8X8 INC /DE/ (EGHT) Q3 2025 Earnings Summary

Executive Summary

Q3 FY25 was steady operationally: total revenue $178.9M and service revenue $173.5M, both within guidance, with record cash from operations ($27.2M) and GAAP profitability; mix and FX weighed on growth and margins .
Non-GAAP operating margin was 10.7% (vs 11.9% in Q2), reflecting higher platform-usage mix (~~13% of revenue) and FX headwinds (~~$2.2M vs initial plan); Adjusted EBITDA was $23.9M (vs $30.7M in Q3 FY24) .
FY25 guidance nudged down on FX while holding profitability targets: FY25 service revenue to $691.3–$696.3M and total revenue to $713–$719M; non-GAAP operating margin 10.7–11.0%; Q4 service revenue $170–$175M, total revenue $175–$181M, margin 9–10% .
Strategic catalysts: rapid AI/new-product adoption (new-product MRR +60% YoY), accelerating multiproduct cross-sell (3+ products cohorts have ~3x average deal size), Fuze migration down to ~5% of service revenue with platform shutdown targeted by 12/31/2025, and ongoing deleveraging (term-loan prepayments) .

What Went Well and What Went Wrong

What Went Well

Record operating cash flow of $27.2M; 16th consecutive quarter of positive CFO; GAAP operating income of $9.0M with non-GAAP operating profit of $19.1M .
AI and new products drove momentum: “New product MRR increased more than 60% year-over-year,” with strong adoption of Intelligent Customer Assistant, Secure Pay, and Video Elevation; CEO: “We delivered solid results… record cash flow from operations” .
Continued deleveraging and balance sheet strength: repaid $33M term loan in Q3 and $15M more in January; net debt/TTM EBITDA down to ~2.6x; stockholders’ equity increased for third straight quarter .

What Went Wrong

FX headwinds (~$2.2M vs plan in Q3; ~$2.3M impact in Q4 guidance) pressured reported revenue; without FX, revenue would have been near the high end of guidance .
Mix shift to lower-margin usage revenue (~13% of total) compressed non-GAAP gross margin to 69.5% (from 71.6% in Q3 FY24) and operating margin to 10.7% (from 13.4% in Q3 FY24) .
Non-GAAP profitability and EBITDA declined YoY: non-GAAP operating profit $19.1M (vs $24.3M) and Adjusted EBITDA $23.9M (vs $30.7M) amid mix and Fuze transition headwinds .

Financial Results

Metric	Q1 FY25	Q2 FY25	Q3 FY25
Total Revenue ($M)	178.147	180.998	178.882
Service Revenue ($M)	172.801	175.075	173.459
Other Revenue ($M)	5.346	5.923	5.423
GAAP EPS (Diluted, $)	(0.08)	(0.11)	0.02
Non-GAAP EPS (Diluted, $)	0.08	0.09	0.11
Non-GAAP Gross Margin %	70.6%	70.2%	69.5%
Non-GAAP Operating Margin %	11.3%	11.9%	10.7%
Adjusted EBITDA ($M)	25.776	26.650	23.913
Cash from Operations ($M)	—	—	27.2

Segment revenue breakdown (revenue type)

Revenue Type	Q1 FY25 ($M)	Q2 FY25 ($M)	Q3 FY25 ($M)
Service Revenue	172.801	175.075	173.459
Other Revenue	5.346	5.923	5.423

Selected KPIs

KPI	Q1 FY25	Q2 FY25	Q3 FY25
Platform usage revenue (% of total)	—	—	~13%
Fuze revenue as % of service revenue	—	~7%	~5%
Stock-based comp as % of revenue	—	5.2%	5.3%
RPO ($M)	—	—	800
Cash & equivalents incl. restricted ($M)	131.225	117.867	104.627
Net debt / TTM EBITDA (x)	—	—	~2.6x

Notes: YoY comparables (from Q3 FY24) provided by company: total revenue $181.0M, service revenue $175.1M, non-GAAP operating profit $24.3M, Adjusted EBITDA $30.7M .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Service Revenue ($M)	Q4 FY25	N/A	170.0–175.0	New
Total Revenue ($M)	Q4 FY25	N/A	175.0–181.0	New
Non-GAAP Operating Margin (%)	Q4 FY25	N/A	~9–10	New
Service Revenue ($M)	FY25	690–701	691.3–696.3	Lowered midpoint (FX)
Total Revenue ($M)	FY25	714–727	713–719	Lowered (FX)
Non-GAAP Operating Margin (%)	FY25	10.25–11.0	10.7–11.0	Raised lower bound
Non-GAAP EPS (Diluted, $)	FY25	N/A	0.35–0.37	New

Management noted FX reduced Q4 and FY25 revenue guidance by ~$2.3M and ~$4.5M respectively versus prior outlooks .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2, Q1)	Current Period (Q3)	Trend
AI/technology initiatives	Expanded AI summarization, Whisper-powered language support, Video Elevation; new AI products and partner ecosystem	New product MRR +60% YoY; Secure Pay in bots; Voice Intelligent Directory; AI across platform	Accelerating product cadence/adoption
Multiproduct cross-sell	New product sales +60% YoY; UC+CC wins	3+ product customers rising; average deal size ~3x vs 2-product cohort; cross-sell focus (Engage, bots, messaging)	Improving attach, higher retention/NRR
Fuze migration	—	Fuze down to ~5% of service revenue (7% in Q2; 11% in Q3’24); target platform shutdown by 12/31/2025; retain 60%+ revenue on migration with contract extensions	Nearing completion; transition headwinds fade into FY26
FX/macro	—	~$2.2M FX headwind vs plan in Q3; ~$2.3M Q4 and ~$4.5M FY impact vs prior guidance	Persistent, managed by natural hedge
Usage mix, margins	—	Platform usage a record and ~13% of revenue; weighs on gross margin vs subscription	Mix headwind to margins near term
International/CPaaS	CPaaS and messaging launches; ecosystem partners	APAC expansion (largest deal); CPaaS ramp in U.S.; international seen as rational market	Expanding footprint and use cases
GTM and investment	—	FY26 non-GAAP operating margin expected lower on strategic GTM/AI investments to drive growth	Investing for growth in FY26

Management Commentary

“We delivered solid results and made strides in executing our broader strategic initiatives… The quality of the earnings remained high, and we generated record cash flow from operations.” – CEO Samuel Wilson .
“New product MRR increased more than 60% year-over-year… cross-sell [is] a high priority… [We] closed the largest follow-on deal in our history when a major U.S. retailer chose 8x8 for their new contact center and expanded their UCaaS commitment.” – CEO .
“This quarter marked another period of strong execution… record communications platform usage revenue, solid profit margins and record cash flow from operations… These results underscore the resilience of our underlying business despite facing approximately $2.2 million in foreign exchange headwinds.” – CFO Kevin Kraus .
“We have now… reduced our total debt, including convertible debt from a peak of $548 million in August 2022 to approximately $354 million today, 35% less in just over 2 years.” – CEO .

Q&A Highlights

FX and growth trajectory: FX headwinds (~$2.3M Q4) mask otherwise flat-to-higher service revenue trends; constant-currency midpoints maintained vs prior guidance .
AI monetization: AI/new products remain single-digit millions per quarter but growing rapidly; management’s goal is to return to service revenue growth in FY26 as new product growth and multiproduct retention compound .
Fuze migration economics: ~60%+ revenue retained on migration with step-down then rebuild; contract terms often extended, improving lifetime value; aiming to shut down Fuze platform by 12/31/2025 .
FY26 margin outlook: Non-GAAP operating margin to be lower in FY26 due to targeted GTM and internal AI investments aimed at accelerating long-term growth; management emphasized ROI discipline but withheld specifics for competitive reasons .
UC pricing environment and positioning: Some aggressive UC pricing in calendar Q4; 8x8 winning platform-led (CX-first) deals where UC is an add-on; focus on platform wins with 3+ products .

Estimates Context

Wall Street consensus (S&P Global) for Q3 FY25 EPS and revenue was unavailable due to an SPGI rate limit at the time of retrieval; as a result, comparisons to consensus are not included. Management stated Q3 service revenue exceeded the guidance midpoint by ~$1M and total revenue was near the midpoint despite FX headwinds .
Where relevant, we compared actuals to company guidance; any future estimate comparisons will be anchored to S&P Global when available .

Key Takeaways for Investors

Cash generation and deleveraging are clear positives: record CFO ($27.2M), continued prepayments, and net debt/EBITDA ~2.6x provide optionality for selective growth investments and risk reduction .
Mix and FX temper near-term optics: platform usage mix (~13%) and FX headwinds suppressed margins and reported growth; constant-currency commentary suggests underlying stability .
Structural drivers building: AI and new-product adoption (+60% YoY new-product MRR), growing multiproduct cohorts (3x average deal size), and CPaaS expansion should support reacceleration as Fuze runoff fades .
Transition nearing end: Fuze now ~5% of service revenue (from 7% in Q2); targeted shutdown by 12/31/2025 points to lower complexity and potential cost savings medium term .
FY25 guide trimmed for FX but profitability intact: FY25 non-GAAP operating margin 10.7–11.0% with new non-GAAP EPS guide $0.35–$0.37; Q4 margin seasonally lower (9–10%) .
Setup into FY26: Management will lean into GTM and internal AI investments; near-term margin tradeoff for growth could be a stock overhang but sets up revenue expansion if execution follows through .
Trading lens: Watch for (1) sustained CFO and debt reduction cadence, (2) Q4/FY25 delivery vs FX-adjusted guidance, (3) evidence of multiproduct acceleration and AI monetization inflecting, and (4) updates on Fuze shutdown timing and associated cost benefits .

Appendix: Additional Relevant Press Releases During Q3 FY25

AI and CX platform innovations (language support via Whisper, Video Elevation, Supervisor Workspace updates, CPaaS integrations) .
CX transformation adoption: new-product sales +60% YoY; expanding contact center footprint; brand evolution supporting CX focus .