Business intelligence platform Domo (NASDAQ: DOMO) met Wall Streets revenue expectations in Q3 CY2025, but sales were flat year on year at $79.4 million. On the other hand, next quarter’s revenue guidance of $78.5 million was less impressive, coming in 0.9% below analysts’ estimates. Its non-GAAP profit of $0.01 per share was significantly above analysts’ consensus estimates.

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Company Overview

Named for the Japanese word meaning "thank you very much," Domo (NASDAQ: DOMO) provides a cloud-based business intelligence platform that connects people with real-time data and insights across organizations.

Revenue Growth

A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, Domo grew its sales at a sluggish 9.8% compounded annual growth rate. This fell short of our benchmark for the software sector and is a tough starting point for our analysis.

Long-term growth is the most important, but within software, a half-decade historical view may miss new innovations or demand cycles. Domo’s recent performance shows its demand has slowed as its revenue was flat over the last two years.

This quarter, Domo’s $79.4 million of revenue was flat year on year and in line with Wall Street’s estimates. Company management is currently guiding for flat sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 1.3% over the next 12 months, similar to its two-year rate. Although this projection implies its newer products and services will spur better top-line performance, it is still below the sector average.

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Billings

Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.

Over the last year, Domo failed to grow its billings, which came in at $73.2 million in the latest quarter. This performance mirrored its total sales and shows the company faced challenges in acquiring and retaining customers. It also suggests there may be increasing competition or market saturation.

Customer Acquisition Efficiency

The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments.

Domo’s recent customer acquisition efforts haven’t yielded returns as its CAC payback period was negative this quarter, meaning its incremental sales and marketing investments outpaced its revenue. The company’s inefficiency indicates it operates in a highly competitive environment where there is little differentiation between Domo’s products and its peers.

Key Takeaways from Domo’s Q3 Results

We were impressed by Domo’s optimistic EPS guidance for next quarter, which blew past analysts’ expectations. We were also glad its full-year EPS guidance trumped Wall Street’s estimates. On the other hand, its billings missed and its revenue guidance for next quarter fell slightly short of Wall Street’s estimates. Zooming out, we think this was a mixed quarter. Investors were likely hoping for more, and shares traded down 9.3% to $10.52 immediately after reporting.

Is Domo an attractive investment opportunity at the current price? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.