Categories Earnings, Technology

Domo stock on a free fall as Q2 earnings and outlook fails to impress

Domo (NASDAQ: DOMO) stock plunged above 30% as the second quarter earnings and outlook fell short of estimates. The cloud platform’s shares have tumbled 49% since March after the company touched a new 52-week high of $47 mark. The firm’s stock has been volatile since it went public last June.

Muted Outlook

Looking ahead into the third quarter, Domo expects sales of $41.5-42.5 million and non-GAAP loss of $1.00-1.04 per share. However, the headline numbers failed to beat estimates. The street is anticipating sales of $44.2 million and adjusted loss of 90 cents per share.

The fiscal year guidance provided by the company also fell short of analysts’ expectations. Domo’s revised revenue for the full-year period stands at $168-169 million and adjusted loss to be in the range of $4.00-4.10 per share.

However, the street is expecting revenue of $173.5 million and non-GAAP loss of $3.82 per share. Last quarter, Domo guided sales to be between $173-174 million and adjusted loss per share to be $3.79-3.87.

Earnings preview: Resources expend to hurt Domo in Q2
Photo Courtesy: Domo / Facebook post

Q2 Performance

Revenue rose 22% to $41.7 million over last year, but still down 10% compared to the 32% growth rate reported in the Q2 2019 period. Subscription revenue contributed 84% to the top line, consistent with the last quarter.

The cloud platform continued its cost control measure into the second quarter. Operating expenses contracted 14% on a GAAP basis and was down 7% on an adjusted basis.

Rising Competition

Billings is one of the key metrics tracked by the street. The company reported 9% growth in billings, which is disappointing for investors. It’s worth noting that in the last four quarters Domo’s billings growth rate has been above 25%. The single-digit growth rate raises concerns about the ability of the firm to tackle competition and add more clients to its platform.

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The competitive landscape for Domo has changed in 2019 with the recent acquisition of its peers by tech giants. In June 2019, Salesforce (CRM) acquired Tableau (NYSE: DATA) and Google purchased Looker for $2.6 billion to beef up their analytics offerings. With nimble rivals to compete against, it would be a tough task for Domo to retain existing customers and add new clients to its platform.

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