What Happened?

Shares of data visualization and business intelligence company Domo (NASDAQ:DOMO) fell 19.5% in the afternoon session after the company reported underwhelming third-quarter results. Billings in the quarter missed meaningfully, although revenue beat. Looking ahead, the company lowered full-year adjusted EPS guidance despite slightly raising full-year revenue guidance. This is a signal of worse future profitability and expense efficiency. Overall, it was a challenging quarter.

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What The Market Is Telling Us

Domo’s shares are quite volatile and have had 19 moves greater than 5% over the last year. But moves this big are rare even for Domo and indicate this news significantly impacted the market’s perception of the business. 

The biggest move we wrote about over the last year was 7 months ago when the stock dropped 16% on the news that the company reported weak first-quarter earnings results, with billings missing Wall Street's estimates. Guidance wasn't encouraging, as revenue projections for the next quarter missed analysts' expectations. Potentially more worrisome, the company did not reiterate or update its full-year guidance, which it gave last quarter. This could mean that visibility into demand trends is murky or changing rapidly. Adding to the concerns, cash flow turned negative, following the rare positive cash inflow recorded in the previous quarter. Overall, this was a mediocre quarter for Domo, providing few reasons for investors to stay positive.

Domo is down 22.2% since the beginning of the year, and at $7.80 per share, it is trading 34.5% below its 52-week high of $11.90 from February 2024. Investors who bought $1,000 worth of Domo’s shares 5 years ago would now be looking at an investment worth $333.48.

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