Earnings to watch: 8x8 (EGHT) reports Q3 results tomorrow

What happened

Cloud communications provider 8x8 reports earnings this Wednesday after the market closes. Last quarter it posted revenue of $190.2 million, up 4.9% year on year, beating analysts' revenue expectations. This quarter, the market expects revenue growth of 1.9% year on year.

Confirmed

Global impact / market context

If 8x8 merely meets the slower 1.9% expected growth, it signals its pace of winning new sales is cooling versus last year. Because it has missed Wall Street's revenue estimates repeatedly over two years, another miss could weaken investor confidence in the business.

Analyst inference

Peer productivity software results were mixed but mostly positive: RingCentral grew revenue 5.9% and beat estimates, with its stock up 5%, while Microsoft grew 18.8% and topped estimates. Those prints suggest demand for such software still holds, though 8x8's own growth has trailed peers.

Analyst inference

What to watch

1. Watch whether 8x8's reported revenue reaches the 1.9% year-on-year growth analysts expect, which is slightly faster than the 1.7% increase recorded in the same quarter last year. Confirmed
2. Watch whether 8x8 misses revenue estimates again, given its history of multiple misses over two years; such a miss could prompt investors to sell shares. Analyst inference
3. Watch adjusted operating income, which means profit after certain adjustments, since last quarter it beat estimates; a solid beat could offset concern about slowing revenue growth. Analyst inference

Evidence

• stockstory.org