Why Domo Shares Plunged Today

What happened

Shares of Domo (NASDAQ: DOMO) have plunged today, down by 12% as of 11:15 a.m. EDT, after the company reported first-quarter earnings results. Soft guidance overshadowed a modest revenue beat.

So what

Total revenue increased 28% to $40.8 million, slightly ahead of the consensus estimate of $40.7 million. Billings came in at $41.1 million, and subscription revenue was $34.4 million, or 84% of total sales. That all translated into a non-GAAP net loss of $29.2 million, or $1.08 per share, also better than the market's expectations of $1.28 per share in adjusted red ink.

Red stock chart going down

Image source: Getty Images.

"As the results show, our strong business execution in Q1 has helped us sustain growth and achieve operating leverage," CEO Josh James said in a statement. "I'm particularly pleased with our people and their performance delivering 29% growth in subscription revenue, while lowering operating expenses 15%. Today we've seen how challenging and expensive it is for even the largest technology vendors to deliver only a few pieces of what we've built in our platform."

Now what

Domo's guidance seemed to spook investors. Revenue in the second quarter is expected in the range of $41 million to $42 million, suggesting the company will miss analyst expectations for $42.3 million. Non-GAAP net loss should be $0.98 to $1.02 per share, and billings should be $42 million. Full-year fiscal 2020 should see revenue of $173 million to $174 million, with a non-GAAP net loss of $3.79 to $3.87 per share.

Domo warned that it would not provide outlook on a GAAP basis due to "items that impact these measures are not within our control or cannot be reasonably predicted." In a Regulation FD disclosure filed this morning, the company also added:

In a call with a securities analyst after the Company's earnings conference call, a representative of the Company unintentionally disclosed the breakdown of third and fourth fiscal quarter for modeled billings and adjusted net cash used in operating activities for the second half of the fiscal year ending January 31, 2020. The additional billings information for the third fiscal quarter and fourth fiscal quarter was approximately $47 million and $68 million, respectively. The additional adjusted net cash used in operating activities information for the third fiscal quarter and fourth fiscal quarter was $17.3 million and $14.5 million, respectively.

Analysts often have private calls with management that are separate than the public conference calls, and it seems Domo gave a little too much information on one such call.

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