8X8 INC /DE/ (EGHT Q4 FY2025 earnings call

Transformation and Strategy

• Began transformation in fiscal 2023 post-Fuze acquisition, focusing on fixing financial model, innovation, and CX outcomes.
• Rebuilt go-to-market functions, rebranded, and paid down debt.

Q4 Highlights

• Rapid adoption of CPaaS, with surge in interactions; customers with 3+ products up 13% y-o-y to over 700.
• 72% increase in Microsoft Teams integrations license sales in Q4 2024; cumulative Teams seats over 550,000.
• Progress in upgrading Fuze customers to 8x8 platform, aiming to complete by end of calendar 2025.

Innovation

• Introduced AI-based capabilities, including platform-wide AI chat summarization and 8x8 JourneyIQ for customer journey visibility.
• Expanded technology partner ecosystem with integrations like CallCabinet, SpinSci, and Meltwater.
• Became first contact center provider to integrate RCS, launched Apple Pay/Google Pay support via 8x8 Secure Pay.

Transitions

• Go-to-market rebuild and channel evolution ongoing; focus on solution selling and partner enablement.
• Growth in enterprise business while maintaining small business customer base; investing in AI capabilities for small businesses.

Total revenue was $177 million, with service revenue totaling $171.6 million. 8x8 standalone service revenue grew 4.6% year-over-year in Q4 2024, up from 2.7% in Q3. For fiscal 2025, 8x8 service revenue excluding Fuze customers grew 2.8% compared to 1.8% in fiscal 2024. Gross margin for the quarter was 69%, and operating margin was 10%. The remaining revenue on the Fuze platform was reduced to under 5% of service revenue, down from ~11% in Q4 2024.

Fiscal Q1 2026

• Service revenue: $170 million - $175 million
• Total revenue: $175 million - $182 million
• Non-GAAP operating margin: 9% - 9.5%

Fiscal 2026

• Service revenue: $682 million - $702 million
• Total revenue: $702 million - $724 million
• Operating margin: 9% - 10%
• Non-GAAP EPS: $0.34 - $0.37
• Cash flow from operations: $40 million - $50 million

Long-Term

• Aim for high single-digit revenue growth and double-digit operating margins by fiscal 2028, with Fuze-related headwinds lessening over time.

• Economic uncertainty, tariff actions, and global instability affecting deal cycles and deal sizes.
• Execution risks related to go-to-market rebuild and platform upgrades, including potential delays in achieving desired growth and margin targets.

Q: What's the macro impact on sales cycles and spending?

A: Sam Wilson noted March/April had elongated deal cycles and smaller deal sizes due to tariff issues, but May was calmer. The US and rest of the world had different market dynamics.

Q: What remains in go-to-market rebuild?

A: Sam Wilson said they're ~60-70% through the go-to-market rebuild, with fine-tuning needed over the next year as deal cycles are long.

Q: Growth excluding Fuze for fiscal 2026?

A: Kevin Kraus indicated positive growth, with prior Q4 growth at 4.6% and expecting positive growth for fiscal 2026 excluding Fuze.

Q: Why are 8x8 winning in CCaaS?

A: Sam Wilson cited having a complete solution with best-in-breed technology from a single vendor, including a technology partner ecosystem and bundled offerings for customer outcomes.

Q: Status of CPaaS in APAC?

A: Sam Wilson mentioned the CPaaS team did well, with communications APIs being a high-growth business and continuing to be a core part of the business.