Hello, and welcome to the Domo Q1 Fiscal Year 2024 Earnings Call. [Operator Instructions]. I will now turn the conference over to Peter Lowry, Domo Vice President of Investor Relations. Please go ahead.

Good afternoon, and welcome. On the call today, we have Josh James, our Founder and CEO; and David Jolley, our Chief Financial Officer. I'll lead off with our safe harbor statement and then onto the call. Our press release was issued after the market closed and is posted on the Investor Relations section of our website where this call is also being webcast. Statements made on this call include forward-looking statements related to our business under federal securities laws. These include statements about future and prospects or financial projections, our cash requirements plans and expectations for our pricing go-to-market strategy, product adoption and product impact. Our expectations for our sales team and new business opportunities and initiatives, the potential of AI and its impact on our business and the impact of macroeconomic and other conditions on our business. These statements are subject to a variety of risks, uncertainties and assumptions. For a discussion of these risks and uncertainties, please refer to documents we file with the SEC, including today's press release, our most recently filed annual report on Form 10-K and our most recently filed quarterly report on Form 10-Q. These documents contain and identify important risk factors and other information that may cause our actual results to differ materially from those contained in our forward-looking statements. In addition, during today's call, we will discuss non-GAAP financial measures, which we believe are useful as supplemental measures of Domo's performance. Other than revenue, unless otherwise stated, we will be discussing our results of operations on a non-GAAP basis. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. Please refer to the tables in our earnings press release for a reconciliation of our non-GAAP financial measures to their most directly comparable GAAP measure, which we have posted to the Investor Relations section of our website. With that, I'll turn it over to Josh. Josh?

Thank you, Pete, and thank you, everyone, for joining the call today. I'm going to touch on some of my key priorities in getting back to growth, highlight a few Q1 customer wins, give some product updates, including how we're thinking about recent developments in AI. In Q1, total revenue growth was 7%. Our subscription revenue growth was 10% and billings declined 4%. These metrics highlight the fact that 3 months ago, we walked into a situation where there were disturbing trends and trajectories. We feel good as a team that we have been able to stabilize things and reenergize the organization and get us poised for the future. My top priority as CEO is to get our growth rate up and to do so in a financially responsible manner. What's going to bring us back to growth is a relentless focus on our customers, and a motivated and aligned sales team. I also think there's a lot of potential upside in how we price and go to market, which I will also talk about today. Focusing on our customers is exactly what I've been spending my time on since my return. It was a very productive quarter, and I couldn't be more excited about the feedback we're getting from customer interactions. As I visited with some of our largest customers and prospects, it's clear we are providing tremendous value to some of the best brands in the world. I heard numerous examples of how companies are using Domo to foster a data-driven culture that transforms curiosity into business impact. For example, the Chief Data Officer of one of our largest customers in Japan told me to expect broad adoption of Domo in the business. When I asked her why? She said, it's simple. I tell them if you want…

Thanks, Josh. I'm also very bullish about Domo's prospects after having been in the seat now for almost 3 months. In Q1, we posted 10% subscription revenue growth and 7% total revenue growth. We slightly exceeded the billings guidance we provided at the beginning of the quarter. We delivered Q1 billings of $70.3 million, a year-over-year decrease of a little under 4%. In reviewing the metrics that will impact the remainder of the year, our current RPO of $237.5 million grew 6% year-over-year, and our total RPO grew 1% to $356.7 million, our ARR grew in line with our subscription revenue growth. An area where we saw continued success was multiyear contracts, on a dollar-weighted measure, we now have 65% of our customers in our multiyear contracts at the end of Q1, up from 64% a year ago. Our gross retention improved from Q4 and approach nearly 90%, and our net retention was just above 100%, down slightly from Q4. Excluding the impact of foreign currency fluctuations, our NRR would have been about 2% higher. Q1 total revenue was $79.5 million, a year-over-year increase of 7%. Subscription revenue represented 89% of total revenue and grew at 10% year-over-year. International revenue in the quarter represented 21% of total revenue consistent with Q1 of last year. Our subscription gross margin was 85.9%, up 1.3 percentage points from Q1 of last year and up 0.3 percentage points from Q4, reflecting continued optimization of our third-party hosting services. In Q1, our non-GAAP operating margin was up 2.7 percentage points from a year ago, non-GAAP operating margin primarily excludes stock-based compensation as well as executive severance, which was related to the transition of C-level executives. Our net loss was $6.1 million, down from $7.6 million a year ago, and our net loss per share was…

[Operator Instructions]. Your first question comes from the line of Derrick Wood with TD Cowen.

Josh, I know one of the initiatives you plan to focus on was rebuilding the large deal pipeline. I just -- just wondering if you could shed some light on what that looks like? Is that reengaging with C-level folks at existing customers? Is that identifying some larger new prospects. Just wondering how those efforts have gotten off the ground and when you are thinking about kind of how that translates into dividends and closed deals in the quarters ahead.

Sorry, can you repeat that first question?

Yes. Can you hear me?

Yes.

Yes, we can now. We had to change to rooms. We had a technical issue on our side. So yes please repeat.

Okay. Yes. So Josh, I was asking about the efforts in building large deal pipelines and I know that was going to be a big focus for you. Just was hoping to kind of hear what some of those initiatives look like? Is that trying to reengage with C-level folks at existing customers? Is that building up new large prospects. Just wondering how those efforts have gotten off the ground and how you're thinking about the sales cycles and when the dividend should start to pay off?

Yes, Great. Yes, I mean it's not so much about the big deal pipeline is just reengaging with customers anywhere and everywhere. So any of the reps that have interesting relationships from conversations with customers and prospects, definitely trying to go out and see them. I'm sure I'm talking to at least 1 or 2 customers a day and a lot of travel. And just again, like I mentioned in the prepared remarks, trying to reengage the sales force, get everyone excited and make sure the whole company sees that we're leaning in, doing anything and everything we can to close the deals and then upsell. And I would say in terms of the big deal pipeline, that's probably been the biggest difference maker is going into our current accounts where we already have established relationships where they are already thinking positively and they're predisposed to want to do more business with us. and finding the senior level executives there, facilitating conversations, and that's worked. And we have found a bunch of opportunities, definitely increase the pipeline meaningfully for the enterprise business in particular. And in terms of when that will come to fruition when we'll start seeing those dollars. I think there's a chance that we could see some of that this quarter. Definitely, we'll see those things in Q3 and Q4 playing out. But yes, a lot of great conversations, a lot of customers leaning in. The macro is certainly not as positive as it has been historically as we all know. But one thing that we've seen with our customers because we do help them save money, we do help them find revenue. If we already have a relationship, we're already -- relationship, we're already an established vendor we can find deals intra-quarter that aren't on their project list. And because they trust is we can do a quick proof-of-concept and away we go. So I think we're going to find some contracts that way.

Yes, that's great to hear. On the consumption push, it sounds like there's a little bit of a change in focus here. Maybe stepping on the pedal a little bit more. Can you just talk about how broad you're going to try to push this? And when you do flip customers to consumption, is it kind of net neutral initially? And then do you see stronger expansion motions once you kind of get customers on board? And then just kind of a third part to that, is that a way to monetize some of the stuff you're doing with generative AI, it seems like that could be an easier way to monetize LLMs and some of the things that come with that?

For sure, for sure. Yes, it helps us -- there's a lot of functionality we've added into the platform over the years. But when you're charging per seat, every single time they want to try something, you have to go out and they have to get approval for it internally. And then we have to get them into some kind of a trial and now with the way we're doing things with consumption, it's all just sitting there at the fingertips. And so they can try it out and pay for it for the day that they use it or 2 days that they use it and it just really provides a lot more flexibility. One of the things that we've seen already is with our data science, our data science efforts that we have, which leads us right into the AI conversations. The take rate from our consumption customers is more than double than it is for our regular customer base. And that's -- our consumption customers have only been with us for a year. So it's -- that's something that we're seeing is the take rate on the addition of products and services is dramatically different. In terms of -- I think you asked a couple of different parts of your question. In terms of the pace, yes, we are definitely speeding it up. The more data we get, the more excited we get. And so that gives us the confidence to be able to lean into it. I was -- I tried to be very thoughtful in the remarks that we made that we've been very judicious and deliberate about evaluating this change. And as people internally are quoting, it's not just a change in pricing, it's a change in approach. We get to go and interact…

Yes. I guess the thing that's impressed me is just, again, to reiterate what Josh said, how judicious we've been on the front end to really be careful about -- it's not just a change in pricing, it's a change in philosophy of how we engage with our customers. It becomes then more about helping them identify those solutions that drive further adoption. And so it requires our AEs to think a little bit differently as well. And we've been very careful about that on the front end, and all the indicators have been very positive. So I think compounding what Josh said, I think, the plan is to continue to accelerate that. Still some things that we need to do from an internal standpoint to make sure we've got all the right controls and process from an accounting perspective. But those are things that we'll just lean in to get focused on and then go much broader with our account base.

Your next question comes from the line of Sanjit Singh with Morgan Stanley.

Perfect. This is [indiscernible] on for Sanjit. Greatly the announcements around AI and obviously, with consumption pricing that starts to make a lot of sense. I want to ask sort of 2 questions on it. One, strategically, how are you thinking about distributions and particularly the world of partnerships as it relates to AI on a go-forward basis? And then tactically, what are you seeing on the ground sort of today with customers? Is there any sense that customers are kind of pausing and evaluating the environment? Or are customers already sort of leading into this?

Yes. Customers are definitely already leading into this. I think the biggest highlight for Domo is anybody out there that's trying to use data with artificial intelligence. To the extent that AI can be effective, it's limited by the data that it's connected to, the systems that it's connected to. And we happen to have the stack that's tightly integrated, and we would contend as the most integrated data stack in existence. And it's been a . It's been very difficult to build what we've built, but at the same time, the -- we have all the metadata about the data that's inside our system. We know what connectors it came from. We know what's stored, where it's stored, how it's connected, how the data interplays and can take that all the way into data science, machine learning and AI. And we do have customers leaning in quite a meaningful way. And I think true to form, we've been pretty agnostic and we'll be agnostic about AI as well. So we'll integrate with the entire ecosystem and if you want to come in and you found that there is a specialized AI focusing on, let's say, for instance, pricing or focusing on optimization of your supply chain, focusing on inventory levels, whatever it is that you find this AI model and you want to integrate and use that with the data that you have in Domo, we'll definitely facilitate that. So we're very excited about the prospects. We think it's going to help really leverage the uniqueness of what we have built here at Domo.

Your next question comes from the line of Patrick Walravens with JMP Securities.

This is Owen Hobbs on for Pat. So I was wondering if you guys could just give some commentary on what you're seeing in the demand environment for different geographies.

In the demand environment through different what?

Different geographies.

Okay. Right now, most of the geographies are pretty much the same. We've got -- I think the biggest thing that we've noticed is if you have an established relationship, with a customer, you have an ability to get in there and sell additional products. If you have an established relationship with the prospect and you've been working with them for a quarter or 2 and they've identified a project internally it's important. And they've had time internally to lay out their case for why they should make this investment in Domo, then those are the deals that are still getting done. The deals that aren't getting done in any geo is, we cold call into your accounts and maybe we've met you once or twice at different conferences or in webinars, and we call in and you have no project identified trying to create that project from scratch right now and getting that approved is next to impossible. And so it's -- that's what's dried up, people are just pausing and we're not losing deals. We're still getting the leads and they're just going and pipeline is just building for customers that aren't ready to make a decision. So hopefully, as the macro returns at some point, we'll have a whole bunch of opportunities and projects where we've been talking with prospects. But in terms of geo, Japan continues to be successful for us. We made investment there early, actually it was the first country that we went to before we even went to London, and that continues to be a good business for us. And internationally, again, the rest of the international geos, I would say, just mostly focused on where we have customers, where we have references. And then the number one type of new deal that we get is a Domo customer that was a user at one of our previous customers and they go to a new account, and then they call us and say, "I want to do exactly the same thing". And those are the deals that we'll get intra-quarter.

Great. And Josh, one for you. So this is your first full quarter back, I guess, kind of in general, retrospectively, how do you feel you guys performed versus expectations coming in?

Well, I think you walk in, you kind of -- the hands has already been built. So you look at the hands, you try to play it the best you can and you set yourselves up for the next round, and that's what we're really trying to do. We're trying to play the hand that we have the best we can. And we mentioned everybody that -- we weren't sandbagging last time around. It was like hold on through dear life and try to make sure that we optimize this thing, we get it to cash flow breakeven and net operating margin positive within those constraints, then get the assets moved in the right places, get this swagger back, get the relationships with the customers, get some deals closed, get some momentum, get some juice because it's infectious. And I think that confidence is here. I had a conversation with our sales consultants -- sales engineers yesterday. And I asked the question, I'm like, okay, there's a bunch of stuff going on that's not so positive in the macro, and we've had to make those adjustments here internally as well. How are you all doing with that. I kind of get a bunch of dumb looks in return, like why are you asking us that question. Yes, we get. We -- of course, we get it. Let's go. We're rallying. We're not in a pessimistic negative situation here. Let's go win some accounts. So it is really refreshing to kind of take the temperature of the team. And I think everyone here is excited about what we're doing. Consumption is going to be a game changer for us, being able to tell the world and tell customers when they're sitting there looking at Power BI for "free" and knowing that our visualization layer is free as well, our seats are free as well and moving all of our accounts over to consumption as quickly as we can is something that's energizing, knowing that we've got a freemium right on the heels of that, we generate over $10 million in freemium last year which is not a number that we're going to continue to provide, but just to help people understand the significance of that opportunity for us. And that's something that we're really focused on optimizing and improving and consumption makes that conversation a whole lot easier. So I think there's a lot of people here that are really excited about the prospects of the future. AI couldn't happen to a better company because we're so integrated top to bottom. We don't have 95 partners in order to make data platform and your data experience work. We are that data platform, we are that data experience. So AI really facilitates and dramatically improves the speed at which you can do things. So we're very excited about those prospects as well.

[Operator Instructions]. And your final question comes from the line of Eric Martinuzzi with Lake Street Capital Markets.

Yes. I just wanted to confirm the billing guide for Q2 is that $69 million to $70 million?

Yes, that's right.

Okay. So assuming we come in at the midpoint of that, we'd have kind of a down 4% for the front half of the year. In order to get to that full year kind of midpoint range, we need to be coming in double digits on the billings growth in Q3 and Q4. And I'm just -- I'm wondering what you guys are seeing in the pipeline that gives you that confidence to reiterate the year given the Q2 billings outlook.

Yes. So a couple of observations there. Going back, if you look at our historical results over the last 3 years, Q1 and Q2 are very close from a billing standpoint. So that's pretty consistent with what we've seen over the last several cycles. And there is a bit of seasonality in the buying patterns of our clients. And so we've historically seen just a natural increase. I think the thing that adds to that for us this year is we added a lot of new sales reps in the third quarter and fourth quarter of last year, and it takes some time for those reps to ramp. And so we see a natural or full ramping of those reps in Q3 and Q4. And as a result -- and that's really how we evaluate their performances once they've been ramped, and they're really familiar with the product, the offerings, the accounts. And so as they become fully ramped in Q3 and Q4, there is a natural acceleration. And so that's what's -- that's built into the model. So that was a -- that's a conscious that's not just to push everything back to the back end of the year. It truly is based on how we've built our sales executives.

Okay. And then, Josh, maybe if you could speak for changes that have been made on the, I guess, maybe a sales management question. I don't know if Jeff is available or not, but the CRO changes since taken over 90 days ago, everything from training, mentorship, travel, demos, what changes have been made with the new hires here versus how they were handled before.

Yes. I think Jeff's really known quantity. He had the majority of the team working for him before. He had relationships with the international folks because they'd go to sales kickoffs together. They'd go to sales trainings together. So very known quantity was very well respected, and there's just different ways of doing things. And we think for the time and place that we're at right now, we're going to see some positive momentum from that. The team certainly energized and excited, and there's highly competitive spirits, and there's definitely a lot of rallying together and so it definitely feels like 1 team here across all the organization I'd say, more than probably it ever has in my 13 years here. So maybe the first couple of years when we're -- when we don't know what we're doing, yes, everyone is pretty excited. But in terms of the last 7 or 8 years, it feels like we're more unified than we've been. So in that sense, I think Jeff plays a part in that certainly, and there's a lot of rigor in the way that Jeff does things and there's really high expectations in the way that Jeff does team -- does things. All the managers across the board for the most part came from his organization at this point. And then there's a few other people that he's brought in and a few people that have just kind of made it through all these years. So it just -- it feels really good. The team is really excited. The reps are really excited. And I think with the changes that we're making, that we're seeing with AI, that we're seeing with consumption, with the ability to get all these different products out to our customers so that they can try them out and use them and the upsells that come from the customer successes, not because we're trying to convince you that maybe you should look at something, but truly because they're having success already and it's spreading inside the organization, that's a really fun way to be a rep. So I think people are pretty excited about the future in that regard.

Okay. And then if I could just get some insight on the ramped sales capacity, is it where you expected it to be? I know you talked about almost a record low turnover here in Q1, but there's 2 parts to it. There's the new hires and then there's also retention of your installed base of reps -- or are we getting -- or what we're expecting as far as the total headcount versus ramped sales capacity.

Yes, I'll take that one. The answer -- the short answer is yes. The folks that we brought in, in the latter half of last year, I think they're continuing to ramp nicely. And we haven't -- we haven't had really what we call any sort of regrettable turnover in the first quarter. We feel really good about where we're at. And we've got some more hires out there on the horizon, but we're bringing those in sort of in an orderly way. And the other thing I'd add is we've had QBRs over the last couple of weeks. And so we've had most of the different reps here at headquarters and hearing a lot about the experiences that they're having and the discussions they're having is all very positive. And to reiterate, Josh brings a certain amount of just excitement and energy back to the organization. And that is especially true in the sales organization. And you can feel it in talking with them. They're really excited about the opportunity about some of these new things that we've got on the horizon, whether it's a pricing model or they're really excited and anxious to lean in on those things. So I think those are all working out as we had hoped.

I'd add also, it's not just Jeff Skousen that's new here, right? We've got Mark Maughan in the new role, but he's been here forever. So very similar to Jeff, very well respected across the organization. And very -- one of the highest rated folks that we had here in management and now he's got a lot more responsibility. So he gets to prove himself, but that's exactly the kind of situation that you want, and everyone in this organization has been really excited. So it's been fun to get all that feedback. Daren Thayne, he was responsible for the entire product and then he -- we had an opportunity to get Catherine and he wanted to shift over to more of engineering services and spending a lot of time with customers because we really didn't understand the market at that time. But now he's back in that role where he has entire responsibility for the product and it's a new style and it's invigorating. And he's really excited and his team is really excited and the pace of innovation is definitely different. So I think that brings a new amount of energy. And then David Jolley being new as well. That's a new amount of energy. So really across the whole organization, Wendy's on the newish front still. It's a new team that we all get to prove to each other what we can do into our organization, what we can do. And it feels like a new start-up in a lot of senses, but we just happen to have $300 million of recurring revenue and a great customer base and a huge platform that we spent a lot of money investing into. So it feels like we're poised really well for the future, really the macro to pick up a little bit. But with the sales capacity that's coming, we think there's still an opportunity to get back to some good growth.

This concludes today's conference call. We thank you for your participation. You may now disconnect your lines.

All right. Thanks so much. Appreciate it.