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Is Domo Exploring a Platform Strategy?

Posted on Friday, Mar 15th 2019

According to a TechNavio report published last year, the global business intelligence market is expected to grow 8% over the next few years driven by the need for businesses to improve their efficiency. The Americas account for the biggest share of the market with 44% share, followed by EMEA and APAC. Utah-based Domo (NASDAQ: DOMO) is a leading cloud-based provider of BI tools. Earlier this week it reported its fiscal fourth quarter results that surpassed all market expectations.

Domo’s Financials

Domo’s revenues for the quarter grew 31% over the year to $39.4 million with subscription services accounting for 81% of the total revenue. The quarter’s billings grew 26% over the year to $57.2 million. It ended the quarter with a net loss of $29.9 million and an adjusted net loss of $0.94 per share. The market was looking for revenues of $37.8 million with a net loss of $1.24 per share.

By segment, Domo’s subscription revenues grew 30% over the year to $31.93 million. Professional services revenue grew 38% over the year to $7.48 million.

It ended the year with revenues growing 31% over the year to $142.5 million and a net loss of $154.3 million. On an adjusted basis, it reported a net loss of $8.31 per share.

For the current quarter, Domo forecast revenues of $40-$41 million with a net loss of $1.30-$1.26 per share. It expects to end the year with revenues of $173-$174 million and a net loss of $4.07-$3.99 a share. The market was looking for revenues of $39.2 million for the quarter with a net loss of $1.40 and revenues of $170.1 million for the year with a net loss of $4.27 a share.

Domo’s Product Upgrades

During the recent quarter, Domo announced its new Domo Integration Cloud, a new iPaaS solution that will simplify and securely manage the implementation and management of an organization’s data ecosystem. The Integration Cloud leverages Domo’s back-end data integration and management features and offers them as a unified iPaaS offering. It is a unified solution that brings together data from across an organization into a securely managed platform, while comprehensively addressing data integration, access, and governance.

Domo currently offers more than 600 plug-and-play cloud connectors. The Integration Cloud will enable secure integration and bi-directional data exchange, live cache, and data transformation in cloud, on-premises or hybrid environments through federated queries. It will allow access to its other offerings including the Integration Studio and its Open Database Connectivity Driver. Additionally, it will also offer an API manager and a third-party developer kit to build custom data connectors.

Domo is also releasing industry-focused solutions. Recently, it announced the release of a Media Suite that is focused on solutions for media buyers and publishers. The Media Suite leverages the Domo platform to better manage systems and data needed to build and sustain audiences. It consists of three key apps – the Programmatic Revenue App, Programmatic Buying App, and a campaign wrap-up report that simplifies campaign performance reporting. Domo has already released a Retail-focused suite and is working on releasing several such industry-focused apps in the coming quarters.

Till June last year, Domo was privately held. It had raised $690 million from investors including Andreessen Horowitz, Benchmark, Ben Horowitz, Bezos Expeditions, BlackRock, BYU Cougar Capital, Capital Group, Credit Suisse, Dan Rose, David Lee, Dragoneer Investment Group, Fidelity Investments, Founders Fund, Frank Wilder, GGV Capital, Glynn Capital Management, Greylock Partners, Hiroshi Mikitani, HWVP, Hummer Winblad Venture Partners, IVP, Jeff Bezos, Jeff Kearl, John Pestana, Lars Dalgaard, Marc Benioff, Mark Gorenberg, Mercato Partners, Meritech Capital Partners, Morgan Stanley, Paul Sagan, Pelion Venture Partners, Ronald Conway, Salesforce Ventures, SharesPost Investment Management, SV Angel, TPG Growth, Transmedia Capital, T. Rowe Price, Viking Venture Management, WPP, and Zetta Venture Partners. Its last private round of funding was held in April 2017 when it raised $100 million at a valuation of $2.3 billion.

However, its valuation was slashed to a more realistic $550 million in its IPO filing. Domo was widely criticized following its initial filing which showed cases of self dealing with companies affiliated with Founder CEO James, including an aircraft leasing company, a local restaurant, and an interior design company.

Last year, Domo raised $193 million from its listing at a valuation of $511 million. Currently, its stock is trading at $37.79 with a market capitalization of $995.3 million. It touched a 52-week high of $36.87 earlier last month. The stock had fallen to a 52-week low of $13.28 in November last year. Domo still doesn’t have a path towards profitability.

In addition, Domo also needs to look at inorganic growth and its iPaaS strategy could be an interesting beginning. In my recent article SaaS Companies NEED PaaS Strategy, I have articulated why it is easier for SaaS companies to acquire related smaller players if they have a smooth integration path, and a path to reconciling technology stacks. I would like to learn what is the thinking around PaaS in the Domo product roadmap.

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