Earnings call transcript: 8x8 Inc Reports Q4 2025 Results, Stock Dips Slightly
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Overview
While the earnings call highlighted positive aspects like debt reduction, consistent cash flow, and stockholder equity growth, the Q&A revealed concerns about elongated sales cycles and macroeconomic impacts. Despite optimistic product expansion and multi-product strategy, the refusal to provide specific growth numbers and the cautious cash flow guidance suggest uncertainty. With revenue and service revenue near guidance midpoints, and gross margin at the low end, the overall sentiment is neutral, reflecting mixed signals from strong operational metrics and macroeconomic challenges.
Key Financial Performance
Total Revenue $177,000,000, near the midpoint of guidance.
Service Revenue $171,600,000, also near the midpoint of guidance. Excluding Fuse, grew 4.6% year-over-year, up from 2.7% in Q3.
Service Revenue Growth (Fiscal Year 2025) 2.8% compared to 1.8% in Fiscal Year 2024.
Gross Margin 69%, at the low end of guidance, driven by a revenue mix with lower margin platform usage revenue growing to approximately 13.5% of total revenue.
Operating Margin 10%, at the high end of guidance.
Stock-Based Compensation 4.6% of total revenue, a multiyear low, down over $22,000,000 year-over-year.
Cash Flow from Operations (Q4) $5,900,000, building on a record Q3, bringing full year cash flow to $63,600,000.
Net Debt to Trailing Twelve Month EBITDA Ratio Approximately 2.7x, down from over 6x in Fiscal Q2 2023.
Remaining Performance Obligation $780,000,000, up approximately 1% year-over-year.
Cash Balance (Q4) $89,300,000, down approximately $15,000,000 sequentially due to term loan prepayment.
Debt Reduction Principal balance of debt reduced by over $209,000,000 or approximately 38% since August 2022.
Operating Cash Flow (Full Year) Over $142,000,000 generated in operating cash flow over the past two years.
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Operating Highlights
New AI Capabilities: Introduced AI-based capabilities across the platform, including intelligent routing, sentiment analysis, and live agent guidance.
Microsoft Teams Integration: Sales of Microsoft Teams integration licenses increased by 72% in Q4, with total licenses sold growing to over 550,000.
Omnichannel Integration: Became the first contact center provider to fully integrate RCS business messaging, enhancing digital communication capabilities.
Customer Growth: The number of customers using three or more products increased by 13% year over year, indicating successful cross-selling.
UK Market Performance: Significant growth in the UK market, attributed to improved execution and new sales leadership.
Debt Reduction: Reduced debt by over $209 million, approximately 38% since August 2022, enhancing financial flexibility.
Operating Cash Flow: Achieved $5.9 million in operating cash flow for Q4, marking the 17th consecutive quarter of positive cash flow.
Go-to-Market Strategy: Rebuilt go-to-market model focused on solution selling and partner enablement, with 60-70% completion.
Transition from Fuse Platform: Accelerated transition from the Fuse platform, with expectations to complete by the end of calendar year 2025.
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Risk or Challenges
Economic Uncertainty: The economic picture has shifted, with recent tariff actions and global uncertainty adding complexity to the environment.
Sales Cycle Delays: There have been elongated deal cycles and shrinking deals depending on urgency, particularly in the U.S. market.
Transition Challenges: The transition of customers from the Fuse platform to the 8x8 platform is ongoing, with some customers not expected to make the transition.
Regulatory Risks: The company acknowledges risks and uncertainties that may cause actual results to vary materially from forward-looking statements.
Competitive Pressures: The company faces competitive pressures in the CCaaS and UCaaS space, with peers reporting growth deceleration.
Market Dynamics: The company is navigating multiple transitions in an uncertain economic environment, which may impact growth.
Debt Management: While the company has made significant progress in debt reduction, ongoing management of debt levels remains a challenge.
Cash Flow Fluctuations: Cash flow may fluctuate due to seasonality, investment timing, and other factors, which could impact financial stability.
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Guidance & Outlook
Go to Market Rebuild: 8x8 is focused on rebuilding its go-to-market model around solution selling and partner enablement, with significant changes in the sales organization and training.
Platform Innovation: The company is investing in AI capabilities and enhancing its technology partner ecosystem to improve customer experience and operational efficiency.
Customer Transition: 8x8 is transitioning customers from the legacy Fuse platform to its own platform, with a goal to complete this by the end of calendar year 2025.
Cash Flow Management: The company has generated strong cash flow, with $63.6 million in operating cash flow for the full year, allowing for strategic investments and debt reduction.
Product Adoption: The number of customers using multiple products has increased, with over half of subscription revenue coming from customers with two or more products.
Fiscal Year 2026 Revenue Guidance: Service revenue is expected to be between $682 million and $702 million, with total revenue between $702 million and $724 million.
Operating Margin Guidance: Full year operating margin is projected between 9% and 10%, translating to non-GAAP operating income of approximately $67.5 million at the midpoint.
Future Growth Expectations: High single-digit revenue growth and double-digit operating margins are anticipated in the next few years, with expectations for continued improvement.
Cash Flow Guidance: Operating cash flow for fiscal year 2026 is expected to be between $40 million and $50 million.
Earnings Per Share Guidance: Fully diluted non-GAAP earnings per share is projected to be in the range of $0.34 to $0.37 for the year.
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Shareholder Return Plan
Debt Reduction: Reduced principal balance of debt by over $209 million or approximately 38% since August 2022 peak.
Cash Flow from Operations: Generated $63.6 million in operating cash flow for the full fiscal year.
Term Loan Prepayment: Made a $15 million term loan prepayment during Q4 and an additional $15 million payment in April.
Operating Cash Flow: Generated $5.9 million in Q4, marking the seventeenth straight quarter of positive operating cash flow.
Stockholder Equity Growth: Reported stockholders’ equity growth for the fourth consecutive quarter.
Future Cash Flow Guidance: Anticipate cash flow from operations to be between $40 million and $50 million for the full fiscal year 2026.
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Key Q&A
Q:Can you share with us what you’re hearing from your field reps, from your partners in terms of the macro impact? Is it sales cycles? Is it just a delay in spending?
A:In March and April, there was a bit of chaos in the U.S. market with elongated deal cycles and some shrinking depending on urgency. By May, the market felt calmer, with the U.S. and the rest of the world showing different dynamics.
Q:Can you clarify the changes to the go to market strategy and what remains to be addressed?
A:The go to market model has been rebuilt around solution selling and partner enablement, with about 60-70% of the work completed. Fine-tuning will continue over the next year.
Q:What is the adjusted service revenue growth for fiscal twenty twenty six, excluding Fuse?
A:The growth rate excluding Fuse is expected to be positive, but specific numbers were not provided.
Q:How much of the expected growth is driven by go to market changes versus customer demand?
A:The growth is based on internal factors such as increased multiproduct customers and improved retention rates, rather than external market changes.
Q:Can you walk us through the cash flow guidance for fiscal twenty six?
A:The cash flow guidance reflects investments being made for growth, and while there may be some pressure on margins, the company expects to generate a good amount of cash flow.
Q:What specific piece of your product is driving wins in the CCaaS business?
A:The complete solution offered by 8x8, which combines contact center and technology partner ecosystem, is driving wins.
Q:What is the status of CPaaS in the APAC region?
A:The CPaaS team continues to perform well, and the business is seen as a core part of the overall strategy.
Q:What takes you to high single digit revenue growth by fiscal year twenty twenty eight?
A:The growth will come from the core business accelerating post-Fuse, increased multiproduct customers, and improved retention rates.
Q:What is your focus now that you’ve made progress on the balance sheet and expense structure?
A:The focus is on getting back to growth, accelerating the shutdown of Fuse, and investing in CPaaS.
Q:What caused the slowdown in new product growth?
A:The slowdown was attributed to the macroeconomic environment and the increasing size of the numbers being compared.
Q:What is the reason for the sequential step down in RPO?
A:The step down in RPO is mainly due to the acceleration of the Fuse transition.
Q:Review of Unclear Management Responses
A:Management avoided providing specific numbers for adjusted service revenue growth for fiscal twenty twenty six, and the response regarding the cash flow guidance lacked detailed projections.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
APIs
Bank America
Chief Financial
FUSE
Financial Officer
Officer Chief
RCS
Rosenblatt Securities
Trebnick Rosenblatt
UK
contract
contraction
crossover point
cycle
digit
distribution
engine
environment
etcetera
fantastic
follow
function
guide
headwind
kind
line
list
lot
market change
piece
play
retention rate
script increase
selling
side house
throat
top
wall
wallet
EGHT Transcript
8x8, Inc. (EGHT) Q2 2026 Earnings Call Transcript
Positive11-5
The earnings call indicates strong financial performance with a revenue and EPS beat, disciplined capital management, and debt reduction. Despite some margin pressures, the overall profitability and cash flow are improving. The Q&A reveals a strategic focus on AI and M&A for growth, with international markets showing promising trends. While management was vague about certain future projections, the overall sentiment is positive due to strong financial metrics, optimistic guidance, and strategic initiatives.
8x8, Inc. (EGHT) Q1 2026 Earnings Call Transcript
Positive8-5
The earnings call presented a positive outlook, with strong revenue performance, debt reduction, and shareholder returns. Despite a slight decline in gross margin, the company is effectively managing cash flow and demonstrating growth in usage-based revenue. The Q&A highlighted challenges with the Fuze migration but also revealed growth opportunities in AI and CPaaS, especially in Asia. The stock buyback and debt reduction further support a positive sentiment. Overall, the company's strategic initiatives and financial health suggest a positive stock price movement in the short term.
8×8, Inc. (NYSE:EGHT) Q4 2025 Earnings Call Transcript
Unknown5-21
The earnings call presents a mixed outlook. Positive aspects include stable financial performance, debt reduction, and strategic investments in R&D and multi-product strategy. However, challenges such as economic uncertainty, competitive pressures, and supply chain issues temper enthusiasm. The lack of a share repurchase or dividend program further neutralizes sentiment. The Q&A section reveals concerns about macroeconomic impacts and ongoing transitions, but also highlights potential growth areas. Overall, the combination of stable financial results and external challenges suggests a neutral stock price movement over the next two weeks.
8x8, Inc. (EGHT) Q4 2025 Earnings Call Transcript
Unknown5-19
The earnings call presents a mixed picture. Basic Financial Performance shows stable revenue and debt reduction but has weak gross margins and uncertain cash flow projections. Product Development is positive with AI focus but faces macroeconomic challenges. Market Strategy is in transition, with incomplete sales and marketing changes. Expenses are managed well, but financial health concerns persist due to vague guidance. Shareholder Return Plan is positive with debt reduction but lacks strong incentives. Q&A reveals market volatility and management's unclear responses, adding uncertainty. Overall, the sentiment is Neutral, expecting a stock price movement between -2% to 2%.
EGHT Slides
EGHT Report
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