Summary
8x8 began fiscal 2022 with a mixed second quarter. Total revenue rose 17.4% year over year to $151.56 million. Gross profit climbed 26.8% to $92.09 million. Gross margin expanded to 60.8%, a gain of 4.5 percentage points. Year to date, revenue rose 19.5% to $299.88 million. The top line and gross profit growth did not carry through to the bottom line. GAAP operating loss widened to $37.16 million for the quarter and to $75.98 million for the first six months. Operating margin improved to negative 24.5% for the quarter. Net loss widened to $42.32 million for the quarter and to $86.23 million year to date. Diluted EPS was negative $0.38 for the quarter and negative $0.78 year to date.
Cash generation turned positive. Operating cash flow was $5.10 million in the quarter, up 233.6% year over year. For the first six months, operating cash flow was $9.13 million, up 169.9% year over year. Capital expenditures fell 13.9% to $1.48 million in the quarter and 43.5% to $2.36 million year to date. Deferred revenue, current portion, jumped 136.6% to $22.36 million. The company ended the quarter with $166.5 million in cash, restricted cash, and investments, compared with $161.5 million at March 31, 2021.
Operational metrics show traction upmarket. Total annualized recurring subscriptions and usage, or ARR, reached $553 million, up 18% year over year. The company had 871 customers with ARR greater than $100,000, up 30% from 670 in the same period last year. Enterprise ARR was 51% of total ARR and grew 33% year over year. Mid-market ARR was 19% of total and grew 14%. Small business ARR was 30% of total and grew 2%. Mid-market and enterprise combined accounted for 70% of total ARR and grew 27%. Service revenue grew 18% year over year. Non-GAAP operating profit was $1.9 million. Non-GAAP gross margin was 64%, compared with 61% a year earlier. Non-GAAP service revenue gross margin was 69%, compared with 67%. Management pointed to several product and channel moves: the launch of 8x8 Frontdesk, an integrated cloud phone and contact center solution for Russia, expansion of Global Reach to 46 countries and territories, more than 100,000 business users for 8x8 Voice for Microsoft Teams, and a distribution agreement with SYNNEX. Industry analysts also named the company a Leader in the 2021 Gartner Magic Quadrant for Unified Communications as a Service for the tenth consecutive year and a Challenger in the Magic Quadrant for Contact Center as a Service for the seventh consecutive year.
Guidance points to steady growth with modest profitability. For the third quarter of fiscal 2022, management expects total revenue growth of approximately 12% to 13% year over year and service revenue growth of approximately 13% to 14%. It forecasts a positive non-GAAP operating margin for that quarter. For the full fiscal year 2022, the company raised its total revenue and service revenue outlook and expects both to grow approximately 15% to 16% year over year. Management also expects a positive non-GAAP operating margin for the remainder of the year, exiting with a non-GAAP operating margin of approximately 2%.
Risks remain familiar. The cloud communications market is crowded, and the company faces competitive dynamics across voice, contact center, video, messaging, and APIs. Customer churn could run higher than expected. Supply chain disruptions, potential intellectual property disputes, and economic downturns could pressure results. The company also relies on channel partners, value-added resellers, and continued spending on sales, marketing, and research and development, and those investments may not deliver the intended revenue growth. COVID-19 and its variants add further uncertainty to customer demand and operations.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2022 | Q1 FY2022 | QoQ | Q2 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $151.6M | $148.3M | +2.2% | $129.1M | +17.4% |
| Research & development | $28.5M | $25.4M | +12.2% | $21.6M | +32.1% |
| Sales & marketing | $76.7M | $75.9M | +1.1% | $61.4M | +25.0% |
| General & administrative | $24.0M | $26.1M | -7.9% | $22.8M | +5.5% |
| Total operating expenses | $188.7M | $187.2M | +0.8% | $162.2M | +16.3% |
| Operating income (loss) | -$37.2M | -$38.8M | +4.3% | -$33.1M | -12.3% |
| Operating margin | -24.5% | -26.2% | +1.7 pp | -25.6% | +1.1 pp |
| Net income (loss) | -$42.3M | -$43.9M | +3.6% | -$38.4M | -10.2% |
| Net margin | -27.9% | -29.6% | +1.7 pp | -29.8% | +1.8 pp |
| Diluted EPS | -$0.38 | -$0.40 | +$0.02 | — | — |
| Customers | 871 | 824 | +5.7% | — | — |
Risks
The company continues to describe its pursuit of a 'path to profitability', with GAAP operating loss widening to $37.2 million in the quarter and net loss widening to $42.3 million year to date, and planned increases in research and development, sales and marketing, and customer acquisition spending in absolute dollars in future periods.
The company states that the full extent of the COVID-19 pandemic, its variants, and the availability and effectiveness of vaccines on customers, suppliers, and vendors remains uncertain and could negatively impact business activity and financial results.
Stock-based compensation expense was $72.4 million for the six months ended September 30, 2021, a primary driver of higher research and development, sales and marketing, and general and administrative expenses, and the company also offered employees the option to take fiscal 2022 cash salary or bonus in stock, introducing dilution and retention considerations.
The company depends on expanding upmarket into mid-market and enterprise customers, whose ARR represented 70% of total ARR in the quarter, and continues investing in internal and field sales, VARs, and master agent channel programs; sales and marketing expense rose 25.0% in the quarter on higher commissions and marketing spend.
No customer represented greater than 10% of the company's total revenue for the six months ended September 30, 2021 or 2020, limiting single-customer concentration exposure.
SaaS KPIs
All quarters →Non-GAAP gross margin
Total ARR
Non-GAAP Operating Profit
Non-GAAP operating margin
Non-GAAP service revenue gross margin
Summary, forecast, risks and KPIs are extracted from 8X8 INC /DE/'s SEC filings for Q2 FY2022 (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.