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8X8 INC /DE/ (EGHT) Q1 2026 Earnings Summary

Executive Summary

  • EGHT returned to year-over-year growth: total revenue $181.4M (+1.8% YoY) and service revenue $176.3M (+2.0% YoY); non-GAAP diluted EPS was $0.08, in line-to-slightly above consensus, while gross margins compressed on a higher mix of usage-based CPaaS revenue .
  • Q1 beat Wall Street revenue consensus by $3.4M and slightly exceeded EPS consensus; management highlighted FX tailwinds ($1.7M) and record platform usage as drivers . Estimates: Revenue $178.0M*, EPS $0.0775* (actuals: $181.4M and $0.08) (*Values retrieved from S&P Global).
  • Guidance updated: FY26 service revenue $685–$700M, total revenue $706–$720M, non-GAAP operating margin 8.5–9.5%, non-GAAP diluted EPS $0.28–$0.33, CFFO $35–$45M—lower EPS and margin ranges vs prior (Q4 FY25) outlook as the usage mix shifts margins downward .
  • Potential stock reaction catalysts: sustained revenue return-to-growth, accelerating CPaaS/usage momentum (usage ~17% of service revenue vs ~12% last year), debt reduction ($15M prepaid in Q1; $219M reduced since Aug-2022) against margin headwinds and lowered FY EPS guide .

What Went Well and What Went Wrong

What Went Well

  • Product-led momentum: “Our return to growth this quarter validates the strength of our platform strategy… product adoption has expanded, consumption-based revenue has accelerated” — CEO Samuel Wilson .
  • CPaaS/usage surge: Platform usage revenue reached ~17% of service revenue (vs ~12% last year); consumption-based revenue grew >30% YoY, with messaging interactions >200% YoY and voice AI interactions >7x YoY .
  • Balance sheet progress: $15M term loan prepayment in Q1; cumulative debt reduction ~$219M (≈40%) since Aug-2022; 1M shares repurchased for $1.8M; 18th consecutive quarter of positive operating cash flow ($11.9M) .

What Went Wrong

  • Margin compression: Non-GAAP gross margin fell to 67.8% (from 70.6% in Q1 FY25; 69.0% in Q4 FY25) due to a higher mix of lower-margin usage-based revenue; non-GAAP operating margin at 9.0% vs 11.3% in Q1 FY25 .
  • Profitability headwinds: Adjusted EBITDA $20.7M vs $25.8M in Q1 FY25; GAAP net loss -$4.3M (vs -$10.3M in Q1 FY25) despite revenue growth .
  • FY guide stepped down: FY26 non-GAAP diluted EPS lowered to $0.28–$0.33 (prior $0.34–$0.37) and CFFO to $35–$45M (prior $40–$50M), reflecting gross margin pressure from mix and planned growth investments .

Financial Results

MetricQ1 FY2025Q4 FY2025Q1 FY2026
Total Revenue ($USD Millions)$178.147 $177.043 $181.361
Service Revenue ($USD Millions)$172.801 $171.588 $176.308
Other Revenue ($USD Millions)$5.346 $5.455 $5.053
GAAP EPS ($USD)$(0.08) $(0.04) $(0.03)
Non-GAAP EPS – Diluted ($USD)$0.08 $0.08 $0.08
GAAP Gross Margin (%)67.9% 67.8% 66.4%
Non-GAAP Gross Margin (%)70.6% 69.0% 67.8%
Non-GAAP Operating Margin (%)11.3% 10.0% 9.0%
Adjusted EBITDA ($USD Millions)$25.776 $22.224 $20.696
Cash Flow from Operations ($USD Millions)$18.148 $5.9 $11.873

Actuals vs Estimates (Q1 FY2026)

MetricConsensus EstimateActualBeat/Miss
Revenue ($USD Millions)$178.0*$181.4 Beat by ~$3.4M
Non-GAAP EPS – Diluted ($USD)$0.0775*$0.08 In-line/Beat
Revenue – # of Estimates7*——
EPS – # of Estimates8*——

Values retrieved from S&P Global.*

Segment Breakdown

SegmentQ1 FY2025 ($M)Q4 FY2025 ($M)Q1 FY2026 ($M)
Service Revenue$172.801 $171.588 $176.308
Other Revenue$5.346 $5.455 $5.053
Total$178.147 $177.043 $181.361

KPIs

KPIQ1 FY2025Q1 FY2026
Platform Usage Revenue (% of Service Revenue)~12% ~17%
Consumption-based Revenue Growth (YoY)—>30% YoY
Intelligent Customer Assistant Adoption (YoY)—+75% YoY
Voice AI Interactions (YoY)—>7x YoY; >3/4 of AI interactions voice
Messaging Interactions (YoY)—>200% YoY; >50% QoQ
8x8 Voice for Teams Licenses (YoY)—>30% YoY
Fuze Service Revenue Remaining—~4% of service revenue; headwind ≈3% to growth

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Service RevenueFY26$682–$702M $685–$700M Raised midpoint
Total RevenueFY26$702–$724M $706–$720M Narrowed; midpoint down slightly
Non-GAAP Gross MarginFY26—66%–68% Initiated range
Non-GAAP Operating MarginFY269.0%–10.0% 8.5%–9.5% Lowered
Non-GAAP EPS – DilutedFY26$0.34–$0.37 $0.28–$0.33 Lowered
Cash Flow from OperationsFY26$40–$50M $35–$45M Lowered

Q2 FY26 (new guidance): Service revenue $170–$175M; total revenue $175–$180M; non-GAAP GM 66%–68%; non-GAAP OM 8%–9%; diluted non-GAAP EPS $0.06–$0.08; CFFO $3–$5M .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 FY25, Q4 FY25)Current Period (Q1 FY26)Trend
AI/Technology InitiativesContinued AI rollouts (AI Orchestrator, JourneyIQ, Engage upgrades) AI embedded across platform; voice AI interactions >7x; ICA adoption +75% Accelerating deployment and usage
CPaaS/Usage MixNew products growth; platform usage an emerging driver Usage ~17% of service revenue; >30% YoY consumption growth; margin mix impact Growing usage; margin compression
Fuze MigrationExpect upgrades complete by CY25; Q4 service revenue -1% driven by Fuze cohort ~4% service revenue remains; headwind ~3% in Q1; expect ~1.5% headwind next year Headwind abating
Microsoft Teams/Operator ConnectCompliance partnerships; Teams integrations (CallCabinet) Voice for Teams licenses >30% YoY; Operator Connect reach top-5 globally Strengthening ecosystem
RCS/Digital ChannelsRBM/RCS added to Contact Center; Engage digital expansion RCS pilot at US specialty retailer; expanding to Europe in 3–4 months Expanding channels
FX/MacroFX unfavorable versus outlook in Q3 FY25 $1.7M FX tailwind to Q1 revenue; FX volatility a Q2 headwind ($1.3M) FX mixed; cautious guidance
Capital StructureDeleveraging through term loan repayments $15M prepay in Q1; +$10M post-Q1; debt down ~$219M since Aug-2022 Continued deleveraging

Management Commentary

  • “The future of customer experience isn’t just digital and automated—it’s intelligent, integrated, and voice-powered. We view 8x8 as uniquely positioned to lead in this space” — CEO Samuel Wilson .
  • “Our communications platform revenue… has a different margin profile, and its accelerated growth is starting to influence our overall gross margin” — CFO Kevin Kraus .
  • “Sales of 8x8 Voice for Teams licenses grew more than 30% YoY… recognized as a top-5 Operator Connect partner worldwide” — CEO Samuel Wilson .
  • “Cash flow from operations exceeded $11 million… and we executed an opportunistic $1.8 million stock buyback” — CFO Kevin Kraus .

Q&A Highlights

  • Fuze migration: ~4% of service revenue remains; ~3% growth headwind in Q1; company expects to retain roughly half of the remaining base and reduce headwind to ~1.5% next year as migrations complete .
  • AI strategy: Prefer build-and-partner vs buy to preserve optionality amid rapid change; in-house AI (summarization, transcription, agent assist) complemented by best-in-breed partners .
  • Legacy migrations and RCS: On-prem vendor turmoil is a tailwind; rising interest in RCS with US traffic live and European expansion planned in 3–4 months .
  • OpEx vs growth: Reallocating spend to high-return areas; willing to accept near-term margin impact to re-accelerate growth; CPaaS strongest in Asia with UK multi-product traction and US RCS traffic .

Estimates Context

  • Q1 FY26 actuals vs consensus: Revenue $181.4M vs $178.0M*; non-GAAP diluted EPS $0.08 vs $0.0775* — revenue beat, EPS in-line/beat .
  • Estimate drivers: FX tailwind (~$1.7M) and record platform usage boosted Q1 revenue; gross margin compressed from usage mix, suggesting sell-side may need to temper margin and EBITDA assumptions near term .
  • Next quarter reference: Management guides Q2 revenue $175–$180M and diluted non-GAAP EPS $0.06–$0.08; FX seen as ~$1.3M sequential headwind .
    Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Revenue trajectory has turned positive, aided by accelerating CPaaS/usage contributions; watch for sustained growth ex-Fuze and normalization of FX to validate the inflection .
  • Mix shift toward usage-based revenue is a deliberate strategy driving platform engagement but compressing gross margins; near-term EPS guide was lowered accordingly—monitor margin progression and attach rates .
  • Deleveraging continues with additional term loan prepayments; interest expense falling supports EPS and cash generation despite lower operating margin guidance .
  • Product momentum is tangible: Voice AI and digital channels (RCS, WhatsApp, Viber) showing strong adoption; Microsoft Teams ecosystem positioning strengthens GTM .
  • Fuze migration headwind is fading; expect diminishing drag on growth through FY26, improving underlying service revenue growth ex-Fuze .
  • Trading lens: Near-term catalysts include continued usage growth, international RCS rollout, and further debt reduction; risks are margin mix and FX volatility vs guidance .
  • Medium-term thesis: If platform-led usage growth scales with manageable margin impact and steady deleveraging, the company’s pivot could support durable top-line growth with improving net income cadence .

Additional Q1 FY2026 Press Releases (Context)

  • Platform innovations: JourneyIQ (customer journey intelligence), AI Orchestrator (multi-bot decision flows), Engage digital channel expansion, RCS business messaging integration in Contact Center .
  • Operator Connect footprint doubled: Top-five global coverage; expanded device/accessory support and compliance safeguards (SMS keyword filtering) .
  • Share repurchase activity and awards/recognition listed in Business Highlights .

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