Domo(US:DOMO)2020-12-04 05:03Financial Data and Key Metrics Changes - Domo achieved a significant milestone by becoming cash flow positive in Q3 with $84 million remaining in the bank, surpassing expectations set at the IPO [15][33] - Q3 billings grew by 25% year-over-year, an acceleration from 23% in the previous quarter [16][35] - Total revenue for Q3 was $53.6 million, representing a 20% year-over-year increase, with subscription revenue growing by 24% [37] - The gross retention rate increased to over 90%, marking a record high, while subscription gross margins reached 81% [34][37] - Operating expenses decreased by 6% year-over-year, contributing to a significant improvement in operating margin by 31 percentage points [38] Business Line Data and Key Metrics Changes - Domo's subscription revenue accounted for 87% of total revenue in Q3, indicating a strong reliance on recurring revenue [37] - The company reported a year-over-year increase in remaining performance obligations (RPO) of 21%, with current RPO expected to be recognized as revenue over the next 12 months growing by 22% [36] Market Data and Key Metrics Changes - International revenue represented 24% of total revenue in Q3, consistent with the previous quarter [37] - The company noted a high transaction volume quarter, driven by new customer growth and upsells within the existing customer base [50] Company Strategy and Development Direction - Domo's strategy focuses on leveraging its unique platform to assist customers with digital transformation initiatives, emphasizing data integration, AI-driven insights, and low-code/no-code app development [18][20] - The company plans to invest in client services and areas that support growth in existing accounts, reflecting a commitment to customer success [24] - Domo aims to maintain cash flow positivity while increasing investments in growth, particularly in salesforce capacity and new product areas [39] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ongoing demand for real-time analytics and business agility, which has been accelerated by the pandemic [17] - The company anticipates continued growth opportunities, with a focus on maintaining high transaction volumes and expanding its customer base [86] - Guidance for Q4 includes expected billings of approximately $72 million, reflecting a strong start to the quarter [43] Other Important Information - Domo received industry recognition, including awards for product innovation and corporate culture, highlighting its commitment to customer success [31] - The company has been recognized for its role in supporting Unilever's philanthropic initiatives, showcasing the impact of its platform [31] Q&A Session Summary Question: Can you discuss the velocity of deals and where demand is coming from? - Management noted an extremely high transaction volume quarter, driven by new customer growth and increased operational rigor in managing the salesforce [50] Question: Can you elaborate on the traction seen in data integration and intelligent app platforms? - Management highlighted successful proof-of-concepts (POCs) that demonstrate Domo's ability to connect previously unconnected data and facilitate low-code/no-code apps [53] Question: What are the underlying assumptions behind Q4 guidance? - Management indicated that the guidance reflects a strong start to Q4 and good visibility into the pipeline, with expectations for continued high transaction volumes [57] Question: How is the large deal pipeline looking going into Q4? - Management confirmed that the large deal pipeline is building, with expectations for continued activity in Q4, although guidance does not assume significant large-scale deals [89] Question: Are there any key areas of productivity or optimization to consider? - Management mentioned ongoing investments in marketing and product, as well as the addition of sales reps to enhance productivity while maintaining positive cash flow [77]