Summary
8x8 closed fiscal 2023 with a smaller loss and a return to GAAP operating profit in the fourth quarter. Total revenue for the quarter ended March 31, 2023 rose 1.7% to $184.5 million from $181.4 million in the prior-year quarter. Operating income was $3.5 million, compared with an operating loss of $40.5 million in the fourth quarter of fiscal 2022, a swing to profit. Operating margin was 1.9%, up 24.3 percentage points from the prior-year quarter. Net loss narrowed to $9.4 million from $45.6 million. Non-GAAP operating profit was $24.8 million, or 13.5% of revenue, compared with non-GAAP operating profit of $4.2 million, or 2.3% of revenue, in the prior-year quarter. Non-GAAP net income was $12.7 million, or 6.9% of revenue, compared with $5.6 million, or 3.1% of revenue. Non-GAAP gross margin on total revenue was 72.5%, compared with 66.7% in the prior-year quarter. Operating cash flow for the quarter was $13.6 million, down 17.6% from $16.5 million a year earlier. Capital expenditures were $0.3 million, down 75.0% from $1.2 million. Deferred revenue, current, was $34.9 million, up 1.9% from $34.3 million.
Fiscal 2023 delivered similar progress. Full-year revenue rose 16.6% to $743.9 million from $638.1 million. Gross profit increased 28.6% to $502.5 million from $390.6 million. The full-year operating loss narrowed to $66.3 million from $154.1 million. Net loss narrowed to $73.1 million from $175.4 million. Diluted EPS loss narrowed to $0.63 from $1.55. Operating cash flow for the fiscal year was $48.8 million, up 40.7% from $34.7 million. Capital expenditures were $3.0 million, down 27.7% from $4.1 million. Non-GAAP operating profit was $62.4 million, or 8.4% of revenue, compared with $10.6 million, or 1.7% of revenue, in fiscal 2022. Non-GAAP net income was $38.5 million, or 5.2% of revenue, compared with $9.4 million, or 1.5% of revenue. Total ARR reached $703 million, up 2% from the end of fiscal 2022. Enterprise ARR was $405 million, up 3%, and represented 58% of total ARR. Enterprise customers totaled 1,301 at the end of fiscal 2023.
Management used the quarter to push further into AI-enabled contact center and unified communications features. 8x8 introduced new AI-based contact center features and tailored user experiences. It launched 8x8 Intelligent Customer Assistant, integrated OpenAI Whisper across the XCaaS platform, and announced 8x8 Supervisor Workspace and an enhanced Agent Workspace Dashboard. Deeper integrations with Microsoft Dynamics 365 Customer Service and Salesforce Sales Engagement were delivered, along with Mobile Admin and Audit History. The company also reported that 8x8 Voice for Microsoft Teams licenses increased by more than 100% from the end of March 2022. Industry recognition included a Strong Performer position in the 2023 Gartner Peer Insights Voice of the Customer for Contact Center as a Service report and a Best Performing Vendor 2022 award from DANA Indonesia. The Fuze integration was completed during the year. To align resources with its focus on mid-market and enterprise customers, 8x8 conducted two workforce reductions involving approximately 300 employees, mainly in sales and marketing and general and administrative functions.
Guidance points to slower top-line growth in fiscal 2024. For the first quarter, ending June 30, 2023, management guided service revenue to a range of $178.5 million to $180.5 million and a non-GAAP operating margin of 12.5% to 13%. For the full fiscal year 2024, ending March 31, 2024, the company guided service revenue to $725 million to $732 million and a non-GAAP operating margin of 12% to 13%, compared with the prior implied range of 11.5% to 12.5%. All projections are on a non-GAAP basis, and the company does not reconcile forward-looking non-GAAP operating margin to the corresponding GAAP measure because the excluded items are difficult to forecast. Risks include customer churn, economic downturns, inflation and rising interest rates, competitive dynamics in cloud communications, supply chain disruptions, third-party IP claims, and lower customer adoption or demand. Management also flagged that its increased emphasis on profitability and cash flow may not be successful and that reducing total costs as a percentage of revenue may hurt revenue. The company continues to face debt-related risks tied to its 2024 convertible notes and term loan, and it plans to use excess cash to reduce debt and fund innovation.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2023 | Q3 FY2023 | QoQ | Q4 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $184.5M | $184.4M | +0.1% | $181.4M | +1.7% |
| Research & development | $36.5M | $38.8M | -6.0% | $30.6M | +19.2% |
| Sales & marketing | $68.8M | $79.0M | -12.9% | $84.8M | -18.8% |
| General & administrative | $20.4M | $27.2M | -24.7% | $38.0M | -46.3% |
| Total operating expenses | $181.0M | $202.5M | -10.6% | $221.9M | -18.4% |
| Operating income (loss) | $3.5M | -$18.1M | +119.5% | -$40.5M | +108.7% |
| Operating margin | 1.9% | -9.8% | +11.7 pp | -22.4% | +24.3 pp |
| Net income (loss) | -$9.4M | -$26.0M | +63.8% | -$45.6M | +79.3% |
| Net margin | -5.1% | -14.1% | +9.0 pp | -25.1% | +20.0 pp |
| Diluted EPS | -$0.08 | -$0.23 | +$0.15 | -$0.40 | +$0.32 |
Risks
During the second quarter of fiscal 2023, 8x8 detected an unauthorized third party and malware in its network; in the third quarter of fiscal 2023 it learned the attacker possessed approximately a terabyte of confidential information from back-office servers and made a ransom demand, which the company did not pay. This creates risk of litigation, regulatory fines, remediation costs, and customer harm.
The company has substantial indebtedness from its senior secured term loan and convertible notes, including the 2024 Notes, 2028 Notes, and Term Loan. Covenants include minimum adjusted EBITDA, minimum liquidity, and maximum secured leverage ratio. The notes are described as significantly out of the money, and refinancing or settling conversions may require cash the company may not have.
8x8 recorded an operating loss of $66.3 million for the year ended March 31, 2023, and expects to continue incurring losses in the near future while investing in sales and marketing and research and development. It will need to increase revenue growth to generate and sustain operating profitability.
The cloud communications market is intensely competitive, with competitors including RingCentral, Zoom, Five9, Twilio, Microsoft, Google, and Amazon. Microsoft is specifically noted as investing significantly in Microsoft Teams, and competitors may bundle services or adopt aggressive pricing, which could pressure 8x8's revenue and market share.
The risk factors warn of difficulty attracting and retaining senior management and other personnel in the cloud communications industry, specifically citing the need to hire a permanent CEO and CFO. Competitors may offer higher compensation or more attractive equity, and losing employees to competitors risks trade secret exposure and operational disruption.
The risk factors cite the 2023 failures of Silicon Valley Bank, Signature Bank, and First Republic Bank and note that 8x8 maintains cash balances at financial institutions which may be in excess of FDIC insurance limits. Any depository failure or credit market instability could impair access to invested cash or cash equivalents and affect operations and liquidity.
Management says total revenue was up 16.6% year to date to $743.9 million in fiscal 2023, but excluding the Fuze customer base total revenue increased only about 3%. Total ARR increased 2% from the end of fiscal 2022, and mid-market and enterprise ARR increased 3%.
MD&A highlights 8x8's integration of generative AI from OpenAI across its XCaaS platform, but the risk factors note rapid technological change and the need for new product introductions. Failure to keep pace with AI-enabled communications and collaboration offerings could reduce market acceptance and harm revenue.
As 8x8 focuses on mid-market and enterprise customers, its sales process has become more complex and resource-intensive, average sales cycle has become longer, and difficulty predicting when sales will be completed has increased. Delays or failures to close large enterprise opportunities in a quarter could significantly harm projected growth rates.
8x8 is emphasizing profitability and cash flow, intends to reduce total costs as a percentage of revenue primarily through sales and marketing expenses, and conducted two workforce reductions involving approximately 300 employees. The risk factors state these cost reduction initiatives may not achieve anticipated savings and may have unintended consequences, including a reduction in revenue.
8x8 has a significant engineering and operations presence in Romania, which borders Ukraine. The risk factors state that any expansion of the Russia and Ukraine conflict to surrounding countries, including Romania, would negatively impact the company and its employees there.
Taxing authorities have asserted or could assert that 8x8 should have collected sales and use, value added, or similar taxes; the company files more than 1,500 state and local tax returns monthly and several jurisdictions are conducting audits. Adverse outcomes could result in tax payments, interest, and penalties in excess of accrued amounts.
MD&A attributes a substantial portion of fiscal 2023 growth to Fuze, but the risk factors note the company may not realize all anticipated benefits of the Fuze acquisition. Integration risks include retaining key employees, consolidating functions, and undisclosed liabilities.
SaaS KPIs
All quarters →Total ARR
Non-GAAP Operating Profit
Enterprise ARR
Summary, forecast, risks and KPIs are extracted from 8X8 INC /DE/'s SEC filings for Q4 FY2023 (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.