DOMO - Earnings call transcript Q2 2023

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Operator

Ladies and gentlemen, thank you for standing by. And welcome to Domo’s Second Quarter Fiscal 2023 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. of you President conference. begin Vice Lowry, Investor may Relations, your Peter

Peter Lowry

afternoon welcome. Good and

call John Communications On Bruce we the safe today, the have then and and lead with onto Kehoe, harbor will statement Felt, Julie? Mellor, Julie our Julie Chief Officer. call. off the CFO; CEO; our

Julie Kehoe

on Relations forward-looking expectations statements after also our website, our our where of related call risks, is about subject was A close financial initiatives, on projections, business the assumptions. new security financial is of press and and uncertainties issued under release include and posted laws, section strategy, and webcast. plans this the Statements to for are our and condition. including expectations made being business a of statements market statements COVID-XX the for our to our on variety call the Investor business federal impact go-to-market sales this our These

information we refer of For recently most these discussion results documents Form release, annual press particular, recently may a the XX-K uncertainties, statements. filed on filed our These most other XX-Q. contain report risks cause please SEC, identify in quarterly important from and factors our Form and actual those materially to our risk today's on forward-looking in differ to filed and documents contained and with report that our

measures our refer tables John? substitute from to in that, a their isolation comparable for believe measure. financial it are basis. will directly of should GAAP of With unless or supplemental results to today's I'll we revenue, in non-GAAP be results. release to Please GAAP a over to financial press as call, which will addition useful considered during on in reconciliation non-GAAP non-GAAP our addition, we of turn John. a non-GAAP operations and discussing most In we be Other measures Domo's our not discuss measures stated, otherwise as than the These earnings performance. for measures,

John Mellor

on our And you our was subscription In very Julie. and Thank our QX, much, total us growth XX%, was thanks everyone billings revenue XX% growth revenue growth for today's XX%. call. joining to was

Our key such as CRPO growth well. about and indicator were XX% metrics ARR as leading

into parse our results major clear, as up corporate even corporate sales are not average over when there is In in good selling growth revenue divergence small, our classify with is well we and figures. highlight. in a We to However, American that we be $X significant higher. corporate I'll these had to six deals $XX,XXX and And revenue. you range customers two over price billion was between groups our corporate, XX% experienced In growth. group companies corporate very with sizes this growth the over North growth XX% can of deal with ACV, new

their visualization businesses. have for staff incredibly The below And customer for were differentiated of corporate market offering to fact produce We the needs to technologies eliminates revenue us enterprise earlier year XX% enterprise, our experienced value-added our strong well This to the provides to the looking in produced has go results we need of solutions results. for. we that not only an data In growth we sales X%, target changes to customers rich in tools only but technology ACV of rep recent to led overall allows and the the growth and turnover. have the rate. made not stack our infrastructure of proposition about the this growth alternative that businesses, platform stack comparison with large pale business high those provides support makes technical typically complete impact power

planned. are the than ramped sales we side capacity entering with So less enterprise QX on

data transformative enterprises for proposition help data and the line especially solve experiences, the provide strong. unique of mile business value leverage. last Our challenge for is of that extremely We

these half significantly To the sell efficient more acquire do is changes to to sales and revenue, our it in realignment of up our will We and this growth. in efficient to cost share and few profitability second believe minutes. impact takes reduction Bruce our digital somewhat Domo have capacity cost customers but transformation cost reduced corporate stage a or environment. long outlook of higher further we help the for for Domo’s reallocation of and enterprise the of value this in half overall flow the can up makes all we The also implemented. These to growth success believe the in cost are we is the puts reductions time cash already meaningful into we believe cash across we us we been the not toward are flow, been in and operating generate long-term positioned capacity year. about of the have this still financial seeing drive the to sales to more effectively. in And more us realigning we growth. the us are reduce which enterprise deeper recurring corporate expect higher Board sales uncertain set reductions cost than the have more cost particularly positive businesses, However, We of logos more sustained in drive is this the a about sizes success customer near also a operating and and some an and our margin, term of implemented plan given reduction organizations we very the our term. new resources, march our which their of costs long-term at to it about for sense the to about non-GAAP do moves be To uniquely how deliver strengthen for and fuel higher think will our It's macroeconomic excellence. customers. good clear, will commitment new long-term enterprise position growth enterprise growth. predictable, customers customers. for of committed so remain these Enterprise corporate force favor more our our

to customers enterprise new continue a particularly logo add quarter. marque We had pace, good And including strong region customers. our at new Japan internationally, a

deliver talk Now highlights a more X,XXX about deliver energy This with $XX the the business. let that sales than One in employees. in quarter win more demonstrate the me and of than billion few through company line value customers was an solution we significant to deeper our that a primary month competitors one of customer line a the self-service for drive of to we analytics deliver delivered one its two couldn't self-service years. organization. was looking into transformation After to solution digital after a business POC,

siloed for a sources new marketing for company enterprise was sources provide assess Another digital win channels chose Domo specific disparate marketing insights the investments. return to on based to KPIs marketers dozens with their to to department. react time collect data logo and connect XX to digital that on real needed and This on company our of to quickly pharmaceutical and data ability Fortune spend maximize

all new its short Domo a is corporate of with group Domo and university was access and quarter share to that This by this demonstrated that a food legacy was to and Domo to was corporate customer the our leading sell the Another operations. solutions business chose solutions The effectiveness clients. market. human up proof its for able its data and months of its two combination with decision customers the wanted This Domo unable power these a growing integrated data in theme world's leading HelloFresh, driven effectively. maker. expand efficiently well integrate significant win resonates solution continues this One resources was which in portion private of insights the after for was best to to deliver business be customers. two partners a providing to which datasets concept in speed-to-value to initially chose offering for differentiated quarter that to common line of Everywhere, logo workforce Domo university two chosen the customers with learning actionable the was analyze deliver to allows wins that line it years. from quickly very win of of

business have to on. more to touch I hand I Before few Bruce, this want I over a highlights

pleased in has extensive experience, where she helping just hired Wendy as initiatives including role double from Steinle Wendy Adobe Chief marketing us enablement Marketing I'm CMO almost years. three she software Experience strategy also announce six years very joins at Officer. have led cross-functional and and significant to new was that BXB almost Adobe's business Digital that a go-to-market we in Degreed First, where she played

a to leader This value business to of our the user, was of the to IDC's we BI the from customers. in our sixth scape overall on ability was market part Most our ability named also study in the XXXX as serve based and year. breadth the Domo analytics Second and for consecutive our technology our platforms. deliver receive speed, market of business an Dresner intelligence strength as continue analysts Crowds recently and to Domo of industry for our the speed named was analyst. leader well for in Wisdom validation capabilities

hires QX, all I workplace value heading growth market as the equitable where believe And Domo our of well our all us our for continued as Domo diverse Women towards I are companies diverse, on positions build compelling XX% Best very opportunity. third a sizes, for next talent open position Parity.Org Advance year. making year. the into am a of list to optimistic changes was look named our in new now candidates. the about inclusive to consecutive to important for In culture. we the critically is ever to best were and for culture Third, and position Companies we thrives. long-term proposition we And commitments

Bruce. it hand I'll over to Now,

Bruce Felt

margin. Thank subscription John. growth In we and QX with billings XX% XX% gross subscription revenue a posted you, record growth,

lower increase at We and was time the retention ourselves such due of of opportunity, $XX.X costs. customer to million, the a of XX%. delivered factors, QX to had company-wide billings same below positioned one-time XX% our was kind retention costs advantage XX%. as of new remained Gross some and part lower confident spot acquisition Net was contracted corporate changes which customer of ARR lower to to gross a retention reflective gross As we're full our mentioned, for is in on XXX%, major our and than don't at have the our our North more than the a enterprise than we customer revenue customers $XXX of a to million customers customers made and to corporate to through taking With in ACV closer customers, growth point acquisition organizational ACV Sales less through ensure our American QX. lower XX% corporate we're focal We is new basis due of in QX changes much retention. think than sales insolvency. executive sales above realignment long-term sponsorship trend. anticipated bright to year-over-year right that

Our we ago. million dollar $XX.X current revenue a RPO customers On year-over-year, RPO revenue billing represented XX% QX, up under XX% of grew representing QX total in weighted rates and of $XXX.X Subscription of from of slightly by in a of mostly year several QX. flat was was XX% up XX%. $XXX.X have XX% in in driven now contracts customers. QX. grew a the large measure multiyear at lower year-over-year, our our year-over-year XX% International to total from QX, end revenue, average revenue XX% grew quarter of down total from million, XX% revenue million. XX% total Service increase XX% with revenue year-over-year was while the

last was increase margin from of operating QX, X.X percentage continue expenses at point gross margin. a In pleased X.X group We're of sales last level head our from Our as with gross XX.X%, from very subscription year, and increased QX QX. expenses up points count. year this record from to primarily percentage XX% in sales up we

our In down share was year weighted on $X.X per was based in is operations outstanding, and basic was $X.XX. diluted. $X.X And average Our net a This million. QX, loss from cash million sales $X.X $XX loss million ago. million, net used

to approximately $XX cash quarter balance from declined last million. Our

fiscal our me QX plan sales cost impacts full let sales year reduction reduced ‘XX discuss and outlook. how and Now our capacity, realignment

QX about QX This impacted had million. For that the are the John lower QX billings is capacity sales of from late by spike mentioned. ramp a $XX in previously in we guiding outlook turnover

element After cost our me the is realignment XX% granular up Let turnover, guidance. ramp more core business capacity capacity. of overall stand is where the driver get Which sales year-over-year. with and we reduction our rep in new on the

of reps have we we However, board as with on significant here also a sit record total ramping now number capacity.

rigor we QX. at this the to job do to in is Our will sales rates able capacity get the that late to experienced point reduce rebuild back rapidly we If rep turnover to we're from the generating now sales get it. that the we With same where of was rep our growth XX% ramped for operational we're growth want string exhibiting confident can quarters, responsible our capacity we the trajectory. organization

continue also sales more corporate to reps, will weighted We just towards new customers. hire

For because quarter. of spending XX% realignment about above On to the costs outlook approximately costs of of reducing million half related operations in used $XX about of current plans. cash fiscal the one-time XX%. growth the be expenses, out we're expecting billings year we're Because taking and second $X year-over-year we're the for our million our other from to expenses

expect we flow cash operations breakeven. be from roughly However, QX

of tailwind billings a QX than cash Going expense much significant forward, year. be our specifically, between which be heading expect two, a our flow In lower expected difference run next into the we will expect we rate to level. QX should

our Our year-end. points margins from reported expense expected expand by XXX to by operating QX reduction levels basis is over

guidance metrics. for the our GAAP Now

third the to expect million $XX of of year $XX quarter GAAP in the million. to be For we ‘XX fiscal range revenue

non-GAAP basic expect net We $X.XX to average and of assumes loss $XX.X $X.XX. weighted basic million per outstanding diluted. and shares diluted This share

to we fiscal to million the year XX% to expect million, $XXX representing of XX%. full of year-over-year growth the be ’XX $XXX revenue in For range GAAP of

We per believe $X.XX prudent in we're to diluted. have are With sales our diluted $X.XX. million This shares weighted drive growth to basic efficient we $XX.X the average expect run in share actions most taken In the and call sustainable, some basic non-GAAP net while and notably short and below closing, assumes that, loss drivers, the of Operator? open our growth. questions. we'll longer-term outstanding right we for the longer-term actions growth capacity, of

Operator

the question Mielczarek first from of with Your line Blair. Kamil Instructions] [Operator William comes

Your line is open.

Kamil Mielczarek

Hi, thanks question. for taking my

sales sure extent related guidance. versus are to related the maybe To I to headcount want weighing revenue of growth? what on factors understand that lower drivers productivity changes the the Just lower make is other macro full-year the or

John Mellor

the is I Yeah. by would to capacity. Hi see capacity. say, fundamental all But enterprise. say, from own did would fundamentally other the -- potentially driven than deal driver macro, at Kamil. large not related internal rep it's our really mean, I here more ramp large dynamics impact sales We the the I an and

Kamil Mielczarek

it. Got

So I quota mentioned in head growth the quarter. carrying think count Bruce that, was XX%

through to Is And still expect in the think back the uncertainty the pace into we as months, to about is or get right kind should of how So when now hiring that there few some growth? realize that that reaccelerate goal will but of year? I tell to XX% hard we to further happen?

John Mellor

Let and -- sales rep speak we When generally rep contribute firepower, a we terminology. have we terms capacity, ramps, they make clarify of sure understand we in speak like just anything. hire our you like they it me don't call when about

months to fraction So they are about nine rep. there are full a considered [indiscernible] just after a of and our year

sales force, script, I capability is what like to a in of add me which clear. but the I'd ramped be we to just production mentioned XX%. The the point which that, my were from real capacity, let So up

and sales count. build to let what We we that avoid a us, automatically that very we percentage higher have them will -- number actual good allow to manage build them capacity them and so than is, head we ramp. effectively do growth. And they need turnover the so with And stay in believe

to and to need have have that allow head count. it nurture reps, as head So progress count Difficulty] we to as a continue sales that, their sales we will And all right our very more now that let is successful at do developing capacity. to continue sales hire record we in here and [Technical continue actually we and we sit number doing of

more will We any capacity, say, without to to hire I reps. have but actually hiring continue would do plan significantly reps, we

Kamil Mielczarek

the for Okay. That's really helpful. you Thank color.

John Mellor

You’re welcome.

Operator

next line the Wood question from of Cowen. Your comes with Derrick

Your open. line is

Derrick Wood

for questions. Thanks guys. Hey beginning missed the my call. the taking of I

tweaks for And go enterprise. trying it, what back. you're been and months XX forward? business kind revive step you did that to the some of you again I what just So as What the seen had the new we've recently through we Obviously, lot make just Could more momentum you building guys a enterprise taking part the slowdown a I mean, -- ago maybe plus look miss that do think wrong? strategy the of went motion. to is of going in

John Mellor

Yeah. Derrick, this Thanks question. John. for is the

and pretty those leads the marketing So sellers I And execute channels and the corporate pretty that when generate enterprise, are that. proposition just go-to-market that we fulsome buying sales a characteristics see value process we think for enablement a We've look on at got need. corporate, the in customers those in we've got way with and and can different. motions that matches of

to It's customers to current new I towards to the that generate is doesn't efficient products. do to it new really think Domo stage value because enterprise, those, given in aligned with the the struggled the incredible these model believe just out -- better cost of the getting logos we've customers we growth we ACV. and investment predictability where customer, sell Domo are and the time have with anything just the to most of that fantastic a have got value and corporate we we've deliver we enterprise more

make that does sense? So

Derrick Wood

just And That enterprise Yeah. makes then of what just part, -- the what like sense. on strategy? the play for the stay is so second new

John Mellor

it. got it, Got

growth to because we a So to believe pretty we opportunity significant market, is real have there continue there. for a do enterprise that go

the shifted selling Just from motion. a significant to headcount corporate priority standpoint, have we

well, growth us believe future. and in the a for driver alive significant still enterprise that’s So we

corporate the engine. logos We put are selling going into disproportionately capacity to new

Derrick Wood

mean, big of sales Got growth. part is equation And the of Yeah. the it. productive obviously, capacity Bruce, I

the the joined, to more even marketing, you newer get there with time help then the And ramp terms lead-gen, growth Just are other things of of that levers that to reps leverage corporate help side? what's lot these on productivity? can you us have average in distribution remind could partners, leverage

Bruce Felt

Yeah. dramatically. is there. opportunity front, There the the is building I capacity doing will All are mean, start driver, of still of that's gross sales to second Yield I'll with key okay grow. out so we're On to lots that grow. the levers improved part first. still on still with hiring intact. marketing a well, spend contribution very room the be Partner

The the customers level in intact. still are unique it's particularly fact for our unique, rates the leverage both renewal I reduces significantly IT it's that such for groups. still of corporate improve. think -- side, a our platform the in platform absolutely find set improved on it and a all so the because XX% and that's we at and to continue corporate neighborhood, play. rich such that's And Our then requirement positionings is But that awareness technologies complete will brand it's their

in ramp On to that. ramping, enterprise, often nine corporate really it's reps longer months model the three a at data, than the months. to but look year, six the the when our In it you has

ramp them XX% can really growing here helpful the reps, hire the they much predictability is favor have quicker. and can train just that’s easily quicker generate the putting we efficient when segment and even to and one and XX% that's last business we're you of home and hire can So corporate and so that of more that then business extremely did much in and growth them that's because a then these quicker in thing reps, resources doing and business, you because business produce ways more many we quarter you grown than growing

so space. in today. that be macro just to ought just well in doing this just upon environment based think ability our to is what and I execute we And this

-- next think this up focus and really, really think into So really have we setting QX through sets ourselves that's that going our we're I placing QX, we're us in we'll where probably well. a better we'll work for and up year

Derrick Wood

side, was on corporate? the churn clear not And the enterprise more happened the, to be the that

Bruce Felt

in on them by real would most, The was the us was just was just bet. side. the they what there think really were Yeah, and the spike enterprise changes. the really matter impacted the turnover. corporate -- did good they fundamentally is, side a -- organization doing And we had significant, the in say, really that I to They cause capacity of that's that it ask replacing churn in the we're placing a

Derrick Wood

Understood. Thank you.

Bruce Felt

welcome. You're

John Mellor

Derrick. Thanks,

Operator

from the of comes question line Securities. Walravens next JMP Pat with Your

open. is line Your

Pat Walravens

Thanks. Oh great.

I this sort QX Bruce, So but of I'm just the billings is mean, right? in eyeballing X%, growth model,

Bruce Felt

right. That's

Pat Walravens

Yeah.

looks Okay. X% like this is like And or it's is XX%, then QX, the I'm eyeballing, something right? that part

Bruce Felt

right. That's

Pat Walravens

Okay.

So what the John, sounds what like mean, happened? by reps, surprised it in the -- were turnover you I

John Mellor

Yes.

thanks for question, the and -- So Pat.

the you brought then that back significant changes the pretty in we where in market. the I and quarters then the organizations. really I'm go enterprise comfortable So reps how and zoom some that's out and got were turnover the year. when here. big pipeline to in through And the look hygiene of made senior of of started we that I some enterprise QX. Domo look data the go that sales sales in saw in leadership we We the and late issues late at most kind some got sales to we pretty the expos to in some QX think went at to the run in of a of we beginning think investments changes the And rigor if market. that we first leadership, made we've made and really And made And some investment with of on the couple pipeline at change looked reasonable. a to see said hygiene to side

us. for process we of that's still through. kind went really is business And enterprise strong think a So that we the opportunity the

are right to the grow, that look and at go the grow how growth like our stage now. be where feel a is in market how we to business, need we investment in corporate efficient So predictable for corporate we place if in we we and better

Pat Walravens

million, cash be decision? making you I instead would it. got of you $XX a Okay, $XXX had if million different in mean

John Mellor

fantastic our looking mean, predictable is we've to get business. think is of -- what half for how the growth into got Enterprises we're I it's I ARR. roughly and Perhaps.

that do in invested that potentially we're growth vectors. that million highly get predictable $XXX gives bank can customers us to able we on growth us I'm other be these looking for we invest just to So that where their consistent gives in the success.

Bruce Felt

and like was add, add just I'll Speakers] would to [Multiple desire I saw that, kill just given works. just environment now I going what and add in going cash positive, such the a still clean us to expansion to we're still we're [indiscernible] our But equation even really for be with enterprise we the going to this platform enterprise, flow get because growth, margin

state what just we big and was big Just are into ran business. as making it just the to go a we a bet, given where trying on of

Just off. I going in pig just environment, to was this in particular,

we're so by as that's kind And it of well. also And cash right safe preserve efficiently. and we're it should in playing the the it mode playing now. And way,

of growth pretty when calculus up our you this the strengths on. helpful overall at point would us really just with whole it's just be this accelerated mean, just getting decision, look well from I So not it to lines and

Pat Walravens

of Okay it over and let's it. news just -- then getting just in bad get the spirit well, out

No, lost, something Nike that that Speakers] the we familiar the or or are So that. like we’re they lighthouse enterprise with of sort customers [Multiple customers okay. Target

Bruce Felt

reliance do extremely zip very to of same that's and situation me anything no big we the does identifiable customer. loss have been. lower it's so it, or to we -- not their No, power are to some mean or competitive in really point have environment -- with on a or just the had code go particular We the platform anything. to have do rates basically and I they I the didn't didn't really renewal mean,

Pat Walravens

you. Thank Okay.

John Mellor

Pat. Thanks,

Operator

question Your of the Stanley. from comes line Singh Morgan with next Sanjit

Your is open. line

Sanjit Singh

subscription taking $XX we from the at of for down year Thanks revenue much question. look that’s Any million. roughly versus services? Bruce, coming how by it's sense full guide, if the coming

Bruce Felt

rest and In better QX services magnitude. we than bit the the a to basically give order of QX, out better the a little QX little QX than is model, you subscription are running bit

Sanjit Singh

Yeah.

the So got of helpful. that’s balance We roughly services, to back on bit really times. question. that sales the couple little And -- from a but that's flattish going a then growth, capacity of different coming

now, I have we expected sync talent. competitive been environment have we're It's the did see little a -- easier, obviously the I actually year. should think that see what typically it start a the the turnover on would for been sales to the we is, why hiring at front. fiscal get It on of bit really least

typically leave is to because or sales meeting when So high. see a don't too are the the path people quota quotas they

ramped following you what's there recent where the is this drove So on more year. on what of Is sort are I going that some organizational having QX going is make -- that some of reps can't something my exit. number or the leadership

John Mellor

Yes. Sanjay, this is John. Thanks for the question.

and -- the that territory changes as at the of quotas in cetera, happen enterprise assignments, those year and changes based I think on pretty reactions et the we put don't immediately. for significant beginning some in that that

our impact we is control of I think, in are and late in where think And saw we are these things that what we fix. really the QX I we imminently is, saw think that.

yes. question your to fixed And it. So we've is,

Sanjit Singh

Understood. Great.

get the to taking question. clarity wanted Abruptly] just [Ends some I Thank you more Okay. for that. on

Domo (DOMO) 25 Aug 222023 Q2 Earnings call transcript