Q4 2024 Domo Inc Earnings Call
Operator: Greetings and welcome to the Domo fourth quarter fiscal year 2024. At this time, all participants are in a list... A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone. As a reminder, this conference, And it is now my pleasure to introduce to you Peter Lowry, Vice President of. Thank you, Peter. You may, Good afternoon.
Greetings and welcome to the Domo fourth quarter fiscal year 2024 earnings call at.
At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad as a reminder, this conference is being recorded.
And it is now my pleasure to introduce to you Peter Lowry Vice President of Investor Relations. Thank you Peter you may begin.
Peter Caldwell Lowry: Good afternoon.
Peter Caldwell Lowry: On the call today we have Josh James, our founder and CEO, and David Jolley, our Chief Financial Officer. I'll lead off with our Safe Harbor Statement and then go on to the call. 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 webbed. Statements made on this call include forward-looking statements related to our business under federal securities law. These statements are subject to a variety of risks, uncertainties, and assumptions.
Peter Caldwell Lowry: On the call today, we have Josh James our founder and CEO and David Jolly, Our Chief Financial Officer.
Joshua G. James: I'll lead off their safe Harbor statement, and then onto the call.
Peter Caldwell Lowry: 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.
Peter Caldwell Lowry: Statements made on this call include forward looking statements relating to our business under federal Securities laws.
Peter Caldwell Lowry: These statements are subject to a variety of risks uncertainties and assumptions.
Peter Caldwell Lowry: These include, but are not limited to, statements about our future and prospects, financial projections, and cash positions. Statements regarding the potential of our consumption model, statements about our sales team, and technology, and expectations regarding new business opportunities, transactions, and initiatives. Statements regarding our channel of communication and upcoming events; Statements regarding the potential of artificial intelligence and its impact on our business; and Statements regarding the impact of macroeconomic and other conditions on our business. For a discussion of these risks and uncertainties, please refer to 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.
Peter Caldwell Lowry: These include but are not limited to statements about our future and prospects, our financial projections and cash position.
Peter Caldwell Lowry: Payments, you're buying the potential of a consumption model statements.
Peter Caldwell Lowry: Statements about our sales team and technology.
Our expectations for new business opportunities transactions and initiatives.
Statements regarding our channel of communication and upcoming events.
Regarding the potential of artificial intelligence and its impact on our business.
Peter Caldwell Lowry: And statements regarding the impact of macroeconomic and other conditions on our business.
Peter Caldwell Lowry: For a discussion of these risks and uncertainties. Please refer to documents, we filed with the I T. C. 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.
Peter Caldwell Lowry: 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.
Peter Caldwell Lowry: In addition, during today's call, we will discuss non-GAAP financial measures, which we believe are useful as supplemental measures of Domo's performance. Other than 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 a substitute for, or in isolation from, our GAAP reserves. 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 measures, which we have posted on the investor relations section of our website at domoinvestors.com. With that, I'll turn it over to Josh. Thank you, Pete.
Peter Caldwell Lowry: In addition, during today's call, we will discuss non-GAAP financial measures, which we believe are useful as supplemental measures of <unk> performance.
Peter Caldwell Lowry: Other than revenue unless otherwise stated we will be discussing our results of operations on a non-GAAP basis.
Peter Caldwell Lowry: These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results.
Peter Caldwell Lowry: 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 Domo investors Dot com with that I'll turn it over to Josh Josh.
Joshua G. James: Thank you Pete.
Joshua G. James: Hello everyone, and thanks for joining us on the call today. I'll start with our quarterly results, including some positive financial results and positive improvements in our financial position, despite a challenging macro environment. We exceeded guidance for key top lane metrics in Q4, including revenue, subscription revenue, and billing. We had record positive free cash flow in the quarter, and for the first time, we were operating margin positive for the full fiscal year.
Joshua G. James: Hello, everyone and thanks for joining us on the call today.
Joshua G. James: I'll start with our quarterly results, including some positive financial results and positive improvements in our financial position, despite a challenging macro environment.
Joshua G. James: We exceeded guidance for key top line metrics in Q4, including revenue.
Joshua G. James: Subscription revenue.
And billings.
Joshua G. James: We had record positive free cash flow in the quarter.
And for the first time, we were operating margin positive for the full fiscal year <unk>.
Joshua G. James: Importantly, we have also extended the maturity of our debt, and we are bullish on closing a more economically advantageous longer-term refinancing option. Now, looking ahead, of course, my top priority is getting Domo back to growth. I started Domo 14 years ago to disrupt practices that were limiting the potential of data in business. Previously, as the co-founder and CEO of a category-leading publicly traded web analytics platform, I just didn't understand why I couldn't also access the online and offline data that lived digitally and that I needed to answer all my questions about the business. I wondered how much more I could do if I had all the data I needed at my fingertips, on my phone, with alerts, and the ability to get the whole company rallied around real-time information. In fact, how much more could all of us do with better access to data? Innovation starts with questions like these. But how often do we dismiss our curiosity just because we don't have a way to explore it?
Joshua G. James: Importantly, we have also extended the maturity of our debt.
Joshua G. James: And we are bullish on closing of more economically advantageous longer term refinancing option.
Joshua G. James: Now looking ahead of course, my top priority is getting domo back to growth.
I started domo 14 years ago to disrupt practices that were limiting the potential with data and business.
Speaker Change: Previously as the co founder and CEO of our category, leading publicly traded web analytics platform I just didn't understand why Couldnt also access the online and offline data that all lives digitally and that I needed to answer all my questions about the business.
Speaker Change: I wondered how much more can I do if I had all the data I needed at my fingertips on my phone with alerts and the ability to get the whole company rallied around real time information.
Speaker Change: In fact, how much more could all of us do with better access to data.
Speaker Change: Innovation starts with questions like these but how often do we dismiss our curiosity Jeff.
Speaker Change: Because we don't have a way to explore it.
Joshua G. James: or because we've been beaten up for so many years with massive costs, inaccurate data, late data, siloed data, or data that was only accessible through gatekeepers, and then just being told over and over and over that it just wasn't possible. That's why at Domo, we're building AI-driven data solutions that are so intuitive that everyone can explore their ideas with AI doing all of the work and then turning them into automated actions leading to substantial impact today with new possibilities for data and AI proactively guiding your whole experience. I see more potential for this vision than ever before. Businesses must free data from central organizations if they want to compete using AI, and Domo lets our customers extend their intelligence, their expertise, and governance into solutions that work for everyone. Now, when I started Domo, it was about democratizing data. Now with A.I.
Speaker Change: Or because we've been beaten up for so many years with massive costs inaccurate data late data silo data or data that was only accessible through gatekeepers, and then just being told over and over and over it just wasn't possible.
Speaker Change: That's why it Domo, we're building AI driven data solutions that are so intuitive that everyone can explore their ideas with AI doing all of the work.
Speaker Change: And then turning them into automated actions leading to substantial impact.
Speaker Change: Today with the new possibilities for data and AI proactively guiding your whole experience I see more potential for this vision than ever before.
Speaker Change: Businesses must free data from central organizations, if they want to compete using AI.
Speaker Change: And domo lets our customers extend their intelligence their expertise and governance into solutions that work for everyone.
Speaker Change: Now when I started domo it was about democratizing data.
Speaker Change: Now with AI.
Joshua G. James: We are democratizing intelligence, and with our broad app platform, we are even democratizing taking action on that intelligence. I spent the last year in the field as much as possible, and the response to this vision is incredibly validation. I hear it time and time again: Domo is game-changing for customers who fully embrace us. That's why this year, our strategic priorities are focused on making it quicker and easier for customers to unlock the full value of Domo. Now, in turn, we expect these initiatives to improve sales cycles, drive user growth, and scale our business faster. Today I'm going to focus on the progress of three key priorities.
Speaker Change: We are democratizing intelligence.
Speaker Change: And with our broad apt platform, where even democratizing taking actions on that intelligence.
Speaker Change: I've spent the last year in the field as much as possible and the response to this vision is incredibly validating.
Speaker Change: Time, and time again Domo is game changing for customers, who fully embrace us.
Speaker Change: That's why this year, our strategic priorities are focused on making it quicker and easier for customers to unlock the full value of domo.
Speaker Change: Now in turn we expect these initiatives to improve sales cycles drive user growth and scale our business faster.
Speaker Change: Today, I'm going to focus on the progress of three key priorities.
Joshua G. James: PLG, or Product-Led Growth, is a rapidly growing effort and place in the ecosystem, democratizing AI while governing it in a very unique way for enterprises, and I'm going to explain how each will help us accelerate Domo's growth. So I want to start with product-led growth, PLG, which contains three foundational components to how Domo operates and lubricates the entire customer adoption lifecycle. First, the consumption model, which we've fully embraced, enables everything else.
Speaker Change: P L G or a product led growth.
Speaker Change: Our rapidly growing efforts and place in the ecosystem.
Speaker Change: And democratizing AI, while governing it in a very unique way for enterprises.
Speaker Change: And I'm going to explain how each will help us accelerate <unk> growth.
Speaker Change: So I want to start with product led growth.
Speaker Change: L G.
Speaker Change: Which contains three foundational components to how domo operates and lubricates the entire customer adoption lifecycle.
Speaker Change: First the consumption model, which we fully embraced enables everything else.
Speaker Change: Second.
Joshua G. James: A low-cost and effective customer acquisition model through our freemium offering, and Third, discoverability of the breadth of our platform, shown entirely in line while customers are using the product. We do this by displaying use cases, demos, and data-driven pathways based on the customer's behavior that ultimately leads them towards optimal success. Of course, this will correlate with high net revenue retention and will drive ROI for both Domo and our customers. Both sides are completely aligned in a PLG model, and I know every Domo sapien is excited to stand behind our ability to have our product speak for itself. Why do I know that?
Speaker Change: Our low cost and effective customer acquisition model through our freemium offering.
Speaker Change: And third.
Speaker Change: Discover ability of the breath of our platform.
Speaker Change: Shown entirely in line, while customers are using the product.
Speaker Change: We do this by displaying use cases demos and data driven pathways based on the customer's behavior that ultimately ultimately leaves them towards optimal success.
Speaker Change: Of course, this will correlate high net revenue retention and will drive ROI for both domo and our customer.
Speaker Change: Both sides are completely aligned in a P. L. G model and I know every almost APN is excited to stand behind our ability to have our products speak for itself.
Speaker Change: Why do I know that because we attend events like our upcoming Domo palooza.
Joshua G. James: Because when we attend events like our upcoming Domo Palooza or our 20 Connections tours that we did last year, or I was definitely reminded of this just last week when I traveled to see customers in eight cities across the globe, we truly have raving superfans who love to tell us how we have changed their entire business. Our job now is to efficiently drive as many of these customers as possible to our product and to a new relationship with Domo. All roads lead to consumption-driven, freemium-enabled, highly discoverable product-led growth. Now, allow me a moment to share some details about each of these areas.
Speaker Change: Or are 20 connections tours that we did last year or I was definitely a reminder of this just last week over and over again when I traveled to see customers in eight cities across the globe.
Speaker Change: That we truly have reading super fans, who loved to tell us how we have changed their entire businesses.
Speaker Change: Our job now is to efficiently drive as many of these customers as possible to our product into a new relationship with domo.
Speaker Change: All roads lead to consumption driven freemium enabled highly discoverable product led growth.
Speaker Change: Now allow me a moment to share some details on each of these areas.
Joshua G. James: Consumption makes it easier for Domo customers to put their data to work across the entire organization. With all of their users being included, and it being free, they can now prove value before adding to their investment. And they can expand immediately without delays like lengthy contract renegotiations or seeking approval around IT restrictions on new users for products without budgets allocated beforehand.
Speaker Change: Consumption makes it easier for domo customers to put their data to work across the entire organization.
Speaker Change: With all of their users being included being free.
Speaker Change: They can now proved value before adding to their investment.
Speaker Change: And they can expand immediately without delays like lengthy contract renegotiation negotiations or seeking approval around I treat I T restrictions on new users for our products without budgets allocated beforehand now.
Joshua G. James: Now, already, consumption is proving its potential to open doors to new and exponential growth for Domo. I'm going to share some great examples when I talk about our wins later, but I want to start with the momentum we're seeing as a result of this new consumption. Over the last two quarters, our consumption customer base has doubled, just two quarters doubled. In Q4, consumption deals accounted for over 90% of the dollar value of our new logo deals. Very significantly, our consumption customers that have already been on the consumption model for at least six months, around half of them, are already pacing to use more credits than what they originally contractually purchased. Now we anticipate this number will increase meaningfully as that time span increases from 6 months to 9 months and 12 months.
Speaker Change: Already consumption is proving its potential to open doors to new and exponential growth for domo.
Speaker Change: I'm going to share some great examples when I talk about our wins later, but I wanted to start with the momentum we're seeing as a result of this new consumption effort.
Speaker Change: And over the last two quarters, our consumption customer base has doubled.
Speaker Change: Just two quarters doubled.
Speaker Change: In Q4 consumption deals accounted for over 90% of the dollar value of our new logo deals.
Speaker Change: Very significantly.
Speaker Change: Our consumption customers that have already been on the consumption model for at least six months.
Speaker Change: Around half of them.
Speaker Change: Are already pacing to use more credits.
Speaker Change: Then what they originally contractually purchased.
Speaker Change: Now we anticipate this number will increase meaningfully as that time span increases from six months to nine months and 12 months.
Joshua G. James: And we believe this will lead to many more upsell opportunities in the year. And again, our interests are aligned with our customers; they are getting more value as their credits are being consumed. And we believe this is a fantastic leading indicator that we just recently discovered. These results showcase compelling indicators of future revenue growth, and we are even more committed to, and even more poised to move the majority of our customers onto the consumption model this year. Now, the second leg of the PLG stool, if you will, is freemium. Freemium, in fact, is possible because of consumption, because of that model.
Speaker Change: And we believe this will lead to many more upsell opportunities in the year.
Speaker Change: And again, our interests are aligned with our customers they are getting more value.
Speaker Change: As their credits are being consumed.
Speaker Change: And we believe this is a fantastic leading indicator that we just recently discovered.
Speaker Change: These results showcase compelling indicators of future revenue growth.
And we are even more committed.
Speaker Change: And even more poised to move the majority of our customers onto the consumption model this year.
Now the second leg of the P. O G stool, if you will is freemium.
Freemium and in fact as possible because of consumption because of that model.
Joshua G. James: We can now offer a free version of our product that lets even more users experience the power of Domo with no time limit and The Natural Path to Becoming Consumption Customers as they expand usage and find value. Importantly, customers do not start paying until after they are receiving value. Coupled with this freemium experience, Discoverability is a critical investment in our product navigation that will let us capitalize on the user growth we gain from both freemium and consumption. Today, the sheer volume of data and apps we all deal with demands new and better organizations. Now, especially as we continue to drive more users to leverage Domo, it's important that we offer an intuitive experience that makes it easy for users to explore Domo and discover all the ways we help them put their data to work for their entire organization. And with this improved discoverability, last fall, we switched to a freemium model based on credits used from a previous free trial model that had a short and expiring time frame. And already, four months later,
Speaker Change: And we can now offer a free version of our product that let's even more users experience the power of Domo with no time limit.
Speaker Change: And the natural path to becoming consumption customers as they expand usage and find value.
Speaker Change: Importantly customers.
Speaker Change: Do not start paying until after they are receiving value.
Speaker Change: Ah coupled with this freemium experience does.
Speaker Change: Discover ability is a critical investment in our product navigation that will let us capitalize on user growth, we gained from both freemium and consumption.
Speaker Change: Today, the sheer volume of data and apps, we all deal with demands new and better organization.
Speaker Change: Now, especially as we continue to drive more users to leverage domo.
Speaker Change: It's important that we offer an intuitive experience that makes it easy for users to explore domo and to discover all the ways. We help them put their data to work for their entire organization.
And with this improved discover ability last fall, we switched to a freemium model based on credits used.
Speaker Change: From a previous free trial model that had a short and expiring timeframe.
Speaker Change: And already.
Speaker Change: Four months later.
Joshua G. James: Our free users who are actively connecting data about their business and exploring Domo have more than doubled. A meaningful increase in the top of the freemium funnel, and we are just getting started. That's only four months in. Now we believe this is an incredible signal of the PLG potential. And as we continue this momentum, we're leaning into Freemium as a strategic lever for sales.
Speaker Change: Our free users who are actively connecting data about their business and exploring domo have more than doubled.
Speaker Change: A meaningful increase in the top of the freemium funnel and we are just getting started and that's only four months in.
Speaker Change: And we believe this is an incredible signal of the P. L G potential.
Speaker Change: And as we continue this momentum we're leaning into freedom as a strategic lever for sales.
Joshua G. James: Our sales teams are actively offering it to keep long-lead customers engaged and to convert cold-called customers faster. Not only that, but with a growing pool of active users, we're improving our sales and marketing strategies with more tailored messaging based on the user activity data that we're gaining. We have not seen a material impact on our financials yet from these initiatives.
Speaker Change: Our sales teams are actively offering it to keep long lead customers engaged and to convert cold called customers faster.
Not only that but with a growing pool of active users, we're improving our sales and marketing strategies with more tailored messaging based on the user activity data that we're gaining.
Speaker Change: We have not seen a material impact on our financials yet from these initiatives.
Joshua G. James: But extrapolating these numbers out and understanding the improvements that we believe we're going to see as we continue to refine the process, we think this is going to be a very cost-effective customer acquisition vehicle with a meaningful impact on our long-term. Now our next strategic priority is to make 2024 the year of the ecosystem, the year of the partner.
Speaker Change: But extrapolating those numbers out in understanding the improvements that we believe we're going to see as we continue to refine the process.
Speaker Change: We think this is going to be a very cost effective customer acquisition vehicle with a meaningful impact on our long term growth.
Speaker Change: Now our next strategic priority is to make 'twenty 'twenty for the year of the ecosystem the year of the partner.
Joshua G. James: We've declared it internally, and we are intensely focused on scaling our ecosystem with efforts towards four different types of partners: technology partners, app partners, data partners, and system integrators. Wittingly, the changes we've made to drive more product-led growth also align us to be effortless equipped for success in the ecosystem, particularly given the breadth of our end-to-end data solution. Historically, most companies in the ecosystem considered us competitors in one form or another. Now, we have mutually beneficial relationships where we typically drive the business of our partners by extending technologies that drive data ingestion and computation and also by extending access to a partner's product to a much broader base of users who were previously unreachable. I'll give you some examples. We now work with cloud hyperscalers to run Domo while keeping compute in their own environment. That wasn't possible before.
Speaker Change: We've declared it internally and we are intensely focused on scaling our ecosystem with efforts towards four different types of partners.
Speaker Change: Technology partners.
Speaker Change: At partners.
Speaker Change: Data partners.
Speaker Change: And system integrators.
Speaker Change: Wittingly the changes we've made to drive more product led growth.
Speaker Change: Also a minus to effortlessly equipped for success in the ecosystem, particularly given the breadth of our end to end data solutions.
Speaker Change: Historically, most companies in the ecosystem considered us as competitors in one form or another.
Speaker Change: Now we have mutually beneficial relationships, where we typically drive the business of our partners by extending technologies that drive data ingestion and compute.
Speaker Change: And also by extending access to our partners products to a much broader base of users who were previously unreachable.
I will give you some examples.
Speaker Change: We now work with cloud Hyperscale or has to run domo, while keeping compute in their own environments that wasn't possible before.
Joshua G. James: Hyperscalers now keep that revenue and gain valuable business user growth. Domo gets more scale and also a much improved impression from the IT organization and CIOs as we are more aligned to their major current IT initiatives. Another example, technology partners can now use Domo to develop apps on our platform, combining multiple technologies automatically and out of the box, so they can provide incredibly valuable data solutions to their customers. Especially with AI being a critical component of most customer strategies, we are leading in this realm as our partners are incorporating AI through predictive data science models and LLM-driven insights that make it intuitive for users to take action. In fact, we're now working with a major e-commerce platform to deliver an app that will help customers keep inventory levels and geographical locations down to the box accurate. Clean inventory data provides operational benefits and will allow this e-commerce platform to deliver AI-powered predictive analytics to its customers through the app.
Speaker Change: Hyperscale are now keep that revenue and gain valuable business user growth.
Speaker Change: Domo gets more scale and also a much improved impression from the I T organization in <unk> as we are more aligned to their major current initiatives.
Speaker Change: Another example, technology partners can now use domo to develop apps on our platform combining multiple technologies automatically and out of the box. So they can provide incredibly valuable data solutions to their customers.
Speaker Change: Especially with AI being a critical component of most customer strategies, we are leading in this realm as our partners are incorporating artificial intelligence.
Speaker Change: Through predictive data science models and L. L M driven insights that make it intuitive for users to take action.
Speaker Change: In fact, we're now working with a major e-commerce platform to deliver an app that will help customers keep inventory levels and geographical locations down to the box accurate.
Speaker Change: Clean inventory data provides operational benefits and will allow this e-commerce platform to deliver AI predictive analytics to its customers through the app.
Joshua G. James: Lastly, on the partner and ecosystem front, Domo Everywhere is central to many data partnerships and is gaining even more momentum, as many of our customers' customers are now adopting Domo. This has also been substantially unlocked by allowing our customers and partners to offer their customers a freemium version of Domo to try out apps that they make that have pre-filled and pre-connected data from that partner. What a fantastic first freemium experience for our potential customers of Domo. Now I mentioned the hyperscalers earlier.
Speaker Change: Lastly, on the partner and ecosystem front Domo everywhere is central to many data partnerships and is gaining even more momentum as many of our customers customers are now adopting domo.
Speaker Change: This has also been substantially unlocked by allowing our customers and partners to offer their customers a freemium version of Domo to trial apps that they make that have pre filled and pre connected data from that partner.
Speaker Change: What a fantastic first freemium experience for our potential customers of Domo.
Speaker Change: Now I mentioned, the hyper scaler earlier.
Joshua G. James: Our fairly unique independence in the market makes our ecosystem opportunities pretty intriguing to multiple large hyperscalers. We now have budding relationships with most every one of them, of any size and ecosystem. In fact, in Q4, we became available in the Microsoft Azure Marketplace, where customers can now purchase Domo using their Azure consumption commitment. We have numerous interesting partnership announcements and updates coming over the next few months and at our annual user conference, Domo Palooza, later this month. Speaking of Domo Pruza...
Speaker Change: Are fairly unique independence in the market makes our ecosystem opportunities pretty intriguing to multiple large hyper Steelers.
Speaker Change: We now have budding relationships with most everyone of size in the ecosystem.
Speaker Change: In fact in Q4, he became available in the Microsoft Azure marketplace, where customers can now purchase domo using their azure consumption commitment.
Speaker Change: We have numerous interesting partnership announcements and updates coming over the next few months.
Speaker Change: And at our annual user conference Domo Palooza later this month.
Speaker Change: Speaking of Domo Puza.
Joshua G. James: The most significant advancements we will be announcing at our user conference center around our very innovative and unique investments in data-related AI technology. I want to take a moment to preview some of our new offerings. Already, Domo excels at accessing data and delivering intelligence at the right place and the right time, which positions us to be a long-term, strong player in AI. It's been said that fantastic AI eliminates the need for user interfaces.
Speaker Change: The most significant advancements we will be announcing at our user conference center around our very in an innovative and unique investments in data related AI technologies.
Speaker Change: I want to take a moment to preview some of our new offerings.
Speaker Change: Already domo excels at accessing data.
Speaker Change: And delivering intelligence at the right place and the right time, which positions us to be a long term strong player and AI.
Speaker Change: It's been said that fantastic AI eliminates the need for UI.
Joshua G. James: For instance... Envision a prompt that guides a business user to view their sales data or any other data and any anomalies or interesting trends. Now, there are other companies who can do that, but what about doing that just for the data that has already been determined for just your access, based on your job, or your title, or your geography? Now, what if you want to deliver that insight regularly to others that are in your organization? Where's the governance around access to information and around sharing it? Where is the data that informs the private LLM in the first place? What if you want to change from, let's say, OpenAI to another AI service? or to one of the thousands of new models available on Hugging Face and elsewhere.
Speaker Change: For instance, envision a prompt that guides a business user to view their sales data or any other data and any anomalies where interesting trends.
Speaker Change: Now there are other companies, who can do that but what about doing that just for the data that has already been determined for just your access based on your job or your title or your Geo.
Speaker Change: Now what if you want to deliver that insight regularly to others that are in your organization.
Speaker Change: Where's the governance around the access and around the sharing.
Speaker Change: Whereas the data that informs the private L M in the first place.
What if you want to change from let's say open AI to another AI service or to one of the thousands of new models available on hugging face and elsewhere.
Joshua G. James: Then what happens to your data governance? to your access to data integrity? And how do you extend that to customers? Through data distribution apps or an automated workflow app. There needs to be a conductor and guarantor of this governance and of this data quality, and we happen to be perfectly and uniquely positioned for that. And as we've highlighted and presented our efforts to customers, we are receiving very encouraging responses. We're leaning into these strengths and letting customers bring Domo's AI into the environments where they need it. It's a new kind of modular AI that lets customers piece together unstructured data and host governance around it, with the flexibility to use any AI model they need. This foundation allows us to think broadly about how we can bring AI to life, and we'll have some exciting new AI products to share.
Speaker Change: Then what happens to your data governance.
Speaker Change: To your access to the data integrity, and how do you extend that to customers in data distribution apps or an automated workflow apps.
Speaker Change: There needs to be a conductor and guarantor of this governance and of this data quality.
Speaker Change: And we happen to be perfectly and uniquely positioned for this.
Speaker Change: As we've highlighted and previewed our efforts to customers. We are receiving very encouraging responses. We're leaning into these strengths and letting customers bring domo <unk> AI into the environments, where they need it.
Speaker Change: It's a new kind of modular AI that lets customers piece together unstructured data and host governance around it with the flexibility to use any AI models they need.
Speaker Change: This foundation, let's just think broadly about how we can bring AI to life and we'll have we'll have some exciting new AI products to share soon.
Joshua G. James: Now, let me share some of our notable wins from the quarter, starting with several new logo customers. I'll start with a new enterprise customer, Diversified Manufacturing, that was looking to expand from tax to other finance use cases, including FB&A and Inventory Planning. The company considered using its legacy BI and ETL providers.
Speaker Change: Now, let me share some of our notable wins from the quarter, starting with several new logo customers.
Speaker Change: I'll start with the new enterprise customer in diversified manufacturing there was looking to expand from tax to other finance use cases.
Including F PNA and inventory planning.
Speaker Change: The company considered using its legacy B I M E T L providers.
Joshua G. James: But after a proof of concept with us, they chose to use Domo for a few reasons. First, after seeing the breadth of our capabilities... the company recognized Domo as a superior solution that combines both BI and ETL into a unified platform.
Speaker Change: But after a proof of concept with us they chose to use domo for a few reasons.
Speaker Change: First after seeing the breadth of our capabilities. The company recognized Domo has a superior solution that combines both be eye and eto into a unified platform. It.
Joshua G. James: It made Domo easier to use for them, better serving its business users, and expansion was a tenth of the cost of expanding with the legacy vendors. The consumption model absolutely facilitated this deal, and we're optimistic it will continue to open doors with this customer to expand as they roll out use cases across the finance department and other departments in the future. Next example.
Speaker Change: It made domo easier to use for them better serving its business users and expansion was a 10th of the cost of expansion expanding with the legacy vendors.
Speaker Change: The consumption model absolute facilitated this deal and we're optimistic it will continue to open doors with this customer to expand as they rollout use cases across the finance department and other departments in the future.
Next example of.
Joshua G. James: A large healthcare company hired Domo to provide an integrated patient data network across multiple systems, a requirement for a business transition the company was undergoing. The consumption models help to strategically map anticipated costs as the company scales its use cases across the organization. We won this deal against a healthcare-focused BI company because, in addition to delivering on this need, we were able to solve a more horizontal business challenge and leverage the expertise of an ecosystem partner. Ecosystem for the win.
Speaker Change: A large health care company hired domo to provide an integrated patient data network across multiple systems.
Requirement for business transition the company that was undergoing.
Speaker Change: The consumption models up to strategically map anticipated costs as the company scales their use cases across the organization.
Speaker Change: We won this deal against a health care focused B I company because in addition to delivering this need we were able to solve more horizontal business challenge and leverage the expertise of an ecosystem partner ecosystem.
Speaker Change: Ecosystem for the win.
Joshua G. James: Now let's move on to another customer. We also had a significant win with a Fortune 50 healthcare company that stores sensitive materials in climate-controlled environments delivered to and stored at thousands of pharmacies. The initial use case incorporates a data reporting app, an automated workflow app, and alerts to help identify and provide a data-driven action plan when the temperature ranges are outside of an acceptable boundary.
Speaker Change: Now, let's move on to another customer.
We also had a significant win with a fortune 50 healthcare company that stores sensitive materials and climate controlled environments delivered to and stored at thousands of pharmacies.
Speaker Change: The initial use case incorporates a data reporting app and automated workflow app and alerts to help identify and provide a data driven action plan when the temperature ranges or outside of an acceptable boundary.
Joshua G. James: The company chose Domo after a brief proof of concept showed how stunningly quickly we could combine data from disparate sources, including IoT devices, with our automated workflow apps to develop a superior solution to solve this problem, versus a non-working Kluge combination from a wide variety of the usual competitors. The customer also liked the flexibility of Domo's platform and our fast time to value. We are in dialogue about a variety of additional use cases without the typical timing of giant budget conversations, RFPs, and procurement approvals, thanks to our ever-enabling consumption contract. Again, good for both parties.
Speaker Change: The company chose Domo after a brief proof of concept showed how stunningly quickly we could combine data from disparate sources, including Iot.
Speaker Change: Devices with our automated workflow apps to develop a superior solution to solve this problem versus a non work include G combination from a wide variety of the usual competitors.
Speaker Change: The customer also like the flexibility of Domo platform and our fast time to value.
Speaker Change: We're in dialogue about a variety of additional use cases without the typical timing of giant budget conversations rfps and procurement approvals, thanks to our ever enabling consumption contract again, good for both parties.
Joshua G. James: An additional example is an industrial equipment company that chose Domo to replace their legacy vendor, which couldn't effectively provide performance metrics like cost of delivery and on-time performance to their hundreds of suppliers. Domo provided the enterprise-level support they needed to integrate data from multiple systems and create their supplier performance scorecard. In another example, we won business with a marketing agency that was using a home-grown analytics solution, making it difficult for business users to answer their own questions.
Speaker Change: An additional example is an industrial equipment company that chose domo to replace their legacy vendor, which couldnt effectively provide performance metrics like cost of delivery and on time performance to their hundreds of suppliers.
Speaker Change: Don will provide at the enterprise level support they needed to integrate data from multiple systems and create their supplier performance scorecards.
Speaker Change: In another example, we won business with a marketing agency that was using a homegrown analytic solution, making it difficult for business users to answer their own questions.
Joshua G. James: The company chose Domo because our platform seamlessly integrates multiple marketing systems for cross-channel analytics, so customers have a single source of truth for marketing data. They also preferred Domo's easy-to-use self-service analytics and our ability to quickly activate additional use cases. Now, those were the new logos and examples, and I also wanted to share some exciting upsell examples. So, with a meaningful expansion in usage in Q4, we have reached about a million dollars in ARR with another Fortune 100 global shipping and logistics customer. The company initially chose Domo because it replaced a manual process by connecting to over a dozen disparate systems to create a daily checklist of key priorities for the company's global freight forwarding team. Prior to Domo, the company spent hours a day assembling the checklist manually.
Speaker Change: The company chose domo, because our platform seamlessly integrates multiple marketing systems for cross channel analytics.
Speaker Change: So customers have a single source of truth for marketing data.
Speaker Change: They also preferred domo is easy to use self service analytics and our ability to quickly activate additional use cases.
Speaker Change: Now those were the new logo.
Speaker Change: Examples and I also wanted to share some exciting upsell examples.
Speaker Change: So with a meaningful expansion in usage in Q4, we have reached about $1 million and a R. R. With another fortune 100, global shipping and logistics customer.
Speaker Change: The company initially chose domo, because we replaced a manual process by connecting to over a dozen disparate systems to create a daily checklist of key priorities for the company's global freight forwarding teams.
Speaker Change: Prior to Domo the company spent hours a day assembling the checklist manually.
Joshua G. James: The expansion this quarter included a variety of use cases that its incumbent providers couldn't deliver, including a unified data experience for its customers. The company chose to expand its usage of Domo partly because of our self-service capabilities that allowed its citizen developers to solve use cases without the additional resources required by Legacy Solutions. In another example, we had an upsell with another Fortune 100 retailer this quarter. We already had a small footprint providing salvage and returns data, and we have been looking for opportunities to expand the relationship. In Q4, we got the opportunity to connect the data sources from its hundreds of salvage vendors and provide them with real-time recovery rate metrics in a portal. A report that used to take three analysts a day to pull together is now completely automated in the Domo platform. As a result, we doubled our contracts.
Speaker Change: The expansion this quarter included a variety of use cases that is incumbent providers couldn't deliver including a unified data experience for its customers.
Speaker Change: The company chose to expand its usage of domo, partly because of our self service capabilities that allowed its citizen developers to solve use cases without the additional resources required by legacy solutions.
Speaker Change: In another example, we had an upsell with another fortune 100 retailer this quarter.
Speaker Change: We already had a small footprint, providing salvage and returns data and had been looking for opportunities to expand the relationship.
Speaker Change: In Q4, we got the opportunity to connect to data sources from its hundreds of salvage vendors and provide them with real time recovery rate metrics in a portal.
Speaker Change: A report that used to take three analysts a day to pull together is now completely automated in the domo platform.
Speaker Change: As a result, we doubled our contract size.
Joshua G. James: Consumption is unlocking a much broader audience with this customer and facilitating many discussions for additional use cases across the organization. And before closing, I want to say that I'm very excited about our aforementioned Domo Palooza user conference, which will be held in person, yay, in Salt Lake City later this month, from March 26th to March 29th. We have some amazing customer stories and new data, plus AI product developments to share on stage. I hope to see many of you there.
Speaker Change: <unk> is unlocking a much broader audience with this customer and facilitating many discussions for additional use cases across the organization.
Now before closing I want to say that I'm very excited about our aforementioned Domo Palooza user conference, which will be held in person yay.
Speaker Change: Salt Lake City later this month from March 26th to March 29th.
Speaker Change: We have some amazing customer stories, and new data plus AI product developments to share on stage I hope to see many of you there.
Joshua G. James: As we look ahead to FY25, with our responsible financial posture as the backdrop, I am very excited about positioning Domo to take great advantage of our future growth potential. I feel optimistic that with the substantial transformations that we've made, our strategic initiatives will create meaningful momentum and let us bring the full value of Domo to customers at a much more rapid pace. I look forward to updating you about our progress throughout the year. And with that, I'll turn it over to Mr. David Jolley. David
Speaker Change: As we look ahead to FY 'twenty five with our responsible financial posture is the backdrop I'm very excited about positioning domo to take great advantage of our future growth potential.
Speaker Change: I feel optimistic that with the substantial transformation that we've made.
Speaker Change: Our strategic initiatives will create meaningful momentum and let us bring the full value of domo to customers at a much more rapid pace.
I look forward to updating you about our progress throughout the year and with that I'll turn it over to Mr. David Jelly David.
David Jolley: Thanks, Josh. Like you, I'm excited about the growth initiatives we have laid out for Fiscal 25. Before I get into the details, let me provide some of the highlights for the quarter. We exceeded our billings guidance, generated record-free cash flow, and for the first time, we were operating margin positive for the full fiscal year. Before I get into more details on these metrics, let me give you an update on our debt refinancing. We've extended the maturity of our debt with BlackRock to April 2026, a little over two years from now.
David Jolley: Thanks, Josh like you I'm excited about the growth initiatives, we have laid out for fiscal 'twenty five before I get into the details. Let me provide some of the highlights for the quarter, we exceeded our billings guidance generated record free cash flow and for the first time, we were operating margin positive for the full fiscal year before I get into more details.
On these metrics, let me give you an update on our debt refinancing we've extended the maturity of our debt with Blackrock to April 2026, little over two years from now. Additionally, we're currently considering options to refinance this debt on more favorable terms with a longer term facility to improve our overall financial position.
David Jolley: Additionally, we're currently considering options to refinance this debt on more favorable terms with a longer-term facility to improve our overall financial performance. While we're still seeing a challenging macro environment, we were able to exceed the billings guidance we provided at the beginning of the quarter. We delivered Q4 billings of $105.4 million, a year-over-year increase of 1%. Total revenue was $80.2 million, also a year-over-year increase of 1%. Subscription revenue represented 90% of total revenue and grew at 2% year-over-year.
David Jolley: While we're still seeing a challenging macro environment, we were able to exceed the billings guidance. We provided at the beginning of the quarter. We delivered Q4 billings of $105 4 million a year over year increase of 1% total revenue was $80 2 million also a year over year increase of 1% subscription revenue represented 90% of <unk>.
David Jolley: All revenue and grew at 2% year over year.
David Jolley: In reviewing the metrics that will impact fiscal year 25, current RPO was $243.4 million, consistent with last year, and our total RPO grew 1% to $380.1 million as of January 31, 2021. On a dollar-weighted measure, we continue to have approximately two-thirds of our customers under multi-year contracts. As we had anticipated, in Q4, we had some downsells at three enterprise customers that, combined with more normal churn, led to gross retention of 82% and net retention of 91%. Moving on to margins and profitability, our subscription gross margin was 83.9 percent, down 1.8 percentage points from Q4 of last year, due primarily to the cost associated with new product features and functionality. We expect these costs to stabilize and our gross margin to improve slightly during fiscal 2014. The non-GAAP operating margin was 4%, up.6 percentage points from a year ago. The net loss is $1.9 million compared to a net loss of $0.8 million a year ago. The net loss per share was $0.05 based on 36.8 million weighted average shares outstanding, basic and delivered.
David Jolley: In reviewing the metrics that will impact fiscal year 'twenty five current RP O was $243 4 million consistent with last year and our total RPM grew 1% to $380 1 million as of January 31 2024.
David Jolley: On a dollar weighted measure we continue to have approximately two thirds of our customers under multiyear contracts.
David Jolley: As we had anticipated in Q4, we had some down sells at three enterprise customers that combined with more normal churn led to gross retention of 82% and net retention of 91%.
David Jolley: Moving onto margins and profitability our subscription gross margin was 83.9% down one eight percentage points from Q4 of last year due primarily to costs associated with new product features and functionality. We expect these costs to stabilize and our gross margin to improve slightly during fiscal 'twenty five.
non-GAAP operating margin was 4% up <unk> six percentage points from a year ago.
David Jolley: Net loss was $1 9 million compared to a net loss of <unk> 8 million a year ago net loss per share was five cents based on $36 8 million weighted average shares outstanding basic and diluted.
David Jolley: In Q4, cash flow from operations was a record $5.4 million, while free cash flow was $2.9 million, and our cash balance increased $3.6 million from last quarter to $60.9 million. For the full fiscal year, we generated positive cash flow from operations of $2.6 million. Now, let me highlight our expectations for Q1 and Fiscal 25. In establishing our fiscal 25 financial plan, we have not assumed any improvement in the IT spending environment or meaningful contribution from some of our newer growth initiatives. To be clear, we continue to be very optimistic about the longer-term impact of these initiatives, including consumption, partners, and freemium. We believe we could see some impact in the back half of the year, but we feel it's prudent to see how these play out before including projected growth in our guidance. At the beginning of last year, we committed to being operating margin positive with positive operating cash flow, both of which we were able to achieve.
David Jolley: In Q4 cash flow from operations was a record $5 $4 million, while free cash flow was $2 9 million and our cash balance increased $3 6 million from last quarter to $60 9 million for.
David Jolley: For the full fiscal year, we generated positive cash flow from operations of $2 6 million.
Speaker Change: Now, let me highlight our expectations for Q1 and fiscal 'twenty five.
Speaker Change: In establishing our fiscal 'twenty five financial plan, we've not assumed any improvement in the it spending environment or meaningful contribution from some of our newer growth initiatives.
Speaker Change: To be clear, we continue to be very optimistic about the longer term impact of these initiatives, including consumption partners and freemium. We believe we could see some impact in the back half of the year, but we feel it's prudent to see how these play out before including projected growth in our guidance.
Speaker Change: At the beginning of last year, we had committed to be operating margin positive with positive operating cash flow both of which we were able to achieve looking forward to fiscal 'twenty. Five again, we expect to have positive operating margin and leveraging what we've been able to achieve in Q4. Our objective is also to be free cash flow positive.
David Jolley: Looking forward to fiscal 25, again, we expect to have positive operating margin, and leveraging what we've been able to achieve in Q4, our objective is also to be free cash flow positive for the full year. With that as a foundation, our plan is to invest our resources in the growth initiatives that Josh just outlined to reignite growth at Domo. While we could focus on margin expansion, we believe that, consistent with the Rule of X theory promoted by Bessemer Ventures, investing in these growth initiatives will provide a higher return over time. That said, we intend to invest prudently such that we remain operating margin and pre-cash flow positive for fiscal 25. With that in mind, we are initiating guidance for Fiscal 25 as follows.
Speaker Change: For the full year.
Speaker Change: With that as a foundation our plan is to invest our resources in the growth initiatives that Josh just outlined to reignite growth at Domo.
While we could focus on margin expansion, we believe that consistent with the rule of Exterran promoted by Bessemer ventures investing in these growth initiatives will provide a higher return at overtime that said, we intend to invest prudently such that we remain operating margin and free cash flow positive for fiscal 'twenty five.
Speaker Change: With that we are initiating guidance for fiscal 'twenty five as follows.
David Jolley: For Q1 top-line metrics, we are expecting billings of about $70 million and GAAP revenue to be in the range of $79 to $80 million. We expect Q2 billings to be relatively flat from Q1. For the full year of Fiscal 25, we expect billings to be in the range of $324 to $334 million, and we expect GAAP revenue to be in the range of $315 to $323 million.
For Q1 top line metrics, we are expecting billings of about $70 million and expect GAAP revenue to be in the range of $79 million to $80 million. We expect Q2 billings to be relatively flat from Q1 for the full year of fiscal 'twenty five we expect billings to be in the range of $324 million to $334 million and we expect GAAP revenue.
Speaker Change: To be in the range of $315 million to $323 million.
David Jolley: Also, as a reminder, in Q1, we are hosting our annual user conference, DomoPalooza, as an in-person event for the first time in five years, which will result in higher sales and marketing. We are extremely excited to be back in person for DomoPalooza and share our developments in AI, product discoverability, and other features with our customers. This investment always yields great returns. As a result, we expect a non-GAAP net loss per share, basic and diluted, of $0.21 to $0.25 for Q1. This assumes 37.4 million weighted average shares outstanding, basic and diluted. For the full year, we expect a non-gap net loss per share, basic and diluted, of 36 to 46%.
Speaker Change: Also as a reminder, in Q1, we are hosting our annual user conference Domo Palooza.
Speaker Change: As an in person event for the first time in five years, which will result in higher sales and marketing expenses.
Speaker Change: We are extremely excited to be back in person for domo palooza share developments in AI product discover ability and other features with our customers. This investment always yields great returns.
Speaker Change: As a result, we expect non-GAAP net loss per share basic and diluted of 21 to 25 cents for Q1. This assumes 37.4 million weighted average shares outstanding basic and diluted.
Speaker Change: For the full year, we expect non-GAAP net loss per share basic and diluted of 36 to <unk> 46 cents.
David Jolley: This assumes 38.5 million weighted average shares outstanding on a basic basis. In addition, we expect cash flow from operations to be slightly positive in Q1, and as I mentioned, for the full year, fiscal 25, we expect to be free cash flow positive. In conclusion, we posted slightly better than expected top-line results with record cash flow, and I believe we are setting the right foundation for sustainable long-term growth. With that, we'll open the call for questions. Operator.
Speaker Change: This assumes $38 5 million weighted average shares outstanding basic and diluted.
Speaker Change: In addition, we expect cash flow from operations to be slightly positive in Q1, and as I mentioned for the full year fiscal 'twenty five we expect to be free cash flow positive in conclusion, we posted slightly better than expected top line results with record cash flow and I believe we're setting the right foundation for sustainable long term.
Speaker Change: Term growth with that we'll open the call for questions operator.
Operator: Thank you. We will now be conducting a question. If you would like to ask a question, please press star 1 on your telephone. The confirmation tone will indicate that your line is in the queue. Press star 2 to remove a, participants using speaker equipment.
Speaker Change: Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate that your line is in the queue. You May press star two to remove a question from the queue.
Speaker Change: For participants using speaker equipment it would be.
Patrick D. Walravens: It may be necessary to pick up your handset. One moment, please, while we pull. And the first question comes from the line of Patrick Walravens with J&P Securities. Please proceed with your question. Oh, great. Thank you. Josh, two for you, but the first one is... What are these investments that you're planning on making, and it seems like more so in the beginning of the year than the rest. Well, in the first half of the year, we have Domo Implusus, so that's a meaningful expense for the Tunisian supporter.
Speaker Change: And may be necessary to pick up your handset before pressing the star keys.
Speaker Change: One moment, please while we poll for questions.
Speaker Change: And the first question comes from the line of Patrick Wall Ravens with JMP Securities. Please proceed with your question.
Speaker Change: Oh, great. Thank you.
Speaker Change: Josh at two for you, but the first one is.
Speaker Change: What are these investments that you're planning on making and it seems like more so in the beginning of the year than the rest of the year.
Speaker Change: Well the first half of the year, we have no inclusive so that's a meaningful X, but I was wanting to get this quarter.
Joshua G. James: And then beyond that, the investments that we're making are around building out our ecosystem and the go-to-market component of that. There are some marketing dollars, and obviously some people associated with all the opportunities that we're seeing in the ecosystem. And then just some additional investments in AI and some SPFs and other incentives around transitioning our customers to the consumption model throughout the CSM organization and the sales organization. That's a big part of the focus as well. And when you say investments in AI, does that basically mean hiring people with those skill sets? Or is it something else?
And then beyond that the investments that we're making are around.
Speaker Change: Building out our ecosystem.
Speaker Change: And go to market component of that.
Speaker Change: Theres, some marketing dollars and obviously some people associated with all the opportunities that we're seeing in the ecosystem.
Speaker Change: And then just some of the additional investments in AI and some.
Speaker Change: Some spits and and other incentives around transitioning our customers to the consumption model throughout the CSM organization of the sales organization, that's a big part of the focus as well.
Speaker Change: And when you say like investments in AI does that basically mean hiring people with those skill sets or is it something else.
Joshua G. James: Yeah, yeah, a bunch of engineers focused on, you know, a bunch of our best engineers focused on that and some backfills as they've transitioned from other areas. Okay, great. And then where would you say that... Domo has the best product market fit today? I would say there are two components.
Speaker Change: Yeah, Yeah, a bunch of engineers are focused on.
Speaker Change: A bunch of our best engineers focused on that and some back bills as they've transitioned from other areas.
Speaker Change: Okay, Great and then where would you say that.
Speaker Change: Domo has the best product market fit today.
Speaker Change: I would say is there's two components are the biggest is just you know understanding of you look at that full stack, it's really a modular full stack and if youre looking at your different AI opportunities that you have how are you going to be able to take advantage of those AI services.
Joshua G. James: The biggest is just, you know, an understanding of how when you look at that full stack, it's really a modular full stack. And, you know, if you're looking at your different AI opportunities that you have, how are you going to be able to take advantage of those AI services? Once you, let's say you go into, let's say you're an open AI, you're an enterprise open AI, and we had a customer just tell us this. You can upload, you can drag and drop your data files and start asking questions.
Speaker Change: Once you, let's say you go into let's say, you're an open AI, you're an enterprise open AI and we had a customer just tell US. This you can upload your you can drag and drop your your data files and start asking questions, but theres zero governance around it the zero ability to distribute that out there zero ability to say I want to start receiving these weekly and we have that infrastructure in that.
Joshua G. James: But there's zero governance around it, there's zero ability to distribute that, there's zero ability to say, I want to start receiving these weekly, and we have that infrastructure and that governance in place. So whether it's extending AI intelligence or building an app and taking action on that data that you have inside your organization, that's where we really fit in distributing that information, governing that information, and then taking action on that information. It was awesome. And then David, a quick one for you, and then a longer one for you. The quick one was, I think last quarter you told us consumption was 20% of ARR. Did I nip it?
Speaker Change: And it's in place so whether it's it's extending AI intelligence.
Speaker Change: Or building an app.
Speaker Change: Taking action off of that data that you have inside your organization and that's why we really fit in in distributing that information gathering that information and then taking action on that information.
Speaker Change: Alright, Awesome and then David a quick one for you and then a lager won't be the quick one was I think last quarter, you told us consumption was 20% of our or did I hope. It did you give us a new number for that.
David Jolley: Did you give us a new number for that? No, I don't think we did, but actually, we're a little over 25% at this point. Great, great. And then on the debt, I think you mentioned that you're bullish about closing on more advantageous terms. Can you just give us a little more color on that? Roughly, I mean, I realize it's hard to predict a deal, but roughly what timeframe are we talking about? And what's the risk that it doesn't, I'll just I'll just say broadly in the process so you know we're looking at some opportunities right now, relatively, you know, kind of near-term, but looking at opportunities currently, and the terms terms look to be, I would say, a little improved on what we have in place today. Great, thank you very much.
David: No I don't think we did but actually we're a little over 25% at this point.
Speaker Change: Okay, great Great and then on the debt I think you mentioned that you're bullish about clothing on more advantageous terms can you just give us a little more.
Speaker Change: Color on that.
Speaker Change: Roughly.
Speaker Change: It's hard to predict the deal, but roughly what timeframe are we talking about and what's the risk that it doesn't happen.
Speaker Change: I'll, just I'll, just say broadly in process.
Speaker Change: So we're looking at some opportunities right now relatively kind of near term but.
Speaker Change: Looking at opportunities.
Speaker Change: Currently in the terms and terms look to be.
Speaker Change: I would say a little improved and what we have in place today.
Speaker Change: Alright, great. Thank you very much.
Max Michaelis: And the next question comes from Max Michaelis with Lake Street Capital Markets. Please proceed with your question. Hey, guys, thanks for taking my question. First one on me is related to the consumption model.
Speaker Change: And the next question comes from the line of Max Mccanless with Lake Street Capital markets. Please proceed with your question.
Max Mccanless: Hey, guys. Thanks for taking my question first one out of me.
Max Mccanless: Related to the consumption model I know you mentioned around half of your customers on the consumption model have already.
Joshua G. James: I know you mentioned around half of your customers on the consumption model have already, I think, approached or surpassed the contracted credits. Maybe if we look at that other half of the customers there, maybe what have you done, or what are you doing, to kind of drive greater usage out of that other half of the customer base on the consumption model? Yeah, I think the biggest component of that, and what's interesting to us about it is they're only six months into it, so a lot of those are new customers. And, you know, so they're working through the installation, they're just rolling it out to people, and they're just connecting the data for the first time.
Max Mccanless: I think approach or surpass the contracted credits maybe if we look at that other half.
Max Mccanless: Of the customers there, maybe what or what have you done or what are you doing to kind of drive greater usage out of that other half of the customer base on the consumption model.
Max Mccanless: Yeah, I think the biggest component of that and what's interesting to us about it is there are only six months into it. So a lot of those are new customers and so they're working through the installation, they're just rolling it out to people, they're just connecting the data for the first time. So we were surprised that already at six months. There were people that were already trending up.
Joshua G. James: So we were surprised that already at six months, there were people that were already trending above where they had contracted with us, and that's what we were hoping for. And frankly, why we've been pushing so hard on consumption because we think the long-term net revenue retention is going to be much higher than we've ever had here before. And then what we're doing is, you know, now instead of focusing on trying to go and pitch a use case to a customer and hoping that they can get budget allocation for a concept. Now we're going into our customers and saying, hey, we're not, we're not coming in to try to get any dollars for you or get any additional contracts, but let us come and show you some use cases. And you can try them out, you know, and you can click on these buttons, and it might cost you five bucks, but, you know, go try it out and see if you get any benefit out of it.
Max Mccanless: Above.
Max Mccanless: Where they had contracted with us and that's what we were hoping for and frankly, what we are.
Max Mccanless: Why we've been pushing so hard consumption, because we think that the long term net revenue retention is going to be much higher than we've ever had here before.
Max Mccanless: And then what we're doing is now instead of focusing on trying to go and pitch it use case to.
Max Mccanless: To a customer and hoping that they can get budget allocation for a concept now we're going into our customers and saying Hey, we're not we're not coming into to try to get any dollars for you we're getting additional contracts, but let's let's come and show you. Some used cases and you can try them out you know and you can click on these buttons and it might cost you five bucks, but.
Max Mccanless: Good try it out and see if you get benefit out of it.
Joshua G. James: And let us show you how to use our AI services, and let us show you how to build automated workflow apps. And those kinds of conversations are much more well received than what they've been historically. We'll go to an organization that maybe has a marketing use case, and they have a great relationship with them. You know, why don't you introduce us to the finance team, and we'll show you. We'll introduce you to the CFO at one of our other customers who's in a similar industry as you guys. And just let us share with you what that CFO is doing in their organization and how they're using Domo. And again, you already have all the users; you can do this again tomorrow. You already have it in the contract, so go ahead and start using it. And so it's more focusing on adoption and trying to help those customers consume the credits because when they do, they're clearly and automatically getting value from it. All right, another one for me, and maybe for you, Josh.
Max Mccanless: And let US show you how to use our AI services and let US show you how to build automated workflow apps and those kind of conversations are much more well received than what they've been historically, we will go to an organization that maybe has a marketing use case and then we have a great relationship with them and we will say hey.
Max Mccanless: When he introduced us to the finance team and we're going to show you.
Max Mccanless: We'll introduce you to your CFO at one of our other customers using a similar industry as you guys and just let us share with you what that CFO is doing in their Oregon, how they're using domo and there again you already have all the users you can do this tomorrow you already have it in the contract. So go ahead and start using it and so it's more focusing on adoption and trying to help those customers consume the <unk>.
Max Mccanless: That's because when they do their they are clearly and automatically getting value from it.
Speaker Change: Alright, another one for me maybe for you Josh So I'm not sure if I missed it on the call here or in the prepared remarks, but when you think about timelines, especially on a I know it's early you guys are hiring young engineers, but I mean, if we think about a timeline on when you could see the benefit from this investment in AI what are you thinking.
Joshua G. James: So I'm not sure if I missed the call here or in the prepared remarks, but we think about timelines, especially for AI. I know it's early, but you guys are hiring engineers. But I mean, if we think about a timeline for when you could see the benefit from this investment in AI, what are you thinking? I mean, most of our conversations that we're having with our customers right now are around AI. All of our current customers are interested in buying additional products and services and helping them manage the various AI investments that they're looking at. So, you know, like we said in the prepared remarks, it used to be democratizing data, and now it's really democratizing that intelligence. And, you know, if there is because AI is moving so fast. When you take an AI model, you want to apply it to data, but it can't be just, you know, a run of the store. It has to be organized. It has to be a private meeting.
Speaker Change: I mean, most of our conversations that we're having with our customers right now.
Speaker Change: Our around AI.
Speaker Change: All of our current customers are interested in buying additional products and services and helping them manage the various AI investments that they are looking at so like we said in the prepared remarks, it's it used to be democratizing data, but now it's really democratizing that intelligence and.
Speaker Change: There's there's because AI is moving so fast when you take an AI model you want to play it to data, but it can't be just you know a run on the store. It has to be organized it has to be a private L. M has to have governance around it you need to have the lineage around what was created what was queried who was a distributed to you and so you need to have.
Speaker Change: Layer like Domo that allows you to understand that and govern that manage that distribute that at the same time what happens if that service that you were excited about last month.
Joshua G. James: It has to have governance around it. You need to have, you know, the lineage around what was created, what was queried, and who it was distributed to. And so you need to have a layer like Domo that allows you to understand that and govern that, manage that, and distribute that. But at the same time, what happens if that service that you were excited about last month is all of a sudden, you know, not very innovative and behind the times, and a brand new one comes out that is helping you, let's say, optimize your pricing. And you want to be able to take advantage of that, and you need to switch from the old one to the new one. Now how are you going to do that? Again, if you have a layer like Domo sitting on top of everything and that has a view into the data that helps you organize and manage your data, let it sit wherever you want; let it stay in Snowflake, let it stay in Databricks, let it stay at AWS; we don't care.
Speaker Change: Is all of a sudden.
Speaker Change: Very innovative and behind the times in a brand new one comes out that is helping you, let's say optimize your pricing.
Speaker Change: And you wont be able to take advantage of that and you need to switch from the old one to the new one now how are you going to do that again, if you have a layer like domo sitting on top of everything in it that has view into the data to help you organize and manage your data let it sit wherever you want but as Stan Snowflake stay in data breaks let it stay at AWS, We don't care, we just hope you manage govern it control it.
Speaker Change: Distributed and that's where we're seeing AI really bring the strengths and advantages that we have to the forefront. So it's actually something that we're doing right now we have some great product announcements coming out of Domo palooza around AI, we've been making investments there for quite some time, we've been in predictive analytics, which machine learning, which are both components of what AI is today.
Speaker Change: So we've been doing this for a long time and it's actually great that now the market is moving there it's really highlighting the distinct advantages that we have.
Speaker Change: Alright, Thanks, and then last one for me David maybe for you how should we be thinking about cash level at the end of 2025 fiscal year 'twenty.
Joshua G. James: We just help you manage it, govern it, control it, and distribute it. And that's where we're seeing AI really bring the strengths and advantages that we have to the forefront. So it's actually something that we're doing right now. We have some great product announcements coming out of Domopoulos around AI. We've been making investments in predictive analytics, which, you know, and machine learning, which are both components of what AI is today.
David: Yeah. So we're very committed to be free cash flow positive.
David: So.
David: Our plan has us achieving that and you know to the extent that we vary from that a little bit we will take whatever actions, we need to to make sure that we are free cash flow positive. So that's the that's our plan going in here at the beginning of fiscal 'twenty five.
David: And that's why we expect to add yes.
David: Okay.
David: Yes.
David: And the next question comes from the line of Derrick Wood with TD Cowen. Please proceed with your question.
James Derrick Wood: Great. Thanks, guys. This is coal on for Derek.
Joshua G. James: So we've been doing this for a long time, and it's actually great that the market is moving there now. It's really highlighting the distinct advantages that we have. All right, thanks, guys. And then, last one for me, David, maybe for you.
James Derrick Wood: David One for you maybe just looking at our our down ticking again.
Coal: You know it sounds like the new investments in consumption and freemium.
Would help that kind of run off over time, but as we think about a number in the next couple of quarters is this kind of a bottom here or do you think that you know looking at deals and potential down cells.
Max Michaelis: How should we be thinking about cash flow at the end of 2025, fiscal year 2025? Yeah, so we're very committed to being free cash flow positive. So, you know, our plan has us achieving that. And, you know, to the extent that we vary from that a little bit, we'll take whatever actions we need to to make sure that we are free cash flow positive. So that's the plan going in here to the beginning of fiscal 25. And that's where we expect to end it. Yeah. OK. And the next question comes from the line of Derek Wood with T.D. Cowan
Coal: Go lower before it starts to accelerate.
Speaker Change: Yes, I mean as we look.
Speaker Change: Look at the plan that we've got in place for this next year I mean, this should be sort of at the low point and the way to think about it you know when you look at billings and either there.
No.
Speaker Change: <unk> are growing there's about Ah theres about it.
Speaker Change: Two quarter lag on that so if we look back a couple of quarters ago Billings were flat we've had a couple of.
Speaker Change: Very low single digit billings, gross but but that that should start to turn and as we add to billings.
David Jolley: Please proceed with your question. Great. Thanks, guys. This is Cole. I'm on behalf of Derek.
Speaker Change: Again, if we see an increase in billings in that are just going to go up so.
Cole: David, one for you, maybe, just looking at NRR down ticking again, sounds like the new investments in consumption and freemium could help that kind of run up over time. But as we think about over the next couple of quarters, is this kind of the bottom here? Do you think that, you know, looking at deals and potential down sales, it could go lower before it, you know, starts to accelerate?
Speaker Change: And that's what we got in the plan.
Speaker Change: Great. Thanks.
Speaker Change: And then Josh one for you would love an update on our go to market Rep productivity pipeline in the first or second quarter here.
Joshua G. James: That'd be great. Thanks.
Joshua G. James: Yeah, I mean, we've definitely seen since.
Joshua G. James: Q4 of a year ago.
Joshua G. James: The macro headwinds definitely took place in terms of rep productivity.
David Jolley: Yeah, I mean, as we look at the plan that we've got in place for this next year, I mean, this should be sort of the low point. And the way to think about it, when you look at billings and either they're flat or growing, there's about a two-quarter lag between that. So if we look back a couple of quarters ago, billings were flat. We had a couple of very low single-digit billings gross. But that should start to turn.
Joshua G. James: Pipeline conversion and it definitely weakened throughout the year.
Joshua G. James: It started to stabilize in Q4, so again to David's last comment.
Joshua G. James: Hopefully we've hit the trough in and.
Joshua G. James: We've had the divot and we're coming back out of it but definitely still feel macro headwinds and we've we've optimized towards the most efficient sales executives that we have.
So we know we have people that can produce and we're doing everything we can to.
Joshua G. James: And as we add to billings, again, if we see an increase in billings, then that ARR is going to go up. So, that's what we've got in the plan. Great, thanks. And then Josh, one for you, would love an update on go-to-market, rep productivity, and pipeline into the first or second quarter. That'd be great, thanks.
Joshua G. James: Optimize their ability to be successful we've had some successes overseas in different pockets as well and I think the investments that we've made in AI and.
Joshua G. James: And the investments that we've made converting this over to consumption.
Joshua G. James: We're going to start seeing some of those things start to affect our ability to be more successful so not only well.
Joshua G. James: Yep. Yeah, I mean, we've definitely seen since Q4 of a year ago, the macro headwinds definitely took place in terms of rep productivity, pipeline conversion, and they definitely weakened throughout the year. I think it started to stabilize in Q4, so again, to David's last comment, hopefully, we've, you know, hit the trough and we've hit the divot, and we're coming back out of it, but definitely still feel macro headwinds, and we've optimized towards the most efficient sales executives that we have, so we know we have people that can produce, and, you know, we're doing everything we can And I think the investments that we've made in AI and the investments that we've made converting this over to consumption, we're going to start seeing some of those things start to affect our ability to be more successful. So not only, well, I think the macro conditions are changing things pretty dramatically, and just with macro recovering alone, I think we would get back to the profile that we were at 24 months ago.
Joshua G. James: The macro conditions change things pretty dramatically and just with macro recovering alone I think we'd get back to you know the profile that we were at 24 months ago.
Joshua G. James: But in addition to that we think there's some really cool tail wins that we have as well with with our ability to uniquely help customers out with AI and then with the change in the transformation of the model and how that affects our customers and their ability to grow with us and adapt with US and also find that return on their investment before they they have to go and get it.
Joshua G. James: Ah contract approved so we're excited about the position we haven't seen yet in our financial results.
Joshua G. James: But I can tell you that everybody here at the company is as excited as we've been about our long term prospects, we feel like we we fit really well in the ecosystem with the changes that we've made to our technology and because you look at if you look at our unique advantages and distinct unique advantages that we have.
Joshua G. James: Relative to the makeup of our company. We are one of the few independents and certainly at scale.
Joshua G. James: That independence is helpful. We have a full stack that is composed of all its modular.
Joshua G. James: And we fit really well with the Hyperscale or is that are out there and they're all really interested if you're going to go to market as you're and you're a hyper scaler and you need to provide a full solution to your customer are you going to walk in with with five partners to be able to just fill up that stack or maybe just with domo and the sales rep doesn't have to managed five different <unk>.
Joshua G. James: But in addition to that, we think there are some really cool tailwinds that we have as well, with our ability to uniquely help customers out with AI and then with change and transformation and the model and how that affects our customers and their ability to grow with us and adapt with us and also find that return on their investment before they have to go and get a contract approved. So we're excited about the position. We haven't seen it yet in the financial results, but I can say that everybody here at the company is as excited as we are about our long-term prospects. We feel like we fit really well in the ecosystem with the changes that we've made to our technology.
Joshua G. James: <unk> transactions and contracts to get a deal done. They can just worked with just us and because we've now made our backend. So you can keep all that data driving the hyperscale or as consumption. We think that it puts us in a really unique position and we're definitely excited to see how that plays out over the next 12 months and we'll certainly keep the street updated on on how that how that.
Joshua G. James: Is going to affect our progress and our ability to do something different than what's in the numbers today.
Speaker Change: Helpful guys. Thanks.
Speaker Change: Hey, you bet. Thank you.
Speaker Change: Okay.
Speaker Change: And there are no further questions at this time and that concludes the question and answer session and that also concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation.
Joshua G. James: And because if you look at our unique advantages and distinct unique advantages that we have relative to the makeup of our company, we are one of the few independents, and certainly at scale, that independence is helpful. We have a full stack that is composable, it's modular, and we fit really well with the hyperscalers that are out there, and they're all really interested. You know, if you're going to go to market and you're a hyperscaler and you need to provide a full solution to your customer, are you going to walk in with five partners to be able to fill out that stack or maybe just with Dom And the sales rep doesn't have to manage five different accounts and transactions and contracts to get a deal done; they can just work with us.
Speaker Change: [music].
Joshua G. James: And because we've now made our back end so you can keep all that data driving the hyperscalers' consumption, we think that it puts us in a really unique position, and we're definitely excited to see how that plays out over the next 12 months, and we'll certainly keep the street updated on how that's going to affect our progress and our ability to, you know, do something different than what's in the numbers today. Helpful guys, thanks. Thank you. There are no further questions at this time, and that concludes the question and answer session, and that also concludes today's teleconference. You may disconnect your lines at this time.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: [music].
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Speaker Change: Yeah.
Speaker Change: Okay.
[music].
Speaker Change: Yeah.
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Speaker Change: [music].
Speaker Change: Yes.