Summary
Domo reported fiscal 2021 second quarter revenue of $51.1 million, an increase of 22.7% from the prior-year quarter. Gross profit was $37.5 million, and gross margin was 73.3%, up 7.4 percentage points year over year. The company's GAAP operating loss was $15.4 million, and operating margin improved by 38.0 percentage points to negative 30.1%. GAAP net loss was $17.9 million, or $0.62 per diluted share. Both the net loss and the per-share loss narrowed from the prior-year quarter. Deferred revenue was $104.23 million, up 14.2% from a year earlier.
Cash generation improved. Net cash used in operating activities was $4.8 million, an improvement of 74% from the prior-year quarter. Capital expenditures were $1.79 million. On a non-GAAP basis, net loss was $10.7 million, or $0.37 per share. Billings were $47.6 million, up 23% year over year. Subscription gross margin was 80%, an improvement of 5 percentage points from the second quarter of fiscal 2020. Non-GAAP operating margin improved 41 percentage points year over year.
For the six months ended July 31, 2020, revenue was $99.7 million, up 20.9% from the prior-year period. Gross profit was $71.9 million, up 29.7%. Operating loss was $37.3 million, a 39.2% narrowing. Net loss was $42.8 million, and diluted EPS was a loss of $1.49, with the net loss narrowing 35.8% and the per-share loss narrowing 39.2%. Operating cash flow was negative $17.7 million, an improvement of 61.0%, and capital expenditures were $3.15 million, down 0.7%.
Domo ended the quarter with more than 1,800 customers. 60% of customers were under multi-year contracts, compared with 55% as of January 31, 2020. Gross retention rate for the twelve months ended July 31, 2020 was 88%. The customer count increased 4% from July 31, 2019 to July 31, 2020. Subscription revenue represented 87% of total revenue. Domo focuses on enterprise customers with over $100 million in revenue, and those customers accounted for 51% of revenue in the quarter. Sales and marketing expense was 54% of total revenue, research and development expense was 31%, and general and administrative expense was 18%.
The outlook keeps the emphasis on cost discipline. For the third quarter of fiscal 2021, non-GAAP net loss per share is expected between $0.42 and $0.46, based on 29.6 million weighted-average shares outstanding. For the full fiscal year 2021, non-GAAP net loss per share is expected between $1.83 and $1.91, based on 29.3 million weighted-average shares outstanding. The company did not reconcile the non-GAAP outlook to GAAP measures because some items fall outside its control or cannot be reasonably predicted.
Risks remain centered on the COVID-19 pandemic. Domo serves customers in travel and hospitality, sports and leisure, and retail, industries that have been severely impacted. Some customers have sought concessions such as lengthened payment terms or reduced contract length. The company also signed $4.6 million of annual recurring revenue contracts with government entities for pandemic response, and those contracts may be at higher risk of not renewing. Domo expects customer retention to be negatively affected in fiscal 2021. It has a $100 million credit facility that was fully drawn as of July 31, 2020. In August 2020, it amended the facility to extend maturity to April 1, 2025, added a $10.0 million minimum cash requirement, revised the debt ratio covenant, and included a $5.0 million amendment fee. The credit facility restricts dispositions, acquisitions, indebtedness, distributions, investments, and affiliate transactions. Management believes existing cash, cash equivalents and short-term investments will be sufficient for at least the next 12 months, but it may need to raise additional funds, and equity financing likely would be dilutive.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2021 | Q1 FY2021 | QoQ | Q2 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $51.1M | $48.6M | +5.3% | $41.7M | +22.7% |
| Gross profit | $37.5M | $34.5M | +8.8% | $27.4M | +36.6% |
| Gross margin | 73.3% | 71.0% | +2.4 pp | 65.9% | +7.4 pp |
| Research & development | $15.9M | $17.5M | -8.8% | $17.0M | -6.6% |
| Sales & marketing | $27.4M | $29.1M | -5.9% | $29.5M | -7.2% |
| General & administrative | $9.6M | $9.9M | -3.2% | $9.3M | +3.0% |
| Total operating expenses | $52.9M | $56.4M | -6.3% | $55.8M | -5.3% |
| Operating income (loss) | -$15.4M | -$22.0M | +30.0% | -$28.4M | +45.8% |
| Operating margin | -30.1% | -45.2% | +15.2 pp | -68.1% | +38.0 pp |
| Net income (loss) | -$17.9M | -$24.9M | +28.1% | -$31.2M | +42.5% |
| Net margin | -35.0% | -51.3% | +16.3 pp | -74.8% | +39.8 pp |
Risks
COVID-19 risk is expanded: substantially all sales and professional services are being conducted remotely, customers in travel and hospitality, sports and leisure, and retail have been severely impacted, and certain customers pursued concessions such as lengthened payment terms or reduced contract length. The company also signed $4.6 million of annual recurring revenue contracts with government entities for pandemic response that may be at higher risk of not renewing once the pandemic subsides.
A majority of annual recurring revenue is up for renewal during the fiscal year ending January 31, 2021, and gross retention rate for the twelve months ended July 31, 2020 was 88%. Management anticipates customer retention in fiscal 2021 will be negatively impacted by the COVID-19 pandemic.
Enterprise sales cycles range from approximately six months to multiple years, and quarterly sales are weighted toward the last few weeks and days of the quarter. Compression of sales activity increases the likelihood that sizable transactions close beyond the forecasted quarter, harming billings, new customer acquisition and renewal metrics.
The market is intensely competitive, with large vendors such as Microsoft, Oracle, SAP and IBM, analytics peers such as Tableau, Qlik, Looker, Sisense and Tibco, and cloud providers such as Salesforce and Infor. Salesforce acquired Tableau and Alphabet acquired Looker, and competitors may bundle analytics into larger deals at significant discounts or no charge, pressuring pricing, gross margins and sales cycles.
Privacy and data protection obligations are expanding under CCPA, GDPR and HIPAA business associate requirements. The July 16, 2020 Schrems II ruling invalidated the EU-U.S. Privacy Shield, which may restrict personal data transfers from the EU and Switzerland and require additional compliance measures and costs.
As of July 31, 2020, the $100 million credit facility was fully drawn and no amounts were available to draw. The facility includes a debt-to-annualized-recurring-revenue covenant; an August 2020 amendment extended maturity to April 1, 2025, added a $10.0 million minimum cash requirement and a $5.0 million amendment fee.
Net losses were $31.2 million and $17.9 million for the three months ended July 31, 2019 and 2020, and the accumulated deficit was $1,080.5 million at July 31, 2020. The company may need additional funds and if unavailable on acceptable terms may be unable to invest in growth opportunities or continue operations at anticipated levels.
Domo's Mr. Roboto uses machine learning algorithms, predictive analytics and other AI technologies. Flawed algorithms, insufficient or biased datasets, or controversial data practices could undermine outputs and expose the company to competitive harm, legal liability and reputational damage.
Securities class-action complaints are pending against the company and certain current and former directors and officers, asserting federal securities law violations and seeking unspecified damages. Defense may be time-consuming and expensive, divert management attention and lead to similar claims.
The dual-class structure gives founder and CEO Joshua G. James approximately 83% of voting power. All Class A shares held by Cocolalla, LLC are pledged to secure a loan, and a default could lead to lender sales of pledged shares and pressure the Class B common stock price.
The company recently experienced turnover in senior sales leadership, which may adversely affect operating results and prospects. New sales hires require significant training and time before full productivity, and competition for technical, managerial and sales talent is intense.
Revenue growth is expected to decline: the filing states revenue grew 22% in the fiscal year ended January 31, 2020 but only 21% in the six months ended July 31, 2020. Reported figures show current year to date revenue up 20.9% versus the prior year to date, and management cites maturation, competition, slowing demand and renewal or upsell risks.
SaaS KPIs
All quarters →Total Customers
Billings
Customer count growth (YoY)
Subscription gross margin on a non-GAAP basis
Summary, forecast, risks and KPIs are extracted from Huckleberry.ai, Inc.'s SEC filings for Q2 FY2021 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.