Domo, Inc.

Greetings and welcome to the Domo Q3 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. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Corey Edward, Vice President of Corporate Communications. Thank you, Corey. You may begin.

Good afternoon. On the call today, we are joined by Josh James, our founder and CEO, and Todd Crane, our Chief Financial Officer. I'll begin with our safe harbor statement. Our press release was issued after the market closed and is available on the Investor Relations section of our website. Please note that today's 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 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 our quarterly report on Form 10-Q, all available on the SEC website. These documents outline important risk factors that may cause 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. unless otherwise stated, all results discussed today, other than revenue, are on a non-GAAP basis. These measures should be viewed as complements to, not substitutes for, our GAAP results. A reconciliation of our non-GAAP results to the most directly comparable GAAP measures can be found in today's earnings release and on our investor relations website at domoinvestors.com. With that, I'll turn it over to Josh. Josh?

Thank you, Corey. Hello everyone and thanks for joining us on the call today. It's been an exciting time for us as we continue to execute against our key objectives. In Q3, we generated positive adjusted free cash flow of $2.1 million, a $15.8 million improvement over last year. We're on track to finish the year with positive adjusted free cash flow for the first time ever, with every quarter being positive along the way. Our operating margin was 6.8%, well above guidance, putting us on pace for our highest full year operating margin ever. We also posted positive EPS for the second consecutive quarter at second time ever. We are pleased with the progress in these financial metrics and are continuing to execute a clear and strategic game plan rooted in three key objectives, deepening our partner ecosystem, accelerating consumption, and pushing the boundaries of what's possible with AI. I'll speak to the importance of and our performance against each of these objectives. I'll start with deepening partner ties. A foundational component of our ecosystem focus has been re-architecting our platform so customers can seamlessly integrate Domo with the cloud data warehouses or CDWs they already use. We call this functionality Cloud Amplifier. Because by sitting on top of Snowflake, Databricks, BigQuery, Redshift, Oracle, or whichever warehouse they prefer, Cloud Amplifier magnifies the value of our customers' previous data infrastructure investments. This approach gives customers flexibility and gives them control while fully leveraging Domo's powerful platform capabilities. Today, over 350 accounts are actively using Cloud Amplifier across nine different cloud data warehouses, a number that has more than doubled year over year. Even more striking, the number of unique users on Cloud Amplifier has soared 450% year over year. This rapid adoption shows that our shift from competing against cloud data warehouses to complementing them is the right move, as we are not only enhancing the entire data experience for our joint customers, but also driving meaningful revenue for our partners. In fact, several of these partners are interested in even tighter relationships and considering OEMing our analytics for all of their new customers or considering investments or other strategic relationships. The power of our products together truly delivers exceptional customer value. Our partnerships with the CDW ecosystem continue to grow stronger and more impactful. In Q3, leads from strategic partners increased over 25% compared to Q2 and more than doubled from what we generated in Q1, showing how quickly these relationships are expanding. While working through partners introduces more stakeholders and may create longer sales cycles than our traditional direct motion, it's actually proving to be a major positive for us. These deals typically involve CIO-level engagement and more strategic conversations across the business, which can lead to stickier relationships, stronger retention, and broader adoption across the organization. It reinforces the growing value of our ecosystem and the durable growth engine we're building. Next is the tremendous and almost unprecedented speed at which we've transitioned to a consumption model and the corresponding value it is adding to our business. We see strong evidence of this in our monthly unique user growth and the increasing share of our revenue coming from consumption pricing. Today, 80% of our annual recurring revenue is on consumption contracts, a significant shift that underscores the broad acceptance of this model. A little more than two years ago after introducing it, the percentage of our ARR in consumption was in the single digits. And as we've now said for the last several calls, we expect to be over 85% by the end of the year. The move to a consumption model is not just about pricing. It's about unlocking full platform access and demonstrating value to a wider user base. By removing traditional licensing limits and enabling broader access, we empower more people across our customers' organizations to engage with data and AI in meaningful ways. Monthly active users across our entire customer base have increased over 10% year over year, reflecting this growing momentum. The result is naturally accelerating adoption and usage, creating a positive feedback loop that drives deeper customer success. Over time, this expanding engagement will generate favorable economic benefits for Domo while delivering greater impact for our customers. This usage-driven momentum gives us growing confidence in the durability of our long-term model. Complementing the move to consumption, we are also leaning into a more composable approach to how we sell the components of our platform. A more composable platform allows us to meet customers where they are and accelerate how quickly that they can get value from Domo. While we can power the full end-to-end data and AI stack, some customers don't always need the whole thing on day one. Sometimes they're looking for a better integration layer. or a workflow engine, or a place to operationalize AI. Embracing composability this way means that we insert value immediately where they need us. That flexibility has been a big advantage as modern data architectures become more modular. Operationally, that means our go-to-market motions now include more of a focus on helping customers start with a piece of Domo that most meets their needs, and then growing naturally into more components of the platform over time. Finally, Innovation with AI continues to accelerate. At a time when industry studies have shown that high levels of generative AI projects fail to reach production, highlighting how hard it is to get value, real value from AI, Domo's customers are proving what's possible with the right foundation. The number of unique accounts using our AI features increased over 60% year over year. while the number of unique users more than doubled. We view this as evidence that our integrated platform combining connectors, ETL, workflows, governance, and visualization is enabling real AI use cases that deliver ROI at scale. Our customers are moving from experimentation to operationalizing AI to transform decision-making. While some of these benefits are still unfolding, we view these strong adoption and usage trends as powerful leading indicators. They validate our strategy and give us confidence that, as we continue executing with this pace and focus, favorable financial performance may naturally follow. I'm incredibly proud of the progress we've made over a relatively short period of time. The trajectory is clear. Building broad platform engagement today sets the foundation for sustainable, profitable growth tomorrow. Now, let me share a few customer wins in the quarter that highlight progress against our key objectives. In our partner ecosystem, we closed new logo deals with a large credit union and a fast-growing logistics provider who each selected Domo and Snowflake together after seeing how our joint solution simplifies their data environment, accelerates reporting, and provides a strong foundation for their long-term AI strategy. a multi-billion dollar global food and beverage nutrition company is modernizing its approach to marketing intelligence and signed with Domo to optimize its use of Databricks after their previous vendor and SI spent more than a year attempting to deliver results with limited success. In contrast, Domo and its SI partners delivered a compelling proof of concept in just a few weeks. Our ability to blend Databricks data with Domo's AI workflows and app capabilities showed the customer a clear path to standardization and faster insights. This deployment is already sparking interest in expanding Domo across the business. One of the largest insurance companies in the US extended its partnership with Domo, evidence of the strength of Domo's offering for large enterprises and an example of our multi-year contract growth. This insurer expanded to a four-year contract seven-figure TCV agreement after a collaborative solution sprint showed how our AI workflows and app development capabilities could streamline their complex RFP process. Because they were already on consumption, they could leverage the full breadth of the platform without licensing barriers, allowing the solution to be scoped for long-term impact rather than limited access. We also expanded to a seven-figure TCV contract with a large global nonprofit that provides care to nearly 3 million patients. They relied on Domo for years, but recently turned to us to help them build predictive models to better understand and reduce patient churn. Moving to consumption has allowed them to broaden user access, deepen analytic exploration, and accelerate their work with AI and application development. They are also a large Snowflake customer, and so together, we're partnering to help this customer unlock even more value from their Snowflake data using Domo. Given the scale of their operations, we see meaningful room for continued growth. And finally, a fast-growing retail technology company expanded its use of Domo as part of a broader effort to simplify its data architecture and scale efficiently. Moving to consumption removed past licensing constraints and enabled enterprise-wide access, positioning Domo as their long-term platform through 2029. By connecting directly to Databricks using Cloud Amplifier, they now have a streamlined path for real-time insights across the business. Through a strong C-level relationship, their projected growth, and increasing focus on AI-driven workflows and natural language experiences, we see significant future expansion potential. Over the past few months, we've also received strong industry recognition from media and industry analysts for our leadership in AI and data products. DOMA was named leader in agentic AI by both Treznor Advisory Services and KM World. with Dresner ranking us as number one in its 2025 Agentic AI report. Nucleus Research named Domo a leader in its Embedded Analytics Technology Value Matrix 2025. CRN selected Domo as its 2025 Product of the Year award for Best Business Intelligence in Data Analytics Technology. ISG named Domo an overall leader in its Data Products Buyer's Guide. And Dresner also recognized Domo's broader platform strength, ranking us number two in its Analytical Data Products report. These recognitions reflect what we're hearing from customers every day, that Domo is helping them turn data into actionable insights, modernize workflows, and get real value out of their data and AI investments. I'm encouraged by the progress we're making and the momentum we're building with this next quarter expected to be the fastest billings growth we've seen in more than three years, while generating positive free cash flow every quarter this year. It's clear that the work of the past few years is paying off, and we're now in a stronger position than ever to drive meaningful, profitable growth in the quarters and years ahead. Finally, I want to thank our employees. It's been a long road to hoe, but the work they've done to strengthen our ecosystem partnerships, move a significant majority of our base to consumption pricing, and build innovative new AI capabilities has been extraordinary. Their passion and persistence are driving this next chapter for Domo, and I'm incredibly proud of what we're achieving together. So speaking of rows to hoe, I know a man who has hoed miles and miles of sugar beets in southern Idaho, so we should turn it over to our one and only Chief Financial Officer, Todd Crane.