Data visualization and business intelligence company Domo (NASDAQ:DOMO) missed Wall Street’s revenue expectations in Q1 CY2025, with sales flat year on year at $80.11 million. Its non-GAAP EPS of $0.09 per share was 53.6% above analysts’ consensus estimates.
Revenue: $80.11 million vs analyst estimates of $77.68 million (flat year on year, 3.1% beat)
Adjusted EPS: -$0.09 vs analyst estimates of -$0.19 (53.6% beat)
Adjusted Operating Income: $1.03 million vs analyst estimates of -$2.68 million (1.3% margin, significant beat)
The company slightly lifted its revenue guidance for the full year to $316 million at the midpoint from $314 million
Management lowered its full-year Adjusted EPS guidance to $0.22 at the midpoint, a 35.3% decrease
Operating Margin: -17.9%, up from -26.8% in the same quarter last year
Free Cash Flow Margin: 1.3%, down from 7.6% in the previous quarter
Billings: $63.9 million at quarter end, down 2.4% year on year
Market Capitalization: $514.2 million
StockStory’s Take
Domo’s first quarter performance centered around the company’s ongoing shift to a consumption-based pricing model and operational changes made over the past several years. CEO Josh James highlighted the impact of longer-term contracts and improved customer retention, supported by deeper engagement with data modernization projects and advanced analytics, including AI. Management also noted that customer adoption of new AI-enabled features and workflow automation tools contributed to higher user engagement and salesforce productivity. CFO Tod Crane added that subscription remaining performance obligations (RPO) growth and sales efficiency were key indicators of the new model’s progress, while gross retention improved for the fourth consecutive quarter. Leadership’s discussion reflected a cautious view of the external environment, emphasizing that recent gains resulted from internal changes rather than broader market tailwinds.
Looking ahead, Domo’s guidance is driven by expectations for continued adoption of its platform’s AI capabilities and further expansion of its ecosystem partnerships, especially with cloud data warehouses (CDWs) like Snowflake and Databricks. Management believes the shift to a consumption model will drive both increased product usage and contract durations as customers explore advanced features without licensing constraints. CEO Josh James stated, “Nearly every customer conversation that we are having aligns with some form of AI-driven workflow or agentic exploration.” CFO Tod Crane noted that improving retention and growing RPO support the company’s outlook for profitable growth, though he acknowledged that macroeconomic uncertainty and customer caution persist. Leadership expects operating margin expansion and modest billings growth through disciplined investment and improved sales execution.
Key Insights from Management’s Remarks
Management attributed the quarter’s performance to the combination of its consumption pricing model, deeper integration with ecosystem partners, and increased adoption of AI-powered features.
Consumption-based model impact: The transition from seat-based to consumption pricing allowed customers to use more features without upfront licensing barriers, leading to higher adoption of advanced analytics and AI tools. Management reported that over 70% of annual recurring revenue (ARR) now comes from consumption customers, heading towards 90% by year-end.
Ecosystem partnerships accelerating pipeline: Deeper integration with cloud data warehouse partners such as Snowflake and Databricks led to a rapid increase in partner-sourced leads and pipeline activity. Management cited a more than 200% increase in deals moving through the sales pipeline from a single partner quarter over quarter, with expectations for other partners to contribute similarly as technical integrations mature.
AI agent adoption and innovation: Domo launched Agent Catalyst, an AI toolset for building automated workflow agents, which saw strong initial uptake with over 200 customer sign-ups during the company’s user conference. Customer feedback indicated that these agents were deployed quickly and improved operational efficiency, supporting Domo’s positioning beyond visualization into AI-driven business process automation.
Improved retention metrics: Gross retention improved to 86%, marking the fourth straight quarter at or above 85%, while net retention rose sequentially. Management attributed these gains to the new pricing model, multiyear contracts, and expanded product usage.
Operational efficiency gains: Management pointed to increased salesforce productivity and disciplined cost controls as contributors to positive operating margin in the first quarter. CFO Tod Crane emphasized that leverage from ecosystem go-to-market motions would support both growth and margin expansion moving forward.
Drivers of Future Performance
Domo’s outlook is anchored by broader adoption of its AI capabilities, growing partner-led sales, and enhanced operational discipline, while macro uncertainties and evolving customer needs remain key variables.
AI-driven platform expansion: Management expects accelerated adoption of AI workflow automation and agentic tools to increase platform usage and customer stickiness. The recently launched Agent Catalyst is anticipated to drive deeper engagement as clients use AI to automate business processes and derive more value from their data.
Partner ecosystem growth: The company projects that maturing integrations with cloud data warehouse partners will generate a larger share of new business over time. Management noted that as technical readiness is achieved with additional partners, partner-sourced deals could match or exceed those from traditional marketing channels, expanding Domo’s market reach—especially within the enterprise segment.
Retention and margin focus: Leadership is prioritizing improving customer retention, aiming to exceed 90% gross retention longer term. Operating margin expansion is expected to continue as sales efficiency rises and cost discipline is maintained, though management acknowledged ongoing macroeconomic caution and slower billings growth in the near term.
Catalysts in Upcoming Quarters
The StockStory team will be closely monitoring (1) the rate at which consumption-based contracts approach 90% of ARR and its effect on retention, (2) the scaling of partner-sourced sales as new cloud data warehouse integrations mature, and (3) customer adoption of AI agent tools like Agent Catalyst. Execution on these fronts, alongside continued improvement in operating margin, will be key for tracking Domo’s progress toward its stated growth and profitability targets.
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