Domo (DOMO) Q2 FY25 Earnings call transcript Aug 29, 2024

Domo, a leading data analytics company, recently held its Q2 Fiscal Year 2025 earnings call, providing insights into its financial performance and strategic initiatives. The call, led by CEO Josh James, CFO David Jolley, and Vice President of Investor Relations Peter Lowry, highlighted several key themes and trends that underscore the company's current position and future growth prospects.

Financial Performance and Strategic Initiatives

Domo reported a slightly lower revenue of $78.4 million, down 2% year-over-year. However, the company's subscription revenue remained stable, representing 90% of total revenue. The quarter saw significant progress in retention, with gross retention bouncing back to 88% at the high end of guidance. This improvement is a critical milestone for the company, signaling a turnaround in its customer retention efforts.

One of the most notable strategic initiatives is Domo's shift towards consumption-based pricing. This move aligns with the company's goal of capitalizing on the partner opportunity and driving expansion with existing customers. The consumption model, which allows customers to explore Domo's products with minimal upfront cost, has been instrumental in facilitating global rollouts and enhancing customer adoption.

Partnerships and Ecosystem Strategy

A significant highlight of the call was the company's partnership strategy, particularly its advancements with cloud-based data warehouses (CDWs). Domo's ability to seamlessly integrate with these CDWs has positioned it as a strategic partner rather than a competitor. This approach has opened up new channels of growth and revenue opportunities, as evidenced by the increase in joint deals in the pipeline with CDW partners.

Domo's strong partnership with Snowflake was showcased as a success story, with the company successfully re-entering a deal after being initially ruled out. This strategic partnership is expected to yield substantial results, with several other partnerships in advanced stages of negotiation.

Future Outlook and Challenges

Looking ahead, Domo is optimistic about its future growth prospects, driven by its strategic partnerships and consumption-based pricing model. The company aims to increase its customer base and expand its market share, leveraging the power of its ecosystem. However, it faces challenges related to managing costs and maintaining profitability while pursuing these strategic initiatives.

Executive Changes

The call also marked the announcement of David Jolley's transition to a senior adviser role, with Tod Crane assuming the CFO position. Jolley's decision to step down was attributed to health issues, but his continued involvement in an advisory role underscores the company's commitment to his expertise and contributions.

Conclusion

Overall, Domo's Q2 Fiscal Year 2025 earnings call painted a picture of a company on the cusp of significant growth. With a strategic focus on partnerships, consumption-based pricing, and a robust data analytics platform, Domo is well-positioned to capitalize on the evolving data analytics market. However, the company must navigate challenges related to cost management and profitability to achieve its growth objectives.