Domo Announces Fiscal 2019 Second Quarter Financial Results

 

 

32% Year-Over-Year Growth in Total Revenue

35% Year-Over-Year Growth in Total Billings

SILICON SLOPES, Utah, Sept. 06, 2018 (GLOBE NEWSWIRE) -- Domo, Inc. (NASDAQ:DOMO), provider of the leading cloud-based operating system for business, today announced results for the fiscal 2019 second quarter ended July 31, 2018.

Fiscal Second Quarter Results

  • Total revenue was $34.3 million, an increase of 32% year over year
  • Subscription revenue represented 82% of total revenue
  • Billings were $35.7 million or 35% year-over-year growth, compared to 22% year-over-year growth for Q1 FY19
  • GAAP subscription gross margin was 71% compared to 64% in Q2 FY18
  • Non-GAAP subscription gross margin was 71% compared to 64% in Q2 FY18
  • GAAP operating margin improved by 41 percentage points year over year
  • Non-GAAP operating margin improved by 62 percentage points year over year
  • GAAP operating expenses increased 11% year over year
  • Non-GAAP operating expenses decreased 3% year over year
  • GAAP net loss was $46.4 million, and GAAP net loss per share was $4.41, based on 10.51 million weighted-average shares outstanding
  • Non-GAAP net loss was $36.2 million, and non-GAAP net loss per share was $3.44, based on 10.51 million weighted-average shares outstanding
  • Cash and cash equivalents were $238.8 million

Comments
"I'd like to thank our employees, customers and investors for helping us achieve the recent milestone of becoming a public company. While we're early in our journey of fulfilling our vision and realizing our full value, we're off to a great start. We're delivering on our top two priorities of focusing on customers and growing the top line, which we've grown by more than 30%, and we're doing so more efficiently," said Josh James, Domo founder and CEO. "Because Domo can digitally connect any organization and empower each of its employees, we believe our market potential is every working person with a mobile device. The IPO has given us the capital needed to successfully execute our business plan. We are well positioned for future growth."

"As our unique capabilities are more widely recognized and used throughout our customer base, we believe our growth will accelerate. We are particularly proud that more than 400 CEOs, including Fortune 500 CEOs, are using Domo to manage their business, with more than half doing so from their mobile device," added James.

"Q2 was a strong quarter for us," said Bruce Felt, CFO. "We improved execution across all functions of the organization. We are pleased with the productivity gains from sales and marketing. We believe, as we displayed this quarter, there is leverage throughout the entire organization to efficiently drive growth."

Recent Highlights
We believe the following points and accolades are leading indicators of what's to come in our business through our commitment to product innovation and customer success:

  • Domo won an Industry Excellence Award from Dresner Advisory Services for the second year in a row for excellence based on customer ratings across all categories of measurement: product/technology, sales and service, value and confidence.
  • Domo received a perfect "recommendation" score from customers and was positioned as an Overall Leader in Dresner's Wisdom of Crowds® flagship research.  Domo also had the best score of all companies evaluated for product integration with third-party technologies, ease of installation and ease of upgrade/migration.
  • Domo received honors, including several Communicator Awards and a silver Omni award, that spotlight its commitment to customer success through excellence in online training.
  • Domo was ranked in the top 20% of all companies on Inc.'s 2018 list of America's fastest-growing private companies for its three-year growth rate through FY18. This is the seventh time that a company that Josh James founded has appeared on this annual Inc. list.
  • Domo also made Constellation Research's ShortList of recommended solutions for both Marketing Analytics and Cloud-based Business Intelligence and Analytics Platforms.

Business Outlook
Based on information available as of September 6, 2018, Domo is providing the following guidance for Q3 and full year fiscal 2019:

Q3 Fiscal 2019

  • Revenue is expected to be in the range of $34.8 million to $35.2 million
  • Non-GAAP net loss per share is expected to be between $1.37 to $1.39 based on 26.35 million weighted-average shares outstanding

Full Year Fiscal 2019

  • Revenue is expected to be in the range of $136.7 million to $137.1 million
  • Non-GAAP net loss per share is expected to be between $9.50 to $9.55 based on 16.35 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 2019 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 www.domo.com/IR. A live dial-in is available domestically at (877) 491-5762 and internationally at (763) 416-6939, with conference ID#8292546. A replay will be available via webcast or at (855) 859-2056 or (404) 537-3406 until midnight (ET) September 20, 2018.

About Domo
Domo's mission is to be the operating system for business, digitally connecting all your people, your data and your systems, empowering them to collaborate better, make better decisions and be more efficient, right from their phones. Domo works with many of the world's leading and most progressive brands across multiple industries including retail, media and entertainment, manufacturing, finance and more. For more information about Domo (NASDAQ:DOMO), visit www.domo.com. You can also follow Domo on Twitter, Facebook and LinkedIn.

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 and non-GAAP net loss per share. In computing these measures, we exclude the effects of stock-based compensation expense, amortization of intangible assets and the reversal of continent tax-related accruals. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and our non-GAAP measures may be different from non-GAAP measures used by other companies.

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, our financial outlook for Q3 fiscal quarter and full fiscal year 2019. 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 Prospectus related to our initial public offering filed with the SEC on June 29, 2018 and the Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2018 expected to be filed with the SEC on or about September 14, 2018.  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,
      2017       2018       2017       2018  
                 
Revenue:                
Subscription   $   21,052     $   28,166     $   40,155     $   54,829  
Professional services and other      4,851        6,101        9,994        11,383  
Total revenue      25,903        34,267        50,149        66,212  
Cost of revenue:        
Subscription (1)      7,570        8,265        14,506        16,321  
Professional services and other (1)      3,083        4,253        5,885        7,763  
Total cost of revenue      10,653        12,518        20,391        24,084  
Gross profit      15,250        21,749        29,758        42,128  
         
Operating expenses:        
Sales and marketing (1)      31,413        34,002        66,930        73,658  
Research and development (1)      20,191        20,919        39,894        39,983  
General and administrative (1), (2), (3)      7,288        10,207        14,533        14,851  
Total operating expenses      58,892        65,128        121,357        128,492  
Loss from operations      (43,642 )      (43,379 )      (91,599 )      (86,364 )
         
Other income (expense), net (1)      243        (2,898 )      325        (4,817 )
Loss before provision for income taxes      (43,399 )      (46,277 )      (91,274 )      (91,181 )
Provision for income taxes      94        107        197        710  
Net loss   $  (43,493 )   $  (46,384 )   $  (91,471 )   $  (91,891 )
         
Net loss per share (basic and diluted)   $   (27.27 )   $   (4.41 )   $   (58.22 )   $   (14.94 )
Weighted-average number of shares (basic and diluted)      1,595        10,509        1,571        6,151  
         
         
(1) Includes stock-based compensation expenses, as follows:        
Cost of revenue:                
Subscription   $   12     $   55     $   23     $   70  
Professional services and other      11        70        21        78  
Sales and marketing      462        3,744        1,052        4,049  
Research and development      595        2,993        1,117        3,476  
General and administrative      1,276        3,330        2,547        4,595  
Other income (expense), net      9        (26 )      17        (9 )
Total stock-based compensation expenses   $   2,365     $   10,166     $   4,777     $   12,259  
                 
(2) Includes amortization of intangible assets, as follows:                
General and administrative   $   20     $   20     $   40     $   40  
 
(3) Includes reversal of contingent tax-related accrual, as follows:                
General and administrative   $   —     $   —     $   —     $   (3,513 )
 
Domo, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
       
  January 31,   July 31,
    2018       2018  
Assets      
Current assets:      
Cash and cash equivalents $   61,972     $   238,802  
Accounts receivable, net    35,484        27,266  
Contract acquisition costs    9,661        6,982  
Prepaid expenses and other current assets    6,144        8,662  
Total current assets    113,261        281,712  
       
Property and equipment, net    14,952        13,830  
Contract acquisition costs, noncurrent    11,521        16,089  
Intangible assets, net    3,026        2,986  
Goodwill    9,478        9,478  
Other assets    3,117        1,674  
Total assets $   155,355     $   325,769  
       
Liabilities, convertible preferred stock and stockholders' (deficit) equity      
Current liabilities:      
Accounts payable $   12,121     $   8,409  
Accrued expenses and other current liabilities    49,428        45,852  
Current portion of deferred revenue    66,712        70,693  
Total current liabilities    128,261        124,954  
       
Deferred revenue, noncurrent    4,244        3,429  
Other liabilities, noncurrent    5,324        5,785  
Long-term debt    46,332        97,103  
Total liabilities    184,161        231,271  
       
Commitments and contingencies      
       
Convertible preferred stock    693,158        —  
Stockholders' (deficit) equity:      
Common stock    2        26  
Additional paid-in capital    35,301        943,722  
Accumulated other comprehensive income    506        414  
Accumulated deficit    (757,773 )      (849,664 )
Total stockholders' (deficit) equity    (721,964 )      94,498  
Total liabilities and stockholders' (deficit) equity $   155,355     $   325,769  
      
Domo, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
               
  Three Months Ended   Six Months Ended
  July 31,   July 31,
    2017       2018       2017       2018  
Cash flows from operating activities              
Net loss  $   (43,493 )   $   (46,384 )   $   (91,471 )   $   (91,891 )
Adjustments to reconcile net loss to net cash used in operating activities:              
Depreciation and amortization    1,971        2,257        3,813        4,522  
Amortization of intangible assets    20        20        40        40  
Amortization of contract acquisition costs    2,246        1,906        4,378        3,633  
Stock-based compensation    2,365        10,166        4,777        12,259  
Reversal of contingent tax-related accrual    —        —        —        (3,513 )
Capitalized interest    —        644        —        993  
Remeasurement of warrant liability    —        (40 )      —        (56 )
Changes in operating assets and liabilities:              
Accounts receivable, net    (1,663 )      1,152        352        8,218  
Contract acquisition costs    (3,473 )      (3,859 )      (6,813 )      (5,782 )
Prepaid expenses and other assets    1,474        (2,995 )      171        (2,393 )
Accounts payable    355        (5,716 )      1,076        (1,288 )
Accrued and other liabilities    (5,037 )      5,356        (1,327 )      (891 )
Deferred revenue    561        1,397        3,978        3,166  
  Net cash used in operating activities    (44,674 )      (36,096 )      (81,026 )      (72,983 )
               
Cash flows from investing activities              
Purchases of property and equipment    (1,184 )      (1,588 )      (4,178 )      (3,205 )
               
Cash flows from financing activities              
Proceeds from initial public offering, net of underwriting discounts and commissions    —        206,627        —        206,627  
Payments of costs related to initial public offering    —        (2,102 )      —        (3,413 )
Proceeds from issuance of convertible preferred stock, net of issuance costs    (1,414 )      —        99,086        (87 )
Debt proceeds, net of issuance costs    (50 )      (23 )      (50 )      49,651  
Proceeds from exercise of stock options    64        60        671        272  
Repurchases of common stock    —        —        (121 )      —  
Principal payments on capital lease obligations    (9 )      —        (18 )      (44 )
Net cash (used in) provided by financing activities    (1,409 )      204,562        99,568        253,006  
Effect of exchange rate changes on cash and cash equivalents    33        (12 )      59        12  
Net (decrease) increase in cash and cash equivalents    (47,234 )      166,866        14,423        176,830  
Cash and cash equivalents at beginning of period    130,641        71,936        68,984        61,972  
Cash and cash equivalents at end of period $   83,407     $   238,802     $   83,407     $   238,802  
 
             
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,    
        2017       2018       2017       2018      
Reconciliation of Subscription Gross Margin on a GAAP Basis to
Subscription Gross Margin on a Non-GAAP Basis:
                   
Revenue:                    
Subscription   $ 21,052     $ 28,166     $ 40,155     $ 54,829      
Cost of revenue:                    
Subscription     7,570       8,265       14,506       16,321      
Subscription gross profit on a GAAP basis     13,482       19,901       25,649       38,508      
Subscription gross margin on a GAAP basis     64 %     71 %     64 %     70 %    
                     
Stock-based compensation     12       55       23       70      
Subscription gross profit on a non-GAAP basis   $ 13,494     $ 19,956     $ 25,672     $ 38,578      
Subscription gross margin on a non-GAAP basis     64 %     71 %     64 %     70 %    
                       
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   $ 58,892     $ 65,128     $ 121,357     $ 128,492      
Stock-based compensation     (2,333 )     (10,067 )     (4,716 )     (12,120 )    
Amortization of intangible assets     (20 )     (20 )     (40 )     (40 )    
Reversal of contingent tax-related accrual                       3,513      
Total operating expenses on a non-GAAP basis   $ 56,539     $ 55,041     $ 116,601     $ 119,845      
                       
Reconciliation of Operating Loss on a GAAP Basis to Operating Loss on
a Non-GAAP Basis:
                   
Operating loss on a GAAP basis   $ (43,642 )   $ (43,379 )   $ (91,599 )   $ (86,364 )    
Stock-based compensation     2,356       10,192       4,760       12,268      
Amortization of intangible assets     20       20       40       40      
Reversal of contingent tax-related accrual                       (3,513 )    
Operating loss on a non-GAAP basis   $ (41,266 )   $ (33,167 )   $ (86,799 )   $ (77,569 )    
                       
Reconciliation of Operating Margin on a GAAP Basis to Operating
Margin on a Non-GAAP Basis:
                   
Operating margin on a GAAP basis     (168 )%     (127 )%     (183 )%     (130 )%    
Stock-based compensation     9       30       10       18      
Amortization of intangible assets                            
Reversal of contingent tax-related accrual                       (5 )    
Operating margin on a non-GAAP basis     (159 )%     (97 )%     (173 )%     (117 )%    
                     
Reconciliation of Net Loss on a GAAP Basis to Net Loss on a Non-
GAAP Basis:
                   
Net loss on a GAAP basis   $ (43,493 )   $ (46,384 )   $ (91,471 )   $ (91,891 )    
Stock-based compensation     2,365       10,166       4,777       12,259      
Amortization of intangible assets     20       20       40       40      
Reversal of contingent tax-related accrual                       (3,513 )    
Net loss on a non-GAAP basis   $ (41,108 )   $ (36,198 )   $ (86,654 )   $ (83,105 )    
                       
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   $ (27.27 )   $ (4.41 )   $ (58.22 )   $ (14.94 )    
Stock-based compensation     1.49       0.97       3.04       1.99      
Amortization of intangible assets     0.01             0.02       0.01      
Reversal of contingent tax-related accrual                       (0.57 )    
Net loss per share on a non-GAAP basis   $ (25.77 )   $ (3.44 )   $ (55.16 )   $ (13.51 )    
                       
Billings:                    
Total revenue   $ 25,903     $ 34,267     $ 50,149     $ 66,212      
Add:                    
Deferred revenue (end of period)     52,409       70,693       52,409       70,693      
Deferred revenue, noncurrent (end of period)     1,505       3,429       1,505       3,429      
Less:                    
Deferred revenue (beginning of period)     (51,876 )     (68,718 )     (48,719 )     (66,712 )    
Deferred revenue, noncurrent (beginning of period)     (1,477 )     (4,007 )     (1,217 )     (4,244 )    
Increase in deferred revenue (current and noncurrent)     561       1,397       3,978       3,166      
Billings   $ 26,464     $ 35,664     $ 54,127     $ 69,378      
                       

Investors / Media Contact
Domo, Inc.

Investors:
IR@domo.com

Media:
PR@domo.com

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NEXT SpeakEasy amends and restates April 30, 2018 interim financial statements