8×8 has hailed the success of its CCaaS and CPaaS offerings, with the latter experiencing nine percent year-on-year growth.
Announced during the company’s Q4 2024 earnings call, 8×8 CEO Samuel Wilson highlighted the importance of CCaaS and CPaaS – claiming that they would be the “two drivers over the next four quarters.”
Both solutions have been integral in helping the company to diversify its portfolio and offer new products.
Amongst these new offerings, Wilson praised the organization for identifying fresh and alternative ways to embed CPaaS capabilities into 8×8’s existing integrated UC and CC solutions – allowing customers to enjoy more “complete” solutions.
Wilson also revealed that one of the company’s six key imperatives for the year had been to focus more heavily on 8×8’s CCaaS offerings by accelerating innovation and embedding AI across its integrated platform, without sacrificing its leadership in cloud telephony.
This tallies with the announcement made by the company last year that it would be pivoting from a UCaaS focus to a CCaaS focus, under the new tagline: “Communications for the Customer Obsessed.”
8×8 has historically employed a “land and expand” strategy, attracting customers with its UCaaS solution, building relationships, and subsequently offering a CCaaS platform to fulfill their requirements – allowing the company to unify UCaaS and CCaaS.
While the vision remains unchanged, 8×8 has made a strategic shift, prioritizing CCaaS over UCaaS.
And it appears that the pivot has already started to pay dividends, as Wilson explains:
[In the] contact center business, we’ve been seeing more growth… We’ve definitely been seeing solid momentum, particularly when we think about the CPaaS partnership around it – the add-on products, those kinds of things.
Let’s take a closer look at what’s fueling 8×8’s CCaaS growth.
A CCaaS Assessment
One of the major reasons for CCaaS growth has been the implementation of a slew of new innovations and enhancements.
Regarding the latter, there have been improvements to the company’s customer interaction data platform, composable user interfaces, and the integrated solutions from its technology partner ecosystem.
When it comes to innovations, Wilson specifically outlined the organization’s Engage solution, claiming that it extends 8×8’s customer experience capabilities “beyond the traditional boundaries of the contact center.”
Launched in March of this year, Engage is an AI-driven solution aimed at improving cross-organizational customer engagement.
In a nutshell, it empowers various customer-facing employees, such as store associates, field service personnel, and sales teams, by providing them with CCaaS capabilities.
While Wilson described Engage as “just one of many examples” of fresh solutions, it is clear that he views the tool as 8×8’s CCaaS crown jewel, commenting:
We believe this product dramatically increases our cross-sell opportunities to existing customers and provides an accessible entry point for new customers looking to improve their customer experience across the organization.
However, despite the success of CCaaS and CPaaS, 8×8 still experienced some struggles during the quarter.
UCaaS: Cracking a “Tough Market”
While 8×8 achieved steady growth across its CCaaS and CPaaS markets, the company admitted that UCaaS has been a more difficult proposition, with Wilson terming it a “tough market.”
Wilson’s comments appear to be indicative of a wider market trend. Speaking on the UC Today Big News show last year, Jon Arnold, Principal Analyst at J Arnold & Associates, discussed how the competitiveness of the market is making UC a “race to zero.”
“It’s just too competitive a market… I don’t think anyone goes into UC to make money now. It’s really more about holding onto their customer base,” Arnold said.
Another issue for 8×8 is the company’s pre-existing UCaaS reputation. Despite having a “really good product innovation led story,” Wilson admits that 8×8 is still known as the “stodgy UCaaS company.”
In order to shake off that stereotype and bring about growth in the UCaaS market, 8×8 is focusing on spreading the message about the company’s improved credentials, as Wilson explains:
It’s just a matter of getting people to realize kind of what we’ve evolved to, and we’ll see those corresponding business improvements. And we see it already in the pipeline.
So, how has the growth of CCaaS and CPaaS, and the struggles of UCaaS impacted the overall finances for the quarter?
The Numbers
8×8 CFO Kevin Kraus described the quarter as “solid” financially. Both total revenue and service revenue met expectations, growing 18 percent year-over-year to $184.4 million and $175.8 million, respectively.
Cash flow also surpassed projections at $12.7 million for the quarter and $79 million for the year, while non-GAAP profit rose to $18.3 million this quarter, a substantial increase from $3.1 million during the same period last year.
Additionally, 8×8 made significant progress in debt repayment, repaying $88.3 million of principal in FY24, fulfilling 35 percent of its commitment to return $250 million to investors through debt repayments over three years.
For more information on the UCaaS news from the earnings call, head over to our sister site UC Today for the full story.
