Domo Inc - Class B (NASDAQ:DOMO) Reports Earnings Beat but Stock Plummets on Weak Revenue Outlook

Domo Inc - Class B (NASDAQ:DOMO) reported financial results for its fiscal third quarter ended October 31, 2025, delivering a notable earnings beat but offering a revenue outlook that appears to have disappointed investors, as reflected in a sharp after-hours stock decline.

Earnings and Revenue Versus Estimates

The company's performance presented a mixed picture when measured against Wall Street's expectations. Domo reported non-GAAP earnings per share (EPS) of $0.01, which significantly surpassed the analyst consensus estimate for a loss of $0.05 per share. This represents a clear positive surprise on profitability.

On the top line, the results were more muted. Third-quarter revenue of $79.4 million was essentially flat compared to the $79.8 million reported in the same period last year. This figure came in slightly below the analyst estimate of $80.5 million.

The market's reaction, a drop of over 11% in after-hours trading, seems primarily tied to the company's forward guidance rather than the quarterly results themselves.

Forward Guidance and Market Reaction

Domo provided its outlook for the upcoming fourth quarter and full fiscal year 2026. The guidance for the next quarter, in particular, appears to be the key driver behind the negative investor sentiment.

• Q4 Fiscal 2026 Revenue Guidance: $78.0 million to $79.0 million (midpoint: $78.5 million).
• Analyst Estimate for Q4 Revenue: $80.8 million.

The company's projection falls approximately 2.8% below the consensus estimate at the midpoint. For the full fiscal year, Domo expects revenue between $317.5 million and $318.5 million, which also trails the current analyst sales estimate of $324.4 million.

This guidance suggests expectations for continued near-flat revenue growth, which likely overshadowed the positive earnings beat for the just-completed quarter. The market reaction indicates that investors were hoping for, or had priced in, a stronger growth trajectory.

Key Highlights from the Quarterly Report

Beyond the headline earnings and sales figures, Domo's press release emphasized several operational and financial improvements:

• Profitability and Cash Flow Metrics: The company highlighted significant year-over-year improvements in its operating margins and cash generation.
  • Non-GAAP operating margin was positive 7%, up 4 percentage points.
  • Net cash from operating activities grew 125% to $3.4 million.
  • Adjusted free cash flow was $2.1 million, an increase of 115%.
• Future Contracted Revenue: Subscription Remaining Performance Obligations (RPO), a measure of future revenue under contract, increased 15% year-over-year to $405.9 million, indicating healthy demand visibility.
• Strategic Positioning: CEO Josh James stated the company's "ecosystem strategy is working" and that Domo expects to be free cash flow positive for the full year and each quarter within the year. The company also pointed to recent industry analyst recognitions, including being ranked #1 in Dresner Advisory Services' 2025 Agentic AI Report.

Conclusion

Domo's third-quarter results underscore a company making tangible progress toward profitability and sustainable cash flow, as evidenced by its earnings beat and improved margins. However, the investment narrative for growth-oriented software companies is heavily weighted toward future revenue expansion. The company's guidance for the coming periods, which points to slower growth than analysts anticipated, has taken precedence in the market's assessment, leading to a significant sell-off post-announcement. The challenge for Domo will be to demonstrate that its path to profitability can be coupled with a re-acceleration of top-line growth.

For a detailed look at Domo's historical earnings, future estimates, and analyst projections, you can review the data here.

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