Domo Reports Strong Q3 2025 Earnings with Growing Metrics

In a recent report, Domo showcased a significant performance in its Q3 2025 earnings call, exceeding revenue and non-GAAP EPS guidance while demonstrating growth in critical metrics such as subscription RPO and average contract lengths.

Date: 06-12-2024

AI Rating: 7

Domo's Q3 earnings showcase several positive indicators for investors. The company reported total revenue of $79.8 million, which indicates stability as it is slightly up year over year, with subscription revenue making up 89% of this figure. Notably, Domo exceeded its billings expectations in this quarter, recording $73.4 million.

A significant highlight from the earnings call is the year-over-year growth in subscription RPO (Remaining Performance Obligations), which increased by 3%. The company further emphasized the strength of these relationships by reporting that subscription RPO beyond 12 months grew by 14%. This growth in long-term commitments underscores Domo’s strategic direction in securing sustainable revenue streams.

Moreover, the average contract length increased by an impressive 13% year over year, indicating stronger customer loyalty and a commitment to longer-term partnerships, which are often viewed favorably by investors.

The gross margin for subscriptions stood at 82.4%, which is stable and expected to improve to the mid-80s in the long term. However, it should be noted that the company recorded a non-GAAP net loss of $3.2 million, reflecting some ongoing financial challenges, but this is mitigated by a strong growth trajectory in key areas.

Investors may also find promise in Domo’s transition to a consumption-based pricing model, which now accounts for 55% of annual recurring revenue (ARR) and is anticipated to increase to over 60% by year-end. This strategic pivot towards aligning pricing with customer value may enhance customer retention and drive further adoption.

The report indicates that the company's free cash flow was more negative than expected due to timing issues related to consumption migrations, but Domo expects to generate positive cash flow in Q4.

Overall, Domo's financial performance and the strategic shift towards consumption pricing in conjunction with robust customer engagement metrics illustrate a positive outlook for future growth.

Stocks: DOMO