Domo Announces Second Quarter Fiscal 2023 Financial Results

SILICON SLOPES, Utah--(BUSINESS WIRE)--Domo, Inc. (Nasdaq: DOMO) today announced results for its fiscal second quarter ended July 31, 2022.

Fiscal Second Quarter Results

• Total revenue was $75.5 million, an increase of 20% year over year
• Subscription revenue was $67.4 million, an increase of 23% year over year
• Subscription revenue represented 89% of total revenue
• Billings were $72.3 million or 21% year-over-year growth
• Remaining Performance Obligations (RPO) was $349.1 million as of July 31, 2022, an increase of 22% year over year
• RPO expected to be recognized as revenue in the next twelve months was $225.3 million as of July 31, 2022, an increase of 23% year over year
• Net cash used in operating activities was $2.4 million
• GAAP subscription gross margin was 84%, an improvement of 2 percentage points from Q2 FY22
• Non-GAAP subscription gross margin was 85%, an improvement of 3 percentage points from Q2 FY22
• GAAP operating margin declined by 4 percentage points year over year
• Non-GAAP operating margin increased by 3 percentage points year over year
• GAAP net loss was $29.1 million, and GAAP net loss per share was $0.86, based on 34.0 million weighted-average shares outstanding
• Non-GAAP net loss was $8.7 million, and non-GAAP net loss per share was $0.26, based on 34.0 million weighted-average shares outstanding
• Cash and cash equivalents were $79.9 million as of July 31, 2022

"Domo is helping companies of all sizes leverage data across their organizations to increase revenue, improve efficiencies and drive better business outcomes — all at incredible speed," said John Mellor, CEO, Domo. "We continue to optimize for long-term, sustainable growth, as we deliver speed-to-value to line-of-business decision makers and support our customers' success."

Recent Highlights

We believe the following announcements and recognition demonstrate our commitment to product innovation and customer value:

• Domo was named in the Leaders category in the 2022 IDC MarketScape for U.S. business intelligence and analytics (BIA) platforms for its speed to deployment, collaboration functionality and self-service analytics capabilities.
• Domo was also named a Leader in Nucleus Research's 2022 Analytics Technology Value Matrix for the second consecutive year, recognized for its integration development tools and enhancement of its multi-cloud capabilities.
• Domo announced it has been named an Overall Leader in the Business Intelligence (BI) category of the Dresner Advisory Services' 2022 Wisdom of Crowds® Industry Excellence Awards for the sixth consecutive year. In addition, Domo was named an overall leader and received its sixth consecutive perfect recommendation score in the 2022 Dresner Wisdom of Crowds® BI Market Study.
• Domo achieved HITRUST Risk-based, 2-year Certification, passing rigorous third-party security review and validating its commitment to managing risk, improving security posture and meeting compliance requirements.
• Domo was named to the 2022 Parity.Org Best Companies for Women to Advance^TM List for the third consecutive year.

Business Outlook

Based on information available as of August 25, 2022, Domo is providing the following guidance for its third fiscal quarter and full year fiscal 2023:

Q3 Fiscal 2023

• Revenue is expected to be in the range of $76.0 million to $77.0 million
• Non-GAAP net loss per share is expected to be between $0.23 and $0.27 based on 34.4 million weighted-average shares outstanding

Full Year Fiscal 2023

• Revenue is expected to be in the range of $305.0 million to $310.0 million
• Non-GAAP net loss per share is expected to be between $0.88 and $0.96 based on 34.1 million weighted-average shares outstanding

We have not reconciled guidance for non-GAAP metrics to their most directly comparable GAAP measures because such items that impact these measures are not within our control or cannot be reasonably predicted.

Earnings Call Details

Domo plans to host a conference call today to review its fiscal 2023 second quarter financial results and to discuss its financial outlook. The call is scheduled to begin at 3:00 p.m. MT/ 5:00 p.m. ET. A live webcast of the event will be available on the Domo Investor Relations website at https://www.domo.com/ir. Participants can register for the call in advance by visiting https://conferencingportals.com/event/zYvDlnjs. Instructions will be shared on how to join the call after registering.

A replay will be available at [phone] or [phone] with conference ID #41576 following the completion of the conference call until 11:59 p.m. (ET) September 8, 2022.

About Domo

Domo transforms business by putting data to work for everyone. Domo's low-code data app platform goes beyond traditional business intelligence and analytics to enable anyone to create data apps to power any action in their business, right where work gets done. With Domo's fully integrated cloud-native platform, critical business processes can now be optimized in days instead of months or more. For more information, visit www.domo.com. You can also follow Domo on Twitter, Facebook and LinkedIn.

Domo Disclosure Channels to Disseminate Information

Domo investors and others should note that we announce material information to the public about our company, products and services, and other issues through a variety of means, including Domo's website, press releases, SEC filings, blogs and social media, in order to achieve broad, non-exclusionary distribution of information to the public. We intend to use the Domo Facebook page, the Domo LinkedIn page, the Domo blog, the @Domotalk Twitter account as a means of disclosing information about the Company and its services and for complying with the disclosure obligations under Regulation FD. The information we post through these social media channels may be deemed material. Accordingly, we encourage investors and others to monitor these social media channels in addition to following our press releases, SEC filings and public conference calls and webcasts. The social media channels that we intend to use as a means of disclosing the information described here may be updated from time to time as listed on our investor relations webpage.

Use of Non-GAAP Financial Measures

To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with Generally Accepted Accounting Principles in the United States of America (GAAP), we reference in this press release and the accompanying tables the following non-GAAP financial measures: billings, non-GAAP subscription gross margin, non-GAAP operating expenses, non-GAAP operating loss, non-GAAP operating margin, non-GAAP net loss, non-GAAP net loss per share, and adjusted free cash flow. In computing these measures, we exclude the effects of certain items including stock-based compensation expense, amortization of certain intangible assets, the reversal of contingent tax-related accruals and proceeds from shares issued in connection with employee stock purchase plan.

As it relates to adjusted free cash flow, we add back amounts equal to the proceeds from shares issued in connection with employee stock purchase plan to reflect the non-cash nature of these transactions. Because no cash is exchanged in these transactions, showing proceeds in the financing section of the statement of cash flows as required by GAAP results in a corresponding decrease in the operating section, which management believes is not indicative of actual cash used in or provided by our operations. We believe that this non-GAAP cash metric is useful because it provides investors with the same information that management uses to consistently evaluate, forecast and measure the Company's actual cash flows and its ability to achieve and maintain positive cash flows.

We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain expenses that may not be indicative of our ongoing core business operating results. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when analyzing historical performance and liquidity and planning, forecasting, and analyzing future periods.

For a reconciliation of these non-GAAP financial measures to GAAP measures, please see the tables captioned "Reconciliation of Non-GAAP Financial Measures" included at the end of this release.

Forward-Looking Statements

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding our future growth, demand for our products and services, our financial outlook for our third fiscal quarter and full fiscal year 2023, and results for future periods. Forward-looking statements are subject to risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance. The potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, those risks and uncertainties included under the caption "Risk Factors" and elsewhere in our filings with the U.S. Securities and Exchange Commission, including, without limitation, the Annual Report on Form 10-K filed with the SEC on April 1, 2021 and the Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2022 expected to be filed with the SEC on or about September 9, 2022. All information provided in this release and in the attachments is as of the date hereof, and we undertake no duty to update this information unless required by law.

Domo is a registered trademark of Domo, Inc.

Domo, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
		Three Months Ended								Six Months Ended
		July 31,								July 31,
		2021				2022				2021				2022
Revenue:
Subscription		$	54,666			$	67,406			$	106,778			$	131,981
Professional services and other			8,159				8,125				16,109				18,014
Total revenue			62,825				75,531				122,887				149,995
Cost of revenue:
Subscription (1)			10,019				10,712				19,076				21,379
Professional services and other (1)			6,299				7,601				12,400				14,595
Total cost of revenue			16,318				18,313				31,476				35,974
Gross profit			46,507				57,218				91,411				114,021
Operating expenses:
Sales and marketing (1)			33,378				44,700				66,832				90,287
Research and development (1)			19,341				25,334				35,527				48,525
General and administrative (1), (2)			12,384				12,825				22,602				29,485
Total operating expenses			65,103				82,859				124,961				168,297
Loss from operations			(18,596	)			(25,641	)			(33,550	)			(54,276	)
Other expense, net (1)			(3,505	)			(3,286	)			(6,767	)			(7,351	)
Loss before income taxes			(22,101	)			(28,927	)			(40,317	)			(61,627	)
Provision for income taxes			139				212				27				400
Net loss		$	(22,240	)		$	(29,139	)		$	(40,344	)		$	(62,027	)
Net loss per share (basic and diluted)		$	(0.70	)		$	(0.86	)		$	(1.28	)		$	(1.84	)
Weighted-average number of shares (basic and diluted)			31,883				33,973				31,451				33,640
(1) Includes stock-based compensation expenses, as follows:
Cost of revenue:
Subscription		$	549			$	778			$	968			$	1,509
Professional services and other			271				563				605				1,031
Sales and marketing			4,747				7,873				8,474				15,948
Research and development			2,751				6,283				5,240				13,287
General and administrative			4,137				4,707				7,053				13,512
Other expense, net			171				189				348				370
Total stock-based compensation expenses		$	12,626			$	20,393			$	22,688			$	45,657
(2) Includes amortization of certain intangible assets, as follows:
General and administrative		$	20			$	20			$	40			$	40

Domo, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
		January 31,				July 31,
		2022				2022
Assets
Current assets:
Cash and cash equivalents		$	83,561			$	79,894
Accounts receivable, net			64,149				49,148
Contract acquisition costs			15,417				15,099
Prepaid expenses and other current assets			9,975				9,205
Total current assets			173,102				153,346
Property and equipment, net			17,584				18,884
Right-of-use assets			16,392				16,082
Contract acquisition costs, noncurrent			23,177				21,693
Intangible assets, net			2,875				2,835
Goodwill			9,478				9,478
Other assets			1,981				1,688
Total assets		$	244,589			$	224,006
Liabilities and stockholders' deficit
Current liabilities:
Accounts payable		$	4,770			$	17,556
Accrued expenses and other current liabilities			59,976				43,357
Lease liabilities			3,439				4,225
Current portion of deferred revenue			168,335				163,454
Total current liabilities			236,520				228,592
Lease liabilities, noncurrent			16,757				16,063
Deferred revenue, noncurrent			2,420				2,560
Other liabilities, noncurrent			10,882				11,486
Long-term debt			103,988				106,251
Total liabilities			370,567				364,952
Commitments and contingencies
Stockholders' deficit:
Common stock			33				34
Additional paid-in capital			1,098,084				1,146,231
Accumulated other comprehensive income			388				(701	)
Accumulated deficit			(1,224,483	)			(1,286,510	)
Total stockholders' deficit			(125,978	)			(140,946	)
Total liabilities and stockholders' deficit		$	244,589			$	224,006

Domo, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
		Three Months Ended								Six Months Ended
		July 31,								July 31,
		2021				2022				2021				2022
Cash flows from operating activities
Net loss		$	(22,240	)		$	(29,139	)		$	(40,344	)		$	(62,027	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization			1,228				1,213				2,256				2,820
Non-cash lease expense			1,373				1,177				2,316				2,375
Amortization of contract acquisition costs			3,932				4,266				7,835				8,578
Stock-based compensation			12,626				20,393				22,688				45,657
Other, net			921				972				1,786				1,892
Changes in operating assets and liabilities:
Accounts receivable, net			1,852				(2,514	)			17,123				15,001
Contract acquisition costs			(3,753	)			(4,079	)			(7,365	)			(7,282	)
Prepaid expenses and other assets			1,774				6,584				4,285				781
Accounts payable			2,930				4,822				6,313				12,907
Operating lease liabilities			(631	)			(1,637	)			(1,711	)			(2,139	)
Accrued and other liabilities			4,976				(1,213	)			(11,103	)			(15,399	)
Deferred revenue			(2,819	)			(3,203	)			(4,638	)			(4,741	)
Net cash provided by (used in) operating activities			2,169				(2,358	)			(559	)			(1,577	)
Cash flows from investing activities
Purchases of property and equipment			(1,640	)			(1,479	)			(3,418	)			(3,416	)
Net cash used in investing activities			(1,640	)			(1,479	)			(3,418	)			(3,416	)
Cash flows from financing activities
Proceeds from shares issued in connection with employee stock purchase plan			-				-				4,133				1,563
Shares repurchased for tax withholdings on vesting of restricted stock			(1,334	)			-				(7,578	)			-
Proceeds from exercise of stock options			2,509				81				3,163				805
Net cash provided by (used in) financing activities			1,175				81				(282	)			2,368
Effect of exchange rate changes on cash and cash equivalents			(157	)			(345	)			(162	)			(1,042	)
Net increase (decrease) in cash and cash equivalents			1,547				(4,101	)			(4,421	)			(3,667	)
Cash and cash equivalents at beginning of period			84,826				83,995				90,794				83,561
Cash and cash equivalents at end of period		$	86,373			$	79,894			$	86,373			$	79,894

Domo, Inc.
Reconciliation of Non-GAAP Financial Measures
(in thousands, except per share data)
(unaudited)
		Three Months Ended								Six Months Ended
		July 31,								July 31,
		2021				2022				2021				2022
Reconciliation of Subscription Gross Margin on a GAAP Basis to Subscription Gross Margin on a Non-GAAP Basis:
Revenue:
Subscription		$	54,666			$	67,406			$	106,778			$	131,981
Cost of revenue:
Subscription			10,019				10,712				19,076				21,379
Subscription gross profit on a GAAP basis			44,647				56,694				87,702				110,602
Subscription gross margin on a GAAP basis			82	%			84	%			82	%			84	%
Stock-based compensation			549				778				968				1,509
Subscription gross profit on a non-GAAP basis		$	45,196			$	57,472			$	88,670			$	112,111
Subscription gross margin on a non-GAAP basis			83	%			85	%			83	%			85	%
Reconciliation of Total Operating Expenses on a GAAP Basis to Total Operating Expenses on a Non-GAAP Basis:
Total operating expenses on a GAAP basis		$	65,103			$	82,859			$	124,961			$	168,297
Stock-based compensation			(11,635	)			(18,863	)			(20,767	)			(42,747	)
Amortization of certain intangible assets			(20	)			(20	)			(40	)			(40	)
Total operating expenses on a non-GAAP basis		$	53,448			$	63,976			$	104,154			$	125,510
Reconciliation of Operating Loss on a GAAP Basis to Operating Loss on a Non-GAAP Basis:
Operating loss on a GAAP basis		$	(18,596	)		$	(25,641	)		$	(33,550	)		$	(54,276	)
Stock-based compensation			12,455				20,204				22,340				45,287
Amortization of certain intangible assets			20				20				40				40
Operating loss on a non-GAAP basis		$	(6,121	)		$	(5,417	)		$	(11,170	)		$	(8,949	)
Reconciliation of Operating Margin on a GAAP Basis to Operating Margin on a Non-GAAP Basis:
Operating margin on a GAAP basis			(30	)%			(34	)%			(27	)%			(36	)%
Stock-based compensation			20				27				18				30
Operating margin on a non-GAAP basis			(10	)%			(7	)%			(9	)%			(6	)%
Reconciliation of Net Loss on a GAAP Basis to Net Loss on a Non-GAAP Basis:
Net loss on a GAAP basis		$	(22,240	)		$	(29,139	)		$	(40,344	)		$	(62,027	)
Stock-based compensation			12,626				20,393				22,688				45,657
Amortization of certain intangible assets			20				20				40				40
Net loss on a non-GAAP basis		$	(9,594	)		$	(8,726	)		$	(17,616	)		$	(16,330	)
Reconciliation of Net Loss per Share on a GAAP Basis to Net Loss per Share on a Non-GAAP Basis:
Net loss per share on a GAAP basis		$	(0.70	)		$	(0.86	)		$	(1.28	)		$	(1.84	)
Stock-based compensation			0.40				0.60				0.72				1.35
Net loss per share on a non-GAAP basis		$	(0.30	)		$	(0.26	)		$	(0.56	)		$	(0.49	)
Billings:
Total revenue		$	62,825			$	75,531			$	122,887			$	149,995
Add:
Deferred revenue (end of period)			126,381				163,454				126,381				163,454
Deferred revenue, noncurrent (end of period)			1,233				2,560				1,233				2,560
Less:
Deferred revenue (beginning of period)			(128,510	)			(167,091	)			(129,079	)			(168,335	)
Deferred revenue, noncurrent (beginning of period)			(1,923	)			(2,126	)			(3,173	)			(2,420	)
Increase in deferred revenue (current and noncurrent)			(2,819	)			(3,203	)			(4,638	)			(4,741	)
Billings		$	60,006			$	72,328			$	118,249			$	145,254
Reconciliation of Net Cash Provided by (Used in) Operating Activities to Adjusted Free Cash Flow:
Net cash provided by (used in) operating activities		$	2,169			$	(2,358	)		$	(559	)		$	(1,577	)
Proceeds from shares issued in connection with employee stock purchase plan			-				-				4,133				1,563
Purchases of property and equipment			(1,640	)			(1,479	)			(3,418	)			(3,416	)
Adjusted free cash flow		$	529			$	(3,837	)		$	156			$	(3,430	)

 

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