Summary
8x8 reported a mixed fiscal second quarter of 2024. Total revenue was $185.0 million, down 1.3% from the prior-year quarter. The GAAP operating loss narrowed 89.7% to $2.6 million, and the GAAP net loss narrowed 36.0% to $7.5 million. Diluted EPS was -$0.06, an improvement of $0.04. Operating margin was -1.4%, up 11.9 percentage points from the prior-year quarter. Gross profit was $127.9 million, and gross margin was 69.1%. On a non-GAAP basis, operating profit was $23.8 million, up 162% from $9.1 million. Non-GAAP net income was $17.1 million, up 181.8% from $6.1 million. Adjusted EBITDA was $30.5 million, or 16% of revenue, up 75% from $17.4 million, or 9% of revenue.
Cash generation improved. Operating cash flow was $17.5 million for the quarter, up 26.2% from the prior-year quarter. Capital expenditures were $1.4 million, up 57.0%. For the first half of fiscal 2024, operating cash flow was $43.9 million, up 123.2% from the first half of fiscal 2023. First-half revenue was $368.3 million, down 1.8%. Current deferred revenue was $33.2 million at September 30, 2023, up 7.7% from a year earlier. Remaining performance obligations were $780.0 million. Total ARR was $707 million, up 2% from the end of the same period last year. Enterprise ARR was $407 million and made up 58% of total ARR.
Operational highlights centered on AI and platform expansion. 8x8 added voice interactions to its Intelligent Customer Assistant and reported more than 50% quarter-over-quarter growth in self-service conversations through that tool. The company also introduced native secure video interaction for contact center agents, launched the Omni Shield CPaaS solution for SMS fraud protection, and released a new 8x8 Phone App for Microsoft Teams. It surpassed 400,000 users of 8x8 Voice for Teams. Industry recognition included a top five ranking in the Metrigy 2023 Contact Center-as-a-Service MetriRank Report, a Strong Performer position in The Forrester Wave Unified Communications As A Service, 2023 report, and G2 Fall 2023 awards across 24 categories.
The outlook covers both the next quarter and the full fiscal year. For the third quarter of fiscal 2024 ending December 31, 2023, management guided to a non-GAAP operating margin of 11% to 12%. For the full fiscal year 2024 ending March 31, 2024, guidance calls for a non-GAAP operating margin of 12% to 13%. The company also gave expected ranges for service revenue and total revenue but did not reconcile forward-looking non-GAAP operating margins to GAAP because of variability in excluded items such as stock-based compensation and hiring.
The quarter still carried risks. MD&A attributed the revenue decline to increased customer churn and down-sell, partly offset by new subscription revenue and SMS usage. Management said macroeconomic conditions, contract duration, churn, upsell and down-sell, renewals, and payment terms could all cause variability in revenue. Higher interest expense on the variable-rate term loan weighed on results. The company also disclosed that its board approved cessation of use of about 42% of its headquarters building and expects total non-cash lease impairment charges of $9.0 million to $10.0 million in the quarter ending December 31, 2023. 8x8 conducted two workforce reductions in fiscal 2023 involving approximately 300 employees, primarily in sales and marketing and general and administration functions. Execution on profitability and cash flow remains a key risk, especially with continued investment in AI and contact center innovation.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2024 | Q1 FY2024 | QoQ | Q2 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $185.0M | $183.3M | +0.9% | $187.4M | -1.3% |
| Research & development | $34.2M | $35.3M | -3.1% | $36.0M | -5.0% |
| Sales & marketing | $68.7M | $68.5M | +0.3% | $80.5M | -14.7% |
| General & administrative | $27.6M | $26.2M | +5.2% | $33.8M | -18.5% |
| Total operating expenses | $187.6M | $184.7M | +1.6% | $212.4M | -11.7% |
| Operating income (loss) | -$2.6M | -$1.4M | -83.2% | -$25.0M | +89.7% |
| Operating margin | -1.4% | -0.8% | -0.6 pp | -13.3% | +11.9 pp |
| Net income (loss) | -$7.5M | -$15.3M | +51.4% | -$11.6M | +36.0% |
| Net margin | -4.0% | -8.4% | +4.3 pp | -6.2% | +2.2 pp |
| Diluted EPS | -$0.06 | -$0.13 | +$0.07 | -$0.10 | +$0.04 |
Risks
Total revenue decreased $2.4 million, or approximately 1% year-over-year, to $185.0 million in Q2 FY2024. Service revenue decreased 0.4% for the three months and 1.3% for the six months ended September 30, 2023, primarily due to increased customer churn and down-sell, while other revenue decreased 18.3% for the three months and 11.7% for the six months.
The company has a variable-rate senior secured term loan, and interest expense increased $4.0 million for the three months and $12.4 million for the six months ended September 30, 2023. Management states that due to the adjustable nature of the interest rate on the term loan, net income may vary.
Cash and cash equivalents and investments were $148.8 million as of September 30, 2023, and significant cash requirements for the remainder of fiscal 2024 include retirement of the 2024 Notes, interest payments, and operating lease obligations. Approximately $63.3 million of the 2024 Notes remained outstanding as of September 30, 2023, and the company prepaid $25.0 million of its term loan in May 2023, reducing the principal outstanding to $225.0 million.
Management monitors macroeconomic conditions, contract duration, churn, upsell and down-sell, renewals, and payment terms, all of which could cause variability in revenue. Total ARR as of September 30, 2023 was $707 million and increased 2% from the end of the second quarter of fiscal 2023, but ARR from mid-market and enterprise customers represented 76% of total ARR and remained flat.
Legal and regulatory costs increased $3.3 million for the three months and $5.2 million for the six months ended September 30, 2023, primarily related to indirect tax contingencies. These higher costs partially offset decreases in general and administrative expenses.
ARR from mid-market and enterprise customers represented 76% of total ARR and remained flat compared to the end of the second quarter of fiscal 2023, while enterprise customers were 58% of total ARR and small business customers were 24%. The company has reduced promotional programs and digital marketing to attract new small business UCaaS-only customers, increasing reliance on larger customer segments.
The company conducted two workforce reductions in fiscal 2023 involving approximately 300 employees, primarily in sales and marketing and general and administration, while focusing sales resources on mid-market and enterprise customers. Sales and marketing expenses decreased 14.7% for the three months and 16.4% for the six months ended September 30, 2023, which may affect execution of growth initiatives.
SaaS KPIs
All quarters →Total ARR
Non-GAAP Operating Profit
Enterprise ARR
Mid-market and enterprise ARR as % of total ARR
Summary, forecast, risks and KPIs are extracted from 8X8 INC /DE/'s SEC filings for Q2 FY2024 (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.