8x8 Inc

Welcome to the second quarter 2025 8x8 Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Kate Patterson, VP of Finance. Please go ahead.

Thank you. Good afternoon, everyone. Today's agenda will include a review of our results for the second quarter of fiscal 2025 with Samuel Wilson, our Chief Executive Officer, and Kevin Krause, our Chief Financial Officer. Following our prepared remarks, there will be a question and answer session. Before we get started, let me remind you that our discussion today includes forward-looking statements about future financial performance, including investments in innovation and our focus on profitability and cash flow, as well as statements regarding our business, products, and growth strategies. We caution you not to put undue reliance on these forward-looking statements, as they involve risks and uncertainties that may cause actual results to vary materially from forward-looking statements, as described in our risk factors in our report filed with the SEC. Any forward-looking statements made on this call and in the presentation slides reflect our analysis as of today, and we have no plans or obligations to update them. All financial metrics that will be discussed on this call are non-GAAP unless otherwise noted. These non-GAAP metrics, together with year-over-year comparisons in some cases, were not prepared in accordance with U.S. generally accepted accounting principles, or GAAP. A reconciliation of these non-gap metrics to the closest comparable gap 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. With that, I'll turn the call over to Samuel Wilson.

Good afternoon, everyone. Thank you for joining us today to discuss our results for the second quarter of fiscal 2025. I am delighted to share that we delivered a quarter of solid performance doing better than expected for key financial metrics like service and total revenue and non-GAAP operating income. Also, I am very pleased to report that we generated an operating profit on a GAAP basis. I believe our results this quarter are a testament to the increasing effectiveness of our go-to-market strategies and the strengths of our product offerings. While it is still early, we are seeing important indications that our transformation strategies are working. Reinforcing my conviction is the fact that revenue generated by customers on the 8x8 platform, which excludes revenue from customers still on FUSE, was up on a year-over-year and quarter-over-quarter basis. We first outlined our transformation initiatives nearly two years ago and we saw accelerating progress against every one this quarter. Briefly, these are, one, accelerate innovation in contact center while maintaining leadership in cloud telephony. Two, establish leadership in our communications platform as a service offerings in the Asia Pacific and leverage these capabilities globally. Three, focus on small and mid-sized enterprises. Four, improve platform win rates and sales productivity. Five, maintain an outstanding experience for our customers. And six, build a fortress balance sheet by reducing debt and remaining vigilant in maintaining our costs, allowing us to deliver value to our investors, customers, and partners. Starting with communications platform as a service, we posted a strong quarter in Q2 with platform usage revenue up more than 20% year-over-year and close to an all-time high. Notably, we achieved our highest single platform usage revenue day ever in early September as we continued to extend our leadership, particularly in the Asia Pacific and European regions. Engagement through our public APIs continues to increase, and sales of non-SMS products grew more than 50% year over year. We recently added Descope, a customer identification and authentication management solution, as our first technology partner ecosystem member to integrate with our communications platform as a service. The customer response in a series of Asia-Pacific innovation roadshows was fantastic. Neuron Group, a leading Malaysia-based e-commerce and digital content provider, is a great example of how our expanded solutions are addressing more complex requirements. With more than 5,000 merchants and 5 million-plus active users across three countries, they chose 8x8's WhatsApp business APIs to deliver bulk messaging, automated communications, and real-time engagement to their community. I believe innovation is the spark that gets the growth engine started. It enables new conversations and creates new opportunities. This is why we continue to invest 15% of our revenue in R&D on a non-GAAP basis. The results of our investment in R&D are visible across our CX solutions. Let me share a few data points. Sales of new products were up more than 60% year over year, an acceleration from the prior quarter. Sales of artificial intelligence-based new products, including Intelligent Customer Assistant and other solutions from our technology partner ecosystem, increased more than 50% sequentially and more than 200% year over year. We have hosted more than 1 million interactions since these products were introduced and usage is accelerating. I believe this growth reflects our differentiated approach to AI, which is built on four core pillars, each focused on enhancing customer experience through powerful, reliable AI capabilities. First, we prioritize comprehensive AI-driven data processing across all voice and digital interactions on our platform, which can deliver accurate transcriptions, summaries, sentiment analysis, and topic tagging while keeping enterprise data secure and compliant. Second, we developed an ecosystem of what we believe to be best in class AI applications integrated seamlessly into our CX solutions. This approach allows our customers to achieve consistent AI driven insights without duplicating costly processing efforts like real-time transcription. Third, We're investing in AI insights that assess the full CX deployment, identifying operational optimizations across both human and AI elements, benefiting both native 8x8 tools and third party components. Finally, our professional services team is expanding its AI consulting services, providing clients with hands-on support to drive value from their AI solutions swiftly and sustainably. AI is just a tool, but we are focused on turning our AI technologies into the business outcomes that our customers want. Our focus on business outcomes is leading to an acceleration in new logo business, coupled with an increase in multi-product lands. New logo business accounted for an increased percentage of our bookings in the second quarter. It is worth noting that the percentage of bookings from new logos has increased in each of the last three quarters. Once again, the majority of our top 20 new logo deals included contact center as a service in the initial commitment and several included more than four products. If innovation is the spark that ignites the growth engine, our relentless focus on customer success is the accelerator. Our customer loyalty and revenue retention for customers on the 8x8 platform is at multi-year highs. Our customers are being deployed faster with a higher level of satisfaction and a shorter time to value. Our support organization has maintained world-class satisfaction metrics for seven consecutive quarters. And our proactive white glove coverage of our top 1,000 revenue-generating accounts has increased customer loyalty and reduced customer churn. We have seen public recognition of our success in the awards we have received. One of our largest wins this quarter demonstrates what I mean. A leading specialty retailer chose 8x8 to help them move from a piecemeal Cisco on-premise solution to a scalable single integrated UCNCC cloud platform. Their implementation will ultimately span 1,600 locations and more than 20,000 employees. A critical factor in their decisions process was the recommendation of an affiliated in-store service provider who had used our UC and CC solutions for four years. The ability to integrate the two solutions to enable a seamless customer experience was a clear differentiator, but we would not have had a chance to prove it if the service partner had not been satisfied with their 8x8 solution. Their recommendation is not unique. This quarter, we earned the Customers Love Us badge on G2, the customer review site, because they do. Cronus Health, a leading provider of healthcare revenue cycle management solutions, is another example of how our investments in customer success are paying off. A fused customer using Teams for collaboration They chose to upgrade to the 8x8 platform after an extensive proof-of-concept period supported by a cross-functional center of excellence team. This was one of several Q2 deals representing more than a million dollars in annual recurring revenue. Speaking of our portfolio of Teams integrations, 8x8 is proud to be the only Gartner UC Magic Quadrant leader, besides Microsoft itself, to be accepted into the Operator Connect program. leveraging our trusted and strategic partnership with Microsoft to deliver comprehensive, integrated Teams solutions. Scandinavian Designs, a brand with 40-plus showrooms across 16 states, chose 8x8 Contact Center with Operator Connect for Microsoft Teams to migrate to a single cloud platform. Differentiated features like Teams Chat Federation and presence visibility in agent workspace were key factors in their decision. They also liked our robust analytics and dashboards with call transcriptions and evaluation capabilities thrown in. 8x8 now supports more than 500,000 Teams users and our Teams base continues to grow quarter over quarter and year over year. Another important aspect of our growing momentum has been our commitment to expanding our partner relationships. including both our reseller partner programs and our technology partner ecosystem. Both programs are closely aligned with our commitment to go beyond technology to deliver outcomes to our customers. New partner Buchanan Industries embraces this vision on multiple levels. A leading managed IT service provider focused on mid-market and enterprise organizations, Buchanan believes in delivering business outcomes by turning their technology into into a powerful competitive business advantage. Not only did they sign up as an 8x8 value-added reseller, they are also migrating their legacy on-prem system to 8x8 contact center as a service solution for their nearly 300 contact center agents. They chose 8x8 for our shared values and vision, our comprehensive omni-channel solutions, our 7x24 agent support, and our exceptional partner relationships. Our technology partner ecosystem has also been a clear win for us and our customers. By offering tightly integrated solutions with a carefully curated community of what we believe are the best in breed partners, we expanded our offerings and accelerated our time to value for our customers. I already mentioned our new partner, Descope. We also added Regal.io a leader in marketing campaign management to the exclusive sell with eight tier. We already have a customer using Regal and 8x8 in high volume production. These customer wins in our Q2 results reflect the hard work and dedication of our team over the last two years. They underscore the resonance of our strategic initiatives in the market, increasing my conviction in our path and my confidence in the future of 8x8. In closing, I want to express my gratitude to our customers, partners, employees, and you, the investors. Your trust and commitment to 8x8 are what empower us to continue our journey of growth and innovation. We are excited about the opportunities ahead and are committed to converting our momentum into increased value for our investors, partners, and customers. With that, I will turn the call over to Kevin, who's back this quarter, for more details on our financial results.