Domo, Inc. Q3 FY2026 earnings call

Key objectives include deepening partner ecosystem, accelerating consumption, and pushing AI boundaries. Deepening partner ties: Cloud Amplifier has over 350 accounts using it across nine cloud data warehouses, unique users up 450% year over year, strategic partner leads up over 25% Q3 vs Q2. Consumption model: 80% of annual recurring revenue on consumption contracts, expected over 85% by year end, monthly active users up over 10% year over year. AI innovation: Unique accounts using AI features up over 60% year over year, unique users more than double. Customer wins include deals with a large credit union, logistics provider, food and beverage company, etc. Received industry recognitions for leadership in AI and data products.

In Q3, adjusted free cash flow was $2.1 million, a $15.8 million improvement year over year. Operating margin was 6.8%, well above guidance. Current subscription RPO grew 3% year over year to $214.1 million, and total subscription RPO grew 15% to $405.9 million. Total revenue was near the high end of guidance at $79.4 million. Gross margin was 75.4%, down 90 basis points year over year. Gross retention in Q3 was 85%, expected to improve to approximately 87% in Q4. ARR net retention was 95%, with ARR net retention for the consumption model customer cohort at 106% in Q3. Currently, 80% of ARR is on consumption contracts, expected to be over 85% by year end.

Q4 expected billings $107.5M - $109.5M, midpoint 6% y-o-y growth. Expected GAAP revenue $78M - $79M, non-GAAP diluted net income per share $0.01 - $0.05. Full year expected billings $315M - $317M, GAAP revenue $317.5M - $318.5M, non-GAAP net loss per share $0.07 - $0.11. Expected adjusted free cash flow positive in Q4 and ~$6M for the year. Full year operating margin expected 5%, highest ever, expected 10% billings growth and 10% operating margin in FY '27.

Partner collaboration may lead to longer sales cycles than traditional direct motion. Macro-economic factors may impact business. AI projects may have uncertainties. Data governance concerns from customers regarding AI use.

Derek Wood asked about Q3 billing shortfall reason and solution, Joshua G. James explained longer sales cycles due to ecosystem deals. Asked about OEM opportunities with CDWs, Joshua G. James said there are meaningful opportunities. Brett Richard Huff asked about time to value vs composability balance and capital investment after profitability, explained composability simplifies sales. Asked about AI, Joshua G. James and Darren Thane explained AI benefits and data governance. Patrick Walravens asked about leverage from Snowflake partnership, Joshua G. James explained multi-faceted leverage. Eric Martinuzzi asked about Q3 billing shortfall composition and 2027 investment plan, Todd Crane explained it's multi-medium deals delay. Lucky Schreiner asked about consumption model ARR net retention drop reason and gross retention improvement uncertainty, Todd Crane explained multiple factors