Domo's Q2 2026 Earnings Call: Contradictions Emerge on Partnerships, Snowflake Event Impact, and Consumption Model Effectiveness

The above is the analysis of the conflicting points in this earnings call

Date of Call: None provided

Financials Results

• Revenue: $79.7M; exceeded guidance
• EPS: $0.02 non-GAAP diluted EPS; first-ever positive non-GAAP EPS
• Gross Margin: Subscription gross margin 81.9%, second consecutive quarter of sequential improvement
• Operating Margin: 7.7%, highest in company history; expected to be temporarily lower in Q3 due to partner event investments

Guidance:

• Q3: billings $75.5–$76.5M; GAAP revenue $78.5–$79.5M; non-GAAP net loss/share $0.03–$0.07; adjusted FCF slightly positive; operating margin to dip due to partner events.
• FY26: billings $317–$321M; GAAP revenue $316–$320M; non-GAAP net loss/share $0.11–$0.19; positive adjusted FCF for the year.
• Exit FY26 targets raised: billings growth 6% and non-GAAP operating margin 6%; aiming for 10%/10% by exit FY27.
• Gross retention ~flat in Q3, up meaningfully in Q4; subscription gross margin stable near term, expanding over time.
• ARR under consumption >85% by year-end (approaching 90%).

Business Commentary:

• Revenue and Billings Growth:
• Domo reported total revenue of $79.7 million and billings of $70.3 million for Q2, exceeding its guidance.

• Growth was driven by strong sales force productivity and an uptick in new ACV.

• Positive Financial Performance:

• Domo delivered its first positive non-GAAP EPS and maintained positive free cash flow for Q2.

• This was attributed to disciplined financial execution, aligned investments with strategic priorities, and improved gross retention.

• Consumption Model Transition:

• Over 75% of Domo's ARR is now under the consumption model, with a 108% net retention rate for customers who initially purchased through this model.

• The shift to consumption contracts resulted in increased flexibility and ease of expansion for customers, leading to higher retention rates.

• International Expansion:

• Japan, in particular, saw significant growth with new ACV doubling year-over-year and a net retention rate of nearly 130%.
• Enhancements in partner integrations, such as with Snowflake and Databricks, contributed to increased leads and successful customer wins.

Sentiment Analysis:

• We beat our guidance on billings, revenue and delivered our first ever positive non-GAAP EPS while generating positive free cash flow. Operating margin was 7.7%, the highest in company history. We raised guidance for billings, revenue and non-GAAP net loss per share. ARR net retention was over 94%, up sequentially for the fourth straight quarter. Subscription gross margin rose to 81.9%.

Q&A:

• Question from Gerrick Wood (TD Cowen): How did Snowflake/Databricks events and the Snowflake GTM affect Q2 closes vs pipeline, and how do you expect conversion through H2?
  Response: Events produced thousands of leads; CDW-sourced deals moved into later stages with higher close rates and should begin impacting results in Q3 as partner-led opportunities convert.

• Question from Gerrick Wood (TD Cowen): Clarify the 108% NRR cohort and timing of consumption credit rebuys after migrations.
  Response: 108% NRR reflects customers that initially purchased on consumption; consumption boosts gross/net retention and expansion (incl. marketplace buys), with gross retention improving meaningfully starting in Q4.

• Question from Brett Huff (Stephens): What use cases are driving NRR—single big use case or broader—and implications for wall-to-wall?
  Response: Broader multi-use-case adoption, deeper technical engagement, and joint selling with CDWs are expanding into IT and lifting NRR toward wall-to-wall deployments.

• Question from Brett Huff (Stephens): What assumptions underpin the raised 6% exit billings growth and operating margin?
  Response: Leverage from focused investment in AI, partners, and consumption plus disciplined resource allocation drives efficiency to support the 6%/6% exit targets.

• Question from Kincaid (Citizens Bank): Beyond Japan, which regions and verticals are performing well internationally?
  Response: Japan is outsized with high retention; EMEA is broad-based and APAC has strong pockets; demand spans industrials, energy, tech, and retail.

• Question from Kincaid (Citizens Bank): Are new verticals/customers opening under consumption that weren’t accessible with seat-based pricing?
  Response: Consumption removes license friction, enabling wall-to-wall scale and exposing integration/ETL and AI/agentic capabilities that unlock new buyers and use cases.

• Question from Yi Fi Li (Cantor Fitzgerald): Color on AWS collaboration and Google BigQuery enhancements and the size of those opportunities.
  Response: Marketplace alignment with AWS/GCP and CDWs is a major unlock—retiring committed spend and wrapping multiple backends—expanding pipeline and partner-led deal flow.

• Question from Yi Fi Li (Cantor Fitzgerald): Could hyperscaler partnerships eclipse CDWs?
  Response: Domo will lean where partners lean, but currently CDWs are ramping faster as they sell solutions that align tightly with Domo’s strengths.

• Question from Yi Fi Li (Cantor Fitzgerald): When should higher top-line growth emerge as the consumption cohort scales?
  Response: Expect growth tailwinds from improving gross retention (multiyear/marketplace/consumption) beginning in Q4 and from new ACV via partners and AI infrastructure demand.

• Question from Matt Mihalis (Lake Street Capital Markets): Differences in buying behavior between large enterprises and SMBs?
  Response: Enterprises prioritize IT‑blessed, partner-aligned stacks; marketplaces and CDW/hyperscaler alignment speed approvals and shorten sales cycles.