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Can Subscription Push Provide a Boost to DOMO's Q2 Earnings?

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Domo (DOMO - Free Report) is set to report second-quarter fiscal 2021 results on Sep 3.

For the quarter, Domo expects revenues between $48.5 million and $49.5 million. Non-GAAP net loss is expected between 48 cents and 52 cents per share.

The Zacks Consensus Estimate for second-quarter loss has been steady at 53 cents per share over the past 30 days. The company reported a loss of 96 cents in the year-ago quarter.

The consensus mark for revenues stands at $48.2 million, indicating an increase of 15.7% from the year-ago reported figure.

Notably, Domo beat the Zacks Consensus Estimate in the past four quarters, delivering an earnings surprise of 16.8%, on average.

Domo, Inc. Price and EPS Surprise

 

Domo, Inc. Price and EPS Surprise

Domo, Inc. price-eps-surprise | Domo, Inc. Quote

Let’s see how things have shaped up for this announcement.

Factors to Watch

Domo’s second-quarter results are expected to have benefited from a resilient subscription-based business model amid the coronavirus pandemic.

Markedly, subscriptions increased 23% year over year and accounted for 87% of the company’s first-quarter revenues. The momentum is expected to have continued in the to-be-reported quarter.

Further, Domo’s expanding clientele, particularly enterprise customers, is expected to have driven the top line in the to-be-reported quarter. Additionally, the company’s expanding service offerings based on a solid partner base is a key catalyst. Notably, at the end of the first quarter, 57% of customers were on multi-year contracts.

Moreover, second-quarter bottom line is expected to reflect benefits of planned cost reductions. Domo expects operating expenses to decrease by about $2-$3 million sequentially.

Key Q2 Developments

During the to-be-reported quarter, Domo announced an expanded partnership with Snowflake to help customers build their business in the cloud.

Moreover, Domo continued to win accolades in the to-be-reported quarter. The company was named a leader in both Customer Experience and Vendor Credibility in the 2020 Dresner Wisdom of Crowds BI Market Study.

The awards reflect Domo’s growing popularity in the BI and analytics market.

What Our Model Indicates

Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Domo has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some companies worth considering from the same sector as our model shows that these have the right combination of elements to beat on earnings this reporting cycle:

Zscaler (ZS - Free Report) has an Earnings ESP of +21.74% and is #2 Ranked. You can see the complete list of today’s Zacks #1 Rank stocks here.

Momo (MOMO - Free Report) has an Earnings ESP of +5.62% and a Zacks Rank #3.

Ambarella (AMBA - Free Report) has an Earnings ESP of +100.00% and a Zacks Rank of 3.

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