Huckleberry.ai, Inc. Q1 FY2021 earnings

Domo posted revenue of $48.56 million for fiscal 2021's first quarter, ended April 30, 2020, up 19.0% from $40.80 million a year earlier. Gross profit rose 23.1% to $34.45 million, and gross margin climbed to 70.9% from 68.6%, a gain of 2.3 percentage points. Subscription gross margin reached 79% on both a GAAP and non-GAAP basis, an improvement of 2 percentage points from the prior-year quarter. The operating loss narrowed to $21.97 million from $33.07 million, and operating margin was -45.2% versus -81.1%, a gain of 35.8 percentage points. Net loss narrowed to $24.90 million from $35.54 million. Diluted EPS was -$0.88, an improvement from -$1.32 in the prior-year quarter. Non-GAAP net loss was $18.4 million, or $0.65 per share.

Subscription revenue of $42.4 million, up 23% year over year, accounted for 87% of total revenue, while professional services and other revenue slipped to $6.1 million as training revenue declined. Billings, a non-GAAP measure, were $46.5 million, up 13% year over year. Domo counted more than 1,800 customers at quarter end, a 2% increase from April 30, 2019, and 57% of customers were on multi-year contracts, up from 55% at January 31, 2020. Enterprise customers generated $23.8 million of revenue, up 23%, and supplied 49% of total revenue versus 47% a year earlier. Deferred revenue was $107.72 million, up 14.4% from the prior-year quarter.

Much of the leverage came from the expense base. Sales and marketing spending fell 19% to $29.1 million and dropped to 60% of total revenue from 88%. Marketing programs, including a Domopalooza conference delivered digitally, accounted for $3.9 million of that reduction, and travel fell $0.7 million because of COVID-19 restrictions. Research and development rose 2% to $17.5 million on severance tied to a reduction in force. General and administrative rose 23% to $9.9 million, mostly because reversals of contingent tax accruals were $1.3 million lower and RSU expense was higher. Operating cash flow was -$12.91 million, an improvement of 52% from the prior-year quarter. Adjusted net cash used in operating activities, a non-GAAP figure, was $9.3 million, an improvement of 58%. Capital expenditures were $1.36 million, down 7.5%. Cash, cash equivalents and short-term investments totaled $88.1 million as of April 30, 2020, and the accumulated deficit stood at $1,062.6 million.

Guidance covers the second quarter of fiscal 2021 and the full fiscal year 2021. For the second quarter, the company projected a non-GAAP net loss per share of $0.48 to $0.52, based on 29.0 million weighted-average shares. For the full fiscal year 2021, it projected a non-GAAP net loss per share of $1.96 to $2.06, based on 29.2 million weighted-average shares. Revenue guidance was issued for both the second quarter and the full year. Domo noted it has not reconciled guidance for non-GAAP metrics to their most directly comparable GAAP measures because items that affect those measures are not within its control or cannot be reasonably predicted.

COVID-19 dominates the risk picture. Domo serves travel and hospitality, sports and leisure, and retail customers, and management said it expects customer retention to be negatively affected in fiscal 2021. Existing and prospective customers may delay or cut technology spending or seek concessions such as longer payment terms, and Domo has moved toward more semi-annual and quarterly billing. The company booked $4.5 million of annual recurring revenue from government contracts tied to the COVID-19 response, and it warned those accounts may be less likely to renew after the crisis if usage does not expand. Domo also carries $100 million of fully drawn term debt at an interest rate of about 7.0%, with a leverage covenant that steps down from 0.75 at April 30, 2020 to 0.60 by July 31, 2021. Management expects losses for the foreseeable future and said existing cash, cash equivalents and short-term investments should fund operations for at least the next 12 months.