Domo Q2 Results Surpass Estimates; Shares Decline 8.4%

Shares of cloud software company Domo, Inc. (DOMO) fell 8.4% in Thursday’s extended trade to close at $89.49 even though the company reported better-than-expected results for the second quarter ended July 31, 2021. The strong results were primarily driven by growth in total revenues.

Domo reported quarterly revenues of $62.8 million, up 23% from the same quarter last year. Moreover, the figure surpassed the Street’s estimates of $60.76 million. The rise in revenues can be attributed to a 23% year-over-year rise in Subscription revenues, which stood at $54.7 million, representing about 87% of the total revenues.

The company reported a loss of $0.30 per share in the quarter, narrower than the previous year’s loss of $0.37 per share. Analysts had estimated the company to report a loss of $0.36 per share.

In other key operating metrics, billings surged 26% year-over-year to $60 million and remaining performance obligations grew 24% year-over-over to $286.8 million. While the company’s net cash from operating activities stood at $2.2 million, it ended the quarter with a cash and cash equivalents balance of $86.4 million.

Notably, the company also provided guidance for the third quarter and Fiscal Year 2022.

For the third quarter, the company expects revenues to be in the range of $63.5 million to $64.5 million against the consensus estimates of $63.42 million. It estimates its third-quarter loss to hover between $0.33 and $0.37 per share against the Street’s estimates of a loss of $0.37 per share.

For Fiscal Year 2022, the company sees revenue to be in the range of $252 million to $256 million against the analysts’ estimates of $250.96 million. It expects to report per share loss in the range of $1.31 to $1.39 against the consensus estimates of a loss of $1.34 per share.

The CEO of Domo, Josh James, said, “As the first cloud-native, modern BI platform, Domo was built to help companies put data to work in new ways with the speed and scale that most organizations haven’t seen to date. I am confident in Domo’s ability to execute on this mission for the remainder of FY22.” (See Domo stock chart on TipRanks)

Recently, Morgan Stanley analyst Sanjit Singh reiterated a Buy rating on the stock with a price target of $91. The analyst’s price target implies downside potential of 6.9% from current levels.

Consensus among analysts is a Strong Buy based on 4 unanimous Buys. The average Domo price target of $97.50 implies downside potential of 0.2% from current levels.

Domo scores a 7 out of 10 from TipRanks’ Smart Score rating system, indicating that the stock is likely to perform in line with market expectations. Shares have gained 155.3% over the past year.