Business communications software company 8x8 (NYSE: EGHT) fell short of the market’s revenue expectations in Q1 CY2025, with sales falling 1.3% year on year to $177 million. Its non-GAAP profit of $0.08 per share was in line with analysts’ consensus estimates.

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StockStory’s Take

8x8’s first quarter results were shaped by the company’s ongoing transition from legacy Fuze customers and a continued push to differentiate its platform across unified communications, contact center, and communications APIs. CEO Samuel Wilson described the quarter as one of “operational discipline, business quality, and flexibility,” highlighting the acceleration in core 8x8 revenue growth excluding Fuze. Management attributed recent performance to higher adoption of multi-product bundles, robust growth in Microsoft Teams integrations, and increased sales through its technology partner ecosystem. Wilson also noted that upgrades from Fuze to 8x8’s platform are progressing, with a target to complete this migration by year-end.

Looking ahead, 8x8’s management is positioning platform innovation and go-to-market execution as central to future growth. Wilson stated that the company’s “innovation engine is delivering,” emphasizing new AI-based capabilities and expanded partner integrations as key differentiators. While macroeconomic uncertainty and recent tariff actions have contributed to elongated sales cycles and unpredictable deal flows, leadership remains focused on cross-selling, customer retention, and growing its enterprise segment. CFO Kevin Kraus cautioned that near-term investments in sales enablement and AI integration may pressure margins, but expects ongoing debt reduction and maturing multi-product adoption to support stable non-GAAP net income. Management maintains that high single-digit revenue growth and double-digit operating margins are achievable over the next few years as headwinds from the Fuze transition subside.

Key Insights from Management’s Remarks

Management credited platform innovation, the shift to multi-product customers, and the ongoing transition away from Fuze as major influences on the quarter’s performance.

• Multi-product adoption gains traction: The number of customers using three or more 8x8 products grew 13% year-over-year, with over 700 such customers now in the base. Management highlighted that these accounts show higher retention and renewal rates, which support overall revenue stability and growth.
• Microsoft Teams integration momentum: License sales for 8x8’s Microsoft Teams solutions increased 72% in the quarter, and the installed base surpassed 550,000 seats. Wilson noted this as evidence that cross-platform compatibility is a compelling selling point for mid-sized and large enterprises.
• Progress in Fuze migration: The company made strides in upgrading legacy Fuze customers to the 8x8 platform, reducing Fuze-related revenue to under 5% of service revenue. Management expects to complete the migration by the end of the year, which should simplify operations and improve customer engagement.
• AI and platform enhancements: New AI-based features such as chat summarization, customer journey analytics (JourneyIQ), and workflow automation (AI Orchestrator) were introduced. These are intended to improve customer experience and operational efficiency, with Wilson emphasizing the ability to provide “seamless, smart, and contextual” transitions across channels.
• Go-to-market transformation: The company continued rebuilding its sales and marketing teams toward solution-based and outcome-oriented selling. Management estimates this transition is about “60% to 70% complete,” with further fine-tuning expected over the next year as new processes mature.

Drivers of Future Performance

8x8’s outlook is driven by the completion of Fuze migration, expansion of AI-powered solutions, and continued progress in platform cross-sell and international markets.

• Completion of Fuze transition: Management expects headwinds from the legacy Fuze business to diminish substantially by year-end, allowing the underlying growth in core 8x8 products to become more visible. This transition is central to 8x8’s path toward higher growth and streamlined operations.
• Strategic investment in innovation: Increased investment in AI, automation, and technology partner integrations is intended to differentiate 8x8’s offerings and improve operational leverage. While these investments may result in near-term margin pressure, Kraus stated they are expected to “unlock long-term operating leverage” and support scalable engagement.
• Enterprise and international focus: The company is targeting growth in mid-market and enterprise segments, especially through cross-selling and multi-product adoption. Wilson mentioned strong sales momentum in the UK and ongoing traction in APAC for platform APIs (CPaaS), viewing these as opportunities to offset competitive pressures in North America.

Catalysts in Upcoming Quarters

In the coming quarters, our analysts will be monitoring (1) the pace at which the remaining Fuze customers are migrated to the 8x8 platform, (2) sustained growth in multi-product adoption and cross-selling to larger enterprise accounts, and (3) evidence that investments in AI-based features and partner integrations are translating into improved customer retention and new wins. The trajectory of international sales and stabilization of sales cycles amid macro uncertainty will also be key indicators.

8x8 currently trades at a forward price-to-sales ratio of 0.3×. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).

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