Q1 2025 Domo Inc Earnings Call

Operator: Greetings and welcome to the Domo First Quarter Fiscal Year 2025 Earnings Call. At this time, all participants are in a listen-only mode. A 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. It is now my pleasure to introduce your host. Peter Lowry, Vice President, Investor Relations, Thank you. You may begin.

Greetings and welcome to the Domo first quarter fiscal year 2025 earnings call.

At this time all participants are in a listen only mode. A 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.

Speaker Change: It is now my pleasure to introduce your host.

Peter Lowry, Vice President Investor Relations. Thank.

Peter Caldwell Lowry: Thank you you may begin.

Peter Caldwell Lowry: Good afternoon. 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 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 webcast. Statements made on this call include forward-looking statements related to our business under federal security.

Speaker Change: Good afternoon on the call today, we have Josh James our founder and CEO and David <unk>, Our Chief Financial Officer, I'll lead off with our Safe Harbor statement and then onto the call.

Speaker Change: Our press release was issued after the market close and is posted on the Investor Relations section of our website.

Speaker Change: Where this call is also being webcast.

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

Peter Caldwell Lowry: These statements are subject to a variety of risks, uncertainties, and assumptions. These include, but are not limited to, statements about our future and prospects, our financial projections, and our cash positions. Statements regarding the potential of our consumption model, statements about our sales team and technology, our expectations for new business opportunities, transactions, and initiatives, and 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.

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

Speaker Change: These include but are not limited to statements about our future and prospects, our financial projections and cash position stays.

Speaker Change: Statements regarding the potential of our consumption model statements about our sales team and technology are expectations for new business opportunities transactions and initiatives stay.

Speaker Change: 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 macro economic 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 SEC, in particular today's press release, our most recently filed annual report on Form 10-K, and our most recently filed quarterly report on Form 10-Q. These documents contain and identify important risk factors and other information that may cause our actual results to differ materially from those contained in our forward-looking statements. In addition, during today's call, we will discuss non-GAAP financial measures, which we believe are useful as supplemental measures of Domo's performance.

Speaker Change: 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 D.

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

Peter Caldwell Lowry: 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, or gap reserve. 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, which we have posted in the investor relations section of our website at domoinvestors.com. With that, I'll turn it over to Josh. Josh said,

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

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

Speaker Change: 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 in the Investor Relations section of our website at double investors Dot com with that I'll turn it over to Josh Josh.

Joshua G. James: Thank you Pete.

Joshua G. James: Thank you, Pete. Hello everyone, and thanks for joining us on the call today. I'll start with our quarterly results. In Q1, we exceeded our revenue guidance and achieved positive adjusted free cash flow. Our billings were not on target, though we would have substantially met our guidance if it weren't for one large non-renewal. With the exception of that one contract, our gross retention would have been 6 percentage points higher and come in closer to 89%. Well, our near-term results are not where I want them to be.

Joshua G. James: Hello, everyone and thanks for joining us on the call today.

Joshua G. James: I'll start with our quarterly results.

Joshua G. James: In Q1, we exceeded our revenue guidance and achieved positive adjusted free cash flow.

Joshua G. James: Our billings were not on target. So we would have substantially met our guidance if it weren't for one large non renewal.

Joshua G. James: With the exception of that one contract our gross retention would have been six percentage points higher and coming closer to 89%.

Joshua G. James: While our near term results are not where I want them to be I.

Joshua G. James: I do remain confident that we're focused on and executing in the right areas, which should have us back to growth in the near future. We continue to get positive signals from our consumption customers. More and more consumption deals are coming up for renewal, and while it's still a small sample size, we think it's big enough to be directionally indicative. Gross and net retention for consumption renewals in Q1 were significantly higher than our seat-based customers.

Joshua G. James: I do remain confident that we're focused on and executing in the right areas.

Joshua G. James: Which should have us back to growth in the near future.

Joshua G. James: We continue to get positive signals from our consumption customers.

Joshua G. James: More and more consumption deals are coming up for renewal and while it is still a small sample size. We think it's big enough to be Directionally indicative grew.

Joshua G. James: Gross and net retention for consumption renewals in Q1 were significantly higher than our seat based customers.

Joshua G. James: In fact, net retention for the consumption cohort was greater than 115% in Q1, which is higher than we've ever seen, and gross retention was 96%. As we look forward to Q2, we have three times the sample size, and the numbers are equally encouraging. With results like these, we are very focused on converting our customer base to consumption as fast as possible. In Q1, over 90% of our new contract dollar value was for consumption, and now we have over 30% of our total ARR for consumption. We continue to believe this number will be over 50% by the end of the year.

Joshua G. James: In fact net retention for the consumption cohort was greater than 115% in Q1, which is higher than we've ever seen.

Joshua G. James: And gross retention was 96%.

Joshua G. James: As we look forward to Q2, we have three times the sample size and the numbers are equally encouraging.

Joshua G. James: With results like these we are very focused on converting our customer base to consumption as fast as possible.

Joshua G. James: In Q1 over 90% of our new contract dollar value was on consumption.

Joshua G. James: And now we have over 30% of our total E. R. R on consumption.

Joshua G. James: We continue to believe this number will be over 50% by the end of the year.

Joshua G. James: Diving into consumption, several years ago, we noticed that the relationships with some of our customers weren't as strong as we wanted them to be. We were having trouble getting in front of the CIO, and we had competitors in other departments also signing big contracts. As a result, we sometimes found ourselves stuck in a single use case, and even when customers wanted to try to expand to other use cases. The permissions required internally for our customers on a seat-based model made it difficult to do so. It limited our ability to spread virally and impeded our growth.

Joshua G. James: Diving into consumption several years ago, we noticed that the relationships with some of our customers weren't as strong as we wanted them to be we were having trouble getting some of the CIL and have competitors in other departments also signing big contracts.

Joshua G. James: As a result, we sometimes found ourselves stuck in a single use case.

Joshua G. James: And even when customers wanted to try to expand to other use cases.

Joshua G. James: The permissions required internally for our customers on a seat based model made it difficult to do so.

It limited our ability to spread virally and impeded our growth.

Joshua G. James: This made it clear that something needed to change, which is why we began exploring a consumption model, more recently. As we saw the economy turn, leading to CFOs putting pressure on CIOs to cut spend, particularly soft.

This made it clear that something needed to change, which is why we began exploring a consumption model.

Joshua G. James: More recently as.

Joshua G. James: As we saw the economy turn leading to CFO is putting pressure on <unk> to cut spend.

Particularly software spend.

Joshua G. James: Decisions were made based on which vendor could be the most aggressive on cost, and Vendor Consolidation became the mantra of the day. We won some of these battles, and we lost some. But even when we won, we often had to cut the price dramatically if it were in a situation where we had a single use case and not a wall-to-wall enterprise license agreement installation or ELA. So, if we were not embraced as a strategic, multi-use case solution, with multiple departments, with the CIO's blessing, we became vulnerable.

Joshua G. James: Decisions were made based on which vendor could be most aggressive on costs.

Joshua G. James: And vendor consolidation became the mantra of the day.

Joshua G. James: We won some of these battles.

Joshua G. James: And we lost some.

Joshua G. James: But even when we won we often had to cut the price dramatically. If it were in a situation, where we had a single use case and not a wall to wall enterprise license agreement installation relay.

So if we were not embraced as a strategic multi use case solution with multiple departments with the CIO was blessing.

Joshua G. James: We became vulnerable.

Joshua G. James: And that's exactly what happened with our large non-renewal this quarter. They were a customer for eight years and had renewed seven times, but we'd struggled to break out of that single use case. As a result, we lost that account due to a CFO-driven, cost-cutting directive focused on tech consolidation. These factors have played a large part in our retention, dropping from our historic rates of about 90% to recent results in the low 80s. Over the last three quarters, we had 16 renewals over a million dollars, of which we lost two, and had varying degrees of down cells at seven.

Joshua G. James: And that's exactly what happened with our large non renewal this quarter.

Joshua G. James: They were a customer for eight years and had renewed seven times.

Joshua G. James: We've struggled to break out of that single use case.

Joshua G. James: As a result.

Joshua G. James: We lost that account due to a CFO driven cost cutting directive focused on tech consolidation.

Joshua G. James: These factors have played a large part in our retention dropping from our historic rates of about 90% to recent results and the Louise.

Joshua G. James: Over the last three quarters, we had 16 renewals over $1 million.

Speaker Change: Of which we lost you.

And had varying degrees of down sells at seven.

Joshua G. James: Of the remaining seven, we either retained or expanded our relationship. For the losses and downsells, the common theme was being vulnerable to budget cuts and tech consolidation because we were only being utilized for a single use case or lacking wall-to-wall adoption. As we've said numerous times, getting more customers to embrace Domo for multiple use cases with ELAs is the only model to move forward with. Unfortunately, we didn't get this model implemented soon enough to mitigate some of the churn we've experienced. But it's in place now.

Speaker Change: Of the remaining seven we either retained or expanded our relationship.

Speaker Change: For the losses and down sells the common theme was being vulnerable to budget cuts and tech consolidation because we were only being utilized for a single use case.

Speaker Change: Or lacking wall-to-wall adoption.

As we've said numerous times getting more customers to embrace domo for multiple use cases with elas.

Speaker Change: Is the only model to move forward with.

Speaker Change: Unfortunately, we didn't get this model implemented soon enough to mitigate some of the churn we've experienced.

Speaker Change: But it's in place now.

Joshua G. James: And as I mentioned earlier, we are seeing great retention numbers from our consumption customers. Also, as we look ahead, we want to make it clear that we think we have truly turned the corner when it comes to retention. As we look at the landscape of customers renewing, it's markedly different than it has been in the last four quarters.

Speaker Change: And as I mentioned earlier, we are seeing great retention numbers from our consumption customers.

Speaker Change: Also as we look ahead, we want to make it clear that we think we have truly turned the corner when it comes to retention.

Speaker Change: As we look at the landscape of customers renewing its markedly different than it has been the last four quarters.

Joshua G. James: We feel confident in our Q2 retention forecast and are guiding gross retention for the first time ever. We expect Q2 gross retention to be increasing and up in the range of 87 to 88%, up from 83% in Q1. We don't plan on providing this guidance every quarter, but we wanted to do this to demonstrate our confidence that the recent trend of low 80s is not expected to be the case for Q2.

Speaker Change: We feel confident in our Q2 retention forecast.

Speaker Change: And our guidance gross retention for the first time ever.

We expect Q2 gross retention to be increasing and up in the range of 87% to 88% up from 83% in Q1.

Speaker Change: We don't plan on providing this guidance every quarter, but we wanted to do this to demonstrate our confidence that the recent trend of low eighty's is not expected to be the case for Q2.

Joshua G. James: What we've seen play out is a tale of two types of customers. On the one side, there are customers with a single use case where Domo is used in only one department and there is a lack of CIO support. On the other hand, we have fiercely loyal customers who embrace Domo as a broad, strategic solution in their organization. They've adopted us as their preferred solution, there are limited competitive offerings in the account, and they have multi-year plans centered around our platform. Those customers love Domo.

Speaker Change: What we've seen play out is a tale of two types of customers.

Speaker Change: On the one side there are customers with a single use case, where domo is used in only one department and there is lack of CIO support.

Speaker Change: On the other side, we are fiercely loyal customers, who embraced domo is a broad strategic solution in the organization they've adopted us as their preferred solution that are limited competitive offerings in the account and they have multiple year plans centered around our platform.

Joshua G. James: And actually, nothing reinforced it more than their engagement at our annual customer conference, Domo Palooza, which was held in March. For the first time since Omniture, I'm seeing customers that are truly raving fans, and they're excited to talk about their multi-year plans with Domo. It was starkly noticeable at Domo Palooza, partly because we hadn't been in person with our customers in mass for five years. I heard dozens and dozens of companies talking emphatically about being at Domo being at the core of their data strategy and how our platform fits into their three or five year plan. The energy was phenomenal

Speaker Change: Those customers love Domo and actually nothing reinforced it more than their engagement at our annual customer conference Domo Palooza, which was held in March.

Speaker Change: For the first time since Omniture I'm seeing customers that are truly raving fans and they're excited to talk about their multiyear plans with domo.

Speaker Change: It was starkly noticeable domed palooza, partly because we havent been in person with our customers in mass for five years.

Speaker Change: I heard dozens and dozens of companies talking emphatically about being at domo being at the core of their data strategy and how our platform fits into their three or five year plans.

Speaker Change: The energy was phenomenal and it was.

Joshua G. James: And it was so exciting to hear story after story about customers transforming their businesses by fully embracing Domo. We heard from customers like Regional One Health, a Level 1 trauma center that has used Domo to reduce its average patient stay by almost two days and free up hospital beds for an additional 12,000 patients every year. They've also used Domo to improve their pharmacy program, driving $6 million in incremental profit from that use case alone.

So exciting to hear story after story about customers transforming their businesses by fully embracing domo.

Speaker Change: We heard from customers like regional one health <unk>.

A level, one trauma center, which is use domo to reduce its average patient stay by almost two days and free up hospital beds to an additional 12000 patients every year.

Speaker Change: They've also use domo to improve their pharmacy program driving $6 million in incremental profit from that use case alone.

Joshua G. James: Thanks to Domo, they have everything they need to leverage, extend, and act on data securely and transparently, as well as automate actions that lead to important outcomes. This customer has also become a valuable partner and contributed to multiple new logo deals for Domo. Another example, Allied Universal, a global security services company that transformed from a $100 million company into a $20 billion company with 800,000 employees operating in over 100 countries, just eight years after launching with Domo.

Speaker Change: Thanks to domo, they have everything they need to leverage extend and act on data securely and transparently as well as automate actions that lead to important outcomes.

Speaker Change: This customer has also become a valuable partner and contributed to multiple new logo deals Purdue.

Speaker Change: Another example, allied universal.

Speaker Change: Global Security services company, the transformed from a $100 million company into a 20 billion dollar company with 800000 employees operating over 100 countries just eight years after launching with Domo.

Joshua G. James: This outstanding growth was possible because they are using Domo to easily and quickly leverage, extend, and act on insights that drive tangible results. But nothing stood out more to me than the incredible praise we saw our customers publicly share with their professional networks following the event. For example, these are some of the posts.

Speaker Change: This outstanding growth was possible because they are using domo to easily and quickly leverage extend and act on insights that drive tangible results.

Speaker Change: But nothing stood out more to me than the incredible praise we saw our customers publicly share with their professional networks. Following the event.

Speaker Change: For example, these are some of the posts are strategy and analytics expert from Ticketmaster's said that domo as current tech stack and where we're headed are at the leading edge and extremely easy to use and called Domo quote a hidden gem of a company and I T leader from Freddy's frozen Custard and steak Berger said, if you've ever heard me talk about my level.

Joshua G. James: A strategy and analytics expert from Ticketmaster said that Domo's current tech stack and where we're headed are at the leading edge and extremely easy to use, and he called it, quote, a hidden gem of a company. An IT leader from Freddy's Frozen Custard and Steakburger said, "If you've ever heard me talk about my love of data, you've probably heard me talk about Domo." We use Domo for so many things, and yet, we may actually underutilize it.

Data you probably heard me talk about Domo, we use domo for so many things and yet we may actually under utilize it.

Joshua G. James: Another example of customer momentum came just last week. We were speaking with a longtime customer who's been on an ELA contract for years. They were extremely excited to share their five-year data strategy with us, which centers around Domo. As part of this, they were looking to do a significant upsell. They were also a little surprised by the lack of appreciation for the value we create and made a comment that they should invest in our stocks.

Speaker Change: Another example of customer Mentum came just last week.

Speaker Change: We were speaking with a longtime customer who has been on an EAA contract for years.

Speaker Change: They were extremely excited to share their five year data strategy with us.

Speaker Change: Which centers around domo.

Speaker Change: As part of this they were looking at a significant upsell.

Speaker Change: They were also a little surprised by the lack of appreciation for the value, we create and made a comment that they should invest in our stock.

Joshua G. James: While we certainly appreciate the sentiment, we do actually believe the level of affinity from our customers is evidence that our recent retention numbers aren't reflective of the incredible traction we're seeing with them. Now, we've mentioned a few times how much this space has evolved.

Speaker Change: While we certainly appreciate the sentiment we do actually believe the level of affinity from our customers is evidence that our recent retention numbers aren't reflective of the incredible traction we're seeing with that.

Speaker Change: Now we've mentioned a few times how much this space has evolved.

Joshua G. James: Over the past several years, cloud data warehouses, or CDWs, have really emerged as a center of gravity in the broader data landscape. Unfortunately, as all the activity and momentum built up around the space, we were kind of left on the sidelines because we had already created capabilities that directly competed with CDWs. As these cloud data warehouses rapidly expanded their businesses and impact, it became clear we needed to change our back end to align with these CDWs and remove the friction that existed, which brings us to today. It's only been one month since we launched Cloud Amplifier with our first CDW partner. And we have four more in the queue for the next few months.

Speaker Change: Over the past several years cloud data warehouses, where cdw's have really emerged as a center of gravity in the broader data landscape.

Speaker Change: Unfortunately, as all the activity and momentum built up around the space. We were kind of left on the sideline because we had already created capabilities that directly competed with the cdw's.

As these cloud data warehouses rapidly expanded their businesses and impact it became clear we needed to change our backend to align with these cdw's and remove the friction that existed which brings us to today.

Speaker Change: It's only been one month since we launched cloud amplifier with our first CDW partner.

Speaker Change: And we have four more in queue for the next few months.

Joshua G. James: Astonishingly... We already have 47 opportunities in the pipeline, with 12 net new relationships where a CDW brought us into customer conversations that would traditionally have gone to one of our competitors. Let me tell you about the other momentum we're seeing with partners, and this is all very recent. In the last few months, we've participated in more than a dozen partner events since April 1st.

Speaker Change: Stan Ischinger Lee.

Speaker Change: We already have 47 opportunities in pipeline with 12, net new relationships, whereas CDW broadest into customer conversations they would've traditionally gone to one of our competitors.

Speaker Change: Let me tell you about the other momentum we're seeing with partners and this is all very recent.

Speaker Change: In the last few months, we participated in more than a dozen partner events.

Speaker Change: Since April 1st.

Joshua G. James: We have led over a dozen partner-enabled trainings and also conducted more than 90 account planning and joint customer calls. And just in April alone, we held more than 300 sales calls where the prospect mentioned a CDW partner, which is a significant increase over previous months. As our customers and our sales executives start to understand and realize the benefit that comes by aligning with these CDW partners, the feedback is extremely positive.

We have led over a dozen partner enabled trainings and also conducted more than 90 account planning and joint customer calls.

Speaker Change: And just in April alone, we held more than 300 sales calls where the prospect mentioned, a CDW partner, which is a significant increase over prior months.

As our customers and our sales executives start to understand and realize the benefit that comes by aligning with the CDW partners.

Speaker Change: Across the board the feedback is extremely positive in.

Joshua G. James: In fact, one CDW told us they had never been able to get data into their product as quickly and easily as they did using Domo, providing access to data that they thought was out of reach. The reps are starting to close deals with us and quickly calling us again to introduce us to their other accounts because it speeds up their time to close. Here are several examples of how becoming a better ecosystem partner is helping us win in the market. One new logo win this quarter was with a manufacturing company that chose Domo and Databricks over Microsoft Fabric.

Speaker Change: In fact, one CW told us they have never been able to get data into their product as quickly and easily as they did using domo, providing access to data that they thought was out of reach.

Speaker Change: The reps are starting to close deals with us and quickly calling us again to introduce us to their other accounts because it speeds up their time to close.

Speaker Change: Here are several examples of how becoming a better ecosystem partner is helping us win in the market.

Speaker Change: One new logo win this quarter was with a manufacturing company that chose domo and data bricks over Microsoft fabric.

Joshua G. James: That choice lets the customer easily leverage existing investment in their cloud data warehouse while giving businesses and their users the real-time insights they need to run their business. Another new logo in this quarter was with a pet care company, where a former Domo customer became their head of operations, and as a condition of her employment, she required that she would be able to deploy Domo company-wide for data management. Another example of the affinity that comes when customers embrace broader use cases with Domo. The deal closed within one month of an on-site meeting with the executive team.

Speaker Change: Choice lift the customer easily leveraged existing investment in their cloud data warehouse, while giving businesses.

Speaker Change: And their users the real time insights they need to run their business.

Speaker Change: Another new logo win this quarter was with a pet care company, where our former domo customer became their head of operations and as a condition of her employment she required that should be able to deploy domo companywide for data management.

Speaker Change: Another example of the affinity that comes when customers' embraced broader use cases with domo.

Speaker Change: The deal closed within one month of an onsite meeting with the executive team.

Joshua G. James: In this case, Domo will sit on Google Cloud, and data will be distributed throughout the line of business with Domo. Another example is a very well-known restaurant chain that chose Domo to replace Tableau this quarter. The company historically used Tableau on Snowflake but switched to Domo because we easily scale across hundreds of users, offer compelling mobile capabilities, and deliver outcomes quickly, all while leaving their data in Snowflake.

Speaker Change: In this case Domo will sit on Google cloud and data will be distributed throughout the line of business with Domo.

Speaker Change: Another example is a very well known restaurant chain that chose domo to replace tableau. This quarter. The company historically used tableau on snowflake, but switched a domo because we easily scaled our cost across hundreds of users offer compelling mobile capabilities and delivering outcomes quickly.

Speaker Change: All while leaving their data and snowflake.

Speaker Change: And then the last example, I want to share is where we've seen we have continued to see strong momentum in upsells on consumption conversions as well.

Joshua G. James: One customer that converted to our consumption model that I want to highlight this quarter was an account-based marketing firm where we had a 30% upsell, primarily because of our ability to integrate with another well-known CDW. Our ecosystem investments are producing results, and we're very excited to see the extent to which they impact our top line over the next few quarters. I'm extremely pleased with the progress we are making as we start closing deals and seeing more and more pipeline generation. And with that, I'll hand it over to Mr. Jolley. David

Speaker Change: One customer that converted to a consumption model that I want to highlight this quarter was with an account based marketing firm, where we had a 30% upsell.

Speaker Change: Primarily because of our ability to integrate with another well known CDW.

Speaker Change: Our ecosystem investments are producing results and we're very excited to see the extent to which impacts our top line over the next few quarters.

Speaker Change: I'm extremely pleased with the progress we are making as we start closing deals and seeing more and more pipeline generation.

Speaker Change: And with that I'll hand, it over to Mr. Johnny David.

David Jolley: Thanks, Josh. While we're still seeing a challenging market environment, we were able to slightly exceed our revenue guidance. Total revenue was $80.1 million, a year-over-year increase of 1%. Subscription revenue represented 90% of total revenue and also grew at 1% year-over-year. Q1 billings were $65.5 million. We have continued to see challenges in our traditional go-to-market channel, which further highlights that the timing is right to lean into the partnership. Reinforcing Josh's earlier point, our billings were primarily impacted by one large contract that didn't renew.

Johnny David: Thanks, Josh while we're still seeing a challenging market environment, we were able to slightly exceed our revenue guidance total revenue was $80 1 million a year over year increase of 1% subscription revenue represented 90% of total revenue and also grew at 1% year over year Q1 billings were $65 five.

Speaker Change: <unk>.

We've continued to see challenges in our traditional go to market channel, which further highlights that the timing is right to lean into the partner channel.

Speaker Change: Reinforcing Josh as earlier point, our billings were primarily impacted by one large contract that didn't renew excluding this one renewal we would have substantially met our billings guidance. Our gross retention was 83% and with the exception of that one large contract would have been 89%. Our net retention was 88 per.

David Jolley: Excluding this one renewal, we would have substantially met our billings guidance. Our gross retention was 83%, and with the exception of that one large contract, it would have been 89%. Our net retention was 88%. That said, we expect our Q2 retention to be in the 87 to 88% range, which gives us a foundation to start to get back to growth. Now, let me review some of the other Q1 methods.

Speaker Change: <unk>.

Speaker Change: That said, we expect our Q2 retention to be in the 87% to 88% range, which gives US a foundation to start to get back to growth.

Speaker Change: Now, let me review some of the other Q1 metrics.

David Jolley: Current RPO was $230.5 million, and our total RPO declined 3% year over year to $346.3 million as of April 30, 2024. On a dollar-weighted measure, we continue to have approximately two-thirds of our customers under multi-year contracts. Multi-year contracts benefit us in a number of ways, particularly in retention. We've recently taken actions to incentivize our reps and customers to enter into multi-year contracts and expect that this will help improve our retention results in future periods. Moving on to margins and profitability, our subscription gross margin was 83.4%, down 2.6 percentage points from Q1 of last year due primarily to customer data usage outpacing revenue.

Speaker Change: Current RP O was $235 million and our total RP O declined 3% year over year to $346 3 million as of April 32024.

Speaker Change: On a dollar weighted measure we continue to have approximately two thirds of our customers under multiyear contracts multiyear.

Speaker Change: Multiyear contracts benefit us in a number of ways, particularly on the retention front. We've recently taken actions to incentivize, our reps and customers to enter into multiyear contracts and expect that this will help improve our retention results in future periods.

Speaker Change: Moving onto margins and profitability.

Speaker Change: Our subscription gross margin was 83, 4% down two six percentage points from Q1 of last year due primarily to customer data usage outpacing revenue growth.

David Jolley: Historically, our contracts haven't had data caps, so this isn't surprising. In fact, we're glad to see customers using the product more and more. Thankfully, we're already well on our way to getting our customer base moved over to consumption contracts, which will better align our revenue with customer data usage. We may see near-term fluctuations of a point or two, but over the long term, we expect our subscription gross margin to stabilize in the mid-80s.

Speaker Change: Historically, our contracts haven't had data caps. So this isn't surprising in fact, we're glad to see customers using the product more and more.

Speaker Change: Thankfully, where we're already well on our way to getting our customer base moved over to consumption contracts, which will better align our revenue with customer data usage.

Speaker Change: We may see near term fluctuations of a point or two but over the long term, we expect our subscription gross margin to stabilize in the mid eighties.

David Jolley: Non-GAAP operating margin was negative 9.2 percent, down 7.2 percentage points from a year ago, primarily due to hosting Domo Palooza as an in-person event this year and fees related to the extension of our debt. Non-GAAP net loss was $12.3 million compared to $6.1 million a year ago. Net loss per share was $0.33 based on 37.5 million weighted average shares outstanding.

Speaker Change: non-GAAP operating margin was negative nine 2% down 7.2 percentage points from a year ago, primarily due to hosting dhamma palooza as an in person event this year and fees related to the extension of our debt facility non.

Speaker Change: non-GAAP net loss was $12 3 million compared to $6 1 million a year ago net loss per share was 33 cents based on $37 5 million weighted average shares outstanding.

David Jolley: Because we're in a net loss position, all share and per-share amounts are the same for basic and diluted. In Q1, cash flow from operations was $1.9 million, while adjusted free cash flow was $0.5 million, and our cash balance increased $0.2 million from last quarter to $61.2 million. Now, let me talk about guidance. As Josh discussed, we've been making foundational changes to our go-to-market strategy. Consumption better aligns our pricing with the value provided to our customers and, even more importantly, enables our ecosystem partners with cloud-based data warehouse providers. In addition, research shows that deals done with partners tend to have stronger retention, shorter deal cycles, and result in much more efficient customer acquisition.

Speaker Change: Because we're in a net loss position all share and per share amounts are the same for basic and diluted.

Speaker Change: In Q1 cash flow from operations was $1 $9 million, while adjusted free cash flow was point $5 million and our cash balance increased <unk> 2 million from last quarter to $61 2 million.

Joshua G. James: Now, let me talk about guidance as Josh discussed, we've been making foundational changes to our go to market.

Joshua G. James: Consumption better aligns our pricing with the value provided to our customers and even more importantly enables our ecosystem partnering with cloud based data warehouse providers. In addition research shows that deals done with partners tend to have stronger retention shorter deal cycles and result in much more efficient customer acquisition.

Speaker Change: <unk> well.

David Jolley: Well, we believe we're making the right moves. The returns on our traditional go-to-market have not been where we want them to be, and we think it will take a few quarters to see a significant impact on billings from our initiatives with ecosystem planning. Looking forward, for Q2, we're expecting billings of about $70 million. Given our Q1 billings performance, we expect Q2 gap revenue to be in the range of $76 to $77 million. We expect a non-GAAP net loss per share of 26 to 30 cents.

Speaker Change: While we believe we're making the right moves the returns on our traditional go to market have not been where we want them to be and we think it will take a few quarters to see significant impact to billings from our initiatives with ecosystem partners.

Speaker Change: Looking forward for Q2, we're expecting billings of about $70 million.

Speaker Change: Given our Q1 billings performance, we expect Q2 GAAP revenue to be in the range of $76 million to $77 million. We expect non-GAAP net loss per share of <unk> 26 to 30 stance, assuming $38 4 million weighted average shares outstanding.

Joshua G. James: Assuming 38.4 million weighted average shares are outstanding. As we've stated before, we are committed to being free cash flow positive for the full year, and we'll make adjustments as necessary to achieve that goal. However, there will be variability in the interim quarter. I'll now hand it back to Josh for some concluding remarks. Thanks, dude.

Speaker Change: As we've stated before we are committed to being free cash flow positive for the full year, and we'll make adjustments as necessary to achieve that goal. However, there will be variability in the interim quarters.

Speaker Change: I'll now hand, it back to Josh for some concluding remarks Josh.

Joshua G. James: Thanks, David.

Joshua G. James: It's been fascinating to see how this space has evolved over the past 14 years. When we started, there were no complete integrated data platforms. Data was siloed offline, online, and in hundreds of disjointed, disconnected systems.

It's been fascinating to see how this space has evolved over the past 14 years. When we started there were no complete integrated data platforms data was siloed offline online and in hundreds of disjointed disconnected systems.

Joshua G. James: We put all of the offerings required together in the cloud so customers could finally have the right experience. And that meant we had to build the entire data stack. At the time, we didn't have the distribution of the biggest tech companies, but we were solving problems that every CIO was trying to sort out. Now, fast forward to today.

Joshua G. James: We put all of the offerings required together in the cloud so customers could finally have the right experience and that meant we had to build the entire data stack.

Joshua G. James: At the time, we didn't have the distribution of the biggest tech companies, but we were solving problems that every CIO was trying to sort out.

Joshua G. James: Fast forward to today.

Joshua G. James: The landscape in our space has dramatically changed. Over the past few years, a center of gravity in the broader data space has finally emerged, cloud-based data warehouses like Snowflake and Databricks. Big Query, Redshift, Oracle, IBM, and several others have taken on a central part of every CIO's data strategy. They're talking about their data strategy, and they're talking about it with one of those vendors. If we are going to be a trusted long-term vendor with our customers, we need to be involved in those conversations, but historically, we haven't been.

Joshua G. James: The landscape in our space has dramatically changed over the past few years.

Joshua G. James: Center of gravity in the broader data space has finally emerged.

Joshua G. James: Cloud based data warehouses like snowflake data bricks big query redshift Oracle IBM and several others have taken on a central part of every CIO is data strategy.

Joshua G. James: They're talking about their data strategy and they're talking about it with one of those vendors.

Speaker Change: If we are going to be a trusted long term vendor with our customers we need to be involved in those conversations but historically we haven't been.

Joshua G. James: Now, with our strong partnerships, we are being brought in to provide advice and perspective because we are a frictionless and integral part of the planet. And even, as you probably saw, Snowflake mentioned us in their earnings call yesterday, saying that we were one of their partners building software on top of their platform and bringing on entirely new capabilities and unlocking new use cases for them and their customers. More excitingly, we are now also able to initiate conversations as well with our customers by bringing our partners to the table. Our customers love it, and, of course, our partners are thrilled. So, when we started Domo, we built the full data stack because it didn't exist.

Speaker Change: Now with our strong partnerships.

Speaker Change: We are being brought in to provide advice and perspective.

Speaker Change: Because we are a frictionless and integral part of the plan.

Speaker Change: And even as you probably saw Snowflake mentioned us in their earnings call yesterday, saying that we were one of their partners building software on top of their platform.

Speaker Change: And bringing an entirely new capabilities and unlocking new use cases for them and their customers.

Speaker Change: More excitingly. We are now also able to initiate the conversations as well with our customers by bringing our partners to the table.

Speaker Change: Our customers love it and of course, our partners are thrilled.

Speaker Change: So.

Speaker Change: When we started domo, we built a full data stack because it didn't exist.

Joshua G. James: But now, we've changed our architecture to be more partner focused and to run Domo's backend on our cloud data warehouse partner, and the conversations are going extremely well. As I described earlier this quarter, we went from zero leads from cloud data warehouse partners to being in dozens and dozens of conversations just in the last month. And that's basically with just one partner that's really unbound at this point.

Speaker Change: But now we've changed our architecture to be more partner focused and to run <unk> backend on our cloud data warehouse partners and the conversations are going extremely well.

Speaker Change: As I described earlier this quarter, we went from zero leads from cloud data warehouse partners to being in dozens and dozens of conversations just in the last month.

Speaker Change: And that's basically with just one partner Thats really on boarded at this point.

Joshua G. James: Several other partners are coming online over the next few months, as we have detailed. I'm really excited about the success and dramatic progress of these partner advances. The reality is, in my opinion, there's a significant chance that one of these cloud-based data warehouses will be a likely acquirer in the next 12 to 24 months. It's true; we get interest from strategics or private equity shops all the time. Additionally, we do have over $1 billion of income tax NOLs, or net operating losses.

Speaker Change: Several other partners are coming online over the next few months as we have detailed.

Speaker Change: I'm really excited about the success and dramatic progress of these partner advancements.

Speaker Change: And the reality is in my opinion, there's a significant chance that one of these cloud based data warehouses as a likely acquirer in the next 12 to 24 months.

Speaker Change: It's true we get interest from strategics or private equity shops, all the time.

Speaker Change: Additionally.

Speaker Change: We do have over $1 billion of income tax Nols or net operating losses.

Joshua G. James: And there is obviously substantial financial value in the NOLs alone to most operating businesses that would be strategic buyers. We are one of the lowest revenue multiple companies in the entire SaaS landscape. In my opinion, the value is clearly misunderstood and or underestimated.

Speaker Change: And there is obviously substantial financial value in the Nols alone to most operating businesses that would be strategic buyers.

Speaker Change: We are one of the lowest revenue multiple companies and the entire SaaS landscape.

Speaker Change: In my opinion the value is clearly misunderstood.

Speaker Change: And or underestimated.

Joshua G. James: In the last two quarters, multiple potential buyers have said to me, "We can pay you multiples of your current stock price." And, of course, we are continuing to talk to them to explore the details of how we would fit together and create value. Additionally, we are demonstrating more value to the market, I believe, and to other potential suitors as we successfully transition our business more and more to the consumption model and as we strengthen our relationships in the ecosystem.

Speaker Change: And the last two quarters.

Speaker Change: A couple potential buyers have said to me we can pay your multiples of your current stock price.

Speaker Change: And of course, we are continuing to talk to them to explore the details of how we would fit together and create value.

Speaker Change: Additionally, we are demonstrating more value to the market I believe and to other potential suitors as we successfully transition our business more and more to the consumption model.

Speaker Change: And as we strengthen our relationships in the ecosystem.

Joshua G. James: That would help us maximize the value that we ultimately receive for the stock in an acquisition scenario. We want to have strategic conversations, and the best way to do that is to successfully execute on these partnerships. We had to get through the pain, which we believe we have now, and had to clean up our architecture so we weren't at odds with many companies in our ecosystem. We have dramatically more wall-to-wall installations than we used to and have gone from just a handful of customers a year ago to over 30% of our customers on ELAs with a data consumption charge currently.

Speaker Change: That would help us maximize the value that we ultimately receive for this stock in an acquisition scenario.

Speaker Change: We want to have strategic conversations and the best way to do that is to successfully execute on these partnerships.

Speaker Change: And we had to get through the pain, which we believe we have now and had to clean up our architecture. So we weren't at odds with many companies in our ecosystem.

We have dramatically more wall to wall installations than we used to and have gone from just a handful of customers a year ago to over 30% of our customers on elas with a data consumption charged currently.

Joshua G. James: And this should reach a meaningful majority by year end. So the plan has been to fix retention and get back to growth. Looking forward, we believe we are on that trajectory. Our ecosystem efforts are showing great signs of life.

Speaker Change: And this should reach a meaningful majority by year end.

Speaker Change: So the plan has been fixed retention and get back to growth.

Speaker Change: Looking forward, we believe we are on that trajectory finally.

Speaker Change: Our ecosystem efforts are showing great signs of life.

Joshua G. James: And I believe we'll either end up with several partnerships and revenue growth north of 20%, or I believe we'll sell to one of several potential strategic parties at a substantial premium that is multiples of where our stock price is today, or to one of many interested private equity shops. To be clear, in my heart of hearts, we'd love to get back to running this thing north of 20% growth while having a blast innovating and growing Domo in this ever exciting space.

Speaker Change: And I believe will either end up with several partnerships and revenue growth north of 20% or.

Speaker Change: I believe we will sell to one of several potential strategic parties at a substantial premium that is multiples of where stock prices today or to one of many interested private equity shops.

Speaker Change: To be clear in my heart of Hearts, we'd love to get back to running this thing north of 20% growth, while having a blast innovating and growing domo in this ever exciting space.

Joshua G. James: That said, if we shoot our shot but we still believe the best move to optimize the long-term risk-adjusted stock price for shareholders is to sell the company, then that is absolutely what we will do, just like I did last time with Omnitrix. With that, we will open the call for questions. Operator.

Speaker Change: That said, if we shoot our shot but we still believe the best move to optimize the long term risk adjusted stock price for shareholders is to sell the company.

Speaker Change: And then that is absolutely what we will do just like I did last time with Omniture.

Speaker Change: With that we will open the call for questions operator.

Speaker Change: Operator.

Speaker Change: Thank you.

Operator: And ladies and gentlemen, at this time, we will conduct our 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 question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions. Our first question comes from... Sanjit Singh with Morgan Stanley. Please state your question. Yeah. Thank you.

Speaker Change: And ladies and gentlemen at this time, we will conduct 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 question queue.

Speaker Change: You May press Star two if you would like to remove your question from the queue for.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.

Speaker Change: Our first question comes from.

Speaker Change: Sanjeev Singh with Morgan Stanley. Please state your question.

Sanjit Kumar Singh: Yeah, thank you for taking the questions. I had a couple. First of all, you guys talked on the script about the importance of being sort of wall-to-wall versus single-use cases. As given where the business stands today, what percentage of your AR is tied to customers with single-use cases versus non-single-use cases or wall-to-wall deployment?

Sanjit Kumar Singh: Yes. Thank you for taking question and I had a couple of them.

Speaker Change: First on you know you guys talked on the script about the importance of being sort of wall to wall versus single use case.

Speaker Change: What is it given where the business yesterday, what percentage of your air or is tied to customers with single use cases versus.

Speaker Change: Non single use cases or wall to wall deployments.

Joshua G. James: We feel comfortable with, in terms of the relationship that we have with our customers and the strategic things that they're doing internally. It really creates a market difference when you're talking about enterprise customers. And for those enterprise customers, I think that, you know, what we're excited about is, you know, A, looking at the NRR for those consumption cohorts and seeing those be higher than we've ever seen from an NRR perspective for any cohort.

Speaker Change: So we feel comfortable with in terms of the relationship that we have with our customers and the strategic things that they're doing internally it's really.

Speaker Change: It creates a market difference when you're talking about the enterprise customers and for those enterprise customers I think that what we're excited about is.

Speaker Change: A the looking at the <unk> for those consumption cohorts and seeing those be higher than we've ever seen from our and our perspective for any cohort. So that's the first thing that we're excited about on that front and then I think.

Joshua G. James: So that's the first thing that we're excited about on that front. And then, secondly, you know, like we said in the script, we have, we feel like we've been through, you know, a year of vendor consolidation conversations now. So, you know, the ones that were potentially problematic, you know, when we look out right now for the next four quarters, it feels very similar to what things looked like when we were trying to project our retention, you know, three years ago, four years ago. It feels like it's normalized again. So we feel a lot better about the places where we took risks, and it feels like it's a more normalized environment for us.

Speaker Change: Secondly, you know like we said in the script, we have we feel like we've been through a year of vendor consolidation conversations now. So you know the ones that were potentially problematic.

Speaker Change: When we look out right now for the next four quarters. It feels very similar to what things look like when we were trying to project. Our retention you know three years ago four years ago. It feels like it's normalized again, so we feel a lot better about.

Speaker Change: The places, where we had risk and it feels like it's a more normalized environment for us.

Sanjit Kumar Singh: Got it. And then, you know, given what you are sort of projecting around improvements in gross retention and the sort of consumption net retention being markedly higher, you guys didn't provide either a fiscal year revenue margin or billings guide. Just wanted to understand the breadth of the lack of a full year of guidance. I think this is David, and I'll provide.

Speaker Change: Got it and then.

Speaker Change: Given what you are sort of projecting around improvements in gross retention and that sort of consumption net retention being markedly higher you guys can provide either a fiscal year revenue margin or billings guide I just wanted to understand.

Speaker Change: The the with the.

Speaker Change: But the lack of a full year guidance as well.

Speaker Change: I think.

David: This is David and I'll provide some some thoughts there there are a lot of variables right now I mean, obviously, we had contracted down renew last quarter that was kind of a one off but but as we said we're looking at improved retention and then the thing that I think is most exciting we've oh.

Speaker Change: Only been live on this CDW, thank Josh indicated.

David Jolley: [inaudible] in the script for a very short period of time. And I've been really, um, I mean, the activity has far exceeded my expectations. And I think, you know, given that variability, um, you know, we don't believe that we've got the visibility to, uh, guide that at this point. And so we want to get some more insight into how this partner ecosystem play is working out before we provide some more insight there.

Speaker Change: In the script for a very short period of time and I've been really.

Speaker Change: I mean, the activity has far exceeded my expectations and I think given that variability.

We don't believe that we've got the visibility to.

Speaker Change: To guide that at this point and so we wanted to get some more insight and to how this partner ecosystem play is working out before we provide some more insight there.

Sanjit Kumar Singh: Got it. And then one last one, if I may, and I promise to see the floor.

Speaker Change: Got it and then one last one if I may and Oh, it pumps to cede the floor.

Speaker Change: Just on your comments on you know potential exit options for the company in terms of.

A strategic sale or sale to P. E. I'm wondering why that wasn't on the table sooner because in some sense right you guys have gone through multiple go to market transition what youre actually trying to attempt is pretty difficult on sort of the order of difficulty scale in terms of you changing your go to market.

Speaker Change: Investing in partnerships going through a business model transition none of that's particularly easy.

Speaker Change: And if you look at your peers.

Speaker Change: In the space, they've all sort of gotten married with with larger platforms and.

Speaker Change: And there's no public sort of business intelligence companies sort of left in the market anymore. So I just want to understand like why has it been that in the the answer like earlier versus now when we're going through.

Sanjit Kumar Singh: Josh, on your comments on, you know, potential exit options for the company in terms of a strategic sale or a sale to PE, I'm wondering why that wasn't on the table sooner because, in some sense, you guys have gone through multiple go-to-market transitions. What you're actually trying to attempt is pretty difficult on the order of difficulty scale in terms of changing your go-to-market, investing in partnerships, and going through a business model transition.

Speaker Change: A downturn in the fundamentals that you're sort of highlighting that as at the opportunity now.

Sanjit Kumar Singh: None of that's particularly easy. And if you look at your peers in this space, they've all sort of gotten married to larger platforms, and there are no public sort of business intelligence companies left in the market anymore. So I just want to understand, like, why hasn't that been the answer, like, earlier versus now when we're going through a downturn in the fundamentals that you're sort of highlighting that as the opportunity

Speaker Change: Yeah I appreciate the question I think the biggest thing is just clarifying that for folks because we do get so many follow up questions.

Joshua G. James: Yeah, I appreciate the question. I think the biggest thing is just clarifying it for folks because we do get so many follow-up questions, whether it's follow-up questions after earnings calls or when we go to investor conferences, or especially if I'm not in the room, there are a lot of questions to the rest of the team about what Josh would probably never actually sell. And we repeatedly say, no, we would.

Speaker Change: When whether it's follow up questions after earnings call when we go to the Investor conferences.

Speaker Change: Or especially if I'm not in the room Theres a lot of questions to the rest of the team about.

Speaker Change: Josh would probably never actually sell and we've repeatedly say no we would.

Joshua G. James: And we're gonna do everything we can to maximize shareholder value. And since it just continues to be a question with an assumption that that actually isn't the case, that we wouldn't do it, we thought that we'd be very explicit about it. To your point about the number of independents that do what we do, we think that leads to the big opportunity that we're in. And, of course, people make offers, we entertain those conversations, and we continue to sort out, okay, what does that look like in a combined scenario? Where's the upside? How do we create value?

Speaker Change: And we're going to do everything we can to maximize the shareholder value and since it just continues to be a question with an assumption that that actually isn't the case that we wouldn't do it without that we'd be very explicit about it to your point about.

Speaker Change: The number of independents that do what we do with them that that leads to the big opportunity that we're in.

Speaker Change: And of course, we will make offers we entertain those conversations and we continue to sort out okay. What does that look like in a combination scenario where is the upside how do we create the value and one of the things that we've been certainly telling people is and signaling is that because we were one of the few independents, there's a whole lot of companies that need.

Joshua G. James: And one of the things that we've been certainly telling people and signaling is that, because we are one of the few independents, there are a whole lot of companies that need our technologies. And when you look at these CDW companies, they're literally out there trying to sell a solution that starts with just a data warehouse. They need a lot of other tools to actually close that solution, and so they're not just trying to close one deal with a customer. In almost every scenario, there are three or four vendors that are in there, sometimes five vendors when you include the consultant.

Speaker Change: That need our technologies and when you look at these CD CDW companies Theyre literally out there trying to sell a solution that starts with just a data warehouse they need a lot of other tools to actually close that solution and so they're not just trying to close one deal with a customer in almost every scenario, there's three or four vendors that are in there sometimes.

Joshua G. James: And instead of talking to five vendors and trying to close a deal, now that we can have our backend be on the CDW, it's literally a CDW plus us and two vendors, and you get your deal closed. So I think that's why the CDWs are falling in love with us, and that's why they're excited about what we're doing. And I think that definitely adds a lot of value to the organization. So it's not a difference in stance in terms of the willingness to be able to sell; it's just being really explicit about it because given the common A, common B, it's led to some confusion about what our willingness is.

Speaker Change: Five vendors when you include the consultant and instead of talking to five vendors and trying to close the deal now that we can have our backend b on the CDW is literally the CDW plus us and two vendors and you got your deal closed. So I think that's why the Cdw's are falling in love with Us and that's why they are excited about what we're doing and.

Speaker Change: I think that definitely a cruise a lot of value to the organization. So.

Speaker Change: It's not a difference in stance in terms of the willingness to be able to to.

Speaker Change: To sell it's just being really explicit about it because given the common a common b. It's led to some confusion about what our willingness is and so we just wanted to be really explicit about that I think the other thing that you mentioned just about.

Joshua G. James: And so we just wanted to be really explicit about that. I think the other thing that you mentioned is just about the variety of changes going on. You're right; there have been a lot of changes. There has also been a lot of work internally. I'm super proud of the team and everyone, for all the work that we've gone through here. But the good news is. You know, those changes that you referenced, we're pretty far down the path on all of them now. But we feel like on consumption, we can't, you know, declare victory.

Speaker Change: A variety of changes going on you're right. It has been a lot of changes.

Speaker Change: It's been a lot of work internally I'm Super proud of the team that everyone.

Speaker Change: That all the work that we've gone through here, but the good news is.

Speaker Change: All those changes that you referenced we're we're pretty far down the path on all of them now are we feel like on consumption.

Speaker Change: We can.

Joshua G. James: We still have a ways to go, but we have over 33% of our business that's transitioned in the last year. That's pretty good progress at a pretty rapid pace.

Speaker Change: Not declared victory, we still have ways to go but if it was 33% of our business. That's transitioned in the last year, that's pretty good progress at a pretty rapid pace and we think that that paces.

Joshua G. James: And we think that that pace has an opportunity to accelerate. And then, you know, secondly, when you think about the ecosystem, you know, we've been working on that for well over a year as well, getting the back end so that we can put our back end on any of the CDW partners that we have. And, you know, as of three weeks ago, we had our first one. And we've gotten a tremendous amount of activity, deals closing, lots of pipe. And that's just one.

Speaker Change: It has an opportunity to accelerate and then secondly, when you think about the ecosystem, we've been working on that for well over a year as well getting the back end. So that we can we can put our back end on any of the CDW partners that we have.

Speaker Change: And as of three weeks ago, we have our first one and we've gotten a tremendous amount of activity deals closing lots of pipe and that's just one we have four more coming online in the next two months so.

Joshua G. James: We have four more coming online in the next two months. So, you know, we think that the fact that we're still a free cash flow positive, recurring revenue business of substantial size, the only independent one that can provide a lot of value to a bunch of potential acquirers, is worth pointing out. And we think, like I said, over the next 12 to 24 months, especially as some of these benefits accrue to us and accrue to our business, and people can start to value that and also see the way that we're working with them, it provides a lot of opportunity to have those conversations.

Speaker Change: We think that the fact that were still free cash flow positive recurring revenue business a substantial size. The only independent one they can provide a lot of value to a bunch of potential acquirers. This is worth pointing out and we think like I said over the next 12 to 24 months, especially as some of the benefits accrue to us and accrue our business and people can.

Speaker Change: And start to value that and also see the way that we're working with them. It provides a lot of opportunity to have those conversations.

Joshua G. James: Thanks Josh, I appreciate the thoughts. Yeah, you bet. Thanks for the question.

Joshua G. James: Thanks, Josh appreciate the thoughts Yeah, you bet. Thanks for the question.

Operator: Thank you. And our next question comes from Derek Wood with TD Cowan. Please state your question.

Speaker Change: Thank you and our next question comes from Derrick Wood with TD Cowen. Please state your question.

Andrew Michael Sherman: Oh, great. Thanks. This is Andrew Ruggs speaking for Derek.

Speaker Change: Oh, great Thanks, etcetera for Derek.

Andrew Michael Sherman: A question on the consumption traction, which has clearly been pretty good. You've been growing at like 500 basis points the past couple of quarters. If I kind of blew that out, it would be 45 by year end, but you're saying over 50. So maybe there's something in the back half that could kind of accelerate that and kind of can also accelerate billings and net revenue.

James Derrick Wood: A question on the consumption traction, which has clearly been pretty good you're you've been growing at like five 500 basis points. The past couple of quarters, if I kind of blow that out it would be 45 by year end, but you're saying over 50, so maybe there's something in the back half that could kind of.

James Derrick Wood: Accelerated that and kind of cannot also accelerated billings and.

And that reputation.

Joshua G. James: Yeah, a great question. I'll start it, and then David might have a few things to add as well.

Speaker Change: Yeah, Great question I'll start and then David might have a few things to add as well, but given the success that we're seeing there and again highlighting what we see from that cohort of customers that are already renewing that had been on consumption for over a year and it's a big enough sample size that we feel comfortable that is directionally accurate and indicative of the future and then.

Joshua G. James: But given the success that we're seeing there, and again, you know, highlighting what we see from that cohort of customers that are already renewing that have been on consumption for over a year, and it's a big enough sample size that we feel comfortable that it's directionally accurate and indicative of the future. And then we look at it again for this quarter and see, you know, almost three times the sample size and also the same kind of high 90s gross retention, north of 115%, net retention. You know, these are great numbers.

Speaker Change: We look at again look at it again for this quarter and seeing almost three times the sample size and also the same kind of high nineties.

Speaker Change: Gross retention north of 115% <unk>.

Joshua G. James: And so of course, we want to lean more on it. And to your point, yes, we got some early wins; we were able to train the sales executives and the team, and they've been great about getting on board with helping our customers understand the benefit of being on consumption as well. So we got to where 90% of the new logo deals we close in a quarter will be on consumption. So now the big opportunity is, what do you do with all the renewals?

Speaker Change: Net retention.

Speaker Change: These are great numbers, and so of course, we want to lean to it even more and to your point, yes. We got some of the early wins, we were able to train the sales executives and and the team and they've been great about getting on board with helping our customers understand the benefit of being on consumption as well, so we got to wear and 90% of.

Speaker Change: Our new logo deals that we closed in a quarter it will be on consumption. So now the big opportunity is what do you do with all the renewals and we have kind of been letting that naturally happen and since we've been seeing as great benefits that are accruing to the business from it we've now gone and said all right, let's be extremely declared and and deliberate about this as well and.

Joshua G. James: And we have kind of been letting that naturally happen. And since we've been seeing these great benefits that are occurring for the business from it, we've now gone and said, "All right, let's be extremely declarative and deliberate about this as well. And so you know, we've created incentives, we've created spiffs, we've done a lot of training. And I think you're going to see a big portion of our renewals start to transition at a much more rapid pace than they have been the last few quarters over to the consumption model over to the ELA with a data consumption charge model.

Speaker Change: So we've created incentives we've created space, we've created a lot of training and I think youre going to see a big portion of our renewals start to transition into a much more rapid pace than they had been the last few quarters over the consumption model over to the E. L. A with a data consumption charge model. So we think that we do have an opportunity to accelerate.

Joshua G. James: So we think that we do have an opportunity to accelerate that. And then, you know, I'll let David talk about what that does to billings and cash flow and stability and retention. Yeah, so just maybe to add just a little bit more on what Josh said. I mean, it's been a process. Certainly, when we started this, we wanted to make sure that we had the motion right.

Speaker Change: That and then.

Speaker Change: I'll, let David talk about what that what that does to billings and cash flow and stability and retention.

Joshua G. James: And then, you know, there's a lot of little nuances to it that aren't just super obvious at the outset, but it's making sure that all these customers have visibility into their data usage and, you know, how can we help them optimize that and be efficient there as we transition them from, you know, a seat license to a consumption model. And so, you know, there's a little bit more to it.

Speaker Change: Yeah, So just maybe to add just a little bit better.

Joshua G. James: Well, Josh I mean, it's been a process certainly you know when we started down this we wanted to make sure that we had the motion right and then you know there there's a lot of little nuances to it that aren't just like super obvious at the outset, but it's making sure that all of these customers have the visibility on their data usage and how.

Joshua G. James: How can we help them optimize that and be efficient there as we transition them from.

License to a consumption model and so you know theres, a little bit more to it and as we've gotten that motion in place. We now feel like we're at a point that we can accelerate and as Josh said incentivizing, our customers and putting some <unk> out there for our customer service people and salespeople to help accelerate that that's been in the process and so we feel like.

Joshua G. James: And as we've gotten that motion in place, we now feel like we're at a point where we can accelerate. And as Josh said, you know, incentivizing our customers and putting some space out there for our customer service people and sales people to help accelerate that. That's been the process.

Joshua G. James: We're in a pretty good place now too.

Joshua G. James: And maybe even a little bit faster.

Speaker Change: I think we continue to see what we hoped that we would with this consumption cohort and that is as Josh indicated better retention better N. R. R.

David Jolley: And so we feel like we're in a pretty good place now to, you know, move even a little bit faster. I think we will continue to see what we hoped that we would with this consumption cohort. And that is, as Josh indicated, better retention, and better NRR. And then, you know, upon conversion, the one thing that we see consistently with our customers is that they continue to get more and more value out of the platform. By seeing the increase in data,

Speaker Change: And then you know.

Speaker Change: Upon conversion.

Speaker Change: The one thing that we see consistently with our customers is that they continue to get more and more value out of the platform.

Speaker Change: By staying in the increase in data that they're using and.

David Jolley: and and so then it's

David Jolley: And so then it's just a process of getting them on the right size of contract, and in most cases, that includes upsizing the contract and just helping them with their use cases. And again, it's just a process of acceleration.

Speaker Change: And so then it's just a process of getting them in the right size of contract and and in most cases that that includes upsizing the contract and.

Speaker Change: And just helping them with their use cases and.

Speaker Change: And again now it's just now it's just a process of accelerating.

David Jolley: Yeah, great. Thanks. And David, I appreciate the gross retention guide for Q2, kind of certainly a big improvement there, would indicate you're through the worst on that front. But then back to Sanjit's question on the lack of a full year guide, can you just maybe spell out what the biggest components and variables are there and kind of help us get more comfortable with the second half numbers?

Yeah, great. Thanks.

David: And David the so appreciate it the gross retention guide for Q2.

Certainly a big improvement there would indicate here.

Speaker Change: First on that front.

Speaker Change: But going back to Andrew's question on the lack of full year guide.

Speaker Change: Can you just maybe spell out what the biggest components and variables are there and kind of help us get more comfortable with the second half numbers.

David Jolley: Yeah, I think that probably the biggest variable as I'm looking at it is, you know, as we've expanded into this partner channel, that is a substantial, that it opens the aperture, our go-to-market aperture, in a big way. And again, as Josh indicated, we went live on the first.

Speaker Change: Yeah, I think that's probably the biggest variable as I'm looking at it as.

Speaker Change: You know as we've expanded into this partner channel that is a substantial data.

They opened the aperture our go to market aperture.

Speaker Change: In a big way.

Joshua G. James: And again as Josh indicated we went live on the first.

David Jolley: Cloud Data Warehouse about three weeks ago, and we're in, and we're being involved in so many more conversations today about data strategies and other things that are customers that we weren't even invited to in the past as a result of these ecosystem partnerships. And so because we think there's so much potential there, I think, you know, to throw a number out there that just, you know, kind of increases the range probably doesn't add a lot of value to you guys at this point. So we want to wait and get a little bit more visibility over the next couple of months. And as we get that, we will provide some more discreet guidance.

Joshua G. James: A cloud data warehouse about three weeks ago, and we're in we're being involved.

Joshua G. James: And so many more conversations today about data strategies and other things that our customers that we weren't even being invited to in the past as a result of these ecosystem partnerships and so.

Joshua G. James: Because we think there's so much potential there I think you know to throw a number out there that just kind of increases the the range probably doesn't give a lot of value to you guys. At this point, so we want to wait and get a little bit more visibility over the next couple of months and as we get that we will provide.

Joshua G. James: Some more discreet guidance.

Speaker Change: Okay. Thanks.

Operator: Thank you. And our next question comes from Patrick Walravens with Citizens JMP. Please state your question.

Speaker Change: Thank you and our next question comes from Patrick Wall Ravens with citizens JMP. Please state your question.

Patrick D. Walravens: Oh, great. Thanks.

Speaker Change: Oh, great. Thanks can you guys hear me.

Patrick D. Walravens: Can you guys hear me? Yeah. Okay, good. It was good to hear. Snowflake mentioned you guys, and I totally agree with that. David, just a couple of quick ones for you. You guided EPS 21 to 25, and it ended up at negative 33. What was the disconnect there? Because revenue is five versus

Speaker Change: Yes.

Okay. Good.

Speaker Change: It was good to hear.

Speaker Change: Snowflake mentioned, you guys I totally agree with that and it shows is the right direction.

Speaker Change: So.

Speaker Change: David just a couple quick ones for you why do you I mean, you guided EPS 21 to 25 and ended up at negative 33, what was the disconnect there.

David: Cause revenue was flat versus the guidance well, yes, I think in terms of revenue it stepped down a little bit from from the revenue and in the first quarter.

David Jolley: Well, yeah, I think, you know, in terms of revenue, it stepped down a little bit from the revenue in the first quarter. Unknown Attendee, Jeff Skousen, David Jolley, Sanjit Singh, Max Michaelis, Unknown Attendee, [inaudible] That was kind of the sum of it. That was a lot of the large chair of it. Okay.

David: And we're about $80 million ish in revenue in the.

David: GAAP revenue in the first quarter, it will come down a little bit in the second quarter. So that has an impact and then as we make some of these investments into the partner channel.

Speaker Change: Yeah, that's going to have an impact in Q2 and.

Speaker Change: I'm just talking about Q1, so why do you why do you want to tell us when you made when you made the Q yeah.

Speaker Change: I'm, sorry, sorry, it was mostly domo palooza.

Having that in person for the first time in a long time, there was a significant investment associated with that.

Speaker Change: And so that certainly had an impact and we had some cost in financing with our debt extension.

Speaker Change: We had some costs there.

Speaker Change: And some professional fees that we paid out this quarter and so.

Speaker Change: That was kind of the some of it that was a lot of large.

Speaker Change: Yeah.

Speaker Change: Sure of it okay.

David Jolley: Okay, and then on the large renewal, can you guys tell us maybe like what industry that company was in maintenance? Broadly enough, so you don't give it away, but just to give us a little more sense of who it was.

Speaker Change: Okay, and then on the on the large renewal can you guys tell us maybe like what industry that company was in May.

Speaker Change: Broadly enough. So you don't give it away, but just give us a little more sense of who it was.

Joshua G. James: Yeah, I think it's probably best to talk about it, you know, when we have those single-use cases. And the ones where we had single-use cases, it wasn't really industry-specific. And, you know, in that industry, specifically, we have just as much success there. So I don't think it's indicative of anything other than, you know, we had this single-use case that was renewed several years in a row, and it just didn't renew. So I think the thing that I don't know if you find it encouraging as well, Patrick, but the fact that the NRR from that consumption cohort was over 115%, we haven't had a cohort ever do that before. So we're excited about that. And then the fact that we are guiding to increase gross retention across the board. Yeah, that's the formula for growth in the not too distant future, right?

Speaker Change: Yeah.

Yeah, I think it's probably just best to talk about it as you know when we have those single use cases.

Speaker Change: And the ones, where we had single use cases, it wasn't really industry specific.

Speaker Change: And in that industry.

Speaker Change: Specifically, we have just as much success. There. So I don't think its indicative of anything other than yes. We had this single use case that.

Speaker Change: Had renewed several years in a row.

Speaker Change: And it just didn't renew.

Speaker Change: So.

Patrick: I think the thing that I don't know if you find it encouraging as well Patrick but you know that.

Patrick: The fact that they enter our from that that consumption cohort.

Over 115% and we haven't had a cohort ever do that before so we're excited about that and then the fact that we are guiding to increased gross retention across the board.

The formula for growth and Theyre not in the not too distant future.

Joshua G. James: Yeah, no, I think you're doing the right things. It's just that the non-renewals keep happening when you don't necessarily expect them to, and so... You know, can you do it fast enough?

Speaker Change: Yeah, No I think you're doing the right things, it's just that the.

The non renewals keep happening when you don't necessarily expect them to and so.

Speaker Change: Can you do it fast enough.

Speaker Change: Yeah.

Joshua G. James: And on that front, I think it was something that was out there that was, you know, we didn't have green lights all around it, knowing that it was going to renew. It was, you know, one of those that was yellow. And a year ago, when we looked out on the forecast, there were a dozen plus customers where we had yellow around them, and we were concerned about them.

Speaker Change: And on that point I think it was something it was something that was out there, but it was we didn't have green lights, all around it knowing that it was going to renew.

Speaker Change: It was one of those that was yellow and.

Speaker Change: A year ago, when we looked out on the on the forecast.

Speaker Change: There was a dozen plus customers, where we had yellow around them and we were concerned about them.

Joshua G. James: And it was a dramatic increase from what we had seen in any previous year. You know, right when I came back, we looked at the list, and we were like, this is going to be, this is going to be a challenge. All hands on deck, and we lost some of them. But compare that to today, and we look out over the next 12 months, and the list is substantially smaller. It's like, it's normal. It's just there are a normal number of accounts that are there now.

Speaker Change: And it was a dramatic increase from what we had seen in any previous year.

Speaker Change: I came back we looked at the list. We're like Oh. This is going to be this is going to be a challenge all hands on deck, and we lost some or bump.

Speaker Change: Compare that to today and we look out over the next 12 months and the list is substantially smaller it's like it's normal. It's just there's a normal amount of accounts that are there now so that part does feel dramatically different which is why we went to the extent of them, saying, Hey, we're actually going to guide to retention because it is different than what it's been the last 12 months.

Joshua G. James: So, that part does feel dramatically different, which is why we went, you know, to the extent of saying, hey, we're actually going to guide retention, because it is different than what it has been for the last 12 months.

Patrick D. Walravens: Okay, great. And then David, I have two more for you.

Speaker Change: Okay, Great and then David two more for you just I mean.

Speaker Change: Rough order magnitude because theres not that much cash right, what what will the cash burn look like in F. <unk>.

Speaker Change: Yeah.

Speaker Change:

Speaker Change: No I think we're going to we're just going to say that our objective and we're committed to this that we will be free cash flow positive for the year. So there may be a little bit of variability over the next couple of quarters, but the way we've set our plan, we'll we'll be free cash flow positive and be adding to our cash balance. This year. So I'm not concerned that we're going to.

David Jolley: Just a rough order of magnitude because there's not that much cash, right? What will the cash burn look like in F2Q?

David Jolley: I think we're just going to say that, and we're committed to this, that we will be free cash flow positive for the year. So there may be a little bit of variability over the next couple of quarters, but the way we've set our plan, we'll be free cash flow positive and will be adding to our cash balance this year. So I'm not concerned that we're going to dip down into a dangerous level or anything like that. It's well within a reasonable range.

Speaker Change: Dip down into a dangerous level or anything like that.

Speaker Change: It's well within a reasonable range.

David Jolley: Okay, and then last one just remind us, I know you extended the debt, but so what is the current amount and interest rate, and when does it actually come due?

Okay, and then just last one.

Speaker Change: Remind us I know you extended the debt, but so what is the current amount.

The amount of interest rate and when does it actually come down.

David Jolley: Yeah, I think I mean the face amount is a hundred million, but it has some pick interest that's accreted a little bit beyond that to 115 or so 119, actually, I think, and it's due on April 26. So, just under two years. Okay.

Speaker Change: Yeah, I think I mean, the face amount is 100 million. It has some pick interest it's accreted up a little bit beyond that too.

Speaker Change: There are 15, or so 119 actually I think.

Speaker Change: And it's due in April of 26.

Speaker Change: So just under two years.

Speaker Change: Okay.

Patrick D. Walravens: All right, thank you guys.

Speaker Change: Alright, Thank you guys.

Pat: Thanks Pat.

Operator: Thank you. And our next question comes from Eric Martinuzzi with Lake Street. Please state your question.

Speaker Change: Yeah.

Speaker Change: Thank you and our next question comes from Eric Martinez with Lake Street. Please state your question.

Eric Martinuzzi: Yeah, I wanted to revisit the large non-renewal. Do we know, obviously, they were using the product and then made a decision, as you said, a CFO-driven decision that we got to consolidate on our tech spend here, but they still have business intelligence needs. Do we know what product they're using in the absence of Domo?

Eric Martinuzzi: Yeah, I wanted to revisit the large non renewal do we know I mean, obviously they were using the product and then made a decision as you said the CFO driven decision that we got a consolidator on our tech spend here, but.

Speaker Change: They still have business intelligence needs do we know what products, they're using and the absence of domo.

Joshua G. James: No, I, all of our customers, the quote that we got back was that they felt like mom and dad got a divorce. It's, it really wasn't about what was good for the kids, good for the business. It just was 100% CFO driven. They fired their CIO, they got a new CIO, and they said, you know, here's the metric that we got to hit from a finance perspective. It had nothing to do with which vendor they were using, where, or what value they were getting from each vendor. There was a vendor that had a broader footprint than ours, and that was it. That was the decision.

No.

Speaker Change: The feedback that we've gotten is.

Speaker Change: All of our customers. The court then we got back was they felt like mom and dad got a divorce.

Speaker Change: It's it really wasn't about what was good for the good for the kids good for the business. It just was a 100% CFO driven they fired their CIO, they've got a new CIO they said.

Speaker Change: Here's the metric that we got a hit from a finance perspective had nothing to do with.

Speaker Change: Which vendor they were using where what value they're getting from each vendor.

Speaker Change: There was a vendor that had a broader footprint than ours and that was it that was the decision.

Joshua G. James: I think, you know, broadly speaking, for our enterprise business, it's actually still doing really well. I think one of the metrics is interesting. Over the last 12 months, the number of accounts that are paying us more than $500,000 to a million bucks has actually increased by 33%.

Speaker Change: Think broadly.

Speaker Change: Broadly speaking to our enterprise business is actually <unk>.

Speaker Change: Still doing really well I think one of the metrics is interesting over the last 12 months. The number of accounts that are paying us more than.

$500000 2 million Bucks has actually increased by 33%.

Speaker Change: So it's still a really healthy business.

Speaker Change: There were just some or a handful.

Handful of customers that were.

Speaker Change: Somewhat loose in that that we need to go through a renewal cycle on in either right size or we would lose.

Joshua G. James: So it's still a really healthy business. There were just some handful of customers that were somewhat loose and that, you know, we need to go through a renewal cycle on and either right-size, or we lost a couple. But again, looking ahead. We got into a higher retention number, and we feel really good about that. And it does feel like we've been through that year of vendor consolidation, and things are much more stable.

Speaker Change: Lost a couple but again looking out in the future.

Speaker Change: We guided to a higher retention number and we feel really good about that and it does feel like we've been through that year of vendor consolidation and things are much more stable.

Joshua G. James: Yeah, and Eric, I just want to point out, you know, on that focus on that one off, but I mean, they had massive layoffs and other things. I mean, it was a big cost cut, and they used tech as, you know, as one of those areas that they were going to consolidate and, and reduce. So it wasn't a, it certainly wasn't a product market fit issue.

Eric: Yeah, and Eric as I always do I pointed out and that focus on that one off but I mean, they had massive layoffs and other things I mean, it was a it was a big cost cut and then they use <unk> as a.

One of those areas that they were going to consolidate in and reduce so it wasn't it certainly wasn't a product market fit issue.

Joshua G. James: Okay, and you gave some good insight on the installed base, basically kind of boiling it down to one type of customer versus another type of customer. What about new business? What are you seeing as far as the pipeline and then the length of the sales cycle?

Speaker Change: Okay, and you gave some good insight on the installed base basically kind of boiling it down to.

Speaker Change: One type of customer versus another type of customer what about new business. What are you seeing as far as the a the pipeline and then b the length of the sales cycle.

Joshua G. James: Yeah, I think the thing that we're probably most excited about there that's going to change is just as we add these partner leads. We've added, there are dozens of partner leads that are in there that weren't there 60 days ago. And, you know, the likelihood of those deals closing, I think, improves, right?

Speaker Change: Yes, I think the thing that probably most excited about there that's gonna changes just as we add these.

Speaker Change: Partner leads.

Speaker Change: We've added there's dozens of partner leads that are in there that weren't there 60 days ago and the.

Joshua G. James: Because you're there, you're part of the overall data strategy, you're bringing multiple vendors in, you know, they're there. Our partners are absolutely thrilled when we call them and say, hey, we got visibility into a deal, and your name came up. You guys should come in with us. And, you know, you do that once, and they turn around; I do it three times back. So we definitely feel like our ability to close the pipeline is improving as we get better at this partner motion.

Speaker Change: The likelihood of those deals closing I think improves right because you're there you're part of the overall data strategy.

Speaker Change: Youre, bringing multiple vendors in there.

Speaker Change: Our partners are absolutely thrilled when we call them and say Hey, we've got visibility into a deal.

Speaker Change: And your name came up you guys should come in with US and you do that once and they turn around I do it three times back so.

We definitely feel like our ability to close the pipeline is improving as we get better with this with this partner motion.

Joshua G. James: But, but that length of the sales cycle, let's set aside the CDWs. Any, any insight, any change versus 180 days ago?

Speaker Change: But but the length of sales cycle, but set aside to CDW.

Speaker Change: Any any insight any change versus the 180 days ago.

Joshua G. James: Yeah, it feels like things have kind of stabilized. You know, people aren't, there's still not customers that are out there, you know, looking to spend money on software every every time you turn around the corner. But the deals that are happening, especially around AI, AI readiness, prepping your data, you know, that's where we're seeing opportunity for sure.

Speaker Change: Yeah. It feels like things have kind of stabilized you know people aren't there's still not.

Speaker Change: Customers that are out there they are looking to spend money on software ever every time, you turn around the corner, but the deals that are happening, especially around AI AI readiness prepping your data.

Speaker Change: That's where we're seeing opportunity for sure.

Eric Martinuzzi: Got it. Thanks for taking my questions.

Speaker Change: Got it thanks for taking my questions.

Speaker Change: Thank you.

Operator: Thank you, and our next question comes from Gil Luria with DA Davidson. Please state your question.

Speaker Change: Thank you and our next question comes from Gil Luria with D. A Davidson. Please state your question.

Gil Barnum Luria: Thank you. I appreciate the openness and talking about the willingness to sell. But especially on a public call, since we do still have you on the public call.

Gil Luria: Thank you.

Speaker Change: We shared the openness and talking about the willingness to sell.

Speaker Change: But especially on a public call since we do still have you on the public call.

Gil Luria: Can you help us with where you are in the process are.

Usually if you have a sense for how high a bid would be that means there was a specific number possibly presented to you by the bankers for the buyer.

Gil Barnum Luria: Can you help us with where you are in the process? Usually, if you have a sense for how high a bid would be, that means there was a specific number, possibly presented to you by the bankers for the buyer. Have you hired a banker to look at strategic options? It's a loaded question for us since we're not allowed to recommend bankers, but everybody on this call has a colleague and would be happy to share a phone number. But is that where you are in the process? Or was this just more at the point of willingness as opposed to pulling the trigger on exploring strategic options?

Speaker Change: Have you hired a banker to look at strategic options.

Speaker Change: That's a loaded question for us since we're not allowed to recommend bankers, but everybody on this call has a colleague and we'd be happy to share a phone number but is that where you are in the process or was this just more.

Speaker Change: At the point of willingness as opposed to pulling the trigger on exploring strategic options.

Joshua G. James: Yeah, it's, we haven't hired a banker, it's, you know, conversations you have with relationships on either the strategic sides or the private or the private equity side. And that's how the conversation starts, right? You have a conversation and someone says, you know, you say, you're not, you're not, that's not where you're focusing your time, the company's not for sale. They come back, they say, you know, here's a range that we'd be thinking, does this get your attention? You say, you know, that that's something that we should explore. And let's start talking about how things would look together.

Speaker Change: Yeah. It's a it's we haven't hired a banker it's conversations you have with relays.

Speaker Change: Our relationships on either strategic sides or private or the private equity side.

Speaker Change: And that's how the conversation start right.

Speaker Change: Do you have a conversation and someone says.

Speaker Change: You say youre not youre not.

Speaker Change: That's not where you're focusing your time the companies up for sale they come back and they say Oh, here's a range that we'd be thinking does this get your attention.

Speaker Change: Yeah that does.

Speaker Change: Something that we should explore and let's start talking about how things will look together and then often that turns into the best thing. We can do is build a go to market motion.

Joshua G. James: And then often that turns into, you know, the best thing we can do is build a go-to-market motion. As we build a go-to-market motion, then people can get more comfortable about the value that's going to be created because you see the take rates inside your organization. So it's still at the beginning of the conversations; we haven't hired bankers yet. But at the same time, you know, I've been through this before. When things go wrong, they go fast.

Speaker Change: As we build the go to market motion then people can get more comfortable about what the value that's going to be created because they see the take rates inside your organization. So it's still at the beginning of the conversations we havent heard bankers.

Speaker Change: But at the same time I've been through this before when they go they go fast.

Speaker Change: And usually it's somebody that's.

Speaker Change: You know trying to not give everyone a chance to get to know the company as well as onemain. So.

Joshua G. James: And usually, it's somebody that's, you know, trying to not give everyone a chance to get to know the company as well as one may. So just, again, the point was making sure that people know there's an absolute willingness there. And beyond a willingness, you know, we think there's a chance to get this thing back to 20% revenue growth, and we think we can do it in the not too distant future. And as we go about doing that, hopefully, that's where things end up.

Speaker Change: Again, the point was making sure that people know there.

Speaker Change: There is an absolute willingness there and beyond a willingness.

Speaker Change: Theres a chance to get this thing back to 20% revenue growth and we think we can do it in the not too distant future.

Speaker Change: And as we go about that hopefully, that's where things end up.

Joshua G. James: But at the same time, we've got to be aware of what's going on in this space. As one of the questions referenced, there's not a lot of independent companies like ours that are out there. We're a very unique asset. And so since there was a perception that there wasn't a willingness to sell, we wanted to be really explicit about that so that we could reference it, so that investors could reference it.

Speaker Change: But at the same time.

Speaker Change: We've got to be aware of what's going on in this space.

Speaker Change: One of the questions referenced there's not a lot of independent companies like ours that are out there were very unique asset.

Speaker Change: And so since there was a perception that there wasn't a willingness to sell we wanted to be really explicit about that so that we could reference it so that investors could reference it and we do think there is a ton of value here.

Joshua G. James: And we do think there is a ton of value here, not only strategic value but even financial value, like we mentioned, a billion dollars of NOLs. And we think that there is an opportunity to get a lot closer to the CDWs and create a lot more value for the company. And as that value gets created, hopefully, that gets delivered in the form of an increase in stock prices. But if it gets delivered with premiums and a takeout, then there's that opportunity as well.

Speaker Change: Not only the strategic value, but even in the financial value like we mentioned $1 billion of Nols.

Speaker Change: And we think that there's an opportunity to get a lot closer to the CDW and create a lot more value for the company and you know as that value gets created hopefully that gets delivered in the form of increasing stock prices, but.

Speaker Change: If it gets delivered with premiums and it take out then there is that opportunity as well.

Gil Barnum Luria: Much appreciated. That makes sense. And I'm pretty sure you're going to get a lot of phone calls tonight and tomorrow. But thank you.

Speaker Change: Okay.

Speaker Change: Much appreciate it that makes sense and I'm.

Speaker Change: I'm pretty sure you're going to get a lot of phone calls Tonight and tomorrow, but thank you.

Speaker Change: Alright. Thanks.

Operator: And that was our final question. So, with that, we conclude today's teleconference. All parties may now disconnect their lines. Thank you all for your participation.

Speaker Change: Thank you.

Speaker Change: And that was our final question so with that we conclude today's teleconference. All parties may now disconnect. Your lines. Thank you all for your participation.