A reconciliation of these non-GAAP metrics to the closest comparable GAAP metric is provided in our earnings press release and our earnings presentation slides, which are available on 8x8's investor relations website at investors.8x8.com. I can summarize our Q3 results and our outlook in a single sentence: We're seeing encouraging momentum across multiple dimensions of the business, though we remain focused on the execution work ahead. The most visible evidence of our growing momentum is our return to top-line growth. This marks our third consecutive quarter of year-on-year service revenue growth and our 20th consecutive quarter of positive operating cash flow.
We exceeded the high end of our guidance range for service revenue, total revenue, operating profit, and cash flow. We're driving growth in strategic components of our service revenue while maintaining discipline on profitability and cash generation. The increase in consumption of our usage-based solutions reflects a broader industry shift away from pure SaaS subscriptions to hybrid and tokenized pricing models. Revenue is linked directly to successful customer outcomes and business activity instead of long-term subscriptions that may or may not be implemented.
On average, customers with three or more products generate more than three times the revenue of customers with two products. Four of our strategic new products grew triple digits year-over-year, including 8x8 Engage. We are seeing increased momentum in our revenue from our channel partners. Importantly, channel source pipeline is showing sequential improvement as new programs take root.
| Metric | Period | Current guidance |
|---|---|---|
| Service revenue | Q4 FY2026 | $173.5M-$178.5M |
| Total revenue | Q4 FY2026 | $178.5M-$183.5M |
| Gross margin | Q4 FY2026 | 64%-65% |
| Operating margin | Q4 FY2026 | 8.5%-9.5% |
| Non-GAAP diluted EPS | Q4 FY2026 | $0.07-$0.08 (on ~145M diluted shares) |
| Cash flow from operations | Q4 FY2026 | $1M-$4M |
| Cash interest payments | Q4 FY2026 | approximately $6.1M |
| Service revenue | Full year FY2026 | $708.6M-$713.6M |
| Total revenue | Full year FY2026 | $729M-$734M |
| Gross margin | Full year FY2026 | 65%-66% |
| Operating margin | Full year FY2026 | 9.5%-10% (~$71M non-GAAP operating income at midpoint) |
| Non-GAAP diluted EPS | Full year FY2026 | $0.36-$0.37 (on ~142M average diluted shares) |
| Operating cash flow (implied change) | Full year FY2026 | up about $4M year-over-year |
| Service revenue growth | FY2027 | positive growth expected despite Fuze churn headwind (most pronounced in H1, rolling off by Q4); no formal FY2027 guidance provided |
| Metric | YoY | Note |
|---|---|---|
| Total revenue | +3.4% | Strong growth in consumption of usage-based offerings combined with improved sales execution; $185M, ~$3M above the high end of guidance. |
| Service revenue | +3.6% | Third consecutive quarter of YoY growth and an all-time record; $179.7M, ~$3M above the high end of guidance. |
| Service revenue excluding Fuze customers | ~+6% | Underlying 8x8-platform growth similar to the prior quarter, excluding upgraded and legacy Fuze customers. |
| Usage-based offerings (share of service revenue) | ~21% vs ~14% in Q3 2025 | Record quarter driven by CPaaS APIs, digital channels, and AI solutions; segment revenue grew nearly 60% YoY. |
| Gross profit / gross margin | gross margin 64.8%, down sequentially | ~$120M gross profit (~$3M above guidance-midpoint implied); margin pressured by mix shift toward lower-margin usage-based offerings. |
| Operating income / operating margin | $21.7M, 11.7% margin (up over $4M sequentially) | Higher revenue plus lower operating expenses (YTD opex down ~$8M vs prior year); well above the 9%-10% guidance. |
| Interest expense | -more than 20% | $4.2M, down as the company continues to pay down debt. |
| Net income / diluted EPS | $17.1M net income; $0.12 EPS ($0.03 above high end of guidance) | Combination of higher revenue, lower operating expenses, and lower interest expense. |
| Cash flow from operations | $20.7M, well above high end of guidance | Net timing benefit from collections and payments; 20th consecutive quarter of positive operating cash flow. |
| Intelligent Customer Assistant contracts | +70% | Accelerating adoption of AI-based offerings as customers move from pilots into production at scale. |
| Voice AI interactions | +more than 200% | Voice now the channel of choice; voice AI represents the vast majority of all AI interactions on the platform. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Fuze sunset / integration | Ongoing multi-quarter migration of Fuze customers to the 8x8 platform | Migration completed by December 31, 2025 (all customers on one platform); creates near-term churn/revenue headwind into Q4 and FY2027, but frees the company to focus fully on growth; Fuze cumulatively generated $300M+ over four years and funded innovation and debt paydown. | — |
| CPaaS / usage-based pricing shift | Usage-based offerings at mid-teens (~14%) of service revenue | ~21% of service revenue, growing nearly 60% YoY; reflects a broader industry move from pure SaaS subscriptions to hybrid/tokenized pay-as-you-go models that 8x8 sees as 'the way of the future.' | — |
| AI adoption | AI products largely in prototyping/beta/pilot stages | Moving into production at scale; voice AI interactions up 200%+, ICA contracts up 70%; use-case-centric monetization (routing, biometric ID, self-service payments, 24/7 appointment booking) with customers adding more use cases over time. | — |
| Debt reduction / balance sheet | Ongoing debt principal paydown since August 2022 | $5M term-loan prepayment this quarter; cumulative $224M (41%) principal reduction since Aug 2022; annualized interest expense down more than 50% versus H2 fiscal 2023; ended quarter with $88.2M cash. | — |
| Margins / operating leverage | Higher gross margins from SaaS mix | Usage-based mix structurally lowers gross margin (comparable to Twilio-type peers) but adds operating profit dollars and preserves healthy operating margins; sustained double-digit operating margin is a stated target with no firm timeline. | — |
| Channel / distribution and multi-product expansion | Channel business lagging direct; distribution build-out early | Sequential channel pipeline improvement with channel now outperforming direct; new partner programs gaining traction; all top-20 customers on multiple products, with 3+-product customers generating 3x+ the revenue of 2-product customers. | — |