管理層發言
Greetings, and welcome to the Domo Q3 Fiscal Year 2026 Earnings Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Cory Edwards, Vice President of Corporate Communications. Thank you, Cory. You may begin.
Good afternoon. On the call today, we are joined by Josh James, our Founder and CEO; and Tod Crane, our Chief Financial Officer. I'll begin with our safe harbor statement. Our press release was issued after the market close and is available on the Investor Relations section of our website. Please note that today's call contains forward-looking statements about our business as defined under federal securities laws. These statements involve risks, uncertainties and assumptions, including, but not limited to, statements and projections about our future financial performance, growth prospects, cash position, sales efforts, technology developments, new business opportunities, transactions and initiatives along with the potential impact of artificial intelligence and macroeconomic factors on our business. For a detailed discussion of these risks and uncertainties, please refer to our public filings, including today's press release, our most recent annual report on Form 10-K and our quarterly report on Form 10-Q, all available on the SEC website. These documents outline important risk factors that may cause actual results to differ materially from our forward-looking statements. We will also discuss non-GAAP financial measures during the call, which we use as supplemental indicators of Domo's performance. Unless otherwise stated, all results discussed today other than revenue, are on a non-GAAP basis. These measures should be viewed as complements to, not substitutes for our GAAP results. A reconciliation of our non-GAAP results to the most directly comparable GAAP measures can be found in today's earnings release and on our Investor Relations website at domoinvestors.com. With that, I'll turn it over to Josh.
Thank you, Cory. Hello, everyone, and thanks for joining us on the call today. It's been an exciting time for us as we continue to execute against our key objectives. In Q3, we generated positive adjusted free cash flow of $2.1 million, a $15.8 million improvement over last year. We're on track to finish the year with positive adjusted free cash flow for the first time ever, with every quarter being positive along the way. Our operating margin was 6.8%, well above guidance, putting us on pace for our highest full year operating margin ever. We also posted positive EPS for the second consecutive quarter, the second time ever. We are pleased with the progress in these financial metrics and are continuing to execute a clear and strategic game plan rooted in three key objectives: deepening our partner ecosystem, accelerating consumption, and pushing the boundaries of what's possible with AI. I'll speak to the importance of and our performance against each of these objectives. I'll start with deepening partner ties. A foundational component of our ecosystem focus has been rearchitecting our platform so customers can seamlessly integrate Domo with the cloud data warehouses or CDWs they already use. We call this functionality cloud amplifier because by sitting on top of Snowflake, Databricks, BigQuery, Redshift, Oracle, or whichever warehouse they prefer, cloud amplifier magnifies the value of our customers' previous data infrastructure investments. This approach gives customers flexibility and control while fully leveraging Domo's powerful platform capabilities. Today, over 350 accounts are actively using cloud amplifier across nine different cloud data warehouses, a number that has more than doubled year-over-year. Even more striking, the number of unique users on cloud amplifier has soared 450% year-over-year. This rapid adoption shows that our shift from competing against cloud data warehouses to complementing them is the right move as we are not only enhancing the entire data experience for our joint customers, but also driving meaningful revenue for our partners. In fact, several of these partners are interested in even tighter relationships, considering OEMing our analytics for all of their new customers, or considering investments or other strategic relationships. The power of our products together truly delivers exceptional customer value. Our partnerships with the CDW ecosystem continue to grow stronger and more impactful. In Q3, leads from strategic partners increased over 25% compared to Q2 and more than doubled from what we generated in Q1, showing how quickly these relationships are expanding. While working through partners introduces more stakeholders and may create longer sales cycles than our traditional direct motion, it's proving to be a major positive for us. These deals typically involve CIO-level engagement and more strategic conversations across the business, which can lead to stickier relationships, strong retention, and broader adoption across the organization. It reinforces the growing value of our ecosystem and the durable growth engine we're building. Next is the tremendous and almost unprecedented speed at which we've transitioned to a consumption model and the corresponding value it is adding to our business. We see strong evidence of this in our monthly unique user growth and the increasing share of our revenue coming from consumption pricing. Today, 80% of our annual recurring revenue is on consumption contracts, a significant shift that underscores the broad acceptance of this model. A little more than two years ago, after introducing it, the percentage of our annual recurring revenue in consumption was in the single digits. As we've now said for the last several calls, we expect to be over 85% by the end of the year. The move to a consumption model is not just about pricing. It's about unlocking full platform access and demonstrating value to a wider user base by removing traditional licensing limits and enabling broader access. We empower more people across our customers' organizations to engage with data and AI in meaningful ways. Monthly active users across our entire customer base have increased over 10% year-over-year, reflecting this growing momentum. The result is naturally accelerating adoption and usage, creating a positive feedback loop that drives deeper customer success. Over time, this expanding engagement will generate favorable economic benefits for Domo while delivering greater impact for our customers. This usage-driven momentum gives us growing confidence in the durability of our long-term model. Complementing the move to consumption, we are also leaning into a more composable approach to how we sell the components of our platform. A more composable platform allows us to meet customers where they are and accelerate how quickly they can get value from Domo. While we can power the full end-to-end data and AI stack, some customers don't always need the whole thing on day one. Sometimes they're looking for a better integration layer, a workflow engine, or a place to operationalize AI. Embracing composability this way means that we insert value immediately where they need us. That flexibility has been a big advantage as modern data architectures become more modular. Operationally, that means our go-to-market motions now include more of a focus on helping customers start with a piece of Domo that most meets their needs and then growing naturally into more components of the platform over time. Finally, innovation with AI continues to accelerate. At a time when industry studies have shown that high levels of generative AI projects fail to reach production, highlighting how hard it is to get real value from AI, Domo's customers are proving what's possible with the right foundation. The number of unique accounts using our AI features increased over 60% year-over-year, while the number of unique users more than doubled. We view this as evidence that our integrated platform, combining connectors, ETL, workflows, governance and visualization is enabling real AI use cases that deliver ROI at scale. Our customers are moving from experimentation to operationalizing AI to transform decision-making. While some of these benefits are still unfolding, we view these strong adoption trends in users as powerful leading indicators. They validate our strategy and give us confidence that as we continue executing with this pace and focus, favorable financial performance may naturally follow. I'm incredibly proud of the progress we've made over a relatively short period of time. The trajectory is clear: building broad platform engagement today sets the foundation for sustainable profitable growth tomorrow. Now let me share a few customer wins in the quarter that highlight progress against our key objectives. In our partner ecosystem, we closed new logo deals with a large credit union and a fast-growing logistics provider, who each selected Domo and Snowflake together after seeing how our joint solution simplifies their data environment, accelerates reporting, and provides a strong foundation for their long-term AI strategy. A multibillion-dollar global food and beverage nutrition company is modernizing its approach to marketing intelligence and signed with Domo to optimize its use of Databricks after their previous vendor and SI spent more than a year attempting to deliver results with limited success. In contrast, Domo and its SI partners delivered a compelling proof of concept in just a few weeks. Our ability to blend Databricks data with Domo's AI workflows and app capabilities showed the customer a clear path to standardization and faster insights. This deployment is already sparking interest in expanding Domo across the business. One of the largest insurance companies in the U.S. extended its partnership with Domo, evidence of the strength of Domo's offering for large enterprises and an example of our multiyear contract growth. This insurer expanded to a four-year, seven-figure TCV agreement after a collaborative solution sprint showed how our AI workflows and app development capabilities could streamline their complex RFP process. Because they were already on consumption, they could leverage the full breadth of the platform without licensing barriers, allowing this solution to be scoped for long-term impact rather than limited access. We also expanded to a seven-figure TCV contract with a large global nonprofit that provides care to nearly three million patients. They relied on Domo for years but recently turned to us to help them build predictive models to better understand and reduce patient churn. Moving to consumption has allowed them to broaden user access, deepen analytic exploration, and accelerate their work with AI and application development. They are also a large Snowflake customer, and so together, we're partnering to help this customer unlock even more value from their Snowflake data using Domo. Given the scale of their operations, we see meaningful room for continued growth. Finally, a fast-growing retail technology company expanded its use of Domo as part of a broader effort to simplify its data architecture and scale efficiently. Moving to consumption removed past licensing constraints and enabled enterprise-wide access, positioning Domo as their long-term platform through 2029. By connecting directly to Databricks using cloud amplifier, they now have a streamlined path for real-time insights across the business. Through a strong C-level relationship, their projected growth and increasing focus on AI-driven workflows and natural language experiences, we see significant future expansion potential. Over the past few months, we've also received strong industry recognition from media and industry analysts for our leadership in AI and data products. Domo was named the leader in Agentic AI by both Dresner Advisory Services and KM World, with Dresner ranking us as #1 in its 2025 Agentic AI report. Nucleus Research named Domo the leader in its embedded analytics Technology Value Matrix 2025. CRN selected Domo as its 2025 Product of the Year Award for Best Business Intelligence and Data Analytics Technology. ISG named Domo an overall leader in its data products buyer's guide, and Dresner also recognized Domo's broader platform strength, ranking us #2 in its analytical data products report. These recognitions reflect what we're hearing from customers every day: that Domo is helping them turn data into actionable insights, modernize workflows, and get real value out of their data and AI investments. I'm encouraged by the progress we're making and the momentum we're building with this next quarter expected to be the fastest billings growth we've seen in more than three years while generating positive free cash flow every quarter this year. It's clear that the work of the past few years is paying off, and we're now in a stronger position than ever to drive meaningful, profitable growth in the quarters and years ahead. Finally, I want to thank our employees. It's been a long road to hoe, but the work they've done to strengthen our ecosystem partnerships, move a significant majority of our base to consumption pricing, and build innovative new AI capabilities has been extraordinary. Their passion and persistence are driving this next chapter for Domo, and I'm incredibly proud of what we're achieving together. So speaking of roads to hoe, I know a man who has hoed miles and miles of sugar beets in Southern Idaho. So we should turn it over to our one and only Chief Financial Officer, Tod Crane.
Thanks, Josh, and thanks to everyone for joining us today. In Q3, we generated positive adjusted free cash flow of $2.1 million, representing a year-over-year improvement of $15.8 million. Importantly, we expect to generate positive adjusted free cash flow in Q4 and are therefore on track to be positive for the full year for the first time in company history. This also means that we expect to generate positive adjusted free cash flow for each quarter this fiscal year, another first. Our operating margin in Q3 was 6.8%, well ahead of our guidance and putting us on track to deliver our highest full year operating margin on record. We also generated positive EPS for the second quarter in a row, the second time ever. These results reflect our ongoing commitment to control the things we can control and operate the company with efficiency and discipline. Billings for Q3 were $73.2 million, below our guidance, primarily due to longer-than-expected sales cycles for certain partner-related deals. We've learned that the sales cycles for customers who are purchasing a CDW for the first time can be long and complex. However, these deals create stronger, more durable customer relationships, often with CIO level support for Domo being part of their company's global data strategy, making the wait worthwhile. While some partner-sourced opportunities are taking longer than expected to show up in our top line metrics, our ecosystem focus is producing measurable benefits elsewhere in the business, as the customer examples we discussed earlier demonstrate. We remain confident that this strategy will continue to unlock many opportunities for us that would not have been possible otherwise. Turning to our recurring revenue metrics. Current subscription RPO grew 3% year-over-year to $214.1 million, and our total subscription RPO grew 15% to $405.9 million. This growth underscores the strength of our customer relationships, highlighted by the prevalence of multiyear contracts and the longest average contract duration we've ever seen. Looking ahead, a substantial portion of Q4 billings will come from existing multiyear agreements, providing increased visibility and reducing risk in our financial outlook. Our gross retention in Q3 was 85%. Several years ago, retention was having a negative impact on our business and we identified it as a major area of focus. Since then, we have made a concerted effort to improve retention primarily through two initiatives: first, shoring up our customer relationships by going into deals jointly with our ecosystem partners, and thereby up-leveling our status with CIOs; and second, generating meaningful growth in RPO, which is a reflection of the value our customers are getting from our product, resulting in strong relationships and a willingness to make long-term commitments to us. The progress we've made in these areas is finally having a material impact, and we expect gross retention to improve to approximately 87% in Q4, the highest gross retention rate in six quarters. This is just the beginning, and we could see ourselves approaching 90% in certain quarters next year. ARR net retention was 95%, up sequentially for the fifth straight quarter and a year-over-year improvement of over four percentage points. Another factor contributing to the improvement in our retention metrics is the retention profile of customers on the consumption model, which continues to be well above that of our seat-based customers. ARR net retention for the customer cohort that began on consumption continues to be above 100% and coming in at 106% in Q3. We currently have 80% of our ARR on consumption contracts. We feel confident we will end the year above 85%, and as our consumption customers represent a higher percentage of our renewal base, we believe both gross and net retention will continue to improve. Total revenue was near the high end of our guidance range at $79.4 million. Gross margin was 75.4%, down 90 basis points year-over-year, primarily driven by ecosystem-focused improvements to our platform. We expect these improvements to not only enhance our ability to continue executing on our partner strategy, but also drive more consumption revenue, which we expect will increase gross margin over the long term. Our non-GAAP net income was $0.3 million. Non-GAAP diluted net income per share was $0.01 based on 44.8 million diluted weighted average shares outstanding. Looking ahead to Q4, we expect billings of $107.5 million to $109.5 million. The midpoint of this range represents 6% year-over-year growth, which would be our highest billings growth in more than three years. We expect GAAP revenue of $78 million to $79 million and non-GAAP net loss per share of $0.01 to $0.05, assuming 42.1 million weighted average shares outstanding, both basic and diluted. For full fiscal year guidance, we expect billings of $315 million to $317 million, GAAP revenue of $317.5 million to $318.5 million, and non-GAAP net loss per share of $0.07 to $0.11, assuming 41 million weighted average shares outstanding, both basic and diluted. In regard to adjusted free cash flow, we expect to be positive in Q4 and to generate approximately $6 million for the year. I would like to highlight that our guidance reflects our expectation that our operating margin will be 5% for the full fiscal year, our highest ever. Earlier in the year, we only expected to exit the year at 5%, but we now expect to achieve that level of profitability for the entirety of the year. We continue to expect that we will exit FY '27 with 10% billings growth and a 10% operating margin. With that, we will open the call for questions.
分析師問答
Our first question comes from Derrick Wood with TD Cowen.
Great. Josh, could you just double-click on the assessment of kind of where the negative billing surprise came from? And what you're doing to address it to get back on track? And maybe give us a little bit more additional color on how we should all be getting comfort on hitting those kind of nice growth rebound targets for Q4 in terms of billings?
Yes. Thanks, Derrick. As this ecosystem business has gotten larger for us, we're starting to realize that it's taking a little longer for us to close those deals because they're more involved. They have higher close rates, and they're much stickier when we get them because we're now in there with the CIO, but involving the CIO and having multiple vendors are causing the sales cycle to be a little longer than we originally realized. So we had a one-time shift, if you will. However, the pipeline in terms of Q4 is looking strong. We're also excited about finally getting to the billings growth. This comes from two things: we're finally seeing the retention improvements from the ecosystem investments that we've made, and we're going to many of our customers and getting a chance to introduce them to different solutions. Just the new deals are taking longer than we originally anticipated. So that's the shift there, but it doesn't change anything about the overall positive premise.
It seems there has been some deal slippage. Is there anything to share about how things closed in Q4? How is the quarter shaping up now that you've had a month into it?
Yes. It started off well. Some deals that slipped have already closed. In Japan, we had deals that closed at the beginning that had slipped also with partners. We didn't lose any of the deals, but we are kind of conservative in our interpretation of expectations. Overall, we feel really good about the pipeline.
Okay. And just your comment on opportunities with some of the CDWs around OEM and other types of investments. Could you give us a little more sense as to what kind of things may be in the hopper?
Yes. We've got these partners, and as we work with them, we're starting to realize what we're doing for them. We're making their customers happier than they have been with alternative solutions. The partners are beginning to approach us and asking if we would be interested in an OEM deal to go to market together. It's surprising because typically you don't see these OEMs select just one partner, but that's what is being discussed. These deals could have a really big impact. We're in a good position because we are independent when it comes to the big players out there.
Great. If I could squeeze one more in for Tod, it's great to hear about the gross retention potential for 90% next year. Do you have any thoughts on where the net revenue retention might go?
Yes. I think that's going to depend on a couple of factors: One, as the gross retention number goes up, there's going to be a corresponding improvement in net. The other factor to consider is as we get better at realizing the upside from the consumption model, that will also help improve our upsell motion. So we see plenty of upside on the net retention side as well.
Our next question comes from the line of Brett Huff with Stephens.
Josh and Tod, congrats on making progress on this. I've got two questions on kind of a balance. One is can you talk a little bit about time to value? I know that's been one of the things that you guys have brought to the table for your partners. But you also mentioned that you're going towards a little bit more composability, which may mean some smaller maybe smaller deals, but perhaps even faster time to value. So can you talk about that balance? And maybe the other balance is you're really improving profitability and free cash flow, which is great. But are you finding that you're running up against things where you wish you had a little more freedom to spend in order to drive better growth? Or have you reached that sort of phase yet in wanting a little bit more freedom on Capital?
Yes. On the composability, we do have a full stack. We have a lot of different entry points into relationships. It's when you're pitching a loan to a new logo, you start with the whole package, and it's appealing. When you're in there with a partner, they already have a strategy and an architecture. So, being able to fill those gaps quickly is a simple way to improve the partner's installation. It hasn't impacted our average deal size as we can still command significant contracts for even integration services. As far as the numbers, we’ve trimmed unnecessary expenses and become efficient, but we are also identifying return-oriented initiatives. We’re not at a point of changing our financial approach yet, though it’s clear that there are some opportunities for further investment.
If you think about the Rule of 40 framework, growth versus profitability, we're pleased with our progress on profitability. However, growth is paramount, and we want to reaccelerate that. We've found other areas to reduce costs without impacting growth potential, and there are exciting opportunities currently that we've identified. The ecosystem improvements we've made are opening many promising avenues.
Great. If I could ask one more question, can you provide an update on the discussion surrounding AI? As you know, there has been a lot of talk about AI disrupting SaaS. I believe you are well-positioned to defend against that. Could you share how those discussions are evolving and what proactive steps you are taking in relation to AI?
Yes. We're definitely playing offense. It is something that we pay close attention to, and it is one of our three big initiatives day in and day out. It significantly improves our ability to deliver for our customers by simplifying operations. We’ve been recognized for our Agentic platform. We hear about many new examples monthly. Our next generation platform is under development and will be available soon.
One of the key things that we see from customers is definitely their concerns about having the right governance on their data. They're not willing to just turn it over without that governance ability to their company data. So we've leaned into this by allowing them to have full governance of their data and unleash their users' ability to leverage AI with confidence.
Our next question comes from the line of Kincaid LaCorte with Citizens.
Great. I was just curious, how much leverage are you guys getting with your new partners based on your learnings from the Snowflake partnership?
It is a great question because we've been building out all of these partners based on the Snowflake experience. The first lift is much harder than subsequent ones. However, in addition to technology, it involves how we go to market. Understanding the complex dynamics and how to tailor our approach to educate sales teams has benefitted us immensely. There are really huge opportunities for economies of scale as knowledge from one partnership is shared across others.
Our next question comes from the line of Eric Martinuzzi with Lake Street Capital Markets.
The billings shortfall for Q3, was this just two or three large transactions? I understand the explanation that you've got more players involved and you're dealing at the CIO level. But was this two or three whale-size deals? Or was this six to ten midsize deals?
Yes, it was a combination; there weren't any one or two large deals that made up the shortfall. It was several medium-sized deals that slipped, largely due to the extended nature of partnered sales cycles. There are many stakeholders involved, and while it makes closing more complex, it ultimately results in stronger customer relationships. We don't expect any net impact to Q4 as we're confident in our pipeline and the visibility from our long-term agreements.
Okay. You did an excellent job in FY '26 managing expenses. This is evident in the free cash flow. I'm not asking for guidance on FY '27 operating expenses, but I'm curious if there are any planned investment areas in FY '27 that will have a run rate higher than in FY '26, particularly in R&D or sales.
There very well could be, but I think we're finding areas of the business where we're able to get more efficiency than we've ever had before. We're obviously like most companies out there looking for ways to deploy AI effectively within our company and how do we get more leverage out of our existing resources by empowering them with technology.
We are still committed to achieving our guidance of 5% and 5% exiting this year, and our plans for the next year to also include 10% growth and 10% margin. If we're successful in driving growth, opportunities to invest will follow.
Our next question comes from the line of Lucky Schreiner with D.A. Davidson.
Great. It was nice to see that ARR net retention for the customers who began on consumption remains strong, but it did decline slightly. I was wondering what the main factor behind that is, considering the usage momentum and user growth you mentioned in your prepared remarks.
Yes, there will be some movement in that cohort in the near term. However, it’s reflective of where we were a year ago on our journey of converting customers to consumption. The retention metric is thus influenced by factors from a year ago and doesn’t reflect the current favorable momentum.
Got you. That's helpful. And then the gross retention improvement to 90% potentially next year was great to hear. Is the uncertainty of timing there, though, primarily a function of the longer sales cycles with CDW and when those start to benefit the renewal process? Or is that around like cohorts were coming up with the longer contracts to renew?
It's a combination of a couple of things. Certainly, the progress we made in getting a higher percentage of our customer base under multiyear contracts will drive the improvement in gross retention. We're also working on onboarding and other initiatives, and we're getting more technical resources in to interface with customers regularly, which will all drive deeper adoption and ensure they're getting value from our product.
There are no further questions at this time. I would like to turn the call back over to Josh James for closing remarks.
Thank you. I'm thrilled that we are expecting the best billings growth in over three years and expecting to be adjusted cash flow positive every quarter this year. And now that we've completed the earnings call, I will take a moment to share a personal message. Over the past several months, I've taken a hard and honest look at my relationship with alcohol. I periodically used it as a crutch during moments of stress and once I started drinking, I sometimes struggled to know when to stop. This pattern doesn't align with the person I want to be for myself and my family and my faith and the people I lead. So a few weeks ago, I checked myself into a residential substance abuse treatment center for alcohol. I have another two weeks to go of residential treatment and then I'll spend several weeks of continued daily treatment followed by a year of weekly counseling. I am making this public because I believe transparent accountability is an important step for my recovery. I never thought it could be on my bingo card that I might become a well-known, very flawed member of the Church of Jesus Christ Latter-Day Saints. I always wanted to be a great example of Christ, of my church, of my wife, my children, my parents, friends, and coworkers. But I failed in many regards on that front, and I'm committed to getting help. I've decided to take some medical time to really focus on recovery. I know that I will recover and improve myself. And going forward, I only hope I can live the rest of my life more humbly, more purely and hope to become a story of redemption of getting back up after falling down and of living a life with character of which I can be proud. I want to express my deepest gratitude to my wife and my family, who've been pillars of strength throughout this journey. Their love, patience, and unwavering support have grounded me through some of my hardest moments, and I'm profoundly grateful. While I'm focusing on myself, I will still be able to perform my duties as CEO at Domo. And as always, continue to take them very seriously. However, for a temporary period, I'll be spending a majority of my time prioritizing my health. I look forward to keeping the Domo train on the rails and executing at the highest levels. As I also temporarily rely on my team more than ever, I will continue driving the strategic conversations and relationships and will also have weekly or daily syncs with my team as needed. I appreciate your listening and pray for your understanding and support. I will try to make myself as available as I can for any follow-up questions at another time. Thank you.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.