Q4 2024 Summary
Published Feb 25, 2025, 3:30 PM UTC- Strong growth and momentum in the Contact Center as a Service (CCaaS) segment, driven by solid customer adoption and partnerships like TFS. Samuel Wilson stated, "Contact Center, we've definitely been seeing solid momentum, particularly when we think about the TFS partnership around it, the add-on products, those kinds of things."
- Significant monetization opportunities from AI-enabled products like the Intelligent Customer Assistant, which is seeing increasing usage and positive customer feedback. Samuel Wilson mentioned, "Our intelligent customer assistant is an AI-enabled voice and digital chatbot...we're seeing significant usage increases off of it...all the customers are referenceable. So it works and it works really darn well."
- Positive outlook for Communications Platform as a Service (CPaaS) growth throughout fiscal 2025, with expectations of continued improvement each quarter. Kevin Kraus said, "In terms of the go-forward view, we see continued improvement in that business throughout each quarter of 2025...we're talking about some decent level of growth rate with some seasonality baked in."
- CPaaS revenue was seasonally down in Q4, and the company is experiencing headwinds in this segment, which could signal potential growth challenges. , ,
- The UCaaS market is described as "tough" by the CEO, indicating potential difficulties in this core market segment. ,
- The macroeconomic environment is unfavorable, with the CEO stating that "the environment is not pretty. It's not great. There's not a lot of tailwinds," suggesting possible impacts on sales and growth.
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Path to Growth
Q: How will EGHT return to positive growth by fiscal Q4 2025?
A: Management expects growth to come from Contact Center (CCaaS) and CPaaS, with new products growing over 50% for two consecutive quarters. As they become a multiproduct company, retention rates should increase, leading to solidly positive net revenue retention and overall growth in the second half and fourth quarter of fiscal 2025. -
Fuze Migration Impact
Q: Are you seeing volatility due to migrating large Fuze customers?
A: As they upgrade Fuze customers to the 8x8 platform, they observe some rightsizing of customer needs, leading to headwinds as they downsell. However, customer satisfaction scores are improving, and they've accelerated the migration, expecting the process to conclude soon. -
Macro Environment and Guidance
Q: How is the macro environment affecting renewals and your fiscal 2025 guidance?
A: The environment is challenging, with layoffs and higher interest rates impacting industries. Customers are scrutinizing cost structures. Larger deals may take longer to close. Management remains cautious and has factored this into their guidance, assuming consistent market conditions without optimism. -
CPaaS Performance and Outlook
Q: How did CPaaS perform in Q4, and what's the outlook for fiscal 2025?
A: CPaaS was seasonally down in Q4 due to factors like Ramadan and Chinese New Year but was up year-over-year by 9%. They expect continued improvement in CPaaS throughout fiscal 2025, with decent growth rates and some seasonal impacts in the first calendar quarter. -
Teams Partnership Growth
Q: Can you provide an update on the Teams partnership and its impact?
A: 8x8 has over 400,000 Teams seats, growing rapidly. They are one of the few vendors offering Operator Connect, direct routing, and a Microsoft-certified Contact Center. The attach rate of Contact Center is much higher in Teams deals, contributing to solid margins. -
AI Opportunities and Monetization
Q: What are the AI use cases among customers, and is there revenue potential?
A: They offer AI-enabled products like the Intelligent Customer Assistant, a voice and digital chatbot sold on a per-interaction basis, seeing significant usage increases. Customers pay for integrated solutions that solve problems, and AI products are increasing total revenue per customer significantly. -
Go-to-Market Investments
Q: What investments are you making in driving awareness and go-to-market efforts?
A: They are investing more in top-of-funnel activities, adding sales capacity, particularly BDRs. They've hired an evangelist to promote their product innovation story. Efforts focus on changing the perception of being just a UCaaS company and highlighting their evolved capabilities, leading to business improvements. -
Engage Product Traction
Q: How is Engage performing, and is it resonating with the expected customers?
A: Engage is in beta, with reception above expectations. A mobile-first approach targeting specific use cases is resonating with both existing customers and prospects. Customers are upgrading to Engage for improved business processes, indicating strong traction.