8x8 Inc

8x8, Inc. (NASDAQ: EGHT) is a provider of software-as-a-service solutions for contact centers, voice communications, video meetings, employee collaboration, and embeddable communication application programming interfaces (API). The Company’s communications platform solutions comprise the 8x8 XCaaS platform, which is an integrated contact center, voice communications, video, chat, and SMS solution built on one global cloud communications platform.

Recent Business and Financial Updates

• Fiscal Year 2024 Financial Performance: In fiscal year 2024, 8x8 reported a slight decrease in total revenue, down 2% to USD 728.7 million from USD 743.9 million in fiscal 2023. Service revenue decreased by 1%, reaching USD 700.6 million compared to USD 710.0 million the previous year. Despite these declines, the company significantly reduced its GAAP operating loss by 58%, reporting a loss of USD 27.6 million, and saw a 52% increase in non-GAAP operating profit to USD 94.7 million. The GAAP net loss improved to USD 67.6 million from USD 73.1 million, while non-GAAP net income rose to USD 58.0 million from USD 38.5 million. Adjusted EBITDA also increased by 29%, reaching USD 121.0 million.
• Fourth Quarter Fiscal 2024 Results: In the fourth quarter of fiscal 2024, 8x8's total revenue was USD 179.4 million, slightly down from USD 184.5 million in the same period the previous year. Service revenue also saw a decline to USD 172.5 million from USD 176.6 million. The company reported a GAAP operating loss of USD 14.2 million, contrasting with a GAAP operating profit of USD 3.5 million in the fourth quarter of fiscal 2023. Non-GAAP operating profit was USD 20.3 million, down from USD 24.8 million, and the GAAP net loss was USD 23.6 million, compared to USD 9.4 million. Non-GAAP net income was USD 10.6 million, down from USD 12.7 million, while Adjusted EBITDA decreased to USD 26.0 million from USD 31.6 million.
• Financial Metrics and Highlights: Key financial metrics for the fourth quarter included a total ARR of USD 697 million, a 1% decrease from the previous year. GAAP gross margin was 68%, compared to 70%, and non-GAAP gross margin was 71%, down from 72%. GAAP service revenue gross margin was 72%, compared to 73%, and non-GAAP service revenue gross margin was 74%, down from 75%. Cash provided by operating activities was USD 12.7 million, slightly down from USD 13.6 million. As of March 31, 2024, cash, cash equivalents, restricted cash, and investments stood at USD 117.8 million, reflecting the repayment of the remaining USD 63.3 million of 2024 Notes. The total principal amount of non-current debt outstanding was USD 426.9 million, compared to USD 515.2 million.
• Recent Business Developments: 8x8 made significant strides in product innovation, launching new solutions such as 8x8 Engage, an AI-powered customer engagement tool, and Proactive Outreach for Unified Communications and Contact Center customers. The company also introduced 8x8 Operator Connect for Microsoft Teams and Meeting Whiteboards, and announced the LINE Official Notification channel for businesses in Thailand and Indonesia. 8x8 received multiple industry recognitions, including awards from G2 and CX Today, and saw two executives named as 2024 Channel Chiefs by CRN. Additionally, the company launched Employee Resource Groups for Women in Technology and LGBTQ+ employees and achieved external verification of its carbon emissions accounting in the UK.
• Outlook for Fiscal 2025: Looking ahead to fiscal 2025, 8x8 projects first-quarter service revenue to be between USD 170 million and USD 174 million, with total revenue ranging from USD 176 million to USD 181 million. The non-GAAP operating margin is expected to be between 11% and 12%. For the full fiscal year 2025, the company anticipates service revenue between USD 693 million and USD 707 million, total revenue ranging from USD 720 million to USD 738 million, and a non-GAAP operating margin between 11.5% and 13%. Non-GAAP net income per share-diluted is expected to be between USD 0.37 and USD 0.45, based on a fully diluted share count of approximately 133 million.

Technical Observation (on the daily chart):

The Relative Strength Index (RSI) over a 14-day period stands at a value of 70.88, recovering from oversold zone and currently inside overbought zone, with expectations of some consolidation or a healthy correction before upward continuation. Additionally, the stock's current positioning is above both the 50-period SMA and 200-period EMA, which may serve as dynamic short to medium-term support levels. The current price is near important resistance level of USD 3.00-USD 3.50, which once broken can lead to upside momentum up to next important resistance level of USD 4.00.

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘WATCH’ rating has been given to 8x8, Inc. (NASDAQ: EGHT) at the current market price of USD 2.90 as of July 16, 2024, at 08:10 am PDT. 

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is July 16, 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the New York Stock Exchange (NYSE), NASDAQ Capital Markets (NASDAQ), and or REFINITIV. Typically, all sources (NYSE, NASDAQ, or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.