Q3 2024 Domo Inc Earnings Call

Speaker 1: Good day, everyone, and welcome to the Domo Third Quarter fiscal year 2024 earnings call. Today's call is being recorded. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question at that time, you may press star 1 on your telephone keypad. Again, and that is star 1 to withdraw.

Good day, everyone and welcome to the adult demo third quarter fiscal year 2024 earnings call. Today's call is being recorded all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question at that time, you May Press star one on your telephone.

Keypad again and that is star one to withdraw your question I would now like to turn the call over to Peter Lowry, Vice President Investor Relations. Please go ahead Sir.

Speaker 1: I would now like to turn the call over to Peter Lowery, Vice President Investor Relations. Please go ahead.

Speaker 2: Good afternoon and welcome on the call today. We have Josh games, our founder and CEO and David Jolly, our chief financial officer. I'll lead off with our safe harbor.

Good afternoon, and welcome on the call today, we have Josh James our founder and CEO and David Jolly, Our Chief Financial Officer.

I'll lead off with our Safe Harbor statement, and then onto the call.

Speaker 2: Our press release was issued after the market closed and is posted on the investor relations section of our website, where this call is also being webcast. Statements made on this call include...

Our press release was issued after the market close and is posted on the Investor Relations section of our website, where this call is also being webcast.

Statements made on this call include forward looking statements related to our business under federal Securities laws.

Speaker 2: These statements are subject to a variety of risks, uncertainties, and assumptions.

These statements are subject to a variety of risks uncertainties and assumptions.

These include but are not limited to statements about future and prospects or financial projections and cash position statements.

Speaker 2: Statements about future and prospects or financial projections and cash.

Speaker 2: statements regarding the potential of our consumption base.

Statements regarding the potential of our consumption based pricing statements about our sales team and technology are expectations for new business opportunities transactions and initiatives.

Speaker 2: statements about our sales team and technology, our expectations for new business opportunities, transactions, and a.

Speaker 2: statements regarding our channel communications and upcoming.

Statements regarding our channel communications and upcoming events stay.

Speaker 2: statements regarding the potential of artificial intelligence and its impact on our business.

Statements regarding the potential of artificial intelligence and its impact on our business.

Speaker 2: and statements regarding the impact of macroeconomic and other conditions on our business. For discussion of these risks and uncertainties, please refer to state documents we've...

And statements regarding the impact of macro economic and other conditions on our business.

For a discussion of these risks and uncertainties. Please refer to state documents, we filed with the SEC in particular today's press release, our most recently filed annual report on Form 10-K, and our most recently filed coordinator report on Form 10-Q.

Speaker 2: Our most recently filed annual report on form 10.

Speaker 2: and are most recently filed quarterly report on Form 10Q.

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.

Speaker 2: important risk factors, and other information that may cause our actual results to differ materially from those contained in our fores.

Speaker 2: In addition, during today's call, we will discuss non-GAAP-

In addition, during today's call, we will discuss non-GAAP financial measures, which we believe are useful as supplemental measures of demos performance.

Speaker 2: which we believe are useful as supplemental measures of dumbbells performance.

Other than revenue unless otherwise stated we will be discussing our results of operations on a non-GAAP basis.

Speaker 2: These non-YAP measures should be considered in addition to and not as a substitute for or an isolation from or...

These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results.

Speaker 2: Please refer to the tables in our earnings press release for a reconciliation of our non-GAAP financial measures to their most directly comparable GAAP measure, which we have posted to the investor relations section.

Please refer to the tables in our earnings press release for a reconciliation of our non-GAAP financial measures to their most directly comparable GAAP measure, which we have posted to the Investor Relations section of our website at Dublin versus dot com with that I'll turn it over to Josh.

Speaker 3: Josh? Thank you, Pete. And thank you, everyone, for joining the call.

Josh Thank you Pete and thank you everyone for joining the call today.

Speaker 3: In Q3 we were able to exceed guidance for our key top-line metrics including revenue, subscription revenue, and bill-

In Q3, we were able to exceed guidance for our key top line metrics, including revenue subscription revenue and billings.

Speaker 3: The highlight in the quarter is that we had our highest operating income in history of $5 million and our highest operating margin in history of $5 million is $2.5 million.

A highlight in the quarter is that we had our highest operating income in history.

$5 million.

And our highest operating margin in history up 6%.

Over the past few years and especially the last few quarters, we have been incubating critical pivots that are finally coming together they are clear and powerful priorities that are removing friction and strengthening our ability to deliver unmatched value to the market.

Speaker 3: We have been incubating critical pivots that are finally coming together. They are clear and powerful priorities that are removing friction and strengthening our ability to deliver unmatched value to the market. Specifically, several years...

Specifically several years ago, we decided to test an idea.

What would customers do if they had unlimited access to features for an unlimited number of users and all visualization for free.

Speaker 3: for an unlimited number of users and all visualization for free. It was a simple value prompt.

It was a simple value prop to customers.

Pay for the value you are realizing.

Speaker 3: Well, after positive feedback, we decided to run an even broader pilot last year, and the pilot was

Well after positive feedback, we decided to run an even broader pilot last year and the pilot proved to be a smash hit.

Speaker 3: We now feel like we've reached critical mass with over 20% of our ARR on the...

We now feel like we've reached critical mass with over 20% of our <unk> on the consumption model.

Speaker 3: As we continue to look at the results from this very large sample.

As we continue to look at the results from this very large sample size, we feel very confident in making the decision and saying we're going all in on consumption by the end of next year, we expect to have the vast majority of our revenue on the consumption model.

Speaker 3: we feel very confident in making the decision and saying we're going all in.

Speaker 3: By the end of next year, we expect to have the vast majority of our revenue on the consent

Speaker 3: Again, we now have over 400 customers on consumption.

Again, we now have over 400 customers on consumption contracts, representing over 15% of our customer base and over 20% of our Anr.

Speaker 3: representing over 15% of our customer base and over 20% of our ARR.

When customers move to consumption, we are seeing user counts growing at almost three times the speed of seat based customers.

Speaker 3: We are seeing user counts growing at almost three times the speed of the user count.

Speaker 3: and we are seeing three times the adoption rate on premium features like data.

And we are seeing three times the adoption rate on premium features like data science.

We've also ruled that reporting so our customers can see in real time with their consumption patterns are.

Speaker 3: We've also ruled out reporting so our customers can see in real time what their consumption patterns are.

So far even with the highest usage of our customers are seeing the feedback has been incredibly positive because customers recognize the value of that usage.

Speaker 3: feedback has been incredibly positive because customers recognize the value.

Speaker 3: As an example, it took us eight years at a fast food chain to get an ARR of about 200,000.

As an example, it took us eight years at a fast food chain to get.

And there are about $200000.

Now that they've converted to consumption. This company has committed to an IRR of over $550000 over the next three years by expanding the use of domo across the organization.

Speaker 3: This company has committed to an ARR of over $550,000 over the next three years.

Speaker 3: One fun story to relate that has happened to me on multiple occasions over the last few months is watching

One fund story to relate that has happened to me on multiple occasions over the last few months is watching how our customers react to the new model.

Speaker 3: I've seen the epiphanies go off in their eyes as they recognize and then look at people internally in the room and tell them conclusively that because they now have unlimited users they can start looking at sun setting all of their other BI technologies and legacy reporting tools and use Delmo instead. Well.

I've seen the Epiphany is go off in their eyes as they recognize and then look at people internally in the room and tell them conclusively that because they now have unlimited users. They can start looking at sunsetting all of their other b I technologies and legacy reporting tools and use domo instead.

Well I couldn't have said it better myself.

And supportive of our consumption strategy and to pay the completely open path to adoption.

Speaker 3: and supportive our consumption strategy and to pave a completely open path to adoption. We've also launched a new freemium model.

We've also launched our new freemium model.

Premium was impossible, which were a consumption model and gives everyone a risk free opportunity to get in and tried domo with new obligations and no restrictions.

Speaker 3: and gives everyone a risk-free opportunity to get in and try DOMO with no obligations and no restrictions. DOMO customer-

Domo customers have access to all the dual features with.

Speaker 3: unlimited users and they can tackle any use case they want.

With unlimited users and they can tackle any use case they want.

Speaker 3: And when they want to go bigger, they can click from within Domo to buy consumption credits and have an unlimited highway to

And when they want to go bigger they can click from within Domo to buy consumption credits and have an unlimited highway to multiply their impact on their business.

Speaker 3: This approach seamlessly aligns with our core philosophy of delivering value before requiring

This approach seamlessly aligns with our core philosophy of delivering value before requiring payment reinforcing our commitment to providing accessible and valuable solutions to our users.

Speaker 3: reinforcing our commitment to providing accessible and valuable solutions.

We've rolled out our free offering last month and will be rapidly iterating on it over the next quarter to focus on user experience and easy Onboarding.

Speaker 3: We rolled out our free offering last month and will be rapidly iterating on it over the next quarter to focus on user experience and user experience.

Speaker 3: think that long-term this offers our ability to attract new customers and give them a friction-free path to move through the pipeline from free to paid usage to sharing with more users to

We think that long term. This ultra is our ability to attract new customers and give them a friction free path to move through the pipeline from free to paid usage to sharing with more users to broad use case adoption.

Speaker 3: Of course, this naturally leads to expanding credits and being ready for a long-term relationship in our sales and support.

Of course, this naturally leads to expanding credits and being ready for a long term relationship with our sales and support organization.

Speaker 3: This new flow evolves us from having to work with cold

This new flow evolves us from having to work with cold leads to being able to talk with happy customers, who already see the value of the platform and are ready to lean in more.

Speaker 3: to be able to talk with happy customers who already see the value of the platform and are ready to lean in.

To demonstrate the power of having a freemium model, let me share a story from two weeks ago.

Speaker 3: To demonstrate the power of having a freemium model, let me share a story from two weeks ago. Our sales team have been calling a CTO prospect for over a year with no luck. One of our sales people called the CTO on a Friday afternoon and left a mess.

Our sales team had been calling a CTO prospect for over a year with no luck.

One of our salespeople called the CTO on a Friday afternoon, and left a message about freemium.

And the free credits it comes with the.

The CTO preceded to sign up for a free instance, and over the weekend multiple users connected to disparate data sources and built data flows powering over 40 reports.

Speaker 3: multiple users connected to disparate data sources and built data flows powering over 40

Speaker 3: By Monday, the CTO was in love with the product and signed up for a three-year deal with a total contract value well into the six figures.

By Monday, the CTO was in love with the product and signed up for a three year deal with a total contract value well into the six figures.

And that was a three day sales cycle.

Our premium product also completely changes the conversation with potential partners, who have wanted to leverage our domo everywhere product due to deliberate data experiences through domo for their own customers.

Speaker 3: The premium product also completely changes the conversation with potential partners who have wanted to leverage our Domo Everywhere product to deliver data experiences through Domo for their own purpose.

Speaker 3: In the past, if we had a customer with say 20,000 external end users, it would have required

In the past if we had a customer with say 20000 external end users.

Would've required a major upfront investment.

Speaker 3: which often led our customer to reduce the use case to maybe just the top five.

Which often led our customers to reduce the use case to maybe just the top 5% of external customers.

Speaker 3: premium however, we can give all 20,000 of those users a free instance of GOMO immediately at no cost.

With premium however, we can give all 20000 of those users are free incidence of Domo immediately at no cost.

Speaker 3: This creates a very meaningful introduction to DOMO for those end users with an obvious up

This creates a very meaningful introduction to domo for those end users with an obvious upgrade experience because they can experience the value and immediately expand and put more of their own data in our platform.

Speaker 3: they can experience the value and immediately expand and put more of their own data in our platform.

And our consumption world focusing on adoption through product led growth and support programs is the critical path to success for both customers and for Domo.

Speaker 3: through product-led growth and support programs is the critical path to success.

Speaker 3: Increased adoption leads to happier and more successful customers, and the corollary is, of course, increased risk.

Increased adoption leads to happier and more successful customers and the corollary is of course increased revenue.

As we roll up features and training that support adoption, we've seen our customers rapidly expand their usage of our platform compared to when they were under a seat based pricing.

Speaker 3: We've seen our customers rapidly expand their usage of our platform compared to when they

For example, one of our largest customers had been a customer for six years.

Speaker 3: For example, one of our largest customers had been a customer for six years.

Speaker 3: In those first six years, they had grown to 3,500 active users and 17 departments. Then...

In those first six years, they had grown to 3500 active users and 17 departments.

And then they converted to a consumption model the growth was rapid.

Speaker 3: In just one additional year, they added 2,300 more active users and more than doubled the number of departments and use cases. This is dramatically in

And just one additional year. They added 2300 more active users and more than doubled the number of departments and use cases.

This has dramatically increased the return for the customer.

And of course, the strengthened our relationship and the account.

In support of our shift to the consumption model focusing on our customers' adoption of our platform brings complete alignment between us and our customers around multiplying value.

Speaker 3: In support of our shift to the consumption model, focusing on our customers' adoption of our platform brings complete alignment between us and our customers around multiplying value.

It's all about opening up unlimited use cases to address a completely expanding list of customer needs and it helps us learn more about what drives customer success.

Speaker 3: It's all about opening up unlimited use cases to address a completely expanding list of customer needs. And it helps us learn.

Speaker 3: which product features and functionality in our products really drive expanded use.

For example, which product features and functionality in our products really drive expanded usage.

Speaker 3: What of our support behaviors drive additional adoption of our products? It shifts the dynamic from trying to sell the customer more products.

One of our support behaviors drive additional adoption of our products.

It shifts the dynamic from trying to sell the customer more products to helping them find more ways to receive value.

Speaker 3: Now the progress we've made with our consumption model and with our launch of freemium has dramatically altered our ability to be successful within the ecosystem.

Now the progress we've made with our consumption model and with our launch of freemium has dramatically altered our ability to be successful within the ecosystem and our partners.

Only recently, we've changed our architecture to allow domo to drive consumption for partners like Snowflake AWS and Microsoft.

Speaker 3: Only recently, we've changed our architecture to allow Domo to drive consumption for partners like Snowflake, AWS and Microsoft.

Speaker 3: Before now, we've had conflict in the channel, where we sometimes drove consumption or compute away from our

Before now we've had conflict in the channel, where we sometimes drove consumption or compute away from our vendors.

Speaker 3: With the architecture changes, we now allow customers to choose to keep the data and the associated querying and processing of data.

With the architecture changes, we now allow customers to choose to keep their data and the associated clearing and processing of data with our partners.

Speaker 3: It was a substantial investment on our part, but we are very excited that this has all been reconciled.

It was a substantial investment on our part, but we are very excited that this has all been reconciled.

Because of these changes we will be making some announcements soon describing partnerships where customers are able to retire spend by purchasing domo through various app stores and marketplaces from major tech players.

Speaker 3: Will you be making some announcements soon describing partners?

Speaker 3: customers are able to retire spends by purchasing Domo through various app stores and marketplace

As it relates to AI. This is another area where consumption allows our customers to get in and start seeing the value of AI in their business without an upfront commitment or investment.

Speaker 3: As it relates to AI, this is another area where consumption allows our customers to get in and start seeing the value of AI in their business without an upfront commitment or investment.

Speaker 3: As mentioned earlier, we've seen dramatically higher uptake in our data science offerings, Ammar consumption customers.

As mentioned earlier, we've seen dramatically higher uptake in our data science offerings Amar consumption customers compared to a seat based customers and we expect to see similar levels of adoption as we continue to expand our AI service layer and other AI offerings.

Speaker 3: and we expect to see similar levels of adoption as we continue to expand our AI service layer.

Speaker 3: The consumption model will expose many more customers to AI because they don't have to sign a contract before they start using it. This in turn, of course, drives consumption.

The consumption model will expose many more customers to AI, because they don't have to sign a contract before they start using it.

This in turn of course drives consumption.

We have several AI related product launches.

Speaker 3: lined up for the coming months that will help our customers build reports and interact with their data in a chat GPT-like fashion. Now to illustrate the impact of this new...

Lined up for the coming months that will help our customers build reports and interact with their data in a chat GPT like fashion.

Now to illustrate the impact of this new model that is already penetrated over 20% of our <unk>. Please.

Speaker 3: Please let me share some real-life examples from...

Please let me share some real life examples from some of our customers.

Speaker 3: So first, a significant new logo win with a Canadian retailer that was using competing BI solutions was having issues with silo data and with connecting to data and disparate systems. The company shows DOMO for our consumption model, which made it easy for the...

So first a significant new logo win with the Canadian retailer that was using competing be ice solutions was having issues with siloed data and with connecting to data and disparate systems.

The company chose Domo for our consumption model, which made it easy for them to Sunset legacy seat based tools, where they weren't sure they were getting the value that they needed.

Speaker 3: We are starting to see more and more of these cases, and it's certainly good to be the consultant.

We are starting to see more and more of these cases and it's certainly good to be the consolidator.

Health care, our health care software company was using our domo everywhere solution to provide data to their medical customers. The.

Speaker 3: The company was adding new Domo Everywhere customers at a faster rate than...

The company was adding new domo everywhere customers at a faster rate than expected and it was challenging under seat based model, where they had to commit to their investment before receiving the value.

Speaker 3: And it was challenging under a seat-based model where they had to commit to their investment before receiving the value.

Speaker 3: Since transferring over to consumption now, our customer has tripled their contract size with us.

Since transferring over to consumption now our customer has tripled their contract size with us and yes that math works.

Speaker 3: An educational software company was debating which vendor to use for their ETL needs.

And educational software company was debating, which vendor to use for their E. T L needs.

Speaker 3: They entered into an upsell contract with Domo not only because of our ETL features, but because our consumption

We entered into an upsell contract with domo not only because of our eto features but because our consumption contract structure allow them to predict their cost with a high level of confidence.

Speaker 3: structure allow them to predict their cost with a high level of confidence.

Speaker 3: Additionally, the company had been considering using Domo Everywhere to provide embedded analytics to thousands of their

Additionally, the company had been considering using domo everywhere to provide embedded analytics to thousands of their end users.

Speaker 3: Moving to a consumption model, open the door for them to test out our GOMO everywhere experience in a very cost...

Moving to a consumption model open the door for them to test out our domo everywhere experience in a very cost effective manner.

Speaker 3: And then because of the value they're seeing in the DOMA platform, this customer has committed to dramatically alter the scale of their...

And then because of the value they're seeing in the Domo platform. This customer has committed to dramatically alter the scale of their investment and agreed to a two year six figure <unk> contract in Q3 with a significant upsell built into the second year.

Speaker 3: and agreed to a two year six figure ARR contract in Q3 with a significant upsell built into the second year. Is consi....

As consumption driving adoption.

It certainly looks like it.

Another example is a financial services company that purchased <unk> to consolidate data from multiple loan origination systems.

Speaker 3: Another example is a financial services company that purchased Elmo to consolidate data from multiple loan originations.

Speaker 3: The consumption model was key to their decision to go with Domo because it unlocked our data science and sandbox features, which were critical to their use case and would have been outside their budget under our seat.

The consumption model was key to their decision to go with Domo because it unlocks our data science and sandbox features which were critical to their use case and would've been outside their budget under a fee based model.

Speaker 3: does access to all of DOMO, help customers unlock the value of the entire platform and become more committed to the entirety of our platform.

Does access to all of Domo help customers unlock the value of the entire platform and become more committed to the entirety of our platform.

So.

Speaker 3: A digital customer engagement platform company has been a domicostmer for a decade. The initial use case was

A digital customer engagement platform company has been a domo customer for a decade.

The initial use case was for sales and marketing analytics.

Speaker 3: However, about a year ago, the company was considering a cancellation because they felt like they were paying too much per seat for about three...

About a year ago. The company was considering a cancellation because they felt like they were paying too much per seat for about 350 users.

Speaker 3: What saved the account was a move to consumption with unlimited use.

What saved the account was a move to consumption with unlimited users.

Speaker 3: Using our product, they created an app, and because they have unlimited users, they were able to deploy the app company-wide and now have over 1,000 users on Domo's platform. Not only did

Using our product they created an app.

And because they have unlimited users they were able to deploy the app companywide and now have over 1000 users and almost platform.

Not only did we save an account that was going to cancel.

Speaker 3: several months after they converted to consumption, they actually committed to an increased level of consumption and up there.

Several months after they can several months after they converted assumption consumption. They actually committed to an increased level of consumption and up their spend with us.

Speaker 3: Now, would we have been able to save this customer without consumption? No.

Now would we have been able to save this customer without consumption now.

And now we have an upsell.

Speaker 3: Looking outside of Q3, here's a few more examples of how consumption is changing the game.

Looking outside of Q3 here is a few more examples of how consumption is changing the game for us.

Speaker 3: A healthcare analytics company, which is using several of our larger competitors, is looking to replace

The health care analytics company, which is using several of our larger competitors is looking to replace.

Some business objects and other legacy providers.

Speaker 3: Consumption is allowing the company to replace the other vendors and expand Domo without the friction of a new contract discussion. Face book that meets the requirements to

Consumption is allowing the company to replace the other vendors and expand domo without the friction of a new contract discussion.

Can domo benefit from vendor consolidation.

Yes, we can.

Speaker 3: Another small highlight is a digital asset company that was about

Another small highlight is a digital asset company that was about to cancel because they thought we were too expensive for the number of users. They had in the account on seat based pricing.

Speaker 3: because they thought we were too expensive for the number of users they had in the account on seat-based pricing. They moved to a consumption contract within limited users.

They moved to consumption contract with unlimited users. Additionally, they agreed to triple their contract size and then just last week agreed to triple It again.

Speaker 3: And then just last week, agreed to triple it again. So they are now close to 10x their original size, as opposed to...

So they are now close to <unk> original size as opposed to just recently being on the brink of canceling.

Speaker 3: Do I wish that all my customers were on consumption contracts? Yes, I do.

Do I wish they all my customers were on consumption contracts, yes, I do.

Speaker 3: Lastly, an insurance company was paying as $200,000 a year moved to consumption because our seat-based model didn't allow them to expand as rapidly as they wanted.

Lastly, an insurance company that was paying us $200000 a year.

Move to consumption because our seat based model didn't allow them to expand as rapidly as they wanted to.

Speaker 3: with the initial move to consumption, they increase their contract with us by over 100,000...

With the with the initial move to consumption the increase their contract with us by over $100000.

Speaker 3: 15 months later, after they had been able to fully realize the value Domo can provide due to having unlimited users and functionality, they added another $200,000 annually to their contract to replace their spend with $200,000 annually.

15 months later after they'd be able to fully realize the value domo can provide due to having unlimited users and functionality. They added another $200000 annually to their contract to replace their spend with Cognos.

Yeah.

Speaker 3: So in totality, I think these are some great examples of multiple customers that highlight the progress we are making as a company. Now while we are...

So in totality I think these are some great examples of multiple customers that highlight the progress we are making as a company.

Now, while we are marching toward improving the prospects of the company. We are also optimizing our costs. So we can operate as efficiently as possible.

Speaker 3: we are also optimizing our costs so we can operate as...

Speaker 3: To that end, we've made changes that impact approximately 7% of our workforce, as well as reductions in contractors, marketing programs and other...

To that end, we've made changes that impacts approximately 7% of our workforce as well as reductions in contractors marketing programs and other expenses.

Speaker 3: We are cognizant of the effect this has on people and would like to take a moment to express our gratitude to everyone for their concern.

We are cognizant of the effect. This has on people and we'd like to take a moment to express our gratitude to everyone for their contributions.

Speaker 3: As we look to the future, I'm sure you can fill my energy around these pivots we're making and the signals we're seeing from customers and partners that resoundingly can

Now as we look to the future I'm sure you can fill my energy around these pivots, we're making and the signals we're seeing from customers and partners that resoundingly has convinced us that they're the right moves.

Speaker 3: Even when we were growing 30% quarter over quarter, they're year over.

Even when we were growing 30% quarter over quarter year over year I wasn't this optimistic about our future and our stability as I am now.

Speaker 3: I wasn't this optimistic about our future and our stability as I am now. We're quick.

We're quickly migrating to the consumption model.

Speaker 3: We'll have the vast majority of our new local customers on

In Q4, we'll have the vast majority of our new logo customers on consumption and we will continue to encourage our existing customers to switch to consumption, resulting in the vast majority of our air our transition to the consumption model within the next year.

Speaker 3: and we will continue to encourage our existing customers to switch to

Speaker 3: resulting in the vast majority of our ARR transition to the consumption model within the next year.

Premium our adoption programs and our AI investments will continue to bolster our efforts in moving to consumption, where customers are able to experience value and see the vision of what domo can mean to their company before having to pay and commit to everything.

Speaker 3: and our AI investments will continue to bolster our efforts in moving to

Speaker 3: where customers are able to experience value and see the vision of what Domo can mean to their company before having to pay and commit.

All of these changes will also lead to a dramatic shift in our approach and success with partners and the broader ecosystem over the next 12 months, which should meaningfully impacts our ability to generate leads efficiently.

Speaker 3: All of these changes will also lead to a dramatic shift in our approach and success with partners and the broader ecosystem over the next 12 months, which should meaningfully impact our ability to

Speaker 3: DOMO is becoming a much more interesting company with prospects that excite our broader team.

Domo is becoming a much more interesting company with prospects that excite our broader team.

And with that I'll now turn it over to David.

Speaker 3: Thanks, Josh. I love those examples. Like you, I'm excited about our key areas of focus and believe we're really well positioned to execute on the opportunities in front of us.

Thanks, Josh I love those examples.

Like you I am excited about our key areas of focus and believe we're really well positioned to execute on the opportunities in front of us.

Speaker 3: Now while we are inspired to hire growth rates and we're currently experiencing, I'm pleased that we were able to exceed the Billings guidance that we provided at the beginning of the quarter, we delivered Q3 Billings is 74.8 million a year over your increase of 1%. Total revenue was 79.7 million, also a year over your increase of 1%. Subscription revenue represented 89% of our total revenue and growth.

Now, while we aspire to higher growth rates and we are currently experiencing I'm pleased that we were able to exceed the billings guidance that we provided at the beginning of the quarter. We delivered Q3 billings of $74 8 million a year over year increase of 1% total revenue was $79 7 million also year over year increase of 1% subscription revenue.

Represented 89% of our total revenue and great.

One moment, everyone library reconnect the speaker line, please standby and do not disconnect.

Speaker 4: One moment, everyone, where we reconnect the speaker line, please stand by and do not disconnect.

Once again, everyone. Please standby.

Once again, everyone. We are reconnecting the speaker line. Please standby.

All right are we back live again.

You are live please go ahead.

Speaker 5: All right, very good. Sorry for the short delay, but thanks, Josh, I appreciate that and appreciate those great examples.

Okay.

Alright, very good sorry for the short delay.

But thanks, Josh I appreciate that appreciate the great examples.

Speaker 5: Like you, I'm excited about our key areas of focus and believe we're well positioned to execute on the opportunities in front of us.

Like you I'm excited about our key areas of focus and believe we're well positioned to execute on the opportunities in front of us now.

Speaker 5: Now while we aspire to higher growth rates and we're currently experiencing, and please that we were able to exceed the Billings guidance that we provided at the beginning of the quarter, we delivered Q3 Billings of 74.8 million, a year over year increase of 1%, till revenue was 79.7 million, also a year over year increase of 1%.

Now, while we aspire to higher growth rates than we're currently experiencing I'm pleased that we were able to exceed the billings guidance that we provided at the beginning of the quarter. We delivered Q3 billings of $74 8 million a year over year increase of 1% total revenue was $79 7 million also a year over year increase of 1%.

Speaker 5: Subscription revenue represented 89% of our total revenue and grew 3% year over year. Our ARR grew roughly in line with subscription revenue growth.

Subscription revenue represented 89% of our total revenue and grew 3% year over year.

<unk> grew roughly in line with subscription revenue growth.

Speaker 5: In reviewing the metrics that will impact the remainder of the year, a current RPO is 230.8 million consistent with last year, and our total RPO grew 4% to 367.2 million as of October 31st.

In reviewing the metrics that will impact the remainder of the year current RPI was $238 million consistent with last year and our total <unk> grew 4% to $367 2 million as of October 31.

Speaker 5: On a dollar weighted measure, we continue to have approximately two-thirds of our customers under multi-year contracts. Our gross retention was about 85 percent, net retention was about 95 percent. Last quarter, we identified potential renewal challenges with several large customers. And while we and some of our customers continue to face challenging IT spending environment, in Q3, these renewals discussions played out somewhat better than expected, which did help our results.

On a dollar weighted measure we continue to have approximately two thirds of our customers that are multiyear contracts.

Our gross retention was about 85% net retention was about 95% last quarter.

We identify potential renewal challenges with several large customers and while we and some of our customers continue to face challenging spending environment. In Q3. These renewals discussions played out somewhat better than expected, which did help our results.

Speaker 5: In regards to the large renewal risks that we had identified last quarter, we have saved a few of them and have not identified any beyond those that we had identified in last quarter, for the fourth quarter.

In regards to the large renewal risk that we identified last quarter, we have saved a few of them and have not identified any beyond those that we had identified in last quarter for the fourth quarter.

Speaker 5: Moving on to margins and profitability. Our subscription gross margin was 84.8% at 0.2% of points from Q3 of last year.

Moving on to margins and profitability our subscription gross margin was 84, 8% at 0.2 percentage points from Q3 of last year.

Speaker 5: And non-gap operating margin was a record high 6.3%. Up 5.4 percentage points from a year ago. Our net loss was very close to break even at 24,000, which is our best result to date. And a big improvement from a net loss of 4.4 million a year ago. Net loss per share was zero based on 36.3 million weighted average shares out of standing basic and deluded.

And non-GAAP operating margin was a record high six 3% at five points four percentage points from a year ago.

Our net loss was very close to breakeven at 24000, which is our best result to date and a big improvement from a net loss of $4 4 million a year ago.

Net loss per share was zero based on $36 3 million weighted average shares outstanding basic and diluted.

Speaker 5: In Q3, cash use and operations was approximately $4.3 million. We capitalized approximately $2 million software costs, resulting in a decline of our cash balance of $6.5 million from last quarter to $57.4 million.

In Q3 cash used in operations was approximately $4 $3 million, we capitalized approximately $2 million software costs, resulting in a decline of our cash balance of $6 $5 million from last quarter to $57.4 million.

Speaker 5: Cash flow from operations in Q3 was negatively impacted by the timing of collections on some receivables. However, we're still on track to generate positive operating cash flow for FY24, and therefore expect our Q4 cash flow from operations to be in the range of three to four million.

Cash flow from operations in Q3 was negatively impacted by the timing of collections on some receivables. However, we're still on track to generate positive operating cash flow for FY 'twenty four and therefore expect our Q4 cash flow from operations to be in the range of $3 million to $4 million.

Speaker 5: Looking forward to next year, we're committed to not only being operating cashflow positive, but we are targeting free cashflow positive for FY 25.

Looking forward to next year, we're committed to not only being operating cash flow positive, but we are targeting free cash flow positive for FY 'twenty five in.

Speaker 5: In order to bring our cost structure in alignment with this target, we recently reduced our headcount related expense by approximately 7%, and also optimized the handful of other costs.

In order to bring our cost structure in alignment with this target we recently reduced our head count related expense by approximately 7% and also optimize the handful of other costs.

Speaker 5: For Q4 top line metrics, we're guiding to a billing range of 102 to 103 million and expect gap revenue to be in the range of 79 to 80 million. For the full year of fiscal 24, we expect buildings to be in the range of 317.7 to 318.7 million and we expect gap revenue to be in the range of 317.8 to 318.8 million. Representing year-over-year growth of approximately 3%.

For Q4 top line metrics, we are guiding to a billing range.

$2 million to $103 million and expect GAAP revenue to be in the range of $79 million to $80 million for.

For the full year of fiscal 'twenty, four we expect billings to be in the range of $317 seven to $318 7 million and.

And we expect GAAP revenue to be in the range of 317.8 to $318 8 million representing year over year growth of approximately 3%.

Speaker 5: We expect non-GAAP net loss per share basic and diluted of 5 to 9 cents for Q4. This assumes a 36.8 million weighted average shares outstanding basic and diluted. For the full year we expect non-GAAP net loss per share basic and diluted of 24 to 28 cents.

We expect non-GAAP net loss per share basic and diluted of five to nine cents for Q4. This assumes a $36 8 million weighted average shares outstanding basic and diluted.

For the full year, we expect non-GAAP net loss per share basic and diluted of 24 to 28 sets.

Speaker 5: This assumes 36.1 million weighted average shares outstanding basic and diluted.

This assumes $36 1 million weighted average shares outstanding basic and diluted.

Speaker 5: Additionally of note is the fact that we've engaged in investment bank to assist us with refinancing and extending the maturity of our outstanding debt. And at this point in the process we have a significant level of interest from potential lenders.

Additionally of note is the fact that we've engaged an investment bank to assist us with refinancing and extending the maturity of our outstanding debt and at this point in the process, we have a significant level of interest from potential lenders.

Speaker 5: In conclusion, we posted better than expected top line results, which record profitability, and believe we're making the right moves to drive long-term profitable growth. With that, we'll open the call for questions. Operator.

In conclusion, we posted better than expected topline results with record profitability and believe we're making the right moves to drive long term profitable growth with that.

I'll open the call for questions.

Operator.

Thank you if you would like to ask a question on the phone lines. Today. Please press star one on your telephone keypad. If you would like to remove yourself from the queue that is star one again, well pause for a moment to allow everyone a chance to signal.

Speaker 1: Thank you. If you would like to ask a question on the phone lines today, please press star 1 on your telephone keypad. If you would like to remove yourself from the queue that is star 1 again. We'll pause for a moment to allow everyone a chance to.

Speaker 1: We'll take our first question from Eric Martinez, you would leg street capital markets. Please go ahead.

We will take our first question from Eric Martin Newsy with Lake Street Capital markets. Please go ahead.

Speaker 6: Yeah, congrats on the good numbers for the quarter and I appreciate the examples regarding the capacity based pricing impacts want to understand a little bit more on the. The risk of non renewals, I think last quarter you talked about 4 or 5 enterprise accounts that were in danger and that was part of the reset to the, the outlook for 24. could you give us a little better color? Have we reached resolution on those 4 or 5 at risk enterprise account?

Yes, congrats on the good numbers for the quarter and I. Appreciate the examples regarding the capacity based pricing impacts wanted to understand a little bit more on the the risk of non renewals I think last quarter, you talked about four or five enterprise accounts that we're in danger and that was part of the reset to the the outlook.

For FY 'twenty four can you give us a little better color have we reached resolution on those four or five at risk enterprise accounts.

Speaker 3: Yeah, we've reached resolution. Good news, we were actually able to keep a couple of them just with down cells, but we still kept them as customers. So that was a little bit of a bright spot when it came to the bad news. And this quarter, we've given the guidance. We're obviously not.

Yeah, we've reached resolution.

Good news, we were actually able to keep a couple of them just with downtown but we still kept them as customers. So.

That was that was a little bit of a bright spot when when it came to the bad news and.

This quarter.

We've given the guidance, we're obviously not all of that on a on a torrid pace here, but we at the same time.

Speaker 3: We're not on a toward pace here, but we, at the same time, feel pretty good about.

Feel pretty good about looking out over the next three four quarters in terms of the pacing of where customers are that are at risk. It feels like we hit the bottom of that and we're recovering from that and like we mentioned many of the examples with the consumption pricing, we actually ended up on the consolidation being the consolidator.

Speaker 3: Looking out over the next three, four quarters, in terms of the pacing of where customers are that are at risk, it feels like we hit the bottom of that and we're recovering from that. And like we mentioned, many of the examples.

Speaker 3: with the consumption pricing, we actually end up on the consolidation, being the consolidator side of the equation versus having, you know, just being impacted by others. So the move to consumption definitely changed the relationship with a lot of our customers and has helped us save a bunch of accounts. And we think especially as that plays out over the future, you know, like we talked about, there's so many upsells that we're getting from these accounts. If you look at the cohort of customers that have been through renewal, we haven't lost any customers that have signed up.

The equation versus having just being impacted by by others. So they moved it to consumption definitely change the relationship with a lot of our customers and has helped us save a bunch of accounts and we think especially as that plays out over the future you know like we talked about there's so many upsells that were getting from these accounts. If you look at the cohort of customers that have been through.

The renewal, we haven't lost any customers that have signed up.

Speaker 3: to consumption and it's a smaller sample size, 30 to 40, but as that number gets bigger, we'll keep watching that, but it certainly is extremely encouraging looking at the 20% of our business that's purely consumption and knowing that we can get that number to a vast majority just over the next 12 months.

To consumption and you know, it's a smaller sample size 30 to 40, but you know as that number gets bigger we'll keep watching that but it certainly is extremely encouraging and looking at the 20% of our business. That's that's purely consumption knowing that we can get that number to.

Asked majority just over the next 12 months.

Uh-huh okay.

Speaker 6: Okay, the other comment that you made last quarter was regarding the pipeline. And you characterize the pipeline back then as soft in all stages. I'm wondering if you could update that to you on the...

Comment that you made last quarter was regarding the pipeline and you characterized the pipeline back Dennis soft in all stages I'm wondering if you could update that view on the pipeline.

Speaker 3: Yeah, it feels, you know, as we look at the numbers, it seems like we started to turn. You know, there's seven, eight, nine numbers that all feel like they've barely started to turn, but it's barely. But, you know, all of our checks, it looks like things are, hit the bottom last quarter and just are certainly slightly improved. So hopefully that's how things play out. But we're feeling like we have our arms wrapped around the situation much better and we feel like we're in a much...

Yeah, Phil as we look at the numbers.

It seems like we're starting to turn.

There's 789 numbers that I'll feel like they've barely started and churn, but it's barely.

But you know all of our checks it looks like things are hit.

I hit the bottom.

Last quarter end and just are certain to slightly improve so hopefully that's how things play out but.

We're we're feeling like we have our arms wrapped around the situation much better and we feel like we're in a much.

Speaker 3: better position in terms of the relationship that we have with our customers and our ability to sell consumption and our ability to get our customers over to consumption, training up the reps, training up the client services folks, you know focusing on adoption and helping people with finding additional use cases. So we feel like we're much better positioned and feel like we've got much better visibility into the customers and the contracts at this stage. Understand, good luck.

<unk> position.

In terms of the relationship that we have with our customers and our ability to sell consumption and our ability to get our customers over to consumption training up the rats training up the client services folks focusing on adoption and helping people find these additional use cases, so we feel like we're much better positioned.

And feel like we've got much better visibility into into the customers and the contracts at this stage.

Understand good luck in Q4.

Thank you very much.

Thanks, Eric.

Speaker 1: Again, that is Star One to ask a question. We'll take our next question from Oliver, cooking in with JMP Securities. Okay.

Once again that is star one to ask a question we will take our next question from Oliver <unk> with JMP Securities.

Yes.

Yeah.

Mhm.

Actually it's Pat but.

Pat Walgreens at JMP Securities. Thank you, so Josh I do love this they shift to consumption.

Speaker 7: So Josh, I do love the shift to consumption.

Speaker 7: And we've seen a lot of other people do it, but I was wondering if you could balance it out a little bit. I mean, there are some negatives to the consumption model too, right? So what do you give up?

And we've seen a lot of other people do it but I was wondering if you could balance it out a little bit I mean, there are some negatives to the consumption model too right. So what what what why do you give up when you when you make this shift.

Yes, I think if you went around the room and he staff in and.

Speaker 3: Yeah, we I think if you want to round the the room and e-staff and and you know try to figure out what the the negatives are I don't we're not seeing any negatives You know the one difference in the model is

Tried to figure out what are the negatives.

Not seeing any negatives.

The one difference in our model is youre not going to sign up any seven figure new logo deals right when you're going to start to use AWS you don't need don't walk in and be like Hey, give me a couple of million Bucks worth.

Speaker 3: you're not going to sign up any seven-figure new logo deals. When you go start to use AWS, you don't walk in and be like, hey, give me a couple million bucks worth. You try it out, and you start spending it. If you like it, you decide that you want to commit to get lower rates, and we're seeing that same thing. So brand new seven-figure billings walking in the door, we're not going to have as many of those. They'll happen, but they'll happen as those customers grow.

You you try it out and you start spending and if you like it you get you decided that you want to commit to get lower rates and we're seeing that same thing. So you know.

Brand, new seven figure billings walking in the door, we're not going to have as many of those they'll they'll happen, but they'll happened as those customers grow.

Speaker 3: So, you know, we're seeing those relationships. We have some really big customers that are standing up right now that on the old seat model, we'd be signing up for three, four million bucks.

So we're seeing those relationships we have some we have some really big customers that are signing up right now that on the old seat model, we'd be signing up for three 4 million Bucks.

Speaker 3: But, you know, annually, but in the consumption model, you sign them up for $400,000 and then another $500,000 and then you get to a couple million bucks and you still get to the same spot. You get there more efficiently, more effectively. You know, there's not as much hemming and hawing. You're not going through as many use cases and approvals internally. But at the same time, you also don't have the big billings hits until they've had time to bake. So we'll have to wait for some of those things to bake a little bit.

But annually, but in the consumption model you sign them up for 400000 Bucks and then another 500000 Bucks and then you get to a couple of million Bucks and you still get to the same spot you get there more efficiently more effectively yes, theres not as many not as much hemming and Hawing youre not gone through as many use cases and approvals internally.

But at the same time you also don't have the big billings hits until they've had time to bake. So we'll have to wait for some of those things to bake a little bit.

Okay great.

Speaker 5: Okay, great. I think another comment was that, I think early on there was a concern with G's, if we give them the whole platform as they're gonna be needing to sell them later on, and there was some concern about that, but the way that's working is when we provide the whole platform and open up all the seats, it's then just about helping the customer identify how to solve more of their data issues and more use cases, and as they do that, as an external site companies are tick off as there are Bank Eirs behind them,

Another just another comment was that I think early on there was there was a concern with Jay as you know if we give them the whole platform is going to be able to sell them later on and.

And there was some concern about that by the way that's working as one we provide the whole platform and open up all the seats. It's been just about helping the customer identify how to solve more of their data issues.

Yeah, and more use cases and as they do that.

The upsell that happens very naturally.

Speaker 8: Okay, so there's not a near-term hit on cashflow. Like you don't get less cashed up front when you go to a consumption model. I mean, maybe not.

Okay. So theres not a near term hit on cash flow like you don't get less cash upfront. When you go to a consumption model I mean, maybe not.

Speaker 5: No, no, no. I mean, no. Still AIA subscription. Yep, subscription AIA. So.

No.

All right Bill AIA subscription subscription AIA so.

Speaker 8: And then my thank you questions, Josh is he could go a little deeper, actually may all just tell you my other question, I'll put them on that one. So for Josh, if he could go a little deeper on the architectural.

Great and then Mike.

If you could go a little deeper actually may I'll, just say mileage guys talking about that let's try and separate for Josh. If you could go a little deeper on the architectural change and help us understand the history of that what was it before.

Speaker 8: and help us understand the history of that. What was it before and was it now and how does it work? And then maybe if you guys could address the debt in a little more detail.

Is it now and how does it work.

And then maybe if you guys could address the debt and a little more detail just sort of.

Speaker 8: What's the current rate when the current when's the maturity and what's your options of course?

What's the current rate what is that correct.

When the maturity and whats your options look like.

Both of those things would be really helpful. Thank you.

Speaker 3: Yeah, so the problem before, you know, when we were starting to get excited about the ecosystem and we were building relationships with some folks, especially the big data providers, if we walk into accounts with reps and then their customer that they introduced us to might start pulling some compute out of our partner and putting it into Domo.

Yeah. So the problem before you know when we were starting to get excited about the ecosystem and we're building relationships with some folks, especially the big data providers.

Walk into accounts with reps and then their their customer that they introduced this to you might start pulling some compute out of our partner and putting into domo.

Speaker 3: And, you know, of course, that's the end of those relationships, right? You've taken dollars out of the pockets of the reps of the partners. And so, you know, that was DOA as soon as that started. And so what we've done now is we've said, okay, we can take that compute component where the data lives and how it gets queried in process. And we can run that inside snowflake or inside AWS or inside Microsoft.

And of course, that's the end of those relationships right.

You've taken taking dollars out of the pockets of the reps and the partners and so yeah that was D O as soon as that started.

And so what we've done now is we said okay. We can take that compute component, where the data lives and how it gets how it gets queried and processed and we can run that.

Inside snowflake or inside AWS or inside Microsoft So any partner that brings in we can keep all the computing.

Speaker 3: So any partner that brings us in, we can keep all the computing charges and credits that are being used up, actually with the partner. And so that changes the dynamic pretty meaningfully because now we have a complete alignment, except for instead of...

The computing charges and credits that are being used up actually with the partner and so that changes the dynamic pretty meaningfully because.

Now we have complete alignment except for instead of a 40.

Speaker 3: 40 users that you may have it, even a big fortune 500 company, you go from 40 users or 100 users to 5,000, 10,000 when you add the DOMO front end on top of that. And that's 5,000 to 10,000 people that are now querying and running reports that are all driving compute on the back end of a Snowflake or a Databricks or a Microsoft or an AWS or Google. So we feel like we're in a much, much better position. And that coupled with freemium.

<unk> 40 users that you may have it even a big Fortune 500 company.

40 users are 100 users to 5000 10000, when you add the Domo front end on top of that and Thats 5010 thousand people that are now querying and running reports that are all driving compute on the backend of a snowflake or a data breaks or Microsoft or AWS or Google So we feel.

We're in a much much better position and that coupled with premium.

Speaker 3: There's been plenty of conversations where we're talking to a partner and someone that maybe we have 300 customers that have connected to their data. So we know it's popular inside our network and we know that we provide a lot of visibility into the data that's inside that partner's analytics. And the partner will come to us and say, gosh, it'd be great if we could give this to the other 10,000 customers that we have.

There's been plenty of conversations where we're talking to are we're talking to our partner and someone that maybe we have 300 customers that have connected to their data. So we know it's popular inside our network and we know that we provide a lot of visibility into the data that is inside that partners.

Analytics and the partner will come to us and say gosh it'd be great. If we could give this to the other 10000 customers that we have.

Speaker 3: And then we say, yeah, great, you should do that. It's, let's see, $840,000.

And then we say yeah, great you should do that it's a let's see $840000 and the partners like what well, we don't know what the values yet really kept but we'll give you upside if they converted their global customers like yeah that seems like a good idea on paper, but I don't know if we can lean in and make the commitment make that investment without seeing a return.

Speaker 3: And the partner's like, what? Well, we don't know what the value is yet. We're like, yeah, but we'll give you an upside if they converted to the normal customer.

Speaker 3: Like, yeah, that seems like a good idea on paper, but I don't know if we can lean in and make the commitment, make the investment without seeing a return. So maybe we should just try it out with a couple of customers and by then you've lost momentum.

And so maybe we should just try it out with a couple of customers and by then you've lost momentum, whereas now we can go in that same customer that same conversation. We say, yes, we can get it to all 10000, let's do it on freemium.

Speaker 3: Whereas now we can go in that same customer, that same conversation, we say, yes, we can't get it to all 10,000. Let's do it on premium.

Speaker 3: Let's build some quick start guides so that the second you roll this out, the customer is able to log into Domo, see all of the data from you as a partner, we'll build out the dashboards, we'll build out the alerts, they're going to get this great white glove perfect experience, replicated 10,000 times automatically. And in there, they can see, hey, this is your Domo experience for this data from your partner. If you want it for everything else.

Let's build some quick start guide so that the second you roll. This out the customer is able to log into Domo C. All of the data from you as a partner, we'll build out the dashboards will build out the alerts they're going to get this great White glove perfect experience replicated 10000 times automatically.

And in there they can see hey, this is your domo experience for this data from your partner if you want it for everything else Here's your framing the account just keep going and then we tell the partner any upside we're going to give you guys a piece of it so all of a sudden providing data to their customers. It becomes not a cost center becomes a profit center and we've seen them.

Speaker 3: here's your freemium account, just keep going. And then we tell the partner, any upside, we're gonna give you guys a piece of it. So all of a sudden, providing data to their customers becomes not a cost center, becomes a profit center. And we've seen a bunch of traction in just even the last month for that. So we're really excited about our ability to provide Domo everywhere through our freemium offering.

Bunch of traction and just even the last month.

For that so we're really excited about our ability to provide them wherever through to referee Liam offering.

Great and then Dave on the debt, yes, so our current debt.

Speaker 5: Yeah, so our current debt, as you might recall, we raised that debt even prior to our IPO, when we were still consuming a lot of cash. And so it's very expensive debt. Carries a cash interest component and a pick interest component. Some other payments that push the effective interest rate north of 14%.

As you might recall, we raise that debt.

Even prior to our IPO.

One we were still using a lot consuming a lot of cash and so.

It's very expensive debt carries a cash interest component and a pik interest component smother payments that push the effective interest rate north of 14%.

Speaker 5: as we're at today and and it's got a maturity of April 25.

That's where we're at today and and it's got a maturity of April 25.

Speaker 5: And so we've gone out with the refinancing and got a bank helping us and we're looking at...

And so we've gone out with a refinancing and.

We got a bank, helping us and and we're looking at.

Speaker 5: cash interest component of, you know, a little over 11% right now based on where so far is at. We're hearing some good things about where rates might go next year, but we're being our rate down substantially and push our maturity date, you know, out to.

Cash interest component of a.

A little over 11% right now based on where Sofer's at.

Yes, we're hearing some some good things about where rates might go next year, but it'll be in our rate down substantially and push our maturity date.

<unk>.

Speaker 5: 29 or 30. So it sort of puts it out.

Yes, 29, or 30, so it sort of puts it out.

Speaker 5: well out into the future and it eliminates some of the other, you know, pick interest in some of the other elements.

Well out into the future.

And it eliminates some of the other pick interest and some of the other elements.

Alright terrific. Thanks, Thanks to both of you.

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Speaker 3: All right, sounds like Pat said thanks, we heard, and there was another question. Is the question still on?

Yes.

Alright, it sounds like Pat said, Thanks, we heard and were there was another question is the question so on.

Speaker 1: Yes, one moment. We'll take our next question from Derek Wood with TD.

Yes, one moment, we will take our next question from Derrick Wood with TD Cowen.

Speaker 9: Hey guys, thanks. This is Cole on for Derek.

Hey, guys. Thanks. This is call on for Derek.

Speaker 9: on the riffs that you talked about, we'd just like to get a little more color.

On the risks that you talked about we'd just like to get a little more color is that a cross sales G&A. If you can just unpack that a bit that'd be helpful.

Speaker 9: cross sales, GNA, if you can just unpack that a bit, that'd be helpful.

Speaker 3: Yeah, we were, it was across every department.

Yes, we were.

It was across every department.

Speaker 3: There was the majority of it was in sales. You know, we're in terms of growth, not where we wanna be. And so for the most part, it was based on performance. Some of it was just positions that were eliminated as we found more optimized way of accomplishing certain things. It wasn't a huge number, but it was still.

There, whereas the majority of it was in sales.

We are in terms of growth.

Where we want to be and so for the most part it was based on performance. Some of it was just positions that were eliminated as we found more optimized wave accomplishing certain things.

It wasn't a huge number but it was still still.

Speaker 3: Still several dozen humans that were affected. So a little bit of a rough day here at the office, but at the same time, to like the companies in a better position, and it's not a dramatic effect on our ability to produce. We think in many cases, actually taking a smaller number of leads, just to distribute it, I'm taking the same number of leads distributed to a smaller number of reps will actually be an improvement for the reps that are here to make sure that they're being fed.

Several dozen.

Humans that were affected so.

A little bit of a rough day here at the office, but at the same time to like the company is in a better position and it's not a dramatic effect on our ability to produce we think in many cases actually.

Taking a smaller number of leads distributed I'm, taking the same number of leads distributed to a smaller number of reps will.

It actually be an improvement for the reps that are here to make sure that theyre being fed. So overall I don't think it's going to be.

Speaker 3: So overall, I don't think it's going to be too impactful to our company. It just obviously impacts the folks that we're affected by it.

Two impactful to our company. It just obviously impacts the folks that were affected by that.

Sounds good helpful. Just building on that too.

Speaker 9: Sounds good and helpful. Just building on that too.

Speaker 9: For the reps that you still have at DOMO, you know, how is productivity trending? Any new initiatives around helping them sell consumption better would be helpful to hear about things.

For the for the reps that you still have a demo.

As productivity trending.

Any new initiatives around helping them sell consumption better.

Would be helpful to hear about thanks.

Speaker 3: Yeah, we have all kinds of initiatives around helping them to consumption. You know, we had a board meeting just recently and walked through our consumption deck and showed the board members, you know, all the positive things that are happening and, and, you know, all the negative things that we might be able to find as well. And, you know, the resounding answer was from the board was.

Yeah, we have all kinds of initiatives around helping them to consumption.

You know we had a board meeting just recently and walk through our consumption that can show. The board members. All the positive things that are happening in and all the negative things that we might build defined.

As well and the resounding answer was from the board was move as fast as you, possibly can we don't see anything.

Speaker 3: Move as fast as you possibly can. We don't see anything.

Speaker 3: that would that would cause us concern about you moving as fast as you possibly can so to that end you know doing as many things as we can To drive the transition to consumption things like we've built out a brand new adoption group

It would that would cause us concern about you moving as fast as you, possibly can so to that end you know Jimmy as many things as we can.

To drive the transition to consumption things like we've built out a brand new adoption group, that's focused on going into our especially our bigger customers in helping them. It's a great phone call, we call customer and we're not asking for or asking for new contract will not ask them to go get approval from procurement, we're just walk in and saying Hey.

Speaker 3: that's focused on going into our, especially our bigger customers and helping them. It's a great phone call. We call a customer and we're not asking for...

Speaker 3: We're not asking for a new contract. We're not asking to go get approval from procurement. We're just walking in and saying, hey, we'd love to come in and show you best uses for data science or we'd love to come in and talk to you about identifying opportunities inside your marketing spend.

We'd love to come in and show your best uses for data science or we'd love to come in and talk to you about identifying opportunities inside your marketing expense and they loved those conversations all we're doing is walking in helping them, but we're helping to identify additional use cases, which of course sensitive driving.

Speaker 3: They love those conversations. All we're doing is walking in and helping them, but we're helping to identify additional use cases, which of course ends up driving consumption. Those are the types of things that we're doing with the customer. We're reevaluating the different departments that we have and what each group does.

Consumption. So those are the types of things that we're doing with the customer and then we're reevaluating.

The different departments that we have and what each group does.

Speaker 3: So, you know, reps, you know, their job on renewal. What is the job on renewal? Is the job to go and procure another contract?

So you know reps their job on renewals, what's what is the job on renewal is the job to go and procure another contract.

Speaker 3: or is the job to help identify some more use cases?

Or is the job to help identify some more use cases and.

Speaker 3: And so just identifying those different ways that we can interact with our customers to help get them excited about adding additional users and adding additional use cases. It's really fun for the customer and it's really fun for us. They end up happier. They end up spending more. And those are the types of things that we can really do to address transitions to consumption. There's some customers that are on seat-based licenses with us.

And so just identifying those different ways that we can interact with our customers to help get them excited about adding additional users and adding additional use cases, it's really fun for the customer that's really fun for us they end up happier they end up spending more <unk>.

And.

Those are the types of things that we can really do to address transitions to consumption.

There's some customers that are on seat based licenses with us and they don't have access to all the features we have new features rolling it all the time and if you want to use. Those features then you need to be on consumption and so as we go out and market the different product offerings that we have in the new product offerings that we have those all leased.

Speaker 3: And they don't have access to all the features. We have new features rolling at all the time. And if you want to use those features, then you need to be on consumption. And so as we go out and market the different product offerings that we have and the new product offerings that we have, those all lead to additional consumption conversations. So we're definitely laser focused on that. We've seen this 20% cohort of

All lead to additional consumption conversation. So we are definitely laser focused on that we've seen this 20% cohort of consumption.

Speaker 3: consumption that's in our business today and it looked better than every other 20% cohort that you could find. So we're going to do anything in everything we can to get the entire business moved over to that because just everyone ends up happier on the consumption model.

That's in our business today, and it looks better than every other 20% cohort that you could find so we're going to do anything and everything we can to get the entire business moved over to that because just everyone ends up happier on the consumption model.

Appreciate the color. Thanks.

Yeah, you bet. Thank you.

Thank you we'll take our next question from Sanjiv Singh with Morgan Stanley.

Speaker 1: You will take our next question from Funti, seeing with Morgan Stan.

Speaker 10: Thank you for squeezing me in and sorry, I've been talking between multiple calls. If I'm repeating a question, I apologize upfront. But David, just given the refinancing of the debt and the higher rate environment and given the actions you guys are doing today on cost, to what extent could debt pay down be part of life?

Yeah. Thank you for squeezing me in I'm, sorry been toggling between multiple calls though.

Im repeating a question I apologize upfront, but David just given the sort of the you know.

Refinancing of the debt and sort of the higher rate environment and given the sort of actions you guys are doing today on cost to what extent could debt paydown b part of like.

Speaker 10: the capital allocation strategy, given that the budget environment is still pretty constrained right now. How do you look at debt paydown as a potential lever for increasing the equity value?

The capital allocation strategy given that the budget environment is still pretty constrained right now how do you look at that.

Debt Paydown, a potential lever for you know increasing sort of the equity value.

Speaker 5: yeah i mean that you know the good thing is is even sort of as is with a very modest growth expectation for next year i think you know we're free cash flow positive which puts us in a great position

Yes.

The good thing is is even sort of as is with a very modest.

Growth expectation for next year, I think where we're free cash flow positive, which puts us in a great position. So if we're able to able to accomplish some of things that Josh talked about them in accelerating our shift to consumption and if we get any sort of help from the from the macro environment.

Speaker 5: So if we're able to accomplish some of the things that Josh talked about and accelerating our ship to consumption and if we get any sort of help from the macro environment.

Speaker 5: You know, then we're then we're into producing some meaningful cash flow.

And were then oriented producing some some meaningful cash flow that then can be used to potentially retire some debt as you know theres, usually some some penalties when you pay it down in the first year. So we'll look at that but I think it'll be probably will be a lot better position as we move in to some of those succeeding years to start.

Speaker 5: that then could be used to potentially retire some debt. As you know, there's usually some penalties when you pay it down in the first year. So we'll look at that, but I think it'll be probably

Speaker 5: It would be a lot better position as we move into some of those succeeding years to start reducing

Reducing Matt.

Speaker 5: well in advance of a maturity, certainly.

Well in advance of the maturity certainly.

Speaker 10: Great. I appreciate the thoughts. And then Josh, on, you know, this is coming out of the AWS conference and when I hear about people's data strategies, one of the bigger themes is sort of English being the new programming language and English being the new SQL. And just want to get a sense of how you guys are sort of abstracting away kind of traditional.

Great I appreciate the thoughts and then Josh on this just coming out of the AWS conference and what I mean.

[noise] about People's data strategies, one of the bigger themes is sort of English being the new programming language and English being the new sequel, and just want to get a sense of how you guys are sort of abstracting away kind of traditional <unk>.

Speaker 10: BI type user interfaces to more of that generative AI modality where users are just, you know, sort of, you know, using, you know, natural language English to get the insights that they need from DEMO.

Type of user interfaces to more of that generative AI modality, where where where users are just sort of you know.

Using.

Natural language English to to get the insights they need from from Delta.

Yes, I mean, its terribly exciting because one of the most challenging things in business intelligence oriented.

Speaker 3: Yeah, I mean it's terribly exciting because one of the most challenging things in business intelligence or in leveraging the data that you have in your company is just getting access to it. And the big part of getting access to it is connecting to it, all of the ETL that needs to go into it. And you're right, that's where these...

Leveraging the data that you have in your company is just getting access to it and a big part of getting access to it is connecting to it all of the ECL that needs to go into it and you're right that's where these.

These are antiquated languages used to be a big part of it and going forward. It is about English and we have a bunch of a bunch of stuff that we've already incorporate into our products a bunch of AI that we've incorporated into our product and a bunch of generative AI that we're gonna be incorporating over the next few months into exploring the data into building cards into sharing data.

Speaker 3: antiquated languages used to be a big part of it and going forward it is about English and we have a bunch of A bunch of stuff that we've already incorporated into our product

Speaker 3: a bunch of AI that we've incorporated into our product and a bunch of generative AI that we're going to be incorporating over the next few months.

Speaker 3: into exploring the data, into building cards, and to sharing data.

Speaker 3: you know, having a data set and having AI suggest you, you know, what you should look at, what formatted should look like.

Having a dataset and having a I suggest to you what you should look at what format. It should look like being able to pick and choose from things that suggest to you fully formed.

Speaker 3: being able to pick and choose from things that it suggests to you uh... fully formed you know reports

Reports and so it's going to dramatically alter the landscape, it's going to dramatically alter the interactions and the benefits that the customers get so we're really excited about that we feel like we're extremely well positioned.

Speaker 3: and so it's gonna dramatically alter the landscape it's gonna dramatically alter the interactions and the benefits that the customers get so we're really excited about that we feel like we're extremely well positioned

Speaker 3: When you look at the data that powers AI, it all depends on how organized that data is.

When you look at the data that powers AI.

It all depends on how organize that data is and if your data is organized like a bunch of trash then that's exactly what you're going to get back and when you use when you use domo he actually not only organize your data, but you have a bunch of metadata about that data and that would helps AI really come up with great conclusions when it actually has an indication of what type.

Speaker 3: And if your data is organized like a bunch of trash, then that's exactly what you're gonna get back.

Speaker 3: And when you use Domo, you actually not only organize your data, but you have a bunch of meditative about that data. And that would help AI.

Speaker 3: really come up with great conclusions when it actually has an indication of what type of data is sitting there because

Data is sitting there because you know in the data where it could be anything it can be unstructured messy data and in it might be David it's coming from.

Speaker 3: you know, in the data work, it could be anything. It could be unstructured, messy data, and it might be data that's coming from another data warehouse. You actually don't know the source of it. And so you need to be able to have the metadata around that and have data organized in a way. And that's one of the things that we really do with our customers, help them organize that so that they can take advantage of all the different.

Their data warehouse, you actually don't know the root source of it and so you need to build to have the metadata around that and have data organized in a way and that's one of the things that we really do with our customers to help them organize that so that they can take advantage of all the different technologies and innovations that are rapidly coming out from AI. So we feel like were extremely well positioned for that and.

Speaker 3: technologies and innovations that are rapidly coming out from AI. So we feel like we're extremely well positioned for that. And that's another big part of why we want to be in the middle of consumption because...

That's another big part of why we want to be in the middle of consumption. Because you know again, if you're using consumption anything that isn't a product you can try out it's going to cost you a buck to try it out.

Speaker 3: You know, again, if you're using consumption, anything that is in our product, you can try out. It's going to cost you a buck to try it out.

Speaker 3: It's not a $50,000 commitment and you got to buy a couple of seats.

It's not a 50000 dollar commitment and he got up by a couple of seats. It's just goin' click on it and see what it does seem to perceive it produces something that's effective.

Speaker 3: And then if it does, of course you're going to start using it more. And because you already know it's effective, even though you're using it more and you're getting a bill for it, you don't care because you already prove the value.

And then if it does of course, you're going to start using it more and because you already know it's effective even though you're using it more and youre getting a bill for it you don't care because you already proved the value. So that's another just another reason why consumption such an important part of this where we see two X three X usage of the additional features and functionality we have in our product when it's a consumption customer because they're.

Speaker 3: So that's just another reason why consumption's such an important part of this, where we see 2X, 3X usage of the additional features and functionality we have in our product when it's a consumption customer because they're able to try it out and prove that it works. So we're really excited about AI in the way it's going to impact our business broadly speaking and feel like we're really well positioned to take advantage of that.

Try it out and prove that it works. So we're really excited about AR AI and the way, it's going to impact our business broadly speaking and feel like we're really well positioned to take advantage of that.

I appreciate the thoughts thank you.

You bet. Thanks.

Yes.

Speaker 1: That does conclude today's presentation. Thank you for your participation today and you may now just

And that does conclude todays presentation. Thank you for your participation today and you may now disconnect.

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Speaker 4: Please wait, the conference will begin shortly. Please wait, the conference will begin shortly.

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