Domo, Inc. (DOMO) Q4 2021 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by. And welcome to Domo's Fourth Quarter Fiscal Year 2021 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. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] And with that, I'll hand the call over to Peter Lowry, Domo's Vice President of 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 on to the call. Julie?

Thanks, Pete. Our press release was issued after the market close, and is posted on 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 conditions. These statements are subject to a variety of risks, uncertainties and assumptions. For a discussion of these risks and uncertainties, please refer to the 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 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 the most directly comparable GAAP measure. With that, let me hand 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 the family is in good health. I'm grateful for every member of our team, who over the last 12-months found the dedication, creativity and resolve to support our customers and our business, resulting in what 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. Q4 capped a tremendous four quarters from Domo. In Q4, we posted 28% billings growth, 26% subscription revenue growth and 23% total revenue growth. So, over the last four quarters, that's billings growth that started at 13% in Q1, grew to 23% in Q2, 25% in Q3, and now 28% in Q4. I'm excited beyond belief to see that acceleration. 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. And over the year, we've seen that that demand for modern BI has accelerated. And it fits squarely into our value proposition of helping customers leverage their existing BI investments, do it 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 compliance, the CDC and other regulatory data to effectively manage safe vaccine distribution. And by the way, we deliver that solution for them in less than 60-days. 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 Domo. They're innovating this company with Domo to create a new service that is the insurance industry's first true 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, Domo is helping this company bring together 143 cloud data connections, across 17 different sales force orgs, creating over 7 million rows of data, representing over $170 million 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. To 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 in 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 markets coming to us and recognizing that leadership and 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. 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 competence 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 a reputation for delivering easy-to-use solutions that 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 Tickle, Jeff Skousen and Jim Kowalski, but also led by many other sales leaders throughout Jeff's and Jim's U.S. 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 Q3. And in fact, we were free cash flow positive in Q3 and Q4. We also ended the year with more than $200 million of ARR across more than 2,000 customers, and more than $90 million 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 in fiscal year '22. Last year, in fact, we closed more than 200 deals with Domo Everywhere, with over 10 of them north of $100,000, and two of them that were seven figure contracts. So, now let me talk about some 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 seven figure upsell at a global health enterprise for companywide 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 solution 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 seven 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. We're 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 omni-channel 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 online and offline sales data across dozens of point of sale systems, from 10s of 1000s 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 executives 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 12-months. And now that we're in a much better financial position, we're 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 retention, 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, Vita 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 businesses manage with modern BI for all. As mentioned earlier, Domo 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. Domo was also named the multiple category winner in the Dresner Advisory Services 2020 Technology Innovation Awards, for being a top-ranked solution in multiple market reports throughout the year. Domo was also honored as a 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-Domo partnership, where we've achieved Premiere 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 Domopalooza 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 parity pledge that I helped found with Cathrin 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 million 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 and the company. And then we created a second parity pledge for ethnic 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 Q4 and full year results, and 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 our position heading into fiscal year '22, and I certainly look forward to updating you as we execute against our plan. We're hosting our Annual User Conference Domo Domopalooza, March 24. We will 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 will continue to deliver on this vision. And with that, I will now turn the time over to the Bruce. Bruce?

Thank you, Josh. We had a strong Q4, and I'm pleased with our execution throughout fiscal year '21. I'll review the detailed financial performance and then discuss first quarter and fiscal 2022 full year guidance. Our Q4 billings of $82.8 million a year-over-year increase of 28% was driven by strong new customer account growth, upsells and expansion and high retention rate, with gross retention approaching 90%, and we continue to invest in retention as a long-term target is 90% or better. Net retention remained above 100%. At the same time, our billing term strengthened even against the backdrop of pandemic driven challenges in some segments of our customer base. We have 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 expectedly recognized as revenue over the next 12-months, grew 23% year-over-year. Q4 total revenue was $56.8 million a year-over-year increase of 23%. Subscription revenue grew 26% year-over-year, and represented 88% of total revenue as we continue to focus on our recurring revenue. International revenue in the quarter represented 24% of total revenue, consistent with Q3. Our subscription gross margin was 82%, up more than 5 percentage points from 77% in Q4 of last year, and up over 1 percentage point from last quarter. We continue to be successful managing our data center costs, even as volumes increase. In Q4 operating expenses decreased by 5% from last year, even though revenue increased by 23%. The net effect of increased revenue while managing costs was an improvement in our operating margin of 33 percentage points from the same quarter last year. Our net loss was $9.8 million and our net loss per share was $0.32. This is based on 30.2 million weighted average shares outstanding, basic and diluted. In Q4, we reported cash flow from operations of $3.5 million. There's no adjustment was necessary for an employee stock purchase plan, an improvement of $2.1 million over the last quarter. In fact, we generated $2.1 million of free cash flow this quarter. This performance contributed to our cash balance increasing by $7 million this quarter to approximately $91 million. Now to discuss what we expect in Q1 and the full-year, FY '22. For Q1, we're expecting billings of about $54 million, up to 16% year-over-year. Note, that this guidance is to get tough compare, as Q1 of last year included $6 million of billings from three COVID-related data 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 16% 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 '22. 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 on-boarded reps to decline. We have modeled in a decline. But if we are able to maintain our productivity rate through the on-boarding process, we have upside to the guidance. Similarly, we don't factor in a large contribution from new reps in our model, as it takes time to hire onboard and ramp new reps. However, we have early hiring and on-boarding success that could provide upside as well. Partnerships is another area of focus and 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 '21. We intend to put even more focus behind this effort in fiscal year '22, 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 the investment sales capacity, hosts 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 of fiscal '22, we expect GAAP revenue to be in the range of $56.5 million to $57.5 million. We expect non-GAAP net loss per share basic and diluted of $0.43 to $0.47. That's the same as 31.1 million weighted average shares outstanding basic and diluted. For the full-year of fiscal '22, we expect GAAP revenue to be in the range of $240 million to $245 million, representing year-over-year growth of 14% to 17%. We expect non-GAAP net loss per share basis again diluted of $1.53 to $1.63, it's the same 32.2 million 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 question. Operator?

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

Thank you for taking the questions, and congrats to the entire Domo team. A pretty incredible year, so congrats. My question is, I guess 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 soft of impact from like the sort of COVID, command center like, how much of a tough compare to that represent? Two, if you could comment on the renewal base next year. Is the renewal base large 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 about looking Q4? And what's the assumption on the spending environment as we progress throughout the year?

Sure. So, on the COVID related one, and specifically for the comment about Q1, we definitely have headwind in our Q1, just because we had the $6 million of invoice, and $2.5 million recurring -- $6 million in total, that was COVID driven, that was the three safe deals. So we fully expect those -- but we have to get $6 million more than we do to keep the growth rate going. So that’s a compare in Q1. On the renewal -- and it really applies to the whole year when you think about it, because 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 something that 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 would be getting ARR, add a new recurrent during, 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, and our case shows as a new recurring or the new ARR, I guess we'll call it. So that's true. And then on spending environment, generally speaking, I mean the difficulty that -- we still see difficulty from some of our customers who are still in challenged industries, and it hasn't quite turned yet, brick-and-mortar retail, certainly transportation, hospitality just more generally. We did, however, had some success with those customers simply because they just had to get to the data to understand the ramifications and COVID on their own business. And because we can move so fast at scale, and it could be distributed too quickly in the cloud, we were a preferred vendor. And people just kind of wait in line the old fashioned way to get data, they really had to cut through that. That's what Domo does. And obviously, we believe -- we read newspapers the same as you just the stimulus plus the vaccinations, we think will bring optimism to the business community. And I'm very much look forward to what we hope is a much more robust environment next year. We didn't really factor that into our numbers, I would say. But, I mean, everything seems to be pointing that way, and we certainly hope it plays out as well.

Great. No, I appreciate the thoughts there, Bruce. And then Josh for you, maybe comment on like, partnership. Starting with Snowflake, for instance, and it doesn't endorse a press release for anybody. And so that was certainly nice to see that. Maybe talk about 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 what's a pretty fast growing Snowflake customer base to help serve out some of their data to those business users and those customers? What's sort of the roadmap for Snowflake? And if you want to comment on the broader partner strategy, feel free to do so, as well.

Yes. So, I mean, this definitely was a breakout year for us in terms of partners this year. It's been a multiyear effort, and trying to find the right relationships and how we fit into the ecosystem most effectively with the other players. Snowflake has been a really healthy relationship. And we sat down with them early on, I sat down with Frank, and he basically laid out a blueprint for things that we could do that would be differentiated in the marketplace. And we did some of those things at the very beginning and gates with the sales organization, and it's helped us with our deals, especially where Snowflake is already installed, or 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 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 that 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 the10 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. And so, we are certainly appreciative of him. I've been on that press release and helping us go to market. I think broadly speaking with partners, in fact, while we were on this call and we pre-record with COVID, now being able -- to be able to being able to be in the same room, we pre-record 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 got a big opportunity with a federal deal. And so having that breakout year that we had, where we went from basically zero in partnerships to having about $10 million or so in new deals that came through partners this year, and hoping to see what that turns into next year. But we have really great relationships that have brought us new revenue and new logos, and certainly want to improve on that this year.

Great. I appreciate the thoughts, Josh, and congrats for the year.

Thank you.

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

Thanks. Hats off to you guys for just an incredible transformative year and exiting the year with 26% subscription growth. Pretty, very impressive to see.

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 when it comes to selling your whole platform and 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 on 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?

That's a great question. Thank you for asking that. It's something that I've mentioned it a few other investor conferences, and I think it's really important that our investors understand. We have a full end-to-end full stack, because our enterprise customers have asked us for it. Almost every feature that we have come from big enterprise customers asking for it. But you're right, they don't come to us at the beginning, saying, we want a full stack purchase, let's rip and replace 19 different things that we have here. That's not how the relationship works. And that's why I think it's important that we keep on repeating the messaging that we are BI leverage at cloud scale, in record time. And that leverage, to your point, if it's a small commercial company, customer, yes, 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 grow with you. We can be your data platform. And we have many customers who will come back to us and be like, I thought I was purchasing some visualization for some executives that we 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 than we do in our data lake. And that's when they see 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 where we see more and more upsells. And so, we're going to continue to go straight down the middle, straight up the middle, we'll keep going there. We'll keep offering the full stack. But these new logo relationships, where we'll go in 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 get you a lot more data, we can get it in people's fingertips, we can turn it mobile for all the data that you have in your organization, we can help you connect to things that you're not connected to right now, because we have 1,000 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.

That's great. Maybe one for Bruce. It sounds like 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 it's like when you look at this the strength in new customer activity. Are they going as just they start small and they're going to expand bigger in the upcoming year? Do they look more like they went big out of the gate and so less expansion? Just curious how you're thinking about that cohort and how meaningful they could be in terms of expansion next year?

Yes. In terms of the first part of the question, this is just a strong new, what we call the new logo year. I mean, we had an incredible number or more and more new customers than I’ve seen, well, certainly since we've been public and before then. So, that was very promising. And we like it, because almost every customer, even small ones almost have an endless, -- it is almost endless opportunity for us to provide solutions to them, where they could just keep generating business for us. The one thing I'll point out is, we basically focus more on getting new customers and less on the dollars. So, the average deal size went down. But I don't think that really is -- but that's not a reflection on -- the opportunity is still protected. And then it goes down by much. So every one of these customers is usually, well, now almost all of them, just by the way, we sell our [Indiscernible] it's pretty much set up for an upsell on day one. And we've been tweaking our pricing, we've been tweaking our messaging.

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 our customers, we will have other very large companies in the ecosystem approached us and say, hey, with this large company that we're both involved with, we should partner together and bring a joint solution and jointly try to be their data architecture of record that they can evolve with for the long-term, for the long haul. And so that's interesting in terms of, you build these relationships out, you start getting brought in new customers that weren't customers of yours before that, and you're able to increase your new logos. And then, it's kind of funny, but that's also how acquisition conversations certainly start. And we get overtures all the time. And we always welcome the overtures, and I'm always open to a conversation. But you're not going to get a real strong acquisition premium, unless you're building relationships with big companies, because those things don't just happen overnight 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 conversations, as well as just making sure that people know you're open to building out your ecosystem, your relationships, because you never know what's going to happen over the long haul. And I think that's been, I guess, fun to be recognized as is 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 here in our name. And they're being told that if they want to be more successful with that customer, then they need to integrate well with us. And so that's, if we're seeing a little bit of the power changing to our side as well, which is a great reward for us.

Yes. Well, it sounds like you had a big breakthrough in market awareness this past year. So thanks for the color. Well done.

Thanks.

Our next question comes from Pat Walravens with JMP. Your line is open.

Oh, great. And let me add my congratulations. It's great how the billings kept accelerating. Alright, Josh, you opened the door, so, I'm going to step through it. Under what circumstances would this business be sold?

Well, I don't think nothing's changed in terms of -- I tried to say it many times, but it's just, anytime you get 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. So, 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 presented with at that point in time. And I think the same thing is here, of course, I'd love to do this for a long time. It's fun. But the most important thing to me is winning, for sure, by far, like I do not really want to play second place and be stuck there for a while. That sounds stupid. So, we want to keep on trying to win. Someone's willing to pay for this feature out yours, then great. That's a real conversation to have. If it feels like that's a way to accelerate things and make sure that you're winning, your people get they have great experiences with great customers, then that's something I think we have responsibility to. But we're not looking to sell, it's not for sale, but I'm definitely always open to having conversations.

Alright, great. Thank you.

Our next question comes from Jennifer Lowe with UBS. Your line is open.

Great. Thank you. And I'll echo the congratulations on the quarter and a strong finish to the year. Maybe just starting with some of the investments and the shift into offense mode. It sounds like you're in terms of getting the sales capacity up, you're looking to be 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's going as well as hoped, if not better, as the inclination and revenues are coming in ahead, billings are coming in ahead, with inclination to kind of continue to hire at that pace, or let it sort of digest for a bit. I know, it's hard to know what the future holds. But, how would you think about a scenario like that? Is it put more money in or kind of let it gel before taking the next slug?

Yes, that's a great question, and that's definitely what we're focused on. And I appreciate the nice comments at the beginning, Jennifer, and hopefully they make it into the report as well. I'm waiting for that massive overweight from Jennifer, they'll know we've reached Mecca. But, I think the call about, the question about hiring, that's definitely right on. And we have been really successful so far. We really challenged the team, especially as it looked like we were doing well at the end of last year. Like, let's get these recruits on board, let's get them on board ASAP. Because if we want them to have a chance it really adding value and adding revenue this quarter, I mean, sorry, this year then we've got to get them on in Q1. And that doesn't mean they're going to have an impact, but it means they have a chance. And so we've already identified and hired a couple dozen. And so that's been something that we're really excited about. And really proud of that that management team in sales, they're just all doing a fantastic job. And HR and everyone that's been -- it's kind of student by right. Here is a new thing that we need to focus on. Like I've been saying, it's offense and that's so much more fun than, who do we need to stack rank and figure out that maybe you shouldn't be here. 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?

Well, I'd just add, first I'll reiterate your comment about Jennifer. But 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 be cash flow positive, 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.

Great. And maybe just one more for me. If you look at where those investments are going specifically, you've got this great enterprise sales motion, you've also had a lot of flow 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? Just anything there would be great. Thank you.

I would say it’s across the board. Go ahead, Josh.

I was going to add just that one area that we haven't been as successful as it doesn't make sense to, so we haven't been successful there have been the companies kind of in that $1 billion to $5 billion revenue range. We have plenty of customers over $5 billion, and we have plenty of customers under $1 billion. And that one to five, we've taken some of our better reps and have them to focus 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, and then double down, because there's a lot of companies in that space that need our product. We've been successful at servicing customers that size. So, we think that's an opportunity. But certainly, more in the corporate and enterprise business more in strategic. We had a little bit of a pause in Asia-Pac 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 stronger performance on a per rep basis. I'm sure we'll increase their quotas, but we don't need stronger performance on a per rep basis. So I think there's still a lot 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 jeez, you can go look at the top couple 100 companies and the penetration that we have there is dramatically outsized relative to the size of business that we have. So, there's a huge opportunity there for us as well.

Great. Thank you.

Our next question comes from Jack Andrews with Needham. Your line is open.

Thanks for taking the questions. And I'll add my congratulations on all 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, as you think about offense on more of the product side of things.

Yes, for sure. 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 Q1 and Q2 of last year. I mean, we went through the most important task that I gave HR last year was everyone that we had to let go of, making sure that we're doing everything that we can to help them get jobs. And so, we paid recruiters to place them. And that's what we were focused on. That's not helping drive the business, it was the right thing to do, but was not helping drive our business, it's defense. And now, HR is trying to figure out, alright, who the top performers are, 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 even more qualified to talk to customers. And then from a product perspective, you look at, okay, we've kind of settled with a product that customers do not complain about. They don't like, there's hardly any, I would say there hasn'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 sales, to increase upsells, what are new products that we can bring to bear that leverage the platform that we have. Because one thing that is very unique about 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, we know what their sales are, we know 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 and presents it in a way that helps them run their business more efficiently and effectively. I was talking to a customer yesterday, who said that they just spent a bunch of money on diversity and inclusion. And they were challenged -- they were going to pay a couple million bucks to solve the problem. And our customer raised his hand and said, I think I can do this with Domo. And everything that that customer needed, that they paid, they literally were going pay, they were about to close a $2 million deal. Everything that they needed, he was able to do in two weeks, two weeks with Domo. And that's without us 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 connectors that we need for all of those Oracle things that we're going to query. Let me see what I can put together, and if I can build the app that you guys want to see. So, he built a really rudimentary app in two weeks and saved him $2 million. So, what if we went to market with a diversity and inclusion app that, because we know it connects to everything. And we brought some best practices to bear. 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 we had and all my salespeople were armed with an additional product to go-to-market with that they can go and sell as an upgrade for $100,000 or $200,000 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 beta internally at Domo that we are just getting ready to bring to the market, and we hope that we're able to do that this year.

Thanks. Really appreciate the commentary around that. Just as a quick follow-up question for Bruce. I just want to make sure we get maybe 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 18-months to 20-months. We'd like to get it to 36-months. We think it's good for us. And we think it's good for the customer. I mean, particularly the larger customers, and the ones that are betting obviously tend to want to go ahead and lock in price. But, no, we incentivize our sales force to get 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 for our customers too.

Got it. Thanks and congrats again.

Yes, thanks a lot.

Thank you.

[Operator Instructions] Our next question comes from Kamil Mielczarek with William Blair. Your line is open.

Hi, thanks for taking my question. And congratulations on the great end to the year. I just want start by sharing competition, because Domo just has so many layers of the stack. And it's somewhat unique in its ability to provide this comprehensive end-to-end solution. Could you maybe tell us on who are some of the companies that you see as your biggest threats over the coming years? And in recent months, have 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 I think soft spot and so done a really nice job building their businesses, and being relevant in their own unique ways. And so those are the companies that we see. But it's not usually head-to-head situations, necessarily. Just other people that are making noise in contracts. I mean, I'm sure, the majority of our customers have purchased stuff from everybody. So it just shows kind of the real opportunity that we have. And I think one of the things deciding is the apps that we have, and that's where we don't compete with anybody. When we're in an account, and we're just sitting there talking to them about a solution, we like to call them the apps that fill in the gaps. When they have a need, and they don't know where to get it, and they have to go outside, they have someone do that for them to have some kind of consulting relationship, or 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 contracts for an app that we just configured. That's really exciting. And it was fun, because 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 they bought another one last night. And so I texted our Head of Enterprise, and Jim Kowalski and I said who are these guys like? What are they doing? They keep buying more apps. He's like, oh, yes, they've already bought five, and they're going to buy two more. And 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 built.

That's great color, Josh. Thank you. And just as a quick follow up, how much of your recent margin improvements are attributed to factors like working from home and travel? And as we look out for the next one to two years, and specifically in fiscal '22, as you try to continue to expand margins while growing revenue, how much of a headwind will that return in T&E expense would be to investments back into the business as we get to a more normalized environment? Thanks.

Well, we didn't save any money on T&E, because Bruce already made us all pay for travel out of our own pockets. So that was just kind of a company policy, he instituted, right, Bruce.

Yes. And I think I'm going to keep it, because it's working.

Now for the real answer, Bruce.

Yes. Well, I don't know that we really have a product, but it's really T&E savings. And I'm not sure, it just 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 at the same rate. And I don't see a step function just because…

I mean, gross margin is just one area right, Bruce? I mean gross margin, it's been -- I think remember a conversation with Bruce and I, three, four years ago when we were talking about what gross margins you get to. And I was definitely wrong and he was definitely right. I didn't imagine like getting to these levels. So it's an awesome to see what the team's done. They're just finding more and more efficiencies with the finance teams done with really driving the right kind of relationships with our vendors. But, yes, there's definitely more opportunities to squeeze and get more juice out of this thing for sure, from a cost perspective and efficiency perspective.

That's great to hear. Thanks, again, and congrats.

Thank you.

There are no further questions at this time. This concludes today's conference. You may now disconnect.

Great. Thank you, everybody.