Domo, Inc. has been at the forefront of the data revolution, providing a cloud-based platform that empowers organizations to unlock the power of their data. As the data landscape continues to evolve, Domo has demonstrated its ability to adapt and capitalize on emerging trends, positioning itself as a strategic partner for businesses seeking to harness the full potential of their data.
Financials
In the fiscal year ended January 31, 2024, Domo reported annual revenue of $318,989,000 and a net loss of $75,569,000. The company's annual operating cash flow was $7,760,000, while its annual free cash flow was -$4,000,000. These financial results reflect Domo's ongoing investments in product development, sales and marketing, and strategic initiatives aimed at driving long-term growth.
Business Overview
Domo's cloud-native data experience platform goes beyond traditional business intelligence and analytics, making data visible and actionable with user-friendly dashboards and applications. The platform is underpinned by AI, data science, and a secure data foundation that connects with existing cloud and legacy systems. This comprehensive approach enables Domo to help companies optimize critical business processes at scale and in record time, empowering them to make data-driven decisions that drive exponential business results.
Adapting to the Evolving Data Landscape
Over the past few years, the data landscape has undergone a significant transformation, with the emergence of cloud-based data warehouses (CDWs) as a central component of many organizations' data strategies. Historically, Domo's offerings have competed with these CDWs, creating friction in the ecosystem. However, the company has recognized the need to adapt and has made strategic investments to align its platform with the CDW ecosystem.
Recent Developments
Domo's Cloud Amplifier: A Game-Changer in Ecosystem Partnerships
In the first quarter of fiscal year 2025, Domo launched its Cloud Amplifier, which allows the company to seamlessly integrate its platform with leading CDW providers, such as Snowflake, Databricks, and Google BigQuery. This integration has been a game-changer, as it has enabled Domo to be actively involved in customer conversations around data strategies, where it was previously excluded.
The results have been impressive. Within just one month of launching the Cloud Amplifier with its first CDW partner, Domo has already generated 47 opportunities in its pipeline, with 12 net new relationships. The feedback from CDW partners has been extremely positive, with one partner stating that they have never been able to get data into their product as quickly and easily as they did using Domo.
Consumption-Based Pricing: Aligning Value and Revenue
In addition to its ecosystem partnerships, Domo has also been focused on transitioning its customer base to a consumption-based pricing model. This model better aligns the company's revenue with the value it provides to customers, as it is based on the actual usage of the platform rather than a fixed seat-based subscription.
The results of this transition have been promising. In the first quarter of fiscal year 2025, over 90% of Domo's new contract dollar value was on consumption-based agreements, and the company now has over 30% of its total annual recurring revenue (ARR) on consumption-based contracts. Domo expects this number to exceed 50% by the end of the fiscal year.
Importantly, the consumption-based cohort has demonstrated significantly higher gross and net retention rates compared to Domo's traditional seat-based customers. In the first quarter, the gross retention rate for the consumption-based cohort was 96%, and the net retention rate was over 115% - the highest Domo has ever seen.
Navigating Macroeconomic Challenges
Like many technology companies, Domo has not been immune to the broader macroeconomic headwinds, which have resulted in some customer churn and elongated sales cycles. However, the company has taken proactive steps to address these challenges, including aligning its sales and marketing efforts with its new consumption-based pricing model and strengthening its ecosystem partnerships.
In the first quarter of fiscal year 2025, Domo's revenue was $80,103,000, a 1% year-over-year increase. The company's subscription revenue, which accounted for 90% of total revenue, also grew by 1% year-over-year. While Domo's billings of $65,496,000 in the quarter were impacted by a large non-renewal, the company expects its gross retention to improve significantly in the second quarter, forecasting a range of 87% to 88%, up from 83% in the first quarter.
Liquidity
As of April 30, 2024, Domo had $61,158,000 in cash, cash equivalents, and restricted cash, providing the company with a solid liquidity position to fund its ongoing operations and strategic initiatives. The company also has a $100 million credit facility, all of which had been drawn as of the end of the first quarter.
Domo's Geographical Footprint
Domo's revenue is primarily generated within the United States, which accounted for 80% of total revenue in the first quarter of fiscal year 2025. The remaining 20% of revenue was derived from international markets, with no single country contributing more than 10% of total revenue.
Risks and Challenges
While Domo has demonstrated its ability to adapt to the evolving data landscape, the company faces several risks and challenges that investors should be aware of. These include the ability to successfully execute its transition to a consumption-based pricing model, the continued development and integration of its ecosystem partnerships, and the potential impact of macroeconomic conditions on customer demand and retention.
Outlook
Domo's strategic pivot to align its platform with the CDW ecosystem and its transition to a consumption-based pricing model have positioned the company for potential long-term success. The early results of these initiatives, including the strong performance of the consumption-based cohort and the growing pipeline of opportunities from CDW partnerships, are encouraging.
Conclusion
While Domo continues to navigate near-term macroeconomic headwinds, the company's focus on improving retention and driving growth through its ecosystem partnerships suggests a path forward. As Domo continues to execute on its strategic initiatives and capitalize on the evolving data landscape, the company may emerge as a compelling investment opportunity for those seeking exposure to the data and analytics market.