Domo(DOMO) - 2026 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q1 2026, the company reported total revenue of $80.1 million and billings of$63.9 million, exceeding guidance for both metrics [26] - Adjusted free cash flow was positive at $1.3 million, a significant improvement from the previous year [28] - Non-GAAP subscription gross margin increased to 81.6$312 million and $322 million, and for GAAP revenue to between$312 million and $320 million [30] Business Line Data and Key Metrics Changes - Subscription Remaining Performance Obligations (RPO) grew 24% year over year, while long-term subscription RPO increased by 61% [6][28] - Subscription Total Contract Value (TCV) was up 69% year over year, indicating strong demand for long-term contracts [6] - Sales force productivity increased over 60% year over year, reflecting improved efficiency in sales operations [7] Market Data and Key Metrics Changes - Gross retention improved to 86% from 85% in the previous quarter, and net retention was reported at 94%, up more than four percentage points year over year [27] - Consumption customers now represent over 70% of Annual Recurring Revenue (ARR), with expectations to reach 90% by year-end [9] Company Strategy and Development Direction - The company is focusing on driving adoption of AI across its platform, enhancing customer relationships, and developing its ecosystem of partners [12] - The transition to a consumption-based pricing model is expected to deliver higher usage, customer satisfaction, and retention [25] - The company aims to exit FY 2026 with 5% billings growth and a 5% operating margin, progressing to 10% growth and margin by FY 2027 [10][25] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a challenging macro environment but noted that customer interest in AI solutions is driving positive momentum [35] - The company is confident in its ability to achieve sustainable long-term profitable growth, supported by improved customer relationships and operational efficiency [31] Other Important Information - The company has made significant improvements in its integrations with Cloud Data Warehouse partners, leading to a 200% increase in partner-sourced leads [18] - The successful launch of Agent Catalyst at Domopalooza has generated strong interest, with over 200 customers signing up to explore AI solutions [14] Q&A Session Summary Question: How is the macro environment affecting the business? - Management noted that while the macro environment is challenging, customer interest in AI solutions is driving positive activity [35] Question: What factors are driving the increase in sales productivity? - The increase in sales productivity is attributed to the consumption model and improved relationships with cloud data warehouse partners [39] Question: Can you elaborate on the growth in RPO? - RPO growth is driven by strong technology and the consumption model, which enhances customer relationships and leads to longer-term contracts [54] Question: How do you see gross margin evolving with the consumption model? - The company expects gross margins to remain around 81.6% in the near term, with potential for long-term increases as consumption dynamics evolve [60] Question: What is the outlook for enterprise versus commercial segments? - The enterprise segment remains a significant part of the business, with many leads coming from partnerships, indicating strong growth potential [62]