Key Highlights

  • 8x8, Inc. (NASDAQ:EGHT) trades on the Nasdaq as EGHT. 8x8 trades near the US$1.565 low of the past year, valuing the equity near US$262m, less than the US$323.9m of debt on its balance sheet.
  • Fiscal 2026 results were released, with the Form 10-K filed on 22 May.
  • The simplest bull argument is valuation against cash. At US$1.85 the equity is capitalised near US$262m, against fiscal 2026 free cash flow near US$40m and adjusted EBITDA of US$93.1m.
  • The US$122.0m 2024 term loan matures and US$201.9m of 4.00 per cent convertible notes.

A profitable year, a share price near its lows

8x8, Inc. (NASDAQ:EGHT) trades on the Nasdaq as EGHT. 8x8 trades near the US$1.565 low of the past year, valuing the equity near US$262m, less than the US$323.9m of debt on its balance sheet.

It sits oddly against what the Campbell, California company reported. Fiscal 2026, the year to 31 March, produced net income of US$1.6m against a US$27.2m loss, the first GAAP-profitable year since 2015.

Revenue grew in all four quarters and debt fell by US$30m. But the market is pricing the year ahead, where guidance implies flat revenue, narrowing margins and lower earnings.

What the company does

8x8 sells cloud communications software: unified communications, cloud telephony, video and messaging replacing a traditional phone system, contact-centre software for service teams, and APIs that let other organisations embed voice, SMS and chat in their own applications.

Almost all revenue recurs: service revenue was US$715.3m of the US$735.8m total in fiscal 2026. Remaining performance obligations, signed revenue not yet recognised, stood at US$660m.

The geographic mix is shifting fast. Fiscal 2026 revenue was US$447.3m in the United States, down from US$478.3m, US$127.1m in the United Kingdom and US$161.4m elsewhere, up from US$112.6m. 8x8 sits mid-table, squeezed by larger platform vendors and contact-centre specialists alike.

Latest financial and operating performance

Fiscal 2026 results were released, with the Form 10-K filed on 22 May.

Fourth-quarter revenue was US$185.2m, up 5 per cent, with GAAP operating income of US$3.3m and net income of US$0.1m. For the full year, revenue rose 3 per cent to US$735.8m, GAAP operating income was US$18.9m, up 25 per cent, and net income US$1.6m, or US$0.01 a share. Non-GAAP diluted earnings were US$0.40 against US$0.36, on adjusted EBITDA of US$93.1m.

Composition matters more than the headline. Gross profit fell, from US$485.3m to US$475.0m, as cost of revenue climbed US$30.9m and GAAP gross margin dropped from 67.9 to 64.6 per cent. The move into profit came from costs: research and development fell to US$113.0m from US$123.2m, interest expense to US$17.8m from US$28.9m.

Cash generation is sturdier. Operating cash flow was US$55.8m against US$63.6m, on capital expenditure of US$16.0m. Cash ended the year at US$93.3m and total debt at US$323.9m, from US$353.9m, after US$30m of repayments.

Fiscal 2027 guidance calls for revenue of US$727m to US$747m, non-GAAP gross margin of 62.5 to 63.5 per cent and non-GAAP diluted earnings of US$0.33 to US$0.38, on operating cash flow of US$45m to US$52m.

The catalyst that matters: usage-based revenue, and the margin it costs

The engine of 8x8's growth is no longer seats. Usage-based revenue, consumption-priced communications APIs and AI-driven interactions, grew more than 50 per cent across fiscal 2026 and more than 70 per cent in the fourth quarter, on more than five billion digital interactions.

That is real demand, and it explains the margin path. Usage traffic carries carrier and network costs that seat-based software does not, so each incremental dollar lands at a much lower gross margin than the subscription business it replaces. Chief financial officer Kevin Kraus said guidance reflects "a continued mix shift toward usage-based revenue".

The question is arithmetic. If margins land in the guided band on flat revenue, gross profit dollars fall again, and operating income holds only if costs keep falling after two years of cuts. Management's answer is to widen the base: on 21 July it launched 8x8 Small Business, a self-serve, consumption-priced package for firms under 100 users in the UK, Ireland and Australia.

The bull case

The simplest bull argument is valuation against cash. At US$1.85 the equity is capitalised near US$262m, against fiscal 2026 free cash flow near US$40m and adjusted EBITDA of US$93.1m.

The second is balance-sheet direction: gross debt fell from US$353.9m to US$323.9m, and interest expense has more than halved in three years, from US$39.8m to US$17.8m.

The third is product cadence. AI Studio, AI Routing, the conversational-intelligence tool Pulse, the alerting product Resolve and the Small Business tier all shipped or expanded between June and July 2026, alongside nearly threefold growth in workforce-management customers reported on 10 June.

The bear case and the risks

The refinancing wall. The US$122.0m 2024 term loan matures and US$201.9m of 4.00 per cent convertible notes. Those notes convert at roughly US$7.15 a share, so at US$1.85 they must be repaid or refinanced in cash, beyond what US$93.3m of cash and US$45m-US$52m of guided operating cash flow can cover.

Margin compression. Gross profit fell in fiscal 2026 despite revenue growth, and guidance points to a further step down. The term loan floats at Term SOFR plus 3.00 per cent, an effective 8.64 per cent, so refinancing could raise interest costs rather than cut them.

A shrinking domestic base. United States revenue has fallen two years running, from US$507.5m in fiscal 2024 to US$447.3m. Growth rests entirely on international and usage traffic; if that slows, the group line turns negative.

Dilution and covenants. Guidance assumes about 150m diluted shares against 142.6m in fiscal 2026. The credit agreement covenants were met, but falling gross profit would erode headroom.

What investors should watch next

. First-quarter results are due after the close. The bar is revenue of US$180m to US$185m and non-GAAP earnings of US$0.08 to US$0.09 a share.

Gross margin. The guided non-GAAP range is 63.5 to 64.5 per cent for the June quarter, and 62.5 to 63.5 per cent for the year.

Usage-based growth. Above 50 per cent for the year and above 70 per cent in the March quarter; it is the only growth engine 8x8 has.

Debt actions. Term-loan repayments of US$39.5m fall due in fiscal 2027 and US$82.5m in fiscal 2028; watch for a refinancing ahead of August 2027.

Domestic revenue and RPO. A stabilising United States line, or obligations holding above US$660m, would signal the seat business has found a floor.

Investor takeaway

8x8's turnaround is real, but narrow. It delivered what it promised: four consecutive quarters of revenue growth, a first GAAP profit in eleven years, US$30m off the borrowings and a credible AI product line. The market is not paying for it, valuing the equity below the face value of its debt.

The scepticism is not irrational. Guidance implies flat revenue, thinner gross margins and lower adjusted earnings, because growth is arriving in a structurally lower-margin form. Above all, US$323.9m of debt falls due between August 2027 and February 2028, and at US$1.85 the notes will not convert away.

The next twelve months are about two things at once: proving usage revenue can carry acceptable margins, and handling the maturities without undoing three years of interest savings.

This article is for informational purposes only and does not constitute investment advice or a recommendation to buy, sell, or hold any security. Share prices can rise or fall, and past performance does not guarantee future results. Investors should conduct independent research and consult a licensed financial adviser before making investment decisions.