EGHT

8x8 has quietly executed a genuine turnaround. FY2026 delivered $1.65M of net income — the first GAAP profit after four straight loss years ($-175M, $-73.1M, $-67.6M, $-27.2M) — on operating income of $18.9M (+24.6%), which management says was positive in all four quarters. Gross margin remains healthy at 64.6% and operating cash flow was still solid at $55.8M. At $1.83 the stock trades at just 0.4x sales and roughly 0.66x EV/sales, which is cheap for a 64%-margin software business and reflects the market's skepticism rather than the operating trajectory. The 183x P/E is a meaningless artifact of near-zero EPS, not a real valuation signal.

The problem is that the business itself is barely growing and the balance sheet does the rest of the discounting. Revenue rose only 2.9% to $736M and has been essentially flat for five years ($638M→$744M→$729M→$715M→$736M), while gross profit actually fell 2.1% — profitability is coming from cost and R&D discipline (R&D -8.3%), not top-line momentum. The one bright spot is usage/API revenue, up 56% as customers lean into communications APIs and AI interactions, and international mix rising from 33% to 39% of revenue; that is the seed of a real re-acceleration if it scales. Against that, liabilities/equity sits at 3.52x, long-term debt is $282M and — critically — the current portion of debt jumped 238% to $39.2M, signaling a maturity that must be refinanced or repaid soon. The MD&A and Risk Factors flag exactly this: 'substantial amount of indebtedness,' 'cash flow may be insufficient to service or pay down our debt,' and conditional conversion features that could dilute the thin $147M equity base. Accumulated deficit stands at -$886M.