Please ensure Javascript is enabled for purposes of website accessibility

Why 8x8 Shares Plunged Today

By Evan Niu, CFA – Updated Apr 24, 2019 at 4:11PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The cloud-based telecommunications specialist reported fiscal third-quarter results.

What happened

Shares of 8x8 (EGHT 0.26%) have plunged today, down by 10% as of 11:30 a.m. EST, after the company reported fiscal third-quarter earnings results. 8x8 also reduced the high end of its fiscal year outlook.

So what

Revenue in the fiscal third quarter came in at $89.9 million, which translated into a non-GAAP net loss of $5.5 million, or $0.06 per share. Analysts were modeling for the cloud-based communications company to generate $88.6 million in sales and post an adjusted net loss of $0.06 per share.

Female call center rep speaking on phone

Image source: Getty Images.

Service revenue increased 20% to $85.9 million, with sales from larger customers billing over $10,000 in monthly recurring revenue jumping 61%. Average monthly service revenue per business customer for midmarket and enterprise customers rose to $5,211.

Now what

"We delivered a solid quarter of overall growth, with service revenue excluding DXI and in constant currency up 22% and ahead of our financial outlook," CEO Vik Verma said in a statement. "More importantly, we are disrupting a $50 billion addressable market that is shifting toward cloud solutions with a preference for a single technology platform."

Investors could be disappointed that 8x8 slightly reduced its forecast for fiscal 2019. The company now expects fiscal 2019 service revenue to be in the range of $334 million to $335 million, down from prior guidance of $334 million to $338 million. 8x8 expects its non-GAAP pre-tax loss for fiscal 2019 to be $19 million.

In terms of the fiscal fourth quarter, the company is guiding service revenue to a range of $88.6 million to $89.6 million, with a non-GAAP pre-tax loss of $7 million to $8 million.

Check out the latest 8x8 earnings call transcript.

Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.