DOMO, INC.

Domo, Inc. – A Deep Dive into the 10-K Report and Investment Prospects

Domo, Inc. is a company that has carved out a niche in the burgeoning market for cloud-based business intelligence and data products platforms. As we examine its recent 10-K filing, it is clear that the company is at an interesting juncture—one where it is pushing hard on innovation and platform development while also contending with the challenges of sustained net losses and a competitive marketplace. In this post, we break down the key aspects of the filing, highlight the strengths and challenges, and provide our assessment of its investment potential.

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Company Overview

Domo’s core belief is that people and data are the most valuable assets for any organization in the cloud era. By offering a mobile-first platform that delivers real-time data access, analytics, and AI-powered insights, Domo aims to transform how companies operate and make decisions. The platform, designed to integrate with over 1,000 data connectors, serves customers across multiple functions including marketing, operations, HR, finance, and more. With a focus on delivering an all-in-one solution that bridges data warehousing, transformation, analysis, visualization, and even app development, Domo is positioning itself as much more than a traditional BI tool.

Business Model and Revenue Streams

The company has diversified its revenue streams into two main categories:

1. Subscription Revenue: This revenue stems from contracts that either follow a traditional subscription model or a newer consumption-based pricing structure. In the consumption-based model, customers commit to an annual usage volume, which is recognized ratably over the term of the contract. This approach is intended to lower barriers to adoption and help the company better align its pricing with the value delivered.
2. Professional Services and Other Revenue: This includes fees for implementation, training, and ongoing support services. While these revenues complement the subscription business, they tend to be more volatile and are largely dependent on the scope and timing of specific projects.

Revenue recognition remains a crucial accounting policy for the company, especially as many customer contracts contain multiple performance obligations that must be separated and allocated a transaction price based on standalone selling prices.

Financial Snapshot and Performance Metrics

One of the most critical elements in the report is the company’s financial performance over the last three fiscal years:

• Revenue Trends: Total revenue was $308.6 million, $319.0 million, and $317.0 million for fiscal years 2023, 2024, and 2025, respectively. The slight decline in revenue in fiscal 2025, compared to the previous year’s level, signals that growth is essentially flat. Revenue is split between subscriptions (approximately 90%) and professional services (roughly 10%).
• Profitability: Domo has experienced significant net losses in recent years. Net losses were reported as $105.6 million in 2023, $75.6 million in 2024, and $81.9 million in 2025. The persistence of these losses is linked to heavy investments in R&D, sales and marketing, and general administrative functions aimed at fueling long-term growth.
• Gross Margin: Gross margins remain somewhat stable at around 74%-76%, which indicates that the cost control measures on the cost of revenue are reasonably effective. However, increasing costs, especially in web hosting related to the consumption-based model, are beginning to affect margin performance.
• Operating Expenses: While the company has managed to slightly control its operating expenses as a percentage of revenues in some areas (for example, sales and marketing expenses have decreased from 51% to 48% of revenue), other areas such as general and administrative costs have risen, exerting additional pressure on overall profitability.

Strategic Initiatives and Growth Prospects

Domo’s strategy revolves around three key pillars:

1. Accelerating Customer Acquisition and Expansion: With over 2,600 customers, the company is focused on not just adding new customers but also expanding its footprint within existing customer organizations. The multi-year contract trend is positive, with roughly 69% of customers under multi-year agreements as of January 31, 2025. However, the gross retention rate and net ARR retention rate have seen a decline, influenced in part by macroeconomic pressures and tighter renewal negotiations.
2. R&D and Continuous Innovation: The company has invested a staggering $920 million in product development over its history. This investment has allowed it to integrate multiple capabilities (data integration, BI, visualization, collaboration, advanced analytics, and AI) into one seamless platform. The R&D expense as a percentage of revenue is high (around 27%-31%), showing that Domo is willing to invest heavily in technology as it seeks to maintain a competitive edge.
3. Transition to a Consumption-Based Model: This shift is perhaps one of the boldest moves by Domo. The consumption-based pricing is intended to make its platform more accessible to a larger segment of the market, aligning cost more directly with usage. However, this approach brings with it challenges in projecting revenue and managing cost fluctuations. The new model’s impact is a key element that investors must watch closely in future filings.

Risk Factors

The 10-K filing details a wide array of risk factors that could adversely affect the company’s future performance. Some of the most salient risks include:

• Persistent Net Losses: Despite significant investments in growth, the company shows sustained net losses. Without a clear path to profitability, there is inherent risk for investors.
• Competitive Market: The market for business intelligence and cloud data platforms is highly competitive, with established players like Microsoft, Oracle, SAP, and emerging cloud-native competitors. The intense competition poses a risk to growth and can pressure pricing and margins.
• Sales Cycle and Customer Retention: Given that many enterprise contracts take time to develop and renew, fluctuations in the sales cycle can result in unpredictable revenue patterns. Moreover, challenges in customer upselling and retention, as reflected in declining retention metrics, are a concern.
• High Operating Expense Base: The continued high investments in sales and marketing, combined with R&D, have led to operating expenses that have not yet translated into proportional revenue growth.
• Regulatory and Cybersecurity Risks: The report outlines comprehensive risk factors related to data privacy, cybersecurity, and compliance with evolving global regulations (such as GDPR, CCPA, and others). Given that Domo processes significant amounts of sensitive customer data, any cybersecurity incident or regulatory noncompliance event could be costly both reputationally and financially.
• Macroeconomic Uncertainties: The broader economic landscape, including inflation, interest rate changes, and international political risks (e.g., geopolitical tensions, bank failures), could impact both Domo and its customer base. This macroeconomic headwind adds another layer of uncertainty to revenue projections.

Capital Resources and Financial Flexibility

The company reported a cash balance of $45.3 million as of January 31, 2025. In addition, Domo has a credit facility of approximately $125.3 million that is fully drawn. The available cash has been primarily used to fund operating activities and capital expenditures related to infrastructure, including cloud hosting and property/equipment. One noteworthy point is that while the company has previously financed operations through equity and convertible instruments, it continues to rely on external financing to cover the gap between cash inflows and outflows. This reliance on external financing could become a concern if operating losses persist or if economic conditions deteriorate further.

Looking Forward

At this juncture, Domo’s platform appears technically robust, and its migration towards a consumption-based pricing model could, in theory, unlock more scalable revenue streams. Moreover, its commitment to innovation and extensive R&D indicates that it is not standing still amid fierce competition. However, the persistent net losses, flat revenue growth, and the multifaceted risk environment give rise to caution. The company is in a transition phase, and while there are many positive indicators regarding technology and customer expansion, the balance sheet and recent operating results do not yet inspire confidence in near-term profitability.

Investment Perspective

Assigning an investment score on a scale of 1 to 10 (with 1 indicating no potential and 10 representing an opportunity with 100% return potential) involves weighing both the significant upsides and the substantial risks. On the upside, Domo has carved out a differentiated offering in a rapidly evolving industry by delivering a unified platform for real-time analytics, data integration, and AI-powered insights. Its mobile-first approach and integrated ecosystem offer competitive advantages that can spur growth if the market adopts its innovations and if the sales cycle shortens.

However, the other side of the coin is the company’s continued net losses and the challenges in executing a new pricing and sales strategy in the face of stiff competition, macroeconomic headwinds, and rising operating expenses. These factors make the investment outlook moderate at best. Given these considerations, we estimate an investment score of 5.0. This rating reflects moderate potential – investors might see growth if the transition to a consumption-based model beats expectations and customer retention improves, but the current balance sheet and performance metrics suggest caution until there is a clear turnaround path toward sustained profitability.

Conclusion

In summary, Domo, Inc. represents a forward-thinking player in the cloud-based business intelligence space with significant technological strengths and a bold strategy to shift toward consumption-based pricing. Nevertheless, its record of sustained net losses, a flat revenue trajectory, and an array of operational and market risks imply that the company is not yet an ideal investment for risk-averse investors seeking immediate returns. The moderate score of 5.0 illustrates its balanced profile: there are real opportunities to grow and eventually achieve profitability, but there remain enough uncertainties and execution risks to warrant a cautious approach.

Investors considering Domo should carefully monitor developments in its transition strategy, improvements in retention metrics, and the overall competitive landscape. As the company continues to refine its business model and hopefully turns the corner on profitability, the risk-reward profile may improve. For now, however, we advise a measured view of the investment potential, recognizing that while Domo has the tools and innovation at its disposal, the path through its financial challenges is still fraught with uncertainty.

Disclaimer: This blog post is for informational purposes only and should not be considered as investment advice. Investors should perform their own due diligence and consult with financial professionals before making any investment decisions.