DOMO - NASDAQ

Greetings and welcome to the Domo Q2 Fiscal Year 2025 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the presentation. [Operator Instructions]. As a reminder, this conference is being recorded. And with that, I will hand it over to Peter Lowry, Domo's Vice President of Investor Relations. Thank you. You may begin.

Good afternoon. On the call today, we have Josh James, our Founder and CEO, and David Jolley, our Chief Financial Officer. I'll lead off with our Safe Harbor statement and then on to the call. Our press release was issued after the market closed 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. These statements are subject to a variety of risks, uncertainties, and assumptions. These include, but are not limited to, statements about our future and prospects, our financial projections, and cash position. Statements regarding the potential of our consumption model, statements about our sales team and technology, our expectations for new business opportunities, transactions, and initiatives, statements regarding our channel of communication and upcoming events, statements regarding the potential of artificial intelligence and its impact on our business, and statements regarding the impact of macroeconomic and other conditions on our business. For a discussion of these risks and uncertainties, please refer to documents we filed 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 our GAAP results. Please refer to the tables in our earnings press release for a reconciliation of our non-GAAP financial measures to their most directly comparable GAAP measure, which we have posted to the investor relations section of our website at domoinvestors.com. With that, I'll turn it over to Josh. Josh?

Thank you, Pete. Hello, everyone, and thanks for joining us on the call today. I'll start with our quarterly results. In Q2, we exceeded our revenue guidance. Our gross retention bounced back to 88% at the high end of our guidance, which was a highlight for the quarter and a dramatic improvement over the last few quarters. While we aspire to return to north of 90% for the long-term, I'm very pleased with this progress. On our biggest deal of the quarter, it was at our option to secure an additional year on the contract term if we agreed to accommodate a quarterly billing schedule. This strategic decision caused our billings to be just below guidance this quarter. Otherwise, we would have met our target had this customer been billed annually. I'm particularly excited about this customer story and our first contract ever with an eight-figure total value. And I'll talk about that a little bit later. Additionally, in order to give us more runway for the initiatives we've been pursuing, we decided to extend the maturity of our debt to August 2028. And in connection with this amendment, we also were able to reduce our overall interest rate and reduce our cash interest rate by a substantial amount. We'd like to thank BlackRock for their continued support of our business. We also make good progress on our growth initiatives, including our partnership efforts and our shift to consumption. I believe these are absolutely the right moves, and while it may take some time for them to translate into top-line growth, the signs are very encouraging that we are better positioned than ever to pursue a huge market opportunity. I'll start by sharing more about this opportunity and the great response from our strategic partnership initiatives. Domo was founded to help organizations leverage their data more effectively. To achieve this, we developed a comprehensive modern analytics stack that lets users store, prepare, analyze, visualize, and distribute data amplified by AI, providing a complete agile cloud-based data solution for our customers. But as the industry evolved, companies started anchoring their data strategies around cloud-based data warehouses, or CDWs. Recognizing this shift, we've advanced our platform to seamlessly integrate with these CDWs, positioning ourselves as a partner rather than a competitor. This approach has enabled us to engage in more strategic conversations with our customers. One of the primary benefits of these CDW partnerships is that instead of cobbling together solutions from four or five different vendors, a customer can achieve the same outcome just with their preferred CDW and Domo. We've been told that no one can get data into the CDWs faster than Domo. The speed and scale at which customers get value from their data has always been one of our key differentiators and is something we think makes us a unique player in today's ecosystem. Let me share a win from Q2 that highlights the opportunity with CDWs. We had previously engaged with a brand communications business that unfortunately ruled Domo out after deciding to implement Snowflake. However, soon after launching Domo's magic ETL on Snowflake in May, we were reintroduced to the conversation with this customer by one of Snowflake's important integration partners who strongly recommended us over the other choices the customer was considering and that customer is now using Domo alongside Snowflake. Clearly, we're very excited by the ecosystem and other partner opportunities in front of us. We acknowledge that the results of these efforts aren't impacting our numbers yet, but they are affecting our pipeline. So let me give you some color around the partner pipeline that we're building. The number of joint deals in our pipeline being worked between us and CDW partners has increased from zero to over 60 deals over just the last two quarters. We closed five new customers from Domo Everywhere partners during Q2. This represents a completely new source of deal flow and although it is small right now, we believe this represents a channel that will grow rapidly. We signed 26 brand new channel partner agreements recently, several of which are elite service partners of Snowflake and Databricks. We've trained five sales teams at CDW partners with another five sales teams on the calendar. This is where the rubber really hits the road, and we are thrilled to be invited to train these sales organizations. We are in advanced conversations with other partners, including two of the global top 10 software companies by revenue, one of which is one of the world's largest cloud ERP providers, to deliver joint solutions to their expansive customer bases, enabling their customers to get fast and actionable insights from their data. It is extremely convenient that two of their biggest competitors are also our two biggest competitors, as we believe the alignment will naturally drive market behavior advantageous to us. One other partner shared that we have helped them win more than 20 new opportunities than they otherwise would have lost, cementing our relationship with them, of course. And then another company recently expressed urgency in getting a partner agreement signed with us because they found an opportunity with a nationwide retailer that operates over 800 stores, and they believe the linchpin to them closing their deal is the Domo platform. This past quarter, we also had a big presence at the Snowflake and Databricks user conferences. I had so many great conversations introducing Domo's capabilities and the tremendous value we can deliver to our mutual customers. I came away from these conversations feeling more excited than ever about Domo's place in the ecosystem. In conclusion, we are seeing great signals that our ecosystem partnership strategy is working and starting to produce results. So we are going to run this play, and if it turns out like we believe it will, then we should get back to meaningful growth. And as I indicated last quarter, it may take 12 to 24 months for that growth to show up in our financial results as we evaluate our strategic options and become much closer to the players in the ecosystem. At this point, we are only one quarter in from going live with Snowflake, and just doing the math, we still have seven more quarters to play the strategy out before I want our place in the world to be truly defined. Our shift to consumption-based pricing is also fundamental to capitalizing on this partner opportunity and driving expansion with existing customers. This strategy goes beyond a signed consumption agreement. Our goal is more customers fully embracing Domo across their entire organization. Whether it's a consumption contract or an enterprise-wide license agreement with a data cap, we want to put our customers in a position where they can quickly achieve wall-to-wall adoption of Domo. Last quarter, we discussed the positive impact that consumption has had on our customer retention. And again, for the Q2 consumption cohort, we saw even better growth and net retention rates on a substantially larger renewal base than we did in Q1. Today, we have over 45% of our ARR on consumption contracts and expect to achieve our goal of having a majority of our ARR on consumption by year-end. Now, let me remind you why transitioning to consumption is a key strategy for our business. It aligns realized value with price as it allows our customers to have company-wide exploration of our products with very little risk up front. It makes it easier to work with partners. It removes hurdles that delay product-led growth and use case expansion. It protects our customer accounts as customers will now openly standardize on us, thereby limiting the number of accounts that have us for a few departments and a few of our competitors for other departments, which is never as stable as we would like. It makes it easier to explore the full breadth of our platform to build use cases from actually using the product versus from a sales pitch. And it facilitates the sun setting of legacy competing solutions that our customers may still be using in various parts of their organization. A new multinational customer we acquired in Q2 described consumption as a no-brainer because instead of adopting Domo in one country, consumption facilitated a global rollout across six countries while setting them up for rapid expansion going forward. Another story from Q2 was with one of our earliest consumption customers. They were recently acquired by a much larger company that was a Power BI shop, and we were very much at risk of losing the customer. However, because that customer was on consumption, the acquiring company was able to explore Domo and quickly found that they were able to do things with analytics that they didn't think were possible. Now, instead of canceling, we're exploring upsell opportunities. And our biggest deal of the quarter, which I mentioned in my introduction, is a great story about the opportunity created by our consumption model. It was a seven-figure upsell and an eight-figure total contract value with a Fortune 500 company that originally chose Domo when they were searching for a partner that could meet the complex integration, collaboration, and security needs of their multinational business a few years ago. We won the opportunity two years ago when the company's BI leadership recognized the range of sophisticated tools Domo offers for global enterprise businesses. It didn't take long before the team realized that those tools created benefits they hadn't experienced before. For example, they completed their first data migration from a legacy tool into Domo in just one week. They also quickly realized they could replace more expensive legacy technologies with Domo. In the two years since, they've applied those benefits broadly across the organization. What started as a use case for 300 analysts has expanded to more than 10,000 users across multiple use cases, including financial planning and analysis, sales forecasting, data science, and AI. Looking ahead, they have plans to expand to more than 50,000 users by the end of 2025. I just love this example because it puts the impact of our strategic priorities on full display and provides a blueprint of how consumption can transform the way Domo is adopted in an enterprise. We got in the door with an extremely innovative and collaborative customer with vast growth potential. Thanks to consumption, we got much earlier expansion to users across the organization. We were then declared as the global standard, and this customer now has a four-year term, eight-figure total contract value. This is actually the first eight-figure contract we've ever had. We've had larger annual customers, but this is the first eight-figure multi-year contract we've ever had. And we believe there's still room to grow this customer. The speed and scope of expansion would have been terribly difficult, if not impossible, with seat licenses. In summary, we are very excited about the traction we're seeing with partners and the customer growth we're seeing as a result of consumption and these partners. I'm extremely optimistic about the growth opportunities with these initiatives as the backdrop. Now, before I turn things over to David, I want to let you know that as a result of some health issues that David has been experiencing over the last year, he has decided to transition to a different role in the organization. David joined Domo during a time of transition, and he has been absolutely fantastic. I appreciate so much the contributions he's made over the past year and a half. While David will be transitioning out of the CFO role at the end of the third quarter, he'll be staying at Domo in the role of senior advisor to the executive team, where we will actively continue to leverage his background and experience going forward. Ultimately, I would be thrilled if David is able to join our Board of Directors when the time is right. And taking over in David's place, I'm happy to announce that Todd Crane, Domo's current Senior VP of Finance, will be assuming the role of CFO. Todd has a wealth of experience at Domo and understands the financial dynamics of our business as well as anyone. He has been here for nearly a decade and held a number of finance leadership roles over that time. As it became apparent that David's eye surgeries were not as successful as he'd hoped and that his time in the CFO seat might become shorter than we had anticipated, we have had Todd work very closely with David in all aspects of the CFO function, from meetings with investors to meetings with our Board to refinancing our debt to being an active member of the executive team. During this time and even before that, Todd and I have worked very closely, and I have often expressed to him that I would love to see him as our CFO someday. I'm truly excited to have Todd's experience and insight as we position Domo to get back to growth. I think it's important to note that Todd has broad support from our executive team and from our board as he steps into this role. And with that, I'll hand it over one last time to Mr. Jolley. Daivd?

Thanks, Josh. Many of you that know me know that I've been experiencing issues with my vision over the past year or so. Unfortunately, I've now lost over 90% of the vision in my right eye and after a bunch of surgeries, I've recently been informed by my doctors that it isn't going to get much better. As a matter of fact, with the retina issues I've had in the other eye, I've been told that there's a higher-than-normal likelihood that my other eye will lose vision as well. The loss of vision has made it challenging to do my day-to-day duties as CFO without serious eye strain and headaches. After a lot of personal reflection and some discussions with Josh, I've decided that it's time for me to move out of the day-to-day role of CFO so I can enjoy more time with my family, while I still have at least half my vision. I hope to not lose the other half, but if I do, there's still a lot of stuff I want to see before that happens. Now, that said, I am not leaving Domo, and I'm grateful that Josh has given me an opportunity to stay involved in a senior advisory role. I'm excited for Todd to be stepping into the CFO role and have the utmost confidence in him given his experience and deep financial knowledge of Domo. I fully intend to see this turnaround through, no pun intended, and I'm looking forward to a very long relationship with the company. Now on to our Q2 results. While we're still seeing a challenging market environment, we slightly exceeded our revenue guidance. Total revenue was $78.4 million, a year-over-year decrease of 2%. Subscription revenue represented 90% of total revenue and was flat year-over-year. Q2 billings were $68.6 million. As discussed, we had one large customer that we agreed to quarterly billing terms in exchange for a longer contractual term. Had we billed this customer annually in advance, our billings would have met our guidance. A highlight in the quarter was our gross retention of 88% at the high end of our guidance and up from 83% in Q1. As a reminder, our gross retention is a measure of in-quarter retention, while our net retention is based on our ARR retained year-over-year. Our year-over-year net retention was 90%. On an in-quarter basis, our net retention was closer to 100%. For the consumption cohort, our gross retention was 98%, and our net retention was 118%, up from Q1 on a substantially larger renewal base. As we mentioned last quarter, this is not something we plan to disclose regularly, but think it's important to highlight this quarter as the consumption customer base performs substantially better than the rest of our business, and it will be 50% to 60% of the overall business by the end of the year. I'm also very pleased that we refinanced our debt to extend the maturity date to August 2028 and reduced our overall interest rate and our cash interest rate. We believe this provides improved financial flexibility as we pursue our growth objectives. Now let me review some of the other Q2 metrics. Current RPO was 225.4 million, and as a reflection of our customers' standardizing on the Domo platform and making longer-term commitments, our total RPO was importantly up year-over-year to 358.9 million as of July 31, 2024. Coincidentally, this improvement and longer-term contracts will also help us improve retention. Also in the good news department, our average contract duration for deals closed in Q2 was up more than 10% year-over-year. On a dollar-weighted measure, we continue to have approximately two-thirds of our customers under multiyear contracts. Multiyear contracts benefit us in a number of ways, particularly on the retention front. Moving on to margins and profitability, our subscription gross margin was 82.4% because we believe consumption will better align revenue with cost, we expect gross margin to stabilize over the next few quarters at about the current level and then to improve to the mid-80s longer term. Non-GAAP operating margin was 2.5% as we strive to keep our costs in line with our revenue. Non-GAAP net loss was 2.7 million compared to 0.8 million a year ago. Net loss per share was $0.07 based on 38.4 million weighted average shares outstanding because we're in a net loss position, all share and per share amounts are the same for basic and diluted. In Q2, adjusted free cash flow was negative 5.6 million, resulting in a cash balance of 55.7 million. We previously commented on our free cash flow objectives for the year, noting that there would be variability from quarter-to-quarter, and we will continue to manage our cost structure and cash balance in response to our financial performance and take action as necessary. Now let me talk about guidance. Looking forward for Q3, we're expecting non-GAAP billings of 70 million to 75 million. We expect Q3 GAAP revenue to be in the range of 77 million to 78 million. We expect non-GAAP net loss per share of $0.14 to $0.18, assuming 38.9 million weighted average shares outstanding. For the full year, we expect billings of approximately 305 million to 315 million and GAAP revenue of 313 million to 315 million. For the full year, we expect non-GAAP net loss per share, basic and diluted, of $0.69 to $0.77. This assumes 38.5 million weighted average shares outstanding, basic and diluted. Our guidance range reflects the variability that may result from making decisions that will benefit longer-term growth at the expense of short-term billings, as we did this quarter with the 8-figure contract. We believe the longer-term opportunity for growth lies in the ecosystem, and we're confident we're on the right path. Our customers love the product. We've got a durable business with close to 300 million in annual recurring revenue, and that's a substantial foundation from which to build. We're executing on our partner strategy, and while it's going to take more than a quarter or two to meaningfully impact our financial results, we believe that growth will follow. With that, let me turn it back to Josh for some closing comments.

Thank you, David. As you know, we've been shifting our efforts and investment over the last several quarters towards ecosystem-led growth. While those efforts are not yet making a marked difference in our reported financial metrics, we are beginning to see promising early results. For example, just this last week, we had a new partner bring us into a deal on Friday, and it closed the following Monday. This deal never even hit our pipeline. It went from nothing to closed in one business day. This sort of opportunity would not be possible without our ecosystem partner strategy and is the type of signal that gives us great confidence in this strategy. To accelerate us being even more tightly aligned on our ecosystem-oriented strategic growth initiatives, I'm excited today to announce some natural progressions taking place in our sales organization, which will better position us for future success. RJ Tracy, our SVP of Strategic Development and Channel, has been leading our ecosystem and consumption efforts. Given the early successes there, as well as the fact that RJ has been one of our most successful leaders to date over the last 10 years, we see it as a natural evolution to move RJ into the expanded role of CRO. RJ is absolutely the right individual to take on these elevated responsibilities, align our strategic initiatives between partner and sales and lead us back to growth. In conjunction with that promotion, I'm also very excited to announce that Jeff Skousen is moving into the role of President of Worldwide Sales and Field Operations. I've been working with Jeff for the better part of 30 years. He's a strong leader and was the one who hired RJ and identified him as the next CRO. The CRO responsibilities will roll up to Jeff and he will continue to own international growth while supporting our ecosystem initiatives, consumption conversion, and mentoring RJ throughout the process. As we look forward, I believe that leveraging partnerships in the broader ecosystem is the best path to return us to growth. And I'm excited to see the impact of these initiatives and the broad, passionate, innovative, and dedicated efforts of our entire team at Domo. With that, we will open up the call for questions. Operator?

Thank you. And we'll now conduct our question-and-answer session. [Operator Instructions] And our first question comes from Derrick Wood with TD Cowen. Please state your question.

Congrats on the P&L performance. And, David, it's been great to work with you. Best of luck in tackling your health challenges. And, Todd, great to reconnect. Congrats on the new role. Josh, I'll start with you. You've indicated that you're now having more strategic conversations with customers given kind of your partnership status with CDWs. Can you drill down a little more on why this helps change the perception of Domo? And I know you guys have kind of always tried to evolve how you engage with CIOs. Is this helping you strengthen the partnership on the CIO front?

Yes. For sure it helps to address the relationship with the CIOs. In many cases we walk in and we want to talk about their broader data strategy, but we haven't historically been the vendor, especially in the enterprises, that they want to have that conversation with. The CDWs, on the other hand, that is where they're centering those conversations. And what we've found is often we go in and we think that we're competing against just one of our smaller competitors or against somebody that's focused just on visualization, and we think that's the competition. The reality is the competition might be a Snowflake plus their integration partner, plus their ecosystem of partners who are all in there selling together. And we don't realize that there's a selling motion that is four or five times the effort than the one that we're putting in. So being aligned with the Snowflakes and Databricks of the world we think is going to have a meaningful impact, as justified by these experiences that we were describing, including the one where we got kicked out early on and we got brought back in because it wasn't even Snowflake. But it was the integration partner of Snowflake who was installing Snowflake, said to the customer, these other choices that you're making to integrate with Snowflake, they're not the right choices. Domo was the right choice. And we got the phone call, we got the deal. So it does change things dramatically. The CDWs are definitely a big strategic component of every CIO's data strategy, and we're just excited to be so broadly accepted now from these CDWs. I mean, the excitement is palpable. The fact that we talked about five sales teams being educated and five more coming on, those aren't the entire sales team. That's not how it happens. It's, hey, here's the Eastern mid-market sales team. We're having an offsite. We want you guys to come in and do a training. And it kind of happened one by one, and you have to develop those relationships. But then as you develop those relationships, we're starting to see reps that went through a training. They call us. They dipped their toe in the water. They brought us into a deal. We close a deal. They call us immediately the next day for being introduced into another deal. So that's the kind of traction and progression that we're getting, which is a very different tack than spending more money on Google to put them in your pipeline, to go in by yourself and try to compete and create the value proposition. It's much easier when you have four or five other people touting what you can do for those customers. So it's been just a totally different experience and one that we're all really excited about.

Yes. I mean, it sounds like the partnership are kind of well beyond just the CDWs, but with a lot more of the ecosystem partners in there. And I guess on that, I mean, going from zero to 60 deals in the pipeline with partners, how are you thinking about the timeframe and going from pipeline build to deal closure? Any kind of sense or color on kind of what average deal sizes could look like or how many quarters to start seeing more conversion on those deals?

Yes, there's nothing more than that we want than being able to say, two quarters out, you're going to start seeing an uptick in billings. We want to say it so desperately, but we still need some more data. In terms of the deal size, we do have, like you referenced, some of these other partners in the ecosystem, not just the CDWs. It's really been fun because they feel like they're extremely defensible partners. We go in, we help them create a joint solution. They've got 500 customers, 2,000 customers, 20,000 customers, and we've got a joint offering. In some of those cases, the ASP might be smaller, but then again, in other cases, it's higher than our average deal. So I think overall, it'll probably average out. We also have customers that are coming to us and saying, can we work on a freemium type solution for 8,000 customers that we can introduce this to next quarter? And we're just licking our chops because that's exactly the kind of relationship that we want because one of the challenges that you have I,s how does that customer get that first bit of value? What's the time to value for having that integrated data visualized, showing up on executives' phones in their apps, getting alerts? And that first bit of data connection is always hard. When you have a partner, they've got the data. You do the integration. They roll it out to 8,000 customers. We're just really excited about what's going to happen as we start integrating with some of these types of partners as well beyond the CDWs.

Got it. If I could squeeze one more in for David. The sales and marketing expenses dropped down quite a bit. I know there's some Domopalooza expenses that come out, but it seems like perhaps there were other cost controls that came into play. Can you just talk about anything that you guys did to drive additional efficiencies in sales and marketing this quarter?

Yes, sure. In sales and marketing, a lot of that that we saw in Q2 is headcount related. And so we've had some natural attrition, and then we've been a little bit active on some others and really trying to get that dialed in. Right now we're balancing that as we're moving into this partner motion. And I think over time, we expect to see that as a much more efficient sales process. So that should bring our tack down naturally as we shift more into the partnership and the ecosystem. So I don't see that as sort of a one-time blip in terms of efficiencies and cost reduction. Now, that said, if we get a lot of leads and opportunities, I think it'll measure pro-rata ad heads as we need them. But right now I think we're in a pretty good place.

Our next question comes from Patrick Walravens with Citizens JMP. Please state your question.

And, David, first of all, I really love working with you, and I'm praying for your vision to stabilize and improve.

I appreciate that, Pat.

Yes, it will. I believe it will. All right, so number one, congrats on the refinancing. What can you tell us about the terms of the new loan and the covenants? Josh, you mentioned a couple quarters ago that you weren't happy with some of the other offers you had around the covenants.

Yes, so I'll take the point on the deal. So, we were able to extend it out from four years from closing, so four years from August, and we think that gives us the kind of runway that we need to do what we want to with partners and see some of that success. And so we were able to bring the interest rate down a bit, but we were able to bring in the cash interest component down to, what is it, SOFR plus 300, so about eight and a quarter on cash interest, and that's a considerable cash savings over where we have been. And then we've got about 500 basis points of PIC on top of that. And that will be on file. I mean, the agreement will be on file, but those are the general terms.

Okay, great. And then, Josh, for you, on the partnerships with the CDWs, I mean, to the extent you could be more specific, I mean, Snowflake, you guys clearly have. Who else can you name? Do you have, I mean, Databricks, is that one public? Who are the ones that you can actually tell us who they are?

Snowflake, Databricks, Google, Oracle, IBM, Dremio, we're working with all of them.

And are those all live?

They're all live in one form or another. We started off with being able to read the data, then we can write the data, then we have our Magic ETL incorporated into their backend and being able to drive consumption on their backend and leave the data on their backend. And as we kind of go through those steps, we get more and more appealing to them. So right now, Snowflake is the furthest along. And Databricks, BigQuery, I guess Amazon as well, Oracle, IBM, they'll all be in the next, one, two months. So it's coming hot and heavy for sure. And it's allowed us to start the conversations because it's just right around the corner. And again, it's stuff that we've been working on for years. And as we started seeing the traction that we were getting on the business side and with customers, and one of the things that's really fun, we love Gong around here and being able to leverage Gong. Instead of having to go visit a bunch of customers, you can listen to the Gong calls. Instead of having to go and shadow a bunch of reps, you can listen to the Gong calls. You can type keywords into the Gong calls. And one of our favorite things to do is to type Snowflake or Databricks or Google into Gong and to see the frequency that those conversations are appearing and then to dive in and listen to how the reps are talking about those things and to hear how we're being involved and incorporated into strategic conversations. And I know that, one of RJ's stated goals, who's now taking over CRO, is to make sure that every single deal we have, we have a partner in there. And that's not dissimilar from where Jeff was at as well. But this is going to be -- this is the flag that he's carrying. And we're really excited about that because it does change the dynamic dramatically. When it feels like you're on the team of everybody that's in there trying to pitch that customer and the most important team to be honest is that CDW. So we feel very optimistic about how things are going to evolve over the next couple quarters.

Thank you. And our next question comes from Sanjit Singh with Morgan Stanley. Please state your question.

Sorry I missed the top of the call. I was at the Databricks Summit earlier this month and saw the Domo press and spent some time at the Domo booth. And it sounds like some exciting developments. I don't think the official sort of partnership announcement was announced then, but certainly a lot of work you were doing with Databricks has certainly been a theme of this call. When you look at what their product roadmap is, they do seem to want to lean into sort of the modern BI use case, whether it's modern dashboards or real-time business alerting, the stuff that Domo has done historically in the past. To what extent does, like, how do you think through the competitive elements as you partner with the CDWs, like over time? Are you fine with them taking maybe the BI use case and you guys become the Magic ETL layer? I just want to think through how you're thinking some of those coopetition dynamics with the CDW ecosystem.

Yes, that's exactly right. Each of these relationships is a little bit different. And, yes, we're more than happy just to provide whatever it is that helps the customer get the solution that they need. The CDWs are definitely focused on consumption of their data warehouse. And there's some that have more of an AI focus. And in that case, we've had customers tell us that, we had one recently tell us that, besides Databricks, we have the best AI strategy solution and products to market than they had seen. And so, we're right in the middle of these conversations. And one thing that these CDWs are not focused on is, how do you distribute all this information out to, you know, the end users in the organization? What's all the governance around all that data? They want governance around AI data. But what's all the governance about who gets to see what? What's the governance around the alerts that happen? What's the governance around when employees roll off? How do you make sure they don't have access to all that information? How do you take that data and extend it out into an app? How do you make that app show up on someone's phone? Yes, that's the stuff that we've been doing for 10-plus years. And so all of these people recognize that we really are extremely complementary. And your question is right on because, the puzzle piece fits a little bit differently for each CDW. But once we're tied in and we hydrate their CDW, they just get really excited because the time to value is quickest with us. Do you want to sign up for five vendors to help you get your solution along with the CDW or just us and the CDW? And we saw that I think the other thing is just seeing that, these CDWs are mostly excited about who can help them build solutions and apps as well. And that's another area where we've been talking about apps for seven, eight years, been building apps for seven, eight years. And one of those examples that we highlighted in the prepared remarks, we talked about a customer that in the last two years has gone from zero users to 10,000 users, kicked out all the other legacy vendors, is multimillion dollar customer for us, eight figure contract and is planning on moving to 50,000 users. That's not on the roadmap for any CDW, but the CDWs love it because when you've got 50,000 people looking at the data that's in the CDW, it makes that data much more valuable and there's a lot of people driving consumption. So that's kind of how we fit into that. That's a very astute question though.

Thank you. And our next question comes from Eric Martinuzzi with Lake Street Capital Markets. Please state your question.

Best wishes on your healthcare journey, David. Certainly disappointed to hear you're moving on, but I know you're still going to be around in an advisory role. So --.

Appreciate it, Eric.

My question's here. Given the billings expectation, I guess it's a pretty substantial reset versus what you guys were thinking. I know when we entered, coming out of Q1, we were expecting to see growth in the billings in the back half of the year. Obviously you guys are having terrific traction with consumption-based pricing. You're having good traction with the CDW partnerships, and that is the long play there. But it feels like more of a dramatic reset for the back half of the year than I was expecting. Just wondering what is, I guess, the key one or two reasons for that reset. Was it just, hey, we're a little bit closer to the end, we've got a better feel, or is there something else to be thinking about here?

Yes. Part of it is that we're a little closer to the end and we have a better feel. But the reason for that is, as you were describing, the beginning of the year we had zero visibility into how this CDW play was going to go.

Okay. And then just on the Q3 outlook given the revenue range and the loss per share range, the revenue range, I mean, we're kind of within spitting distance of where we were in Q2. So just curious to know why the $0.07 non-GAAP loss in Q2, why that becomes kind of mid-point $0.16 in Q3. Where are our expenses maybe creeping up Q3 versus Q2?

I think in response to that, in Q2 we certainly have been trying to monitor and sort of moderate our costs just based on where we're at with our billings and cash and everything. And so, you know, we'll continue to do that into Q3. And so we've got some back bills that we'll want to do in Q3 with some of our Q2 attrits, but it's a process going forward and we'll continue to kind of moderate those costs and make sure that we have alignment between our billings, our revenue, and our cost structure as we go through Q3 and Q4.