Summary
8x8 reported a softer top line for its fiscal 2025 first quarter. Total revenue fell 2.8% to $178.1 million. Gross profit fell 6.0% to $121.0 million. Gross margin was 67.9%, down 2.3 percentage points. The GAAP operating loss narrowed to $1.4 million. The net loss narrowed to $10.3 million. Diluted EPS was -$0.08, a narrower loss per share than the prior-year quarter. Operating margin was -0.8%, flat with the prior-year quarter.
Cash generation weakened. Operating cash flow was $18.1 million, down 31.4%. Capital expenditures were $0.4 million, up 105.4%. Current deferred revenue was $33.7 million, down 16.6%. Remaining performance obligations were $780.0 million, down 1.3%. On a non-GAAP basis, operating profit was $20.1 million, net income was $10.4 million, and adjusted EBITDA was $25.8 million. The MD&A attributed the gross margin decline to higher costs to deliver subscription and platform usage services, partially offset by lower amortization of capitalized software and lower software costs. Research and development, sales and marketing, and general and administrative expenses all declined, which helped narrow the operating loss.
The quarter brought a broad set of AI product updates. 8x8 deployed a more powerful large language engine, improved transcription accuracy, and expanded language support at no additional cost. Interaction summaries can be integrated into CRM systems such as Salesforce and Zoho. The company launched 8x8 Intelligent Customer Assistant Support for Voice and Interact for Proactive Outreach. It also announced 8x8 Ballot It!, an AI-powered self-service solution used in UK elections. Regal.io joined the 8x8 Technology Partner Ecosystem. The company won two 2024 ChannelVision Visionary Spotlight Awards and was recognized as a leader in TrustRadius UCaaS and Contact Center categories. Management discontinued its prior ARR metric because usage revenue is expected to increase and the metric is less relevant. The MD&A said service revenue declined on lower subscription revenue, partly offset by higher platform usage revenue. Management's long-term strategy focuses on mid-market, enterprise, and public sector customers, and on innovation in contact center as a service and communications platform as a service.
For the second quarter of fiscal 2025, management issued revenue ranges and guided non-GAAP operating margin to approximately 10% to 11%. For the full fiscal year 2025, it again issued revenue ranges and guided non-GAAP operating margin to 10% to 11%. The company does not reconcile forward-looking non-GAAP operating margin to GAAP operating margin because of the variability of the excluded items, such as stock-based compensation and unpredictable hiring.
In early July 2024, the company secured a new $200 million delayed draw term loan. On August 5, 2024, it used the proceeds plus approximately $29 million from existing cash to repay the entire $225 million outstanding on its Francisco Partners term loan. Since August 2022, 8x8 has reduced total principal outstanding on its debt, including convertible notes, by $146 million, or 27%. Management flagged macroeconomic headwinds, especially for an installed base that includes more than 52,000 small businesses. Other risks include customer churn, down-sell, competitive dynamics in cloud communications, uncertain customer adoption of new products, interest rates, foreign exchange, and the possibility that its increased emphasis on profitability and cash flow may not succeed. The company also appointed Andrew Burton to its board as a new independent director.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2025 | Q4 FY2024 | QoQ | Q1 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $178.1M | $179.4M | -0.7% | $183.3M | -2.8% |
| Gross profit | $121.0M | $503.8M | -76.0% | — | — |
| Gross margin | 67.9% | 280.8% | -212.9 pp | — | — |
| Research & development | $32.1M | $33.9M | -5.3% | $35.3M | -8.9% |
| Sales & marketing | $67.1M | $67.8M | -1.0% | $68.5M | -2.0% |
| General & administrative | $23.1M | $35.0M | -34.0% | $26.2M | -12.0% |
| Total operating expenses | $122.3M | -$31.3M | +491.2% | $184.7M | -33.8% |
| Operating income (loss) | -$1.4M | -$14.2M | +90.3% | -$1.4M | +2.6% |
| Operating margin | -0.8% | -7.9% | +7.2 pp | -0.8% | ±0.0 pp |
| Net income (loss) | -$10.3M | -$23.6M | +56.4% | -$15.3M | +32.9% |
| Net margin | -5.8% | -13.2% | +7.4 pp | -8.4% | +2.6 pp |
| Diluted EPS | -$0.08 | -$0.19 | +$0.11 | -$0.13 | +$0.05 |
Risks
The company has substantial indebtedness from approximately $201.9 million of 2028 Notes and a $200.0 million 2024 Term Loan borrowed on August 5, 2024. The 2024 Credit Agreement includes restrictive financial covenants, including consolidated interest coverage, maximum consolidated total net leverage, and maximum consolidated secured leverage ratios, and limits share repurchases, indebtedness, liens, investments, dividends, and asset dispositions.
The 2024 Term Loan matures on August 15, 2027 and the 2028 Notes mature on February 1, 2028. The company states its notes are significantly out of the money and its stock price would have to increase significantly for the notes to convert prior to maturity, increasing reliance on refinancing or cash flow to repay debt.
Service revenue decreased 1.4% for the three months ended June 30, 2024 versus the prior-year quarter, driven by a $5.8 million decrease in subscription revenue related to increased customer churn and down-sell, partially offset by a $3.4 million increase in platform usage revenue.
MD&A states that adverse economic conditions are expected to continue to adversely impact the business in future periods, and that the installed base business, which includes more than 52,000 small businesses, continues to experience macroeconomic headwinds.
Gross margin decreased 2.3 percentage points to 67.9% for the three months ended June 30, 2024 from 70.2% in the prior-year quarter, as cost of service revenue rose 7.0%, primarily from a $5.0 million increase in costs to deliver subscription and platform usage services.
The company is discontinuing ARR as a key business metric because usage revenue is expected to increase and makes the prior recurring subscription metric less relevant, which may reduce revenue visibility and comparability as the business mix shifts toward consumption-based revenue.
Operating cash flow decreased 31.4% to $18.1 million for the three months ended June 30, 2024 from $26.5 million in the prior-year quarter, mainly due to a decrease in cash received from customers.
SaaS KPIs
All quarters →Non-GAAP operating profit (as a percentage of total revenue)
Small business customers (installed base)
Summary, forecast, risks and KPIs are extracted from 8X8 INC /DE/'s SEC filings for Q1 FY2025 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.