A reconciliation of these non-GAAP metrics to the closest comparable GAAP metric is provided in our earnings press release and earnings presentation slides, which are available on 8x8's Investor Relations website at investors.8x8.com. In Q1, we returned to year-over-year growth for the first time in nine quarters. We exceeded the midpoint of our service revenue guidance by more than $3 million. This growth was fueled by strong growth for our 8x8 CPaaS Solutions, continued momentum in platform adoption, a steady shift towards usage-based consumption models, and a small tailwind on FX.
Our rapid growth in 8x8 CPaaS Solutions reflects that alignment, as more customers tap into programmable voice, video, digital messaging, authentication, and AI-enabled workflows. That said, this transition brings trade-offs: a different financial profile with higher growth but lower gross margins. In Q1, consumption-based revenue, primarily 8x8 CPaaS Solutions, but also usage related to our UCaaS and CCaaS subscriptions, grew more than 30% year-over-year. We saw growth in new use cases, new channels, and more diverse engagement models.
Sales of 8x8 Voice for Teams licenses grew more than 30% year-over-year again this quarter. Voice interactions grew more than 7x year-over-year, representing more than three quarters of all AI interactions this quarter. Revenue from customers using three or more products now accounts for about one-third of our annual subscription revenue. That eliminates complexity, unlocks margin leverage, and frees up resources to focus on growth.
| Metric | Period | Current guidance |
|---|---|---|
| Q2 total/service revenue | Q2 FY2026 | Sequential decline expected following a strong Q1 that included record platform usage revenue and favorable FX; usage-based revenue forecast more cautiously. |
| Gross margin | Remainder of FY2026 | Guiding lower for the rest of the year due to rapid growth of lower-margin communications platform solutions. |
| FX impact | Q2 FY2026 and full year | Strengthening U.S. dollar versus the British pound creates a sequential revenue headwind relative to June 2025 rates. |
| Usage-based revenue mix | Through fiscal year end | Expected to continue growing roughly 1%-2% per quarter (management characterized this as an estimate). |
| Fuse migration growth headwind | Next fiscal year | Expected to be about 1.5% of growth headwind next year, with roughly half of the remaining ~4% fuse base retained. |
| Fuse platform sunset | By fiscal year end / end of calendar year | On track to fully sunset the fuse platform and migrate remaining customers to the 8x8 system by end of the calendar year. |
| Metric | YoY | Note |
|---|---|---|
| Total revenue | up ~1.9% | Return to growth fueled by CPaaS/consumption revenue, platform adoption, usage-based shift, and an FX tailwind; landed near the high end of guidance. |
| Service revenue | up 2% | Above the high end of guidance on healthy core demand and go-to-market execution; grew just over 5% excluding fuse. |
| Usage-based revenue as % of service revenue | ~17% vs ~12% in Q1 2025 | Rapid growth of 8x8 CPaaS Solutions and usage tied to UCaaS/CCaaS, plus AI products that are consumption-priced. |
| Consumption-based revenue | up more than 30% | Growth across new use cases, channels, and engagement models beyond SMS into programmable voice, alerts, authentication, and AI workflows. |
| Gross margin | 67.8%, down year-over-year and sequentially | Mix shift toward lower-margin usage-based communications platform revenue. |
| Operating margin | 9% | Within guidance; slightly below prior double-digit levels as the company reinvests for growth, with FX raising costs to offset revenue tailwinds. |
| Non-GAAP fully diluted EPS | $0.08 | Landed in the middle of the guidance range on disciplined spending. |
| Cash flow from operations | over $11 million | Healthy cash collections; 18th consecutive quarter of positive operating cash flow. |
| Stock-based compensation as % of revenue | 3.5%, a multi-year low | Continued downward trend from prudent equity management and reduced dilution. |
| Fuse platform share of service revenue | ~4% vs ~8% in Q1 2025 | Ongoing migration of fuse customers to the 8x8 platform ahead of the fiscal year-end sunset. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Fuse platform sunset | A persistent drag on revenue (about 8% of service revenue a year ago, ~3% growth headwind last quarter). | Down to about 4% of service revenue; all remaining customers dispositioned and on track to fully sunset by fiscal year end, unlocking margin leverage; upgraded fuse cohort delivered 94% gross retention and over 100% net revenue retention. | — |
| CPaaS / usage-based consumption shift | Emerging stream running ~12% of service revenue a year ago. | Fastest-growing part of the business at ~17% of service revenue, up more than 30% year-over-year, set a usage record, and is reshaping the financial profile toward higher growth but lower gross margin. | — |
| AI-enabled engagement and voice | Perception that voice is in decline. | Company positions voice as foundational to AI-era customer experience; intelligent customer assistant adoption up 75%, voice AI interactions up more than 7x, and roadmap centered on predictive orchestration, sentiment analysis, and AI summarization. | — |
| AI strategy: build and partner vs. buy | Broader industry trend of acquiring AI assets. | 8x8 favors building in-house and partnering with best-in-breed providers over buying, preferring optionality given how fast AI is evolving. | — |
| Debt reduction and capital return | Peak debt of $548 million in August 2022. | Debt reduced 40% ($219 million) with continued prepayments; term loan amended July 29 to add flexibility and a $25 million acquisition basket; returned over $17 million to investors via debt paydown, buybacks, and reduced dilution. | — |
| Growth vs. profitability trade-off | Double-digit operating margins a few quarters ago. | Willing to accept slightly lower operating margin (9%) and reallocate OpEx/COGS to secure a return to growth, with intent to grow revenue faster than expenses and rebuild margins over time. | — |
| Microsoft Teams and channel go-to-market | SKU-based selling. | Moved to outcome-based, multi-product selling; 8x8 Voice for Teams licenses up more than 30% year-over-year, now a top-five Operator Connect partner by country reach, and largest U.K. partner grew bookings more than 100% year-over-year. | — |