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Cloud Stocks: Domo Counts on Enterprise Revenue for Growth

Posted on Thursday, Jul 18th 2019

According to an IDC report published earlier this year, the global revenues for big data and business analytics (BDA) solutions are estimated to grow from $189.1 billion in 2019 to $274.3 billion by 2022 at a CAGR of 13%.
Cloud-based provider of BI tools Domo (NASDAQ: DOMO) is seeing strong growth in its revenue.

Domo’s Financials

Domo’s revenue for the quarter grew 28% over the year to $40.8 million, marginally ahead of the market’s forecast of $40.7 million. It ended the quarter with a non GAAP loss of $1.08 per share, better than the Street’s estimated loss of $1.28 per share.

Subscription revenue grew 29% to $34.4 million with billings growing 22% to $41.1 million. Professional services revenue grew 21% over the year to $6.4 million.

Among other metrics, 45% of its customers were on multi-year contracts at the end of first-quarter compared with 35% at the end of a year ago. Its enterprise customer base grew 19% to 458 enterprise customers and reported a 33% growth in revenue.

For the current quarter, Domo forecast revenue of $41-$42 million with a net loss of $0.98-$1.02 per share. It expects to end the year with revenue of $173-$174 million and a net loss of $3.79-$3.87 a share. The market was looking for revenue of $42.3 million for the quarter with a net loss of $1.

Domo’s Enterprise Focus

Domo continues to push the adoption of its services to enterprise customers. As part of this move, it piloted a new pricing model last quarter. The new model allows customers to derive more value from increased adoption by paying initially for the platform and incrementally for additional service levels and usage. It is designed so that per seat pricing doesn’t hamper a customers’ ability to implement Domo across their organization.

It has also revamped its enterprise apps. The enterprise apps now include a Retail Performance Suite focused on retail customers to help them compete more effectively through better store performance and inventory management analytics. It also released a new suite of IoT apps to help manufacturers create value from IoT data.

Domo has also announced a new IoT partnership with Zendesk. The Zendesk IoT app takes machine data and runs it through Domo’s learning and workflow engines and automatically initiates a Zendesk support ticket without any human involvement.

Earlier this year, Domo had announced the launch of the Domo Integration Cloud, an iPaaS solution that includes more than 1,000 pre-built connectors and query capabilities to connect to and leverage data. The Integration Cloud can connect to 17 separate AWS Services such as Redshift, RDS, Aurora, Athena, S3, and 19 Google services such as BigQuery, Google Analytics, AdSense, and Google Cloud Storage. It helps customers to quickly and securely bring together many disparate data sources to deliver business value.

Domo is making the right moves to drive growth to its platform, but a less than impressive outlook had the investors worried. The data analytics market is currently undergoing consolidation. Salesforce recently acquired Tableau for $15.7 billion and Google acquired Looker for $2.6 billion. I think Domo could also be a potential acquisition target for other tech giants looking to make it big in the cloud-based analytics space. For instance, SAP could benefit by adding Domo’s visual capabilities to its Business Intelligence Platform. Domo already offers several apps that are focused on SAP solutions and can pull data from SAP tools to help businesses make meaningful decisions.

Domo went public in June last year. It had raised $690 million from investors including Andreessen Horowitz, Benchmark, Bezos Expeditions, BlackRock, BYU Cougar Capital, Capital Group, Credit Suisse, Dan Rose, David Lee, Dragoneer Investment Group, Fidelity Investments, Founders Fund, GGV Capital, Glynn Capital Management, Greylock Partners, HWVP, Hummer Winblad Venture Partners, IVP, Mercato Partners, Meritech Capital Partners, Morgan Stanley, Pelion Venture Partners, 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.

Last June, Domo went public and raised $193 million at a valuation of $511 million. It is currently trading at $27.56 with a market capitalization of $756.8 million. It touched a 52-week high of $47.08 in April this year. The stock had fallen to a low of $13.28 in November last year.

This segment is a part in the series : Cloud Stocks

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