Domo, Inc. (DOMO) Earnings Call Transcript & Summary

Welcome to Domopalooza LIVE. This is the investor and analyst session, brought to you virtually. Hopefully, you had the opportunity to see the main session. And it was quite a remarkable amount of content put on LIVE with 2 weeks' notice from the time we went to a physical setting to a virtual setting. And I think that's a sign of times to come. We're going to all have to reach our audience, our customers, and now our investors virtually. And I think you will find us being quite proactive about that in the upcoming months, as we turn our non-deal roadshows into virtual meetings. So welcome, and thank you for joining us. Let me first start with the proverbial forward-looking statement, disclaimer or content. So please review that so that we can proceed with providing as much information as possible. Now let's go to the agenda. So I'm here to introduce the agenda and our speakers. We are going to start with our top line. We think the best thing we can do in a very uncertain world is grow the business as much as possible and at a minimum, protect our top line. So the first part of our session is going to focus on our go-to-market and our go-to-market strategy by our 2 leaders there. Then we will bring in a customer, one of our new customers, who will give you some more insight as to why they acquired Domo, how they're using it, the value we're bringing. And it's a very interesting use case because it is coming from the financial industry. I will then cover our current thinking about our financial and our financial situation -- our financial scenarios, I'll call it. Of course, we're doing everything we can to protect the top line, but we've also taken action already to protect the bottom line. It's the $5 million, $30 million, $30 million scenario. Just in the last few days, we took $5 million of cost out relative to our plan. $30 million, we're prepared to pull the trigger at any minute. I'll explain what the timing of that might be, whether it's tomorrow or the next day or days after that, but how our thinking is of the timing. And then we have $30 million more ready to take out of our cost structure as needed. And again, I'll cover that in my section. Then we'll have Josh come up with his comments and views of the business and how we're prepared to operate in the current environment. And then we will open up the opportunity for you to answer questions virtually. So for you that have signed in through the webinar, you will be able to ask us questions at any point in time, where we will queue them up. And then the team that's up here, in addition to our product team will be on stage to answer questions. So with that, let me turn it over to John Mellor, our Chief Strategy Officer; and Ian Tickle, our Chief Revenue Officer and General Manager. Guys?

Bruce. And thank you all for joining. It's a pleasure to speak with you this afternoon. My name is John Mellor, and I'm the Chief Strategy Officer for Domo. I've been here for a little over 6 months, and it's been a very, very exciting ride. I continue to be very impressed with the Domo product, and I think even more impressed with our customers and the enthusiasm of our customers and how they're using the product. But I want to talk to you a little bit about today. Let me just spend a minute recapping Domopalooza LIVE because I don't know how many of you got to see this session this morning. But as Bruce talked about, we changed our strategy 12 business days ago for Domopalooza. So our plan had been, as in previous years, to have an in-person event where we bring 3,000, 4,000 of our customers and prospects to Salt Lake City. And of course, given the environment, we made the decision that, that was not the best idea. And we wanted to convert that in-person event to a digital, 100% online event. So within 12 days, we completely converted that content and rethought the whole format. And this morning, we delivered 90 minutes of Domopalooza content virtually to our customers, and I'm very happy to say that we had multiples of people watch that content than we would have had in-person in Salt Lake City. So we had well over 8,000 registrations for this event. We had thousands of people actually join. We'll be streaming it to the international audiences fully dubbed in Japanese tomorrow and to the APAC region. So it's a real opportunity for us to rethink what the new normal will be in terms of interacting with customers and prospects. And I'm just extremely proud of what the team pulled off today to deliver that event. And I would encourage you to go to domopalooza.com and watch this content. I think it's very, very rich. So with that, I want to talk a little bit about the journey we've been on with the Domo messaging and the Domo story. And this is an evolution for the business. As Domo has talked about itself to the market, the benefits that Domo delivers, the value proposition that our customers realize continues to evolve. And we feel like that a few months ago, it was the right opportunity to evolve this situation further. And I want to walk you through this because I think there are some interesting findings here. So the key process was that we wanted to go out to our customers, who are using Domo and talk to them about what were the benefits that they were getting from the product. And what were the challenges they were facing that Domo could come in and help them address, and then based on that, how do we create a nice, consistent, repeatable story for Domo that we can continue to propagate to our customers, but importantly, use as a way to acquire new customers and spread the Domo value proposition out there. So as part of this process, we did some extensive interviews with 20 customers. We talked to small customers. We talked to large enterprises. We talked to CIOs or IT-driven customers and business-driven customers. We even talked to a couple of customers that we had lost. And we recorded all of those interviews. And from those interviews, we derived some of the basics of what the Domo story is. I want to play a few of these clips for you because I think they're really instructive in terms of what the customer pain was that they were dealing with. So I have three clips that we'll walk through, then talk about the challenges customers are dealing with and then three clips that talk about the benefits that those customers are realizing from Domo. [Presentation]

And these two clips, I think, speak specifically to the challenges around all of the dark data inside of our customers, so the different pockets of data that live within the organization that need to be accessed and it's what we call dark data. And then the second clip talks about the labor. The challenges or the thinly resourced BI teams that are continually getting more and more requests and need to perform with higher leverage. [Presentation]

So this clip is actually from a customer that left Domo to go to a competitor. And when we asked them about how are they doing their real-time analytics, they said they aren't able to because they're not able to access that data. So these points really highlight the fact that Domo is helping customers access dark data and get leverage out of their teams. So now when we move to the benefits that customers are experiencing, I'll play you these clips. [Presentation]

So these are indicative of the kind of comments that we get from customers consistently. Number one is the speed, the speed at which they're able to get an implementation up and running, get access to the data, but then also the speed with which they're able to deliver results to the business users that they're interacting with. And when you get a chance to go back and watch some of the Domopalooza LIVE content, I really want to point you to the Pep Boys interview, where we talked to Jarrod, their CIO, and listened to him talk about the speed at which they were able to pull data out of the system that previously had not even been thought to be accessed. And pull that data out and start to deliver actionable insights down to the store managers of their 1,100 retail stores and service centers to be able to manage the day-to-day parts of that business more effectively. It's a very interesting story about speed. So this last quote, I'll end with this one, is my favorite of all-time because it speaks to how passionate customers can be about what their work is. [Presentation]

So we hear this again and again, people are able to do work that previously they didn't even think they would be able to do, getting leverage out of their data, leverage out of their systems and delivering results to the business in a more timely manner. So from these interviews and the research that we did with our customers, prospects and competitors, you really distill the Domo story down into three things: number one, what is Domo? Domo is the business cloud. What does that give you? That gives you BI leverage at cloud scale in record time. So what benefits do I get from that? It allows you as a business to go fast, to go big and to go bold. And this becomes the architecture, the foundation of the Domo story. And this becomes a repeatable message, that as a marketing team and as a sales team, we can go out and talk to our customers about repeatedly, again and again, to put Domo in that sweet spot of the value that we deliver to customers. So something that you'll see pretty consistently is this business cloud graphic. And this isn't just a pretty picture. This is actually a screenshot from within the Domo interface that shows all of the data connections that an organization has and how those data connections are flowing into data flows and creating data sets that are combined and usable by the organization. And you'll see this graphic just as an iconic representation of how we talk about the business cloud. It's on our website, it's in our selling and marketing materials. So I wanted to familiarize you with this. So quickly, before I turn it over to Ian, I wanted to just highlight these value propositions because we talk about BI leverage at cloud scale in record time. Those words were chosen very purposefully. And I want to just talk to you about each of these. So first, BI leverage. So we're not going to customers insisting that they rip out their systems. We recognize that they have lots of investment in the systems that are in place, whether those are old proprietary systems, whether those are more traditional BI systems, they're not looking to rip those out in most cases. What they need from those systems is leverage. They need to get data into those systems more quickly. They need to get the data out of those systems more quickly. And that is a sweet spot for Domo. They're also looking for leverage on their people. How do I take my team and 10x, 100x the analytics capabilities of my team without growing my headcount. You'll hear Jarrod, the CIO of Pep Boys, talk about in this video, talk about how he has not increased the size of his team yet has 100x the analytics capabilities previous to when he was not using Domo. And then, of course, leveraging operation. That builds that BI leverage pillar. Then we move over to cloud scale. And Domo as a cloud-native solution gives the virtually unlimited capacity to our customers. And to put some numbers around that, we're talking about tens of trillions of rows of data, updated hundreds and thousands of times an hour, while they're being queried 100 million times a week. So you get a sense for the scale of this system and that really blows people's minds when they realize they don't have to buy more hardware for this. They don't need more people for this. This is inherent in the Domo business cloud. And then those 2 pillars lead you to record time. And I think if you talk to Domo customers, you're going to hear consistently speed. The speed with which we can get an implementation up and running, the speed with which we can deliver business results to the customer. So that makes the backbone of the Domo value proposition. So these are not just words that sound nice, these are words that are built on a foundation of real customer benefits, real product and real benefits we're able to deliver to customers. So we are taking that value proposition. We continue to see the ecosystem expand. We see, just in Domopalooza LIVE, just early this morning, we had AWS, Amazon, talking about how we're working with them with AI and ML. You saw the Amazon data exchange announcement. Several announcements have come out around IoT with Verizon and other partner announcements from Snowflake, Microsoft and HubSpot. So we see that ecosystem continuing to be rich because of where we are -- where we sit in terms of pulling data in, making data available at the end point of where it is consumed. So where this really hits the road, and I'll begin to pass things over to my colleague, Ian, here. You take the value proposition, and then you boil that down to what does that mean not just to a business, but to a persona within that business, who is a target buyer for the Domo solution. And what we've done this year is, we've distilled that solution down to 5 specific personas that we are approaching in our marketing and our selling activities. And you can see these on this slide. But each one is a line of business that has a unique use for data. So whether they're in sales or marketing or finance, their business proposition that they're trying to solve is rooted in data, but the language they use to talk about it is slightly different, the data sources that they need to pull from are slightly different and the business outcomes that each one of these personas is trying to drive is slightly different. So we've tailored selling materials and marketing materials that our colleagues in sales are using to help drive these discussions, to open new opportunities and more efficiently progress those opportunities through the pipeline and selling process. So with that, why don't I bring Ian into the fold here?

Thank you, John. Thank you. I think the first thing I'd like to say that the collaboration between marketing, operations and sales in -- as we build out this, Sales Plays has been phenomenal. It really has been an area where we have worked together tirelessly to look at the available go-to-market, who are the people who we have sold to, who are the people who continue to purchase and invest in Domo, and where we're seeing traction. And with that, we took the Sales Plays, and we decided that they were something that we should really double down on and make sure we understood where we were and where we're trying to execute. And the reason why this was so important to us was really one around focus. It was really focused not only for the sales organization, but for the marketing team and also for everybody who is involved in the process from client success through to implementation. And it gave us the ability to really start to look at some of the areas where we provide massive value, where we hadn't seen traditional offerings or operations been able to execute. And if you do look at the Domopalooza breakout sessions, we have 24 customers who are talking about the unique proposition that we have executed with them and the value that it has brought to them. The other thing that we started to see as well is a great alignment between sales and marketing. And I think we can't underestimate how strong that partnership has been with John and his team. With the additional support and resources we have available from the focused approach, we're seeing some really strong traction across, not just pipeline generation, the execution, cross-sell, upsell, new business as well. And it really does support our focus of landing inside an organization and building out our strategy and credibility as we deliver progress and as we deliver business value to those organizations. And it's been exciting to see, I mean, we have an excited workforce focused on a consistent message that everybody has been educated on, everybody has been trained on and everybody has been certified on. And the beauty of that is it just generates confidence in our own sales organization. So we know where we can execute, we know where we can win and we know where we need to go and drive our performance and drive our behavior as a sales organization. The outcome of that is really that we're starting to see just a high quality of meeting. We're seeing a higher level of interaction inside the organization. We're seeing a higher level of entry point into organizations. And with that becomes more entry points for us as well as a different environment for us to work within, but also with higher executive sponsors who understand the business values that they're trying to execute across. Now the results are really in early days, but very, very promising. So we piloted the sales plays across a period of time. We worked on them time at a time, so we can make sure we understood and executed. And we're seeing some good starting points, but John and I are forecasting quite comfortably 70% of our production will be generated from these Sales Plays over the next 3 to 6 months. The sales are really aligning to the message. They're executing incredibly well. It's resonating with our customer base incredibly well, and everybody we're working with is looking at the delivery that we're doing and recognizing that this is the future direction for Domo and our focus. So how are we bringing that focus really into being inside our own organization? Well, the reality is, we had to focus on outbound activity to make sure that we were driving the right behavior in our reps. So we created repeatable campaign-based approach through the sales plays. We built a collaborated market campaign structure. We built a far more efficient and far more effective lead-generation process. And we landed in the organizations that we were targeting to have with greater scale. So we landed quicker, and we landed bigger, and that's something that we're continuing to drive as our baseline performance metric. The other thing that we did was really corrected balance in regards to who we were targeting. So we looked at the new logos that we knew we could go and land with regards to the way that we were executing across the sales plays. We looked at organizations where the upsells were a potential for us, where we could go and use the existing partnerships and go and build out the revenue there. And then we looked at, how do we look after the people that we have and make sure that we drive those organizations to not only remain with us, but to grow? And I'm really delighted and excited that we have over a greater than 90% customer retention rate at the moment. And I just think that's an amazing performance from Domo. And within that, we continue to drive additional opportunity so we can build the operations out and make sure we meet all of their business requirements. Now while we were doing that, we were very conscious that we also needed to drive efficiency in the organization, and there were several ways that we could drive efficiency. And we decided to take every one of them. So the first one was just to make sure we were more efficient as a sales organization. It was to look at the core metrics that we were executing across, and I cover governance in the next slide. But really making sure that we tracked, monitored and educated and enabled our sales team so that they could go into an account and reduce the time it took and use less resources to do it as well, a massive efficiency for us. We also spent a long time looking at the commission stack to see if we could just reduce the cost to acquire our customer, and we're doing great progress there. And I'm sure Bruce will talk about some of this later on, but we've recognized the fact that if we can become more efficient, and we can reduce costs, and we can have a more effective sales force, they're in a far stronger position to be able to grow the business and continue the expectations that we have on ourselves of maximizing the opportunity. But to do that, we did have to put some governance and control. And one of the things I'm fastidious on is governance and control. And there were some great operations in Domo before I joined. I've been in the company for 4 years. I've seen the potential, I've seen what the product can offer to people. And I can see the opportunity in front of us. So what we had to do, though, was just to drive a better level of execution and a better level of understanding of my expectations of what people were there to do. And we've used it quite a lot in the last couple of hours with regards to Domopalooza about, there is a degree of what we expect people to do and then there's a degree of what we're inspecting people. And as we've increased the inspection level, what we expect is rising rapidly, and we're very excited about the progress we're seeing in all areas of the business cadence. We've just put in some simple metrics around the weekly forecast accuracy, the contribution, the participation. We built around more of the sales managers to ensure that they understood their roles and their responsibilities. And we're just starting to see massive growth and massive traction with this. And what's really interesting in this week where we've probably had one of the most business difficult climates we've seen, and we've been doing Domopalooza, and we've been doing all of our other meetings, we have seen an increase in pipeline generation this week, whilst people are working from home. And I truly believe that's because we've put in place the metrics, the cadence, the governance that we require for our workforce to require. The other thing I would say as well is the passion of the workforce. The workforce is determined to make Domo a success. We understand the power of the platform. We understand how it can execute. We understand the value that it brings to us as our own organization. So that enthusiasm and motivation starting to drive more confident sales, more confident execution and more confident way of executing with the customers. Very excited about the way we're working, very excited about some of the logos that we've won in the last 6 months. And the customers that we have absolutely love us, which is really shown by the fact that during this business time, when everybody is looking at business continuity, we've had 24 customers take time out of their day, take time out of their process, take time out of their environment to record the Domopalooza LIVE and On-Demand. And I think we shouldn't underestimate the time that, that takes for people to do. We even had people who are shut down in their own office to go to hotel, so they could book a room, so there could be nothing quite for that video collaboration. And I think it's that passion for Domo that we're continuing to see and continue to grow. And when we talk about passion for Domo, we should really talk about some of the deals that we're working on and some of the customers who we've been engaging with and the value that we bring to those. We were delighted that Pep Boys presented at Domopalooza LIVE. It's a fascinating story. It's an intriguing one for me about, where an organization who's relatively old, they've been there for a long time, they've got 1,000 retail stores, they've got 1,000 franchisees, but they wanted to become more effective, and they wanted to understand how they could drive that behavior. And with Domo, they created this culture of curiosity, where people became interested in analytics, they became interested in the information that we could provide. And when they became curious, they got adventurous and they started to add in different data sources and different areas that they hadn't thought it was possible before such as a phone system. They integrated a phone system into regional sales, and they realized that people who were taking longer to pick up the phone in a branch were selling less than those who picked up the phone quickly. A very simple, easy question, but they hadn't been able to do it before, and we enabled them to have that integration.

And Ian. Ian, there's one other example from the Pep Boys store that I found fascinating. So you talk about this culture of curiosity and how they -- yes, the phone system was a really interesting integration. But as the brand started to move beyond just the mundane, they got this idea to actually bring in data from their torque wrenches, which sounds odd, but as we think about a service section -- a service scenario, every one who has a torque wrench, it has to be calibrated on a daily, weekly basis in that service center. So they actually do that calibration, feed that data into Domo, so then at the regional level, they can see which stores are calibrating their wrenches correctly so that they can put priority of their customers -- prioritize safety of their customers as a high priority. Also in the Swire case, and you'll see this in the video, you think about Coca-Cola. And of course, Swire is one of the largest Coca-Cola bottlers in the country, but Coke. As we were -- as Josh was walking through the warehouse with Jack Pelo, the CEO of Swire. He -- Jack made this comment, where you think about Coke, and it seems like a simple business, but it's incredibly complex. You've got the small, mini Coke cans, you've got the regular-sized Coke cans, you have Coke bottles, you have the larger self-serve plastic bottles, the 2-liter, the cases, the 6-pack. All of that complexity is made sense of through Domo. And it's made sense of by the merchandiser, the actual individual who is driving around in the Coke truck, walking into the convenience store to determine at that convenience store, in that neighborhood, in that community, what is the right assortment based on what is selling. Do I highlight Powerade, which I might do in Utah, where we have a high ski culture? Do I highlight energy drinks, where you might find in a blue-collar or a college-age culture. These kind of decisions are able to be made at the merchandiser level, putting Domo in the hands of -- the phones and the devices that those customers are using.

Yes, absolutely, John. I appreciate the commentary there. And it's one of the areas that we start to see Domo being more confident in is, our ability to help drive these organizations and the way that it can drive their business transformation. And a good example of that is GfK, where we use Domo Everywhere to help distribute the data that they have and provide a service to them, where they could monetize that service. And as we see Domo Everywhere become more and more prevalent in the market space, and as organizations are more interested in making sure that every level inside their team and their partners and their suppliers has access to information, so they can all become more efficient, Domo Everywhere is an amazing platform that enables us to distribute that, but also to provide massive value. With that value becomes momentum, with momentum become success and with success becomes confidence. And that's the journey that we're on at this point in time within our sales organization that they're standing shoulder tall, they understand the power of the platform. With help of John, they understand the uniqueness of what we're able to offer, and we're delivering and executing far more efficiently, but we've still got a way to go, but we're pushing it and we're driving it, and we're very excited to take that journey. So John, over to you now, I think, to introduce a customer who's going to talk around some of this.

So we have the pleasure of being joined by one of our customers. Really appreciate Mark taking the time. I'm going to actually turn it over to Terry, on our sales team, who will do a proper introduction of Mark. Terry? Terry, are you with us? Are you on mute, perhaps?

Okay. Can't hear from Terry. Mark, are you on the line, sir? Okay. Could you just bear with us for a second? We have a slight phone line issue. We will just take a moment to correct that. Should we move to Bruce?

Let's move to Bruce and then we'll come back to Mark, that's it. Should we -- are we there? Oh, here we go.

I can hear you.

Mark, I can hear you.

I don't think they can hear us.

Okay. I think, yes, we can hear you.

Okay. Good.

Terry, can you take it?

Yes. Sorry, guys.

Thank you so much.

Yes, no problem. My name is Terry Layo, I'm the Regional Vice President for Domo's enterprise sales team in the east. And it is my pleasure to introduce Mark McKenna, who's the Chief Marketing Officer from Putnam Investments here in Boston. So welcome, Mark. And if you could give us just a brief introduction on Putnam and your role there.

Sure. Putnam Investments is an investment firm managing institutional assets and working across that part of the industry on a global level as well as advisers' asset. So we really manufacture products, mutual funds, hedge funds, et cetera, for distribution. So really in the more of the B2B space than B2C. In my role, I report to our CEO, Robert Reynolds, and I'm a member of the Operating Committee, and it really provides the direction for the firm in terms of the marketing, the Internet, e-commerce, advertising, mobile and all of our social media initiatives. I've been in the industry about 30 years. And prior to that, worked in a major advertising firm doing work with Fortune 500 companies. And I can say at Putnam, we're on the leading edge of doing things digitally. We've won awards for being a digital engagement with financial advisers, and we've won social media leader of the year in our industry. So -- and throughout I have been introduced to Domo and engaged in the product. And I think, Terry, I'll turn it back to you to sort of lead us through.

Sure. Thanks, Mark. Fantastic. So in staying with the theme of Domo in the messaging today that John laid out, what is BI leverage at cloud scale in record time mean to you?

That's -- it's been great to listen in on the session, and I'm really impressed with the whole engagement. And I think we're really moving all of us to a cloud-based world, and Domo is there. I should say, when one looks at sort of the BI ecosystem with other BI tools, there's desktop, there's server configurations and variations of their products in the cloud. And the problem has been that it's hard to synchronize across mobile, desktop, server, cloud. And just keeping current with the various upgrades is very challenging. And I think what excited me most is that Domo is truly a cloud offering that works across mobile, tablet, PC, MacBook, seamlessly. So for us, it means we can avoid that resource-intensive work to update releases and making sure it's consistent with previously credited work when you're upgrading other BI-type tools, that doesn't happen with Domo. So I think a lot of IT departments are kind of stumbling to get it correct in getting to the cloud in the right way. It's not just rebuilding an app in the cloud environment, it's having it cloud-ready, and that's a big differentiator. I mean I think anyone who's worked with Microsoft, you've gone through their desktop version, the OS 365, it's different interfaces and different experiences across different platforms. And what I was told about is that Domo doesn't have a lot of legacy issues. It works seamlessly across mobile, PC, et cetera. And when we started off, and just sort of proof of concept, we were able to move some 900 million records over within a matter of -- the better part of a day. And no issues, no server, no software challenges. We were just up and running immediately.

Excellent. So what problem did you have, Mark?

The problem, Terry, I've been trying to resolve is that, as the whole role of marketing has become much more digital, and we have a very sophisticated marketing database with -- hosted with, what was referenced before, AWS and if our sales or assets or clicks or e-mails or demographic data, and we do very sophisticated product propensity scoring models. So at times, I'm meeting with business units and sales environment. And they say, well -- recording that video, if you're an investment manager, did that work, how many views were there, what were my open rates, were our search terms working correctly, how is the media buy going? I mean it's really across the gambit. And when you're going off to present, and you were locked down in PowerPoint, you're often getting the question from the management team or an operating committee level, oh, how did that compare with last week and month-over-month and year-over-year. We had tools that could get these, but it wasn't really ready for a boardroom type of setup. And by working with Domo, we were able to do that very handily. So we had to take a lot of data, make it very available. So I can get it such that I can share it with our key stakeholders. And it was making that data accessible and having it work in the C-suite, if you will, and across the whole organization.

Okay. So in light of that challenge, what was the current solution in place?

Well, we were -- we do have a very highly connected, integrated environment in our marketing operations. And -- but it still involves a lot of moving from person-to-person, skill set to skill set and changing things to get them ready for major presentations. Bear in mind, when you're in PowerPoint, as I was mentioning earlier, you can't really drill down and answer some of the deep questions. And there was -- we've got the answer, we'll get back to you. That was kind of the challenge. And I wanted to have information at my fingertips because we have the data. I just didn't have it in a connected way that Domo's offered.

Okay. So with certain tools in place already, why did you choose Domo?

Yes, it's a good question. And I think that, that one looks in an environment to saying, okay, I've got these BI tools, be it Tableau or MicroStrategy, et cetera. Why do you need something else? And what I picked in marketing just, because I knew the product was going to work great, was the ability to just tie it more directly into our media buying to make faster, better decisions. So the ability as you have connectors into our DSP, which is held at Centro, mattered a lot. And what really impressed us was the ability to -- how you keep up those connections at Domo. So connecting to Google's BigQuery and other data sources, it was very easy. And before Domo, we couldn't do that. We'd see issues from time to time. We'd have to figure out that BigQuery or Google would change in its analytics part of its structure. And that's, I think, a really important thing. I think another reason was just speed to market. I wanted to show our colleagues that this investment would have a payback. And your team really gave us the confidence I could get an insight quickly. So on a technical level, I mean, we like the ETL layer. We can migrate pretty much all of our SQL developer code into Domo for data manipulation and making the resulting sources shareable within and outside of Domo. And this is how we bring -- that's how we really bring it into Domo from our marketing database. So the native connections are really critical and making us -- allowing us to make much faster decisions than what grade is working and what's not working and shifting it up. And we're spending a whole lot less time dealing with the data connections. And now we're able to tell our story. So it's been tremendous.

Okay. So it's interesting that one of the things that you wanted to be able to demonstrate in the face of having hurdles in place and being a relatively connected environment was to be able to demonstrate how quickly we could do this. So what was -- how did we solve the problem?

Well, it's interesting, we came in and your -- when your team was in, it was really just a couple of days before I had a national sales meeting, where we would bring people from across the country and typically I present in PowerPoint and show them what are the key trends, what was happening in the space. And I get a lot of questions, and I thought that it would be a little bit of a risk, but I wanted to see and challenge the team if we couldn't have something that really literally in day and a half I could be up on stage with. And that meeting occurred and what I did was I wired it to -- well, I had my traditional PowerPoint, but then I wired that directly to Domo. And when I had some questions I was able to go right out into the data and talk about the most clicked on pieces, which firms in our industry were leveraging Putnam's digital properties quicker. And I really wanted to send a broader message to my colleagues across the firm that marketing was operating in the present real-time data, data-driven decisions. And I think that's what we all need to do in this environment. So to me, it was sort of an opportunity to show leadership, and so this is the way Putnam as an organization really needs to move. That was a powerful part of what I wanted to accomplish.

Yes. So connected in 1.5 days, 2 days, 900-plus million rows, created your dashboards, decided to present it in a meeting with your national sales organization, produced the PowerPoint out of Domo and then reverted back to Domo when there was a question where you wanted to drill into it, pretty good.

Yes. It was really amazing. I mean, yes, we have data, but the -- I think there are really 2 features of Domo, it's the ability [indiscernible]

All right. Thank you, Mark. We very much appreciate you joining us and telling us your use case. We just walked off the stage. We just had a major tremor here in Salt Lake City after a large earthquake this morning. So we're regrouping right now. We will go ahead and move on to my section. I'm not on the stage right now because the equipment might not be stable enough to support me, but maybe I can go on anyway with that. I want to go on stage.

Okay.

So glad to be back with you. Okay, again, we're working through logistics. I may have to jump off the stage or under a table at any point in time, but I can continue to talk. So again, thanks for joining us. Let me start with -- for those that joined us in the IPO, those that joined us as investors afterwards, and those that are contemplating joining us, I think, it's important just to highlight the progress we've made over the last few quarters. You can see the unit economic progression since the IPO. We have operated, I think, in a sound and prudent manner and made fantastic progress against some very, very key metrics, one of which is to have gotten our ARR to $162 million, which is much more ARR that I had at SuccessFactors when we faced the 2008 downturn. So I am comforted with the scale that we've been able to accomplish at the top line, the recurring revenue that we've been able to set up, as we may enter -- as we're in any of these very uncertain times. But we've also made important progress on our subscription revenue, our gross -- subscription gross margins, both feed into the lifetime value of a customer that has grown substantially over time, the subscription mix 86%, gross retention rate 91%, which is starting to get into a zone you would expect from an enterprise software company with the kind of customers and the kind of value we bring to them. That's supported by the fact we've been able to get 55% of our business multiyear contracts. We've done -- we've been in public 7 quarters, and our expenses have gone down. And I think, obviously, we'll continue to have that posture as we enter into these very unchartered waters that we're all facing as businesses. And our cash burn is down to $15 million from $36 million per quarter. And then that's supported by what we saw in Q4. Again, we saw reasonable subscription revenue growth of 24%. Record gross retention rates. Our enterprise net retention rates hit 120%, which, I believe, is an indicator of what's possible with our entire business. Again, multiyear contracts, we continue to be committed to cash flow positive. We were before, we're even more so now. And our fiscal '21 plan really focuses on cash improvement. We're able to hit our top line, all things being equal with our current rep count. And we have many new initiatives and even more to come that we don't count on to be able to hit our numbers. Now to get to where we are today. Well, we're all -- all businesses are trying to accommodate what we do with the COVID-19 crisis. Certainly, what most of us have done is take prudent actions to make us have a safe work environment and to try to do everything we can to operate effectively, yet don't, but also play our part in not allowing the spread to continue. So we've -- this, in fact, is one of many steps that we've taken. We've taken Domopalooza to 100% digital. And we are very aggressively leaning into having all our business development initiatives be virtual. And I think we've had a great start by how we've been able to hold this event in very short notice. And we've learned a lot on how to do it. We'll continue to kind of leverage that knowledge and our experience as we go forward. Now as we face a downturn and we know it's a downturn, I'm somewhat comforted and ought to offer you comfort that we have the type of revenue stream that's more resilient than many industries and many businesses. And that's because we have most of our business comes from our renewal stream that's generally sticky, even more so when it's under multiyear contracts. We have 50% of our new business. This is on top of the renewal stream. Our new business comes from current customers. And you've heard some of the cases all day long today of why customers are buying it? And how they're using it? And the value they're bringing to their own businesses. And why it might even be more necessary in today's environment? We also have our new business that's very accustomed to doing business virtually over the phone and through the web, and that is a strength that we will absolutely lean into to help protect the top line in very uncertain terms. We have a product that's very easy to use and deploy, which is a great characteristics of a product set as you're going into these times. And then we are also finding, it's becoming more prominent today, it's always been the case that we have a solution that helps facilitate work from home that helps -- that's absolutely designed for a mobile workforce. And we think that as companies really need to pay attention to what's going on in the business right now, Domo is the perfect platform to rely on to give them the data they need to be able to respond quickly to the changing work environment. And I will show you how we're using Domo literally to that effect. In support of the fact that we have a top line that is more resilient than many industries than most, we have a very diversified, from an industry point of view. This is a Domo Card. It's live. It shows the diversification. It's our ARR by industry. And you'll see it's very diversified. And I will also point out that some of the industries, the parts that we support, for example, in retail, we are very supportive of businesses that are very strong in e-retail. In financial services, even though, that industries may become -- is coming under extreme pressure, we're on the money management side with the Putnam's and the Fidelity's, to a different degree MasterCard that have resilience or more resilience than some other parts of the sector. So we are somewhat -- we are comforted in both industry diversification and customer diversification. Now moving on, what's going on in our business today? And this is how I'm using Domo to help manage Domo and to try to stay on top of our business. Here is how Japan is doing right now. It is a chart that tracks how our business is this quarter versus how it is a quarter a year ago, so Q1 to Q1. It's a pacing card. The left axis is new business, we call it new ACV. And the bottom axis is the percent of the quarter. And you can see that Q1 of this year is higher than Q1 of last year. I point this out because Japan has absolutely been in lockdown situation for many months now. That is not a characteristic. That is not something that they are accustomed to. They are accustomed to in-person meetings, face-to-face. And for them to be able to continue to operate, run their businesses and have needs to run their businesses and be able to do so, I think, is quite phenomenal. And our business has continued to at least pace above the same time last year, even in an extremely lockdown situation. So our revenue stream, unlike some industries that have already been severely impacted by the COVID-19 outbreak, ours has not, particularly in an environment, where you would fully expect to have seen it. Now I'm not naive. I know it can happen. And in this particular case, looking at Japan, most of the quarter is still to come. Because we can see that -- what the pattern is for Q1 of last year, and we need to stay on top of it, and we still have a long way to go. However, if we were severely disrupted, we would not be pacing where we are right now. And I'll say for the company as a whole, we're pacing above where we were last year. That's one point. The company as a whole, if all we do is pace where we were last year, we're well within guidance. And I will add that, we could absorb a 20% downturn in our new business, all else being equal, which is a very important criteria; all else being equal, if we had a 20% falloff in our new business, we would still be within our guidance range. Now moving on to what is our business slowdown plan? First, I remember like it happened yesterday what happened in 2008. As at SuccessFactors, the world changed overnight, and we moved immediately and aggressively. Josh also was at Omniture at the same time. So we already have experience in facing this. And I am using as the base case by which we measure, how we ought to react to it. I am sensitive to that we could end up in the exact same top line impact that we saw in 2008. And the top line impact was this. Our new business went down by 40% year-over-year in the first quarter of the crisis. The second quarter went down 38%. The third quarter went down 21%. And that's year-over-year new business declines. That's what I experienced in 2008. That's the baseline by which we're measuring what this downturn will bring to us. And that's how we are running our cost scenarios. And in the short run, we've already taken $5 million of costs out, as we set up the mechanisms and the specificity to take the next $30 million out. I am highly confident that most investors would suggest to do it now. I will state this. You can consider it done. We are, however, still being very sensitive to how our business is tracking. But as we see businesses slow down, and it slowed down for us, it will be done. And then behind that, we're also making sure we have another $30 million set up to go to provide further insurance that we protect the balance sheet in a situation where businesses decline even further than what we believe happened in 2008. And so we are keeping the $5 million, $30 million, $30 million and are not afraid to go beyond that if, in fact, we find that we need to. So now let me -- those are my prepared remarks. Let me now invite Josh up to give his thoughts. And then what we will do is we'll be available for question and answer. There is a tab, should be available on your screen, where you can submit questions. So please do so. You can -- based on my -- based on what I just said, what Ian and John have said, and certainly, you can follow-up with anything that Josh covers right now.

Thanks, Bruce. Yes. So interesting day. Interesting couple of weeks. We just -- as Bruce was saying, we just -- we found out it was a 4.0 -- well, between 3.9 and 4.6 magnitude earthquake that hit, while we were standing here. So a little on edge. But assuming that it follows the normal pattern of lesser and lesser aftershocks, the big one was this morning. But echoing what Bruce was just talking about, we're definitely aggressively changing the way we run the company. We're going much more online, much more virtual. I'm really proud of what the team did today. It was special -- product has been working their butts off for a few quarters leading up to Domopalooza. And marketing just got a huge change delivered to them 2 weeks ago. And so John Mellor and Eric, Paris, Danaca, I can't believe what they did and what they delivered here and it's -- in just a matter of literally 2 weeks. And I think in a lot of ways, there'll be -- it was better for us because we're able to create so much content in a more bite-size pieces that we can now use with our sales organization. And that's one of the things that we need. It was more content. So we're really excited about that. And I think, it can be pretty instructive for how we run next year's Domopalooza. Still, there's a bunch of great things that happen when you're meeting with people and a lot of deals that get facilitated. But this online component will be something, I'm sure, we'll keep big elements of that. So going to continue to change the way we run the company. We're very focused on pipeline, as John and Ian talked about. As focused on it from the sense that watching it daily because that's going to be the thing that starts to change as things get bad and trying to understand how bad it's changing. We've got -- I think, like Bruce mentioned, we've done this before. Unfortunately, I hate to say that I've been through 2 of these, but I've been through 2 of them, and definitely understand the inner-workings of an ARR business. And we will definitely keep this thing on the rails and make whatever cuts we need to make. We've got the $5 million that we already took out. We've got $30 million that's on basically a hair trigger. And like Bruce said, definitely we have heard from some investors that you'd love to see that now. But we'll respond to how our business is doing. Definitely aware of how the market is doing, hate how the market is doing. But at the same time, we're going to gauge it based on how our pipeline is changing, how our daily cash collections are changing and how our daily closed deals are changing. So that's -- those are metrics that we're looking at daily, and we can make changes daily. And we've challenged our team and challenged the company to understand that the only way through this is to be more efficient, to be more effective and to generate that pipeline and close deals. And to the extent that changes, we're ready to make changes and make sure that by the time we get to the end of this, we've got plenty of cash in the bank to be able to maintain the flexibility and run the business effectively. And I feel very confident in our ability to do that. I think the other -- all the scenarios that we're looking at allow us to get there with plenty of cash in the bank. And I think the other thing that's really important to understand is this is a big ARR. It's a meaningful size of recurring revenue now with a lot of multiyear contracts. And so it does put us in a position to have a little bit more flexibility than -- or predictability, I should say, than a company that is doing daily sales or relying on 100% of the sales coming from that quarter. And I don't know if we're going to -- it seems like over the next couple of weeks, we're going to have a lot more information, we're going to have a lot more of an understanding of the approach that we've taken here in the U.S. has been the right approach. And if things calm down from a virus perspective, and if it feels like -- and we have great examples out there to look at and watch our Japanese business, and they're talking about going back to the office. And we've seen there that their pipeline -- as Bruce showed, their pipeline's continuing to grow and deals are continuing to get done. We are seeing a lack of new opportunities being created. But as we talk to our people that's because there's not the events taking place. So just trying to really understand exactly how it's going to impact our business within the constraints that Bruce was talking about and the expectations that we have for how much business may change. We're operating within those guidelines and really trying to make sure that we're being really prudent. But one thing we can definitely say is, rest assured, there's a lot of value here. There's a lot of really happy customers, customers that the majority of our business that we sell every quarter are happy customers buying more, are happy customers doing more in other parts of their organization, where they've already seen how effective it is, how efficient it is, how much more efficient it is than other things they're spending money on. So it's a great opportunity for us, especially when people get -- when budgets get tight to continue to build the business with customers that we currently have. And so we're going to continue to look at that, like I said, on a daily basis. We're prepared to make the changes based on what's happening in our pipeline with our daily collections and with our sales that we're closing on a daily basis. So with that, I think, we'll open it up to questions. Thank you.

I'll start with the question here. I think the audience can see the questions, but I'll read it anyway. Bruce, SuccessFactors' Billings Growth rate went from April 2008 to April 2009. It went 109%, 68%, 52%, 2%, minus 6% before beginning to recover. Salesforce wasn't much better, 71% down to 10%. What do you expect to happen at Domo? Well, first, I quoted the underlying numbers that you did not see, Pat, which is what happened to the new business. And you can see in these SaaS models, they are very resilient to immediate downturns even in new business because of the strength of the renewal stream. So we were able to absorb, and we plan to be able to absorb big decreases in new business should that happen by the cushioning effect of the recurring revenue stream. But what do I think will happen? We don't know. We do know where -- it's all hands on decks on protecting the top line to be able to hit our plan. We're going to do everything we can to do that. And whatever we do there absolutely will cushion the impact of any downturn around us. But we're absolutely prepared to execute on the 2008 scenario, and hopefully, we don't have to go beyond that, but we will have plans beyond that should that be the case.

Yes. What are current plans on headcount and hiring, is another question. I think we've talked about a little bit of that, but definitely not hiring. And plans on headcount, and that's -- there's another question. Is Josh okay with layoffs? Yes, I'm okay with layoffs. I've laid out people before. I hate it. It's horrible. But you do -- you have to do, you protect the business. We have a very, very good business here that customers love to use. Big enterprises are very happy. You heard it with Pep Boys today at Domopalooza. The CEO, Chief Revenue Officer, COO, CIO, they love using the product to run their business. So in times where you're trying to find efficiency, we are the most mobile, the most cloud-friendly business intelligence system that's out there by a mile. And we've -- we have happy customers that will continue to work with us and will retain their business. And I think we'll be able to, that's why we're seeing our pipeline, where we'll see the ability to continue to sell into them. We might have a couple of slowdown quarters, like, Pat just asked in that question. And if that happens, we're ready to respond on a daily basis. But if -- there's no way in a million years after working on this thing for 10 years with close to $200 million in ARR, we're going to do anything other than exactly what's prudent to make sure that this business lasts and that we operate in a way to make sure that it's cash flow positive with plenty of cash in the bank. Is it time to consider selling the business to a larger vendor, like, SAP or Oracle or Microsoft? Yes, it's -- we always take it down when they come, certainly not opposed to selling the company, but always evaluate that with the opportunity we think is in front of us and evaluate that with where the value is at today. And most importantly, we've wanted to go out and really execute on building this thing that we had envisioned for. And I think we've done that. We've built something that makes customers extremely happy. And so having the ability to continue to deliver on that is something that's important to us. Do I want to sell? No, I don't want to sell. But there's the reality of also having to face whatever is taking place with your ability to execute out there in the marketplace. And that's why we've really put a challenge out to our sales team and our marketing team, let's figure out how to get more and more efficient in, especially as this new world is starting to hit us, that we're ready for that. But yes, I mean, we'll always -- I'll always take calls. I've heard people say that they thought I sold Omniture too early. I didn't sell Omniture too early, I sold Omniture when we felt like we should have sold Omniture. And it was the right time. And it's really easy to look at, oh, that probably would be worth $50 billion today, and it probably would be over $50 billion today. But at the same time, a lot of -- it was under the shelter of Adobe that has done well. And our stock was going down 25% every time someone said Google Analytics. So we made the best decision we could with the information that we had, and I'll continue to always make the best decisions with the information that we have. So sometimes people say, too, like, are you mad, you sold it. It did so well, like, I don't want to sell a dog to someone. But I think the opportunity here, Bruce talked about it, Ian talked about it, John talked about it, we're sensitive to what's going on out there. We recognize what's going on out there. We've been through this twice before. I had to let 48 people go 2 day -- or 2 weeks before Christmas, one time with no severance. I've been through hard times. We're not going to let the hard times beat us up and make us lose business or make all the value that's been created here make that lost over time. Stock is going to do what it's going to do. We're going to manage the business and make sure that it doesn't run out of money and make sure that we respond in a way that we have enough cash to get to breakeven. And we hope that we can do that without being too dramatic. But if we have to be dramatic, we'll be dramatic. I'm not afraid of that. Not afraid of that at all. And that's the message that we delivered to all of our people last Friday, and we said, so we got to go out there and we got to crank it. We've got to go out there and do everything we can to find efficiency. And we think that there is -- like Bruce showed you, if there's still opportunities out there, we think deals are getting done. They are getting done. And we see it on a daily basis. As it changes, we'll adjust.

Well, we're running over, but we probably have time for 2 more questions. Okay. Bruce, would you find -- where would you find the additional $30 million in cuts, sales, marketing, somewhere else? Well, we -- one of the aspects of our cost structure is we have built in an incredible amount of investment in the future and strategic initiatives that, we believe, will really transform the way that this whole industry has been thinking about data. It would be great to keep that. We won't be able to do so in a downturn, particularly if it's a severe downturn. So it will come out of -- it will come out with the investment in people and systems that are really meant to set us up even better for the future. A lot of that will be in research and development, unfortunately. But -- and at the same time, we have significant investments in marketing. And in a world where the marketing return is just going to be way below even what we've experienced, that will also be earmarked. And then there's just less of everything that we'll need to do and it will come out of every -- pretty much every line item that we have on the P&L. What I can tell you is we have a very clear plan of how we would get the $30 million from where we are right now -- from where we are in our plan right now, taken out. And I can tell you that we feel like even after that, we are able -- still in a very good position to maintain the investments across all those areas, including the strategic areas. If we have to go another $30 million, that is where it gets a little more difficult, but we're confident that we could do that if we need to.

I'll just read through these questions really quickly. So under what circumstances would you consider raising more capital right now? When we feel like we need more capital and we still feel like we've said it many, many, many times, we know how to run these companies, and we understand what cash we have, and we understand the sensitivity around it, and we're going to manage to that. So we -- if we get down to where we think we need more capital, then, of course, we'd raise it. We don't feel like we're in that position today. Next question, I believe, Domo is worth a lot more than the stock price reflects -- where did that go? And both Looker and Tableau were acquired last year. Are you staying independent as subscale cash burning software company? Do you think that's the right course versus the certainty of generating value for shareholders via a sale through a larger software company? Again, we always look at everything, but we feel like we're in a good position to continue to execute on our plan. If there's an alternative that feels like it's a better alternative than that to shareholders, then, of course, we'll take a look at that and continue to evaluate things on a day-by-day basis. But like Bruce said, we feel like, even in the face of cuts, we can make -- especially that first big chunk of cuts without -- with taking out moon shots with taking out R&D that's meant for 3 years, 4 years down the road, but we can -- and obviously, sales and marketing wouldn't be as big in an environment, where people aren't buying, and we hope we can do that relatively cleanly and still maintain the business very effectively. Why would you protect the business with layoffs, why not find a strategic partner? I feel like I have answered that one. On a more positive note, are you seeing any customers that are spending more on IT, streaming companies, daily essential companies, delivery companies? Yes, we're seeing customers. I think for the most part, what we see is we see customers that are using our product. They've been using it for 1, 2, 3 years. They've seen efficiencies in their organization because of it. They have other parts of their organization that aren't using it, as most of our customers are using this in 1/10 of their organization. So there's lots of up-sell opportunities inside organizations, where they've got a perfect case study inside their own brand. So that's where, I think, a lot of the opportunity is going to come -- continue to come for us. Bruce, for the $5 million of cost taken out, is that reflected in the prior guidance or incremental to what's been outlined a week ago?

Yes, that was not in the prior guidance. This is -- the guidance was based on our business plan at that point in time. This $5 million is a reduction in the cost structure we had in that plan. And it's really to make sure we're in the best position possible to protect the bottom line, even though, the business has not yet seen an impact of what we're reading about in the newspapers right now.

And then the last question there, Bruce, and then I'll close it up.

Footing $162 million ARR to $172 million projected subs revenue for fiscal '21 seems to imply a big cushion, higher amount of coverage. Is there any reason why there'd be a disconnect between ARR in the next 12 months' subscription revenue? Now they're highly related. We did go into this year planning to outperform guidance. We'll be rethinking that at all times. Also keep in mind that 2 things happened during the year: one, you get new business that you factor in, and there is just naturally, at any SaaS company there is a churn that does happen, that has to be factored in. But we did enter the year highly confident with the numbers we gave you. We saw absolutely a path to not only get there, but beat it. We're going to obviously rethink that, rethink the whole plan given where we are. But that's part of the reason why you think, yes, we had good coverage on the numbers that we committed to you. And if all things being equal and the environment stays the same, we're in a good position. But we don't think that, that's how we can think about business in the world around us. We have to be totally prepared to make the changes necessary to protect the balance sheet and cash flow.

All right. Well, that's it for the questions. Thank you very much. Again, I think, remember that we've got a big ARR business here with extremely happy customers. And as long as we continue to focus on them, including the up-sells that will come from them, including adjusting to this new online virtual world, which we seem to be fairly adept at adjusting to, I think, there's still an ability to execute even in this kind of an environment. But like we said, given the environment, given what's going on, rest assured, we're going to do anything and everything that it takes to make sure that we get to cash flow positive in a timely basis with plenty of cash in the bank when we get there. Thank you, everybody.

Yes, thank you. Thank you for joining us today.