Why Domo Stock Is Crashing Today

What happened

Domo (DOMO -0.39%) stock is getting pummeled in Friday's trading. The data-software company's share price was down 42.1% at 11:45 a.m. ET, according to data from S&P Global Market Intelligence.

Domo released its second-quarter results after the market closed yesterday, posting sales and earnings for the period that actually came in ahead of Wall Street's targets. The company recorded a non-GAAP (adjusted) loss per share of $0.02 on sales of $79.67 million in the quarter, while the average analyst estimate had called for a per-share loss of $0.09 on revenue of $78.9 million. While its Q2 results beat expectations, the company had some bad news on its demand outlook. 

So what

Domo grew revenue roughly 5% year over year (YOY) in the second quarter and managed to post a narrower-than-expected loss, but other metrics also suggested demand softness to come. The company ended the quarter with remaining performance obligations (RPO) of $357.6 million -- up just 2% YOY. The specialist in business intelligence software also issued substantial downward revisions to its forward performance guidance. 

Now what

For the third quarter, Domo is guiding for sales to be between $78.5 million and $79.5 million. It also expects an adjusted loss per share between $0.10 and $0.14. Given that the company posted sales of $79 million and an adjusted net loss of $0.13 in last year's quarter, there's not much to get excited about there. 

For the full year, management is guiding for sales between $316 million and $320 million, suggesting annual growth of roughly 3% at the midpoint of the target. The company is also guiding for an adjusted loss per share between $0.39 and $0.47 in the period.

Prior to its Q2 release, Domo's most recent guidance had called for sales to be between $323 million and $330 million and its adjusted loss to be between $0.27 per share and $0.39 per share. Meanwhile, the average analyst estimate had expected the company to post an adjusted loss of $0.36 per share on sales of roughly $325.5 million in the period.