8x8’s third quarter results were met with a significant positive market reaction, reflecting the company’s ability to outperform Wall Street’s revenue and profit expectations. Management attributed this to the rapid adoption of AI-powered features and a successful transition towards usage-based revenue streams. CEO Samuel Wilson highlighted the role of embedded AI in enhancing both customer and employee experiences, citing real-time call summarization, agentless payment capabilities, and expanded digital channels as key differentiators driving growth for the quarter.
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8x8 (EGHT) Q3 CY2025 Highlights:
- Revenue: $184.1 million vs analyst estimates of $178.5 million (1.7% year-on-year growth, 3.1% beat)
- Adjusted EPS: $0.09 vs analyst estimates of $0.07 (28.6% beat)
- Adjusted Operating Income: $17.32 million vs analyst estimates of $15.21 million (9.4% margin, 13.9% beat)
- The company slightly lifted its revenue guidance for the full year to $719 million at the midpoint from $713 million
- Operating Margin: 2.9%, down from 4% in the same quarter last year
- Billings: $185.5 million at quarter end, in line with the same quarter last year
- Market Capitalization: $273.1 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From 8x8’s Q3 Earnings Call
- Michael Funk (BofA Securities) asked about the impact of volume versus price on service margins. CFO Kevin Kraus explained that current margin pressures are mostly due to increased usage volume, not price declines, but acknowledged some isolated pricing pressure in renewals.
- Josh Nichols (B. Riley Securities) questioned how the transition of Fuze customers would impact future growth. CEO Samuel Wilson replied that after the remaining Fuze customers are upgraded, growth rates should normalize, though usage-based revenue introduces some variability.
- Peter Levine (Evercore ISI) inquired about the rationale for launching Workforce Management as a free product. CEO Samuel Wilson explained the strategy targets replacing spreadsheet-based solutions, aiming for broad adoption and future upsell to premium versions.
- Catharine Trebnick (Rosenblatt Securities Inc.) asked how AI is changing buying patterns. Wilson responded that customers now seek specific AI use cases, such as Agent Assist, and that the industry is moving toward consumption-based billing models.
- Unknown Analyst (Mizuho) asked about cost management amid lower-margin revenue growth. Wilson and Kraus highlighted increased use of AI internally to optimize expenses and maintain operational efficiency.
Catalysts in Upcoming Quarters
Looking ahead, our analysts will watch for (1) the success and customer adoption rate of the new 8x8 Workforce Management tool, (2) sustained international growth and the company’s ability to offset U.S. margin pressures, and (3) the impact of AI-driven, usage-based revenue on long-term profitability and customer retention. The evolution of the App Store and product-led growth initiatives will also be important indicators of future momentum.
8x8 currently trades at $2.10, up from $1.78 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free for active Edge members).
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