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. We achieved record service revenue, our fifth consecutive quarter of year-over-year revenue growth, and exceeded our guidance ranges for service and total revenue, non-GAAP operating margin, and operating cash flow. Voice messaging, digital engagement, become the interface between people and intelligent software. As we have since I became CEO, we will continue to invest in innovation that makes communications smarter, AI easier to deploy, and customer engagement more effective.
We believe for the first time in the history of software, innovation cycles are shorter than sales cycles. While our retention rates are consistent with industry benchmarks, and actually often a little bit better, we see reducing customer churn as perhaps the single most effective way to drive growth and profitability. Unless otherwise noted, all figures other than revenue and cash flow are presented on a non-GAAP basis. Q1 marked our fifth consecutive quarter of year-over-year revenue growth, extending the momentum we built in fiscal 2026 as we again delivered healthy operating profit and further strengthened our balance sheet.
We exceeded our guidance ranges for service revenue, total revenue, operating profit, and cash flow from operations, and delivered earnings per share at the top of our range. We had another record quarter for service revenue, and we have had positive operating profit and cash flow from operations in every quarter for more than five years. Total revenue was $190.2 million, and service revenue was $185.3 million, growing 4.9% and 5.1% year-over-year, respectively. Gross profit was approximately $117.2 million, above the gross profit dollars implied by the midpoint of our Q1 guidance.
| Metric | Period | Current guidance |
|---|---|---|
| Service revenue | Q2 FY2027 | $180M-$185M |
| Total revenue | Q2 FY2027 | $185M-$190M |
| Non-GAAP operating margin | Q2 FY2027 | 8%-9% |
| Non-GAAP diluted EPS | Q2 FY2027 | $0.07-$0.08 on ~149M diluted shares |
| Cash flow from operations | Q2 FY2027 | $9M-$11M |
| Service revenue | FY2027 | $725M-$745M (raised $18M) |
| Total revenue | FY2027 | $745M-$765M (raised) |
| Non-GAAP operating margin | FY2027 | 8.8%-9.8% (maintaining ~$70M operating income at midpoint) |
| Non-GAAP diluted EPS | FY2027 | $0.33-$0.38 (maintained), ~150M avg diluted shares |
| Cash flow from operations | FY2027 | $45M-$52M (unchanged) |
| Metric | YoY | Note |
|---|---|---|
| Total revenue | +4.9% to $190.2M | Continued strength in usage-based offerings; fifth straight quarter of year-over-year growth. |
| Service revenue | +5.1% to $185.3M | Record service revenue driven by platform usage and multi-product adoption. |
| Platform usage revenue | +~63% | All-time record; CPaaS APIs, digital channels, and AI solutions rose to ~26% of service revenue from ~17% a year earlier. |
| Non-GAAP gross margin | 61.6% | Continued mix shift toward lower-margin usage-based revenue, a deliberate choice to capture share in the fastest-growing part of the market. |
| Non-GAAP operating income | $18.9M (9.9% margin) | Above the high end of guidance; operating expenses down more than $8M year-over-year, mostly on sales-and-marketing efficiency. |
| Non-GAAP net income | $13.6M ($0.09 diluted EPS) | Higher revenue, lower operating expenses, and lower interest expense; EPS at the high end of guidance. |
| Principal debt | $309.4M outstanding | Down ~44% from the $548M August 2022 peak; a $14.5M term-loan payment was made in the quarter. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Unified platform and 'I didn't know you did that' | Years of deliberate platform investment | Management repeatedly heard customers surprised by the platform's breadth (AI Studio, programmable engagement, embedded Workforce Management, transcription), framing awareness and adoption -- not more technology -- as the central challenge and opportunity. | — |
| Usage-based model economics | SaaS seat-based revenue | Usage-based offerings carry lower gross margin but a lower OpEx profile; management runs the business to operating-income and cash-flow dollars, expecting economies of scale in newer AI products (and a geographic mix shift away from low-margin APAC) to lift margins over time. | — |
| AI Studio and agentic AI | Launched ~3.5 months ago, in beta | Over 200 organizations across many verticals built more than 2,900 agents, with over half becoming paying customers; AI is sold as a usage-based add-on to hybrid seat-based UC/CC deployments, growing well in excess of 100% year-over-year. | — |
| Partner-first go-to-market | Channel is the primary route to market | Within the existing S&M envelope, resources are shifting to partner recruitment, training, and enablement; a new consumption-based self-service small-business partner portal launched in the U.K., Ireland, and Australia; channel-generated pipeline grew ~25%. | — |
| Retention and multi-product adoption | Downsell pressure on smaller UC customers | Customer losses are declining, but street-price downsell pressure persists for a few more quarters; management sees a clear correlation between more products, higher retention, and higher revenue per customer, making multi-product adoption a top FY2027 priority. | — |
| Debt and refinancing | $548M peak debt in 2022 | Debt reduced to $309.4M; the term loan reclassifies to current liabilities next quarter ahead of its August 2027 maturity, with management confident in refinancing but not yet sharing specifics. | — |