DOMO, Inc. IPO (NASDAQ:DOMO)

DOMO, Inc. Symbol: BJ Exchange: DOMO Share Price: 19.00-22.00 Shares Offered: 9,200,000 Offer Amount: $232,760,000 Expected IPO Date: 6/29/2018

We were incorporated in Delaware in September 2010 under the name Shacho, Inc. In December 2010, we changed our name to “Lightstorm, Inc.” and in July 2011, we changed our name to “Domo Technologies, Inc.” We changed our name to “Domo, Inc.” in December 2011. Our principal executive office is located at 772 East Utah Valley Drive, American Fork, Utah 84003. Our telephone number is (801) 899-1000. Our website is www.domo.com.

Domo is an operating system that powers a business, enabling all employees to access real-time data and insights and take action from their smartphone. We believe digitally connected companies will increasingly be best positioned to manage their business by leveraging artificial intelligence, machine learning, correlations, alerts and indices. We bring massive amounts of data from all departments of a business together to empower employees with real-time data insights, accessible on any device, that invite action. Accordingly, Domo enables CEOs to manage their entire company from their phone, including one Fortune 50 CEO who logs into Domo almost every day and over 10 times on some days. This is possible because Domo digitally connects all the people, data and systems in an organization.

A digitally connected organization maximizes the contributions of its employees and harnesses the power of both its quantitative and qualitative data. Data is the lifeblood of every application, system and performance measure in a company and constitutes the substantive part of most communications. When data is digitally connected from every source, resides in one place and is accessible to every single worker in real time, from any device, the platform that serves up the data and makes it available for everyone to use acts like an operating system for a company.

Domo digitally connects data from across the organization and makes it useful for everyone. Through Domo’s platform, data from across the business is collected, stored, prepared, organized, analyzed, visualized, and shared. Algorithms and machine learning are applied to the data that allow alerts to be triggered and actions invited. Users can receive these notifications on any device and immediately act on the invitation, after which the system can write back to the original system of record. Because Domo can digitally connect any organization and empower each of its employees, we believe our market potential is every working person with a mobile device.

Our founder, chief executive officer and chairman, Josh James, previously started Omniture, the online marketing cloud company that became Adobe Marketing Cloud. He understood that real-time data powering the marketing cloud improved how online marketers ran their business, and he identified an opportunity to create and apply that same transformational paradigm across businesses more broadly and not for just one department. This insight served as the impetus for Domo, the platform for digitally connecting a company and enabling data-driven decision making, not just for one department or one person, but for an entire company.

Because we leverage the power of the cloud, our platform can process extremely large volumes of quantitative and qualitative data while maintaining high performance levels. On a typical business day, our customers in the aggregate typically query between 100 to 200 trillion rows from uncached queries. Even with this volume of data, we maintain a subsecond average query response time. In aggregate, the data in Domo can be indexed anonymously.

From the beginning, we targeted CEOs as a key user of our platform. That concept has fundamentally influenced every aspect of the Domo platform from architecture to user experience. We made significant investments over the past seven years to build an enterprise-grade platform that serves as the operating system that powers a digitally connected business. In many ways, building Domo was like building seven start-ups in one. We built connectors to connect real-time to all of the data within a company and bring all that data into a warehouse and developed a data engine that is able to manage up to trillions of rows of data. We built visualization tools that enable our users to explore the data on any device and enable them to collaborate on the data in real time. We built our artificial intelligence and machine learning engine that is able to find correlations within the data and invites users to action. To enable our users to develop the applications they wanted on top of this platform, we built an app store with pre-built applications as well as the tools for users to build their own applications. That’s why Domo is more than just a business intelligence, data warehouse, data discovery, analytics, collaboration, dashboarding, visualization or reporting tool. These tools and technologies are typically provided by separate vendors today. Domo combines all of them in a single platform with the following:

  1. Connectors: Domo offers more than 500 powerful, first-class connectors, also known as DomoBots, which we define as read/write, API and standards based connectors that are available in the Domo Appstore, as well as a library of very flexible universal connectors that currently power over one hundred thousand Domo datasets, enabling all users, regardless of technical ability, to connect to data across a broad range of sources and facilitate initiation of business processes. These DomoBots enable data to be continuously synchronized in real time, fostering visibility and interoperability across a broad range of data sources.
  2. Data Warehouse: Our data warehouse, Adrenaline, stores massive amounts of data from across the business, organizes that data across many factors or variables and employs a massive number of processors to query that data in parallel, enabling employees across the organization to simultaneously access the same data for their various needs with subsecond response times on average.
  3. Domo ETL: Fusion is our data transformation engine that sorts customer data, making it possible for any dataset connected to Domo to be cleansed, combined and prepared for use leveraging Magic ETL, Data Flows and hygiene algorithms.
  4. Data Analysis and Visualization: Our Explorer analytics suite allows users to analyze, display, share and interact with data through pixel-perfect visualizations. Explorer is a data discovery tool that seamlessly works on mobile as well as on wall monitors in executive offices or manufacturing facility floors.
  5. Collaboration: Buzz is our standalone collaboration and productivity suite that integrates seamlessly with Domo’s other features. Chat, sharing, organizational charts, profiles, and project management all help foster an engaged and curious workforce, so that anyone in an organization can participate in improving the business.
  6. Artificial Intelligence Algorithms: Domo’s Mr. Roboto leverages machine learning algorithms, predictive analytics, and other artificial intelligence technologies to create alerts, detect anomalies, optimize queries, and suggest areas of interest to help people focus on what matters most. Mr. Roboto constantly scans incoming data to identify trends, anomalies and correlations, providing alerts and initiating business processes.
  7. Partner Ecosystem: With the Domo Appstore, APIs and developer tool kits, Domo enables an ecosystem of partners to quickly build applications on the platform. We believe this will be a meaningful source of future lead generation as application creation investment thresholds are high.

Our multi-tenant architecture allows all users to have access to the same version at the same time on any device, with all updates and functionality deployed to our entire customer base. This enables organizations to use Domo for complex analytics processing that cannot be done in spreadsheets or traditional business intelligence, data discovery, data analytics or data visualizations tools.

As of April 30, 2018, we had more than 1,500 organizations as customers, including 385 customers with more than $1 billion in revenue, which we refer to as enterprise customers. For the fiscal years ended January 31, 2017 and 2018 and the three months ended April 30, 2017 and 2018, our enterprise customers accounted for 47%, 46%, 46% and 46% of our revenue for such periods, respectively. We employ a land-and-expand business model and typically enter into enterprises within a specific division or for a specific use case. As our users see the value of our platform, we expand our footprint within the enterprise. As of January 31, 2018, our 20 largest customers as measured by annualized recurring revenue, had increased their investment in our platform by approximately nine times compared to their initial subscription. These 20 customers comprise both enterprise and non-enterprise customers and contributed 14% of our revenue for the fiscal year ended January 31, 2018.

As of January 31, 2018, for the cohort of enterprise customers that licensed our product in the fiscal year ended January 31, 2015, the current annual contract value, or ACV, was 186% of the original license value, compared to 129% and 160% for the cohorts of enterprise customers that subscribed to our platform in the fiscal years ended January 31, 2016 and 2017, respectively. For the cohort of non-enterprise customers that licensed our product in the fiscal year ended January 31, 2015, the current ACV as of January 31, 2018 was 59% of the original license value, compared to 86% and 111% for the cohorts of non-enterprise customers that subscribed to our platform in the fiscal years ended January 31, 2016 and 2017, respectively. ACV represents the total annual contract value of subscriptions to our platform exclusive of professional services and one-time revenue generating events and after giving effect to the impact of cancellations.

In addition, over the fiscal year ended January 31, 2018, our subscription net revenue retention rate, which compares the subscription revenue generated from a cohort of customers that generated subscription revenue at the beginning of the same period in consecutive fiscal years (excluding customers from the cohort who canceled during the initial period), was over 100%, 115% and 95% for all customers, enterprise customers and non-enterprise customers, respectively. For the three months ended April 30, 2018, our subscription net revenue retention rates were 105%, 115% and 98% for all customers, enterprise customers and non-enterprise customers, respectively, compared to 101%, 108% and 95% for the three months ended April 30, 2017. We believe we are extremely well-poised to capitalize on global digital transformation, creating more competitive organizations built on data-centric, connected and collaborative workforces. We have assembled an experienced management team to execute on this global opportunity.

As of January 31, 2018, approximately 1,500 of our users in the preceding 90 days were C-level executives, of which over 400 were CEOs. The real power of our platform, however, lies in enabling every type of employee to connect to, analyze, and leverage data. Traditional tools do not address the needs of many of today’s employees who depend on IT to implement numerous systems to capture, store, view, and analyze data and business analysts with technical expertise to run queries to extract data and configure and run reports. Business decision makers can view these reports, but they cannot create them on their own, or customize for their specific use, without involving business analysts. With Domo, employees without technical expertise can use all of the features of our platform without involving a business analyst. The intuitive use of our platform enables users to spend less time gathering and iterating data, preparing reports, and attending meetings to discuss results and more time acting upon the results of the data. Additionally, as employees customize our platform for their own specific use cases, they become better at using data to do their jobs. When everyone can use data, the value that it provides to an organization increases significantly, and everyone is equipped with a common set of facts to communicate across all levels of an organization.

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