Domo, Inc., a cloud-based business intelligence software provider, offers a comprehensive platform that integrates various functionalities, including data warehousing, analytics, visualization, and more.
The company, which emphasizes a subscription-based revenue model, is transitioning towards a consumption-based model to potentially enhance customer sales. With over 2,500 clients, Domo is headquartered in American Fork, UT, and has a market capitalization of around $400 million.
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Recent Financial Performance
In its third-quarter report released on November 30th, Domo announced nearly unchanged earnings with a slight 1% increase in sales, reaching $79.7 million.
Subscription fees, contributing $71.3 million, saw a 3% rise from the previous year. The company’s Remaining Performance Obligations (RPO) also saw a 4% increase, totaling $367.2 million.
Despite a stable GAAP gross subscription margin of 84%, Domo reported a net loss of $16.4 million, or 45 cents per share. The company has projected a non-GAAP net loss of 24 to 28 cents for the 2024 fiscal year, with revenue expectations between $317.8 million and $318.8 million.
Industry Analysts and Insider Activity
Post-Q3 earnings, several analysts have shared their perspectives on Domo. Lake Street and JMP Securities have reiterated their Buy ratings, with price targets of $17 and $23, respectively.
Meanwhile, TD Cowen, D.A. Davidson, and Morgan Stanley have maintained Hold ratings. Notably, insiders, including the CEO, purchased around $10 million worth of shares in 2023, primarily in the first half of the year, with no insider transactions reported in 2024.
Financial Health and Market Position
As of the third quarter’s end, Domo’s cash reserves stood at $57.4 million, with $4.3 million used in operating activities.
The company reported $108 million in long-term debt. While Domo is making strides in reducing losses—from 61 cents per share in FY2023 to an anticipated quarter per share in FY2024—the company faces challenges in accelerating sales growth.
Competing against giants like Microsoft, Domo’s focus on business intelligence may not align with current corporate priorities, which are leaning more toward AI and other technologies.
Outlook and Recommendation
Domo’s efforts to narrow its losses are commendable, but the company appears to be in a state of limbo with limited prospects for significant sales growth.
The balance sheet is satisfactory, and insider purchases in 2023 signal confidence in the company’s future.
However, with continued losses expected in the upcoming year and a lack of immediate catalysts, it may be prudent to adopt a wait-and-see approach.
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Kris is a finance consultant, content marketer, and speaker specializing in helping brands and business owners navigate complex concepts and decisions. Since earning her Finance and Accounting degree, Kris has spent over half a decade writing about financial and technological concerns of brands spanning different life cycles.
