Q4 2025 Domo Inc Earnings Call
Speaker Change: Greetings and welcome to DOMO fourth 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, please press star zero on your telephone keypad. As a reminder, this conference call is being recorded. I would now like to turn the call over to Peter Lowry.
Speaker Change: And statements regarding the impact of macroeconomic and other conditions on our business.
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.
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.
In addition, during today's call, we will discuss non-GAAP financial measures, which we believe are useful as supplemental measures of demos performance.
Speaker Change: Other than revenue unless otherwise stated 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 to the Investor Relations section of our website at Domo investors dotcom.
Josh: With that I'll turn it over to Josh Josh.
Josh: Thank you Pete Hello, everyone and thanks for joining us on the call today.
Josh: In Q4, we exceeded our guidance for billings revenue non-GAAP, EPS and adjusted free cash flow.
Josh: We have also turned the corner on cash generation and expect positive adjusted free cash flow.
Josh: For Q1 and for fiscal year 'twenty six.
Josh: Our subscription <unk> growth accelerated to 14% year over year, and our long term subscription <unk> growth accelerated to 38% year over year.
Josh: I don't know how many companies ever have had that big of a gap between billings growth and long term RPM growth is certainly one of the best performances relative to billings growth across the entire software landscape that I know of.
Josh: Our apio was over the 400 million Mark for the first time ever.
Josh: And as an incredibly important metric for our business as it de risks revenue and indicates future stability.
Josh: I'm, particularly excited about this improvement in our P O because of what it represents in.
Josh: In the past there may have been some misinterpretations regarding the strength of our customer relationships.
Josh: But as you can see many of our customers have made long term bets on the domo platform and our ability to evolve and grow with them.
Josh: The improvement in our P. O is also a positive because of what it means for our retention rate.
Josh: Longer term contracts mean more opportunities to help our customers adopt new use cases and achieve a meaningful return on their investment in our technology.
Josh: This dramatic improvement and executing longer contracts was accomplished in only two quarters of the year of focused effort.
Josh: We believe that we can continue to move the needle meaningfully on retention as we get better and better and executing on this plan over the next fiscal year.
Josh: Continuing on the theme of improving retention there are four ways. We believe we will meaningfully enhance our ability to retain customers.
Josh: Number one.
Josh: After the macro changed and our retention along with it.
Josh: We quickly made a change to stop charging for seats, which immediately ultra the landscape for us.
Josh: Number two we focus on partnering with Cdw's as the lack of CIO endorsement was the soft underbelly of the relationships with our customers in the past.
Josh: Number three we made an aggressive mood move towards shifting all of our customers to consumption.
Josh: Since then we've tracked the health of our customer relationships based on metrics, such as user growth logins and cards created.
Josh: As expected consumption customers are adopting domo substantially more widely in their organizations compared to the cohort of seat based customers.
Josh: And this puts us in a much stronger position that we think bodes well for retention and up sell.
Josh: As evidence of this in fiscal year, 'twenty, five or consumption customer cohort had gross retention of over 90% and net retention of over 100%.
Josh: We've made great progress migrating our customer base to consumption over the past 21 months.
Josh: We've gone from 5% of our a R. R. On the consumption model roughly two years ago to 25% at the end of fiscal year, 'twenty, four and now to more than 65% at the end of fiscal year 'twenty five.
Josh: Excitingly I can see this approaching 90% by the end of fiscal year 'twenty six what.
Josh: What a dramatic change in such a short window and it's totally attributed attributable to the efforts of all Domo sapiens.
Josh: And finally, the fourth move we've initiated to affect retention is the focus to improve the satisfaction of our customers leading to much longer deals for both renewals and new logos, we've had great success getting more and more of our customer base into multiyear agreements.
Josh: And if you just do the simple math the change in contract length alone should contribute at least two percentage points of improvement in our gross retention rate in fiscal year, 'twenty six compared to compared to fiscal year 'twenty five.
Josh: Moving along to our priorities as a reminder, our primary fiscal year 'twenty five growth initiatives were to build out our partner network continued to add AI innovation throughout the platform and shipped our customers to consumption pricing.
Josh: As for our primary focus at the beginning of the year. We said that this was going to be the year of the ecosystem.
Josh: Throughout the year, we saw partners bring us high quality leads and helping us close new a C V.
Josh: Accordingly, we have reallocated, our engineering resources to make domo work more seamlessly with our partners technology and redirected our sales resources towards partner enablement.
Josh: Our primary partner focus has been with cloud based data warehouses, where cdw's.
Josh: Over the past few years, we've seen leading CDW has become the center of gravity and our ecosystem and we believe are foundational vision strategy and platform make us an ideal partner for them.
Josh: Domo is an AI and data products platform and as such as companies have recognized the AI and the digitization of businesses have become more important than ever they are relying on domo. They recognize we are uniquely positioned to enable amazing experiences hosted on our partner CDW, which benefits them and positions us extremely well in the data ecosystem.
Josh: Domo was architected to rapidly ingest store prepare visualize and analyze vast amounts of data as a modern cloud based platform.
Josh: And because we are now uniquely built to wrap around a cloud based data warehouse or a CDW a customer can quickly and efficiently implement a modern data analytic solution or leverage new AI opportunities with just their preferred CDW and domo instead of Cobbling together, four or five different solutions from <unk>.
Josh: Different vendors.
Josh: We went live with our first CDW partner in June of 2024, and we were immediately brought into many strategic data conversion conversations.
Josh: Let me share a few of these deals with you which highlight the type of success, we're seeing with our CDW partners.
Josh: An entertainment company chose Domo because its data was siloed and its legacy be a vendor was not being adopted.
Josh: The company was looking to consolidate its b I technology stack to provide a better integrated solution that had the ability to create low code apps.
Josh: Critical to winning this deal was our seamless integration with our CDW partner, including our E T L capabilities, which run on top of our CD CDW partner's infrastructure.
Josh: After evaluating our capabilities the company replaced its entire legacy B, I stack, including power be eye with Domo and our CDW partner.
Josh: Another win was with an engineering company that chose Domo and one of our CDW partners to replace its existing systems, which were not meeting the needs where its rapidly growing number of new facilities.
Josh: After a proof of concept the company chose Domo and our CDW partner based on our superior real time performance and the ease of developing better analytics for its new locations.
Josh: Finally, our rapidly growing retail franchise management company was looking for a solution that can provide franchise metrics such as revenue membership growth and product.
Josh: Inventory with a business friendly front end and a scalable enterprise class back end to support its rapid growth.
Josh: The company chose Domo and one of our CDW partners based on the strength of our partners' backend and our easy to use solutions and the overall integration.
Josh: These examples where all coupon new logo wins with our CDW partners in one of their strategic system integrators or S. Ais, which is another important partner focus for domo.
Josh: Leading CDW size are hugely relied on an influential in many of our customers and the broader data landscape. They are considered domain experts and provide powerful customer recommendations.
Josh: This type of endorsement creates more lead flow and a more robust pipeline for us in the S is involvement helps ensure a successful implementation for our mutual customers.
Josh: In FY 'twenty five we actually added more than 10 of these CDW system integrators as dermal partners several of which are top tier implementers implementers of our CDW partners technology.
Josh: Another area of opportunity for us is leveraging domo everywhere to partner with our customers to provide powerful data solutions to their customers in a beta beta b or b to b to C setup.
Josh: Data is incredibly valuable, but often companies struggle with unlocking that value for their customers and their partners are domo everywhere solutions allow customers to unlock that value by embedding data and insights into their own applications par.
Josh: Partnering with Domo creates competitive differentiation without the need to build a data sharing solution internally, which provides cost savings and monetization opportunities.
Josh: We have dozens of multimillion dollar contracts from Domo everywhere as it continues to be a strategic and defensible part of our business.
Speaker Change: For example, our COO.
Speaker Change: Cloud based legal case management software company has been an abdominal customer for almost a decade.
Speaker Change: This customer initially chose domo to provide basic case management analytics, and then expanded to provide analytics around a variety of internal use cases, including sales marketing and finance.
Speaker Change: After having a great internal experience with Domo. The company then partnered with us to create an external data offering to improve case management and operational efficiency for their customers.
Speaker Change: The company has added hundreds of customers sports new analytics offering.
Speaker Change: Which is powered by Domo and this not only offsets their data costs, but actually now represents millions of dollars of revenue and margin for our customer with plenty of room to grow and the beauty of the partnership is that it provides more exposure to domo for their customers in fact dozens of their customers now have become direct domo customers with.
Speaker Change: Significant upsell in Q4. This relationship now represents several million dollars for us that is also driving new efficient revenue as our partner.
Speaker Change: While it is still a challenging softer spending environment, one area, where we see companies willing to invest in increasing spend is around AI enablement and we see AI as another key growth driver for us over the long term.
Speaker Change: Over the past year, we have seen a I jumped to the top of everyone's mind dominating technology spending and roadmap discussions.
Speaker Change: <unk> solutions, such as recommendation engines machine learning algorithms and agent like workflows have been a part of the Domo platform long before AI went mainstream we believe domo was built to capitalize on this AI moment with enterprise grade access to data products in a safe governed way our platform allows us to innovate rapidly because we have already built.
Speaker Change: The foundational elements necessary for a successful <unk> strategy.
Speaker Change: This is the moment, where data and intelligence come together to drive real business value and we believe we are extremely well positioned.
Speaker Change: In fact Domo AI.
Speaker Change: When several industry awards in Q4, including the 2025 Debbie's award in the data analytics and visualization category. The 2020 for Cam World Readers' Choice Award for Best AI.
Speaker Change: And the database trends and application magazine's list of trendsetting products in data and information management for 2025.
Speaker Change: <unk> sells it connecting to all the data within an organization something data scientists have long struggled with but we're not only connected the data our platform allows our customers transform the data to make it AI ready. We also recognized early on that customers would want the flexibility to choose from a variety of new models that were being developed including those hosts.
Speaker Change: And leading cdw's like Snowflake data bricks, Oracle, Google or Amazon.
Speaker Change: So early last year, we launched our AI services layer, which lets customers select the model of their choice and a well governed and secure environment.
Speaker Change: Our ability to access to proprietary data needed for AI to carried it to be a a ready to apply models to gain insights and to deliver those insights to the line of business is a core domo competency.
Speaker Change: What our customers are demanding is an ROI on AI investments and domo platform delivers it today domas powerful tools combined with consumption pricing allows business users and data scientists to quickly try out and axis artificial intelligence capabilities without having to allocate substantial incremental budget. We are hearing positive customer feed.
Speaker Change: Back in both the strength of the dual platform for AI and it's low friction accessibility.
Speaker Change: Our platform allows our customers to create AI agents and AI driven workflows. These Asia. These agents perform automated tasks independently to drive incredible efficiencies, we developed workflows years ago and those capabilities combined with our AI service leader have allowed us to rapidly innovate to create a gentex AI solutions, which are increase.
Speaker Change: Singly, becoming adopted by our customers.
Speaker Change: In summary, Dow most AI and data products platform lets people channel AI and data into innovative uses that deliver a measurable impact anyone can use domo to prepare analyze visualized automate and build data products supported by an amplified by AI.
Speaker Change: Yeah.
Speaker Change: As we have moved to a consumption model, we've seen that it better aligns pricing with value delivered.
Speaker Change: <unk> facilitates rapid rapid adoption and aligns with our partners pricing models.
Speaker Change: Consumption drives product led growth as customers are often unaware of the vast capabilities of our platform.
Speaker Change: With unlimited access to the platform all of Domo capabilities are more discoverable, which drives adoption of course consumption is also driving longer term more strategic relationships with our customers as evidenced by 38% long term subscription or appeal growth.
Speaker Change: For example last quarter, a packaging company entered who have entered into a five year almost seven figure agreement to replace power B I with Domo.
Speaker Change: The company chose Domo, because we demonstrated a faster time to value, we're better able to serve their internal constituents and can more effectively consolidate data from acquired companies into their primary ERP system.
Speaker Change: Our consumption model, which includes unlimited seats allows the company to expand with them internally and through acquisitions.
Speaker Change: And gave the company confidence in entering into a five year deal.
Speaker Change: Moving onto an industry recognition. In addition to the Domo AI Awards, we received in Q4, the Domo platform rose above the pack and several industry distinctions. This.
Speaker Change: This includes receiving five Dresner Advisory services Technology Innovation awards, our eight consecutive years of multiple category winner.
Speaker Change: Domo is recognized as a top vendor in the analytics platform cloud computing and business intelligence embedded B I collective insights and self service bi wisdom of the crowds thematic market reports.
Speaker Change: <unk> was also ranked in the exemplary quadrant and received several top distinctions across five 'twenty 'twenty four information services group analytics and data by our guides, including Jenny I analytics buyer guide collaborative analytics buyer buyers guide mobile analytics buyers guide embedded analytics buyers guy.
Speaker Change: <unk> and analytics and data buyers guide.
Speaker Change: All five buyers guides domo scored an a minus and the customer experience and T C O ROI categories.
Speaker Change: Finally nucleus research down the Domo customers report a return of nearly $7 for every dollar invested into our AI and data products platform through.
Speaker Change: Through the firm's rigorous ROI analysis domo.
Speaker Change: Domo customers highlighted consistent benefits, including a 35% improvement in user productivity.
Speaker Change: A 20% technology cost savings and an average 15% increase in revenue.
Sure.
Speaker Change: We are of course very excited that we are once again hosting our annual user conference Domo Palooza on March 18th twenty-first in Salt Lake City.
Speaker Change: You can expect to see new product announcements and many amazing customer stories from companies such as Samsung Lenovo file a vine.
Speaker Change: U S Bank Harvard business review.
Speaker Change: The M B, a A&E networks disc.
Speaker Change: Discount tire tailor made and Sony.
Speaker Change: I hope to see many of you there and if you're coming to these reach out and we'll connect you with as many customers as possible Inc.
Speaker Change: In conclusion, I'm very pleased with our Q4 results I believe we're absolutely, making the right strategic moves to get back to efficient growth as we look ahead to fiscal year 'twenty six we remain focused on further developing our partner relationships enhancing our AI capabilities and migrating the remainder of our customer base to the consumption model.
Speaker Change: And from a financial standpoint, I believe we will start to see the beginning of growth acceleration, while consistently generating cash the progress we have made over the past year positions us very well and provides a solid foundation for defensible long term growth and with that I'll hand, it over to our esteemed Chief Financial Officer, Todd Crane.
Todd Crane: Thanks, Josh we exceeded our Q4 guidance for billings revenue non-GAAP EPS and adjusted free cash flow total revenue was $78 8 million with subscription revenue representing 91% of that amount Q4 billings were $102 6 million.
Todd Crane: In Q3, the year over year percentage improvement in sales Rep productivity was the best we had seen in four years in Q4, we continued that trend and the improvement in productivity was even better. This is critical for us as a company and has been a priority of mine to make sure we're not only getting back to growth, but doing so efficiently.
Todd Crane: We ended the quarter with total subscription or P. O a $403 6 million up 14% year over year, a significant acceleration from Q3, and our best subscription RPM growth result in over two years.
Todd Crane: Subscription or P. O beyond 12 months grew 38% year over year and the average contract length across our entire customer base continued to increase.
Todd Crane: Gross retention was 85% in Q4.
Todd Crane: The third consecutive quarter at 85% or above which is a nice improvement from where we were in Q1, we expect gross retention to remain around the current level and for FY 'twenty six as a whole based on the progress we've made in key areas. We expect at least a two percentage point improvement.
Todd Crane: Our long term goal continues to be gross retention of 90% or better.
Todd Crane: Our year over year, a RR net retention was up sequentially for the second consecutive quarter.
Todd Crane: We see consumption as another potential tailwind to gross and net retention in FY 'twenty five hour consumption customers had gross retention of over 90% and net retention of over 100% both of which are meaningfully better than the cohort of seat based customers and.
Todd Crane: In FY 'twenty six consumption renewals will represent a larger percentage of our renewal base and therefore had a larger impact on our retention metrics.
Todd Crane: Our adjusted free cash flow was $6 million in Q4, a significant improvement from Q3, and our cash balance increased from $40 9 million in Q3 to $45 3 million in Q4.
Todd Crane: Looking forward, we expect to be cash flow positive in both Q1 and FY 'twenty six.
Todd Crane: Moving on to margins and profitability our subscription gross margin was 81, 4% down sequentially due to timing of capitalized software amortization. We expect this metric to be in the low eighties over the near to medium term and then an expectation of returning to the mid eighties over the longer term.
Todd Crane: non-GAAP operating margin was four 1% and non-GAAP net loss was $1.8 million.
Todd Crane: non-GAAP net loss per share was five cents based on $39 3 million weighted average shares outstanding.
Todd Crane: Because we are in a net loss position all share and per share amounts are the same for basic and diluted aspect.
Todd Crane: As for guidance for the full year, we expect billings of $310 million to $320 million GAAP revenue of $310 million to $318 million and non-GAAP net loss per share of 29 to 39 cents, assuming $40 9 million weighted average shares outstanding our FY 'twenty six EPS guidance implies a 2% operating margin.
Todd Crane: FY 'twenty six and expansion from breakeven in FY 'twenty five.
Todd Crane: For Q1, we expect billings of 62 to 63 million GAAP revenue of 77.5 to $78 5 million and non-GAAP net loss per share of 18, 22 cents, assuming $39 7 million weighted average shares outstanding.
Todd Crane: Our Q1 billings guidance reflects the impact of approximately $5 million of renewals that have shifted out of Q1, two other quarters in FY 'twenty six as a result of consumption conversions that occurred in FY 'twenty five.
Todd Crane: As our full year billings guidance indicates this is just a matter of timing.
Todd Crane: For Q2, we expect low single digits billings growth and from there we expect a steady acceleration in billings growth for the remainder of the year.
Todd Crane: In conclusion, I am very pleased with the progress that we have made at building inefficient growth engine and based on the actions we have taken over the past year I believe we are well positioned to improve both our growth and our profitability in FY 'twenty six with that we will open the call for questions operator.
Speaker Change: Thank you if he would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if he would like to remove your question from the queue.
Speaker Change: And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: One moment, while we poll for questions.
Speaker Change: Our first question is fantastic Walraven sway that citizens JMP. Please proceed.
Speaker Change: Oh, great. Thank you congratulations on the quarter.
Speaker Change: Hey, Josh can you comment a little bit about what youre seeing in the macro.
Speaker Change: All of the.
Speaker Change: Sort of rapid movement coming out of Washington D. C is having any impact on your customers and their willingness to pull the trigger.
Speaker Change: So the last couple of years, which is.
Speaker Change: You know people aren't doing anything that's not.
Speaker Change: Well organized there hasn't been thought about for a long time as lots of authorizations.
Speaker Change: Theres no theres no superfluous activities going on right now so.
Speaker Change: That said you know when they are making a purchase decision about us is something that's that's pretty well backed with the different metrics on their side and so yeah. It feels very similar to how it's been R. J do you want to add anything to that.
R. J.: Yeah, I agree I think you know.
R. J.: We've definitely seen in the last couple of years, but I don't think we've seen anything in the recent term yet but rob.
Always looking out for it.
R. J.: Okay.
Speaker Change: Todd if I could ask Judy I would love to understand a little bit better this dynamic between renewals and consumption.
Speaker Change: $5 million you were talking about and then secondly, if you could just talk about where you are sort of cash debt.
Speaker Change: How you feel about the balance sheet and addressing our balance sheet.
Speaker Change: Really helpful.
Speaker Change: Yeah. Thanks, Thanks, Pat I appreciate the questions.
Speaker Change: So first on the shift.
Speaker Change: As we worked through consumption conversions over the past year.
Speaker Change: A lot of times, when we have that conversation with the customer we'll reset their renewal date. So normally they might have renewed in Q1, we have a conversation in the middle of their contract that could be in Q2 to your Q4 and when they decided to make that conversion will actually reset that renewal date into a new quarter. So just we had more of a shift in renewal timing last year than we normally do and the net impact.
Speaker Change: That was a 5 million dollar shift out of Q1 into the other quarters.
Speaker Change: On the on the other question.
Speaker Change: Regarding the other question was bad.
Speaker Change: Oh just modality.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Yeah on balance sheet cash so I mean, very happy with the free cash flow result in Q4 6 million was actually the highest cash free cash flow result, we've had in our company's history.
Speaker Change: So happy to see that cash balance go up from about 40 million to 45 million plus during the quarter.
Speaker Change: We have debt of about $120 million.
That's when we got four plus years to kind of.
Speaker Change: Deal with that so right now the focus is on getting.
Speaker Change: Getting back to growth and at the same time generating cash and continuing to bolster that cash balance.
Speaker Change: Great. Thank you all.
Speaker Change: Thanks Pat.
Speaker Change: As a reminder, it is star one on your telephone keypad, if he would like to ask a question. Our next question is from Derek Glynn with TD Securities. Please proceed.
Jared: Alright. This is Jared undrawn on for Derik one.
Speaker Change: Was wondering if you can talk to the partnerships, who have snowflake and data bricks, maybe comment on how deal activity of them has been tracking relative to your expectations.
Speaker Change: Yes, so we definitely made a big deal.
Speaker Change: Internally and externally this last year about we were going to.
Speaker Change: Almost re architect our company to be focused on the ecosystem first from a product standpoint, and from a customer experience standpoint, and then secondly from a go to market standpoint.
Speaker Change: And we felt like we made tremendous progress there we made a big goal out of it and I think we were very successful at the activity that we had around it.
Speaker Change: The last quarter I think we said this this quarter, we were hoping to.
Speaker Change: She is see some data and be able to start to understand how it's going to affect our numbers and our growth trajectory and there's a few pieces of data that we saw that are really that's really encouraging.
Speaker Change: First of all when we generate a lead historically.
Speaker Change: If you look at the conversion rate of that compared to a lead that we generate from our ecosystem our ecosystem converts.
Speaker Change: At about a five X increase in conversion rates.
Speaker Change: So you know one lead from the ecosystem is worth five leads that we generated independently.
Speaker Change: Secondly, if you look at once that lead becomes.
Speaker Change: Our stage three lead for US, which is basically you know where it is in the pipe and the the sales reps or are responsible for closing it.
Speaker Change: We have a two to three X increase in close rates from the ecosystem than we do from regularly generated leads so we're starting to see a lot of really positive activity across not just the cdw's, but our entire ecosystem and there's dozens and dozens of partners that we added last year.
Speaker Change: Some are cdw's, some or the size of the Cdw's and many of them are also.
Speaker Change: Partners that we that have come through domo everywhere.
And it's certainly exciting to see the massive difference and in conversion rates and so now it's all about building that pipeline and we started just last quarter its kind of add at a meaningful rate.
Speaker Change: And I think as we look to Q3 and Q4, hoping to see some meaningful acceleration in actual deals that are closed in and hopefully that'll affect billings in a way that we're not guiding to we think that through.
Speaker Change: Through the end of this quarter and through next quarter, we're hoping to get some good news that will allow us to be able to raise guidance for the Q3 and Q4 numbers based on what we're seeing in the partner network.
Speaker Change: But.
Speaker Change: That's been a really exciting to see and I think from yes. So there's the the increase in close rates and there was another piece that we were going to mentioned do you remember.
Speaker Change: Yeah, one thing to keep in mind, while it may not have had a huge impact on our overall billings number it is a meaningful percentage of our no. That's right yeah, and there was little piece, but just so.
Speaker Change: Even this year.
Speaker Change: It should have a material impact on the percentage of revenue.
Speaker Change: That's derived from new logos the percentage of billings is derived from new logos.
Speaker Change: We think that our channel our ecosystem is going to make up a very meaningful portion of that I don't know if it'll be a majority, but it'll be a very substantial portion of that and the thing that's exciting about that that's within this fiscal year.
Speaker Change: If that happens within this fiscal year, then it's going to give us a ton of confidence about substantial acceleration of the year. After that so lots of great science lots of great signals not enough for Todd and I to be able to say hey, we're running a public company, let's increase guidance for it yet.
Speaker Change: But we're hoping through Q1 and Q2, we start getting enough meaningful information there and as those if those close rates are those massive differences in close rates hold true and we think they will because we've got a substantial enough sample size already that that we believe that's accurate, but assuming that's the case and assuming that pipe fills with the activities that we already have going on.
Speaker Change: We just need to continue to do the same thing that we're doing that hopefully by the end of Q2, we're able to talk about guidance Q3, Q4, that's going to be impacted.
Speaker Change: By this by this channel so lots of great progress there.
Speaker Change: Thank you I appreciate all the Colorado and then last one for me obviously, you've done a lot of work on go to market motion, so far but heading into the next year do you plan on making any additional tweaks and then maybe just comment on sales hiring expectations as well. Thank you.
Speaker Change: Any additional tweaks to market.
Speaker Change: The channel and the childhood market is that we were talking about just just go to market more broadly.
Speaker Change: I think you know we will just continue to do more of the same we've been shifting more and more to the ecosystem. So as we as we get a good leading indicators.
Speaker Change: From from that investment and we will continue to shift more and more dollars there.
Speaker Change: You know the type of profile of people that we're hiring finding people that have experience with the ecosystem or in any of those cdw's.
Speaker Change: We will definitely continue to look to hire that type of a profile and then you'll know there's difference change that I would talk about is just our focus on adoption as you move over to consumption oriented company.
Speaker Change: Youre not selling.
Speaker Change: Youre not selling ideas.
Speaker Change: And and aspirational use cases that you hope a customer can sign up to you actually just go in and helping the customer use the product and find satisfaction and find ROI and as they do that their consumption increases. So it's a different motion at a more satisfying motion the customers like it you're it's easier to walk into a customer and say hey.
Speaker Change: We just want to show you how to use the product better.
Speaker Change: And they're excited to do that because it doesn't come with a big upfront costs that can incrementally try it if they get a return than they do more of it but that requires a different type of skill set as well. So we will continue to shift more and more technically technical in terms of the profile of people that we have the organization.
Speaker Change: Our next question is from E Fluidly with Cantor Fitzgerald. Please proceed.
Speaker Change: Thank you for taking my questions and congrats on the shelf finish to fiscal 'twenty five good afternoon, Josh and Todd. So a couple for Josh and then a couple of thoughts hottest well so sticking with our partner ecosystem update as this is a big part of that you said was wonder if you could give us more.
Speaker Change: Update on the celebrations on the tragic shifting consumption to the partnership model, where we have the CDW partners. The Isd partners Hyperscale us and now like two day, Josh you talked about is can you give a little bit more color on how this channel is now I think the ESI and perhaps speak a little bit more about that five year seven.
Speaker Change: Youre talking about is it like a wawa voucher.
Speaker Change: Okay.
Speaker Change: Yeah, great. Thank you.
Speaker Change: You know definitely nuances to all the different types of partners and RJ feel free to jump in if you want any color, but different types of of nuances with each partner.
Todd Crane: CDW uses in that.
Speaker Change: We're seeing the majority of activity from.
Speaker Change: From the Cdw's, but it's it's not necessarily the CDW is the cdw's plus the si's.
Speaker Change: And in many cases, it's just the Si.
Speaker Change: That's facilitating that relationship and with the size, especially in that CDW world like if you go look at the top if you go look at those top Cdw's net and look at their top five size. We have a really we have relationships with the majority of those.
Speaker Change: And with the best S eyes, and you know I think it's fair to say many of them are fawning over us and they're saying things like we used to go to market with.
Four or five different vendors every time, we got involved but it's so much easier to work just with you guys or we didn't evaluation.
Speaker Change: Of all the vendors in this space and one S. I said, we evaluated you enlisted you at the top end said there was a giant gap and then there was everybody else. So we're getting really positive feedback from the size and that's been very encouraging as well and we're just starting to scratch the surface on how.
That's going to impact our business, but again, nothing but really positive feedback there and then from the domo everywhere type customers.
Speaker Change: We've been we've closed some great deals we have some great customers already I think we've been awakened a little bit this last quarter or two the opportunity. That's there and also to a few of the blockers that may have existed in our product and so being able to focus on that a little bit more we had a couple of customers really highlight for us a few areas where.
Speaker Change: If we improved it could it can really move the dial and since we now have this partner motion, we're able to go and really help those customers a mine there their customer bases and help them generate revenue. So it really is a win win because where we're making it faster and quicker for them to be able to go to market.
Speaker Change: Their customers happier because they providing them data and it's in line with the other information that and the other software that they're selling to them and then we're helping them improve and increase the revenue by selling this this analytics add on.
So theyre able to offset the costs they were paying for domo in the first place and in some cases make substantial revenue and profit margin out of it and then at the same China out the backend comes good deals for us in some cases multimillion dollar deals. So it's a it's a really good business for us well for us as well and definitely continue to be excited by the ecosystem.
Speaker Change: Nothing but positive signs right now from every portion of the ecosystem.
Speaker Change: Josh and talk about can you talk about the data brakes like.
Speaker Change: I imagine like for this quarter, you added data <unk> right.
Speaker Change: So I understand you're probably working with.
Speaker Change: <unk> like data break so like how does that add to the mix.
Speaker Change: In terms of like adding legs.
Speaker Change: Very good.
Speaker Change: CDW and mix.
Speaker Change: Yes, so it's been.
Speaker Change: Certainly we didn't bring everybody on at the same time and if you look at all the Cdw's, we have more momentum with some of them than we do with the others.
Speaker Change: But theres five five cdw's that we have pretty substantial relationships with.
Speaker Change: You know, where we've kind of been through the executive process, we have executive relationships, we have there.
Speaker Change: They've kicked the tires, we've done the due diligence they've done the due diligence we've gone to some joint customers together, we've talked about joint products together, we've developed to their technical specs.
Speaker Change: To make sure all the API is that our products work well within the framework that they want their customers to have an experienced and and so now it's <unk>. It's.
Speaker Change: We cant put all over all of our efforts to all of them at the same time, so like I've mentioned before the ones that are leading into us as where we're leaning back first I think the challenge right now is theyre all leaning in towards us.
Speaker Change: Lot more intensely than we have the resources to lean back.
Speaker Change: But yeah.
Speaker Change: Yes data bricks is definitely a CDW that's coming on quite quickly and we're having a lot of great experiences with them and with their size and.
Speaker Change: Then we've got several others some before and some after you know amongst that list of Google and Oracle and IBM.
Speaker Change: And I'll, let I'll, let art, you talked a little bit more about some.
Speaker Change: Some of the other activities, we're having with some of these newer newer cdw's or working with.
Speaker Change: Yeah, one of the things I'm excited about as you know ultimately, we're removing friction out of the sales cycle.
Speaker Change: And that for that friction that we're removing is was unintentional in the first place we were never trying to compete.
Speaker Change: But removing the friction is really good for domo. It's good for customers. It's good for the CDW used for S size, because it gives customers choice. It allows us to partner and let the Cdw's do what they do well and different cdw's have different strengths and this allows customers to purchase their data foundation and allows us to have a symbiotic relationship.
Speaker Change: Chip, where our goals are aligned we want customers to get value out of their data and domo is really good at helping to hydrate. These clouds at providing E. T. L capabilities to these clouds, providing a way to disseminate that information out AI agents.
Speaker Change: You've got a whole AI strategy that that all these clouds are really excited about because it leverages all the cool things, they're doing with L. L M as an and.
Speaker Change: And.
Speaker Change: And all of the infrastructure that they have in place and allows us to be the vehicle that gets it out to everybody. So I'm really excited about thanks for that.
Speaker Change: Yep.
Speaker Change: Excellent. Okay can I ask just squeezing one more justify as tight on the financial question. We've seen IBM acquisition of data stack I know, it's a different area within data cloud and Snowflake I cannot.
Speaker Change: Colorful Amiga what has this in and keep the conversation in terms of M&A in this space.
Speaker Change: Just a brief take on it Josh look like all the financial questions.
Speaker Change: Yes, I think that's one of the things that we said we were open to of course and we.
Speaker Change: We said in order to maximize the value that does exist here of Domo, we need relationships with multiple cdw's, we need to show the value that we can provide to the ecosystem as Archie mentioned, we werent, we werent trying specifically to to cut ourselves out of those relationships and those conversations but there was a perception that we were competitive with that risk.
Speaker Change: CDW out there.
Speaker Change: And <unk>.
Speaker Change: Fixing that has I think really opened the eyes of all of the Cdw's. We had one CDW just recently say.
Speaker Change: We.
Speaker Change: We have our number one competitor in the CDW space, we've always struggled competing with them because they're he's abuses is is a more substantial than our ease of use but us plus domo, we feel like we feel like that neutralize it neutralizes the ease of use instantly and then the customer gets more of the.
Speaker Change: Did that we offer so we're start and this is the CDW telling us. This so we're starting to see.
Speaker Change: Them really recognize there's no other company like ours were independent or not owned by any of their competitors and we're not just one piece of six where all of them and the integration actually helps oh and by the way if you want to build an AI product. If you want to build in some kind of agentic.
Speaker Change: Functionality on top of that you're going to want that enterprise class youre going to want it had it governed youre going to want to have a secure youre not going to want to have it passed between five or six different vendors and here. We are just sitting here, we just really needed to fix this piece to unlock it and it's going to take us through the end of the year before all the technology is working as smoothly as we want it.
Speaker Change: You for all of these cdw's, but I actually think we have a really good path for a long time as an independent provider. So all of these folks because they don't they don't feel threatened by us and if along the way all of a sudden there's consolidation for our space and we think we're going to be in a prime position with multiple parties at the table because they're recognizing the value we're providing to their customers.
Speaker Change: Got it thanks for that Josh it's hard it's one let's even one quick one on the financial side I understand the guidance and I appreciate that the first half. It sounds like you guys are going to build a pipe for better quote unquote quarter display to perhaps maybe like adjusted guidance later.
Speaker Change: But the good thing is you know you're going to guide free cash flow positive for the entire fiscal 'twenty six.
What are some of the things that tie you could see that could potentially give you more confidence.
Speaker Change: Two guy higher as we go along the year.
Speaker Change: Yeah, there's a couple of things there as.
Speaker Change: As we've talked about the leads continue to come in steadily on the partner front, which we're really really glad to see the conversion rates are multiples higher for partner deals than they are for non partner deals. The piece of it that we're still waiting to get a little more predictive predictability and consistency on as the volume of those leads so once we have like we have a good beat on that volume.
Speaker Change: I think that's going to give us the confidence we need to bump up that guidance for the back half.
Speaker Change: Got it thanks for that Todd and thank you very much Josh Tetrick later, thanks, Yes. Thank you see you soon.
Speaker Change: Thank you with no further questions. This will conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Okay.
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Speaker Change: Okay.
Speaker Change: [music].