8x8 (NYSE:EGHT) Misses Q4 Revenue Estimates

Adam Hejl /
2023/05/11 4:52 pm EDT

Business communications software company 8x8 (NYSE:EGHT) missed analyst expectations in Q4 FY2023 quarter, with revenue up 1.74% year on year to $184.5 million. Guidance for the next quarter also missed analyst expectations with revenues guided to $187 million at the midpoint, or 1.71% below analyst estimates. 8x8 made a GAAP loss of $9.43 million, improving on its loss of $45.6 million, in the same quarter last year.

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8x8 (EGHT) Q4 FY2023 Highlights:

  • Revenue: $184.5 million vs analyst estimates of $185.7 million (0.65% miss)
  • EPS (non-GAAP): $0.11 vs analyst estimates of $0.09 (22.7% beat)
  • Revenue guidance for Q1 2024 is $187 million at the midpoint, below analyst estimates of $190.2 million
  • Management's revenue guidance for upcoming financial year 2024 is $759 million at the midpoint, missing analyst estimates by 0.89% and predicting 2.02% growth (vs 17.4% in FY2023)
  • Free cash flow of $8.19 million, down 44.1% from previous quarter
  • Gross Margin (GAAP): 70.1%, up from 62.2% same quarter last year

“Fiscal 2023 was a year of milestones for 8x8 as we continued to invest in innovation while increasing our profitability and cash flow," said Samuel Wilson, 8x8 Interim Chief Executive Officer.

Founded in 1987, 8x8 (NYSE:EGHT) provides software for organizations to efficiently communicate and collaborate with their customers, employees, and partners.

Work is becoming more distributed, both across geographies and devices. In order for businesses to keep functioning efficiently, they need to be able to communicate as well as they did when the teams were co-located, which drives the demand for integrated communication platforms.

Sales Growth

As you can see below, 8x8's revenue growth has been solid over the last two years, growing from quarterly revenue of $144.7 million in Q4 FY2021, to $184.5 million.

8x8 Total Revenue

8x8's quarterly revenue was only up 1.74% year on year, which might disappoint some shareholders. On top of that, revenue increased $129 thousand quarter on quarter, a strong improvement on the $2.99 million decrease in Q3 2023, and a sign of acceleration of growth, which is very nice to see indeed.

8x8 is guiding for revenue to decline next quarter 0.33% year on year to $187 million, a further deceleration on the 26.5% year-over-year decrease in revenue the company had recorded in the same quarter last year. For the upcoming financial year management expects revenue to be $759 million at the midpoint, growing 2.02% compared to 16.6% increase in FY2023.

In volatile times like these we look for robust businesses with strong pricing power. Unknown to most investors, this company is one of the highest-quality software companies in the world, and their software products have been the default standard in critical industries for decades. The result is an impressive business that is up an incredible 18,152% since the IPO. You can find it on our platform for free.

Large Customers Growth

You can see below that at the end of the quarter 8x8 reported 1,301 enterprise customers paying more than $100,000 annually, a decrease of 8 on last quarter. We have no doubt shareholders would like to see the company regain its sales momentum.

8x8 customers paying more than $100,000 annually

Key Takeaways from 8x8's Q4 Results

With a market capitalization of $365.1 million 8x8 is among smaller companies, but its more than $137.6 million in cash and positive free cash flow over the last twelve months put it in a very strong position to invest in growth.

It was good to see 8x8 beat expectations for quarterly EPS and improve their gross margin this quarter. On the other hand, the revenue guidance for next quarter and the full year both missed analysts' expectations. However, guidance for the next quarter and the full year operating profit were ahead of Consensus, the latter raised from previous guidance. Overall, this quarter's results were mixed. The company is down 0.78% on the results and currently trades at $3.2 per share.

8x8 may have had a tough quarter, but does that actually create an opportunity to invest right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

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The author has no position in any of the stocks mentioned.