8X8 Q2 2027 Earnings Results & Report

8X8 EPS Results

• Actual EPS: $0.12
• Consensus EPS: $0.04
• Beat/Miss: Beat by +$0.08
• One Year Ago EPS: N/A
• EPS Beat Rate: 7 of last 8 quarters

8X8 Revenue Results

• Actual Revenue: $192.00 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

8X8 (NASDAQ:EGHT), Inc. is a cloud communications and customer experience technology company that provides voice, video, chat, contact center and communications application programming interface (API) services. Its platform is designed to help businesses manage employee communications and customer interactions through integrated, cloud-based tools.

The company’s offerings include 8x8 Work, a unified communications service for business calling, messaging and meetings, and 8x8 Contact Center, which supports customer service operations across voice and digital channels. Through its communications platform as a service, 8x8 also provides programmable communications capabilities that organizations can incorporate into their own applications and workflows.

Founded in 1987, 8x8 has evolved from a provider of networking and voice-over-internet-protocol products into a broader cloud communications and customer experience company. It serves businesses and other organizations in North America, Europe and additional international markets through its cloud-based platform.

8X8 Q2 2027 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: 8x8 posted its sixth consecutive quarter of year-over-year revenue growth, with Q2 total revenue up 4.3% to $192 million and service revenue up 4.9% to $187.8 million. Operating income, EPS, and cash flow also exceeded the high end of guidance.
• Positive Sentiment: Platform usage revenue grew 51%, led by CPaaS in Asia Pacific and rising AI adoption; recurring revenue from AI solutions increased 58% year over year. The company raised its full-year revenue, operating income, EPS, and operating cash flow outlook.
• Negative Sentiment: Growth in usage-based offerings is weighing on gross margin because those offerings carry lower margins; Q2 gross margin was 60.1%, and management expects the mix shift to continue pressuring the percentage. Executives said usage revenue is less predictable because it is not contracted, and forecast growth to moderate to 35%–45% in Q3.
• Negative Sentiment: 8x8 has about $297 million of debt after an October repayment and said it is working on a refinancing solution for its term loan and 2028 notes ahead of the term loan’s August 2027 maturity. Management expressed confidence, but did not provide details of the refinancing.

Presentation

[Operator]

Good day, and thank you for standing by. Welcome to the 8x8, Inc. Q2 2027 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone.

[Operator]

You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Kate Patterson, Head of Investor Relations. Please go ahead.

[Kate Patterson, Head of Investor Relations at 8x8]

Thank you. Good afternoon, everyone. Today's agenda will include a review of our results for the second quarter of fiscal 2027 with Samuel Wilson, our Chief Executive Officer, and Kevin Kraus, our Chief Financial Officer. Following our prepared remarks, there will be a question-and-answer session. Unless otherwise noted, all financial metrics discussed on this call, other than revenue and cash flow from operations, are non-GAAP.

[Kate Patterson, Head of Investor Relations at 8x8]

These non-GAAP metrics were not prepared in accordance with the US Generally Accepted Accounting Principles, or GAAP. A reconciliation of these non-GAAP metrics to the most directly comparable GAAP metric is provided in our earnings press release, shareholder letter, and earnings presentation slides, each of which is available on the quarterly results section of our investor relations website.

[Kate Patterson, Head of Investor Relations at 8x8]

Before we get started, let me remind you that our discussion today includes forward-looking statements about our future financial performance, including investments in innovation and our focus on profitability and cash flow, our plans to refinance our debt, as well as statements regarding our business, products, and growth strategies.

[Kate Patterson, Head of Investor Relations at 8x8]

We caution you not to put undue reliance on these forward-looking statements, as they involve risks and uncertainties that may cause actual results to vary materially from forward-looking statements, as described in our risk factors in our most recent report, Form 10-K, and our quarterly report on Form 10-Q to be filed with the SEC.

[Kate Patterson, Head of Investor Relations at 8x8]

Any forward-looking statements made on this call and in the presentation slides reflect our analysis as of today, and we have no plans or obligation to update them. With that, I'll turn the call over to our Chief Executive Officer, Samuel Wilson.

[Samuel Wilson, CEO at 8x8]

Thank you, and good afternoon, everyone. We delivered another strong quarter ending in September, our sixth consecutive quarter of year-over-year revenue growth. Service revenue reached $187.8 million, up 4.9% year-over-year. Platform usage revenue, which includes the use of our communications APIs, digital and voice AI interactions, telephony minutes, grew 51%, driven primarily by the use of our communications APIs in Asia Pacific.

[Samuel Wilson, CEO at 8x8]

Our second quarter outperformance led us to raise our full-year outlook for revenue, profitability, and operating cash flow. Kevin will cover the financial results and outlook. I want to focus on the business we're building and how we turn more of our platform into value for customers and growth for 8x8. Our promise is to make every conversation count. AI gives that promise new power.

[Samuel Wilson, CEO at 8x8]

It can automate the work a conversation sets in motion, help people resolve problems faster, and turn conversation data into knowledge that makes the next interaction more useful. That starts with reliable communications. Our global carrier-grade voice network combines decades of voice expertise with the connectivity, quality, and operating experience needed to serve businesses around the world.

[Samuel Wilson, CEO at 8x8]

Voice remains central to customer service, particularly when an interaction is complex, urgent, or personal. As AI agents handle more conversations, reliable connections, high-quality audio, and seamless handoffs to employees become even more important. Our platform brings that network together with contact center applications, communications APIs, interaction data, and native AI.

[Samuel Wilson, CEO at 8x8]

Customers can put these capabilities to work together with fewer systems to integrate and manage. Our priorities remain the same as we outlined in Q1: become truly partner-first, improving customer satisfaction and retention, and increasing multi-product adoption.

[Samuel Wilson, CEO at 8x8]

Let me start with partners. We are committing resources, strengthening leadership, and tailoring our offerings to help partners win customers, retain them, and expand their relationships. Our growth depends on their success. During Q2, we introduced a tiered reseller program that rewards those outcomes.

[Samuel Wilson, CEO at 8x8]

We also introduced 8x8 Small Business, a flexible, consumption-based offering that lets resellers serve smaller organizations without fixed seat commitments. Microsoft Teams gives us another opportunity to expand our reach. On November 2nd, we announced that 8x8 has earned Microsoft certification for our session border controller technology for both Direct Routing and Operator Connect.

[Samuel Wilson, CEO at 8x8]

We will now run this SBC infrastructure ourselves with no third-party infrastructure provider, which we will expect to result in improved quality and reliability with better economics for both 8x8 and Microsoft partners. We are one of the only native cloud communications company providers with Microsoft-certified SBC technology, enabling both calling options.

[Samuel Wilson, CEO at 8x8]

Hundreds of millions of people use Teams. Bringing external calling into the environment where they already work is a substantial opportunity for us and our partners. The next opportunity is within our installed base. Many customers first choose 8x8 for a single product.

[Samuel Wilson, CEO at 8x8]

As their needs grow, we want them and their trusted partners to look to us for more. AI increases what those products can do. Transcription, analytics, call summaries turn conversations into useful knowledge. Shared context makes that knowledge available to employees and AI agents so the next interaction can pick up where the last one ended.

[Samuel Wilson, CEO at 8x8]

Our October updates make this tangible. Customer 360 brings interaction history into Agent Workspace with sentiment and topic insights where Speech Analytics is enabled. JourneyIQ puts voice interactions across Work, Contact Center, Engage, and AI Studio on one timeline, helping teams see where calls transferred, stalled, or dropped.

[Samuel Wilson, CEO at 8x8]

Engage brings contact center capabilities to customer-facing employees in sales, field service, finance, and customer success. They gain tools for more responsive service while supervisors get visibility across Engage and the contact center. Engage customers more than doubled year-over-year. CPaaS APIs extend those workflows further.

[Samuel Wilson, CEO at 8x8]

Teams can move from a call to a video, send a secure payment link, or follow up through messaging. Those are enterprise applications connecting communications directly to business processes. Outside Asia Pacific, customers integrating CPaaS APIs into their workflows doubled year-over-year.

[Samuel Wilson, CEO at 8x8]

More than half of those year-over-year customer additions came in the second quarter. As customers deploy applications and build usage, we see an opportunity to expand this enterprise traffic, particularly in EMEA and North America. We are also seeing broader adoption of premium capabilities and an acceleration in the adoption of our AI solutions.

[Samuel Wilson, CEO at 8x8]

Overall, customers using three or more revenue-producing 8x8 products grew 19% in the second quarter. Those using four or more products grew more than 50%, both year-over-year numbers. Recurring revenue from our AI solutions grew 58% year-over-year, and customers using at least one AI solution represented approximately 13% of total recurring revenue at the end of September, up from 7% a year ago.

[Samuel Wilson, CEO at 8x8]

AI Studio opens up another dimension to the AI opportunity. Communications, conversation intelligence, and shared context are the building blocks for better customer experiences. AI Studio is our native development environment, built directly into the platform, where customers and partners can bring those capabilities together in their own agents and workflows.

[Samuel Wilson, CEO at 8x8]

They describe what they want to accomplish in plain language. Their agents can draw on customer context, connect to business systems, and work across voice and digital channels.

[Samuel Wilson, CEO at 8x8]

Starting within 8x8's platform reduces the complexity of assembling separate technologies and connecting them afterwards. AI Studio has moved from open beta to our early adopter program.

[Samuel Wilson, CEO at 8x8]

We provide free credits for every customer to get them started with AI Studio through our 8x8 App Store without additional AI Studio licensing fees so they can get started building agents immediately. AI Studio is HIPAA-ready and designed to support our customers' GDPR compliance, helping them address privacy and data handling requirements.

[Samuel Wilson, CEO at 8x8]

Interactions powered by AI Studio have grown nearly 450% since it became available through the 8x8 App Store in April. The numbers are still small, but the customers are already putting agents to work in production. A healthcare organization is routing callers to the right department. An IT services provider has connected the phone and chat agents to its ticketing system.

[Samuel Wilson, CEO at 8x8]

A utility provider has expanded priority routing into after-hours technical support and automated call evaluation. That last example illustrates the expansion opportunity. A customer solves one problem, sees the value, identifies another use case, and builds another agent. Partners can multiply this effect.

[Samuel Wilson, CEO at 8x8]

They can turn industry expertise into applications that they adapt and deploy across multiple customers. Pooled credits and consolidated invoicing makes those accounts easier to manage. It's a classic flywheel. Partners build differentiated services, customers get applications tailored to their needs, and our opportunity grows as adoption expands.

[Samuel Wilson, CEO at 8x8]

Here's the message I want to leave you with before I turn the call to Kevin. 8x8 is a healthy, growing business with a strong financial foundation and substantial opportunities ahead. Our network connects the conversations businesses depend on. Our platform turns them into insights and shared context.

[Samuel Wilson, CEO at 8x8]

AI Studio allows customers and partners to build their own agents and apps, creating more ways to put those capabilities to work. Capturing the opportunity ahead of us takes focused execution, helping customers succeed and stay with us, expanding adoption, and helping partners grow.

[Samuel Wilson, CEO at 8x8]

That is how we intend to deliver on our promise to make every conversation count and create greater long-term value for our stockholders. Thank you to our customers, partners, and employees, and to our stockholders for their continued support. Kevin, over to you.

[Kevin Kraus, CFO at 8x8]

Thanks, Samuel. Good afternoon, everyone, and thank you for joining us for our fiscal second quarter earnings call. In addition to our shareholder letter, detailed financial results are available in our press release and on our investor relations website. Therefore, I'll focus my remarks on a few key highlights.

[Kevin Kraus, CFO at 8x8]

Unless otherwise stated, all figures other than revenue and cash flow are presented on a non-GAAP basis. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are included in our press release and shareholder letter. Q2 marked our sixth consecutive quarter of year-over-year revenue growth,

[Kevin Kraus, CFO at 8x8]

Extending the momentum we built in fiscal 2026 as we again delivered healthy operating profit and further strengthened our balance sheet. We exceeded the high end of our guidance ranges for service revenue, total revenue, operating margin, earnings per share, and cash flow from operations.

[Kevin Kraus, CFO at 8x8]

We had another record quarter for service revenue and generated positive cash flow from operations for the 23rd consecutive quarter. Total revenue was $192 million, and service revenue was $187.8 million, growing 4.3% and 4.9% year-over-year, respectively. These results again reflected continued strength in our usage-based offerings.

[Kevin Kraus, CFO at 8x8]

Our platform usage revenue, which includes the use of our communication APIs, digital and voice AI interactions, and telephony minutes, set another all-time record, growing approximately 51% year-over-year and representing an increasing share of our service revenue.

[Kevin Kraus, CFO at 8x8]

Gross profit was approximately $115.5 million, above the gross profit dollars implied by the midpoint of our Q2 guidance. Gross margin was 60.1%, reflecting the continued mix shift toward our usage-based offerings, which in aggregate carry a lower margin profile, but can add meaningful growth in operating profit dollars as the business scales.

[Kevin Kraus, CFO at 8x8]

We are focused on increasing gross profit dollars. As platform usage grows, we expect gross profit dollars to increase, but the mix shift will continue to impact the consolidated gross margin percentage, and this is a deliberate choice. We are prioritizing share capture in the fastest-growing part of the customer engagement market, where AI is reshaping how enterprises connect with customers.

[Kevin Kraus, CFO at 8x8]

Usage-based revenue scales efficiently, and combined with disciplined expense management, this allows us to continue growing operating income dollars and cash flow, which we expect to strengthen over time.

[Kevin Kraus, CFO at 8x8]

Operating expenses were down approximately $9 million year-over-year, with savings realized across several functional areas. As a result, operating income came in at $20.7 million, and operating margin was 10.8%, both above the high end of our guidance range.

[Kevin Kraus, CFO at 8x8]

The combination of higher revenue, lower operating expenses, and lower interest expense resulted in net income of $17.6 million and fully diluted EPS of $0.12 per share, also above the high end of our guidance range. Contractual interest expense was $3.9 million, down from $4.5 million a year ago, reflecting the continued decline in our debt balances.

[Kevin Kraus, CFO at 8x8]

As expected, cash interest paid in Q2 was approximately $5.9 million, since we paid both our term loan interest payment and the semi-annual interest payment on our 2028 convertible notes.

[Kevin Kraus, CFO at 8x8]

Cash flow from operations was $13.1 million for the quarter, above the high end of our guidance range. We ended the quarter with $102.6 million in cash equivalents, and restricted cash, an increase of approximately $10.3 million sequentially, reflecting strong operating cash generation.

[Kevin Kraus, CFO at 8x8]

We ended Q2 2027 with $309.4 million of principal debt outstanding. on October 9, we repaid an additional $12.5 million in principal, bringing the balance of the term loan down to $95 million and total debt to approximately $297 million. On a post-payment basis, we have reduced principal debt by more than $250 million, or approximately 46%, from the August 2022 peak of $548 million.

[Kevin Kraus, CFO at 8x8]

As we previewed last quarter, our remaining term loan balance has been reclassified to current liabilities on our balance sheet, consistent with standard GAAP treatment ahead of the August 2027 maturity. We are well along in our refinancing process, and we are confident that we will have a solution in place that addresses our debt structure, including the term loan and the 2028 notes, ahead of the August 2027 maturity of the term loan.

[Kevin Kraus, CFO at 8x8]

Our consistent cash flow generation, operating discipline, and multi-year track record of debt reduction provide a strong foundation for this process. We will share additional details at the appropriate time. Turning to guidance. We are providing both third quarter and updated full year fiscal 2027 guidance.

[Kevin Kraus, CFO at 8x8]

Our outlook reflects continued focused execution and operating discipline as we continue building a more diversified, durable business. We are leaning into where the market is growing fastest while protecting profitability and cash flow through the operating discipline we have demonstrated quarter after quarter.

[Kevin Kraus, CFO at 8x8]

For fiscal Q3 2027, we are providing the following guidance. Service revenue is expected to be between $184 million and $188 million. Total revenue is anticipated to be between $188 million and $192 million. We anticipate gross margin between 58% and 60%, reflecting the continued mix shift toward usage-based revenue. We anticipate operating margin between 8% and 10%.

[Kevin Kraus, CFO at 8x8]

This results in a range for fully diluted non-GAAP earnings per share of $0.08-$0.09 per share, based on approximately 150 million fully diluted shares outstanding. In fiscal Q3, we expect contractual interest expense, which excludes amortization of debt issuance costs, to be approximately $3.7 million, based on current interest rates and the principal outstanding on our term loan and 2028 convertible notes.

[Kevin Kraus, CFO at 8x8]

We expect to make cash interest payments of approximately $1.7 million, reflecting our term loan interest payment. We anticipate cash flow from operations to be between $11 million and $13 million. Let me provide a little more color on the model dynamics driving our Q3 guidance.

[Kevin Kraus, CFO at 8x8]

We are assuming continued strong growth for platform usage, although the year-over-year growth rate is expected to moderate from 51% in Q2 to the 35%-45% range year-over-year, as we lap a strong Q3 2026 comparison and focus on higher-margin solutions within the CPaaS portfolio. That said, the continued mix shift to platform usage drives our gross margin outlook slightly down from Q2.

[Kevin Kraus, CFO at 8x8]

We are keeping operating expenses tightly managed, consistent with our commitment to deliver on our operating income and cash flow targets for the year. For full year fiscal 2027, we are updating our guidance as follows. We are raising our service revenue guidance range to between $732 million and $752 million, an increase of $7 million from our prior range of $725 million-$745 million.

[Kevin Kraus, CFO at 8x8]

This reflects our revenue over-performance in Q2, as well as our confidence in current business trends. Total revenue is anticipated to be between $750 million and $770 million, an increase of $5 million from our prior range of $745 million-$765 million. We anticipate gross margin to be between 59.7% and 60.2%, reflecting the increasing amount of usage-based revenue in our revenue mix.

[Kevin Kraus, CFO at 8x8]

While our updated gross margin range reflects the continued mix shift toward usage-based offerings, we are managing that mix operationally through disciplined operating expense management. This allows us to raise our full year non-GAAP operating income, EPS, and cash flow operations outlook, even as our revenue mix continues to evolve.

[Kevin Kraus, CFO at 8x8]

Our prior guidance for non-GAAP operating margin implied non-GAAP operating income of approximately $70 million at the midpoint, and we are raising this to a midpoint of $73 million and a range of $68 million-$78 million. This yields an operating margin range of 9.1%-10.1%.

[Kevin Kraus, CFO at 8x8]

We are also raising our range for fully diluted non-GAAP EPS to $0.36-$0.40 per share from our prior range of $0.33-$0.38 per share, assuming approximately 150 million average diluted shares outstanding.

[Kevin Kraus, CFO at 8x8]

For full year fiscal 2027, we are raising our guidance range for cash flow from operations to between $49 million and $54 million, up from our prior range of $45 million-$52 million. In closing, Q2 was another quarter in which we delivered strong financial results.

[Kevin Kraus, CFO at 8x8]

The investments in our platform are driving top-line momentum, while our commitment to financial discipline gives us the flexibility to invest in high-growth areas while raising our profitability and cash flow outlook for the fiscal year.

[Kevin Kraus, CFO at 8x8]

Our updated outlook reflects both our confidence in the trajectory of the business and the operating discipline we continue to demonstrate. I want to thank our customers for their continued partnership, our employees for their dedication, and our investors for their continued support. With that, I will turn the call over for Q&A.

[Operator]

Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by. Our first question comes from Matthew Mauss from B. Riley Securities. Please go ahead.

[Josh Nichols, Analyst at B. Riley Securities]

Hi, it's Josh Nichols here from B. Riley Securities. Well, look, congrats on the record quarter. Clearly, the usage revenue came in well above the 30%-35% guide. Maybe if you could just give a little bit more color on what's driving that, traditional CPaaS versus AI and Engage platform offerings overall.

[Samuel Wilson, CEO at 8x8]

All right, I'll take the first part of that, and I'll let Kevin make a comment on number one. Okay, so it's across the board we're seeing increases in usage products. But a couple of things are going on, Josh. First, yes, the core CPaaS business in Southeast Asia continues to grow very robustly. We've seen some of our competitors effectively exit the market, opening the door to more opportunities there, and we've been seizing on them.

[Samuel Wilson, CEO at 8x8]

Also, all of our AI products are usage-based by nature, for the most part, when we charge for them. And we're seeing a very rapid adoption of AI products into our base and those kinds of things. And we put out numbers recently in a release. We mentioned them on the call also, right?

[Samuel Wilson, CEO at 8x8]

I think it's Kate can correct me, but I think it's 13% of our revenue now has an AI product attached to it. So we're seeing that adoption increase, and that's coming through in the usage baseline also. The hard part, obviously, with usage is it's not contracted, and so there's not that forward certainty of revenue, but we're really pleased with how it's been going.

[Kevin Kraus, CFO at 8x8]

Yeah, and I'll echo what Samuel just said, Josh. We do have growth in various areas across the platform usage. The bulk of the revenue is in APAC, but we are seeing upticks elsewhere, so that's a good sign.

[Josh Nichols, Analyst at B. Riley Securities]

Yep. I noticed a couple things. One, you have had very good success, the multi-product customers that are ramping. I am kind of curious, with the new customers that you are seeing coming on board, are they coming in strictly as usage customers, or are some landing and then expanding to more UC and Contact Center, or are more of the customers now signing up initially from a multi-product offering?

[Samuel Wilson, CEO at 8x8]

Wow. I mean, the thing is, it is a little bit of everything, right? We are winning more multi-product land new logos. Obviously, a vast majority of our usage base are add-ons to existing UC/CC customers. Still landing with that seat message is, that seat product is generally the first, the core of the land.

[Samuel Wilson, CEO at 8x8]

Even if we sell an AI Studio or we sell one of, CPaaS or one of the other things, or SMS messaging or WhatsApp or anything else, most of those are effectively add-ons to that core UC/CC or business platform land for our main business.

[Samuel Wilson, CEO at 8x8]

Then in Asia, for our CPaaS business, that just starts as all usage, all new logos are usage. We sell, obviously, in Australia, New Zealand, and other places, UC/CC, but it is not as big as the CPaaS business. But it is a little bit of everything.

[Samuel Wilson, CEO at 8x8]

I would love to tell you it is really straightforward, but it all depends on the problem the customer is trying to solve.

[Josh Nichols, Analyst at B. Riley Securities]

Yep. Yeah, fair point. I think that is good for now. I appreciate it, guys. That is all for me. Great to see the progress the business has been making here. I will jump back in the queue.

[Kate Patterson, Head of Investor Relations at 8x8]

Josh.

[Operator]

Thanks, Josh.

[Samuel Wilson, CEO at 8x8]

Thanks.

[Operator]

Thank you. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by. Okay. I am showing no further questions at this time. I would now like to turn it back to Samuel Wilson for closing remarks.

[Samuel Wilson, CEO at 8x8]

All right. Thank you, everyone. I know it is a super busy day with the elections yesterday and lots of earnings today, so I appreciate the time to be on the call tonight. I just want to refer everybody back to what is in our IR section, as we did an analyst event or a kind of a readout, a virtual event last quarter. I think there is a lot of super important information, long-term operating model, those kinds of things were in that thing.

[Samuel Wilson, CEO at 8x8]

If you have any questions about the company, et cetera, as you read this transcript, please refer to that. That is a great source of information. Otherwise, we will not probably speak to you again until after the holidays, so I wish everybody a happy holidays coming up and look forward to talking to you again in January or February. Thank you.

[Operator]

Thank you for your participation in today's conference. This does conclude the program, and you may now disconnect.

Participants

Executives

• Samuel Wilson, CEO

Analysts

• Kate Patterson, Head of Investor Relations at 8x8
• Kevin Kraus, CFO at 8x8
• Josh Nichols, Analyst at B. Riley Securities