PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) Domo's unaudited financial statements for Q2 FY2020 show decreased assets, a shift to stockholders' deficit, increased revenue, and reduced net loss compared to prior periods [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Domo's balance sheet as of July 31, 2019, reflects a decrease in total assets to $234.5 million and a shift from stockholders' equity to a $4.9 million deficit Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | As of Jan 31, 2019 | As of July 31, 2019 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $176,973 | $97,939 | | Total current assets | $246,754 | $189,968 | | Total assets | $292,632 | $234,529 | | **Liabilities & Stockholders' Equity (Deficit)** | | | | Deferred revenue (current) | $88,959 | $87,616 | | Long-term debt | $97,245 | $99,113 | | Total liabilities | $248,105 | $239,435 | | Total stockholders' equity (deficit) | $44,527 | $(4,906) | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q2 FY2020, total revenue increased 21.6% to $41.7 million, with net loss improving to $31.2 million, reflecting higher gross profit and reduced operating expenses Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended July 31, 2018 | Three Months Ended July 31, 2019 | Six Months Ended July 31, 2018 | Six Months Ended July 31, 2019 | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $34,267 | $41,660 | $66,212 | $82,458 | | Gross profit | $21,749 | $27,449 | $42,128 | $55,443 | | Loss from operations | $(43,379) | $(28,373) | $(86,364) | $(61,444) | | Net loss | $(46,384) | $(31,160) | $(91,891) | $(66,696) | | Net loss per share | $(4.41) | $(1.14) | $(14.94) | $(2.45) | [Condensed Consolidated Statements of Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) Comprehensive loss for the three and six months ended July 31, 2019, was $31.2 million and $66.8 million, respectively, slightly exceeding net loss due to currency adjustments Comprehensive Loss (in thousands) | Period | Net Loss | Comprehensive Loss | | :--- | :--- | :--- | | Three Months Ended July 31, 2019 | $(31,160) | $(31,170) | | Six Months Ended July 31, 2019 | $(66,696) | $(66,762) | [Condensed Consolidated Statements of Stockholders' Equity (Deficit)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20(Deficit)) Stockholders' equity shifted from $44.5 million to a $4.9 million deficit for the six months ended July 31, 2019, primarily due to a $66.7 million net loss - The company's total stockholders' equity shifted from a positive **$44.5 million** at the beginning of the period to a deficit of **$4.9 million** as of July 31, 2019[30](index=30&type=chunk) - Key activities impacting equity during the six months ended July 31, 2019, included the net loss of **$66.7 million**, stock-based compensation expense of **$12.3 million**, and **$4.5 million** in proceeds from the employee stock purchase plan[30](index=30&type=chunk)[35](index=35&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended July 31, 2019, operating cash burn improved to $45.4 million, while investing cash use increased to $38.6 million, and financing cash significantly decreased due to prior-year IPO proceeds Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended July 31, 2018 | Six Months Ended July 31, 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | $(72,983) | $(45,422) | | Net cash used in investing activities | $(3,205) | $(38,621) | | Net cash provided by financing activities | $253,006 | $4,937 | | Net increase (decrease) in cash | $176,830 | $(79,034) | | Cash and cash equivalents at end of period | $238,802 | $97,939 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, including revenue recognition, software development costs, the $100 million credit facility, and equity incentive plans, with the company operating as a single U.S.-centric segment - The company derives revenue primarily from subscriptions to its cloud-based platform and professional services, recognizing subscription revenue ratably over the contract term[66](index=66&type=chunk)[69](index=69&type=chunk) - As of July 31, 2019, the company had **$187.3 million** in remaining performance obligations for subscription contracts, with **$69.0 million** expected to be recognized in the remainder of fiscal year 2020[128](index=128&type=chunk) - The company has a **$100 million** credit facility, fully drawn as of July 31, 2019, with a maturity date of October 1, 2022, carrying a floating interest rate component (approximately **7.9%** at period end) and a fixed **2.5%** PIK component[132](index=132&type=chunk)[134](index=134&type=chunk)[135](index=135&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a 22% revenue increase for Q2 FY2020, driven by enterprise customers, alongside reduced operating expenses and improved billings, with sufficient liquidity for the next 12 months - Total revenue for the three months ended July 31, 2019, was **$41.7 million**, a **22%** increase year-over-year, with revenue from enterprise customers growing **29%** to **$19.8 million**[199](index=199&type=chunk) - The company incurred a net loss of **$31.2 million** for the quarter, an improvement from **$46.4 million** in the prior-year period, and had an accumulated deficit of **$978.8 million** as of July 31, 2019[200](index=200&type=chunk) - A key business metric, billings, increased to **$38.8 million** for the three months ended July 31, 2019, up from **$35.7 million** in the same period of 2018[207](index=207&type=chunk)[212](index=212&type=chunk) [Results of Operations](index=39&type=section&id=Results%20of%20Operations) Q2 FY2020 revenue grew 22% to $41.7 million, driven by subscription growth, with gross margin improving to 66% and operating expenses decreasing 14%, resulting in a reduced operating loss Revenue by Type - Q2 FY2020 vs Q2 FY2019 (in thousands) | Revenue Type | Q2 2018 | Q2 2019 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Subscription | $28,166 | $34,873 | $6,707 | 24% | | Professional services & other | $6,101 | $6,787 | $686 | 11% | | **Total revenue** | **$34,267** | **$41,660** | **$7,393** | **22%** | Operating Expenses - Q2 FY2020 vs Q2 FY2019 (in thousands) | Expense Category | Q2 2018 | Q2 2019 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Sales and marketing | $34,002 | $29,501 | $(4,501) | (13)% | | Research and development | $20,919 | $17,046 | $(3,873) | (19)% | | General and administrative | $10,207 | $9,275 | $(932) | (9)% | | **Total operating expenses** | **$65,128** | **$55,822** | **$(9,306)** | **(14)%** | - Sales and marketing expense as a percentage of total revenue decreased significantly from **99%** in Q2 2018 to **71%** in Q2 2019[238](index=238&type=chunk) [Liquidity and Capital Resources](index=45&type=section&id=Liquidity%20and%20Capital%20Resources) As of July 31, 2019, Domo held $133.8 million in liquid assets and a fully drawn $100 million credit facility, with management confident in sufficient liquidity for the next 12 months - The company held **$97.9 million** in cash and cash equivalents and **$35.9 million** in short-term investments as of July 31, 2019[262](index=262&type=chunk) - The company has a **$100 million** credit facility which was fully drawn as of July 31, 2019, with an amended maturity date of October 1, 2022[262](index=262&type=chunk)[267](index=267&type=chunk) Historical Cash Flow (in thousands) | Cash Flow Activity | Six Months Ended July 31, 2018 | Six Months Ended July 31, 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | $(72,983) | $(45,422) | | Net cash used in investing activities | $(3,205) | $(38,621) | | Net cash provided by financing activities | $253,006 | $4,937 | [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=48&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company faces interest rate risk from its variable-rate debt and foreign currency risk from international operations, primarily in JPY, GBP, and AUD, without using hedging instruments - The company's **$100 million** credit facility has a floating interest rate component tied to LIBOR, exposing it to interest rate fluctuations, with the rate approximately **7.9%** as of July 31, 2019[290](index=290&type=chunk) - International operations expose the company to foreign currency risks, primarily from the Japanese Yen, British Pound Sterling, and Australian Dollar, though a **10%** change in the U.S. dollar's value is not expected to have a material effect on operating results[292](index=292&type=chunk) [Item 4. Controls and Procedures](index=49&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of July 31, 2019, with no material changes to internal control over financial reporting during the quarter - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[295](index=295&type=chunk) - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[296](index=296&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=50&type=section&id=Item%201.%20Legal%20Proceedings) As of the filing date, Domo, Inc. is not a party to any material legal proceedings, though routine claims may arise - The company is not currently a party to any material legal proceedings[300](index=300&type=chunk) [Item 1A. Risk Factors](index=50&type=section&id=Item%201A.%20Risk%20Factors) Key risks include a history of net losses, intense competition, dependence on customer acquisition and retention, data security and privacy regulations, system failures, and concentrated voting control due to a dual-class stock structure - The company has a history of significant net losses (**$31.2 million** for the quarter) and an accumulated deficit of **$978.8 million**, with no guarantee of achieving profitability in the future[302](index=302&type=chunk)[303](index=303&type=chunk) - Competition is intense from large software companies like Microsoft and Oracle, as well as specialized analytics firms such as Tableau and Qlik, which could lead to price pressure and market share loss[317](index=317&type=chunk)[319](index=319&type=chunk) - The dual-class stock structure concentrates approximately **84%** of voting power with the founder and CEO, Joshua G. James, limiting other shareholders' influence on corporate matters[478](index=478&type=chunk)[479](index=479&type=chunk) - The business is subject to complex data privacy laws like GDPR and the upcoming CCPA, and any failure to comply could result in significant fines, litigation, and reputational damage[352](index=352&type=chunk)[354](index=354&type=chunk)[355](index=355&type=chunk) [Item 6. Exhibits](index=79&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including Sarbanes-Oxley certifications by the CEO and CFO, and XBRL data files - Exhibits filed include CEO and CFO certifications under Sarbanes-Oxley Sections 302 and 906, and interactive data files (XBRL)[517](index=517&type=chunk)[518](index=518&type=chunk)[519](index=519&type=chunk)

Financial Data and Key Metrics Changes - The company reported a 22% year-over-year increase in revenue, reaching $41.7 million, and a 9% year-over-year increase in billings [7][24] - Subscription revenue grew by 24%, representing 84% of total revenue, with international revenue consistent at 26% of total revenue [24] - The subscription gross margin improved to 74.9%, up from 70.9% in the same quarter last year, while total gross margin increased to 66.2% [24][25] - The net loss for the quarter was $26.4 million, with a net loss per share of $0.96 [25][26] Business Line Data and Key Metrics Changes - The enterprise customer count exceeded 460, with new deal sizes in the corporate business averaging over $50,000 [20][21] - The gross renewal rate approached 90%, indicating strong customer retention [15][21] - The company added new Lighthouse customers, including luxury brands and global retailers, and signed key expansion deals with notable customers [16] Market Data and Key Metrics Changes - The international business, particularly in Asia Pacific, faced challenges, impacting overall performance [9] - The corporate business has shown resilience, with a shorter sales cycle and lower customer acquisition costs compared to the enterprise segment [20][23] Company Strategy and Development Direction - The company is refining its go-to-market strategy to focus on acquiring new customers more quickly while pursuing larger enterprise transactions [8][10] - There is an emphasis on simplifying the product message and enhancing self-service proof of concepts to increase customer engagement [11][12] - The company plans to expand partnerships with technology firms to enhance market reach and capitalize on recent acquisitions in the industry [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the pipeline and the potential for larger enterprise deals, despite longer sales cycles [10][32] - The company is committed to achieving cash flow positive status and reducing cash burn, with a focus on maintaining a fully funded business plan [20][26] - Management noted that the competitive environment has not worsened, and recent acquisitions in the market may create opportunities for growth [44][54] Other Important Information - The company is targeting a reduction in cash burn each quarter and expects to manage operating expenses effectively [28] - The dollar-based net revenue retention rate remains above 100%, with an increase in multiyear contracts among customers [23] Q&A Session Summary Question: Concerns about go-to-market strategy and focus on larger enterprise customers - Management acknowledged the need to balance efforts between larger enterprise deals and corporate business, noting that while larger deals are taking longer, they have not lost any significant deals [32][33] Question: Dynamics between renewal portfolio and new business - Management highlighted that while renewal rates are strong, new business acquisition has been slower than desired, prompting initiatives to accelerate new customer onboarding [35][36] Question: Competitive environment and impact on enterprise deals - Management indicated that recent acquisitions have caused temporary confusion but do not foresee long-term negative impacts, with opportunities arising from strengthened partnerships [44][46] Question: Strategy for multiyear deals and customer commitment - Management noted that increased multiyear contracts are driven by the strategic use of the platform and improved customer conversations, rather than solely sales incentives [55][57] Question: Marketing spending and its impact on growth - Management confirmed that while marketing expenses have been reduced, they remain focused on efficient spending and improving conversion rates through enhanced customer engagement [59][60]

Revenue Growth - Total revenue increased by 28% year-over-year, from $31.9 million in Q1 2018 to $40.8 million in Q1 2019[189] - Revenue from enterprise customers grew by 33% year-over-year, reaching $19.4 million in Q1 2019[189] - Total revenue for the three months ended April 30, 2019, was $40.8 million, an increase of $8.9 million, or 28%, compared to $31.9 million for the same period in 2018[217] - Subscription revenue was $34.4 million, representing 84% of total revenue for the three months ended April 30, 2019, up from $26.7 million, or 83%, in the same period of 2018[217] Customer Base and Contracts - As of April 30, 2019, 45% of customers were under multi-year contracts, enhancing subscription revenue predictability[188] - The customer base grew to over 1,800 as of April 30, 2019, indicating significant market penetration opportunities[192] - The transition to multi-year contracts is expected to improve revenue stability and customer retention over time[188] Financial Performance - The company reported net losses of $35.5 million for the three months ended April 30, 2019, with an accumulated deficit of $947.6 million[190] - Net loss for the three months ended April 30, 2019, was $35.5 million, compared to a net loss of $45.5 million in the same period of 2018[217] - Gross profit increased to $28.0 million for the three months ended April 30, 2019, a rise of $7.6 million, or 37%, from $20.4 million in the same period of 2018[220] Expenses and Cost Management - Total operating expenses decreased by $2.3 million, or 4%, to $61.1 million for the three months ended April 30, 2019, compared to $63.4 million in 2018[224] - Sales and marketing expenses as a percentage of total revenue decreased from 124% in 2018 to 88% in 2019[226] - Research and development expenses decreased by $2.0 million, or 10%, to $17.1 million for the three months ended April 30, 2019[227] - General and administrative expenses increased by $3.4 million, or 73%, to $8.0 million for the three months ended April 30, 2019, primarily due to lower reversals of contingent tax-related accruals[229] Cash Flow and Investments - Net cash used in operating activities for the three months ended April 30, 2019 was $80.8 million, with cash collected from customers amounting to $54.1 million[246] - Significant cash outflows during the same period included $38.9 million for personnel costs and $22.4 million for marketing programs and events[246] - Net cash used in investing activities for the three months ended April 30, 2019 was $64.5 million, primarily due to $63.0 million in purchases of short-term investments[248] - The company provided $4.5 million in net cash from financing activities during the three months ended April 30, 2019, mainly from shares issued in connection with the employee stock purchase plan[250] Debt and Financing - The company drew a total of $100 million from its credit facility, with an interest rate of approximately 8.1% as of April 30, 2019[238] - Total debt outstanding as of April 30, 2019 was $98.2 million, with a hypothetical 10% change in interest rates not expected to materially impact fair value[261] - The company is required to maintain a minimum debt ratio of 0.85 as of January 31, 2019 and April 30, 2019, decreasing to 0.60 by July 31, 2021[240] - The company has no current agreements for potential investments or acquisitions but may seek additional equity financing in the future[237] Strategic Initiatives - The company plans to invest in machine learning and AI technologies to enhance platform functionality and customer engagement[199] - Sales and marketing expenses are focused on increasing efficiency and targeting enterprise customers to drive higher initial contract values[198] - The company aims to expand its international business, with 74% of revenue from U.S. customers in Q1 2019[189] - The company does not engage in hedging of foreign currency transactions but is considering the costs and benefits of such a program as it expands internationally[263]

Financial Data and Key Metrics Changes - In Q1, the company reported a 28% year-over-year growth in revenue, reaching $48.8 million, and a 22% year-over-year growth in billings, totaling $41.1 million [8][31] - Subscription revenue grew by 29%, representing 84% of total revenue, with international revenue increasing to 26% of total revenue, up from 22% in the previous quarter [32] - The subscription gross margin improved to 77%, up 270 basis points from the previous quarter and significantly higher than 69.8% from the same quarter last year [32][33] - The net loss for the quarter was $29.2 million, with a net loss per share of $1.08, reflecting a decrease in operating expenses by 10% year-over-year [34][35] Business Line Data and Key Metrics Changes - The corporate business saw a 30% year-over-year increase in average new deal size, indicating strong growth in this segment [13] - The company added 458 enterprise customers, a 19% year-over-year increase, with enterprise revenue growing by 33% year-over-year [12] Market Data and Key Metrics Changes - The company reported a dollar-based net revenue retention rate greater than 100%, with 45% of customers now on multiyear contracts, up from 35% a year ago [31] - The remaining performance obligation (RPO) grew by 34% compared to the same quarter last year, indicating strong future revenue visibility [31] Company Strategy and Development Direction - The company is focused on becoming cash flow positive without raising additional capital, emphasizing the power of its platform and expanding within its enterprise customer base [9] - A new pricing model was piloted to enhance customer value and facilitate easier expansion across organizations, which has shown positive impacts on deal sizes and customer engagement [10][11] - The company is investing in its ecosystem and partnerships, including the Domo Integration Cloud and the Domo Business Automation Engine, to enhance its product offerings and customer value [21][23] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about customer engagement and the strength of the pipeline, noting an increase in seven-figure opportunities [41] - The competitive environment remains favorable, with the company positioned well due to its differentiated product offerings [39][40] - Management expects to see continued improvements in cash flow and operating expenses, with a goal of reducing cash burn each quarter [36][37] Other Important Information - The company ranked number one in a recent report on self-service BI, highlighting its strong market position and customer satisfaction [29][30] - The company is expanding its training and certification programs to enhance customer skills and engagement with its platform [28] Q&A Session Summary Question: Changes in competitive environment or customer purchasing behavior - Management noted that the product remains differentiated and customers are increasingly embracing the platform's capabilities [39][40] Question: Sales capacity increase and productivity improvements - Management confirmed plans to increase sales capacity by 30% and reported positive metrics in productivity and pipeline coverage [44] Question: Drivers of increase in corporate deal sizes - The increase is attributed to strategic relationships and the new pricing model, which facilitates larger contracts and longer terms [48][49] Question: Forecasting big deals and sales cycles - Management indicated that big deals often stem from established relationships and that they are closely monitoring the pipeline for forecasting accuracy [60][61] Question: Insights on pricing changes and their impact - The new pricing model is expected to reduce friction in deal flow and facilitate larger initial engagements, enhancing customer relationships [64][67] Question: Thoughts on Looker acquisition and market positioning - Management views Looker as a smaller competitor and emphasizes the company's agnostic approach to cloud data solutions, which positions it favorably in the market [70][73] Question: Focus areas for management - The CEO is focused on efficiently acquiring new customers, while the CFO is focused on supporting growth initiatives and managing costs effectively [76][78]

SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 __________________________ Form 10-K __________________________ Emerging growth company ý (Mark One) ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the annual period ended January 31, 2019 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For transition period from to . Commission File Number 001-38553. DOMO, INC. (Exact Name of Registrant as Specified in its Char ...