Domo, Inc. (DOMO) Q2 2021 Earnings Report, Transcript and Summary

Welcome to Domo’s Second Quarter Fiscal Year 2021 Earnings Conference Call. At this time, all participant lines are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] And with that, I will hand the call over to Peter Lowry, Domo’s Vice President, Investor Relations.

Good afternoon and welcome. On the call today, we have Josh James, our Founder and CEO; Bruce Felt, our CFO; and Julie Kehoe, our Chief Communications Officer. Julie will lead off with our Safe Harbor statement and then onto the call. Julie?

Thanks, Pete. Our press release was issued after the market close of market 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 securities 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-19 on our business and our financial condition. 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 file with the SEC, 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 of operations on a non-GAAP basis. These non-GAAP measures should be considered in addition to and is not -- and not as a substitute for or in isolation from GAAP results. Please refer to the tables in our earnings press release for a reconciliation of our non-GAAP financial measures to their most directly comparable GAAP measure. With that, let me hand it over to Josh. Josh?

Thank you, Julie. Hello, everyone. Thanks for joining the call. Let me start off by saying I hope all of you and your loved ones are healthy and safe in what continues to be a challenging environment. I remain incredibly proud of how our team has adapted and the great care they continue to show our customers. Domo was made for this new world of work, where business agility is imperative to surviving and thriving. In Q2, we posted 23% billings growth, 27% subscription revenue growth, 23% total revenue growth and better than expected cash flow. I’m very pleased with our Q2 results and our consistently strong execution against our plan, particularly given the current backdrop. Since our IPO, we have been relentlessly focused on growing our business, while at the same time, making our growth more efficient and driving to cash flow breakeven with the cash we have on our balance sheet. In Q2, we once again continue to make great progress on this front, as we have committed time and time again to you since the IPO, and now I’m very proud and very excited to say that at this point, achieving cash flow breakeven is at our discretion. So on the call today, I’m going to focus on a few items. One, how Domo is positioned in the future-of-work, which is being re-imagined based on the current pandemic. Two, how Domo is helping companies with their related digital transformation initiatives and transforming data into more value for businesses, their partners and customers. Three, I’ll talk about Q2 highlights, including exciting new business across a variety of industries and geographies, exciting new partners and how that demonstrates how Domo is extremely well-positioned for current market trends. And I’ll touch on some recent industry recognition. There’s been significant attention to the future-of-work and what that means for organizations. Companies across the Board are being forced to re-imagine how they do business and how they empower a more efficient and often distributed workforce that can operate in a more digital and agile fashion. Prior to COVID, many companies had started digital transformation initiatives and the current environment is only accelerating the timeline for these critical projects. All business processes and legacy technologies just aren’t sustainable and companies are being forced to adapt much more quickly than most planned. If you recall, we founded Domo to be a different kind of company to solve the challenges of running a modern business through better leverage of all of an organization’s data anywhere on any device. We are a different kind of company and we’ve always had a great product. The pandemic is highlighting some of our platforms, most important strings, particularly in building intelligent data ecosystems that improve internal data utilization and grow the value of data externally. Our platform is designed to solve the complex, strategic data challenges that are holding companies digital transformation initiatives back. Data challenge is the traditional tools just were not built to solve. On the back end, we help some of the world’s largest companies solve one of the most common yet complex and time consuming barriers to digital transformation. That is breaking down data silos to make data usable, regardless of where it lives, even 80% of enterprise data that isn’t being used because connecting to it is so difficult. We help companies transform this dark data into more value for their business, more value for their partners and more value for their customers. Now the front-end, Domo empowers every line of business to make more agile, well-informed decisions through well-governed, self-service, BI and analytics, delivery into the hands of business users at every level in departments such as marketing, finance, sales and operations. Our cloud based mobile first design makes live data accessible to anyone, anywhere to create truly data driven organizations at a speed that our customers tell us they’ve never seen. Now using the embedded and extended analytics, of what we call Domo Everywhere, many of our large customers are constantly extending the value of their data with internal and external partners, with the platform’s underpinnings of data governance, security and advanced analytics in a cloud based environment. They’re collaborating with external stakeholders and making fast and even automated decisions around the data, creating new business value and new revenue streams, all in an easy to use mobile interface. Through intelligent applications built on the Domo platform in a low code, no code environment, customers are modernizing business processes at unbelievable speed, leveraging artificial intelligence and automating workflows. The speed at which applications can be developed and deployed is truly a competitive differentiator that helps us win deals and is definitely working in this new environment. Last quarter, over a matter of days, we built a series of applications to help state governments manage the COVID crisis. The feedback continues to be very positive for these customers, and in fact, this quarter, we’ve already extended our contract with the State of Iowa by two years, and at the same time, significantly expanded the contract as well. In June, following on the Crisis Command Center Solution, we launched our get back to work collection of applications. These new applications reinforce our ability to quickly leverage any data source to initiate new workflows in response to rapidly changing environments. It’s this agility and ability to scale in part that is helping us win deals and positions us well for the future-of-work because we’re able to move at a pace and scale that other technology stacks just cannot. So now let me talk about some of the significant recent wins we’ve had across a variety of industries and geographies. These deals are exciting because they highlight that the market is now skating to where Domo has always been headed and they’re not just opportunistic deals that we’re bending into. This quarter we won a significant expansion with a global manufacturer that have been using Domo for a fairly traditional BI use case. They initially chose Domo a few years ago based on our ability to better meet their internal analytics requirements, compared to a variety of traditional vendors. This recent expansion was for our unique offering for distributing data outside of the organization, our extended analytic solution called Domo Publish, which is a part of Domo Everywhere. Like most large organizations, this customer had several BI tools in use throughout the organization. This is a normal situation for Domo. But Domo was selected on the recommendation of the company’s CIO and CTO, and our superior ability to scale self-service capabilities, our interoperability with existing technologies, our governance and our cloud based architecture. We’re also seeing significant international wins as well. For a Fortune Global 500 retail conglomerates early in this quarter, early in Q3, we had a seven-figure per year upsell that we won based on our outperformance in speed and scale. Domo was chosen to help the organization get massive volumes of data out of its existing systems without replacing or re-architecting them, so that business decision makers could understand critical time sensitive business metrics. One of the key factors in our selection was not just accessing data, but our ability to provide data governance at scale, our ability to provide new apps at scale. And again, like most large organizations, this customer has multiple data technologies in use, but none of them were built to perform at cloud scale and in record time like Domo. We beat out well entrenched competitors and all the usual suspects had contracts there before we won the business. It’s also worth noting that this deal was won with notable support from one of our major consulting partners. Now among new international business for the quarter we also won an annual six-figure new logo deal with a global pharmaceutical company based in Germany, an annual six-figure renewal deal with the leading ex-integrator based in Japan and a multiyear annual six-figure expansion deal with a rail services operator based in Australia. And demonstrating the need for Domo in any environment, we signed significant new customers in what would be considered distressed industries. For example, we closed an annual six-figure new logo deal with a fitness chain operator to migrate their legacy BI system to the cloud with Domo’s more modern, scalable and easier to use platform. Domo is bringing together internal metrics, as well as external data to help the customer determine when it makes sense to reopen their facilities in different markets. Now we also signed a six-figure new logo deal with a manufacturer that had closed all their stores as a result of the pandemic and is leveraging Domo to optimize their pricing strategy for their online business model. We also recently closed an expansion deal with a cruise line operator to improve the real-time marketing analytics as they try to figure out how to time their marketing campaigns in this new world. We’re also talking partners to expand in new markets. In the U.S. Federal space for instance, we leveraged the partner relationship to close early in Q3 an almost seven-figure annual contract to power a public facing website that gives taxpayers the ability to see and explore data related to pandemic funding grants. We believe this relationship has great potential to open doors to additional opportunities and we love seeing the progress with our partners in several of these very large deals. So now let me talk about some of our recent wins -- industry recognition. Our team continues to receive accolades that reflect our commitment to product innovation, customer success and our corporate culture. Most recently Domo was named an overall leader in the Dresner Advisory Services’ 2020 Industry Excellence Awards for the fourth consecutive year. This recognition was based on consistently high customer ratings and confidence in product quality, value delivered and sales and service. Additionally, Constellation Research recognized Domo on its 2020 Shortlist for BI and Analytics Solutions. And we are also recognized for our commitment to building a diverse, inclusive and welcoming workplace. Parity.org named us to the 2020 Parity.org Best Companies for Women to Advance List. And with diversity being more than gender, we became a founding member of a new Parity pledge to help us increase racial diversity across our entire organization. It feels good to report that we’re seeing results. As of July 1st, 45% of all open positions of which we’ve had north of 20 have been filled by qualified women and underrepresented minority candidates. This progress has been made possible by our companywide commitment to expand our networks to create a more diverse slate of qualified talent. In closing, we’ve made tremendous strides in improving our operations across all aspects of the business to become much more efficient and to improve our go-to-market motion. We have better sales leadership and sales operation rigor than we have ever had. We brought our cash burn for more than $36 million a quarter two years ago to what is becoming very close to cash flow breakeven. We are running sales place that are working, including good traction with the technical audiences of IT and BI. We have an ability to tell a data story for CIOs and Chief Data officers that puts them in a position of transformation agent, while leveraging and not needing to replace their existing investments. We have wonderful referenceable large enterprise customers with 19 now paying us more than a million dollars a year. We have a very, very bright future. And we’re doing this in the middle of a pandemic. It has increased our focus, accelerated both our innovation and that of our customers and prove their value -- and prove that our value proposition. We have great customers’ who are standardizing on us and loving us, and I’d like to reiterate how proud I am of our employees who continue to excel in execution and helping our customer -- our customers operate most effectively in this new environment. And so, with that, I’ll now turn it over to the Bruce. Bruce?

Thank you, Josh. We had a strong Q2. It is encouraging to look back on the past four quarters and see the momentum driven by steady execution. The macro environment is driving the need for digitizing business processes, and specifically, the need for real-time data and analytics. And a portion of IT budget allocated to modernizing BI and Analytics function is increasing. We believe we are benefiting from this trend, as we offer a modern cloud based, easy-to-use and mobile solution and we also believe this need will continue beyond the pandemic. I’ll now review the details behind our performance followed by providing third quarter and fiscal 2021 full year guidance. Our Q2 billings of $47.6 million, a year-over-year increase of over 23% was driven by wins across a number of industries and expansion with the State of Iowa, strong renewal rate and consistent execution across the business, particularly in our enterprise customer base. Our renewal rate was well over 85%. It was a few percentage points better than last quarter. Our net retention rates remained above 100%. We have 60% of our customers on the multiyear contracts at the end of Q2. Our remaining performance obligations or RPO grew 16% compared to the same quarter last year. Q2 revenue was $51.1 million, a year-over-year increase of 23%. Subscription revenue grew 27% year-over-year and represented 87% of total revenue, accelerating from 23% growth in the first quarter, reflecting our focus on specifically growing new recurring revenue and improving our retention rate. International revenue in the quarter represented 24% of total revenue consistent with Q1. Our subscription gross margin was above 80% for the first time, up more than 5 percentage points from 75% in Q2 of last year. This is a very important milestone and a goal that was set many years ago because we believe it is one of the key drivers for long-term profitability. We are optimistic we can drive our subscription margin even higher over time, as we continue to find leverage points in our data center operations. In Q2, operating expenses decreased by 10% from last year, even though revenue increased by 23%. In fact, our subscription revenue per head has grown in excess of 40% over Q2 of last year. The net effect of increased revenue, while managing costs allowed us to improve our operating margin by 41 percentage points from the same quarter last year. Our net loss was $10.7 million and our net loss per share was $0.37. This is based on 29 million weighted average shares outstanding, basic and diluted. Since our IPO, we have been disciplined about managing our costs, while building a faith of recurring revenue to make consistent progress toward achieving a cash flow positive state. Earlier this year, because of COVID, like many other companies, we prepared for a significant decrease in our new business. But as our Q1 and Q2 results show, that decrease has not materialized, and in fact, we’re pretty much on track to our original topline plan. As a result of our cost discipline and our strong topline growth, particularly in recurring revenue, we have reduced our net cash use and operations from $18.7 million in Q2 fiscal ‘20 to $4.8 million in Q2 of fiscal ‘21, a 74% reduction compared to Q2 of last year and an improvement of $4.5 million over last quarter. We also recently extend the maturity of our existing debt with Blackrock to April 2025 from October 2022 under substantially the same terms as our existing agreement. Our significant cash flow outperformance coupled with over $180 million of ARR and the expansion of our debt term has not only significantly reduced our risk profile, but now provides additional financial degrees of freedom. The progress we have made over the last few quarters demonstrates why we believe we’re on track to become cash flow positive. Turning now to our balance sheet. As of July 31, we had cash, cash equivalents and short-term investments of approximately $83 million. Now let’s discuss what we expect in Q3 and the full year. For Q3, we are modeling billing of about $48.5 million. If you recall, in Q3 of last year, we had billing outperformance driven by large enterprise transaction with standard billings terms. We have assumed in our model this will not repeat itself for the Q3. Specifically, we are not modeling the same number of large deals we closed last year, and at the same time, because of the economic environment, we are assuming more non-annual advanced billing terms relative to last year for the deals we do close. However, even against those assumptions, at this point in time, we expect to experience year-over-year growth of both contracted annual recurring revenue or ARR and year-over-year growth of GAAP subscription revenue of at least 20% in Q3. That expectation is supported by the observation that we are off to a good start in Q3. Our outperformance in the first half of the year allows us to increase our billings outlook for the year to $208 million up from $197 million last quarter and up from an initial outlook of about $190 million based on our COVID-19 downside case that we use for reducing costs. Our expense -- on expenses, we’re planning on our Q3 operating expenses to increase modestly from Q2 levels. We expect Q3 adjusted net cash used in operation of approximately $4.5 million and expects full year adjusted net cash used in operations of approximately $23 million. Now to formal guidance, for the third quarter of fiscal year ‘21, we expect GAAP revenue to be in the range of $51.2 million to $52.2 million. We expect non-GAAP net loss per share, basic and diluted of $0.42 to $0.46. This assumes 29.6 million weighted average shares outstanding, basic and diluted. For the full year of fiscal ‘21, we expect GAAP revenue to be in the range of $202.5 million to $206.5 million, representing year-over-year growth of 17% to 19%. We expect non-GAAP net loss per share, basic and diluted of $1.83 to $1.91. This assumes 29.3 million weighted average shares outstanding, basic and diluted. In closing, we’re pleased with our execution in Q2 and we’re optimistic about the underlying trends in the business as we head into the second half of the year. With that, we’ll open up the call for question. Operator?

Thank you. [Operator Instructions] Our first question comes from Sanjit Singh with Morgan Stanley. Your line is now open.

Thank you for taking the questions and congrats to the team on a really strong Q2 set of results. Maybe I’ll start with you, Bruce…

Thank you.

…on the -- yeah, it was just phenomenal performance across the board. So our congrats. On the guidance assumptions, Bruce, can you just, you’ve been using a pretty consistent framework for the balance of for most of this year, embedded within your second half guidance, how are you thinking about that new business trajectory, new business performance both in Q3 and Q4. It sounds like we’re up against a difficult comp going into next quarter. But at the same time, it sounds like this is off to a good start. So Can you just sort of walk through your framework and update that framework for us, that’d be helpful?

Sure. At the time of providing guidance, we did take all the information we have at hand. A lot of it is pipeline review, forecasts, our pacing and then we compare it to everything that happened at the same time the prior year. And the big item I’d pointed out last year was just the volume of the large deals. And we do have large deals in the pipeline. But as we’ve mentioned, time and time again, and maybe apply to every enterprise software company, getting the timing of those right is very difficult. When we found out how hard that was in Q2 of last year. So we’re just assuming we won’t have the same level of success at least in terms of providing guidance. Our hope, however, as you might imagine, is to see if we can get some of those deals to close. But we are optimistic, as we sit here, nevertheless, on the fact that we’re trending really well in Q3, so the first month of the quarter was just a very strong month. So we’re very happy about that and we don’t mind telling you that. But at the end of the day, it’s what happens at the very end of the quarter on the large deals and so we’re just being, I think, reasonably cautious and being quite open about, how we’re thinking about the number, and of course, yeah, we hope we get large deal to close, but we just don’t want to guide to it, not as we sit here today. So that’s the thinking behind guidance.

Super helpful, Bruce. And then, Josh, for you, if I think about like where your unit economics are today, you’re certainly been proving more resilient, 85% retention rates and then net retention rates above 100%. You’ve done a lot of things on the sales force. You’re talking about sales getting more efficient. What do you see as the opportunity to get those gross retentions up to sort of -- gross retention rates up to 90% and then maybe the expansion rates that starts to improve with a better economy and continued efficiency on the playbook, on the sales playbook, so that we’re looking at a net expansion rate of 110% plus. I know it’s tough to get the timing right on that. But how are you thinking about driving to those level metrics?

Yeah. I think -- great question. I think we’re closer to 90% than we are at 85%. I can’t remember the exact word to be put in there, but I think it intimated that and we’ve seen enterprise above 90%. And I think we can get enterprise 90% to 95%, it’s not the whole new -- the whole business 92% to 95%. But right now, we feel like we’re getting pretty close to 90% and that’s a really healthy spot to be. So that’s our first goal and we’re really starting to focus on all of the things that we can do to make sure that we’re retaining those customers. And what -- the other thing that we’re seeing is, in terms of that, net retention, we’re seeing bigger and bigger upsells. So we’re more prepared than ever, in terms of, the way that we can talk to Chief Data Officers and the way that we can talk to Chief Information Officers in getting these really big expansions at the enterprise and strategic level. So I think that’s going to be something that’s going to continue to drive and accelerate our business forward.

Appreciate it Josh. Thanks.

Thank you. And our next question comes from Brad Zelnick with Credit Suisse. Your line is now open.

Awesome. Thank you so much, guys, and congrats. These really are fantastic results and congrats to you on the call but to the whole Domo team, because I know it takes a lot of folks to make this all happen to make the magic come together.

Yeah. Thank you. [Indiscernible]. So thanks for the shout out.

For sure. And that’s where I start with. But maybe forgive me for a question that reflects a little bit in the rearview mirror. You made a comment, Josh, about feeling good about the go-to-market and the leadership that you now have there? Can you just remind us of the changes in the sales process from 12 months or 18 months ago and why you have the confidence that you’ve now got it right and that we shouldn’t come back in a quarter or two and be disappointed from an execution perspective.

Yeah. For sure. And I’ll have Ian jump in here as well. We’ve got him on the line. He’s our Chief Revenue Officer. But I think, a couple of things. Number one, as much as I’d like this to be about one person, bring one person in and everything magically improves. That’s not the case. You can bring one person in and have everything, have much better execution, much better leadership, much better strategy. But the other thing that we have going for us is kind of what you said at the beginning, you called out everybody, and there has been for a long time now, we’ve been working on this platform. We’ve been working with customers. We’ve been retaining customers and we now have a bunch of referenceable customers and we call that one on the call today, one of the largest retailers in the world, sorry, largest apparel retailers in the world. And they are every single person under the sun was in there had contracts and we beat them all out. And it was a long protracted, everyone was doing POCs or had contracts and we had to -- we had CEOs of the biggest tech companies in the world calling in trying to save their business and our team, our products, our platform just continued to show well that we can at scale in a mobile environment, in a COVID environment, really help the largest, smartest companies in the world get data in ways they’ve never been able to see it before and helps them manage their business in ways that never been able to see before and when timing is so critical. So that’s one thing that we really have going for us. So I feel like, we’re going to do well. It is going to be up into the right, no matter what. It -- then it’s just a question of how long does that take and how many bumps in the road are there along the way, and that’s where having the chance to see Ian over there running Europe and he hadn’t been a global CRO before, but he - where he lived really, but he’s certainly been handling his business and handling his customers and helping them along the way and helping expand contracts. And so we felt like, this might not be the obvious pick when you sit there and look at resumes, but when you look at resumes and then look at performance, and look at performance here, doing what we do, it was a no brainer. And so we’re really excited to have Ian and we’ve been even more excited since he’s been running that team and excited to have him be partnered with John. So I’ll let Ian take a few minutes and answer your question.

Great. Thanks, Josh. Appreciate that. Hi, Brad. So I think there’s a couple of things that we’ve continued to focus on and we’ve built everything that we do around really driving customer value and making sure that our customers really see how we can help them make decisions and drive business in a way that they haven’t been able to before and the platform is more than capable of doing that. So it’s really been a couple of things. We’re just really focused on. A -- I said, the alignment with all of the teams inside Domo, I think, John Miller and myself and the go-to- market sales plays are resonating well, the lead gens working well. The market understands more and more who we are and the value that we can bring. And then we’ve just underpinned that -- across all of the organizations we have really strong operational rigor and a cadence that drives a behavior that enables us to feel comfortable about where we are and how we’re moving forward.

Thank you for that, Ian, and I really appreciate it. Maybe, if I may just follow up with another one for you, Josh. Josh, you’re a visionary by just about any definition. I think most of us agree. Your view of what the world needed and what you built with Domo, you were very early. But if we fast forward to today, there are other cloud data analytics platforms out there, one which comes to mind which I think is on file for a public offering. But to what extent are they competing -- are you guys competing with these other platforms versus complementing, because I think, I remembered at one point talking about opportunities where you might actually be the mobile front-end to another data warehousing type solution or data pipeline. Are these other companies out there competitors or even possible partners for you?

Yeah. We, I guess, probably view them more as possible partners. I mean, when you look at, and again, I’ll use this, several million dollar deal that we just close with one of the largest retailer, one of our apparel retailers in the world. You look at them and they didn’t rip out everything else. Everything else had its place. But in terms of true digital transformation and the ability for the executives to get data the way that they needed to see it to build apps on top of that data to accomplish other tasks they have inside their organization. To take processes that today may take hundreds of hours to put together and our manual processes and slow. If you want to automate those processes and automate your ability to compete and make it much faster, well, then you have to have all of that data in one place. You need to be able to connect to all the different systems that you have. And then you need to be able to have that data available in real-time no matter how large the scale is. And there’s just no one else that does that like us. When Power BI falls down, Tableau fall down first, size sense is good for tiny companies. But in terms of, I mean, quick is old. So it really comes down to how are you going to play with the Snowflakes of the world and how are you going to help people with their strategy about how they’re storing their data in AWS and how are you going to help them. They’ve got a little group that has 18 people that love using Tableau. We’re like great, he is using Tableau for a little bit of visualization for those folks, but if you want truly a platform that brings all your data together to allow you to be nimble as a large organization, there’s just nothing like Domo. And visionary, I get it backhanded compliment. But I think over time.

Not at all.

I think over time, if we’ve been up into the right the whole time that I wouldn’t take it as backhanded compliment. But that’s okay. Over time, it’ll prove out. And would have been easier, if we just said, hey, let’s just make something that’s a little bit better than Tableau. But you’re kind of right, we didn’t want to do that. We wanted to be a little visionary. We want to just say, here’s what the world needs and it’s taken a while for it to prove out. But we are relentless in our willingness to continue to be diligent and work hard and we see what’s happening with our biggest customers. And if you want to figure out where the world’s going, go look at our biggest customers and how they use our products. There’s nothing else that comes close to what we’re doing, because we put so much into the platform and I think it’s finally starting to play out and COVID might accelerate that.

Thank you for that, Josh. And somebody wants shared with me, no tree grows straight to heaven and I think this is definitely of any of the quarters you guys have printed since you’re a public company, this is a proof point of moving in the right direction and doing really well. So congrats to you and the team once again and thanks for taking my questions.

Thanks, Brad. My favorite new saying. Thank you.

Thank you. And our next question comes from Jennifer Lowe with UBS. Your line is now open.

Great. Thank you. I wanted to touch on sales productivity and if I think back a couple years ago, that was an area of focus, I think, Josh and Bruce, you’re both sort of dissatisfied with where that was relative to your experiences at other organizations and industry benchmarks. Clearly, the efficiency of the business has improved pretty significantly since then? So I am just curious where do you -- how do you feel about the level of productivity you’re seeing in the sales force at this point? And how much more do you think you can get out of the existing footprint?

Yeah. Hi, Jennifer. Yes. It was super strong this quarter. It might have been a record. If it gets to a level overall that we thought -- that we think is in the ballpark of what should be expected from an enterprise sales force, particularly on the enterprise side. So we’re very happy with that. We, at this point, me -- at this point, we’re focused on, well, continuing to improve that because there are parts of the business that at least relative to the benchmarks we think we can do better, but at the same time, our head -- rep headcounts down over year-over-year. So we want to continue to build out primary heavy [ph] but we’re also -- we also in hiring mode right now. So even over the last few weeks we’ve really stepped it out. We feel good about the results. We feel good about where we are in the market, the kind of transactions we’re getting done with some incredible brands are really so unique that we really do want to make sure we don’t undercover the opportunity here. We’re very worried about it at the beginning of the year as COVID hit, we just didn’t know how it’s going to play out. But now that we’ve had a couple quarters of success, and then, again, Q3 off to a very good start, we really want to start building up the sales force again. So do both, and hopefully, the combined effect at least over the long run will be very good for growth for Domo.

Great. And maybe just sort of expanding on that point, I think, Josh in your prepared remarks, you used the word discussion, as the timing of free cash flow profitability at this point? And Bruce, you kind of pointed out all the improvements that you’ve had so far around the margin front relative to revenue growth. And you mentioned through the push out of the debt timeline, giving you a bit more flexibility. If I read between the lines there, is the message that we should come away with that, you feel pretty good about where you are currently in the level of burn and we should expect that trajectory of improvement that we’ve seen to continue as we head into next year, given the productivity…

I think a couple of things.

… all the opportunity in the pipeline currently. Is that the right way to sort of contextualize what we’ve seen to-date relative to what seems like a good opportunity to maybe inch up a little bit more on the spending again?

Yeah. The way I think about it is, we wanted to get to zero as quickly as possible. When we went public, we saw circled Q3. I was hoping that we’d be able to get to the cash flow positive in Q3. We gave the guidance that we gave because that’s the appropriate guidance to give. But certainly it’s been a goal for a long time to be able to be cash flow positive in Q3 and once we’re there, we’re saying this. So we’re not going to force something we can’t maintain. And I think, we’ve got a really good track record now since we’ve been public of bringing down the cash burn every single quarter, it’s sequentially come down. And same thing going forward, we want to get to zero as quickly as possible and keep it there and it might inch up positive slowly, because we’ll be looking for opportunities to invest, assuming that we’re getting the productivity gains that we’ve been getting that we can maintain those and slightly improve those. We’d be in a really happy place. So we want to be able to invest going forward. We’re not looking at dropping as much cash to the bottomline as we have been sequentially improvements. But want to get it to zero as quick as we can and then keep it there and then find ways to really start playing offense and like Bruce said, maintain that productivity and then also increase the number of heads that are producing.

Great. Thank you both.

Thank you. Our next question comes from Derrick Wood with Cowen. Your line is now open.

Thanks and I’ll echo my congratulations. Really impressive to see 20% plus growth in billings in this environment, no doubt.

Thanks.

So, Josh, you mentioned, the State of Iowa expansion, and obviously, you’ve had some other state wins, and yeah, it was interesting that they are signing up for a multiyear agreement and it goes to show that they want to work with Domo, not just in the near-term, but really in a much longer fashion. So I am just -- how should we think about the opportunities with other states or maybe other federal or local government at this point in time?

Yeah. I think it’s a real opportunity. I mean, we’ve seen that once we get into places, these big enterprise organizations, whether it’s a state government or federal government or big Fortune 500 global fortune company, we do really well. And with Iowa, in particular, with all the states actually that we have signed up, the number one goal we’ve had with all of them and the people that we have managing those is, let’s do everything that we can to, A, retain this customer, and B, transition to other things besides COVID. So that’s been their charter and we’ve seen it play out really effectively because as they’re getting data so efficiently and so quickly from all types of different systems that they have internally, the different county health system being able to distribute data out to the different county health departments that they’ve never been able to do. When the CIOs of the state see that, as they have other problems, whether TMV [ph] or other diseases, like, whatever it is, we’re so excited to say, you bet we can help you with that. And then, the lights start going off internally that, oh, wow, these guys really truly be our data platform to help us grow for the future for all of the things that we’re trying to accomplish. And you’re going to see some videos that were coming out with governors speaking about us and talking about how they’re able to manage their states now with that. So it’s probably going to -- I will also have John Miller kind of pipe in here and add a few comments about our opportunities there.

Sure. Thank you. Thank you, Josh, and thanks, Derrick. Yeah. We’ve seen good traction with the state and I think that value proposition, in our mind it is just a really good validation point for the flexibility of the Domo platform and the fact that we were able to create these applications in such a quick turnaround and really just even in the case of the State of Utah, we were able to get this system up and live with them within 72 hours. It’s just an amazing proof point of what of what Domo can do and can deliver in the state circumstances or even in the transformation that’s being accelerated in enterprises today. It all just plays to our strengths really well.

Thanks for that color. And I guess this is as kind of a follow up that what else is shown the power of the platform is your ability to go build these back to work applications? And I’m just curious, is that -- should we think of that as a meaningful new revenue driver or is that something that just opens the doors, creates new conversations, creates marketing awareness, top of funnel, how should we think about the opportunity there?

Yeah. I would say, more on the latter and I think the real proof point and the real lights that went off for us with this whole COVID situation is, when we can walk in the door with an application that we can rapidly put together because of the powerful and the extensiveness of our platform. It is an entirely different selling situation relative to competition. No one else offers what we offer in that kind of a situation. So it helps us get in there, establish a relationship, establish a paying relationship and then expanding out from there. So that’s what really went off, I think, for us in terms of an epiphany is, wow, we were able to do something here in a week was hard work. But it got the attention of a lot of people and now we’re having conversations that we weren’t having before, because they need a solution and we have the ability to build these solutions in pretty rapid form. So we’re looking at what we’re doing with our customers. We’re taking those, where there’s a vein that has a group of 20 or 30 customers doing the same thing that we can turn into an app and then go take that and run that play, those are the types of sales plays that teams running now and I think it just transforms that first sales motion for us.

Great. Congrats again.

Thank you.

Thank you. And our next question comes from Bhavan Suri with William Blair. Your line is now open.

Hey, guys. Thanks for taking my question and phenomenal job there. I want to dive into your very large win. As an example, at that the apparel retailer, we’ve talked about this in the past about instead of displacing everything, partnering with the office of CIO and saying, okay, well, this is what we can address. So what I’d love to understand is like, as you think about these large enterprises, where do you land in that stack? Is it the connector piece? Is the state of storage piece? Is it the mobile app visualization piece? And then how do you think about expanding and sort of growing the tentacles of everything you’ve built in the platform? So maybe over time replacing some of those components that are piecemeal put together, how should we think about a where you landed in the motion of how that expansion work from a technology stack perspective?

You bet. Bhavan thanks a lot for the comments and the question. I’m going to ask Ian to answer this one because he was pretty intimately involved with this deal. It was a fantastic deal and rep -- really representative of everything that we can do and all the possibilities and upset that we have. But I think it’d be great for Ian to touch on that. So, Ian, will you please go ahead.

Yeah. Thanks, Josh. Hi, Bhavan. This is really an exciting…

Hi, Ian.

…example of what we’re able to deliver at the Domo platform. We are originally started working with this company. They had a particular business challenge that they required that they were struggling with executing across the platforms that they had and they had all the platforms ranging from the ETL, to the storage, to the analysis, to the delivery, but they really struggled with the mobility side as well. And then the largest challenge they had was speed. The organization of their size, there is a lot of data and a lot of people talk about big data, but it’s come on it’s like a term that just is referring to data. These people have big, big data. And the areas that they wanted to focus on was a very specific use case in a particular brand that we needed to drive and execute quicker than they could do at this point in time, because they couldn’t get the data into a place to then go and build the analysis to drive the business decisions. So we landed in one part the organization, the organization as typical that Domo land, they loved it. They was finding all sorts of things that they could do. They found that they could get to market quicker. They found that they could find information quicker. They could start to be proactive in the work that they were looking at and they still like to talk to the other brands in the central IT team, and said, hey, this is something that we think could be of use to the larger organization. So we went to a larger organization. They naturally -- they handle the vendor behind. They had everything, right? They had everything across the stack. But we very quickly started to demonstrate the true scale of how much data we can take in. How quickly we can take that transform it, move it into something that’s usable and then deliver it out to the business user where you get adoption. And of all the things that we talk about adoption is the thing that’s so exciting with the Domo platform. We created an app. It fits on iPad. It’s going out to all of the install workers, so they can see stock levels and returns and all information they haven’t seen before. But it’s all based on the fundamental premise that the Domo platform is designed to take data from multiple data sources, across on-premise and the cloud, wherever it might happen to be, not care how much you have, process it in sub-second and then deliver out to the market space. And as you went through the process, people just feel more and more in love with the platform and that’s what we’re seeing in our enterprise deals. And to Josh’s point, if we get into an organization and we’re getting far better at that, we are doing it more frequently, we’re doing it with a higher net land, we can expand them into a great organization that utilizes Domo platform to deliver not just data, but also application and ultimately business value that we referenced when we’re talking about some of the focus that we have on our sales organization.

So, Ian, I’m going to -- my follow up actually going to stick to this for a second here. So it seems like you landed with the whole platform in one use case area where it was the connector of the data, everything, and then you sort of expanded broadly. But if we go back and not too much rearview mirror but sort of saying to someone, like, let’s take a large company that might have Taradata and TMV in there, they might have an ETL from Informatica and things like that. Typically saying, let’s replace everything hasn’t worked, and you said, let’s solve a pain point. When you are solving that pain point, is that a platform sale or is that a sale of one piece of the Domo stack and the expansion, because this particular case sounded like it was a platform sell for one use case that expanded broadly. And I’m just wondering, A, if that’s still the case that you’re still saying, okay, let’s show you the front-end and we’ll connect to your Taradata system. We’ll connect your Snowflake system or will use Informatica for a little bit of whatever whenever I am trying replace them or are you seeing sort of these platform approaches resonate more where you’re actually saying, okay, we’ll provide you the whole thing up front. So that’s what I’m trying to gauge a little bit of sort of the piecemeal approach, which was something that was working a little bit, say, six months to 12 months ago versus the platform approach, which is kind of what you’ve just outlined. So just trying to understand that initial land hustling out? Thank you.

Yeah. That’s a great question, a great clarification. So it was both and I’ll explain about what I mean by that. It was the ability of the platform to be part of an ecosystem that’s already in place that originally enabled us…

Right.

…to get into the organization because we weren’t dependent. We were -- hey, do you want to use somebody else’s ETL, use somebody else’s ETL, if you’re a big shop using and have run these provider, you should have run this provider. Yeah, we don’t mind that. So we entered into the organization, we’ve been very open minded about what our role would be. But the end result was about getting a massive data into a place and the actual delivery to the business user. So those parts of our platform were originally we went in and they were said, yeah, we might use something else to start with that. And that’s fine by us. We have plenty of customers who use us to deal with the data ingestion side, the normalization, the data science and then we push it out to something else to actually do the standard visualization part. In this one, it started and they started to see that we could actually then start to consolidate. They had some legacy vendors that were pretty, pretty expensive on premise providers that they wanted to see if they could start to change away. And as the platform was started its way through the process of evaluation, they realized that there’s some things that they want to keep, there is some things that they wanted to double down on Domo, but ultimately, this particular use case is now top to tail Domo execution.

Got it. Got it. That’s really helpful. Thank you, guys, and yeah, echoing again, congratulations.

Thank you.

Thank you.

Thank you. Our next question comes from Pat Walravens with JMP Securities. Your line is now open.

Oh!. Great. Thank you. And Josh, Bruce and Ian, congratulations. It’s terrific. So Josh, here’s my question and I’ve asked a bunch of other CEOs this question, so I’d love to hear your thoughts. How do you make Domo the best place to work? I mean, everybody is working from home. And if you can throw in like a specific little example of something you’re doing that would be great too?

Yeah. I mean, I think, the most important thing, honestly, is having everyone feel like they’re a part of something. And when work-from-home started, obviously, there was a rally point. How do we make sure that we can thrive in this environment? We unfortunately had to let some people go as we were just worried and I think everyone rallied together. And so making sure that your teams and your managers are staying connected to people that whether you’re doing, using zoom calls to have happy hour on Fridays or your teams are getting together or they’re getting together outside and doing remote meetings. I think the most important thing is that you’re staying connected, you’re understanding how your people are feeling and that they’re a part of something that that is exciting. And so for Domo right now, that’s been from, hey, Black Lives Matter starts, let’s get our employees of color and let’s get them on a call so everyone can hear from them. And that’s a way to bring everyone together and to become closer and to understand people you didn’t understand before and it’s a family that provides that connection that, frankly, would have been more difficult to do in an environment where we were just in the office. So I think, it’s kind of leveraging these technologies and these tools in these situations that we’re in, in a way that we might not have been able to before this work-from-home situation. But then, of course, what’s the mission and making sure that everyone’s focused on that mission that you’ve got leaders that are staying connected to their people. And I think we have that right now and we’re also trying to show that we care. I heard one time I was on a call with a bunch of CEOs and everyone was trying to talk about best practices, and someone said, it’s probably important right now, that when, if you have a team together and one of them is sitting there and you’re trying to be serious on zoom and your kid walks in, that they don’t feel awkward about it, and that maybe they even see your kids walk in. And just this is just a new environment, so embracing it, understanding it, making sure your people feel loved and cared for, and then making sure that that mission is paramount. That’s how I’d answer the question.

Awesome. Thank you.

Thank you. And that does conclude our Q&A portion for today’s call and as well concludes our call for today. Ladies and gentlemen, thank you for your participation on today’s conference. This does conclude your program and you may now disconnect.