8x8 Stock Before Q3 Earnings: A Smart Buy or Risky Investment?

8x8 EGHT is slated to release its third-quarter fiscal 2025 results on Feb. 04. Find the latest EPS estimates and surprises on Zacks Earnings Calendar.For the fiscal third quarter, the company expects revenues between $177 million and $182 million.The Zacks Consensus Estimate for fiscal third-quarter revenues is pegged at $179.18 million, suggesting a 1.01% year-over-year decline.8x8 Inc Price and EPS Surprise 8x8 Inc price-eps-surprise | 8x8 Inc QuoteThe consensus mark for earnings is pegged at 8 cents per share, unchanged in the past 30 days. The projection suggests a 33.33% decline from the figure reported in the year-ago quarter.EGHT earnings beat the Zacks Consensus Estimate in all the trailing four quarters, delivering an earnings surprise of 11.70% on average.Let’s see how things have shaped up for the upcoming announcement.Factors Likely to Have Influenced Q3 PerformanceEGHT’s third-quarter fiscal 2025 results are expected to benefit from the sequential increase in service revenue, particularly in the Communications Platform as a Service (CPaaS) and contact center as-a-service (CCaaS) segments.For the fiscal third quarter of 2025, EGHT projects service revenues to be in the range of $171 million-$174 million.The company continues to see robust performance in its CPaaS segment, particularly in the Asia-Pacific and European regions. The platform usage revenue is expected to maintain strong year-over-year growth, which should contribute positively to revenues in the to-be-reported quarter.EGHT’s initiatives to broaden its product portfolio across its segments and enable the adoption of its innovative solutions by both existing and new customers are expected to have been a tailwind.8x8’s ongoing investments in artificial intelligence (AI) and the increasing adoption of AI-based solutions, including its Intelligent Customer Assistant, are expected to drive further growth in the to-be-reported quarter. The company has seen an acceleration in AI-based new product sales, and with more than 1 million interactions since the launch of these products, this growth is expected to continue in the next quarter.EGHT Shares Underperform Sector, IndustryEGHT shares have plunged 5.7% in the trailing six-month period, underperforming the Zacks Computer & Technology sector’s return of 13.2% and the Zacks Internet Software industry’s appreciation of 36.9%.This global provider of cloud-based CCaaS and unified communications-as-a-service (UCaaS) software has underperformed its competitors from Internet and cloud service companies, such as Amazon AMZN and Alphabet GOOGL, over the trailing six-month period. Amazon and Alphabet shares have returned 30.5% and 14.8%, respectively, in the same time frame.EGHT Stock’s Six-Month PerformanceImage Source: Zacks Investment ResearchEGHT Stock is Trading at a Discount8x8 stock is cheap, as suggested by the Value Score of B.In terms of the forward 12-month Price/Sales, EGHT is trading at 0.53X, lower than the industry's 3.21X.Price/Sales (F12M)Image Source: Zacks Investment ResearchRobust AI-Powered Portfolio Boosts EGHT’s ProspectsEGHT’s prospects are bright, given its expanding AI-powered portfolio. In the second quarter of fiscal 2025, 8x8 announced the availability of Active Assessor, an AI-powered housing association solution enabling landlords to proactively engage with tenants and ensure homes meet health and safety standards.The company also enhanced AI-enabled interaction summarizations across its platform to empower contact center agents with personalized interactions, faster wrap-up times, and seamless Customer Relationship Management integration.8x8 has also made significant advancements in language support and real-time accuracy with the latest OpenAI Whisper model, expanding live chat translation to more languages, enhancing text-to-speech capabilities, and improving analytics to boost efficiency, productivity, and customer satisfaction.Rich Partner Base to Boost EGHT’s Top LineEGHT’s expanding partner base, which includes technology partners like Descope and Regal.io, as well as the Microsoft MSFT Teams integrations, positions the company to attract more customers and broaden its offerings, creating additional sales opportunities in the to-be-reported quarter.EGHT’s integration with Microsoft Teams has been a key catalyst. EGHT offers one of the broadest enterprise voice integrations with Microsoft Teams. It also includes 8x8 Operator Connect and 8x8 Voice for Microsoft Teams. 8x8 currently supports more than 500,000 Teams users.EGHT — A Smart Buy or Risky Bet8x8’s expanding AI-powered portfolio and a strong partner base are major growth drivers. However, challenging macroeconomic conditions and intense competition are likely to have affected recurring revenues and customer count in the to-be-reported quarter making it a risky investment despite its cheap valuation.In the fiscal third quarter, 8x8 may also face challenges from the ongoing customer migration from the Fuze platform to the 8x8 platform and potential impacts from foreign exchange rate fluctuations.8x8 currently has a Zacks Rank #3 (Hold), which implies that investors should wait for a more favorable entry point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Amazon.com, Inc. (AMZN): Free Stock Analysis Report Microsoft Corporation (MSFT): Free Stock Analysis Report Alphabet Inc. (GOOGL): Free Stock Analysis Report 8x8 Inc (EGHT): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks