Hello, everybody. We'll get started. For those online, the general session ran a little long. We had Drew Brees here, it was kind of fantastic, I think. I didn't know he's such a nice guy and a good quarterback. We're glad you could make it here today. We have, I guess, two purposes today. One, we certainly have content. We'd like to give you some more insight into our go-to market and our kind of platform play, so to speak, in addition to that. This is also a great opportunity to introduce you to other members of the management team, starting with the go-to market team, the sales team. They've been on board. I kind of joke, Dean's almost off probation. What I tell him in a recurring revenue point of view, I said, "Look, you will now be on auto-renewal as opposed to opt-in.
Every three months, right?
No, you'll be auto-renewal at this point. Again, thank you, and let me review the agenda with you. Oh, before I do that, we will be making forward-looking statements. They never come exactly true, just be aware. Here's the agenda today. I'm just saying hello to you now, and we'll go right as quickly as possible. We'll get you to the go-to market team. It's really Dean, our Chief Revenue Officer, and our whole sales leadership is here, which includes North America Enterprise, North America Commercial/Corporate, our EMEA team, and our APAC team. All the leaders are here. We will go just cover the power of the platform. You got a taste of it already. Apps is part of it, there are other elements of the platform that matter from a go-to market point of view.
We'll have the technology team come in and go deeper into the platform and what it means and what the components are, fundamentally how we play nice with other technologies, and how we fit in well with other technologies. I'll cover just a brief summary of kind of the financial themes. Pretty much a lot of what we already covered on the earnings call, I'll just review that one more time, we'll leave it over for Q&A. All right? With that, let me hand the mic over, or he's mic-ed, to Dean Germeyer, who is our Chief Revenue Officer .
Thank you, Bruce.
Welcome to the investment community.
Hey, team.
And here's-
Oh, thanks
Here's this. Maybe a second on your background.
Yeah. First and foremost, thank you so much for coming and investing your time to get to know us a little bit more. My name is Dean Germeyer. I've joined Domo I was actually at Domopalooza last year in an interview capacity. I joined about 10 and a half months ago. The last 15 years prior to Domo, I was at SAP. My last four years at SAP, I had about a $1.8 billion group that was responsible for all North America sales for their services group. Everything that I've been doing for the last 15 years has been at the enterprise level. SAP really only had direct sales calling on billion-dollar-plus companies. I'm excited to share what the team has been able to do over the last nine months and kind of the direction we're going.
Just as a quick kind of a responsibility standpoint, I've got a responsibility that spans kind of all the inside sales, the go-to market for all sales and AEs, the renewals team, the services team, tech support, customer success, and education. We really have an end-to-end view of the customer life cycle, and we are absolutely focused to make sure that they're crazy successful given our land and expand strategy. Bruce, which button goes forward?
Green.
I guess I can try, but I might ask you if you know.
Right there. Here, go like this. This way.
Thank you.
Welcome.
What I want to talk about is kind of the major transformation levers that when I first joined, and I actually did an investment, an analyst call with Bruce, probably 40 days in or so to my time here, what is the journey we've been on? If you think about Domo as was maybe 18 months, two years ago, the motions were focused on a very heavy marketing spend that had a tremendous amount of inbound leads coming in. That was serviced more by remote sales. That was typically at a slightly lower level in the company because those inbound leads were form fills. They ended up in with more activities in slightly smaller companies.
There was generally an avoidance to try not to tangle with a CIO, because in that land and expand strategy, the motion and the conversation with CIOs often proved deadly early on. The motion was more about landing and almost becoming shadow IT versus selling and doing a platform. My comment would be is what we've done, and we just kicked off our fiscal year here in February, is we now have a very specific set, an ideal customer profile that's driven primarily by putting all of our marketing and sales efforts into companies that have $250 million in revenue or more. The outbound marketing now is extremely targeted at a named target list. We're taking all the power of Domo and pointing it in a much more consistent and deliberate way.
The reps that are being hired tend to be in geo, so they're closer to customers, can have much more customer-facing time and activity. We're targeting with our messaging, with our sales motions, higher-end executives in the companies to hook onto bigger problems. We're not shying away at all from CIOs. In fact, we're embracing CIOs. We find them to be critical to bless us so that when we do land, that it's allowed to grow. It's got sun on it. It can get water. That initial land is allowed to grow, and it's sanctioned. The sales team, we really modeled the success that Ian and Paul had had in our international sales committee. They owned that end-to-end customer life cycle, and that's now both with Jeff, who runs our corporate business, and Jim that runs enterprise.
They very much look over that end-to-end life cycle of a customer. I want to now talk about what does it feel different if you're a customer? How is that changing things in the field? We saw at the beginning, or when I joined, is that the biggest fight we had was almost trying to get out of the Power BI, Tableau, Viz Box comparison. In order to avoid IT, we would land in departments, and we would probably have a small footprint. The departmental buy wasn't a big enough dollar amount to necessarily require us going and getting full enterprise approval and certification. We were landing with per-seat pricing, and what we're now doing is walking in with a completely different value prop story and entry point. We're talking about this whole theme today or over Domopalooza is the power of the platform.
If we walk in with the power of the platform and we're hooking to critical digital transformation initiatives, the product is so robust now. We have so many ways to show that we're so far outside of that box. The apps that we can build, the fact that there's AI and ML, the fact that we can publish to customer suppliers and to their customers. It allows us to really go from shadow IT to a fully endorsed IT-supported platform, and that really allows things to spread rapidly. We're basically landing somewhere with a very strong value prop that's probably departmental in nature, but showing what the platform could do for everybody. Now what we're talking about is what is the rate of speed on that journey you can go on? They never thought that where we landed is the ending point.
They think it's just the beginning now, we have an opportunity to say, "How fast can you consume?" What's happening is customers are piloting a couple of thousand seats, wondering about tens of thousand seats. That's an enormous transformation over the last, I would say, two quarters, where companies are jumping in and saying, "Okay, I see the vision, I now am going to try these much larger programs and projects." We're also experimenting with platform pricing. We've built a CIO council to help guide us, that CIO council's given us a lot of good feedback around this platform was built for everybody in the company. That was always Josh's vision. If you've got a very steep per-user price that's only sprinkled out to limited.
If you walk in now with a CIO's approval and you talk about an enterprise-wide platform and a very clear path to roll that out as fast as possible, it's a completely different dynamic than when you were locked in at a very high seat cost in a small department that wasn't approved. What we're also seeing, and we're going to talk next and have each of the sales leaders talk about the changing things. There's not really a budgeted Domo line item in most IT budgets right now. We're not there yet. What we're seeing is a fierce return on investment. Forrester did something called the Total Economic Impact study, showing about a 432% return, an ROI, and a payback period well under a year.
We are seeing great power when we position everything on the right for them creating and opening up budget in a way that is a lot different than when we were walking in with a very high seat cost and a very departmental use case. What I'd love to do is have Ian and Jim, Paul and Jeff, please come on up. Let's do quick intros. What we're going to do now is just talk about a couple real-world example deals to give you a sense of what's the business shape look like now.
I'd say, before we jump into this specifically, we've implemented a lot of sales training so that every person that touches a customer across all North America, across all Europe, across all APAC, now has a consistent set of training, consistent set of tools to live by the things we just talked about. Let's do a quick intro. Jeff, maybe you start.
Start and then do my thing.
Yeah. Then we'll hit.
All right. Nice to meet everybody. I'm Jeff Skousen. I've been with Domo since the very beginning, so a little over eight years. I've enjoyed this ride. I wanted to cover a couple of things today, a couple of use cases or recent sales that highlight some of the things that Dean was talking about. This first one with a large home automation system. We had landed in a sales and marketing use case and They, I think, were using Tableau at the time, couldn't get the traction with the business users. They were loving what we were doing, but couldn't expand in their organization because we were getting roadblocked by the CIO. He came to me one day and he said, "Hey, I need some help.
We're trying to build out this app so we can put it into the hands of all of our sales reps that are going door to door to see commissions and everything." Asked if we could please make an introduction, because our CEO knows their CEO. Anyway, through that, we were introduced to their CIO and went in, and I believe it was Daren and Josh and I went in and talked to her, and she opened up and said, "Hey, I thought you were just a data visualization tool, and that you couldn't do what you were doing." Similar to what you saw today what Josh outlined, we outlined with her, and she said, "I had no idea.
I've got a bunch of things you guys could help me out with." We were able to land a really nice contract on an app to enable their salesforce of 2,500 users. It's an example of landing departmentally and expanding throughout the organization and really doing an enterprise-type deal with this company, and this is the corporate space, right? This is a large deal where we're focused mainly on companies that are $1 billion and below.
Can you share the size of some of your deals, the larger deals you've done?
This one was $538,000 on this one right here. It's what it ended up at. Very nice-sized deal for the corporate space. Way higher than the average had been when we were just looking internal use case. The second one, it's a leading content marketing company. They were actually using Looker, what they wanted to do, they cover large enterprises on this next company, they wanted to extend their platform to all their customers. We've had a product for years that we've been working on called Domo Everywhere. This enables us to extend and enhance our platform to our customer's customers. They wanted to look very good in front of their enterprise customers, there's many big customers that they're servicing. Like I said, they were using Looker in-house.
They started looking at Tableau, Sisense, a bunch of other companies to see if they could extend what they were trying to do. They were really trying to retain their customers, they needed something that looked very good and also could scale with their needs. In most of these decisions, they're trying to do build versus buy. We're dealing with our technology groups. In that one, we ended up landing a just over $400,000 deal, what seemed like a no-brainer for them when they considered what they would have to do to go build a data warehouse and do all the things to scale this to all their customers. With Domo, we were able to implement this within about a month.
just a couple of examples of, in the corporate space, do some very large deals, and we see this over and over again. We just landed another one that's not up here this week for another $200,000, trying to do the same thing. A little smaller use case, but these deals are getting very large, meaty deals in our space, which is something that we hadn't really planned on expected, but it's coming forth.
I just want to make a few more comments and then have Jeff comment, which is, when we turned the knob on digital spending down, and we shifted from outbound marketing and filtering leads, his team really had to go into a hunting mode and had to go out and really generate a lot of demand. What was amazing is, when you're pointing where you're going to go, Jeff's been able to point his team at the upper end of his spectrum. They own the zero to a billion-dollar revenue companies, but everybody's pointed at $250 million to $1 billion now. I wanted to make sure we highlighted the size and the potential of this installed base. If you saw Domopalooza earlier, our platform can almost be a wall-to-wall solution, the data lake ETL tool.
It literally, for companies in this size, it can be an amazing, unique platform to go wall to wall, and I think we're going to learn how to land and go rapidly. Any other comments you have, Jeff?
I was just going to say, if you saw that graphic that showed overlaying on a big company, a mid-size company, and a small company, or a smaller type company, we can sometimes be their entire platform. They see it very valuable because they don't have some of those components that some of the enterprises have.
That's awesome.
That's exactly right.
Thanks. Jim, I was going to have you maybe share some comments on enterprise, a couple deals. I think you got the deals on the right. I'll share mines on the right.
Yeah. Well, I'll introduce myself as well. Jim Kowalski, I lead the enterprise team here at Domo. I'm the new kid on the block. I've been here about nine months or so I guess. Just a kind of a quick little bit of background. I did a stint at MapR in the big data space. During my tenure there, we grew about 49%, and we did a C round before we completed that. Got that done very well. Prior to that, I was at Marketo in a very similar role. I don't know if you've heard this story before, but when I joined Marketo, they were about $750 million in market cap. The comment from the street was, "We need to grow our enterprise business," because we had too many one-year deals. There was a lot of pressure on renewals. We had high customer acquisition cost.
The company was selling exclusively in the line of business and needed to get to IT. Stop me any time if you've heard this story before, right? I joined Marketo. We were about $780 million in market cap. I ran the enterprise team there, and 16 months later, we were acquired by Vista Equity Partners for $1.9 billion. That kind of threw that journey. Prior to that, I did 47 quarter ends at Oracle. For those of you not in the Oracle world, that's 10 .5 years. I had a pretty good breadth and depth, right? What we're doing here from an enterprise standpoint, I think first and foremost, just organizationally, is we're simplifying a little bit. We were able to move quite a few unproductive heads and just simplify from a regional standpoint, get closer to the customer.
We took a lot of the focus away from headquarters and more in front of the customer. As Dean said, that full customer life cycle. We've moved some sort of, I guess, call point solution people out, and we've brought in more enterprise-capable platform sellers. We're already seeing some dividends. I wanted to just point out a couple of stories here. I'm going to start here in this corner, the auto parts retailer, because it's a great story. It's a microcosm of really Domo. There were two executives that were Domo customers at another organization, and they moved to this retailer, and the first thing they did was they called their old Domo rep and said, "I want to do the same thing again.
I want to buy Domo for my division, and let's bang this in and not tell anybody." They had about two conversations, the CIO got word of it, I got the call, said, "Well, the CIO sniffed this out." You look at the CIO's background, certified Oracle executive, sits on Oracle's BI committee, the SAP HANA advisory board, you name it, right? All the big names. We went in there, we met with that CIO, and about 10 minutes into the presentation. We were kind of loaded for a confrontation, right? About 10 minutes into the presentation, the CIO got up and walked out. You tend to not want to have that when you're selling, right? He walked back in five minutes later with about six other people, and he said, "You know what?
Based on what I had previously heard about Domo, I thought you were just another effing viz tool." He didn't say effing. We're in the Northeast. He said, "I thought you were just another effing viz tool." He goes, "Now I get it. I see what you guys are doing. I needed to bring more of my organization to see what goes on." We had a very lengthy conversation about the platform, what it does, all those kinds of things. He literally turned to us and said, "All right, you're an Oracle guy." He turned to me and said, "You're an Oracle guy. How would you architect this with HANA and Oracle OBIEE and Exalytics?" We drew it all on the board. The CIO went from being our biggest antagonist to our biggest advocate.
We had already loaded their data. Two weeks later, we got on a touchpoint call with him, and he said, "We've been able to merge data from so many systems." He said, "We've been trying to do this in Oracle BI for over five years, and we did it in Domo yesterday." That CIO, when we did the deal, economic headwinds, that company shut down a number of stores, and they announced in their earnings call that they were going to shut down a bunch more. They turned to the chief operating officer and the CIO and said, "Which stores should we shut down?" The CIO said, "I got to buy Domo to be able to tell you." Able to resist the economic headwinds as well. It's a land and expand, but it's a different kind of land and expand.
It's a platform land and expand. Instead of going into one department, we're now at the CIO, and we're already continuing to expand within that organization. I think it's a great story. Kind of staying on that land and expand. We had a customer who's a big Einstein user in the Salesforce world. Very similar conversation. We were going down the road with them, and about two weeks to go at the end of our year, their CIO announced a major restructuring, freeze on all spending. You guys all know the drill. In a typical software world, in all my time at Oracle, I'd see those all the time, right? Those deals, they die and never come back. Our sponsoring executive stood in front of the entire management board and said, "Last year, I was the only guy who made my number.
The reason I made my number is because I use Domo to run my business. If you guys truly want to do this restructuring and reorganization, you got to deploy Domo across the entire executive team, and I'll put my job on the line." CEO saw it, CFO saw it, said, "All right. You're on. Let's go." They're now deploying Domo as part of their reorganization and transformation. You start to see, we're changing. We're moving up the food chain. We're going broader. We continue, as I said, I'll give you another quick example. Just some of the folks we're hiring. We had a rep start last Monday. When you bring somebody in, he's somebody from my network. When you bring somebody in and you start getting phone calls from other people, you never know what you're going to hear, right?
I've already heard this rep drove a deal strategy call, and he's already owning it. Yesterday, that rep, now this is day eight for this rep. Yesterday, this rep gave a presentation to a customer, and one of our solution executives, solution consultants, who's been here since the beginning of Domo, turned to him and said, "I'm calling foul here. There's no way you started last week. You gave that presentation. You hit all the customer points. The customer's very complimentary." That whole thing about ramping up, getting to speed, being able to address the volume and articulate the platform is really the big piece of the transformation. Your turn next, buddy.
Hi, everybody. My name's Ian Tickle. I'm responsible for the European organization. I've been with Domo for just under three years. A bit about my background. I've been working in cloud technologies for probably 13, 14 years, from the early days, and worked organizations such as Adobe, prior to working for Omniture. My last four and a half years was at Oracle following an acquisition of another smaller cloud company. I'm pretty familiar with the small startup mentality and how you build and grow, as well as the multilevel super corporates that are out there. The European organization had great success over the last three years. It's been going really well for us. We have been focusing, same as the other guys, really, on enterprise and value.
That's really where we've seen a lot of the success come from, which is actually looking for specific use cases where there's a business problem that they haven't been able to solve, and Domo is able to help them with that. Then we can show the value to that, which then obviously brings additional opportunities with inside those businesses as well. We're seeing good strong use cases in digital marketing, which is a classic because of the complexity of the market. Also in supply chain and also in forecasting planning. They're really three key areas where we're really seeing a great deal of traction in our enterprise clients, where they've been struggling with not just the volume of data, but being able to do something with that data, and also utilize that data for other purposes as well.
The reference we have up on here is actually a market research company. It's one of the largest in Germany. It's the fourth largest in the world. We had recognized from a previous deal that we had taken from a different organization, that they had value in the data that they held, and that they were able to sell that to their clients to be able to pay for the infrastructure. Domo Everywhere is a perfect model for this, where we offer some really cool functionality to enable not just the delivery of information, but also interactivity with that as well. Once we saw that use case, we decided there's got to be more people who have data who could use that. Market research was the natural starting place for us.
We engaged with this organization, and they were having the classic challenge of digital transformation inside their own organization. They were experiencing challenges with their ability to put all the information together. This is point-of-sale information, so it's a lot of data, and it comes in a very strange format as well from all different providers. They had a program ongoing to build out their new digital format. As part of that, we started to work with the team. We found the business owner. We demonstrated the value of how Domo can bring speed and agility to this. We landed a pilot. The pilot went incredibly well. As to Jim's point and also Jeff's, the ability once Domo's in to show return and value quickly is just immense. From there we build additional sponsorship. We then start to build out our network inside the organizations.
We found a receptive-ish CIO in the organization because they're trying to build this. Again, the platform and the way for us to integrate with their existing infrastructure and existing architecture, and then to be able to build out a program enabled us to have a very nice deal in the last part of Q4. The beauty of that success is that momentum breeds success. Once you find a value proposition inside these organizations, maybe it is in the supply chain. The beauty is that then you can start to talk to the marketing or the finance or to the other departments because you then become a trusted advisor as opposed to just the platform. What we're starting to see from a local area is two real interests. Domo Everywhere is receiving phenomenal traction.
It really is something that people are struggling with, the ability to distribute data and to be able to still control, manage, secure, and authenticate, whilst governance is a key there. Also with the new data science releases as well. The ability for somebody to actually look at a set of data whilst it's inside our platform or while we're collaborating with other platforms and just analyzing the data to see true value. One of the examples is forecasting accuracy for an organization, a big consumer product group. They had a challenge with their forecasting, and we increased that productivity by 10%, which means there's a net increase in the amount of stock that they have to promote or provide to the source.
That gives us a great use case that we can build more value propositions to go out and talk to other organizations. Like automotive, where you have a lot of dealers and you want to report to dealers. They're usually very traditional manual processes where you go with sheets of paper, you take pictures, you go back to the central office, and then you upload them. With Domo, we created an app. It's on their iPad. They go to the dealership. They take a picture. They do their net promoter scores. They do their reviews. They click submit. It writes back automatically to their systems, and everybody's happy. That's not only optimizing a process, it also means that organization can now do it more frequently as well, which means they can put more governance and more control. Just great traction.
The final part for me is the great deal of interest and activity on our application framework as well. The ability for us to, again, build on the complexity that we hide from organizations and put on these discreet niche applications that really solve specific business pains to specific people. There's plenty of opportunity for us in that area as well to continue with. That's it.
Thank you. Paul.
Afternoon, everyone. My name's Paul Harapin. I run Asia Pacific and Japan, based in Sydney when I'm there. I've been here just over four years. I was the first person working out of a coffee shop in Sydney as we were building the organization. We now have people across five countries and customers in many more from Australia, Indonesia, Malaysia, Singapore, Japan, and China. We've found that across that base, small, medium, and some of the largest corporations in the world, all have a very similar problem, which is lots of information but no way to actually distribute that to decision makers in a timeframe that allows them to use that data to change the course of the business. They normally pick it up six weeks later, by which point it's just a data point and they can't really do too much with it.
I chose this customer example for a couple of reasons. One, it's government. Two, we engage pretty effectively with the CIO and IT. We were lucky enough that one of our great salespeople is actually the Minister for Finance in the largest state government in Australia. He shows everyone Domo. He runs the Department of Finance with Domo and is a great advocate on LinkedIn as well. One of the departments there, the Department of Transport, through their trains division, was having a lot of challenges. Were using IBM's Cognos. The business was becoming frustrated that it was taking up to two months to get information. A lot of political pressure within there as well. We got an introduction both to the line of business and the CIO at the same time.
The CIO cottoned on very quickly, like Ian's example, to the value we could bring, but most importantly, the time to value. They'd been trying to do something for at least two years, if not more. They paid us to come in and do a proof of value. We were able, within four weeks, to show them a very structured pilot that hit many of the things that they were trying to show the business, and had been spending so much time trying to do. They then signed up phase one, which was a three-year piece of business over $800,000. We're well into that, not just on our own, but with one of our partners, Deloitte, as well. That's progressing extremely well. The customer's very happy.
The line of business is engaged, also has started another project on their own that they wanted to do separately to IT, but all using exactly the same platform. We got through all of those concerns that you would think comes up with government, which is particularly data security and governance. Across our region, we have the three areas that are particularly focused on things like that, banking, telco, and government. We have large examples of some of the world's largest in each of those verticals across our region. Thank you.
Bruce, I'll just take one comment, which is, we wanted to really kind of highlight some of the deals getting done, size and magnitude, both in Jeff's business globally and particularly in enterprise. Realize that as our team sees this happen, we hadn't really gone up to enough customers and said, "Let's have this enterprise-wide conversation." That is something that after Domopalooza, after the way we're launching Power of the Platform, we got a lot of work to do in front of us to go help everybody see how to migrate from a point solution to wall-to-wall Domo. Thank you. Back to you, Bruce.
All right. Thanks, everybody. We have a Q&A section at the end, we'll just hold our questions till then. Let me keep this moving. Let me introduce Jay Heglar, who's our Chief Strategy Officer.
These guys did such a great job. They told half my story, I won't have to be as verbose as I once was. Really, everything that we do is built right on top of that platform. Following me is going to be the product team, they're going to go into greater depth about the platform itself. I just wanted to ground everybody, everything I'm going to talk about now with all the different additional products that we're working on and put out in market, it really is predicated on the fact that your data's in the platform, and you're leveraging all the tools of the platform. I wanted to be concise and expose you to three things that I think are really unique about Domo and the offerings that we have out today. The first is Domo Everywhere.
Two years ago at Domopalooza, we launched this new product family. Really what it was, is it was our first foray into distributing all of your data that you have inside of Domo, externally. The first product we launched was Embed. We have a couple different flavors of that, where you have authenticated or public. A year later, this past September, we launched something we call Domo Publish. Publish, at its root, is basically the ability for Domo to provide our customers with monetization as a service.
What we mean by that, and this is what Ian was talking about, is when you have the data in Domo, and then you have all this rich data that your customers are asking for or they want to interact with it, Domo's turned into the platform, somewhat of a data exchange, where we help to connect customer and customers of customers to share their data. We have many, many, many examples of that. Just since the time of launch, which was in September, this has been one of our fastest adopted products that we have out there. What's really unique about this is we actually have customers that are building entire business models off of that, which is a super unique capability for a company like Domo.
The second is data science, and we spent a lot of time this morning, as you all saw in the keynote, on data science with Artificial Intelligence and Machine Learning. Our spin on that is so unique. I realize here I got a bunch of build slides on this. What I like so much about our story with data science is we're trying to democratize data science. We're not trying to be the one rich tool that the small number of PhDs that are out there in the world, that they consume and live in and breathe in every day. They've got their own set of tooling that they're comfortable with that helps power their day-to-day life. We want to help them make them more successful in their organization.
There's such a global shortage of PhDs out there that if you've got the PhD or PhDs in your environment, in your office, we want them to be able to build these models, train these models, but then also have data sets that continue to refresh and update when the data does, that they can build data sets off of, that then go to visualization through all of their company. That's a unique value proposition. It's enabling the data scientists. One of our functionalities that we have today, which is to support custom scripts. What the team talked about today with the ability to support Jupyter Notebooks and SageMaker integration.
What we've now done is, we have the ability for a customer to build and train these models, really sophisticated models that could take weeks, months, or years to create, and to run those as managed code in the Domo platform. Just think about that. How different of an environment can you operate in now where you don't have to run this outside of Domo, which people could do on an R stack, and then take it and then bring it into Domo, rather just execute that inside of Domo. The SageMaker integration, what's super unique about that and the future of the machine learning that Amazon's really doubled down on, is the fact that now after you've got those models created, Domo's going to help you take advantage of those. It's a really unique capability there. Final, apps.
I'm sure you guys didn't miss the App Attack. You might've saw a few things with that. No jokes on the App Attack. What's that?
Oh, they didn't see that. Okay. App Attack. Let's see here. Quick recap. People on stilts, cannons. Okay, lots of stuff like that. What we like to talk about with the apps is, data doesn't have to look like data. You don't have to have a dashboard, a chart. That's not necessarily super interesting to the masses. For people that dig in data all day long, it's really interesting to them. You're not always there, the author of that, to be able to explain what the data's telling you. The idea of apps is to really take the information that could live in hundreds of data sources and make it meaningful for the end user. Put it in a way that speaks your language, and is something that's very easily intuitive and easy to use, and interactive.
The final one, our customers have been telling us they love our platform, they also like the ability to solve specific problems. Some of the apps that you've seen released in the last number of months are a media suite, a retail suite. We launched a marketing suite today. There's some more stuff that's going to happen tomorrow. Really what these suites are these applications that sit inside the suites. They're really aimed at solving a specific business problem. We wire up the data, we understand your processes. All of a sudden now, rather than having just raw data, you've got a sophisticated application that you can look at to help run and manage your business. I raced through that on purpose here because I wanted to invite somebody up.
Randy Bock, why don't you come up here. Josh told a story this morning about one of the customers he'd met at the reception last night. This is not a plant, this is just a cool story. We want to get Randy up here. Randy was telling us a story about how his organization has used Domo, how it's really changed their business. I just wanted to bring him up here and ask him a few questions, because I thought you all would find this educational. Randy, thanks for joining us. Tell us a little bit about Boyd Group.
Boyd Group is a Canadian-based company, started in Winnipeg, Manitoba. It is the now grown to be the largest publicly traded automotive collision repair business in North America. We've got, currently, I believe the location count as of yesterday was about 630 locations between the U.S. and Canada. That number changes literally every day. I get emails every day that we've just added another 20 locations, 18 locations. The business' direction is to double the size of our business to be over a $2 billion company by 2020. We are going to hit that target. A very aggressive growth strategy. That's really where Domo really came in for us. We were managing our business using Google Sheets. We had an access database running. It was really a house of cards. We needed a better strategy.
We adopted Domo three years ago. We've got to a point now with Domo that some really, really cool things are starting to happen. One of the stories that I was telling last night was we wanted a GM dashboard. We wanted our GMs to be able to really quickly see where their issues were every single day. Prior to having a dashboard, they had to go into the management system. They were pulling approximately 10-15 reports every day. They'd pull those reports, they'd look at the numbers, try and decipher what to do with them. I said, "I can build a dashboard." When the new dashboard layout was released, it gave us the flexibility to really make it not only look good, but function exactly the way we wanted it to. I made the mistake of releasing it over the weekend.
It was supposed to be a limited release, market by market. I got up to go to the airport on Monday morning to come here, and from the time I left my house till I got to the airport, I had over 100 requests to give security access to the PDP that was applied to it. I had to go, while I was on the plane, put a title, a subtitle on it to say, "Please stop clicking on all these cards requesting access." I woke up yesterday morning to over 150 more requests in my email asking for access to the card. Because I'm here, I actually had to pull it back down until I can get back home and I can manage it. Really cool thing, one of the things that we saw today is the new dynamic PDP.
That's going to allow me to just turn it on and roll it out right across the entire company right away, and I'm not going to have to worry about it anymore. That's one cool story. The other one I wanted to talk about, because everybody talks about marketing and sales and all the kind of really neat things that Domo can do. Domo did one thing for us as an organization that we've never been able to do, and we didn't even think we would ever be able to do it. Everybody knows how complex cars are today, with the autonomous, the lane keeping assist, and all that kind of stuff out there. Give you an idea, like the 787 Dreamliner's probably got about 80,000 lines of computer code that run it.
Any one of a 2019 fully loaded car, has got about 120,000 lines of code in it. The complexity of cars right now is amazing. The liability that comes with us fixing those cars is incredible, and the training that the technicians need to take and stuff. We're at such high risk of having the wrong people fixing the wrong cars, that we needed a way to figure out, what are we going to do about it? Well, Domo allowed us to take our HR database, pull it in, that has all of our technician and location training and certification levels in it.
I can cross-reference that now to repair order data, so if a location creates a repair order, says, "We're going to fix that Tesla," and that location is not certified to repair Teslas, an alert immediately goes out to senior level management, market, regional, and our COO of the company saying, "They've just created an RO for a car they should not be fixing." It goes one step further now. Maybe they are certified to fix that Tesla, but maybe not everybody in that store is certified to fix that Tesla.
As soon as I bring that car in and I assign it to a technician that is not qualified to work on that car, the same alert pattern will go out again to the same level of people saying, "They are giving that car to the wrong employee." We are now using Domo as an insurance policy, in essence. It's our protection from fixing cars that we shouldn't be, and by people that shouldn't be fixing them. That was something that six months ago, we didn't even think that it was going to be possible.
Very cool. What's next? What are you going to do next?
Probably one of the things that we've been talking about is actually automating our parts purchasing. We're now bringing in our estimate line item detail, and so now we're looking at a way to be able to configure basically an alert of some sort that is going to send an email automatically to the manufacturer, the vendor for that vehicle, and supply them the parts list so that we can eliminate the need for human interaction and actually going through and ordering the parts. That way, we can control who they're being ordered from and the timing of when they're being ordered.
Very cool.
Yeah.
Well, great. Well, thanks, Randy. We really appreciate it.
Not a problem. Thank you for having me.
Yeah, thank you. Guess what? We are 100% of plan right now. Time plan.
Thank you, Randy.
Let me introduce you to the technology group. Catherine, Daren. Adam's here, too. Adam, you weren't on the slide, turn it over to you guys.
Thank you.
You're welcome.
Thank you so much. Thank you for letting us come and share with you a little bit about how we think about the architecture of the product and this platform that we've really built over the years. You saw Josh probably referenced it, or maybe not actually. Josh referenced this this morning, the architecture diagram. We've really built seven major components into this platform, and we'll walk through each of these at a high level. One of the things that Daren and I from the beginning always talked about was the importance of helping IT departments and helping business users really future-proof when we look at tech stacks and tech decisions. One thing we know is that there will always be new technology. There are new startups, there are new database techs. We love it. We geek out on it.
That's something that we plan on, and we count on it. Over the years, throughout our careers, we've realized if you embrace that and plan for it, then your technical strategy actually is very open.
Yeah.
That's really what drives a lot of what we did here.
From day one, we started talking about this is an open platform.
Right.
Open data platform. That's been a key tenet for sure.
We built these seven different components, they're very tightly integrated with each other, absolutely. As Daren mentioned, they're very open, the idea is that we know that customers have existing investments. We plan on that. Domo plays well with those investments, and it really allows for adaptability to an organization's priorities. We've had large retailer customer who came and said, "We don't need the connect piece right now. We actually just need to connect into our massive data warehouse directly into Adrenaline." That was great. That's how they got started. A year after that, they came and said, "Hey, now we need those connect pieces for additional functionality." That flexibility is something that we're really proud of and that we always try and push for because the point is to support the business.
It's not necessarily always about having, quote unquote, the perfect tech, right?
Yeah.
Perfect is done.
I can't tell you how many times I've been in meetings with our largest customers who almost all of them will say some version of, "Believe me, we have one of everything." One of them, yeah. Actually one of them, even kind of one of the largest, they started out the conversation like, "We have at least two of everything.
They soon find out that, yeah, we play well with the investments that you have made.
These different components that, we certainly have a very robust data pipeline. We talk a lot about the connect framework, Integration Cloud. This is the capability to connect to data wherever it is. That's also one of our tenets, that Domo really is designed to adapt to your business. You have data on-premise, you have data that needs to sit behind a firewall, you have data in the cloud, we're going to connect to all of that. Again, the objective is to get speed and agility for your organization. Adrenaline, this is one of our secret sauce elements. Fast query, highly scalable.
Yeah.
Massively parallel. Fusion.
Let me just touch.
Oh, go ahead. Yeah
A little bit on the Adrenaline one.
Yeah
These customers that do say, let's start out by saying we have one of everything. They do often have a big investment in something like a HANA or Teradata. They go through it. Yeah, we certainly can leverage that highly through this path. It's remarkable how often they say, "Wow, we were trying to do a Teradata, we can't do." They do choose, versus this, they'll choose often to put some of their most strategic data sets here.
Yeah.
To add to that, I was talking to a customer last night who's here from a very large multinational company. His comment to me was, because your question you might ask me, if we hear what they're saying is, "Well, why, if people bought all these things, why isn't this automatically working?" It's really the magic of Domo is that high integration that Patrick talked about. This customer last night was explaining that to me in great detail, saying, "Look, we bought" What he said is, "We bought a toy for everything. We bought a piece to do every one of the things that's on there, but we could never put them together. We could never actually get the Domo to come out with all our individual pieces until we put Domo on top of it all.
We see customers doing that mixing and matching, as well in the Fusion area. This is where we're really cleansing, refining, and combining data. Of course, we have built-in capabilities, but you saw us announce today integration with SageMaker, with Jupyter. This idea of embracing the ecosystem is really what a lot of our customers love from a CIO technology strategy perspective.
I would also add that Fusion box, there's a lot more there than is just apparent, and especially when we sometimes-- Maybe the next slide, right, shows some of the-
Yeah.
It does. You can build these data pipelines, Magic has a very nice graphical interface for building these pipelines. There's a bunch of other technology in there, too. When you heard Vincent at L'Oréal, Josh ask him, "How many datasets?" He said, "I need to ask my team, but it's dozens of tens of thousands or thousands." I think it's over 40,000, I know that. They're using this Fusion technology to do that, and that's something that I would say. They tried to do it with other technologies. I can't imagine trying to build a data pipeline with Informatica where you're going to try to bring in 40,000 datasets. They have different schemas, and you're going to try to put them all into one. That would be such a challenging job to do.
It's what customers love, right?
Yeah.
Is the ability to take existing investments. Because Domo's so pluggable, they're able to actually continue on.
Yeah
to your point.
Yeah.
Things that they maybe had a hard time doing before. Governance is central to everything we do. It has to be, obviously. What that really does is helps really the crossing points between data, people, and content. That's foundational to what we do. Down here you see as well, there's productivity opportunities because we have all of the people connected. Explore, and this is what most people think of when they think of Domo initially, is that visualization and that user experience. We've always held very firm. From the beginning, Josh said, "I want to be able to run my business from my phone." So that is very strategic and significant to us from a product development perspective. You need speed on the phone. Things can't take a long time.
Yeah.
A lot of what informs what we do technically is that we know that's the end game. We want to prompt action.
I'm guessing tomorrow in our product session, when the audience sees more of what we're going to be able to show them, then I think you're going to see a lot of cheering from that session when we show that.
We continue to push the envelope there.
Yeah, they're going to love that.
I think an interesting thing to call out here as well is Domo Everywhere. Not only have our customers loved using the visualizations and insights within their own organization, you heard Jeff mention it earlier today. They naturally have come and said, "We want to use this with our own customers, with our partners, with vendors." There's a huge pull there from the market.
Yeah, I don't think we could understate the opportunity that Domo Everywhere actually represents from several different perspectives. One is, obviously the customer who gets into Domo and really starts leveraging the platform, they get all the value inside their business. You heard the customer stories today. It really just starts taking off. What Domo Everywhere allows them to really start considering is how to do that outside the walls of their business, out to their vendors, out to their own customers, and really extend the power of their data and really turn it into a monetized asset. We have several customers really doing that at scale now.
The interesting thing to me about it, a couple things that make it really, really sticky and really defensible is a lot of times within an organization, especially in sort of the midcap area, it actually unlocks a lot more available budget and money to be spent on Domo because you also get part of their R&D budget because they productize what they do with Domo into their own portals and their own products and things like that. You also become part of their experience. They touch customers, touch their vendors, and work on their partnerships. That's just incredibly defensible. It's very hard to replace
Those relationships when we make them.
Yeah
Domo Everywhere is just-
The step of going from Domo for your internal use to going and doing Embed, Publish, or white label is a small step. It's not something that they don't have to go build a bunch of code. It's remarkably easy for them to do. You'll see, I think we have two customers on stage tomorrow that will talk about their usage of that.
As we've talked to other heads of engineering and technology and our customers, what they say is, "Hey, by leveraging this functionality, they can use their own R&D teams to focus on what uniquely and strategically differentiates them.
Yeah.
They're not in the business of building pipelines or analytics.
Doing their own end product analytics, that kind of stuff.
Exactly.
Yeah.
They love the idea of, "Hey, we already have our data in Domo anyway. You guys can provide that, and we can actually go and move on our strategic imperatives." A lot of value there and opportunity. Across all of these components, we have Mr. Roboto. You saw us talk a little bit about it this morning. That's an ongoing area of heavy investment and emphasis. Really, this is, of course, about leveraging machine learning. Interestingly as well, because we have behavioral data, knowing what users are clicking on, what employees are clicking on, what they're viewing, what they're sharing, it really informs what's of value to the individual. That is what you saw manifest a little bit today in Did You Know? That we can personalize what we show you because we've got all of this data that we can learn from.
The Appstore, which Jay talked to you about apps and the impact there. This visual is really us emphasizing that the Domo platform, certainly we have those Seven Samurai, we have a ton of other components that we had to build into that platform-
Yeah
in order to make it work. Making those available as a service is key.
Yeah. We're really excited about. You saw the apps in the, what do we call it?
App stack.
The app stack. Yeah. All those apps were built, all of the apps basically that are out there, the thousands that are out there, were built prior to our new enhancements to our app platform and SDK. We had some classes Monday and Tuesday, I believe. I wasn't at the classes, but two of the people that were teaching the classes on how to build Domo apps and the new functionality that's added to the platform, they told me that they were like, people in the rooms were cheering about these things that they were showing them. We're really excited about that too. We're excited about taking it to the next level, what people can do with the AI platform.
Yeah. Continued investment here and emphasis on the developer ecosystem, partners, customers being able to develop their own custom solutions, extending and expanding on top of that Domo platform. I think, ultimately, what we're really to reiterate again, no matter what architecture or existing investment that the CIO or IT team have made, our view and philosophy from a product and engineering organization's perspective is that it blends really well, that we can augment and extend whatever they have. That combination of what they've invested in as well as the Domo technology, they can build applications and leverage solutions, best practices very easily off of that investment.
Great.
Okay.
Yeah. Okay.
I'll jump to the financial part. When we went public, $75 million of R&D spend, $100 million of revenue, roughly a little bit more. That seemed like a high number. It is. It takes a while to grow into it. We also said, "The product's built. We don't need to build anymore." This team is just delivering functionality after functionality, after functionality. That's basically changing the game in this whole space. The space, from our point of view, is just getting bigger because we're just doing more across the whole landscape of technology and big data and how you use data.
With this theme of why don't we really transform the way businesses are run. We seem to really be delivering on that point. Yeah, we want to keep the investment high, and we have. We've let it drift down a little bit, just we could do that a little bit and really contribute to cash flow from operations. When you hear the team speak, you kind of have to ask, do I really want to pull that back much more than this? I think the answer is no. What I think you're getting a feeling for is the go-to-market team is kind of intersecting in a way that we've never seen before, where they can really, truly appreciate from, because of their background and what they're seeing happen to customers.
It's intersecting pretty well so that we will get the full benefit of this investment and continued investment. That kind of sets up the. Just one slide on financials. My philosophy is, hey, if the stock's working, don't say anything. When it's not, that's when I'm on the road. I do want to just reiterate some of the points that we made on the earnings call. This is the year of accelerating new ACV. It's been challenging, frankly, the last few years, particularly in North America. We've had such a good international team. It's good you got introduced to Ian and Paul. We've invested in them. They've done well. The U.S. was a challenge for a whole bunch of reasons.
I don't need to really repeat it. This, I think we have the team now that really gets the play, understands the value of the platform, starting to lean into the market in a very aggressive way. We really do believe that we're going to see an acceleration of new ACV. What kind of drives that is, in the U.S., we really haven't done much with reps at all. We've actually decreased. Even as a company, I'll just say roughly a little bit over 100, in the past, and we brought it down into the 80s. A little bit over 110 down to the 80s before we started building it back up. We're at a point right now where we want to add 30% to the base of reps. We think it will work, we think we have the management structure to do that.
We have the training in place to do that, which is new. I'll even say as much as optimistic as we feel now, there's still a lot to do. We want to try not to get over our skis here on over-promising what the acceleration means. Let's don't get over our skis. It means it's accelerating. Not nearly where we want it to be, but it's moving in the right direction and it's setting up maybe a good part of a strong finish to the year, but certainly some nice momentum into next year. We have to ramp them, so we're still hiring them, then we have to ramp them. That takes time. Once you ramp them, they have to build pipe too.
They have longer sales cycles and you might get the impression some of the size of deals are getting larger, so those take some time. That's an element of it. Leveraging leadership, you kind of got a taste of it with some of the things we're doing. Training, onboarding, changing the profile a little bit of the reps, certainly the new ones we brought in. We've identified those few that don't quite fit the platform play, but most do. Most get it. When we show them how we're doing it, they get it. We have a good foundation to start with, and then we're adding talent that just comes with a different perspective, a perspective that we think fully appreciates the power of the platform and what can take place.
A group that's actually extremely comfortable walking to the office of a CIO as a rep and explaining why this is good for them, as a rep. That's kind of new, and that's still developing, but those are the kind of people that we're bringing in. At least from a model point of view, we had a lot of sales productivity last year that kind of carried the day. We aren't counting on it this year. Minimal productivity from a model point of view. Different groups have different expectations, but on average, not much. That kind of de-risks the plan. This year's growth is really based on get the reps on board. I think, at the appropriate time, in an FD compliant kind of setting, we'll tell you how we're doing and how it's going. Accelerate new ACV, one major point. Renewal stream.
Well, for those that are SaaS experts, which I think everybody here are experts, if you have challenged new ACV in one year, like last year, it just puts a drag on renewal ACV this year. That's why, again, we want to be very careful about the growth rates we advertise. What we want to do is, if we accelerate this year, that really sets up growth and renewal streaming next year. If we have even more acceleration, then that really can be a good build-up to having a good next year. We don't want to expect too much expectation. Again, not get over our skis this year. By the way, I got over my skis on Sunday and I planted. I face-planted. I reminded myself why you don't do that. Everybody that was skiing with me thought it was funny.
There was like three guys in the room here. Thought it was funny. The other thing we have going on in the renewal stream is, we are getting to larger companies that have much greater prospects to upsell and expand. That's good because the expansion revenue's there, which is in the end, less costly. The renewal rates, the gross renewal rates are higher.
Yeah.
I do contrast that with a few years ago, where just smaller companies that they just don't expand, and they just churn more just by the nature of the beast. These are two big inputs into how we're thinking about the renewal stream as a revenue driver. Lastly, of course, we have to continue to make progress toward improving cash flow. We want sequential progress each quarter this year. We think we're set up well to do it, so that's why we don't mind making the commitment. We can do it. We're increasing reps, but we're doing everything we can to not increase sales and marketing costs as a whole. What happens as you're going more outbound, more direct, more enterprise, where corporate's going to larger accounts, that is becoming more high touch, more field enablement, less raw marketing spend.
We're taking some of the marketing bucket, and we're moving it over to sales. It doesn't mean that we have to, or it means we can do that and not increase costs, not increase total costs. We are, as a whole, very helpful to just let the personnel costs trail the top line. You can do that for a while. We're still doing it. It really helped us last year. It set up this year really well. We're still doing that. There's some pain in the business, I'll tell you that. People need bodies to get work done. We're making them drag, and that can't go on forever, but it's been very helpful the last few quarters. We're kind of keeping it that way now, but it is a nice down payment. If you can pull that off long enough, it's a nice down payment on the burn.
We still think we can scale in other areas. The same engineering team that's building product also put some of their talent on optimizing the data center costs, AWS costs, finding other platforms, using our own data centers. These costs just keep going flat, sometimes down, even though the user count's going up dramatically. All these are big contributors to how we feel confident making the statement, yeah, we're going to really make some progress on cash flow from operations, we call it adjusted just because of the ESPP, the one-time item, and get to, by the end of the year, a non-scary zone, right? Just a zone where we all see that we haven't put ourselves in harm's way. Anything could happen in the economy, we have not put ourselves in harm's way.
We decide at the end of the year, what's the slope of the curve to get to positive? That's a function of how fast we want to grow. I suspect we will want to grow fast. I suspect our investor base will appreciate that as long as we are reasonably responsible and respectful of the bottom line. Too early to make the call right now, okay? That's it for the key financial themes. With that, we are ahead of plan and want to make sure we made ourselves available for Q&A with the whole management team here available to answer any question you have. Frankly, the tougher the better. We don't mind the tough ones. I'll leave it to the audience to go ahead and answer the question. We have 40 or 50 online, so we probably need Hey, Kimberly.
Hey, Ms. Kimberly. Kimberly, can you help with the mics? Just the person asking the question? Thanks.
I have two questions. Maybe the first one for Bruce, just following up on the key financial themes since it's still up there. This is Jen Lowe from UBS. You mentioned sort of that the plan this year isn't reliant on significant improvements in sales productivity. I know in the past, there's been some discussion of sort of where productivity levels were versus what you view as sort of normal or best in class within the industry. Do you feel like you're at that point, or is it if it happens from here, that's great? I guess I'm just trying to understand, do you think that lack of implicit productivity improvement is because you're where you want to be, or it's just not in the model?
It got from a danger zone to actually a not a bad place across the board on average with upside. On the enterprise, I think there's plenty of upside. The one part that we came in hot on, and hot in a good way, is the commercial business and corporate business did really well. They're like over normal. They're certainly over SMB quotas that you'd normally find in any other business. They're over it. If we can just bank on that, great. We're not banking on it continuing, just to play it safe and to keep in line with market metrics. At the same time, the market metric, that could slide back, and we kind of provided for that. At the same time, I think the market metrics for enterprise show there's still room.
On average, just modest increases across the board to play it safe. I hope all the training, all the new reps, going after office of CIO, really articulating the power of the platform, that it is a platform that's different from anything else. I hope that really does kick in a little bit of productivity kind of contribution. We don't count on it on the base plan.
My other question was maybe more for the product-oriented people. There were a lot of product announcements today, some of the things around managing permissions based on different profiles, the Digital 360 offering. I'd just be curious to get a breakdown of what sort of added into the core product versus something that's monetizable on a standalone basis or an upsell type opportunity. Thanks.
You're talking pricing and packaging kind of on that stuff, right?
Yeah.
You got to get a mic. Well, she's asking about real new features.
Like what's going into scalability and privacy on the one hand versus
Okay.
I don't know, net new things you can literally go sell. What's the time split? How should they think about where the R&D money's going?
Yeah. This is Josh. I'll answer.
Okay.
A lot of it is monetizable. I think when you look at, I remember back at Omniture, you start realizing that at first in software as a service, the actual pitch was it's software as a service, so all upgrades are free. Then we got five, six years into that, and we're like, "All we're doing is increasing our costs." There's a disincentive to give customers good product here. The market since then has obviously changed. Now as we put more effort into R&D, we absolutely want to monetize those things. Every once in a while, there'll be something, depends on what's happening in the market. If everyone's now offering that, then you maybe include that. You take those pieces, and you package them up. Yeah, the intention for most of the stuff that you'll see us announce is that we can monetize it.
Functionality that makes things work a little bit better. Enterprise, scale, security, governance, that's stuff that's included that makes the product work more effectively for our big enterprise customers. Then, even on some of the scale, we do now make decent money from, we have some of our largest customers that exceeded data charges that they and us ever thought they would hit, and they're exceeding them. We have customers who are making a lot more money from the amount of data that we're processing than we do from the original platform fee or for the user fees. That'll be a component that we make money off of. The way we think about it is platform fees, and then user fees, data charges, and then extra functionality like for instance, data science, and then apps.
Those are the ways that we're going to monetize the product that we have. Go ahead. We need a mic.
Yeah, we have 40, 50 people online.
Thanks. Derrick Wood at TD Cowen. I have a two-part question on sales go-to-market, and then one on product. On sales, Bruce, it sounds like you're on a net basis, the headcount was down year-over-year, but on a growth basis, it was maybe down even more, meaning that we heard that, you moved some reps out of corporate HQ and more in region. It does sound like there is kind of a new freshman class of reps that came in. I'm just curious what the expectation is on ramp to productivity and how long that takes. Another question on go-to-market is around now that you're embracing the CIO, have you seen any change in the sales cycle or do you anticipate any change?
I think it's a really important question. I'm glad you bring it up in terms of the ramping reps and what that number got down to. When Bruce mentioned it got down to the 80s. It's not anything that we've really had conversations with people about yet. I think it is an important conversation because it demonstrates how much we took out and then started replacing some of that, in different areas. Like we moved some of it more international. We moved some non-performers out and said, as we brought in Jim and Dean, let's go get some folks from their network, replace them, and then still net added reps. There's actually a good chunk of a freshman class that isn't going to affect this year that much. It's hard to talk about it a lot because it's not really reflected in the numbers.
We're investing in something we're obviously not getting any value out of yet. It's definitely us laying the groundwork for We've said it numerous times since we've been a public company and on the road show, we're not playing for the kind of growth numbers that anyone's talking about. That's starting that groundwork to put us in position for that. I don't remember the second question.
If sales cycles are different now that you're embracing the CIO and earlier in the process.
You want to take that, Dean?
Yeah. I think what's happening is the time to kind of land the initial customer could be elongated by a month or so if we've got to go through a much bigger CIO council. It's when we're going from 100-seat deals to 5,000, 10,000-seat deals that we're going through a very engaged and rigorous process with the CIOs. That may take another two to three months to go through. It depends how engaged you were with them before, the payoff's been pretty substantial, and you saw those deals earlier.
We've got the short-term numbers, we've got the longer-term numbers and trying to reconcile when we see enough that is predictable and we can really rely on and we can lean into this a little bit more in terms of what we're communicating to all of you. The CIO, for instance, just last night, I was talking to a customer, I mean, the one Are they still in here? The customer came in and spoke. They take off. Man, I just met them last night at 11:30 P.M., and I thought, "This is awesome." I mean, obviously he was awesome. I wasn't here for it, I talked to him last night. That's what's out there. That's what we're talking to all day, every day.
Talked to another customer last night, literally looking at hundreds of billions of dollars of transactions, zero visibility across the entire executive team into those transactions, except for once a month, including on days like Black Friday, zero visibility. They start using Domo, we're talking about hundreds of billions of transactions a year, trillions of dollars in value, and now they're able to see that every hour during Black Friday. The CEO is logging in. That's great, and it's exciting. To the play where we need the sales team to make sure that we're getting in front of every CIO, I could point out every single one of these sales leaders in an example where they didn't get us in front of a CIO, and all we had to do was ask. It just wasn't our move, it's becoming our move.
Last night with that gigantic customer that I was talking to, they said they were talking about their President of Technology, who is their CIO, and I just asked the customer, "I would love to come and meet with your CIO and President of Technology." They said, "Oh, yeah. Anytime, come by." Then I look at the rep, I'm like, "Really?" How many times have we said this and we're still not doing it yet? I think there's a ton of upside in that, because that play will work. We've seen it work. Everyone here has seen it work. We just haven't really product systematized that move yet in our organization. There's upside from that. Oh, yeah. Yep, that's exactly right.
Just two hours ago, having a conversation with a brand that everyone in here would love us to talk about, and we've got really good traction there. We got a deal just in the last few quarters, and it's grown really well. They love us. They've had Bruce out to talk to their CFO, and I'm talking to someone that manages a good chunk of the relationship on their side. He mentioned the CIO, and how at some point, they're going to show the CIO how they're using it. I said, "Well, can we come on-site, and I'll bring my CTO, and we'd love to come and meet with your CIO?" "Oh, yeah. His assistant's really great. We can schedule that anytime you want in the next couple of weeks." "What? Where's Kowalski?
Jim, get your guys to make this move." There's a lot of upside in that.
The other question was on product pricing, and it was briefly mentioned you guys are experimenting with different pricing. Can you talk to-
Is that on mic?
Hello?
Will you say that again, please? Okay, it's working now.
The question's on change in pricing for the product. It sounds like you're doing some experimentation, but to what degree is that changing? Maybe walk us through a little bit more detail, that'd be helpful.
Sure. Yeah, it's definitely going to change. We're taking our time to try to have it not be any kind of negative impact. We've probably had 20 discussions at the sales management layer. I've read in Bruce. Bruce, pay attention to this because there's potentially downside if we screw it up. I think everyone's kind of worried about their pipeline, make sure we don't do anything that has any kind of downside. There's a tremendous amount of upside, and what that is basically is sometimes we'll have a customer, they're a great customer, and let's say they're paying us half a million dollars a year, and their business has a little hiccup. Not a big hiccup, just a little hiccup.
We get a phone call, this happened to Paul Harapin, they said, "So if we cut our users in half, do the other half of users get the exact same experience that we already have?" The answer, yeah, they do, because we charge per seat. That's typically where the value is, but the problem is we've built this great product, I've said this numerous times, but we built this great product. Every single product we have ever had, that the leaders that were up here talking, every single one we've ever had, has in mind that everybody in the company will be using it. Then we go out and have an adoption prevention department, i.e. sales, go and charge per seat. I had multiple sales leaders experimenting with different things and moving to a platform.
Paul and Jeff, especially since day one, because Jeff will be the customer, they don't have a lot of users. He's like, "But I can still make a lot of money off these guys. I want to charge a platform fee." We're going to move to platform fees, there'll be multiple platform levels. Platform one will include this much functionality, then two that much, three that much, four that much. It'll be similar to other software companies that you see charge based on platforms. If you want functionality over here, even though you're not using the rest of it, guess what? You got to move to platform three. It's the same thing. When I'm looking at when Domo was small and someone says, "Well, we got to upgrade to the highest level that Salesforce has. We got to pay for that platform." Why?
We have 50 reps on it. Who cares? I don't need that. Yeah, we need the API connections, if we want that, we got to get this level. I just accept it, like, eh, it's what it is. I watch myself and how we buy things, that's what we're moving to is, here's the platform fee, then drop the user pricing dramatically. We have a firm belief, we've seen it in the numbers, you get over 50 users, retention increases significantly. We want to get over 50 users as quickly as possible versus you might have somebody like Cisco call us and say, "We only need 10 users to start with." It's really hard to construct a contract that Cisco is more than happy to pay for, A.
B, you don't have anybody in the organization pulling you along because every new license is a new purchase order. Getting that user license down to you got to buy a couple of hundred at a time. There's no deal that we do with less than, let's say, a couple of hundred users, period. We go and make money on the other things that happen when you get a lot more users, which you make money on data, you make money on apps, you make money on the custom apps that have. They're custom just in the sense that we might charge $50,000 or $100,000 to do the skin, but then we're still going to charge $100,000 a year for access to that software that just comes right out of our code base. Solutions like the IoT solution.
That's where the pricing is shifting. Timing, over the next, I'd say one to two quarters. We're experimenting with it already pretty heavily. Yeah, in the back.
Yeah, thanks. Thomas McGannon from Whetstone. Two quick questions. First, the integration platform as a service. Could you talk about how you see that market opportunity? I think we've heard from some commentators that Domo has more or less a MuleSoft within it. How do you guys see that market? How do you see that opportunity? How does that maybe change the conversation that you have with your customers on a day one?
Yeah. Jay, will you take that? Before you answer, I also want to make sure we recognize we've got our new board member, Carine Clark, here in the back. Thanks for joining us, Carine.
On the comment about Integration Cloud, everything you said, spot on. It's an additional entry point for us. When people gave us the comparison of MuleSoft, right? We have more connectors than anybody out there. We have the ability to stitch together data, provide these complicated data sets. We now have bidirectional data flow, so we can write back to data source. All of those provide us with such unique capability that when you're a Domo customer, you recognize all this unique functionality. You can now purchase Integration Cloud, or if you just want that part of us, it's a great place to get started.
Come in, connect the data, and understand the value of Domo all together.
A financial question. You guys are talking about increasing the number of reps by 30%, and you're seeing some numbers that tell you that that's a good spend. I think that when outside investors look at your sales and marketing line item, there's a lot there, and I think that maybe if you could break down, give us some visibility into that sales and marketing line to kind of highlight for us, what is really being spent on sales, and what is it that you're seeing there that tells you that we're getting to a point where this is where we want to put more money into it?
Let me work backwards on the more money into it. As you go enterprise, larger companies, you definitely need the feet on the street. That's point one. Point two is the productivity moved up to a level where we feel very comfortable hiring them. We hire them, and they get to that productivity level. It's a high ROI investment. Those two, we check the box that we're hiring for sure. Historically, out of the sales and marketing spend, it was not much different than 50/50 sales and marketing. It's just how we went to market. It's how we kept going to market. If you step back and look at what do the big companies do, and the platform companies, they get more field-oriented, more high touch. The split goes more 75% in favor of sales, 25% marketing, sometimes even less.
SuccessFactors, we may be at 15%, it's like 85/15. Extremely high touch, very sales-driven, and it worked. The split, certainly, we know we have room to just turn the knob one way into the other. The other is, at the end of the day, because we have so much upsell potential, we firmly believe we should be able to spend $1 in sales and marketing and get a dollar in new recurring revenue at the end of the day. We aren't forcing that discipline upon us anytime soon, but directionally, that ought to be the ending answer. It's market, and you could even argue that we can do better than market, given what we have. Out of the $120 million or $30 million in sales and marketing, we aren't even close to that yet. I know we got that going for us, too.
That means it's moving the things around. It's switching from marketing to sales. It's getting more field enablement, more sales tools, running the CIO play. The one thing we didn't really talk a lot about is we've got to get the partner ecosystem going. It doesn't happen overnight, but if you meet some of the crowd here, they are partners, and they are thrilled, and we just need to replicate that in a big way and make it part of our DNA. We just know there's so much to work with. We can make this move, and it will work. The backstop is good sales leadership. It just happens. They know how to hire reps. They even know the reps to go get right now. We're kind of making this change with a lot of confidence that it's going to work.
Some of the historical context is, at this point, interesting because we're starting to perform better. I think it informs at least what's going on, maybe makes a little more sense. We were getting some data that that marketing spend was working. That's why we were doing it. We didn't think it wasn't working and keep doing it. There was some data that we were getting that suggested that it was working. Every time we would find a piece of data that was working, we'd think we had a controlled experiment. We'd go lean into it and then find out, oh, it wasn't a controlled experiment, and it was really bad. It was bad at scale because we also had this huge hole because of how much we were spending in R&D.
Only way to get out of that is get out of it fast and get out of it in a hurry. Mistakes are big mistakes, and that was a big mistake. The other piece that we had that compounded it, just from a dollar spent perspective, not compounding the problem, because I think this helped fix potentially what could become a bigger problem is, our reps weren't making money. We had to create an artificial comp plan to make sure we didn't lose our really good reps. We look at that, and then towards the end of that period where I remember there was one day I was going to lose five reps in a week, and they were five really good reps. They got together and been talking, and that was that. Scared the heck out of me.
We went, and we adjusted, but that's an adjustment that lasts throughout that year. By the end of the year, everyone's selling. Now they're confident they can make money, but you've got that expense base for that year. Going into the next year, you know you can lower it because you know they're selling more now, and you know that they're going to hit their OTE based on the targets that you're giving them. It's been that kind of stuff that we've had to work with, and that's what gave us a lot of confidence we were going to see those productivity increases, whether it was in the amount of commissions that we were paying per dollar or whether it was in the amount of marketing spend that we were spending per dollar because we found a bunch of stuff that wasn't effective.
There were some pieces in there that were effective. This year, like Bruce said, it's not that we're immediately cutting, but it's directionally definitely where we're heading. We're finding pieces in there that are performing much higher than we need them to perform. Now it's just a matter of trying to replicate that, and hopefully it's this soft landing, and we get to that magic number of one.
Hello, my name is Jason Adams. I am a home builder. Josh, got to meet you three years ago at the Domopalooza. I have a unique distinction. I am a customer first, certified partner second, a stockholder third. I am a very happy customer. We are using it. Very happy stockholder, that chance to invest in the company. The partner program has been a failure for us financially. The question I have is around that. I have been a customer of other enterprise companies and had other partners. Are you guys considering bringing the partner more in financially? What I mean by that is, the incentives for partners right now are like a one-time thank you, either an hour services or like a sign-up fee.
Would you consider some sort of a recurring revenue for partners to be able to stay involved in deals? I say this not knowing what you know. I hear last year, partners have been influential at a factor of 3x success rate to regular salespeople. This year, I heard 4x. I have seen it for myself. I have seen Domo sales reps struggle in our industry how to sell Domo. I have sat on a bunch of calls with home builders, construction people. This is Domo. Let me translate this for you. Fundamentally, financially, it is failing. Is that a consideration in your partner plan?
I think the way that we are going to see a lot of differences by the end of this year in how we go to market with partners. We are having a lot of internal conversations about finally actually getting our arms around what it means. Looking at our international partners, looking at the big SIs, looking at the smaller SIs, looking at our installation partners, looking at our technology partners. In that smaller SI group are some of the vertical SIs where we would categorize you and understanding, A, what it is that is going on. That is the first thing we had to do, and we are just kind of in the middle of that. We are not very good at this.
We have said it a few times. By the end of this year, we are going to make sure that we have a good plan, and we have brought on resources that next year we can really make it the year of the partner, the year of the ecosystem. In terms of how we financially structure that, we are open to looking at anything. If recurring revenue is what floats your boat, there is a group of folks that that is what is interesting to them, that is something that is really interesting. Our experience has been, most of the SIs want to be able to figure out how to go in and not only sell the installation, but sell a whole bunch of other services on top of that. That is where the majority of our conversations have been.
We'd love to explore what you need and see if there's a group of folks like you as well that we can go and try to be more market friendly.
The turnover's probably been a tough point. We've probably had eight different reps assigned to us in the last year. Partner reps it's changed about eight different times. There's been some, I know, some change in how that's managed. I know as a business owner, referrals are wonderful things. I think my heart as a Domo partner is just the fact that I love to refer people. I got to justify to my wife that I'm making money at it, and I got to make sure I lose money on vacation. I'll leave you with that.
All right.
I think Josh really summed it up.
Okay.
We're in the middle of assessing all these different levels and the vertical partner. What I would say is, if there was a way for you to incorporate and build an app that you thought was yours that you could put in our Appstore, that's a way for you to monetize. You could make intros, we could joint sell, and then your app sits on top of the platform. That's the first thing that came to mind is given you're a vertical partner.
Yeah. We'll definitely be getting together a better program and reaching out, and like I said, we had five different people doing five different things. We're now all getting in the same room and understanding what's happened so we can create a plan and a strategy.
Yeah, I said it was okay to ask tough questions, but that was too tough. You went overboard.
It wasn't tough. It was just really personal.
No. It's appropriate. We know. We definitely know where you're coming from.
No questions from [Dockyard]. What's up? Oh, yeah.
This is Jen Lowe again, UBS. This is another sort of technology question, but I know there was a lot of discussion when showing that big slide with all the different logos of different players and different parts of the stack that Domo provides.
Yeah.
There was some discussion of the optionality for enterprises in particular to coexist with some existing technology versus displacement. I'm just curious if there's any areas where one of those modes is more common than the other. I think there was a brief reference to the example sitting around Teradata.
Yeah.
Just where are you seeing displacement? Where are you seeing coexistence? Does it look different depending on which of those little areas of that chart you're living in?
Yeah. I don't see Daren, Catherine, Adam, you guys can pipe in as well, there's some pieces up there that you don't have to have all your information, or you don't have to have just one vendor. I think Snowflake, Teradata, AWS, we have a lot of customers that have all of those. The reason for showing that slide is sometimes there's a perception when we show the slide without showing that, oh, you're going to make me put everything under one roof, and there's going to be vendor lock-in, and it's the exact opposite. For me, what's interesting is we really don't care what you have. We'll work with it. And we can integrate with it. Like Jay mentioned about Integration Cloud, we can bring data from anything, whether it's behind your firewall or not.
What is interesting though is to see with that approach, what that journey ends up looking like. Because we do have customers that will come in and say that the way they're running it is everything's going into Teradata, they'll give us summary tables, that's going to be just some dashboarding for their executive team, that's going to be the relationship. What happens is we get in, the executive's looking at that, then they want to click, they can't click because it's a summary table coming out of Teradata, they didn't give us all of the streaming information. They end up giving us more information out of Teradata, then, well, that's only going in and getting batched once a day.
I don't know if this is the most up-to-date because I'm getting this information, it's actually not as up-to-date if I went and looked at the source record. Now I want to go directly to the source record. That journey is typical. That particular area of that sheet, there's others where, for instance, mobile apps. They may have an app that they have 10 people, 10 engineers that are keeping the app up to date and working. They built it 40 years ago, invested $10 million into it, they look at our framework, they're like, "We can spend $100,000 here once in development then $100,000 a year, this thing will work, it's going to be a lot better than that, it's going to be easy to iterate," they'll make the shift.
There's a good ebb and flow. Do you want to add something, Catherine?
Yeah. I'd say, the displacement that we see is really a story.
Do we have mics?
Oh, sorry. There I am.
Oh, you have one on? Okay.
I have. The displacement that we see is a story over time, to Josh's point, that a lot of what the CIOs love is they've got that immediate ability to get results quickly because they can connect in, get the value that they need from Domo, from the piece that they need for their objective that quarter, right, or that month. They love that agility. Then over time, we've had them come back and say, "Hey, I've taken down this number of licenses for this tool because I don't need it anymore." That's just a natural evolution for them. I think that resonates so well with them that they have this flexibility.
That's a really good point, too.
Yeah.
Going back to Omniture days, I've probably had 50 customers that have asked for full-blown proposals on how to take everything that we have in the cloud and put it behind their firewall and run it as a managed service, and we'll give them five employees to manage it because we're not going to give them our code, probably 50 times. Never once has anybody taken us up on it because they'll say, "Good. Thank you. You checked the box. I know this. I'm going to put it in the drawer now, and we'll probably use it in six months. In the meantime, let's meet the business needs," then we're off and running.
Yeah.
All right, Josh. I will respond to your request for a softball question.
Well, you send me like eight text messages a month with questions or comments.
It's very evident from listening to the sessions today, there's a torrid pace of innovation around your platform. It's very impressive. What's even more impressive is for customers who know, who have brought Domo in and tried to use it the way that you've intended it to be used, the outcomes are phenomenal, and they really speak for themselves. My question is, just bridging between creating great outcomes for customers who have some very difficult data problems. Help us take both the customer base you have today, and if we widen the aperture to large enterprises and mid-size customers that you target in your sales and marketing efforts, how big can this thing be? How do you define the TAM that you sit in today within your own customers? How do you define the TAM that you're going after? Is this BI? Is it bigger than BI?
Where's your head? What do you want to be when Domo really grows up?
I think, definitely bigger than BI. Every time I've seen anybody do a thoughtful TAM analysis, it ends up in stupid numbers. I think it is a stupid number. You go in, whether it's someone like Vincent, who spoke from L'Oréal, and we got off stage, and he's like, "Oh, I wish I had a little more time to tell how horrible the situation was before I found you guys." If you think about that company, literally the second, third-largest advertiser in the world, not getting data more than once a quarter most times. A company that their branding is not leading to any sales that are happening that they're managing. It's all managing out in their channel. Being able to measure the results of that effort, basically all they've known is when they spend more money, they sell more product.
All of a sudden, they have the ability to tie in social and influence and e-commerce data they get from partners, then offline retail data they get from partners, being able to tie that together and hold a manager in Peru responsible for one specific product and how they're influencing that. They've just never had the ability to do that. They've never had the ability to manage it. When he's talking about the CEO going to visit a country and finally understanding what's taking place there, which leads me right into Dave Layton, who spoke from Layton Construction, they go onto these half a billion-dollar hospital projects, and before they get out of their truck to walk into the job site, they actually know where to go and focus.
When you think about that kind of value being delivered, it's obviously a lot bigger than BI. When you layer on top of that apps, and you see customers like Vivint, who we talked about on the earnings call. I don't know if I was backstage talking to other people, but did they do the App Attack today or no? Yeah. When you talk about the Vivint app, when that literally has nothing to do with traditional BI, has nothing to do with traditional analytics. It doesn't have anything to do with big data. It's creating an application that no software company could ever get funded for if they said, "We're going to go and create an app that's distributable to every employee that's going to show their comp for a field sales team." Good luck getting backed for that.
We could go and they could spend a chunk of money with us. We get a big recurring piece out of it, the torrid pace of innovation, I think that's really fascinating. We kind of laugh at it as product leaders because it's no different than the pace that we were operating at before, just no one saw what we were doing because we were trying to stitch the thing together to make sure that it worked at scale, we were trying to build the architecture in a way that would allow us to rapidly be able to develop apps. That slide we have that has that triangle that has all these pieces in there, and seven of them turn yellow when we're doing the Marketing 360 app.
The seven that turned yellow, we're just plugging together like LEGOs, putting an interface on top of it, and you've got a brand-new product. Yes, it's a rapid pace of innovation that's finally being publicly known. In terms of TAM, I don't know. I don't know the answer to it. I just know it's a lot bigger than we're going to run into for a long time.
Hi there.
Hi.
Tyler Radke from Citi. One of the slides you, I think earlier in the presentation, had kind of the examples of the large customers you signed. I think some were north of $1 million or around $1 million of ACV. My question is, in those customers, how many of the modules are they actually using of kind of the seven of the products that you showed? Because the implication of that is if they're using or have a path to use everything from data warehouse to like an ETL to a BI, that spend could conceivably grow multiples the size of where it is today. Just where are we on that path? Or have you convinced them to use the Domo data warehouse, the Domo ETL products as well?
Yep. Great question. To the earlier comment I was making about marketing spend as well. One of the big challenges here is people are not looking for this. We're still evangelizing this in a big way. It takes the flywheel to show and help our customers that have been using our product for three years to understand everything that it is that we're doing for them and how they. Unless you're talking to the CIO, they still can't grok it. That's definitely been a challenge. The reason we did this is because we're building something to allow you to run your business, and that's what this takes. What was your specific question?
How many of they use.
Oh, yeah. In terms of the big customers, we did look at our biggest customers, and we looked at apps, and we found that it was fairly penetrated in our biggest customers, that they were using apps. We had one of our top five customers come up to us today, I guess, was texting our CTO and came up to me after the App Attack and was upset that we didn't show his app because he said it was 10 times better than any of the apps that were shown. Sorry. Wish we would've known. That's kind of the point. We don't know what they're doing. We looked at our top 20 customers. App penetration was high. It was mostly custom apps because we haven't had apps that we really were able to go and sell.
One really interesting metric that I read was none of them have one. If they have one, they have multiple apps. Once they understand that they can create, take all of these building blocks, and then create a very specific experience for a part of their business. You look at the retention of people that have made apps, and it's through the roof. That's something that we are seeing. It's just been happening with the customers building their own apps and us potentially helping them. It just hasn't been real coordinated, which is why we've kind of come to this. All right, we got to focus on apps much more than we have historically. Data science is brand new. IoT is brand new. All of the apps that we've put out, brand new. Integration Cloud, brand new.
We don't have a lot of penetration yet, but I'll refer back to the other comment that I made, and then I'll close it off. The comment that I made about the data science. We literally have a customer that has hired people like McKinsey to create an algorithm to take the data from the retailer to predict and create the order that they should go and put an inventory on the retailer shelf. They do it for hundreds upon hundreds of products. They have to come up with a different answer for each geo. It's a cumbersome project that they would never do. That they would literally hire somebody on the outside just to create one algorithm. They go inside our product, and we're not going to tell them the story yet. We're telling it in a cumbersome way.
They go inside our products and they write several new algorithms. They bring in the algorithm they paid a bunch of money from an outside consultant for, then right there, because all the data's already sitting there, because it's already in Domo, and they have, in literally a couple of hours, a $5 million improvement. When that kind of stuff happens and we figure out how to package that a little bit more effectively, and we figure out how to go and sell that more effectively, that's going to be a game changer. We just need to figure out how to do that. Again, that's why the theme of this conference is the power of the platform. You can't do that anywhere else.
If you haven't brought together your data from all your sources and put it in a system like ours, which doesn't really exist, the high availability, massive scale, where everything's already connected. We don't know anybody that's doing that. When we do it that way, it enables things like these apps and these data science things. I think your question's telling in terms of that's what we're excited about. That's why there is a bunch of big upside. We just need to figure out how to make that a motion that got some good muscle memory on it, and we can start to predict it.
All right. Well, I think that brings us to the conclusion. I want to thank everybody for participating and thank the management team for spending time with everybody, and we look forward to continued dialogue with everybody here. Thanks for those that joined via the webcast. Signing off for now.