Cloud communications provider 8x8 (NASDAQ: EGHT) announced better-than-expected revenue in calendar Q3 2026 (fiscal Q2 2027), with sales up 4.3% year on year to $192 million. Guidance for next quarter’s revenue was better than expected at $190 million at the midpoint, 0.7% above analysts’ estimates. Its non-GAAP profit of $0.12 per share was 50% above analysts’ consensus estimates.

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StockStory’s take

8x8’s latest quarter saw continued revenue growth, supported by robust expansion in usage-based offerings and rising adoption of AI-powered products. Management emphasized that the company’s platform usage, especially in Asia Pacific, grew sharply as some competitors exited the market. CEO Samuel Wilson highlighted that AI now represents a growing share of revenue, pointing out that “13% of our revenue now has an AI product attached to it,” helping to drive the business forward. The company’s ongoing focus on multi-product adoption and leveraging its global carrier-grade voice network also contributed to performance.

Looking ahead, 8x8’s raised guidance is anchored by management’s confidence in further expanding usage-based and AI revenues, continued customer adoption of multi-product solutions, and disciplined expense management. Wilson described the opportunity as “a classic flywheel”—where partner-driven industry solutions and AI-powered workflows expand platform value for customers and partners. CFO Kevin Kraus noted that while gross margins may moderate due to the mix shift toward usage-based revenue, operational discipline should support higher operating income and cash flow. Management also pointed to broader adoption of its AI Studio and integration with Microsoft Teams as key growth levers.

Key insights from management’s remarks

8x8’s management attributed the quarter’s performance to momentum in Asia Pacific usage-based offerings, accelerated AI product adoption, and progress in partner-driven multi-product expansion.

• Usage-based platform growth: Strong demand for communications APIs and usage-based products, particularly in Asia Pacific, drove significant revenue gains. Management credited competitor exits and increased demand in the region as key factors.
• AI adoption accelerating: The share of revenue tied to AI solutions nearly doubled year-over-year, with recurring revenue from AI products up 58%. Customers using at least one AI solution rose to 13% of total recurring revenue, up from 7% last year.
• Multi-product customer expansion: Customers using three or more 8x8 products grew 19%, while those using four or more products increased by over 50%. This trend reflects successful cross-selling strategies and higher engagement across the platform.
• Partner-first strategy: The launch of a tiered reseller program and the introduction of 8x8 Small Business enabled better support for partners, helping them win and retain customers, especially in the small business segment.
• Microsoft Teams integration: Earning Microsoft certification for session border controller technology allowed 8x8 to provide native calling options within Teams, potentially expanding its reach to hundreds of millions of users and improving integration reliability and economics.

Drivers of future performance

8x8’s outlook is shaped by scaling AI and usage-based solutions, product integration, and disciplined cost management amid evolving revenue mix.

• AI and platform usage momentum: Management expects continued adoption of AI-powered features and usage-based offerings, particularly through AI Studio and CPaaS APIs, to drive top-line growth, though year-over-year growth rates may moderate compared to recent surges.
• Product integration and partner channel: Expanded integrations, such as with Microsoft Teams, and investments in partner programs are expected to deepen customer relationships and unlock new market segments, especially in enterprise and small business channels.
• Margin dynamics and cost discipline: While the shift toward lower-margin, usage-based revenue weighs on gross margin percentage, management intends to offset this with continued operating expense reductions and a focus on increasing gross profit dollars, supporting higher operating income and cash flow.

Catalysts in upcoming quarters

In coming quarters, the StockStory team will be watching (1) further adoption and monetization of AI Studio and AI-powered agents, (2) the pace of expansion in usage-based revenue, especially in APAC and new geographies, and (3) the impact of Microsoft Teams integration and partner-led initiatives on customer growth and retention. Continued margin performance as the revenue mix evolves will also be a key signpost.

8x8 currently trades at $2.34, up from $2.26 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).

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