8x8, Inc. (EGHT) DCF Valuation & Fundamental Primer
8x8, Inc. (EGHT) trades at $18.88 with a market enterprise value of $2.90B and generated $744.6M in TTM revenue and $57.0M in free cash flow (filed 2026-08-05 (period ended 2026-06-30)). Our 5-year DCF model estimates an implied intrinsic value of $4.22 per diluted share ($816.3M DCF enterprise value, Grade: B+ · 70/100 · Quality Software Operator).
SEC 10-K/10-Q DCF teardown of 8x8, Inc. (EGHT): $744.6M TTM revenue (3.6% growth), 63.3% GAAP gross margin, 7.6% FCF margin, 2.4% SBC/revenue, and R&D Return Grade D (Faders, $-0.08 new gross profit per $1 prior R&D).
8x8, Inc. (EGHT) earns a "Pass" rating and an institutional Quality Score of 70/100 (Grade B+). On $744.6M in baseline revenue (3.6% growth, 63.3% gross margin, 7.6% FCF margin), our 5-year DCF yields an Enterprise Value of $816.3M ($4.22/share vs. $18.88 market price). On the R&D Return Benchmark, EGHT ranks #159 of 174 (Faders · Grade D, -0.08× return).
Gross Margin & Unit Economics: 8x8, Inc. operates at a 63.3% gross margin on $744.6M revenue (9.5 pts below the Software - Application median of 72.7%).
R&D Productivity (Faders · Grade D): Investing 15.4% of revenue in R&D ($113.0M) generates $-0.08 of incremental gross profit per R&D dollar (Rank #159 of 174).
Rule of 40 & Cash Conversion: Combining 3.6% top-line growth with 7.6% FCF margin yields a 11.3% Rule of 40 score (vs. 47.2% cohort median) and $816.3M DCF Enterprise Value.
3-Statement Financial Schedule & 5-Year Horizon
Synchronized directly with the 3-Year Operating Statement (63.3% Gross Margin · 3.6% Growth)
| Income Statement Line | Year 1 (2026) | Year 2 (2027) | Year 3 (2028) |
|---|---|---|---|
| Revenue | $744.6M | $771.5M | $799.5M |
| Cost of Revenue (COGS) | ($273.6M) | ($279.6M) | ($285.8M) |
| Gross Profit & Margin | $471.0M (63.3%) | $491.9M (63.8%) | $513.7M (64.3%) |
| Research & Development (R&D) | $113.0M | $112.4M | $111.7M |
| Sales & Marketing (S&M) | $241.3M | $240.1M | $238.4M |
| General & Administrative (G&A) | $93.9M | $93.4M | $92.7M |
| Operating EBIT | $22.8M (3.1%) | $46.0M (6.0%) | $70.9M (8.9%) |
| Adjusted EBITDA | $41.4M (5.6%) | $65.3M (8.5%) | $90.9M (11.4%) |
3 Key Underwriting Risks
Structural sensitivities monitored in the 3-Statement Financial Engine
Value-Creation Levers · Quantified Statement Impact
Apply any lever below to write its operating assumptions directly into the 3-Statement Model
Automate cloud hosting & support workflows to lift gross margin from 63.3% to 68.3%.
Align R&D intensity and ASC 350-40 capitalization to the R&D Compounders cohort median, recapturing $14.9M in annual EBITDA.
Lift net dollar retention and expansion velocity by +300 bps, compounding Year 3 revenue to $846.4M.
8x8, Inc. (EGHT) 3-Scenario DCF Valuation Range
Stress-test EGHT's 5-year growth, target FCF margin, WACC, terminal methodology, and SBC/dilution friction in real time.
Simulate how deploying Gemini workflow automation and autonomous engineering expands EGHT's Gross Margin, FCF Margin, DCF share price, and 2x2 R&D Return Quadrant.
Split between 5-Year Explicit Cash Flows and Discounted Terminal Value
2D Institutional Valuation Sensitivity Heatmap
Implied share price & upside/downside spread across 25 valuation states (Current Price: $18.88).
| WACC \ Terminal | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.5% | $6.80 -64% | $7.29 -61% | $7.87 -58% | $8.56 -55% | $9.38 -50% |
| 9.3% | $5.98 -68% | $6.37 -66% | $6.82 -64% | $7.34 -61% | $7.95 -58% |
| 10.0% | $5.31 -72% | $5.63 -70% | $5.98 -68% | $6.39 -66% | $6.86 -64% |
| 10.8% | $4.75 -75% | $5.01 -73% | $5.30 -72% | $5.62 -70% | $5.99 -68% |
| 11.5% | $4.27 -77% | $4.49 -76% | $4.72 -75% | $4.99 -74% | $5.29 -72% |
Institutional Software Quality Scorecard (70/100 · Grade B+)
Solid software model with clear operating leverage, partially offset by standard SBC or moderate burn.
Elite deferred revenue float; FCF exceeds operating income by >20%
Minimal dilution friction; management compensation aligned with shareholders
Sub-par gross margins; higher cost of delivery or hardware/services mix
Moderate leverage or cash burn; monitor liquidity runway
Core Investment Strengths & Moats
- High-grade cash conversion: FCF is 250% of EBIT driven by upfront annual collections
- Low dilution friction: SBC is only 2.4% of revenue
Key Operational & Dilution Risks
- Lower software gross margins (63.3%), indicating higher hosting or service delivery drag
Audited R&D Intensity is 15.4% of revenue with a -0.08× incremental gross profit return per R&D dollar. Under your current Stage 1 (3.6% CAGR / 63.3% GM) assumptions, EGHT projects to 0.06× R&D Return (Grade C · Faders).
Reverse-DCF Solver: What Growth is Priced Into EGHT?
The current share price demands 36.9% 5-year CAGR (48.5% net of SBC & dilution)—a +33.3% acceleration over historical run-rate (3.6%). Any growth slowdown risks valuation multiple contraction.
Headline Reverse-DCF ignores Stock-Based Compensation (2.4% of revenue) and annual share dilution (4.6%/yr). Accounting for both requires 48.5% 5-year revenue CAGR to justify $18.88/sh on a true per-share economic cash flow basis.
8x8, Inc. (EGHT) 5-Year Fundamental Forecast
| Statement Line Item | TTM Audited Base | TTM | Y1 | Y2 | Y3 | Y4 | Y5 |
|---|---|---|---|---|---|---|---|
| Revenue | $744.6M | $744.6M | $771.5M | $799.4M | $828.4M | $858.4M | $889.4M |
| Gross Profit | $471.0M | $471.0M | $488.1M | $505.7M | $524.0M | $543.0M | $562.7M |
| Operating Income (EBIT) | $22.8M | $22.8M | $23.6M | $24.5M | $25.3M | $26.3M | $27.2M |
| Stock-Based Compensation (SBC) | $18.1M | $18.1M | $18.7M | $19.4M | $20.1M | $20.9M | $21.6M |
| Unlevered Free Cash Flow (FCF) | $57.0M | $57.0M | $59.0M | $61.2M | $63.4M | $65.7M | $68.0M |
| SBC-Adjusted True Cash Flow | $38.9M | $38.9M | $40.3M | $41.7M | $43.2M | $44.8M | $46.4M |
Software - Application Peer Comparables & Rule of 40 Regression
Rule of 40 vs. EV / Revenue Multiple Regression
OLS Fit: EV/Rev = 7.0 + 0.05 × (Rule of 40) · R² = 12%Stocks below the gold regression line trade at a discount relative to their Rule of 40 compounding efficiency.
| Company | Ticker | Market Cap | TTM Revenue | Gross Margin | FCF Margin | Rule of 40 | SBC % Rev | EV / Rev |
|---|---|---|---|---|---|---|---|---|
| 8x8, Inc. | EGHT | $2.68B | $744.6M | 63.3% | 7.7% | 11.3% | 2.4% | 3.9× |
| Grab Holdings Limited | GRAB | $20.18B | $2.80B | 42.0% | 27.7% | 84.0% | 10.0% | 6.3× |
| Figma, Inc. | FIG | $18.07B | $749.0M | 88.3% | -9.2% | 39.1% | 126.5% | 23.5× |
| Full Truck Alliance Co. Ltd. | YMM | $71.73B | $11.24B | 86.6% | 25.8% | 70.2% | 4.4% | 5.9× |
| ServiceTitan, Inc. | TTAN | $9.97B | $771.9M | 64.9% | 2.0% | 30.5% | 21.2% | 12.5× |
| InterDigital, Inc. | IDCC | $8.65B | $868.5M | 80.5% | 30.6% | 55.3% | 5.3% | 9.9× |
| OPEN TEXT CORP | OTEX | $8.11B | $5.30B | 63.5% | 13.0% | 23.8% | 2.0% | 2.6× |
| Peer Cohort Median Benchmark (N=6) | 72.7% | 19.4% | 47.2% | 7.6% | 8.1× | |||
EV / Revenue Multiple Compression Stress Test
| Multiple Scenario | EV / Revenue | Implied Enterprise Value | Implied Equity Value | Implied Share Price | Delta vs Current |
|---|---|---|---|---|---|
| Current Multiple | 3.9× | $2.90B | $2.68B | $18.88 | 0.0% |
| -20% Multiple Compression | 3.1× | $2.32B | $2.10B | $14.80 | -20.0% |
| -35% Multiple Compression | 2.5× | $1.88B | $1.67B | $11.74 | -35.0% |
| Software Baseline Floor (5.0× EV/Rev) | 5.0× | $3.72B | $3.51B | $24.70 | +28.5% |
Frequently Asked Questions: 8x8, Inc. (EGHT) Valuation
What is 8x8, Inc. (EGHT)'s intrinsic DCF valuation and implied share price?
Based on audited SEC 10-K/10-Q filings and a 5-year 3-statement discounted cash flow (DCF) model, 8x8, Inc. (EGHT) has a Base Case implied value of $4.22 per share (with a Bear Case of $1.92 and a Bull Case of $6.70), compared to its current price of $18.88. The model discounts projected free cash flows at a 10.0% WACC and a 2.5% terminal growth rate.
What is 8x8, Inc. (EGHT)'s Rule of 40 score and Free Cash Flow margin?
8x8, Inc. achieves a Rule of 40 score of 11.3%, combining a 3.6% revenue growth run-rate with a 7.6% TTM free cash flow margin on $744.6M in trailing twelve-month revenue. In the Software - Application peer cohort, the median Rule of 40 benchmark is 47.2%.
What revenue growth rate is priced into EGHT stock according to Reverse-DCF analysis?
At $18.88 per share (Enterprise Value of $2.90B), our Reverse-DCF solver indicates the market is pricing in a 5-year implied revenue CAGR of 36.9%, compared to 8x8, Inc.'s historical CAGR of 3.6%. Overall market expectations are rated as "Aggressive Growth Expectations Priced In".
What is 8x8, Inc. (EGHT)'s R&D Return Score and innovation productivity?
On the Golden Door Software R&D Return Benchmark, 8x8, Inc. (EGHT) is ranked #159 out of 174 scored software peers, earning a Grade D in the "Faders" quadrant. 8x8, Inc. invests 15.4% of FY revenue into R&D ($113.0M) and generated $-0.08 of incremental gross profit per prior-year R&D dollar.
How does 8x8, Inc. compare to Software - Application peers?
8x8, Inc. (EGHT) earns an institutional Software Quality Score of 70/100 (Grade B+ — Quality Software Operator). Across its Software - Application peer group (GRAB, FIG, YMM, TTAN, IDCC), the cohort trades at a median EV/TTM Revenue multiple of 8.1× and a median gross margin of 72.7%.
How does Stock-Based Compensation (SBC) impact 8x8, Inc. (EGHT)'s valuation?
8x8, Inc. recorded $18.1M in TTM stock-based compensation (2.4% of revenue). When treating SBC as a cash-equivalent compensation expense, 8x8, Inc.'s SBC-adjusted free cash flow yield is 1.5%, scoring 25/25 on our Shareholder Dilution Friction pillar.