Domo(DOMO) - 2026 Q2 - Quarterly Report

Form 10-Q Cover Page This section confirms Domo, Inc. filed its Quarterly Report on Form 10-Q for the period ended July 31, 2025, detailing outstanding common stock shares - Domo, Inc. filed its Quarterly Report on Form 10-Q for the quarterly period ended July 31, 2025[2] Class B Common Stock Registration | Title of each class | Trading symbol(s) | Name of each exchange on which registered | | :------------------ | :---------------- | :---------------------------------------- | | Class B Common Stock, par value $0.001 per share | DOMO | The Nasdaq Global Market | - As of September 2, 2025, there were approximately 3.26 million shares of Class A common stock and 37.97 million shares of Class B common stock outstanding[8] TABLE OF CONTENTS This section provides an organized listing of all major sections and subsections within the Form 10-Q report SUMMARY RISK FACTORS This section provides a high-level overview of the significant risks and uncertainties that could adversely affect Domo, Inc.'s business, operating results, and financial condition - The company has a history of losses and may not achieve or maintain profitability[12] - Effective management of growth is crucial, and failure to do so could adversely affect business and operating results[12] - The company faces intense competition, which could reduce demand for its platform and negatively impact business, growth, revenue, and market share[12] PART I. FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) This section presents Domo, Inc.'s unaudited condensed consolidated financial statements, including the balance sheets, statements of operations, comprehensive loss, stockholders' deficit, and cash flows for the periods ended July 31, 2025, along with accompanying notes detailing significant accounting policies, financial instrument valuations, and other relevant financial information Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets (in thousands) | Item | As of January 31, 2025 | As of July 31, 2025 | | :------------------------------------------------------------------------------------------------ | :--------------------- | :------------------ | | Total current assets | $141,677 | $117,405 | | Total assets | $214,340 | $195,715 | | Total current liabilities | $254,949 | $246,365 | | Total liabilities | $391,586 | $387,201 | | Total stockholders' deficit | $(177,246) | $(191,486) | - Total assets decreased from $214.3 million as of January 31, 2025, to $195.7 million as of July 31, 2025[15] - Total stockholders' deficit increased from $(177.2) million to $(191.5) million during the six-month period[15] Condensed Consolidated Statements of Operations Condensed Consolidated Statements of Operations (in thousands, except per share amounts) | Item | Three Months Ended July 31, 2024 | Three Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenue | $78,407 | $79,718 | $158,510 | $159,829 | | Gross profit | $58,283 | $59,643 | $117,672 | $119,086 | | Loss from operations | $(14,487) | $(7,251) | $(35,937) | $(21,597) | | Net loss | $(19,490) | $(22,932) | $(45,497) | $(40,984) | | Net loss per share, basic and diluted | $(0.51) | $(0.56) | $(1.20) | $(1.02) | - Total revenue increased by 1.7% for the three months ended July 31, 2025, compared to the same period in 2024, and by 0.8% for the six months ended July 31, 2025[17] - Net loss increased to $(22.9) million for the three months ended July 31, 2025, from $(19.5) million in the prior year, but decreased to $(41.0) million for the six months ended July 31, 2025, from $(45.5) million in the prior year[17] Condensed Consolidated Statements of Comprehensive Loss Condensed Consolidated Statements of Comprehensive Loss (in thousands) | Item | Three Months Ended July 31, 2024 | Three Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(19,490) | $(22,932) | $(45,497) | $(40,984) | | Foreign currency translation adjustments | $346 | $(222) | $100 | $1,137 | | Comprehensive loss | $(19,144) | $(23,154) | $(45,397) | $(39,847) | - Comprehensive loss for the three months ended July 31, 2025, was $(23.2) million, an increase from $(19.1) million in the prior year, primarily due to increased net loss and negative foreign currency translation adjustments[21] - For the six months ended July 31, 2025, comprehensive loss decreased to $(39.8) million from $(45.4) million in the prior year, benefiting from a lower net loss and positive foreign currency translation adjustments[21] Condensed Consolidated Statements of Stockholders' Deficit Changes in Stockholders' Deficit (in thousands, except share amounts) - Six Months Ended July 31, 2025 | Item | Class A Common Stock (Amount) | Class B Common Stock (Amount) | Additional Paid-in Capital | Accumulated Other Comprehensive (Loss) Income | Accumulated Deficit | Total Stockholders' Deficit | | :------------------------------------------------------------------------------------------------ | :---------------------------- | :---------------------------- | :------------------------- | :-------------------------------------------- | :------------------ | :-------------------------- | | Balance as of January 31, 2025 | $3 | $36 | $1,310,922 | $(669) | $(1,487,538) | $(177,246) | | Vesting of restricted stock units | — | $1 | — | — | — | $1 | | Shares repurchased for tax withholdings on vesting of restricted stock | — | — | $(486) | — | — | $(486) | | Issuance of common stock under employee stock purchase plan | — | — | $680 | — | — | $680 | | Stock-based compensation expense | — | — | $15,042 | — | — | $15,042 | | Other comprehensive income | — | — | — | $1,359 | — | $1,359 | | Net loss | — | — | — | — | $(18,052) | $(18,052) | | Balance as of April 30, 2025 | $3 | $37 | $1,326,158 | $690 | $(1,505,590) | $(178,702) | | Vesting of restricted stock units | — | $1 | — | — | — | $1 | | Shares repurchased for tax withholdings on vesting of restricted stock | — | — | $(1,119) | — | — | $(1,119) | | Stock-based compensation expense | — | — | $11,488 | — | — | $11,488 | | Other comprehensive loss | — | — | — | $(222) | — | $(222) | | Net loss | — | — | — | — | $(22,932) | $(22,932) | | Balance as of July 31, 2025 | $3 | $38 | $1,336,527 | $468 | $(1,528,522) | $(191,486) | - Total stockholders' deficit increased from $(177.2) million at January 31, 2025, to $(191.5) million at July 31, 2025, primarily due to net losses incurred during the period[29] - Additional paid-in capital increased by $25.6 million during the six months ended July 31, 2025, largely driven by stock-based compensation expense[29] Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Six Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | | :---------------------------------------- | :----------------------------- | :----------------------------- | | Net cash (used in) provided by operating activities | $(4,270) | $7,319 | | Net cash used in investing activities | $(4,730) | $(5,276) | | Net cash provided by (used in) financing activities | $3,695 | $(1,353) | | Net (decrease) increase in cash, cash equivalents, and restricted cash | $(5,235) | $1,879 | | Cash, cash equivalents, and restricted cash at end of period | $55,704 | $47,143 | - Net cash provided by operating activities significantly improved to $7.3 million for the six months ended July 31, 2025, compared to net cash used of $(4.3) million in the prior year[33] - Net cash used in financing activities was $(1.4) million for the six months ended July 31, 2025, a decrease from $3.7 million provided in the prior year, primarily due to payments on short-term payable financing and share repurchases for tax withholdings[33] Notes to Condensed Consolidated Financial Statements 1. Overview and Basis of Presentation This note describes Domo, Inc.'s business as a cloud-based AI and data products platform provider, its incorporation in Delaware, and its global subsidiaries - Domo, Inc. provides a cloud-based AI and data products platform, digitally connecting employees with real-time data and insights[38][174] - The unaudited condensed consolidated financial statements are prepared in conformity with GAAP and reflect all necessary adjustments, but results for the interim period are not necessarily indicative of future results[39][40] - The Company operates as one operating segment, with the CEO reviewing consolidated financial information for decision-making[46] 2. Summary of Significant Accounting Policies This note details the significant accounting policies applied in preparing the financial statements, covering areas such as cash and equivalents, accounts receivable, contract acquisition costs, property and equipment, leases, internal-use software, goodwill and intangible assets, revenue recognition (subscription and professional services), cost of revenue, advertising, R&D, stock-based compensation, and income taxes - Revenue is primarily derived from subscription services (consumption-based and subscription-based agreements) and professional services, recognized as control is transferred to customers[66][69][72][73] - Contract acquisition costs for initial contracts are deferred and amortized over approximately four years, while renewal contract costs are amortized over two years if the benefit period is greater than one year[50] - The Company has a full valuation allowance for domestic net deferred tax assets due to uncertainty of realization[84] - Recent accounting pronouncements include ASU 2023-09 (Income Tax Disclosures), ASU 2024-03 (Income Statement Expense Disaggregation), and ASU 2025-05 (Credit Losses for Accounts Receivable and Contract Assets), with the Company evaluating their impacts[92][93][94] 3. Cash and Cash Equivalents This note provides a breakdown of the Company's cash and cash equivalents, which primarily consist of cash on hand and money market funds Cash and Cash Equivalents (in thousands) | Item | As of January 31, 2025 | As of July 31, 2025 | | :------------------ | :--------------------- | :------------------ | | Cash | $30,208 | $33,619 | | Money market funds | $15,056 | $13,524 | | Total | $45,264 | $47,143 | - Total cash and cash equivalents increased from $45.3 million to $47.1 million from January 31, 2025, to July 31, 2025[95][98] 4. Fair Value Measurements This note outlines the Company's fair value measurements, categorizing financial instruments into Level 1, Level 2, and Level 3 based on input observability Fair Value Measurements (in thousands) | Item | As of January 31, 2025 | As of July 31, 2025 | | :---------------- | :--------------------- | :------------------ | | Money market funds (Level 1) | $15,056 | $13,524 | | Warrant liability (Level 3) | $11,208 | $20,491 | - The warrant liability, a Level 3 instrument, increased from $11.2 million to $20.5 million, with a $10.4 million change in fair value recognized in other expense, net for the three months ended July 31, 2025[99][102] Warrant Liability Valuation Assumptions (Six months ended July 31, 2025) | Assumption | Value | | :---------------------- | :---------------- | | Expected stock price volatility | 69% - 72% | | Expected term | 2.6 - 3.6 years | | Risk-free interest rate | 3.58% - 4.32% | | Expected dividend yield | — | 5. Property and Equipment, Net This note details the Company's property and equipment, net, including capitalized internal-use software development costs, computer equipment, leasehold improvements, and office equipment Property and Equipment, Net (in thousands) | Item | As of January 31, 2025 | As of July 31, 2025 | | :------------------------------------------ | :--------------------- | :------------------ | | Capitalized internal-use software development costs | $65,225 | $71,085 | | Total property and equipment, gross | $73,943 | $79,980 | | Less accumulated depreciation and amortization | $(45,318) | $(50,539) | | Total property and equipment, net | $28,625 | $29,441 | - Capitalized internal-use software development costs increased by $5.9 million to $71.1 million as of July 31, 2025[104] - Amortization of capitalized software development costs was $1.6 million for the three months and $3.3 million for the six months ended July 31, 2025[105] 6. Intangible Assets This note provides a breakdown of the Company's intangible assets, primarily intellectual property and patents, along with their accumulated amortization and remaining useful lives Intangible Assets (in thousands) | Item | As of January 31, 2025 | As of July 31, 2025 | | :-------------------------------- | :--------------------- | :------------------ | | Intellectual property excluding patents | $2,437 | $2,438 | | Patents | $950 | $950 | | Total intangible assets, gross | $3,387 | $3,388 | | Less accumulated amortization | $(1,262) | $(1,546) | | Total intangible assets, net | $2,125 | $1,842 | - Net intangible assets decreased from $2.1 million to $1.8 million from January 31, 2025, to July 31, 2025[107] - Amortization expense for intangible assets was $0.2 million for the three months and $0.3 million for the six months ended July 31, 2025[107] 7. Accrued Expenses and Other Current Liabilities This note details the components of accrued expenses and other current liabilities, including accrued expenses, commissions, bonuses, payroll and benefits, short-term payable financing, and taxes Accrued Expenses and Other Current Liabilities (in thousands) | Item | As of January 31, 2025 | As of July 31, 2025 | | :-------------------------------- | :--------------------- | :------------------ | | Accrued expenses | $14,203 | $14,414 | | Accrued commissions | $8,297 | $9,143 | | Accrued bonus | $8,872 | $4,991 | | Short-term payable financing liability | $4,435 | $3,665 | | Total | $49,701 | $44,659 | - Total accrued expenses and other current liabilities decreased from $49.7 million to $44.7 million from January 31, 2025, to July 31, 2025[108] - Accrued bonus decreased significantly from $8.9 million to $5.0 million during the period[108] 8. Leases This note provides information on the Company's operating leases for office space, including lease expense, sublease income, weighted-average remaining lease term, and discount rate Lease Expense (in thousands) | Item | Three Months Ended July 31, 2024 | Three Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | | :------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total lease expense | $1,748 | $1,999 | $3,528 | $3,725 | | Sublease income | $365 | $310 | $554 | $616 | - Total lease expense increased to $2.0 million for the three months and $3.7 million for the six months ended July 31, 2025[113] Maturities of Lease Liabilities as of July 31, 2025 (in thousands) | Year Ending January 31: | Amount | | :---------------------- | :----- | | 2026 | $4,304 | | 2027 | $8,356 | | 2028 | $3,710 | | Thereafter | $925 | | Total lease payments | $17,295 | | Less imputed interest | $(2,055) | | Present value of lease liabilities | $15,240 | 9. Deferred Revenue and Performance Obligations This note details the changes in deferred revenue, unbilled receivables, and the transaction price allocated to remaining performance obligations (RPO) Deferred Revenue Changes (in thousands) - Six Months Ended July 31, 2025 | Item | Amount | | :-------------------------------------------------------------------- | :----- | | Balance as of January 31, 2025 | $181,104 | | Revenue recognized that was included in the deferred revenue balance at the beginning of the period | $(122,472) | | Increase due to billings excluding amounts recognized as revenue during the period | $96,879 | | Balance as of July 31, 2025 | $155,511 | - As of July 31, 2025, approximately $409.8 million of revenue was expected to be recognized from remaining performance obligations for subscription contracts, with $220.2 million expected within the next twelve months[119] - Unbilled receivables increased from $0.9 million as of January 31, 2025, to $2.6 million as of July 31, 2025[118] 10. Geographic Information This note presents the Company's revenue breakdown by geographic area, determined by the customer's billing address Revenue by Geographic Area (in thousands) | Region | Three Months Ended July 31, 2024 | Three Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | | :------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | United States | $62,391 | $63,736 | $126,372 | $128,094 | | International | $16,016 | $15,982 | $32,138 | $31,735 | | Total | $78,407 | $79,718 | $158,510 | $159,829 | | Percentage (US) | 80% | 80% | 80% | 80% | | Percentage (Intl) | 20% | 20% | 20% | 20% | - The United States consistently accounted for 80% of total revenue for both the three and six months ended July 31, 2024 and 2025[120] - No other individual country exceeded 10% of total revenue during these periods[120] 11. Debt This note details the Company's credit facility, including term loan borrowings, recent amendments, interest rates (cash and capitalized), and financial covenants - The Company has a credit facility permitting up to $125.3 million in term loan borrowings, fully drawn as of July 31, 2025[123] - Amendments in February and August 2024 extended the maturity date to August 19, 2028, revised interest terms, and resulted in the issuance of 1,211,954 fully-vested Class B common stock warrants[124][125][144] - The credit facility includes a floating cash interest rate (approx. 7.3% as of July 31, 2025) and a fixed 5.0% capitalized interest rate, along with financial covenants for annualized recurring revenue, consolidated EBITDA, and minimum liquidity[126][130] Long-Term Debt Balances (in thousands) | Item | As of January 31, 2025 | As of July 31, 2025 | | :-------------------------- | :--------------------- | :------------------ | | Principal | $128,238 | $131,492 | | Less: unamortized debt issuance costs | $(10,570) | $(9,552) | | Net carrying amount | $117,668 | $121,940 | 12. Commitments and Contingencies This note addresses the Company's commitments and contingencies, including legal proceedings, warranties, indemnification obligations, and other purchase commitments - Management believes the outcome of current legal proceedings will not have a material impact on the Company's financial condition, results of operations, or liquidity[133][266] - The Company's subscription services are warranted to perform materially in accordance with terms, and arrangements generally include indemnification for intellectual property infringement[134] - No significant costs or liabilities have been accrued for warranties, indemnification, or service level agreement failures to date[134][137] 13. Stockholders' Deficit This note details the Company's capital structure, including authorized and outstanding shares of Preferred Stock, Class A Common Stock, and Class B Common Stock - The Company has a dual-class common stock structure: Class A (40 votes/share) and Class B (1 vote/share)[140] - As of July 31, 2025, there were 3,263,659 shares of Class A common stock and 37,967,469 shares of Class B common stock issued and outstanding[141] - The Company may sell up to $150.0 million of Class B common stock through an 'at-the-market' offering program, with no shares sold to date[142][233][234] - As of July 31, 2025, there were 1,211,954 Class B common stock warrants outstanding with an exercise price of $0.01 per share, expiring in 2028[144] 14. Equity Incentive Plans This note describes the Company's equity incentive plans, including the 2018 Equity Incentive Plan (2018 Plan) and the Employee Stock Purchase Plan (ESPP) - The 2018 Plan allows for various stock-based awards, with 2,130,656 shares available for grant as of July 31, 2025[146][147] Stock-Based Compensation Expense (in thousands) | Item | Three Months Ended July 31, 2024 | Three Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cost of revenue: Subscription | $807 | $947 | $1,605 | $1,617 | | Sales and marketing | $5,170 | $3,864 | $10,484 | $8,265 | | Research and development | $4,069 | $4,206 | $8,491 | $9,108 | | General and administrative | $5,911 | $3,700 | $8,995 | $8,686 | | Total | $16,473 | $13,228 | $30,615 | $28,683 | - Total stock-based compensation expense decreased to $13.2 million for the three months and $28.7 million for the six months ended July 31, 2025[149][207] - As of July 31, 2025, there was $68.4 million of unrecognized stock-based compensation expense related to outstanding RSUs, expected to be recognized over 2.6 years[156] 15. Income Taxes This note details the Company's income tax provision, which is primarily attributable to foreign and state taxes - Income tax expense was $0.2 million for the three months and $0.4 million for the six months ended July 31, 2025[162] - The effective tax rate differs from the U.S. statutory rate primarily due to a full valuation allowance on U.S. net deferred tax assets[163] 16. Net Loss Per Share This note presents the calculation of basic and diluted net loss per share using the two-class method Net Loss Per Share (in thousands, except per share amounts) | Item | Three Months Ended July 31, 2024 | Three Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | | :-------------------------------------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss per share, basic and diluted (Class A) | $(0.51) | $(0.56) | $(1.20) | $(1.02) | | Net loss per share, basic and diluted (Class B) | $(0.51) | $(0.56) | $(1.20) | $(1.02) | | Weighted-average number of shares used in computing net loss per share, basic and diluted (Class A) | 3,264 | 3,264 | 3,264 | 3,264 | | Weighted-average number of shares used in computing net loss per share, basic and diluted (Class B) | 35,125 | 37,379 | 34,679 | 36,932 | - Net loss per share (basic and diluted) for Class B common stock was $(0.56) for the three months and $(1.02) for the six months ended July 31, 2025[168] - Potentially dilutive securities were excluded from diluted EPS calculations as they were anti-dilutive due to the Company's net loss position[168] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Domo, Inc.'s financial condition and results of operations, highlighting key business developments, macroeconomic impacts, and factors affecting performance Overview This section provides a high-level summary of Domo's business, its cloud-based AI and data platform, and key financial metrics for the reporting periods - Domo provides a cloud-based AI and data products platform to connect employees with real-time data and insights[174] - 76% of Annual Recurring Revenue (ARR) is now from consumption-based services, expected to increase[176] Key Financial Overview (in millions) | Metric | 3 Months Ended July 31, 2024 | 3 Months Ended July 31, 2025 | 6 Months Ended July 31, 2024 | 6 Months Ended July 31, 2025 | | :---------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total Revenue | $78.4 | $79.7 | $158.5 | $159.8 | | Net Loss | $(19.5) | $(22.9) | $(45.5) | $(41.0) | | Total RPO | $358.9 (July 31, 2024) | $430.9 (July 31, 2025) | | | Impact of Macroeconomic Conditions This section discusses how macroeconomic conditions have influenced Domo's sales cycles, deal scrutiny, and renewal discussions, and the company's strategic response - Macroeconomic conditions have elongated software sales cycles, increased deal scrutiny, and made renewal discussions more challenging[181] - The company is focusing on cost control and sales team alignment to improve margins, achieve sustained positive cash flow, and efficient long-term growth[182] Factors Affecting Performance Continue to Attract New Customers Domo's growth depends on attracting new customers, defined as entities generating over $2,500 in revenue per quarter - As of July 31, 2025, Domo had over 2,500 customers[184] - Enterprise customers (over $1 billion in revenue) accounted for 44% of revenue for the six months ended July 31, 2025[184] - The company plans to further develop its partner ecosystem to expand customer and geographic coverage[184] Customer Upsell and Retention Domo's performance relies on retaining existing customers and expanding their platform usage - The trailing twelve-month gross retention rate was 85% as of July 31, 2025, up from 84% in the prior year[188] - Customer retention has been affected by macroeconomic conditions and challenging renewals from COVID-19 related use cases[188] - The company expects customer retention to increase long-term through partner ecosystem expansion and wider strategic adoptions[189] Sales and Marketing Efficiency Domo is focused on improving the efficiency of its sales and marketing efforts through enhanced account targeting, messaging, and sales training - Sales and marketing expense as a percentage of total revenue decreased from 47% for the three months ended July 31, 2024, to 44% for the same period in 2025[191] - The company expects sales and marketing expense as a percentage of revenue to increase in the near term and decrease in the long term[215] Leverage Research and Development Investments for Future Growth Domo plans to continue investing in research and development to expand platform functionality, including machine learning, predictive analytics, and AI technologies - Investments will focus on machine learning algorithms, predictive analytics, and other artificial intelligence technologies[192] - Research and development expense as a percentage of total revenue decreased from 28% for the three months ended July 31, 2024, to 24% for the same period in 2025[193] - The company expects R&D expense as a percentage of revenue to decrease in the long term[217] Key Business Metric Billings Billings, a key business metric, represent total revenue plus the change in deferred revenue - Billings are calculated as total revenue plus the change in deferred revenue[194] Billings (in thousands) | Period | 2024 | 2025 | | :------------------------ | :----- | :----- | | Three Months Ended July 31, | $68,626 | $70,333 | | Six Months Ended July 31, | $134,122 | $134,236 | - Billings for the six months ended July 31, 2025, were $134.2 million, a slight increase from $134.1 million in the prior year[195] Components of Results of Operations This section defines the key components of Domo's results of operations: Revenue (subscription and professional services), Cost of Revenue (subscription and professional services), Operating Expenses (sales and marketing, research and development, general and administrative), Other Expense, Net, and Income Taxes - Subscription revenue includes consumption-based and subscription-based agreements, recognized ratably over the contractual term[196][197][198] - Cost of subscription revenue primarily includes third-party hosting, employee-related costs for cloud infrastructure and support, and amortization of capitalized software[200] - Operating expenses include sales and marketing (with deferred contract acquisition costs), research and development (expensed as incurred, except capitalized software), and general and administrative costs[202][203][204] Results of Operations This section provides a detailed comparative analysis of Domo's financial performance for the three and six months ended July 31, 2025, versus the corresponding periods in 2024 Discussion of the Three Months Ended July 31, 2024 and 2025 For the three months ended July 31, 2025, total revenue increased slightly, driven by new customers, while professional services revenue decreased Revenue (in thousands) | Revenue Type | 2024 | 2025 | $ Change | % Change | | :-------------------------- | :----- | :----- | :------- | :------- | | Subscription | $70,921 | $72,730 | $1,809 | 3% | | Professional services and other | $7,486 | $6,988 | $(498) | (7)% | | Total revenue | $78,407 | $79,718 | $1,311 | 2% | - Subscription revenue increased by $1.8 million (3%) due to new customers, partially offset by a net decrease from existing customers[210] Gross Profit and Margin (in thousands) | Item | 2024 | 2025 | $ Change | % Change | | :-------------------------- | :----- | :----- | :------- | :------- | | Total cost of revenue | $20,124 | $20,075 | $(49) | —% | | Gross profit | $58,283 | $59,643 | $1,360 | 2% | | Total gross margin | 74% | 75% | | | - Operating expenses decreased by $5.9 million (8%), driven by lower employee-related costs in sales & marketing, R&D, and G&A[215][216][218] - Total other expense, net, increased by $10.7 million (225%) primarily due to a $10.3 million revaluation of warrant liability[219] Discussion of the Six Months Ended July 31, 2024 and 2025 For the six months ended July 31, 2025, total revenue saw a modest increase, with subscription revenue growing from new customers and professional services increasing due to training Revenue (in thousands) | Revenue Type | 2024 | 2025 | $ Change | % Change | | :-------------------------- | :----- | :----- | :------- | :------- | | Subscription | $143,031 | $144,119 | $1,088 | 1% | | Professional services and other | $15,479 | $15,710 | $231 | 1% | | Total revenue | $158,510 | $159,829 | $1,319 | 1% | - Subscription revenue increased by $1.1 million (1%) due to new customers, partially offset by a net decrease from existing customers[221] Gross Profit and Margin (in thousands) | Item | 2024 | 2025 | $ Change | % Change | | :-------------------------- | :----- | :----- | :------- | :------- | | Total cost of revenue | $40,838 | $40,743 | $(95) | —% | | Gross profit | $117,672 | $119,086 | $1,414 | 1% | | Total gross margin | 74% | 75% | | | - Operating expenses decreased by $12.9 million (8%), primarily due to lower employee-related costs in sales & marketing and R&D, and a decrease in professional and legal fees in G&A[225][226][227] - Total other expense, net, increased by $9.8 million (106%) primarily due to a $9.7 million revaluation of warrant liability[228] Liquidity and Capital Resources Domo's liquidity is supported by $47.1 million in cash and cash equivalents and a fully drawn $125.3 million credit facility - As of July 31, 2025, the Company had $47.1 million in cash and cash equivalents[230] - The $125.3 million credit facility was fully drawn as of July 31, 2025[230][236] - The Company believes existing cash and equivalents will meet operating requirements for at least the next 12 months[232] - An 'at-the-market' offering program allows for the sale of up to $150.0 million of Class B common stock, though no shares have been sold yet[233][234] Historical Cash Flow Trends Operating Activities Cash flows from operating activities improved significantly, moving from a net cash outflow of $(4.3) million in the six months ended July 31, 2024, to a net cash inflow of $7.3 million in the same period of 2025 - Net cash provided by operating activities was $7.3 million for the six months ended July 31, 2025, compared to net cash used of $(4.3) million in the prior year[242] - Cash collected from customers was $161.8 million, exceeding cash outflows of $154.5 million for the six months ended July 31, 2025[245] Investing Activities Net cash used in investing activities increased to $(5.3) million for the six months ended July 31, 2025, primarily due to higher capitalized development costs for internal-use software - Net cash used in investing activities was $(5.3) million for the six months ended July 31, 2025, up from $(4.7) million in the prior year[242] - Capitalized development costs for internal-use software were $4.9 million for the six months ended July 31, 2025, compared to $3.5 million in the prior year[247] Financing Activities Net cash used in financing activities was $(1.4) million for the six months ended July 31, 2025, a shift from $3.7 million provided in the prior year - Net cash used in financing activities was $(1.4) million for the six months ended July 31, 2025[242] - Significant outflows included $7.0 million in payments on short-term payable financing and $1.6 million for share repurchases for tax withholdings[250] - Inflows included $7.0 million from short-term payable financing and $0.7 million from employee stock purchase plan proceeds[250] Contractual Obligations and Commitments The Company's principal commitments include long-term debt, operating lease obligations, and non-cancelable contracts for cloud infrastructure services - Principal commitments include long-term debt, operating leases, and non-cancelable cloud infrastructure contracts[251] - No material changes in contractual obligations and commitments since the Annual Report on Form 10-K[251] Critical Accounting Policies and Estimates This section states that there have been no material changes to the Company's critical accounting policies and estimates as previously disclosed in its Annual Report on Form 10-K - No material changes to critical accounting policies and estimates since the Annual Report on Form 10-K[253] - Preparation of financial statements requires estimates and assumptions that affect reported amounts[252] Recent Accounting Pronouncements This section refers to Note 2 of the condensed consolidated financial statements for information regarding recent accounting pronouncements, including ASU 2023-09, ASU 2024-03, and ASU 2025-05 - Refer to Note 2 for details on recent accounting pronouncements[254] Item 3. Quantitative and Qualitative Disclosures about Market Risk This section discusses Domo's exposure to market risks, including interest rate risk, foreign currency exchange rate risk, and inflation risk Interest Rate Risk Domo is exposed to interest rate risk primarily through its cash and cash equivalents and its credit facility - The Company had $47.1 million in cash and cash equivalents as of July 31, 2025, primarily in cash and money market funds[255] - The $125.3 million credit facility has a floating interest rate (approx. 7.3% cash interest as of July 31, 2025), exposing the Company to interest rate movements[256] - A hypothetical 100 basis point change in interest rates would not materially impact the fair value of outstanding debt or returns on cash[257] Foreign Currency Exchange Risk Domo faces foreign currency exchange risk due to international operations with revenues and expenses denominated in currencies other than the U.S. dollar, primarily Japanese Yen, British Pound Sterling, and Australian Dollar - Foreign currency risks arise from revenue and operating expenses denominated in currencies like Japanese Yen, British Pound Sterling, and Australian Dollar[258] - Changes in the U.S. dollar's value relative to other currencies can affect revenue and operating results[258] - The Company does not currently hedge foreign currency transactions but may do so in the future[259] Inflation Risk Domo does not believe inflation has materially affected its business to date, as subscription contracts often include CPI-tied pricing - Inflation has not had a material effect on the business to date[260] - Subscription contracts often contain pricing terms tied to the Consumer Price Index (CPI)[260] - Inability to offset higher costs from significant inflationary pressure with price increases could adversely affect business[260] Item 4. Controls and Procedures This section addresses the effectiveness of Domo's disclosure controls and procedures and internal control over financial reporting Evaluation of Disclosure Controls and Procedures Management, including the principal executive and financial officers, evaluated the effectiveness of disclosure controls and procedures as of July 31, 2025 - Disclosure controls and procedures were evaluated as effective at a reasonable assurance level as of July 31, 2025[261] Changes in Internal Control Over Financial Reporting There were no changes in internal control over financial reporting during the period covered by this report that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting - No material changes in internal control over financial reporting occurred during the period[262] Inherent Limitations on Effectiveness of Disclosure Controls and Procedures Management acknowledges that disclosure controls and internal control over financial reporting, no matter how well designed, can only provide reasonable, not absolute, assurance due to inherent limitations - Control systems provide only reasonable, not absolute, assurance due to inherent limitations[263] - Limitations include faulty judgments, simple errors, circumvention by individual acts or collusion, and management override[263] PART II. OTHER INFORMATION Item 1. Legal Proceedings Domo is involved in legal proceedings in the normal course of business, but management believes these will not have a material impact on the Company's financial condition, results of operations, or liquidity - The Company is involved in legal proceedings arising in the normal course of business[266] - Management believes the outcome of these proceedings will not materially impact the Company's financial condition, results of operations, or liquidity[266] Item 1A. Risk Factors This section details various risk factors that could materially and adversely affect Domo's business, operating results, and financial condition Risks Related to Our Financial Position and Capital Needs Domo faces risks related to its financial position, including a history of net losses and an accumulated deficit of $1.5 billion as of July 31, 2025 - The Company has incurred significant net losses, with an accumulated deficit of $1,528.5 million as of July 31, 2025[268][273] - Future capital raising may be limited, potentially hindering growth or forcing delays in product development[273][274] - Operating results may fluctuate significantly due to factors like customer expansion, contract terms, competition, and seasonal sales variations[277][279] - The credit facility contains restrictive and financial covenants, including minimum annualized recurring revenue and consolidated EBITDA, which could limit operating flexibility or trigger default if not met[285][286][130] - The Company's ability to use its net operating loss (NOL) carryforwards (federal: $1.2 billion, state: $1.4 billion as of Jan 31, 2025) may be subject to limitations due to ownership changes or regulatory changes[295][296] Risks Related to Our Relationships with Customers and Third Parties Domo's business success is highly dependent on its relationships with customers and third parties - Failure to attract new customers cost-effectively or retain existing ones could harm revenue growth and operating results[301][303] - The loss of key customers or failure to renew contracts could significantly affect revenue, reputation, and ability to acquire new customers[308] - Dependence on third-party data centers and technology systems creates vulnerability to outages, interruptions, and performance problems, which could disrupt operations and harm reputation[311][313][316] - Contractual disputes with customers, including non-payment, could be costly, time-consuming, and damage the Company's reputation[317][318] Risks Related to Our Products and Solutions Domo faces intense competition in a rapidly evolving technology market, which could reduce demand for its platform - The market for Domo's platform is intensely competitive, with large software companies and business analytics providers as key competitors[319][320] - The transition to a consumption-based pricing model, while representing 76% of ARR, is relatively new and carries risks such as lower net retention if customers use less data than expected[327] - Failure to adapt to rapidly changing technology, evolving industry standards, and customer needs, especially concerning AI and IoT, could make solutions less competitive[330][333][338] - The use of AI tools on the platform raises novel and complex issues, including potential for deficiencies, inaccuracies, biases, and evolving legal/regulatory landscapes (e.g., EU AI Act, Utah AI Policy Act)[333][334] - Inability to timely and effectively scale technology, meet service level commitments, or manage open-source software could lead to performance problems, customer dissatisfaction, and increased costs[340][342][349] Risks Related to Our Personnel and Operations Domo's operational success is tied to its personnel and operational strategies - Failure to effectively align, develop, and expand sales and marketing capabilities with the new pricing structure could harm customer acquisition and platform acceptance[352] - The Company may be subject to litigation, which could be costly, time-consuming, and harm its reputation[354][355] - Inability to attract, integrate, and retain qualified personnel, especially top technical talent, could adversely affect the business due to intense competition and high training costs[357] - Expanding international operations subjects the Company to various risks, including significant investments, localization needs, regulatory changes, currency fluctuations, and political instability[363][364] - Future acquisitions could disrupt business, divert resources, and expose the Company to integration difficulties and financial risks[370] Risks Related to Privacy and Cybersecurity Domo is subject to extensive and evolving governmental laws and regulations related to privacy, data protection, and cybersecurity globally - The Company is subject to evolving privacy and data protection laws globally (e.g., CCPA, CPRA, GDPR, PIPL, LGPD, NIS2, DORA), with non-compliance potentially leading to significant penalties and reputational harm[376][378][382][385][387] - Security breaches, unauthorized access to customer data, or other security incidents (including those from third-party hosting, open-source libraries, or AI-generated code) could disrupt operations, damage reputation, and incur significant remediation costs[389][390][391][392][397] - The use of generative AI technologies may expose sensitive information, intellectual property, and source code, triggering legal and compliance risks[393] - Insider threats, whether malicious or inadvertent, pose significant risks to data confidentiality, integrity, and availability[394] - Insurance coverage for security and privacy damages may not be sufficient for all liabilities incurred[400] Risks Related to Our Intellectual Property Domo's business heavily relies on its brand recognition and the protection of its intellectual property (IP) - Maintaining and enhancing the Domo brand and reputation is critical, and negative publicity or reviews could adversely affect business and operating results[408][409][411] - The Company faces risks of third-party claims of intellectual property infringement, which could lead to costly litigation, require expensive licenses, or force redesigns of its platform[412][414] - Indemnity provisions in customer agreements could expose the Company to substantial liability for IP infringement and other losses[415] - The success of the business depends on protecting and enforcing its proprietary technology, including 82 issued U.S. patents, but patent protection is expensive, time-consuming, and may not provide competitive advantages or be enforceable in all jurisdictions[416][417] - Unauthorized use of intellectual property, including in the context of artificial intelligence, may occur, requiring significant resources for monitoring and enforcement, potentially leading to costly litigation[420][421] Risks Related to Our Corporate Governance Domo's corporate governance structure, particularly its dual-class common stock, concentrates voting control with Joshua G. James, the founder and CEO - The dual-class common stock structure concentrates approximately 78% of voting control with Joshua G. James, limiting other stockholders' influence[422] - Concentrated control may delay or prevent a change in control and could affect the market price of Class B common stock[422] - As a 'controlled company' under Nasdaq rules, Domo may rely on exemptions from certain corporate governance requirements, potentially reducing protections for stockholders[424][425] - The dual-class structure may result in a lower or more volatile market price and potential exclusion from certain stock indexes[426] Risks Related to Our Financial Reporting and Disclosure Domo's financial reporting and disclosure are subject to risks from changes in GAAP, increased costs as a public company, and the need to maintain effective internal controls - Changes in GAAP or their interpretations could significantly affect reported financial results and comparability with other companies[427] - As a public company, Domo incurs increased legal, accounting, and compliance costs, including those related to corporate governance and Sarbanes-Oxley Act Section 404[428][429][430] - Failure to comply with Section 404 requirements or identification of material weaknesses in internal controls could lead to stock price decline and regulatory sanctions[430][431] Other Risks Related to Ownership of Our Class B Common Stock Ownership of Domo's Class B common stock carries risks including high market price volatility due to various factors, such as operating results, competitor actions, and economic conditions - The market price of Class B common stock may be highly volatile due to fluctuations in operating results, competitor actions, analyst coverage, and general market conditions[432][433][434][435] - Future sales of a large number of Class B common shares, including those from equity compensation plans or shares pledged by the CEO, could cause the stock price to fall[436][437][438][439] - Anti-takeover provisions in charter documents and Delaware law could make an acquisition difficult and limit stockholders' ability to influence management or receive a premium for their shares[440][441] - The amended and restated bylaws designate Delaware courts as the exclusive forum for certain disputes, potentially limiting stockholders' choice of judicial forum[442][443] General Risk Factors Domo's business is susceptible to general economic uncertainties or downturns, both domestically and internationally - Economic uncertainties or downturns, including those from inflation, recession, and military conflicts, could adversely affect business investments and demand for the platform[445] - Challenging economic times can lead to tightened customer budgets, delayed payments, and increased allowance for doubtful accounts[446] - Elevated inflation rates (e.g., 2.9% in 2024) and labor shortages could increase expenses and operating costs[447] Item 5. Other Information This section provides details on compensatory arrangements for certain officers and information regarding securities trading plans Compensatory Arrangements of Certain Officers On July 2, 2025, the compensation committee approved a one-time grant of 450,000 performance-based restricted stock units (PSUs) to CEO Joshua G. James - A one-time grant of 450,000 performance-based restricted stock units (PSUs) was approved for CEO Joshua G. James on July 2, 2025[450] - PSUs vest upon Class B common stock achieving specific 30-trading day average closing price hurdles ($20, $25, $35, $45 per share) within a four-year period, alongside service-based conditions[450] Securities Trading Plans of Directors and Executive Officers During the last fiscal quarter, no director or officer adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the last fiscal quarter[451] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including organizational documents, certifications from the principal executive and financial officers, and Inline XBRL documents - Exhibits include Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws, and certifications from principal executive and financial officers[452] - Inline XBRL documents (Instance, Schema, Calculation, Definition, Label, Presentation Linkbase Documents, and Cover Page Interactive Data File) are also filed[452] SIGNATURES This section contains the required signatures for the Form 10-Q report, confirming its submission by authorized personnel - The report was signed on September 4, 2025, by Tod Crane, Chief Financial Officer (Principal Financial and Accounting Officer) of Domo, Inc[457]