Domo Inc (DOMO) Posts Marginal Revenue Growth in Q3 Fiscal 2024
Total revenue for Q3 FY24 increased by 1% year-over-year to $79.7 million.
Subscription revenue, representing 89% of total revenue, grew by 3% to $71.3 million.
GAAP net loss stood at $16.4 million, while non-GAAP net loss was minimal at $24.0 thousand.
Guidance for Q4 FY24 projects revenue between $79.0 million to $80.0 million and a non-GAAP net loss per share of $0.05 to $0.09.
On November 30, 2023, Domo Inc (NASDAQ:DOMO) released its 8-K filing, detailing the financial outcomes for the third quarter of fiscal year 2024. The company reported a modest year-over-year revenue increase, with total revenue reaching $79.7 million, up 1% from the previous year. Subscription revenue, a key component of Domo's business model, rose to $71.3 million, marking a 3% increase and accounting for the majority of the total revenue.
Financial Performance Overview
Domo Inc (NASDAQ:DOMO) demonstrated stability in its subscription gross margin, maintaining a GAAP subscription gross margin of 84% and a non-GAAP subscription gross margin of 85%, consistent with the third quarter of fiscal 2023. The company's GAAP operating margin saw a significant improvement, increasing by 9 percentage points year-over-year, while the non-GAAP operating margin rose by 5 percentage points.
The company's net loss on a GAAP basis was $16.4 million, translating to a net loss per share of $0.45. However, on a non-GAAP basis, the net loss was substantially lower at $24.0 thousand, or $0.00 per share, reflecting a more favorable view of the company's profitability when excluding certain expenses.
Balance Sheet and Cash Flow Highlights
As of October 31, 2023, Domo Inc (NASDAQ:DOMO) reported cash, cash equivalents, and restricted cash totaling $57.4 million. The net cash used in operating activities amounted to $4.3 million. The company's Remaining Performance Obligations (RPO) stood at $367.2 million, a 4% increase from the previous year, with $230.8 million expected to be recognized as revenue over the next 12 months.
Management Commentary and Business Outlook
Josh James, founder and CEO of Domo, expressed confidence in the company's strategic initiatives, stating,
In Q3, we exceeded guidance for key top-line metrics and delivered record operating margin. I am confident we are focused on the right initiatives--such as driving consumption and offering a true freemium model--to help accelerate our path to long-term, profitable growth."
He also highlighted the value customers derive from Domo's platform and commended the team's efforts.
Looking ahead, Domo Inc (NASDAQ:DOMO) provided guidance for the fourth fiscal quarter and full year fiscal 2024. The company anticipates Q4 revenue to be in the range of $79.0 million to $80.0 million, with a non-GAAP net loss per share between $0.05 and $0.09. For the full fiscal year, revenue is expected to grow by 2-4%, reaching between $317.8 million to $318.8 million, with a non-GAAP net loss per share of $0.24 to $0.28.
Investor Considerations
Value investors may find Domo Inc (NASDAQ:DOMO)'s focus on long-term profitability and the consistent performance in subscription revenue growth appealing. The company's efforts in product innovation and customer value were recognized with several industry awards, which could be indicative of its competitive positioning and potential for future growth.
While the net loss figures may raise concerns, the non-GAAP measures suggest that the company is managing its expenses and investments effectively. Potential investors should consider the company's strategic direction, market position, and financial health as outlined in the recent earnings report when evaluating Domo Inc (NASDAQ:DOMO) for their portfolios.
For a more detailed analysis of Domo Inc (NASDAQ:DOMO)'s financials and future outlook, interested readers can access the full earnings report and listen to the earnings call via the links provided in the 8-K filing.
Explore the complete 8-K earnings release (here) from Domo Inc for further details.
This article first appeared on GuruFocus.
