Domo (NASDAQ:DOMO) Beats Q4 Sales Targets But Stock Drops 13.3%
Data visualization and business intelligence company Domo (NASDAQ:DOMO) announced better-than-expected results in Q4 FY2024, with revenue flat year on year at $80.18 million. The company expects 2024 revenue to be around $319 million, missing analysts' estimates. It made a non-GAAP loss of $0.05 per share, down from its loss of $0.02 per share in the same quarter last year.
Is now the time to buy Domo? Find out by accessing our full research report, it's free.
Domo (DOMO) Q4 FY2024 Highlights:
Revenue: $80.18 million vs analyst estimates of $79.54 million (0.8% beat)
EPS (non-GAAP): -$0.05 vs analyst expectations of -$0.05
Revenue Guidance for Q1 2025 is $79.5 million at the midpoint, roughly in line with what analysts were expecting
Management's revenue guidance for the upcoming financial year 2025 is $319 million at the midpoint, missing analyst estimates by 1.5% and implying 0% growth (vs 3.4% in FY2024)
Free Cash Flow of $2.93 million is up from -$5.67 million in the previous quarter
Gross Margin (GAAP): 76.3%, down from 77.2% in the same quarter last year
Market Capitalization: $427 million
“The strategic investments we’re making this year will help customers capitalize on the new opportunities offered through artificial intelligence (AI) and data, making it easier and faster to scale Domo’s full suite of solutions across the entire organization,” 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 silo-ed data.
Sales Growth
As you can see below, Domo's revenue growth has been unremarkable over the last two years, growing from $69.99 million in Q4 FY2022 to $80.18 million this quarter.
Domo's quarterly revenue was only up 0.7% year on year, which might disappoint some shareholders. However, we can see that the company's revenue grew by $509,000 quarter on quarter, accelerating from $3,000 in Q3 2024.
Next quarter's guidance suggests that Domo is expecting revenue to grow 0.1% year on year to $79.5 million, slowing down from the 6.7% year-on-year increase it recorded in the same quarter last year. For the upcoming financial year, management expects revenue to be $319 million at the midpoint, growing 0% year on year compared to the 3.4% increase in FY2024.
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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's free cash flow came in at $2.93 million in Q4, turning positive over the last year.
Domo has burned through $5.75 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 Q4 Results
Domo's free cash flow came in positive but revenue barely grew in Q4 and full-year revenue guidance was below expectations and suggests a slowdown in demand. Overall, this was a weak quarter for Domo. The company is down 13.3% on the results and currently trades at $9.85 per share.
So should you invest in Domo 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.
