Summary
Domo reported fiscal 2023 fourth quarter revenue of $79.6 million, up 13.8% from the prior-year quarter. Full year revenue reached $308.6 million, up 19.6%. The top line held up even as billings slipped. Fourth quarter billings were $104.5 million, down 3% year over year, while full year billings were $323.8 million, up 9%. Remaining performance obligations were $378.2 million as of January 31, 2023, up 12% year over year, and $243.8 million of that is expected to be recognized as revenue in the next 12 months, up 10%.
Gross margin expanded. Fourth quarter gross margin was 77.2%, up 3.6 percentage points, and full year gross margin was 76.3%, up 2.4 percentage points. Gross profit was $61.4 million in the quarter, up 19.4%, and $235.6 million for the full year, up 23.5%. The company continued to show operating leverage. Fourth quarter operating loss was $16.1 million, a narrowed loss from the prior-year quarter, and operating margin was negative 20.2%, up 22.6 percentage points. Full year operating loss was $88.9 million, essentially flat versus the prior year, with operating margin of negative 28.8%, up 5.5 percentage points. Net loss was $19.8 million in the fourth quarter, a narrowed loss, and $105.6 million for the full year, a widened loss of 3.4%. Full year diluted EPS was negative $3.10, up $0.09.
Cash flow weakened. Operating cash flow was negative $2.8 million in the fourth quarter, down from the prior-year quarter, and negative $10.9 million for the full year, down year over year. Capital expenditures were $2.9 million in the quarter, up 88.3%, and $8.0 million for the full year, up 22.7%. Deferred revenue ended the year at $185.9 million, up 8.9% from the prior-year quarter. On a non-GAAP basis, fourth quarter net loss was $0.8 million, or $0.02 per share, and full year non-GAAP net loss was $21.6 million, or $0.63 per share. Non-GAAP operating margin improved by 18 percentage points in the quarter and 9 percentage points for the full year.
Customer metrics showed pressure. The ARR net retention rate fell to 101% in the fourth quarter from 110% in the prior-year fourth quarter. Gross retention rate was 89% for the 12 months ended January 31, 2023. Domo had over 2,500 customers, and 65% of customers were under multi-year contracts on a dollar-weighted basis. Management said net retention trended lower because of slowing upsells, while gross retention declined in part because of macroeconomic conditions. The company also cited higher sales representative turnover, an elongated software sales cycle, and increased deal scrutiny.
Leadership changed sharply. John Mellor stepped down as CEO, and founder Josh James returned as CEO. David Jolley was named CFO, succeeding Bruce Felt, and Jeff Skousen was named Chief Revenue Officer, succeeding Ian Tickle. Dan Strong and Renee Soto joined the board, which now has seven directors. The transition comes as Domo guides for slower growth. For the first quarter of fiscal 2024, revenue is expected to be $78.5 million to $79.5 million, and non-GAAP net loss per share is expected to be $0.15 to $0.19 based on 35.3 million weighted-average shares. For the full fiscal year 2024, revenue is expected to be $323.0 million to $330.0 million, and non-GAAP net loss per share is expected to be $0.27 to $0.39 based on 36.2 million weighted-average shares.
Risks remain. Macroeconomic conditions have pressured technology spending, and inflation could raise operating costs. Domo also disclosed that Silicon Valley Bank was closed on March 10, 2023, and that it does not anticipate losses from the closure. The company has a fully drawn credit facility and expects to incur losses for the foreseeable future. It believes existing cash and cash equivalents will be sufficient for at least the next 12 months. The main question is whether the leadership reset and cost controls can stabilize net retention and return the business to positive operating cash flow.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2023 | Q3 FY2023 | QoQ | Q4 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $79.6M | $79.0M | +0.8% | $70.0M | +13.8% |
| Gross profit | $61.4M | $60.1M | +2.2% | $51.5M | +19.4% |
| Gross margin | 77.2% | 76.1% | +1.1 pp | 73.5% | +3.6 pp |
| Research & development | $22.0M | $24.6M | -10.6% | $23.5M | -6.5% |
| Sales & marketing | $42.0M | $41.0M | +2.4% | $39.4M | +6.6% |
| General & administrative | $13.5M | $13.0M | +3.9% | $18.5M | -26.9% |
| Total operating expenses | $77.5M | $78.6M | -1.4% | $81.4M | -4.8% |
| Operating income (loss) | -$16.1M | -$18.5M | +13.1% | -$29.9M | +46.3% |
| Operating margin | -20.2% | -23.4% | +3.2 pp | -42.8% | +22.6 pp |
| Net income (loss) | -$19.8M | -$23.7M | +16.4% | -$33.3M | +40.4% |
| Net margin | -24.9% | -30.0% | +5.1 pp | -47.5% | +22.6 pp |
| Diluted EPS | -$0.58 | -$0.69 | +$0.11 | -$1.04 | +$0.46 |
Risks
MD&A states revenue growth rate is expected to decline in the near term due in part to a macroeconomic environment that has elongated the software sales cycle and increased deal scrutiny. Inflation may raise operating costs and reduce or delay customer technology spend, and customers have pursued concessions such as lengthened payment terms or reduced contract length.
Enterprise sales cycles vary from approximately six months to multiple years, and quarterly sales are weighted toward the last few weeks and days of the quarter. This compression increases the likelihood that large transactions extend beyond the forecasted close, harming forecasting accuracy and billings.
A majority of annual recurring revenue is up for renewal during the fiscal year ending January 31, 2024. ARR net retention rate declined to 101% in Q4 2023, and gross retention rate was 89% for the 12 months ended January 31, 2023, down from 90% in the prior-year period, with slowing upsells and gross retention decline attributed in part to macroeconomic conditions.
Fiscal 2023 saw higher turnover among sales representatives, resulting in decreased sales capacity, and it takes approximately six to nine months for newly hired sales representatives to reach full selling capacity. The company had a record number of sales representatives as of January 31, 2023 but must recruit, train, and retain sufficient direct sales personnel.
Net loss was $105.6 million for the fiscal year ended January 31, 2023, and accumulated deficit was $1,330.0 million at January 31, 2023. Operating cash flow was negative $10.9 million for the fiscal year ended January 31, 2023, down from positive $0.4 million in the prior fiscal year, and the $100 million credit facility was fully drawn with no amounts available to draw.
The risk factors newly detail the Silicon Valley Bank closure, noting the company had approximately $12.4 million in deposit accounts with SVB and an additional $18.3 million subject to SVB sweep account arrangements prior to closure. Although access was regained, uncertainty remains and future bank failures could impair access to cash or financing.
The credit facility is secured by substantially all assets, contains restrictive covenants, and had $100 million fully drawn as of January 31, 2023. The interest rate was approximately 10.3%, and failure to meet financial covenants could cause outstanding principal, interest, and fees to become due immediately.
The market is intensely competitive with large software companies such as Microsoft, Oracle, SAP, and IBM, and analytics providers such as Tableau, Qlik, Looker, Sisense, and Tibco. Competitors may bundle products at significant discounts or no charge, leading to price cuts, longer sales cycles, and loss of market share.
The platform uses machine learning, predictive analytics, and other artificial intelligence technologies, and AI algorithms may be flawed or datasets may be insufficient or biased. Inappropriate data practices could impair acceptance, and deficiencies could undermine decisions, predictions, or analysis and subject the company to competitive harm, legal liability, and reputational harm.
Founder and CEO Joshua G. James beneficially controlled approximately 81% of voting power as of January 31, 2023 and has pledged Class A shares to secure a loan. If shares are sold or transferred upon default, the market price of Class B common stock could decline or be volatile.
The company is subject to complex multinational tax rules, sales, use, and VAT tax collection uncertainty, and net operating loss limitations. As of January 31, 2023, federal NOL carryforwards were approximately $1,166.2 million and state NOLs were $1,344.7 million, which may expire or be limited by ownership changes.
A securities class-action complaint is pending against the company and certain current and former directors and officers, asserting violations of federal securities laws and seeking unspecified damages. Defense is expensive and could divert management attention.
SaaS KPIs
All quarters →Total Customers
Remaining Performance Obligations (RPO)
Current Remaining Performance Obligations (cRPO)
Summary, forecast, risks and KPIs are extracted from Huckleberry.ai, Inc.'s SEC filings for Q4 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 2, 2026.