8x8, Inc. (EGHT) is a leading provider of cloud-based communication and collaboration solutions, empowering businesses worldwide to enhance their customer experiences and drive strategic growth. With a rich history spanning over three decades, the company has evolved from a pioneering voice over IP (VoIP) provider to a comprehensive platform for customer experience (CX) transformation.
Business Overview and History
Incorporated in California in February 1987 and reincorporated in Delaware in December 1996, 8x8 has been at the forefront of the communication services industry. The company was founded to provide software-as-a-service solutions for voice communications, initially focusing on serving small businesses with voice communication services.
As 8x8 grew, it strategically expanded its target market to include mid-market, enterprise, and public sector customers with more complex communication and contact center requirements. This shift in focus allowed the company to broaden its product portfolio and deliver a more comprehensive unified communications and contact center platform.
Throughout its history, 8x8 has consistently invested in research and development to enhance its offerings. The company has added features such as artificial intelligence-driven self-service, intuitive user interfaces, and real-time business analytics to its platform, maintaining its position as a leading provider of cloud-based communication and collaboration solutions.
A significant milestone in 8x8's journey was the acquisition of Fuze in 2022. This strategic move accelerated the company's transformation into a leading provider of cloud-based customer experience solutions. However, the integration process presented challenges as 8x8 worked to migrate Fuze customers onto its platform and streamline operations.
Today, 8x8's expanded product portfolio includes contact center, video meetings, employee collaboration, and embeddable communication application program interfaces, in addition to its core voice communication services. This comprehensive suite of solutions enables 8x8 to meet the diverse needs of its growing customer base and solidify its position in the market.
Financial Performance and Resilience
8x8's financial performance has demonstrated resilience amidst changing market dynamics. In the fiscal year ended March 31, 2024, the company reported total revenue of $728.71 million, a 1.8% increase from the previous year. However, the impact of the COVID-19 pandemic and the subsequent economic uncertainty have resulted in some variability in the company's financial results.
Despite these challenges, 8x8 has remained focused on strengthening its financial position. The company has consistently generated positive cash flow from operations, reporting $78.98 million in the fiscal year 2024. Additionally, 8x8 has been actively managing its debt, reducing its total debt by 35% from a peak of $548 million in August 2022 to approximately $354 million as of December 31, 2024.
This disciplined approach to financial management has enabled 8x8 to maintain a strong balance sheet and enhance its flexibility to navigate the evolving business landscape. The company's net debt-to-trailing 12-month EBITDA ratio has decreased from over 6 times in fiscal year 2023 to approximately 2.6 times as of December 31, 2024, providing the company with greater financial agility.
In the most recent quarter (Q3 fiscal 2025), 8x8 reported revenue of $178.88 million, representing a 1.2% year-over-year decline. This decrease was primarily attributed to the anticipated decline in revenue from customers still on the Fuze platform, partially offset by growth in subscription and usage-based service revenue on the 8x8 platform. Despite the revenue decline, the company achieved a net income of $3.02 million for the quarter, demonstrating improved profitability.
8x8's financial performance is driven by two primary product segments: Service Revenue and Other Revenue. The Service Revenue segment, which includes unified communications as-a-service (UCaaS), contact center as-a-service (CCaaS), and communications platform as-a-service (CPaaS) offerings, experienced a slight decline of 1.6% year-over-year for the three months ended December 31, 2024, and 1.3% for the nine months ended December 31, 2024. This decline was primarily due to lower revenue from customers on the Fuze platform.
However, the company saw growth in its platform usage revenue, which increased by $2.7 million or 15.5% year-over-year for the three months ended December 31, 2024, and $7.1 million or 14.6% for the nine months ended December 31, 2024. This growth reflects increased usage of 8x8's cloud communications platform by customers.
The Other Revenue segment, which includes professional services and IP telephone sales and rentals, experienced a decrease of 8.7% year-over-year for the three months ended December 31, 2024, and 21.3% for the nine months ended December 31, 2024, due to lower professional service and product revenue.
Liquidity
8x8's liquidity position has remained robust, supported by its disciplined financial management and consistent cash flow generation. As of December 31, 2024, the company had $104.17 million in cash and cash equivalents. The company's strong cash position and reduced debt levels have provided it with increased financial flexibility to pursue strategic initiatives and navigate market uncertainties.
The company's debt-to-equity ratio stood at 2.45 as of March 31, 2024, while its current ratio and quick ratio were both 1.24, indicating a healthy short-term liquidity position. 8x8 also has access to a $200 million delayed draw term loan facility, which was fully drawn as of August 5, 2024, providing additional financial resources if needed.
Operational Highlights and Strategic Initiatives
8x8's operational performance has been bolstered by its focus on innovation and customer-centric solutions. The company's Platform for CX has been recognized for its comprehensive capabilities, earning high scores from industry analysts. In Gartner's Peer Insights, 8x8's UC and CC solutions both have a rating of 4.4 out of 5, reflecting the strong product portfolio and customer satisfaction.
The company's multi-product strategy has been a key driver of growth, with customers using three or more products seeing a significant increase in monthly recurring revenue (MRR) compared to those with only two products. This highlights the effectiveness of 8x8's approach to deepening customer engagement and unlocking additional value.
To further accelerate its transformation, 8x8 has been making strategic investments in its go-to-market capabilities and innovation. The company has strengthened its leadership team with the addition of key executives, such as Joel Neeb as Chief Transformation and Business Operations Officer, to spearhead the company's operational excellence and drive long-term growth.
Additionally, 8x8 has been actively expanding its ecosystem of technology partners, integrating best-in-class solutions and leveraging artificial intelligence (AI) to enhance its platform's capabilities. The recent partnership with CallCabinet, a leading provider of compliance call recording solutions, demonstrates the company's commitment to delivering comprehensive and compliant CX solutions to its customers.
Key operational metrics highlight 8x8's progress in executing its strategic initiatives:
- New product MRR increased more than 60% year-over-year, reflecting strong growth in AI-based intelligent customer assistance, secure payments, and video elevation solutions. - The number of customers with three or more products continued to increase, with the average monthly recurring revenue of these customers more than 3 times that of two-product customers, and higher retention rates. - Customer satisfaction remains high, with CSAT scores in the mid- to high-90% range for targeted enterprise customers.
Navigating Industry Dynamics and Outlook
The communication and collaboration services industry has been experiencing rapid evolution, driven by factors such as the shift to remote and hybrid work, increasing customer demands, and the rise of AI-powered technologies. 8x8 has been navigating these industry dynamics with agility, adapting its strategies to capitalize on emerging opportunities.
The company's platform-centric approach, combined with its focus on innovation and customer success, has positioned 8x8 as a strategic partner for organizations seeking to transform their customer experiences. As businesses continue to prioritize seamless communication, collaboration, and data-driven insights, the demand for 8x8's comprehensive solutions is expected to remain strong.
Looking ahead, 8x8 remains committed to its long-term growth strategy. The company plans to make strategic investments in its go-to-market initiatives and sales capabilities, aiming to capture new opportunities and drive sustainable revenue expansion. While these investments may result in a temporary decrease in operating margin compared to the fiscal year 2025, 8x8 believes they are essential for strengthening its market position and accelerating its transformation journey.
For the fourth quarter of fiscal year 2025, 8x8 expects service revenue to be in the range of $170 million to $175 million, with total revenue projected between $175 million and $181 million. The company anticipates an operating margin in the range of 9% to 10% for the quarter.
For the full fiscal year 2025, 8x8 projects service revenue between $691.3 million and $696.3 million, with total revenue anticipated to be between $713 million and $719 million. The company expects a full-year operating margin between 10.7% and 11%, translating to non-GAAP operating income of approximately $77.5 million at the midpoint of the revenue and operating margin guidance. Additionally, 8x8 anticipates fully diluted non-GAAP earnings per share to be in the range of $0.35 to $0.37 for the year and expects full-year cash flow from operations to be between $61 million and $65 million.
Conclusion
8x8, Inc. has established itself as a leading provider of cloud-based communication and collaboration solutions, powering the future of customer experience transformation. With its comprehensive Platform for CX, the company has evolved from a pioneering VoIP provider to a strategic partner for businesses seeking to enhance their customer interactions and drive business success. 8x8's financial discipline, operational excellence, and commitment to innovation position the company well to navigate the evolving industry landscape and capitalize on the growing demand for integrated CX solutions.