Shares of 8x8 Inc. (NYSE: EGHT) jumped 14.1% in after-hours trading Tuesday, reaching $2.75, after the cloud communications company reported fiscal fourth-quarter results that topped analyst expectations. The stock closed the regular session at $2.41, while the broader market declined, with the Nasdaq falling 0.84% and the S&P 500 down 0.67%.
The Campbell, California-based company posted total revenue of $185.2 million for the quarter ended March 31, up 5% from $177.0 million in the same period last year. Service revenue came in at $180.2 million. On an adjusted basis, diluted earnings per share reached $0.11, surpassing the consensus estimate of $0.07 per share on revenue of $181.07 million, according to Benzinga.
8x8 achieved GAAP net income of $0.1 million, a significant improvement from a net loss of $5.4 million in the year-ago quarter. CEO Samuel Wilson described fiscal 2026 as a "turning point" for the company, noting it was the first full year of GAAP profitability since 2015, with annual revenue rising 3% to $735.8 million and GAAP net income of $1.6 million, versus a loss of $27.2 million in fiscal 2025.
Usage-Based Revenue Drives Growth
A key highlight was the performance of 8x8's usage-based revenue, which includes communications APIs, AI tools, digital channels, and telecom services. This segment surged more than 70% year-over-year in the fourth quarter, accounting for 23% of service revenue, up from 14% in the prior year. The company reported that AI self-service interactions more than doubled in fiscal 2026, while 8x8 Engage customer adoption jumped over 300% in the fourth quarter and messaging API interactions climbed 218% year-over-year.
Chief Product Officer Hunter Middleton attributed the strong adoption to the effectiveness of the tools, stating that customers continue to use them because they are "actually working for them."
Margin Pressure and Guidance
Despite the revenue growth, the shift toward usage-based revenue is weighing on profitability. Gross margin dropped to 63% from 68% in the quarter, while non-GAAP gross margin slipped to 64% from 69%. The company's debt stood at $323.9 million as of March 31, down from $353.9 million a year earlier.
Looking ahead, 8x8 provided guidance for the first quarter of fiscal 2027, forecasting total revenue between $180 million and $185 million, with service revenue in the range of $175 million to $180 million. For the full fiscal year 2027, the company targets total revenue of $727 million to $747 million and adjusted diluted EPS of $0.33 to $0.38. CFO Kevin Kraus noted that the guidance accounts for "macro and geopolitical uncertainty" and the ongoing transition to usage-based revenue. Operating cash flow for fiscal 2027 is expected to be between $45 million and $52 million, below the $55.8 million generated in fiscal 2026.
Competitive Landscape
8x8 operates in a highly competitive market with offerings in contact-center, unified-communications, and communications-platform-as-a-service (CPaaS). Key competitors include RingCentral, which provides AI-focused business communications and contact-center tools; Twilio, whose communications arm handles APIs for messaging, voice, email, and identity; and Zoom, which is expanding its Phone, Contact Center, and Virtual Agent products.
The company's ability to sustain growth while managing margin compression will be closely watched by investors. While the strong usage-based revenue growth and return to profitability are positive signs, the lower gross margins and cautious guidance suggest that 8x8 still faces significant challenges in balancing growth with profitability.