Domo (NASDAQ:DOMO) Reports Q1 In Line With Expectations But Stock Drops

Radek Strnad /
2024/05/23 4:26 pm EDT

Data visualization and business intelligence company Domo (NASDAQ:DOMO) reported results in line with analysts' expectations in Q1 CY2024, with revenue flat year on year at $80.1 million. On the other hand, next quarter's revenue guidance of $76.5 million was less impressive, coming in 3.9% below analysts' estimates. It made a non-GAAP loss of $0.33 per share, down from its loss of $0.17 per share in the same quarter last year.

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Domo (DOMO) Q1 CY2024 Highlights:

  • Revenue: $80.1 million vs analyst estimates of $79.5 million (small beat)
  • EPS (non-GAAP): -$0.33 vs analyst estimates of -$0.23
  • Revenue Guidance for Q2 CY2024 is $76.5 million at the midpoint, below analyst estimates of $79.64 million
  • Full year guidance, given in the previous earnings release, was pulled this quarter
  • Gross Margin (GAAP): 74.1%, down from 76.6% in the same quarter last year
  • Free Cash Flow was -$625,000, down from $2.93 million in the previous quarter
  • Market Capitalization: $279.4 million

“We’re hyper-focused on returning to growth, and feel optimistic about early signals from our strategic initiatives such as partner collaborations, consumption momentum and multi-use case customers,” said Josh James, founder and CEO, Domo.

Founded by Josh James after selling his former business Omniture to Adobe, Domo (NASDAQ:DOMO) provides business intelligence software that allows managers to access and visualize critical business metrics in real-time, using their smartphones.

Data Analytics

Organizations generate a lot of data that is stored in silos, often in incompatible formats, making it slow and costly to extract actionable insights, which in turn drives demand for modern cloud-based data analysis platforms that can efficiently analyze the siloed data.

Sales Growth

As you can see below, Domo's revenue growth has been unremarkable over the last three years, growing from $60.06 million in Q1 2022 to $80.1 million this quarter.

Domo Total Revenue

Domo's quarterly revenue was only up 0.8% year on year, which might disappoint some shareholders. On top of that, the company's revenue actually decreased by $81,000 in Q1 compared to the $509,000 increase in Q4 CY2023. Taking a closer look we can a similar revenue decline in the same quarter last year, which could suggest that the business has seasonal elements. Regardless, this situation is worth monitoring as management is guiding for a further revenue drop in the next quarter.

Next quarter, Domo is guiding for a 4% year-on-year revenue decline to $76.5 million, a further deceleration from the 5.5% year-on-year decrease it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 0.3% over the next 12 months before the earnings results announcement.

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Cash Is King

If you've followed StockStory for a while, you know that we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. Domo burned through $625,000 of cash in Q1 , increasing its cash burn by 12.7% year on year.

Domo Free Cash Flow

Domo has burned through $5.65 million of cash over the last 12 months, resulting in a negative 1.8% free cash flow margin. This low FCF margin stems from Domo's constant need to reinvest in its business to stay competitive.

Key Takeaways from Domo's Q1 Results

We struggled to find many strong positives in these results. Its revenue guidance for next quarter missed analysts' expectations and its billings missed Wall Street's estimates. Potentially more worrisome, the company did not reiterate or update its full year guidance, which it gave last quarter. This could mean that visibility into demand trends is murky or changing rapidly. Overall, this was a mediocre quarter for Domo. The company is down 12.5% on the results and currently trades at $6.25 per share.

Domo may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.