Domo Posts 8% Margin Gain in Fiscal Q2

Key Points

• Domo posted its first-ever positive non-GAAP EPS and a record non-GAAP operating margin in Q2 FY2026.

• Revenue (GAAP) increased just 1.7% year-over-year in Q2 FY2026, while billings rose modestly by 2.5%.

• Management provided cautious guidance for Q3 FY2026 and FY2026, indicating flat or minimal top-line growth.

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Domo (NASDAQ:DOMO), a business intelligence and analytics software provider, released results for Q2 FY2026 on August 27, 2025. The company reported its first-ever positive non-GAAP earnings per share of $0.02, and its strongest non-GAAP operating margin to date at 8%. Revenue (GAAP) reached $79.7 million, up only 1.7% compared to Q2 FY2025, Billings increased by 2.5% year-over-year, while operating expenses (GAAP) declined. These results aligned with or slightly exceeded earlier company guidance. Overall, the quarter underscored Domo’s progress in cost discipline and operating efficiency, even as it faces stagnant top-line trends.

Understanding Domo’s Business and Recent Focuses

Domo delivers a cloud-based platform for business intelligence and analytics, enabling organizations to connect, analyze, and visualize large volumes of data from multiple sources in real time. Its software combines data warehousing, artificial intelligence (AI), and dashboard tools into a single self-service offering, targeting both business leaders and technical users.

In recent years, the company has focused on advancing the technological capabilities of its platform, especially by adding AI-driven features like DomoGPT and AutoML. The business strategy revolves around expanding its recurring subscription base, shifting customers to a consumption-based billing model, and increasing operating leverage by strictly managing costs. Success in this market depends on innovation, maintaining strong customer retention through value delivery, and demonstrating competitive advantage in data analytics and security.

Key Developments in the Quarter: Financial and Product Performance

Domo marked several milestones in Q2 FY2026, most notably achieving its first positive non-GAAP earnings per share and a record non-GAAP operating margin. Revenue growth (GAAP) rose 1.7% compared to Q2 FY2025. Billings increased by 2.5% compared to Q2 FY2025.

Subscription revenue, which forms the bulk of Domo's business, grew by 2.5% compared to Q2 FY2025 and totaled $72.7 million. Professional services and other revenue (GAAP), by contrast, declined 6.7% compared to Q2 FY2025. The company’s recurring revenue metrics provide insight into its financial health; subscription remaining performance obligations (RPO), which show contracted revenue yet to be recognized, rose by 19% year over year to $409.8 million as of Q2 FY2026. The current portion of RPO, expected to convert to revenue in the near term, grew 4% year over year.

Domo noted stabilization in its cash position, ending the quarter with $47.1 million in cash and equivalents. Adjusted free cash flow turned positive at $1.4 million, representing a meaningful swing from a negative figure a year prior. However, the company continued to report a GAAP net loss, which increased year over year to $22.9 million. The improvement in non-GAAP performance came primarily through operational discipline and expense management, with sales and marketing spend falling by 3.6%, research and development by 13.7%, and general and administrative expenses by 11% compared to Q2 FY2025.

From a product perspective, Domo emphasizes advancements in its AI and analytics offerings. The Domo platform, which houses its cloud-based business intelligence software, incorporates AI tools like DomoGPT (natural language data querying) and AutoML (automated machine learning) to help customers analyze and act on data more quickly. The company highlighted high net revenue retention for customers on consumption-based contracts, with a reported net revenue retention rate of 108% for that segment. Domo also continued to receive recognition from third-party research groups as a leader in analytics software, underscoring its push to remain competitive through ongoing product innovation.

Management Outlook and What to Watch Going Forward

For Q3 FY2026, management guided for revenue of $78.5 million to $79.5 million and a non-GAAP net loss per share of $0.03 to $0.07. This range suggests sequentially flat or even slightly declining sales, continuing the slow growth pattern observed this period. Full-year FY2026 guidance calls for GAAP revenue between $316 million and $320 million, roughly flat compared to the prior year, and a non-GAAP net loss per share of $0.11 to $0.19. There was a minor raise in the revenue outlook from the prior quarter.

Management did not provide a dividend, and Domo does not currently pay a dividend. Investors and observers may want to watch for evidence of accelerating revenue or billings growth, further signs of progress in upselling and retaining customers—particularly for those using Domo's consumption model—and the sustainability of recent improvements in cash flow and margins. With operational efficiency driving results but top-line growth still limited, Domo’s performance will hinge on its ability to translate innovation and retention into stronger sales momentum.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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