Evercore ISI reiterated an In Line rating and a $2.00 price target on 8x8 (NASDAQ:EGHT) following the company’s latest quarterly report, noting results that surpassed expectations. As of the publication of these results the stock was trading at $1.66, situated inside its 52-week trading range of $1.52 to $3.52. InvestingPro analysis cited within the report indicates the shares may be undervalued despite a 41.55% decline over the past year.
The company recorded 3.4% year-over-year revenue growth in the third fiscal quarter, marking the third consecutive quarter of topline expansion. Service revenue for the period reached $179.7 million, which exceeded the high end of the company’s guidance and was attributed primarily to stronger-than-expected usage revenue. On a last-twelve-months basis, 8x8 reported total revenue of $727.55 million and carried a market capitalization of $230.14 million.
Management updated its fiscal year service revenue outlook, increasing guidance by roughly $12.1 million. For the fourth quarter, service revenue is now projected to grow 2.6% year-over-year. The mix of revenue shifted toward usage-based sales, which rose to approximately 21% of service revenue compared with about 14% in the comparable quarter a year earlier.
InvestingPro data included in the report highlights a robust free cash flow yield of 19% for 8x8, and analysts cited in the same data set expect the company to return to profitability this fiscal year. Those metrics were presented alongside operating trends that management emphasized as constructive for durability: Contact Center seats increased on both a year-over-year and sequential basis, countering market concerns that artificial intelligence could be reducing seat counts.
Company commentary emphasized accelerating AI deployments and broader multi-product adoption as customers transition from pilot programs into scaled production use. The completion of the Fuze migration was confirmed, but management said the migration creates a revenue headwind of about $10 million that will extend into fiscal year 2027. That impact is expected to be concentrated in the first half of fiscal 2027 and to abate fully by the fourth quarter of that fiscal year.
In related financial disclosures, 8x8 reported third-quarter fiscal 2026 earnings that beat analyst expectations. The company posted earnings per share of $0.12 against a consensus of $0.09, and quarterly revenue of $185.1 million topped the projected $179.65 million. Despite the beat on both EPS and revenue, the stock moved lower in aftermarket trading, a decline the company and market observers attributed to broader market conditions rather than the reported quarter itself.
These results underscore a combination of operational momentum in usage-driven service growth and near-term balance-sheet and cash generation strengths, while also calling attention to transitional items - notably the Fuze migration - that will weigh on revenue until the scheduled roll-off in fiscal 2027. Investors continue to evaluate how the company converts pilot AI projects to larger-scale deployments and how the evolving revenue mix supports margin and profitability targets under the updated guidance.
Key points
- Evercore ISI maintained an In Line rating and a $2.00 price target on 8x8 following results that beat expectations.
- Service revenue reached $179.7 million and total trailing 12-month revenue was $727.55 million; usage-based revenue rose to ~21% of service revenue.
- Financial metrics include a 19% free cash flow yield and analyst forecasts of profitability this fiscal year; market cap stood at $230.14 million.
Sectors impacted
- Cloud communications and enterprise software - trends in usage-based revenue and contact center adoption.
- Technology and business services - AI deployment and multi-product adoption dynamics.
Risks and uncertainties
- The Fuze migration created a roughly $10 million annualized revenue headwind expected to persist into fiscal 2027, with the impact concentrated in the first half and fully rolling off by the fourth quarter of fiscal 2027 - a transitional revenue risk for the communications sector.
- Despite an earnings and revenue beat, shares declined in aftermarket trading amid broader market conditions, reflecting market volatility risk for shareholders in the technology and software sectors.
- Although analysts project profitability this fiscal year, future results depend on converting pilot AI initiatives into scaled deployments and sustaining usage growth - an operational execution risk relevant to enterprise software and cloud services providers.