Domo’s SWOT analysis: stock at crossroads amid consumption shift, partnerships

Domo (NASDAQ:DOMO), Inc., a cloud-based business intelligence and analytics platform provider, finds itself at a critical juncture as it navigates a strategic shift towards a consumption-based pricing model while grappling with revenue growth challenges and balance sheet concerns. Despite these challenges, the stock has shown remarkable momentum, surging over 108% in the past six months and currently trading near its 52-week high of $15.09. According to InvestingPro data, the company’s stock performance and future prospects have drawn mixed reactions from analysts, with price targets ranging from $9 to $20, reflecting the market’s divided outlook on its potential.

Strategic Transformation and Partnerships

At the heart of Domo’s strategy is its transition to a consumption-based pricing model, which is expected to comprise over 70% of Annual Recurring Revenue (ARR) in the near term, with a target of 90% by the end of fiscal year 2026. This shift aims to align more closely with customer usage patterns and potentially drive higher retention rates. Early indicators are promising, with net retention rates exceeding 100% and gross retention rates around 96% among consumption-model customers.

Domo has also been actively cultivating strategic partnerships with major cloud data warehouse providers such as Snowflake (NYSE:SNOW), Oracle (NYSE:ORCL), and Google (NASDAQ:GOOGL). These alliances are seen as key drivers for future growth, with partner-led deals contributing significantly to the company’s pipeline and sales productivity. Analysts note that Domo’s sales team productivity has increased by 60% year-over-year, largely attributed to these cloud data warehouse partner-sourced deal activities.

Innovation and Product Development

Innovation remains a cornerstone of Domo’s strategy, with the company expanding its offerings into AI/ML model management and agentic AI automation. The recent launch of Agent Catalyst, a platform enabling rapid creation of AI agents by developers, has garnered significant customer interest. This focus on AI-driven solutions aligns with broader industry trends and could position Domo favorably in the competitive business intelligence market.

Financial Performance and Outlook

Domo’s recent financial performance has been mixed. In its fiscal first quarter of 2026, the company reported revenue of $80.1 million, which was flat year-over-year but exceeded analyst expectations. Non-GAAP earnings per share came in at -$0.09, ahead of the consensus estimate of -$0.19. However, subscription revenue showed a slight decline of 1% year-over-year. InvestingPro data reveals broader financial challenges, with the company posting negative EBITDA of $50.76 million in the last twelve months and a concerning current ratio of 0.51, indicating potential liquidity constraints.

Looking ahead, management has provided guidance for fiscal year 2026, projecting revenue between $312 million and $320 million, implying roughly flat growth at the midpoint. The company expects to be free cash flow positive for both the first quarter and the full fiscal year 2026, signaling improved operational efficiency.

Competitive Landscape and Market Opportunity (SO:FTCE11B)

Domo operates in a highly competitive market for business intelligence and analytics solutions, competing with established players and innovative startups alike. The company targets an estimated total addressable market exceeding $120 billion by the end of this decade, suggesting significant growth potential if it can successfully execute its strategy.

The shift towards cloud-based solutions and increasing demand for AI-powered analytics tools present both opportunities and challenges for Domo. Its partnerships with major cloud providers and focus on AI capabilities could help differentiate its offerings in a crowded market.

Valuation and Investor Sentiment

Domo’s valuation has been a topic of debate among analysts. As of the most recent data, the stock trades at a CY26E EV/revenue multiple of approximately 1.8x, which some analysts view as a significant discount compared to peers. InvestingPro analysis suggests the stock is currently undervalued, with additional financial metrics and insights available to subscribers. Want to make more informed investment decisions? Check out our comprehensive undervalued stocks list and discover more opportunities like DOMO. This relatively low valuation has led to speculation about Domo as a potential acquisition target for larger software vendors or private equity firms.

Insider buying activity, particularly by CEO Josh James, has been noted as a positive signal by some analysts. James has made multiple purchases of Class B Common Stock over the past two years, increasing his economic interest to around 12% and his voting control to 79.7%.

Bear Case

Can Domo overcome its revenue growth challenges in a competitive market?

Domo’s recent financial results have shown flat to declining revenue growth, raising concerns about its ability to compete effectively in the crowded business intelligence market. The company’s guidance for fiscal year 2026 suggests continued challenges in accelerating growth, with projections indicating roughly flat performance year-over-year. This stagnation in revenue growth could make it difficult for Domo to gain market share and improve its financial position.

Additionally, while the transition to a consumption-based pricing model shows promise, it also presents execution risks. If not managed carefully, this shift could potentially disrupt existing revenue streams and create uncertainty in forecasting future performance. The company will need to demonstrate that it can successfully navigate this transition while simultaneously reigniting growth.

How will Domo’s balance sheet constraints impact its ability to invest in growth initiatives?

Domo’s balance sheet has been a point of concern for some analysts. With approximately $45 million in cash and $118 million in debt as of recent reports, the company’s financial flexibility may be limited. This debt burden could potentially restrict Domo’s ability to invest aggressively in research and development, marketing, or strategic acquisitions that might be necessary to drive growth and innovation.

The company’s ability to generate positive free cash flow in the near term is encouraging, but it will need to balance debt servicing with investments in growth initiatives. If Domo is unable to significantly improve its cash position or reduce its debt load, it may find itself at a disadvantage compared to better-capitalized competitors in the rapidly evolving business intelligence market.

Bull Case

How could Domo’s strategic partnerships accelerate its growth trajectory?

Domo’s partnerships with major cloud data warehouse providers like Snowflake, Oracle, and Google represent a significant opportunity for growth acceleration. These alliances not only expand Domo’s reach but also position the company favorably with decision-makers at potential client organizations. Analysts have noted that partner-led deals are showing higher close rates compared to regular leads, suggesting that these relationships could be a key driver of future revenue growth.

The success of these partnerships could lead to a virtuous cycle, where increased adoption of Domo’s platform through partner channels leads to greater visibility and credibility in the market, potentially attracting more customers and partners. If Domo can effectively leverage these relationships to drive sales and expand its customer base, it could see a significant uptick in growth rates, potentially exceeding 20% as some analysts have suggested.

What is the potential upside if Domo becomes an acquisition target?

Given Domo’s current valuation, which some analysts view as depressed relative to peers, the company could be an attractive acquisition target for larger software vendors or private equity firms. Domo’s innovative platform, strategic partnerships, and growing focus on AI capabilities could make it a valuable asset in the consolidating data analytics market.

An acquisition scenario could potentially offer significant upside for investors. Some analysts have suggested that applying industry-standard multiples to Domo’s revenue could imply a stock price significantly higher than current levels. For example, using the 4.6x multiple from Salesforce (NYSE:CRM)’s acquisition of Informatica could suggest a potential stock price around $36, representing substantial upside from current levels.

Furthermore, Domo’s net operating loss carryforwards of over $2.5 billion could provide significant tax benefits to potential acquirers, making the company even more attractive as a takeover target. If a competitive bidding situation were to emerge, shareholders could potentially see a premium well above current market valuations.

SWOT Analysis

Strengths:

• Strong partnerships with cloud data warehouse providers
• Innovative AI capabilities, including Agent Catalyst platform
• High retention rates among consumption-model customers
• Improving profitability metrics and positive free cash flow outlook

Weaknesses:

• Declining or flat revenue growth
• High debt levels relative to cash on hand
• Low overall gross retention rate (85% in recent quarters)
• Execution risks associated with transition to consumption model

Opportunities:

• Large and growing total addressable market in business intelligence
• Potential for accelerated growth through consumption model adoption
• Possible acquisition target due to attractive valuation
• Expansion into AI/ML model management and agentic AI automation

Threats:

• Intense competition in the BI and analytics space
• Macroeconomic factors potentially impacting IT spending
• Execution risks in strategic shift to consumption model
• Potential for dilution or financial strain if additional capital is needed

Analyst Targets

1. Cantor Fitzgerald: $17 (June 25, 2025)

2. JMP Securities: $20 (June 25, 2025)

3. Cantor Fitzgerald: $17 (May 28, 2025)

4. Cantor Fitzgerald: $12 (May 22, 2025)

5. JMP Securities: $16 (May 22, 2025)

6. JMP Securities: $16 (April 8, 2025)

7. JMP Securities: $16 (March 21, 2025)

8. Cantor Fitzgerald: $11 (March 20, 2025)

9. Cantor Fitzgerald: $11 (March 10, 2025)

10. D.A. Davidson: $8 (March 7, 2025)

11. JMP Securities: $16 (March 7, 2025)

12. Cantor Fitzgerald: $11 (February 11, 2025)

As Domo continues its strategic transformation, investors and analysts will be closely watching for signs of success in its consumption model transition and the impact of its partnerships on revenue growth. The company’s ability to navigate these challenges while improving its financial position will likely be key determinants of its future performance and market valuation. For deeper insights into Domo’s financial health, growth potential, and expert analysis, explore the comprehensive Pro Research Report available exclusively on InvestingPro, featuring detailed metrics, peer comparisons, and actionable investment intelligence.

This analysis is based on information available up to July 7, 2025, and does not include any subsequent developments or market changes.

InvestingPro: Smarter Decisions, Better Returns

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