Q3 2020 Domo Inc Earnings Call
There will be a question and answer session.
To ask the question during the session you'll need the press star one of your telephone please.
Please be advised of today's conference is being recorded the.
If you require any further assistance please press star zero.
And with that I will hand, it over to Peter Lowry day.
Almost vice President of Investor Relations. Please go ahead.
Good afternoon, and welcome on the call today, we have Josh standard, our founder and CEO, Bruce felt our CFO and Julie Keyhole, Our Chief Communications Officer, Julie will be the opposite our safe Harbor statement and then onto the call Julie.
Thanks, Pete our press release of issued after the market close and the posted on the Investor Relations section of our website, where this call is also the webcast.
Statements made on this call include forward looking statements related to our business under federal Securities laws, including statements about financial projections, the plans and expectations for our go to market strategy, our expectation for our sales the new business initiatives the impact of code the 19 on our business and our financial condition.
These statements are subject to a variety of risks uncertainties and assumptions for a discussion of these risks and uncertainties. Please refer to the documents we file with the SEC in particular today's press release, our most recently filed annual report on form 10-K, and our most recently filed quarterly report on form 10-Q.
These documents contain and identify important risk factors and other information that may cause our actual results to differ materially from those contained in our forward looking statements.
In addition, during today's call, we will discuss non-GAAP financial measures, which we believe are useful as supplemental measures of governments performance of it.
The revenue unless otherwise stated we will be discussing our results of operations on a non-GAAP basis. These non-GAAP measures should be considered in addition to and not as the substitute for or in isolation from GAAP results. Please refer to the tables in our earnings press release for a reconciliation of our non-GAAP financial measures to the most directly.
Comparable GAAP measure.
With that let me hand, it over to Josh Josh.
Thank you Julie Hello, everyone. Thanks for joining the call.
First I hope that everyone of them good health.
As we all know the Sears presented the unimaginable health and economic challenges across the globe and we'd hope to standard like there is a once in the last time of events.
On the call today, I'm going to focus on a few items.
First a huge financial milestones the we've been working poor for years and the implications of our recent success increased financial flexibility in our plans to drive efficient revenue growth.
Second how.
Although most differentiated platform uniquely positions us to help our customers with their digital transformation initiatives.
Including several significant of cells and wins across a variety of industries.
And I'll touch on some recent re industry recognition.
Some of the start with sharing how instead of going on that we achieved the significant milestone.
As of Q3 total is the recurring revenue cash flow positive company that has had the customers with growth retention north of 90%.
And is growing subscription revenue north of 20% with the total annualized revenue run rate of over $200 million.
This is the culmination of over 1000 people, including some of the 100 that are here today and we have been working on this for over 10 years.
This is the culmination of listening to customers and building what they need.
This is the culmination of putting our hearts and souls into our customers and our vision and we are only just getting started.
Were the only publicly traded independent cloud based company and we of countless opportunities in front of us.
So a huge thank you to our customers.
The huge thank you to our team members by partners and our investors of always believed the us.
Now we are going to return that belief with greatness.
Not many if any believed we would get the cash flow positive. This fast after our IPO two years ago.
From there on the calendar from Q3 fiscal year 21.
Adamantly believe we would make it one way or another in.
Despite the ups and downs and Pandemics earthquakes unrest political upheaval cuts from losses.
Great people and the wonderfully innovative customers banded together to create what is now a world class organization.
I recently, but of a Billboard that says simply.
Theres of Pony in there somewhere.
The references from President Ronald Reagan.
He often told the story the story concerns 20 boys of five or six.
Worries of the boys to develop the extreme personalities one was the total pessimists. The other of total optimist the apparent to come to a psychiatrist.
Well first of the cytokine history, the the tough pessimists.
Trying to bait, Brian has outlook the psychiatry hes took into a room piled to the ceiling the brand new toys.
But instead of yielding with the light the little boy burst into tears.
What's the matter of psychiatry has asked baffled debt.
Those who want to play with any of the toys.
Yes, the little boy evolves, but as I did I'd only break them.
Next the psychiatry history, the the optimists.
Turning to his dampen his outlook the psychiatry took him to of room Peter.
Well to the ceiling with horse manure.
But instead of wrinkling his nose and discussed the optimists emitted just the yelp of the light and claims related to the top of the pile dropped to his knees and begin gleefully digging out the scoop after school with the bare hands.
What do you think you're doing the psychiatrists assets.
Just as baffled by the Optimists as he has been by the pessimists.
With all this new newer of the little Boy replied, beaming, there must be in of Pony in here somewhere.
Well I think president Ronald Reagan certainly could have been referring to the terminal that hopefully measured optimism for entrepreneurs.
And so for good luck I put up that Billboard at the beginning of this quarter the repeated that phrase theres of Tony in there somewhere.
We've been through our shares of ups and downs, but I was always a 100% convinced this will eventually turn into a fantastic even world class company.
Maybe it's my entrepreneurial optimism shining through.
But we found the pony of big recurring revenue fast growing cash flow positive company with all kinds of happy customers innovations and market positions to go out and capitalize on.
Since our IPO, we've been committed to getting to adjusted cash flow positive with the cash on our balance sheet without raising adoption.
And I'm thrilled to announce today that in Q3, we achieved it and.
And in fact, we achieved it with $84 million remaining in the bank.
Substantially more than anyone to match it.
In Q3, we posted 25% billings growth and acceleration from 23% last quarter.
The continued growth in our base of the recurring revenue and reaching cash flow positive status gives us increased financial flexibility to pursue the tremendous growth opportunity in front of us.
Now, let me talk a little bit about our unique positioning and helping our customers with their digital transformation initiatives.
As we all know what has happened this year has force companies our employees customers the supply chains to re imagine how they operate.
The the need for real time information speed and business agility. The digital transformation provides has only accelerated.
These elements have always been crucial and other reason we founded the company.
But in this climate these business priorities have moved to the forefront.
Our customers of challenged us to solve their business problems with data at an unprecedented speed.
And we've delivered for them.
Total is unique platform has three pillars of the driver differentiation.
The first is our data integration capabilities, the felt backend integration at cloud scale without moving data.
Second is our ability to drive insights and action with AI and if the well governed business intelligence power into the hands of business users in an easy to use sales service and Mobilefirst solutions.
Third is the ability to build data driven apps in the low code no code way that can monitor modernize business processes at high speed and extends the value of data analytics and insights outside of the organization to customers and partners.
Our platforms ability to solve the scale and in record time, the Bakken and the front end challenges to make data more valuable internally and externally for customers.
The huge key differentiation.
Our most significant wins this quarter were driven by proof of concepts Pfcs, where we were able to demonstrate our ability to deliver better solutions faster than the competition.
The reason, we can compose solutions. So quickly is part of the inherent flexibility and scalability of the Domo cloud first platform.
Which brings all the services needed integration data management data science, AI and machine learning governance distribution to citizen developers and more to the data and apps.
Three of intelligent analytics based applications built on the dome platform and the low code no code environment, we are helping customers to rapidly modernized business processes, leveraging artificial intelligence and automating workflows.
Our platform.
Through our domo everywhere offering.
Also goes beyond traditional embedded analytics capabilities and enables customers to extend the analytics and the value of their data to external stakeholders, such as customers and supply chain partners, while also generating new revenue models.
Ill share a couple of examples of this in just a few minutes.
Our view is that the demand for speed Bill.
The business agility and the real time analytics is not something that goes away. After the pandemic and we will continue to deliver this to our customers now let me discuss how we're thinking about our increased financial flexibility and our plans to drive efficient growth.
I'm, particularly proud of how our employees have delivered trends the pandemic.
I would point out that our recent performance occurred against the backdrop of pretty significant cost reductions this year and the severe economic downturn.
Our employee head count in Q3 was down year over year.
We've continued to grow our recurring revenue with the reduce expenses.
We've also been relentlessly focused on customer success.
Which is reflected in our higher retention rates.
Going forward, we plan to investing clients services and other areas of our business the directly support our ability to serve and grow existing accounts.
So now let me talk about some of the business highlights from Q3.
One highlight was the seven figure annual upsell I mentioned on last quarters call with the Fortune Global 500 retail conglomerate.
We one of the steel based on our outperformance in the speed and scale compared to the competition.
Don't was chosen to help the organization integrate massive volumes of data from its existing systems without replacing or re architecting them. So.
So business decision makers could understand critical time sensitive business metrics.
One of the key factors in our selection was not just don't was ability to access and integrate data, but our ability to provide data governance at scale and do so without adding burden to already strained ita teams.
The most large organizations. This customer has multiple related technologies news, but none were built to perform the cloud scale and in record time like Domo.
Another highlight in the us federal space, where we leverage our partner relationship to close when almost seven figure annual new low of contracts to power PR AC of public facing website. The gives taxpayers the ability to see and explore pandemic relief spending data.
Several of our largest spans from this quarter demonstrate the success of customers, having with domo and how we can grow with the success.
For example, we closed a seven figure of cell with technology and media conglomerate that is using our don't want everywhere solution to extend the value of its analytics and data and the full power of domo externally to its community of tens of thousands of partners.
We were initially chosen based on our superior speed and scale.
The significant expansion was based on the successful rollout to a subset of the company's massive partner network.
We also signed the large upsells deal for Domo everywhere, the give us the learning management system or LMS software company, the ability to embed and monetize LMS analytics into a software solution for its growing customer base.
Before the initial contract this customer had evaluated numerous solutions and also build the homegrown option. The just didnt completely from their vision.
After a plc the customer slippage zone will because it was the only solution that allows the company to extend the interactive analytics and data experience. It one for your customers of scale.
The most recent expansion was driven by the demand the company has seen across the rest of Skus from the base for its domo powered analytics, which the company has also turned into a new revenue stream.
Now, let me talk about some recent industry recognition.
The team continues to receive accolades the reflect our commitment to product innovation customer success.
And our corporate culture.
Most recently domo with our customer Unilever was named the winner inventories of researches digital leadership awards for the support the data and the the don't platform play the in Unilever's National philanthropic initiative, United for America, which provided under the $25 million worth of support the local communities.
In addition, domo was named and overall experience and credibility leader in the Dresner Advisory services 2020, Esmee the study.
The study.
And lastly dome was named for the ninth year in a row as.
As the Youtube business best companies the workforce.
In closing I continue to be impressed by the work our team is doing to help customers thrive and im impressed by our employees performance in this environment.
It is extremely rewarding as well to new we achieved record quarterly results. While also cutting the significant milestone of getting the cash flow positive in the quarter with plenty of cash in the bank.
Looking forward to continuing to execute on our tremendous growth opportunity.
And I sincerely, thank our employees for their commitment and I'm. So excited to take a moment and celebrate this milestone with them and so incredibly proud of all of they've accomplished and with that I will turn it over to the Bruce.
Bruce.
Thank you Josh we had a strong Q3 and at the same time, we hit several important milestones this quarter.
As Jeff mentioned, we met our commitments or its positive operating cash flow without the need to raise additional capital. New fact, we reached this milestone with $84 million in the bank substantially ahead of our plans at the IPO and we intend to stay operating cash flow positive going forward.
Another milestone as our growth retention rate increase the over 90% represents a record high.
Third milestone as director of subscription gross margins at 81% and.
An important metric and driving long term profitability.
These achievements are a result of the many incremental internal improvements we have made across the business enhance the by the market shifting towards solutions, such as ours that provide modern ways to create distribute and use data the run businesses.
I will now review of the details behind our performance and then discuss fourth quarter and fiscal 2021 full year guidance.
Our Q3 billings of $55.7 million.
Year over year increase of more than 25% was driven by strong new customer count growth ups.
Up sales and expansions and high retention rates we.
We delivered these results overcoming a tough year over year large steel comparison by generating a much higher volume of transactions the one year ago.
At the same time, we have maintained our standard of billing terms, even against the backdrop of pandemic driven of challenges in south of the segments of our customer base.
We have 59% of our customers under multiyear contracts at the end of Q3.
The remaining performance obligations or our PEO grew 21% compared to the same quarter last year.
Current archeo.
Archeo expected to be recognized as revenue over the next 12 months grew 22% year over year.
Q3, total revenue was $53.6 million a year over year increase of 20% subscription revenue grew 24% year over year and represented 87% of total revenue.
International revenue in the quarter represented 24% of total revenue consistent with Q2.
Our subscription gross margin was 81% of more than four percentage points from 76% in the Q3 of last year and a slight improvement from last quarter.
We continue to be successful in managing our datacenter costs, even as volumes continue to increase.
In Q3 operating expenses decreased by 6% from last year, even though revenue increased by 20%.
The net effect of the increase revenue, while being cost efficient improved our operating margin by 31 percentage points from the same quarter last year.
Now, let me comment briefly on our investment in margin approach going forward.
Now the we have hit the milestone of becoming adjusted cash flow positive we plan to continue to generate positive operating cash flow.
At the same time since the accretion on the balance sheet and of demonstrated leverage in the business. We believe we can safely take some of that leverage and investing more in growth and we have over the last few years.
We're already building our sales force capacity and plan to make additional investments in new product areas in order to support our growth plans.
We can make these investments, yes continue to expand margins although.
Although we expect margin improvement to occur at a lesser rate than we have demonstrated recently as we sought to achieve cash flow profitability.
We will provide specific guidance and more color around these things, where we announced the Q4 results.
Our net loss was 11.9 million and net loss per share was 40 cents. This is based on 29.5 million weighted average shares outstanding basic and diluted.
In Q3 of your reported adjusted cash flow from operations of $1.4 million and improvement of.
The 6.2 million over the last quarter.
Adjusted cash flow from operations excludes $3.1 million of share purchases in Q3 under our employee stock purchase plan the amount.
John is included as a positive amount in our GAAP cash flow from financing section of our cash flow statement and an offsetting negative amount in our GAAP cash flow from operations section with no effect on our cash balance.
Turning now to our balance sheet as of October 31, we had cash and cash equivalents of approximately 84 million net.
The massive discuss what we expect in Q4 and the full fiscal year 21.
For Q4, we are expecting billings of about 72 million.
As we are experiencing strength in our business.
And have good visibility as we head into the remainder of Q4.
For the current fiscal year, we now expect the length of about 222 million.
Up from 208 million that we guided to last quarter.
And well above our initial outlook of $190 million based on October 19, downside case that we use for reducing costs.
On expenses, we're planning on our Q4 operating expenses to increase modestly from Q3 levels.
While we expect to see decreasing operating expenses in fiscal year 21.
We expect them the increase in fiscal year 2000.
We expect Q4 adjusted net cash provided by operations of approximately 1.5 million.
In the expect full year adjusted net cash used in operations.
Of approximately $11 million.
Now the formal guidance for the.
The fourth quarter of fiscal year 21, we expect GAAP revenue to be in the range of $53.3 million the $54.3 million.
We expect non-GAAP net loss per share basic and diluted of 42 cents to 46 cents.
This assumes 30.1 million weighted average shares outstanding basic and diluted.
For the full year of fiscal 2000 line, we expect GAAP revenue to be in the range of $206.6 million to $207.6 million record.
Representing year over year growth of 19% to 20%.
We expect non-GAAP net loss per share basic and diluted of $1.83 to $1.87.
The savings 29.3 million weighted average shares outstanding basic and diluted.
In closing, we're pleased with our execution in Q3 and are optimistic about our financial position and growth opportunities as we close out fiscal year 21.
And head into next year.
With that we'll open up the call for questions operator.
As a reminder to ask a question the lead the press Star one of your telephone to withdraw your question press the pound key and your first question comes from the line of Sangita Singh from Morgan Stanley. Your line is open.
[music].
Hi, Thank you begin the question and congrats.
Both.
On the cash flow positive was the long good at the got the earnings.
The credit Chief net.
In terms of thinking about the quarter.
The 20% of billings growth against the tougher comp.
Was.
Julian process flow through so let me sort of and.
The so talk about the the velocity of deals I think in your script. The mentioned a higher volume of deals compared to last year can you just sort.
Sort of describe what where that demand is coming from flow of vertical perspective, or just from a sales perspective, how you're driving that that increased volume of blocking tackling business.
Sure happy to do so.
This was an extremely high transaction volume quarter.
Led by.
A lot of the higher growth the percentage is year over year on new customers will the called new logo count.
Hey, I was also good hi, transact high transaction volumes within our current customer base as well.
And I think that half the do with debt.
Yes, the on the line has.
The increase operational rigor that we're using.
The man, it's the sales force.
And we really pick that up with debt pandemic, just assuming we just needed the work harder the.
But thats absolutely paid off for US and then of the same time.
Our operating EPS fit nicely into what our customers with the today I mean, they need a product that's easy to use.
The to install easy the rollout to end users.
At the end the cloud that's on your phone and that can scale.
And just the general trend toward the go transformation with the businesses.
Is what we see the nicely into sell the train the operational rigor.
And the fact that.
Our solutions really neat what the market needs to growth.
Very healthy transaction volume this quarter.
So we're really think we're really pleased with that of the very healthy quarter.
At the very promising and then Josh if I think about sort of looking at the website, where you're today kind of of the messaging to seems so much more targeted in Pittsburgh sort of positioning don't know as one of the data integration platform to the.
Business intelligence solution and three an intelligent platform can you talk to me about.
We're seeing sort of traction I'm sure like the BDI cases sort of albeit but both on the data integration side and on the intelligent outside of what are your sort of seeing customer traction on on both of.
Those parts of the of the use cases.
Yes, and I talked about a little bit of my comments. The the fact that we're seeing.
The PEO sees where we'll go in and work with the big customer.
We are not as easily many experiences training other things usually many experiences with alternatives that are already installed at the place of business and there's still one or two things they can't get done.
And they call us into the PSC and we connected data they havent been able to connect to before.
And then of course, we're able to distribute that data in such a timely quick manner to so many people in the organization and in most cases, there will be these apps that we end up.
The the facilitate low code no code apps and day really end up well.
Helping out with with work flow and the accomplishing things that they had teams of people that it took to accomplish before already where EBIT accomplishing.
And so it is the combination of those three things and it's been exciting to see the pace picking up.
The thing that we mentioned is still more everywhere.
And we'll have the large customers that will come in and start using our products and services and.
Fine so much benefit from being able to distribute that information so easily with real time data no matter the size of the data to all of your internal constituents that debt.
Of course, the the next question that that debt is can we get this to our partners can we get this to our vendors can we get this to our suppliers.
And each we highlighted one of the largest ones that we work with today with literally tens of thousands of partners. The fair distributing data too and it's the life blood of their business. The relationship of their 10000 partners of the likelihood of their business and they are using EPS to to manage all of those communications now and making those partners so much where debt.
The reacting to whats taking place in this ever changing digital world. So digital transformation is definitely.
The way of that we're writing it it's the three simple things of.
That we the happened do better than anyone else.
That's great and if I could just sneak one last one on the great toggling back to Bruce if I look at the Q4 guidance, obviously, all the all year.
The rating that number even the original guidance of the year. We are now above that but Q4 does imply.
A slow down back to sort of 10% to 11% growth can you walk us through some of the underlying assumptions behind your billings guidance.
As we get into the sort of sort of the year end on the from the closure rate or from the demand environment perspective, just to pick in the context on the.
Before.
Sure well.
Let me highlight that we.
Basically brought out of our guidance from Q4 of by about 6 million of our implied guidance from last quarter.
And what drove the that was the fact that we are off to.
The at the very good start the Q4.
Maybe one of our best starts ever for a month.
And on top of that we just have good visibility into.
Our pipeline of.
And it's also supported by the fact, we just came off hi.
Hi transaction volume could you can get very very healthy growth.
Good day in this environment the have at.
Many new customers and sales and transactions in the current customers of set which is very healthy.
And the lean.
Obviously the.
To do better than that number.
We use the same approach that we value Rupert.
We provide guidance on what we know.
And I just have to repeat myself, we know a lot now and Thats why we brought the number of by 6 million.
And what we hope for is four of our use of very active and.
We can only we can only guide by what we know, but most of what's going to happen through the rest of the quarter.
Is still before us, but we like what we see so far so.
So that's the basic thoughts behind.
Our guidance and we're happy that we've brought it up like a significant amount from last quarter.
And.
We would love to do better and.
Everything stays the only recently, what we can do it.
That's very clear thank you.
Well, it's also been all six of them that I've said, a few times of the last few quarters.
Our goal right now is consistently above 20% and then it will be get consistently above 30%.
And I think when you look at this one.
Like Bruce said I mean is the substantial is the substantial raise from where it was a quarter ago and so I think thats something that should be definitely take into account. The crusher number hit cash flow positive did.
Did it with lower expenses and.
Brought up guidance by a substantial amount and we felt like there is a lot of gas and I think there and you know what our goals are our goals are from what we're trying to accomplish what we want to consistently be able to.
Deliver but also guide to and right now, we're hoping we can deliver to it.
But felt like this is the best place the guide.
Yes, we don't have we haven't had as many quarters of the current situation, we're sitting here as we'd like to to be comfortable enough to.
Guide up is higher as we'd like to.
The definitely see deals and opportunities out there, but like this is the appropriate appropriate guidance Didier and then hopefully some because of some things will fall away and we'll we'll continue to be north of the 20% growth as we have been the last few quarters.
Appreciate it guys. Thank you.
Your next question comes from the line of Brad Zelnick from Credit Suisse. Your line is open.
Great. Thank you so much for taking the questions congrats.
It's really great to see two quarters in a row now of greater than 20% growth.
And the hitting this milestone.
Were a lot of naysayers the has been anything you could flow it often.
I'm really proud of you guys. So it's good to see the rest.
This accomplishment for sure it new my first question if I may.
And the we still got to get through Q4, but I imagine you all are doing your planning and thinking forward into next year and.
And understanding that the beginning of a new fiscal year is usually a good time to make some adjustments due to your go to market strategy.
I used the word for sales leader many years ago that lets say whatever you did this year to be successful you've got to change it up but it's not the work next year. So what are some of the changes that you might be contemplating any and how might you be able to mix. It up even if just slightly correcting course to drive real sustainable 20% growth into 2002.
Well I think some of the things we are day in the mix it up from.
We will we just started.
Many of them, but.
How to gain as the new sales leaders dumps something the spirit of the big mix up.
In terms of how it's affected.
The team it's it's the.
The way he manages is dramatically different than what we've seen before and it's proven to be effective M.
His leaders that works for him like in the in the teams really kind of snap into it. So thats been something I think is going to have an impact for long time, I think that alone could you give us low 20% growth for a long time.
The GAAP Miller, who is who John Miller, who is the lead in the marketing organization and are those two leaders coming together.
Again, I think thats going to just that alone and better execution is going to be north of 20%.
I think beyond that which then looking at these pockets where.
When we go to market what pockets do we have today that we could double down on the triple down the line and Weve tried to highlight some of those things, but apps for instance is one thing the DC is the big differentiator.
Hello Code, no code apps and solving business problems.
Thats what enables us to enabled us to get these state deals the lease federal deals that's what enabled us.
To get.
The really large retailer that we talked about.
Global retailer and then you see domo everywhere thats whats, enabling us to get some really large upsells with some of our customers but.
Our entire sales teams.
Trained on.
All of those things and so is saying okay. What are the three or four things that we can you really train the sales team on that are predictable. The every single customer and the state of from time to gather all that information. So I think thats another area that the as as Ian and John.
Dictate which brings we're going to train the tea line and go to market with.
We're going to see some additional performance there and then the next the last day I'd say is finding partners.
And we highlighted it last quarter and this quarter from the first time seeing some real traction.
With partners in the marketplace, where we're delivering the deals seven figure deals from partners.
And Thats something something that we havent had the short.
So, we'll we'll be seeing our partner efforts continue to increase and now not just noise, but also deals.
And we're excited about what can happen the snowflake over the long term.
We're excited about of position in the marketplace. We're excited the people are coming to us is.
As you know a large independent public traded business intelligence company. That's the cloud based we're the only one and so thats facilitating conversations in the call.
No. It's in it it shows that a lot of out of the investments that you've been making like the Cogs.
In the about the partner channel they are really beginning to bear fruit the meaningful way.
And along those lines Josh.
I always felt like there's been this opportunity to become more of a standard.
Inside of your accounts of some of the early success that we would hear about it and I know going back to target and others like you had some of these massive commitments.
But but as well a lot of customers that we would speak the were more hey, it's a division of the specific use case.
Just so just maybe being the something beyond a great solution for that particular use case around data aggregation and analytics are there any proof points that you can speak to it in the.
The baby.
Capturing more success in driving that expansion in the larger organizations and becoming that standard.
Oh, Yes, if you look at and I think thats the other shoe to drop to be honest with you. So but I think about a lot. If you look at our top 10 customers the.
Relative of receiving from our top 10 customers. Today is is from almost double what it was a year ago and so we're seeing the massive expansion inside of these accounts were.
Yes, there has been a long journey I always kind of the felt like.
Is the size of this company.
It behaves still like it's one fifth the size, we're still figuring things out as $200 million run rate and when you look at some of these accounts like you said initially we guided we made some great progress.
We had a hard time expanding beyond the department that we are in to become the the tactile solution because of all the we're all these competing components instead of it took us a long time to figure out how to speak the right language the different constituents in the organization. We had to get we took a year or two figuring out how to speak to CIO is more effectively but now.
Good day and so.
Once we got good or all of those things variance to your point, we're proof points.
I was looking at the top to the customers are today, when we of customers paying of several million dollars a year and each one of them still just expanding our second largest customer of the customer. The we went into a few years ago. We got a good deal that we got another good deal and then finally got corporate wide deal and then we've got a corporate wide deal for all of their.
For all of their vendors, so 80 does happen and as we get more and more customers like that that we can talk to what I'm excited about is being able to one of these quarters soon say alright.
Here's five new names here's the journey that we just had with them for the last four years and these are representative of what we think every customer can and should look like because here's the five things that we can do for them is that no. One else can you do.
And the great brands in the are extremely intelligent companies, we have those customers those proof points just.
Just not enough that were out there publicly talking about yet, but they had been happening that happen, they're signed and more of them are in the pipeline and as those come to fruition then.
Then how the sales and marketing organization and what the team to go until the customers is going to be every week and all the almost the sit there in mind, our current customer base, we have plenty of any new customers.
And have years the years of explosive growth.
I think that is whats happening it really hit the nail on the head with that question.
Thanks, so much cash and if I could sneak in one of the quick one from the Bruce.
Bruce as as we think about this milestone of reaching operating cash flow.
Profitability.
Honestly, if we think about the the the factors it's going to be.
Bookings billings top line growth, but it's also going to be released the this year you've had some cold related savings, but are there any other key areas of.
Of productivity optimization to call out of that that we should be thinking about.
Yes, I mean I think.
I think we have a kind of a true for working for US right now I think on the line had.
There's still a lot more we can get out of.
The investment.
Platform, we have right now.
In marketing and product.
We still have the ability the it get a lot more out of that.
At the same time, we also are and I.
I would say pretty comfortable position the start adding resources for example.
We've already started hiring sales reps.
And this year has been a year of Dow reps compared the last year and Thats, because we are very cautious and coated the 19 yet.
And we've kept the core cautious posture, but we've already started.
Adding more more reps and layering the man.
And sales moving debt and we were also.
Quite pleased with the productivity that was up from the reps that we've had.
So we build the blue felt very comfortable putting that Larry of if we get a little bit additional bang out of the Buck that already exists and then and then the of the AD bad debt.
And still generate positive cash flow, we think thats, a pretty good spot the ban.
But our main focus is really we really think that we are well positioned to grow.
And we want to take advantage of it but do it prudently continue to generate positive cash flow and watch watch the return of we get all of those investments watching carefully.
And so far the indication is that we'll get a great yield from them, but the local.
The will still continue to be very careful about it at the same time.
Thanks, so much price for taking the questions and congrats again.
The next question. Your next question comes the line of Derrick Wood from Cowen.
Alan and company your line is open.
Great Nice you guys and I'll Echo my congratulations on lots of good milestones here.
Josh.
I wanted to touch on does flow everywhere, because it's interesting the last night Snowflake talked about seeing a lot of traction with with data sharing and that it's really a transformational capability companies are starting to embrace.
You guys also have a unique position to serve this kind of capability of the clearly sounds like you're seeing some similar demand. So I guess when you look at your installed base I mean can you any way to kind of size up the opportunity. You think you have the really cross sell double everywhere and how are you going to lean into this growth.
Going out over the next year.
Yes, the home everywhere.
Is something that's applicable to almost all of our customers.
And it's something that we've put a lot of price.
Product effort into.
Especially over the last year as we see more and more progress there on the sales side.
And it's our high priority right now as well from a product perspective, so we continue to see huge opportunities there and in meeting the needs.
The customers and the opportunity there in the marketplace really in a way that no one else can so there's there's in debt, which is what a lot of people talk about when they talk about this kind of the an opportunity and thats, what our competitors do but truly taking our whole platform and making that available for our customers to all of your two zero.
Partners and their vendors and that kind of the experience versus just an embedded analytics.
Is it is a highly complex.
The set of software that really creates an experience that the untouchable. So we feel recently feel really good about our unique selling proposition of bad our differentiators of better defensibility in that space and youre going to see some more efforts from us from the product perspective, and definitely a lot more efforts from us.
From the sales perspective, and having sales leaders and sales people that are dedicated to this opportunity that's part of the his plans.
Yes, okay that makes sense.
Then the growth.
Great to hear set you're seeing such a pickup in new logo growth can you unpack that a little bit more is that is that driven by better sales productivity are you getting leads from different channels. The you didn't have before and does this suggest you're seeing increased win rates against the competition would would be great to hear of or detail on the underlying drivers.
Yes, I mean, we're getting more referenceable customers and customers that are the employees are moving to other companies and saying I can't be here with our Domo, that's definitely led to a bunch of logos. We've we've had the execution that I was talking about earlier from Ian and his management team they've been doing a lot of sales blitzes.
And a lot of all right.
I guess monthly keep moving to a monthly cadence from a quarterly cadence and having the team on that kind of the cadence, especially when you're kind of in the remote work force has actually been really positive for us.
Because you don't gets the everybody all the time, we're not walking around Q to Q.
So how the everybody really focused on a monthly number has been part.
Part of the in strategy. That's worked really effectively so those are two of the ways that weve been getting more logos and I'd say the third is just the marketing is continuing to find opportunities and ways to efficiently bring in.
New logos and so that seems to be the.
That seems to be working out for us in terms of the picking up the pace and the rate. The we can generate new logos from us.
Great all right at a bucket of squeeze one more.
Bruce I think you did mentioned that you may be up to the the the best start of the quarter ever.
Anything anything more new elaborate in terms of what you guys are seeing.
Well I would just say that.
The momentum that we experienced in Q3 seems to be continuing.
And it makes sense given you know again, what Scott just pointed to operationally.
The rigorous there and we're still apply it and on the sales side on the marketing side again focused on branding the messaging.
On certain product area is getting more clarity.
Of providing better sales tools the list goes on and on.
And the Fortunately, we've always been worrying done then cautious given.
Economic environment, the that that just seems to be the same.
Hasn't deteriorated and what we said last quarter if it just stays where it is we are in pretty good shape.
And it's.
Shifting itself and.
Just a great great start to the quarter I mean is the only like our comfort and have a great start the knot, but.
Yes. This is the just the continuation of what we've been zone. So.
So it gave us the ability to raise guidance by $6 million for the quarter, which frankly is the lot.
It's more of the we've done in the very very long time.
And I just I just think we can count on the.
The result of high level of trust.
And back to the volume as we can continue the sell what's good about getting.
A lot more new customers as we already know we can sell into them.
It Doesnt matter of the size, we can continue to sell until the so that just provides more fertile ground for the upside of it so the PTAB everything seemed to the going our way and.
Well, the net keep working pretty hard at it and doing a better job.
Acquiring customers at a reasonable cost the.
We also were anywhere in the air.
Our potential.
And can you just keep it up through the rest of this quarter and into next year, we're going to have the corridor.
And the.
Look forward has the best year.
Sounds good well done thanks.
Thanks, a lot.
Your next question comes from the line of Jennifer Lowe from EPS. Your line is open.
Great. Thank you.
Can I follow the and Im the last at the last discussion there and just dig in for the day parts I know you're always very very conservative on forecasting large deals and it's great to see this high level of transactions, which seem to really be supporting the guidance, but maybe just sort of specifically I mean, how's the large deal pipeline.
And looking going into Q to Q4 of which is normally a pretty strong quarter for that and is any of that in the guide.
Right that sort of upside even what we're talking about here.
Half of the ability to do that given the size of our customers.
The big customers buying more and more with finding more of our use cases, so thats comforting.
So we have the ability to keep building large deal pipeline, but I will say in guidance it.
Does not assume.
A significant number of.
Large deals of Lady or any of the go for it.
Further.
It really does the net.
So any single.
I'll say the only size deal.
So thats good to know the guys and Q4 as the.
We tend to have lots of activity of the.
The shift the nature of Q fours.
So.
The guidance is founded on transaction volume good start.
With the little bit of upside if we are able.
To close on the larger size deals.
Great and the standouts is just the the larger upsell deals that you're doing with your base and.
Even sort of the discussion around.
The more flexible how you get into those organizations and then expand once you're in there it seems to really be playing out.
But im curious you guys you get the seven figure type deals that are upsells on your existing footprint, if it still largely carving out opportunities around the existing VI footprint are you starting to to displays.
Some of those categories as they get bigger and bigger debt more.
Well.
We're we're really we're really well first of all day at.
At all our large customers they have every product.
Out there in the space and the reported space of the biggest base.
So we're able we're able to the just solve problems that are.
The haven't been solved by.
Other technologies or set of technologies or a combination of the technologies.
And that's pretty that's pretty comforting names that means we are very unique in our ability that bring the whole stack.
And then just record time, good day that the visit to create data and deliver it in ways that customers, Jeff at they'll have the ability to do it.
And that generally comes out of you know a wide variety of barges and budget areas. Some of these of revenue enhancing.
So.
Kind of create their own budgets, but over time over time, we do start eating into the available.
As for other technologies.
It's all customers I mean this growth that early it's all customers.
That figure this out and they determined what technologies that can turn off or the commission or roll back. We don't have to do that at least at least the that we found thats kind of the duct a lot of just like the customer do that why don't we just bring a solution. They don't have with the staff they have today.
And the Delphi and all kinds of places is that an expand whether or not its leading internet of budget, but we are finding the variable good.
Good start using a part of the marketing budget sales budget and the IP, but the sell.
And our our IP friendly methods keep everything your average of extended.
Allow the IP department to embrace the are you going to the IR department to embrace it and sometimes they have that that's the type of sometimes they're able to write rearrange things in our favor.
But we like the figure that out and the.
So that that our approach and it's working for the.
No. It's not the same day, we did a few years ago.
The thing, it's a much better way to approach the market of very friendly way of better part of the friendly way of the better customer friendly way certainly more from a lightweight the.
Go about approaching our customers.
Okay. Thank you.
Your next question comes from the line of Patrick Walravens from JMP. Your line is open.
Oh, great. Thank you and let me add my congratulations.
So Josh Yes, you want your software to be able to do in the future. The they can't do today.
Good question.
Yes, Theres just from additional things.
I would say the number one.
The more and more partner friendly so we'll be able to integrate even more seamlessly with partners than we do.
We've been able to identify some partners will be has had great successes with with our customers, but it's taken a little more backend. The work then maybe.
Possible and the Cmos possibilities of trying to identify them and is really do more of their I think there is an opportunity for us from the upside and then from the usability perspective.
I think once you get all of these executives using the products there really isn't another.
Theres not other software in the world debt.
Enterprise Cxos used to run the business besides.
Word excel Powerpoint.
Email and social media. So this is actually like the real business tool that the used to run the business and when you are the first company to have those people actually logging in and getting things on their phone and getting text messages and.
In out messages that some real.
Opportunity and power to leverage in the platform and I know that we're the first ones to do that at scale.
And we've seen out of these customers like the question I was answering earlier about what happens when you get in there and you kind of start expanding in seeing the cxos use. These products has been really from so I would say there is more opportunity there as well Pat.
Okay. Thanks, and then you know as we see some of these some of these other companies that are focusing on particular verticals in AI and.
Sometimes extracting the really enormous amounts of money.
How much of a part of the vision for Docomo is that you know.
Commercial aiotv or GAAP.
For the intelligence agencies or you know the media industry.
Yes, I think you've seen sort of the efforts there with with our data science and with our AI and ml and they are certainly more opportunities there.
See we we put a lot of effort into the.
And it was one of those things that they are still needed to be four or five pieces to really finish.
Finished the solution up and there has been some.
Players that have taken a really.
Deep approach to very specific niche verticals that it'd be really successfully and more power tomb. It's been awesome to watch him inspiring certainly in the you can see some of the ways that the world of evolving you can see somebody gets so deepen an organization and so I think theres opportunities there as well.
And we're continuing to net mentioned one of the big efforts in product right now is done where were the other rebate.
Temporary underway is just continued more and more advanced analytics, because as we get into these big customers. That's one of the things that they look for from US if they are going to replace everything else that they have inside the organization they want to see more and more advanced analytics and more data science opportunities in war machine learning opportunities and those of some of the partners that assets.
Talking about where I think we have more opportunities to do the partner up and become closer to two of Theres an ecosystem.
The system and that will help us understand that Peter.
Awesome, Thanks, a lot.
Your next question comes from a line of Jack Andrews from Needham Your line is open.
Great. Thanks for taking my question and congratulations given the results there's.
It was nice to see the the uptick in gross retention and I just wanted to force that a little bit if we could you talked about investing in customer success a bit more is this should we think of this as sort of a new dedicated team and what do you think the impact from growth.
Gross retention rates could be moving forward given given some of these investments.
Yes, the retention has been off the answers so fun to watch that kind of the numbers that I think we're more you still.
It was just a longtime coming in terms of there is the really complex space and the we've taken a really broad approach and so there were a lot of things that we use to shore up Julie prevent.
To create the right kind of experience, we want to the customers have and we've done that with the product.
And then it was getting the leadership correct, there and we have a new leader there that's been doing a great job in his next stable of leaders of.
Just on fire they are having a lot of fun, they're excited about what they do they love our customers that love Domo the.
They are passionate they love tell me anytime I do any of the wrong.
And it's just the awesome.
Peter So passionate about what they do and we're seeing that reflection in the way the based type for our customers to make sure that the customers get everything that they need in order to return to us and and buying more and more products from us and we are seeing we talked about our upsells, but a.
Big swath of our customer base is is up selling and buying additional products and services.
And whether that's buying an extra dollar an extra million dollars.
It's a pretty good sign that they're they're happy when they are investing more and more into your product. So I think thats. The best in the we're seeing there and the incremental investments were just as the product.
The revenue base grows you need to continue to invest there and it will just some innovative things as well, but we have the right we had the expense base.
The map to net revenue base to be able to do that so the not large incremental investments. It's more just as the revenue growth will continue making investments there because we love seeing the results that we're getting out of the team.
Great. Thanks for your prospective and thanks for fitting into the call.
You bet the well.
[music].
Our next question comes from the line of Camilo. Thanks, Eric from William Blair. Your line is open.
Hey, guys its job of on year.
Thanks for taking the question and avant and the.
The and congrats on the line.
On the ability of none of those there was really good.
And maybe one for Josh here, we touch from partners and I want to focus on the ESI partners a little bit.
And it's really exciting and starting to see them deliver implementations of that scale I guess of using any of them Josh.
Start to implement applications, the half customers, where they're starting to monetize all themselves a little bit is that is that some of that could happen or should happen over.
Overtime.
Is it doesn't happen over time, the we're starting to see some of that I mean the.
The federal deal that we talked about the is definitely one of those situations where they are there.
The we're really happy to go to market with us They chose US it was a big bake off the went and then they took their.
Their combined proposal in and we're successful at selling them to the federal government and so that was really nice to see we think there's a lot more of these the kind of I really think that question was asked early on in the call was really apropos for where we're at right now it's the.
The other issue that hasn't dropped in terms of people understanding how successful we really are the big accounts.
And how we really do.
The takeover and they.
Some of that all of the other tools eventually.
And really.
Centering on us from top to bottom in the organization and then expanding out from the organization to their vendors and suppliers. So I think as that kind of matches and gets out there more hopefully as analysts write more favorable in the.
The three analysts write more favorable reports status when you know as they as they get their their quadrants to map more I think where the the market is going which is where we've always been then you will see some more success in those areas, but there has been some headwinds there historically for sure.
Yeah, because ultimately that's what I think the comes really instant flywheel long term because they have such high.
Next level relationships.
Good to hear the the starting the happened a little bit.
A quick one for Bruce actually two quick ones from Bruce one.
You guys talked about sort of continuously improving enterprise sales productivity, obviously it improved.
Given you've cut the number of sales reps, but the but the billings et cetera have been really strong I guess you know.
No.
Are you at a point, where you don't think you have room from more effectively given you want to ramp up more salespeople or is this still one of the productivity in the rapid sales people sort of of our 12 month period has left the layer in on top of the improved productivity olefins and of the dynamics between those two pieces.
Some of the sales investment coming out.
Well, we measure the productivity on the concept of a ramp head a ramp rep.
And thats, the nice and healthy so again, depending on where the.
The corporate wrapper and enterprise Rep six month of the nine month, sometimes 12 months.
So the answer your question there is that there is absolutely built and ramping on the reps we have.
So that really set the set the growth for us.
And then on top of that we plan to hire more reps.
And yes, they they may do or they think the ramp the only have a ramping schedule.
So as the layer them and thats kind of of another layer of of growth.
And then we will have even.
Even though we're we're we're pleased with the overall productivity of sales force.
We still think there's even room to improve that over time of.
And so.
That way, we of let really three ways to.
Grow.
If we if we focus on of the just the concept of.
Productivity per rep. So thats, how we think about it.
Gotcha Gotcha, and then the one quick ones of those of you.
Or even of BNS is there, but the visibility.
The question is come up with investors, which is as people are seeing demand.
Demand pickup in the back half of this year.
And people accelerated digital transformation initiatives analytics initiatives, we need to get data to the executives on the mobile devices faster et cetera.
As you look forward I know, you're not giving guidance because you look forward.
You wind up with an air pocket the Q.
Q1, Q2 next year, where people then take a pause how do you think about that obviously the visibility of it maybe compared to where it was a year ago two years ago I just want to get understand how you're thinking about guidance. Thanks.
Well I mean, what we have what we have going for US is just the whole portfolio of like industries customer sizes.
Types of customer types of use cases.
That.
Our jif commonsense use out of our platform such as ours. The just simply get data of the people in ways. They just can't get today.
And I don't see why that's going to change at any time in the future.
And we certainly are you at the kind of gets better at all to get better maybe the activity you know audit pickup in the troubled industries.
Finally can start purchasing from us because they.
I mean, we've had success with triple the industry has been not nearly where we would have had we not had this economic downturn.
So the only that I think the one of the.
Bruce on the say one of the.
[music].
I think hesitations around calling some of the big deals.
Is one of my reps just texted me an answer of they're listening to the questions and I got a text message and it's as telling the answers chirco debt.
Okay, great great from the sense that.
It's really helped I think its celery the amount of digital transformation and it's helped us pick up the new partners and really prove our ability to be to rapidly respond and to have a very flexible newco local operating et cetera et cetera.
At the same time, there's still just there's still just unknown is out there and you're talking the big customers about really large deals.
And you know, it's not a normal environment. So.
As much as you know that they need us.
It just gets really hesitant to.
To start calling those deals when it would meaningfully impact your your guidance.
So I think that is in fact, one of the answers but.
Pipelines pipelines looking good I mean, we have to really interesting conversations with customers that we've known for a long time and there is really big upsells that are out there and.
We're also seeing new customers come in that.
No what we've done for other customers because.
Our our customer left of their former employer and went to new one and brings us.
The big Juicy deal so there's deals out there for sure and.
Like Bruce said earlier, we've had a good beginning of our of our quarter.
And we brought in some decent size deals already on it which is the interesting to see how the rest of the square plays out, but we've been a 20% grower for the last few quarters and we're going to do our damn. This make sure that's the case again.
Just given the environment the growth living and feels appropriate to be a little conservative.
Yeah, Yeah and Bruce.
The remainder of pacing as you go said seems to be doing well. So congrats guys. Thanks for squeezing me in I appreciate it yeah excellent. Thank you.
Ladies and gentlemen, this concludes the almost third quarter fiscal year 2021 earnings call. Thank you for participating you may now disconnect.
[music].