Last week, murmurs of an 8x8 takeover by RingCentral set the CX world alight.
After an unnamed source alerted respected finance website Investing.com to the news, many analysts began to weigh up the possibility.
Some suggested that the move could give 8x8 shareholders a chance to escape its decline.
Indeed, the vendor once boasted a market cap of $4BN. Fast-forward to today, and it is $480MN.
Alternatively, some argued that the current share price is obscenely low, given 8x8’s stature in enterprise communications.
Moreover, they pointed to 8x8’s rich product portfolio and large customer base, indicating that 8x8 may prefer to hold firm in anticipation of a bounce back.
From the outside in, it seems a delicate balance. So, let’s take a closer look at the arguments for both.
The Argument for "Yes"
Both RingCentral and 8x8 have lost 75 percent in their stock value in the last year.
Yet, by acquiring 8x8 and consolidating the market, RingCentral may push back, unlocking cross-selling opportunities and opening the door to share gains.
Such share gains are often challenging in mature markets like enterprise communications.
Furthermore, optimism was in the air after a difficult year during 8x8’s last earnings call, with the business striving to strike the right balance between growth and profitability.
Samuel Wilson, Chief Financial Officer at 8x8, doubled down on its aim to achieve a 10 percent growth in profitability in its 2024 fiscal year. During an earnings call, he stated:
We’re not giving up on our goal of being a double-digit grower… If we were really focused on being a single digit grower, we would probably reduce our R&D spending, and we’re not.
If it is really on track to meet this target, RingCentral will onboard a potentially profitable company.
Finally, by acquiring 8x8, RingCentral gains a native CCaaS solution – and can converge this with its UCaaS platform to seize upon a burgeoning market trend.
Of course, RingCentral is already big on CCaaS. Yet, it currently resells NICE CXone, so it only takes a small slice of the business it generates. By selling a native CCaaS solution, RingCentral can seize more and grow its contact center profits.
The Argument for "No"
Is RingCentral in a position to grow? This was likely top of mind for many after the news broke.