8X8 (NASDAQ:EGHT) Chief Technology Officer Bryan Martin outlined the company’s strategy to combine its global communications network with artificial intelligence tools, while emphasizing cash flow generation, debt reduction and expansion in Microsoft Teams integrations.
Speaking at the LD Micro conference, Martin said 8X8 generated $736 million in revenue during its last fiscal year and is working toward reaching $1 billion in annual revenue. The company’s business is split roughly evenly between unified communications, contact center offerings and messaging, with messaging representing its fastest-growing segment, he said.
For the June quarter, 8X8 reported $190 million in revenue and growth in the range of 5% to 6%, according to Martin. Excluding churn associated with the company’s 2022 acquisition of Fuze, revenue growth would have been approximately 8%, he said. The company completed the migration of the Fuze customer base to the 8X8 network at the end of the prior year after a multiyear transition that produced customer churn and other headwinds.
Cash Flow and Debt Reduction
Martin said 8X8 has recorded 22 consecutive quarters of operating cash flow and had $92 million in cash at the end of June. He said the company generates about $20 million in operating cash flow per quarter.
The company had a little more than $300 million of debt on its balance sheet, Martin said, adding that management is using cash flow to reduce that balance. He said more than 43% of the debt had been removed and that the company is committed to returning to a zero-debt position.
Martin also cited a 10% operating margin for the June quarter. He said 8X8’s next quarterly earnings release was scheduled for Nov. 4.
AI Strategy Built Around Communications Data
Martin described 8X8’s AI strategy as an extension of the company’s telecommunications infrastructure, which it has built over roughly two decades. The company operates a global network for voice, messaging and other communications services and holds more than 400 patents related to its network operations, according to Martin.
He said 8X8’s systems can collect and organize communications data across calls, text messages, contact-center interactions, chat platforms and customer relationship management integrations. The company’s “Conversation OS” approach is intended to create a more complete record of customer and employee interactions that can be analyzed by AI tools.
Martin said the company introduced 8X8 AI Studio this year, a product designed to allow customers to build AI agents using natural language rather than requiring coding expertise. The company had 3,200 AI agents in production workloads since the product’s April launch, he said.
- Martin said an Irish power company had built about 800 bots using the platform.
- He said a wholesale supplier serving companies including Home Depot was also deploying bots through 8X8 AI Studio.
- He described AI Studio as one of only two “viral” products he has seen during his career, alongside the company’s video meetings product during the COVID-19 period.
Martin argued that owning underlying network infrastructure can provide an advantage in AI deployments. For example, he said AI-based fraud prevention can operate at the network layer and stop suspected fraudulent calls before they reach a customer’s applications or employees.
Contact Centers and Human Agents
During a question-and-answer session, Martin pushed back on the view that AI adoption will reduce contact-center seat revenue by replacing human agents. He said 8X8’s year-over-year count of human contact-center agent seats has increased rather than declined.
“All this AI application sits on top of that seat revenue and the number of seats is increasing, not decreasing,” Martin said.
He characterized paid AI adoption as still being in the early stages, in part because many customer-service automation deployments are not yet configured effectively. Martin said AI systems should rapidly transfer customers to human representatives when they cannot resolve an issue, and human agents should receive the customer’s relevant information rather than requiring the customer to repeat the interaction.
Microsoft Teams Opportunity
Martin said 8X8 has partnered with Microsoft since about 2020 and currently supports about 1 million Microsoft Teams seats on its network. He said the company wants to expand that number substantially.
In January, 8X8 acquired Callroute, whose software is being certified with Microsoft, according to Martin. The offering is intended to make it easier for organizations using Teams for video and chat to use the platform for external phone calling as well.
Martin said 8X8 supports Microsoft Teams in 59 countries, compared with Microsoft’s deployment footprint in 35 countries. He said the company is willing to share communications data with Microsoft’s Copilot AI tools, distinguishing its approach from competitors that seek to retain the data within their own AI systems.
About 8X8 (NASDAQ:EGHT)
8×8, Inc is a cloud communications and customer engagement company that provides software and services for businesses. Its platform combines business phone systems, unified communications, contact center capabilities, team messaging, video meetings and application programming interfaces for communications-enabled applications.
The company’s offerings include 8×8 Work, a cloud-based business communications service, and 8×8 Contact Center, which supports customer service operations across voice and digital channels.
