Data visualization and business intelligence company Domo (NASDAQ:DOMO) reported Q1 CY2025 results exceeding the market’s revenue expectations, but sales were flat year on year at $80.11 million. Guidance for next quarter’s revenue was better than expected at $78 million at the midpoint, 0.7% above analysts’ estimates. Its non-GAAP loss of $0.09 per share was 53.6% above analysts’ consensus estimates.
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Domo (DOMO) Q1 CY2025 Highlights:
- Revenue: $80.11 million vs analyst estimates of $77.68 million (flat year on year, 3.1% beat)
- Adjusted EPS: -$0.09 vs analyst estimates of -$0.19 (53.6% beat)
- Adjusted Operating Income: $1.03 million vs analyst estimates of -$2.68 million (1.3% margin, significant beat)
- The company slightly lifted its revenue guidance for the full year to $316 million at the midpoint from $314 million
- Management lowered its full-year Adjusted EPS guidance to $0.22 at the midpoint, a 35.3% decrease
- Operating Margin: -17.9%, up from -26.8% in the same quarter last year
- Free Cash Flow Margin: 1.3%, down from 7.6% in the previous quarter
- Billings: $63.9 million at quarter end, down 2.4% year on year
- Market Capitalization: $343.7 million
“Our Q1 momentum is proof positive that our strategy is fueling powerful, innovative solutions for our customers,” said Josh James, founder and CEO, Domo.
Company Overview
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.
Sales Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Regrettably, Domo’s sales grew at a weak 5.2% compounded annual growth rate over the last three years. This was below our standard for the software sector and is a tough starting point for our analysis.
This quarter, Domo’s $80.11 million of revenue was flat year on year but beat Wall Street’s estimates by 3.1%. Company management is currently guiding for flat sales next quarter.
Looking further ahead, sell-side analysts expect revenue to decline by 1.2% over the next 12 months, a deceleration versus the last three years. This projection doesn't excite us and suggests its products and services will face some demand challenges.
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Billings
Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.
Domo’s billings came in at $63.9 million in Q1, and it averaged 2.4% year-on-year declines over the last four quarters. This performance mirrored its total sales and shows the company faced challenges in acquiring and retaining customers. It also suggests there may be increasing competition or market saturation. 
Customer Acquisition Efficiency
The customer acquisition cost (CAC) payback period represents the months required to recover the cost of acquiring a new customer. Essentially, it’s the break-even point for sales and marketing investments. A shorter CAC payback period is ideal, as it implies better returns on investment and business scalability.
Domo’s recent customer acquisition efforts haven’t yielded returns as its CAC payback period was negative this quarter, meaning its incremental sales and marketing investments outpaced its revenue. The company’s inefficiency indicates it operates in a highly competitive environment where there is little differentiation between Domo’s products and its peers.
Key Takeaways from Domo’s Q1 Results
Revenue and adjusted EPS in the quarter beat, which is always a good start. We were also impressed by Domo’s optimistic EPS guidance for next quarter, which blew past analysts’ expectations. We were also glad its full-year EPS guidance trumped Wall Street’s estimates. Zooming out, we think this quarter featured some important positives. The stock traded up 7% to $9.15 immediately following the results.
Indeed, Domo had a rock-solid quarterly earnings result, but is this stock a good investment here? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.