Domo Inc ((DOMO)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Domo Inc’s recent earnings call painted a largely positive picture of the company’s financial health and strategic direction. The call was marked by several record-breaking achievements, including the company’s first-ever positive non-GAAP EPS and strong revenue and billings performance. These accomplishments, coupled with accelerated new ACV growth and increased sales force productivity, underscore Domo’s robust momentum. However, the company also faces challenges, such as stagnant gross retention rates and potential temporary impacts on margins due to increased partner investments.
Record First-Ever Positive Non-GAAP EPS
Domo celebrated a significant milestone by reporting its first-ever positive non-GAAP EPS. This achievement marks a pivotal moment in the company’s financial journey, reflecting its improved operational efficiency and financial management.
Strong Revenue and Billings Performance
The company reported total revenue of $79.7 million and billings of $70.3 million, both figures exceeding guidance. This strong financial performance highlights Domo’s ability to execute its business strategy effectively and deliver value to its stakeholders.
New ACV Growth Acceleration
Domo’s new ACV growth accelerated every quarter, reaching nearly 20% in Q2 FY ’26. This represents the highest growth rate in 3.5 years, indicating a strong demand for Domo’s offerings and successful customer acquisition strategies.
Sales Force Productivity Surge
The company reported a remarkable year-over-year sales force productivity growth, which surged from 19% in Q3 FY ’25 to 67% in Q2 FY ’26. This increase demonstrates the effectiveness of Domo’s sales strategies and its ability to leverage its sales force to drive growth.
International Momentum in Japan
Domo’s international operations, particularly in Japan, showed impressive results. New ACV nearly doubled year-over-year, and TCV hit all-time highs, showcasing the company’s successful expansion and market penetration efforts in this region.
Increased Partner Ecosystem and Integrations
The company has strengthened its partner ecosystem with deeper integrations into major platforms like Snowflake, Databricks, Oracle, and Google. These partnerships are expected to enhance Domo’s offerings and expand its market reach.
Recognition and Awards
Domo was recognized as a leader in multiple industry reports and received several awards for its technology and workplace environment. These accolades reinforce the company’s reputation as an innovator and a desirable workplace.
Gross Retention Rate Stagnation
Despite the positive developments, Domo’s gross retention rate remained stagnant at 85% for the past five quarters. The company anticipates improvements in this area by Q4, indicating ongoing efforts to enhance customer retention.
Temporary Margin Impact Due to Partner Investments
Domo plans to make upcoming investments to support and strengthen partner relationships, which may temporarily affect operating margins. This strategic move is aimed at long-term growth and solidifying its partner network.
Forward-Looking Guidance
Looking ahead, Domo provided optimistic guidance, exceeding its expectations on several key metrics. The company highlighted the success of its consumption-based model, with over 75% of its ARR now on consumption contracts. Domo’s strategic focus on AI-driven solutions and partner ecosystem expansion, particularly with cloud data warehouse partners, is expected to drive future growth. For Q3, the company anticipates billings between $75.5 million and $76.5 million, with full-year billings projected to reach $317 million to $321 million.
In summary, Domo Inc’s earnings call reflected a positive sentiment, driven by record-breaking achievements and strategic advancements. While challenges such as stagnant retention rates and potential margin impacts exist, the company’s forward-looking guidance and strategic focus on partnerships and AI-driven solutions position it well for future growth.