Welcome to Domo's second quarter fiscal year 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you need to press star one on your telephone. If you require further assistance, please press star then zero. With that, I'll hand the call over to Peter Lowry, Domo's Vice President of Investor Relations.
Good afternoon, and welcome. On the call today, we have Josh James, our founder and CEO, Bruce Felt, our CFO, and Julie Kehoe, our Chief Communications Officer. Julie will lead off with our safe harbor statement and then on with the call. Julie?
Thanks, Peter. Our press release was issued after the close of market and is posted in the investor relations section of our website, where this call is also being webcast. Statements made on this call include forward-looking statements related to our business under federal securities laws, including statements about financial projections, the plans and expectations for our go-to-market strategy, our expectations for our sales and new business initiatives, the impact of COVID-19 on our business, and our financial conditions. These statements are subject to a variety of risks, uncertainties, and assumptions. For a discussion of these risks and uncertainties, please refer to documents we file with the SEC, in particular, today's press release, our most recently filed annual report on Form 10-K, and our most recently filed quarterly report on Form 10-Q.
These documents contain and identify important risk factors and other information that may cause our actual results to differ materially from those contained in our forward-looking statements. In addition, during today's call, we will discuss non-GAAP financial measures, which we believe are useful as supplemental measures of Domo's performance. Other than revenue, unless otherwise stated, we will be discussing our results of operations on a non-GAAP basis. These non-GAAP measures should be considered in addition to, and not as a substitute for, or in isolation from GAAP results. Please refer to the tables in our earnings press release for a reconciliation of our non-GAAP financial measures to the most directly comparable GAAP measure. With that, let me hand it over to Josh. Josh?
Thank you, Julie. Hello, everyone. Thanks for joining the call. Let me start off by saying I hope all of you and your loved ones are healthy and safe in what continues to be a challenging environment. I remain incredibly proud of how our team has adapted and the great care they continue to show our customers. Domo was made for this new world of work, where business agility is imperative to surviving and thriving. In Q2, we posted 23% billings growth, 27% subscription revenue growth, 23% total revenue growth, and better-than-expected cash flow. I'm very pleased with our Q2 results and our consistently strong execution against our plan, particularly given the current backdrop.
Since our IPO, we have been relentlessly focused on growing our business while at the same time making our growth more efficient and driving to cash flow breakeven with the cash we have on our balance sheet. In Q2, we once again continued to make great progress on this front, as we have committed time and time again to you since the IPO. Now I'm very proud and very excited to say that at this point, achieving cash flow breakeven is at our discretion. On the call today, I'm going to focus on a few items. One, how Domo is positioned in the future of work, which is being reimagined based on the current pandemic. Two, how Domo is helping companies with their related digital transformation initiatives and transforming data into more value for businesses, their partners, and customers.
Three, I'll talk about Q2 highlights, including exciting new business across a variety of industries and geographies, exciting new partners, and how that demonstrates how Domo is extremely well-positioned for current market trends. I'll touch on some recent industry recognition. There's been significant attention to the future of work and what that means for organizations. Companies across the board are being forced to reimagine how they do business and how they empower a more efficient and often distributed workforce that can operate in a more digital and agile fashion. Prior to COVID, many companies had started digital transformation initiatives, and the current environment is only accelerating the timeline for these critical projects. Old business processes and legacy technologies just aren't sustainable, and companies are being forced to adapt much more quickly than most had planned.
If you recall, we founded Domo to be a different kind of company to solve the challenges of running a modern business through better leverage of all of an organization's data anywhere on any device. We are a different kind of company, and we've always had a great product. The pandemic is highlighting some of our platform's most important strengths, particularly in building intelligent data ecosystems that improve internal data utilization and grow the value of data externally. Our platform was designed to solve the complex strategic data challenges that are holding companies' digital transformation initiatives back. Data challenges that traditional tools just were not built to solve. On the back end, we help some of the world's largest companies solve one of the most common, yet complex and time-consuming barriers to digital transformation.
That is breaking down data silos to make data usable regardless of where it lives, even the 80% of enterprise data that isn't being used because connecting to it is so difficult. We help companies transform this dark data into more value for their business, more value for their partners, and more value for their customers. On the front end, Domo empowers every line of business to make more agile, well-informed decisions through well-governed self-service, BI, and analytics delivered into the hands of business users at every level in departments such as marketing, finance, sales, and operations. Our cloud-based mobile-first design makes live data accessible to anyone, anywhere to create truly data-driven organizations at a speed that our customers tell us they've never seen.
Now, using the embedded and extended analytics of what we call Domo Everywhere, many of our large customers are confidently extending the value of their data with internal and external partners. With the platform's underpinnings of data governance, security, and advanced analytics in a cloud-based environment, they're collaborating with external stakeholders and making fast and even automated decisions around the data, creating new business value and new revenue streams, all in an easy-to-use mobile interface. Through intelligent applications built on the Domo platform in a low-code, no-code environment, customers are modernizing business processes at unbelievable speed, leveraging artificial intelligence and automating workflows. The speed at which applications can be developed and deployed is truly a competitive differentiator that helps us win deals and is definitely working in this new environment.
Last quarter, over a matter of days, we built a series of applications to help state governments manage the COVID crisis. The feedback continues to be very positive from these customers. In fact, this quarter, we've already extended our contract with the State of Iowa by two years, and at the same time significantly expanded the contract as well. In June, following on the Crisis Command Center solution, we launched our Get Back to Work collection of applications. These new applications reinforce our ability to quickly leverage any data source to initiate new workflows in response to rapidly changing environments. It's this agility and ability to scale, in part, that is helping us win deals, and positions us well for the future of work because we're able to move at a pace and scale that other technology stacks just cannot.
Now let me talk about some of the significant recent wins we've had across a variety of industries and geographies. These deals are exciting because they highlight that the market is now skating to where Domo has always been headed, and they're not just opportunistic deals that we're bending into. This quarter, we won a significant expansion with a global manufacturer that had been using Domo for a fairly traditional BI use case. They initially chose Domo a few years ago based on our ability to better meet their internal analytics requirements compared to a variety of traditional vendors. This recent expansion was for our unique offering for distributing data outside of the organization, our extended analytics solution called Domo Publish, which is a part of Domo Everywhere. Like most large organizations, this customer had several BI tools in use throughout the organization.
This is a normal situation for Domo. Domo was selected on the recommendation of the company's CIO and CTO, and our superior ability to scale self-service capabilities, our interoperability with existing technologies, our governance, and our cloud-based architecture. We're also seeing significant international wins as well. For a Fortune Global 500 retail conglomerate early in this quarter, early in Q3, we had a $7-figure per year upsell that we won based on our outperformance in speed and scale. Domo was chosen to help the organization get massive volumes of data out of its existing systems without replacing or re-architecting them, so that business decision-makers could understand critical, time-sensitive business metrics. One of the key factors in our selection was not just accessing data, but our ability to provide data governance at scale, our ability to provide new apps at scale.
Again, like most large organizations, this customer has multiple data technologies in use, but none of them were built to perform at cloud scale and in record time like Domo. We beat out well-entrenched competitors, and all the usual suspects had contracts there before we won the business. It's also worth noting that this deal was won with notable support from one of our major consulting partners. Now, among new international business for the quarter, we also won an annual six-figure new logo deal with a global pharmaceutical company based in Germany, an annual six-figure new logo deal with a leading IT integrator based in Japan, and a multi-year annual six-figure expansion deal with a rail services operator based in Australia. Demonstrating the need for Domo in any environment, we signed significant new customers in what would be considered distressed industries.
For example, we closed an annual six-figure new logo deal with a fitness chain operator to migrate their legacy BI system to the cloud with Domo's more modern, scalable, and easier-to-use platform. Domo's bringing together internal metrics as well as external data to help the customer determine when it makes sense to reopen their facilities in different markets. We also signed a six-figure new logo deal with a manufacturer that had closed all their stores as a result of the pandemic and is leveraging Domo to optimize their pricing strategy for their online business model. We also recently closed an expansion deal with a cruise line operator to improve their real-time marketing analytics as they try to figure out how to time their marketing campaigns in this new world. We're also tapping partners to expand in new markets.
In the U.S. federal space, for instance, we leveraged a partner relationship to close early in Q3 an almost seven-figure annual contract to power a public-facing website that gives taxpayers the ability to see and explore data related to pandemic funding grants. We believe this relationship has great potential to open doors to additional opportunities, and we love seeing the progress with our partners in several of these very large deals. Now let me talk about some of our recent industry recognition. Our team continues to receive accolades that reflect our commitment to product innovation, customer success, and our corporate culture. Most recently, Domo was named an overall leader in the Dresner Advisory Services 2020 Industry Excellence Awards for the fourth consecutive year. This recognition was based on consistently high customer ratings and confidence in product quality, value delivered, and sales and service.
Additionally, Constellation Research recognized Domo on its 2020 shortlist for BI and analytics solutions. We are also recognized for our commitment to building a diverse, inclusive, and welcoming workplace. Parity.org named us to the 2020 Parity.org Best Companies for Women to Advance list. With diversity being more than gender, we became a founding member of a new parity pledge to help us increase racial diversity across our entire organization. It feels good to report that we're seeing results. As of July 1st, 45% of all open positions, of which we've had north of 20, have been filled by qualified women and underrepresented minority candidates. This progress has been made possible by our company-wide commitment to expand our networks to create a more diverse slate of qualified talent.
In closing, we've made tremendous strides in improving our operations across all aspects of the business to become much more efficient and to improve our go-to-market motion. We have better sales leadership and sales operation rigor than we have ever had. We've brought our cash burn from more than $36 million a quarter two years ago to what is becoming very close to cash flow breakeven. We are running sales plays that are working, including good traction with the technical audiences of IT and BI. We have an ability to tell a data story for CIOs and chief data officers that puts them in a position of transformation agent while leveraging and not needing to replace their existing investments. We have wonderful, referenceable, large enterprise customers, with 19 now paying us more than a million dollars a year. We have a very, very bright future.
We are doing this in the middle of a pandemic. It has increased our focus, accelerated both our innovation and that of our customers, and proved our value proposition. We have great customers who are standardizing on us and loving us. I'd like to reiterate how proud I am of our employees who continue to excel in execution in helping our customers operate most effectively in this new environment. With that, I'll now turn it over to the Bruce. Bruce?
Thank you, Josh. We had a strong Q2. It is encouraging to look back on the past four quarters and see the momentum driven by steady execution. The macro environment is driving the need for digitizing business processes, and specifically the need for real-time data and analytics. The portion of IT budgets allocated to modernizing BI and analytics functions is increasing. We believe we are benefiting from this trend as we offer a modern, cloud-based, easy-to-use, and mobile solution. We also believe this need will continue beyond the pandemic. I'll now review the details behind our performance, followed by providing third quarter and fiscal 2021 full-year guidance.
Our Q2 billings of $47.6 million, a year-over-year increase of over 23%, was driven by wins across a number of industries, an expansion with the state of Iowa, strong renewal rates, and consistent execution across the business, particularly in our enterprise customer base. Our renewal rate was well over 85% and was a few percentage points better than last quarter. Our net retention rates remained above 100%. We have 60% of our customers under multi-year contracts at the end of Q2. Our remaining performance obligations or RPO grew 16% compared to the same quarter last year. Q2 revenue was $51.1 million, a year-over-year increase of 23%. Subscription revenue grew 27% year-over-year and represented 87% of total revenue, accelerating from 23% growth in the first quarter, reflecting our focus on specifically growing new recurring revenue and improving our retention rates.
International revenue in the quarter represented 24% of total revenue, consistent with Q1. Our subscription gross margin was above 80% for the first time, up more than five percentage points from 75% in Q2 of last year. This is a very important milestone and a goal that was set many years ago because we believe it is one of the key drivers for long-term profitability. We are optimistic we can drive our subscription margin even higher over time as we continue to find leverage points in our data center operations. In Q2, operating expenses decreased by 10% from last year, even though revenue increased by 23%. In fact, our subscription revenue per head has grown in excess of 40% over Q2 of last year. The net effect of increased revenue while managing costs allowed us to improve our operating margin by 41 percentage points from the same quarter last year.
Our net loss was $10.7 million, and our net loss per share was $0.37. This is based on 29 million weighted average shares outstanding, basic and diluted. Since our IPO, we have been disciplined about managing our costs while building a base of recurring revenue to make consistent progress toward achieving a cash flow positive state. Earlier this year, because of COVID, like many other companies, we prepared for a significant decrease in our new business. As our Q1 and Q2 results show, that decrease has not materialized. In fact, we're pretty much on track to our original top-line plan. As a result of our cost discipline and our strong top-line growth, particularly in recurring revenue, we have reduced our net cash use in operations from $18.7 million in Q2 fiscal 2020 to $4.8 million in Q2 of fiscal 2021.
A 74% reduction compared to Q2 of last year, and an improvement of $4.5 million over last quarter. We also recently extended the maturity of our existing debt with BlackRock to April 2025 from October 2022, under substantially the same terms as our existing agreement. Our significant cash flow outperformance, coupled with over $180 million of ARR and the extension of our debt term, has not only significantly reduced our risk profile, but now provides additional financial degrees of freedom. The progress we have made over the last few quarters demonstrates why we believe we're on track to become cash flow positive. Turning now to our balance sheet. As of July 31, we had cash equivalents, and short-term investments of approximately $83 million. Now to discuss what we expect in Q3 and the full year. For Q3, we are modeling billing of about $48.5 million.
If you recall, in Q3 of last year, we had billings outperformance driven by large enterprise transactions with standard billings terms. We have assumed in our model this will not repeat itself for this Q3. Specifically, we are not modeling the same number of large deals we closed last year, and at the same time, because of the economic environment, we are assuming more non-annual and advanced billing terms relative to last year for the deals we do close. However, even against those assumptions, at this point in time, we expect to experience year-over-year growth of both contracted annual recurring revenue, or ARR, and year-over-year growth of GAAP subscription revenue of at least 20% in Q3. That expectation is supported by the observation that we are off to a good start in Q3.
Our outperformance in the first half of the year allows us to increase our billings outlook for the year to $208 million, up from $197 million last quarter, and up from an initial outlook of about $190 million based on our COVID-19 downside case that we used for reducing costs. On expenses, we're planning on our Q3 operating expenses to increase modestly from Q2 levels. We expect Q3 adjusted net cash used in operation of approximately $4.5 million. We expect full year adjusted net cash used in operations of approximately $23 million. Now to formal guidance. For the third quarter of fiscal year 2021, we expect GAAP revenue to be in the range of $51.2 million-$52.2 million. We expect non-GAAP net loss per share, basic and diluted, of $0.42-$0.46. This assumes 29.6 million weighted average shares outstanding, basic and diluted.
For the full year of fiscal 2021, we expect GAAP revenue to be in the range of $202.5 million-$206.5 million, representing year-over-year growth of 17%-19%. We expect non-GAAP net loss per share, basic and diluted, of $1.83-$1.91. This assumes 29.3 million weighted average shares outstanding, basic and diluted. In closing, we're pleased with our execution in Q2, and we're optimistic about the underlying trends in the business as we head into the second half of the year. With that, we'll open up the call for questions. Operator?
Thank you. As a reminder, to ask a question, you will need to press star then one on your touchtone telephone. To withdraw your question from the queue, please press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from Sanjit Singh with Morgan Stanley. Your line is now open.
Thank you for taking the questions, and congrats to the team on a really strong Q2 set of results. It was just phenomenal performance across the board. Our congrats. On the guidance assumptions, Bruce, you've been using a pretty consistent framework for the balance of most of this year. Embedded within your second half guidance, how are you thinking about that new business trajectory, new business performance both in Q3 and Q4? It sounds like we're up against a difficult comp going into next quarter. At the same time, it sounds like business got off to a good start. If you just sort of walk through your framework and update that framework for us, that'd be helpful.
Sure. At the time of providing guidance, we just take all the information we have at hand. A lot of it is pipeline review, forecasts, our pacing, and then we compare it to everything that happened at the same time the prior year. The big item that pointed out last year was just the volume of the large deals. We do have large deals in the pipeline, but as we've mentioned time and time again, and maybe applies to every enterprise software company, getting the timing of those right is very difficult. We found out how hard that was in Q2 of last year. We're just assuming we won't have the same level of success, at least in terms of providing guidance. Our hope, however, as you might imagine, is to see if we can get some of those deals to close.
We are optimistic as we sit here, nevertheless, on the fact that we're trending really well in Q3. The first month of the quarter was just a very strong month. We're very happy about that, and we don't mind telling you that. At the end of the day, it's what happens at the very end of the quarter on the large deals. We're just being, I think, reasonably cautious and being quite open about how we're thinking about the number. Of course, yeah, we hope we get them large deals to close, but we just don't want to guide to it, not as we sit here today. That's the thinking behind guidance.
Super helpful, Bruce. Josh, for you, if I think about where your unit economics are today, you're certainly improving more resilient, 85% retention rates, and then net retention rates above 100%. You've done a lot of things on the sales force. You're talking about sales getting more efficient. What do you see as the opportunity to get those gross retentions up to those retention rates up to 90%, and then maybe the expansion rates that starts to improve with a better economy and continued efficiency on the sales playbooks so that we're looking at a net expansion rate of 110% plus? I know it's tough to get the timing right on that, but how are you thinking about driving to those level of metrics?
Yeah, I think great question. I think we're closer to 90% than we are to 85%. I can't remember the exact words we put in there, but I think it intimated that. We've seen enterprise above 90%, and I think we can get enterprise 92%-95% if not the whole business 92%-95%. Right now, we feel like we're getting pretty close to 90%, and that's a really healthy spot to be. That's our first goal, and we're really starting to focus on all the things that we can do to make sure that we're retaining those customers. The other thing that we're seeing is, in terms of that net retention, we're seeing bigger and bigger upsells.
We're more prepared than ever in terms of the way that we can talk to chief data officers and the way that we can talk to chief information officers in getting these really big expansions at the enterprise and strategic level. I think that's going to be something that's going to continue to drive and accelerate our business forward.
Appreciate it, Josh. Thanks.
Thank you. Our next question comes from Brad Zelnick with Credit Suisse.
Awesome. Thank you so much, guys. Congrats. These really are fantastic results, and congrats to you on the call, but to the whole Domo team, because I know it takes a lot of folks to make this all happen and make the magic come together.
Yeah. Thank you. Domo here too, so thanks for the shout-out.
For sure. That's where I start with. Maybe forgive me for a question that reflects a little bit in the rearview mirror. You made a comment, Josh, about feeling good about the go-to-market and the leadership that you now have there. Can you just remind us of the changes in the sales process from 12 or 18 months ago, and why you have the confidence that you've now got it right, and that we shouldn't come back in a quarter or two and be disappointed from an execution perspective?
Yeah, for sure. I'll have Ian jump in here as well. We've got him on the line, and he's our Chief Revenue Officer.
Oh, awesome.
I think a couple of things. Number one, as much as I'd like this to be about one person, bring one person in and everything magically improves, that's not the case. You can bring one person in and have everything have much better execution, much better leadership, much better strategy. The other thing that we have going for us is kind of what you said at the beginning. You called out everybody. There has been, for a long time now, we've been working on this platform. We've been working with customers. We've been retaining customers. We now have a bunch of referenceable customers. We called out one on the call today, one of the largest retailers in the world. Sorry, largest apparel retailers in the world. They are, every single person under the sun was in there, had contracts, and we beat them all out.
It was a long, protracted, everyone was doing POCs or had contracts. We had CEOs of the biggest tech companies in the world calling in trying to save their business. Our team, our product, our platform just continued to show well, that we can, at scale, in a mobile environment, in a COVID environment, really help the largest, smartest companies in the world get data in ways they've never been able to see it before. It helps them manage their business in ways they've never been able to do before, and when timing is so critical. That's one thing that we really have going for us. I feel like we're going to do well. It's going to be up and to the right no matter what.
Then it's just a question of how long does that take, and how many bumps in the road are there along the way? That's where having the chance to see Ian over there running Europe, and he hadn't been a global CRO before, but that's where he lived, really. He'd certainly been handling his business and handling these customers and helping them along the way and helping expand contracts. We felt like this might not be the obvious pick when you just sit there and look at resumes. When you look at resumes and then look at performance and look at performance here, doing what we do, it was a no-brainer. We're really excited to have Ian, and we've been even more excited since he's been running that team, and excited to have him be partnered with John.
I'll let Ian take a few minutes and answer your question.
Great. Thanks, Josh. Appreciate that. Hi, Brad. I think there's a couple of things that we've continued to focus on, and we've built everything that we do around really driving customer value and making sure that our customers really see how we can help them make decisions and drive business in a way that they haven't been able to before. The platform is more than capable of doing that. It's really been a couple of things we're just really focused on. A, I'd say the alignment with all of the teams inside Domo. I think John Mellor, and myself, and the go-to-market, the sales plays are resonating well. The lead gen's working well. The market understands more and more who we are and the value that we can bring.
We've just underpinned that across all of the organizations with really strong operational rigor and a cadence that drives a behavior that enables us to feel comfortable about where we are and how we're moving forward.
Thank you for that, Ian. I really appreciate it. Maybe if I may just follow up with another one for you, Josh. Josh, you're a visionary by just about any definition. I think most of us agree, your view of what the world needed and what you built with Domo, you were very early. If we fast-forward to today, there are other cloud data analytics platforms out there, one which comes to mind, which I think is on file for a public offering. To what extent are they competing, or are you guys competing with these other platforms versus complementing? I think I remembered at one point talking about opportunities where you might actually be the mobile front end to another data warehousing type solution or data pipeline. Are these other companies out there competitors or even possible partners for you?
Yeah. We, I guess, probably view them more as possible partners. When you look at and again, I'll use this several million-dollar deal that we just closed with one of the largest apparel retailers in the world. You look at them, and they didn't rip out everything else. Everything else had its place. In terms of true digital transformation and the ability for the executives to get data the way that they needed to see it, to build apps on top of that data, to accomplish other tasks that they have inside their organization, to take processes that today may take hundreds of hours to put together and are manual processes and slow. If you want to automate those processes and automate your ability to compete and make it much faster, well, then you have to have all of that data in one place.
You need to be able to connect to all the different systems that you have, and then you need to be able to have that data available in real time, no matter how large the scale is. There's just no one else that does that like us. When Power BI falls down, Tableau falls down first. Sisense is good for tiny companies. I mean, Qlik is old. It really comes down to how are you going to play with the Snowflake of the world, and how are you going to help people with their strategy about how they're storing their data at AWS, and how are you going to help them? They've got a little group that has 18 people that love using Tableau.
We're like, Great, keep using Tableau for a little bit of visualization for those folks. If you want truly a platform that brings all your data together to allow you to be nimble as a large organization, there's just nothing like Domo. Visionary, I get it, backhanded compliment.
Not at all.
I think over time, if we'd been up and to the right the whole time, then I wouldn't take it as a backhanded compliment. That's okay. Over time, it'll prove out. It would've been easier if we would've just said, "Hey, let's just make something that's a little bit better than Tableau." You're kind of right. We didn't want to do that. We wanted to be a little visionary. We wanted to say, "Here's what the world needs." It's taken a while for it to prove out. We are relentless in our willingness to continue to be diligent and work hard, and we see what's happening with our biggest customers. If you want to figure out where the world's going, go look at our biggest customers and how they use our products.
There's nothing else that comes close to what we're doing because we put so much into the platform, and I think it's finally starting to play out, and COVID might accelerate that.
Thank you for that, Josh. Somebody once shared with me, no tree grows straight to heaven, and I think this is definitely, of any of the quarters you guys have printed since you're a public company, this is a proof point of moving in the right direction and doing really well. Congrats to you and the team once again, and thanks for taking my questions.
Thanks, Brad. My favorite new saying. Thank you.
Thank you. Next question comes from Jennifer Lowe with UBS.
Great. Thank you. I wanted to touch on sales productivity, and if I think back a couple years ago, that was an area of focus. I think Josh and Bruce, you were both sort of dissatisfied with where that was relative to your experiences at other organizations and industry benchmarks. Clearly, the efficiency of the business has improved pretty significantly since then. I'm just curious, how do you feel about the level of productivity you're seeing in the sales force at this point? How much more do you think you can get out of the existing footprint?
Yeah. Hi, Jennifer. Yes, it was super strong this quarter. It might have been a record. It did get to a level overall that we think is in the ballpark of what should be expected from an enterprise sales force, particularly on the enterprise side. We're very happy with that. At this point, we're focused on, well, continuing to improve that because there are parts of the business that at least relative to benchmarks, we think we can do better. At the same time, our rep headcount's down year-over-year. We want to continue to build out the productivity, but we're also in hiring mode right now. Even over the last few weeks, we've really stepped it up. We feel good about the results. We feel good about where we are in the market.
The kind of transactions we're getting done with some incredible brands are really so unique that we really do want to make sure we don't understate the opportunity here. We were very worried about it at the beginning of the year as COVID hit. We just didn't know how it was going to play out. Now that we've had a couple quarters of success, and then again, Q3 off to a very good start, we really want to start building up the sales force again. Do both, and hopefully the combined effect, at least over the long run, will be very good for growth for Domo.
Great. Maybe just sort of expanding on that point. I think Josh, in your prepared remarks, you used the word discretion as the timing of free cash flow profitability at this point. Bruce, you kind of pointed out all the improvements that you've had so far around the margin front relative to the revenue growth. You mentioned sort of the push out of the debt timeline, giving you a bit more flexibility.
If I read between the lines there, is the message that we should come away with that you feel pretty good about where you are currently in the level of burn, and we shouldn't expect that trajectory of improvement that we've seen to continue as we head into next year? Given the productivity gains you've seen and all the opportunity in the pipeline currently, is that the right way to sort of contextualize what we've seen to date relative to what seems like a good opportunity to maybe inch up a little bit more on the spending again?
Yeah. The way I think about it is we wanted to get to zero as quickly as possible. When we went public, we soft circled Q3. I was hoping that we'd be able to get to cash flow positive in Q3. We gave the guidance that we gave because that's the appropriate guidance to give. Certainly, it's been a goal for a long time to be able to be cash flow positive in Q3. Once we're there, we're staying there. We're not going to force something we can't maintain. I think we've got a really good track record now, since we've been public, of bringing down the cash burn every single quarter. It's sequentially come down. Same thing going forward. We want to get to zero as quickly as possible, and keep it there.
It might inch up positive slowly because we'll be looking for opportunities to invest, assuming that we're getting the productivity gains that we've been getting, that we can maintain those and slightly improve those, we'd be in a really happy place. We want to be able to invest going forward. We're not looking at dropping as much cash to the bottom line as we have been, sequentially improvements. Want to get it to zero as quickly as we can, and then keep it there and then find ways to really start playing offense. Like Bruce said, maintain that productivity, and then also increase the number of heads that are producing.
Great. Thank you both.
Thank you. Our next question comes from Derrick Wood with Cowen. Your line is now open.
Thanks. I'll echo my congratulations. Really impressive to see 20% plus growth in billings in this environment, no doubt.
Thanks.
Josh, you mentioned the state of Iowa expansion. Obviously you've had some other state wins. Yeah, it was interesting that they are signing up for a multi-year agreement. It goes to show that they want to work with Domo, not just in the near term, but really in a much longer fashion. How should we think about the opportunities with other states or maybe other federal or local governments at this point in time?
Yeah, I think it's a real opportunity. We've seen that once we get into places, these big enterprise organizations, whether it's a state government or a federal government or a big Fortune 500 global Fortune company, we do really well. With Iowa in particular, with all the states actually that we have signed up, the number one goal we've had with all of them, the people that we have managing those is, let's do everything that we can to, A, retain this customer, and B, transition to other things besides COVID. That's been their charter, and we've seen it play out really effectively because as they're getting data so efficiently and so quickly from all types of different systems that they have internally, the different county health systems, being able to distribute data out to the different county health departments that they've never been able to do.
When the CIOs of the state see that, as they have other problems, whether it's DMV or other diseases, like whatever it is, we're so excited to say, "You bet we can help you with that." The lights start going off internally that, "Oh, wow, these guys could really truly be our data platform, to help us grow for the future for all of the things that we're trying to accomplish." You're going to see some videos that we're coming out with governors speaking about us and talking about how they're able to manage their states now with that. It's probably a good idea to also have John Miller kind of pipe in here and add a few comments about our opportunities there.
Sure. Thank you, Josh, and thanks, Derrick. We've seen good traction with the states, and I think that value proposition in our mind is just a really good validation point for the flexibility of the Domo platform. The fact that we were able to create these applications in such a quick turnaround, and really, just even in the case of the state of Utah, we were able to get this system up and live with them within 72 hours. It's just an amazing proof point of what Domo can do and can deliver in these state circumstances or even in the transformation that's being accelerated in enterprises today. It all just plays to our strengths really well.
Thanks for that, John. I guess as kind of a follow-up, what else has shown the power of the platform is your ability to go build these back-to-work applications. I'm just curious, should we think of that as a meaningful new revenue driver, or is that something that just opens the doors, creates new conversations, creates marketing awareness, top of funnel? How should we think about the opportunity there?
Yeah, I would say more on the latter. I think the real proof point and the real lights that went off for us with this whole COVID situation is when we can walk in the door with an application that we can rapidly put together because of the powerful and the extensiveness of our platform, it is an entirely different selling situation relative to competition. No one else offers what we offer in that kind of a situation. It helps us get in there, establish a relationship, establish a paying relationship, and then expanding out from there. That's what really went off, I think, for us in terms of an epiphany is, wow, we were able to do something here in a week.
It was hard work, but it got the attention of a lot of people, and now we're having conversations that we weren't having before because they need a solution, and we have the ability to build these solutions in pretty rapid form. We're looking at what we're doing with our customers. We're taking those, where there's a vein that has a group of 20 or 30 customers doing the same thing that we can turn into an app and then go take that and run that play. Those are the types of sales plays that team's running now, and I think it just transforms that first sales motion for us.
Great. Congrats again.
Thank you.
Thank you.
Thank you. Our next question comes from Bhavan Suri with William Blair. Your line is now open.
Hey, guys. Thanks for taking my question, and phenomenal job there. I want to dive into your very large win as an example at the apparel retailer. We've talked about this in the past, about instead of displacing everything, partnering with the office of the CIO and saying, "Okay, well, this is what we can address." What I'd love to understand is, as you think about these large enterprises, where do you land in that stack? Is it the connector piece? Is it the data storage piece? Is it the mobile app visualization piece? How do you think about expanding and sort of growing the tentacles of everything you've built in the platform to maybe over time, replacing some of those components that are piecemeal put together?
How should we think about, A, where you land and then the motion of how that expansion works from a technology stack perspective?
You bet, Bhavan. Thanks a lot for the comments and the question. I'm going to ask Ian to answer this one because he was pretty intimately involved with this deal. It was a fantastic deal, and really representative of everything that we can do and all the possibilities and upside that we have. I think it'd be great for Ian to touch on that. Ian, will you please go ahead?
Yeah. Thanks, Josh. Hi, Bhavan. This is really an exciting sample of what we're able to deliver with the Domo platform. We originally started working with this company. They had a particular business challenge that they required, that they were struggling with executing across the platforms that they had. They had all the platforms ranging from the ETL to the storage, to the analysis to the delivery, but they really struggled with the mobility side as well. The larger challenge they had was speed. An organization their size, there's a lot of data, and a lot of people talk about big data, but it's come almost like a term that just is referring to data.
These people have big data, the areas that they wanted to focus on was a very specific use case in a particular brand that we needed to drive and execute quicker than they could do at this point in time, because they couldn't get the data into a place to then go and build the analysis to drive the business decisions. We landed in one part of the organization. The organization, as typical of a Domo land, they loved it. They was finding all sorts of things that they could do. They found that they could get to market quicker. They found that they could find information quicker. They could start to be proactive in the work that they were looking at.
They started to talk to the other brands in the central IT team and said, "Hey, this is something that we think could be of use to the larger organization." We went to the larger organization. They had left the vendor behind. They had everything, right? They had everything across the stack. We very quickly started to demonstrate the true scale of how much data we can take in, how quickly we can take that, transform it, move it into something that's usable, and then deliver it out to the business user where you get adoption. Of all the things that we talk about, adoption is the thing that's so exciting with the Domo platform. We created an app. It sits on an iPad.
It's going out to all of their in-store workers so they can see stock levels and returns and all information they haven't seen before. It's all based on the fundamental premise that the Domo platform is designed to take data from multiple data sources across on-premise, in the cloud, wherever it might happen to be, not care how much you have, process it in sub-second, and then deliver it out to the market space. As we went through the process, people just fell more and more in love with the platform. That's what we're seeing in our enterprise deals.
To Josh's point, if we get into an organization, and we're getting far better at that, we're doing it more frequently, we're doing it with a higher net land, we can expand them into a great organization that utilizes the Domo platform to deliver not just data, but also application and ultimately business value that we referenced when we were talking about some of the focus that we have on our sales organization.
Ian, my follow-up, actually going to stick to this for a second here. It seems like you landed with the whole platform in one use case area, where it was the connectors, the data, everything, and then you sort of expanded broadly. If we go back and again, not too much rearview mirror, but sort of saying to someone like, let's pick a large company that might have Teradata and Netezza in there, they might have an ETL from Informatica and things like that, typically saying let's replace everything hasn't worked, and you said, let's solve a pain point. When you're solving that pain point, is that a platform sale or is that a sale of one piece of the Domo stack and the expansion? This particular case sounded like it was a platform sale for one use case that expanded broadly.
I'm just wondering, A, if that's still the case, that you're still sort of saying, "Okay, let's show you the front end and we'll connect to your Teradata system.
We'll connect to your Snowflake system," or "We'll use Informatica for a little bit or whatever. We're not going to try and replace them." Are you seeing sort of these platform approaches resonate more where you're actually saying, "Okay, we'll provide you the whole thing up front." That's what I'm trying to gauge a little bit of sort of the piecemeal approach, which was something that was working a little bit, say six, 12 months ago, versus the platform approach, which is kind of what you've just outlined. Just trying to understand that initial land, how it's playing out. Thank you.
No, that's a great question, a great clarification. It was both, and I'll explain about what I mean by that. It was the ability of the platform to be part of a ecosystem that's already in place that originally enabled us to get into the organization because we weren't dependent. We went, "Hey, you want to use somebody else's ETL? Use somebody else's ETL." If you're a big shop using another analytics provider, use the other analytics provider. We don't mind that. We entered into the organization. We've been very open-minded about what our role would be. The end result was about getting a mass of data into a place and the actual delivery to the business user.
There's parts of our platform where originally we went in and they were saying, "Yeah, we might use something else to start with that." That's fine by us. We have plenty of customers who use us to do all the data ingestion side, the normalization, the data science, and then we push it out to something else to actually do just the standard visualization part. In this one, it started, and they started to see that we could actually then start to consolidate. They had some legacy vendors that were pretty expensive, on-premise providers, that they wanted to see if they could start to change away.
As the platform started its way through the process of evaluation, they realized that there's some things that they want to keep, there's some things that they wanted to double down on Domo, but ultimately, this particular use case is now top to tail Domo execution.
Got it. That's really helpful. Thank you guys. Yeah, echoing everybody else, congratulations.
Thank you.
Thank you.
Thank you. Our next question comes from Patrick Walravens with JMP Securities. Your line is now open.
Oh, great. Thank you. Josh and Bruce and Ian, congratulations. It's terrific. Josh, here's my question, and I've asked a bunch of other CEOs this question, so I'd love to hear your thoughts. How do you make Domo the best place to work when everybody is working from home? If you can throw in like a specific little example of something you're doing, that would be great too.
Yeah, I think the most important thing, honestly, is having everyone feel like they're a part of something. When work from home started, obviously there was a rally point. How do we make sure that we can thrive in this environment? We unfortunately had to let some people go, as we were just worried. I think everyone rallied together. Making sure that your teams and your managers are staying connected to people that, whether you're using Zoom calls to have happy hour on Fridays, or your teams are getting together, or they're getting together outside and doing remote meetings. I think the most important thing is that you're staying connected, that you're understanding how your people are feeling, and that they're a part of something that is exciting.
For Domo right now, that's been from, hey, when Black Lives Matter starts, let's get our employees of color and let's get them on a call so everyone can hear from them. That's a way to bring everyone together and to become closer and to understand people you didn't understand before. It's a family, and it provides that connection that frankly, would've been more difficult to do, in an environment where we were just in the office. I think, it's kind of leveraging these technologies and these tools and these situations that we're in a way that we might not have been able to before this work from home situation. Of course, what's the mission? Making sure that everyone's focused on that mission, that you've got leaders that are staying connected to their people.
I think we have that right now, and we're also trying to show that we care. I heard one time I was on a call with a bunch of CEOs and everyone was trying to talk about best practices, and someone said it's probably important right now that when, if you have a team together and one of them is sitting there and you're trying to all be serious on Zoom and their kid walks in, that they don't feel awkward about it. That maybe they even see your kids walk in. This is just a new environment. Embracing it, understanding it, making sure your people feel loved and cared for, and then making sure that that mission is paramount. That's how I'd answer the question.
Awesome. Thank you.
Thank you. That does conclude our Q&A portion for today's call, and as well concludes our call for today. Ladies and gentlemen, thank you for your participation on today's conference. This does conclude your program, and you may now disconnect.