Domo Inc - Class B (NASDAQ:DOMO) Surprises on Earnings but Stock Slumps on Guidance

Domo Inc - Class B (NASDAQ:DOMO) reported fiscal second-quarter results that delivered a significant earnings surprise while meeting revenue expectations, though the market reaction appeared to reflect concerns about forward guidance and profitability metrics.

Financial Performance Versus Expectations

The business intelligence software company reported revenue of $79.7 million for the quarter ended July 31, 2025, essentially matching analyst expectations of $79.6 million. Subscription revenue, which constitutes the bulk of Domo's business, reached $72.7 million. The more notable development came on the bottom line, where Domo reported non-GAAP earnings per share of $0.02, dramatically outperforming the consensus estimate of a $0.05 loss per share. This represents the company's first-ever quarter of positive non-GAAP earnings per share.

Despite this earnings beat, the stock experienced significant after-hours selling pressure, declining approximately 12% following the earnings release. This reaction suggests investors may be focusing on other aspects of the report, including the company's guidance for the coming quarters.

Operational Highlights and Metrics

Several key operational metrics showed positive momentum during the quarter. Subscription remaining performance obligations reached $409.8 million, representing a 19% year-over-year increase, while current subscription RPO grew 4% to $220.2 million. The company also demonstrated improved cash flow generation, with operating cash flow increasing 155% year-over-year to $3.4 million and adjusted free cash flow reaching $1.4 million, up 125% from the same period last year.

CEO Josh James highlighted the company's progress, noting "record operating margin" and the positive non-GAAP EPS achievement. He also pointed to a 108% net revenue retention rate for customers who started with Domo on consumption contracts as evidence that the company's business model is gaining traction.

Forward Guidance and Analyst Expectations

For the third quarter of fiscal 2026, Domo provided revenue guidance of $78.5-$79.5 million, which falls slightly below analyst expectations of $80.6 million. The company anticipates a non-GAAP net loss per share between $0.03 and $0.07, compared to analyst projections of a $0.05 loss.

For the full fiscal year 2026, management expects revenue in the range of $316-$320 million, which aligns closely with the analyst consensus of $322.7 million. The company projected a non-GAAP net loss per share between $0.11 and $0.19, while analysts had anticipated a full-year loss of $0.21 per share.

Market Context and Performance

The negative after-hours reaction contrasts with the stock's recent performance, which had shown modest gains over the past week (0.3%) and two-week period (0.2%). The disconnect between the earnings beat and market reaction may reflect concerns about the company's growth trajectory amid the slightly conservative third-quarter revenue guidance, despite the improved profitability metrics.

For more detailed earnings analysis and future estimates, readers can review additional information through Domo's earnings and estimates page.

This article is for informational purposes only and does not constitute investment advice. Readers should conduct their own research and consult with a qualified financial advisor before making investment decisions.