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Don't Forget: 8x8 Benefits From COVID-19 Policies

By Anders Bylund - May 13, 2020 at 10:37AM

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Cloud communications services are an easy sell under coronavirus lockdown and work-from-home policies.

Voice-over-IP solutions specialist 8x8 (EGHT 1.38%) reported results on Tuesday, covering the fourth quarter of fiscal-year 2020. The company exceeded Wall Street's estimates across the board as businesses of every type leaned into remote work in a big way.

8x8's fourth-quarter results by the numbers


Q4 2020

Q4 2019


Analyst Consensus


$121 million

$94 million


$119.3 million

GAAP net income (loss)

($50.1 million)

($28.1 million)



Adjusted earnings (loss) per diluted share





Data source: 8x8. GAAP = generally accepted accounting principles.

CEO Vik Verma said on the fourth-quarter earnings call:

We believe the world of work has now fundamentally changed. Flexible work from anywhere on any device and in any digital form is now not just a nice to have, it is a critical business continuity imperative. Fortunately, we are ready.

8x8 added 42 new enterprise clients with deal sizes above $100,000 and 5,500 new paying customers. The company rode the work-at-home wave, providing voice and video-communication platforms to businesses of every size. It was more than simply letting a rising tide lift all boats in the cloud-based communications market, though. Five of 8x8's 10 largest deals were replacements of existing Avaya solutions.

New rules, new partners

The company struggled to serve this torrential influx of new business, at first. Open-source video meetings service Jitsi scaled up from a few hundred thousand customers to 20 million monthly active accounts in a matter of weeks. This ramp-up process was supposed to take 18 to 24 months.

"Our video traffic climbed to more than 1.5 petabytes per day, leading us to evaluate hosting options," Verma said. "To put this in perspective, this is equivalent to uploading 10 billion new photographs to Facebook every day."

The review led 8x8 to Oracle (ORCL 2.04%), whose cloud computing platform offered the right combination of reasonable prices, strong security, and cross-promotion opportunities.

"8x8's video meeting solutions, including our free and paid offerings, along with, are now live on the Oracle Cloud Infrastructure," Verma explained. "We also joined the Oracle PartnerNetwork, and as a result, our video meeting solutions are now available in the Oracle Cloud Marketplace, where hundreds of thousands of Oracle customers can now buy 8x8 Meetings Pro."

That sounds like a win-win. Actually, it is a win-win-win if you consider Oracle's role in all of this. Leading video-meetings specialist Zoom Video Communications also moved to Oracle's cloud platform last month for similar reasons. I'm not really here to talk about the database-software giant, but Oracle is finding a lucrative service niche here.

A young woman in a red shirt smiles at her laptop and notebook.

Image source: Getty Images.

What's next for 8x8?

8X8 is going places in this game-changing business environment. Management isn't afraid of finding new partners to boost 8x8's marketing efforts during the COVID-19 lockdown period. The company's also using its free video meetings as a platform to promote paid products to 20 million potential customers. That's a new effort that should pay off in the next fiscal year.

It's not all wine and roses, of course. Customer churn is uncomfortably high in the small and medium business segment because many of 8x8's customers in this class are struggling to keep their own lights on. In an effort to keep these customers engaged through low-cost communications services, 8x8 is working to automate the account-management platform with a heavy dose of online self-service options.

Lessons learned here should help 8x8 control its operating costs in the long run. At the same time, 8x8's top-line sales are poised to skyrocket as businesses around the world get used to letting employees work from home. Cloud communications is a hot ticket these days.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Anders Bylund has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Facebook and Zoom Video Communications and recommends the following options: short May 2020 $120 calls on Zoom Video Communications. The Motley Fool has a disclosure policy.

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Stocks Mentioned

8x8, Inc. Stock Quote
8x8, Inc.
$5.16 (1.38%) $0.07
Oracle Corporation Stock Quote
Oracle Corporation
$78.73 (2.04%) $1.57
Zoom Video Communications Stock Quote
Zoom Video Communications
$108.55 (0.45%) $0.49
Avaya Holdings Corp. Stock Quote
Avaya Holdings Corp.
$0.70 (2.62%) $0.02

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