8x8 Cash Flow Hits Record in Q4 2025

8x8, Inc. (NASDAQ:EGHT) reported fourth quarter and fiscal year 2025 results on May 19, 2025, highlighting accelerated growth in core service revenue (non-GAAP) and record multi-year cash generation (non-GAAP). The company made significant progress in platform innovation, customer upgrades, and debt reduction, while refining its go-to-market model. Investors should note an inflection in product adoption, streamlined operations, and clear financial targets for the next stages of the company’s transformation.

Core Service Revenue Growth Reaccelerates Amid Customer Transition

Excluding legacy Fuze customer revenue, year-over-year quarterly service revenue growth accelerated to 4.6% in Q4 FY2025—up from 2.7% in Q3 (non-GAAP)—with annual growth for the segment reaching 2.8% (non-GAAP), surpassing the prior year’s 1.8% (non-GAAP). Upgrades from the Fuze platform reduced its revenue impact to under 5% of total service revenue (non-GAAP) in Q4, compared to approximately 11% in Q4 FY2024.

"For Q4 FY2025, year-over-year growth in 8x8 excluding revenue from all Fuze customers (non-GAAP) accelerated to 4.6% from 2.7% in Q3. This is the second consecutive quarter of improvement and marks our highest growth rate in 8x8 stand-alone service revenue in ten quarters. We've also accelerated when looking at the entire year."
-- Samuel Wilson, Chief Executive Officer

This sustained improvement in organic growth reflects ongoing progress in the company's product transition strategy, reducing structural revenue headwinds and enhancing long-term retention and cross-selling opportunities.

Cash Flow and Balance Sheet Strength Enable Strategic Flexibility

Operating cash flow in Q4 FY2025 reached $5.9 million and full-year cash flow hit $63.6 million, with two-year aggregate operating cash flow (non-GAAP) totaling more than $142 million. Net debt to trailing twelve-month EBITDA declined to 2.7x, down from over 6x in Q2 2023, while over $209 million in debt principal—approximately 38% of the peak—has been retired since August 2022.

"Q4 marked our seventeenth straight quarter of positive operating cash flow and non-GAAP operating profit. We continued our thoughtful approach to debt reduction, making a $15 million term loan prepayment during Q4 and an additional $15 million payment in April during fiscal Q1 2026. With these actions, we have now reduced the principal balance of our debt by over $209 million, or approximately 38% since the August 2022 peak."
-- Kevin Kraus, Chief Financial Officer

The company’s ability to maintain long-term cash generation and systematically improve its leverage profile provides 8x8 with a capital foundation to pursue innovation and go-to-market initiatives without compromising financial stability.

AI Platform Expansion and Multiline Product Adoption Drive Competitive Differentiation

The number of customers with three or more products rose 13% year over year to over 700 (non-GAAP) in Q4 FY2025. Platform-level AI integrations such as JourneyIQ (customer journey analytics) and AI Orchestrator (workflow automation) were introduced, while Microsoft Teams integration license sales surged 72% in Q4 FY2024 (non-GAAP) with over 550,000 cumulative seats deployed as of Q4 FY2025.

On the conference call, Wilson highlighted that over half the subscription revenue generated this quarter has been from customers who bought at least two products, resulting in a better retention rate for the company. He also emphasised that 8x8 is the "first contact center provider to fully integrate rich communication services or RCS business message, enabling rich branded, two-way messaging for digital channels", with customers including a prominent UK-based travel company.

Expanding usage-based CPaaS, differentiated omnichannel capabilities, and broadening ecosystem integrations reveal early success in the company’s efforts to move upmarket and embed itself more deeply within customers’ digital infrastructures, directly supporting expansion revenue and elevated retention.

Looking Ahead

Management projects total revenue (non-GAAP) of $702 million to $724 million for FY2026, service revenue (non-GAAP) of $682 million to $702 million, and non-GAAP operating margins of 9%-10%, resulting in $67.5 million anticipated non-GAAP operating income at the midpoint. Cash flow from operations (non-GAAP) is guided to $40 million-$50 million, reflecting ongoing investments in growth and channel expansion. The company affirmed its expectation of achieving high single-digit service revenue growth and double-digit operating margins (non-GAAP) by FY2028, with Fuse platform migration risks rapidly diminishing and underlying growth drivers set to dominate reported results.

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This article was created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.