Rosenblatt Securities has revised its price target for 8x8, Inc. (EGHT, Financial), reducing it from $3.30 to $2.70 while maintaining a Buy rating on the stock. This adjustment reflects concerns over continued economic challenges, recent changes in company leadership, and increasing competition within the industry.
The firm's decision to lower revenue expectations for the fiscal years 2025 and 2026 takes into account these factors. Although 8x8's latest offerings have demonstrated positive initial results, external economic pressures and heightened competition in the partner channel are likely to temper growth, according to an analyst's assessment.
As 8x8 navigates this evolving landscape, the company will need to address these challenges to maintain its position and achieve sustainable growth in the future.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 10 analysts, the average target price for 8x8 Inc (EGHT, Financial) is $2.97 with a high estimate of $4.00 and a low estimate of $1.90. The average target implies an upside of 80.00% from the current price of $1.65. More detailed estimate data can be found on the 8x8 Inc (EGHT) Forecast page.
Based on the consensus recommendation from 10 brokerage firms, 8x8 Inc's (EGHT, Financial) average brokerage recommendation is currently 2.8, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for 8x8 Inc (EGHT, Financial) in one year is $2.95, suggesting a upside of 78.79% from the current price of $1.65. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the 8x8 Inc (EGHT) Summary page.
EGHT Key Business Developments
Release Date: February 04, 2025
- Total Revenue: $178.9 million for Q3 fiscal 2025.
- Service Revenue: $173.5 million, exceeding the midpoint of guidance by $1 million.
- Operating Margin: 10.7%, slightly above the midpoint of guidance.
- Gross Margin: 69.5%, within guidance range.
- Cash Flow from Operations: $27.2 million, a record for the company.
- Debt Reduction: Reduced debt by $33 million in Q3 and an additional $15 million in January 2025.
- Net Debt to EBITDA Ratio: Approximately 2.6x, down from over 6x in fiscal Q2 2023.
- Stock-Based Compensation: 5.3% of total revenue, near a multi-year low.
- Remaining Performance Obligation: $800 million, a year-over-year increase of 4.6%.
- Guidance for Q4 2025: Service revenue expected between $170 million to $175 million; total revenue between $175 million to $181 million.
- Full Year 2025 Guidance: Service revenue between $691.3 million and $696.3 million; total revenue between $713 million and $719 million.
- Full Year Operating Margin: Projected between 10.7% and 11%.
- Full Year Cash Flow from Operations: Expected between $61 million and $65 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- 8x8 Inc (EGHT, Financial) achieved service revenue above the midpoint of their guidance range despite facing a $2 million FX headwind.
- The company generated record cash flow from operations and used excess cash to reduce debt by $33 million in the quarter and an additional $15 million in early January.
- New product monthly recurring revenue (MRR) increased by more than 60% year-over-year, driven by growth in AI-based solutions.
- Customer satisfaction remains high, with CSAT scores in the mid to high 90% range for targeted enterprise customers.
- 8x8 Inc (EGHT) continues to expand its international presence, particularly in the Asia Pacific region, securing its largest deal ever with a well-known auto manufacturer.
Negative Points
- The company is still working through revenue headwinds from Fuze customer upgrades to the 8x8 platform.
- Foreign exchange headwinds impacted total revenue by approximately $2.2 million, affecting the company's ability to meet the high end of its guidance range.
- The anticipated decline in revenue from customers still on the Fuze platform continues to offset growth.
- Operating margin guidance for fiscal Q4 2025 is expected to be lower due to seasonally higher expenses.
- 8x8 Inc (EGHT) plans to make strategic investments in fiscal 2026 that may result in a lower non-GAAP operating margin compared to fiscal 2025.
