Summary
Domo reported total revenue of $62.8 million for its fiscal 2022 second quarter, up 23% year over year. Gross profit rose 24% year over year to $46.5 million. GAAP gross margin was 74.0%. GAAP operating loss widened to $18.6 million. GAAP net loss widened to $22.2 million, and GAAP net loss per share was $0.70. Operating cash flow was $2.2 million. Deferred revenue was $127.6 million, up 22.4% year over year. The results show a business that is growing quickly but still spending more than it brings in on a GAAP basis.
The company also reported several non-GAAP and operating metrics. Billings were $60.0 million, or 26% year-over-year growth. Non-GAAP net loss was $9.6 million, and non-GAAP net loss per share was $0.30. Non-GAAP subscription gross margin was 83%, an improvement of 2 percentage points from Q2 FY21. Non-GAAP operating margin improved by 6 percentage points year over year. Non-GAAP operating loss was $6.1 million. Non-GAAP total operating expenses were $53.4 million. Free cash flow was $0.5 million. Adjusted net cash provided by operating activities was $2.2 million. These figures show that the company's cash and non-GAAP profitability trends are better than its GAAP results.
Domo ended the quarter with over 2,100 customers. The customer count increased 13% from July 31, 2020 to July 31, 2021. Gross retention rate for the twelve months ended July 31, 2021 was 90%. As of July 31, 2021, 60% of customers were under multi-year contracts on a dollar-weighted basis, compared to 60% as of January 31, 2021. Enterprise customers accounted for 53% of revenue for the three months ended July 31, 2021. Revenue from customers with billing addresses in the United States comprised 76% of total revenue for the same quarter. The company focuses its sales and marketing resources on companies with over $100 million in revenue. Management said it expects customer retention to increase over the long term, but it also warned that retention for customers in industries hit hard by the pandemic may be lower in fiscal 2022.
Guidance points to more growth but continued losses. For the third fiscal quarter, Domo expects revenue of $63.5 million to $64.5 million. Non-GAAP net loss per share is expected to be between $0.33 and $0.37 based on 32.4 million weighted-average shares outstanding. For the full fiscal year 2022, revenue is expected to be $252.0 million to $256.0 million. Non-GAAP net loss per share is expected to be between $1.31 and $1.39 based on 32.0 million weighted-average shares outstanding. The company does not reconcile these non-GAAP figures to GAAP because some items are not within its control or cannot be reasonably predicted.
The outlook carries familiar risks. Domo has incurred significant net losses since inception and expects losses for the foreseeable future. COVID-19 remains a wildcard, especially for customers in travel and hospitality, sports and leisure, and retail. Existing and potential customers may delay technology spending or seek concessions such as longer payment terms or shorter contracts. Domo also faces competition, sales productivity challenges from hiring new representatives, and the need to renew a majority of its annual recurring revenue during the fiscal year ending January 31, 2022. The company has a credit facility with covenants tied to its outstanding indebtedness and annualized recurring revenue, and it was in compliance with the covenant terms at July 31, 2021. Management has said the company may need to raise additional funds for growth opportunities, product development, sales and marketing, and other purposes. Domo also said its revenue growth rate may decline in future periods due to maturation, competition, or a failure to capitalize on growth opportunities. It expects sales and marketing expense and research and development expense to decline as a percentage of total revenue in the long term, but the pace of decline may slow as it invests in its sales organization.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2022 | Q1 FY2022 | QoQ | Q2 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $62.8M | $60.1M | +4.6% | $51.1M | +22.9% |
| Gross profit | $46.5M | $44.9M | +3.6% | $37.5M | +24.1% |
| Gross margin | 74.0% | 74.8% | -0.7 pp | 73.3% | +0.7 pp |
| Research & development | $19.3M | $16.2M | +19.5% | $15.9M | +21.5% |
| Sales & marketing | $33.4M | $33.5M | -0.2% | $27.4M | +21.9% |
| General & administrative | $12.4M | $10.2M | +21.2% | $9.6M | +29.6% |
| Total operating expenses | $65.1M | $59.9M | +8.8% | $52.9M | +23.2% |
| Operating income (loss) | -$18.6M | -$15.0M | -24.4% | -$15.4M | -20.9% |
| Operating margin | -29.6% | -24.9% | -4.7 pp | -30.1% | +0.5 pp |
| Net income (loss) | -$22.2M | -$18.1M | -22.8% | -$17.9M | -24.2% |
| Net margin | -35.4% | -30.1% | -5.3 pp | -35.0% | -0.4 pp |
Risks
The MD&A and Risk Factors both emphasize that the COVID-19 pandemic's full impact remains uncertain and could reduce or delay enterprise software spending. Domo serves customers in travel and hospitality, sports and leisure, and retail, and some customers have already sought concessions such as lengthened payment terms or reduced contract length.
A majority of Domo's annual recurring revenue is up for renewal during the fiscal year ending January 31, 2022, and customers have no obligation to renew after their initial one to three year terms. The company also notes that $4.5 million of annual recurring revenue contracts signed in the six months ended July 31, 2020 with government entities for COVID-19 response may be at higher risk of non-renewal absent expansion beyond the pandemic use case.
Domo incurred a net loss of $22.2 million for the three months ended July 31, 2021 compared with $17.9 million for the three months ended July 31, 2020, and had an accumulated deficit of $1,162.7 million at July 31, 2021. As of July 31, 2021 it had $86.4 million of cash and cash equivalents and no amounts available to draw under its credit facility.
Domo targets enterprise customers with sales cycles of roughly six months to multiple years, and sales are heavily weighted toward the last few weeks and days of each quarter. This end-of-quarter compression raises the odds that sizable transactions slip beyond the forecasted quarter, harming forecasting accuracy and billings, and Domo expects the fiscal 2022 hiring of additional sales representatives may adversely impact near-term productivity.
The Risk Factors describe the market for Domo's platform as intensely and increasingly competitive, naming large software vendors such as Microsoft, Oracle, SAP and IBM, analytics vendors such as Tableau and Qlik, and cloud providers such as salesforce.com, several of which bundle competing products at significant discounts or for free. Domo also flags that its Mr. Roboto artificial intelligence features could produce flawed or biased outputs and expose it to reputational harm or liability.
The $100 million credit facility was fully drawn as of July 31, 2021, with a term loan maturing April 1, 2025. It contains restrictive covenants limiting asset dispositions, mergers, acquisitions, new offices, dividends and additional indebtedness, is secured by substantially all assets including intellectual property, and requires compliance with a minimum unrestricted cash covenant of $10.0 million and a maximum debt ratio covenant that steps down over time.
Domo depends on attracting, training and retaining direct sales personnel and key management, and states it does not maintain key person insurance for any employee. Sales and marketing expense rose 22% for the three months ended July 31, 2021 versus the prior-year quarter, driven largely by a $4.7 million increase in employee-related costs including stock-based compensation.
Domo is subject to evolving sales, use, value added and other tax rules across multiple jurisdictions and could face audits and assessments for past transactions where it did not collect such taxes. It also notes it ceased to be an emerging growth company on January 31, 2021, so its auditor must now attest to internal control over financial reporting under Section 404, increasing compliance costs.
Domo's dual-class structure gives founder and CEO Joshua G. James approximately 82% of the voting power through Cocolalla, LLC, and the company relies on the Nasdaq controlled-company exemption from independent board and committee requirements. Mr. James has pledged all of his shares to secure a loan, and sales of pledged shares upon default could adversely affect the Class B common stock price.
Domo has securities class-action complaints pending against it and certain current and former directors and officers asserting violations of federal securities laws and seeking unspecified damages, which the company says it will defend vigorously. Any such litigation is expensive and could divert management attention and resources.
SaaS KPIs
All quarters →Total Customers
Billings
Remaining Performance Obligations (RPO)
Non-GAAP Subscription Gross Margin
Free Cash Flow
Summary, forecast, risks and KPIs are extracted from Huckleberry.ai, Inc.'s SEC filings for Q2 FY2022 (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.