Japan records surprise trade deficit in July as exports weaken further
On Tuesday, Evercore ISI issued an update on 8x8 Inc . (NASDAQ:EGHT), reducing the company’s price target from $3.00 to $2.00 while maintaining an In Line rating. The adjustment follows 8x8’s mixed fourth fiscal quarter results and a cautious fiscal year 2026 outlook. The stock, currently trading at $1.80, has seen a significant decline of over 36% in the past six months, though InvestingPro data shows 4 analysts have recently revised their earnings upwards for the upcoming period. Management attributed the conservative forecast to the uncertain macroeconomic climate, which has led to a challenging business environment in the United States.
During the fourth fiscal quarter, 8x8 experienced a service revenue shortfall of approximately $1 million from the midpoint of its guidance. This was due to what management described as "chaos" in the U.S. market throughout March and April, with extended deal cycles and smaller deal sizes as customers exercised caution. According to InvestingPro data, the company maintains a "Fair" overall financial health score, with particularly strong marks in relative value despite revenue declining by 2.23% over the last twelve months. Despite these challenges, the company noted that May showed signs of improvement. In contrast, international markets have remained largely unaffected by the U.S. situation.
The report also provided details on the planned end-of-life for the Fuze platform, which is expected by the end of calendar year 2025 or during 8x8’s third fiscal quarter. Fuze-related revenue now accounts for less than 5% of total service revenue, a decrease from around 11% in the fourth fiscal quarter of the previous year. Excluding Fuze, core service revenue grew by 2.8% in fiscal year 2025, an increase from 1.8% in fiscal year 2024. Nevertheless, the discontinuation of Fuze is anticipated to pose difficult comparative figures through fiscal year 2026.
Management outlined a long-term goal of achieving mid- to high-single-digit growth by fiscal year 2028. This growth is expected to be fueled by expansion into higher market segments, partnership momentum, increased usage of AI products, and broader multi-product penetration. While the company currently shows a strong free cash flow yield, InvestingPro analysis indicates the stock is trading below its Fair Value, suggesting potential upside for investors who believe in the company’s growth strategy. Notably, the number of customers using three or more products grew by 13% year-over-year, surpassing 700 in the fourth fiscal quarter.
In their commentary, management conveyed that while the unified communications environment is volatile and challenging, there is potential for business stabilization if the company can effectively execute its product strategies and market approach to stimulate top-line growth. However, the return on investment remains uncertain, and any significant impact is not anticipated until fiscal year 2027.
In conclusion, Evercore ISI sees 8x8 as a "show-me" story, requiring clear evidence of revenue stabilization or reacceleration before the stock can break out of its current range. Although the company is progressing in reducing debt and generating cash flow, with impressive levered free cash flow of $68 million in the last twelve months, the timing of when top-line growth will stabilize remains a critical question. For deeper insights into 8x8’s financial health and growth prospects, investors can access the comprehensive Pro Research Report available exclusively on InvestingPro, which includes detailed analysis of the company’s valuation metrics and growth potential.
In other recent news, 8x8 Inc reported its fourth-quarter 2025 financial results, revealing earnings per share (EPS) of $0.08, which aligned with analyst expectations. However, the company’s revenue of $177 million fell short of the anticipated $181.65 million. Despite the revenue miss, 8x8 continues to focus on innovation, introducing AI-based product enhancements and diversifying its revenue streams. The company is also working on reducing its debt and transitioning customers off the Fuze platform, aiming to complete this by the end of the calendar year. Analysts from firms like Evercore and Mizuho (NYSE:MFG) have inquired about the macroeconomic impacts on the company’s performance and future growth strategies. 8x8’s strategic initiatives seem to be resonating with customers, as evidenced by its expanding customer base and strong momentum in product adoption. The company projects service revenue between $170 million and $175 million for the first quarter of fiscal 2026, with a full fiscal year target of $682 million to $702 million. 8x8’s leadership remains focused on executing its go-to-market transformation and leveraging its platform innovations to drive future growth.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.