Business Context and Reporting Period
Company: Domo, Inc.
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended January 31, 2026
Business Overview: Domo provides a cloud-based AI and data products platform enabling organizations to connect, analyze, and operationalize data. The company employs a "land, expand, and retain" model, transitioning significantly toward consumption-based pricing (84% of ARR as of the most recent quarter). As of January 31, 2026, Domo had over 2,400 customers, with 80% of revenue derived from the United States.
Key Financial Metrics
| Metric (in millions) | Fiscal 2024 | Fiscal 2025 | Fiscal 2026 |
|---|---|---|---|
| Total Revenue | $319.0 | $317.0 | $318.9 |
| Gross Profit | $243.5 | $236.1 | $239.1 |
| Gross Margin | 76% | 74% | 75% |
| Net Loss | $(75.6) | $(81.9) | $(59.3) |
| Operating Cash Flow | $2.6 | $(9.1) | $7.9 |
| Cash and Equivalents (End of Period) | $60.9 | $45.3 | $43.0 |
| Total Debt (Carrying Amount) | N/A | $117.7 | $126.5 |
| Remaining Performance Obligations (RPO) | N/A | $423.8 | $464.8 |
Note: Debt figures reflect the carrying amount of the credit facility, which was fully drawn ($125.3 million principal) as of January 31, 2026.
Material Changes vs. Prior Period
- Revenue Stability: Total revenue increased 1% year-over-year to $318.9 million, recovering from a 1% decline in the prior year. Subscription revenue grew 1% to $289.4 million, while professional services revenue declined 5% to $29.5 million.
- Improved Profitability: Net loss narrowed significantly by 28% to $59.3 million, compared to $81.9 million in Fiscal 2025. This improvement was driven by a reduction in operating expenses and a $2.0 million gain from the remeasurement of warrant liability.
- Expense Reduction: Total operating expenses decreased 6% to $278.2 million. Sales and marketing expenses dropped 6% (to 44% of revenue), and R&D expenses fell 12% (to 24% of revenue), primarily due to reduced stock-based compensation.
- Customer Metrics: The customer count decreased 7% year-over-year. However, the ARR net retention rate improved to 94% for the full year, up from 89% in the prior year, with sequential quarterly improvements noted in the latter half of the fiscal year.
- Liquidity: Operating cash flow turned positive at $7.9 million, reversing a $9.1 million outflow in the prior year. However, cash balances declined to $43.0 million.
Guidance, Outlook, Risks, and Unusual Items
- Strategic Alternatives: In February 2026, the Board of Directors initiated a formal process to explore strategic alternatives to maximize shareholder value, including potential sale, strategic investment, or business combination. No transaction has been completed as of the filing date.
- Outlook: Management expects to continue investing in growth and product development. They anticipate sales and marketing and R&D expenses as a percentage of revenue will decrease in the long term. Gross margins are expected to remain stable in the near term and increase long-term as the consumption-based model matures.
- Key Risks:
- Liquidity and Capital Needs: The company has a history of losses and an accumulated deficit of $1.55 billion. While cash is sufficient for 12 months, future capital raises may be necessary, potentially causing dilution.
- Debt Covenants: The company is subject to restrictive covenants on its credit facility, including minimum annualized recurring revenue and EBITDA requirements. Failure to meet these could trigger a default.
- Macroeconomic Conditions: Economic uncertainty has elongated sales cycles and increased deal scrutiny, potentially impacting near-term revenue growth.
- Cybersecurity: As a cloud provider, the company faces ongoing risks of data breaches and cyber-attacks, which could damage reputation and incur significant costs.
- Unusual Items: Fiscal 2026 included a $2.0 million gain from the remeasurement of warrant liability and $3.4 million in executive officer severance costs included in General and Administrative expenses.
Investor Verification Checklist
- Strategic Process Status: Monitor updates regarding the formal process to explore strategic alternatives announced in February 2026.
- Debt Covenant Compliance: Verify continued compliance with the minimum annualized recurring revenue and EBITDA covenants on the $125.3 million credit facility.
- Cash Burn vs. Runway: Assess the sustainability of the $43.0 million cash balance against operating costs and the timeline for potential capital raises.
- Customer Churn: Investigate the 7% decline in total customer count despite the improvement in ARR net retention rates.
- Consumption Model Transition: Evaluate the long-term impact of the shift to consumption-based pricing (84% of ARR) on revenue predictability and gross margins.