EPS of $-0.56 decreased by 9.8% from previous year
Gross margin of 74.8%
Net income of -22.93M
"The NRR for customers who first purchased Domo on a consumption contract was 108%, which we believe is a strong indicator of where the consumption model is headed." - Josh James
Domo Inc (DOMO) QQ2 2026 Results – AI-Driven Consumption Model Accelerates Growth, Delivers Positive Non-GAAP EPS and Strengthens Partner-Driven Revenue
Executive Summary
Domo reported a standout QQ2 2026 quarter, marking a meaningful inflection in growth and profitability progression amid its strategic shift to a consumption-based, AI-enabled analytics platform. Revenue of $79.7 million surpassed guidance on billings and revenue, with the company delivering its first positive non-GAAP EPS and generating positive free cash flow. Importantly, Domo’s consumption cohort is delivering strong retention and expansion dynamics, highlighted by a 108% net revenue retention (NRR) for customers who originally purchased on a consumption contract, and a consumption-based ARR share of over 75% as the year advances. Management framed these results as validation of a multi-year transformation: a broadened ecosystem through CDWs, hyperscalers, and partner-led go-to-market, coupled with an AI-first product and platform that goes beyond dashboards to end-to-end AI-enabled analytics.
International momentum was a standout theme, with Japan delivering new records: new ACV doubled year over year, TCV at all-time highs, and renewal deals yielding an NRR near 130%. The company also expanded its ecosystem with deeper integrations into Snowflake, Databricks, Oracle, and Google, and highlighted several high-profile wins across industries that benefited from consumption-based pricing and platform breadth (Workflows, Domo Everywhere, and AI capabilities). Domo reiterated its plan to keep investing in AI innovations, partner enablement, and the consumption model, while aiming to lift gross retention meaningfully in Q4 and sustain retention gains into FY27. Management guidance was raised for FY26 exiting metrics (billings growth to ~6% and non-GAAP operating margin to ~6%), with expectations of further lifts to ~10% on both metrics in FY27. The combination of AI-driven product value, ecosystem leverage, and a more scalable procurement path through CDWs and marketplaces underpins an investment thesis built on durable, profitable growth.”
Key Performance Indicators
Revenue
79.72M
QoQ: -0.49% | YoY:1.67%
Gross Profit
59.64M
74.82% margin
QoQ: 0.34% | YoY:2.33%
Operating Income
-7.25M
QoQ: 49.46% | YoY:49.95%
Net Income
-22.93M
QoQ: -27.03% | YoY:-17.66%
EPS
-0.56
QoQ: -24.44% | YoY:-9.80%
Revenue Trend
Margin Analysis
Key Insights
Current subscription RPO: $220.2 million, up 4% YoY.
Total subscription RPO: $409.8 million, up 19% YoY, the highest ever.
ARR on consumption accounts: >75% of ARR under consumption; expectation to end FY26 north of 85% (goal ~90%).
ARR net retention: >94%, sequentially higher for four straight quarters.
Subscription gross margin: 81.9% (two consecutive quarters of sequential improvement).
Financial Highlights
Revenue: $79.718 million in Q2 FY2026, up YoY 1.7% and down QoQ 0.49% according to reported quarterly data. Gross profit: $59.643 million; gross margin: 74.82% (vs. prior periods in the quarter’s data).
Net income (GAAP): -$22.932 million; net income margin: -28.77%. Diluted EPS: -$0.56; weighted average diluted shares: 40.643 million.
Non-GAAP net income: $0.9 million; non-GAAP diluted EPS: $0.02; basic shares ~41.5 million (as stated in guidance context).
Cash flow and liquidity: Net cash from operating activities: $3.368 million; capital expenditures: -$2.349 million; free cash flow: $1.019 million; adjusted free cash flow (non-GAAP) in Q2: $1.4 million. Cash and equivalents: $47.143 million at period end.
RPO and retention:
- Current subscription RPO: $220.2 million, up 4% YoY.
- Total subscription RPO: $409.8 million, up 19% YoY, the highest ever.
- ARR on consumption accounts: >75% of ARR under consumption; expectation to end FY26 north of 85% (goal ~90%).
- ARR net retention: >94%, sequentially higher for four straight quarters.
- Subscription gross margin: 81.9% (two consecutive quarters of sequential improvement).
Guidance and forward-looking metrics:
- Q3 guidance: billings $75.5–$76.5 million; GAAP revenue $78.5–$79.5 million; non-GAAP net loss per share $0.03–$0.07 (41.5M basic shares).
- Full-year guidance: billings $317–$321 million; GAAP revenue $316–$320 million; non-GAAP net loss per share $0.11–$0.19 (about 41.0M basic shares).
- Exit FY26 targets raised: billings growth 6% and non-GAAP operating margin 6% (with a continued objective to reach 10% in FY27 for both metrics).
Strategic takeaways: The results underpin a durable strategy around AI-enabled analytics, ecosystem partnerships with CDWs and hyperscalers, and a transition to consumption-based pricing that expands addressable usage and reduces procurement friction. The early cross-customer and cross-product expansion signals—especially in IT-adjacent use cases (ETL/integration) and AI-enabled workflows—support the view that the growth engine is shifting toward higher utilization, stickiness, and longer-duration contracts. The Q2 results also demonstrate meaningful international traction, particularly in Japan, and validate management’s emphasis on a partner-led, multi-vendor GTM approach for durable revenue expansion.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
79.72M
1.67%
-0.49%
Gross Profit
59.64M
2.33%
0.34%
Operating Income
-7.25M
49.95%
49.46%
Net Income
-22.93M
-17.66%
-27.03%
EPS
-0.56
-9.80%
-24.44%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Theme: Strategy and AI-driven transformation
- Management highlighted the AI-driven growth engine and the shift from dashboards to end-to-end AI-enabled platforms: 'BI as a simple dashboard concept is dead, but the spending environment for infrastructure and services to capitalize on the promise of AI is very healthy.'
- Josh James emphasized the transformation over the last two years: 'Two years ago, we had zero cloud data warehouse partners or CDW partners. Today, we have 5 of the largest and most important CDWs.' This underpins the leverage from a partner-centric GTM and broader ecosystem expansion.
Theme: Growth through partnerships and ecosystem
- James described the Snowflake and CDW momentum: 'We strengthened our ecosystem with deeper integrations into Snowflake and 3 other CDW partners: Databricks, Oracle and Google.' and 'the details on our enhanced integrations and capabilities with Snowflake and BigQuery' signaling multi-vendor collaboration to unlock demand.
- He provided color on partner-led deal velocity and conversion: 'deals from CDWs just started affecting that number this quarter... in Q3, it will start having an impact on our numbers' and 'lead-to-deal conversion rates from CDWs appear to be higher (5–7x close rates) than self-sourced leads.'
Theme: International expansion and use-cases breadth
- Japan momentum was highlighted: 'Japan set new records. New ACV there doubled -- nearly doubled year-over-year. TCV hit all-time highs and the deals up for renewal in the quarter saw an NRR of close to 130%.'
- Use-case breadth beyond visuals: 'we’re winning deals that include integration and ETL use cases, and customers ask for AI capabilities and agentic solutions' indicating deeper platform adoption.
Theme: Operational execution and profitability
- Tod Crane stressed disciplined investment allocation and execution: 'aligned investments with our strategic priorities, deepening our commitment on AI innovation, partner enablement and the consumption model while maintaining rigorous cost management to improve profitability.'
- He also noted the Q2 results exceeded guidance with positive adjusted free cash flow and the potential near-term margin impact from partner events: 'This may temporarily affect our margin and is factored into our guidance.'
The NRR for customers who first purchased Domo on a consumption contract was 108%, which we believe is a strong indicator of where the consumption model is headed.
— Josh James
We now have over 75% of our ARR under consumption, and with 2 quarters left in the year, we feel confident we will end the year north of 85%, reaching the goal that we set over a year ago of approaching 90%.
— Tod Crane
Forward Guidance
Management raised FY26 guidance on billings, revenue, and non-GAAP net loss per share, and reiterated a longer-term framework to reach a 10% billings growth and 10% non-GAAP operating margin by FY27. Key components of the outlook include:
- Consumption-driven growth: With >75% of ARR under consumption and commitment to achieving ~90% by year-end, management expects higher upsell opportunities as multiyear consumption contracts mature and procurement friction declines via CDW marketplaces. This should support higher retention and expanded ACV with longer-tenure customers.
- RPO and retention tailwinds: Higher multiyear deals and longer-dated contracts are expected to lift gross retention in Q4 and beyond, creating a foundation for sustainable top-line growth and improved profitability.
- Partner-enabled growth: Ongoing investments in CDWs and hyperscalers (Snowflake, AWS, Google, Databricks, Oracle, etc.) are expected to broaden addressable market and accelerate conversions from pipeline to close, particularly in consumption-based consumption expansions.
- Profitability path: Exiting FY26 with 6% billings growth and 6% non-GAAP operating margin, with a target to reach 10% for both metrics in FY27. Achievability hinges on continued mix shift toward higher-margin consumption ARR, stronger gross retention, and productive ROI from AI features and workflows. Investors should monitor: (1) execution of CDW/hyperscaler-led pipelines in H2 FY26, (2) realization of higher renewal rates from consumption contracts in Q4 and beyond, and (3) sustained efficiency improvements and AI-driven product adoption that expand usage per customer.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
DOMO Focus
74.82%
N/A
N/A
N/A
DT
81.40%
11.20%
2.05%
90.55%
ESTC
74.50%
-1.21%
-3.14%
-81.36%
PD
82.70%
-13.80%
-6.63%
-44.73%
MNDY
89.90%
0.76%
1.57%
208.20%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Domo’s QQ2 2026 results validate a strategic pivot toward a consumption-based, AI-enabled analytics platform and a partner-centric go-to-market. The combination of consumption-driven ARR growth, a 108% NRR on consumption customers, and meaningful international momentum (Japan) supports a constructive medium-term growth trajectory. The elevated RPO and strong gross margins on subscription illustrate improving profitability potential as multiyear, consumption-based contracts mature. Management’s guidance refinement—exit FY26 with 6% billings and non-GAAP margins, aiming for 10% in FY27—suggests a path to sustainable profitability if the company can sustain higher ACV growth, improve gross retention, and realize the upside from partnerships and AI-driven workflows. Investors should monitor: (1) cadence of CDW/hyperscaler-led deal closures in H2 FY26, (2) progression of gross retention into Q4 and beyond, (3) expansion of consumption-based ARR into non-consumption cohorts, and (4) headline customer wins that confirm durable use-case breadth. Given the company's cash position and positive near-term cash flow, along with a clear strategy to scale profitability, Domo presents an asymmetric setup: near-term investments to accelerate long-run margin expansion and ARR growth, with a meaningful upside if the partner-driven engine accelerates UT (unit economics) and AI-enabled adoption continues to broaden across enterprise buyers.
Key Investment Factors
Growth Potential
AI-enabled analytics platform combined with a broad partner ecosystem (CDWs and hyperscalers) unlocks cross-sell into IT and business users, accelerates consumption-based ARR, and supports higher ACV growth. Japan and other APAC/EMEA pockets offer meaningful international upside, while expanded Snowflake/BigQuery and Oracle/Google integrations create multi-vendor value propositions that improve customer conversion and stickiness.
Profitability Risk
Execution risk from the transition to consumption pricing in a competitive BI/analytics market; reliance on partner channels (CDWs and hyperscalers) for pipeline generation and deal flow; potential margin compression from near-term investments to support partnerships; macroeconomic headwinds and longer sales cycles in international markets (e.g., Japan); competition from entrenched players (Looker, Power BI, Tableau) and rising alternatives.
Financial Position
Liquidity remains adequate with $47.1 million cash and equivalents and positive operating cash flow ($3.37 million) along with adjusted free cash flow ($1.4 million). Net debt stands at approximately $90.0 million, and total liabilities exceed assets, yielding negative stockholders’ equity (~$-191.5 million). The balance sheet reflects a growth-focused software company in transition, prioritizing profitability via operating leverage and ARR growth while balancing near-term cash needs and investment in AI/ecosystem initiatives.
SWOT Analysis
Strengths
AI-first platform designed for modern analytics, enabling deeper adoption and cross-use-case deployment
Strong consumption transition (75%+ ARR on consumption) with high retention dynamics (ARR NRR ~94% and 108% for consumption customers)