DOMO earnings name for the interval ending December 31, 2024.
Picture supply: The Motley Idiot.
Domo (DOMO -8.80%)
This fall 2025 Earnings Name
Mar 06, 2025, 5:00 p.m. ET
Contents:
- Ready Remarks
- Questions and Solutions
- Name Members
Ready Remarks:
Operator
Greetings, and welcome to Domo fourth quarter fiscal yr 2025 earnings name. Right now, all contributors are in a listen-only mode. A matter-and-answer session will comply with the formal presentation. [Operator instructions] As a reminder, this convention name is being recorded.
I’d now like to show the decision over to Peter Lowry, vice chairman of investor relations of Domo. Thanks. You could start.
Peter Lowry — Vice President, Investor Relations
Good afternoon. On the decision at present, we’ve got Josh James, our founder and CEO; and Tod Crane, our chief monetary officer. I am going to lead off with our protected harbor assertion after which on to the decision. Our press launch was issued after the market closed and is posted on the investor relations part of our web site, the place this name can be being webcast.
Statements made on this name embody forward-looking statements associated to our enterprise beneath federal securities legal guidelines. These statements are topic to quite a lot of dangers, uncertainties, and assumptions. These embody, however will not be restricted to, statements about our future and prospects, our monetary projections and money place, statements concerning the potential of our consumption mannequin, statements about our gross sales crew and know-how, our expectations for brand spanking new enterprise alternatives, transactions, and initiatives. Statements concerning our channel of communication and upcoming occasions, statements concerning the potential of synthetic intelligence and its influence on our enterprise, and statements concerning the influence of macroeconomic and different situations on our enterprise.
For a dialogue of those dangers and uncertainties, please consult with paperwork we file with the SEC. Specifically, at present’s press launch, our most just lately filed annual report on Type 10-Ok and our most just lately filed quarterly report on Type 10-Q. These paperwork include and establish vital danger components and different data which will trigger our precise outcomes to vary materially from these contained in our forward-looking statements. As well as, throughout at present’s name, we’ll talk about non-GAAP monetary measures, which we imagine are helpful as supplemental measures of Domo’s efficiency.
Apart from income, except in any other case acknowledged, we shall be discussing our outcomes of operations on a non-GAAP foundation. These non-GAAP measures needs to be thought-about along with and never as an alternative to or in isolation from our GAAP outcomes. Please consult with the tables in our earnings press launch for a reconciliation of our non-GAAP monetary measures to their most immediately comparable GAAP measure, which we’ve got posted to the investor relations part of our web site at domoinvestors.com. With that, I am going to flip it over to Josh.
Josh?
Joshua G. James — Founder, Chief Government Officer, and Director
Thanks, Pete. Good day, everybody, and thanks for becoming a member of us on the decision at present. In This fall, we exceeded our steering for billings, income, non-GAAP EPS, and adjusted free money circulation. We’ve additionally turned the nook on money technology and count on optimistic adjusted free money circulation for Q1 and for fiscal yr ’26.
Our subscription RPO development accelerated to 14% yr over yr, and our long-term subscription RPO development accelerated to 38% year-over-year. I do not know what number of firms ever have had that large of a spot between billings development and long-term RPO development. It is actually probably the greatest performances relative to billings development throughout the whole software program panorama that I do know of. RPO was over the $400 million mark for the primary time ever and is an extremely vital metric for our enterprise because it derisks income and signifies future stability.
I am significantly enthusiastic about this enchancment in RPO due to what it represents. Up to now, there could have been some misinterpretations concerning the energy of our buyer relationships, however as you’ll be able to see, a lot of our prospects have made long-term bets on the Domo platform and our potential to evolve and develop with them. The development in RPO can be a optimistic due to what it means for our retention price. Longer-term contracts imply extra alternatives to assist our prospects undertake new use instances and obtain a significant return on their funding in our know-how.
This dramatic enchancment in executing longer contracts was completed in solely two quarters of the yr of targeted effort. We imagine that we will proceed to maneuver the needle meaningfully on retention as we get higher and higher in executing on this plan over the following fiscal yr. Persevering with on the theme of bettering retention, there are 4 methods we imagine we’ll meaningfully improve our potential to retain prospects. Primary, after the macro modified in our retention together with it, we rapidly made a change to cease charging for seats, which instantly altered the panorama for us.
Quantity two, we targeted on partnering with CDWs as the dearth of CIO endorsement was the mushy underbelly of the relationships with our prospects prior to now. Quantity three, we made an aggressive transfer towards shifting all of our prospects to consumption. Since then, we have tracked the well being of our buyer relationships based mostly on metrics resembling consumer development, logins, and playing cards created. As anticipated, consumption prospects are adopting Domo considerably extra broadly of their organizations in comparison with the cohort of seat-based prospects.
And this places us in a a lot stronger place that we expect bodes nicely for retention and upsell. As proof of this, in fiscal yr ’25, our consumption buyer cohort had gross retention of over 90% and web retention of over 100%. We have made nice progress migrating our buyer base to consumption over the previous 21 months. We have gone from 5% of our ARR on the consumption mannequin roughly two years in the past to 25% on the finish of fiscal yr ’24, and now to greater than 65% on the finish of fiscal yr ’25.
Excitingly, I can see this approaching 90% by the tip of fiscal yr ’26. What a dramatic change in such a brief window, and it’s very attributable to the efforts of all Domo sapiens. And at last, the fourth transfer we have initiated to have an effect on retention is the main focus to enhance the satisfaction of our prospects, resulting in for much longer offers for each renewals and new logos. We have had nice success getting an increasing number of of our buyer base into multi-year agreements.
And when you simply do the straightforward math, the change in contract size alone ought to contribute not less than 2 share factors of enchancment in our gross retention price in fiscal yr ’26 in comparison with fiscal yr ’25. Transferring alongside to our priorities, as a reminder, our main fiscal yr ’25 development initiatives have been to construct out our associate community, proceed so as to add AI innovation all through the platform, and shift our prospects to consumption pricing. As for our main focus at the start of the yr, we stated that this was going to be the yr of the ecosystem. All year long, we noticed companions bringing us top quality leads and serving to us shut new ACV.
Accordingly, we’ve got reallocated our engineering sources to make Domo work extra seamlessly with our companions’ know-how and redirected our gross sales sources towards associate enablement. Our main associate focus has been with cloud-based information warehouses, or CDWs. Over the previous few years, we have seen main CDWs change into the middle of gravity in our ecosystem, and we imagine our foundational imaginative and prescient, technique, and platform make us a really perfect associate for them. Domo is an AI and information merchandise platform, and as such, as firms have acknowledged that AI and the digitization of companies have change into extra vital than ever, they’re counting on Domo.
They acknowledge we’re uniquely positioned to allow wonderful experiences, hosted on a associate CDW, which advantages them and positions us extraordinarily nicely within the information ecosystem. Domo was architected to quickly ingest, retailer, put together, visualize, and analyze huge quantities of knowledge as a contemporary cloud-based platform. And since we at the moment are uniquely constructed to wrap round a cloud-based information warehouse, or a CDW, a buyer can rapidly and effectively implement a contemporary information analytics answer or leverage new AI alternatives with simply their most popular CDW and Domo, as an alternative of cobbling collectively 4 or 5 totally different options from totally different distributors. We went reside with our first CDW associate in June of 2024, and we have been instantly introduced into many strategic information conversations.
Let me share a number of of those offers with you, which spotlight the kind of success we’re seeing with our CDW companions. An leisure firm selected Domo as a result of its information was siloed and its legacy BI vendor was not being adopted. The corporate was trying to consolidate its BI know-how stack to supply a greater built-in answer that had the flexibility to low-code apps. Crucial to successful this deal was our seamless integration with our CDW associate, together with our ETL capabilities, which run on high of our CDW associate’s infrastructure.
After evaluating our capabilities, the corporate changed its complete legacy BI stack, together with Energy BI, with Domo and our CDW associate. One other win was with an engineering firm that selected Domo and one in all our CDW companions to switch its current techniques, which weren’t assembly the wants for its quickly rising variety of new amenities. After a proof of idea, the corporate selected Domo and our CDW associate based mostly on our superior real-time efficiency and the benefit of creating higher analytics for its new places. Lastly, a quickly rising retail franchise administration firm was searching for an answer that would present franchise metrics resembling income, membership development, and product stock with a business-friendly entrance finish and a scalable enterprise class backend to assist its fast development.
The corporate selected Domo and one in all our CDW companions based mostly on the energy of our associate’s backend and our easy-to-use options and the general integration. These examples have been all This fall new brand wins with our CDW companions and one in all their strategic system integrators, or SIs, which is one other vital associate focus for Domo. Main CDW SIs are massively relied on and influential in a lot of our prospects within the broader information panorama. They’re thought-about area consultants and supply highly effective buyer suggestions.
This kind of endorsement creates extra lead circulation and a extra strong pipeline for us and the SIs’ involvement helps guarantee a profitable implementation for our mutual prospects. In FY ’25, we truly added greater than 10 of those CDW system integrators as Domo companions, a number of of that are top-tier implementers of our CDW companions’ know-how. One other space of alternative for us is leveraging Domo In all places to associate with our prospects to supply highly effective information options to their prospects in a B2B2B or B2B2C setup. Information is extremely priceless, however usually firms battle with unlocking that worth for his or her prospects and their companions.
Our Domo In all places options enable prospects to unlock that worth by embedding information and insights into their very own functions. Partnering with Domo creates aggressive differentiation with out the necessity to construct a knowledge sharing answer internally, which supplies price financial savings and monetization alternatives. We’ve dozens of multi-million greenback contracts from Domo In all places because it continues to be a strategic and defensible a part of our enterprise. For instance, a cloud-based authorized case administration software program firm has been a Domo buyer for nearly a decade.
This buyer initially selected Domo to supply primary case administration analytics after which expanded to supply analytics round quite a lot of inner use instances, together with gross sales, advertising, and finance. After having an amazing inner expertise with Domo, the corporate then partnered with us to create an exterior information providing to enhance case administration and operational effectivity for his or her prospects. The corporate has added a whole lot of shoppers for its new analytics providing, which is powered by Domo, and this not solely offsets their information prices, however truly now represents hundreds of thousands of {dollars} of income and margin for our buyer with loads of room to develop. And the great thing about the partnership is that it supplies extra publicity to Domo for his or her prospects.
In actual fact, dozens of their prospects now have change into direct Domo prospects. With a big upsell in This fall, this relationship now represents a number of million {dollars} for us that can be driving new environment friendly income as our associate. Whereas it’s nonetheless a difficult software program spending surroundings, one space the place we see firms prepared to speculate and growing spend is round AI enablement, and we see AI as one other key development driver for us over the long run. Over the previous yr, we’ve got seen AI soar to the highest of everybody’s thoughts, dominating know-how spending and roadmap discussions.
AI options resembling suggestion engines, machine studying, algorithms, and agent-like workflows have been part of the Domo platform lengthy earlier than AI went mainstream. We imagine Domo was constructed to capitalize on this AI second with enterprise-grade entry to information merchandise in a protected, ruled means. Our platform permits us to innovate quickly as a result of we’ve got already constructed the foundational parts crucial for a profitable AI technique. That is the second the place information and intelligence come collectively to drive actual enterprise worth, and we imagine we’re extraordinarily well-positioned.
In actual fact, Domo AI received a number of business awards in This fall, together with the 2025 DEVIES Award within the information analytics and visualization class, the 2024 KMWorld Readers’ Alternative Award for Finest AI, and the Database Tendencies and Utility Journal’s record of trend-setting merchandise in information and knowledge administration for 2025. Domo excels at connecting to all the information inside a company, one thing information scientists have lengthy struggled with. However we not solely hook up with the information, our platform permits our prospects to rework the information to make it AI-ready. We additionally acknowledged early on that prospects would need the flexibleness to select from quite a lot of new fashions that have been being developed, together with these hosted in main CDWs like Snowflake, Databricks, Oracle, Google, or Amazon.
So, early final yr, we launched our AI providers layer, which lets prospects choose the mannequin of their alternative in a well-governed, safe surroundings. Our potential to entry the proprietary information wanted for AI, to curate it to be AI-ready, to use fashions to realize insights, and to ship these insights to the road of enterprise is a core Domo competency. What our prospects are demanding is an ROI on AI investments, and Domo’s platform delivers it at present. Domo’s highly effective instruments, mixed with consumption pricing, permits enterprise customers and information scientists to rapidly check out and entry synthetic intelligence capabilities with out having to allocate substantial incremental price range.
We’re listening to optimistic buyer suggestions on each the energy of the Domo platform for AI and its low-friction accessibility. Our platform permits our prospects to create AI brokers and AI-driven workflows. These brokers carry out automated duties independently to drive unimaginable efficiencies. We developed workflows years in the past, and people capabilities, mixed with our AI service layer, have allowed us to quickly innovate to create agentic AI options, that are more and more turning into adopted by our prospects.
In abstract, Domo’s AI and information merchandise platform lets folks channel AI and information into progressive makes use of that ship a measurable influence. Anybody can use Domo to organize, analyze, visualize, automate, and construct information merchandise supported by and amplified by AI. As we’ve got moved to a consumption mannequin, we have seen that it higher aligns pricing with worth delivered, facilitates fast adoption, and aligns with our companions’ pricing fashions. Consumption drives product-led development, as prospects are sometimes unaware of the huge capabilities of our platform.
With limitless entry to the platform, all of Domo’s capabilities are extra discoverable, which drives adoption, in fact. Consumption can be driving longer-term, extra strategic relationships with our prospects, as evidenced by 38% long-term subscription RPO development. For instance, final quarter, a packaging firm entered right into a five-year, nearly seven-figure settlement to switch Energy BI with Domo. The corporate selected Domo as a result of we demonstrated a quicker time to worth, we’re higher capable of serve their inner constituents, and might extra successfully consolidate information from acquired firms into their main ERP system.
Our consumption mannequin, which incorporates limitless seats, permits the corporate to develop with Domo internally and thru acquisitions and gave the corporate confidence in getting into right into a five-year deal. Transferring on to an business recognition, along with the Domo AI awards we acquired in This fall, the Domo platform rose above the pack in a number of business distinctions. This contains receiving 5 Dresner Advisory Providers Expertise Innovation Awards, our eighth consecutive yr as a a number of class winner. Domo is acknowledged as a high vendor within the analytics platform, cloud computing and enterprise intelligence, embedded BI, collective insights and self-service BI knowledge of the crowds, thematic market studies.
Domo was additionally ranked within the exemplary quadrant and acquired a number of high distinctions throughout 5 2024 Info Providers Group Analytics and Information Purchaser guides, together with gen AI analytics purchaser information, collaborative analytics purchaser’s information, cell analytics purchaser’s information, embedded analytics purchaser’s information, and analytics and information purchaser’s information. In all, 5 purchaser’s guides, Domo scored an A- within the buyer expertise and TCO ROI classes. Lastly, Nucleus Analysis discovered that Domo prospects report a return of practically $7 for each greenback invested into our AI and information merchandise platform. By way of the agency’s rigorous ROI evaluation, Domo prospects highlighted constant advantages, together with a 35% enchancment in consumer productiveness, a 20% know-how price financial savings, and a median 15% enhance in income.
We’re, in fact, very excited that we’re as soon as once more internet hosting our annual consumer convention, Domopalooza, on March 18th to twenty first in Salt Lake Metropolis. You’ll be able to count on to see new product bulletins and lots of wonderful buyer tales from firms resembling Samsung, Lenovo, Filevine, U.S. Financial institution, Harvard Enterprise Assessment, the NBA, A&E Networks, Low cost Tire, TaylorMade, and Sony. I hope to see a lot of you there, and when you’re coming, please attain out and we’ll join you with as many shoppers as doable.
In conclusion, I am very happy with our This fall outcomes. I imagine we’re completely making the proper strategic strikes to get again to environment friendly development. As we look forward to fiscal yr ’26, we stay targeted on additional creating our associate relationships, enhancing our AI capabilities, and migrating the rest of our buyer base to the consumption mannequin. And from a monetary standpoint, I imagine we’ll begin to see the start of development acceleration whereas constantly producing money.
The progress we’ve got revamped the previous yr positions us very nicely and supplies a stable basis for defensible long-term development. And with that, I am going to hand it over to our esteemed chief monetary officer, Tod Crane.
Tod Crane — Chief Monetary Officer
Thanks, Josh. We exceeded our This fall steering for billings, income, non-GAAP EPS, and adjusted free money circulation. Whole income was $78.8 million, with subscription income representing 91% of that quantity. This fall billings have been $102.6 million.
In Q3, the year-over-year share enchancment in gross sales rep productiveness was the very best we had seen in 4 years. In This fall, we continued that pattern, and the development in productiveness was even higher. That is crucial for us as an organization and has been a precedence of mine to ensure we’re not solely getting again to development however doing so effectively. We ended the quarter with complete subscription RPO of $403.6 million, up 14% yr over yr, a big acceleration from Q3, and our greatest subscription RPO development end in over two years.
Subscription RPO past 12 months grew 38% yr over yr, and the typical contract size throughout our complete buyer base continued to extend. Gross retention was 85% in This fall, the third consecutive quarter at 85% or above, which is a pleasant enchancment from the place we have been. In Q1, we count on gross retention to stay across the present stage, and for FY ’26 as a complete, based mostly on the progress we have made in key areas, we count on not less than a 2 percentage-point enchancment. Our long-term aim continues to be gross retention of 90% or higher.
Our year-over-year ARR web retention was up sequentially for the second consecutive quarter. We see consumption as one other potential tailwind to gross and web retention. In FY ’25, our consumption prospects had gross retention of over 90% and web retention of over 100%, each of that are meaningfully higher than the cohort of seat-based prospects. In FY ’26, consumption renewals will characterize a bigger share of our renewal base and due to this fact have a bigger influence on our retention metrics.
Our adjusted free money circulation was $6 million in This fall, a big enchancment from Q3, and our money steadiness elevated from $40.9 million in Q3 to 45.3 million in This fall. Wanting ahead, we count on to be money circulation optimistic in each Q1 and FY ’26. Transferring on to margins and profitability, our subscription gross margin was 81.4%, down sequentially as a consequence of timing of capitalized software program amortization. We count on this metric to be within the low-80s over the close to to medium time period, after which an expectation of returning to the mid-80s over the long run.
Non-GAAP working margin was 4.1%, and non-GAAP web loss was 1.8 million. Non-GAAP web loss per share was $0.05 based mostly on 39.3 million weighted common shares excellent. As a result of we’re in a web loss place, all share and per share quantities are the identical for primary and diluted. As for steering, for the total yr, we count on billings of 310 million to 320 million, GAAP income of 310 million to 318 million, and non-GAAP web loss per share of $0.29 to $0.39, assuming 40.9 million weighted common shares excellent.
Our FY ’26 EPS steering implies a 2% working margin in FY ’26, an enlargement from breakeven in FY ’25. For Q1, we count on billings of 62 million to 63 million, GAAP income of 77.5 million to 78.5 million, and non-GAAP web loss per share of $0.18 cents to $0.22, assuming 39.7 million weighted common shares excellent. Our Q1 billings steering displays the influence of roughly $5 million of renewals which have shifted out of Q1 to different quarters in FY ’26 on account of consumption conversions that occurred in FY ’25. As our full yr billings steering signifies, that is only a matter of timing.
For Q2, we count on low single digits billings development, and from there, we count on a gentle acceleration in billings development for the rest of the yr. In conclusion, I’m very happy with the progress that we’ve got made at constructing an environment friendly development engine, and based mostly on the actions we’ve got taken over the previous yr, I imagine we’re well-positioned to enhance each our development and our profitability in FY ’26. With that, we’ll open the decision for questions. Operator?
Questions & Solutions:
Operator
[Operator instructions] Our first query is from Patrick Walravens with Residents JMP. Please proceed.
Patrick Walravens — Analyst
Nice. Thanks, and congratulations on the quarter. Hey, Josh, are you able to remark slightly bit about what you are seeing within the macro and if all the form of fast motion popping out of Washington, D.C. is having any impact in your prospects and their willingness to tug the set off?
Joshua G. James — Founder, Chief Government Officer, and Director
The final couple of years, which is, you already know, folks aren’t doing something that is not well-organized, that hasn’t been considered for a very long time, has a lot of authorizations. There is no superfluous actions occurring proper now. So, that stated, you already know, when they’re making a purchase order choice about us, it is one thing that is fairly nicely backed with totally different metrics on their aspect. And, yeah, it feels similar to the way it’s been.
RJ, do you need to add something to that?
RJ Tracy — Chief Income Officer
Yeah, I agree. I believe, you already know, we have positively seen it the final couple of years, however I do not suppose we have seen something within the latest time period but, however we’re all the time looking for it.
Patrick Walravens — Analyst
And, Tod, if I may ask two to you, I’d love to grasp slightly bit higher this dynamic between renewals and consumptions and the shift, the $5 million you have been speaking about. After which, secondly, when you may simply discuss form of money debt and the way you’re feeling concerning the steadiness sheet, addressing the steadiness sheet. Each of these could be actually useful.
Tod Crane — Chief Monetary Officer
Yeah. Thanks, Pat. Recognize the questions. So, first on the shift, you already know, as we labored by means of consumption conversions over the previous yr, plenty of instances when we’ve got that dialog with a buyer, we’ll reset their renewal date.
So, usually they may’ve renewed in Q1. We’ve a dialog in the midst of their contract that might be in Q2 by means of This fall. And once they determine to make that conversion, we’ll truly reset that renewal date into a brand new quarter. So, simply we had extra of a shift in renewal timing final yr than we usually do.
And the online influence of that was a 5 million greenback shift out of Q1 into the opposite quarters. On the opposite query, you already know, concerning — remind me what the opposite query was, Pat?
Joshua G. James — Founder, Chief Government Officer, and Director
Steadiness sheet.
Patrick Walravens — Analyst
The steadiness sheet — you already know, yeah.
Tod Crane — Chief Monetary Officer
Yeah, on steadiness sheet and money, so I imply, very proud of the free money circulation end in This fall. Six million was truly the best money free money circulation consequence we have had in our firm’s historical past. So, blissful to see that money steadiness go up from about 40 million to 45 million-plus in the course of the quarter. We’ve debt of about 120 million, however that is we have got four-plus years to form of cope with that.
So, proper now the main focus is on getting again to development and on the identical time producing money and persevering with to bolster that money steadiness.
Patrick Walravens — Analyst
Nice. Thanks, all.
Tod Crane — Chief Monetary Officer
Thanks, Pat.
Operator
[Operator instructions] Our subsequent query is from Derrick Wooden with TD Securities. Please proceed.
Jared Levine — Analyst
Hello, crew. That is Jared Jungjohann on for Derrick Wooden. I used to be questioning when you can discuss to the partnerships you’ve got with Snowflake and Databricks. Possibly touch upon how deal exercise with them has been monitoring relative to your expectations.
Joshua G. James — Founder, Chief Government Officer, and Director
Yeah, so we positively, you already know, made an enormous deal of internally and externally this final yr about we have been going to nearly rearchitect our firm to be targeted on the ecosystem, first, from a product standpoint and from a buyer expertise standpoint, after which secondly, from a go to market standpoint. And we felt like we made great progress there. We made an enormous aim out of it, and I believe we have been very profitable on the exercise that we had round it. The final quarter, I believe we stated this, this quarter, we have been hoping to see some information and be capable of begin to perceive how it should have an effect on our numbers and our development trajectory.
And there is a few items of knowledge that we noticed that is actually encouraging. To start with, after we generate a lead traditionally, when you take a look at the conversion price of that in comparison with a lead that we generate from our ecosystem, our ecosystem converts at a few 5x enhance in conversion price. So, one lead from the ecosystem is price 5 leads that we generated independently. Secondly, when you take a look at as soon as that lead turns into a stage three lead for us, which is mainly the place it is within the pipe and the gross sales reps are chargeable for closing it, we’ve got a 2x to 3x enhance in shut charges from the ecosystem than we do from recurrently generated leads.
So, we’re beginning to see plenty of actually optimistic exercise throughout not simply the CDWs, however our complete ecosystem. And there is dozens and dozens of companions that we added final yr. Some are CDWs, some are the SIs for the CDWs, and lots of of them are additionally companions which have come by means of Domo In all places. And it is actually thrilling to see, you already know, the large distinction in conversion charges.
And so now, it is all about constructing that pipeline. And we began simply final quarter to form of add at a significant price. And I believe, you already know, as we glance to Q3 and This fall, hoping to see some significant acceleration in precise offers which can be closed. And hopefully, that may have an effect on billings in a means that we’re not guiding to.
We predict that by means of the tip of this quarter and thru subsequent quarter, we’re hoping to get some excellent news that may enable us to have the ability to increase steering for the Q3 and This fall numbers based mostly on what we’re seeing within the associate community. However, you already know, that is been actually thrilling to see. And I believe from — so there’s the rise in closed charges. And there was one other piece that we have been going to say.
Do you keep in mind?
Tod Crane — Chief Monetary Officer
Yeah. One factor to bear in mind, whereas it might not have a huge effect on our total billings quantity, it’s a significant share of our new enterprise.
Joshua G. James — Founder, Chief Government Officer, and Director
Nicely, that is proper. Yeah. I knew there was one other piece. So, even this yr, it ought to have a fabric influence on the share of income that is derived from new logos, the share of billings that is derived from new logos.
We predict that our channel, our ecosystem goes to make up a really significant portion of that. I do not know if it will be a majority, however it’ll be a really substantial portion of that. And the factor that is thrilling about that, that is inside this fiscal yr. If that occurs inside this fiscal yr, then it should give us a ton of confidence about substantial acceleration the yr after that.
So, a lot of nice indicators, a lot of nice alerts, not sufficient for Tod and I to have the ability to say, “Hey, we’re operating a public firm, let’s enhance steering for it,” but. However we’re hoping by means of Q1 and Q2, we begin getting sufficient significant data there. And if these closed charges, these large variations in closed charges maintain true, we expect they’ll as a result of we have got a considerable sufficient pattern dimension already that we imagine that is correct. However assuming that is the case and assuming that pipe fills with the actions that we have already got occurring, we simply must proceed to do the identical factor that we’re doing.
And hopefully by, you already know, finish of Q2, we’re capable of discuss steering Q3, This fall that is going to be impacted by this channel. So, a lot of nice progress there.
Jared Levine — Analyst
Thanks. Recognize all the colour on that. After which, final one for me, clearly, you have executed plenty of work on go-to-market movement thus far. However heading into the following yr, do you propose on making any further tweaks? After which, perhaps simply touch upon gross sales hiring expectations as nicely.
Thanks.
Joshua G. James — Founder, Chief Government Officer, and Director
Any further tweaks to go-to-market? The channel and the channel go-to-market, is that what you are speaking about?
Jared Levine — Analyst
Simply go-to-market extra broadly.
Joshua G. James — Founder, Chief Government Officer, and Director
I believe, you already know, we’ll simply proceed to do extra of the identical. We have been shifting an increasing number of to the ecosystem. So, as we get good main indicators from that funding, and it’ll proceed to shift an increasing number of {dollars} there, the kind of profile of folks that we’re hiring, discovering folks that have expertise with the ecosystem or in any of these CDWs, we’ll positively proceed to look to rent that sort of a profile. After which, the one different distinction or change that I’d discuss is simply our give attention to adoption.
As you progress over to consumption-oriented firm, you are not promoting concepts and aspirational use instances that you just hope a buyer can signal as much as. You are truly simply serving to the client use the product and discover satisfaction and discover ROI. And as they try this, their consumption will increase. So, it is a totally different movement.
It is a extra satisfying movement. The shoppers prefer it. It is simpler to stroll right into a buyer and say, “Hey, we simply need to present you learn how to use the product higher.” And so they’re excited to try this as a result of it would not include an enormous upfront price. They will incrementally attempt it.
In the event that they get a return, then they do extra of it. However that requires a special sort of talent set as nicely. So, you already know, we’ll proceed to shift an increasing number of technical by way of the profile of folks that we’ve got on the group.
Operator
Our subsequent query is from Yi Fu Lee with Cantor Fitzgerald. Please proceed.
Yi Fu Lee — Cantor Fitzgerald — Analyst
Thanks for taking my questions, and congrats on the sturdy end to fiscal ’25. Good afternoon, Josh and Tod. So, a pair for Josh after which a pair for Tod as nicely. So, sticking with our associate ecosystem replace, as it is a large a part of our thesis, I used to be questioning when you may give us extra replace on the acceleration from the transition to the consumption to the partnership mannequin the place, you already know, we’ve got the CDW companions, the ISV companions, hyperscalers.
And now, like at present, Josh, you talked about SIs. Are you able to give slightly bit extra shade on how this channel is managing the SI? And, maybe, converse slightly bit extra about that five-year, seven-figure deal you are speaking about. Is it like a wall-to-wall adoption?
Joshua G. James — Founder, Chief Government Officer, and Director
Yeah. Nice. Thanks. Positively nuances to all of the several types of companions.
And, RJ, be at liberty to leap in if you wish to add any shade. However several types of nuances with every associate. The CDWs, you already know, we’re seeing the vast majority of exercise from the CDWs. However it’s not essentially the CDWs.
It’s the CDWs plus the SIs. And in lots of instances, it is simply the SI that is facilitating that relationship. And with the SIs, particularly in that CDW world, when you go take a look at the highest — when you go take a look at these high CDWs and take a look at their high 5 SIs, we’ve got relationships with the vast majority of these SIs and with the very best SIs. And, you already know, I believe it is truthful to say a lot of them are fawning over us.
And so they’re saying issues like, you already know, “We used to go to market with 4 or 5 totally different distributors each time we obtained concerned. However it’s a lot simpler to work simply with you guys.” Or we did an analysis of all of the distributors within the area, and one SI stated, “We evaluated you and listed you on the high,” and stated there was a large hole, after which there was all people else. So, we’re getting actually optimistic suggestions from the SIs. And that is been very encouraging as nicely.
And we’re simply beginning to scratch the floor on how that is going to influence our enterprise. However once more, nothing however actually optimistic suggestions there. After which from the Domo In all places sort prospects, we have been — we have closed some nice offers. We’ve some nice prospects already.
I believe we have been woke up slightly bit this final quarter to the chance that is there. And in addition to a couple of the blockers which will have existed in our product, and so having the ability to give attention to that slightly bit extra. We had a few prospects actually spotlight for us a number of areas the place if we enhance, it may actually transfer the dial. And since we now have this associate movement, we’re capable of go and actually assist these prospects mine their buyer bases and assist them generate income.
So, it truly is a win-win as a result of we’re making it quicker and faster for them to have the ability to go to market, make their prospects happier as a result of they’re offering them information. And it is according to the opposite data that and the opposite software program that they are promoting to them. After which, we’re serving to them enhance and enhance their income by promoting this analytics add-on. So, they’re capable of offset the fee they have been paying for Domo within the first place and, in some instances, make substantial income and revenue margin out of it.
After which on the identical day out the again finish comes good offers for us, in some instances, multi-million greenback offers. So, it is a actually good enterprise for us as nicely. And positively proceed to be excited concerning the ecosystem. Nothing however optimistic indicators proper now from each portion of the ecosystem.
Yi Fu Lee — Cantor Fitzgerald — Analyst
Josh, are you able to discuss concerning the Databricks? I think about for this quarter you added Databricks to the combination. So, I perceive you are most likely working with Snowflake, Databricks. So, how does that add to the combination by way of including like, you already know, an excellent stable CDW to the combination?
Joshua G. James — Founder, Chief Government Officer, and Director
Yeah. So, it has been — actually, we did not deliver all people on on the identical time. And when you take a look at all of the CDWs, we’ve got extra momentum with a few of them than we do with the others. However there’s 5 CDWs that we’ve got fairly substantial relationships with, you already know, the place we have form of been by means of the manager course of.
We’ve government relationships. They’ve kicked the tires. We have executed the due diligence. They’ve executed the due diligence.
We have gone to some joint prospects collectively. We have talked about joint merchandise collectively. We have developed to their technical specs to ensure all of the APIs and our merchandise work nicely throughout the framework that they need their prospects to have an expertise in. And so, now, we won’t put all of our efforts to all of them on the identical time.
So, like I discussed earlier than, those which can be leaning into us is the place we’re leaning again first. I believe the problem proper now could be they’re all leaning in towards us much more intensely than we’ve got the sources to lean again. However, yeah, Databricks is certainly, you already know, a CDW that is approaching fairly rapidly, and we’re having plenty of nice experiences with them and with their SIs. After which, you already know, we have got a number of others, some earlier than and a few after, amongst that record of Google and Oracle and IBM.
And I am going to let RJ discuss slightly bit extra about, you already know, a few of the different actions we’re having with a few of these newer CDWs that we’re working with.
RJ Tracy — Chief Income Officer
Yeah. And one of many issues I am enthusiastic about is, finally, we’re eradicating friction out of the gross sales cycle. And that friction that we’re eradicating was unintentional within the first place. We have been by no means attempting to compete.
However eradicating the friction is de facto good for Domo. It is good for purchasers. It is good for the CDWs, for SIs, as a result of it provides prospects alternative. It permits us to associate and let the CDWs do what they do nicely.
And totally different CDWs have totally different strengths. And this enables prospects to buy their information basis and permits us to have a symbiotic relationship the place our targets are aligned. We would like prospects to get worth out of their information. And Domo’s actually good at serving to to hydrate these clouds, at offering ETL capabilities to those clouds, offering a solution to disseminate that data out, AI brokers.
You recognize, we have got a complete AI technique that every one these clouds are actually enthusiastic about as a result of it leverages all of the cool issues they’re doing with LLMs and all the infrastructure that they’ve in place and permits us to be the car that will get it out to all people. So, I am actually enthusiastic about it.
Yi Fu Lee — Cantor Fitzgerald — Analyst
Thanks for that.
RJ Tracy — Chief Income Officer
Yup.
Yi Fu Lee — Cantor Fitzgerald — Analyst
Thanks for that, RJ. Thanks for that, Josh. Can I simply squeeze in yet another, Josh, earlier than I ask Tod on the monetary questions? We have seen IBM acquisition of DataStax. I do know it is an space inside Information Cloud.
And Snowflake eyeing Redpanda, you already know, coming from the media. I used to be questioning, has this elevated the dialog by way of M&A on this area? Only a transient tackle it, Josh, earlier than I’m going on to the monetary questions.
Joshua G. James — Founder, Chief Government Officer, and Director
Yeah, I believe, you already know, that is one of many issues that we stated we have been open to, in fact. And, you already know, we stated as a way to maximize the worth that does exist right here at Domo, we’d like relationships with a number of CDWs. We have to present the worth that we offer to the ecosystem. As RJ talked about, we weren’t attempting particularly to chop ourselves out of these relationships and people conversations.
However there was notion that we have been aggressive with each CDW on the market. And fixing that has, I believe, actually opened the eyes of all the CDWs. We had one CDW only recently say, “You recognize, our No. 1 competitor within the CDW area, we have all the time struggled competing with them as a result of their ease of use is extra substantial than our ease of use.
However us plus Domo, we really feel like that neutralizes the benefit of use immediately. After which the client will get extra of the complexity that we provide.” So, we’re — and that is the CDW telling us this. So, we’re beginning to see, you already know, them actually acknowledge there is not any different firm like ours. We’re unbiased.
We’re not owned by any of their opponents. And we’re not only one piece of six, we’re all of them. And the combination truly helps. Oh, and by the best way, if you wish to construct an AI product, if you wish to construct some form of agentic performance on high of that, you are going to need that enterprise class.
You are going to need to have it ruled. You are going to need to have it safe. You are not going to need to have it move between 5 – 6 totally different distributors. And right here we’re simply sitting right here.
We simply actually wanted to repair this piece to unlock it. And it should take us by means of the tip of the yr earlier than all of the know-how is working as easily as we wish it to for all of those CDWs. However I truly suppose we’ve got a very good path for a very long time as an unbiased supplier to all of those people as a result of they do not really feel threatened by us. And if alongside the best way, unexpectedly there’s consolidation for our area, then we expect we’ll be in a chief place with a number of events on the desk as a result of they’re recognizing the worth we’re offering to their prospects.
Yi Fu Lee — Cantor Fitzgerald — Analyst
Bought it. Thanks for that, Josh. And, Tod, I’ll provide you with one fast one on the monetary aspect. I perceive the steering, and I respect that the primary time it sounds such as you guys are going to construct a pipe for a greater third quarter and fourth quarter.
This manner you can, maybe, alter the steering later. However the good factor is you are going to free money deposits for the whole fiscal ’26. I used to be questioning, what are a few of the issues that, Tod, you can see that would doubtlessly provide you with extra confidence to information larger as we go alongside the yr?
Tod Crane — Chief Monetary Officer
Yeah, there’s a few issues there. As we have talked about, the leads proceed to come back in steadily on the associate entrance, which we’re actually, actually glad to see. The conversion charges are multiples larger for associate offers than they’re for nonpartner offers. The piece of it that we’re nonetheless ready to get slightly extra predictability and consistency on is the amount of these leads.
So, as soon as we really feel like we’ve got a very good beat on that quantity, I believe that is going to provide us the arrogance we have to bump up that steering for the again half.
Yi Fu Lee — Cantor Fitzgerald — Analyst
Bought it. Thanks for that, Tod. And thanks very a lot, Josh.
Joshua G. James — Founder, Chief Government Officer, and Director
Thanks. See you quickly. See you quickly.
Operator
Thanks. With no additional questions, this can conclude at present’s convention. [Operator signoff]
Period: 0 minutes
Name contributors:
Peter Lowry — Vice President, Investor Relations
Joshua G. James — Founder, Chief Government Officer, and Director
Tod Crane — Chief Monetary Officer
Patrick Walravens — Analyst
Josh James — Founder, Chief Government Officer, and Director
RJ Tracy — Chief Income Officer
Pat Walravens — Analyst
Jared Levine — Analyst
Jared Jungjohann — Analyst
Yi Fu Lee — Cantor Fitzgerald — Analyst
