[Management View]
8x8 accelerated migration from the legacy Fuse platform in Q4 FY2025, reducing revenue headwinds and simplifying operations. Product innovation advanced with AI features and expanded technology partnerships, supporting customer wins across sectors. Management emphasized balance sheet health, debt reduction, and lower stock-based compensation, resulting in four consecutive quarters of stockholders’ equity growth.

[Outlook]
Management projects a return to high single-digit service revenue growth by FY2028 as Fuse headwinds subside and cross-sell momentum builds. AI-based product enhancements and omnichannel integrations are key differentiators. Interest expense is expected to decline in FY2026 following debt repayments, supporting stable non-GAAP net income despite planned operating margin compression.

[Financial Performance]
Total revenue reached $177 million in Q4 FY2025, near the midpoint of guidance. Service revenue was $171.6 million, with positive YoY growth excluding Fuse revenue. Adjusted gross margin was 69%, and operating margin was 10%. Operating cash flow was $5.9 million in Q4, totaling $63.6 million for FY2025. Debt reduction exceeded $209 million since August 2022.

[Q&A Highlights]
Question 1: What are you hearing from field reps and partners regarding macro impacts? Is it affecting sales cycles or spending delays?
Answer: In March and April, there was chaos in the US with elongated deal cycles and shrinking deal sizes. However, May has been calmer, and the rest of the world seems unaffected, continuing to progress steadily.

Question 2: Can you clarify the remaining changes in your go-to-market strategy and provide adjusted service revenue growth for FY2026 excluding Fuse?
Answer: The go-to-market strategy is a work in progress, focusing on solution selling and outcome-based selling. Heavy reorganization is mostly complete, with fine-tuning expected over the next year. Revenue growth excluding Fuse was 4.6% YoY, with positive growth expected next year as headwinds diminish.

Question 3: How do you plan to achieve high single-digit growth, considering peers report growth deceleration in CCaaS and UCaaS?
Answer: Growth is driven by internal factors, including increased multiproduct customers, new product sales, expanded distribution, and improved GTM performance. The growth rate is based on internal execution rather than market changes.

Question 4: Can you explain the cash flow guidance for FY2026, considering margin contraction?
Answer: The $10 million range reflects investments in growth and maintaining stable net income. The approach is measured, with a focus on generating substantial cash flow.

Question 5: Why is 8x8 winning in the CCaaS space, and how is CPaaS performing in APAC?
Answer: 8x8 offers best-in-breed technology from a single vendor, with integrated solutions and compelling commercial offers. The UK market performed well, and CPaaS continues to be a high-growth business, integral to 8x8's strategy.

Question 6: What drives high single-digit revenue growth by FY2028, post-Fuse transition?
Answer: Growth is driven by increased multiproduct customers, higher retention rates, new product adoption, and usage-based business growth. Once Fuse is phased out, core business growth will shine through.

Question 7: What is the current focus after improving the balance sheet and expense structure?
Answer: The focus is on accelerating growth, investing in CPaaS, and improving distribution as Fuse transitions are completed.

Question 8: What caused the slowdown in new product growth and the step down in RPO?
Answer: The slowdown is attributed to macroeconomic factors and larger compares. The RPO step down is mainly due to the accelerated Fuse transition.

[Sentiment Analysis]
Analysts and management maintained a constructive tone, focusing on strategic execution and growth potential despite macroeconomic challenges. Management expressed confidence in overcoming Fuse-related headwinds and achieving long-term growth.

[Quarterly Comparison]
| Metric | Q4 FY2025 | Q3 FY2025 | Q4 FY2024 |
|--------|-----------|-----------|-----------|
| Total Revenue | $177M | $171M | $165M |
| Service Revenue | $171.6M | $166M | $160M |
| Gross Margin | 69% | 70% | 68% |
| Operating Margin | 10% | 9% | 8% |
| Operating Cash Flow | $5.9M | $6.5M | $5.2M |

[Risks and Concerns]
Risks include macroeconomic uncertainty, tariff impacts, and potential delays in customer spending. The transition from the Fuse platform poses challenges, with conservative estimates on retained revenue.

[Final Takeaway]
8x8's Q4 FY2025 performance reflects strategic execution in migrating from the Fuse platform and advancing product innovation. Management is optimistic about achieving high single-digit service revenue growth by FY2028, driven by AI enhancements and expanded partnerships. Despite macroeconomic challenges, the company is focused on internal execution to sustain growth and profitability. Investors should monitor the Fuse transition and macroeconomic impacts on customer spending.