Financial Performance and Key Metrics - The company reported cash flow for Q1 2025 at 71 million, which exceeded expectations [4][18] - Service revenue and total revenue were near the midpoint of guidance ranges, with service revenue guidance adjusted to 707 million for the year [21][22] - Total revenue guidance for fiscal 2025 is now 732 million, reflecting a more conservative outlook due to potential customer attrition [21][22] - Gross margin for the year is expected to be in the range of 69% to 71%, while operating margin is projected to be between 10% and 11% [22] Business Line Performance - The enterprise contact center business showed significant momentum, with 15 of the top 20 new logo deals in the quarter including contact center and enterprise accounts, which grew 36% year-over-year [9][11] - Sales of new products increased by more than 40% year-over-year, indicating strong demand for integrated solutions [11] - The CPaaS segment experienced a 25% increase in monthly interactions and over 60% year-over-year growth in sales excluding SMS messaging [14] Market Trends and Competitive Landscape - The competitive environment has become more challenging, with competitors like NICE introducing lower-cost offerings that disrupt sales cycles [4][42] - The company is focusing on innovation and integrated platform solutions to maintain a competitive edge, particularly in the Asia-Pacific region [7][12] - The management team has been revamped, leading to improved go-to-market strategies and better performance in the CPaaS segment [28] Strategic Direction and Future Outlook - The company is committed to six key initiatives aimed at driving sustainable growth, including accelerating innovation and focusing on small to mid-sized enterprises [7] - The transition from the Fuze platform to the 8x8 platform is being accelerated, with a goal to complete the migration within the next year or two [19][20] - The company expects to continue generating cash and returning value to investors through debt reduction and efficient management [23] Management Commentary on Operating Environment - Management noted a cautious approach from customers in decision-making, but emphasized the importance of digital transformation as a key driver for future growth [44][47] - The company is optimistic about the potential for integrated products to improve customer satisfaction and reduce costs for clients [47] Other Important Information - The company has reduced its stock-based compensation expense to less than 8% of revenue, aiming to minimize dilution over time [18] - The management expressed confidence in the ongoing transformation and the positive results being seen in various parts of the business [23] Q&A Session Summary Question: Insights on usage or consumption-based revenue growth - Management highlighted the launch of new contact center integrated products and noted an uptick in customized CPaaS solutions, indicating healthy interest in these offerings [24][25] Question: Trends in the CPaaS business in APAC - Management attributed recent growth to a combination of macro factors and improved management, emphasizing the importance of good leadership and aligned organization [28] Question: Details on new logo deals in contact center - Management confirmed that 15 of the top 20 new logo deals were contact center-based, with a mix of new logos and upgrades from legacy systems [32][34] Question: Trends on Engage product and competitive dynamics - Management noted positive feedback on the Engage product, which is still in beta, and discussed the competitive landscape with respect to pricing and product quality [38][41] Question: Customer engagement activity and near-term catalysts - Management observed cautiousness in customer engagement but emphasized the importance of demonstrating the value of integrated products to accelerate decision-making [44][47] Question: Average revenue per customer trends - Management reported an increase in average revenue per customer, indicating success in cross-selling multiple products [50] Question: Fuze migration and associated costs - Management indicated that less than 8% of revenue currently comes from Fuze customers, with plans to accelerate migration to the 8x8 platform [56]
8x8(EGHT) - 2025 Q1 - Earnings Call Transcript