8×8 CEO Samuel Wilson swiped at competitors NICE and RingCentral during the company’s latest earnings call.
During his opening comments, Wilson described NICE’s recent entry into the UCaaS market with a disruptive (and controversial) $5-a-month offering as a “marketing splash”.
Later, during the Q&A, when asked a follow-up question about NICE’s customer overlap with 8×8, Wilson referred to NICE’s go-to-market partner, RingCentral, as a “certain company in Belmont, California, that starts with an ‘R’ and ends with ‘Central'(…) who suddenly decided they want to go in a different direction.”
Wilson also flagged “vendors with subpar products that they like to talk about a lot using price” in response to a separate question about the impact of NICE’s new solution on 8×8’s sales.
Wilson began his briefing by contextualising the company’s steady quarter for Q1 FY25, in which revenues declined slightly ($178.1 million, compared to $183.3 million in Q1 FY24), but cash flow was better than expected at $18 million. Wilson then suggested that 8×8 achieved these results despite the market becoming “incrementally more competitive, if only from a marketing and messaging standpoint”.
For example, we saw NICE making a marketing splash for the $5 UCaaS offering. These solutions are typically feature-light and unintegrated, but the announcements have served to disrupt and extend sales cycles in some cases.”
Wilson elaborated by saying that 8×8’s competitors crowding the market further has made the business “think about getting more creative to push our competitive advantage and drive awareness and adoption”, albeit the company has nothing to announce in this area yet.
Comments During Q&A Section
During the call’s Q&A section, Wilson answered Meta Marshall of Morgan Stanley’s question about the impact of NICE’s $5-a-month UCaaS offering on 8×8’s sales this past quarter.
Wilson said that it slows down the deal cycle because “the customer’s going to print out the press release or email it over to the sales rep and say, ‘Well this is five bucks, why don’t we buy that?’ You have to read the fine print that says you have to be a (NICE) CXOne user – there’s a whole bunch of other stuff attached to it, and it’s not that great of a product”.
Wilson called out “vendors with subpar products, particularly subpar contact centre products, that they like to talk about a lot using price.” He suggested that these vendors are getting their customer numbers because “they want to report it to you guys on Wall Street, they’re using price, and it’s the same as the 3CX products by NICE, etc”.
These are subpar products. I’d go so far as one customer called them crappy products. But it just slows down the sales cycle because they’re going to run a PoC, or they’re going to do whatever. I get what they’re doing; they’re just trying to use price to disrupt the market, and it just takes time to work our way through that. That’s what we see. We just see bad products at low prices, and you have to sell through it.”
Later in the Q&A section, Michael Funk of Bank of America Merrill Lynch asked Wilson to elaborate on the sense of customer overlap Wilson sees between 8×8 and NICE.
“So let’s remember that there’s a certain company in Belmont, California, that starts with an ‘R’ and ends with ‘Central’ that has resold NICE for years, and so when I say NICE, I also take it in the context of inside of their go-to-market partner,” Wilson responded.
Wilson continued by noting that perhaps that customer overlap might have been more pronounced two or three years ago, but 8×8 has invested heavily in its contact centre business since then, meaning it can now “hold (its) own” in that market.
However, Wilson affirmed that he respects NICE as a “great company” and that there are areas in which NICE does better than 8×8.
“There are places that NICE is better than we are,” Wilson said. “I think there are places that we are better than NICE. Great company, by the way. I respect them tremendously. They’ve done wonders for our industry.”
“But the UC stuff, I think, was definitely not aimed at us. The things that they did were very much aimed at that GTM relationship with a certain vendor because that certain vendor has suddenly decided they want to go in a different direction.”
Notable Operational Successes This Quarter
8×8 continues to develop its CCaaS and CPaaS portfolio, with several major developments in AI-powered solutions, such as organisations bringing their own AI into 8×8 Contact Center and the launch of 8×8 Intelligent Customer Assistant Support for Voice.
On the UC front, Wilson lauded multi-product UCaaS and CCaaS deals for its steady quarter. While confirming that a “vast majority” of its customers still utilise its UC products and that its XCaaS product comprises 40 percent of its total revenue, Wilson also said there’s a “big delta between contact centre seats and UC seats”.
However, Wilson celebrated 8×8 having “hundreds of customers probably getting closer to thousands of customers sitting at three, four, and five products. Now, actually we have thousands of customers at three, four, and five products now.”
Wilson cited one such new deal, a leading home furnishings retailer that signed up with five products, including XCaaS, Secure Pay, agent assist and workforce management. Wilson also said there were “other four and five product customers” this quarter, with “many more” in the pipeline.
“At the same time, we are seeing more multi-product deals in our pipeline and we are landing new logos with multiple products,” Wilson said.
8×8’s Financial Health This Quarter
In Q1 FY25, 8×8 reported total revenue of $178.1 million, a slight decrease from $183.3 million in the same quarter of FY24 but one that fell within 8×8’s guidance. Service revenue also dipped to $172.8 million from $175.2 million year-over-year.
The company maintained a GAAP operating loss of $1.4 million, unchanged from the prior year, while non-GAAP operating profit declined significantly to $20.1 million, down from $26.4 million. The GAAP net loss improved to $10.3 million, compared to a $15.3 million loss in the previous year, indicating some progress in cost management. However, non-GAAP net income dropped to $10.4 million from $15.5 million, reflecting a challenging operating environment.
The results highlight a slight revenue decline and reduced profitability, though the GAAP net loss improved year-over-year.
