Summary
Domo's fiscal third quarter revenue rose 21% year over year to $79.0 million. Gross margin improved to 76.1%, up 2.4 percentage points. Operating loss narrowed to $18.5 million, and operating margin was negative 23.4%, up 15.0 percentage points. Net loss narrowed to $23.7 million, or $0.69 per diluted share. On a non-GAAP basis, net loss was $4.5 million, or $0.13 per share. Deferred revenue was $161.0 million, up 21.3% from the prior-year quarter. Capital expenditures were $1.7 million. Net cash used in operating activities was $6.5 million, down from positive operating cash flow in the prior-year quarter. For the nine months, revenue was $229.0 million, up 22%. Net loss for the nine months widened to $85.7 million. Net cash used in operating activities for the nine months was $8.1 million, down from the prior-year period. The company said the increase in subscription revenue came from both new and existing customers, while professional services revenue rose on higher billable hours and custom data apps.
Domo ended the quarter with over 2,500 customers. Customer count increased 14% from October 31, 2021 to October 31, 2022. Gross retention rate was 91% for the 12 months ended October 31, 2022. Multi-year contracts represented 65% of customers on a dollar-weighted basis as of October 31, 2022, compared with 62% as of January 31, 2022. Billings were $74.0 million, up 5% year over year. The company was named Customers Choice in Gartner Peer Insights Voice of the Customer Report for Analytics and Business Intelligence Platforms. It was named a Leader in Nucleus Research's 2022 Embedded Analytics Technology Value Matrix. It was ranked as a Technology and a Credibility Leader in Dresner Advisory Services' 2022 Small and Mid-Sized Enterprise Business Intelligence Market Study. These recognitions point to product and customer value, but they do not change the near-term growth challenges. Management also said the company is underpenetrated in the overall market and sees room to expand its customer base over time.
For the fourth fiscal quarter, Domo expects revenue of $77.0 million to $78.0 million. Non-GAAP net loss per share is expected to be between $0.07 and $0.11 based on 34.7 million weighted-average shares outstanding. For full fiscal year 2023, revenue is expected to be $306.0 million to $307.0 million. Non-GAAP net loss per share is expected to be between $0.68 and $0.72 based on 34.1 million weighted-average shares outstanding. The company has not reconciled non-GAAP guidance to GAAP because certain items are not within its control or cannot be reasonably predicted. Bruce Felt is transitioning out as CFO. He will remain in the role until a successor is named. Domo has started an executive search with Heidrick Struggles. Felt is on the search team and is committed to a seamless transition. The CFO change adds an execution risk while the company works through a sales realignment.
Management expects the revenue growth rate to decline in the near term, especially in the enterprise market. The decline is tied to lower sales capacity after higher turnover among sales representatives. New sales representatives take about six to nine months on average to reach full selling capacity. Domo is realigning its sales team toward the corporate market and executing a cost reduction plan across all functions. The company expects this plan to improve margins, sustain positive cash flow, and support efficient long-term growth. Macroeconomic conditions and high inflation may cause customers to reduce or delay technology spending. Some customers may seek concessions such as longer payment terms or shorter contract lengths. The COVID-19 pandemic continues to create uncertainty for customers in travel and hospitality, sports and leisure, and retail. Domo has incurred significant net losses since inception and expects losses for the foreseeable future. It may not achieve or sustain profitability. The credit facility was fully drawn as of October 31, 2022, and the interest rate was approximately 9.3%. The company was in compliance with the covenant terms of the credit facility at January 31, 2022 and October 31, 2022. The combination of a fully drawn credit facility, a wide net loss, and slowing growth leaves little room for error.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2023 | Q2 FY2023 | QoQ | Q3 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $79.0M | $75.5M | +4.6% | $65.1M | +21.4% |
| Gross profit | $60.1M | $57.2M | +5.1% | $47.9M | +25.4% |
| Gross margin | 76.1% | 75.8% | +0.3 pp | 73.7% | +2.4 pp |
| Research & development | $24.6M | $25.3M | -3.0% | $22.0M | +11.8% |
| Sales & marketing | $41.0M | $44.7M | -8.3% | $37.5M | +9.4% |
| General & administrative | $13.0M | $12.8M | +1.6% | $13.4M | -3.0% |
| Total operating expenses | $78.6M | $82.9M | -5.1% | $72.9M | +7.8% |
| Operating income (loss) | -$18.5M | -$25.6M | +27.8% | -$25.0M | +25.9% |
| Operating margin | -23.4% | -34.0% | +10.5 pp | -38.4% | +15.0 pp |
| Net income (loss) | -$23.7M | -$29.1M | +18.6% | -$28.5M | +16.8% |
| Net margin | -30.0% | -38.6% | +8.6 pp | -43.8% | +13.8 pp |
| Diluted EPS | -$0.69 | -$0.86 | +$0.17 | — | — |
Risks
The MD&A states the company expects its revenue growth rate to decline in the near term, particularly within its enterprise market, due to decreased sales capacity as a result of recent higher turnover with sales representatives. It also notes newly hired sales representatives take approximately six to nine months to ramp to full selling capacity and that realigning the sales force toward the corporate market may adversely impact productivity in the near term.
The filing cites ongoing macroeconomic uncertainty, historically elevated U.S. inflation, recession risk, and a labor shortage with escalating wages. These conditions may cause customers to reduce or delay technology spending, seek payment or contract concessions, or lengthen sales cycles, and may increase Domo's operating costs without a corresponding ability to raise prices.
A majority of annual recurring revenue is up for renewal during the fiscal year ending January 31, 2023. Gross retention was 90% and 91% for the 12 months ended October 31, 2021 and 2022, respectively, and any failure to renew or reduced spending by renewing customers would cause revenue to decline.
As of October 31, 2022, accumulated deficit was $1,310.2 million and net loss widened to $85.7 million for the nine months ended October 31, 2022 from $68.9 million in the prior-year period. Operating cash flow was down, with cash used in operating activities of $8.1 million for the nine months ended October 31, 2022 versus $0.5 million in the prior-year period, and the $100 million credit facility was fully drawn with no amounts available to draw.
Domo's Mr. Roboto uses machine learning algorithms, predictive analytics, and other artificial intelligence technologies. Risk factors warn that AI algorithms may be flawed, datasets may be insufficient or contain biased information, and inappropriate or controversial data practices could impair acceptance and subject the company to competitive harm, legal liability, and brand or reputational harm.
A securities class-action complaint is pending against Domo and certain current and former directors and officers, asserting violations of federal securities laws and seeking unspecified damages. The outcome is uncertain and could be expensive, divert management attention, and adversely affect operating results or cash flows.
In March 2022, Joshua G. James resigned as chairman and executive officer and John Mellor was appointed chief executive officer. Risk factors state that management turnover creates uncertainty, can cause loss of institutional knowledge, and may negatively affect strategy and execution, and that additional management turnover could be difficult to address given high competition for top management.
Joshua G. James, founder and former chief executive officer, beneficially controlled approximately 81.0% of the voting power of outstanding capital stock as of October 31, 2022 through Class A shares held by Cocolalla, LLC. He has pledged all such shares to secure a loan, and if those shares were sold or otherwise transferred upon default, the market price of Class B common stock could decline or be volatile.
SaaS KPIs
All quarters →Total Customers
Billings
Remaining Performance Obligations (RPO)
Non-GAAP Subscription Gross Margin
Adjusted Free Cash Flow
Current Remaining Performance Obligations (cRPO)
Non-GAAP Operating Margin
Customer count growth (YoY)
Customers under multi-year contracts (dollar-weighted)
Summary, forecast, risks and KPIs are extracted from Huckleberry.ai, Inc.'s SEC filings for Q3 FY2023 (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 1, 2026.