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Domo (DOMO) Q4 2025 Earnings Call March 07, 2025 02:34 AM ET Company Participants Peter Lowry - VP, IRJosh James - CEOTod Crane - CFORJ Tracy - CRO Conference Call Participants Patrick Walravens - AnalystJared Jungjohann - AnalystYi Fu Lee - Equity Research Analyst Operator Greetings, and welcome to Domo Fourth Quarter Fiscal Year twenty twenty five Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this ...

Financial Data and Key Metrics - Q4 billings reached $105 4 million, a 1% YoY increase, exceeding guidance [129] - Total revenue for Q4 was $80 2 million, also a 1% YoY increase, with subscription revenue growing 2% YoY and representing 90% of total revenue [129] - Non-GAAP operating margin improved to 4%, up 0 6 percentage points YoY [130] - Net loss for Q4 was $1 9 million, compared to $0 8 million a year ago, with a net loss per share of $0 05 [130] - Free cash flow for Q4 was $2 9 million, with cash flow from operations reaching a record $5 4 million [116] - Current RPO stood at $243 4 million, consistent with last year, while total RPO grew 1% to $380 1 million [115] - Gross retention was 82%, and net retention was 91% in Q4 [115] Business Line Data and Key Metrics - Consumption model customers doubled over the last two quarters, with half of them pacing to use more credits than originally contracted [60][92] - Freemium users actively connecting data and exploring the platform more than doubled in four months [64] - Consumption deals accounted for over 90% of the dollar value of new logo deals in Q4 [92] - Subscription gross margin was 83 9%, down 1 8 percentage points YoY due to costs associated with new product features [83] Market Data and Key Metrics - The company is working with major hyperscalers and has budding relationships with most large players in the ecosystem [69] - Domo is now available in the Microsoft Azure Marketplace, allowing customers to purchase using Azure consumption commitments [101] - The company is focusing on four types of partners: technology, app, data, and system integrators, with ecosystem opportunities driving growth [97][99] Company Strategy and Industry Competition - The company is prioritizing product-led growth (PLG) through consumption models, freemium offerings, and improved product discoverability [58][59] - Investments in AI and ecosystem partnerships are key strategic initiatives, with AI-driven data solutions being a focus for democratizing intelligence [87][89] - The company is uniquely positioned in the market as an independent player with a modular, composable full-stack solution, aligning well with hyperscalers [19][69] - Domo is leveraging its independence and modularity to differentiate itself in the AI and data governance space, particularly with private LLMs and AI model flexibility [29][105] Management Commentary on Operating Environment and Future Outlook - Management is optimistic about the long-term impact of consumption, freemium, and ecosystem initiatives, with potential benefits expected in the back half of the year [131] - The company is committed to being free cash flow positive for fiscal 2025 and plans to invest prudently in growth initiatives while maintaining operating margin positivity [117][85] - Macro headwinds have impacted rep productivity and pipeline conversion, but stabilization is expected, with AI and consumption investments driving future success [15][17] Other Important Information - The company extended its debt maturity to April 2026 and is exploring refinancing options on more favorable terms [82] - Domopalooza, the annual user conference, will be held in person for the first time in five years, with significant announcements expected around AI and product developments [127][133] Q&A Session Summary Question: What are the investments planned for the beginning of the year? - Investments include building out the ecosystem, go-to-market strategies, and hiring engineers focused on AI [123][124][136] Question: Where does Domo have the best product-market fit today? - Domo has strong product-market fit in industries like healthcare, manufacturing, and retail, where its platform integrates data and provides actionable insights [126][74][76] Question: How should we think about cash flow at the end of fiscal 2025? - The company is committed to being free cash flow positive for fiscal 2025 and will take necessary actions to achieve this goal [33][117]

Core Viewpoint - Domo, Inc. is conducting its Q4 fiscal year 2025 earnings call, highlighting its financial performance and future prospects [1]. Group 1: Company Overview - Domo's earnings call features key executives including the CEO and CFO, indicating a structured approach to investor communication [2][3]. - The company emphasizes the importance of its press release, which was issued after market hours and is available on its investor relations website [3]. Group 2: Financial Projections and Business Outlook - The call includes forward-looking statements regarding Domo's business, financial projections, and cash position, which are subject to various risks and uncertainties [4]. - Domo discusses the potential of its consumption model and expectations for new business opportunities, indicating a focus on growth and innovation [4][5].

Financial Data and Key Metrics Changes - In Q4, the company exceeded guidance for billings, revenue, non-GAAP EPS, and adjusted free cash flow, with total revenue reaching $78.8 million, of which subscription revenue accounted for 91% [29] - Q4 billings were $102.6 million, and subscription RPO grew to $403.6 million, up 14% year over year, marking the best subscription RPO growth in over two years [30] - Adjusted free cash flow was $6 million in Q4, the highest in the company's history, with cash balance increasing from $40.9 million in Q3 to $45.3 million in Q4 [32][42] Business Line Data and Key Metrics Changes - Subscription RPO beyond twelve months grew 38% year over year, indicating a significant improvement in long-term contracts [30] - Gross retention was 85% in Q4, maintaining this level for three consecutive quarters, with expectations for at least a two percentage point improvement in FY '26 [31] Market Data and Key Metrics Changes - The consumption model has seen significant adoption, with consumption customers achieving gross retention of over 90% and net retention of over 100% [31] - The company has transitioned from 5% of ARR on the consumption model two years ago to over 65% by the end of FY '25, with expectations to approach 90% by the end of FY '26 [10] Company Strategy and Development Direction - The primary growth initiatives for FY '25 included building out the partner network, adding AI innovations, and shifting customers to consumption pricing [11] - The company is focusing on enhancing partnerships with cloud-based data warehouses (CDWs) and system integrators (SIs) to drive growth and improve customer satisfaction [12][16] Management's Comments on Operating Environment and Future Outlook - Management noted that the current macroeconomic environment has led to more organized and well-thought-out purchasing decisions from customers, with no significant recent changes observed [37][38] - The company is optimistic about future growth, expecting to generate positive cash flow in both Q1 and FY '26, while also aiming for improved growth and profitability [35][36] Other Important Information - Domo's AI capabilities have been recognized with several industry awards, highlighting the platform's strength in data analytics and visualization [20][25] - The company is hosting its annual user conference, Domopalooza, on March 21, which will feature new product announcements and customer success stories [26] Q&A Session Summary Question: Can you comment on the macro environment and its effect on customer willingness to purchase? - Management indicated that purchasing decisions are well-organized and backed by metrics, with no recent significant changes in customer behavior [37][38] Question: Can you explain the dynamic between renewals and consumption, and the impact on cash and debt? - The CFO explained that the shift in renewal timing due to consumption conversions resulted in a $5 million shift out of Q1 into other quarters, and expressed satisfaction with the cash flow results and balance sheet [40][42] Question: How are partnerships with Snowflake and Databricks tracking? - Management reported significant progress in partnerships, with ecosystem leads converting at a much higher rate compared to independently generated leads, indicating a positive trend for future growth [49][50] Question: Are there plans for additional tweaks to the go-to-market strategy? - The company plans to continue focusing on the ecosystem and hiring individuals with experience in CDWs, emphasizing customer satisfaction and ROI [58][60] Question: Has recent M&A activity in the data cloud space increased discussions about potential acquisitions? - Management acknowledged openness to M&A opportunities, emphasizing the importance of relationships with multiple CDWs and the value Domo provides as an independent provider [78][81]

Revenue and Financial Performance - Total revenue for Q4 FY2025 was $78.8 million, with subscription revenue at $71.9 million[4] - For Q1 FY2026, revenue is expected to be in the range of $310.0 million to $318.0 million[6] - Total revenue for the three months ended January 31, 2024, was $80.184 million, a 1.8% increase from $78.770 million in the same period of 2025[22] - Subscription revenue for the year ended January 31, 2024, was $285.500 million, slightly down from $286.002 million in 2025[22] - Subscription revenue for the three months ended January 31, 2024, was $71,906 thousand, a slight increase from $71,858 thousand in the previous quarter[29] - The company reported billings of $105,412 thousand for the three months ended January 31, 2024, an increase from $102,644 thousand in the previous quarter[31] Cash Flow and Operating Activities - Net cash provided by operating activities was $8.9 million, representing a 64% increase year over year[4] - Adjusted free cash flow for Q4 FY2025 was $6.0 million, an increase of 105% year over year[4] - Net cash provided by operating activities for the three months ended January 31, 2024, was $5.445 million, compared to $8.919 million in the same period of 2025[27] - Adjusted free cash flow for the three months ended January 31, 2024, was $2,925 thousand, a decrease from $6,006 thousand in the previous quarter[31] Profitability and Loss - Domo's GAAP net loss for FY2025 was $81.9 million, with a net loss per share of $2.13 based on 38.5 million weighted-average shares outstanding[4] - Non-GAAP net loss per share for Q1 FY2026 is expected to be between $0.18 and $0.22 based on 39.7 million weighted-average shares outstanding[6] - Net loss for the three months ended January 31, 2024, was $18.685 million, compared to a net loss of $17.677 million in the same period of 2025[22] - The company reported a net loss on a GAAP basis of $18,685 thousand for the three months ended January 31, 2024, compared to a net loss of $17,677 thousand in the previous quarter[31] - The net loss per share on a GAAP basis for the three months ended January 31, 2024, was $(0.51), compared to $(0.45) in the previous quarter[31] Assets and Liabilities - Cash and cash equivalents were $45.3 million as of January 31, 2025[4] - Total current assets decreased from $153.744 million in 2024 to $141.677 million in 2025[25] - Total liabilities increased from $379.206 million in 2024 to $391.586 million in 2025[25] - Cash, cash equivalents, and restricted cash at the end of the period on January 31, 2024, was $60.939 million, down from $45.264 million in 2025[27] Operating Expenses and Margins - Operating expenses for the three months ended January 31, 2024, totaled $74.496 million, up from $70.837 million in the same period of 2025, indicating a 5.5% increase[22] - Total operating expenses on a GAAP basis for the three months ended January 31, 2024, were $74,496 thousand, compared to $70,837 thousand in the previous quarter[29] - Subscription gross margin on a GAAP basis improved to 83% for the three months ended January 31, 2024, up from 80% in the previous quarter[29] Awards and Recognition - Domo received five Dresner Advisory Services 2024 Technology Innovation Awards, marking its eighth consecutive year as a multiple-category winner[6]

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Core Viewpoint - Domo (DOMO) has received an upgrade to a Zacks Rank 1 (Strong Buy) due to an upward trend in earnings estimates, indicating a positive earnings outlook that may lead to increased stock price [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on the consensus measure of EPS estimates from sell-side analysts, which reflects the changing earnings picture of a company [1][2]. - Changes in earnings estimates are strongly correlated with near-term stock price movements, influenced by institutional investors who adjust their valuations based on these estimates [4][6]. Domo's Earnings Outlook - For the fiscal year ending January 2025, Domo is expected to earn -$0.66 per share, representing a change of -164% from the previous year [8]. - Over the past three months, the Zacks Consensus Estimate for Domo has increased by 9.4%, indicating a positive trend in earnings estimates [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - Domo's upgrade to Zacks Rank 1 places it in the top 5% of Zacks-covered stocks, suggesting a strong potential for market-beating returns in the near term [10].