Domo(US:DOMO)2024-05-24 05:29Financial Data and Key Metrics Changes - Total revenue for Q1 was $80.1 million, representing a year-over-year increase of 1% [28] - Subscription revenue accounted for 90% of total revenue, also growing at 1% year-over-year [28] - Non-GAAP operating margin was negative 9.2%, down 7.2 percentage points from a year ago [14] - Non-GAAP net loss was $12.3 million compared to $6.1 million a year ago, with net loss per share at $0.33 [14] - Cash flow from operations was $1.9 million, while adjusted free cash flow was $0.5 million, with a cash balance of $61.2 million [14] Business Line Data and Key Metrics Changes - Gross retention was 83%, which would have been 89% excluding one large non-renewal [13] - Net retention was 88%, with expectations for Q2 retention to be in the range of 87% to 88% [13] - Subscription gross margin was 83.4%, down 2.6 percentage points from Q1 of last year [29] - Over 90% of new contract dollar value in Q1 was on consumption, with over 30% of total ARR on consumption expected to exceed 50% by year-end [104] Market Data and Key Metrics Changes - The company is seeing strong momentum in upsells on consumption conversions, with one customer achieving a 30% upsell [27] - The number of accounts paying more than $500,000 to $1 million increased by 33% over the last 12 months [74] - The company has 47 opportunities in the pipeline with 12 net new relationships, indicating increased engagement with cloud data warehouse partners [24] Company Strategy and Development Direction - The company is transitioning to a consumption model to better align pricing with customer value and enhance partnerships with cloud data warehouse providers [51] - The focus is on becoming a strategic multi-use case solution rather than being limited to single use cases [4] - The management believes that the current market environment is more normalized and conducive to growth [34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in improving retention rates and indicated that the recent trend of low retention is not expected to continue [6] - The company is committed to being free cash flow positive for the full year, despite variability in interim quarters [15] - There is a belief that the company could either achieve revenue growth north of 20% or be acquired at a substantial premium [54] Other Important Information - The company has over $1 billion in net operating losses (NOLs), which could provide substantial financial value to potential acquirers [53] - The management highlighted the importance of aligning with cloud data warehouse partners to enhance customer acquisition and retention [51] Q&A Session Summary Question: What percentage of ARR is tied to customers with single use cases versus non-single-use cases? - Management noted that they are excited about the net revenue retention for consumption cohorts being higher than ever seen before, indicating a positive shift in customer relationships [55] Question: Why hasn't a strategic sale been considered sooner? - Management clarified that while there have been ongoing conversations, the explicit willingness to sell has been communicated more clearly recently [60] Question: What are the biggest components and variables affecting future guidance? - Management indicated that the expansion into the partner channel opens up significant opportunities, and they are focused on gaining visibility before providing more discrete guidance [68] Question: What caused the disconnect between EPS guidance and actual results? - The significant investment in hosting Domopalooza as an in-person event and costs related to debt extension were cited as major factors impacting results [47] Question: Can you provide insight into the large non-renewal? - Management explained that the non-renewal was driven by a CFO-led cost-cutting directive rather than product performance, indicating a broader trend of vendor consolidation [92]