Summary
8x8 reported total revenue of $178.9 million for its fiscal 2025 third quarter ended December 31, 2024, down 1.2% from the prior-year quarter. Gross profit was $121.1 million, down 3.0%, and gross margin was 67.7%, down 1.3 percentage points. Management attributed the revenue decline to lower subscription revenue from customers on the Fuze platform, partly offset by higher platform usage revenue. Other revenue also fell. The company swung to GAAP operating income of $9.0 million from an operating loss in the prior-year quarter. Operating margin was 5.0%, up 10.2 percentage points. GAAP net income was $3.0 million, compared with a net loss in the prior-year quarter. Diluted EPS was $0.02.
For the nine months, total revenue was $538.0 million, down 2.1% from the prior-year period. Gross margin was 67.9%, down 1.5 percentage points. Operating income was $14.8 million, compared with an operating loss in the prior-year period. Operating margin was 2.7%, up 5.2 percentage points. Net loss was $21.8 million, or -$0.17 per diluted share. The nine-month results show that profitability improved on a GAAP basis, even as revenue slipped.
The profit swing came from cost reductions and a favorable adjustment to legal and regulatory accruals. Non-GAAP operating profit was $19.1 million, down from $24.3 million a year earlier. Adjusted EBITDA was $23.9 million, down from $30.7 million. Non-GAAP net income was $14.5 million, compared with $14.8 million. The gap between GAAP and non-GAAP results reflects the prior-year quarter's impairment charge and stock-based compensation, among other items. Management also pointed to a 60% year-over-year increase in new products, which it said showed strong adoption of its AI-powered customer experience solutions.
Cash generation remained a bright spot. Operating cash flow was $27.2 million in the quarter, up 21.5% from the prior-year quarter. This was the 16th consecutive quarter of positive cash flow from operations. For the nine months, operating cash flow was $57.7 million, down 13.0% from the prior-year period. Capital expenditures were $0.46 million in the quarter, down 41.8%, and $2.0 million for the nine months, down 12.6%. Deferred revenue was $33.4 million, up 1.9%. Remaining performance obligations were $800.0 million, up 4.6%. The company said its installed base includes more than 51,000 small businesses, a group that continues to face macroeconomic headwinds.
For the fourth quarter of fiscal 2025, 8x8 guided service revenue of $170.0 million to $175.0 million and projected non-GAAP operating margin of about 9% to 10%. For the full fiscal year 2025, the company guided service revenue of $691.3 million to $696.3 million. Full-year non-GAAP operating margin was projected at 10.7% to 11.0%, with non-GAAP net income per diluted share of $0.35 to $0.37. Management said the quarter included unfavorable foreign exchange rates compared with rates when it set its outlook.
Risks remain. The company cited macroeconomic conditions, inflation, interest rates, supply chain disruptions, and currency fluctuations. It also named competitive dynamics in cloud communications, customer churn, and the chance that cost reductions could hurt revenue. The Fuze acquisition and the company's debt load add further uncertainty. Management said it may make additional term loan prepayments, and it already made a $15 million prepayment in January. The company's focus on profitability and cash flow may not succeed if demand weakens or competition intensifies.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2025 | Q2 FY2025 | QoQ | Q3 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $178.9M | $181.0M | -1.2% | $181.0M | -1.2% |
| Gross profit | $121.1M | $123.2M | -1.7% | — | — |
| Gross margin | 67.7% | 68.0% | -0.4 pp | — | — |
| Research & development | $29.8M | $31.3M | -4.7% | $32.8M | -9.0% |
| Sales & marketing | $65.6M | $64.9M | +1.2% | $67.0M | -2.0% |
| General & administrative | $16.6M | $19.8M | -16.2% | $23.4M | -29.0% |
| Total operating expenses | $112.1M | $116.0M | -3.4% | $190.4M | -41.1% |
| Operating income (loss) | $9.0M | $7.2M | +25.2% | -$9.4M | +195.6% |
| Operating margin | 5.0% | 4.0% | +1.1 pp | -5.2% | +10.2 pp |
| Net income (loss) | $3.0M | -$14.5M | +120.8% | -$21.2M | +114.2% |
| Net margin | 1.7% | -8.0% | +9.7 pp | -11.7% | +13.4 pp |
| Diluted EPS | $0.02 | -$0.11 | +$0.13 | -$0.17 | +$0.19 |
Risks
MD&A states adverse economic conditions are expected to continue to adversely impact the business in future periods, and the installed base of more than 51,000 small businesses continues to experience macroeconomic headwinds. Total revenue was down 1.2% in FY2025 Q3 versus the prior-year quarter.
Service revenue decreased 0.9% in FY2025 Q3 and 1.3% year to date, driven by a decline in revenue from customers on the Fuze platform, partially offset by platform usage revenue increases of $2.7 million in the quarter and $7.1 million year to date.
Uncommitted platform usage increased as a percentage of revenue in fiscal year 2024 and is expected to continue increasing, which MD&A notes can add variability because revenue depends on usage volumes rather than committed subscriptions.
MD&A says macroeconomic conditions, the competitive environment, contract duration, churn, upsell and down-sell, renewals, and payment terms have caused variability in results and may continue to do so.
Gross margin was down 1.3 percentage points to 67.7% in FY2025 Q3 from 69.0% in the prior-year quarter, and down 1.5 percentage points to 67.9% year to date, as cost of service revenue increased 3.2% in the quarter.
The 2024 Term Loan had $167.0 million principal remaining after payments as of December 31, 2024 and requires scheduled repayments including $22.5 million in fiscal year 2025, while the 2028 Notes are trading at a substantial discount to principal. Cash provided by operating activities was down 13.0% year to date.
MD&A discloses a $6.0 million benefit in FY2025 Q3 and $9.2 million year to date from adjustments to USF and other Fuze legal, regulatory and state and local tax accruals, indicating ongoing exposure to future regulatory and tax changes.
SaaS KPIs
All quarters →Non-GAAP operating margin
Small business customers
Summary, forecast, risks and KPIs are extracted from 8X8 INC /DE/'s SEC filings for Q3 FY2025 (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.