8X8 INC /DE/ — Call Transcript 2026

Casts. Thank you for tuning in. With me today is Kevin Kraus, the CFO of 8x8. Kevin, thank you for being here with us. Thank you, Peter. Appreciate the opportunity to speak today. No, no. It's been an interesting market for you guys, especially in the UCaaS/CCaaS world. There's been a lot of convergence in terms of consolidated platform. I think you guys have done a pretty incredible job building out, I think, organically, mostly the full stack. I prepared questions, but maybe one of the first questions I have is maybe just give us a highlight of where this market is going, what you guys have built, and then with AI, where do you see this market in the next 12-24 months? Sure, yeah. Just at a high level for the people who might not know much about us, we are a UCaaS/CCaaS communication API company, and we've got some significant AI products that have been developed that are out and that are coming out. We're one of the few players out there that have all of those packaged, let's say, into a full platform. We're pretty unique in that regard. To your question about where the market's going, we see this convergence of all of these technologies into a single platform, which we've built natively. Like you said, we do have technology partners. But we've built out, we've made investments in innovation. We've built out a pretty robust product portfolio, so we can offer a lot of different products to our customers, and solutions. The focus there for us is we like to build our multi-product customer base. We look at multi-product customers, which has grown 16% year-on-year, and they become stickier customers. We're able to serve them better. They're happier customers. Their customers are happier. Our whole focus has been addressing all of the communications needs on a single platform, and we compete very well because we're able to offer all of these things where we're able to consolidate. In a competitive situation, we're able to consolidate. One of our customers, they might be buying things from two or three other vendors, and they consolidate into us. That has happened, and it does happen each quarter. That's where we're focused. The voice infrastructure is another very, very important thing about what we do. Contact centers and AI agents in particular, they rely on the voice infrastructure. Our contact center platform enables all of that. We can synthesize customer interactions, capture the conversations, and work with all that data natively on our platform. Right. I think on the call, your call a couple of weeks ago, Sam kind of called out, like this was a turn. 2026, I guess fiscal 2026 was a turning point for you guys, four consecutive quarters of accelerating growth. You hit GAAP profitability for the first time, I think since 2015. 2015, yeah. If I take a step back, what's the next leg of, what's the journey look like? Is it stabilizing growth at where it is, low single digits, or is there a path towards re-acceleration? Just walk us through what the journey looks like and where you guys are, what you are targeting. Sure. We're in the midst of a multi-year journey, okay? We've had 21 consecutive quarters of positive cash flow at this point, positive non-GAAP operating income. Non-GAAP net income is up 19% year-over-year. What we've done as a company is we've focused on operating discipline, debt paydown. Our debt interest expense, the cash paid for debt interest has gone down something like 51% over the last two years. Yeah. That is a big reason why our net income has grown. The focus has been on investing in areas that we know will provide a return. We mentioned the AI products and things like that. We're focused on operating discipline and profit and cash flow sustainability, not necessarily the highest revenue growth trajectory. That's reflected actually in our fiscal 2027 guidance because we've kind of deliberately ran a conservative model on the top line. Our focus to continue delivering the operating profit and the cash flow is still there. Over time, we think that we're gonna be, look, our focus is on double-digits, we guided 9%-10% non-GAAP operating income, our focus is on double-digit and then grow from there. At this moment, we're transitioning into a revenue mix that's more usage-based, particularly around AI products. That's harder to forecast. Yeah. We mentioned this on our earnings call. You heard that from Sam and me. We're not necessarily leaning forward because it's harder for even our own customers to understand how much consumption they're going to have. That's a little bit harder to predict in the near term, but we do have good traction there. The usage revenue is reflected because it's gone up 70%. It was Q4, up 70%. Yeah. Year-on-year, up 50% for the full year, year-on-year. I look at this as kind of we still have a little bit of the revenue headwinds too from Fuze for the first three quarters because we've transitioned all those customers out by our fiscal fourth quarter. Yeah. I look at this as a double-digit profitability and then growing from there over time. Of course, the revenue, the revenue growth and getting the better margins out of that revenue. Good. Maybe to that point, you know, 70% up, I mean, usage was up 70%, I think 23% now of service revenue versus 14% last year. Yes. Maybe like, what's the, how sustainable is that pace of growth? Second is, on the call, we talked about the predictability of revenue as you changed the pricing model. How are you predicting growth this year, and then what's the sustainability of that growth, and I guess, what your customers are coming back to you with? If you're talking about usage specifically, I think the usage revenue growth is durable. A lot of that growth came from our APAC or CPaaS product APIs, which is most of our usage revenue now, but there's a lot of new things coming out, and that's all AI. The CPaaS products have a lot of AI-driven product in that too. We have new products coming out that are really exciting for us. AI Studio is an example where it's a native agentic AI agent developer that can be programmed using natural language. That's showing early, it's brand new, but it's showing very early pickup. Not material revenue yet, but it's something that we believe in. I think it's pretty durable, and the one thing I would say is the customers that we see buying our usage-based products, if you measure NRR, it's not necessarily committed usage, but if you look at it doesn't toggle on and off. Yeah. Just because it's uncommitted usage. We see in certain areas of our company, APAC particularly, the net revenue retention of these customers is very high. I feel very comfortable and confident in that revenue stream, and we believe that that's the way the market is going, and we're following that market. One of the other things that we're working on, and one thing I want to point out from a financial perspective is that while that margin profile might be a little bit lower at the gross margin level, it can really inflect up and deliver the dollars. Okay. That particular usage revenue, generally, for us, would have a very light OpEx component. OpEx comes through. So, a lot more of that, a lot of the OpEx is relatively light relative to the subscription-based revenue that we have. A lot of those dollars, more of those dollars can drop to the bottom line, as that part of the business scales. Are there specific dynamics to the APAC customers at a vertical customer size that you think can replicate here in the U.S. that's maybe lagging? The. In terms of adoption? I think that the, I think that we can have customer sizes, like enterprise customers in the U.S. that are, if you're talking about CPaaS products specifically, the communication APIs, one thing we can do is we can expand that more geographically. It's APAC-focused, but we do a lot of that revenue in the U.K. now, and we can bring it to other geos for better margins. Other usage-based products, we see this delivery, our ability to sell it, I think pretty much everywhere. We're starting out strong in North America and the U.K. right now for what we're doing, and we see very, very healthy interest levels. We've given some products away for free, and they're just being snatched up, and now, we're starting to see customers turn over into paying customers very, very quickly. It's only the very, very beginning of that, but it's happened very quickly, in a matter of weeks. I'm very, obviously, happy to see that. Yeah. For our company, and that's the type of go-to-market, that's the type of product that people want, that customers want. They want to be able to consume and pay for what they use, and we see that potentially having a pretty huge uptake for us. What are you seeing in terms of replacement then? You're adapting more of your products. Who are they replacing, and then where is the budget coming from for, call it, the incremental spend? From our customers? Well, I think that there could be, I could talk about that from the standpoint of internal efficiencies that we're seeing from the use of AI products ourselves, so we use AI, and my group in G&A uses AI to improve efficiency. In our own company, we have used AI to get cheaper ways to land the customer, to source pipeline, to service the customer, all through the use of agentic agents and so forth. I think that other company, and we have, we can achieve savings elsewhere or just do more revenue, and I think other companies can do the same thing. They may spend more with us, but they could be saving elsewhere in their organization. I think that companies, as they go through this evolution of how to deploy AI internally in their own organizations, will find pockets of costs that they can take out or optimize in order to do their work more efficiently. Right. We talked about the pricing model. One of the big debates in this market is, especially on the CCaaS side is, you know, agents are gonna replace, AI agents will replace the live human agents. I think on your last two calls, I think Sam and maybe you as well, talked about an uptick in actually seat growth. Yeah. On the contact center side. Exactly. The seats are up year-on-year for us. I think that there's a bit of a misconception there among some people who may not know how contact centers, all the inner workings of a contact center. You need, most people communicate through voice, whether it's an AI agent or a human. You still need the infrastructure to handle those communications and the transactions, so you need, I'll express it in simple terms that are probably the wrong words, but you need a place to package it, store it, analyze it, pass it along to the next person in the organization who's working in the contact center, use a product like Engage, that 8x8 sells, that goes beyond the contact center, but it has contact center-like capabilities. The people are all connected, and the information and intelligence can transfer from person to person within the organization. That requires the infrastructure, and that's the CCaaS seat. AI is actually complementary to what we're doing. It's not necessarily a replacement for a seat. We haven't seen the degradation in seat count in our company. We had year-over-year seat growth for contact center seats. And AI, getting back to your earlier question about what are they going to do? Where's the budget going to come from? There's ways to make their support organizations for their customers more efficient and combine the seat count with AI. I look at it as really complementary to what we're doing, and we haven't seen this degradation. The voice network, the carrier networks that we operate in still need to be there, and so it's a very important point to make when you talk about AI not eating the contact center software. Agents have become revenue generators versus call centers. Yeah, and we're doing it too. We have people in the customer support organization that can upsell and things like that. By the way, getting back to the point about AI agents and so forth, the next, Sam likes to say the next billion phone numbers might be to an AI agent, but they still need the voice infrastructure to work on and the platform. Again, AI, I think, is complementary to what we do. Right. If there are any questions from the audience, feel free to jump in. I think we have time for one more, which is, I guess maybe let's talk about the competitive environment a little bit. Maybe on the CCaaS side, you have Five9, you have Zoom, you have AWS Connect. Just help us understand what differentiates your products, your data, your AI from some of these other vendors. Then on the CCaaS side, the core voice. Yeah. What do you see going on there competitively? Sure. I think, for us, like I mentioned earlier, that we see, first of all, I think for us, it's the ability to sell a lot of different capability from one vendor, us. Okay? There's examples, we may have given it in the shareholder letter, with the healthcare companies that we've displaced six other vendors with our solutions. There was another example in an insurance company and so forth. We have a differentiation there. I'll toot the horn of the company, I guess, a little bit. We've won a lot of awards. We've been in UCaaS, Gartner Magic Quadrant, 14 times, CCaaS 10 times. We just won from Critical Capability Award, number one with CCaaS, integrated with UCaaS from Gartner. There's been some Forrester awards and things like that. We are known as a company that has great capabilities to integrate a lot of different seats, different functionalities for good customer experience and good customer outcomes. I think that's a big differentiator for us. There are other companies out there that may be entirely focused, you mentioned some of the names, are entirely focused on CCaaS only. We have more than what they can do, and we can do a lot of things natively. To the earlier point, at the beginning of the conversation around we have technology partners that we've used in the past, that we could do things that have a native look and feel. Again, I think we're developing a lot of stuff internally now using our own AI capabilities to, like AI Studio is a good example, where customers can configure their own agents and things like that are going to, I believe, become very popular for us. Okay. Maybe in 30 seconds or less, what's your pitch to investors today? Where the stock is, performance you put up in Q4, the guide for the fiscal 2027, what's your message to investors? Well, my message is, look, for years now, we've been focused on operating discipline. We've put out our guidance. We've met our guidance, with very few exceptions in the recent years. We've delivered cash flow 21 quarters in a row now. We've delivered positive non-GAAP op income. The trajectory that we're on is very good, and we continue to execute with discipline to generate the value, pay down the debt, and that creates opportunities for us. The opportunities to do a small acquisition, which we've done a couple of those recently, and continue to build our company. This is a long-term plan for us to focus on building the value, through executing with discipline, and then hopefully the shareholders will see the value in that over time. Perfect. All right. Kevin, thank you very much for your time. Thank you, Peter. Appreciate it. Thank you.

Speaker 2: Casts. Thank you for tuning in. With me today is Kevin Kraus, the CFO of 8x8. Kevin, thank you for being here with us. Casts. casts Thank you for tuning in. thank you for tuning in With me today is Kevin Kraus, the CFO of 8x8. with me today is kevin kraus the cfo of 8x8 Kevin, thank you for being here with us. kevin thank you for being here with us

Speaker 1: Thank you, Peter. Appreciate the opportunity to speak today. Thank you, Peter. thank you peter Appreciate the opportunity to speak today. appreciate the opportunity to speak today

Speaker 2: No, no. It's been an interesting market for you guys, especially in the UCaaS/CCaaS world. There's been a lot of convergence in terms of consolidated platform. I think you guys have done a pretty incredible job building out, I think, organically, mostly the full stack. I prepared questions, but maybe one of the first questions I have is maybe just give us a highlight of where this market is going, what you guys have built, and then with AI, where do you see this market in the next 12-24 months? No, no. no no It's been an interesting market for you guys, especially in the UCaaS/CCaaS world. it's been an interesting market for you guys especially in the ucaas/ccaas world There's been a lot of convergence in terms of consolidated platform. there's been a lot of convergence in terms of consolidated platform I think you guys have done a pretty incredible job building out, I think, organically, mostly the full stack. i think you guys have done a pretty incredible job building out i think organically mostly the full stack I prepared questions, but maybe one of the first questions I have is maybe just give us a highlight of where this market is going, what you guys have built, and then with AI, where do you see this market in the next 12-24 months? i prepared questions but maybe one of the first questions i have is maybe just give us a highlight of where this market is going what you guys have built and then with ai where do you see this market in the next 12-24 months

Speaker 1: Sure, yeah. Just at a high level for the people who might not know much about us, we are a UCaaS/CCaaS communication API company, and we've got some significant AI products that have been developed that are out and that are coming out. We're one of the few players out there that have all of those packaged, let's say, into a full platform. We're pretty unique in that regard. To your question about where the market's going, we see this convergence of all of these technologies into a single platform, which we've built natively. Like you said, we do have technology partners. But we've built out, we've made investments in innovation. We've built out a pretty robust product portfolio, so we can offer a lot of different products to our customers, and solutions. The focus there for us is we like to build our multi-product customer base. Sure, yeah. sure yeah Just at a high level for the people who might not know much about us, w e are a UCaaS/CCaaS communication API company, and we've got some significant AI products that have been developed that are out and that are coming out. just at a high level for the people who might not know much about us, w e are a ucaas/ccaas communication api company and we've got some significant ai products that have been developed that are out and that are coming out We're one of the few players out there that have all of those packaged, let's say, into a full platform. we're one of the few players out there that have all of those packaged let's say into a full platform We're pretty unique in that regard. we're pretty unique in that regard To your question about where the market's going, we see this convergence of all of these technologies into a single platform, which we've built natively. to your question about where the market's going we see this convergence of all of these technologies into a single platform which we've built natively Like you said, we do have technology partners. like you said we do have technology partners But we've built out, we've made investments in innovation. but we've built out we've made investments in innovation We've built out a pretty robust product portfolio, so we can offer a lot of different products to our customers, and solutions. we've built out a pretty robust product portfolio so we can offer a lot of different products to our customers and solutions The focus there for us is we like to build our multi-product customer base. the focus there for us is we like to build our multi-product customer base We look at multi-product customers, which has grown 16% year-on-year, and they become stickier customers. We're able to serve them better. They're happier customers. Their customers are happier. Our whole focus has been addressing all of the communications needs on a single platform, and we compete very well because we're able to offer all of these things where we're able to consolidate. In a competitive situation, we're able to consolidate. One of our customers, they might be buying things from two or three other vendors, and they consolidate into us. That has happened, and it does happen each quarter. That's where we're focused. The voice infrastructure is another very, very important thing about what we do. Contact centers and AI agents in particular, they rely on the voice infrastructure. Our contact center platform enables all of that. We look at multi-product customers, which has grown 16% year-on-year, and t hey become stickier customers. we look at multi-product customers which has grown 16% year-on-year, and t hey become stickier customers We're able to serve them better. we're able to serve them better They're happier customers. they're happier customers Their customers are happier. their customers are happier Our whole focus has been addressing all of the communications needs on a single platform, and w e compete very well because we're able to offer all of these things where we're able to consolidate. our whole focus has been addressing all of the communications needs on a single platform, and w e compete very well because we're able to offer all of these things where we're able to consolidate In a competitive situation, we're able to consolidate. in a competitive situation we're able to consolidate One of our customers, they might be buying things from two or three other vendors, and they consolidate into us. one of our customers they might be buying things from two or three other vendors and they consolidate into us That has happened, and it does happen each quarter. that has happened and it does happen each quarter That's where we're focused. that's where we're focused The voice infrastructure is another very, very important thing about what we do. the voice infrastructure is another very, very important thing about what we do Contact centers and AI agents in particular, they rely on the voice infrastructure. contact centers and ai agents in particular they rely on the voice infrastructure Our contact center platform enables all of that. our contact center platform enables all of that We can synthesize customer interactions, capture the conversations, and work with all that data natively on our platform. We can synthesize customer interactions, capture the conversations, and work with all that data natively on our platform. we can synthesize customer interactions capture the conversations and work with all that data natively on our platform

Speaker 2: Right. I think on the call, your call a couple of weeks ago, Sam kind of called out, like this was a turn. 2026, I guess fiscal 2026 was a turning point for you guys, four consecutive quarters of accelerating growth. You hit GAAP profitability for the first time, I think since 2015. Right. right I think on the call, your call a couple of weeks ago, Sam kind of called out, like this was a turn. 2026, I guess fiscal 2026 was a turning point for you guys, f our consecutive quarters of accelerating growth. i think on the call your call a couple of weeks ago sam kind of called out like this was a turn 2026 i guess fiscal 2026 was a turning point for you guys, f our consecutive quarters of accelerating growth You hit GAAP profitability for the first time, I think since 2015. you hit gaap profitability for the first time i think since 2015

Speaker 1: 2015, yeah. 2015, yeah. 2015 yeah

Speaker 2: If I take a step back, what's the next leg of, what's the journey look like? Is it stabilizing growth at where it is, low single digits, or is there a path towards re-acceleration? Just walk us through what the journey looks like and where you guys are, what you are targeting. If I take a step back, what's the next leg of, what's the journey look like? if i take a step back what's the next leg of, what's the journey look like Is it stabilizing growth at where it is, low single digits, or is there a path towards re-acceleration? is it stabilizing growth at where it is low single digits or is there a path towards re-acceleration Just walk us through what the journey looks like and where you guys are, what you are targeting. just walk us through what the journey looks like and where you guys are what you are targeting

Speaker 1: Sure. We're in the midst of a multi-year journey, okay? We've had 21 consecutive quarters of positive cash flow at this point, positive non-GAAP operating income. Non-GAAP net income is up 19% year-over-year. What we've done as a company is we've focused on operating discipline, debt paydown. Our debt interest expense, the cash paid for debt interest has gone down something like 51% over the last two years. Sure. sure We're in the midst of a multi-year journey, okay? we're in the midst of a multi-year journey okay We've had 21 consecutive quarters of positive cash flow at this point, positive non-GAAP operating income. we've had 21 consecutive quarters of positive cash flow at this point positive non-gaap operating income Non-GAAP net income is up 19% year-over-year. non-gaap net income is up 19% year-over-year What we've done as a company is we've focused on operating discipline, debt paydown. what we've done as a company is we've focused on operating discipline debt paydown Our debt interest expense, the cash paid for debt interest has gone down something like 51% over the last two years. our debt interest expense the cash paid for debt interest has gone down something like 51% over the last two years

Speaker 2: Yeah. Yeah. yeah

Speaker 1: That is a big reason why our net income has grown. The focus has been on investing in areas that we know will provide a return. We mentioned the AI products and things like that. We're focused on operating discipline and profit and cash flow sustainability, not necessarily the highest revenue growth trajectory. That's reflected actually in our fiscal 2027 guidance because we've kind of deliberately ran a conservative model on the top line. Our focus to continue delivering the operating profit and the cash flow is still there. Over time, we think that we're gonna be, look, our focus is on double-digits, we guided 9%-10% non-GAAP operating income, our focus is on double-digit and then grow from there. At this moment, we're transitioning into a revenue mix that's more usage-based, particularly around AI products. That is a big reason why our net income has grown. that is a big reason why our net income has grown The focus has been on investing in areas that we know will provide a return. the focus has been on investing in areas that we know will provide a return We mentioned the AI products and things like that. we mentioned the ai products and things like that We're focused on operating discipline and profit and cash flow sustainability, n ot necessarily the highest revenue growth trajectory. we're focused on operating discipline and profit and cash flow sustainability, n ot necessarily the highest revenue growth trajectory That's reflected actually in our fiscal 2027 guidance because we've kind of deliberately ran a conservative model on the top line. that's reflected actually in our fiscal 2027 guidance because we've kind of deliberately ran a conservative model on the top line Our focus to continue delivering the operating profit and the cash flow is still there. our focus to continue delivering the operating profit and the cash flow is still there Over time, we think that we're gonna be, l ook, our focus is on double-digits, w e guided 9%-10% non-GAAP operating income, o ur focus is on double-digit and then grow from there. over time we think that we're gonna be, l ook our focus is on double-digits, w e guided 9%-10% non-gaap operating income, o ur focus is on double-digit and then grow from there At this moment, we're transitioning into a revenue mix that's more usage-based, particularly around AI products. at this moment we're transitioning into a revenue mix that's more usage-based particularly around ai products That's harder to forecast. That's harder to forecast. that's harder to forecast

Speaker 2: Yeah. Yeah. yeah

Speaker 1: We mentioned this on our earnings call. You heard that from Sam and me. We're not necessarily leaning forward because it's harder for even our own customers to understand how much consumption they're going to have. That's a little bit harder to predict in the near term, but we do have good traction there. The usage revenue is reflected because it's gone up 70%. It was Q4, up 70%. We mentioned this on our earnings call. we mentioned this on our earnings call You heard that from Sam and me. you heard that from sam and me We're not necessarily leaning forward because it's harder for even our own customers to understand how much consumption they're going to have. we're not necessarily leaning forward because it's harder for even our own customers to understand how much consumption they're going to have That's a little bit harder to predict in the near term, but we do have good traction there. that's a little bit harder to predict in the near term but we do have good traction there The usage revenue is reflected because it's gone up 70%. the usage revenue is reflected because it's gone up 70% It was Q4, up 70%. it was q4 up 70%

Speaker 2: Yeah. Yeah. yeah

Speaker 1: Year-on-year, up 50% for the full year, year-on-year. I look at this as kind of we still have a little bit of the revenue headwinds too from Fuze for the first three quarters because we've transitioned all those customers out by our fiscal fourth quarter. Year-on-year, up 50% for the full year, year-on-year. year-on-year up 50% for the full year year-on-year I look at this as kind of we still have a little bit of the revenue headwinds too from Fuze for the first three quarters because we've transitioned all those customers out by our fiscal fourth quarter. i look at this as kind of we still have a little bit of the revenue headwinds too from fuze for the first three quarters because we've transitioned all those customers out by our fiscal fourth quarter

Speaker 2: Yeah. Yeah. yeah

Speaker 1: I look at this as a double-digit profitability and then growing from there over time. Of course, the revenue, the revenue growth and getting the better margins out of that revenue. I look at this as a double-digit profitability and then growing from there over time. i look at this as a double-digit profitability and then growing from there over time Of course, the revenue, the revenue growth and getting the better margins out of that revenue. of course the revenue, the revenue growth and getting the better margins out of that revenue

Speaker 2: Good. Maybe to that point, you know, 70% up, I mean, usage was up 70%, I think 23% now of service revenue versus 14% last year. Good. good Maybe to that point, you know, 70% up, I mean, usage was up 70%, I think 23% now of service revenue versus 14% last year. maybe to that point you know, 70% up, i mean, usage was up 70% i think 23% now of service revenue versus 14% last year

Speaker 1: Yes. Yes. yes

Speaker 2: Maybe like, what's the, how sustainable is that pace of growth? Second is, on the call, we talked about the predictability of revenue as you changed the pricing model. How are you predicting growth this year, and then what's the sustainability of that growth, and I guess, what your customers are coming back to you with? Maybe like, what's the, how sustainable is that pace of growth? maybe like, what's the, how sustainable is that pace of growth Second is, on the call, we talked about the predictability of revenue as you changed the pricing model. second is on the call we talked about the predictability of revenue as you changed the pricing model How are you predicting growth this year, and then w hat's the sustainability of that growth, and I guess, what your customers are coming back to you with? how are you predicting growth this year, and then w hat's the sustainability of that growth and i guess what your customers are coming back to you with

Speaker 1: If you're talking about usage specifically, I think the usage revenue growth is durable. A lot of that growth came from our APAC or CPaaS product APIs, which is most of our usage revenue now, but there's a lot of new things coming out, and that's all AI. The CPaaS products have a lot of AI-driven product in that too. We have new products coming out that are really exciting for us. AI Studio is an example where it's a native agentic AI agent developer that can be programmed using natural language. That's showing early, it's brand new, but it's showing very early pickup. Not material revenue yet, but it's something that we believe in. If you're talking about usage specifically, I think the usage revenue growth is durable. if you're talking about usage specifically i think the usage revenue growth is durable A lot of that growth came from our APAC or CPaaS product APIs, which is most of our usage revenue now, but there's a lot of new things coming out, and that's all AI. a lot of that growth came from our apac or cpaas product apis which is most of our usage revenue now but there's a lot of new things coming out and that's all ai The CPaaS products have a lot of AI-driven product in that too. the cpaas products have a lot of ai-driven product in that too We have new products coming out that are really exciting for us. we have new products coming out that are really exciting for us AI Studio is an example where it's a native agentic AI agent developer that can be programmed using natural language. ai studio is an example where it's a native agentic ai agent developer that can be programmed using natural language That's showing early, it's brand new, but it's showing very early pickup. that's showing early, it's brand new but it's showing very early pickup Not material revenue yet, but it's something that we believe in. not material revenue yet but it's something that we believe in I think it's pretty durable, and the one thing I would say is the customers that we see buying our usage-based products, if you measure NRR, it's not necessarily committed usage, but if you look at it doesn't toggle on and off. I think it's pretty durable, and the one thing I would say is the customers that we see buying our usage-based products, if you measure NRR, it's not necessarily committed usage, but if you look at it doesn't toggle on and off. i think it's pretty durable and the one thing i would say is the customers that we see buying our usage-based products if you measure nrr it's not necessarily committed usage but if you look at it doesn't toggle on and off

Speaker 2: Yeah. Yeah. yeah

Speaker 1: Just because it's uncommitted usage. We see in certain areas of our company, APAC particularly, the net revenue retention of these customers is very high. I feel very comfortable and confident in that revenue stream, and we believe that that's the way the market is going, and we're following that market. One of the other things that we're working on, and one thing I want to point out from a financial perspective is that while that margin profile might be a little bit lower at the gross margin level, it can really inflect up and deliver the dollars. Okay. That particular usage revenue, generally, for us, would have a very light OpEx component. Just because it's uncommitted usage. just because it's uncommitted usage We see in certain areas of our company, APAC particularly, the net revenue retention of these customers is very high. we see in certain areas of our company apac particularly the net revenue retention of these customers is very high I feel very comfortable and confident in that revenue stream, and we believe that that's the way the market is going, and we're following that market. i feel very comfortable and confident in that revenue stream and we believe that that's the way the market is going and we're following that market One of the other things that we're working on, and one thing I want to point out from a financial perspective is that while that margin profile might be a little bit lower at the gross margin level, it can really inflect up and deliver the dollars. one of the other things that we're working on and one thing i want to point out from a financial perspective is that while that margin profile might be a little bit lower at the gross margin level it can really inflect up and deliver the dollars Okay. okay That particular usage revenue, generally, for us, would have a very light OpEx component. that particular usage revenue generally for us would have a very light opex component

Speaker 2: OpEx comes through. OpEx comes through. opex comes through

Speaker 1: So, a lot more of that, a lot of the OpEx is relatively light relative to the subscription-based revenue that we have. A lot of those dollars, more of those dollars can drop to the bottom line, as that part of the business scales. So, a lot more of that, a lot of the OpEx is relatively light relative to the subscription-based revenue that we have. so, a lot more of that, a lot of the opex is relatively light relative to the subscription-based revenue that we have A lot of those dollars, more of those dollars can drop to the bottom line, as that part of the business scales. a lot of those dollars, more of those dollars can drop to the bottom line as that part of the business scales

Speaker 2: Are there specific dynamics to the APAC customers at a vertical customer size that you think can replicate here in the U.S. that's maybe lagging? Are there specific dynamics to the APAC customers at a vertical customer size that you think can replicate here in the U.S. that's maybe lagging? are there specific dynamics to the apac customers at a vertical customer size that you think can replicate here in the u.s that's maybe lagging

Speaker 1: The. The. the

Speaker 2: In terms of adoption? In terms of adoption? in terms of adoption

Speaker 1: I think that the, I think that we can have customer sizes, like enterprise customers in the U.S. that are, if you're talking about CPaaS products specifically, the communication APIs, one thing we can do is we can expand that more geographically. It's APAC-focused, but we do a lot of that revenue in the U.K. now, and we can bring it to other geos for better margins. Other usage-based products, we see this delivery, our ability to sell it, I think pretty much everywhere. We're starting out strong in North America and the U.K. right now for what we're doing, and we see very, very healthy interest levels. We've given some products away for free, and they're just being snatched up, and now, we're starting to see customers turn over into paying customers very, very quickly. I think that the, I think that we can have customer sizes, like enterprise customers in the U.S. that are, if you're talking about CPaaS products specifically, the communication APIs, one thing we can do is we can expand that more geographically. i think that the, i think that we can have customer sizes like enterprise customers in the u.s that are, if you're talking about cpaas products specifically the communication apis one thing we can do is we can expand that more geographically It's APAC-focused, but we do a lot of that revenue in the U.K. now, and we can bring it to other geos for better margins. it's apac-focused but we do a lot of that revenue in the u.k now and we can bring it to other geos for better margins Other usage-based products, we see this delivery, o ur ability to sell it, I think pretty much everywhere. other usage-based products we see this delivery, o ur ability to sell it i think pretty much everywhere We're starting out strong in North America and the U.K. right now for what we're doing, and w e see very, very healthy interest levels. we're starting out strong in north america and the u.k right now for what we're doing, and w e see very, very healthy interest levels We've given some products away for free, and they're just being snatched up, and now, we're starting to see customers turn over into paying customers very, very quickly. we've given some products away for free and they're just being snatched up and now we're starting to see customers turn over into paying customers very, very quickly It's only the very, very beginning of that, but it's happened very quickly, in a matter of weeks. I'm very, obviously, happy to see that. It's only the very, very beginning of that, but i t's happened very quickly, in a matter of weeks. it's only the very, very beginning of that, but i t's happened very quickly in a matter of weeks I'm very, obviously, happy to see that. i'm very obviously happy to see that

Speaker 2: Yeah. Yeah. yeah

Speaker 1: For our company, and that's the type of go-to-market, that's the type of product that people want, that customers want. They want to be able to consume and pay for what they use, and we see that potentially having a pretty huge uptake for us. For our company, and that's the type of go-to-market, that's the type of product that people want, that customers want. for our company and that's the type of go-to-market that's the type of product that people want that customers want They want to be able to consume and pay for what they use, and we see that potentially having a pretty huge uptake for us. they want to be able to consume and pay for what they use and we see that potentially having a pretty huge uptake for us

Speaker 2: What are you seeing in terms of replacement then? You're adapting more of your products. Who are they replacing, and then where is the budget coming from for, call it, the incremental spend? What are you seeing in terms of replacement then? what are you seeing in terms of replacement then You're adapting more of your products. you're adapting more of your products Who are they replacing, and then where is the budget coming from for, call it, the incremental spend? who are they replacing and then where is the budget coming from for call it the incremental spend

Speaker 1: From our customers? Well, I think that there could be, I could talk about that from the standpoint of internal efficiencies that we're seeing from the use of AI products ourselves, so we use AI, and my group in G&A uses AI to improve efficiency. In our own company, we have used AI to get cheaper ways to land the customer, to source pipeline, to service the customer, all through the use of agentic agents and so forth. I think that other company, and we have, we can achieve savings elsewhere or just do more revenue, and I think other companies can do the same thing. They may spend more with us, but they could be saving elsewhere in their organization. From our customers? from our customers Well, I think that there could be, I could talk about that from the standpoint of internal efficiencies that we're seeing from the use of AI products ourselves, so w e use AI, and my group in G&A uses AI to improve efficiency. well i think that there could be, i could talk about that from the standpoint of internal efficiencies that we're seeing from the use of ai products ourselves, so w e use ai and my group in g&a uses ai to improve efficiency In our own company, we have used AI to get cheaper ways to land the customer, to source pipeline, to service the customer, all through the use of agentic agents and so forth. in our own company we have used ai to get cheaper ways to land the customer to source pipeline to service the customer all through the use of agentic agents and so forth I think that other company, and we have, we can achieve savings elsewhere or just do more revenue, and I think other companies can do the same thing. i think that other company, and we have, we can achieve savings elsewhere or just do more revenue, and i think other companies can do the same thing They may spend more with us, but they could be saving elsewhere in their organization. they may spend more with us but they could be saving elsewhere in their organization I think that companies, as they go through this evolution of how to deploy AI internally in their own organizations, will find pockets of costs that they can take out or optimize in order to do their work more efficiently. I think that companies, as they go through this evolution of how to deploy AI internally in their own organizations, will find pockets of costs that they can take out or optimize in order to do their work more efficiently. i think that companies as they go through this evolution of how to deploy ai internally in their own organizations will find pockets of costs that they can take out or optimize in order to do their work more efficiently

Speaker 2: Right. We talked about the pricing model. One of the big debates in this market is, especially on the CCaaS side is, you know, agents are gonna replace, AI agents will replace the live human agents. I think on your last two calls, I think Sam and maybe you as well, talked about an uptick in actually seat growth. Right. right We talked about the pricing model. we talked about the pricing model One of the big debates in this market is, especially on the CCaaS side is, you know, agents are gonna replace, AI agents will replace the live human agents. one of the big debates in this market is especially on the ccaas side is you know, agents are gonna replace, ai agents will replace the live human agents I think on your last two calls, I think Sam and maybe you as well, talked about an uptick in actually seat growth. i think on your last two calls i think sam and maybe you as well talked about an uptick in actually seat growth

Speaker 1: Yeah. Yeah. yeah

Speaker 2: On the contact center side. On the contact center side. on the contact center side

Speaker 1: Exactly. The seats are up year-on-year for us. I think that there's a bit of a misconception there among some people who may not know how contact centers, all the inner workings of a contact center. You need, most people communicate through voice, whether it's an AI agent or a human. You still need the infrastructure to handle those communications and the transactions, so you need, I'll express it in simple terms that are probably the wrong words, but you need a place to package it, store it, analyze it, pass it along to the next person in the organization who's working in the contact center, use a product like Engage, that 8x8 sells, that goes beyond the contact center, but it has contact center-like capabilities. The people are all connected, and the information and intelligence can transfer from person to person within the organization. Exactly. exactly The seats are up year-on-year for us. the seats are up year-on-year for us I think that there's a bit of a misconception there among some people who may not know how contact centers, all the inner workings of a contact center. i think that there's a bit of a misconception there among some people who may not know how contact centers all the inner workings of a contact center You need, most people communicate through voice, whether it's an AI agent or a human. you need, most people communicate through voice whether it's an ai agent or a human You still need the infrastructure to handle those communications and the transactions, so y ou need, I'll express it in simple terms that are probably the wrong words, but you need a place to package it, store it, analyze it, pass it along to the next person in the organization who's working in the contact center, use a product like Engage, that 8x8 sells, that goes beyond the contact center, but it has contact center-like capabilities. you still need the infrastructure to handle those communications and the transactions, so y ou need i'll express it in simple terms that are probably the wrong words but you need a place to package it store it analyze it pass it along to the next person in the organization who's working in the contact center use a product like engage that 8x8 sells that goes beyond the contact center but it has contact center-like capabilities The people are all connected, and the information and intelligence can transfer from person to person within the organization. the people are all connected and the information and intelligence can transfer from person to person within the organization That requires the infrastructure, and that's the CCaaS seat. AI is actually complementary to what we're doing. It's not necessarily a replacement for a seat. We haven't seen the degradation in seat count in our company. We had year-over-year seat growth for contact center seats. And AI, getting back to your earlier question about what are they going to do? Where's the budget going to come from? There's ways to make their support organizations for their customers more efficient and combine the seat count with AI. I look at it as really complementary to what we're doing, and we haven't seen this degradation. The voice network, the carrier networks that we operate in still need to be there, and so it's a very important point to make when you talk about AI not eating the contact center software. That requires the infrastructure, and that's the CCaaS seat. that requires the infrastructure and that's the ccaas seat AI is actually complementary to what we're doing. ai is actually complementary to what we're doing It's not necessarily a replacement for a seat. it's not necessarily a replacement for a seat We haven't seen the degradation in seat count in our company. we haven't seen the degradation in seat count in our company We had year-over-year seat growth for contact center seats. we had year-over-year seat growth for contact center seats And AI, getting back to your earlier question about what are they going to do? and ai getting back to your earlier question about what are they going to do Where's the budget going to come from? where's the budget going to come from There's ways to make their support organizations for their customers more efficient and combine the seat count with AI. there's ways to make their support organizations for their customers more efficient and combine the seat count with ai I look at it as really complementary to what we're doing, and we haven't seen this degradation. i look at it as really complementary to what we're doing and we haven't seen this degradation The voice network, the carrier networks that we operate in still need to be there, and so it's a very important point to make when you talk about AI not eating the contact center software. the voice network the carrier networks that we operate in still need to be there and so it's a very important point to make when you talk about ai not eating the contact center software

Speaker 2: Agents have become revenue generators versus call centers. Agents have become revenue generators versus call centers. agents have become revenue generators versus call centers

Speaker 1: Yeah, and we're doing it too. We have people in the customer support organization that can upsell and things like that. By the way, getting back to the point about AI agents and so forth, the next, Sam likes to say the next billion phone numbers might be to an AI agent, but they still need the voice infrastructure to work on and the platform. Again, AI, I think, is complementary to what we do. Yeah, and w e're doing it too. yeah, and w e're doing it too We have people in the customer support organization that can upsell and things like that. we have people in the customer support organization that can upsell and things like that By the way, getting back to the point about AI agents and so forth, the next, Sam likes to say the next billion phone numbers might be to an AI agent, but they still need the voice infrastructure to work on and the platform. by the way getting back to the point about ai agents and so forth the next, sam likes to say the next billion phone numbers might be to an ai agent but they still need the voice infrastructure to work on and the platform Again, AI, I think, is complementary to what we do. again ai i think is complementary to what we do

Speaker 2: Right. If there are any questions from the audience, feel free to jump in. I think we have time for one more, which is, I guess maybe let's talk about the competitive environment a little bit. Maybe on the CCaaS side, you have Five9, you have Zoom, you have AWS Connect. Just help us understand what differentiates your products, your data, your AI from some of these other vendors. Then on the CCaaS side, the core voice. Right. right If there are any questions from the audience, feel free to jump in. if there are any questions from the audience feel free to jump in I think we have time for one more, which is, I guess maybe let's talk about the competitive environment a little bit. i think we have time for one more which is i guess maybe let's talk about the competitive environment a little bit Maybe on the CCaaS side, you have Five9, you have Zoom, you have AWS Connect. maybe on the ccaas side you have five9 you have zoom you have aws connect Just help us understand what differentiates your products, your data, your AI from some of these other vendors. just help us understand what differentiates your products your data your ai from some of these other vendors Then on the CCaaS side, the core voice. then on the ccaas side the core voice

Speaker 1: Yeah. Yeah. yeah

Speaker 2: What do you see going on there competitively? What do you see going on there competitively? what do you see going on there competitively

Speaker 1: Sure. I think, for us, like I mentioned earlier, that we see, first of all, I think for us, it's the ability to sell a lot of different capability from one vendor, us. Okay? There's examples, we may have given it in the shareholder letter, with the healthcare companies that we've displaced six other vendors with our solutions. There was another example in an insurance company and so forth. We have a differentiation there. I'll toot the horn of the company, I guess, a little bit. We've won a lot of awards. We've been in UCaaS, Gartner Magic Quadrant, 14 times, CCaaS 10 times. We just won from Critical Capability Award, number one with CCaaS, integrated with UCaaS from Gartner. There's been some Forrester awards and things like that. Sure. sure I think, for us, like I mentioned earlier, that we see, first of all, I think for us, it's the ability to sell a lot of different capability from one vendor, us. i think, for us, like i mentioned earlier, that we see, first of all i think for us it's the ability to sell a lot of different capability from one vendor us Okay? okay There's examples, we may have given it in the shareholder letter, with the healthcare companies that we've displaced six other vendors with our solutions. there's examples we may have given it in the shareholder letter with the healthcare companies that we've displaced six other vendors with our solutions There was another example in an insurance company and so forth. there was another example in an insurance company and so forth We have a differentiation there. we have a differentiation there I'll toot the horn of the company, I guess, a little bit. i'll toot the horn of the company i guess a little bit We've won a lot of awards. we've won a lot of awards We've been in UCaaS, Gartner Magic Quadrant, 14 times, CCaaS 10 times. we've been in ucaas gartner magic quadrant 14 times ccaas 10 times We just won from Critical Capability Award, number one with CCaaS, integrated with UCaaS from Gartner. we just won from critical capability award number one with ccaas integrated with ucaas from gartner There's been some Forrester awards and things like that. there's been some forrester awards and things like that We are known as a company that has great capabilities to integrate a lot of different seats, different functionalities for good customer experience and good customer outcomes. I think that's a big differentiator for us. There are other companies out there that may be entirely focused, you mentioned some of the names, are entirely focused on CCaaS only. We have more than what they can do, and we can do a lot of things natively. To the earlier point, at the beginning of the conversation around we have technology partners that we've used in the past, that we could do things that have a native look and feel. We are known as a company that has great capabilities to integrate a lot of different seats, different functionalities for good customer experience and good customer outcomes. we are known as a company that has great capabilities to integrate a lot of different seats, different functionalities for good customer experience and good customer outcomes I think that's a big differentiator for us. i think that's a big differentiator for us There are other companies out there that may be entirely focused, you mentioned some of the names, are entirely focused on CCaaS only. there are other companies out there that may be entirely focused you mentioned some of the names are entirely focused on ccaas only We have more than what they can do, and w e can do a lot of things natively. we have more than what they can do, and w e can do a lot of things natively To the earlier point, at the beginning of the conversation around we have technology partners that we've used in the past, that we could do things that have a native look and feel. to the earlier point at the beginning of the conversation around we have technology partners that we've used in the past that we could do things that have a native look and feel Again, I think we're developing a lot of stuff internally now using our own AI capabilities to, like AI Studio is a good example, where customers can configure their own agents and things like that are going to, I believe, become very popular for us. Again, I think we're developing a lot of stuff internally now using our own AI capabilities to, like AI Studio is a good example, where customers can configure their own agents and things like that are going to, I believe, become very popular for us. again i think we're developing a lot of stuff internally now using our own ai capabilities to like ai studio is a good example where customers can configure their own agents and things like that are going to i believe become very popular for us

Speaker 2: Okay. Maybe in 30 seconds or less, what's your pitch to investors today? Where the stock is, performance you put up in Q4, the guide for the fiscal 2027, what's your message to investors? Okay. okay Maybe in 30 seconds or less, what's your pitch to investors today? maybe in 30 seconds or less what's your pitch to investors today Where the stock is, performance you put up in Q4, the guide for the fiscal 2027, what's your message to investors? where the stock is performance you put up in q4 the guide for the fiscal 2027 what's your message to investors

Speaker 1: Well, my message is, look, for years now, we've been focused on operating discipline. We've put out our guidance. We've met our guidance, with very few exceptions in the recent years. We've delivered cash flow 21 quarters in a row now. We've delivered positive non-GAAP op income. The trajectory that we're on is very good, and we continue to execute with discipline to generate the value, pay down the debt, and that creates opportunities for us. The opportunities to do a small acquisition, which we've done a couple of those recently, and continue to build our company. This is a long-term plan for us to focus on building the value, through executing with discipline, and then hopefully the shareholders will see the value in that over time. Well, my message is, look, for years now, we've been focused on operating discipline. well my message is look for years now we've been focused on operating discipline We've put out our guidance. we've put out our guidance We've met our guidance, with very few exceptions in the recent years. we've met our guidance with very few exceptions in the recent years We've delivered cash flow 21 quarters in a row now. we've delivered cash flow 21 quarters in a row now We've delivered positive non-GAAP op income. we've delivered positive non-gaap op income The trajectory that we're on is very good, and we continue to execute with discipline to generate the value, pay down the debt, and that creates opportunities for us. the trajectory that we're on is very good and we continue to execute with discipline to generate the value pay down the debt and that creates opportunities for us The opportunities to do a small acquisition, which we've done a couple of those recently, and continue to build our company. the opportunities to do a small acquisition which we've done a couple of those recently and continue to build our company This is a long-term plan for us to focus on building the value, through executing with discipline, and then hopefully the shareholders will see the value in that over time. this is a long-term plan for us to focus on building the value through executing with discipline and then hopefully the shareholders will see the value in that over time

Speaker 2: Perfect. All right. Kevin, thank you very much for your time. Perfect. perfect All right. all right Kevin, thank you very much for your time. kevin thank you very much for your time

Speaker 1: Thank you, Peter. Appreciate it. Thank you, Peter. thank you peter Appreciate it. appreciate it

Speaker 2: Thank you. Thank you. thank you