8x8 Earnings: An Early Look

With hundreds of companies having already reported quarterly results, we're now in the heart of earnings season. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Let's turn to 8x8 (NASDAQ: EGHT  ) . The telecom has made a niche for itself by providing Internet-based voice and video communications specifically to business clients, and shares have soared throughout the past year on optimism about its model's success. Let's take an early look at what's been happening with 8x8 over the past quarter and what we're likely to see in its quarterly report on Thursday.

Stats on 8x8

Analyst EPS Estimate


Change from Year-Ago EPS


Revenue Estimate

$27.3 million

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Will 8x8 connect investors to profits?
Analysts haven't budged in their estimates for 8x8's earnings all quarter, seeing the company's substantial growth continue. Investors are excited about 8x8's prospects, though, having bid up shares almost 25% since mid-October.

8x8's business of turning an Internet connection into a viable alternative to traditional voice telephone services doesn't get as much exposure as those of Vonage (NYSE: VG  ) , and magicJack VocalTec (NASDAQ: CALL  ) , as those latter two companies have focused on consumer-facing sales by tapping into the market of residential customers seeking to get rid of their landlines. Rather, 8x8 has keyed in on businesses in general and on the concept of unified communications specifically, allowing small and medium-sized businesses to get the same remote access and communications ability from anywhere around the world that larger companies have enjoyed for a while now.

8x8 has done a good job of convincing customers to commit to its services, with customer churn levels well below Vonage's. Moreover, last quarter, businesses that use 8x8 adopted more of the telecom provider's services, leading to a nearly 25% boost in average monthly revenue per customer. That loyalty can lead to word-of-mouth referrals, which are crucial for anyone trying to tap the small-business segment.

The biggest concern investors should have in the coming earnings report is whether the stock has gotten ahead of itself. With shares fetching nearly 30 times fiscal 2014 estimates, 8x8 will have to demonstrate its ability to keep growing at a strong pace. Be sure to look for signs that the recovering economy is leading to more sales for 8x8, but if the growth is there, then the stock has plenty of room to grow in the long run.

2013 and beyond
The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock it is in our brand-new free report: "The Motley Fool's Top Stock for 2013." I invite you to take a copy, free for a limited time. Just click here to access the report and find out the name of this under-the-radar company.

Click here to add 8x8 to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2207385, ~/Articles/ArticleHandler.aspx, 9/30/2016 10:28:41 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,269.46 126.01 0.69%
S&P 500 2,160.86 9.73 0.45%
NASD 5,289.29 20.14 0.38%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/30/2016 10:09 AM
EGHT $15.24 Up +0.03 +0.20%
8x8 CAPS Rating: ****
CALL $6.11 Up +0.01 +0.16%
VocalTec Communica… CAPS Rating: **
VG $6.55 Up +0.03 +0.38%
Vonage Holdings CAPS Rating: *