Company Quick10K Filing
Domo
Price17.86 EPS-3
Shares28 P/E-5
MCap494 P/FCF-8
Net Debt11 EBIT-95
TEV505 TEV/EBIT-5
TTM 2019-10-31, in MM, except price, ratios
10-Q 2020-04-30 Filed 2020-06-09
10-K 2020-01-31 Filed 2020-04-13
10-Q 2019-10-31 Filed 2019-12-12
10-Q 2019-07-31 Filed 2019-09-12
10-Q 2019-04-30 Filed 2019-06-13
10-K 2019-01-31 Filed 2019-04-15
10-Q 2018-10-31 Filed 2018-12-13
10-Q 2018-07-31 Filed 2018-09-13
S-1 2018-06-01 Public Filing
8-K 2020-06-04
8-K 2020-06-02
8-K 2020-04-14
8-K 2020-03-23
8-K 2020-03-10
8-K 2020-03-05
8-K 2019-12-05
8-K 2019-09-20
8-K 2019-09-05
8-K 2019-06-06
8-K 2019-06-06
8-K 2019-06-04
8-K 2019-05-08
8-K 2019-04-19
8-K 2019-03-29
8-K 2019-03-13
8-K 2019-03-13
8-K 2019-01-04
8-K 2019-01-04
8-K 2018-12-06
8-K 2018-09-17
8-K 2018-09-06

DOMO 10Q Quarterly Report

Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 6. Exhibits
EX-31.1 domofy21q1exhibit311.htm
EX-31.2 domofy21q1exhibit312.htm
EX-32.1 domofy21q1exhibit321.htm

Domo Earnings 2020-04-30

Balance SheetIncome StatementCash Flow
33025818611442-302016201720182020
Assets, Equity
45267-12-31-502016201720182020
Rev, G Profit, Net Income
3011-8-27-46-652016201720182020
Ops, Inv, Fin

domo10q-20200430
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________
Form 10-Q
__________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For transition period from to .
Commission File Number 001-38553.

DOMO, INC.
(Exact Name of Registrant as Specified in its Charter)
__________________________
Delaware
(State or Other Jurisdiction of Incorporation or Organization)
27-3687433
(I.R.S. Employer Identification Number)
772 East Utah Valley Drive
American Fork, UT 84003
(Address of principal executive office, including zip code)

(801) 899-1000
(Registrant's telephone number, including area code)
__________________________
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ý No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes  No 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading symbol(s)  Name of each exchange on which registered
Class B Common Stock, par value $0.001 per shareDOMOThe Nasdaq Global Market
As of May 31, 2020, there were approximately 3,263,659 shares of the registrant's Class A common stock and 25,551,402 shares of the registrant's Class B common stock outstanding.



TABLE OF CONTENTS
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Information (unaudited)
Condensed Consolidated Balance Sheets
Condensed Consolidated Statements of Operations
Condensed Consolidated Statements of Comprehensive Loss
Condensed Consolidated Statements of Stockholders' Equity (Deficit)
Condensed Consolidated Statements of Cash Flows
Notes to Condensed Consolidated Financial Statements
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Item 4. Controls and Procedures
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 6. Exhibits
Signatures




PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Domo, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except per share amounts)
(unaudited)
 As of January 31,As of April 30,
 20202020
Assets
Current assets:
Cash and cash equivalents$80,843  $75,543  
Short-term investments17,967  12,571  
Accounts receivable, net of allowances of $2,164 and $4,023 as of January 31, 2020 and April 30, 2020, respectively47,967  29,644  
Contract acquisition costs, net12,676  12,513  
Prepaid expenses and other current assets12,809  12,507  
Total current assets172,262  142,778  
Property and equipment, net12,816  13,111  
Right-of-use assets—  11,095  
Contract acquisition costs, noncurrent, net17,083  15,641  
Intangible assets, net3,865  3,815  
Goodwill9,478  9,478  
Other assets1,234  1,300  
Total assets$216,738  $197,218  
Liabilities and stockholders' deficit
Current liabilities:
Accounts payable$2,298  $2,347  
Accrued expenses and other current liabilities46,473  30,892  
Lease liabilities —  3,610  
Deferred revenue105,290  104,804  
Total current liabilities154,061  141,653  
Lease liabilities, noncurrent—  8,166  
Deferred revenue, noncurrent4,454  2,916  
Other liabilities, noncurrent6,329  6,415  
Long-term debt101,074  102,056  
Total liabilities265,918  261,206  
Commitments and contingencies (Note 12)
Stockholders' deficit:
Preferred stock, $0.001 par value per share; 10,000 shares authorized as of January 31, 2020 and April 30, 2020; no shares issued and outstanding as of January 31, 2020 and April 30, 2020    
Class A common stock, $0.001 par value per share; 3,264 shares authorized as of January 31, 2020 and April 30, 2020; 3,264 shares issued and outstanding as of January 31, 2020 and April 30, 20203  3  
Class B common stock, $0.001 par value per share; 500,000 shares authorized as of January 31, 2020 and April 30, 2020; 24,986 and 25,548 shares issued and outstanding as of January 31, 2020 and April 30, 2020, respectively25  26  
Additional paid-in capital988,141  998,271  
Accumulated other comprehensive income389  345  
Accumulated deficit(1,037,738) (1,062,633) 
Total stockholders' deficit(49,180) (63,988) 
Total liabilities and stockholders' deficit$216,738  $197,218  
See accompanying notes to condensed consolidated financial statements.
1


Domo, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
 Three Months Ended April 30,
 20192020
Revenue: 
Subscription$34,391  $42,436  
Professional services and other6,407  6,125  
Total revenue40,798  48,561  
Cost of revenue:
Subscription8,035  9,105  
Professional services and other4,769  5,004  
Total cost of revenue12,804  14,109  
Gross profit27,994  34,452  
Operating expenses:
Sales and marketing35,949  29,096  
Research and development17,099  17,453  
General and administrative8,017  9,869  
Total operating expenses61,065  56,418  
Loss from operations(33,071) (21,966) 
Other expense, net(2,325) (2,724) 
Loss before income taxes(35,396) (24,690) 
Provision for income taxes140  205  
Net loss$(35,536) $(24,895) 
Net loss per share, basic and diluted$(1.32) $(0.88) 
Weighted-average number of shares used in
computing net loss per share, basic and diluted
26,966  28,450  
See accompanying notes to condensed consolidated financial statements.
2


Domo, Inc.
Condensed Consolidated Statements of Comprehensive Loss
(in thousands)
(unaudited)
 Three Months Ended April 30,
 20192020
Net loss$(35,536) $(24,895) 
Foreign currency translation adjustments(58) (43) 
Unrealized gains on securities available for sale2  (1) 
Comprehensive loss$(35,592) $(24,939) 
See accompanying notes to condensed consolidated financial statements.
3


Domo, Inc.
Condensed Consolidated Statements of Stockholders' Equity (Deficit)
(in thousands, except share amounts)
(unaudited)
Three Months Ended April 30, 2019
Class A Common StockClass B Common StockAdditional
Paid-in Capital
Accumulated
Other
Comprehensive
Income
Accumulated
Deficit
Total
Stockholders'
Equity (Deficit)
SharesAmountSharesAmount
Balance as of January 31, 20193,263,659  $3  23,434,542  $23  $956,145  $438  $(912,082) $44,527  
Vesting of restricted stock units—  —  357,565  —  —  —  —    
Shares repurchased for tax withholdings on vesting of restricted stock—  —  (20,726) —  (900) —  —  (900) 
Issuance of common stock under employee stock purchase plan—  —  253,104  1  4,518  —  —  4,519  
Exercise of stock options—  —  61,844  —  1,338  —  —  1,338  
Stock-based compensation expense—  —  —  —  7,653  —  —  7,653  
Exercise of common stock warrants—  —  3,130  —  —  —  —    
Other comprehensive loss—  —  —  —  —  (56) —  (56) 
Net loss—  —  —  —  —  —  (35,536) (35,536) 
Balance as of April 30, 20193,263,659  $3  24,089,459  $24  $968,754  $382  $(947,618) $21,545  

Three Months Ended April 30, 2020
Class A Common StockClass B Common StockAdditional
Paid-in Capital
Accumulated
Other
Comprehensive
Income
Accumulated
Deficit
Total
Stockholders'
Equity (Deficit)
SharesAmountSharesAmount
Balance as of January 31, 20203,263,659  $3  24,985,698  $25  $988,141  $389  $(1,037,738) $(49,180) 
Vesting of restricted stock units—  —  99,762  —  —  —  —    
Shares repurchased for tax withholdings on vesting of restricted stock—  —  (4,578) —  (38) —  —  (38) 
Issuance of common stock under employee stock purchase plan—  —  466,214  1  3,658  —  —  3,659  
Exercise of stock options—  —  1,155  —  11  —  —  11  
Stock-based compensation expense—  —  —  —  6,499  —  —  6,499  
Other comprehensive loss—  —  —  —  —  (44) —  (44) 
Net loss—  —  —  —  —  —  (24,895) (24,895) 
Balance as of April 30, 20203,263,659  $3  25,548,251  $26  $998,271  $345  $(1,062,633) $(63,988) 

See accompanying notes to condensed consolidated financial statements.
4


Domo, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended April 30,
20192020
Cash flows from operating activities
Net loss$(35,536) $(24,895) 
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization1,764  1,293  
Non-cash lease expense—  951  
Amortization of contract acquisition costs2,678  3,408  
Stock-based compensation expense7,575  6,476  
Other, net(659) 879  
Change in operating assets and liabilities:
Accounts receivable, net12,214  18,323  
Contract acquisition costs(2,062) (1,926) 
Prepaid expenses and other(4,493) 213  
Accounts payable551  45  
Operating lease liabilities—  (905) 
Accrued expenses and other liabilities(8,977) (14,751) 
Deferred revenue267  (2,024) 
Net cash used in operating activities(26,678) (12,913) 
Cash flows from investing activities
Purchases of property and equipment(1,474) (1,363) 
Purchases of securities available for sale(63,008) (11,149) 
Proceeds from maturities of securities available for sale  16,600  
Purchases of intangible assets  (104) 
Net cash (used in) provided by investing activities(64,482) 3,984  
Cash flows from financing activities
Proceeds from shares issued in connection with employee stock purchase plan4,518  3,659  
Shares repurchased for tax withholdings on vesting of restricted stock(900) (38) 
Proceeds from exercise of stock options1,338  11  
Net cash provided by financing activities4,956  3,632  
Effect of exchange rate changes on cash and cash equivalents(6) (3) 
Net decrease in cash and cash equivalents(86,210) (5,300) 
Cash and cash equivalents at beginning of period176,973  80,843  
Cash and cash equivalents at end of period$90,763  $75,543  
Supplemental disclosures of cash flow information
Cash paid for income taxes$  $245  
Cash paid for interest$2,796  $2,478  
Non-cash investing and financing activities
Stock-based compensation capitalized as internal-use software$132  $116  
See accompanying notes to condensed consolidated financial statements.
5



Domo, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)

1. Overview and Basis of Presentation
Description of Business and Basis of Presentation
Domo, Inc. (the Company) provides a cloud-based platform that digitally connects everyone from the CEO to the frontline employee with all the data, systems and people in an organization, giving them access to real-time data and insights and allowing them to manage their business from their smartphones. The Company is incorporated in Delaware. The Company's headquarters is located in American Fork, Utah and the Company has subsidiaries in the United Kingdom, Australia, Japan, Hong Kong, Singapore, New Zealand, and Canada.
The accompanying unaudited condensed consolidated financial statements, which include the accounts of the Company and its wholly owned subsidiaries, have been prepared in conformity with accounting principles generally accepted in the United States of America or GAAP. All intercompany balances and transactions have been eliminated in consolidation. The Company’s fiscal year ends on January 31.
Unaudited Condensed Consolidated Financial Statements
The accompanying condensed consolidated balance sheet as of April 30, 2020, and the condensed consolidated statements of operations, comprehensive loss, stockholders' equity (deficit), and cash flows for the three months ended April 30, 2019 and 2020 are unaudited. The unaudited condensed consolidated financial statements have been prepared on a basis consistent with the annual consolidated financial statements and, in the opinion of management, reflect all adjustments necessary to state fairly the Company's financial position as of April 30, 2020 and its results of operations and cash flows for the three months ended April 30, 2019 and 2020. The financial data and the other financial information disclosed in the notes to these condensed consolidated financial statements related to the three-month periods are also unaudited. The results of operations for the three months ended April 30, 2020 are not necessarily indicative of the results to be expected for the fiscal year ending January 31, 2021 or for any other future year or interim period.
The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes thereto as of and for the year ended January 31, 2020, included in the Company's Annual Report on Form 10-K.
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the condensed consolidated financial statements and the accompanying notes. The Company bases its estimates on historical experience and on other assumptions that its management believes are reasonable under the circumstances. Actual results could differ from those estimates. The Company’s estimates and judgments include the determination of standalone selling prices for the Company’s services, which are used to determine revenue recognition for arrangements with multiple performance obligations; the amortization period for deferred contract acquisition costs; valuation of the Company’s stock-based compensation, including the underlying estimated fair value of common stock in periods prior to the date of the Company's IPO; useful lives of fixed assets; capitalization and estimated useful life of internal-use software; the incremental borrowing rate used to calculate the present value of capitalized leases; valuation estimates used when evaluating impairment of long-lived and intangible assets including goodwill; and the allowance for doubtful accounts.
Foreign Currency
The functional currencies of the Company’s foreign subsidiaries are the respective local currencies. The cumulative effect of translation adjustments arising from the use of differing exchange rates from period to period is included in accumulated other comprehensive income within the condensed consolidated balance sheets. Changes in the cumulative foreign translation adjustment are reported in the condensed consolidated statements of convertible preferred stock and stockholders’ equity (deficit) and the condensed consolidated statements of comprehensive loss. Transactions denominated in currencies other than the functional currency are remeasured at the end of the period and when the related receivable or
6


Domo, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(unaudited)
1. Overview and Basis of Presentation (Continued)
payable is settled, which may result in transaction gains or losses. Foreign currency transaction gains and losses are included in other expense, net in the condensed consolidated statements of operations. All assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the exchange rate on the balance sheet date. Revenue and expenses are translated at the average exchange rate during the period, and equity balances are translated using historical exchange rates.
Segment Information
The Company operates as one operating segment. The Company’s chief operating decision maker is its chief executive officer, who reviews financial information presented on a consolidated basis for purposes of making operating decisions, assessing financial performance and allocating resources.
2. Summary of Significant Accounting Policies
Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand, money market funds and highly liquid investments purchased with an original maturity date of 90 days or less from the date of purchase. The fair value of cash equivalents approximated their carrying value as of January 31, 2020 and April 30, 2020.
Short-Term Investments
The Company’s short-term investments are primarily comprised of commercial paper, U.S. treasury securities, asset-backed securities and corporate debt securities. The Company determines the appropriate classification of its short-term investments at the time of purchase and reevaluates such designation at each balance sheet date. The Company has classified and accounted for its short-term investments as available-for-sale securities as the Company may sell these securities at any time for use in its current operations or for other purposes, even prior to maturity. As a result, the Company classifies its short-term investments, including securities with stated maturities beyond twelve months, within current assets in the condensed consolidated balance sheets.
The Company's short-term investments are recorded at fair value each reporting period. Unrealized gains and losses on these short-term investments are reported as a separate component of accumulated other comprehensive income in the condensed consolidated balance sheets until realized. Interest income is reported within other expense, net in the condensed consolidated statements of operations. The Company periodically evaluates its short-term investments to assess whether those with unrealized loss positions are other-than-temporarily impaired. The Company considers various factors in determining whether to recognize an impairment charge, including the length of time the investment has been in a loss position, the extent to which the fair value is less than the Company’s cost basis, and the financial condition and near-term prospects of the investee. If the Company determines that the decline in an investment’s fair value is other-than-temporary, the difference is recognized as an impairment loss in the condensed consolidated statements of operations. Realized gains and losses are reported in other expense, net in the condensed consolidated statements of operations.
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable are recorded at the invoiced amount (net of allowances), do not require collateral, and do not bear interest. The Company’s payment terms generally provide that customers pay within 30 days of the invoice date. 
The Company maintains an allowance for doubtful accounts for amounts the Company does not expect to collect. In establishing the required allowance, management considers historical losses, current market conditions, customers’ financial condition, the age of the receivables, and current payment patterns. Account balances are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.
Contract Acquisition Costs
Contract acquisition costs, net are stated at cost net of accumulated amortization and primarily consist of deferred sales commissions, which are considered incremental and recoverable costs of obtaining a contract with a customer. Contract acquisition costs for initial contracts are deferred and then amortized on a straight-line basis over the period of benefit, which
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Domo, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(unaudited)
2. Summary of Significant Accounting Policies (Continued)
the Company has determined to be approximately four years. The period of benefit is determined by taking into consideration contractual terms, expected customer life, changes in the Company's technology and other factors. Contract acquisition costs for renewal contracts are not commensurate with contract acquisition costs for initial contracts and are recorded as expense when incurred if the period of benefit is one year or less. If the period of benefit is greater than one year, costs are deferred and then amortized on a straight-line basis over the period of benefit. Contract acquisition costs related to professional services and other performance obligations with a period of benefit of one year or less are recorded as expense when incurred. Amortization of contract acquisition costs is included in sales and marketing expenses in the accompanying condensed consolidated statements of operations.
Amortization expense related to contract acquisition costs was $2.7 million and $3.4 million for the three months ended April 30, 2019 and 2020, respectively. There was no impairment charge in relation to contract acquisition costs for the periods presented.
Property and Equipment
Property and equipment, net, are stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets or over the related lease terms (if shorter). Repairs and maintenance costs are expensed as incurred.
The estimated useful lives of property and equipment are as follows:
Computer equipment and software2-3 years
Furniture, vehicles and office equipment3 years
Leasehold improvementsShorter of remaining lease term or estimated useful life
Leases
As a result of the adoption of ASC 842, the Company has made changes to its accounting policies with respect to leases. At the inception of a contract, the Company determines whether the contract is or contains a lease. Leases with a term greater than one year are recognized on the balance sheet as right-of-use (ROU) assets and lease liabilities. The Company has elected the short-term leases practical expedient which allows any leases with a term of 12 months or less to be considered short-term and thus will not have an ROU asset or lease liability recognized on the balance sheet.
ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As these leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The incremental borrowing rate is the rate incurred to borrow on a collateralized basis over a similar term and amount equal to the lease payments in a similar economic environment. The operating lease ROU asset also includes any lease payments made in advance of lease expense and excludes lease incentives and initial direct costs incurred. Lease terms may include options to extend or terminate the lease, which the Company does not include in its minimum lease terms unless the options are reasonably certain to be exercised. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. ROU assets are subject to evaluation for impairment or disposal on a basis consistent with other long-lived assets.
The Company has lease agreements with lease and non-lease components which the Company has elected to account for as a single lease component. On the lease commencement date, the Company establishes assets and liabilities for the present value of estimated future costs to retire long-lived assets at the termination or expiration of a lease. Such assets are depreciated over the lease term to operating expense.
Income from subleases in recorded in other expense, net in the accompanying condensed consolidated statements of operations.
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Domo, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(unaudited)
2. Summary of Significant Accounting Policies (Continued)
Capitalized Internal-Use Software Costs
The Company capitalizes certain costs related to development of its platform incurred during the application development stage. Costs related to preliminary project activities and post-implementation activities are expensed as incurred. Maintenance and training costs are also expensed as incurred. Capitalized costs are included in property and equipment.
Capitalized internal-use software is amortized as subscription cost of revenue on a straight-line basis over its estimated useful life, which is generally three years. Management evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets.
Goodwill and Intangible Assets
Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired. Goodwill and indefinite-lived intangible assets are not amortized, but rather tested for impairment at least annually on November 1 or more often if and when circumstances indicate that the carrying value may not be recoverable. Finite-lived intangible assets are amortized over their useful lives.
Goodwill is tested for impairment based on reporting units. The Company periodically reevaluates the business and has determined that it continues to operate in one segment, which is also considered the sole reporting unit. Therefore, goodwill is tested for impairment at the consolidated level.
The Company reviews its long-lived assets, including property and equipment, finite-lived intangible assets, and ROU assets for impairment whenever an event or change in facts and circumstances indicates that their carrying amounts may not be recoverable. Recoverability of these assets is measured by comparing the carrying amount to the estimated undiscounted future cash flows expected to be generated. If the carrying amount exceeds the undiscounted cash flows, the assets are determined to be impaired and an impairment charge is recognized as the amount by which the carrying amount exceeds fair value.
There was no goodwill acquired and no impairment charges for goodwill or long-lived assets recorded during the periods presented.
Revenue Recognition
The Company derives revenue primarily from subscriptions to its cloud-based platform and professional services. Revenue is recognized when control of these services is transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled to in exchange for those services, net of sales taxes.
For sales through channel partners, the Company considers the channel partner to be the end customer for the purposes of revenue recognition as the Company's contractual relationships with channel partners do not depend on the sale of the Company's services to their customers and payment from the channel partner is not contingent on receiving payment from their customers. The Company's contractual relationships with channel partners do not allow returns, rebates, or price concessions.
The price of subscriptions is generally fixed at contract inception and therefore, the Company's contracts do not contain a significant amount of variable consideration.
Revenue recognition is determined through the following steps:
Identification of the contract, or contracts, with a customer
Identification of the performance obligations in the contract
Determination of the transaction price
Allocation of the transaction price to the performance obligations in the contract
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Domo, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(unaudited)
2. Summary of Significant Accounting Policies (Continued)
Recognition of revenue when, or as, performance obligations are satisfied
Subscription Revenue
Subscription revenue primarily consists of fees paid by customers to access the Company’s cloud-based platform, including support services. The majority of the Company's subscription agreements have multi-year contractual terms and a smaller percentage have annual contractual terms. Revenue is recognized ratably over the related contractual term beginning on the date that the platform is made available to a customer. Access to the platform represents a series of distinct services as the Company continually provides access to and fulfills its obligation to the end customer over the subscription term. The series of distinct services represents a single performance obligation that is satisfied over time. The Company recognizes revenue ratably because the customer receives and consumes the benefits of the platform throughout the contract period. The Company's contracts are generally non-cancelable.
Professional Services and Other Revenue
Professional services revenue consists of implementation services sold with new subscriptions as well as professional services sold separately. Other revenue includes training and education. Professional services arrangements are billed in advance, and revenue from these arrangements is recognized as the services are provided, generally based on hours incurred. Training and education revenue is also recognized as the services are provided.
Contracts with Multiple Performance Obligations
Most of the Company's contracts with new customers contain multiple performance obligations, generally consisting of subscriptions and professional services. For these contracts, individual performance obligations are accounted for separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. Standalone selling prices are determined based on historical standalone selling prices, taking into consideration overall pricing objectives, market conditions and other factors, including contract value, customer demographics and the number and types of users within the contract.
Deferred Revenue
The Company's contracts are typically billed annually in advance. Deferred revenue includes amounts collected or billed in excess of revenue recognized. Deferred revenue is recognized as revenue as the related performance obligations are satisfied. Deferred revenue that will be recognized during the succeeding twelve-month period is recorded as a current liability and the remaining portion is recorded as a noncurrent liability.
Cost of Revenue
Cost of subscription revenue consists primarily of third-party hosting services and data center capacity; employee-related costs directly associated with cloud infrastructure and customer support personnel, including salaries, benefits, bonuses and stock-based compensation; amortization expense associated with capitalized software development costs; depreciation expense associated with computer equipment and software; certain fees paid to various third parties for the use of their technology and services; and allocated overhead. Allocated overhead includes items such as information technology infrastructure, rent, and employee benefit costs.
Cost of professional services and other revenue consists primarily of employee-related costs associated with these services, including stock-based compensation; third-party consultant fees; and allocated overhead.
Advertising Costs
Advertising costs are expensed as incurred. Advertising expense was $2.3 million and $2.1 million for the three months ended April 30, 2019 and 2020, respectively.
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Domo, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(unaudited)
2. Summary of Significant Accounting Policies (Continued)
Research and Development
Research and development expenses consist primarily of employee-related costs for the design and development of the Company's platform, contractor costs to supplement staff levels, third-party web services, consulting services, and allocated overhead. Research and development expenses, other than software development costs qualifying for capitalization, are expensed as incurred.
Stock-Based Compensation
The Company has granted stock-based awards, consisting of stock options and restricted stock units, to its employees, certain consultants and certain members of its board of directors. The Company records stock-based compensation based on the grant date fair value of the awards, which include stock options and restricted stock units, and recognizes the fair value of those awards as expense using the straight-line method over the requisite service period of the award. For restricted stock units that contain performance conditions, the Company recognizes expense using the accelerated attribution method if it is probable the performance conditions will be met. The Company estimates the grant date fair value of stock options using the Black-Scholes option-pricing model.
Stock-based compensation expense related to purchase rights issued under the 2018 Employee Stock Purchase Plan (ESPP) is based on the Black-Scholes option-pricing model fair value of the estimated number of awards as of the beginning of the offering period. Stock-based compensation expense is recognized using the straight-line method over the offering period.
The determination of the grant date fair value of stock-based awards is affected by the estimated fair value of the Company's common stock as well as other assumptions and judgments, which are estimated as follows:
Fair Value Per Share of Common Stock. Because there was no public market for the Company's common stock prior to the IPO, the board of directors determined the common stock fair value at the grant date by considering numerous objective and subjective factors, including contemporaneous valuations of the Company’s common stock, actual operating and financial performance, market conditions, and performance of comparable publicly traded companies, business developments, the likelihood of achieving a liquidity event, and transactions involving preferred and common stock, among other factors. Subsequent to the IPO, the Company determines the fair value of common stock as of each grant date using the market closing price of the Company's Class B common stock on the date of grant.
Expected Term. The expected term is determined using the simplified method, which is calculated as the midpoint of the option’s contractual term and vesting period. The Company uses this method due to limited stock option exercise history. For the ESPP, the expected term is the beginning of the offering period to the end of each purchase period.
Expected Volatility. Since a public market for the Company's common stock did not exist prior to the IPO and, therefore, the Company does not have sufficient trading history of its common stock, expected volatility is estimated based on the weighted average of the volatility of similar publicly held companies and the Company's common stock over a period equivalent to the expected term of the awards.
Risk-free Interest Rate. The risk-free interest rate is determined using U.S. Treasury rates with a similar term as the expected term of the option.
Expected Dividend Yield. The Company has never declared or paid any cash dividends and does not presently plan to pay cash dividends in the foreseeable future. Consequently, the Company uses an expected dividend yield of zero.
Income Taxes
The Company accounts for income taxes in accordance with the liability method of accounting for income taxes. Under this method, the Company recognizes a liability or asset for the deferred income tax consequences of all temporary differences between the tax basis of assets and liabilities and their reported amounts in the condensed consolidated financial statements that will result in taxable or deductible amounts in future years when the reported amounts of the assets and
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Domo, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(unaudited)
2. Summary of Significant Accounting Policies (Continued)
liabilities are recovered or settled. These deferred income tax assets or liabilities are measured using the enacted tax rates that will be in effect when the differences are expected to affect taxable income.
Valuation allowances are provided when it is more-likely-than-not that some or all of the deferred income tax assets may not be realized. In assessing the need for a valuation allowance, the Company has considered its historical levels of income, expectations of future taxable income and ongoing tax planning strategies. Because of the uncertainty of the realization of its deferred tax assets, the Company has a full valuation allowance for domestic net deferred tax assets, including net operating loss carryforwards, and tax credits related primarily to research and development. Realization of its deferred tax assets is dependent primarily upon future U.S. taxable income.
Tax positions are recognized in the condensed consolidated financial statements when it is more-likely-than-not the position will be sustained upon examination by the tax authorities. The Company’s policy for recording interest and penalties related to income taxes, including uncertain tax positions, is to record such items as a component of the provision for income taxes.
Concentrations of Risk and Significant Customers
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, short-term investments and accounts receivable. Cash denominated in currencies other than the United States dollar represented 9% and 13% of total cash, cash equivalents and short-term investments as of January 31, 2020 and April 30, 2020, respectively.
The Company maintains its cash accounts with financial institutions where, at times, deposits exceed federal insured limits. The Company invests its excess cash in money market funds and in short-term investments consisting of highly-rated debt securities.
No single customer accounted for more than 10% of revenue for the three months ended April 30, 2019 and 2020 or more than 10% of accounts receivable as of January 31, 2020 and April 30, 2020.
The Company is primarily dependent upon third parties in order to meet the uptime and performance requirements of its customers. Any disruption of or interference with the Company's use of these third parties would impact operations.
Net Loss per Share
The Company computes net loss per share using the two-class method required for multiple classes of common stock and participating securities. The rights, including the liquidation and dividend rights, of the Class A common stock and Class B common stock are substantially identical, other than voting rights. Accordingly, the Class A common stock and Class B common stock share equally in the Company’s net losses. Before the IPO, the Company’s participating securities also included convertible preferred stock. The holders of convertible preferred stock did not have a contractual obligation to share in the Company’s losses, and as a result net losses were not allocated to these participating securities.
Basic net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period increased by common shares that could be issued upon conversion or exercise of other outstanding securities to the extent those additional common shares would be dilutive. The dilutive effect of potentially dilutive securities is reflected in diluted net loss per share by application of the treasury stock method. During periods when the Company is in a net loss position, basic net loss per share is the same as diluted net loss per share as the effects of potentially dilutive securities are anti-dilutive.
Recently Adopted Accounting Standards
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which establishes a comprehensive new lease accounting model. Under the new guidance, at the commencement date, lessees are required to recognize a lease liability with a corresponding right-of-use asset.
12


Domo, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(unaudited)
2. Summary of Significant Accounting Policies (Continued)
On February 1, 2020, the Company adopted Topic 842 using the modified retrospective approach with the effective date as of the date of initial application. Consequently, results for the three months ended April 30, 2020 are presented under Topic 842. Prior period amounts were not adjusted and continue to be reported in accordance with previous lease guidance under ASC Topic 840, Leases. The Company elected the package of practical expedients permitted under the transition guidance, which allows an entity to carryforward certain conclusions for leases that commenced prior to the effective date, including the determination of whether an existing contract contains a lease, the classification of the lease, and the accounting for initial direct costs. The Company performed evaluations of its contracts and determined each of its identified leases are operating leases. Upon adoption, the Company recognized cumulative operating lease liabilities of $12.8 million and operating right-of-use assets of $12.2 million.
Recently Issued Accounting Pronouncements
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326), which requires the measurement and recognition of expected credit losses for certain financial instruments, which includes the Company's accounts receivable and available-for-sale debt securities. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. For available-for-sale debt securities, credit losses should be recorded through an allowance for credit losses. The Company expects to adopt this standard for the year ending January 31, 2021. The standard requires a cumulative effect adjustment to the balance sheet as of the beginning of the first reporting period in which the guidance is effective. The Company is evaluating the impact of the adoption of ASU 2016-13 on its consolidated financial statements.
3. Cash, Cash Equivalents and Short-Term Investments
The amortized cost, unrealized gain and estimated fair value of the Company’s cash equivalents and short-term investments as of January 31, 2020 and April 30, 2020 were as follows (in thousands):
January 31, 2020
Amortized CostUnrealized GainUnrealized LossEstimated Fair Value
Cash$10,375  $—  $—  $10,375  
Cash equivalents:
Money market funds45,654  —  —  45,654  
Certificates of deposit15,021  —  —  15,021  
Reverse repurchase agreements4,200  —  —  4,200  
Commercial paper4,093  —  —  4,093  
Corporate debt securities1,500  —  —  1,500  
Total cash and cash equivalents80,843  —  —  80,843  
Short-term investments:
Commercial paper10,567      10,567  
U.S. treasury securities4,999  1    5,000  
Asset-backed securities2,399  1    2,400  
Total short-term investments17,965  2    17,967  
Total cash, cash equivalents and short-term investments$98,808  $2  $  $98,810  

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Domo, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(unaudited)
3. Cash, Cash Equivalents and Short-Term Investments (Continued)
April 30, 2020
Amortized CostUnrealized GainUnrealized LossEstimated Fair Value
Cash$14,385  $—  $—  $14,385  
Cash equivalents:
Money market funds44,781  —  —  44,781  
Certificates of deposit15,078  —  —  15,078  
Commercial paper1,299  —  —  1,299  
Total cash and cash equivalents75,543  —  —  75,543  
Short-term investments:
Commercial paper10,265      10,265  
Asset-backed securities1,003  1    1,004  
Corporate debt securities1,302      1,302  
Total short-term investments12,570  1    12,571  
Total cash, cash equivalents and short-term investments$88,113  $1  $  $88,114  

All short-term investments were designated as available-for-sale securities and had contractual maturities due within less than one year as of January 31, 2020 and April 30, 2020.
There were no material gross unrealized gains or losses from available-for-sale securities and no realized gains or losses from available-for-sale securities that were reclassified out of accumulated other comprehensive income for the three months ended April 30, 2020.
For available-for-sale debt securities that have unrealized losses, the Company evaluates whether (1) it has the intention to sell any of these investments and (2) whether it is not more likely than not that it will be required to sell any of these available-for-sale debt securities before recovery of the entire amortized cost basis. Based on this evaluation, the Company determined that there were no other-than-temporary impairments associated with short-term investments as of April 30, 2020.
4. Fair Value Measurements
Assets Measured at Fair Value on a Recurring Basis
Financial instruments recorded at fair value in the financial statements are categorized as follows:
Level 1: Observable inputs that reflect quoted prices for identical assets or liabilities in active markets.
Level 2: Observable inputs, other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3: Unobservable inputs reflecting management's assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.
14


Domo, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(unaudited)
4. Fair Value Measurements (Continued)
The following table summarizes the assets measured at fair value on a recurring basis as of January 31, 2020 and April 30, 2020 by level within the fair value hierarchy (in thousands):
January 31, 2020
Level 1Level 2Level 3Total
Cash equivalents:
Money market funds$45,654  $