Welcome to Domo's Third Quarter Fiscal Year 2021 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] And with that, I'll hand it over to Peter Lowry, Domo's Vice President of Investor Relations. Please go ahead.

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 on to the call. Julie?

Thanks, Pete. Our press release was issued after the market close and is posted on 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 conditions. These statements are subject to a variety of risks, uncertainties and assumptions. For a discussion of these risks and uncertainties, please refer to the 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 the most directly comparable GAAP measure. With that, let me hand it over to Josh. Josh?

Thank you, Julie. Hello, everyone. Thanks for joining the call. First, I hope that everyone is in good health. As we all know this year has presented unimaginable health and economic challenges across the globe, and we indeed hope this pandemic is a once in a lifetime event. On the call today, I'm going to focus on a few items. First, a huge financial milestone that we've been working for years and the implications for our recent success, increased financial flexibility and our plans to drive efficient revenue growth. Second, our Domo's differentiated platform uniquely positions us to help our customers with their digital transformation initiatives. And third, I'll cover Q3 highlights, including several significant upsells and wins across a variety of industries. And I'll touch on some recent industry recognition. So I'm going to start with sharing how ecstatic I am that we achieved a significant milestone. As of Q3, Domo was a recurring revenue cash flow positive company that has happy customers with gross retention north of 90% and has growing subscription revenue north of 20% with a total annualized revenue run rate of over $200 million. This is the culmination of over a thousand people, including several hundred that are here today, and we have been working on this for over 10 years. This is the culmination of listening to customers and building what they need. This is the culmination of putting our hearts and souls into our customers and our vision, and we are only just getting started. We are the only publicly traded independent cloud-based BI company, and we have countless opportunities in front of us. So a huge thank you to our customers and a huge thank you to our team members, my partners and our investors who have always believed in us. Now we are going to return that belief with greatness. Not many, if any believed we would get to cash flow positive this fast after our IPO two years ago. I put it on the calendar for Q3 fiscal year 2021, and I adamantly believe we would make it one way or another, and despite ups and downs in pandemics, earthquakes, unrest, political upheaval, cuts and losses, great people and wonderful innovative customers banded together to create what is now a world-class organization. I recently put up a billboard that says simply, there's a pony in there somewhere. The reference is from President Ronald Reagan. He often told the story. The story concerns twin boys of five or six. Worried that the boys had developed extreme personalities, one was a total pessimist, the other a total optimist, their parents took them to a psychiatrist. Well, first the psychiatrist treated the pessimist. Trying to brighten his outlook, the psychiatrist took him to a room piled to the ceiling with brand-new toys. But instead of yelping with delight, the little boy burst into tears. 'What's the matter?' the psychiatrist asked, baffled. 'Don't you want to play with any of the toys?' 'Yes, the little boy bawled, but if I did I'd only break them. Next the psychiatrist treated the optimist. Trying to dampen his outlook, the psychiatrist took him to a room piled to the ceiling with horse manure. But instead of wrinkling his nose in disgust, the optimist emitted just the yelp of delight and clambered to the top of the pile, dropped to his knees, and began gleefully digging out scoop after scoop with his bare hands. 'What do you think you're doing?' the psychiatrist asked, just as baffled by the optimist as he had been by the pessimist. 'With all this manure,' the little boy replied, beaming, 'there must be a pony in here somewhere!' Well, I think President Ronald Reagan certainly could have been referring to eternal, but hopefully measured optimism for entrepreneurs. And so for good luck, I put up that billboard at the beginning of this quarter, that repeated that phrase, there's a pony in there somewhere. We've been through our shares of ups and downs, but I was always 100% convinced. This would eventually turn into a fantastic, even world-class company. Maybe it's my entrepreneurial optimism shining through, but we found the pony, a big recurring revenue, fast growing cash flow positive company with all kinds of happy customers, innovations and market positions to go out and capitalize on. Since our IPO, we've been committed to getting to adjust our cash flow positive with the cash on our balance sheet without raising a dime. And I'm thrilled to announce today that in Q3 we achieved it. And in fact, we achieved it with $84 million remaining in the bank substantially more than anyone imagined. In Q3, we posted 25% billings growth, an acceleration from 23% last quarter. The continued growth in our base of recurring revenue and reaching a cash flow positive status gives us increased financial flexibility to pursue the tremendous growth opportunity in front of us. Now, let me talk a little bit about our unique positioning and helping our customers with their digital transformation initiatives. As we all know, what has happened this year has forced companies, their employees, customers, and supply chains to re-imagine how they operate. The need for real-time information, speed and business agility that digital transformation provides has only accelerated. These elements have always been crucial another reason we found at the company. But in this climate, these business priorities have moved to the forefront. Our customers have challenged us to solve their business problems with data at an unprecedented speed and we have delivered for them. Domo's unique platform has three pillars that drive our differentiation. The first is our data integration capabilities to solve back-end integration at cloud scale without moving data. Second is our ability to drive insights and action with AI into well-governed business intelligence power into the hands of business users in an easy-to-use self-service and mobile-first solution. Third is the ability to build data-driven apps in a low-code, no-code way that can modernize business processes at high speed and extend the value of data analytics and insights outside the organization to customers and partners. Our platforms ability to solve at scale and in record time, the back-end and front-end challenges to make data more valuable internally and externally for customers is a huge key to our differentiation. Our most significant wins this quarter were driven by proof-of-concepts, POCs, where we were able to demonstrate our ability to deliver better solutions faster than the competition. The reason we can compose solutions so quickly is part of the inherent flexibility and scalability of the Domo cloud first platform, which brings all the services needed, integration, data management, data science, AI, and machine learning, governance, distribution to citizen, developers and more to the data and apps. Through intelligent analytics-based applications built on the Domo platform in a low-code, no-code environment, we are helping customers to rapidly modernize business processes, leveraging artificial intelligence and automating workflows. Our platform through our Domo Everywhere offering also goes beyond traditional embedded analytics capabilities and enables customers to extend their analytics and the value of their data to external stakeholders, such as customers and supply chain partners, while also generating new revenue models. I'll share a couple examples of this in just a few minutes. Our view is that the demand for speed, business agility and real-time analytics is not something that goes away after the pandemic, and we will continue to deliver this to our customers. Now, let me discuss how we are thinking about our increased financial flexibility and our plans to drive efficient growth. I am particularly proud of how our employees have delivered during the pandemic. I would point out that our recent performance occurred against the backdrop of pretty significant cost reduction this year in a severe economic downturn. Our employee headcount in Q3 was down year-over-year, and we've continued to grow our recurring revenue with [indiscernible] expenses. We have also been relentlessly focused on customer success, which is reflected in our higher retention rates. Going forward, we plan to invest in client services and other areas of our business that directly support our ability to serve and grow existing accounts. So now let me talk about some of the business highlights in Q3. One highlight was the seven-figure annual upsell I mentioned on last quarter's call with the Fortune Global 500 retail conglomerate. We won this deal based on our outperformance and speed and scale compared to the competition. Domo was chosen to help the organization, integrate massive volumes of data from its existing systems without replacing or rearchitecting them, so business decision makers could understand critical time-sensitive business metrics. One of the key factors in our selection was not just Domo’s ability to access and integrate data, but our ability to provide data governance at scale and do so without adding burden to already strained IT teams. Like most large organizations, this customer has multiple related technologies in use, but none were built to perform at cloud scale and in record time, like Domo. Another highlight in the U.S. federal space where we leverage a partner relationship to close and almost seven-figure annual new-logo contract to power PRAC, a public-facing website that gives taxpayers the ability to see and explore pandemic relief spending data. Several of our largest banks in this quarter demonstrate the success of customers having with Domo and how we can grow with the success. For example, we closed a seven-figure upsell with technology and media conglomerate that is using our Domo Everywhere solution to extend the value of its analytics and data and the full power of Domo externally to its community of tens of thousands of partners. We were initially chosen based on our superior speed and scale. This significant expansion was based on the successful rollout to a subset of the company's massive partner network. We also signed a large upsell deal for Domo Everywhere that gives the learning management system, or LMS software company, the ability to embed and monetize LMS analytics into a software solution for its growing customer base. Before the initial contract, this customer had evaluated numerous solutions and also built a homegrown option that just didn't completely fit their vision. After POC, the customer selected Domo because it was the only solution that allowed the company to extend the interactive analytics and data experience it want for your customers at scale. The most recent expansion was driven by the demand the company has seen across the rest of its customer base for its Domo powered analytics, which the company has also turned into a new revenue stream. Now let me talk about some recent industry recognition. Our team continues to receive accolades that reflect our commitment to product innovation, customer success, and our corporate culture. Most recently, Domo with our customer Unilever was named a winner in Ventana Research's Digital Leadership Awards for the support that data and the Domo platform played in Unilever's national philanthropic initiative United for America, which provided them with $25 million worth of support to local communities. In addition, Domo was named an overall experience and credibility leader in the Dresner Advisory Services’ 2020 SME BI study. And lastly, Domo was named for the ninth year in a row as a Utah Business best company to work for. In closing, I continue to be impressed by the work our team is doing to help customers thrive, and I am impressed by our employees’ performance in this environment. It’s extremely rewarding as well to know we achieved our quarterly results while also hitting the significant milestone of getting the cash flow positive in the quarter with plenty of cash in the bank. And I'm looking forward to continuing to execute on our tremendous growth opportunity. And I sincerely thank our employees for their commitment and I'm so excited to take a moment and celebrate this milestone with them. I am so incredibly proud of all that they've accomplished. And with that, I will turn it over to Bruce. Bruce?

Thank you, Josh. We had a strong Q3 and at the same time, we had several important milestones this quarter. As Josh mentioned, we met our commitments to reach positive operating cash flow without the need to raise additional capital. In fact, we reached this milestone with $84 million in the bank, substantially ahead of our plans at the IPO, and we intend to stay operating cash flow positive going forward. Another milestone is that our gross retention rate increased to over 90% and represents a record high. If the milestone is record subscription gross margins at 81%, an important metric in driving long-term profitability. These achievements are result of many incremental internal improvements we have made across the business enhanced by the market shifting towards solutions such as ours that provide modern ways to create, distribute and use data to run businesses. I will now review the details behind our performance and then discuss fourth quarter and fiscal 2021 full-year guidance. Our Q3 billings of $55.7 million, a year-over-year increase of more than 25% was driven by strong new customer count growth, upsells and expansions and high retention rates. We delivered these results overcoming a tough year-over-year large scale comparison by generating a much higher volume of transactions than one-year ago. At the same time, we've maintained our standard billing terms even against the backdrop of pandemic-driven challenges in seven segments of our customer base. We have 59% of our customers under multi-year contracts at the end of Q3. Our remaining performance obligations, or RPO grew 21% compared to the same quarter last year. Current RPO or RPO expected to be recognized as revenue over the next 12 months, grew 22% year-over-year. Q3 total revenue was $53.6 million, a year-over-year increase of 20%. Subscription revenue grew 24% year-over-year and represented 87% of total revenue. International revenue in the quarter represented 24% of total revenue consistent with Q2. Our subscription gross margin was 81% up more than 4 percentage points from 76% in Q3 of last year and a slight improvement from last quarter. We continue to be successful managing our data center costs even as volumes continue to increase. In Q3, operating expenses decreased by 6% from last year, even though revenue increased by 20%. The net effect of increased revenue while being cost efficient, improved our operating margin by 31 percentage points from the same quarter last year. Now let me comment briefly on our investment and margin approach going forward. Now we have hit the milestone of becoming adjusted cash flow positive, we plan to continue to generate positive operating cash flow. At the same time, since we have cushion on the balance sheet and have demonstrated leverage in the business, we believe we can safely take some of that leverage and invest more in growth than we have over the last two years. We are already building our salesforce capacity and plan to make additional investments in some new product areas in order to support our growth plans. We can make these investments continue to expand margins. Although we expect margin improvement to occur at a lesser rate that we have demonstrated recently as we sought to achieve cash flow profitability. We will provide specific guidance and more color around these things when we announce our Q4 results. Our net loss was $11.9 million and our net loss per share was $0.40. This is based on 29.5 million weighted-average shares outstanding, basic and diluted. In Q3, we reported adjusted cash flow from operations of $1.4 million, an improvement of $6.2 million over last quarter. Adjusted cash flow from operations excludes 3.1 million of share purchases in Q3 under our employee stock purchase plan. The amount is included as a positive amount in our GAAP cash flow from financing section of our cash flow statement and an offsetting negative amount in our GAAP cash flow from operations section with no effect on our cash balance. Turning now to our balance sheet. As of October 31, we had cash and cash equivalents of approximately $84 million. Now to discuss what we expect in Q4 and the full fiscal year of 2021. For Q4, we are expecting billings of about $72 million as we are experiencing strength in our business and have good visibility as we head into the remainder of Q4. For the current fiscal year, we now expect billings of about $222 million, up from $208 million that we guided to last quarter and well above our initial outlook of $190 million based on our COVID-19 downside case that we use for reducing costs. On expenses, we are planning on our Q4 operating expenses to increase modestly from Q3 levels. While we expect to see decrease in operating expenses in fiscal year 2021, we expect them to increase in fiscal year 2022. We expect Q4 adjusted net cash provided by operations of approximately $1.5 million and expect full-year adjusted net cash used in operations of approximately $11 million. Now to formal guidance. For the fourth quarter of fiscal year 2021, we expect GAAP revenue to be in the range of $53.3 million to $54.3 million. We expect non-GAAP net loss per share, basic and diluted of $0.42 to $0.46. This assumes 30.1 million weighted average shares outstanding, basic and diluted. For the full-year of fiscal 2021, we expect GAAP revenue to be in the range of $206.6 million to $207.6 million, representing year-over-year growth of 19% to 20%. We expect non-GAAP net loss per share, basic and diluted of $1.83 to $1.87. This assumes 29.3 million weighted average shares outstanding, basic and diluted. In closing, we are pleased with our execution in Q3 and are optimistic about our financial position and growth opportunities as we close out fiscal year 2021 and head into next year. With that, we'll open up the call for questions. Operator?

[Operator Instructions] And your first question comes from the line of Sanjit Singh from Morgan Stanley. Your line is open.

Hi. Thank you for taking the questions. Congrats to you both on the cash flow positive. It was a long road, I mean, you got there and now it’s a quite an achievement. In terms of thinking about the quarter, the 20% billings growth against the tougher comp was – it's really impressive. So Bruce, I was wondering if you can sort of talk about the velocity of deals, I think in your script, you mentioned a higher volume of deals compared to last year. Can you just sort of describe where that demand is coming from, from a vertical perspective or just from a sales perspective? How you driving that that increased volume of blocking and tackling business?

Sure. Happy too. So it was an extremely high transaction volume quarter led by a one of the highest growth in percentages year-over-year on new customers, what we call a new logo account. And it was also just high transaction volumes within our current customer base as well. And I think that has to do with just the – on the one hand, the increased operational rigor that we're using to manage the salesforce, and we really picked it up with the pandemic just assuming we just needed to work harder. But that's absolutely paid off for us. And then at the same time, our offering just fits nicely into what our customers need today. I mean, they need a product that's easy to use, easy to install, easy to rollout to end users that's in the cloud, that's on your phone and that can scale. And just the general trend toward digital transformation within businesses is what we see nicely into, so between the operational rigor and the fact that our solutions really meet with the market needs just drove very healthy transaction volumes this quarter. So we're really pleased with that. It's a very healthy quarter.

That's very promising. And then Josh, if I think about, I was sort of looking at the website earlier today, kind of the messaging just seems so much more targeted and CRISPR sort of positioning Domo as one, data integration platform; two, a business intelligence solution; and three, an intelligent app platform. Can you talk to me about where you're seeing sort of traction, I'm sure like the BI case is sort of obvious, but both on the data integration side and on the intelligent app side, where you're sort of seeing customer traction on those parts of the use cases?

Yes. I talked about it a little bit at my comments. The fact that we're seeing these POCs, where we'll go in and work with a big customer has usually many experiences trying out those things, usually many experiences with alternatives that are already installed at their place of business. And there's still one or two things they can't get done, and they call us in for POC and we connect the data they haven't been able to connect to before. And then of course, we're able to distribute that data in such a timely quick manner to so many people in the organization. And in most cases, there'll be these apps that we end up helping facilitate low-code, no-code apps. And they really end up helping out with workflow and accomplishing things that they had teams of people that it took to accomplish before, or they weren't even accomplishing it. And so it is a combination of those three things, and it's been exciting to see the pace picking up. Another thing that we mentioned is Domo Everywhere. And we'll have these large customers that will come in, start using our products and services and find so much benefit from being able to distribute that information so easily with real-time data, no matter the size of the data to all their internal constituents that then of course the next question that that begs is, can we get this to our partners? Can we get this to our vendors? Can we get this to our suppliers? And we highlighted one of the largest ones that we worked with today with literally tens of thousands of partners, but they're distributing data to, and it's the lifeblood of their business. The relationship with their 10,000 partners is the lifeblood of their business. And they're using us to manage all of those communications now and making those partners so much more adaptive reacting to what's taking place in this ever-changing digital world. So digital transformation is definitely the wave that we're riding and it's these three simple things that we have to do better than anyone else.

That's great. And if I could just speak one last one on – toggling back to Bruce. If I look at the Q4 guidance, obviously all year, you've been beating and raising that number, even the original guidance for the year, we're now above that, but Q4 does imply a slowdown back to sort of 10% to 11% growth. Can you walk us through some of the underlying assumptions behind your billing side is as we get into sort of year-end from a closure rate or from a demand environment perspective? Just to put some context on the both side into Q4.

Sure. Well, first let me highlight that we basically brought up our guidance in Q4 by about $6 million of our implied guidance from last quarter. And what drove that was the fact that we are off to get the very good start to Q4, maybe one of our best starts ever for a month. And on top of that, we just have good visibility into our pipeline and it's also supported by the fact that just came off high transaction volumes, which is very, very healthy. I mean, particularly in this environment to have that many new customers and sales and transactions in your current customers which is very healthy. And we obviously seek to do better than that number. We've used the same approach that we've always used to provide guidance on what we know. And I just have to repeat myself. We know a lot now, and that's why we brought the number up by $6 million. And what we hope for is Q4s are usually very active and we can only guide by what we know, but most of what's going to happen through the rest of the quarter is still before us. But we like what we see so far. So that's the basic thoughts behind our guidance and we're happy that we brought it up like a significant amount from last quarter. And we would love to do better and everything stays the same, and we certainly hope we can do it.

That's very clear. Thank you. I appreciate it. Congrats.

And I'll say something that I've said a few times over the last few quarters. Our goal right now is to get consistently above 20% and then we’ll be getting consistently above 30%. And I think when you look at this one, like Bruce said, I mean, it's a substantial raise from where it was a quarter ago. And so I think that's something that should be definitely taken into account. We crushed our number, hit cash flow positive, did it with lower expenses and brought up guidance by a substantial amounts, and we set up like, there's a lot of gas in the tank there. And you know what our goals are – our goals are and what we're trying to accomplish and what we want to consistently be able to deliver, but also guide to. And right now, we're hoping that we can deliver to it, but feel like this is the best place to guide. We don't have – we haven't had as many quarters of the current situation where we're sitting is, we'd like to be comfortable enough to guide up as high as we'd like to, but definitely see deals and opportunities out there. It looks like this is the appropriate guidance to do, and then hopefully some things will fall away and we'll continue to be north of 20% growth as we have during the last few quarters.

Appreciate it, Josh. Thank you.

Your next question comes from the line of Brad Zelnick from Credit Suisse. Your line is open.

Great. Thank you so much for taking the question and congrats. It's really great to see two quarters in a row now greater than 20% growth and hitting this milestone. There were a lot of naysayers that didn't think you could pull it off and I'm really proud of you guys. So it's good to see this accomplishment yes for sure. Maybe my first question if I may, I know we still got to get through Q4, but I imagine you all are doing your planning and thinking forward into next year and understanding that the beginning of a new fiscal year is usually a good time to make some adjustments to your go-to-market strategy. I used to work for a sales leader many years ago that would say whatever you did this year to be successful, you've got to change it up. That's not the work next year. So what are some of the changes that you might be contemplating and how might you be able to mix it up even if just slightly correcting for us to drive real sustainable 20% growth into 2022?

Well I think some of the things that we are doing to mix it up, we just started many of them. But having Ian as a new sales leader is something that's been a big mix up in terms of how it's affected the team, the way he manages is dramatically different than what we've seen before, and it's proven to be effective. And his leaders that worked for him like him and the teams really kind of snapped into it. So that's been something that I think is going to have an impact for a long time. I think that alone is going to give us 20% growth for a long time. Then we've got Mellor – John Mellor, who has been leading the marketing organization. And those two leaders coming together, again, I think that's going to – just that alone and better execution is going to be north of 20%. I think beyond that, it's been looking at these pockets where – when we go to markets and what pockets do we have today that we could double down on or triple down on, and we've tried to highlight some of those things, but apps, for instance, is one thing that we see as a big differentiator. These low-code, no-code apps and solving business problems that's what enabled us to get these state deals and these federal deals, that's what enabled us to get the really large retailer that we talked about global retailer, and then you see Domo Everywhere. That's what's enabling us to get some really large upsells with some of our customers. But our entire sales teams not trained on all of those things. And so saying, okay, what are the three or four things that we can really train the sales team on that are applicable to every single customer? And it's taken some time to gather all that information. So I think that's another area that – as Ian and John dictate which things we're going to train the team on and go-to-market with. We're going to see some additional performance there. And then the next, the last thing I would say is finding partners and we highlighted it last quarter and this quarter for the first time seeing some real traction with partners in the marketplace where we're delivering big deals, seven-figure deals from partners, and that's something that we haven't had before. So we'll be seeing our partner efforts continuing to increase and now not just noise, but also deals, and we're excited about what can happen with Snowflake over the long-term. We're excited about our position in the marketplace. We're excited that people are coming to us as a large independent publicly traded business intelligence company. That's cloud-based, we're the only one. And so that's facilitating conversations as well.

No, it shows that a lot of – lot of these investments that you've been making, like talking about the partner channel, they're really beginning to bear fruit in a meaningful way. And along those lines, Josh, I always felt like there's been this opportunity to become more of a standard inside of your accounts. I feel like some of the early success that we would hear about it, and I know going back to Target and others, like you had some of these massive commitments. But as well, a lot of customers that we would speak to were more, hey, it's a division, it's a specific use case. Just maybe being something beyond a great solution for that particular use case around data aggregation and analytics, are there any proof points that you can speak to just in – maybe capturing more success in driving that expansion in these larger organizations and becoming that standard?

Yes. If you look at – I mean, I think that's the other shoe to drop to be honest with you. But I think about it a lot. If you look at our top 10 customers, the revenue they're receiving from our top 10 customers today is almost double what it was a year ago. And so we're seeing massive expansion inside these accounts where – yes, this has been a long journey. I always kind of felt like the size of this company, it behaves still like it's one fifth the size, we're still figuring things out as $200 million run rate. And when you look at some of these accounts, like you said, initially, we got it and we made some great progress. We had a hard time expanding beyond the department that we were in to become the de facto solution because there's all – there were all these competing components. And so then it took us a long time to figure out how to speak the right language to the different constituents in the organization. We had to get – we took a year or two figuring out how to speak to CIOs more effectively, but now we're good at that. And so once we got good at all those things, then it's to your point, where's the proof points. And I was looking at the top 10 customers today and when we have customers paying a several million dollars a year, and one of them still just expanding our second largest customer as a customer that we went into a few years ago, we got a good deal. Then we got another good deal. And then finally we got corporate wide deal. And then we've got a corporate wide deal for all of their vendors. So it does happen. And as we get more and more customers like that, that we can talk to. What I'm excited about is being able to one of these quarters soon, say, all right, here is five new names. Here's the journey that we just had with them for the last four years. And these are representative of what we think every customer can and should look like because here's the five things that we can do for them that no one else can do. And they're great brands and they're extremely intelligent companies when we have those customers and those proof points just not enough that we're out there publicly talking about it yet, but they have been happening. They've happened, they're signed and more of them are in the pipeline. And as those come to fruition, then having the sales and marketing organization and what we need to go and tell the customers is going to be every week and all – almost to sit there and minor current customer base without signing any of any new customers and have years and years of explosive growth. But I think that is what's happening. You've really hit the nail on the head with that question.

Thanks so much, Josh. And if I could sneak in one quick one for the Bruce. Bruce as we think about this milestone of reaching operating cash flow profitability, obviously if we think about the factors it's going to be bookings, billings, topline growth, but it's also going to be, at least in this year, you've had some COVID-related savings. But are there any other key areas of productivity or optimization to call out that we should be thinking about?

Yes. I mean, I think we have a kind of a twofer working for us right now. I think on the one hand, they're still a lot more, we can get out of our investment platform we have right now in marketing and product. I mean, we still have the ability to get a lot more out of that. But at the same time, we also are in, I would say a pretty comfortable position to start adding resources. For example, we've already started hiring sales reps, and this year has been a year of down reps compared to last year. And that's because we’re very cautious when COVID-19 hit and we've kept the cost as posture, but we've already started adding more reps and layering them in. And so we didn't get – and we were also quite pleased with the productivity that we got from the reps that we've had. So we feel very comfortable putting that layer in. And if we can get additional bang on the buck that already exists and then be able to add that in and still generate positive cash flow, we think that's a pretty good spot to be in. But our main focus is really – we really think that we're well positioned to grow and we want to take advantage of it, but do it prudently, continue to generate positive cash flow and watch the return we get on those investments watching carefully. And so far the indication is that we'll get a great yield from them, but we will still continue to be very careful about it at the same time.

Thanks so much guys for taking the questions and congrats again.

Thank you.

Your next question comes from the line of Derrick Wood from Cowen and Company. Your line is open.

Great. Nice to talk to you guys. And I'll echo my congratulations on lots of good milestones there. Josh, I wanted to touch on Domo Everywhere because it's interesting. Last night, Snowflake talked about seeing a lot of traction with data sharing and that it's really a transformational capability companies are starting to embrace. You guys also have a unique position to serve this kind of capability and it clearly sounds like you're seeing some similar demand. So I guess when you look at your installed base, I mean, can you any way to kind of size up the opportunity you think you have to really cross-sell Domo Everywhere and how are you going to lean into this going out over the next year?

Yes. Domo Everywhere is something that's applicable to almost all of our customers. And it's something that we've put a lot of product effort into especially over the last year as we've seen more and more progress there on the sales side. And it's our high priority right now as well from a product perspective. So we continue to see huge opportunities there and in meeting the needs of the customers and the opportunity there in the marketplace, really in a way that no one else can. So there's embed, which is what a lot of people talk about when they talk about this kind of an opportunity and that's what our competitors do. But truly taking our whole platform and making that available for our customers to offer to their partners and their vendors and that kind of an experience versus just an embedded analytics. It is a highly complex set of software that really creates an experience that's untouchable. So we feel really good about our unique selling proposition about our differentiators, about our defensibility in that space. And you're going to see some more efforts from us from the product perspective and definitely a lot more efforts from us from a sales perspective and having sales leaders and salespeople that are dedicated to this opportunity that's part of Ian's plans.

Yes. Okay. That makes sense. Then the – great to hear, you're seeing such a pickup in new logo growth. Can you unpack that a little bit more? Is that driven by better sales productivity? Or are you getting leads from different channels that you didn't have before? And does this suggest you're seeing increased win rates against the competition? Would be great to hear more detail on the underlying drivers.

Yes. I mean, we're getting more referenceable customers and customers that are – the employees that are moving to other companies and saying, I can't be here without Domo. That's definitely led to a bunch of logos. We've had the execution that I was talking about earlier from Ian and his management team. They have been doing a lot of sales blitzes, and a lot of, I guess, moving to a monthly cadence from a quarterly cadence and having the team on that kind of a cadence, especially when you're kind of in a remote workforce is actually been really positive for us because you don't get to see everybody all the time. You're not walking around cube to cube. And so having everybody really focused on a monthly number has been a part of Ian strategy that's worked really effectively. So those are two of the ways that we've been getting more logos and I'd say the third is just that marketing is continuing to find opportunities in ways to efficiently bring in new logos. And so that seems to be working out for us in terms of picking up the pace and the rate that we can generate new logos for us.

Great. All right. And if I could squeeze one more. Bruce, I think you did mention that you maybe off to the best start of a quarter ever. Anything more to elaborate in terms of what you guys are seeing?

Well, I would just say that the momentum that we experienced in Q3 seems to be continuing, and it makes sense given, again, what Josh has pointed to operationally. The rigor is there, and we're still applying it on the sales side. On the marketing side, again, focused on branding and messaging on certain product areas, getting more clarity, providing better sales tools, the list goes on and on. And fortunately, we've always been worried and cautious given economic environment. But that just seems to be the same. It hasn't deteriorated. And what we said last quarter, if it just stays where it is, we’re in pretty good shape. And it's manifesting itself and just a great start to the quarter. I mean, [indiscernible]. But yes, this is just a continuation of what we've been seeing. So it gave us the ability to raise guidance by $6 million for a quarter, which frankly is a lot. It's more than we've done in a very, very long time. And I just think we can count on reasonable high level transaction volumes. We can continue to sell. What's good about getting a lot more new customers is we already know we can sell it to them. It doesn't matter the size, we can continue to sell into them. So that just provides more fertile ground for the upsell business. So we just have everything that seemed to be going our way, and we're going to keep working pretty hard at even doing a better job at acquiring customers at a reasonable cost. We don't feel we're anywhere near our potential. And if we can just keep it up through the rest of this quarter and into next year, we're going to have a good quarter and look forward to a good next year.

Sounds good. Well done. Thanks.

Thanks a lot.

Your next question comes from the line of Jennifer Lowe from UBS. Your line is open.

Great. Thank you. Maybe Bruce, can I just follow-up on the last discussion there and just digging slowly deeper because I know you're always very, very conservative on forecasting large deals and it's great to see this high level of transactions, which seem to really be supporting the guidance. But maybe just sort of specifically, I mean, how's the large deal pipeline looking, going into Q4, which is normally a pretty strong quarter for that. And is any of that in the guide or is that sort of upside to even what we're talking about here?

Yes. We still are building a large deal pipeline. We have the ability to do that given the size of our customers. The big customers seem to just keep buying more and more, obviously finding more and more use cases. So that's comforting. So we have the ability to keep building a large deal pipeline, but I will say in guidance, it does not assume a significant number of large scales and maybe I need to go even further. It really doesn't assume any single, I'd say reasonably sized deal. So that's good to know because in Q4, we tend to have just lots of activity. It's just the nature of Q4. So the guidance is founded on transaction volume line of sight for what we see a good start with a little bit of upside if we are able to close larger sized deals.

Great. And maybe just taking a step back, I think from the one of the other standouts was just the larger upsell deals that you're doing within your base and given sort of the discussion around, being a bit more flexible how you get into those organizations and then expand once you're in there, it seems to really be playing out. But I'm curious, as you get these seven-figure type deals that are upsells on your existing footprint, is it still largely carving out opportunities around the existing BI footprint? Are you starting to displace some of those categories as the deals get bigger and bigger a bit more?

Well, we really talk about – first of all, I’d say at all our large customers, they have every product out there in the BI space and the reporting space and big data space. So we're able to just solve problems that haven't been solved by other technologies or sets of technologies or combinations of the technologies. And that's pretty comforting. It means we are very unique in our ability to bring that whole stack and then just record time, get data delivered to create data and deliver it in ways that customers just don't have the ability to do it. And that generally comes out of a wide variety of budget and budget areas, some of these are revenue enhancing, so they kind of create their own budgets. But over time, we do start eating into the available budgets for other technologies. It's our own customers. I mean, this is what we found out earlier. It's our own customers that figured this out and they determined what technologies they can turn off or decommission or roll back. We don't have to do that. And we used to do that. We found that is counter productive. Why don't we just let the customer do that? Why don't we just bring a solution they don't have with the staff they have today? And they'll find all kinds of ways to use it and expand whether or not it's leading into another budget, but we are finding, they are able to start using parts of marketing budget, sales budget, and the IT budget itself. And our IT friendly message keep everything you have and just extended, allows the IT department to embrace it or even a BI department to embrace it. And sometimes they have this excess budget and sometimes they're able to like rearrange things in our favor. But we like that and figure that out. And so that's been our approach and it's working for us and it's not the same thing we did a few years ago. We think it's a much better way to approach the market a very friendly way, a better partner friendly way, the better customer friendly way. It's certainly a more friendly IT way to go about approaching our customers.

Great. Thank you.

Your next question comes from the line of Patrick Walravens from JMP. Your line is open.

Great. Thank you. And let me add my congratulations. So Josh, unless you want your software to be able to do in the future that it can't do today?

It’s a good question. There's just some additional things, I'd say number one, be more and more partner friendly, so be able to integrate even more seamlessly with partners than we do. We've been able to identify some partners that we have had great successes with, with our customers, but it's taken a little more back into work then maybe if possible. And so seeing those possibilities and trying to identify them and really do more that I think is an opportunity for us on the upside. And then from a usability perspective, I think once you get all of these executives using these products, there really isn't another – there's not other software in the world that enterprise CXOs use to run their business besides, Word, Excel, PowerPoint, Email, and social media. So this is actually like the real business tool that they use to run their business. And when you're the first company to have those people actually logging in and getting things on their phone and getting text messages and in-app messages, that's a real opportunity and power to leverage in the platform. And I know that we're the first ones to do that at scale. And we've seen that these customers like that question I was answering earlier about what happens when you get in there and you finally start expanding and seeing these CXOs use these products has been really fun. So I would say there's more opportunity there as well, Pat.

Thanks. And then as we see some of these other companies that are focusing on particular verticals in AI and sometimes extracting really enormous amounts of money, how much of a part of the vision for Domo is that, commercial IoT or government for the intelligence agencies or the media industry?

Yes. I think we've seen some of the efforts there with our data science and with our AI and ML, and there's certainly more opportunities there. IoT, we put a lot of effort into and it was one of those things that there still needed to be four or five pieces to really finish the solution up. And there has been some players that have taken a really deep approach to very specific niche verticals that they've been really successful and more power to them. It's been awesome to watch them and inspiring certainly and you can see some of the ways that the world's going to evolve and you can see someone gets go deep in an organization. And so I think there is opportunities there as well, and we're continuing to – I mentioned one of our big efforts in product right now is Domo Everywhere. The other really big effort underway is just continuing more and more advanced analytics because as we get into these big customers, that's one of the things that they look for from us. If they're going to replace everything else that they have inside the organization, they want to see more and more advanced analytics and more data science opportunities and more machine learning opportunities. And those are some of the partners that I was talking about where I think we have more opportunities to really partner up and become closer to – there's an ecosystem and that'll help us understand that better.

Awesome. Thanks a lot.

Your next question comes from the line of Jack Andrews from Needham. Your line is open.

Great. Thanks for taking my question and congratulations again on the results. It was nice to see the uptick in gross retention. And I just wanted to flush that out a little bit if we could. You talked about investing in customer success a bit more. Is this – should we think of this as sort of a new dedicated team and what do you think the impact from a gross retention rates could be moving forward given some of these investments?

Yes. Retention has been awesome. And this is so fun to watch that [indiscernible] numbers that I think we're more used to. It was just a long-term coming in terms of their – this is a really complex space and we've taken a really broad approach. And so there were a lot of things that we needed to shore up to really prevent, I mean, to create the right kind of experience we wanted our customers to have, and we've done that with the product. And then it was getting the leadership correct there. And we have a new leader there. That's been doing a great job and his next stable of leaders, they're just on fire. They're having a lot of fun. They're excited about what they do. They love our customers, they love Domo. They're passionate, they love telling me anytime I do anything wrong. And it's just awesome. They're so passionate about what they do, and we're seeing that reflection in the way that they fight for our customers to make sure that the customers get everything that they need in order to return to us and buy more and more products from us. And we're seeing – we've talked about our upsells, but a big swath of our customer base is upselling and buying additional products and services. And whether that's buying an extra dollar or an extra million dollars, it's a pretty good sign that they're happy when they're investing more and more into your product. So I think that's the best thing that we're seeing there. And the incremental investments are just as the product – as the revenue base grows, you need to continue to invest there. And we'll do some innovative things as well, but we have the expense base, that's mapped to that revenue base to be able to do that. So they're not large incremental investments. It's more just – as the revenue grows, we'll continue making investments there because we love seeing the results that we're getting out of that team.

Great. Thanks for your perspective, and thanks for fitting me into the call.

You bet.

Your next question comes from the line of Kamil Mielczarek from William Blair. Your line is open.

Hey guys. It’s Bhavan here. Thanks for taking the question.

Hey, Bhavan.

Hey, and congrats on the billings number. That was really good. Maybe one for Josh here, you touched on partners and I want to focus on the SI partners a little bit. And it's really exciting you’re starting to see them deliver implementations of that scale. I guess have you seen any of them, Josh, start to implement applications on behalf of customers where they're starting to monetize themselves a little bit? Is that some of that could happen or should happen over time?

It definitely happened over time and we're starting to see some of that. I mean the federal deal that we talked about, that’s definitely one of those situations where they – they were really happy to go to market with us. They chose us. It was a big take-off. They went and then they took their combined proposal in and we’re successful at selling that to the federal government. And so that was really nice to see. We think there's a lot more of these to come. I really think that that question was asked early on in the call was really apropos for where we're at right now. It's the other shoe hasn't dropped in terms of people understanding how successful we really are at our big accounts, and how we really do a takeover and they sunset all of their other tools eventually and really centering on us from top to bottom in their organization, and then expanding out from the organization to their vendors and suppliers. So I think as that kind of messaging gets out there more, hopefully as analysts write more favorable – industry analysts write more favorable reports about us when – as they get their quadrants to [indiscernible] more, I think, where the market is going, which is where we've always been. Then we'll see some more success in those areas, but there is been some headwinds there historically for sure.

Yes. Because ultimately that I think becomes really interesting flywheel long-term because they have such high CX level relationships. It's good to hear though that it's starting to happen a little bit. A quick one for Bruce, actually two quick ones for Bruce. One, you guys have talked about sort of continuously improving enterprise sales productivity, obviously it improved given you a couple number of sales reps, but the billings, et cetera have been really strong. I guess, are you at a point where you don't think you have room for more productivity given you want to ramp up more sales people? Or is there still room for productivity and the ramp on sales people sort of in a 12-month period has led to layer in on top of the improved productivity, [indiscernible] the dynamics between those two pieces of the sales investment coming out?

Well, we measure the productivity on the concept of a ramp head, a ramp rep, and that's been nice and healthy. So we give depending on whether it's a corporate rep or an enterprise rep six months to nine months, sometimes 12 months. So in answering your question, there is absolutely built-in ramping on the reps we have, so that really sets up growth for us. And then on top of that, we plan to hire more reps and yes, they need to ramp and we have a ramping schedule. So as we layer them in and that's kind of another layer of growth, and then we still have – even though we're pleased with the overall productivity of salesforce, we still think there's even room to improve that over time. And so that way we have like three ways to grow if we focus on just the concept of productivity per rep. So that's how we think about it.

Got it. And then one quick one for both of you or even if Ian is there. But the visibility, this question has come up with investors, which is, as people have seen a demand pickup in the back half of this year and people accelerated digital transformation initiatives, analytics initiatives, we need to get data to executives and among devices faster, et cetera. As you look for – and I know you're not giving guidance, but as you look forward, do you worry that there's an air pocket, Q1, Q2 next year, what people then take a pause. How do you think about that vis-à-vis visibility maybe compared to where it was a year ago or two years ago? I'd just love to get – understand how you're thinking about that? Thanks.

Well, I mean, what we have going for us is just the whole portfolio like industries, customer sizes, types of customers, types of use cases that are just common sense use of our platform such as ours to just simply get data to people in ways they just can't get today. And I don't see why that's going to change at any time in the future. And we certainly argue as the economy gets better, it ought to get better, maybe the activity ought to pickup in those troubled industries, finally can start purchasing from us. I guess they – I mean, we've had success with troubled industries, it’s been not nearly what we would have had and we now have to seeking on the downturn.

I think one of the – Bruce didn't say one of the – I think hesitations around calling some of the big deals is, one of my reps just texted me an answer, they're listening to the questions and I got a text message and it says, tell them the answers to cure COVID. COVID [indiscernible] from the sense that it's really helped, I think accelerated a lot of digital transformation and it's helped us pickup new partners and really prove our ability to be – to rapidly respond and to have a very flexible local offering, et cetera, et cetera. At the same time, there's still just unknowns out there. And you're talking to big customers about really large deals and you know it's not a normal environment. So as much as you know that they need us, it just gets really hesitant to start calling those deals, when it would meaningfully impact your guidance. So I think that is in fact one of the answers. But pipeline is looking good. I mean we have really interesting conversations with customers that we've known for a long time, and those are really big upsells that are out there. And we're also seeing new customers come in that know what we've done for other customers because our customer left their former employer and went to a new one and brings us a big juicy deal. So there is deals out there for sure. And like Bruce said earlier, we've had a good beginning of our quarter and we brought in some decent sized deals already. And just be interesting to see how the rest of this quarter plays out. But we've been a 20% grower for the last few quarters and we're going to do our damnedest to make sure that's the case again just given the environment that we're all living in, it feels appropriate to be a little conservative.

Yes. There's a [certain metric phasing as you guys said seems to be doing well]. Well, congrats guys. Thanks for squeezing me in. I appreciate it.

Yes. Thanks a lot.

Thank you.

Ladies and gentlemen, this concludes Domo's third quarter fiscal year 2021 earnings call. Thank you for participating. You may now disconnect.