8x8 (NYSE:EGHT) Q1: Strong Sales, Stock Soars

Adam Hejl /
2021/08/04 4:36 pm EDT

Business communications software company 8x8 (NYSE:EGHT) reported Q1 FY2022 results beating Wall St's expectations, with revenue up 21.7% year on year to $148.3 million. 8x8 made a GAAP loss of $43.9 million, down on its loss of $41.9 million, in the same quarter last year.

Is now the time to buy 8x8? Access our full analysis of the earnings results here, it's free.

8x8 (EGHT) Q1 FY2022 Highlights:

  • Revenue: $148.3 million vs analyst estimates of $143 million (3.67% beat)
  • EPS (non-GAAP): $0.01 vs analyst estimates of $0.0 ($0.01 beat)
  • Revenue guidance for Q2 2022 is $148.2 million at the midpoint, above analyst estimates of $146.4 million
  • Free cash flow was negative -$3.4 million, compared to negative free cash flow of -$6.62 million in previous quarter
  • Customers: 824 customers paying more than $100,000 annually
  • Gross Margin (GAAP): 59.7%, up from 57.7% previous quarter

“We were pleased with our first quarter results,” said Dave Sipes, Chief Executive Officer at 8x8,

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

As consumers adopt multiple online channels to engage with their favorite brands and as employees work from remote locations, more organizations are expected to adopt unified communication platforms to improve collaboration and business productivity.

Sales Growth

As you can see below, 8x8's revenue growth has been decent over the last year, growing from quarterly revenue of $121.8 million, to $148.3 million.

8x8 Total Revenue

This quarter, 8x8's quarterly revenue was once again up a very solid 21.7% year on year. But the growth did slow down compared to last quarter, as the revenue increased by just $3.6 million in Q1, compared to $8.03 million in Q4 2021. We'd like to see revenue increase by a greater amount each quarter, but a one-off fluctuation is usually not concerning.

Analysts covering the company are expecting the revenues to grow 11.6% over the next twelve months, although we would expect them to review their estimates once they get to read these results.

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Large Customers Growth

You can see below that at the end of the quarter 8x8 reported 824 enterprise customers paying more than $100,000 annually, an increase of 63 on last quarter. That is quite a bit more contract wins than last quarter and quite a bit above what we have typically seen lately, demonstrating that the business itself has good sales momentum. We've no doubt shareholders will take this as an indication that the company's go-to-market strategy is working very well.

8x8 customers paying more than $100,000 annually

Key Takeaways from 8x8's Q1 Results

Since it has still been burning cash over the last twelve months it is worth keeping an eye on 8x8’s balance sheet, but we note that with market capitalisation of $2.83 billion and more than $140.5 million in cash, the company has the capacity to continue to prioritise growth over profitability.

We were very impressed how strongly 8x8 accelerated the rate of new contract wins this quarter. And we were also glad to see the improvement in gross margin. Overall, we think this was a strong quarter, that should leave shareholders feeling very positive. The company is up 7.07% on the results and currently trades at $26.49 per share.

8x8 may have had a good quarter, so should you 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 full report which you can read here, it's free.

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