DOMO earnings name for the interval ending December 31, 2024.
Picture supply: The Motley Idiot.
Domo (DOMO -8.80%)
This autumn 2025 Earnings Name
Mar 06, 2025, 5:00 p.m. ET
Contents:
- Ready Remarks
- Questions and Solutions
- Name Individuals
Ready Remarks:
Operator
Greetings, and welcome to Domo fourth quarter fiscal yr 2025 earnings name. Presently, all contributors are in a listen-only mode. An issue-and-answer session will comply with the formal presentation. [Operator instructions] As a reminder, this convention name is being recorded.
I might now like to show the decision over to Peter Lowry, vp of investor relations of Domo. Thanks. You could start.
Peter Lowry — Vice President, Investor Relations
Good afternoon. On the decision immediately, we have now Josh James, our founder and CEO; and Tod Crane, our chief monetary officer. I will lead off with our secure 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 also be being webcast.
Statements made on this name embody forward-looking statements associated to our enterprise underneath federal securities legal guidelines. These statements are topic to a wide range of dangers, uncertainties, and assumptions. These embody, however should not restricted to, statements about our future and prospects, our monetary projections and money place, statements relating to the potential of our consumption mannequin, statements about our gross sales group and expertise, our expectations for brand spanking new enterprise alternatives, transactions, and initiatives. Statements relating to our channel of communication and upcoming occasions, statements relating to the potential of synthetic intelligence and its influence on our enterprise, and statements relating to the influence of macroeconomic and different circumstances on our enterprise.
For a dialogue of those dangers and uncertainties, please seek advice from paperwork we file with the SEC. Particularly, immediately’s press launch, our most just lately filed annual report on Kind 10-Okay and our most just lately filed quarterly report on Kind 10-Q. These paperwork comprise and establish vital threat components and different data that will trigger our precise outcomes to vary materially from these contained in our forward-looking statements. As well as, throughout immediately’s name, we’ll talk about non-GAAP monetary measures, which we consider are helpful as supplemental measures of Domo’s efficiency.
Apart from income, except in any other case acknowledged, we can be discussing our outcomes of operations on a non-GAAP foundation. These non-GAAP measures must be thought-about along with and never as an alternative to or in isolation from our GAAP outcomes. Please seek advice from the tables in our earnings press launch for a reconciliation of our non-GAAP monetary measures to their most straight comparable GAAP measure, which we have now posted to the investor relations part of our web site at domoinvestors.com. With that, I will flip it over to Josh.
Josh?
Joshua G. James — Founder, Chief Govt Officer, and Director
Thanks, Pete. Hey, everybody, and thanks for becoming a member of us on the decision immediately. In This autumn, we exceeded our steering for billings, income, non-GAAP EPS, and adjusted free money move. We’ve got additionally turned the nook on money technology and anticipate constructive adjusted free money move for Q1 and for fiscal yr ’26.
Our subscription RPO progress accelerated to 14% yr over yr, and our long-term subscription RPO progress accelerated to 38% year-over-year. I do not know what number of corporations ever have had that large of a niche between billings progress and long-term RPO progress. It is definitely among the finest performances relative to billings progress throughout the complete 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. Previously, there could have been some misinterpretations relating to the power 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 capability to evolve and develop with them. The development in RPO can also be a constructive due to what it means for our retention price. Longer-term contracts imply extra alternatives to assist our prospects undertake new use circumstances and obtain a significant return on their funding in our expertise.
This dramatic enchancment in executing longer contracts was achieved in solely two quarters of the yr of targeted effort. We consider that we will proceed to maneuver the needle meaningfully on retention as we get higher and higher in executing on this plan over the subsequent fiscal yr. Persevering with on the theme of enhancing retention, there are 4 methods we consider we’ll meaningfully improve our capability 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 shortage of CIO endorsement was the gentle 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 reminiscent of consumer progress, logins, and playing cards created. As anticipated, consumption prospects are adopting Domo considerably extra extensively of their organizations in comparison with the cohort of seat-based prospects.
And this places us in a a lot stronger place that we predict bodes properly 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 eventually, the fourth transfer we have initiated to have an effect on retention is the main target 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 should you simply do the easy math, the change in contract size alone ought to contribute a minimum of 2 share factors of enchancment in our gross retention price in fiscal yr ’26 in comparison with fiscal yr ’25. Shifting alongside to our priorities, as a reminder, our main fiscal yr ’25 progress initiatives had been to construct out our companion community, proceed so as to add AI innovation all through the platform, and shift our prospects to consumption pricing. As for our main focus firstly of the yr, we stated that this was going to be the yr of the ecosystem. All year long, we noticed companions bringing us prime quality leads and serving to us shut new ACV.
Accordingly, we have now reallocated our engineering assets to make Domo work extra seamlessly with our companions’ expertise and redirected our gross sales assets towards companion enablement. Our main companion focus has been with cloud-based knowledge warehouses, or CDWs. Over the previous few years, we have seen main CDWs turn into the middle of gravity in our ecosystem, and we consider our foundational imaginative and prescient, technique, and platform make us a really perfect companion for them. Domo is an AI and knowledge merchandise platform, and as such, as corporations have acknowledged that AI and the digitization of companies have turn into extra vital than ever, they’re counting on Domo.
They acknowledge we’re uniquely positioned to allow wonderful experiences, hosted on a companion CDW, which advantages them and positions us extraordinarily properly within the knowledge 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 knowledge warehouse, or a CDW, a buyer can rapidly and effectively implement a contemporary knowledge analytics answer or leverage new AI alternatives with simply their most popular CDW and Domo, as an alternative of cobbling collectively 4 or 5 completely different options from completely different distributors. We went stay with our first CDW companion in June of 2024, and we had been instantly introduced into many strategic knowledge conversations.
Let me share a couple 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 knowledge was siloed and its legacy BI vendor was not being adopted. The corporate was seeking to consolidate its BI expertise stack to offer a greater built-in answer that had the flexibility to low-code apps. Crucial to profitable this deal was our seamless integration with our CDW companion, together with our ETL capabilities, which run on prime of our CDW companion’s infrastructure.
After evaluating our capabilities, the corporate changed its total legacy BI stack, together with Energy BI, with Domo and our CDW companion. One other win was with an engineering firm that selected Domo and one in all our CDW companions to interchange its current methods, which weren’t assembly the wants for its quickly rising variety of new services. After a proof of idea, the corporate selected Domo and our CDW companion based mostly on our superior real-time efficiency and the convenience of growing higher analytics for its new places. Lastly, a quickly rising retail franchise administration firm was on the lookout for an answer that might present franchise metrics reminiscent of income, membership progress, and product stock with a business-friendly entrance finish and a scalable enterprise class backend to assist its speedy progress.
The corporate selected Domo and one in all our CDW companions based mostly on the power of our companion’s backend and our easy-to-use options and the general integration. These examples had been all This autumn new brand wins with our CDW companions and one in all their strategic system integrators, or SIs, which is one other vital companion focus for Domo. Main CDW SIs are massively relied on and influential in a lot of our prospects within the broader knowledge panorama. They’re thought-about area specialists and supply highly effective buyer suggestions.
This sort of endorsement creates extra lead move and a extra strong pipeline for us and the SIs’ involvement helps guarantee a profitable implementation for our mutual prospects. In FY ’25, we really 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’ expertise. One other space of alternative for us is leveraging Domo In all places to companion with our prospects to offer highly effective knowledge options to their prospects in a B2B2B or B2B2C setup. Information is extremely precious, however usually corporations 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 knowledge and insights into their very own purposes. Partnering with Domo creates aggressive differentiation with out the necessity to construct an information sharing answer internally, which gives price financial savings and monetization alternatives. We’ve got 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 offer primary case administration analytics after which expanded to offer analytics round a wide range of inside use circumstances, together with gross sales, advertising and marketing, and finance. After having an important inside expertise with Domo, the corporate then partnered with us to create an exterior knowledge providing to enhance case administration and operational effectivity for his or her prospects. The corporate has added lots of of shoppers for its new analytics providing, which is powered by Domo, and this not solely offsets their knowledge prices, however really 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 gives extra publicity to Domo for his or her prospects.
In reality, dozens of their prospects now have turn into direct Domo prospects. With a major upsell in This autumn, this relationship now represents a number of million {dollars} for us that can also be driving new environment friendly income as our companion. Whereas it’s nonetheless a difficult software program spending atmosphere, one space the place we see corporations keen to take a position and growing spend is round AI enablement, and we see AI as one other key progress driver for us over the long run. Over the previous yr, we have now seen AI bounce to the highest of everybody’s thoughts, dominating expertise spending and roadmap discussions.
AI options reminiscent of advice engines, machine studying, algorithms, and agent-like workflows have been part of the Domo platform lengthy earlier than AI went mainstream. We consider Domo was constructed to capitalize on this AI second with enterprise-grade entry to knowledge merchandise in a secure, ruled method. Our platform permits us to innovate quickly as a result of we have now already constructed the foundational components mandatory for a profitable AI technique. That is the second the place knowledge and intelligence come collectively to drive actual enterprise worth, and we consider we’re extraordinarily well-positioned.
In reality, Domo AI received a number of business awards in This autumn, together with the 2025 DEVIES Award within the knowledge analytics and visualization class, the 2024 KMWorld Readers’ Alternative Award for Finest AI, and the Database Traits and Software Journal’s record of trend-setting merchandise in knowledge and knowledge administration for 2025. Domo excels at connecting to all the information inside a company, one thing knowledge scientists have lengthy struggled with. However we not solely connect with the information, our platform permits our prospects to remodel the information to make it AI-ready. We additionally acknowledged early on that prospects would need the flexibleness to select from a wide range of new fashions that had 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 companies layer, which lets prospects choose the mannequin of their alternative in a well-governed, safe atmosphere. Our capability to entry the proprietary knowledge wanted for AI, to curate it to be AI-ready, to use fashions to achieve 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 immediately. Domo’s highly effective instruments, mixed with consumption pricing, permits enterprise customers and knowledge scientists to rapidly check out and entry synthetic intelligence capabilities with out having to allocate substantial incremental price range.
We’re listening to constructive buyer suggestions on each the power 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 knowledge merchandise platform lets individuals channel AI and knowledge into progressive makes use of that ship a measurable influence. Anybody can use Domo to arrange, analyze, visualize, automate, and construct knowledge merchandise supported by and amplified by AI. As we have now moved to a consumption mannequin, we have seen that it higher aligns pricing with worth delivered, facilitates speedy adoption, and aligns with our companions’ pricing fashions. Consumption drives product-led progress, 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 also be driving longer-term, extra strategic relationships with our prospects, as evidenced by 38% long-term subscription RPO progress. For instance, final quarter, a packaging firm entered right into a five-year, nearly seven-figure settlement to interchange Energy BI with Domo. The corporate selected Domo as a result of we demonstrated a quicker time to worth, we’re higher in a position to serve their inside constituents, and might extra successfully consolidate knowledge from acquired corporations 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 coming into right into a five-year deal. Shifting on to an business recognition, along with the Domo AI awards we obtained in This autumn, the Domo platform rose above the pack in a number of business distinctions. This consists of receiving 5 Dresner Advisory Companies Expertise Innovation Awards, our eighth consecutive yr as a a number of class winner. Domo is acknowledged as a prime vendor within the analytics platform, cloud computing and enterprise intelligence, embedded BI, collective insights and self-service BI knowledge of the crowds, thematic market experiences.
Domo was additionally ranked within the exemplary quadrant and obtained a number of prime distinctions throughout 5 2024 Data Companies Group Analytics and Information Purchaser guides, together with gen AI analytics purchaser information, collaborative analytics purchaser’s information, cellular analytics purchaser’s information, embedded analytics purchaser’s information, and analytics and knowledge 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 knowledge merchandise platform. By means of the agency’s rigorous ROI evaluation, Domo prospects highlighted constant advantages, together with a 35% enchancment in consumer productiveness, a 20% expertise price financial savings, and a median 15% improve 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 may anticipate to see new product bulletins and plenty of wonderful buyer tales from corporations reminiscent of Samsung, Lenovo, Filevine, U.S. Financial institution, Harvard Enterprise Overview, the NBA, A&E Networks, Low cost Tire, TaylorMade, and Sony. I hope to see a lot of you there, and should you’re coming, please attain out and we’ll join you with as many shoppers as attainable.
In conclusion, I am more than happy with our This autumn outcomes. I consider we’re completely making the appropriate strategic strikes to get again to environment friendly progress. As we look forward to fiscal yr ’26, we stay targeted on additional growing our companion relationships, enhancing our AI capabilities, and migrating the rest of our buyer base to the consumption mannequin. And from a monetary standpoint, I consider we’ll begin to see the start of progress acceleration whereas constantly producing money.
The progress we have now revamped the previous yr positions us very properly and gives a stable basis for defensible long-term progress. And with that, I will hand it over to our esteemed chief monetary officer, Tod Crane.
Tod Crane — Chief Monetary Officer
Thanks, Josh. We exceeded our This autumn steering for billings, income, non-GAAP EPS, and adjusted free money move. Whole income was $78.8 million, with subscription income representing 91% of that quantity. This autumn billings had 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 autumn, we continued that development, and the advance in productiveness was even higher. That is important for us as an organization and has been a precedence of mine to verify we’re not solely getting again to progress however doing so effectively. We ended the quarter with complete subscription RPO of $403.6 million, up 14% yr over yr, a major acceleration from Q3, and our greatest subscription RPO progress end in over two years.
Subscription RPO past 12 months grew 38% yr over yr, and the common contract size throughout our total buyer base continued to extend. Gross retention was 85% in This autumn, the third consecutive quarter at 85% or above, which is a pleasant enchancment from the place we had been. In Q1, we anticipate 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 anticipate a minimum of a 2 percentage-point enchancment. Our long-term purpose 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 subsequently have a bigger influence on our retention metrics.
Our adjusted free money move was $6 million in This autumn, a major enchancment from Q3, and our money steadiness elevated from $40.9 million in Q3 to 45.3 million in This autumn. Wanting ahead, we anticipate to be money move constructive in each Q1 and FY ’26. Shifting on to margins and profitability, our subscription gross margin was 81.4%, down sequentially attributable to timing of capitalized software program amortization. We anticipate 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 term.
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 complete yr, we anticipate 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 growth from breakeven in FY ’25. For Q1, we anticipate 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 anticipate low single digits billings progress, and from there, we anticipate a gradual acceleration in billings progress for the rest of the yr. In conclusion, I’m more than happy with the progress that we have now made at constructing an environment friendly progress engine, and based mostly on the actions we have now taken over the previous yr, I consider we’re well-positioned to enhance each our progress 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 a bit of bit about what you are seeing within the macro and if all the type of speedy 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 Govt Officer, and Director
The final couple of years, which is, , individuals aren’t doing something that is not well-organized, that hasn’t been thought of for a very long time, has numerous authorizations. There is not any superfluous actions happening proper now. So, that stated, , when they’re making a purchase order choice about us, it is one thing that is fairly properly backed with completely 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, , we have undoubtedly seen it the final couple of years, however I do not suppose we have seen something within the current time period but, however we’re at all times searching for it.
Patrick Walravens — Analyst
And, Tod, if I might ask two to you, I might love to grasp a bit of bit higher this dynamic between renewals and consumptions and the shift, the $5 million you had been speaking about. After which, secondly, should you might simply speak about type of money debt and the way you are feeling concerning the steadiness sheet, addressing the steadiness sheet. Each of these can be actually useful.
Tod Crane — Chief Monetary Officer
Yeah. Thanks, Pat. Respect the questions. So, first on the shift, , as we labored by means of consumption conversions over the previous yr, a whole lot of occasions when we have now that dialog with a buyer, we’ll reset their renewal date.
So, usually they could’ve renewed in Q1. We’ve got a dialog in the course of their contract that could possibly be in Q2 by means of This autumn. And once they determine to make that conversion, we’ll really 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 web influence of that was a 5 million greenback shift out of Q1 into the opposite quarters. On the opposite query, , relating to — remind me what the opposite query was, Pat?
Joshua G. James — Founder, Chief Govt Officer, and Director
Steadiness sheet.
Patrick Walravens — Analyst
The steadiness sheet — , yeah.
Tod Crane — Chief Monetary Officer
Yeah, on steadiness sheet and money, so I imply, very pleased with the free money move end in This autumn. Six million was really the best money free money move end result we have had in our firm’s historical past. So, completely satisfied to see that money steadiness go up from about 40 million to 45 million-plus throughout the quarter. We’ve got debt of about 120 million, however that is we have four-plus years to type of cope with that.
So, proper now the main target is on getting again to progress 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, group. That is Jared Jungjohann on for Derrick Wooden. I used to be questioning should you can discuss to the partnerships you’ve got with Snowflake and Databricks. Perhaps touch upon how deal exercise with them has been monitoring relative to your expectations.
Joshua G. James — Founder, Chief Govt Officer, and Director
Yeah, so we undoubtedly, , made a giant deal of internally and externally this final yr about we had 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 a giant purpose out of it, and I believe we had been very profitable on the exercise that we had round it. The final quarter, I believe we stated this, this quarter, we had been hoping to see some knowledge and be capable to begin to perceive how it’ll have an effect on our numbers and our progress trajectory.
And there is a few items of knowledge that we noticed that is actually encouraging. To start with, once we generate a lead traditionally, should 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 improve in conversion price. So, one lead from the ecosystem is value 5 leads that we generated independently. Secondly, should you take a look at as soon as that lead turns into a stage three lead for us, which is principally the place it is within the pipe and the gross sales reps are liable for closing it, we have now a 2x to 3x improve in shut charges from the ecosystem than we do from recurrently generated leads.
So, we’re beginning to see a whole lot of actually constructive exercise throughout not simply the CDWs, however our total 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 plenty of of them are additionally companions which have come by means of Domo In all places. And it is definitely thrilling to see, , the huge distinction in conversion charges.
And so now, it is all about constructing that pipeline. And we began simply final quarter to type of add at a significant price. And I believe, , as we glance to Q3 and This autumn, hoping to see some significant acceleration in precise offers which are closed. And hopefully, that can have an effect on billings in a method that we’re not guiding to.
We expect that by means of the tip of this quarter and thru subsequent quarter, we’re hoping to get some excellent news that can enable us to have the ability to increase steering for the Q3 and This autumn numbers based mostly on what we’re seeing within the companion community. However, , 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 had been going to say.
Do you bear in mind?
Tod Crane — Chief Monetary Officer
Yeah. One factor to bear in mind, whereas it could not have a huge effect on our general billings quantity, it’s a significant share of our new enterprise.
Joshua G. James — Founder, Chief Govt Officer, and Director
Properly, that is proper. Yeah. I knew there was one other piece. So, even this yr, it ought to have a cloth influence on the proportion of income that is derived from new logos, the proportion of billings that is derived from new logos.
We expect 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’ll give us a ton of confidence about substantial acceleration the yr after that.
So, numerous nice indicators, numerous nice alerts, not sufficient for Tod and I to have the ability to say, “Hey, we’re working a public firm, let’s improve 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 huge variations in closed charges maintain true, we predict they’ll as a result of we have a considerable sufficient pattern dimension already that we consider that is correct. However assuming that is the case and assuming that pipe fills with the actions that we have already got happening, we simply have to proceed to do the identical factor that we’re doing.
And hopefully by, , finish of Q2, we’re in a position to speak about steering Q3, This autumn that is going to be impacted by this channel. So, numerous nice progress there.
Jared Levine — Analyst
Thanks. Respect all the colour on that. After which, final one for me, clearly, you have performed a whole lot of work on go-to-market movement thus far. However heading into the subsequent yr, do you propose on making any extra tweaks? After which, possibly simply touch upon gross sales hiring expectations as properly.
Thanks.
Joshua G. James — Founder, Chief Govt Officer, and Director
Any extra 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 Govt Officer, and Director
I believe, , 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 people who we’re hiring, discovering people who have expertise with the ecosystem or in any of these CDWs, we’ll undoubtedly proceed to look to rent that sort of a profile. After which, the one different distinction or change that I might speak about is simply our concentrate on adoption.
As you progress over to consumption-oriented firm, you are not promoting concepts and aspirational use circumstances that you simply hope a buyer can signal as much as. You are really 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 completely 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 how one can use the product higher.” They usually’re excited to do this as a result of it would not include a giant 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 distinct sort of talent set as properly. So, , we’ll proceed to shift an increasing number of technical by way of the profile of people who we have now 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 properly. So, sticking with our companion ecosystem replace, as it is a large a part of our thesis, I used to be questioning should you might give us extra replace on the acceleration from the transition to the consumption to the partnership mannequin the place, , we have now the CDW companions, the ISV companions, hyperscalers.
And now, like immediately, Josh, you talked about SIs. Are you able to give a bit of bit extra coloration on how this channel is managing the SI? And, maybe, communicate a bit of 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 Govt 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 coloration. However several types of nuances with every companion. The CDWs, , we’re seeing nearly all of exercise from the CDWs. However it’s not essentially the CDWs.
It’s the CDWs plus the SIs. And in lots of circumstances, it is simply the SI that is facilitating that relationship. And with the SIs, particularly in that CDW world, should you go take a look at the highest — should you go take a look at these prime CDWs and take a look at their prime 5 SIs, we have now relationships with nearly all of these SIs and with the very best SIs. And, , I believe it is truthful to say a lot of them are fawning over us.
They usually’re saying issues like, , “We used to go to market with 4 or 5 completely different distributors each time we received 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 prime,” and stated there was an enormous hole, after which there was all people else. So, we’re getting actually constructive suggestions from the SIs. And that is been very encouraging as properly.
And we’re simply beginning to scratch the floor on how that is going to influence our enterprise. However once more, nothing however actually constructive suggestions there. After which from the Domo In all places sort prospects, we have been — we have closed some nice offers. We’ve got some nice prospects already.
I believe we have been woke up a bit of bit this final quarter to the chance that is there. And likewise to a couple of the blockers that will have existed in our product, and so having the ability to concentrate on that a bit of bit extra. We had a few prospects actually spotlight for us a couple of areas the place if we enhance, it might actually transfer the dial. And since we now have this companion movement, we’re in a position to 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 knowledge. And it is consistent with the opposite data that and the opposite software program that they are promoting to them. After which, we’re serving to them enhance and improve their income by promoting this analytics add-on. So, they’re in a position to offset the price they had been paying for Domo within the first place and, in some circumstances, make substantial income and revenue margin out of it.
After which on the identical trip the again finish comes good offers for us, in some circumstances, multi-million greenback offers. So, it is a actually good enterprise for us as properly. And undoubtedly proceed to be excited concerning the ecosystem. Nothing however constructive 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 in all probability working with Snowflake, Databricks. So, how does that add to the combination by way of including like, , an excellent stable CDW to the combination?
Joshua G. James — Founder, Chief Govt Officer, and Director
Yeah. So, it has been — definitely, we did not convey all people on on the identical time. And should you take a look at all of the CDWs, we have now extra momentum with a few of them than we do with the others. However there’s 5 CDWs that we have now fairly substantial relationships with, , the place we have type of been by means of the manager course of.
We’ve got government relationships. They’ve kicked the tires. We have performed the due diligence. They’ve performed 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 verify all of the APIs and our merchandise work properly inside 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 are leaning into us is the place we’re leaning again first. I believe the problem proper now’s they’re all leaning in towards us much more intensely than we have now the assets to lean again. However, yeah, Databricks is unquestionably, , a CDW that is approaching fairly rapidly, and we’re having a whole lot of nice experiences with them and with their SIs. After which, , we have a number of others, some earlier than and a few after, amongst that record of Google and Oracle and IBM.
And I will let RJ discuss a bit of bit extra about, , 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, in the end, we’re eradicating friction out of the gross sales cycle. And that friction that we’re eradicating was unintentional within the first place. We had been by no means attempting to compete.
However eradicating the friction is actually good for Domo. It is good for patrons. It is good for the CDWs, for SIs, as a result of it provides prospects alternative. It permits us to companion and let the CDWs do what they do properly.
And completely different CDWs have completely different strengths. And this permits prospects to buy their knowledge basis and permits us to have a symbiotic relationship the place our objectives are aligned. We wish prospects to get worth out of their knowledge. And Domo’s actually good at serving to to hydrate these clouds, at offering ETL capabilities to those clouds, offering a approach to disseminate that data out, AI brokers.
You recognize, we have 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 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, , 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 am going on to the monetary questions.
Joshua G. James — Founder, Chief Govt Officer, and Director
Yeah, I believe, , that is one of many issues that we stated we had been open to, in fact. And, , we stated with a purpose to maximize the worth that does exist right here at Domo, we want 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 had 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 at all times 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 convenience 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, , them actually acknowledge there isn’t any different firm like ours. We’re unbiased.
We’re not owned by any of their rivals. And we’re not only one piece of six, we’re all of them. And the combination really helps. Oh, and by the way in which, if you wish to construct an AI product, if you wish to construct some type of agentic performance on prime 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 cross between 5 – 6 completely different distributors. And right here we’re simply sitting right here.
We simply actually wanted to repair this piece to unlock it. And it’ll take us by means of the tip of the yr earlier than all of the expertise is working as easily as we wish it to for all of those CDWs. However I really suppose we have now a very good path for a very long time as an unbiased supplier to all of those of us as a result of they do not really feel threatened by us. And if alongside the way in which, abruptly there’s consolidation for our area, then we predict we will be in a main 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
Received 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 recognize 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 could possibly, maybe, alter the steering later. However the good factor is you are going to free money deposits for the complete fiscal ’26. I used to be questioning, what are a few of the issues that, Tod, you could possibly see that might 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 return in steadily on the companion entrance, which we’re actually, actually glad to see. The conversion charges are multiples larger for companion offers than they’re for nonpartner offers. The piece of it that we’re nonetheless ready to get a bit of extra predictability and consistency on is the amount of these leads.
So, as soon as we really feel like we have now a great 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
Received it. Thanks for that, Tod. And thanks very a lot, Josh.
Joshua G. James — Founder, Chief Govt Officer, and Director
Thanks. See you quickly. See you quickly.
Operator
Thanks. With no additional questions, this may conclude immediately’s convention. [Operator signoff]
Length: 0 minutes
Name contributors:
Peter Lowry — Vice President, Investor Relations
Joshua G. James — Founder, Chief Govt Officer, and Director
Tod Crane — Chief Monetary Officer
Patrick Walravens — Analyst
Josh James — Founder, Chief Govt Officer, and Director
RJ Tracy — Chief Income Officer
Pat Walravens — Analyst
Jared Levine — Analyst
Jared Jungjohann — Analyst
Yi Fu Lee — Cantor Fitzgerald — Analyst
