What Happened?

Shares of business communications software company 8x8 (NYSE:EGHT) jumped 26.3% in the morning session after the company reported strong third-quarter earnings, which blew past analysts' EBITDA and billings expectations. Management observed strong growth in the usage of existing solutions, which contributed to improved retention. The trend continues as the company also observed growth in the sales of new products. On the other hand, its revenue guidance for next quarter missed analysts' expectations, but the market seems willing to overlook this. Overall, this quarter had some key positives.

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What The Market Is Telling Us

8x8’s shares are extremely volatile and have had 48 moves greater than 5% over the last year. But moves this big are rare even for 8x8 and indicate this news significantly impacted the market’s perception of the business. 

The biggest move we wrote about over the last year was 3 months ago when the stock dropped 39% on the news that the company reported second quarter earnings results. Its full-year revenue guidance was below expectations, and its revenue guidance for next quarter missed Wall Street's estimates. In addition, all key operating metrics we track fell below Wall Street's estimates during the quarter, including revenue, billings, ARR (annual recurring revenue), adjusted operating income, and EPS. Overall, this was a weaker quarter for 8x8.

8x8 is down 21.3% since the beginning of the year, and at $2.89 per share, it is trading 25.9% below its 52-week high of $3.90 from December 2023. Investors who bought $1,000 worth of 8x8’s shares 5 years ago would now be looking at an investment worth $149.59.

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