Why Domo Inc (NASDAQ: DOMO) stock investors are happy

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Domo Inc (NASDAQ: DOMO) stock rose over 20.6% on 14th March, 2019 (as of 11:41 am GMT-4; Source: Google finance) after the company posted better than expected results for the fourth quarter of FY 19. During the quarter, the company has added 17 enterprise customers, bringing our total number of customers with more than $1 billion in revenue to 447, up from 375 as of the end of the fourth quarter last year. New enterprise customers this quarter include Uber, as well as one of North America’s most well-known auto aftermarket retail and service change, chains and also a US-based financial services firm with more than $1 trillion in assets under management. The company experienced a 62% increase in business from customers between $250 million and $1 billion in revenue this quarter compared to the same quarter last year. DOMO had cash and cash equivalents of $177 million. The company used cash from operations of $27.7 million, an improvement of $3 million over the prior quarter and a 25% reduction since Q1.

DOMO in the fourth quarter of FY 19 has reported the adjusted loss per share of 94 cents, beating the analysts’ estimates for the adjusted loss per share of $1.24. The company had reported the adjusted revenue growth of 31 percent to $39.4 million in the fourth quarter of FY 19, beating the analysts’ estimates for revenue of $37.76 million. Billings were $57.2 million or 26% year-over-year growth.

Subscription revenue grew 30% and represented 81% of total revenue. Revenue growth was mostly driven by additional sales into the installed base. Consistent with Q3, international represented 23% of revenue. The billings were supported by the fact that the dollar-based net renewal retention rates continue to be greater than 100% and in line with prior quarters. Because of the strong sales into the installed base, in Q4, DOMO do expect the dollar renewal rate to improve in future quarters. The subscription gross margin was 74.3%, up 100 basis points from 73.3% in Q3 and up 10 full percentage points from 64.3% in Q4 of last year. The total gross margin was 68.5%, a 330 basis point improvement compared to 65.2% in the third quarter of this year and a significant improvement compared to 59.7% gross margin in the fourth quarter of last year. Services and other gross margin improved mostly due to $1.1 million one-time revenue transaction and also by improved average billing rates.

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