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Sep 30, 2022
8x8 Q2 2023 Earnings Report
Reported increased service revenue and gross profit, driven by emphasis on profitability and cash flow generation.
Key Takeaways
8x8, Inc. reported a 24% year-over-year increase in total revenue, reaching $187.4 million, with service revenue up 25% to $178.6 million. The company's focus on profitability was evident in the increased gross margin and operating profit, with non-GAAP operating profit rising by 368% to $9.1 million. They retired approximately $404 million in aggregate principal amount of its convertible notes due in 2024 in exchange for the issuance of $202 million new senior convertible notes due in 2028 and $182 million in cash out of the proceeds from a $250 million term loan due in 2027.
Total revenue increased 24% year-over-year to $187.4 million.
Service revenue increased 25% year-over-year to $178.6 million.
GAAP operating loss was $25.0 million, improved from $37.2 million in the prior year.
Non-GAAP operating profit increased 368% year-over-year to $9.1 million.
8x8
8x8
Forward Guidance
For the third quarter of fiscal year 2023, 8x8 anticipates service revenue between $178 million and $180 million, total revenue ranging from $185 million to $188 million, and a non-GAAP operating margin between 5.0% and 5.8%. For the full fiscal year 2023, the company projects service revenue between $712 million and $720 million, total revenue ranging from $745 million to $755 million, and a non-GAAP operating margin of approximately 5.5%, aiming to exit fiscal 2023 with a non-GAAP operating margin of at least 6.5%.
Positive Outlook
- Service revenue is expected to grow by approximately 20% year-over-year at the midpoint for Q3 2023.
- Total revenue is projected to grow by approximately 19% year-over-year at the midpoint for Q3 2023.
- Non-GAAP operating margin is expected to be in the range of 5.0 to 5.8% for Q3 2023.
- Service revenue is anticipated to grow 19% year-over-year at the midpoint for fiscal year 2023.
- The company aims to exit fiscal year 2023 with a non-GAAP operating margin of at least 6.5%.
Challenges Ahead
- The Company does not reconcile its forward-looking estimates of non-GAAP operating margin to the corresponding GAAP measures of GAAP operating margin due to the significant variability of, and difficulty in making accurate forecasts and projections with regards to, the various expenses it excludes.
- Foreign currency exchange fluctuations may negatively impact our guidance.
- Our increased emphasis on profitability and cash flow generation may not be successful.
- The reduction in our total costs as a percentage of revenue may negatively impact our revenue and our business in ways we don't anticipate and may not achieve the desired outcome.
- Management provides expected ranges for total revenue, service revenue and non-GAAP operating margin based on its evaluation of the current business environment and foreign current exchange rates prevailing as of the announcement date of the prior quarters' financial results.