Domo(DOMO) - 2019 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Subscription revenue growth averaged 28% year-over-year, never falling below 24% in any quarter [11] - Subscription gross margins improved from 71% at IPO to 77% [11] - Gross retention rate increased from 82% to 91% [11] - Contracted annualized recurring revenue exceeded $160 million [11] - Quarterly cash burn reduced from $36 million to $15 million [11] - Q4 revenue was $46.2 million, a 17% year-over-year increase [17] - Net loss for the quarter was $23.7 million, with a net loss per share of $0.85 [18] Business Line Data and Key Metrics Changes - Subscription revenue represented 86% of total revenue in Q4 [17] - International revenue accounted for 25% of total revenue, up from 24% in Q3 [17] - Net revenue retention rate reached 120% in North America enterprise business [16] Market Data and Key Metrics Changes - Remaining performance obligations (RPO) grew 17% compared to the same quarter last year [16] - 55% of customers were under multiyear contracts at the end of Q4, up from 42% a year prior [16] Company Strategy and Development Direction - Focus on increasing recurring revenue base with minimal reliance on large deals, as top five new business deals comprised only 5% of billings [14] - Emphasis on improving customer lifetime value (LTV) and retention rates [15] - Plans to achieve subscription gross margins of over 80% in the long term [17] - Entering fiscal year 2021 with a 20% larger pipeline than the previous year [22] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic despite the uncertain environment, noting that business continues to close even in challenging conditions [20][39] - The company is well-positioned due to a large sticky renewal base and the ability to sell to existing customers [21] - Guidance for Q1 billings is between $40 million and $44 million, with full-year billings expected between $205 million and $210 million [23] Other Important Information - Cash, cash equivalents, and short-term investments totaled approximately $99 million as of January 31 [19] - Adjusted net cash used in operations was $15.3 million, a 45% reduction compared to Q4 of the prior year [19] Q&A Session Summary Question: How is the enterprise sales team adapting to potential travel disruptions? - Management believes that the strong pipeline and existing customer relationships will facilitate continued business over the phone despite travel restrictions [28][30] Question: What levers are available to manage cash burn in adverse scenarios? - The company plans to increase telesales activity and has the capacity to cut costs if necessary [32][34] Question: Why does guidance seem conservative despite positive metrics? - Management acknowledges the current macro environment and has baked in caution into their guidance [41] Question: How is the competitive landscape affecting the company? - Consolidation in the industry has positioned the company as a strong independent partner, enhancing its attractiveness to customers [63] Question: What is the focus on bake-offs and POCs for 2021? - The company plans to continue leveraging POCs as they have proven effective in increasing close rates [42][43] Question: Are customers cutting budgets or delaying projects due to the current environment? - Management has not seen significant project delays or budget cuts yet, although they acknowledge the changing landscape [45][46] Question: What is the status of partnerships with Amazon and Microsoft? - The ecosystem is evolving positively, with ongoing investments and collaborations with major partners [49] Question: How is the sales organization structured to maximize effectiveness? - The sales team is divided into strategic accounts, corporate, and international teams, each focusing on different market segments [52][54]