Domo, the innovative cloud-based data experience platform, has been making waves in the business intelligence and analytics space. With its mission to digitally connect everyone within an organization with real-time, rich, and relevant data, Domo has been at the forefront of empowering enterprises to unlock the full potential of their data.
Company Background and Evolution
Founded in 2010, Domo has had a remarkable journey, evolving from a visionary idea to a leading provider of modern cloud-based data solutions. The company was established with the recognition that many organizations were struggling to access and leverage the vast amounts of data they were collecting in siloed cloud applications and on-premise databases. Even when organizations could access their data, the process was often time-consuming, costly, and resulted in outdated information by the time it reached decision-makers.
To address these challenges, Domo developed a modern cloud-based data experience platform that digitally connects everyone at an organization, from the CEO to frontline employees, with all the people, data, and systems within the company. This approach provides access to real-time data and insights, enabling more effective collaboration and decision-making. Initially, Domo offered its platform as a subscription-based service, with fees based on chosen packages that included tier-based platform capabilities or usage.
As the company grew, it began engaging with CIOs and other executives to facilitate broader enterprise adoption. To support this expansion, Domo invested in platform capabilities and online support resources that allow customers to expand their use of the platform independently. The company's professional services, customer support, and customer success functions have also played crucial roles in supporting the sales force by helping customers successfully deploy the platform and implement additional use cases.
Throughout its history, Domo has experienced significant growth, reflected in its expanding customer base, increasing revenue, and growing market presence. However, the company has also faced challenges, including incurring substantial net losses since its inception. To address these issues, Domo has continuously evolved its subscription and pricing models, invested heavily in research and development to enhance platform functionality, and focused on improving the efficiency of its sales force and marketing activities.
Financial Performance
Domo's financial performance, while showing signs of volatility in recent years, reflects the company's ongoing transition and strategic shift. In the fiscal year ended January 31, 2024, Domo reported total revenue of $318.99 million, a year-over-year increase of 3.3%. However, the company continued to incur net losses, with a net loss of $75.57 million for the same period. The company's operating cash flow and free cash flow also remained negative, at -$10.89 million and -$18.89 million, respectively.
One of the key factors impacting Domo's financial results has been its investment in strategic initiatives, such as the development of its partner ecosystem and the transition to a consumption-based pricing model. The company has been actively expanding its relationships with leading cloud data warehouse providers, including Snowflake, Databricks, and Google, to seamlessly integrate Domo's capabilities with their platforms. This strategic alignment has opened up new sales opportunities and positioned Domo as a complementary solution within the broader data analytics landscape.
Moreover, Domo's shift to a consumption-based pricing model has been a critical component of its growth strategy. By aligning realized value with pricing and removing barriers to adoption, Domo has been able to facilitate broader enterprise-wide usage of its platform. As of the latest reported quarter, more than 45% of Domo's annual recurring revenue (ARR) was generated from consumption-based agreements, and the company expects this percentage to increase further in the coming years.
In the most recent quarter (Q2 2025), Domo reported revenue of $78.41 million, representing a year-over-year decrease of 2%. The net loss for this quarter was $19.49 million, with operating cash flow of -$6.17 million and free cash flow of -$8.38 million. This decline in revenue has been attributed to macroeconomic conditions impacting the software sales cycle and renewal discussions.
Product Segments and Revenue Streams
Domo primarily generates revenue through two main segments:
1. Subscription Revenue: This is Domo's primary source of revenue, derived from subscription-based agreements for its cloud-based platform. It includes both traditional subscription-based agreements and consumption-based agreements. Revenue from subscription-based agreements is recognized ratably over the contractual term, while consumption-based agreements utilize a tiered pricing structure based on estimated usage volume.
2. Professional Services and Other Revenue: This segment includes revenue from implementation services sold with new subscriptions, as well as standalone professional services. It also encompasses training and education offerings. Revenue from professional services is recognized as the services are provided, generally based on hours incurred.
The company's transition towards a consumption-based pricing model has been significant, with over 45% of its annual recurring revenue now coming from consumption-based agreements or enterprise-wide subscription agreements (ELAs) as of the end of the most recent fiscal quarter.
Geographic Performance
Domo's revenue is predominantly generated in the United States, with approximately 79% and 80% of total revenue derived from the U.S. market for the six months ended July 31, 2023 and 2024, respectively. This indicates a strong domestic focus while also highlighting potential opportunities for international expansion.
Industry Trends
The business intelligence software market has been experiencing robust growth, with a compound annual growth rate (CAGR) of around 10-12% in recent years. This growth is primarily driven by the increasing need for data-driven decision-making across organizations, a trend that aligns well with Domo's value proposition.
Liquidity and Capital Resources
Despite the challenges, Domo has demonstrated resilience and a steadfast commitment to its long-term vision. The company has continued to invest in product innovation, expanding its platform's capabilities and addressing the evolving needs of its customers. Domo's focus on driving customer success through its comprehensive data solutions, seamless integrations, and strategic partnerships has been a key differentiator in the competitive business intelligence market.
As of July 31, 2024, Domo had $55.70 million in cash, cash equivalents, and restricted cash, of which $3.70 million was restricted cash. The company also has a $100 million credit facility, which had been fully drawn as of the same date. Domo's debt-to-equity ratio stands at -0.726, while its current ratio and quick ratio are both 0.57, indicating potential liquidity challenges that the company is actively addressing through its strategic initiatives.
Furthermore, Domo has experienced significant leadership changes in recent months, with the announcement of David Jolley's transition from the Chief Financial Officer role and the appointment of Todd Crane as the new CFO. This transition, while presenting short-term challenges, is expected to provide fresh perspectives and accelerate Domo's alignment with its long-term strategic initiatives.
Future Outlook and Guidance
Looking ahead, Domo remains optimistic about its future prospects. For the third quarter of fiscal year 2025, the company expects non-GAAP billings of $70 million to $75 million, GAAP revenue of $77 million to $78 million, and a non-GAAP net loss per share of $0.14 to $0.18, assuming 38.9 million weighted average shares outstanding.
For the full fiscal year 2025, Domo has provided guidance projecting billings of approximately $305 million to $315 million, GAAP revenue of $313 million to $315 million, and a non-GAAP net loss per share of $0.69 to $0.77, assuming 38.5 million weighted average shares outstanding. This guidance reflects Domo's continued investment in its ecosystem partnerships and consumption-based model, which the company believes will drive long-term growth and profitability, even if it impacts short-term billings.
It's worth noting that in the second quarter of fiscal year 2025, Domo slightly exceeded their revenue guidance, reporting total revenue of $78.4 million. However, the company's Q2 2025 billings of $68.6 million fell just below their guidance due to a large customer deal that was structured with quarterly billing terms instead of annual billing.
Conclusion
In conclusion, Domo's journey has been one of innovation, adaptation, and strategic positioning within the rapidly evolving business intelligence landscape. While the company has faced financial challenges, its unwavering focus on empowering enterprises with data-driven insights and its commitment to transformative partnerships position Domo as a compelling player in the industry. The company's strategic shift towards a consumption-based pricing model and its investments in ecosystem partnerships demonstrate a clear vision for long-term growth.
As Domo navigates the path ahead, investors and customers will be closely watching the company's ability to capitalize on its strategic initiatives, improve its financial metrics, and deliver sustainable growth and profitability. The company's guidance for the coming quarters reflects a cautious optimism, balancing the impact of ongoing investments with expectations of future returns. With the business intelligence market continuing to expand and the demand for data-driven solutions on the rise, Domo's ability to execute on its strategy and adapt to market conditions will be crucial in determining its future success in this competitive landscape.