Summary
8x8 reported total revenue of $181.0 million for its fiscal 2024 third quarter, down 1.8% from the prior-year quarter. Year-to-date revenue was $549.3 million, down 1.8% from the prior-year period. Gross margin was 69.0% for the quarter and 69.4% year to date. The company continued to improve profitability. GAAP operating loss narrowed 48.1% to $9.4 million in the quarter. Year-to-date GAAP operating loss narrowed 80.8% to $13.4 million. GAAP net loss narrowed 18.5% to $21.2 million in the quarter. Year-to-date GAAP net loss narrowed 30.9% to $44.0 million. Diluted EPS improved 26.1% to -$0.17 in the quarter. Year-to-date diluted EPS improved 32.7% to -$0.37. Operating margin was -5.2% in the quarter, up 4.6 percentage points. Year-to-date operating margin was -2.4%, up 10.0 percentage points.
Cash generation remained a bright spot. Operating cash flow was $22.4 million for the quarter, up 44.7% from the prior-year quarter. Year-to-date operating cash flow was $66.3 million, up 88.6%. Capital expenditures were $0.8 million for the quarter, down 6.8%. Year-to-date capital expenditures were $2.3 million, down 12.8%. Deferred revenue, current portion, was $32.8 million, down 4.2% from the prior-year quarter. Remaining performance obligations were $765.0 million, up 2.0% from the prior-year quarter. On a non-GAAP basis, operating profit was $24.3 million, up 32%. Non-GAAP net income was $14.8 million, up 78.5%. Adjusted EBITDA was $30.7 million, up 19%.
Operational metrics showed mixed trends. Total ARR was $707 million at quarter-end, up 1% from the end of the same period last year. Enterprise ARR was $409 million, up 2%. Mid-market ARR was $129 million, down 1%. Small business ARR was $168 million, flat. The company launched several products, including a new product line for cross-organization customer engagement, native video for 8x8 Contact Center, 8x8 Remote Fix for UK housing associations, and 8x8 Sales Assist for retailers. It also delivered AI-powered voice conversational self-service and deeper Microsoft Teams integrations. Industry recognition included a Leader position in the 2023 Gartner Magic Quadrant for Unified Communications as a Service for the twelfth consecutive year. The company won 2023 CRN Product of the Year Awards, TrustRadius 2023 Best Of Awards, and 38 badges in the G2 Winter 2024 Awards. It appointed Michelle Paitich as Global Vice President of Channel Sales, Mike McCarron as Vice President of Customer Strategy, and Brian Paterson as Global Vice President of North America Sales.
Guidance points to continued revenue pressure but stable margins. For the fourth quarter of fiscal 2024 ending March 31, 2024, management expects total revenue of $176 million to $181 million and non-GAAP operating margin of approximately 10%. For the full fiscal year 2024 ending March 31, 2024, management expects total revenue of $725.3 million to $730.3 million and non-GAAP operating margin of 12.5% to 13%. The company will retire the remaining 2024 Notes upon maturity on February 1, 2024. Risks include macroeconomic conditions, contract duration, churn, upsell and down-sell, renewals, payment terms, competitive dynamics, customer adoption, economic downturns, inflation, interest rates, supply chain disruptions, third-party IP claims, and the Fuze acquisition. The company also notes that its increased emphasis on profitability and cash flow generation may not be successful, and that reducing total costs as a percentage of revenue may negatively impact revenue. Impairment charges related to partially ceasing use of its headquarters and an international office space also weighed on results.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2024 | Q2 FY2024 | QoQ | Q3 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $181.0M | $185.0M | -2.2% | $184.4M | -1.8% |
| Research & development | $32.8M | $34.2M | -4.2% | $38.8M | -15.5% |
| Sales & marketing | $67.0M | $68.7M | -2.5% | $79.0M | -15.2% |
| General & administrative | $23.4M | $27.6M | -15.1% | $27.2M | -13.8% |
| Total operating expenses | $190.4M | $187.6M | +1.5% | $202.5M | -6.0% |
| Operating income (loss) | -$9.4M | -$2.6M | -263.6% | -$18.1M | +48.1% |
| Operating margin | -5.2% | -1.4% | -3.8 pp | -9.8% | +4.6 pp |
| Net income (loss) | -$21.2M | -$7.5M | -184.8% | -$26.0M | +18.5% |
| Net margin | -11.7% | -4.0% | -7.7 pp | -14.1% | +2.4 pp |
| Diluted EPS | -$0.17 | -$0.06 | -$0.11 | -$0.23 | +$0.06 |
Risks
Third quarter fiscal 2024 total revenue decreased $3.4 million, or approximately 2% year over year, to $181.0 million, with service revenue down 0.4% on a $3.1 million subscription revenue decline attributed to increased customer churn and down-sell. Total ARR increased only 1% to $707.0 million and Mid-Market ARR decreased 1% to $129.0 million for the three months ended December 31, 2023.
Management states it continues to monitor factors that could impact customer buying behavior and demand, including macroeconomic conditions, contract duration, churn, upsell and down-sell, renewals, and payment terms, all of which could cause variability in revenue. Small Business ARR remained flat at $168.0 million for the three months ended December 31, 2023 as promotional programs and digital marketing to attract new small business UCaaS-only customers were reduced.
Interest expense on the variable-rate senior secured term loan increased $13.7 million for the nine months ended December 31, 2023 versus the prior-year period, and other expense, net was $29.0 million compared to $7.2 million of other income, net a year earlier. The company notes that due to the adjustable nature of the term loan interest rate, net income may vary.
General and administrative expense decreased $10.6 million, or 12.0%, for the nine months ended December 31, 2023 but was partially offset by a $5.0 million increase in legal and regulatory costs primarily related to indirect tax contingencies. The provision for income taxes increased $0.5 million for both the three and nine months ended December 31, 2023.
Impairment of long-lived assets increased $7.3 million for the three months ended December 31, 2023 to $11.0 million after the company partially ceased use of its Headquarters and an international office space, recording $9.9 million and $1.1 million of right-of-use asset impairment charges respectively. The charges reflect carrying values exceeding estimated future discounted cash flows for the leased facilities.
Approximately $63.3 million of the 2024 Notes remained outstanding as of December 31, 2023 and the company paid the remaining principal plus $0.2 million of accrued interest on February 1, 2024. Remaining fiscal year cash requirements include operating lease obligations, debt interest, retirement of the 2024 Notes, and operating and capital purchase commitments.
SaaS KPIs
All quarters →Total ARR
Enterprise ARR
Non-GAAP operating profit (as a percentage of total revenue)
Summary, forecast, risks and KPIs are extracted from 8X8 INC /DE/'s SEC filings for Q3 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 1, 2026.