Domo(DOMO 6.50%) reported fiscal second quarter 2026 earnings on August 28, 2025, delivering $79.7 million in GAAP revenue, $70.3 million in billings, its first positive non-GAAP EPS ($0.02), and $1.4 million in positive adjusted free cash flow. Management emphasized a successful transformation to a consumption-based model, rapidly expanding cloud data warehouse (CDW) partnership activity, and rising net revenue retention (NRR), particularly among new consumption customers, which reached 108%. The following insights examine the company's business model inflection, emerging competitive strengths, and investment implications. (Fiscal year 2026 refers to the period ending January 31, 2026.)
Domo accelerates shift to consumption-based revenue
The company's annual recurring revenue (ARR) mix reached over 75% consumption-based contracts, up from just a few percentage points two years ago, with management aiming to exit fiscal 2026 above 85%. Consumption customer NRR for those who initiated purchases on the new model was 108%, while total ARR net retention rate was over 94%, marking the fourth consecutive sequential increase.
"Two years ago, we had zero cloud data warehouse partners, or CDW partners. Today, we have five of the largest and most important CDW. Back then, consumption customers were just a few points of our ARR. And now over 75% of our ARR is on consumption. What an incredible transformation in just two years. Sales productivity and new ACV once lagged, now they're performing as strong as ever. The new business engine is firing on all cylinders. Our turnaround is visible in multiple areas over the past year. New ACV growth has accelerated every quarter. After a double-digit decline in Q3 fiscal year 2025, we have accelerated to growth approaching 20%. The highest we've seen in three and a half years. Our year-over-year Salesforce productivity growth has accelerated from 19% in Q3 fiscal year 2025 to a stunning 67% in Q2 fiscal year 2026. Subscription RPO growth has accelerated from 3% in Q3 fiscal year 2025 to 19% in Q2 fiscal year 2026."
-- Josh James, CEO
This historic mix shift to consumption contracts, coupled with surging sales productivity and annual contract value (ACV) momentum, signals structurally higher growth capacity and improves Domo’s long-term operating leverage, as well as customer expansion potential.
Partner ecosystem propels pipeline and enterprise adoption
Domo integrated with five leading CDWs, enhanced technical integrations with Snowflake, Databricks, Oracle, and Google, and is now present in hyperscaler marketplaces, which enables streamlined procurement and creates joint selling opportunities. New logos and large upsells increasingly originate through partner referrals; for example, a private equity customer signed a five-year deal expanding Domo’s platform company-wide via a CDW marketplace, while a home improvement retailer replaced Power BI with a joint solution through a CDW partner.
"Through this collaboration, we constructed a solution that was truly a win-win. We helped the customer transition from a traditional seat-based licensing model to consumption, which also opened the door for an upsell and a three-year contract. Importantly, they were able to leverage their existing spend commitment with our CDW partner by purchasing our product through their marketplace, allowing our customer to increase their usage of our platform without needing any approvals for extra budget. This would not have been possible without our partnership with the CDW, the availability of our platform on their marketplace, and the flexibility built into our consumption model."
-- Josh James, CEO
The multi-channel partner-led go-to-market model increases enterprise account penetration, accelerates sales cycles, and drives a higher-quality pipeline that historically converts at up to seven times the rate of Domo’s own-sourced leads, according to management commentary on partner ecosystem lead conversion rates.
Domo achieves non-GAAP profitability and margin expansion milestones
The fiscal second quarter marked Domo’s first-ever positive non-GAAP earnings per share ($0.02) and positive adjusted free cash flow ($1.4 million), with operating margin reaching a record 7.7% and subscription gross margin improving for the second straight quarter to 81.9%. Current subscription remaining performance obligations (RPO) grew 4% year-over-year to $220.2 million, and total subscription RPO reached a new high of $409.8 million, up 19% year-over-year. These results support Domo’s sustainability and provide financial flexibility for reinvestment in AI and strategic partnerships.
"Balance has been critical to achieving our first positive non-GAAP EPS and maintaining a positive free cash flow, milestones that demonstrate the strength and momentum of our business. Moving forward, I'm committed to scaling efficiencies and driving consistent profitable growth. This disciplined approach to growth and profitability is reflected in our continued focus on longer-term, more strategic contracts, which contributed to another strong RPO quarter. Current subscription RPO grew 4% year over year to $220.2 million and our total subscription RPO grew 19% to $409.8 million, the highest ever."
-- Todd Crane, CFO
This supports Domo’s sustainability and provides financial flexibility for reinvestment in AI and strategic partnerships.
Looking Ahead
Management guided to billings of $75.5 million to $76.5 million for the fiscal third quarter, GAAP revenue of $78.5 million to $79.5 million, and a non-GAAP net loss per share of $0.03 to $0.07. For fiscal 2026, Domo raised guidance to billings of $317 million to $321 million, GAAP revenue of $316 million to $320 million, and non-GAAP net loss per share of $0.11 to $0.19. Management now targets year-end fiscal 2026 billings growth and non-GAAP operating margin of 6% each, up from 5%, and reiterated the goal to reach 10% for both metrics by fiscal year-end 2027, with expectations that gross retention will improve meaningfully in the fiscal fourth quarter as multi-year consumption contracts scale.
