What happened

Shares of cloud-based communications specialist 8x8 (EGHT -8.86%) fell as much as 30% on Friday morning, following the company's release of disappointing results for the first quarter of fiscal year 2018. As of 11:27 a.m. EDT, 8x8 shares had recovered to a milder 12% drop.

So what

8x8's first-quarter sales rose 15% year over year, landing at $69.1 million and slightly ahead of Wall Street's $68.6 million consensus estimate. On the bottom line, adjusted net income fell from $3.4 million to $2.1 million, producing earnings of $0.02 per diluted share. Analysts had been looking for $0.03 per share.

Looking ahead, 8x8 reiterated its full-year 2018 revenue guidance of roughly $298 million but lowered the target for non-GAAP pre-tax income. That figure is now expected to be approximately $9 million, down from $24 million in the forecast offered three months ago.

Businessman juggling a computer, a phone, and a tablet at his desk.

Image source: Getty Images.

Now what

The mixed results are easy to shrug off, but the dramatically lower full-year earnings guidance looks troubling. Dig a little deeper, and you'll see that the company is planning to reinvest its profits into a foundation for further growth.

"We believe we now have the critical framework in place to fully capitalize on our leadership position in the mid-market and enterprise segments of this $50 billion + market," said 8x8 CEO Vik Verma in a prepared statement. "To that end, we are stepping up our investment in the business, relative to our fiscal 2018 plan, in several key areas including sales, marketing and R&D, while maintaining our commitment to non-GAAP profitability."

So 8x8 saw an opportunity to double down on a solid growth opportunity in the cloud-based communications sector, with a particular focus on larger customers, and decided to sacrifice short-term profits in an effort to capture bigger wins down the road. The market reaction to this smart move is completely backwards and myopic, and it would make sense to treat 8x8's plunge as a buy-in window.