Summary
8x8 reported total revenue of $184.1 million for the quarter ended September 30, 2025, up 1.7% from $181.0 million a year earlier. That was the second straight quarter of year-over-year growth and the best top line in two years, according to the CEO letter. Service revenue reached $179.1 million, up 2.3%, while other revenue fell 15.6% to $5.0 million. The quarterly filing attributes the mix to an $11.9 million increase in platform usage revenue, mostly in Asia-Pacific, partly offset by a $7.9 million decline in subscription revenue tied mainly to former Fuze customers. Excluding Fuze, service revenue grew nearly 6% year over year, the fourth consecutive quarter of accelerating growth. Usage-based offerings now represent roughly 19% of service revenue, up from 13% a year ago. Current deferred revenue rose 15.6% to $43.6 million.
Profitability was mixed. Gross profit fell 3.1% to $119.3 million, and gross margin dropped to 64.8% from 68.1%, as cost of service revenue climbed 14.8% to $57.7 million. GAAP operating income was $5.3 million, down 25.4% from a year earlier, and operating margin slipped to 2.9% from 4.0%. The bottom line improved sharply. Net income was $0.8 million, a turnaround from a prior-year loss, and diluted earnings per share was $0.01 versus a loss a year earlier. Non-GAAP operating profit was $17.3 million, a 9.4% margin, and non-GAAP net income was $13.1 million. Adjusted EBITDA was $22.0 million, below the prior-year figure.
Cash generation slowed. Operating cash flow was $8.8 million, down 28.3% from a year earlier, though the company marked a 19th consecutive quarter of positive cash flow from operations. Year to date, operating cash flow was $20.7 million, down 32.0%; the 10-Q ties the decline to working capital changes and the timing of billings, collections and vendor payments. Capital expenditures edged down 5.4% to $1.1 million. The quarter ended with $76.7 million in cash, cash equivalents and restricted cash. 8x8 repaid $10 million of term loan principal during the quarter and another $5 million in October, bringing total debt reduction to $224 million, or 41%, since August 2022. Stockholders' equity rose to $133.2 million, up 21.3% from the end of the second quarter of fiscal 2025.
The product push centered on AI and packaging. 8x8 made Workforce Management a standard feature in every Contact Center seat at no extra cost, added native Mitel desk phone support, and rolled out real-time summarization and transcription. Usage of the AI-based Intelligent Directory grew more than 180% quarter over quarter. AI-driven voice interactions increased nearly sixfold and now account for more than 80% of all AI-based interactions on the platform. Customers buying three or more products grew double digits year over year and represent more than one-third of total annual revenue excluding usage. The Fuze migration is nearly complete: about 3% of service revenue remains on the legacy platform, all remaining customers are expected to move by year end, and legacy back-office systems should be shut down by March 31, 2026. Stephen Hamill took over as Chief Revenue Officer to run the go-to-market overhaul.
Guidance points lower for the near term. For the third quarter of fiscal 2026, management guided to a sequential decline in revenue, citing record platform usage in the second quarter and remaining Fuze headwinds, along with non-GAAP operating margin of 9% to 10%, non-GAAP diluted net income per share of $0.08 to $0.09, and cash flow from operations of $10 million to $14 million. The company also said faster growth in lower-margin platform solutions will hold gross margins below prior levels. For the full fiscal year 2026, the outlook calls for non-GAAP operating margin of 8.5% to 9.5%, non-GAAP diluted net income per share of $0.31 to $0.33, and cash flow from operations of $38 million to $42 million.
Risks remain familiar. Remaining performance obligations fell 11.2% to $710 million. Management flags churn that could run higher than expected, competition across UCaaS, CCaaS and CPaaS, and macro pressure such as inflation and tariffs on an installed base that includes more than 50,000 small businesses. The Fuze sunset is expected to eliminate complexity and unlock margin leverage once complete. The company also increased a non-cancellable three-year hosting service commitment to $54.0 million from $24.1 million, a fixed cost worth watching.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2026 | Q1 FY2026 | QoQ | Q2 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $184.1M | $181.4M | +1.5% | $181.0M | +1.7% |
| Gross profit | $119.3M | $120.4M | -0.9% | $123.2M | -3.1% |
| Gross margin | 64.8% | 66.4% | -1.6 pp | 68.0% | -3.2 pp |
| Research & development | $27.9M | $28.4M | -1.6% | $31.3M | -10.8% |
| Sales & marketing | $63.8M | $68.2M | -6.4% | $64.9M | -1.6% |
| General & administrative | $22.2M | $23.3M | -4.7% | $19.8M | +12.0% |
| Total operating expenses | $114.0M | $119.9M | -4.9% | $116.0M | -1.7% |
| Operating income (loss) | $5.3M | $565.0K | +846.7% | $7.2M | -25.4% |
| Operating margin | 2.9% | 0.3% | +2.6 pp | 4.0% | -1.0 pp |
| Net income (loss) | $767.0K | -$4.3M | +117.8% | -$14.5M | +105.3% |
| Net margin | 0.4% | -2.4% | +2.8 pp | -8.0% | +8.4 pp |
| Diluted EPS | $0.01 | -$0.03 | +$0.04 | -$0.11 | +$0.12 |
Risks
The MD&A states that adverse economic conditions could adversely impact future periods, and notes the installed base includes more than 50,000 small businesses that tend to be disproportionately impacted by macroeconomic headwinds such as tariffs, inflation, and higher interest rates.
Service revenue growth for the quarter ended September 30, 2025 was driven by an $11.9 million increase in platform usage revenue generated primarily in the Asia-Pacific region, while subscription revenue decreased $7.9 million predominantly from former Fuze customers. Remaining performance obligations also decreased 11.2% to $710.0 million from $800.0 million in the prior-year quarter.
Gross margin declined to 64.8% in the quarter ended September 30, 2025 from 68.1% in the prior-year quarter, down 3.2 percentage points, while gross profit decreased 3.1% to $119.3 million. Cost of service revenue increased 14.8% for the same quarter, primarily due to $10.1 million higher costs to deliver subscription and platform usage services.
MD&A says customer buying behavior and demand are subject to variability from macroeconomic conditions, competition, contract duration, churn, upsell and down-sell, renewals, and payment terms, and that these factors have caused variability in results and may continue to do so.
Cash and cash equivalents were $75.9 million at September 30, 2025, down from $88.1 million at March 31, 2025, and net cash provided by operating activities decreased 32.0% to $20.7 million for the six months ended September 30, 2025. The company also has significant debt repayments under the 2024 Term Loan, with $127.0 million principal remaining as of September 30, 2025.
General and administrative expenses increased 12.0% for the quarter ended September 30, 2025, primarily due to a $3.6 million increase in legal and regulatory costs. This rise in compliance and legal costs could continue to pressure operating margins.
MD&A states continued innovation is critical to attracting and retaining customers and that the company is focused on AI-based capabilities for its platform and contact center. It also cites the competitive environment as a factor that can affect customer buying behavior and demand.
SaaS KPIs
All quarters →Non-GAAP gross margin
Non-GAAP operating margin
Adjusted EBITDA
Cash Flow from Operations
Summary, forecast, risks and KPIs are extracted from 8X8 INC /DE/'s SEC filings for Q2 FY2026 (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.