Domo - Earnings Call - Q4 2021
March 11, 2021
Transcript
Speaker 0
Ladies and gentlemen, thank you for standing by, and welcome to the Domo's Fourth Quarter Fiscal Year twenty twenty one Earnings Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press 1 on your telephone. Please be advised that today's conference is being recorded.
If you require any further assistance, please press 0. And with that, I will hand the call over to Peter Lowry, Domo's vice president investor relation.
Speaker 1
Good afternoon, and welcome.
Speaker 2
On the call today, have Josh Gaines, our founder and CEO Bruce Stout, our CFO and Julie Quijo, our chief communications officer. Julie, please stop with our safe harbor statement and then on to the call. Julie?
Speaker 3
Thank you, Pete. Our press release was issued after market closed and is posted in the Investor Relations section of our website, where this call is also being webcast. Statements made on this call include forward looking statements related to our business under federal security laws, including statements about financial projections, the plans and expectations for our go to market strategy, our expectations for our sales and new business initiatives, the impact of COVID nineteen on our business and our financial position. These statements are subject to a variety of risks, uncertainties and assumptions. For a discussion of these risks and uncertainties, please refer to documents we filed with the SEC and in particular today's press release, our most recently filed annual report on Form 10 k, and our most recently filed quarterly report on Form 10 Q.
These documents contain and identify important risk factors and other information that may cause our actual results to differ materially from those contained in our forward looking statements. In addition, during today's call, we will discuss non GAAP financial measures, which we believe are useful as supplemental measures of Domo's performance. Other than revenue, unless otherwise stated, we will be discussing our results operations on a non GAAP basis. These non GAAP measures should be considered in addition to earnings press release for a reconciliation of our non GAAP financial measures to their most directly comparable GAAP measure. With that, let me hand
Speaker 2
it over to Josh. Over to you, Josh. Well, thank you, Julie, and hello, everyone. Thanks for joining us on the call today. I hope that everyone in their family is in good health.
I'm grateful for every member of our team who over the last twelve months found the dedication, creativity, and resolve to support our customers and our business. This whole team led was really an outstanding year. I'm optimistic about the macro recovery that's in front of our entire society as we all focus on getting back to normal. Now to Domo's performance, we really had a breakout quarter and year, and I am so proud of our team and really the decade of work from so many people. Q four capped a tremendous four quarters from Domo.
In q four, we posted 28% billings growth, 26% gross revenue growth, and 23% full revenue growth. So over the last four quarters, that's billings growth. It started at 13% in q one, grew to 20% in q three, and now and also, we set ourselves up to really execute well as we enter into this new fiscal year. Digital transformation initiatives remain a top IT spending priority in 2021. At the end of the year, we've seen that demand for modern BI accelerated, and it fits our value proposition, helping customers leverage their existing AI investments, to win at a massive scale in the cloud, and at an unbelievable speed.
In many cases, businesses want data faster than ever and are embracing transformation for all parts of their business from machines to end users. As an example, a cold chain equipment manufacturer needed to closely monitor sensors for temperature controlled refrigeration units housing COVID vaccines. This customer is connecting to IoT data, regulatory data to effectively manage safe vaccine, and these examples are becoming more and more normal. Just last week, a CIO customer proactively reached out to us to let us know how ecstatic they are with They're innovating this company with Domo to create a new service that is the insurance insurance industry's first true ad aggregated view of the entire insurance experience between the insurance consumer, insurance agency, and the insurance carrier, all seen, analyzed, and dynamically presented by Domo. To put some of this to numbers, Il is helping this company bring together a 143 cloud data connections across 17 different Salesforce orgs, creating over 7,000,000 rows of data representing over a $170,000,000 in insurance premium.
And as he said to us, this is only the beginning. We also introduced several new product capabilities to make it easier to put any data to work more effectively, and we've seen a market that is moving in our direction resulting in better recognition of Domo's unique value. And building on this point, as we've seen with much of the consolidation that's been taking place in our space, Domo was way out in front of building the future model for modern BI. We're now seeing this come to fruition as not only have we been copied by many others, but finally, the market's coming to us and recognizing that leadership in our vision. And finally, we've dramatically improved our analyst rankings.
So for instance, Domo moves into the challenger quadrant in the ever important 2021 Gartner Magic Quadrant for analytics and business intelligence platforms. Now this is due to the recognition of the quality of our products, particularly in the areas of data preparation and manageability, which gives line of business, IT, and data leaders more capability and confidence to put data to work at scale in record time across the entire business. This improved ranking in the Gartner Magic Quadrant will certainly have an impact on our business. Given our reputation for delivering easy to use solutions the appeal to line of business executives, we believe our full end to end capabilities should really be a tailwind to our sales efforts. On our go to market, we're finding that our message of delivering BI leverage at cloud scale in record time continues to resonate.
In addition, led by our sales leadership of Ian Tickel, Jeff Skowzen, and Jim Kowalski, but also led by many other sales leaders throughout Jeff's and Jim's US organizations and also led by our sales leaders in Europe and Asia, our sales rigor and our sales force productivity have significantly improved, resulting, of course, in better new business cadence throughout the year. I'm really proud that we achieved our strong top line performance while driving operating expenses down year over year. This has also put us in a much better position financially. We reached the adjusted operating cash flow positive milestone in q three. And in fact, we were free cash flow positive in q three and q four.
We also ended the year with more than $200,000,000 of ARR across more than 2,000 customers and more than $90,000,000 of cash in the bank. We've also made strong progress with our Domo Everywhere solution. Now this is our offering that helps customers extend the value of their data outside their organizations to their customers, partners, and suppliers. Domo Everywhere isn't just embedded analytics. It also allows a full Domo experience to our customers' customers, helping them deliver new data experiences and creating new revenue streams by monetizing data that they already have.
And we have a very strong pipeline of Domo Everywhere deals heading into fiscal year twenty two. Last year, in fact, we closed more than 200 deals with Delmo Everywhere, with over 10 of them north of a $100,000 and two of them that were 7 figure contracts.
Speaker 1
So now let me talk about some
Speaker 2
of the Q4 business highlights. Q4 was driven by continued strong customer count growth, significant new wins and continued expansion with existing customers. One highlight was a 7 figure upsell at a global health enterprise for company wide analytics to help improve the patient experience. We won this deal because we were able to solve their data integration issues and get the right data to the right people across the organization better and faster than any other solutions they looked at. Before Domo, this process of getting the right data together and making it actionable used to take them weeks every time they wanted to run the data.
And now with Domo, seconds. Another highlight was a 7 figure deal with a partner that is bringing next generation health products to market with Domo's intelligent apps. Additionally, in the public sector, we also signed a state expansion worth more than $500,000 and to provide analytics around vaccine distribution. I'm proud of the value we've delivered to state governments, which has also resulted in expansions outside of COVID use cases. We had significant new logo wins as well.
We won a new $500,000 plus ACV deal with a leading omnichannel retailer. Domo was chosen after a POC to support their CEO's goal of creating a more data driven and action oriented culture. Domo won because we demonstrated the record speed at which we could deliver self-service insights to decision makers across their entire company to support a more agile business. Additionally, we won a new logo deal with a Fortune 500 Restaurant Corporation. We won this deal based on our ability to merge online and offline sales data across dozens of point of sale systems from tens of thousands of franchises to deliver uniform analytics, visibility, and transparency across all of their brands, all of their geographies, and all of their segments.
We won this contract with the support of a c level executive's prior experience with Domo at one of the nation's largest media groups. Now let me talk about some of our plans for upcoming year. We've executed well over the last twelve months, and now that we're in a much better financial position, we are able to think about how to invest for growth. And let me tell you, I'm very excited to be able to finally start playing offense. We've been playing defense for the last few years, and now we get to really focus on playing offense.
We'll do it diligently. We'll do it responsibly, but it's a mindset shift, and we're very excited about it. We are looking to accelerate our long term sustainable growth, and the progress we've made across the board over the past year gives me confidence in the investments we're making. So let me share with you some of these investments. Hiring.
We've been hiring salespeople over the past several months and plan to increase our sales capacity to support at least 20% longer term growth just to start as we've been growing faster, and we have aspirations to grow much faster than that. We are also investing in sales enablement and customer success initiatives to drive customer satisfaction, of course, renewals, and new business. We've also made some key leadership hires we believe will help us accelerate some very important initiatives for us this year. First, Jita Shannon joins us from KPMG and Oracle to lead our partnership and ecosystem efforts. Also, Shelley Morrison has joined us to run our demand center, bringing her expertise in leading global demand programs for companies such as Adobe, Amazon, and SAP while she was at Accenture Interactive.
I'll close with some of our recent industry recognition and company progress as I think they speak to our relevance and our commitment to our mission of transforming the way business is managed like modern BI for all. As mentioned earlier, YoMo was named a challenger in the 2021 Gartner Magic Quadrant for Analytics and Business Intelligence Platforms. We feel this signals a strong product market fit for our solution and validates the investments we've made to deliver end to end BI capabilities that help companies accelerate their digital transformation initiatives. Thoma was also named a multiple category winner in the Tresner Advisory Services 2020 Technology Innovation Awards for being a top ranked solution in multiple market reports throughout the year. Dylan was also honored as the 2020 to 2021 best cloud business intelligence for analytics solution by the cloud awards.
And as you saw yesterday in our announcement with Snowflake, Frank and I announced the advancements in the Snowflake thermal partnership where we've achieved premier status in Snowflake's Partner Connect program. And on the product front, a native integration that allows Snowflake customers to better leverage their data that's in Snowflake. You'll hear more product news like this at Domeclusa later this month. On another front, we are very proud to be a strong corporate citizen in our community. Locally, we've led out on a number of DEI initiatives, and more globally, the parody pledge that I helped found with Catherine Stickney to achieve gender parity at the highest levels of leadership has now been taken by close to 500 companies that represent more than 1,000,000 employees on six continents.
And also, of everyone I've recruited to our board, a full 50% of them are women. This past year, in addition to the parity pledge for just the senior levels of leadership, we extended that parity pledge out to every position that we hire in the company. And then we created a second parity pledge for ethic diversity and are now interviewing a broader slate of diverse hires for every single position that we hire in Domo. So, of course, not by chance, with great effort and also with great pride, in the second half of the year, women and underrepresented minorities represented almost 40% of our new hires. So in closing, I'm thrilled with our q four and full year results.
I'm incredibly proud of the progress we've made across the board over the past year, and I'm thrilled to be playing offense. This is when things get fun, and I'm so excited about that. I feel great about how we're positioned heading into fiscal year twenty two, and I certainly look forward to updating you as we execute against our plan. We're hosting our annual user conference in Opelousa March 24. We'll be virtual again this year, and I look forward to sharing more about our vision of modern BI for all and exciting product news that we'll continue to deliver on this vision.
And with that, I will now turn the time over to the Bruce. Bruce?
Speaker 1
Thank you, Josh. We had a strong Q4, and I'm pleased with our execution throughout fiscal year 'twenty one. I'll review the detailed financial performance and then discuss first quarter and fiscal twenty twenty two full year guidance. Our Q4 billings of $82,800,000 a year over year increase of 28%, was driven by strong new customer count growth, up sales and expansion and high retention rates, With gross retention approaching 90%, and we continue to invest in retention as our long term target is 90% or better. Net retention remained above 100%.
At the same time, our billings terms strengthened even against the backdrop of pandemic driven challenges in some segments of our customer base. We had 62% of our customers under multiyear contracts at the end of Q4. Our remaining performance obligations, or RPO, grew 21% compared to the same quarter last year. Current RPO, or RPO expected to be recognized as revenue over the next twelve months, grew 23% year over year. Q4 total revenue was $56,800,000 a year over year increase of 23%.
Subscription revenue grew 26% year over year, 26 year over year and represented 88% of total revenue as we continue to increase costs on our recurring revenue. The quarter represented 24% of total revenue since Q3. Our subscription gross margin was 82%, up more than five percentage points from 77 in Q4 of last year and up over one percentage point two times quarter. We continue to be successful managing our data center costs even as volumes increased. In Q4, operating expenses decreased by 5% from last year, even though revenue increased by 23%, with an improvement in our operating margin of 33 percentage points from the same quarter last year.
Our net loss was $9,800,000 and our net loss per share was $0.32 This is based on 30,200,000.0 weighted average shares outstanding basic and diluted. In Q4, we reported cash flow from operations of $3,500,000 as no adjustment was necessary for an employee stock purchase plan, an improvement of $2,100,000 over last quarter. In fact, we generated $2,100,000 of free cash flow this quarter. This performance contributed to our cash balance increasing by $7,000,000 this quarter to approximately $91,000,000 Now to discuss what we expect in Q1 and the full year FY 'twenty two. For Q1, we're expecting billings of about $54,000,000 up 16% year over year.
Note that this guidance is against a tough compare as Q1 of last year included $6,000,000 of billings from three COVID related state deals we closed. For the current fiscal year, we expect billings growth of about 16% year over year. Now let me explain some of the thought process behind the 15% growth guidance. As mentioned in previous quarter, we have been building our sales capacity, and we are continuing to build our sales capacity going into fiscal year 'twenty two. The goal is to build enough capacity to support sustainable 20% -plus longer term growth.
We have aggressive short term hiring goals, and our experience has shown that hiring at these levels causes productivity of the onboarded reps to decline. We have modeled them a decline. So if we are able to maintain our productivity rate through the onboard process, we have upsized to the guidance. Similarly, we don't factor in a large contribution from higher onboard and ramp new reps. However, we have early hiring and onboarding success that could provide upside as well.
Partner systems is another area of focus on possible upside. As Josh mentioned, we have hired a new Head of Partnership. We had meaningful help on new business from partners in fiscal year 'twenty one, so we intend to put even more focus beyond this effort in fiscal year 'twenty two as we view this as a significant longer term growth driver. On expenses, we're planning for Q1 operating expenses increasing from Q4 levels, primarily as we invest in sales capacity, host our annual user conference and have higher payroll related expenses in Q1. For the year, we're also expecting operating expenses to increase, with the largest increase in sales and marketing as we invest in our growth initiatives.
We expect Q1 and full year adjusted net cash provided by operations to be slightly positive throughout the year. Now the formal guidance. For the first quarter fiscal 'twenty two, we expect GAAP revenue to be in the range of 56,500,000 to $57,500,000 We expect non GAAP net loss per share, basic and diluted, of $0.43 to $0.47 consisting of 31,100,000.0 weighted average shares outstanding, basic and diluted. For the full year of fiscal 'twenty two, we expect GAAP revenue to be in the range of $240,000,000 to $245,000,000 representing year over year growth of 14% to 17%. We expect non GAAP net loss per share, basic and diluted, of $1.53 to $1.63 This assumes 32,200,000.0 weighted average shares outstanding, basic and diluted.
In closing, we're pleased with our execution in Q4 and are optimistic about our financial position and growth opportunities ahead of us. With that, we'll open up the call for questions. Operator?
Speaker 0
Our first question comes from Sanjit Singh with Morgan Stanley. Your line is open.
Speaker 4
Thank you for taking the questions, and congrats to to the entire Tesla team. Pretty incredible year. So congrats on all the Thank you. My quest My question is just for for Bruce. I appreciate that the context around the guidance.
I wanted to introduce a couple of elements to help understand the guidance for next year. So one, the sort of impact from, like, the sort of COVID command center apps, like how much of a tough compare does that represent? Two, if you could comment on the renewal base next year. Is the renewal base larger going into next year versus last year on a year over year basis? And then the third element is your view on the spending environment.
What's the underlying assumption there? How does that look into Q4? And what's the assumption on the spending environment as we progress throughout the year?
Speaker 1
Sure. So on the COVID related one, specifically for the comment about Q1, we definitely have headwind in Q1 just because we had the $6,000,000 of invoicing, dollars 4,500,000.0 recurring, 6,000,000 in total. COVID That driven. That was the three state deals. So we fully expect those to be two, but we don't but we have to get $6,000,000 more to keep the growth rate going.
So that's a tough compare in Q1. On the renewal base and it really about the whole year, if think about it, because and we had some quite a bit of COVID specific deals throughout the year. The good news is we actually see some of that continuing. So that kind of mitigates full year kind of something there, we're able to help people roll out vaccines, for example. On the renewal base, I mean, the base is certainly higher this year.
I mean, it's the classic SaaS start with beginning ARR, add a new recurring factor in churn, and then you have your kind of ending renewal base. But yes, the renewal base is definitely much higher than last year because you're able to add to it the new recurring revenue that was generated this year or in our case, the new recurring or the new ARR, I guess, we'll call it. So that's true. And then on the semiifier, generally speaking, I mean, the difficulty is that we still see difficulty for some of our customers who are still in challenged industries that hasn't quite turned yet, brick and mortar retail, certainly transportation, hospitality, too far generally. We did, however, have some success with those customers because they just had to get to the data to understand the ramifications of COVID on their own business.
And because we can move so fast at scale and we can distribute it quickly and in the cloud, We were a preferred vendor. And, you know, people just kinda wait in line, the old fashioned way to say that they really have to cut through that. That's what that's what demo does. And and, obviously, we, you know, we believe, we read that new favorite thing as you, just the stimulus plus the activations. We think we'll bring optimism to the business community and very much look forward to what we hope is a much more robust environment next year.
We really factor that into our numbers, I would say. But I mean, everything declining that way. We certainly hope to play a customer.
Speaker 4
Great. No. I appreciate the thoughts there, Bruce. And then, Josh, can you maybe comment on like partnership starting with Snowflake? Thanks to Vincent.
You know, there was a press release for for anybody,
Speaker 0
and so that was very nice to see.
Speaker 4
And maybe talk about what you what the team is building with Snowflake. And then to what extent do you think that'll help you serve as an entry point to the with the you know, a pretty fast growing Snowflake customer base to help serve out some of their data to to their
Speaker 2
to those business users and then those customers? What what what's sort
Speaker 4
of the road map for Snowflake? And and if you wanna comment on the broader partner strategy, feel
Speaker 2
free to do so. Yeah. So this definitely was a a a breakout year for us in terms of partners this year. It's a, you know, it's a multiyear effort and, you know, trying to find the the right relationships and how we fit into the ecosystem most effectively with with the other players. It's not like it's been a really healthy relationship.
You know, we sat down with them early on. I sat down with Frank, and
Speaker 4
he basically laid out laid
Speaker 2
out a blueprint for things that we can do that would be differentiated in the marketplace. And we did some of those things at the very beginning, engaged with the sales organization, and and it's helped us with with our deals, especially where Snowflake is is already installed or where someone's making a Snowflake purchase. And then there were other things that they asked us to do that truly would be differentiated. And some of that relates to, you know, being able to take that data that's in Snowflake, but then also take our entire back end and have it run on Snowflake. And so it's all still in the cloud, but it's all in Snowflake.
Our entire back end can be Snowflake in Snowflake, and that's something that really helps the relationship that they have with their customers. It increases the speed, and it certainly increases the reliance that those customers have on both us and Snowflake in a world where CIOs are trying to figure out how to make sense of the partners that want to be their data platform. So it's been a healthy relationship, and I think Frank appreciated what we've done relative to the strategy that he laid out in that meeting. So we were certainly appreciative of him being on that press release and helping us go to market. And I think broadly speaking with partners, in fact, while we were on this call, and we prerecord with COVID now being able to be in the same room, we prerecorded our our prepared remarks.
And in those well, while those prepared remarks were being read, I got a text message from one of our partners who just had a big opportunity with the federal deal. And so having that breakout year that we had where we went from basically zero in partnerships to having about $1,000,000 or so in new deals between two partners this year. And hopefully, we'll see what that turns into next year, but we have these great relationships that have brought us new revenue and new logos and certainly want to improve on that this year.
Speaker 4
Our
Speaker 0
next question comes from Derrick Wood with Cowen. Your line is open.
Speaker 5
Thanks. Hats off to you guys for just an incredible transformative year and and exiting the year with 26% subscription growth. Pretty very impressive to see. Thank you. Thank you.
Yes. So Josh, I'll start with you. And so you've made this pivot to be more interoperable with the analytics ecosystem like what you're doing with Snowflake and cloud data warehousing. But I'm curious, like how to selling your whole platform, kind of giving companies a single vendor serving many analytic needs, and I think you mentioned some on the call. Where are you seeing demand for that?
Is that more in the commercial and international markets? Do you see enterprise opportunities as well? I mean, how do you balance the opportunities between the Capstone approach and the full platform approach?
Speaker 2
That's a great question. Thank you for asking that. It's something that I've mentioned in a few of the investor conferences, and I think it's really important that our investors understand. We have a full, you know, end to end full stack because our enterprise customers have asked us for it. Almost every feature that we have came from big enterprise customers asking for But you're right.
They don't come to us at the beginning saying, but we want a we want a full stack purchase. Let's work and replace 19 different things that we have here. It's not how the relationship works. And that's why I think it's important that and and then we keep on repeating the messaging and your BI leverage at cloud scale in record time. And that leverage, to your point, you know, if it's a small commercial company customer, yeah, it can be the full stack.
If it's a large enterprise customer, then basically what we can go to them and say is, we can evolve and
Speaker 1
grow with you. We can
Speaker 2
be your data platform. And we have many customers that will come back to us and be like, I thought I was just purchasing some visualization for some executives that need to get information to. And here we are a year later, and we have more data in Domo than we do in our own data warehouse more more than we do in our data lake. And, you know, that's when they see these when they see these this evolution with their organization and how they just trust us more and more, they really start to look beyond just that initial capstone or that initial contract. And that's why we're seeing more and more upsells.
And so, you know, we're gonna continue to go straight down the middle, straight up the middle. We'll we'll keep going there. We'll keep offering the full stack, but these these new local relationships where we'll go in with with one solution, we'll go in with a part of the stack. We're more than happy to do that. It's BI leverage.
Whatever you have, we can help make it faster. We can help give you a lot more data. We can get it in people's fingertips. We can turn it turn it mobile for all the data that you have in your organization. We can help you connect the things that you're not connected to right now because we have a thousand connectors.
So it's really something that we can get in there and get started in a variety of ways and then evolve with that customer over time.
Speaker 5
That's great. Maybe one for Bruce. It
Speaker 2
sounds like
Speaker 5
it was another strong quarter of customer generation. Last quarter, you called out 50% growth. Anything to call out this quarter in Q4? And then I know it may be early, but
Speaker 1
it's like when you look
Speaker 5
at the strength in new
Speaker 0
bit And
Speaker 5
just a you're thinking about that cohort market. And how meaningful they could be more in terms of expansion next year?
Speaker 1
Yes. In terms of the first part of the question, we this is just a strong, beautiful, positive logo year. I mean we added credible number or more and more to customers than I've seen. Well, certainly, since we've been public and and before them. So that was very promising.
And we like it because almost every customer, even small ones, almost have an endless it's almost an endless opportunity for us to provide solutions to them where they could just keep generating business for us.
Speaker 6
I mean the one thing I'll point
Speaker 1
out is we basically focus more on getting new customers and less on the dollars. So the average skill size went down, but I don't think that really is That's not a reflection of the opportunity you still would say. And then it goes down by much. So every one of these customers is usually well, now almost all of it, just by the way we sell our personal, is pretty much set up for an upsell on day one. And we've been tweaking our pricing.
We've been tweaking our messaging.
Speaker 2
Well, and Bruce, I would add that that's one of the things that we've seen with because we've been evolving these relationships with customers, we will have other very large companies in the ecosystem approach With this, you know, large company that we're both involved with, we should partner together and bring a joint solution and, you know, jointly try to be their data architecture of record that they can evolve it for the long for the long haul. And so you're not interesting in terms of, you know, you build these relationships out, you start getting brought in new customers that that weren't customers of yours before that and, you know, are able to increase
Speaker 4
your new logos. And then, it's kind of funny,
Speaker 2
but that's also how acquisition conversations certainly start. And we get overtures all the time, and I always welcome the overtures, and I'm always open to a conversation. But you're not going to get real strong acquisition premium unless you're building relationships with big companies because those things will just happen overnight with in places where there's no relationship, at least not if you want to get the right price for your shareholders. So I think that's a really important component of all these all these conversations as well as just making sure that people know you're you're open to building out your your ecosystem, your relationships because you never know what's gonna happen over the long haul. And, you know, I think that's been, I guess, starting to be recognized an important part of the ecosystem with some of these really big customers that we have because it shows you that the big companies are hearing our name, and they're being told if they want to be more successful with that customer, then they need to integrate well with us.
And so that's I think we're seeing a little bit of the power changing to our side as well, which is
Speaker 5
a great reward for us.
Speaker 1
Yes. Well, it sounds
Speaker 5
like you had a big breakthrough in market awareness this past year. So thanks for the color. Well done.
Speaker 1
Our
Speaker 0
next question comes from Pat Mulravens with GMP.
Speaker 2
Oh, great. Let me add my my congratulations. It's great how the billing step is tolerating. Alright, Josh. You opened the door,
Speaker 5
so I'm gonna step through it. Under what circumstances would this business be pulled?
Speaker 2
Oh, I I I I don't think it's nothing's changed in terms of you know, I've I've tried to say it many times, but it's just you know, anytime you get you get an an offer where someone's willing to pay you for your future efforts, then that's something that you have to evaluate and bring to your board and have conversations about what's the right thing for the shareholders. I didn't want to sell Omniture, but I got an offer that felt like it was the right thing for the shareholders, and it was the right value relative to the risk reward that we were presenting at that point in time. And I think the same thing here. Of course, I'd love to do this for a long time. It's fun.
But the most important thing to me is win, for sure, by far. Like, I do not really wanna play second place and
Speaker 1
be stuck there for a while.
Speaker 2
That sounds stupid. So, you know, we wanna keep on trying
Speaker 4
to win. Someone's willing to
Speaker 2
pay for those future out years, great. That's a real conversation to have.
Speaker 4
If it feels like that's a
Speaker 2
way to accelerate things and make sure that you're winning, your people, they have great experiences with great customers, then that's something I think you have responsibility too. But we're not looking to sell. It's not for sale, but, you know, I'm definitely always open to having conversations. Our
Speaker 0
next question comes from Jennifer Lau with UBS.
Speaker 7
I'll echo the congratulations on the quarter and a strong finish to the year. Maybe starting with some of the investments and the shift in offense mode. It sounds like you're in terms of getting the sales capacity up, you're looking to get front loaded on that. So maybe two questions. One, is it reasonable to think that you've kind of identified candidates at this point?
Or people have actually come on board? Or is it still sort of in the recruiting process? And two, let's say, six months down the road, everything is going as well as hoped, if not better. Is the inclination and revenues are coming in ahead, those are coming in ahead. Would the inclination be to kind of continue to hire at that pace?
Or you know, what it sort of digest for a bit? I know it's hard to know what the future holds, but, you know, how would you think about a scenario like that? Is is it put more money in or or kind of let it gel before taking the next plug?
Speaker 2
Yeah. That's a good question, and and that's definitely what we're focused on. And I appreciate the nice comments at the beginning, Jennifer,
Speaker 4
and hopefully, they make them to
Speaker 2
the report as well. I'm waiting for that massive overweight from Jennifer. They'll know we've reached we've reached Mecca. But the I think the call about or the question about hiring, that's definitely right on. And we have been really successful so far.
We we really challenged the team, especially it looks like we were doing well at the end of end of last Let's get these recruits on board. Let's get them on board ASAP because if we want them to have a chance at at at really adding value and adding revenue this quarter I mean, sorry, this year, then we've got to get them on in q one. And that doesn't mean they're going to have an impact, that means they have a chance. And so we've been we've already identified and hired a couple of dozen. And so that's been that we're really excited about and really proud of that management team in sales.
They're just all doing a fantastic job in HR and everyone that's been it's kind of student body right. Here's a new thing that we need to focus on. And I had this hand, it's offense, and that's so much more fun than, you know, who do we need to stack rank and figure out that maybe shouldn't be here. It's just it's so much more interesting and so much more fun. You're excited when you wake up.
And so I think we're making some good success there. I don't know, Bruce, if you want to add any color.
Speaker 1
Well, I'll just add first, I'll reiterate your comment about Jennifer. I'll also add that if we do see success in the first batch, we're going to keep going. And what's nice about now that cash deposit, we feel like we can afford it. And we have not been in that position since we went public. So we don't know yet for sure.
We want to see how this first batch of hiring goes, but I would love to just keep it going and therefore, kind of set up a nice growth profile for next year.
Speaker 7
Okay. Great. And maybe just one more for me. If you look at where those investments are going specifically, you've got the great enterprise sales motion. You've also had a lot of full business on the corporate side.
Is it going to be sort of evenly distributed across those cohorts? Or is there a particular focus in where the sales are going to go? If anything there would be great. You.
Speaker 1
Yes. It's a process. Sorry, Todd.
Speaker 2
One more I was gonna add just that that one area that we haven't been as successful is that it doesn't make sense just that we haven't been successful there have been the companies kind of in that $1,000,000,000 to $5,000,000,000 revenue range. We have plenty of customers over $5,000,000,000 and we have plenty of customers under $1,000,000,000 And that 1,000,000,000 to $5,000,000,000 we've taken some of our some of our better reps and have them focus on on that section starting with last year and started to make some good progress there. So hopefully, we'll be able to continue that progress
Speaker 4
and then and then double down because there's a
Speaker 2
lot of companies in that space that need our products. We've been successful at servicing customers our size. So we think that's an opportunity. But certainly, more in the corporate and enterprise business, business, more in strategic. We had a little bit of a pause in APAC for a while, but now we're ramping that back up, and we're starting to see the performance metrics that we need to see.
I mean, performance metrics last year were really strong. We don't need we don't need stronger performance on a per rep basis. I'm sure we'll increase the quotas, but, you know, we don't need stronger performance on a per rep basis. So I think, there's still a lot of opportunity in Europe. We've closed some really big deals over there.
So we've got great lighthouse customers. And same holds true for Japan. I mean, Japan, geez, you can go look at the top you know, couple 100 companies, and the penetration that we have there is dramatically outsized relative to the type of business that we have. So there's a huge opportunity there for us as well.
Speaker 0
Our next question comes from Jack Andrews with Needham. Your line is open.
Speaker 1
Well, thanks for taking the questions,
Speaker 5
and I'll add my congratulations on all
Speaker 1
the progress you've achieved thus far. Just continuing with the theme of moving to offense. Josh, you talked a lot about what's happening on the sales side. I was wondering if you could just talk about maybe some of the product advancements that you're looking to make to your portfolio of the product side of things.
Speaker 2
Yes, for sure. And it really I mean, it's across everything. It's across when you think about HR and what everyone in HR is doing this year compared to what they were doing in in q one and q two of last year. I mean, we went through the the most important task that I gave HR last year was everyone that that we had to let go of, you know, making sure that they're we're doing everything that we can to help them get jobs and to you know, we paid recruiters to place them, and that's what we were focused on. That's not helping driving business.
It's the right thing to do, but it's not helping driving business. So it's defense. And now, you
Speaker 3
know, HR is trying to figure out, alright, who's who's
Speaker 2
the top performing people? What kind of training can we get them? Where are the opportunities to promote additional people that are here? How can we improve our diversity so that we are, you know, even more qualified to talk to customers? And then from a product perspective, you look at you look at, okay.
We're we we've kinda settled with product that customers do not complain about. They don't like, there's there's hardly any I I would say there's there haven't been any, but there's hardly any, if any at all, customers that have quit paying us and didn't renew because of a product issue. It's just we're blessed with fantastic team, and that doesn't happen. And so being able to take that team focused on offense and say, hey. What are other things that we can do to increase revenue, to increase cross sell, to increase upsells, put a new products that we can bring to bear that leverage the platforms that we have?
Because one thing that is very unique to us, I don't think there's another company in the world that has as much data at any of the customers that we're at where that company knows what all of data is, and our machines know what that data is too. So, you know, we know what their sales are. We know what their how many employees they have. We know what is converting well. All of that data is sitting there just ready to have AI and predictive applied to it or another app that pulls that information out
Speaker 4
and presents it in a way
Speaker 2
that helps them run their business more efficiently and effectively. Talking to a customer yesterday who said that they just spent a bunch of money on on diversity and inclusion, and they were challenged they were gonna pay a couple million bucks to solve the problem. And our customer raised a fan and said, I can't do this with Domo. And everything that that customer needed to pay today they literally were gonna pay. They were about to close a $2,000,000 deal.
Everything that they needed, he was able to do in two weeks two weeks with Domo. And that's what that was having a diversity and inclusion offering because we're already connected to the data. And that's what he said. He said, I think Domo has all the connections that we need for all of those Oracle things that we're gonna query. Let me see what I can put together and if I can build the app that you guys wanna see.
And so we built a really rudimentary app in two weeks and saved them 2,000,000. So what if we went to market with the diversity and inclusion app that because we know it connects to everything, and we brought some best practices in there. Should we do that? I don't know. There's lots of opportunities like that, but we haven't been able to even think about that.
But if you have, and all my sales were armed with with an additional product to go to market with that we can go and sell and upgrade for a $102,100,000 bucks a year, who wouldn't buy that? So there's a lot of opportunities like that that we just continue to evaluate. We've had several of them that have been in in beta internally at Domo that we are just getting ready to move to the market, and we hope that we're able to do that this year. Thanks. Really appreciate the commentary around that.
Just as
Speaker 1
a quick follow-up question for Bruce. I I just want to make sure we could maybe get an update in terms of your view of multiyear contracts. I think you've mentioned you've reached the 62% threshold now. Are you actively looking to steer customers towards more multiyear contracts? Or are you effectively agnostic on that front?
No. We very much like multiyear contracts. The average has been eighteen months, twenty months. We'd like to get it to thirty six months. We think it's good for us, and we think it's good for the customer.
I mean, I think the larger customers are the ones that are betting on us. They tend to want to go ahead and lock in price. But we incentivize our sales force with multiyear contracts. We've been making that evolution for the last couple of years, and we want to keep doing that. It's just good for the business.
And in the end, I think it's good
Speaker 0
Our next question comes from Kamil Uchariq with William Blair. Congratulations
Speaker 6
on a great end to the year. Just want to start by sharing competition. Because Domo addresses so many layers
Speaker 2
of the stack, and it's somewhat unique and
Speaker 6
its ability to provide this comprehensive end to end solution.
Speaker 2
Can you maybe tell us on who are some of the companies that
Speaker 6
you see your biggest threats over the coming years? And in recent months, have
Speaker 2
you seen any changes to the competitive environment? I mean, we certainly hear Tableau has always been there. Power BI has always been there. I'm sure both of them will continue to be there. We've got, you know, I think ThoughtSpot and Sisense have done a really nice job building their businesses and being relevant in their own unique ways.
And
Speaker 4
so so those
Speaker 2
are the companies that we see, but it's not usually in head to head situations necessarily. Just other people are making noise in contracts. I mean, I'm sure there's the majority of our customers have purchased stuff from everybody. So it just shows kind of the the real opportunity that that we have. And I think one of the things deciding is is the apps that we have, and that's where we don't compete with anybody.
When we're in a when we're in a an account and we're just sitting there talking to them about a solution, you know, we like to call them the apps to fill in the gaps when they have a need and they don't know where to get it. And they have
Speaker 1
to go outside to have someone do
Speaker 2
that for them to have, you know, some kind of consulting relationship where they're getting custom software. And we can put together an app in a couple of weeks, charge 10% or 20% or 30% of the contract and services and then get a renewable 100,000, $200,000 contract for an app that we just configured. That's really exciting. And I it was fun because I got a I got a notification on Domo last night, and I looked at it, and it was this enterprise customer that continues to buy apps from us. And I bought another one last night.
So I I texted our head of our head of enterprise and Jim Kowalski, and I said, what what is who are these guys? What are they doing?
Speaker 4
They keep buying more apps. He's like, oh, yeah. They're gonna
Speaker 2
buy five, and they're gonna buy two more. And, you know, those are places those are things that we're doing that it's not competitive in the slightest, and we're offering a great value to our customer and making great money off of it. So it's truly a win win. It's just leveraging this amazing platform that our people have built.
Speaker 6
That's great color, Josh. Thank you. And as just a as a quick follow-up, how much of your recent margin improvements are attributable to factors like working from home and travel? And as we look out for the next one to two years and specifically in fiscal 'twenty two, as you try to continue to expand margins while growing revenue, how much of that headwind will that return in taking expense be to investments back into the business as we get to a more normalized environment?
Speaker 2
Well, we didn't save any money on Teams because Bruce already made us all pay for travel out of our own pocket. So that was just kind of a policy that he instituted. Right, Bruce?
Speaker 1
Yeah. And I think I'm gonna keep it because it's working.
Speaker 2
Not for real answer, Bruce.
Speaker 1
Yeah. Well, the I don't know that we really have a lot of it's really t and a savings, and I'm not sure if it jumps back to normal anytime soon. So I don't really see headwind there. And I think we just overall still have a lot of leverage opportunities within our cost structure. If we can keep growing the business at our goal of 20% plus, we don't have to have expenses grow the same rate.
And I don't see a step motion.
Speaker 2
I mean, gross margin is one area, right, Bruce? I mean, gross margin, it's been I I mean, I remember the conversation with Bruce and I three, four years ago, we were talking about what gross margin you get to. And, you know, I was definitely wrong, and he was definitely right. I couldn't imagine it getting to these levels. So it's an option to see what the team's done there, just adding more and more efficiencies, what the finance team's done with, you know, really driving the right kind of relationships with our with our vendors.
But, yeah, there's definitely more opportunities to to squeeze and get more get more juice out
Speaker 1
of this thing for sure from
Speaker 2
a cost perspective and efficiency perspective.
Speaker 6
That's that's great to hear, and thanks again, and congrats.
Speaker 1
Thank you.
Speaker 0
There are no further questions at this time. This concludes today's conference. You may now disconnect.
Speaker 1
Good. Thank you, everybody.