Business communications software company 8x8 (NYSE:EGHT) reported results in line with analysts' expectations in Q1 CY2024, with revenue down 2.8% year on year to $179.4 million. On the other hand, next quarter's revenue guidance of $178.5 million was less impressive, coming in 1.5% below analysts' estimates. It made a non-GAAP profit of $0.08 per share, down from its profit of $0.11 per share in the same quarter last year.

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Founded in 1987, 8x8 (NYSE:EGHT) provides software for organizations to efficiently communicate and collaborate with their customers, employees, and partners.

Video Conferencing

Work is becoming more distributed, both across geographies and devices. In order for businesses to keep functioning efficiently, they need to be able to communicate as well as they did when the teams were co-located, which drives the demand for integrated communication platforms.

Sales Growth

As you can see below, 8x8's revenue growth has been unremarkable over the last three years, growing from $144.7 million in Q4 2021 to $179.4 million this quarter.

This quarter, 8x8's revenue was down 2.8% year on year, which might disappointment some shareholders.

Next quarter, 8x8 is guiding for a 2.6% year-on-year revenue decline to $178.5 million, a further deceleration from the 2.3% year-on-year decrease it recorded in the same quarter last year. For the upcoming financial year, management expects revenue to be $729 million at the midpoint, flat year on year compared to the 2% drop in FY2024.

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Cash Is King

If you've followed StockStory for a while, you know that we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. 8x8's free cash flow came in at $62.05 million in Q1, up 658% year on year.

8x8 has generated $115.1 million in free cash flow over the last 12 months, a solid 15.8% of revenue. This strong FCF margin stems from its asset-lite business model, giving it optionality and plenty of cash to reinvest in its business.

Key Takeaways from 8x8's Q1 Results

8x8 expects revenue to stay flat over the next 12 months, missing analysts' expectations and indicating continued demand weakness in its market. On the other hand, strong free cash flow was a positive this quarter. Overall, this was a mixed quarter for 8x8. The stock is flat after reporting and currently trades at $2.34 per share.

8x8 may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.