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Domo (DOMO) to Report Q3 Earnings: What's in the Cards?

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Domo, Inc. (DOMO - Free Report) is set to report third-quarter fiscal 2019 results on Dec 7.

In the last reported quarter, the company reported non-GAAP loss of $3.44 per share that narrowed down significantly from a loss $25.77 reported in the year-ago quarter.

Revenues of $34.3 million came ahead of the Zacks Consensus Estimate of $32 million and grew 32.3% year over year. Subscription revenues, which represented 82% of total revenues, jumped almost 31%. Further, new customer wins and expanding international presence drove the top line for the company in the last reported quarter.

Notably, this computer software company with a specialization in business intelligence tools and data visualization debuted on Jun 29, 2018 on Nasdaq.

For the third quarter, Domo expects revenues between $34.8 million and $35.2 million and net loss in the range of $1.37 and $1.39 per share.  

The Zacks Consensus Estimate for the quarter to be reported is pegged at a loss of $1.38 per share while the same for revenues is pegged at $35 million.

Let’s see how things are shaping up for the upcoming announcement.

Domo, Inc. Price and EPS Surprise

Factors Likely to Influence Q3 Results

In the last reported quarter, Domo witnessed 35% year-over-year increase in billings driven by improvement in sales force productivity, which surged 47% sequentially. In the to-be reported quarter, Domo expects billings on a dollar basis to be similar to billings in the second quarter.

The company’s top 20 customers witnessed 10 times increase in annual recurring revenues (ARR) compared with nine times increase on Domo’s debut. Notably, the company expects ARR to accelerate significantly in the near-term.

In the last reported quarter, net revenue retention rate was the same as the first quarter, primarily driven by its portfolio strength. The company was also successful in attracting referenceable customers, which is a positive. This continued momentum is expected to boost the top line in the to-be reported quarter.

Moreover, improving operating efficiency primarily driven by higher sales productivity is expected to drive profitability.

Notably, Domo was selected by CAPCOM, a Japanese video game developer and publisher, to accelerate its business growth strategy and digital transformation across its global offices.

The company also announced a deal with Amazon Web Services (AWS) in Japan, which will enable it to meet the growing needs of customers and partners in the country as well as globally. Domo was also selected by the Global Automotive Leader DENSO to strengthen its Human Resource (HR) department.

Such deals are expected to expand Domo’s international presence and boost the company’s growthin near term. Notably, international business represented 23% of the total revenues in the last reported quarter.

Additionally, the company achieved ISO/IEC 27001 and ISO/IEC 27018 certifications in the to-be reported quarter. Such certifications will provide the company with a plethora of opportunities and make it more attractive to cloud-based business enterprises.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or #5) are best avoided.
    
Domo has a Zacks Rank #3 and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks with a Favorable Combination

Here are some companies, which, per our model, have the right combination of elements to post an earnings beat this quarter:

 Caseys General Stores, Inc. (CASY - Free Report) has an Earnings ESP of +6.17% and a Zacks Rank #2.You can see the complete list of today’s Zacks #1 Rank stocks here.

Costco Wholesale Corp. (COST - Free Report) has an Earnings ESP of +1.24% and a Zacks Rank #3.

DSW Inc. (DSW - Free Report) has an Earnings ESP of +9.85% and a Zacks Rank #3.

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