Summary
8x8 closed fiscal 2021's third quarter with total revenue of $136.7 million, up 15.3% from the prior-year quarter. Gross profit was $76.3 million, up 22.3%. GAAP gross margin was 55.8%, up 3.2 percentage points from the prior-year quarter. The company still posted an operating loss of $35.3 million, but that loss narrowed 18.3% from the prior-year quarter. Net loss was $40.2 million, a 14.5% improvement. Diluted EPS was -$0.38. For the first nine months of fiscal 2021, revenue reached $387.6 million, up 19.4%, while operating loss narrowed 6.6% to $106.1 million and net loss narrowed 1.4% to $120.6 million. Diluted EPS for those nine months was -$1.15. Growth is steady, but the bottom line is improving more slowly than the top line.
The quarter's operating metrics show a mix shift toward larger customers. Total annual recurring revenue grew 20% to $494.3 million. 8x8 closed a record 53 new customer deals with ARR greater than $100K, an increase of 33% from the same period last year. Those deals represented 39% of new bookings and included 34 new logo deals. The company ended the period with 734 customers generating ARR greater than $100K, compared with 592 a year earlier, growth of 24%. Channel bookings grew 64% and represented 64% of new bookings. Contact center new bookings grew 33% and represented 31% of total new bookings. Bundled contact center and communications made up 67% of new bookings that were $12K or more in ARR. Enterprise customers, defined as companies with more than $1 billion in annual revenue, were 22% of total ARR and grew 46% year over year. Mid-market customers were 26% of total ARR and grew 21%, while small business customers were 52% of total ARR and grew 12%. Average annualized service revenue per customer rose to $8,705 from $8,248. Over 90% of customers have been migrated to the 8x8 X Series platform.
Cash generation improved sharply. Operating cash flow was -$1.8 million for the quarter, an improvement of 90.2% from the prior-year quarter. For the first nine months, operating cash flow was -$14.9 million, an improvement of 76.3% from the prior-year period. Capital expenditures were $0.8 million in the quarter, down 94.9% from the prior-year quarter, and $5.0 million for the nine months, down 78.2%. Deferred revenue was $20.8 million, up 140.9% from the prior-year quarter. Remaining performance obligations were $365.0 million, up 49.0%. The company ended the quarter with 262 patents awarded.
Guidance moved higher. For the fourth quarter of fiscal 2021, ending March 31, 2021, management guided total revenue growth of approximately 14% to 16% year over year. Service revenue guidance was $130.8 million to $131.8 million, representing approximately 16% to 17% year-over-year growth. Non-GAAP pre-tax loss guidance was approximately $0.8 million. For the full fiscal year ending March 31, 2021, the company raised its total revenue guidance and now points to approximately 18% year-over-year growth. It also raised service revenue guidance from a range of $489.0 million to $492.0 million to a range of $493.0 million to $494.0 million, representing approximately 19% year-over-year growth. Non-GAAP pre-tax loss guidance was updated from approximately $16.0 million to approximately $13.7 million. The company does not reconcile its forward-looking non-GAAP pre-tax loss estimate to GAAP net loss because it cannot reliably forecast excluded items such as stock-based compensation and impairments.
Risks remain tied to the pandemic and to the company's growth spending. Management said small business and mid-size customers have been more affected by COVID-19 than enterprise customers. 8x8 continues to invest in direct marketing, sales, e-commerce, channel programs, and value added resellers. If those investments do not produce additional revenue, operating results could suffer. Other named risks include customer churn and downsell, competitive pressures, reliance on third-party network providers, cybersecurity and data privacy compliance, and the integration of acquired businesses. The company also carries convertible senior notes, and interest expense plus debt discount amortization keep other expense in a net expense position. 8x8 appointed David Sipes as Chief Executive Officer on December 10, 2020, and Jaswinder Pal Singh as Chairman of the Board.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2021 | Q2 FY2021 | QoQ | Q3 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $136.7M | $129.1M | +5.8% | $118.6M | +15.3% |
| Research & development | $23.7M | $21.6M | +9.9% | $19.9M | +19.3% |
| Sales & marketing | $64.0M | $61.4M | +4.2% | $63.1M | +1.4% |
| General & administrative | $23.8M | $22.8M | +4.7% | $22.5M | +5.8% |
| Total operating expenses | $171.9M | $162.2M | +6.0% | $161.7M | +6.3% |
| Operating income (loss) | -$35.3M | -$33.1M | -6.5% | -$43.2M | +18.3% |
| Operating margin | -25.8% | -25.6% | -0.2 pp | -36.4% | +10.6 pp |
| Net income (loss) | -$40.2M | -$38.4M | -4.7% | -$47.1M | +14.5% |
| Net margin | -29.4% | -29.8% | +0.3 pp | -39.7% | +10.3 pp |
Risks
MD&A states small business and mid-size customers have been more impacted by COVID-19 than enterprise customers, and the pandemic has altered sales activities and market conditions. Resurgences and limited vaccine availability could negatively impact business activity and customer creditworthiness.
The company plans continued investments in customer acquisition, global expansion, direct marketing, sales force, e-commerce, and indirect channel programs. MD&A warns that if these investments do not result in additional revenue from new or existing customers, including due to COVID-19, or if cost reduction and efficiency efforts do not produce meaningful savings, operating results may be adversely impacted.
G&A expenses for the three and nine months ended December 31, 2020 included a higher allowance for credit losses, partially in response to external market factors and uncertainties in connection with the COVID-19 pandemic, indicating elevated customer credit risk.
SaaS KPIs
All quarters →Non-GAAP gross margin
Total ARR
Enterprise ARR
Non-GAAP Service Margin
Average annualized service revenue per customer
Summary, forecast, risks and KPIs are extracted from 8X8 INC /DE/'s SEC filings for Q3 FY2021 (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.