Greetings, and welcome to the Domo Q1 Fiscal Year 2026 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Peter Lowry, Vice President, Investor Relations. Thank you, Peter, you may begin.

Good afternoon. On the call today, we're joined by Josh James, our Founder and CEO, and Tod Crane, our Chief Financial Officer. I'll lead off with our safe harbor statement and then onto the call. Our press release was issued after the market close and is available on the Investor Relations section of our website. Please note, this call contains forward-looking statements about our business as defined under federal securities laws. These statements involve risks, uncertainties, and assumptions, including, but not limited to, statements and projections about our future financial performance, growth prospects, cash position, sales efforts, technology developments, new business opportunities, transactions and initiatives, the potential impact of artificial intelligence, and other macroeconomic factors on our business. For a detailed discussion of these risks and uncertainties, please refer to our public filings, including today's press release, our most recent annual report on Form 10-K, and quarterly report on Form 10-Q, all available on the SEC website. These documents list important risk factors that could cause our actual results to differ materially from our forward-looking statements. We will also discuss non-GAAP financial measures during the call, which we use as supplemental indicators of Domo's performance. Other than revenue, unless otherwise stated, we will be discussing our results of operations on a non-GAAP basis. These measures should be viewed as complements to, not substitutes for, our GAAP results. Please see the reconciliation of our non-GAAP results to their most directly comparable GAAP measure on our Investor Relations website at domoinvestors.com. With that, I'll turn it over to Josh. Josh?

Thank you, Pete. Hello, everyone, and thanks for joining us on the call today. I am pleased to report that in Q1, we demonstrated substantial operating leverage in the business showing that our model is truly working. Once again, we exceeded guidance on billings, revenue, and non-GAAP EPS, and generated positive adjusted free cash flow. Notably, this marks the first time we've achieved a positive operating margin in a Q1. We saw a significant increase in pipeline activity generated by our ecosystem, a dramatic increase in our sales efficiency, a substantial lengthening of our contracts, and an acceleration in RPO growth, all reflecting the durable, trusted relationships we have with our customers. As a direct result of this momentum and due to continued strength in the business, we are raising our full year guidance. Tod will have more to say about that shortly. We are confident that we have finally achieved a business model that will provide continued operating leverage for years to come. As you'll recall, a few years ago, we identified cracks forming in our business and knew we needed to institute changes to our model. We rapidly converted our business to consumption-based pricing and reconfigured our technology and go-to-market motion to become very ecosystem-friendly. The substantial changes our team has made over the last few years have led to measurably improved performance with the following metrics highlighting that the new model is working. Subscription remaining performance obligations, or RPO, growth accelerated to 24% year-over-year. Subscription total contract value, or TCV, was up 69% year-over-year. Long-term subscription RPO was up 61% year-over-year. Net retention was up sequentially for the third consecutive quarter, and ARR was also up sequentially. Salesforce productivity was up over 60% year-over-year and up for the third consecutive quarter. Gross retention improved to 86% from…

Thanks, Josh. We exceeded our Q1 guidance for billings, revenue, and non-GAAP EPS and we're adjusted free cash flow positive. Total revenue was $80.1 million, and billings were $63.9 million. As a company and in my role as CFO, a primary focus is driving operational efficiency and managing the company to achieve positive operating margins and free cash flow. As we leverage the early-stage success with our ecosystem partners, it further positions us for growth while maintaining disciplined control over costs. It allows us to continue to scale our sales efforts effectively and achieve a stronger return on sales investments, supporting sustainable and profitable growth. Gross retention improved to 86% from 85% in Q4 and 83% a year ago. This is the fourth consecutive quarter at 85% or above, and we continue to expect a 2 percentage point improvement in gross retention for FY '26 compared to the prior year. Our year-over-year net retention was 94%, up sequentially for the third consecutive quarter and up more than 4 percentage points year-over-year. Our improving retention rates are another important factor because profitable growth is difficult when retention rates are low. Retaining customers is far more cost effective than acquiring new ones. Our RPO growth is also significant. Current subscription RPO grew 5% year-over-year to $226 million, and our total subscription RPO grew 24% to $408 million, an acceleration from 14% growth in Q4. Improved sales force productivity, higher retention rates, and accelerating RPO growth all support my confidence that we are well positioned to accelerate our billings growth over the remainder of the year while also expanding our operating margin. In addition to improving operating margin, generating positive free cash flow remains a key focus. In Q1, adjusted free cash flow was $1.3 million, a significant improvement from Q1 last year.…

Thank you. We will now be conducting a Q&A session. [Operator Instructions] Thank you. Our first question comes from the line of Yi Fu Lee with Cantor Fitzgerald. Please proceed.

Thank you for taking my question. Congrats on the very strong start, Josh, Tod and team. Maybe, like, Josh and Tod, maybe can you just flip back to the macro environment, just to start off [conversation] (ph). Does it seem like with all the trade, tariffs, right, negotiation that's coming along that's affecting the business that the fundamental is clearly affecting positively? And then, on the Domopalooza event, obviously, well attended, you were there as well. Can you comment more on the, I guess, like, the -- when you talk about one of the partners who 2x in terms of -- who 2x [indiscernible], how do you get the other partners to -- I guess, to be on the same track? Maybe start with that and also I have a couple of more follow-ups.

Yeah. So, from a macro perspective, it's definitely not a great environment, but it's -- our team seems to be able to do marketing through it. I think the way that customers view us as a way -- a path forward when it comes to AI. Like we mentioned, almost every conversation we're having with customers right now is how to leverage the data that they have inside Domo and how they can create agents. So, that's been a very positive development, and it's driving activity. I think from a macro perspective, people are definitely more hesitant than they were five years ago, but I don't think it's changed a lot in the last 12 months. We have a few customers that talk about tariffs, but it hasn't been a large issue. I think when it comes to the partners that you're talking about, we do have one partner that's moving faster than the other one so far, but that's been mostly tied to where we've made the investment. And our product was most ready for -- and we kind of had to serially go through and get it ready for different partners. And so, we've had a lot of activity with Snowflake, and that activity we expect also with Databricks and with Oracle and with IBM and with Google, and others internationally. So, we're having actually a lot of success and a lot of stuff in the pipeline already. It's just that one's further ahead. So, we do expect to see the same kind of activity from the other partners and expect that partners are going to end up being equal amount of new logo activity as all of our other marketing activities combined.

And then, Josh, can you just comment a little bit more like 6x increase on sales productivity? Obviously, feel free to have RJ comment as well. Like, in terms of -- if you can break it down, what is it that 6x better this quarter that -- is it because you're working more with the partner ecosystem or the combination with the consumption model that's driving it, the 6x increase? And then, flipping back to Domopalooza, in terms of the pipeline building activity, obviously, you were on the floor speaking with all your partners and some of the customers as well. How is the pipeline building efforts on that? And how does it translate into the second half closure?

Yeah. So, consumption is definitely an important component of our model. And we're -- I think we're seeing in this Q1 just really leveraging the model. The models work we worked really hard on changing our model over the last several years and really starting to see the fruits of that, and actually getting operational leverage at the same time. So, we think there's going to be good profitable growth from here. And the efficiency that we're seeing in the sales organization is, first of all, obviously, interest, because of what we're doing from an AI perspective, and then, also, what we're doing with the CDWs. That really has made our business more defensible, and it's created more opportunities and relationships. And when we look at our pipeline, this will be the quarter that we actually see a meaningful amount of deals close that have been in the pipeline for the last few quarters. And so, close rates are higher. Deals are a little bit bigger. We think retention is going to be higher, and we go in with relationships with a partner who's espousing the positive attributes of our business and how we help the customer. So that's been a really positive development that we've been talking about for a while. This quarter, we're seeing the numbers actually hit, and we'll see those numbers in billings. And with the pipeline that we also see building for Q3 and Q4, we feel very good about the fact that as we enter next year, we'll probably have the same amount of business that's being generated from our partners as we do from all of our other marketing activities. That's kind of what we're -- that's what we're seeing right now. And as that plays out, we'll give more guidance around that, but I think that's what gives us the confidence that we can say, hey, for the last three years, we've been saying we're going to reconfigure the model, we're going to invest, and we're going to get back to growth. And you saw us this last quarter, we -- first time ever, we've been positive in the Q1, net operating -- net margin positive. And then, the other thing is, we're sitting here saying, not only that, we're going to be 5% margin positive and 5% growth exiting this year, and double those numbers for exiting next year. And there's a lot of upside to that. But we're finally in a different category of company than where we've been the last three years and it's because of all the reconfiguration, the consumption model, being able to get the multiyear deals because customers love what we're doing with them, and then, also, all the efforts that we put into those partnerships with CDWs.

Thanks for that, Josh. And just one last one on the technology front before I move on to Tod on the financial side is, obviously, you talked a lot about agentic AI. We saw Catalyst, you launched at Domopalooza. And then, there was another thing called ML model management. Can you discuss what are you most excited about in terms of the product adoption? And I think it's going to tie into my question later for Tod, like RPO, right? What is it that the customers adopting in terms of [indiscernible] that leads to the longer duration, long contract sizes?

Yeah. I think the thing that I'm most excited is that we're teaching customers how to build their own agents, and they're doing it. There's a text message I got just this morning from our team, and it was a customer that said, I just want to provide some feedback on the recent AI agent training, hosted by you guys last Wednesday. I followed along the video. I paused only to make a few datasets to use. And by the time I got to the 37-minute mark, I actually had a working AI agent that was looking at my datasets, invoices, intakes, contracts, and composing and delivering a combined weekly category management summary for sourcing managers based on the little bit of direction I gave it. So, boom, 37 minutes, they got an agent working inside their organization because they're already using Domo. The data's already governed. It's already secure. We allowed them to use LMs inside their organization. And then, this guy goes on and says, I tried another one today from scratch, specifically to see if I could just ask the AI to iterate through a list of items for me and act on each one. It is nearly production-ready. A few hours later, this AI agent accesses a data set of associates who've been recently transferred to another manager and who are corporate and -- corporate cardholders. The AI agent looks at a row of data containing the new manager, the old manager, and the worker who was transferred. It then generates an email based on the prompt I gave it. It then sends the email, then it does it again until it's done with all the rows. It worked beautifully the first time. It composed an absolutely lovely email, even identifying more information from the data without me telling it to. So, I mean, you see that kind of stuff. There're two agents that were created by an individual that got trained on our agentic platform, and all of that is driving consumption in our product, and they're much happier. And we're not seen as a visualization tool. So, we are definitely here prime time ready for the AI agent world.

Excellent Josh. I'm going to move on -- thanks for that. I'm going to move on to Tod on the financials. Tod, obviously, RPO -- subscription RPO is a key focus, right? Short-term is up 24% this quarter, up from 14% last quarter, long-term, even better, 61%. Can you help us break it down, Tod? Why is this metric [inflecting] (ph) so much better? And what are the factors that driving customers go long-term with Domo? And also, you also upped your guidance, right, in terms of like beating it as well as you raised it a little on the EPS side. What gives you confidence that you're able to gain the operating efficiency for the rest of the year? And how conservative are you with the model? And that's it from me. And thank you, gentlemen, for taking all my questions.

Yeah. Thanks for the question Yi. Yeah, RPO, very happy with the result there coming in at over $400 million for subscription RPO. That's growth of 24% year-over-year, with current growing 5%, long-term growing 61%. I think the technology and the things that -- the example that Josh just gave is very powerful in terms of the ability of our customers to get value from our product very, very quickly. And then, you pair that with consumption, which allows them to quickly unlock that value, not being limited by seats, not being limited by -- not having access to the full platform, they can try anything, they can go in there and explore. So, we're seeing kind of that powerful combination of our good technology, our consumption model contributing to stronger customer relationships, which is in turn allowing us to get longer-term contracts. So, that's the story of RPO. Very happy with the growth there. In terms of the leverage and the model, if you look at our operating expenses over the last four or five quarters, there's been kind of a steady improvement and then steady demonstration that we're getting leverage there. We're continuing to do that. We've made great progress there. And as we look ahead and model out what the rest of this year looks like, we see an opportunity to continue to expand margins, and we will continue to do that.

Okay. Thanks, again, gents. Congrats.

Thank you.

Thanks, Yi.

Thank you. Our next question comes from the line of Derrick Wood with TD Cowen. Please proceed.

Hi, team. This is Jared Jungjohann on for Derrick Wood. As we incorporate new consumption dynamics and AI elements into your cost of goods sold, how should we be thinking about gross margin trajectory over the medium term?

Yeah. So, we were at 81.6% subscription gross margin this quarter. We expect it to remain around that level for the near term, with the long-term goal of having an increase from there. In terms of the dynamic related to consumption, it does tie the revenue more closely with the cost. So, that's in large part the reason why we're expecting that to increase over time going forward.

Awesome. Appreciate that color. And then, can you talk to some of the trends you're seeing in your enterprise base versus commercial base? And then, maybe, how do these evolving partnerships impact better? Are you seeing these partnership deals skew larger or just some color there?

Yeah. I'll jump in on that one and Josh feel free to chime in too. Yeah, on the enterprise side, I mean, it's a large portion of our business. It's an important part of our business. We've had great success there over the years. We have a lot of great enterprise customers. And if we look at the leads that are coming in from partner, a significant portion of those are enterprise leads. And so, we're seeing this as a real opportunity to continue to expand our presence in the enterprise and to continue to have success there. So, we're definitely encouraged by that.

Awesome. And then, as you gain more traction with these cloud partners and get adopted into modern stack, what area of your solutions that are you seeing these customers really dive into?

Yeah, one of the biggest thing with the clouds is they're looking to get more and more information into their clouds. They want to hydrate their clouds, and we have a unique ability to do that. We have more connectors than anybody in the industry and we have a very robust system to be able to help them manage the ETL. And when we walk into an account, instead of the hundred or so people that might be using a CDW, when we're in an account, we might see 10,000, 50,000, even 100,000 users. And so, if you can have all of those people also accessing that data in formats that they want in a secure way, then it just drives more adoption of that CDW and secures the CDW's relationship even more. Most of the CDWs are out there trying to build other use cases, and they're all trying to expand beyond IT central functions and go into creating marketing use cases and sales use cases and operations use cases. And that's our bread and butter. So, it really is a good combination of us with the CDWs. And one of the things that we get out of that is we get a CIO-blessed relationship, which makes our relationship with that customer much stronger and ability to weather different changes they're going through. And we're seeing -- we're kind of -- you have an ability to sit on top of multiple CDWs. And that's actually something that CIOs, like as well as people are shifting their strategies or adopting one CDW and moving to others and it really puts us in a unique position.

Awesome. I'll just finish up with one last one, but real positive commentary around the guidance and what you're seeing out of the CDW ecosystem. And given that sort of strength in commentary, I'm wondering how you're thinking of investing in growth versus investing in margins. You've obviously factored in a little bit of op margin expansion, but maybe just talk to that a little. Thank you.

Yeah. It's a great question. It's always a balancing act. We feel confident that we're getting the right investments in place and that we have an opportunity to keep that momentum going with the CDWs while still expanding margins. So, we're not trying to get to 30% margins overnight. We're going to slow and steady expansion towards that 5% and then that 10% level over the next couple years, but that's going to allow us plenty of room to continue to invest in these partnerships.

Thank you. Our next question comes from the line of Eric Martinuzzi with Lake Street. Please proceed.

Curious to learn a little bit more about your pricing policy on your consumption-based contracts. Just as you've got -- as you've been at this for now -- I guess, we're in our third year or so of the consumption-based pricing contracts, as these come up for renewal, is there an opportunity to raise prices or is it really just more -- there's a natural as the customer uses the product more, they consume more and that's what kind of drives a higher year-over-year growth in that consumption-based install base?

Yeah. So, our focus on consumption pricing is to make sure that -- oh, yeah. This is RJ Tracy, CRO at Domo. So, our real goal with consumption is to align the value that customers get with how they pay. And so, it's a natural motion for us to go work with customers and help them get more value out of the platform. So, solve more use cases, get them using agentic AI solutions that help them to take action on the data. And as they use the product, then it drives the usage up, which we want to go in and then help them get a better rate on their consumption price. So, it's a pretty natural motion for us, and we're still figuring out the best methods for adoption, but it's a real natural motion for customers because as they get more value, then they pay more.

Got you. And then, the cohorts, again, we're looking at -- this is a consumption-based question. As you've seen those cohorts come back for renewal, you already talked about, hey, we're up to 70% of the installed -- of the ARR is on a consumption-based pricing metric. As those cohorts -- are you seeing the consumption based cohorts as more likely to adopt the AI and the newer products, or is it kind of equal mix between the folks who aren't on consumption-based that are on the perceived-based pricing?

Yeah. They're a lot more likely to adopt because there's not a restriction or a paywall in front of them before they adopt. So, when you buy Domo, the entire platform is available to our customers to use. When we were on seat-based pricing, any feature that they hadn't paid for was hidden behind the paywall. And so, it created a barrier of entry for customers to go in and adopt that technology, where now, if they want to try, like, the customer example that Josh read, if they want to try out one agent, they can go in and in 37 minutes build an agent, and that might only take a couple of credits. And then, they'll decide whether they're getting value from that or not. And if they keep it running, then it'll consume more and more over the year. And if not, they can shut it off, and they paid maybe a couple of credits to try something out. So, significant increase in adoption across the entire platform, including users.

Got it. And then, last question is around the -- I guess, the progression of the billings growth implied in the guidance. If I take your Q2 billings growth, midpoint looks like a little over 1% growth, but you're talking about exiting the year. So, a Q4 billings growth rate of 5%, is that based on things that you already have in the pipeline, or is that on kind of yet to be filled in at the top of the funnel?

Yeah. It's based on a number of factors. We consider a number of different inputs in our financial models. Pipeline is certainly one of them. The trajectory of the pipeline, pipeline generation, quality of the pipeline, and then just historical trends, what we're seeing in terms of rep productivity, those kind of increases. But yeah, based on everything we're seeing, we have confidence that we'll exit at 5%. And so, you can kind of do the math between what we guided for Q2 and the 5% for Q4 and get to what we're going to be at -- be around for Q3.

Got you. Thanks for taking my questions.

No problem. Thanks, Eric.

Thank you. Our last question comes from the line of Patrick Walravens with Citizens JMP. Please proceed.

Great. This is Nick on for Pat. Thank you for taking my question, and congrats on the quarter. Josh, at Domopalooza, on the call today, you mentioned that 200 customers who wanted to try Agent Catalyst. And I was wondering if you could speak a little on what demand looks like today for that offering? And then, Tod, one for you. It's been almost nine months since you stepped into the role of CFO. What is one thing that's been harder than you thought? And what is one thing that has been easier than you thought since assuming your new role?

Yeah. I talked a little bit about the kind of conversations we're having with our customers. They're just ongoing and continual, and they're not just exploratory, right? Like I mentioned, they're actually making things in these trainings and in these conversations, but I'm going to have RJ talk a little bit more about the opportunities and some of the activities that we're seeing in our pipeline.

Yeah. So, as we get leads, especially from the ecosystem, we're seeing a ton of customers that want to dive into AI and figure out what that looks like within their company, within their org. And a lot of those AI use cases require hydration. They need access to data. They need to be able to transform that data. They need a way to surface it out or embed it to where their users are at or where their customers are at. So, we're seeing use cases all across our stack. And the great thing is that they can come in and buy just the components that they need. And the entire stack is available to them, so at any time, they can start to use other components that help them and will help drive consumption and get more value to our customers.

From an AI perspective and the agents, talk about some, like, the ServiceNow stuff that we're seeing as well.

Yeah. So, we have a customer right now that's -- they're surfacing particular use cases in ServiceNow, but it requires a human intervention to come in and to actually do all the work. So, we're supplementing some of what they're doing in ServiceNow with our agentic workflow. So, one of the use cases was helping get data to hydrate a warehouse. And in this example, customers can start a ticket in ServiceNow. They want to bring data into their warehouse. And typically, that requires now a person to then take that ticket, go out, do an integration, upload data. We're now Domo's automating that entire process. But we still allow for that human in the loop to approve or to reject a request. But if they approve it, then the data's uploaded immediately and that process now takes 30 seconds to 1 minute instead of sometimes several days or weeks, to get that human-ready. We're seeing customers that want to automate labor management, where they want to automate the ability to help customer -- their employees that maybe can't work the next day and need to fill in, AI is helping them find a replacement. It's automating the process for that. It's immediately notifying people and asking if they can accept a shift that they weren't expecting to work, and that entire process can happen in seconds instead of having someone have to go manage thousands of employees to figure out who can cover shifts. So, those are some of the examples and use cases that we're seeing.

Got it. Thank you, RJ. Thank you, Josh.

Yeah.

Yeah. And then, on your other question in terms of harder and easier, I'll probably characterize that a little bit differently if that's okay. I'll probably put it in categories of things I really wanted -- something I really want to fix and things that I've been happy with how they've been going. So for me, we're obviously pleased with the improvement in gross retention, over last year and over last quarter. But that's a big, big focus for us as an executive team to continue to that that march toward 90% plus gross retention. So that's the one thing that I'm really focused on in terms of improving. Very, very happy with our RPO performance. We've talked about that already a few times. But that 5% current RPO growth, not a huge number but it does point to that 5% exit rate that we've talked about earlier and derisk that. And then, that longer-term portion of RPO also derisk our forward-looking revenue and our forecast beyond this year.

Got it. Thank you for that, and congrats again on the quarter.

Thank you.

Thank you.

Thank you. With that, that concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.