8x8(US:EGHT)2025-05-19 22:02Financial Data and Key Metrics Changes - Total revenue for Q4 was $177 million, near the midpoint of guidance, while service revenue totaled $171.6 million, also near guidance [31] - Year-over-year growth in service revenue, excluding Fuse, accelerated to 4.6% from 2.7% in Q3, marking the highest growth rate in 10 quarters [11] - Combined cash flow from operations for fiscal years 2024 and 2025 is the highest ever at 8x8, exceeding half of the market capitalization as of the last Friday [12] Business Line Data and Key Metrics Changes - The number of customers with three or more products increased by 13% year-over-year to over 700 customers, indicating successful cross-selling [12] - Sales of Microsoft Teams integration saw new license sales up 72% in Q4, with cumulative licenses sold growing 30% year-over-year to over 550,000 seats [13] - The gross margin for Q4 was 69%, driven by a revenue mix with lower margin platform usage revenue growing to approximately 13.5% of total revenue [32] Market Data and Key Metrics Changes - The company noted a shift in the economic picture due to recent tariff actions and global uncertainty, impacting sales cycles and spending [7][45] - The UK market showed strong performance with improved execution and higher retention rates compared to the U.S. market [71] Company Strategy and Development Direction - The company is focused on building a durable, cash-generative business that creates long-term value through disciplined execution and platform innovation [7] - A significant transformation began in fiscal 2023, with a focus on fixing the financial model, investing in innovation, and enhancing customer experience [10] - The company aims for high single-digit revenue growth and double-digit operating margins in the coming years, with expectations of continued execution and product adoption [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's direction despite macroeconomic challenges, emphasizing the importance of operational discipline and innovation [6][8] - The company anticipates that the headwinds from the Fuse platform will lessen significantly in fiscal 2027, allowing for improved growth rates [27] - Management highlighted the importance of transitioning customers from the legacy Fuse platform to enhance customer engagement and operational efficiency [31][25] Other Important Information - The company has made significant progress in upgrading customers from the Fuse platform, reducing revenue from Fuse to under 5% of service revenue [31] - Stock-based compensation has declined to 4.6% of total revenue, reflecting a shift to primarily cash-based compensation [33] - The company is investing in AI capabilities and expanding its technology partner ecosystem to enhance customer experience [19][20] Q&A Session Summary Question: What are the macro impacts on sales cycles and spending? - Management noted elongated deal cycles and some shrinking depending on urgency, with a calmer environment observed in May compared to March and April [45] Question: What remains in terms of go-to-market changes? - The company is approximately 60-70% through the go-to-market rebuild, focusing on solution selling and fine-tuning processes [48] Question: What is the adjusted service revenue growth forecast for fiscal 2026, excluding Fuse? - The company expects positive growth rates for fiscal 2026, with specific numbers not provided but indicating a positive outlook [56] Question: How much of the growth is driven by go-to-market changes versus customer demand? - Management emphasized that growth is primarily driven by internal factors, including an increase in multiproduct customers and improved retention rates [61] Question: What is the status of cash flow guidance for fiscal 2026? - The company provided a cash flow guidance range of $40 million to $50 million for the full year, reflecting ongoing investments [40] Question: Why is the company winning in the CCaaS space? - The company offers a complete solution with best-in-breed technology from a single vendor, which is appealing to mid-market and enterprise customers [68]