8X8 INC /DE/

Previous wording

We serve a broad customer base, from small businesses to large global enterprises across every major industry and in over 160 countries. Our strategic focus has increasingly shifted toward mid-market, small and mid-sized enterprise, and public sector organizations, particularly those with 500 to 10,000 employees. These customers often have more complex communication and customer service needs and are more likely to benefit from and invest in multiple services across our platform. This focus aligns with our strengths, eliminating communication silos and enabling businesses to transform every customer interaction into a strategic asset. We also invest resources in retaining our small business customers, including world class onboarding and customer care specialists that are a single point of contact for all service and support needs.

Current wording

We serve a broad customer base, from small businesses to large global enterprises across every major industry. Our strategic focus has increasingly shifted toward mid-market, small and mid-sized enterprise, and public sector organizations, particularly those with 500 to 10,000 employees. These customers often have more complex communication and customer service needs and are more likely to benefit from and invest in multiple services across our platform. This focus aligns with our strengths, eliminating communication silos and enabling businesses to transform every customer interaction into a strategic asset. We also invest resources in retaining our small business customers, including world-class onboarding and customer care specialists that are a single point of contact for all service and support needs.

Previous wording

To further enhance deployment speed and geographic coverage, we leverage third-party service providers, enabling us to deliver implementation and support services efficiently at a global scale.

Current wording

To further enhance deployment speed and geographic coverage, we leverage third-party service providers, enabling us to deliver implementation and support services efficiently on a global scale.

Previous wording

We generate service revenue from subscriptions to our communications services, as well as from usage of our platform. Our service subscription plans are sold on a per-user basis and are structured with increasing levels of functionality, based on the specific communication needs and customer engagement profile of each user. Platform usage, including telephony minutes, messaging, SMS, and digital and voice chat bot interactions, encompasses committed usage, which may be bundled with our service subscription plans, and uncommitted usage, which is sold on an as-used basis.

Current wording

We generate service revenue from subscriptions to our communications services, as well as from usage of our platform. Our service subscription plans are sold on a per-user basis and are structured with increasing levels of functionality, based on the specific communication needs and customer engagement profile of each user. Platform usage revenue is revenue recognized from sales of products on an as-used basis, such as telephony minutes, messaging, SMS, and communications APIs, and digital and voice chat bot interactions.

Previous wording

Service revenue consists of communication services subscriptions, platform usage revenue, and related fees from our UCaaS, CCaaS, and CPaaS offerings. We plan to increase service revenue through a combination of new customer acquisition, cross-sell of additional products to existing customers, including new products resulting from our increased investment in innovation, artificial intelligence, geographic expansion of our customer base outside the United States, innovation in our products and technologies, and through strategic acquisitions of technologies and businesses.

Current wording

Service revenue consists of communication services subscriptions and platform usage revenue and related fees from our UCaaS, CCaaS and CPaaS offerings. We plan to increase service revenue through a combination of new customer acquisition, cross-sell of additional products to existing customers, including new products resulting from our increased investment in innovation, artificial intelligence, geographic expansion of our customer base outside the United States, innovation in our products and technologies, and through strategic acquisitions of technologies and businesses.

Previous wording

Provision for income taxes consists primarily of foreign income taxes and state minimum taxes in the United States. As we expand the scale of our international business activities, any changes in the United States and foreign taxation of such activities may increase our overall provision for income taxes in the future. We have a valuation allowance for our U.S. deferred tax assets, including federal and state net operating loss carryforwards. We expect to maintain this valuation allowance until it becomes more likely than not that the benefit of our federal and state deferred tax assets will be realized by way of expected future taxable income in the United States.

Current wording

Provision for income taxes consists primarily of foreign income taxes and state taxes in the United States. As we expand the scale of our international business activities, any changes in the United States and foreign taxation of such activities may increase our overall provision for income taxes in the future. We have a valuation allowance for our U.S. deferred tax assets, including federal and state net operating loss carryforwards. We expect to maintain this valuation allowance until it becomes more likely than not that the benefit of our federal and state deferred tax assets will be realized by way of expected future taxable income in the United States.

Previous wording

Service revenue increased by $3.5 million, or 2.0%, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024. This change was driven by an increase of $8.2 million in platform usage revenue partially offset by a decrease in subscription revenue of $4.7 million consisting predominantly of former Fuze customers.

Current wording

Service revenue increased by $4.0 million, or 2.3%, for the three months ended September 30, 2025, compared to the three months ended September 30, 2024. This change was driven by an increase of $11.9 million in platform usage revenue generated primarily in the Asia-Pacific region. This increase was partially offset by a decrease in subscription revenue of $7.9 million consisting predominantly of former Fuze customers.

Previous wording

Other revenue decreased by $0.3 million, or 5.5%, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, due to lower product revenue of $0.8 million partially offset by an increase in professional service revenue of $0.5 million.

Current wording

Other revenue decreased by $1.2 million, or 10.8%, for the six months ended September 30, 2025, compared to the six months ended September 30, 2024, due to lower product revenue of $1.6 million, partially offset by an increase in professional service revenue of $0.4 million.

Previous wording

Cost of service revenue increased by $4.3 million, or 8.7%, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily due to an increase of $7.1 million in costs to deliver our subscription and platform usage services and $1.1 million in salaries, benefits and consulting costs. This increase was partially offset by decreases of $2.4 million in amortization of capitalized software and $1.5 million in stock-based compensation.

Current wording

Cost of service revenue increased by $7.4 million, or 14.8%, for the three months ended September 30, 2025, compared to the three months ended September 30, 2024, primarily due to increases of $10.1 million in costs to deliver our subscription and platform usage services and $0.3 million in salaries, benefits and consulting costs. These increases were partially offset by decreases of $1.6 million in amortization of intangible assets, $0.8 million in stock-based compensation, and $0.6 million in amortization of capitalized software.

Previous wording

Cost of other revenue decreased by $0.6 million, or 7.7%, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily due to decreases of $0.6 million in lower product costs associated with IP telephone hardware and $0.3 million of stock-based compensation. These decreases were partially offset by an increase of $0.3 million in salaries, benefits, and consulting costs to deliver our professional services.

Current wording

Cost of other revenue decreased by $0.5 million, or 6.8%, for the three months ended September 30, 2025, compared to the three months ended September 30, 2024, primarily due to decreases of $0.5 million in lower product costs associated with IP telephone hardware and $0.2 million of stock-based compensation. These decreases were partially offset by an increase of $0.2 million in salaries, benefits, and consulting costs to deliver our professional services.

Previous wording

Research and development expenses decreased by $3.8 million, or 11.7%, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily due to decreases of $3.1 million in stock-based compensation, $1.2 million in internally-developed software and other costs and $0.4 million in costs to operate data centers and facilities. These decreases were partially offset by an increase of $0.9 million in combined salaries, benefits, and consulting costs necessary for us to conduct our product, platform development and engineering efforts.

Current wording

Research and development expenses decreased by $3.4 million, or 10.8%, for the three months ended September 30, 2025, compared to the three months ended September 30, 2024, primarily due to decreases of $2.1 million in stock-based compensation, $1.4 million in internally-developed software and other costs, and $0.6 million in costs to operate data centers and facilities. These decreases were partially offset by increases of $0.4 million in amortization of capitalized software and $0.3 million in combined salaries, benefits, and consulting costs necessary for us to conduct our product, platform development and engineering efforts.

Previous wording

Sales and marketing expenses increased by $1.1 million, or 1.6%, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily due to increases of $3.4 million in salaries, benefits, and consulting costs and $1.7 million in paid media and other marketing services costs. These increases were partially offset by decreases of $2.8 million in channel commissions and amortization of deferred contract acquisition costs and $1.2 million in stock-based compensation expense.

Current wording

Sales and marketing expenses decreased by $1.0 million, or 1.6%, for the three months ended September 30, 2025, compared to the three months ended September 30, 2024, primarily due to decreases of $3.3 million in channel commissions and amortization of deferred contract acquisition costs and $0.5 million in stock-based compensation expense. These decreases were partially offset by increases of $1.9 million in salaries, benefits, and consulting costs and $0.9 million in paid media and other marketing services costs.

Previous wording

General and administrative expenses increased by $0.2 million, or 1.0%, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily due to increases of $0.7 million in salaries, benefits, and consulting costs and $0.6 million in legal and regulatory costs. These increases were partially offset by decreases of $1.1 million in stock-based compensation expense and other costs.

Current wording

General and administrative expenses increased by $2.4 million, or 12.0%, for the three months ended September 30, 2025, compared to the three months ended September 30, 2024, primarily due to increases of $3.6 million in legal and regulatory costs, $0.5 million in facilities costs, and $0.3 million in salaries, benefits, and consulting costs. These increases were partially offset by a decrease of $2.0 million in stock-based compensation and other costs.

Previous wording

Interest expense decreased by $6.0 million, or 60.1%, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily due to a lower interest rate and principal balance on the 2024 Term Loan compared to the 2022 Term Loan and capitalized interest related to property, plant and equipment from general borrowing costs. See Note 8, Convertible Senior Notes and Term Loan, for further details.

Current wording

Interest expense decreased by $9.1 million, or 50.7%, for the six months ended September 30, 2025, compared to the six months ended September 30, 2024, primarily due to a lower interest rate and principal balance on the 2024 Term Loan compared to the 2022 Term Loan and capitalized interest related to property, plant and equipment from general borrowing costs. See Note 8, Convertible Senior Notes and Term Loan, for further details.

Previous wording

We recognized $0.4 million of other income, net during the three months ended June 30, 2025, compared to $1.7 million of other expense, net during the three months ended June 30, 2024, primarily due to a reduced gain of $1.5 million on the remeasurement of Warrants issued in connection with the 2022 Term Loan and $0.6 million decrease in interest income earned on cash and cash equivalents. These decreases were partially offset by a $0.8 million increase due to foreign exchange.

Current wording

We recognized $0.8 million of other income, net during the six months ended September 30, 2025, compared to $11.0 million of other expense, net during the six months ended September 30, 2024, primarily due to a decrease in the loss on debt extinguishment of $11.9 million and a $2.7 million decrease due to foreign exchange losses. These decreases were offset by a reduced gain of $1.8 million on the remeasurement of Warrants issued in connection with the 2022 Term Loan and a $1.0 million decrease in interest income earned on cash and cash equivalents.

Previous wording

(1) Restricted cash supports letters of credit securing leases for office facilities and certain equipment for the same periods, and an accrued holdback related to a business combination (see Note 1, The Company and Significant Accounting Policies).

Current wording

(1) Restricted cash supports letters of credit securing leases for office facilities and certain equipment for the same periods, and an accrued holdback related to a business combination.

Previous wording

Our primary requirements for liquidity and capital are working capital needs due to delivery of our various products to customers, research and development, sales and marketing activities, principal and interest payments on our outstanding debt and other general corporate needs. Historically, these cash requirements have been met from cash provided by operating activities and our cash and cash equivalents balances. Our current capital deployment strategy for fiscal year 2026 is to invest excess cash on hand to support our continued growth initiatives into select markets and planned software development activities, and pay down our debt. As of June 30, 2025, we are not party to any off-balance sheet arrangements that have had or are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures, or capital resources. Significant cash requirements for the fiscal year include our operating lease obligations, interest payments related to our debt obligations, and operating and capital purchase commitments. For information regarding our expected cash requirements and timing of payments related to leases and non-cancellable purchase commitments, see Note 6, Leases, and Note 7, Commitments and Contingencies, respectively, to the consolidated financial statements. Additionally, refer to Note 8, Convertible Senior Notes and 2024 Term Loan, to the consolidated financial statements for more information related to our debt obligations and applicable covenants.

Current wording

Our primary requirements for liquidity and capital are working capital needs due to delivery of our various products to customers, research and development, sales and marketing activities, principal and interest payments on our outstanding debt, and other general corporate needs. Historically, these cash requirements have been met from cash provided by operating activities and our cash and cash equivalents balances. Our current capital deployment strategy for fiscal year 2026 is to invest excess cash on hand to support our continued growth initiatives into select markets and planned software development activities, and pay down our debt. As of September 30, 2025, we are not party to any off-balance sheet arrangements that have had or are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures, or capital resources. Significant cash requirements for the fiscal year include our operating lease obligations, interest payments related to our debt obligations, and operating and capital purchase commitments. For information regarding our expected cash requirements and timing of payments related to leases and non-cancellable purchase commitments, see Note 6, Leases, and Note 7, Commitments and Contingencies, respectively, to the condensed consolidated financial statements. Additionally, refer to Note 8, Convertible Senior Notes and Term Loan, to the condensed consolidated financial statements for more information related to our debt obligations and applicable covenants.

Previous wording

Our outstanding 2024 Term Loan allows for voluntary prepayments. In order to reduce future cash interest payments, as well as future amounts due at maturity or upon redemption, we may, from time to time, make prepayments. The Company evaluates opportunities for stock repurchases, and may utilize cash and cash equivalents to repurchase shares under the 2017 Plan. During the three months ended June 30, 2025, the Company repurchased 1.0 million shares of common stock in the open market for approximately $1.8 million at an average price of $1.83 per share. For more information, see Note 9, Stock-Based Compensation and Stockholders' Equity.

Current wording

Our outstanding 2024 Term Loan allows for voluntary prepayments. In order to reduce future cash interest payments, as well as future amounts due at maturity or upon redemption, we may, from time to time, make prepayments. The Company evaluates opportunities for stock repurchases and may utilize cash and cash equivalents to repurchase shares under the 2017 Plan. During the six months ended September 30, 2025, the Company repurchased 1.0 million shares of common stock in the open market for approximately $1.8 million at an average price of $1.83 per share. For more information, see Note 9, Stock-Based Compensation and Stockholders' Equity.

Previous wording

Cash provided by operating activities decreased by $6.3 million to $11.9 million for the three months ended June 30, 2025, primarily due to changes in working capital, the timing of billings and customer collections, as well as the amount and timing of disbursements to our vendors. Cash used in investing activities increased $1.3 million to $4.4 million for the three months ended June 30, 2025, mainly due to an increase in capitalized internal-use software costs. Cash used in financing activities increased by $17.0 million to $17.3 million for the three months ended June 30, 2025, mainly due to principal repayments for our term loan, payments for repurchases of shares of common stock, and other financing activities.

Current wording

Cash provided by operating activities decreased by $9.8 million to $20.7 million for the six months ended September 30, 2025, primarily due to changes in working capital, the timing of billings and customer collections, as well as the amount and timing of disbursements to our vendors. Cash used in investing activities increased $1.5 million to $8.7 million for the six months ended September 30, 2025, mainly due to an increase in capitalized internal-use software costs. Cash used in financing activities increased by $1.5 million to $26.7 million for the six months ended September 30, 2025, mainly due to principal repayments for our term loan, payments for repurchases of shares of common stock, and other financing activities.

Previous wording

On August 5, 2024, we drew upon the entire facility of $200.0 million under the delayed draw term loan facility (the "2024 Term Loan") and used the proceeds of the 2024 Term Loan and cash on hand of approximately $29.0 million to repay in full the $225.0 million of outstanding principal amount and accrued interest of the 2022 Term Loan and the fees incurred in connection with the repayment (the "Repayment").

Current wording

On August 5, 2024, we drew upon the entire facility of $200.0 million under the delayed draw term loan facility (the "2024 Term Loan") and used the proceeds of the 2024 Term Loan and cash on hand of approximately $29.0 million to repay in full the $225.0 million of outstanding principal amount and accrued interest of the 2022 Term Loan and the fees incurred in connection with the Repayment.

Previous wording

The 2024 Term Loan bears interest at an annual rate equal to the Term SOFR, plus a margin of either 2.50%, 2.75% or 3.00% based on the consolidated total net leverage ratio of the Company and its subsidiaries. The initial margin was 3.00% for the fiscal quarter ending September 30, 2024 and remained 3.00% as of June 30, 2025. We have the option to pay interest monthly, quarterly, or semi-annually. During the three months ended June 30, 2025, we elected monthly interest payment terms which resulted in cash payments of $2.6 million. For the three months ending September 30, 2025, we have elected monthly interest payment terms, which will result in cash payments of approximately $2.4 million. As of June 30, 2025, the debt issuance costs were amortized to interest expense over the term of the 2024 Term Loan at an effective interest rate of 8.65%.

Current wording

The 2024 Term Loan bears interest at an annual rate equal to the Term SOFR, plus a margin of either 2.50%, 2.75% or 3.00% based on the consolidated total net leverage ratio of the Company and its subsidiaries. The initial margin was 3.00% for the fiscal quarter ending September 30, 2024 and remained 3.00% as of September 30, 2025. We have the option to pay interest monthly, quarterly, or semi-annually. During the three months ended September 30, 2025, we elected monthly interest payment terms which resulted in cash payments of $2.5 million. For the three months ending December 31, 2025, we have elected quarterly interest payment terms, which will result in cash payments of approximately $2.2 million. As of September 30, 2025, the debt issuance costs were amortized to interest expense over the term of the 2024 Term Loan at an effective interest rate of 8.65%.

Previous wording

Under the terms of the 2024 Credit Agreement, the Company has the right to prepay the 2024 Term Loan at any time without any premium or penalty. The Company completed three principal payments of the 2024 Term Loan during fiscal year 2025 for a total of $48.0 million in aggregate principal amount. On April 11, 2025, the Company prepaid $15.0 million of quarterly principal payments due under the 2024 Term Loan. As of June 30, 2025, the scheduled remaining principal repayments are $44.5 million in fiscal year 2027 ($7.0 million on June 30, 2026 and $12.5 million on September 30, 2026 and each quarter thereafter through maturity) and $92.5 million principal is due before or upon maturity in fiscal year 2028. These annualized repayments will be made in quarterly installments. As of June 30, 2025, the Company has paid $37.5 million and $3.0 million of the originally scheduled principal repayments for fiscal year 2026 and 2027, respectively, and the remaining principal amount of the 2024 Term Loan after the payments is $137.0 million.

Current wording

Under the terms of the 2024 Credit Agreement, the Company has the right to prepay the 2024 Term Loan at any time without any premium or penalty. The Company completed three principal repayments of the 2024 Term Loan during fiscal year 2025 for a total of $48.0 million in aggregate principal amount. The Company completed two principal repayments of the 2024 Term Loan during fiscal year 2026 for a total of $25.0 million in aggregate principal amount. As of September 30, 2025, the scheduled remaining principal repayments are $44.5 million in fiscal year 2027 ($7.0 million on June 30, 2026 and $12.5 million on September 30, 2026 and each quarter thereafter through maturity) and $82.5 million principal is due before or upon maturity in fiscal year 2028. These annualized repayments will be made in quarterly installments. As of September 30, 2025, the Company has paid $37.5 million, $3.0 million, and $10.0 million of the originally scheduled principal repayments for fiscal year 2026, 2027, and 2028 respectively, and the remaining principal amount of the 2024 Term Loan after the payments is $127.0 million.

Previous wording

On July 29, 2025, we prepaid $10.0 million of the long-term principal payment due in August 2027 under the 2024 Term Loan. See Note 13, Subsequent Events, for more information regarding this prepayment.

Current wording

On October 31, 2025, we prepaid $5.0 million of the short-term principal payment due in June 2026 under the 2024 Term Loan. See Note 13, Subsequent Event, for more information regarding this prepayment.

Previous wording

These short-term principal debt payments are accounted for as partial debt extinguishment transactions. The carrying value of the 2024 Term Loan, including the unamortized debt discount and issuance costs, was derecognized. The difference of $0.3 million between the cash consideration paid to partially extinguish the 2024 Term Loan and the carrying value of the 2024 Term Loan was recognized as a loss on debt extinguishment included in the loss on debt extinguishment line item recorded in other expense in the condensed consolidated statement of operations and comprehensive income (loss).

Current wording

These short-term principal debt repayments are accounted for as partial debt extinguishment transactions. The carrying value of the 2024 Term Loan, including the unamortized debt discount and issuance costs, was derecognized. The difference of $0.5 million between the cash consideration paid to partially extinguish the 2024 Term Loan and the carrying value of the 2024 Term Loan was recognized as a loss on debt extinguishment included in the loss on debt extinguishment line item recorded in other expense in the condensed consolidated statement of operations and comprehensive income (loss).

Previous wording

Loans made under the 2022 Credit Agreement bore interest at an annual rate equal to the Term SOFR, subject to a floor of 1.00% and a credit spread adjustment of 0.10%, plus a margin of 6.50%. During the three months ended June 30, 2024, we paid $7.7 million of interest under the 2022 Term Loan.

Current wording

Loans made under the 2022 Credit Agreement bore interest at an annual rate equal to the Term SOFR, subject to a floor of 1.00% and a credit spread adjustment of 0.10%, plus a margin of 6.50%. During the six months ended September 30, 2024, we paid $9.4 million of interest under the 2022 Term Loan.

Previous wording

As of March 31, 2025, our material cash requirements and other obligations were $527.1 million. During the three months ended June 30, 2025, the Company increased its non-cancellable three-year hosting service contract commitment from $24.1 million to $54.0 million. Under this agreement, $7.1 million remains due during fiscal year 2026, $10.0 million will be due during fiscal year 2027 and $10.0 million will be due during fiscal year 2028. For information regarding our material cash requirements and other obligations, see Item 7, "Management's Discussion and Analysis", in the Form 10-K.

Current wording

As of March 31, 2025, our material cash requirements and other obligations were $527.1 million. During the six months ended September 30, 2025, we increased our non-cancellable three-year hosting service contract commitment from $24.1 million to $54.0 million. Under this agreement, $4.8 million remains due during fiscal year 2026, $10.0 million will be due during fiscal year 2027 and $10.0 million will be due during fiscal year 2028. For information regarding our material cash requirements and other obligations, see Item 7, "Management's Discussion and Analysis", in the Form 10-K.

Previous wording

Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). See Note 1, The Company and Significant Accounting Policies, in the notes to the unaudited condensed consolidated financial statements included in this Quarterly Report, which describes the significant accounting policies and methods used in the preparation of our consolidated financial statements. There have been no significant changes during the three months ended June 30, 2025 to our critical accounting policies and estimates previously disclosed in our Form 10-K.

Current wording

Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). See Note 1, The Company and Significant Accounting Policies, in the notes to the unaudited condensed consolidated financial statements included in this Quarterly Report, which describes the significant accounting policies and methods used in the preparation of our consolidated financial statements. There have been no significant changes during the six months ended September 30, 2025 to our critical accounting policies and estimates previously disclosed in our Form 10-K.