to larger-scale deployments, validating the usage-based model [40][42] Question: Impact of new partner programs on sales momentum - Management reported quarter-on-quarter increases in pipeline and sales, particularly in AI-based products, indicating growing comfort among channel partners [64][65]

Financial Data and Key Metrics Changes - Total revenue for Q3 2026 was $185 million, and service revenue was $179.7 million, both exceeding guidance by approximately $3 million, with year-over-year growth of 3.4% and 3.6% respectively [17] - Operating income reached $21.7 million, resulting in an operating margin of 11.7%, significantly above the guidance range of 9%-10% [19] - Net income was $17.1 million with fully diluted EPS of $0.12, which was $0.03 above the high end of the guidance range [20] Business Line Data and Key Metrics Changes - Usage-based offerings, including CPaaS communication APIs, accounted for approximately 21% of service revenue, up from 14% in Q3 2025, reflecting a nearly 60% year-over-year growth [17][6] - Service revenue, excluding Fuze customers, rose approximately 6% year-over-year, maintaining a growth rate similar to the previous quarter [17] Market Data and Key Metrics Changes - The company noted an increase in consumption of usage-based solutions, indicating a broader industry shift towards hybrid and tokenized pricing models [8][6] - Voice AI interactions increased over 200%, now representing a vast majority of all AI interactions on the platform, showcasing strong customer adoption [6] Company Strategy and Development Direction - The company is focusing on operational efficiency, innovation, and distribution, with a multi-product strategy gaining traction among top customers [9][10] - Investments in AI-driven automations and simplified pricing models are aimed at enhancing customer experience and driving growth [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's momentum entering Q4, highlighting the return to top-line growth and sustained profitability [5][14] - The company acknowledged the competitive landscape and the need to accelerate installed base expansion while driving stronger channel momentum [14][15] Other Important Information - The completion of the Fuze customer base upgrade to the 8x8 platform marks a significant operational milestone, allowing the company to focus on growth and customer success [27][13] - The company has reduced its debt principal by $224 million since August 2022, resulting in a more than 50% reduction in annualized interest expense [20] Q&A Session Summary Question: Impact of Fuze on Q4 service revenue - Management confirmed that Fuze represents a $4.5 million service revenue headwind in Q4, but adjusted for this, service revenue guidance indicates a year-over-year increase of over 5% [30][31] Question: Operating margin sustainability - Management indicated that while gross margins may trend lower due to the usage-based model, operating margins are expected to remain strong as the business scales [33][35] Question: Adoption of voice AI - Management noted a significant increase in voice AI adoption, with customers moving from pilot projects to larger-scale deployments, validating the usage-based model [39][41] Question: Revenue contribution from Maven Lab - Maven Lab closed in January and did not contribute to Q3 revenue, with any impact being minimal [44][52] Question: Future of contact center seats - Management stated that total contact center seats increased, countering concerns about AI reducing agent numbers, and emphasized the importance of revenue per customer over seat counts [61][62]