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

All right, everyone. Thank you for coming. Welcome to the 26th Annual Credit Suisse Technology Conference. My name is Radi Sultan. I work on the Software Team in Security Research at the bank. I'm very excited to host Chris Willis, Chief Design Officer at Domo; Peter Lowry, Head of IR. Thank you, everyone, for being here. And just a quick note before we begin the presentation. Domo is in their acquired period, so it won't be disclosing any material information here. Thank you, guys for being here.

Yes. Thank you, Radi.

So Chris, maybe just to kick it off, and to level up the conversation, many people know Domo, but maybe you can start off by giving us a brief overview.

Sure. So Domo was started with a very different sort of vision in mind, which was, how can we turn data into -- or put data to work at every part of the organization for everybody. As you know, the data analytics, the BI space is -- has not been overlooked. There's hundreds of different kinds of products out there. But what we saw was no one had a native cloud platform that allowed you to really create value very quickly by putting the data to work for people where they do their jobs. And that's something that's very different than, I think, sort of traditional BI analytics, which is, mostly for 2% of the organization, we want to build something for 100% of the organization.

And there are a range of point solutions in the data analytics space. Maybe you could talk a little bit about how Domo fits in there and maybe some of your competitive differentiation?

Sure. Again, no shortage of competitors out there, but I would think of ones like -- that we see a lot, Power BI and Tableau. Again, we're a native cloud solution. So when we started building Domo, it was a pretty big challenge. I don't think we fully understood how difficult it was going to be to do this, because it seemed like a very obvious thing for us to do. But if you want to, again, put data to work for everybody to do it quickly, you have to have a fully integrated system so you can create a digitally connected business. And other tools are typically kind of point solutions where you're either analyzing and reporting for a small audience and you have a small group that's sort of creating that. For Domo, when we started building it, we thought -- and this was Josh James early on -- just want to solve a problem from a business user standpoint, which was, how do I know what's going on in my business versus a -- I need -- I have to make a purchase, and let me just buy the cheapest thing out there to solve that problem, right? It was, how do we inform everybody from the CEO all the way down so that they can read and react in real time. And as far as we know, this is the way to do it. I don't know of any other way. As we talked about earlier, I don't think you can Frankenstein your way to success by just piecing together lots of bits and pieces.

Yes. And maybe just -- one that's just been with Domo since the beginning. I mean, can you talk from an architectural standpoint, like how your products are on competitive differentiation? Sort of anything architecturally that serves as a big competitive advantage?

Yes. So I think one of the early issues with Domo, and it took us a while to kind of understand this was, we built a complete end-to-end solution. So everything from data warehousing, connectors. So we have well over 1,000 connectors. So our competitor in that space might be like a MuleSoft, right? So we go up against these point solutions, ETL, so Informatica, data warehousing, Snowflake or others, AWS. What we learned was, we need to be both agnostic and also give companies the ability to use the full power of the platform in a way that makes sense to them. So we have a full end-to-end architecture for creating everything from gathering and collecting new data, analyzing it, turning it into applications, turning it into reports, automation, workflows, et cetera, dashboards, of course. So we kind of think of ourselves -- I think at the start, we thought of ourselves as sort of like this modern BI platform, but it's turned out to be much more. That's where you start, and that's where a lot of companies have budget and they think that's where their need is. But what we're excited about is, they mature quickly. So if you kind of think about the sort of data maturation kind of curve, I think we get them on that curve faster and help them learn faster about how to, again, get more value out of their information that otherwise just sits dormant.

And then, as Domo's Chief Design Officer, can you talk a little bit about the importance of design in analytics?

Yes. And this is one that I think the industry is slowly starting to get, which is, you can't design for the 2%, right, like the 2% of the analysts or the data scientists. You need to make it more accessible to more people. And design, I think, has really been one of the key ingredients in our secret sauce. I think if you look at like our NPS scores, the things that people really know about Domo, the first would be speed to value. Like you can get things done on that you just thought -- you'd never imagined you could do. We see that a lot, which is actually kind of a challenge because sometimes people are like, well, we've been trying to solve this problem, we've been banging our head against the wall for years, why do you think you could do it? It's like, well, we have a completely different sort of solution that makes it much easier to do that. And we can talk about some examples about that. But secondly, adoption is the biggest risk factor in enterprise software, right? Like if people aren't going to use it, your investment is going nowhere. So being able to put technology into people's hands in a friendly, usable, and frankly, in a way that they can love, is a big differentiator. And I think that's what separates like the Apples from maybe the other companies in the world, right. Apple, I don't know what it is today, but $2.5 trillion market cap. They figured out how to match technology with an experience and create something that in a world of undifferentiated technology, people can really fall in love with something. And that's what we keep striving to do, and we're never satisfied. We learn a lot every day, and yes, we love to hear when our customers love us and we love to hear when we can do better.

Yes. And it also seems to help reduce like selling friction to when you're able to just -- everything works out of the box and able to add value from day 1 really when you...

Yes. Honestly. I've seen it a number of times that it's both fun and it makes me a little nervous, because there are times when people like, well, okay, that's great, but that's just Domo data. Like no, that's billions of rows, I'm like, what? Like I can manipulate. I can self-serve. Now there is -- I would say, companies are starting to learn how to learn, which is something they haven't had to do before because they tend to be very siloed, right? And there's someone to do that. I think there is a mind-shift coming. And I would say the place where we do really well is with companies who have the desire to transform, do better, compete better, be more aware of what's happening in a changing environment. If I go in and talk to a potential customer and they're like, yes, we just want to keep things the way they are. We're a status quo. We're probably not right for them because we're there to help you do things differently. And that requires a learning organization. And I think that's one of the challenges out there. And I think with COVID and the current sort of economic uncertainty, I think it's starting to put a fire under a lot of organizations to say, we need to think differently and do things a little differently, and we have designed the tool for that.

And how do you proactively like break down those silos to kind of connect organizations?

So -- that's a great question. I think in some ways, we've had to think about this not just as a technology -- from a technology viewpoint, but almost as an anthropological or ethnography viewpoint, which is understanding -- and I know this might sound a little outside of what you guys typically talk about, but because -- you can say, look, well, we do SQL databases. Great. That's wonderful, right? And I understand why that's a tool and why that's important, why you need that. It's part of the larger sort of suite of capability. However, when you're trying to transform an organization, you have to understand that the organization is a human organization, right? And so, there's laws, there's morays, there's culture, there's language. In Domo, one of the things we did very early on was to make sure that we built in governance and compliance. And as I like to talk about when I say when you're frankensteining a solution, a lot of times, you look at the architecture, right? You look at like I need this visualization tool, I need this data warehouse, I need this ETL tool, et cetera, et cetera. What we really focused on were -- was the connections between those things. And that's critical because it helps you map the technology to the organization. Because you can create great stuff, but if you can't deploy it securely, govern it, audit it, you're just creating yet another bottleneck. So you might have done really great solving one problem only to open up a world of others.

Yes, absolutely. You've recently been talking more about data apps. Can you talk about what these are and how these help your customers?

Yes, sure. So like we said from the very beginning -- and I know apps are getting very much the buzz nowadays. That was always part of our vision. In fact, we used to call it -- before we had the whole infrastructure -- This was 10 years ago -- I remember with Josh, we'd call it apps to fill the gaps. That was our kind of our internal tagline. Why was it important? And why is it important now? It's important because once you've done all the hard work of collecting, analyzing and then sort of create data products, the last part is turning it into action. Apps are about action. And I would say you could even extend that a little bit further by saying that at the start, companies that begin to transform, they start internally. So creating apps to solve specific problems that are usually -- I think, for the most part, very idiosyncratic. I'll give you one example, if you like. This is a really exciting company O'Reilly Auto Parts. They have nearly 6,000 stores. And like everybody else, they have got problems when it's trying to figure out, how do I know how well we're performing at all of those 6,000 locations. And the idea of trying to figure out how we're doing in real time was not a question they were even asking, right? It was how do we replace this very laborious and error prone excel, e-mail situation? I'm sure we've all been there, or it's like, well, we haven't built anything, we don't really understand the problem, so let's just fill up this excel spreadsheet and send it in. And so, their managers were doing this. And then we sort of came along and introduced ourselves. And what they've done now is, they've actually built their own custom apps for their managers and the people on the floor. So they're able to gather not just real-time intelligence, because they can actually check things and go like, yes, this matches up with what we think the inventory is, or how we think we're selling or being able to actually communicate, because it's a collaborative platform as well. So if a manager says, well, I'm going to try and experiment in the store. I'm going to try moving this product to the red zone or the greeting area, or frankly, just basic efficiencies, not having to spend time in the back room when you should be out there with customers, it's huge. And then, once you have all of this data, it changes the kinds of questions and awareness that you get at all different levels. So again, if I were to sort of boil it down, I would say, most of the BI solutions out there -- if you thought of us as just a BI solution, you would miss the point, which is, we can absolutely do BI, and we can do it well at scale and very quickly. But BI solutions out there have typically been designed for analytics that allow you to sort of put a microscope on different parts of your business. They're not the tools that can also transform your business, in my opinion, because there are different tools. They were designed for a different purpose. And that purpose tends to shape what we think we can do. And that's where I see the shift between the companies that get it and the companies that are still learning.

And where do you think we are, like, just given sort of the accessibility of that data now in terms of like use cases? And it seems like you talk to every organization, and they're always finding more use cases every week, every day, and it's something that's constantly evolving and dynamic. I mean, where are we in that progression?

I have to say I feel like we're still very early. And the reason I say that is, if you look at the class of problems that are mostly being solved, they're really obvious ones, right? So it's ones that you have the data. You know what the data is. It's a well-understood problem. You know what success looks like. And that's absolutely fine. Because I think if you think about sort of your digital transformation arc, that's where you have to start, which is just like with the O'Reilly example. And we just want to be more efficient. Some companies are actually biased because they're like, well, we're creating like this report in -- for executives in PowerPoint, and we're spending tons of hours on it. Like yes, we can automate that. But what's interesting is, once we do that, they're like, oh, you can do other things. And that's how you get on the curve, right? And so, I would say, at the start, it's about sort of awareness, understanding and being able to change or find new efficiencies. And that's basic, right? And it's -- but it's also important because, back to sort of the learning organization, giving the organization the right tools to transform, they have to get good at winning. And I would say a lot of companies are not used to winning. Once you get beyond the facade, right, the marketing, it's people doing hard work, right? We're just trying to make their lives better and ultimately allow them to focus on what matters most.

Yes. Exactly. Domo also has strength in embedded application analytics and data sharing capabilities. I mean, can you talk a little bit more about how those product capabilities have evolved and maybe where you're seeing the most traction?

Yes. Well, we definitely see a lot of traction in our -- what we call Domo Everywhere, which is -- I mean I think the general term would be embedded analytics, right? So that's great. That's part of -- very core to our analytics buyers, right? It's like, okay, we've got some data, we want to put it out there. But we do it differently in that, when you're embedding analytics with Domo, you're not just embedding the chart or the table or even a page, you're embedding the entire platform, right? And so, you have the ability to leverage the platform in new kinds of ways. So that means that -- I would say like that's a good example, Sony Entertainment. They've got a ton of data coming in from game consoles. And what they do is, they use Domo to use that data to analyze what's happening internally, but they also turn that around. They use Domo Everywhere to provide a new kind of app experience for their developers -- their developer network. And their developers can actually use that and extend it to their partners, which -- I think that's what digital transformation is ultimately all about, right? It's about taking information and problem solving that normally only stayed internal, and finding external opportunities for it. That's really what digital platforms do. And that's what I think we really enable -- for those who are really thinking about it. And a lot of times -- again, I'll give another example real quick. There was a company that was in the process of acquiring lots of other companies. And so, when you do that, you have to also deal with all the data that comes in. And so, they came to Domo for just a very simple IT problem. It was an IT challenge. And we're like, oh, there's an opportunity to create a business solution here, which was not just connecting the data on all these disparate systems, which we did in -- I want to say it was like in about a week, but they also had the platform to turn that data into making their business better. And they -- even they were shocked. They're like, okay, great, you did this connecting thing for us, wonderful, and they're like, oh, wait a minute, the same tool that did all of this allows us to create new kinds of apps and create a new kind of customer satisfaction in our business. Great.

Do you notice any trends in terms of the customers that do use the embedded analytics and data sharing in terms of like audit adoption? Maybe it's potentially different than sort of the rest of the customer base, or how that sort of is on ramp to other products?

Yes. I would say, in the larger scheme of things, what you're seeing is -- we've talked about digital transformation for years. I've never seen a great definition for it. So we've come up with a few, but I find that the companies that get it, seem to have an intuitive sense that they're on a path that's different than what they did before. And unfortunately, it's still early days. So it's hard to point to one company and go like, oh, that's what digital transformation looks like. I mean, if you look at the -- again, the largest companies on the planet 10 years ago, they were things like Coca-Cola and GE, and now they're Microsoft and Alphabet, right? They're platform companies. Those are older companies, legacy companies, still grew at the way people expected. But when you start to create a digital platform and you create a digitally connected business, it changes, I think, the economics of growth, right, and the potential where you're not just focusing on just optimizing your sort of basic pipeline value chain business, you're able to create new business opportunities. And I think that's the big trend.

And I would just add quickly is, one of the things Domo Everywhere shows -- I think people know it, but Domo Everywhere in our customer base has proven it, is, how valuable data is. So we've had software companies that have add-ons that are data analytics add-ons, that use Domo Everywhere to sell to their customer base. We had a really large upsell last year. Basically, they thought they'd get 10%, 15%, 20% adoption. They got about -- they got enough to basically cover their entire customer base. And we have -- you can use it to optimize your supply chain, and the ROI that we've seen with companies that have adopted Domo Everywhere, either in optimizing the supply chain or exposing the data to their customers, or the Sony example is really high. So I think it highlights just the value of data and how -- well, Domo basically allows you to unlock that value. There's tons of companies that are sitting on really valuable data and have no idea what to do with it, and Domo can come in and provide a solution.

And do it in a way that, as Pete was saying, from a return on investment. It just takes the imagination, right? And it takes like a little bit of work and saying like, oh -- when you're monetizing your data, that's a platform play, right? That's using your data instead of just keeping it internal and turning it into a new kind of product or a new kind of service. And that's not something when you have done, that's not something you have to go out and say, okay, we have to go price the development, the hardware, the software. It's already there. You just have to come up with the right idea and test it. And I think that's what we're kind of discovering here, which is, there's some natural experiments that are kind of happening out there, and they seem to be very positive.

Yes. I mean, it seems like, especially in a market like today, anything with a clear ROI that's…

Yes. It's value focused. Right.

Exactly. It's getting spent on. We -- like to say, like companies now don't have a revenue problem, they have cost problem, and anyone that can help address that, that's been getting prioritized. I want to talk next about, there seems to be a pretty robust market for vertical solutions in the BI analytics space. I mean, can you walk us through your vertical strategy, and maybe any particular verticals you'd highlight as particularly strong?

Yes, sure. So again, Domo being kind of a very large platform, you can do just about anything. That's one of our challenges. But I would say where we've seen some interesting sort of vertical stories emerge. I mean -- so we definitely do create apps. We also have consulting services because one of the things that's a bit of a challenge is that many companies have like the retail solution, right? So we have different kinds of retail solutions. We created different kinds of retail apps. There's usually a structure to it, but every company has their own little twist -- or twist to it. So it's hard to find, I think, a magic bullet for any of those because the systems are different. The people are different. The situation is different. The -- maybe the kind of an environment or where they're trying to take their retail experience is different. So what we have found is that we tend to see sort of clear challenges. As Pete likes to say, there's like sort of -- we turned IT challenges into business solutions, and those seem to run. So yes, we definitely have like marketing solutions, retail solutions. We've done things for supply chain and whatnot. But usually, it still requires companies to go like, okay, do we really understand our problem because every problem is a little different. And I think that's why you don't really see except for like the major sort of CRMs, like you look at like a sales force. And in my opinion, they kind of define CRM for everybody early on. And like everyone is like, okay, that's my problem, right? We solve a class of many different types of problems. So you can get as specific as you want or you can get as broad as you want. But that's, again, part of that larger sort of digital transformation trend. I don't know if you want to add anything to that, but...

No, I don't…

And how would you break it out in terms of like use cases that your customers bring to you versus issues that you approach your customers, hey, we can solve these 5 problems for you? Like how does that mix look like?

Yes. No, that's a great question. I mean, that's definitely a design question. So I appreciate that because that's one of those kind of things where it would be great if you could go and ask your customers and say, tell me exactly what to build. They can't tell you. Well -- I'm sorry, they will tell you, but it's going to be the wrong thing. And the reason it's the wrong thing is because -- and I know this is kind of getting into my liberal arts background, but I call it the Anna Karenina principle. So the Leo Tolstoy book, which I love, has a great opening line, which says, all happy families are alike, all unhappy families are unhappy in their own way. I feel like a lot of our customers and prospects are like that. Because, again, the problems they're trying to solve are problems unique to their own making, right? It's like lots of different decisions, how much is on-prem data versus cloud data, what -- even the politics within the organization, how do they make decisions, stuff like that. So for us, what we do is we really focus on solving with our technology, the big general problem. So no matter what you create with data, you have to collect it or connect it. You have to be able to analyze it. You have to be able to wrangle it, ETL it, right? And then you have to be able to turn it into something actionable. Those don't go away. So we always are trying to make those things better. But now as we kind of go down the chain, where, like you had mentioned before, we focus a lot on, well, how do we make app development better? Is there just one app development path. And in Domo, there isn't, there's everything from no code to Pro code. So you can create interactive data visualizations, don't have to know anything about the code. You can create something we call DDX Bricks, which is JavaScript, but it's all connected to your data. So usually, 80% to 90% of your work is on the data side like connecting it, wrangling it, et cetera. We already have that taken care of. All you have to do is just paste the code and start going. And then we have Jupyter Notebook integration. So if you want your data scientists and your AI, ML experts to jump in there, that's a very comfortable place for them to do it. All the data is already connected. So they just go, like, I want to use these data sets. And by the way, I also want to create these output, these data products. And here's all your work, and then all the way to native pro code which would be native iOS and Android apps. So that's kind of where we're moving, which is -- I think we've got that -- the infrastructure down. Now it's how do people want to create and how do they want to deploy it. So building into all of those things, you're deployed model, you're sharing your governance, et cetera, managing usage, because now you're in the -- you're now going to be in the business of trying to make sure that people adopt what you build, which is not easy, right? So we want to make sure we make it as easy as possible, at least give them the tools so they can get off on the right foot.

Absolutely. I'll just pause briefly if anyone in the audience has any questions. Otherwise, I have a couple more here. We also have a couple more. And then Domo is also known for its data integration and connectors. I mean can you talk about how this helps you competitively?

Sure. It always starts with data, right? And as I mentioned before, there are some companies that have come to us just because of our connectors, and it was something that we invested heavily in, and I think we were also a bit naive to start thinking like how hard could this be? It's hard. It's a hard problem. So we have continued to invest heavily in our connector framework and monitoring, making the experience easier. And we're going to continue to do that because there's a lot, I think, more that companies -- a lot more value that can be unlocked if the connector experience is easier and more broad. But again, it has to be part of an integrated system, right? So the speed to value comes from, I want to connect to, let's say, Twitter or NetSuite data or maybe there's a workday information that you want to pull in. Great. But once you have it connected, what do you do? And that's where we, again, want to make sure that, that part is easy. And it's also a team sport, right? So that how do we make it easy for the people, whether they're in IT or they're in a different part of the organization to communicate and coordinate around that. And let's say -- how do you bring visibility. So let's say you're interested in sort of following with your social media impact, right? So you're like -- you have an Instagram connector, of course. So you do the Instagram connector. How do you socialize that in your organization, right? Well, we've got sort of playbooks ready to go. So if you don't know what to do with it, it's like you just connect the data. Here's some reports or metrics or apps that you can then use to just sort of socialize it. And then you can start asking questions and then you're off to the races. But yes, that's -- it's always very key. And I think, I'm glad you brought it up because I think it's often overlooked. It's not super sexy, but yes, I think there's also -- we know a lot. I mean, I think one of the things -- because I'll talk to the connector team -- it's amazing how much data we have just about APIs, like who's the best, who's the fastest, who's the most reliable. That's stuff that's usually kind of dark. No one really knows, right? Just kind of expect that it exists and everything works great. We've got teams that are constantly monitoring like network operations on every one of our 1,000-plus connectors.

It's interesting because it's actually been pretty topical with investors lately. Everyone's like listen why don't you just do ELT, pump it into your data lake and figure out later, but there's a lot of value in sort of the data integration and connectivity, the AP integration beyond just ETL?

Yes. A lot of it is just, if you don't have those connectors, it's a nonstarter. And so, I think many times what people are doing in the interim is, there's a lot of people kind of doing a lot of manual labor, like I can get an excel spreadsheet of that, and then I'm going to spend hours and hours and then I'll move that up, but it's not real time. It's historical from the moment you start. And that's not what we do. Like we want all of your data in real time so that you can do interesting things with it. And so yes, we've got a very passionate and hard-working team on that.

I want to say one last one in. High level, how do you think data use and data platforms will evolve over the next 5 years and maybe sort of the #1 technology you may be most excited about?

Yes. So I'm probably super biased on this one, but, because we haven't pivoted -- like we started off with a platform because we felt you needed the full stack integrated platform so that it's cloud-native, quick speed to value, time to value, mobile first, et cetera. But I think I'm starting to see -- even this week, I mean, I was looking at some LinkedIn post, people echoing the Domo story, end-to-end, digitally integrated businesses. That's great. It's hard to build. I will tell you right now. Like if you didn't start this 10 years ago, it's going to take you some time to do this. And then, to your point, like, well, where are the things going? I think it's all about connecting data with people, right? Like where they do their work, how they do their work in the way that they need to make better decisions. It's pushing decision-making to the edge and also allowing expertise to emerge anywhere within your organization. And that's what we really try to unlock.

Absolutely. Chris, Peter, thank you so much for being here.

Yes. Thank you, Radi. Appreciate it.

Thank you.