Earnings Call Transcript - DOMO Q2 2021

Operator, Operator

Welcome to Domo’s Second Quarter Fiscal Year 2021 Earnings Conference Call. At this time, all participant lines are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. And with that, I will hand the call over to Peter Lowry, Domo’s Vice President, Investor Relations.

Peter Lowry, Vice President, Investor Relations

Good afternoon and welcome. On the call today, we have Josh James, our Founder and CEO; Bruce Felt, our CFO; and Julie Kehoe, our Chief Communications Officer. Julie will lead off with our Safe Harbor statement and then onto the call. Julie?

Julie Kehoe, Chief Communications Officer

Thanks, Pete. Our press release was issued after the market close and is posted in the Investor Relations section of our website, where this call is also being webcast. Statements made on this call include forward-looking statements related to our business under federal securities laws, including statements about financial projections, the plans and expectations for our go-to-market strategy, our expectations for our sales and new business initiatives, the impact of COVID-19 on our business and our financial condition. These statements are subject to a variety of risks, uncertainties, and assumptions. For a discussion of these risks and uncertainties, please refer to documents we file with the SEC, in particular, today’s press release, our most recently filed annual report on Form 10-K, and our most recently filed quarterly report on Form 10-Q. These documents contain and identify important risk factors and other information that may cause our actual results to differ materially from those contained in our forward-looking statements. In addition, during today’s call, we will discuss non-GAAP financial measures, which we believe are useful as supplemental measures of Domo’s performance. Other than revenue, unless otherwise stated, we will be discussing our results of operations on a non-GAAP basis. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from GAAP results. Please refer to the tables in our earnings press release for a reconciliation of our non-GAAP financial measures to their most directly comparable GAAP measure. With that, let me hand it over to Josh. Josh?

Josh James, CEO

Thank you, Julie. Hello, everyone. Thanks for joining the call. I hope you and your loved ones are healthy and safe in these challenging times. I’m proud of our team's ability to adapt and the care they show our customers. Domo is designed for this new world of work, where business agility is essential for survival and success. In Q2, we achieved 23% billings growth, 27% subscription revenue growth, and 23% total revenue growth, along with better-than-expected cash flow. I'm pleased with our results and our strong execution against our plans, especially given the current circumstances. Since our IPO, we have focused on growing our business efficiently while working towards cash flow breakeven with our current resources. In Q2, we made significant progress on this goal, and I'm excited to share that achieving cash flow breakeven is now within our control. Today, I'll cover a few key topics: how Domo is positioned for the future of work, how we assist companies with their digital transformation efforts, and highlight Q2 achievements, including new business across industries and regions as well as recognition we've received. The future of work is being redefined in light of the pandemic, compelling companies to rethink their operational strategies and empower a more distributed workforce to function in a digital and agile manner. While many companies had initiated digital transformation projects pre-COVID, the urgency around these initiatives has intensified, as traditional business processes and legacy technologies are becoming untenable. Domo was founded to address the challenges of modern business by improving data leverage across organizations. The pandemic has underscored the critical strengths of our platform, particularly in developing intelligent data ecosystems that enhance internal data use and increase data value externally. Our platform addresses complex data challenges that traditional tools were not designed to tackle. We assist major companies in overcoming significant barriers to digital transformation, such as breaking down data silos to make unused data accessible. Domo enables businesses to make agile, well-informed decisions through well-governed self-service BI and analytics, empowering users at all levels across different departments. Our cloud-based, mobile-first design allows real-time data access anywhere, facilitating truly data-driven organizations at unprecedented speed. With our Domo Everywhere solution, many of our larger clients are extending the value of their data with internal and external partners, utilizing advanced analytics and ensuring data governance in a cloud environment. They are making rapid, informed decisions based on the data, creating new business value and revenue streams through an easy-to-use mobile interface. Through intelligent applications on our low-code, no-code platform, customers are modernizing business processes rapidly by leveraging AI and automating workflows. The speed of application development is a significant competitive differentiator for us. Last quarter, we swiftly created applications to assist state governments in managing the COVID crisis, receiving positive feedback and securing a two-year contract extension with the State of Iowa. In June, we launched our collection of get-back-to-work applications, showcasing our ability to leverage any data source to initiate responsive workflows in a rapidly changing environment. This agility is helping us win deals and positions us favorably for the future. Now, let's discuss some recent significant wins across various industries and regions. These deals showcase the market aligning with Domo’s vision, and they're not just opportunistic. This quarter, we expanded our relationship with a global manufacturer that had been utilizing Domo for traditional BI. They selected Domo for our advanced capabilities to share data externally through our Domo Publish solution. In addition to domestic growth, we've secured substantial international contracts, including a seven-figure upsell with a Fortune Global 500 retail conglomerate based on our speed and scalability. Domo enables organizations to extract vast amounts of data from existing systems without needing to replace them, thus allowing business leaders to access critical metrics. Notably, we also won a six-figure deal with a global pharmaceutical company based in Germany and a renewal with a leading integrator in Japan, along with growth with a rail services operator in Australia. Even in distressed industries, we've engaged new customers, such as a fitness chain transitioning to the cloud with Domo for its BI needs, as well as a manufacturer optimizing its online pricing strategy in light of the pandemic. We established a significant contract in the U.S. Federal space by partnering to launch a public website displaying data about pandemic funding grants. This collaboration holds promise for future opportunities. We have received notable industry recognition for our commitment to innovation, customer success, and corporate culture. Domo was recognized as a leader in the Dresner Advisory Services’ 2020 Industry Excellence Awards for the fourth consecutive year, driven by high customer satisfaction. Additionally, we were featured on Constellation Research's 2020 Shortlist for BI and Analytics Solutions, and honored for our efforts towards creating an inclusive workplace. Our diversity initiatives are yielding results, with nearly half of our filled positions being held by qualified women and underrepresented minority candidates. In closing, we've enhanced our operations to become more efficient and improve our market strategies. We've made strides in sales leadership and operations, reducing our cash burn significantly. We’re successfully engaging target audiences in IT and BI, positioning ourselves as transformation agents without requiring clients to replace their existing tools. With over 19 large enterprise customers now investing more than a million dollars annually, our future looks bright. Despite the pandemic, our focus has sharpened, accelerating innovation and showcasing our value proposition. We're seeing more customers standardize on Domo, and I’m extremely proud of our team for their commitment to helping our customers navigate this new environment effectively. Now, I’ll turn it over to Bruce.

Bruce Felt, CFO

Thank you, Josh. We had a strong Q2. It is encouraging to look back on the past four quarters and see the momentum driven by steady execution. The macro environment is driving the need for digitizing business processes, and specifically, the need for real-time data and analytics. And a portion of IT budget allocated to modernizing the BI and Analytics function is increasing. We believe we are benefiting from this trend, as we offer a modern cloud-based, easy-to-use, and mobile solution, and we also believe this need will continue beyond the pandemic. I’ll now review the details behind our performance followed by providing third-quarter and fiscal 2021 full-year guidance. Our Q2 billings of $47.6 million, a year-over-year increase of over 23%, was driven by wins across a number of industries and expansion with the State of Iowa, strong renewal rate, and consistent execution across the business, particularly in our enterprise customer base. Our renewal rate was well over 85%. It was a few percentage points better than last quarter. Our net retention rates remained above 100%. We have 60% of our customers on the multiyear contracts at the end of Q2. Our remaining performance obligations or RPO grew 16% compared to the same quarter last year. Q2 revenue was $51.1 million, a year-over-year increase of 23%. Subscription revenue grew 27% year-over-year and represented 87% of total revenue, accelerating from 23% growth in the first quarter, reflecting our focus on specifically growing new recurring revenue and improving our retention rate. International revenue in the quarter represented 24% of total revenue consistent with Q1. Our subscription gross margin was above 80% for the first time, up more than 5 percentage points from 75% in Q2 of last year. This is a very important milestone and a goal that was set many years ago because we believe it is one of the key drivers for long-term profitability. We are optimistic we can drive our subscription margin even higher over time as we continue to find leverage points in our data center operations. In Q2, operating expenses decreased by 10% from last year, even though revenue increased by 23%. In fact, our subscription revenue per head has grown in excess of 40% over Q2 of last year. The net effect of increased revenue while managing costs allowed us to improve our operating margin by 41 percentage points from the same quarter last year. Our net loss was $10.7 million and our net loss per share was $0.37. This is based on 29 million weighted average shares outstanding, basic and diluted. Since our IPO, we have been disciplined about managing our costs while building a path of recurring revenue to make consistent progress toward achieving a cash flow positive state. Earlier this year, because of COVID, like many other companies, we prepared for a significant decrease in our new business. But as our Q1 and Q2 results show, that decrease has not materialized, and in fact, we’re pretty much on track to our original topline plan. As a result of our cost discipline and our strong topline growth, particularly in recurring revenue, we have reduced our net cash use in operations from $18.7 million in Q2 fiscal ‘20 to $4.8 million in Q2 of fiscal ‘21, a 74% reduction compared to Q2 of last year, and an improvement of $4.5 million over last quarter. We also recently extended the maturity of our existing debt with Blackrock to April 2025 from October 2022 under substantially the same terms as our existing agreement. Our significant cash flow outperformance coupled with over $180 million of ARR and the expansion of our debt term has not only significantly reduced our risk profile, but now provides additional financial degrees of freedom. The progress we have made over the last few quarters demonstrates why we believe we’re on track to become cash flow positive. Turning now to our balance sheet. As of July 31, we had cash, cash equivalents, and short-term investments of approximately $83 million. Now let’s discuss what we expect in Q3 and the full year. For Q3, we are modeling billing of about $48.5 million. If you recall, in Q3 of last year, we had billing outperformance driven by large enterprise transactions with standard billing terms. We have assumed in our model this will not repeat itself for Q3. Specifically, we are not modeling the same number of large deals we closed last year, and at the same time, because of the economic environment, we are assuming more non-annual advanced billing terms relative to last year for the deals we do close. However, even against those assumptions, at this point in time, we expect to experience year-over-year growth of both contracted annual recurring revenue or ARR and year-over-year growth of GAAP subscription revenue of at least 20% in Q3. That expectation is supported by the observation that we are off to a good start in Q3. Our outperformance in the first half of the year allows us to increase our billings outlook for the year to $208 million, up from $197 million last quarter and up from an initial outlook of about $190 million based on our COVID-19 downside case that we used for reducing costs. On expenses, we’re planning on our Q3 operating expenses to increase modestly from Q2 levels. We expect Q3 adjusted net cash used in operations of approximately $4.5 million and expect full-year adjusted net cash used in operations of approximately $23 million. Now to formal guidance, for the third quarter of fiscal year ‘21, we expect GAAP revenue to be in the range of $51.2 million to $52.2 million. We expect non-GAAP net loss per share, basic and diluted of $0.42 to $0.46. This assumes 29.6 million weighted average shares outstanding, basic and diluted. For the full year of fiscal ‘21, we expect GAAP revenue to be in the range of $202.5 million to $206.5 million, representing year-over-year growth of 17% to 19%. We expect non-GAAP net loss per share, basic and diluted of $1.83 to $1.91. This assumes 29.3 million weighted average shares outstanding, basic and diluted. In closing, we’re pleased with our execution in Q2 and we’re optimistic about the underlying trends in the business as we head into the second half of the year.

Operator, Operator

Thank you. Our first question comes from Sanjit Singh with Morgan Stanley. Your line is now open.

Sanjit Singh, Analyst

Thank you for taking the questions and congrats to the team on a really strong Q2 set of results. Maybe I’ll start with you, Bruce…

Josh James, CEO

Thank you.

Sanjit Singh, Analyst

...on the guidance assumptions, Bruce, can you just, you’ve been using a pretty consistent framework for the balance of most of this year, embedded within your second-half guidance, how are you thinking about that new business trajectory, new business performance both in Q3 and Q4? It sounds like we’re up against a difficult comp going into next quarter. But at the same time, it sounds like this is off to a good start. So Can you just sort of walk through your framework and update that framework for us, that’d be helpful?

Bruce Felt, CFO

Sure. At the time of providing guidance, we did take all the information we have at hand. A lot of it is pipeline review, forecasts, our pacing and then we compare it to everything that happened at the same time the prior year. And the big item I’d point out last year was just the volume of large deals. And we do have large deals in the pipeline. But as we’ve mentioned, time and time again, and maybe apply to every enterprise software company, getting the timing of those right is very difficult. When we found out how hard that was in Q2 of last year. So we’re just assuming we won’t have the same level of success, at least in terms of providing guidance. Our hope, however, as you might imagine, is to see if we can get some of those deals to close. But we are optimistic, as we sit here, nevertheless, on the fact that we’re trending really well in Q3, so the first month of the quarter was just a very strong month. So we’re very happy about that and we don’t mind telling you that. But at the end of the day, it’s what happens at the very end of the quarter on the large deals and so we’re just being, I think, reasonably cautious and being quite open about how we’re thinking about the number, and of course, yeah, we hope we get large deals to close, but we just don’t want to guide to it as we sit here today. So that’s the thinking behind guidance.

Sanjit Singh, Analyst

Thank you, Bruce. Josh, considering your current unit economics, you have demonstrated impressive resilience with an 85% retention rate and net retention rates exceeding 100%. You’ve made significant improvements in your sales force, and you’ve mentioned efforts to enhance sales efficiency. What steps do you envision to elevate your gross retention rates to around 90%, and how might you see improvement in expansion rates as the economy strengthens and your sales strategy continues to evolve, aiming for a net expansion rate of over 110%? I understand that pinpointing the timing for these advancements may be challenging, but how do you plan to achieve these metrics?

Josh James, CEO

I believe we are closer to 90% retention rather than 85%. While I can't recall the specific wording, it suggested that we've observed enterprise retention above 90%. I think we can achieve an enterprise retention rate of 90% to 95%, although the overall business may fall between 92% to 95%. Currently, we feel we are nearing the 90% mark, which is a healthy position to be in. This is our primary goal, and we are focusing on various strategies to ensure customer retention. Additionally, we are noticing larger upsells in net retention. We are better equipped than ever to engage with Chief Data Officers and Chief Information Officers to secure significant expansions at both the enterprise and strategic levels. I believe this will continue to propel our business forward.

Sanjit Singh, Analyst

Appreciate it, Josh. Thanks.

Operator, Operator

Thank you. And our next question comes from Brad Zelnick with Credit Suisse. Your line is now open.

Brad Zelnick, Analyst

Awesome. Thank you so much, guys, and congrats. These really are fantastic results and congrats to you on the call but to the whole Domo team, because I know it takes a lot of folks to make this all happen to make the magic come together.

Josh James, CEO

Thank you for that. I appreciate it.

Brad Zelnick, Analyst

For sure. And that’s where I start with. But maybe forgive me for a question that reflects a little bit in the rearview mirror. You made a comment, Josh, about feeling good about the go-to-market and the leadership that you now have there? Can you just remind us of the changes in the sales process from 12 months or 18 months ago and why you have the confidence that you’ve now got it right and that we shouldn’t come back in a quarter or two and be disappointed from an execution perspective?

Josh James, CEO

Certainly. I'll have Ian chime in as well since he's on the line as our Chief Revenue Officer. There are a few key points to consider. Firstly, I wish it were as simple as bringing in one person and seeing immediate improvement, but that's not the reality. While bringing someone on can definitely enhance execution, leadership, and strategy, what's also important is the work we've been doing on our platform. We've been collaborating with customers, retaining them, and we now have several referenceable clients, including one of the largest apparel retailers globally. We successfully outperformed the competition there, even facing offers from major tech companies. Our team and platform have consistently proven to support the largest and most intelligent firms in accessing and managing data in unprecedented ways, particularly in a mobile and COVID environment, where timing is crucial. This gives us a solid advantage. I am optimistic about our trajectory, expecting continual growth, though the timeline and obstacles may vary. Ian has stepped up as the global CRO while also managing his customers and expanding contracts effectively. Initially, he might not have seemed like the obvious choice based on his resume, but when comparing resumes against performance, it was clear he was the right fit. We're thrilled to have him on the team, and since he started leading, it's been even more exciting to see his partnership with John. Now, I'll let Ian take a moment to respond to your question.

Ian Tickle, Chief Revenue Officer

Great. Thanks, Josh. I appreciate that. Hi, Brad. There are a couple of things we’ve been focusing on, and we’ve centered our efforts on driving customer value. We want to ensure our customers see how we can help them make decisions and grow their business in ways they haven’t before, and our platform is fully capable of supporting that. We are really focused on a few key areas. Firstly, the alignment within all the teams at Domo, with John Miller and myself, has been effective, and our go-to-market strategies are resonating well, with lead generation working effectively. The market increasingly understands who we are and the value we offer. Additionally, we have reinforced strong operational discipline across all organizations, creating a cadence that fosters behaviors that give us confidence in our current position and our progress moving forward.

Brad Zelnick, Analyst

Thank you for that, Ian. I really appreciate it. I would like to follow up with another question for you, Josh. You are recognized as a visionary by almost any standard, and I think most of us agree. Your understanding of what the world needed and what you built with Domo was ahead of its time. However, if we look at the current landscape, there are other cloud data analytics platforms emerging, one of which I believe is preparing for a public offering. How do you view Domo’s competition with these other platforms? Are you competing with them, or are you potentially complementing their services? I recall discussions about opportunities where Domo could serve as the mobile front-end for another data warehousing or data pipeline solution. Are these companies competitors, or could they be possible partners for Domo?

Josh James, CEO

Yeah. We, I guess, probably view them more as possible partners. I mean, when you look at, and again, I’ll use this, several million dollar deal that we just close with one of the largest retailer, one of our apparel retailers in the world. You look at them and they didn’t rip out everything else. Everything else had its place. But in terms of true digital transformation and the ability for the executives to get data the way that they needed to see it to build apps on top of that data to accomplish other tasks they have inside their organization. To take processes that today may take hundreds of hours to put together and are manual processes and slow. If you want to automate those processes and automate your ability to compete and make it much faster, well, then you have to have all of that data in one place. You need to be able to connect to all the different systems that you have, and then you need to be able to have that data available in real-time no matter how large the scale is. And there’s just no one else that does that like us. When Power BI falls down, Tableau falls down first, size sense is good for tiny companies. But in terms of, I mean, quick is old. So it really comes down to how are you going to play with the Snowflakes of the world and how are you going to help people with their strategy about how they’re storing their data in AWS and how are you going to help them. They’ve got a little group that has 18 people that love using Tableau. We’re like great, he is using Tableau for a little bit of visualization for those folks, but if you want truly a platform that brings all your data together to allow you to be nimble as a large organization, there’s just nothing like Domo. And visionary, I get it backhanded compliment. But I think over time.

Brad Zelnick, Analyst

Not at all.

Josh James, CEO

I think over time, if we’ve been up into the right the whole time that I wouldn’t take it as backhanded compliment. But that’s okay. Over time, it’ll prove out. And would have been easier, if we just said, hey, let’s just make something that’s a little bit better than Tableau. But you’re kind of right, we didn’t want to do that. We wanted to be a little visionary. We want to just say, here’s what the world needs and it’s taken a while for it to prove out. But we are relentless in our willingness to continue to be diligent and work hard and we see what’s happening with our biggest customers. And if you want to figure out where the world’s going, go look at our biggest customers and how they use our products. There’s nothing else that comes close to what we’re doing, because we put so much into the platform and I think it’s finally starting to play out and COVID might accelerate that.

Brad Zelnick, Analyst

Thank you for that, Josh. And somebody once shared with me, no tree grows straight to heaven and I think this is definitely of any of the quarters you guys have printed since you’re a public company, this is a proof point of moving in the right direction and doing really well. So congrats to you and the team once again and thanks for taking my questions.

Josh James, CEO

Thanks, Brad. My favorite new saying. Thank you.

Operator, Operator

Thank you. And our next question comes from Jennifer Lowe with UBS. Your line is now open.

Jennifer Lowe, Analyst

Thank you. I wanted to discuss sales productivity. A couple of years ago, that was a key focus area, and I remember that both Josh and Bruce were somewhat dissatisfied with the state of productivity compared to your experiences in other organizations and industry standards. Clearly, the business's efficiency has significantly improved since then. So, I’m interested in your thoughts on the current level of productivity within the sales team and how much additional growth potential you see within the existing structure.

Josh James, CEO

Hi, Jennifer. It was a very strong quarter, possibly a record. We believe it's aligning with expectations from an enterprise sales force, particularly on the enterprise side, which makes us very pleased. Currently, our focus is on improving areas of the business that can do better, especially in relation to benchmarks. However, our sales rep headcount has decreased year-over-year, so we aim to expand primarily but we're also in hiring mode. Over the past few weeks, we've made significant strides. We're optimistic about the results and our position in the market, as we're closing deals with some remarkable brands. We want to capitalize on this opportunity because we were concerned at the start of the year due to COVID and its unpredictable impact. Now that we've seen a couple of successful quarters, with Q3 also starting strong, we are eager to rebuild our sales force. We believe that the combined impact of these efforts will be beneficial for Domo's growth in the long run.

Jennifer Lowe, Analyst

Great. And maybe just sort of expanding on that point, I think, Josh in your prepared remarks, you used the word discussion, as the timing of free cash flow profitability at this point? And Bruce, you kind of pointed out all the improvements that you’ve had so far around the margin front relative to revenue growth. And you mentioned through the push out of the debt timeline, giving you a bit more flexibility. If I read between the lines there, is the message that we should come away with that, you feel pretty good about where you are currently in the level of burn and we should expect that trajectory of improvement that we’ve seen to continue as we head into next year, given the productivity…

Josh James, CEO

I think a couple of things.

Jennifer Lowe, Analyst

...all the opportunity in the pipeline currently. Is that the right way to sort of contextualize what we’ve seen to-date relative to what seems like a good opportunity to maybe inch up a little bit more on the spending again?

Josh James, CEO

Yeah. The way I think about it is, we wanted to get to zero as quickly as possible. When we went public, we saw circled Q3. I was hoping that we’d be able to get to the cash flow positive in Q3. We gave the guidance that we gave because that’s the appropriate guidance to give. But certainly it’s been a goal for a long time to be able to be cash flow positive in Q3 and once we’re there, we’re saying this. So we’re not going to force something we can’t maintain. And I think, we’ve got a really good track record now since we’ve been public of bringing down the cash burn every single quarter, it’s sequentially come down. And same thing going forward, we want to get to zero as quickly as possible and keep it there and it might inch up positive slowly, because we’ll be looking for opportunities to invest, assuming that we’re getting the productivity gains that we’ve been getting that we can maintain those and slightly improve those. We’d be in a really happy place. So we want to be able to invest going forward. We’re not looking at dropping as much cash to the bottom line as we have been sequentially improvements. But want to get it to zero as quick as we can and then keep it there and then find ways to really start playing offense and like Bruce said, maintain that productivity and then also increase the number of heads that are producing.

Jennifer Lowe, Analyst

Great. Thank you both.

Operator, Operator

Thank you. Our next question comes from Derrick Wood with Cowen. Your line is now open.

Derrick Wood, Analyst

Thanks and I’ll echo my congratulations. Really impressive to see 20% plus growth in billings in this environment, no doubt.

Josh James, CEO

Thanks.

Derrick Wood, Analyst

So, Josh, you mentioned the State of Iowa expansion, and clearly, you've secured other state wins as well. It's notable that they are committing to a multi-year agreement, which indicates they want to partner with Domo not just in the short term but over the long run. How should we consider the opportunities with other states or perhaps other federal or local government entities at this time?

Josh James, CEO

I believe this represents a significant opportunity. We’ve observed that once we engage with large enterprise organizations, whether they are state governments, federal agencies, or major Fortune 500 companies, we perform exceptionally well. With Iowa and the other states we have partnered with, our primary objective has been to retain these customers and expand beyond just COVID-related projects. This focus has proven effective as they receive data quickly and efficiently from various internal systems, allowing for improved data distribution within county health departments. When state CIOs recognize this capability, they understand we can assist them with other challenges they face, whether related to TMV or other health issues. The realization hits that we can indeed serve as their data platform for future growth in pursuit of their goals. We will also be sharing videos featuring governors discussing how they manage their states with our support. Additionally, John Miller will provide some insights on our opportunities in this area.

John Miller, Executive

Sure. Thank you. Thank you, Josh, and thanks, Derrick. Yeah. We’ve seen good traction with the state and I think that value proposition, in our mind it is just a really good validation point for the flexibility of the Domo platform and the fact that we were able to create these applications in such a quick turnaround and really just even in the case of the State of Utah, we were able to get this system up and live with them within 72 hours. It’s just an amazing proof point of what Domo can do and can deliver in the state circumstances or even in the transformation that’s being accelerated in enterprises today. It all just plays to our strengths really well.

Derrick Wood, Analyst

Thanks for that insight. I’d like to follow up on the power of the platform regarding your ability to develop these back-to-work applications. I’m curious whether we should consider this a significant new revenue source or if it's primarily a way to initiate conversations, raise marketing awareness, and generally expand our reach. How should we view this opportunity?

Josh James, CEO

Yeah. I would say more on the latter and I think the real proof point and the real lights that went off for us with this whole COVID situation is, when we can walk in the door with an application that we can rapidly put together because of the powerfulness and the extensiveness of our platform. It is an entirely different selling situation relative to competition. No one else offers what we offer in that kind of a situation. So it helps us get in there, establish a relationship, establish a paying relationship and then expanding out from there. So that’s what really went off, I think, for us in terms of an epiphany is, wow, we were able to do something here in a week with hard work. But it got the attention of a lot of people and now we’re having conversations that we weren’t having before, because they need a solution and we have the ability to build these solutions in pretty rapid form. So we’re looking at what we’re doing with our customers. We’re taking those where there’s a vein that has a group of 20 or 30 customers doing the same thing that we can turn into an app and then go take that and run that play, those are the types of sales plays that teams running now and I think it just transforms that first sales motion for us.

Derrick Wood, Analyst

Great. Congrats again.

Josh James, CEO

Thank you.

Operator, Operator

Thank you. And our next question comes from Bhavan Suri with William Blair. Your line is now open.

Bhavan Suri, Analyst

Hey, guys. Thanks for taking my question and phenomenal job there. I want to dive into your very large win. As an example, at that the apparel retailer, we’ve talked about this in the past about instead of displacing everything, partnering with the office of CIO and saying, okay, well, this is what we can address. So what I’d love to understand is like, as you think about these large enterprises, where do you land in that stack? Is it the connector piece? Is it the state of storage piece? Is it the mobile app visualization piece? And then how do you think about expanding and sort of growing the tentacles of everything you’ve built in the platform? So maybe over time replacing some of those components that are piecemeal put together, how should we think about a where you landed in the motion of how that expansion work from a technology stack perspective?

Josh James, CEO

You bet. Bhavan thanks a lot for the comments and the question. I’m going to ask Ian to answer this one because he was pretty intimately involved with this deal. It was a fantastic deal and really representative of everything that we can do and all the possibilities and upset we have. But I think it’d be great for Ian to touch on that. So, Ian, will you please go ahead.

Ian Tickle, Chief Revenue Officer

Thank you, Josh. Hi, Bhavan. This is a great example of what we can achieve with the Domo platform. Initially, we began working with this company because they faced specific business challenges that were difficult to execute across their various platforms, including ETL, storage, analysis, and delivery. However, they struggled significantly with mobility and speed. Given their size, they manage a massive amount of data, and their goal was to focus on a specific use case for a brand that required quicker execution. They were unable to efficiently process their data to build the necessary analyses for informed business decisions. We started with one part of the organization, and as is often the case with Domo, they embraced it enthusiastically. They discovered numerous capabilities, enabling them to reach the market faster and access information quickly, allowing them to take a more proactive approach. They communicated with other brands and the central IT team about the potential benefits for the larger organization. We then engaged with the broader organization, which already had a robust vendor setup and various tools in place. We quickly showcased our ability to handle large volumes of data, transform it efficiently, and provide it to business users to encourage adoption. Adoption is incredibly exciting with the Domo platform. We developed an app compatible with iPads for all install workers to view stock levels, returns, and other previously unavailable information, all underpinned by the Domo platform's capability to integrate data from multiple sources, whether on-premise or in the cloud, regardless of volume, processing it rapidly, and delivering it to the market. Throughout the process, users became increasingly attached to the platform, which we have noticed in our enterprise agreements. As Josh pointed out, when we enter an organization, we are improving our ability to do so more often and effectively, allowing for greater expansion within organizations that leverage the Domo platform to provide not just data, but also applications and, ultimately, business value, as we have discussed concerning our sales team's focus.

Bhavan Suri, Analyst

Got it. Got it. That’s really helpful. Thank you, guys, and yeah, echoing again, congratulations.

Josh James, CEO

Thank you.

Ian Tickle, Chief Revenue Officer

Thank you.

Operator, Operator

Thank you. Our next question comes from Pat Walravens with JMP Securities. Your line is now open.

Pat Walravens, Analyst

Oh! Great. Thank you. And Josh, Bruce and Ian, congratulations. It’s terrific. So Josh, here’s my question and I’ve asked a bunch of other CEOs this question, so I’d love to hear your thoughts. How do you make Domo the best place to work? I mean, everybody is working from home. And if you can throw in like a specific little example of something you’re doing that would be great too?

Josh James, CEO

Yeah. I mean, I think the most important thing, honestly, is having everyone feel like they’re a part of something. And when work-from-home started, obviously, there was a rally point. How do we make sure that we can thrive in this environment? We unfortunately had to let some people go as we were just worried and I think everyone rallied together. And so making sure that your teams and your managers are staying connected to people that whether you’re doing, using Zoom calls to have happy hour on Fridays or your teams are getting together or they’re getting together outside and doing remote meetings. I think the most important thing is that you’re staying connected, you’re understanding how your people are feeling and that they’re a part of something that is exciting. And so for Domo right now, that’s been from, hey, Black Lives Matter starts, let’s get our employees of color and let’s get them on a call so everyone can hear from them. And that’s a way to bring everyone together and to become closer and to understand people you didn’t understand before and it’s a family that provides that connection that, frankly, would have been more difficult to do in an environment where we were just in the office. So I think it’s kind of leveraging these technologies and these tools in these situations that we’re in, in a way that we might not have been able to before this work-from-home situation. But then, of course, what’s the mission and making sure that everyone’s focused on that mission that you’ve got leaders that are staying connected to their people. And I think we have that right now and we’re also trying to show that we care. I heard one time I was on a call with a bunch of CEOs and everyone was trying to talk about best practices, and someone said, it’s probably important right now, that when, if you have a team together and one of them is sitting there and you’re trying to be serious on Zoom and your kid walks in, that they don’t feel awkward about it, and that maybe they even see your kids walk in. And just this is just a new environment, so embracing it, understanding it, making sure your people feel loved and cared for, and then making sure that that mission is paramount. That’s how I’d answer the question.

Pat Walravens, Analyst

Awesome. Thank you.

Operator, Operator

Thank you. And that does conclude our Q&A portion for today’s call and as well concludes our call for today. Ladies and gentlemen, thank you for your participation on today’s conference. This does conclude your program and you may now disconnect.