Cloud Stocks: Domo Growing Steadily

According to Gartner, the overall analytics and business intelligence software market grew by 10.4% to $24.8 billion in 2019. Modern BI platforms continue to be the fastest growing segment at 17.9%. Utah-based Domo (DOMO) is a niche player in the BI market. It recently reported a strong second quarter that surpassed estimates and raised its full year guidance.

Domo’s Financials

Domo’s revenue for the second quarter grew 23% to $51.1 million, ahead of the market’s forecast of $49 million. Non GAAP loss was $0.37 per share, better than the Street’s estimated loss of $0.50 per share. Subscription revenue grew 27% to $44.3 million, with billings growing 23% to $47.6 million. Professional services revenue was flat at $6.78 million.

Among other metrics, 60% of its customers were on multi-year contracts at the end of Q2. Its net retention rate remained over 100% and renewal rate was well over 85%, a few percentage points better than the last quarter. It now has 19 customers paying over $1 million a year. Its Remaining Performance Obligation, or RPO, grew 16% over the year.

As of July 31, it has had cash, cash equivalents, and short-term investments of approximately $83 million.

For the third quarter, Domo forecast revenue of $51.2-$52.2 million with non GAAP net loss of $0.42-$0.46 per share. It raised its full-year guidance. It now expects to end the year with revenue of $202.5-$206.5 million and a net loss of $0.42-$0.46 a share. The market was looking for revenue of $49.4 million for the quarter and $197.2 million for the fiscal year 2021.

COVID Impact

Last quarter, Domo built a series of applications over a matter of days to help state governments manage the COVID crisis. During the quarter, it extended and expanded its contract with the State of Iowa by two years. In June, following on the crisis commence center solution, it launched its get-back-to-work collection of applications.

Domo’s Platform Strategy

Domo provides a cloud-native platform that combines iPaaS capabilities for data integration, visualizations for real-time and predictive insights, and a foundation for organizations to build their own apps to take immediate action on those insights.

Last year, Domo launched the Domo Integration Cloud, an iPaaS solution that includes more than 1,000 pre-built connectors and query capabilities to connect to and leverage data. The Integration Cloud can connect to AWS Services such as Redshift, RDS, Aurora, Athena, and S3 and Google services such as BigQuery, Google Analytics, AdSense, and Google Cloud Storage. It helps customers to quickly and securely bring together many disparate data sources to deliver business value.

Last year, Domo also announced a partnership with Snowflake, which includes an API integration and co-selling initiative, to help customers more easily leverage the flexibility and scalability of the cloud. With this partnership, customers can leverage Domo’s iPaaS capabilities to manage their entire data ecosystem and easily bring additional sources of data from across their organization into Snowflake (SNOW). Snowflake went public last week in the year’s biggest IPO that raised $3.3 billion.

Domo operates in a crowded BI market with bigger players like Microsoft (MSFT), Salesforce (CRM), Oracle (ORCL), and SAP (SAP). In the recent Gartner Magic Quadrant, it was placed in the niche player quadrant along with IBM (IBM) and Birst.

Domo went public in June 2018 and raised $193 million at a valuation of $511 million. It had raised $690 million from investors including:

• Andreessen Horowitz.
• Benchmark.
• Bezos Expeditions.
• BlackRock.
• BYU Cougar Capital,
• Capital Group.
• Credit Suisse.
• Dan Rose.
• David Lee.
• Dragoneer Investment Group.
• Fidelity Investments.
• Founders Fund.
• GGV Capital.
• Glynn Capital Management.
• Greylock Partners.
• HWVP.
• Hummer Winblad Venture Partners.
• IVP.
• Mercato Partners.
• Meritech Capital Partners.
• Morgan Stanley.
• Pelion Venture Partners.
• Salesforce Ventures.
• SharesPost Investment Management,
• SV Angel.
• TPG Growth.
• Transmedia Capital.
• T. Rowe Price.
• Viking Venture Management.
• WPP.
• Zetta Venture Partners. 

Its last private round of funding was held in April 2017 when it raised $100 million at a valuation of $2.3 billion. Domo’s stock popped 10% following its result announcement. Its stock is currently trading at $41.3 with a market capitalization of $1.2 billion. It touched a 52-week high of $47.25 last month and a 52-week low of $7.62 in March this year.