8X8 INC /DE/
For the period ended Sep 30, 2026. Filed Nov 5, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 5, 2026
EGHT$2.13-5.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-08-05.
0001023731-26-000114
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-05.
0001023731-26-000170
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 97 previous paragraphs and 120 current paragraphs.
59 unchanged; 30 reworded; 25 added; 8 removed; 0 previous and 6 current paragraphs rearranged.
Tables are not compared: 14 previous and 15 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (25)
Current report
•Service revenue increased 4.9% to $187.8 million, compared to $179.1 million in the second quarter of fiscal 2026.
Current report
•Gross margin was 59.7%, compared to 64.8% in the second quarter of fiscal 2026.
Current report
•Operating income was $6.9 million, compared to $5.3 million in the second quarter of fiscal 2026.
Current report
•Net income was $3.4 million, compared to net income of $0.8 million in the second quarter of fiscal 2026.
Current report
•Cash provided by operating activities was $13.1 million, compared to $8.8 million in the second quarter of fiscal 2026.
Current report
•Service revenue increased 5.0% to $373.1 million, compared to $355.4 million in the six months ended September 30, 2025.
Current report
•Gross margin was 60.4%, compared to 65.6% in the six months ended September 30, 2025.
Current report
•Operating income was $11.3 million, compared to $5.9 million in the six months ended September 30, 2025.
Current report
•Net income was $2.2 million, compared to net loss of $3.5 million in the six months ended September 30, 2025.
Current report
•Cash provided by operating activities was $30.1 million, compared to $20.7 million in the six months ended September 30, 2025.
Current report
Impairment of Long-Lived Assets
Current report
Impairment of long-lived assets consists of non-cash impairment charges for right-of-use assets. During the second quarter of fiscal 2027, we partially ceased use of the Company's Headquarters. We reviewed the recoverability of the related right-of-use asset and determined this event represented an impairment indicator, because it indicated the carrying value of the right-of-use asset may not be recoverable. In connection with the partial cease-use of the Company’s Headquarters, we recorded an impairment charge of $2.9 million, as the carrying amount of the right-of-use asset exceeded its fair value based on our estimate of future discounted cash flows related to the leased facility. During the three and six months ended September 30, 2026, the non-cash charge of $2.9 million was recorded as an impairment of long-lived assets on the condensed consolidated statements of operations and comprehensive income (loss). See Note 6, Leases, for further details.
Current report
Service revenue increased by $17.7 million, or 5.0%, for the six months ended September 30, 2026, compared to the six months ended September 30, 2025. This change was primarily due to an increase of $36.2 million in platform usage revenue driven by an increase in the use of communication APIs in the Asia-Pacific region, reflecting expanded customer adoption of our usage-based offerings. This increase was partially offset by a decrease in subscription revenue of $18.5 million related to customer churn and down-sell.
Current report
Cost of service revenue increased by $27.2 million, or 24.4%, for the six months ended September 30, 2026, compared to the six months ended September 30, 2025, primarily due to an increase of $30.5 million in network and carrier service provider costs to deliver our platform usage services and support our capacity needs. This increase was partially offset by decreases of $1.8 million in salaries, benefits and consulting costs, $1.0 million in depreciation and amortization of intangible assets, and $0.5 million in amortization of capitalized software.
Current report
Cost of other revenue decreased by $1.6 million, or 11.6%, for the six months ended September 30, 2026, compared to the six months ended September 30, 2025, primarily due to decreases in salaries, benefits, and consulting costs to deliver our professional services.
Current report
Research and development expenses decreased by $0.3 million, or 0.5%, for the six months ended September 30, 2026, compared to the six months ended September 30, 2025, primarily due to decreases of $5.2 million in combined salaries, benefits, and consulting costs necessary to conduct our product, platform development and engineering efforts and $0.8 million in stock-based compensation. These decreases were partially offset by lower capitalization of internally-developed software and an increase in other costs necessary to conduct our research and development activities of $4.5 million, a $0.6 million increase in amortization of capitalized software placed into service in prior periods, and a $0.6 million increase in amortization of intangible assets.
Current report
General and administrative expenses increased by $0.3 million, or 0.6%, for the six months ended September 30, 2026, compared to the six months ended September 30, 2025, primarily due to increases of $1.7 million in transaction-related and general corporate costs and $0.2 million in facilities costs. These increases were partially offset by decreases of $1.3 million in stock-based compensation and $0.3 million in personnel and consulting costs.
Current report
Impairment of long-lived assets
Current report
Three and Six Months Ended
Current report
Impairment of long-lived assets increased by $2.9 million for the three and six months ended September 30, 2026, compared to the three and six months ended September 30, 2025. During the second quarter of fiscal 2027, we partially ceased use of office space at the Company's Headquarters. We reviewed the recoverability of the related right-of-use asset and determined this event represented an impairment indicator, because it indicated the carrying value of the right-of-use asset may not be recoverable. In connection with the partial cease-use of the Company's Headquarters, we recorded an impairment charge of $2.9 million, as the carrying amount of the right-of-use asset exceeded its fair value based on our estimate of future discounted cash flows related to the leased facility. During the three and six months ended September 30, 2026, the non-cash charge of $2.9 million was recorded as an impairment of long-lived assets on the condensed consolidated statements of operations and comprehensive income (loss).
Current report
Other income (expense) increased by $0.6 million during the three months ended September 30, 2026, compared to the three months ended September 30, 2025, primarily due to increases of $0.5 million in miscellaneous other income and $0.1 million in foreign exchange gains.
Current report
Provision for income taxes increased by $0.2 million for the three months ended September 30, 2026, compared to the three months ended September 30, 2025, primarily due to increases of $0.4 million in foreign tax expense and $0.2 million in federal tax expense, which were partially offset by a $0.4 million reduction in unrecognized tax benefit.
Current report
Provision for income taxes was relatively flat for the six months ended September 30, 2026, compared to the six months ended September 30, 2025, due to increases of $0.3 million in foreign tax expense and $0.1 million in federal tax expense, which were partially offset by a $0.4 million reduction in unrecognized tax benefit.
Current report
As of September 30, 2026, the remaining $107.5 million outstanding principal balance of the 2024 Term Loan has been classified as a current liability on our condensed consolidated balance sheets, as the final maturity date is August 15, 2027, which falls within twelve months of the balance sheet date. Management has evaluated our liquidity position and concluded that our existing cash and cash equivalents, together with anticipated cash flows from operations, are sufficient to repay the 2024 Term Loan at maturity. We are pursuing debt refinancing options for all debt instruments prior to their maturity.
Current report
On October 9, 2026, we paid the $12.5 million short-term principal payment due December 2026 under the 2024 Term Loan, reducing the remaining principal balance to $95.0 million. We have $12.5 million of mandatory principal payments remaining due for fiscal 2027, and the next quarterly payment is due on March 31, 2027. See Note 12, Subsequent Events, for more information.
Removed paragraphs (8)
Previous report
•Service revenue increased 5% to $185.3 million, compared to $176.3 million in the first quarter of fiscal 2026.
Previous report
•Gross margin was 61.2%, compared to 66.4% in the first quarter of fiscal 2026.
Previous report
•Operating income was $4.4 million, compared to $0.6 million in the first quarter of fiscal 2026.
Previous report
•Net loss was $1.2 million, compared to $4.3 million in the first quarter of fiscal 2026.
Previous report
•Cash provided by operating activities was $17.0 million, compared to $11.9 million in the first quarter of fiscal 2026.
Previous report
Other expense, net
Previous report
Provision for income taxes decreased by $0.3 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily driven by the effects of the OBBBA on federal and state taxes for the three months ended June 30, 2026.
Previous report
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 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). See Note 4, Financial Statement Components, for further details.
Reworded paragraphs (30)
Previous wording
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report. As discussed in the section entitled “Forward-Looking Statements,” the following discussion and analysis contain forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and elsewhere in this Quarterly Report, and those set forth under the section entitled "Risk Factors" in the Form 10-K for the fiscal year ended March 31, 2026.
Current wording
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report. As discussed in the section entitled “Forward-Looking Statements and Risk Factors,” the following discussion and analysis contain forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and elsewhere in this Quarterly Report, and those set forth under the section entitled "Risk Factors" in the Form 10-K for the fiscal year ended March 31, 2026.
Previous wording
We generate service revenue from subscriptions to our UCaaS and CCaaS offerings, as well as 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 and includes the use of our communications APIs, digital and voice AI interactions and telephony minutes. Usage revenue increased by 63% in the first quarter of fiscal 2027 as customers increased inbound and outbound engagement strategies using our communication APIs and AI-based interactions.
Current wording
We generate service revenue from subscriptions to our UCaaS and CCaaS offerings, as well as 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 and includes the use of our communications APIs, digital and voice AI interactions, and telephony minutes. Platform usage revenue increased by 51% in the second quarter of fiscal 2027 compared to the second quarter of fiscal 2026, driven by an increase in the use of communication APIs in the Asia-Pacific region, reflecting expanded customer adoption of our usage-based offerings. This growth was partially offset by a decrease in subscription revenue related to customer churn and down-sell, reflecting a continued shift in revenue mix from subscription-based to usage-based offerings.
Previous wording
While the implications of macroeconomic events on our business, results of operations, and overall financial position remain uncertain, we expect that difficult economic conditions could negatively impact our business in future periods. For example, our installed base includes small businesses, which tend to be disproportionately affected by macroeconomic headwinds. International revenue grew from approximately 38% of total revenue in the first quarter of fiscal 2026 to approximately 44% in the first quarter of fiscal 2027, increasing our exposure to foreign currency fluctuations. However, a significant portion of our international operating expenses is denominated in the same currencies as our international revenue, which partially mitigates the impact of currency movements on profitability. We also continue to monitor the pace of AI adoption across our customer base, which represents both an evolving competitive dynamic and a direct driver of demand for our platform capabilities and usage-based revenue.
Current wording
While the implications of macroeconomic events on our business, results of operations, and overall financial position remain uncertain, we expect that difficult economic conditions could negatively impact our business in future periods. For example, our installed base includes small businesses, which tend to be disproportionately affected by macroeconomic headwinds. International revenue grew from approximately 38% of total revenue in the second quarter of fiscal 2026 to approximately 46% in the second quarter of fiscal 2027, increasing our exposure to foreign currency fluctuations. However, a significant portion of our international operating expenses is denominated in the same currencies as our international revenue, which partially mitigates the impact of currency movements on profitability. We also continue to monitor the pace of AI adoption across our customer base, which represents both an evolving competitive dynamic and a direct driver of demand for our platform capabilities and usage-based revenue.
Previous wording
In the first quarter of fiscal 2027, we delivered the following financial results:
Current wording
In the second quarter of fiscal 2027, we delivered the following financial results:
Previous wording
Our primary focus involves the following: (i) expanding the features and functionality of our Platform for CX, (ii) increasing the use of our agentic AI solutions and communication APIs, (iii) growing our community of value-added resellers and technology partners as a means to expand distribution, especially in international regions, and (iv) increasing the efficiency of our operations through process improvements, automation, and self-service. We are embracing the use of AI internally to accelerate innovation and the introduction of new products, improve our sales productivity and conversion rates, increase the efficiency and security of our global network infrastructure, and simplify our back-office operations.
Current wording
This fiscal year our focus involves the following: (i) strengthening our partner-first go-to-market strategy and growing our community of value-added resellers and technology partners as a means to expand distribution, especially in international regions; (ii) improving customer retention while continuing to expand the features and functionality of our Platform for CX; (iii) driving multi-product adoption within our installed base by increasing the use of our agentic AI solutions and communication APIs; and (iv) increasing the efficiency of our operations through process improvements, automation, and self-service. We are embracing the use of AI internally to accelerate innovation and the introduction of new products, improve our sales productivity and conversion rates, increase the efficiency and security of our global network infrastructure, and simplify our back-office operations.
Previous wording
To assess the success of our strategies to achieve growth and increase our cash flow, our management reviews our financial performance as presented in our condensed consolidated financial statements, including trends in revenue, gross profit margin, income (loss) from operations, and cash flow generated by operations in absolute dollars and as a percentage of revenue as presented in the following table:
Current wording
To assess the success of our strategies to achieve growth and increase our cash flow, our management reviews our financial performance as presented in our condensed consolidated financial statements, including trends in service revenue, gross profit margin, income from operations, net income (loss), and cash flow generated by operations in absolute dollars and as a percentage of total revenue as presented in the following table:
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-selling 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 strategic acquisitions of technologies and businesses.
Current 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-selling of additional products to existing customers, including new products resulting from our increased investment in innovation, AI, geographic expansion of our customer base outside the United States, innovation in our products and technologies, and strategic acquisitions of technologies and businesses.
Previous wording
Other income (expense), net, consists primarily of losses on debt extinguishment, gain on warrant remeasurement, interest income, gains or losses on foreign exchange transactions, as well as other income.
Current wording
Other income (expense), net, consists primarily of losses on debt extinguishment, gains or losses on warrant remeasurement, interest income, gains or losses on foreign exchange transactions, as well as other income.
Previous wording
Service revenue increased by $9.0 million, or 5.1%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. This change was driven by an increase of $18.5 million in platform usage revenue generated primarily in the Asia-Pacific region, resulting from higher customer consumption volumes of our usage-based offerings, reflecting expanded customer adoption and usage of messaging, minutes and AI-based solutions during the period. This increase was partially offset by a decrease in subscription revenue of $9.5 million related to customer churn and down-sell.
Current wording
Service revenue increased by $8.7 million, or 4.9%, for the three months ended September 30, 2026, compared to the three months ended September 30, 2025. This change was primarily due to an increase of $17.7 million in platform usage revenue driven by an increase in the use of communication APIs in the Asia-Pacific region, reflecting expanded customer adoption of our usage-based offerings. This increase was partially offset by a decrease in subscription revenue of $9.0 million related to customer churn and down-sell.
Previous wording
Other revenue decreased by $0.2 million, or 4.5%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, due to a decrease in professional service revenue of $0.8 million, partially offset by an increase in product revenue of $0.6 million.
Current wording
Other revenue decreased by $1.0 million, or 10.1%, for the six months ended September 30, 2026, compared to the six months ended September 30, 2025, due to a decrease in professional service revenue of $1.5 million, partially offset by an increase in product revenue of $0.5 million.
Previous wording
Cost of service revenue increased by $13.8 million, or 25.7%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to an increase of $15.8 million in network and carrier service provider costs to deliver our platform usage services and support our capacity needs. These increases were partially offset by decreases of $1.6 million in salaries, benefits and consulting costs, $0.2 million in amortization of intangible assets, and $0.2 million in stock-based compensation.
Current wording
Cost of service revenue increased by $13.4 million, or 23.2%, for the three months ended September 30, 2026, compared to the three months ended September 30, 2025, primarily due to an increase of $14.3 million in network and carrier service provider costs to deliver our platform usage services and support our capacity needs. This increase was partially offset by decreases of $0.7 million in depreciation and amortization of intangible assets and $0.2 million in amortization of capitalized software.
Previous wording
Cost of other revenue decreased by $0.9 million, or 13.2%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to a decrease in salaries, benefits, and consulting costs to deliver our professional services.
Current wording
Cost of other revenue decreased by $0.7 million, or 10.1%, for the three months ended September 30, 2026, compared to the three months ended September 30, 2025, primarily due to decreases in salaries, benefits, and consulting costs to deliver our professional services.
Previous wording
Gross profit decreased by $4.1 million, or 3.4%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, driven by the shift in revenue mix toward usage-based offerings as growth in cost of service revenue outpaced service revenue growth. Generally, usage-based offerings generate higher network and carrier service provider costs per dollar of revenue relative to our subscription-based offerings, resulting in lower gross margin.
Current wording
Gross profit decreased by $4.8 million, or 4.0%, for the three months ended September 30, 2026, compared to the three months ended September 30, 2025, driven by the shift in revenue mix toward usage-based offerings, as growth in cost of service revenue outpaced service revenue growth. Generally, usage-based offerings generate higher network and carrier service provider costs per dollar of revenue relative to our subscription-based offerings, resulting in lower gross margin.
Previous wording
Research and development expenses were flat for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to decreases of $2.4 million in combined salaries, benefits, and consulting costs necessary to conduct our product, platform development and engineering efforts and $0.5 million in stock-based compensation. These decreases were offset by increases of $2.4 million in capitalization of internally-developed software, software licenses and other costs and $0.5 million in amortization of capitalized software.
Current wording
Research and development expenses decreased by $0.3 million, or 1.2%, for the three months ended September 30, 2026, compared to the three months ended September 30, 2025, primarily due to decreases of $2.7 million in combined salaries, benefits, and consulting costs necessary to conduct our product, platform development and engineering efforts and $0.3 million in stock-based compensation. These decreases were partially offset by lower capitalization of internally-developed software of $1.2 million, an increase of $1.2 million in other costs necessary to conduct our research and development activities, and a $0.3 million increase in amortization of intangible assets.
Previous wording
Sales and marketing expenses decreased by $9.4 million, or 13.8%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to decreases of $4.1 million in salaries, benefits, and consulting costs, $3.5 million in channel commissions and amortization of deferred contract acquisition costs, $1.0 million in paid media and other marketing services costs, and $0.8 million in stock-based compensation expense.
Current wording
Sales and marketing expenses decreased by $7.7 million, or 12.0%, for the three months ended September 30, 2026, compared to the three months ended September 30, 2025, primarily due to decreases of $3.7 million in salaries, benefits, and consulting costs, $2.5 million in channel commissions and amortization of deferred contract acquisition costs, $1.1 million in paid media and other marketing services costs, and $0.4 million in stock-based compensation expense.
Previous wording
General and administrative expenses increased by $1.5 million, or 6.5%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to increases of $2.4 million in transaction-related and general corporate costs and $0.5 million in personnel and consulting costs. These increases were partially offset by decreases of $0.9 million in stock-based compensation and $0.5 million in legal and regulatory costs.
Current wording
General and administrative expenses decreased by $1.3 million, or 5.6%, for the three months ended September 30, 2026, compared to the three months ended September 30, 2025, primarily due to decreases of $0.8 million in transaction-related and general corporate costs, $0.7 million in personnel and consulting costs, and $0.4 million in stock-based compensation. These decreases were partially offset by increases of $0.4 million in legal and regulatory costs and $0.2 million in facilities costs.
Previous wording
Interest expense increased by $0.2 million, or 5.3%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to capitalized interest related to property, plant and equipment from general borrowing costs recorded in fiscal 2026. This increase was partially offset by reduced debt interest due to a lower interest rate and principal balance on the 2024 Term Loan. See Note 8, Convertible Senior Notes and Term Loan, for further details.
Current wording
Interest expense decreased by $0.4 million, or 4.8%, for the six months ended September 30, 2026, compared to the six months ended September 30, 2025, primarily due to reduced debt interest resulting from a lower interest rate and principal balance on the 2024 Term Loan. This decrease was partially offset by lower capitalized interest related to property and equipment from general borrowing costs recorded in fiscal 2026.
Previous wording
We recognized $0.4 million of other expense, net during the three months ended June 30, 2026, compared to $0.4 million of other income, net during the three months ended June 30, 2025, primarily due to an increase of $0.7 million in foreign exchange losses and a reduced gain of $0.1 million on the remeasurement of the Warrants issued in connection with the 2022 Term Loan.
Current wording
Other income (expense) decreased by $0.1 million during the six months ended September 30, 2026, compared to the six months ended September 30, 2025, primarily due to an increase of $0.6 million in foreign exchange losses and a reduced gain of $0.2 million on the remeasurement of the Warrants issued in connection with the 2022 Term Loan. These decreases in other income (expense) were partially offset by increases of $0.6 million in miscellaneous other income and $0.1 million in interest income.
Previous wording
We believe that our existing cash, cash equivalents and our anticipated cash flows from operations will be sufficient to meet our working capital, expenditure, and contractual obligation requirements for a minimum of the next twelve months and the foreseeable future. Although we believe we have adequate sources of liquidity for at least the next twelve months and for the foreseeable future, the success of our operations, the global economic outlook, and the pace of growth in our markets could impact our business and liquidity.
Current wording
We believe that our existing cash, cash equivalents and our anticipated cash flows from operations will be sufficient to meet our working capital, expenditure, and contractual obligation requirements for a minimum of the next twelve months and the foreseeable future. Although we believe we have adequate sources of liquidity for at least the next twelve months and the foreseeable future, the success of our operations, the global economic outlook, and the pace of growth in our markets could impact our business and liquidity.
Previous wording
Our primary requirements for liquidity and working capital include 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 2027 is to maintain sufficient liquidity to fund our operations and growth initiatives, including planned software development activities, and to pay down our outstanding debt. As of June 30, 2026, 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, principal and 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 noncancelable 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.
Current wording
As of September 30, 2026, 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, principal and 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 noncancelable 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.
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 Repurchase 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. We evaluate opportunities for stock repurchases, and may utilize cash and cash equivalents to repurchase shares under the 2017 Repurchase Plan. During the six months ended September 30, 2025, we 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
As of June 30, 2026, our 2028 Notes were trading at a discount to their respective principal amount. We may seek to retire, refinance or purchase our outstanding debt through open-market purchases, privately negotiated transactions or otherwise, which may have an impact on our liquidity requirements. Any such transactions will be dependent upon several factors, including our liquidity requirements, contractual restrictions, prevailing market conditions, and other factors. Whether or not we engage in any such transactions will be determined at our discretion. For historical debt payments, see Note 8, Convertible Senior Notes and Term Loan.
Current wording
As of September 30, 2026, our 2028 Notes were trading at a discount to their principal amount. We may seek to retire, refinance or purchase our outstanding debt through open-market purchases, privately negotiated transactions or otherwise, which may have an impact on our liquidity requirements. Any such transactions will be dependent upon several factors, including our liquidity requirements, contractual restrictions, prevailing market conditions, and other factors. Whether or not we engage in any such transactions will be determined at our discretion. For historical debt payments, see Note 8, Convertible Senior Notes and Term Loan.
Previous wording
Cash provided by operating activities increased by $5.2 million to $17.0 million for the three months ended June 30, 2026, primarily due to an increase in cash collected from customers, a decrease in cash paid to vendors, employees and interest on outstanding debt and an increase in other accrued liabilities primarily in the APAC region. Cash used in investing activities decreased by $1.3 million to $3.1 million for the three months ended June 30, 2026, mainly due to a decrease in capitalized internal-use software costs partially offset by an increase in purchases of property and equipment. Cash used in financing activities decreased by $1.2 million to $16.2 million for the three months ended June 30, 2026, mainly due to a repurchase of common stock completed in fiscal 2026 and repayment of the 2024 Term Loan, partially offset by an increase in payments for other activities.
Current wording
Cash provided by operating activities increased by $9.4 million to $30.1 million for the six months ended September 30, 2026, primarily driven by an increase in cash collected from customers and a decrease in cash paid to vendors, employees and interest on outstanding debt. Cash used in investing activities decreased by $3.1 million to $5.6 million for the six months ended September 30, 2026, primarily due to decreases in capitalized internal-use software costs and purchases of property and equipment. Cash used in financing activities decreased by $10.5 million to $16.1 million for the six months ended September 30, 2026, mainly due to a decrease in the repayment of principal on the 2024 Term Loan and no common stock repurchases for such period, partially offset by an increase in payments for other financing activities.
Previous wording
(1) Restricted cash is related to accrued holdbacks for business combinations.
Current wording
1 Restricted cash is related to accrued holdbacks for business combinations.
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, 2026. We have the option to pay interest monthly, quarterly, or semi-annually. During the three months ended June 30, 2026, we elected monthly interest payment terms which resulted in cash payments of $1.8 million. For the three months ending September 30, 2026, we have elected monthly interest payment terms, which will result in cash payments of approximately $1.8 million. As of June 30, 2026, the debt issuance costs were amortized to interest expense over the term of the 2024 Term Loan at an effective interest rate of 8.61%.
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, 2026. We have the option to pay interest monthly, quarterly, or semi-annually. During the three months ended September 30, 2026, we elected monthly interest payment terms which resulted in cash payments of $1.8 million. For the three months ending December 31, 2026, we have elected monthly interest payment terms, which will result in cash payments of approximately $1.7 million. As of September 30, 2026, the debt issuance costs were amortized to interest expense over the term of the 2024 Term Loan at an effective interest rate of 8.61%.
Previous wording
Under the terms of the 2024 Credit Agreement, we have the right to prepay the 2024 Term Loan at any time without any premium or penalty. We completed three principal repayments of the 2024 Term Loan during fiscal 2026 for a total of $30.0 million in aggregate principal amount. We completed one principal repayment of the 2024 Term Loan during fiscal 2027 for $14.5 million in aggregate principal amount.
Current wording
Under the terms of the 2024 Credit Agreement, we have the right to prepay the 2024 Term Loan at any time without any premium or penalty. We completed three principal repayments of the 2024 Term Loan during fiscal 2026 for a total of $30.0 million in aggregate principal amount. We completed one principal repayment of the 2024 Term Loan during the six months ended September 30, 2026 for $14.5 million in aggregate principal amount.
Previous wording
As of June 30, 2026, the scheduled minimum principal repayments are $25.0 million in fiscal 2027 (comprised of $12.5 million on each of December 31, 2026 and March 31, 2027) and $82.5 million fiscal 2028 (comprised of $12.5 million on June 30, 2027 and $70.0 million due upon maturity on August 15, 2027). As of June 30, 2026, we have paid $22.5 million, $37.5 million, $22.5 million, and $10.0 million of the originally scheduled principal repayments due in fiscal 2025, 2026, 2027, and 2028 respectively, and the remaining principal amount of the 2024 Term Loan after the payments is $107.5 million.
Current wording
As of September 30, 2026, the scheduled minimum principal repayments are $25.0 million in fiscal 2027 (consisting of $12.5 million on each of December 31, 2026 and March 31, 2027) and $82.5 million in fiscal 2028 (consisting of $12.5 million on June 30, 2027 and $70.0 million due upon maturity on August 15, 2027). As of September 30, 2026, we have paid $22.5 million, $37.5 million, $22.5 million, and $10.0 million of the originally scheduled principal repayments due in fiscal 2025, 2026, 2027, and 2028 respectively, and the remaining principal amount of the 2024 Term Loan after the payments is $107.5 million.
Previous wording
As of March 31, 2026, our material cash requirements and other obligations were $69.6 million. During the fiscal year ended March 31, 2026, we increased our noncancelable three-year hosting service contract commitment from $24.1 million to $54.0 million. Under this agreement, $6.7 million remains due in fiscal 2027 and $10.0 million will be due in fiscal 2028. During the three months ended June 30, 2026, we entered into a $74.0 million noncancelable five-year hosting service contract with a cloud service provider. Under this agreement, $8.1 million remains due during fiscal 2027, $13.9 million will be due during fiscal 2028, $15.8 million will be due during fiscal 2029 and $36.2 million will be due for the remaining contractual term. 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
During the six months ended September 30, 2026, we entered into a $74.0 million noncancelable five-year hosting service contract with a cloud service provider. Under this agreement, $2.0 million has been paid as of September 30, 2026, $6.1 million remains due during fiscal 2027, $13.9 million will be due during fiscal 2028, $15.8 million will be due during fiscal 2029 and $36.2 million will be due for the remaining contractual term. 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
During the three months ended June 30, 2026, we reduced the 2024 Term Loan contractual principal by $14.5 million to $107.5 million. See Note 8, Convertible Senior Notes and Term Loan, for further details.
Current wording
During the six months ended September 30, 2026, we reduced the 2024 Term Loan contractual principal by $14.5 million to $107.5 million. See Note 8, Convertible Senior Notes and Term Loan, for further details.
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, 2026 to our critical accounting policies and estimates previously disclosed in the Form 10-K.
Current wording
Our condensed 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 condensed consolidated financial statements. There have been no significant changes during the six months ended September 30, 2026 to our critical accounting policies and estimates previously disclosed in the Form 10-K.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
Other revenue decreased by $0.8 million, or 15.7%, for the three months ended September 30, 2026, compared to the three months ended September 30, 2025, primarily due to a decrease in professional service revenue of $0.8 million.
Current report — wording carried from elsewhere
Gross profit decreased by $8.8 million, or 3.7%, for the six months ended September 30, 2026, compared to the six months ended September 30, 2025, driven by the shift in revenue mix toward usage-based offerings, as growth in cost of service revenue outpaced service revenue growth. Generally, usage-based offerings generate higher network and carrier service provider costs per dollar of revenue relative to our subscription-based offerings, resulting in lower gross margin.
Current report — wording carried from elsewhere
Sales and marketing expenses decreased by $17.1 million, or 13.0%, for the six months ended September 30, 2026, compared to the six months ended September 30, 2025, primarily due to decreases of $7.8 million in salaries, benefits, and consulting costs, $6.0 million in channel commissions and amortization of deferred contract acquisition costs, $2.0 million in paid media and other marketing services costs, and $1.3 million in stock-based compensation expense.
Current report — wording carried from elsewhere
Interest expense decreased by $0.6 million, or 13.1%, for the three months ended September 30, 2026, compared to the three months ended September 30, 2025, primarily from reduced debt interest due to a lower interest rate and principal balance on the 2024 Term Loan. See Note 8, Convertible Senior Notes and Term Loan, for further details.
Current report — wording carried from elsewhere
Our primary requirements for liquidity and working capital include 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 2027 is to maintain sufficient liquidity to fund our operations and growth initiatives, including planned software development activities, and to pay down our outstanding debt.
Current report — wording carried from elsewhere
As of March 31, 2026, our material cash requirements and other obligations were $69.6 million. During the fiscal year ended March 31, 2026, we increased our noncancelable three-year hosting service contract commitment from $24.1 million to $54.0 million. Under this agreement, $3.4 million remains due in fiscal 2027 and $10.0 million will be due in fiscal 2028.