Cloud communications provider 8x8 (NASDAQ: EGHT) reported Q3 CY2025 results exceeding the market’s revenue expectations, with sales up 1.7% year on year to $184.1 million. The company expects next quarter’s revenue to be around $179.5 million, close to analysts’ estimates. Its non-GAAP profit of $0.09 per share was 28.6% above analysts’ consensus estimates.
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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
- Free Cash Flow Margin: 2.5%, down from 4.1% in the previous quarter
- Billings: $185.6 million at quarter end, in line with the same quarter last year
- Market Capitalization: $253.6 million
“Our second quarter performance reflected progress against our strategic priorities,” said Samuel Wilson, Chief Executive Officer at 8x8, Inc.
Company Overview
Named after its founding year (1987) with "8x8" representing binary code for communications, 8x8 (NASDAQ: EGHT) provides cloud-based contact center and unified communications solutions that enable businesses to manage customer interactions and internal communications through a single platform.
Revenue Growth
A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, 8x8 grew its sales at a sluggish 8% compounded annual growth rate. This fell short of our benchmark for the software sector and is a tough starting point for our analysis.
We at StockStory place the most emphasis on long-term growth, but within software, a half-decade historical view may miss recent innovations or disruptive industry trends. 8x8’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 1.1% annually. 
This quarter, 8x8 reported modest year-on-year revenue growth of 1.7% but beat Wall Street’s estimates by 3.1%. Company management is currently guiding for flat sales next quarter.
Looking further ahead, sell-side analysts expect revenue to remain flat over the next 12 months. This projection doesn't excite us and indicates its newer products and services will not catalyze better top-line performance yet.
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Billings
Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.
Over the last year, 8x8 failed to grow its billings, which came in at $185.6 million in the latest quarter. This performance mirrored its total sales and shows the company faced challenges in acquiring and retaining customers. It also suggests there may be increasing competition or market saturation. 
Customer Acquisition Efficiency
The customer acquisition cost (CAC) payback period represents the months required to recover the cost of acquiring a new customer. Essentially, it’s the break-even point for sales and marketing investments. A shorter CAC payback period is ideal, as it implies better returns on investment and business scalability.
8x8’s recent customer acquisition efforts haven’t yielded returns as its CAC payback period was negative this quarter, meaning its incremental sales and marketing investments outpaced its revenue. The company’s inefficiency indicates it operates in a highly competitive environment where there is little differentiation between 8x8’s products and its peers.
Key Takeaways from 8x8’s Q3 Results
We were impressed by how significantly 8x8 blew past analysts’ billings expectations this quarter. We were also glad its EBITDA outperformed Wall Street’s estimates. Overall, we think this was a decent quarter with some key metrics above expectations. The stock traded up 5.6% to $1.88 immediately following the results.
Indeed, 8x8 had a rock-solid quarterly earnings result, but is this stock a good investment here? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.
