Domo Shares Slump Over 8% Post Q2 Earnings; Outlook Still Bright

Domo shares slumped over 8% after the cloud software company reported a loss in the second quarter despite revenue jumping over 20% and beating analysts’ estimates.

The American Fork, Utah- based company said its non-GAAP net loss was $9.6 million, and non-GAAP net loss per share was $0.30, based on 31.9 million weighted-average shares outstanding. That was better than the market expectations for a loss of 0.36 per share.

Total revenue was $62.8 million, an increase of 23% year over year, beating the Wall Street consensus estimate of 60.8 million. Subscription revenue was $54.7 million, an increase of 23% year over year.

For the fiscal third quarter of 2022, the company forecast revenue in the range of $63.5 million to $64.5 million and non-GAAP net loss per share to be between $0.33 and $0.37 based on 32.4 million weighted-average shares outstanding.

For the full-year fiscal 2022, revenue is expected to be in the range of $252.0 million to $256.0 million and non-GAAP net loss per share is expected to be between $1.31 and $1.39 based on 32.0 million weighted-average shares outstanding.

Despite that Domo shares plunged over 8% to $89.53 on Friday. The stock has surged over 40% so far this year.

Analyst Comments

“Billings growth accelerated to 26% despite a tough compare, with cash flow remaining positive. We see DOMO as a durable mid 20% grower with the potential to accelerate to ~30% over the next several quarters. While this will require even more execution, we are optimistic on this front and remain OW,” noted Sanjit K Singh, equity analyst at Morgan Stanley.

Domo provides information workers real-time data they need to make better decisions with a comprehensive data analytics platform that combines data visualization, alerting, ETL and machine learning in a single solution. We view Domo’s technology as differentiated and are encouraged by more recent transactional strength and higher levels of sales productivity. Domo achieved CF breakeven, leaving concerns behind. Management will now invest to grow within the fast-growing cloud business intelligence market. Current trading levels of ~11.8x EV/CY22e Sales and ~0.59x growth adjusted, in line with SaaS peers at ~0.57x, but with potential to accelerate in FY24.”

Domo Stock Price Forecast

Five analysts who offered stock ratings for Domo in the last three months forecast the average price in 12 months of $106.25 with a high forecast of $111.00 and a low forecast of $98.00.

The average price target represents an 18.68% change from the last price of $89.53. All those five analysts rated “Buy”, none rated “Hold” or “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $98 with a high of $152 under a bull scenario and $46 under the worst-case scenario. The firm gave an “Overweight” rating on the cloud software company’s stock.

Several other analysts have also updated their stock outlook. Needham raised the target price to $111 from $93. Cowen and company lifted the target price to $110 from $100.

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