What Happened:

Shares of business communications software company 8x8 (NYSE:EGHT) fell 5.23% in the morning session after the company reported first quarter results that missed analysts' expectations for revenue. In addition, its full-year revenue guidance was lowered and missed analysts' estimates. Next quarter's revenue guidance also missed Wall Street's Consensus estimate. The company mentioned that results reflected "our decision to prioritize profitability and cash flow while increasing investment in innovation." 

On the other hand, free cash flow came in strong and ahead of Consensus. Gross margin also improved. Recall that in January 2023, the company announced a restructuring plan involving a worldwide workforce reduction of around 7 percent. The workforce adjustments are projected to be concluding on June 30, 2023. The company emphasized that the reduction was crucial for enhancing efficiency and aligning resources with critical strategic priorities. 

Overall, it was a weaker quarter for the company with the company missing Wall Street's expectations for key performance metrics. Separate from the quarterly results, the company appointed Samuel Wilson as CEO and member of the Board of Directors. He was the interim CEO prior to the announcement.

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What is the market telling us:

8x8's shares are very volatile and over the last year have had 76 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business. 

The previous big move was three months ago, when the stock dropped 7.12% on the news that the company reported fourth-quarter sales that missed analysts' estimates, with revenue growth remaining weak. On a brighter note, earnings per share beat by an impressive 23%. Gross margin also rose, surpassing estimates. However, revenue guidance for the next quarter and full year missed Consensus. In addition, guidance for operating income beat, and the full year operating income guidance was raised. 

Management highlighted the focus on driving business efficiency, adding that "we continued to invest in innovation while reducing our service delivery costs and increasing operational efficiency across the organization." While the improvements in profitability margins and an increase in full-year operating income guidance may appeal to investors, the weak revenue growth is likely to have subdued the overall market sentiment.

8x8 is down 21.1% since the beginning of the year, and at $3.39 per share it is trading 47.2% below its 52-week high of $6.42 from February 2023. Investors who bought $1,000 worth of 8x8's shares 5 years ago would now be looking at an investment worth $153.93.

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