Domo Announces Third Quarter Fiscal 2021 Financial Results

Subscription Revenue Increased 24%; Achieved Cash-Flow Milestone

SILICON SLOPES, Utah--(BUSINESS WIRE)--Domo, Inc. (Nasdaq: DOMO) today announced results for its fiscal third quarter ended October 31, 2020.

Fiscal Third Quarter Results

• Total revenue was $53.6 million, an increase of 20% year over year
• Subscription revenue was $46.9 million, an increase of 24% year over year
• Subscription revenue represented 87% of total revenue
• Billings were $55.7 million or 25% year-over-year growth
• Revenue allocated to remaining performance obligations (RPO) was $248.8 million as of October 31, 2020, an increase of 21% year over year
• RPO expected to be recognized as revenue in the next twelve months was $153.9 million as of October 31, 2020, an increase of 22% year over year
• Net cash used in operating activities was $1.7 million, while adjusted net cash provided by operating activities was $1.4 million
• GAAP subscription gross margin was 80%, an improvement of 4 percentage points from Q3 FY20
• Non-GAAP subscription gross margin was 81%, an improvement of 4 percentage points from Q3 FY20
• GAAP operating margin improved by 24 percentage points year over year
• Non-GAAP operating margin improved by 31 percentage points year over year
• GAAP net loss was $22.2 million, and GAAP net loss per share was $0.75, based on 29.5 million weighted-average shares outstanding
• Non-GAAP net loss was $11.9 million, and non-GAAP net loss per share was $0.40, based on 29.5 million weighted-average shares outstanding
• Cash and cash equivalents were $83.8 million as of October 31, 2020

“In Q3, we achieved strong growth and delivered on the commitment we made at our IPO to grow revenue while getting to cash-flow positive with the cash we had on hand,” said Josh James, founder and CEO. “This is a huge financial milestone for our company and a result of listening to our customers and building what they need, and having every employee put their hearts and souls into this mission. Our strong results and our improved financial position give us the confidence to invest in the significant growth opportunity in front of us. I want to extend a huge thank you to our customers, our employees and investors who have been part of this ongoing journey of building a world-class enterprise software business.”

Recent Highlights

We believe the following points and accolades demonstrate our commitment to product innovation, go-to-market initiatives and customer success:

• Domo was named Winner with its customer Unilever in Ventana Research's Digital Leadership Awards for Analytics. This award was based on the use of Domo to support Unilever's United for America, a national philanthropic program that provided more than $25 million in goods and services to communities in need.
• Domo was ranked an Overall Experience Leader and a Credibility Leader in Dresner Advisory Services' 2020 SME Business Intelligence Market Study.
• Domo received industry recognitions in Gartner Research’s Digital Markets brands Capterra Top 20 - Statistical Analysis (August 2020) and GetApp Category Leader - Statistical Analysis (August 2020).
• Domo was been named a Best Company to Work For by Utah Business Magazine for the ninth consecutive year.
• Domo achieved SAP-certified integration with SAP HANA®. The SAP® Integration and Certification Center (SAP ICC) has certified that Domo integrates with SAP HANA using standard integration technologies.

Business Outlook

Based on information available as of December 3, 2020, Domo is providing the following guidance for its fourth fiscal quarter and full year fiscal 2021:

Q4 Fiscal 2021

• Revenue is expected to be in the range of $53.3 million to $54.3 million
• Non-GAAP net loss per share is expected to be between $0.42 and $0.46 based on 30.1 million weighted-average shares outstanding

Full Year Fiscal 2021

• Revenue is expected to be in the range of $206.6 million to $207.6 million
• Non-GAAP net loss per share is expected to be between $1.83 and $1.87 based on 29.3 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 2021 third 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 https://www.domo.com/ir. Participants can register for the call in advance by visiting http://www.directeventreg.com/registration/event/4296169. Instructions will be shared on how to join the call after registering.

A replay will be available at [phone] or [phone] with conference ID #4296169 following the completion of the conference call until 11:59 p.m. (ET) December 17, 2020.

About Domo

Domo is the Business Cloud, empowering organizations of all sizes with BI leverage at cloud scale in record time. With Domo, BI-critical processes that took weeks, months or more can now be done on-the-fly, in minutes or seconds, at unbelievable scale. For more information about how Domo (Nasdaq: DOMO) helps its customers go fast, go big and go bold, visit www.domo.com. You can also follow Domo on Twitter, Facebook and LinkedIn.

Domo Disclosure Channels to Disseminate Information

Domo investors and others should note that we announce material information to the public about our company, products and services, and other issues through a variety of means, including Domo's website, press releases, SEC filings, blogs and social media, in order to achieve broad, non-exclusionary distribution of information to the public. We intend to use the Domo Facebook page, the Domo LinkedIn page, the Domo blog, the @Domotalk Twitter account and the @JoshJames Twitter account as a means of disclosing information about the Company and its services and for complying with the disclosure obligations under Regulation FD. The information we post through these social media channels may be deemed material. Accordingly, we encourage investors and others to monitor these social media channels in addition to following our press releases, SEC filings and public conference calls and webcasts.

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, non-GAAP net loss per share and adjusted net cash used in operating activities. In computing these measures, we exclude the effects of certain items including stock-based compensation expense, amortization of certain intangible assets, the reversal of contingent tax-related accruals and proceeds from shares issued in connection with employee stock purchase plan. 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, demand for our products and services, our financial outlook for its fourth fiscal quarter and full fiscal year 2021, and results for future periods. 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 Annual Report on Form 10-K filed with the SEC on April 10, 2020 and the Quarterly Report on Form 10-Q for the fiscal quarter ended October 31, 2020 expected to be filed with the SEC on or about December 10, 2020, as well as risks to our business related to the COVID-19 outbreak. 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, Domo Business Cloud and Domo is the Business Cloud are registered trademarks of Domo, Inc.

Domo, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
	Three Months Ended						Nine Months Ended
	October 31,						October 31,
	2019			2020			2019			2020
Revenue:
Subscription	$	37,841		$	46,906		$	107,105		$	133,689
Professional services and other		6,925			6,739			20,119			19,648
Total revenue		44,766			53,645			127,224			153,337
Cost of revenue:
Subscription (1)		9,045			9,372			25,896			27,288
Professional services and other (1)		5,418			5,106			15,582			14,948
Total cost of revenue		14,463			14,478			41,478			42,236
Gross profit		30,303			39,167			85,746			111,101
Operating expenses:
Sales and marketing (1)		29,784			29,609			95,234			86,089
Research and development (1)		17,578			16,504			51,723			49,874
General and administrative (1), (2), (3)		9,590			11,929			26,882			31,355
Total operating expenses		56,952			58,042			173,839			167,318
Loss from operations		(26,649	)		(18,875	)		(88,093	)		(56,217	)
Other expense, net (1)		(2,368	)		(3,215	)		(7,175	)		(8,356	)
Loss before provision for income taxes		(29,017	)		(22,090	)		(95,268	)		(64,573	)
Provision for income taxes		84			131			529			446
Net loss	$	(29,101	)	$	(22,221	)	$	(95,797	)	$	(65,019	)
Net loss per share (basic and diluted)	$	(1.05	)	$	(0.75	)	$	(3.50	)	$	(2.24	)
Weighted-average number of shares (basic and diluted)		27,638			29,533			27,345			28,998
(1) Includes stock-based compensation expenses, as follows:
Cost of revenue:
Subscription	$	151		$	377		$	341		$	750
Professional services and other		123			273			276			494
Sales and marketing		2,135			3,301			8,184			7,670
Research and development		1,493			2,716			4,852			6,595
General and administrative		1,533			3,452			3,953			8,172
Other expense, net		47			172			142			267
Total stock-based compensation expenses	$	5,482		$	10,291		$	17,748		$	23,948
(2) Includes amortization of certain intangible assets, as follows:
General and administrative	$	20		$	20		$	60		$	60
(3) Includes reversal of contingent tax-related accrual, as follows:
General and administrative	$	-		$	-		$	(1,293	)	$	-

Domo, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
	January 31,			October 31,
	2020			2020
Assets
Current assets:
Cash and cash equivalents	$	80,843		$	83,813
Short-term investments		17,967			-
Accounts receivable, net		47,967			37,788
Contract acquisition costs		12,676			13,013
Prepaid expenses and other current assets		12,809			9,112
Total current assets		172,262			143,726
Property and equipment, net		12,816			14,259
Right-of-use assets		-			5,009
Contract acquisition costs, noncurrent		17,083			16,201
Intangible assets, net		3,865			3,515
Goodwill		9,478			9,478
Other assets		1,234			954
Total assets	$	216,738		$	193,142
Liabilities and stockholders' deficit
Current liabilities:
Accounts payable	$	2,298		$	4,756
Accrued expenses and other current liabilities		46,473			45,911
Lease liabilities		-			4,169
Current portion of deferred revenue		105,290			103,075
Total current liabilities		154,061			157,911
Lease liabilities, noncurrent		-			2,693
Deferred revenue, noncurrent		4,454			3,182
Other liabilities, noncurrent		6,329			9,324
Long-term debt		101,074			98,548
Total liabilities		265,918			271,658
Commitments and contingencies
Stockholders' deficit:
Common stock		28			30
Additional paid-in capital		988,141			1,023,662
Accumulated other comprehensive income		389			549
Accumulated deficit		(1,037,738	)		(1,102,757	)
Total stockholders' deficit		(49,180	)		(78,516	)
Total liabilities and stockholders' deficit	$	216,738		$	193,142

Domo, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
	Three Months Ended						Nine Months Ended
	October 31,						October 31,
	2019			2020			2019			2020
Cash flows from operating activities
Net loss	$	(29,101	)	$	(22,221	)	$	(95,797	)	$	(65,019	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		1,691			1,126			5,307			3,490
Non-cash lease expense		-			1,044			-			2,997
Amortization of contract acquisition costs		3,008			3,657			8,503			10,577
Stock-based compensation		5,482			10,291			17,748			23,948
Other, net		819			1,634			816			3,456
Changes in operating assets and liabilities:
Accounts receivable, net		(2,915	)		(2,855	)		14,370			10,179
Contract acquisition costs		(4,031	)		(4,047	)		(9,017	)		(9,939	)
Prepaid expenses and other assets		3,026			474			(362	)		4,039
Accounts payable		862			2,991			304			2,397
Operating lease liabilities		-			(996	)		-			(2,564	)
Accrued and other liabilities		1,978			5,159			(3,876	)		506
Deferred revenue		(338	)		2,027			(2,937	)		(3,487	)
Net cash used in operating activities		(19,519	)		(1,716	)		(64,941	)		(19,420	)
Cash flows from investing activities
Purchases of property and equipment		(1,683	)		(1,105	)		(4,860	)		(4,259	)
Purchases of securities available for sale		(14,387	)		-			(93,331	)		(11,149	)
Proceeds from maturities of securities available for sale		28,000			4,900			71,500			29,200
Purchases of intangible assets		-			(6	)		-			(111	)
Net cash provided by (used in) investing activities		11,930			3,789			(26,691	)		13,681
Cash flows from financing activities
Proceeds from shares issued in connection with employee stock purchase plan		3,294			3,099			7,812			6,748
Shares repurchased for tax withholdings on vesting of restricted stock		(98	)		(194	)		(1,110	)		(717	)
Proceeds from exercise of stock options		70			446			1,501			2,505
Net cash provided by financing activities		3,266			3,351			8,203			8,536
Effect of exchange rate changes on cash and cash equivalents		(105	)		(66	)		(33	)		173
Net (decrease) increase in cash and cash equivalents		(4,428	)		5,358			(83,462	)		2,970
Cash and cash equivalents at beginning of period		97,939			78,455			176,973			80,843
Cash and cash equivalents at end of period	$	93,511		$	83,813		$	93,511		$	83,813

Domo, Inc.
Reconciliation of Non-GAAP Financial Measures
(in thousands, except per share data)
(unaudited)
	Three Months Ended						Nine Months Ended
	October 31,						October 31,
	2019			2020			2019			2020
Reconciliation of Subscription Gross Margin on a GAAP Basis to Subscription Gross Margin on a Non-GAAP Basis:
Revenue:
Subscription	$	37,841		$	46,906		$	107,105		$	133,689
Cost of revenue:
Subscription		9,045			9,372			25,896			27,288
Subscription gross profit on a GAAP basis		28,796			37,534			81,209			106,401
Subscription gross margin on a GAAP basis		76	%		80	%		76	%		80	%
Stock-based compensation		151			377			341			750
Subscription gross profit on a non-GAAP basis	$	28,947		$	37,911		$	81,550		$	107,151
Subscription gross margin on a non-GAAP basis		76	%		81	%		76	%		80	%
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	$	56,952		$	58,042		$	173,839		$	167,318
Stock-based compensation		(5,161	)		(9,469	)		(16,989	)		(22,437	)
Amortization of certain intangible assets		(20	)		(20	)		(60	)		(60	)
Reversal of contingent tax-related accrual		-			-			1,293			-
Total operating expenses on a non-GAAP basis	$	51,771		$	48,553		$	158,083		$	144,821
Reconciliation of Operating Loss on a GAAP Basis to Operating Loss on a Non-GAAP Basis:
Operating loss on a GAAP basis	$	(26,649	)	$	(18,875	)	$	(88,093	)	$	(56,217	)
Stock-based compensation		5,435			10,119			17,606			23,681
Amortization of certain intangible assets		20			20			60			60
Reversal of contingent tax-related accrual		-			-			(1,293	)		-
Operating loss on a non-GAAP basis	$	(21,194	)	$	(8,736	)	$	(71,720	)	$	(32,476	)
Reconciliation of Operating Margin on a GAAP Basis to Operating Margin on a Non-GAAP Basis:
Operating margin on a GAAP basis		(60	)%		(35	)%		(69	)%		(37	)%
Stock-based compensation		13			19			14			16
Amortization of certain intangible assets		-			-			-			-
Reversal of contingent tax-related accrual		-			-			(1	)		-
Operating margin on a non-GAAP basis		(47	)%		(16	)%		(56	)%		(21	)%
Reconciliation of Net Loss on a GAAP Basis to Net Loss on a Non-GAAP Basis:
Net loss on a GAAP basis	$	(29,101	)	$	(22,221	)	$	(95,797	)	$	(65,019	)
Stock-based compensation		5,482			10,291			17,748			23,948
Amortization of certain intangible assets		20			20			60			60
Reversal of contingent tax-related accrual		-			-			(1,293	)		-
Net loss on a non-GAAP basis	$	(23,599	)	$	(11,910	)	$	(79,282	)	$	(41,011	)
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	$	(1.05	)	$	(0.75	)	$	(3.50	)	$	(2.24	)
Stock-based compensation		0.20			0.35			0.65			0.83
Amortization of certain intangible assets		-			-			-			-
Reversal of contingent tax-related accrual		-			-			(0.05	)		-
Net loss per share on a non-GAAP basis	$	(0.85	)	$	(0.40	)	$	(2.90	)	$	(1.41	)
Billings:
Total revenue	$	44,766		$	53,645		$	127,224		$	153,337
Add:
Deferred revenue (end of period)		88,214			103,075			88,214			103,075
Deferred revenue, noncurrent (end of period)		2,751			3,182			2,751			3,182
Less:
Deferred revenue (beginning of period)		(87,616	)		(101,982	)		(88,959	)		(105,290	)
Deferred revenue, noncurrent (beginning of period)		(3,687	)		(2,248	)		(4,943	)		(4,454	)
(Decrease) increase in deferred revenue (current and noncurrent)		(338	)		2,027			(2,937	)		(3,487	)
Billings	$	44,428		$	55,672		$	124,287		$	149,850
Reconciliation of Net Cash Used in Operating Activities to Adjusted Net Cash Used in Operating Activities:
Net cash used in operating activities	$	(19,519	)	$	(1,716	)	$	(64,941	)	$	(19,420	)
Proceeds from shares issued in connection with employee stock purchase plan		3,294			3,099			7,812			6,748
Adjusted net cash (used in) provided by operating activities	$	(16,225	)	$	1,383		$	(57,129	)	$	(12,672	)