8x8 Inc

Thank you for standing by, and welcome to 8x8's fourth quarter and fiscal year 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. To remove yourself from the queue, you may press star 11 again. I would now like to hand the call over to Kate Patterson, Vice President, Finance. Please go ahead.

Thank you. Good afternoon, everyone. Today's agenda will include a review of our results for the fourth 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 our future financial performance, including investments and innovation and our focus on profitability and cash flow, as well as statements regarding our business, product, 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-GAAP metrics to the closest comparable GAAP metric is provided in our earnings release and our 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 review our fourth quarter and full fiscal year 2025 performance. I want to express my deep appreciation to our global team, our customers, our partners, and our investors. This quarter reflects the grit, focus, and long-term thinking that defines 8x8 and gives me real confidence about where we're headed. Before we get into the details of the quarter, I want to address a few of the broader market dynamics. While our opportunity remains large, the economic picture has shifted, and recent tariff actions and global uncertainty have added more noise to an already complex environment. We're staying focused on what we can control, disciplined execution, platform innovation, and delivering outcomes that matter to our customers. Markets will ebb and flow, but what doesn't change is our commitment to building a durable, cash-generated business that creates long-term value, and that's exactly what we're doing. We're not dismissing these challenges, but we've prepared for them. Our business model is built on resilience, and the results for the quarter reflect operational discipline, business quality, and the flexibility to keep investing where it counts. Our theme for today is simple. the flywheel is starting to turn. After several years of foundational work, we are seeing real acceleration in our core 8x8 revenue, platform differentiation, and strategic execution. This momentum is visible in our numbers, in our innovation, and in the way our customers are responding. Let's walk through three key messages we believe define the fiscal fourth quarter and FY25, and why I'm confident we have a solid future. As many of you know, we began a massive transformation of 8x8 in earnest in fiscal 2023 on the heels of our acquisition of Fuse. We had a clear plan. Fix our financial model, invest in innovation and retention, and deliver measurable CX outcomes for our customers. We took bold steps to set the stage. We began paying down debt to increase our financial flexibility. We rebranded the company and completely rebuilt our go-to-market functions while continuing to invest. and innovation. Now, as we exit fiscal 2025, I am confident in saying we are starting to see the results of our GTM rebuild, which is not complete yet. For the fourth quarter, year-over-year growth in 8x8, excluding revenue from all FUSE customers, accelerated to 4.6% from 2.7% in Q3. This is the second consecutive quarter of improvement and marks our highest growth rate in 8x8 standalone service revenue in 10 quarters. We've also accelerated when looking at the entire fiscal year. For fiscal 2025, 8x8 service revenue, again excluding revenue from Pew's customers, grew 2.8% compared to growth of 1.8% in fiscal 2024. Lastly, as Kevin will discuss, the combined cash flow from operations for fiscal 24 and 25 is the highest two years ever at 8x8 and over half our market capitalization as of Friday. We have used the cash wisely, paying off debt, and reinvesting in platform innovation that is driving today's growth. Highlights for the fourth quarter include continued rapid adoption of our communications APIs, also known as CPaaS. The number of interactions surged in the fourth quarter, driving solid growth. The number of customers with three or more products increased 13% year-over-year to more than 700 customers. This reflects increasing cross-sell to our installed base, as well as landing more new logos with multiple products. Demonstrating this trend, 80% of our top 20 new logo customers and two-thirds of our top 20 add-on deals included both unified communications and contact centers. We saw strong momentum in sales of our Microsoft Teams integrations, with new license sales up 72% in the fourth quarter of 2024. The cumulative number of licenses sold into Teams environments grew 30% year-over-year and now totals more than 550,000 seats. We also continue to see sizable UC-only deals as customers migrate from legacy vendors, in particular Avaya, Mitel, and Cisco. We win these deals based on the strength of our unified platform, and the initial UCaaS deployment is typically the first phase of a multi-product adoption. Finally, we made substantial progress in upgrading customers from the FUSE service platform to 8x8. We expect to have all the customers fully off the legacy FUSE platform by the end of the calendar year. I believe these are important signals, especially in the current uncertain environment. We still have a lot of work to do, but we are seeing a steady climb, not just isolated wins. That gives me confidence as we look beyond our fiscal year 2026 into fiscal 27 and fiscal 28. Our second key message this quarter is about innovation, specifically how we've added new AI-based capabilities across our platform, expanded our technology partner ecosystem, and improved usability and accessibility. In the quarter, we introduced a series of platform-level enhancements designed to solve systematic challenges in customer experience, employee efficiency, and digital transformation. Before we go through the highlights, it makes sense to add the context of how the 8x8 platform for CX is differentiated and why it matters for customers. You already know that 8x8 was the first in the industry to deliver an integrated platform with contact center, unified communication, and communications APIs built into a single cloud-native solution. Agentic AI requires data quantity, quality, and context to deliver on its promise. 8x8's platform for CX delivers all three via the Customer Interaction Data Platform, or CIDP. CIDP captures, connects, and contextualizes interaction data across the organization and across channels. With fully AI-optimized data, customers are able to unlock the potential of an expanding portfolio of powerful AI capabilities, including intelligent routing, incentive analysis, live agent guidance, journey optimization, and a host of other capabilities available from 8x8 and our partners. In early April, we showcased to our UK Customer Advisory Council and our global industry analysts how our unified platform and approach to data differentiated our solutions, and they were notably impressed. We heard comments like, quote, this feels like a company starting to go on offense, not just cleaning up from the past, and, quote, your biggest differentiator might be how you show up. There's a level of honesty and transparency we don't often see in this space. During these events, we showcased recent innovations, including platform-wide AI chat summarization and composed with AI capabilities. Advanced CX solutions that leverage the power of our platform, such as 8x8 Journey IQ, which gives businesses real-time visibility into the customer journey, not just inside the contact center, but across every department and channel. and 8x8 AI Orchestrator, which connects communications flows using a GUI across systems, ensuring that transitions between bots, agents, and departments are seamless, smart, and contextual. Expanding an omni-channel, we became the first contact center provider to fully integrate rich communication services, or RCS, business messaging, enabling rich, branded, two-way messaging for digital channels. I'm proud to say we are carrying traffic today, and I'm bullish on RCS. We launched Apple Pay and Google Pay support via 8x8 SecurePay, streamlining transactions and expanding self-service payment options. We also expanded our technology partner ecosystem, or TPES for short, to provide customers with best-in-breed from single-source solutions. New integrations include call cabinets, to deliver industry-leading compliant call recording for regulated industries. SpinSci, powering EHR-compliant patient engagement in healthcare. And lastly, Meltwater, allowing social media engagement to be routed, tracked, and resolved within the contact center. As with other TPES partners, these solutions are deeply integrated with our platform and our customer interaction data layer to deliver complete solutions and specific outcomes. This allows the customers to punch above their weight and deliver tailored omnichannel customer experiences typically available only to the largest enterprises. Our platform strategy, continued innovation, and our focus on outcomes is clearly resonating with customers. Let me highlight a few wins. A prominent UK-based travel company who chose 8x8 platform for CX for its seamless communication and collaboration across the organization combined with the scalability and global reach to power their ambitious expansion plans. They are deploying 8x8 work, contact center, and voice for teams. A home-building products company where our success was driven by our compelling AI vision and the ability to consolidate multiple legacy systems. Our team delivered a tailored, impactful demonstration that showcased how 8x8 could simplify operations and deliver the features they needed. A leading UK-based mortgage lender, where we demonstrated a foolproof solution that aligned closely with their strategic goals. We stood out from competitive solutions with a unified user experience and tangible cost benefits. Products included 8x8 Voice for Teams, 8x8 Contact Center with enhanced IVR. A US-based network of medical clinics, where we were able to demonstrate the integration of their EHR system with 8x8 Contact Center, an initiative that the competition was either unable or unwilling to support. Each of these wins and other wins profiled in the Earnings Act demonstrate the breadth of our solution. Perhaps most importantly, they showcase our consultative, partner-first approach, solving customer challenges and delivering outcomes. The third and final key message is about the multiple transitions we are navigating in the uncertain economic environment. We believe these transitions are essential to position us for long-term, durable growth, profitability, and value creation. Let me touch on the largest of these initiatives. First, our go-to-market rebuild and channel evolution. After slashing costs in fiscal 23 and early fiscal 2024, we have rebuilt our go-to-market model around solution selling and partner enablement. This has required making changes in our sales organization and building innovative training and robust processes for accountability, and we're seeing performance improve. The next initiative is continuing to grow our enterprise business while maintaining our installed base of small business customers. We know our innovation strategy and focus on outcome resonates with small and medium-sized enterprises, and we are investing in targeted programs to reach new logos and expand our wallet share within existing customers. But this does not mean we are abandoning our installed base of small business customers. Investments expanding AI capabilities in 8x8 work and other UC feature releases, along with resources dedicated to education and customer success, all support this customer cohort. Finally, we continue to upgrade the FUSE customer base to 8x8 platforms. We recognize that not all of the remaining customers will make the transition, and we are being conservative in our estimates of the amount of revenue we will retain. Those that upgrade are exceptionally happy and have a net dollar retention rate above 100%. These transitions are not easy, but they're setting the stage for what comes next. As we look forward, we remain realistic about the challenges ahead, but we are seeing signs of a tailwind. Our 8x8 business is growing, and our growth is accelerating. Again, growth is not a straight line, but we continue to believe that high single-digit revenue growth and double-digit operating margins are achievable in the next few years. Our innovation engine is delivering, and our own platform and new products are being adopted at scale. And we are navigating through the current economic conditions while ensuring our GTM and financial foundations are stronger than they've been in years. Our guidance for fiscal 26 reflects the impacts of our decision to close down the FUSE platform and that impact lessens substantially in fiscal 2027. We believe that with continued execution, we can achieve that high single-digit service revenue growth by fiscal 2028. And we believe we can improve each year between now and then. Thank you for your continued support. I will now turn the call over to Kevin to take you through a detailed financial performance.