8×8 Inc Reports Strong Q3 Fiscal 2025 Performance with Record Cash Flow and Reduced Debt

8×8 Inc (NASDAQ: EGHT) has delivered a solid performance for Q3 fiscal 2025, surpassing service revenue expectations, generating record cash flow, and reducing its debt significantly. Despite facing challenges, including foreign exchange (FX) headwinds, the company has shown growth across multiple fronts, positioning itself for a promising future.

Key Financial Highlights – Q3 Fiscal 2025

• Total Revenue: $178.9 million for Q3, demonstrating strong growth.
• Service Revenue: $173.5 million, exceeding the midpoint of the company’s guidance by $1 million.
• Operating Margin: 10.7%, slightly above the midpoint of guidance.
• Gross Margin: 69.5%, falling within the expected range.
• Cash Flow from Operations: $27.2 million, a record for the company.
• Debt Reduction: $33 million reduction in Q3 and an additional $15 million in early January 2025.
• Net Debt to EBITDA Ratio: Reduced to 2.6x, down significantly from over 6x in fiscal Q2 2023.
• Stock-Based Compensation: At 5.3% of total revenue, nearing a multi-year low.
• Remaining Performance Obligation: $800 million, an increase of 4.6% year-over-year.

Growth and Operational Efficiency

8×8 Inc has continued to make strides in various areas:

• The company’s new product monthly recurring revenue (MRR) has grown by more than 60% year-over-year, driven largely by the rising demand for AI-based solutions.
• Customer satisfaction remains high, with CSAT scores consistently in the mid to high 90% range for targeted enterprise customers.
• The company has continued to expand its international presence, particularly in the Asia Pacific region, securing a notable deal with a major auto manufacturer—its largest deal to date.

Challenges and Headwinds

Despite these positive developments, 8×8 Inc is still navigating several challenges:

• Foreign exchange headwinds of approximately $2.2 million have slightly impacted the company’s total revenue, hindering its ability to meet the upper end of the guidance range.
• The Fuze customer upgrade to the 8×8 platform is still presenting revenue headwinds, with the expected revenue decline from customers on the Fuze platform offsetting some of the company’s growth.
• For Q4 fiscal 2025, the company expects its operating margin guidance to be slightly lower due to seasonally higher expenses.
• Looking forward, 8×8 plans to make strategic investments in fiscal 2026 that could lead to a lower non-GAAP operating margin in comparison to fiscal 2025.

Q4 and Full-Year Guidance for Fiscal 2025

Looking ahead, 8×8 Inc has provided its outlook for Q4 2025 and full-year guidance:

• Q4 Service Revenue: Expected to be between $170 million to $175 million, with total revenue ranging from $175 million to $181 million.
• Full-Year Service Revenue: Projected between $691.3 million to $696.3 million and total revenue between $713 million and $719 million.
• Full-Year Operating Margin: Expected between 10.7% and 11%.
• Full-Year Cash Flow from Operations: Projected between $61 million and $65 million.

With its record cash flow, effective debt reduction, and growing product revenue, 8×8 Inc is demonstrating its ability to navigate challenges while preparing for future growth.