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Domo Inc (NASDAQ:DOMO)
Q1 2020 Earnings Call
Jun 6, 2019, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, ladies and gentlemen, and welcome to the Domo First Quarter Fiscal Year 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to introduce your host for today's conference Mr. Peter Lowry, Vice President of Investor Relations. Sir, you may begin.

Peter Lowry -- Vice President, Investor Relations

Good afternoon and welcome. I enjoyed getting to meet most of you and looking forward to meeting the rest of you. 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?

Julie Kehoe -- Chief Communications Officer

Thanks, Pete. A press release was issued after the market closed and it's posted on the Investor Relations section of our website, where this call is also being webcast. Statements made on this call may include forward-looking statements related to our business under federal securities laws. 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 filed with the SEC, in particular, today's press release and most recently filed Annual Report on Form 10-K. 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.

And with that, let me hand it over to Josh.

Joshua James -- Founder, Chief Executive Officer and Chairman of the Board

Thank you, Julie. Hello everyone. It's good to be back with you again for our Q1 fiscal year 2020 earnings call. Before I jump in, I first want to congratulate the team over Looker, the acquisition underscores the value of helping businesses use their data, as well as the challenge and expense that even the world's largest technology vendors face in delivering just a few of the capabilities in our platform.

For today's call, I'll focus on three things: first, our strong business execution; second, customers leveraging the power of our platform for our enterprise apps and additional advance data offerings; and then third, the strength of our ecosystem and the defensible business it creates.

On my first point, our strong execution has helped us sustain growth and achieve operating leverage. In Q1, we saw 28% year-over-year growth in revenue and 22% year-over-year growth in billings. And at the same time, we realized a 19% year-over-year decrease in sales and marketing expense, and a 15% decrease in overall operating expenses. We continue to make clear and significant progress toward making our commitment to being cash flow positive without having to raise any additional capital a reality. We focused on the power of the platform in growing and selling into our enterprise base. Our platform messages resonating in the market. We see this in the customer conversations we are having and is evidenced by a pipeline that is larger than ever with more seven figure opportunities than we've ever seen.

In the past quarter, we began piloting a new pricing model that focuses on the value of the components of the platform and is designed so that per seat pricing doesn't hamper a customers' ability to expand Domo across their organization. This allows them to derive more value from increased adoption, while paying initially for the platform and incrementally for additional service levels and usage as they realize that value instead of just receipts. Today, this new pricing approach is showing a positive impact on the initial size and scope of deals in the pipeline and on customers ability to more easily imagine what's possible as their data is easily brought together at scale, securely governed and rapidly leveraged across the business.

Concurrently, we're seeing customers engage in deals that are large in scope and we're experiencing rapid expansions and deployments. As an example, a customer we sign in Q4 expanded its roll-out from 1,000 people to more than 5,500 in Q1 and is currently on its way to deploying 15,000 plus people. During the quarter, we had a new warehouse enterprise customers include pharmaceutical giant, GlaxoSmithKline, the global Japanese consumer products manufacturer Bandai Spirits, and an international oil and gas business. We now have 458 enterprise customers, a year-over-year increase of 19%. Enterprise revenue grew 33% year-over-year, an acceleration from Q4.

Our corporate business also remains a bright spot. We saw strong new local growth, a modest improvement in sales rep productivity, a 30% year-over-year increase in corporate average new deal size, and as our product becomes more and more automated the highest mix of recurring revenue in two years. Again, on execution, I'm encouraged by the combination of solid results and a robust and growing pipeline of large deals, all while still reducing expenses for which I'm quite impressed with my team.

On my second point, our customers are leveraging the power of the platform for our enterprise apps and additional advanced data offerings. Domo can do things that no other technology company can do today. Domo's enterprise apps include a Retail Performance Suite that helps retailers compete more effectively through better store performance and inventory management. Other enterprise apps also include suites of apps for media companies and for marketers to help drive better marketing and advertising our way, as well as a new suite of IoT apps to help manufacturers create new value from IoT data. It's easy for us to introduce additional apps across the business, all of which are additive to our selling the platform.

I realized that everyone I know and probably everyone you know knows someone who has an idea for a great app but no one knows how to get them built. They're time consuming, they're expensive. The good news here is that for anyone who's a customer of ours who has an idea for an app to improve their business, they can easily use one of our enterprise apps then customize it to their needs.

One customer, for example, purchased our sales team management app to improve retention and recruiting of its sales team for more than 5,000 people in the organization. This enterprise app provides transparency regarding sales and goal performance and also associated compensation. Other customers use our retail management app to get real time sales and performance metrics across thousands of floor associates regarding what is happening now, not yesterday, and allows them to also compete with other branches in their organization. Enterprise apps are the future of how our customers will fully realize the value of their data and fully realize the value of a digitally transformed business.

When we talk about enterprise apps, we're talking about fully functioning feature rich business apps to help solve some of our customer's most challenging business issues. They are just little workflows where someone stitch together two data points and called it an app. These apps have robust enterprise grade security with fine grained data access controls. They have multiple distribution options including, access with any browser and being natively deployed to iOS, Android and the mobile web. They also have an interactive and responsive UI taking advantage of Domo's industry leading and user experience, as well as sophisticated mapping capabilities, integrations with thousands of data sources and importantly write-back capability to complete the round-trip data exchange.

The excitement around our apps is palpable. At Domopalooza, our annual customer event in March after a main stage customer session where several customers presented their apps in a session called App Attack, many of our other customers approaches who were upset that they didn't get a chance to show off their enterprise apps that they used to run their businesses. One of those customers was NBC whom we brought on stage the next morning to demonstrate the programming performance app that 400 to 500 people, everyone from executives, producers to marketers use on their phones to interact with hundreds of millions of rows of data so they can easily understand how their programming is performing against the competition.

Also during the App Attack, UPMC, a 40 hospital healthcare system demonstrated how it is using our Digital 360 app, part of the Domo marketing suite to drive better marketing ROI across the entire organization. And Telus, the Canadian telecom company shared how they are using a store performance app to get real time data into the hands of their store managers to track better store performance across their retail business.

Now to my third point, the strength of our ecosystem is helping us build a defensible business. In combination with the power and scale of the Domo platform, our ecosystem partners allow us to offer new products, features and integrations that serve the unique needs and environments across every area of every business.

In Q1, in conjunction with our growing portfolio of technology partners such as AWS, Google, Azure, LinkedIn, Box, Coupa, Okta and Zendesk, we announced the Domo Integration Cloud. The Domo Integration Cloud or iPaaS solution includes more than 1,000 pre-built connectors and are federated query capabilities to connect to and leverage data, no matter where it lives, on-prem or in the cloud. To demonstrate how expansive our connector partnerships are, for example, we connect to 17 separate AWS Services such as Redshift, RDS, Aurora, Athena and S3 and 19 Google services such as BigQuery, Google Analytics, AdSense and Google Cloud Storage, many of which include write-back and which we believe are industry leading. Integration Cloud is designed for customers who need a solution with more than a 1,000 pre-built connectors to quickly and securely bring together their many disparate data sources to deliver business value. Astellas Pharma US, a $3 billion plus revenue business is one example of a new integration cloud customer.

One of the most exciting ecosystem announcements in the last quarter was the Domo business automation engine, part of Mr. Roboto, and the first of its kind orchestration layer that works across all of an organization's data systems and people. It leverages machine learning and advance the learning capabilities to help organizations coordinate intelligent event based workflows and shorten the time from insights to action. In plain English this means Domo goes beyond delivering insights to truly becoming operating system for your company by intelligently automating key actions across multiple systems of record.

Another instance that demonstrates the strength of partnerships in our ecosystem is our new data science and machine learning offerings which we also announced in Q1 and which have been a big hit with customers as they look to rapidly deliver advanced insights into the business. Through key integrations with Amazon Sagemaker as well as Jupiter, we are helping data scientists spend more time doing the work they were trained to do by eliminating much of the time consuming repetitive work of data preparation and transfer. A global CPG leader leveraged our data science offering to dramatically improve store forecasting, realizing millions of dollars of value after only two weeks of work. That is also extends beyond the data scientist to help people who aren't technical experts leverage data science to predict outcomes.

At Domopalooza, for instance, TripAdvisor's Head of People Analytics demonstrated how he is using the programming language R within the Domo platform to better understand and predict employee behavior so they can reduce employee turnover. Further in their ecosystem footprint with Domo's IoT Cloud, we leverage relationships with AWS IoT Analytics, AWS IoT Core, AWS IoT Device Defender, Azure, Particle, Raspberry Pi, Costco and Mongo DB to name a few. Domo IoT Cloud features more than 30 unique IoT connectors and several new -- several new IoT apps to help customers get more value from machine generated data.

A manufacturer of robotic consumer products, SharkNinja, for example, is using our IoT capability to understand the behavior of their products once they're purchased, which is something they just couldn't do before and this capability helps them produce better products to improve their customers' experience.

Building on our IoT partnerships, I'm excited to announce today the Zendesk customer success IoT app, a new app developed with Zendesk. It takes machine data into our platform and then through Domo's learning and workflow engines when certain conditions are met, it automatically initiates a Zendesk support ticket without any human involvement. This is just one of several new apps you'll see us develop with partners that leverage the power of the Domo platform to create new value for customers. We're in the very early innings of customers adopting the platform for purposes of applying it to very specific high value use cases and we believe we'll see significant proliferation of applications on our platform as they become more well-known to the marketplace.

One strength of our ecosystem is our growing body of users and available training. This last quarter we announced our first official certification program which includes five new product certifications to help people level up their data skills and demonstrate proficiency in Domo. We'll continue to make investments in our vast and growing ecosystem to better support our customers and gain further leverage. You can expect more related announcements in the future.

In closing, I'm proud of our team for the innovation they keep delivering that keeps us ahead of the pack as recognized by our customers and by third parties. In the most recent Dresner Advisory Services report on Self-Service BI, Domo ranked Number 1 out of 23 vendors, scoring high points for our collaboration, governance, storytelling and integration features, which continue to grow an importance as organizations realize they need the combination of tools that only Domo provides.

Additionally, in Dresner separate flagship Wisdom of the Crowds research, Domo received a perfect recommendation score from customers for the third year in a row. In the Gartner report published in May, customers ranked the BI and Analytics vendors, Domo received the Number 1 rating of all vendors for business benefits achieved, as well as for ease of migration, which signifies how easy it is to implement the products that we roll-out. I'm continually astounded and impressed how the biggest companies in the world are using our platform and our enterprise apps to transform their businesses.

With that, I'll now turn it over to Bruce. Bruce?

Bruce Felt -- Chief Financial Officer

Thank you, Josh. I'll begin with our first quarter performance followed by our second quarter and fiscal 2020 full-year guidance. We had another solid quarter, and as Josh mentioned, we're executing well against our plan. Billings grew 22% to $41.1 million. Our billings growth was supported by our dollar-based net revenue retention rate that continues to be greater than 100% and was slightly higher than last quarter. We also continue to see more customers entering into multi-year contracts with 45% of our customers now under multi-year contracts at the end of Q1 compared to 35% at the end of Q1 last year. This drove our remaining performance obligations or RPO to grow 34% compared to the same quarter last year.

Q1 revenue was $40.8 million, a year-over-year increase of 28%. Subscription revenue grew 29% and represented 84% of total revenue. Year-over-year subscription revenue growth was driven primarily by new customers and we now have over 1,800 customers. International revenue represented 26% of total revenue, up from 23% in Q4. Our subscription gross margin was 77%, up 270 basis points from 74.3% in Q4 and up over 74 percentage points from 69.8% in Q1 of last year. We plan to get additional leverage out of our subscription cost of revenue as we continue to effectively manage our data center operations to finding efficiencies and better utilizing services. Including our services business, our total gross margin was 69.1%, a 60 basis point improvement compared to 68.5% in the fourth quarter of last year and a 520 basis point improvement compared to 63.9% gross margin in the first quarter of last year.

In addition to our revenue growth and improving gross margin, I was pleased that we were able to deliver these results once again with a further decrease in operating expenses. In Q1, we were able to decrease operating expenses by 15% from last year, even though revenue increased by 28% year-over-year, the decreases came from lower marketing and personnel costs. The net effect of increased revenue while effectively managing costs allowed us to improve operating margin by 73 full percentage points from the same quarter last year. Our net loss was $29.2 million and our net loss per share was a $1.8, this is based on 27 million weighted average shares outstanding basic and diluted.

Turning now to our balance sheet. As of April 30th, we had cash, cash equivalents and short-term investments of $154 million, more than adequate amount to get us to cash flow positive. Our adjusted cash used in operations was $22.2 million, an improvement of $5.5 million over the prior quarter and a 40% reduction compared to Q1 of the prior year. Adjusted cash used in operations excludes the effect of $4.5 million of proceeds from shares purchased in Q1 under our Employee Stock Purchase Plan, which had no effect on our cash balance, but is presented as a gross up in two different sections of the cash flow statement.

Now to discuss what we expect in Q2. We expect Q2 billings of about $42 million. We expect our Q2 operating expenses to decline as expenses related to new sales hires are more than offset by the Q1 cost of our annual user conference. For the year, we expect our operating expenses to be down slightly from fiscal '19. We expect to continue to execute on our plan to decrease cash burn sequentially each quarter fiscal year '20 and expect Q2 adjusted cash used in operations of about $20.5 million and $74.5 million for the year.

Now to our formal guidance. For the second quarter of 2020 we expect GAAP revenue to be in the range of $41 million to $42 million. We expect non-GAAP net loss per share basic and diluted of $0.98 to $1.02, this assumes 27.5 million weighted average shares outstanding basic and diluted. For the full-year of fiscal '20, we expect GAAP revenue to be in the range of $173 million to $174 million, representing year-over-year growth of approximately 22%. We expect non-GAAP net loss per share basic and diluted of $3.79 to $3.87. This assumes 27.6 million of weighted average shares outstanding basic and diluted.

In closing, I'd like to reiterate, we're pleased with the progress we made in Q1 in executing against our fiscal year '20 objectives as we balance improvements in our cash profile and our expense profile with investments in growth opportunities.

With that, we'll open up the call for questions. Operator?

Questions and Answers:

Operator

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

Joshua Baer -- Morgan Stanley -- Analyst

Hi. This is Josh Baer on for Sanjit. Congrats on 73% of margin improvement year-over-year.

Joshua James -- Founder, Chief Executive Officer and Chairman of the Board

Thank you.

Joshua Baer -- Morgan Stanley -- Analyst

Over the last three quarters, we've seen a bit more upside I think and more in line top line this quarter. So I'm just wondering, have you seen any changes this quarter in the competitive environment or customer purchasing behavior or demand or anything else?

Bruce Felt -- Chief Financial Officer

Hi, it's Bruce. No, we -- I mean, most of the data points that we see like engagement with our customer base further reinforce the fact that this is extremely differentiated product compared to anything out there primarily because it's a complete platform designed for business users to get access to the data they need and then we're even -- in addition to that, we're finding that the customers are embracing the fact that they can do -- they can build upon the platform and use different components of the platform in ways that really enhance the operations of their business. So I think that we are in a extremely good competitive position.

Just to your point on over performance, our Q1 (ph) -- just tend to be the seasonally low quarter and we just then -- we did not see the outperformance that we've seen in the past, but all the operations, all the metrics still point the right direction and again, we're mostly excited about the fact that the customer engagement that we find with our product and platform particularly is evidenced that our large user of that user conference that we're seeing such positive kind of embracing of it and such robust use cases that we're pretty optimistic about how this is going to play out through the future quarters.

Joshua James -- Founder, Chief Executive Officer and Chairman of the Board

And then one thing I would add to that is, if you look at -- Q1 is typically seasonally low, you know a lot of the big deals that comes through -- it come through in Q4. And as we looked at things, we didn't have any of the big deals come through in Q1, but like we mentioned in the script, we have more seven figure deals in our pipeline than we've ever had, by a meaningful amount. And it just feels like there's a lot of really interesting conversations that we're having with brand new customers, with customers that sign within the last year and then also with customers who have been with us for three years, we're having a very big strategic conversations with them where they recognize the value of all the things that we're doing, now maybe not just some components or just one piece like Looker does for instance, but really leveraging all of the things that we do, having big strategic conversations with us. So hopefully we'll see some of that outperformance like we did in previous quarters, but we knew Q1 is always tight because we have a big clean out in Q4.

Joshua Baer -- Morgan Stanley -- Analyst

Excellent. Are you still looking to increase sales capacity by 30% this year? Are you seeing the productivity improvements to justify that, and then with that in mind, can you just comment on the potential to accelerate new ACV in FY '20? Thanks.

Joshua James -- Founder, Chief Executive Officer and Chairman of the Board

To answer initially, yeah, definitely still pushing forward and on track in terms of hiring the reps and getting the reps in place still really encouraged by the underlying metrics like productivity, pipeline coverage, the -- in the different regions. Also like we mentioned not only in the outer regions but also just in corporate here, retention rates are starting to look similar to enterprise retention rates, productivity is looking really positive which is why about a quarter ago we said we need to start hiring more reps in all the regions. So we're very encouraged by that and now it's really a matter of getting that capacity in place.

And then before I turn to Bruce who can answer this question as well, the other thing that I was really encouraged by in Q1 even though we didn't outperform on some of the -- on the billings metrics, we certainly did on the cash flow metric and that's something that's just important to us right now is really getting this by sometime, I guess, I can't give any kind of timeline but sometime in the near future getting us to where we are close to break-even and then growing as rapidly as we can from that point forward.

Bruce Felt -- Chief Financial Officer

And I'll just add, we did make the comment last quarter that we believe for this fiscal year we should see new ACV accelerate and we are on track to kind of deliver on that, you know that expectation that we put out there last quarter.

Joshua Baer -- Morgan Stanley -- Analyst

Great. Thank you.

Operator

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

Sven -- Credit Suisse AG -- Analyst

This is Sven (ph) for Brad. Congrats on a strong quarter. I just had a very quick question. I wanted to see what is driving the increase in corporate due sizes. Is it more driven by big initial deployments or do you -- or it's just a sign of more traction that you're getting up market?

Joshua James -- Founder, Chief Executive Officer and Chairman of the Board

Yeah, I think we have a very strategic relationships with these customers. So even if it's a $100 million business, $500 million business, $1 billion business in that corporate area and like I've said many times before, to me half of that business feels like enterprise business. And the contracts that we're seeing -- the new pricing that we talked about you know their ability to go in and they've always been a leader going in and trying to sell the value of the platform. But really switching hard to that definitely helps and they're also taking cues from some other successes we've had where they'll go in and sell in addition to selling the platform and selling minimums and getting longer contracts, also selling some multiyear services to go along with that to help them get the most out of the product in the platform.

Sven -- Credit Suisse AG -- Analyst

Okay. I also as a follow up. It seems as if service's growth rate is now, decelerating -- so can you actually give us a little bit of idea if we should expect that to continue and why that deceleration is not actually going to be a leading indicator for subscription?

Joshua James -- Founder, Chief Executive Officer and Chairman of the Board

Yeah, I didn't hear of the first part of it but you know we put out what we think we will do this year and underlying it is accelerating ACV and you don't necessarily see that right away in billings or revenue. But -- so there's no underlying, I guess, factor that would cause us not to be able to kind of deliver again on accelerating ACV.

And the biggest piece that we indicated to everybody to show that to demonstrate that we believe as an accelerate is the commitment to hiring the reps and adding their heads because we're seeing the productivity that we want. But you can't just turn them overnight. You've got to get the reps, you got to get it ramped up and then they've got to close the ACV and then you have to wait for that ACV to hit your GAAP accounting revenue -- and billings in some cases, depending on whether it's annual or not. So yeah, we're definitely optimistic about the future.

Sven -- Credit Suisse AG -- Analyst

Thanks. That makes a lot of sense. Thank you.

Joshua James -- Founder, Chief Executive Officer and Chairman of the Board

Thank you.

Operator

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

Jennifer Lowe -- UBS -- Analyst

Great. Thank you. I wanted to just talk about how we should think about the big deals going forward. Can you just give us a little color on how the sales cycles for those types of deals look relative to some of the smaller deals you've done traditionally. And maybe specifically for Bruce, how do you sort of forecast close rates and and linearity around those, because is there sort of an extra degree of conservatism there, how do you think about forecasting when some of these big deals can maybe swing things around a bit? Thanks.

Joshua James -- Founder, Chief Executive Officer and Chairman of the Board

Yes, so the big deals in most cases are places where we've had a relationship. They had some positive experiences with us and now they want to roll it out across their organization. In addition to buying more capacity, whether it's data capacity or c-capacity in the old pricing model or adding additional applications, it's usually a combination of the two, and it's been really fun to sit down with CIOs. As we mentioned, we started really going out and talking to more CIOs, because the users of Tableau and Qlik and Looker, that's not our target audience in terms of who we sell to -- whom we sell to, but they can be blockers, and so we've tried to make a concerted effort to make sure we get out there and talk to the CIO or the CEO's lieutenants. And as we've had those conversations, it's been really fun, because like I mentioned in my comments, you really do -- everybody really does know someone that has a great idea for an app, probably get -- it seems like I get two or three text messages a week from somebody that has a great idea for an app but they're hard to get made. I always think people are having great ideas for apps in their business but no one has a clue how to do anything with it.

And when you get in there and talk to the CIOs, there's been multiple times where you start showing them the power of the platform, the apps that can be built on top of that, configure all these enterprise apps that we have and they start telling you about three projects, four projects, five projects that they have and they had no idea how to sort through those projects without them being just custom development initiatives, and now they're like, oh, we can do all that with Domo. So it really is a differentiated solution that we have and you know these big customers, it's just looking at what we've done smaller and doubling it or 10x-ing it and as we get bigger and bigger -- into the bigger and bigger enterprise customers. We're seeing people that we're talking to and they're like, we're thinking about putting 50,000 employees on this or 75,000 employees on this, and those are the kind of deals that we're looking at in the pipeline.

Bruce Felt -- Chief Financial Officer

And then in terms of forecastability, one element of business that we really like is the fact that the corporate business and again that focuses on company size, it's less than $1 billion in revenue it's doing very well. Productivity remains extremely high on a pro rata basis. Deal size are high and they are growing. And so that's a foundation actually and that has very good visibility from the fact that very fast sales cycles. So we like that it's kind of a, maybe a floor of growth that we have in the business.

When it comes to the enterprise business, and again, part of what we see in Q1 and the reason why it is seasonally low is, the enterprise business tends to be a back-end of the year business generally and on top of that that's a big focus of our sales hiring. On top of that, the deal sizes are getting very large or larger than we've seen ever in history of the company which adds complexity to it.

And then on top of that, we're talking significantly to the CIO now compared to before that adds complexity in general but we do watch these deals extremely carefully and get updates constantly on the progress and that does give us the ability to forecast. And we finally have enough volume where you can -- you can never predict every single deal how it's going to play out, but you can as a whole get a good feel for where you believe we will land in terms of new business. And so there -- the raw volume and the fact that we have the highest pipeline ever and the company is extremely as it is conducive to give us -- given us confidence to forecast what we think will happen in Q2 and optimism for what we think we will see in Q3 and Q4.

Jennifer Lowe -- UBS -- Analyst

Great. Maybe just one more for you Bruce. I think in your prepared remarks as you're talking about the growth in subscription revenue. I think you made a comment along the lines of the big lever on growth there was new business and just -- you know and you also mentioned over 100% net retention. So that's -- you know there's sort of a gray space in there of that upsell. So I guess, the question I had was, putting in context when you talked about new business as being the driver the subscription revenue growth, what are you seeing on the up sell side? Was it a little bit less or are you lumping that into that new business categorization?

Bruce Felt -- Chief Financial Officer

Well, the new business from new customers was the highest growth component between that and selling into the installed base. We just had a lot of that in Q4 and I think that just did have some impact on Q1, but a lot of the larger deals that are in the pipeline are upsell deals, because they're much more strategic transactions with very large current customers. So that could easily change and will most likely change toward the back end of the year as those relationships come to closure and we complete the transactions with them.

Jennifer Lowe -- UBS -- Analyst

Great. Thank you.

Operator

Thank you. And our next question comes from Derrick Wood with Cowen and Company. Your line is now open.

Derrick Wood -- Cowen and Company -- Analyst

Great. Thanks. Josh, I wanted to dive into the pricing changes a little bit more. I had a couple of questions on that. First, can you give us a sense for how you're rolling it out, is it with new customers? Is it with renewals? And then, what's the idea in terms of how it helps the cadence of your deal flow to you. Do you think it'll help create less friction at the front end of the funnel or do you think it helps kind of bigger initial gate -- engagements out of the gate. Just curious what do you think there?

Joshua Baer -- Morgan Stanley -- Analyst

Yeah. So it definitely changes the conversation in a few different ways. I think with the renewals, it certainly helps, because you know one of the customer ask you, do you get the same value if we -- and the same functionality if we drop our seats in half. That's a bad conversation to have. We don't want to have that conversation with customers and we had one or two of them and those conversations freak me out. So we recovered from all those and said we've got to roll out this new pricing approach. And that was a few quarters ago when we got that indicator and so as we started looking at it, also our sales managers were out there saying, hey, this is an opportunity for us to build more value in that initial contract. And it sets us up to get even more sales.

And like I said in my prepared remarks, instead of putting these gating item in front of the customer that says, you're not going to really find value until you get more users on here, but we're going to put a big gating item to prevent you from rapidly expanding your users. And then another byproduct of the old pricing model was, they would look at what we charge them for the first couple 100 users and say we've got 10,000 employees and think to themselves this is not going to foot and that wasn't a way that we wanted to think about it as well.

So charging them based on the platform, having data charges associated with it, being able to charge for the apps that sit on top of it, being able to charge for data science seems to resonate with them much better. And because IT is generally involved in the -- with this as the contracts increase, they're used to paying for data, they don't have problem paying for data, but the seat charges is definitely difficult especially with some of these bigger customers. So that's been helpful and it's also helpful in constructing these new relationships instead of them trying to figure out exactly how many people they're going to have on it, to figure out what price they should pay. They want it for a use case and they've already assigned value to that use case. And so introducing seats in many cases was confusing the conversation. So it seems to be better all around. We have our reps out there talking about it, using this pricing model in front of all of our new deals. We've also got a strategy for renewals to bring the renewals into this -- back into this contract by offering them incentives, but setting up the contract in the right way to go forward.

And then it also really helps us in the enterprises, expand to multi-million dollar deals much earlier than we would have otherwise, instead of hoping and praying that more departments are going to come on as soon as they're finding that value. They have a lot of ideas for more things that they want to do but not necessarily going out and recruiting all the users. Now all they have to do is, see the value initially, have the ideas for the future and then be willing to pay for that, implement it, knowing the users are going to bill and have access to it.

Derrick Wood -- Cowen and Company -- Analyst

Makes sense. That's great. And my second question is just around the Google, Looker acquisition. It would be nice to get your thoughts on how you guys fit in the market with Looker and what do you think this means for the space and maybe kind of remind us on the -- on your AWS partnership and what you've been doing to strengthen that?

Joshua James -- Founder, Chief Executive Officer and Chairman of the Board

Yeah, so I think you know this is a case where one of the things is challenging is getting data into places like Big Query or AWS or Microsoft's Azure Cloud and Looker provides one of those functions. We actually don't see them a ton. They're down the list on competitors that we see frequently and they provide -- you know of the competitors that we normally talk about, they provide the smallest amount of the stack but it's a good technology and IT people really like it and it's an admirable technology. Some of the things that they didn't put together are things that we've talked about doing as well. It is further down that stack in terms of just connecting data, being able to visualize that data, and I'm sure for Google it's going to be -- it's going to be a great thing for them.

But they've already said in their acquisition notes, the CEO of Looker came out and said, hey this is -- you know we're still going to be partnered with all the other vendors out there and Google is still going to be open to every other vendor despite in no way changes any of the dynamics or approaches that we've taken there, which I think is important to make that statement for them but it also is indicative of fact that no vendor controls data anymore. The data is owned by the customer. Customers figure that out about 10 years ago and any vendor that says anything otherwise you really raise the ire of your customers.

So from that perspective, Google is a great partner of ours. We do connect over a 1,000 different enterprise applications and databases with pre-built connectors 1000s upon 1000s with some of the generic connectors that we have. And Google I think we have over 19 pre-built connectors that we use. We have to integrate with Snowflake, we integrate with AWS in a lot of different ways and it's been fun work with AWS, because they bring us deals, and they say, hey, here's something we provide this, we need some people to help us create this solution like we described with the IoT solution. So these solutions that we're creating are exciting to us, because we're not out there looking for something to do, our customers are coming to us, our partners are coming to us and saying can you help us with the final mile here in the last leg and it's been fun to deliver those to the market and see the value that that then goes straight to the customer.

So I think all in all it's a good thing. It certainly raises more awareness in the market. We've had a lot of customers ask us to, you know they've got -- there's very few companies that only pick one cloud, most of them pick multiple clouds. We happen to really be the only agnostic cloud data provider that's out there with any of the kind of functionality that we have. And so I think that's going to bode well for us as well as you look at all the other major technology companies that aren't aligned with one of the big three cloud providers. And then when you look at most companies, they use multiple cloud providers. So I think from that sense, it's taken a competitor in a way is certainly from one perspective.

Derrick Wood -- Cowen and Company -- Analyst

Great. Thanks for the color.

Joshua James -- Founder, Chief Executive Officer and Chairman of the Board

You bet.

Operator

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

Patrick Walravens -- JMP Securities -- Analyst

Great. Thank you. Hi guys. So my question would be giving all the moving parts here and how dynamic this space is for each of you, Josh, I mean, what's the number one thing you're focused on right now in terms of what you're personally trying to accomplish? And Bruce for you, what's your number one focus ?

Joshua James -- Founder, Chief Executive Officer and Chairman of the Board

Yeah, my number one focus right now is the one that we've stated at the -- time of IPO and that's going to continue to be our number one focus, probably another 12 months, which is just trying to find the most efficient way possible to identify new customers and close those new customers, acquiring new customers. Once we once we get the customer our nose in the tent, we do a heck of a job retaining that customer or selling them additional product and services. Actually once we even get in where we have a real opportunity on the line, we have great close rates. We just need to continue to find customers more efficiently, which is why things like the Looker acquisition just continue to help us, because it raises more eyes that are saying, hey, what am I supposed to do in this space, what's my strategic move here. And you're seeing companies like Google start to -- put together more of the stack that we built and we'll find at the end of all this, whether or not we should have built the whole thing or not, but we did, and it really resonates with the forward thinking customers that we have and that gives us a lot of -- a lot of confidence that over time that will end up being the right thing, because these are the forward thinking customers that are looking at our whole stack and realizing how they can change the run -- the way they run their business.

I'd say secondarily the other thing that, we had a lot of effort that we're focusing in right now is our ecosystem and our partners. We've got a lot of technology partners. We don't have as many go to market partners and we just hired a new VP, Rob Delaney (ph) who's going to help us out. He was at Microsoft for 12 years and was in their enterprise space and partner businesses, and he's going to come in and run partners for us working for Jay Heglar. And we also actually just got John Miller who was over at Adobe and he's going to be our VP of Strategy and Jay is going to move to -- Chief Strategy Officer I should say, and Jay's going to move to Chief Business Officer, which is where he was spending all his time anyway and that's going to help us a lot with that go-to-market with the cap, with the efficiently finding customers, messaging to those customers.

So we thought we've made two really good hires on those fronts and then the last piece is, you know retention -- the number start getting bigger in terms of the recurring revenue and you -- and as efficient as you can get there. That's a positive thing and we're kind of get into the time in our lifecycle where -- our Company's lifecycle where we can focus it on that. So we just hired a lady named Pam Marianne (ph), who's had a lot of experience at SAP and other companies, managing renewal streams and so we're excited for that as well. So we've got three new people helping us in the three areas that we think are the most important right now.

Bruce Felt -- Chief Financial Officer

Yeah for me it's -- support all the growth initiatives including hiring new reps, building new apps, supporting new customers...

Joshua James -- Founder, Chief Executive Officer and Chairman of the Board

And closing deals, Bruce closes a lot of deals.

Bruce Felt -- Chief Financial Officer

Thank you.

Joshua James -- Founder, Chief Executive Officer and Chairman of the Board

He visits a lot of really -- he visits a lot of CFO's, and it's a pretty interesting demo he says. Here's how I run my public company and the CFO's amount usually drops. So that's been probably Bruce's big focus.

Bruce Felt -- Chief Financial Officer

And on that point, I guess will say -- here I will say, I need it. They've always said, I need it. But it's to support all that within the same cost down below. Like we want to do all these things, but we can't spend any more money. So me and my team do spend a lot of time working on, but how do you fund it, because the total cannot go up and this automatically drives down cash (Technical Difficulty) automatically -- in recurring revenue model where you're used in building layers and layers in new business that's highly profitable. It just drives you to be cash flow positive naturally without doing anything unnatural. So that's just a lot of my effort and I have the whole Company kind of working with me so it's not an impossible task by any means, in fact, we've shown it in numbers. We are able to keep growing the business and we're able to do it with even fewer costs than what we have done in the past.

Patrick Walravens -- JMP Securities -- Analyst

All right. Super helpful. Thank you guys.

Operator

Thank you. (Operator Instructions) Our next question comes from Jack Andrews with Needham & Company. Your line is now open.

Jack Andrews -- Needham & Company -- Analyst

Good afternoon. Thanks for taking my question. I was wondering if you could shed some light on the pricing scheme of your verticalized applications like marketing suite in IoT, cloud and maybe how these compared to your core platform?

Joshua James -- Founder, Chief Executive Officer and Chairman of the Board

Yeah. So there's a incremental fee associated with configuring those enterprise apps. We've built hundreds and hundreds of apps for our customers. We have thousands of apps being used by our customers, some of which they built themselves. And so we're able to go off the shelf and pull these different building blocks and put them together for our customers and so there is a fee associated with that. And then there's an ongoing ACV component. So you might have an app like Digital 360, it might be $200,000 to sell up and $200,000 a year depending on how many users they have.

By the time we've gotten to that point, they've identified which users they want. And so that's one way that we can charge, but generally whatever it is that we're -- that we're selling, there's an annual fee associated with that app and there's some apps that are small that don't have tons of technology behind them that we're might only charge $25,000 to $50,000 a year for and there's others that will charge $250,000, $400,000, $500,000 a year for.

Jack Andrews -- Needham & Company -- Analyst

Great. Thanks. And then just sort of moving forward is, thinking about the apps you've introduced so far, I mean, is it fair to think that you may become perhaps more verticalized over time around this initiative?

Joshua James -- Founder, Chief Executive Officer and Chairman of the Board

Yeah, I think specialized whether it's -- whether it's a verticalized or for a particular function in your organization. We have a very -- certainly a very well-known brand that's in the news all the time and they're a customer of ours and they are in the pipeline right now have a travel and expense application that they're -- that they're looking to meet and it's a good sized contract. So sometimes it's verticalized and sometimes it's a function. Like I mentioned, there's that app that will show Domopalooza around HR in retaining your employees. So I think really over any function in your company and that's why I say, your customers look at us and say, hey, we've got these -- you know all of these employees we're trying to figure out how to give them real time commissions on what they're selling, because they sell so many things and we're losing employees because our reps can't actually make sense of the commission spreadsheets that we send to them, can we give them an app. It helps them see it in real time and it feels kind of next generation and feels like we're being transparent and open with them because they get it in real time and we were able to again pull those building blocks off the shelf, put a -- a skin on it that looks like their brand and they get a really cool custom software application that we just pulled off the shelf that looks custom to all of their employees. So yeah, I think we'll see more verticalization and more specialization for sure.

Jack Andrews -- Needham & Company -- Analyst

Great. Thanks for the color.

Joshua James -- Founder, Chief Executive Officer and Chairman of the Board

You bet.

Operator

Thank you. Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program, and you may all disconnect. Everyone have a wonderful day.

Duration: 52 minutes

Call participants:

Peter Lowry -- Vice President, Investor Relations

Julie Kehoe -- Chief Communications Officer

Joshua James -- Founder, Chief Executive Officer and Chairman of the Board

Bruce Felt -- Chief Financial Officer

Joshua Baer -- Morgan Stanley -- Analyst

Sven -- Credit Suisse AG -- Analyst

Jennifer Lowe -- UBS -- Analyst

Derrick Wood -- Cowen and Company -- Analyst

Patrick Walravens -- JMP Securities -- Analyst

Jack Andrews -- Needham & Company -- Analyst

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