What caused EGHT's Q1 2025 earnings to fall short?

8x8's Q1 2025 earnings fell short, as indicated by the net loss of $10.3 million and a non-GAAP net income of $10.4 million, which is a decline from the non-GAAP operating profit of $26.4 million in the same quarter of the previous year. The causes for this shortfall can be analyzed as follows: 1. **Revenue Decline**: The company's total revenue decreased to $178.1 million in Q1 2025, down from $183.3 million in the same quarter of the previous year. This decline was primarily due to a decrease in service revenue, which fell to $172.8 million from $175.2 million. 2. **Billings Trend**: The trend in billings, which is a leading indicator of revenue, showed a concerning trend. 8x8's billings averaged 2.1% year-on-year declines over the last four quarters, indicating a weakening in the company's ability to acquire and retain customers. 3. **Customer Acquisition Costs**: The customer acquisition cost (CAC) payback period is a critical metric that affects profitability. A longer payback period delays returns and increases the cost of acquiring new customers. This suggests that 8x8 may be investing more in sales and marketing to maintain its customer base, which could impact short-term profitability. 4. **Foreign Exchange Headwinds**: 8x8 has faced foreign exchange headwinds, resulting in a pressure on its financial performance. This is evident in the reported quarter where forex headwinds amounted to more than $2 million, contributing to the revenue shortfall. In summary, 8x8's Q1 2025 earnings fell short due to a combination of revenue decline, customer acquisition costs, and foreign exchange headwinds.