- Adjusted Free Cash Flow: Positive $2.1M, a $15.8M improvement YoY, marking first-ever annual positive adjusted free cash flow.
- Operating Margin: 6.8%, significantly above guidance, with 5% full-year margin expected.
- Cloud Amplifier Growth: 350+ active accounts and 450% YoY increase in unique users, driven by cloud data warehouse integration.
- Consumption Pricing Shift: 80% of ARR now on consumption contracts, up from single digits two years ago.
- ARR Net Retention: 95%, up sequentially for fifth consecutive quarter, with 90% gross retention expected by FY '27.
Key Objectives and Progress
The company is making significant progress in executing its key objectives, including deepening its partner ecosystem, accelerating consumption, and pushing AI boundaries. Over 350 accounts are actively using Cloud Amplifier, with unique users soaring 450% year over year. The company has seen a substantial shift to consumption pricing, with 80% of annual recurring revenue on consumption contracts, up from single digits two years ago. This shift is driving growth and improving customer retention.
Growth Prospects and AI Adoption
Domo is experiencing strong adoption of AI features, with unique accounts using AI features increasing over 60% year over year. The company is building an agentic platform, with a next-generation version available in Q1. This focus on AI is expected to drive growth and improve customer delivery. Customer wins in the quarter included new logo deals and expansions with major companies, demonstrating the company's ability to attract and retain customers.
Valuation and Outlook
With a P/S Ratio of 1.12 and an EV/EBITDA of -9.95, the market is pricing in a certain level of growth and profitability. Analysts estimate next year's revenue growth at 0.5%. Given the company's progress in achieving positive adjusted free cash flow and its focus on balancing growth and profitability, it is well-positioned to meet its guidepost for 10% growth and 10% margin. The expected improvement in gross retention to 90% next year, driven by multiyear contracts and other initiatives, further supports this outlook.
Operational Efficiency and Expense Management
The company is leveraging AI to empower resources and increase efficiency, which is expected to help manage expenses. While areas of investment may see a run rate higher than in FY '26, the company is focused on balancing growth and profitability. The rule of 40 framework is guiding this balance, ensuring that the company prioritizes both growth and profitability.