Summary
8x8 opened fiscal 2027 with record revenue of $190.2 million for the quarter ended June 30, 2026, up 4.9% from $181.4 million a year earlier. Service revenue rose 5% to $185.3 million, marking a fifth consecutive quarter of year-over-year revenue growth. GAAP operating income reached $4.4 million, up from $0.6 million, and operating margin improved to 2.3% from 0.3%. The net loss narrowed to $1.2 million from $4.3 million, and diluted loss per share narrowed to $0.01 from $0.03.
Profitability at the gross line moved the other way. Gross profit fell 3.4% to $116.4 million, and gross margin dropped to 61.2% from 66.4%. Management ties the decline to a deliberate mix shift toward usage-based offerings, which carry higher network and carrier costs per dollar of revenue. Platform usage revenue, spanning CPaaS APIs, digital channels and AI solutions, grew 63% year over year and accounted for roughly 26% of total service revenue, up from 17%. Subscription revenue fell $9.5 million on churn and down-sell. Non-GAAP gross margin was 61.6%, compared with 67.8% a year earlier.
Lower operating expenses absorbed much of that pressure. Sales and marketing spending declined, research and development was roughly flat, and general and administrative costs rose modestly. Non-GAAP operating income was $18.9 million, or 9.9% of revenue, up from $16.3 million. Operating cash flow rose 43.5% to $17.0 million, the 22nd consecutive quarter of positive cash flow, with trailing twelve month cash flow of $60.9 million. Capital expenditures were $0.7 million. Cash, cash equivalents and restricted cash stood at $92.3 million on June 30, 2026, down from $95.0 million at the end of fiscal 2026 after a $14.5 million principal payment on the 2024 Term Loan. Total debt outstanding was $309.4 million, versus $323.9 million at the end of fiscal 2026.
AI adoption is the operational story management wants investors to focus on. Customer adoption of AI solutions, including AI Studio and 8x8 Intelligent Customer Assistant, grew 121% year over year and 68% sequentially. More than 200 organizations were active in AI Studio as of the end of July, and they had built more than 2,900 AI agents. Customers using three or more paid products increased 18% year over year and now represent about 38% of recurring revenue, up from 35%. Channel-generated new-business pipeline rose roughly 25% year over year and 8% sequentially.
Guidance for the second quarter of fiscal 2027 puts non-GAAP gross margin at 60.5% to 61.5% and non-GAAP operating margin at 8.0% to 9.0%, with cash flow from operations of $9 million to $11 million. For the full fiscal year 2027, management raised its revenue outlook while keeping non-GAAP operating margin at 8.8% to 9.8% and cash flow from operations at $45 million to $52 million. The company does not reconcile these forward-looking non-GAAP measures to their GAAP counterparts, citing the variability of the excluded items.
Two balance sheet lines deserve attention. Deferred revenue, current portion, fell 16.1% to $35.3 million, and remaining performance obligations fell 15.2% to $640.0 million, both against the prior-year quarter. Churn and down-sell are already visible in the subscription line, and the mix shift keeps pressuring gross margin. International revenue grew from about 38% of total revenue to about 44%, which raises exposure to currency swings. Management also cites macroeconomic conditions, geopolitical instability, tariffs, inflation, competitive dynamics and the pace of AI adoption as factors that could change customer buying behavior.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2027 | Q4 FY2026 | QoQ | Q1 FY2026 | YoY |
|---|---|---|---|---|---|
| Revenue | $190.2M | $185.2M | +2.7% | $181.4M | +4.9% |
| Gross profit | $116.4M | $117.1M | -0.6% | $120.4M | -3.4% |
| Gross margin | 61.2% | 63.2% | -2.0 pp | 66.4% | -5.2 pp |
| Research & development | $28.4M | $29.5M | -3.7% | $28.4M | +0.1% |
| Sales & marketing | $58.8M | $59.9M | -1.9% | $68.2M | -13.8% |
| General & administrative | $24.8M | $24.3M | +2.0% | $23.3M | +6.5% |
| Total operating expenses | $112.0M | $113.7M | -1.5% | $119.9M | -6.6% |
| Operating income (loss) | $4.4M | $3.3M | +31.5% | $565.0K | +675.0% |
| Operating margin | 2.3% | 1.8% | +0.5 pp | 0.3% | +2.0 pp |
| Net income (loss) | -$1.2M | $106.0K | -1232.1% | -$4.3M | +72.2% |
| Net margin | -0.6% | 0.1% | -0.7 pp | -2.4% | +1.8 pp |
| Diluted EPS | -$0.01 | $0.00 | -$0.01 | -$0.03 | +$0.02 |
| Customers | 8 | — | — | — | — |
Risks
Gross margin fell to 61.2% in FY2027 Q1 from 66.4% in FY2026 Q1, a decline of 5.2 percentage points, as cost of service revenue rose 25.7% and the revenue mix shifted toward usage-based offerings that generate higher network and carrier service provider costs per dollar of revenue than subscription offerings.
Subscription revenue decreased $9.5 million in FY2027 Q1 versus FY2026 Q1 due to customer churn and down-sell, leaving total service revenue growth of 5.1% dependent on an $18.5 million increase in platform usage revenue generated primarily in the Asia-Pacific region.
Deferred revenue (current portion) was down 16.1% year over year to $35.33 million and remaining performance obligations were down 15.2% to $640.00 million in FY2027 Q1, which may signal pressure on future recognized revenue.
MD&A cites geopolitical instability, tariffs, inflationary pressures, increased interest rates, supply chain disruptions and currency volatility, and notes the installed base includes small businesses that tend to be disproportionately affected by macroeconomic headwinds.
International revenue grew from approximately 38% of total revenue in FY2026 Q1 to approximately 44% in FY2027 Q1, increasing exposure to foreign currency fluctuations; other income (expense), net swung to $0.4 million of expense from $0.4 million of income on a $0.7 million increase in foreign exchange losses.
The company continues to monitor the pace of AI adoption across its customer base, which it describes as both an evolving competitive dynamic and a direct driver of demand, requiring continued investment in agentic AI solutions, communication APIs and new products such as 8x8 Engage and 8x8 AI Studio.
The 2028 Notes were trading at a discount to their principal amount as of June 30, 2026, and the 2024 Term Loan has $107.5 million outstanding with $25.0 million of scheduled principal repayments due in fiscal 2027 and $82.5 million in fiscal 2028, creating refinancing and liquidity risk.
During FY2027 Q1 the company entered into a $74.0 million noncancelable five-year hosting service contract with a cloud service provider, adding $8.1 million due in fiscal 2027 and $13.9 million due in fiscal 2028 to its fixed obligations.
SaaS KPIs
All quarters →Non-GAAP gross margin
Non-GAAP operating margin
Summary, forecast, risks and KPIs are extracted from 8X8 INC /DE/'s SEC filings for Q1 FY2027 (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 1, 2026.