Summary
8x8's third quarter of fiscal 2022 produced total revenue of $156.9 million, up 14.8% from the prior-year quarter. Service revenue climbed 18% to $149.4 million and supplied 95.2% of total revenue, against 93.0% a year earlier. Other revenue moved the other way, slipping to $7.5 million from $9.6 million, as customers shifted toward the hardware rental program and soft phones while global supply chain shortages pinched product sales. Revenue for the first nine months of fiscal 2022 was $456.8 million, up 17.8%, with management pointing to a larger customer base, more offerings sold to existing accounts, higher usage, and demand for XCaaS and standalone UCaaS and CCaaS from mid-market and enterprise buyers.
The gross line improved. Gross profit was $97.0 million, up 27.2%, and gross margin was 61.9% versus 55.8%. The company paid for that progress further down the income statement. The operating loss widened to $37.6 million, though operating margin still came in at -24.0% compared with -25.8%, helped by a lighter cost structure than the prior-year quarter carried. Net loss was $43.6 million, or $0.38 per diluted share, flat with the prior-year quarter on a per-share basis. Strip out stock-based compensation, acquisition and integration costs and other adjustments, and the quarter shows non-GAAP operating profit of $3.1 million and non-GAAP net profit of $0.02 per diluted share.
Cash was the bright spot. Operating cash flow was $9.0 million in the quarter and $18.2 million for the first nine months, up from a use of cash in both comparable prior-year periods, and the release notes a fourth consecutive quarter of positive cash from operations. Nine-month results lean heavily on non-cash items, including stock-based compensation expense of $106.2 million and amortization of the debt discount of $13.8 million, set against a net loss and sales commission outflows. Capital expenditures were $0.6 million in the quarter, down 30.7%, and $2.9 million for the nine months, down 41.4%. Cash, restricted cash, and investments reached $260.5 million at December 31, 2021, from $161.5 million at March 31, 2021, aided by a $137.5 million convertible note placement and trimmed by a repurchase of roughly $45 million of common stock.
ARR and customer mix support the upmarket push. Total ARR was $572 million, up 16% from the same period last year. Customers billing more than $100,000 of ARR totaled 907, up 24% from 734. Enterprise ARR grew 30% and accounted for 54% of total ARR versus 48%, while mid-market ARR grew 9% and small business ARR declined 1%. Deferred revenue, current portion only, was $23.6 million, up 30.7%.
Fuze closed on January 18, 2022 for about $211.9 million in cash and stock, bringing a larger enterprise base and cross-sell opportunities in contact center and CPaaS. Fourth quarter fiscal 2022 guidance calls for service revenue growth of 30% at the midpoint, total revenue growth of 25% at the midpoint, and a positive non-GAAP operating margin, all including an estimated $20 million of Fuze revenue. For the full fiscal year, management lifted the service revenue range to between $603 million and $605 million and the total revenue range to between $636.8 million and $638.8 million. Those ranges imply service revenue growth of 22% and total revenue growth of 20% at the midpoint, again including roughly $20 million from Fuze, with a positive non-GAAP operating margin.
The cost base still expands faster than revenue. Sales and marketing rose 20.0% in the quarter, research and development 17.8%, and general and administrative 25.6%, the last lifted by $5.5 million of Fuze-related acquisition and integration costs. Cost of service revenue rose 3.7% but fell as a percentage of service revenue, to 32.6% from 37.0%. Other expense, net, was $5.9 million and is expected to stay in an expense position until the convertible notes mature in fiscal 2024. Management flags customer churn, competition across voice, contact center, video and messaging, supply chain disruption, third-party claims on core technology, and the risk that Fuze integration spending fails to deliver forecast revenue. COVID-19 and its variants remain an open variable for customer demand.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2022 | Q2 FY2022 | QoQ | Q3 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $156.9M | $151.6M | +3.5% | $136.7M | +14.8% |
| Research & development | $27.9M | $28.5M | -2.1% | $23.7M | +17.8% |
| Sales & marketing | $76.8M | $76.7M | +0.1% | $64.0M | +20.0% |
| General & administrative | $29.9M | $24.0M | +24.7% | $23.8M | +25.6% |
| Total operating expenses | $194.5M | $188.7M | +3.1% | $171.9M | +13.1% |
| Operating income (loss) | -$37.6M | -$37.2M | -1.2% | -$35.3M | -6.7% |
| Operating margin | -24.0% | -24.5% | +0.5 pp | -25.8% | +1.8 pp |
| Net income (loss) | -$43.6M | -$42.3M | -2.9% | -$40.2M | -8.3% |
| Net margin | -27.8% | -27.9% | +0.2 pp | -29.4% | +1.7 pp |
| Diluted EPS | -$0.38 | -$0.38 | ±$0.00 | — | — |
| Customers | 734 | 871 | -15.7% | — | — |
Risks
The Fuze acquisition closed on January 18, 2022 for approximately $211.9 million, and success depends on integrating operations, retaining key employees, managing customer and partner reactions, consolidating corporate functions, and avoiding management distraction. MD&A notes research and development expenses may initially increase as a percentage of revenue as the Fuze research and development organization is integrated.
The Fuze acquisition success depends in part on retaining and attracting key employees. Failure to do so could impair integration, growth opportunities, and synergy realization from combining the two businesses.
Former Fuze security holders received common stock in the acquisition, and once the registration statement is effective most shares will be available for resale, subject to holdback and management carveout exceptions. Sales by these holders could depress the market price of 8x8 common stock and dilute earnings per share.
After the Fuze acquisition, the surviving corporation possesses all Fuze liabilities, and undisclosed, contingent, or other liabilities or problems may arise. These could have an adverse effect on 8x8's business, financial condition, and prospects.
Other revenue decreased 21.9% for the three months ended December 31, 2021 compared to the prior-year period, primarily due to lower product revenue from a shift toward hardware rentals, soft phone usage, and global supply chain shortages.
SaaS KPIs
All quarters →Non-GAAP gross margin
Total ARR
Non-GAAP Operating Profit
Non-GAAP operating margin
Enterprise ARR as % of Total ARR
Non-GAAP service revenue gross margin
Mid-market ARR as % of total ARR
Mid-market and enterprise ARR as % of total ARR
Small business ARR as % of total ARR
Summary, forecast, risks and KPIs are extracted from 8X8 INC /DE/'s SEC filings for Q3 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.