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]

Financial Data and Key Metrics Changes - Total revenue for Q2 2026 was $184.1 million, exceeding guidance by approximately $4 million, with a year-over-year growth of 1.7% [13] - Service revenue reached $179.1 million, growing 2.3% year-over-year, driven by strong usage-based offerings [13] - Gross profit was $120.9 million, with a gross margin of 65.7%, reflecting a sequential decline due to a shift towards lower-margin usage revenue [14] - Operating income was $17.3 million, resulting in a 9.4% operating margin, above expectations [14] - Cash flow from operations was $8.8 million, exceeding guidance, with a cash balance of $76.7 million at quarter-end [14][15] Business Line Data and Key Metrics Changes - Usage revenue, including CPaaS communication APIs, accounted for approximately 19% of service revenue, up from 13% in Q2 2025 [13] - Service revenue from Fused customers declined to about 3% of total service revenue, down from 7% in Q2 2025, as the company transitions these customers to the 8x8 Platform [13] Market Data and Key Metrics Changes - The U.S. business is experiencing slower growth compared to international markets, with the U.K. and international segments growing substantially faster [63] - The company is seeing increased demand for its AI-powered solutions, which are becoming integral to customer engagement strategies [55] Company Strategy and Development Direction - The company is focusing on innovation, particularly through the integration of AI across its platform to enhance customer experiences and operational efficiency [5][11] - A new product, 8x8 Workforce Management, will be offered free to all Contact Center customers, marking a shift towards product-led growth [6][7] - The company is committed to disciplined capital management, including debt reduction, with a significant reduction of $224 million in debt principal since August 2022 [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver sustained shareholder value, despite potential variability in usage-based revenue growth [16][19] - The transition to a usage-based revenue model is expected to lead to increased revenue growth, albeit with decreasing gross margins in the short term [61] - Management is aware of pricing pressures in the market but believes that the introduction of new AI products will help offset these challenges [42] Other Important Information - The company is actively exploring M&A opportunities to drive geographic and product portfolio expansion, while maintaining a focus on cash flow and debt management [49][50] - The company is implementing a new conference call format, providing detailed quarterly letters and financial highlights to enhance communication with investors [4][12] Q&A Session Summary Question: What is driving the service margin changes? - Management indicated that the changes are primarily driven by volume rather than price, with stable margins on application services [22] Question: How will the revenue trajectory look as Fused customers transition? - Management noted that while there will be a temporary headwind as Fused customers are upgraded, they expect to return to normalized growth rates thereafter [23][24] Question: How is pipeline quality being measured? - Pipeline quality is measured by the number of deals reaching stage three in their sales process, indicating a higher likelihood of closing [25][26] Question: What actions are being taken regarding cost management? - The company is deploying AI technologies internally to improve efficiency and reduce costs, while also managing supplier pricing [60][62] Question: How does the company view M&A versus organic growth? - Management stated that while they are looking at tuck-in acquisitions, debt reduction remains a priority, and they are focused on cash flow-driven growth [49][50]