Domo’s SWOT analysis: stock at crossroads amid ai push, debt concerns

Domo, Inc., a cloud-based business intelligence and analytics platform provider, finds itself at a critical juncture as it navigates a transition to a consumption-based pricing model while grappling with flat revenue growth and significant debt. Recent analyst reports paint a picture of a company with innovative potential in the artificial intelligence (AI) space, but also one facing challenges in a competitive market landscape. According to InvestingPro data, the stock has shown significant volatility, with a beta of 1.88, and has experienced a dramatic 93% surge over the past six months despite recent market pressures.

Financial Performance and Outlook

Domo’s recent financial performance has been mixed, with the company reporting flat revenue growth year-over-year in its latest quarterly results. For the first quarter of fiscal year 2026, Domo reported revenue of $80.1 million, slightly exceeding analyst expectations. The company’s non-GAAP earnings per share (EPS) of -$0.09 also outperformed the consensus estimate of -$0.19. InvestingPro data reveals that despite maintaining a healthy gross profit margin of 74.6%, the company faces profitability challenges with negative EBITDA of $43.6 million in the last twelve months.

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Looking ahead, management has provided guidance that suggests a cautious outlook for the near term. For the full fiscal year 2026, Domo projects revenue between $316 million and $320 million, implying roughly flat growth at the midpoint. However, the company expects to see improvements in profitability, with management guiding for a billings growth of 5% year-over-year and an operating income margin of 5% by the end of FY26, doubling to 10% by FY27.

One bright spot in Domo’s financial picture is the growth in its subscription Remaining Performance Obligation (RPO). The company reported a 24% year-over-year increase in subscription RPO, with long-term subscription RPO growing by an impressive 61%. This suggests that while current revenue growth may be stagnant, there is potential for future revenue realization from existing contracts.

Strategic Initiatives and Partnerships

A key focus of Domo’s growth strategy is its partner ecosystem, particularly its collaborations with major cloud data warehouse providers. The company has been actively pursuing partnerships with industry leaders such as Snowflake, Amazon Web Services (AWS), and Google Cloud. These alliances are designed to enhance Domo’s go-to-market capabilities and improve sales productivity.

Analysts have noted that these partnerships are already yielding positive results. Domo reported that its sales team productivity increased by 60% year-over-year, largely attributed to deal activities sourced through cloud data warehouse partners. Moreover, the company has seen higher close rates on partner-landed sales compared to regular leads, indicating the effectiveness of this strategy.

Product Innovation and AI Integration

Domo has been making significant strides in product innovation, particularly in the realm of artificial intelligence. The company’s recent launch of Agent Catalyst, a platform that enables developers to rapidly create AI agents, has garnered considerable attention from customers and analysts alike. This offering positions Domo at the forefront of the growing trend towards AI-enhanced business intelligence tools.

Additionally, the introduction of Domo.AI in August 2023 is seen as a potential game-changer in business data management. These innovations demonstrate Domo’s commitment to expanding its capabilities beyond traditional BI and analytics into adjacent areas such as AI/ML model management and agentic AI automation.

Transition to Consumption Model

A central element of Domo’s strategy is its ongoing transition to a consumption-based pricing model. This shift is expected to align the company’s revenue more closely with customer usage and value, potentially leading to more predictable and sustainable revenue streams. Management projects that over 90% of Annual Recurring Revenue (ARR) will be derived from the consumption model by the end of FY26.

Early indicators of this transition’s success are encouraging. Domo reports that the net retention rate among consumption customers exceeds 100%, with gross retention rates above 90% for this cohort. However, the overall gross retention rate stands at 86%, suggesting that the company still faces challenges in retaining some of its legacy customers.

Market Position and Competitive Landscape

Domo operates in a highly competitive market for business intelligence and analytics solutions. The company targets an estimated total addressable market (TAM) exceeding $120 billion by the end of this decade, indicating significant growth potential. However, Domo faces stiff competition from both established players and innovative startups in the space. InvestingPro’s Financial Health Score indicates a "FAIR" overall rating, with particularly strong momentum scores but weaker performance in cash flow metrics.

The company’s focus on real-time data visualization and decision-making tools, coupled with its mobile-first approach, helps differentiate its offerings. Domo’s ability to integrate data from disparate legacy systems and provide actionable insights quickly is seen as a key competitive advantage.

Valuation and Stock Performance

Domo’s stock has experienced significant volatility over the past year, with the price ranging from a low of $6.01 to a high of $17.88. As of the most recent analysis, the stock was trading at a considerable discount compared to its peers, with an enterprise value to revenue (EV/revenue) multiple of approximately 1.8x for calendar year 2026 estimates. Based on InvestingPro’s comprehensive Fair Value analysis, the stock currently appears undervalued, presenting a potential opportunity for investors. Discover more about undervalued stocks at Investing.com’s Undervalued Stocks List.

This valuation has led some analysts to suggest that Domo could be an attractive acquisition target for larger companies in the data management or cloud data warehouse space. The company’s substantial net operating loss carryforwards, exceeding $2.5 billion, could provide significant tax benefits to potential acquirers, further enhancing its appeal as a takeover candidate.

Bear Case

How might Domo’s high debt levels impact its growth strategy?

Domo’s balance sheet shows approximately $47 million in cash against $122 million in debt, which could constrain the company’s ability to invest in growth initiatives. This high debt-to-cash ratio may limit Domo’s flexibility in pursuing aggressive marketing campaigns, research and development efforts, or strategic acquisitions. Additionally, servicing this debt could divert cash flow from operations that might otherwise be reinvested in the business, potentially slowing down the company’s ability to capitalize on market opportunities or respond to competitive pressures.

What risks does the transition to a consumption model pose for Domo?

While the shift to a consumption-based pricing model offers potential benefits, it also carries significant execution risks. This transition may lead to short-term revenue volatility as customers adjust their usage patterns. There’s also the risk of underestimating or overestimating customer usage, which could result in pricing inefficiencies. Furthermore, if customers find ways to optimize their usage and reduce costs, it could negatively impact Domo’s revenue. The company must also invest in robust usage tracking and billing systems to support this model, which could incur additional costs and operational complexities.

Bull Case

How could Domo’s partnerships with major cloud providers drive future growth?

Domo’s strategic partnerships with leading cloud data warehouse providers like Snowflake, AWS, and Google Cloud have the potential to significantly accelerate the company’s growth. These alliances provide Domo with access to a broader customer base and enhance its credibility in the enterprise market. By integrating closely with these platforms, Domo can offer seamless data connectivity and analytics capabilities, making its solutions more attractive to large organizations already invested in these cloud ecosystems. The partnerships also enable Domo to leverage the sales and marketing resources of these tech giants, potentially reducing customer acquisition costs and improving sales efficiency.

What potential does Domo have as an acquisition target in the current market?

Given Domo’s current valuation and its position in the high-growth business intelligence and AI market, the company could be an attractive acquisition target for larger tech firms or private equity investors. Domo’s innovative AI capabilities, established customer base, and strategic partnerships make it a valuable asset in the data analytics space. Moreover, the company’s substantial net operating loss carryforwards could provide significant tax benefits to a potential acquirer, enhancing its appeal. An acquisition could also provide Domo with the financial resources and operational scale needed to compete more effectively against larger rivals, potentially unlocking value for shareholders.

SWOT Analysis

Strengths:

• Strong partner ecosystem with major cloud providers
• Innovative AI products, including Agent Catalyst
• Improving customer retention rates
• Mobile-first approach to business intelligence

Weaknesses:

• High debt levels relative to cash reserves
• Flat revenue growth in recent quarters
• Lower gross retention rate compared to industry leaders

Opportunities:

• Large and growing total addressable market in BI & analytics
• Potential for acquisition at a premium valuation
• Expansion into AI/ML model management and automation

Threats:

• Highly competitive market landscape
• Execution risks associated with business model transition
• Potential for economic downturns affecting IT spending

Analysts Targets

• D. A. Davidson: $15 (August 28th, 2025)
• Cantor Fitzgerald: $20 (August 28th, 2025)
• JMP Securities: $20 (August 28th, 2025)
• Cantor Fitzgerald: $17 (June 25th, 2025)
• Cantor Fitzgerald: $12 (May 22nd, 2025)
• JMP Securities: $16 (May 22nd, 2025)
• JMP Securities: $16 (April 8th, 2025)
• Cantor Fitzgerald: $11 (March 10th, 2025)
• D. A. Davidson: $8 (March 7th, 2025)
• JMP Securities: $16 (March 7th, 2025)
• Cantor Fitzgerald: $11 (February 11th, 2025)

Domo finds itself at a critical juncture, balancing the promise of its AI-driven innovations and strategic partnerships against the challenges of flat revenue growth and a significant debt burden. The company’s transition to a consumption-based model and its focus on AI integration present opportunities for future growth, but also carry execution risks. As Domo navigates these challenges, investors and industry observers will be closely watching to see if the company can leverage its strengths to overcome its weaknesses and capitalize on the expanding market for business intelligence and analytics solutions.

This analysis is based on information available up to September 2nd, 2025, and reflects the views and projections of various financial analysts as of that date. For the most comprehensive analysis of Domo and over 1,400 other US stocks, explore InvestingPro’s exclusive research reports, which transform complex Wall Street data into clear, actionable intelligence for smarter investing decisions.

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