10q10k10q10k.net

What changed in DOMO, INC.'s 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of DOMO, INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+441 added−395 removedSource: 10-K (2024-03-28) vs 10-K (2023-03-27)

Top changes in DOMO, INC.'s 2024 10-K

441 paragraphs added · 395 removed · 321 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

64 edited+48 added−12 removed130 unchanged
Biggest changeData Governance Once data is connected to Domo, the platform provides capabilities and tools to manage it across its lifecycle. The Domo Data Warehouse is a dynamic 3D management console that enables IT professionals to interact with and curate every data source in Domo.
Biggest changeThe activity log can also be written to an external streaming service (such as kafka) so that existing enterprise monitors are fully aware of activity with Domo. Data Governance Once data is connected to Domo, the platform provides capabilities and tools to manage it across its lifecycle.
On a typical business day, our customers in the aggregate typically query several hundred trillion rows from uncached queries. Even with this volume of data, we maintain a subsecond average query response time.
On a typical business day, our customers in the aggregate typically query several hundred trillion rows from uncached queries. Even with this volume of data, we maintain a subsecond average query response time.
Other features to promote collaboration are included throughout our platform, including: • Report Scheduler, which allows users to schedule delivery of a card or page to anyone; • Snapshot Annotation, which allows users to call out a specific spike or trends in data, annotate on any card to highlight it for others and initiate a conversation from any device; • Projects and Tasks, which help users quickly take action with simple planning and assignment tools, including creating a task directly from a Buzz thread; and • Alerts, which prompt timely collaboration and action.
Other features to promote collaboration are included throughout our platform, including: • Report Scheduler, which allows users to schedule delivery of a card or page to anyone; • Snapshot Annotation, which allows users to call out a specific spike or trends in data, annotate on any card to highlight it for others and initiate a conversation from any device; 15 • Projects and Tasks, which help users quickly take action with simple planning and assignment tools, including creating a task directly from a Buzz thread; and • Alerts, which prompt timely collaboration and action.
In the case of a bakery, for example, our platform can alert the owner that she does not have enough flour to meet tomorrow’s demand and recommend a supply schedule to prevent future stock-outs. 7 Domo Apps and Appstore We, our development partners, and our users have built intelligent applications to create custom solutions for unique business needs.
In the case of a bakery, for example, our platform can alert the owner that she does not have enough flour to meet tomorrow’s demand and recommend a supply schedule to prevent future stock-outs. Domo Apps and Appstore We, our development partners, and our users have built intelligent applications to create custom solutions for unique business needs.
We have attracted and retained top talent in our industry and have become a top choice for organizations looking for better ways to use data to run their businesses. We have received multiple innovation awards and top- 10 ranked recognition for ease-of-use and business value based on customer-based research from organizations such as Dresner Advisory Services, Gartner and Ventana Research.
We have attracted and retained top talent in our industry and have become a top choice for organizations looking for better ways to use data to run their businesses. We have received multiple innovation awards and top-ranked recognition for ease-of-use and business value based on customer-based research from organizations such as Dresner Advisory Services, Gartner and Ventana Research.
Additionally, any user can schedule critical insights to be delivered to the right inboxes, ensuring the right stakeholders are being kept up-to-date on relevant developments. Enterprise Security, Scalability and Compliance We have invested significantly to build security features in our platform that have enabled us to expand our presence within the enterprise.
Additionally, any user can schedule critical insights to be delivered to the right inboxes, ensuring the right stakeholders are being kept up-to-date on relevant developments. 9 Enterprise Security, Scalability and Compliance We have invested significantly to build security features in our platform that have enabled us to expand our presence within the enterprise.
Available Information The following filings are available through our investor relations website after we file them with the Securities and Exchange Commission, or SEC: Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and our Proxy Statement for our annual meeting of stockholders. These filings are also available for download free of charge on our investor relations website.
Available Information The following filings are available through our investor relations website after we file them with the Securities and Exchange Commission (SEC): Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and our Proxy Statement for our annual meeting of stockholders. These filings are also available for download free of charge on our investor relations website.
Authorized users can quickly access usage metrics like login attempts, card views, card creation and card edits. The console also provides the times those events took place and by which user. Admins can filter and sort this data, and export to an Excel spreadsheet or CSV file.
Authorized users can quickly access usage metrics like login attempts, card views, card creation and card edits. The console also provides the times those events took place and by which user. Admins can filter and sort this data, and export to an Excel spreadsheet or CSV 17 file.
We typically invoice our customers annually in advance for subscriptions to our platform. Our one-year and multi-year contracts generally automatically renew for additional one-year terms, with each party having the option to elect not to renew, and generally may not be canceled absent material breach by us or the customer.
We typically invoice our customers annually in advance for subscriptions to our platform. Our one-year and multi-year contracts generally automatically renew for additional one-year terms, with each party having the option to elect not to renew, and generally may 18 not be canceled absent material breach by us or the customer.
Additionally, we believe that our significant investments in research and development will provide tremendous leverage in our financial model as our business continues to scale. • Strong Industry Recognition. Our brand is synonymous with the next generation of cloud-native, mobile-first data solutions.
Additionally, we believe that our significant investments in research and development will provide tremendous leverage in our financial model as our business continues to scale. 11 • Strong Industry Recognition. Our brand is synonymous with the next generation of cloud-native, mobile-first data solutions.
While these efforts often require a substantial commitment and upfront costs, we believe our investment in product, customer support, customer success and professional services will create opportunities to expand our customer relationships over time. Sales and Marketing We offer our platform to our customers as a subscription-based service.
While these efforts often require a substantial commitment and upfront costs, we believe our investment in product, customer support, customer success and professional services will create opportunities to expand our customer relationships over time. Sales and Marketing We typically offer our platform to our customers as a subscription-based service.
Intellectual Property We rely on a combination of trade secret, copyright, trademark, patent and other intellectual property laws, contractual arrangements, such as assignment, confidentiality and non-disclosure agreements, and confidentiality procedures and technical measures to gain rights to and protect the technology and intellectual property used in our business.
Intellectual Property We rely on a combination of trade secret, copyright, trademark, patent and other intellectual property laws, contractual arrangements, such as assignment, confidentiality and non-disclosure agreements, and confidentiality procedures and 20 technical measures to gain rights to and protect the technology and intellectual property used in our business.
Our Business Cloud is a modern business intelligence software platform that enables processes that are critically dependent on business intelligence data – which historically could take weeks, months or longer – to be done on-the-fly, in as fast as minutes or seconds, at scale.
Our cloud-based platform is a modern business intelligence software platform that enables processes that are critically dependent on business intelligence data – which historically could take weeks, months or longer – to be done on-the-fly, in as fast as minutes or seconds, at scale.
Now business leaders can have fully comprehensive views of what is happening, across all departments and across all systems. 8 Digitally Connected Organization — Interconnecting and Orchestrating across Disparate Systems Businesses use many separate software systems to facilitate core elements of managing their business.
Now business leaders can have fully comprehensive views of what is happening, across all departments and across all systems. Digitally Connected Organization — Interconnecting and Orchestrating across Disparate Systems Businesses use many separate software systems to facilitate core elements of managing their business.
Developer tools and programmatic APIs enable the rapid development and delivery of custom apps leveraging the Domo platform and services. Domo’s developer portal provides all of the tools and documentation needed to build custom apps leveraging our platform.
Developer tools and programmatic APIs enable the rapid development and delivery of custom apps leveraging the Domo platform and services. 16 Domo’s developer portal provides all of the tools and documentation needed to build custom apps leveraging our platform.
Further corporate governance information, including our corporate governance guidelines and code of conduct, is also available on our investor relations website under the heading "Governance." The contents of our websites are not intended to be incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only. 20
Further corporate governance information, including our corporate governance guidelines and code of conduct, is also available on our investor relations website under the heading "Governance." The contents of our websites are not intended to be incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only. 22
All algorithms can be implemented using a simple wizard for configuration. Real-time Analysis and Visualization Our Explorer analytics suite, consisting of Domo Analyzer, Domo Pages and Collections, Domo Stories, Publication Groups and Domo Everywhere, allows users to analyze, display, share and interact with data through pixel-perfect visualizations.
All algorithms can be implemented using a simple wizard for configuration. Analysis and Visualization Our Explorer analytics suite, consisting of Domo Analyzer, Domo Pages and Collections, Domo Stories, Publication Groups and Domo Everywhere, allows users to analyze, display, share and interact with data through pixel-perfect visualizations.
As of January 31, 2023, we used Amazon Web Services, or AWS, data center facilities located in Western Europe, North America and Australia. We committed to spend an aggregate of $106.0 million between October 2022 and September 2027 pursuant to our agreement with AWS.
As of January 31, 2024, we used Amazon Web Services, or AWS, data center facilities located in Western Europe, North America and Australia. We committed to spend an aggregate of $106.0 million between October 2022 and September 2027 pursuant to our agreement with AWS.
These connectors enable data to be continuously synchronized in real time, fostering visibility and interoperability across a broad range of data sources. • Data Warehouse : Our data warehouse, Adrenaline, stores massive amounts of data from across the business, organizes that data across many factors or variables and employs a massive number of processors to query that data in parallel, enabling employees across the organization to simultaneously access the same data for their various needs with subsecond response times on average.
These connectors enable data to be continuously synchronized in real time, fostering visibility and interoperability across a broad range of data sources. • Data Warehouse : Our data warehouse, Adrenaline, stores massive amounts of data from across the business, organizes that data across many factors or variables and employs a massive number of processors to query that data in parallel, enabling employees across the organization to simultaneously access the same data for their various needs with sub second response times on average.
PDPs allow users to create robust entitlement policies that govern access to specific data, increasing data usage while simultaneously helping to ensure that sensitive or irrelevant information remains secure. Pre-defined security profile options are included to allow organizations to easily deploy our platform.
Personalized Data Permissions (PDPs) allow users to create robust entitlement policies that govern access to specific data, increasing data usage while simultaneously helping to ensure that sensitive or irrelevant information remains secure. Pre-defined security profile options are included to allow organizations to easily deploy our platform.
Each of the core tenets of the platform are offered as services and functionality used to build the types of products that typically would be expensive and time-consuming to replicate. 9 Virtuous Cycle of Optimization The combination of these six core benefits drives a seventh factor, a virtuous cycle of optimization.
Each of the core tenets of the 10 platform are offered as services and functionality used to build the types of products that typically would be expensive and time-consuming to replicate. Virtuous Cycle of Optimization The combination of these six core benefits drives a seventh factor, a virtuous cycle of optimization.
For the fiscal years ended January 31, 2021, 2022 and 2023, no single customer represented more than 10% of our revenue, nor did any single organization when accounting for multiple subsidiaries or divisions which may have been invoiced separately.
For the fiscal years ended January 31, 2022, 2023 and 2024, no single customer represented more than 10% of our revenue, nor did any single organization when accounting for multiple subsidiaries or divisions which may have been invoiced separately.
Algorithms and machine learning can be applied to the data that allow alerts to be triggered and actions invited. Users can receive these notifications on any device and immediately act on the invitation, after which the system can write back to the original system of record.
Artificial intelligence algorithms and machine learning can be applied to the data that allow alerts to be triggered and actions invited. Users can receive these notifications on any device and immediately act on the invitation, after which the system can write back to the original system of record.
Using Sandbox, users can build and test new visualizations in a separate testing environment and easily promote content once it’s ready for consumption, thereby avoiding disruptive downtime and maintenance. Customers As of January 31, 2023, we had over 2,500 customers. We have customers in a wide variety of industries, geographies, and sizes, ranging from small organizations to large enterprises.
Using Sandbox, users can build and test new visualizations in a separate testing environment and easily promote content once it’s ready for consumption, thereby avoiding disruptive downtime and maintenance. Customers As of January 31, 2024, we had over 2,600 customers. We have customers in a wide variety of industries, geographies, and sizes, ranging from small organizations to large enterprises.
Our annual recurring revenue (ARR) net retention rate, which compares the ARR as of the measurement date to ARR from the same cohort as of the same period in consecutive fiscal years (excluding customers from the cohort who canceled during the initial period), was an average of 104%, 109%, and 106% for the years ended January 31, 2021, 2022 and 2023, respectively.
Our annual recurring revenue (ARR) net retention rate, which compares the ARR as of the measurement date to ARR from the same cohort as of the same period in consecutive fiscal years (excluding customers from the cohort who canceled during the initial period), was an average of 109%, 106%, and 96% for the years ended January 31, 2022, 2023 and 2024, respectively.
Analyzer allows users to create their own workspace: • over 300 chart types and a robust mapping engine that enable users to immediately visualize area-specific data, even suggesting charts based on the data input so users never start with a blank slate; • the ability to see and manipulate the data in all columns that are applied to charts, along with any other unused columns that should be shown; • out-of-the-box visualizations that make it easy to review numerous time periods to see trends and comparisons; • pre-defined filters for any visualization, making it easy for viewers to explore the data and see results in specific areas; • the ability to change options, colors, series, and even chart types on the fly and get instant feedback; and • tools to allow users to verify that data is flowing correctly and on time.
Analyzer allows users to create their own workspace: • over 300 chart types and a robust mapping engine that enable users to immediately visualize area-specific data, even suggesting charts based on the data input so users never start with a blank slate; • the ability to see and manipulate the data in all columns that are applied to charts, along with any other unused columns that should be shown; • out-of-the-box visualizations that make it easy to review numerous time periods to see trends and comparisons; • pre-defined filters for any visualization, making it easy for viewers to explore the data and see results in specific areas; • the ability to change options, colors, series, and even chart types on the fly and get instant feedback; and • tools to allow users to verify that data is flowing correctly and on time. 14 Domo provides a vast library of illustrative forms (including ISOTYPEs) out of the box.
We derived 78% of our revenue for the year ended January 31, 2023 from customers in the United States. We define a customer at the end of any particular quarter as an entity that generated revenue greater than $2,500 during that quarter.
We derived 79% of our revenue for the year ended January 31, 2024 from customers in the United States. We define a customer at the end of any particular quarter as an entity that generated revenue greater than $2,500 during that quarter.
Data Management, Governance, Security and Access Control Domo's Business Cloud is designed to meet the enterprise security, compliance and privacy requirements of our customers, particularly in highly regulated industries, such as financial services, government, health care, pharmaceuticals, energy and technology.
Data Management, Governance, Security and Access Control The Domo platform is designed to meet the enterprise security, compliance and privacy requirements of our customers, particularly in highly regulated industries, such as financial services, government, health care, pharmaceuticals, energy and technology.
Corporate Information We were originally incorporated in Delaware in September 2010 under the corporate name "Shacho, Inc." We changed our name to "Domo, Inc." in December 2011. Our principal executive offices are located at 772 East Utah Valley Drive, American Fork, UT 84003, and our telephone number is (801) 899-1000. Our website address is www.domo.com.
Corporate Information We were originally incorporated in Delaware in September 2010 under the corporate name "Shacho, Inc." We changed our name to "Domo, Inc." in December 2011. Our principal executive offices are located at 802 East 1050 South, American Fork, UT 84003, and our telephone number is (801) 899-1000. Our website address is www.domo.com.
Subscription fees are based upon the chosen Domo package which includes tier-based platform capabilities as well as the number of users. Business leaders, department heads and managers are the typical initial subscribers to our platform, deploying Domo to solve a business problem or to enable departmental access to critical data.
Subscription fees are based upon the chosen Domo package which includes tier-based platform capabilities, or usage. Business leaders, department heads and managers are the typical initial subscribers to our platform, deploying Domo to solve a business problem or to enable departmental access to critical data.
We have invested significantly to broaden our platform capabilities and enhance security and scalability requirements for the enterprise. • Continuous Product Innovation. From inception through January 31, 2023, we have invested $730.4 million in research and development to create our comprehensive platform.
We have invested significantly to broaden our platform capabilities and enhance security and scalability requirements for the enterprise. • Continuous Product Innovation. From inception through January 31, 2024, we have invested $824.1 million in research and development to create our comprehensive platform.
We believe that the principal competitive factors in our markets include the following: • user-centric design; • ease of adoption and use; • rapid time to value; • features and platform experience; • enterprise-grade performance, including scalability, reliability and query response time; • brand; • security, governance and privacy; • accessibility across mobile devices, operating systems, and applications; • breadth of data source connectivity through third-party integration; • customer support; • continued innovation; and • pricing. 17 We believe that we compete effectively on each of the factors listed above; however, we expect competition to intensify in the future.
We believe that the principal competitive factors in our markets include the following: • user-centric design; • ease of adoption and use; • rapid time to value; • features and platform experience; • enterprise-grade performance, including scalability, reliability and query response time; • brand; • security, governance and privacy; • accessibility across mobile devices, operating systems, and applications; • breadth of data source connectivity through third-party integration; • customer support; 19 • continued innovation; and • pricing.
Employees As of January 31, 2023, we had 967 employees, of which 773 work in the United States. None of our employees are represented by a labor union, and we believe our employee relations are good.
Employees As of January 31, 2024, we had 958 employees, of which 740 work in the United States. None of our employees are represented by a labor union, and we believe our employee relations are good.
Our architecture is designed to allow customers to maintain control of their data through various means including: multiple logical and physical security layers; least privilege and separation of duties access model; threat assessments of each new feature; transport layer encryption and encryption at rest that allows customers to manage their own encryption keys using Domo’s Bring Your Own Key, or BYOK; several self-service security controls offered within the Domo platform for customers to implement their own security policies, and extensive logging and monitoring of network, system and application events.
Our architecture is designed to allow customers to maintain control of their data through various means including: multiple logical and physical security layers; least privilege and separation of duties access model; threat assessments of each new feature; transport layer encryption and encryption at rest that allows customers to manage their own encryption keys using Domo’s Bring Your Own Key, or BYOK; several self-service security controls offered within the Domo platform for customers to implement their own security policies, and extensive logging and monitoring of network, system and application events. 21 We voluntarily engage independent third-party security auditors to test our systems and controls at least annually against several widely recognized security standards and regulations.
Research and development expenses were $66.5 million, $81.0 million and $95.1 million for the fiscal years ended January 31, 2021, 2022 and 2023, respectively.
Research and development expenses were $81.0 million, $95.1 million and $85.0 million for the fiscal years ended January 31, 2022, 2023 and 2024, respectively.
Service Organization Controls, or SOC, are standards established by the American Institute of Certified Public Accountants for reporting on internal control 19 environments implemented within an organization. We have also been certified as compliant with ISO 27001 and ISO 27018 standards.
We have completed a SOC 1 and SOC 2, and HITRUST risk-based attestation. Service Organization Controls, or SOC, are standards established by the American Institute of Certified Public Accountants for reporting on internal control environments implemented within an organization. We have also been certified as compliant with ISO 27001 and ISO 27018 standards.
Our marketing programs target C-level, and senior line of business leaders spanning all functional areas of a business, including sales, marketing, finance, human resources and information technology. We also host Domopalooza, our annual user conference for current customers and prospects.
We generate customer leads, accelerate sales opportunities and build brand awareness through our marketing programs. Our marketing programs target C-level, and senior line of business leaders spanning all functional areas of a business, including sales, marketing, finance, human resources and information technology. We also host Domopalooza, our annual user conference for current customers and prospects.
Fusion also includes a variety of machine learning algorithm and predictive analytics tools to allow everyone to add intelligence to any dataset, enabling a range of data science analysis, including: • cluster analysis to perform cohort analysis and discover relationships to understand complex data; • predictive models built on a suite of regression algorithms to better understand core drivers and influencers of key business metrics; • forecasting models using common forecasting methods; • time-series, multivariate, parametric and non-parametric algorithms to reveal abnormal or “interesting” data in any dataset; and • intelligent models built on machine learning algorithms.
Fusion also includes a variety of machine learning algorithm and predictive analytics tools to allow everyone to add intelligence to any dataset, enabling a range of data science analysis, including: • cluster analysis to perform cohort analysis and discover relationships to understand complex data; • predictive models built on a suite of regression algorithms to better understand core drivers and influencers of key business metrics; • forecasting models using common forecasting methods; • Scripting tiles for running custom R and Python scripts; • Deployment of AI Models hosted in Domo or other third party Data Science/Machine Learning platforms; • time-series, multivariate, parametric and non-parametric algorithms to reveal abnormal or “interesting” data in any dataset; and • intelligent models built on machine learning algorithms.
For the years ended January 31, 2021, 2022 and 2023, we had total revenue of $210.2 million, $258.0 million and $308.6 million, respectively, representing year-over-year growth of 23% and 20%, respectively. For the years ended January 31, 2021, 2022 and 2023, our net loss was $84.6 million, $102.1 million and $105.6 million, respectively.
For the years ended January 31, 2022, 2023 and 2024, we had total revenue of $258.0 million, $308.6 million and $319.0 million, respectively, representing year-over-year growth of 20% and 3%, respectively. For the years ended January 31, 2022, 2023 and 2024, our net loss was $102.1 million, $105.6 million and $75.6 million, respectively.
We also rely on other technology that we license from third parties. Though such third-party technology may not continue to be available to us on commercially reasonable terms, we believe that alternative technology would be available to us.
Though such third-party technology may not continue to be available to us on commercially reasonable terms, we believe that alternative technology would be available to us.
From marketing to operations, HR to finance, IT to product development, supply chain to sales, Domo's Business Cloud is designed to change the way organizations are managed and empower our customers to go fast, go big and go bold. Through Domo’s Business Cloud, data from across the business is collected, stored, prepared, organized, analyzed, visualized, and shared.
From marketing to operations, HR to finance, IT to product development, supply chain to sales, Domo's platform is designed to change the way organizations are managed and empower our customers to multiply their impact on the business. Through the Domo platform, data from across the business is collected, stored, prepared, organized, analyzed, visualized, and shared.
Through this user-controlled encryption, organizations can revoke encryption keys at any time, nullifying all data in the Domo platform and preventing access to their sensitive customer data. Domo Sandbox enables the creation of new content without upsetting day-to-day operations.
Domo Bring Your Own Key, or BYOK, provides the ability to rotate encryption keys numerous times a day. Through this user-controlled encryption, organizations can revoke encryption keys at any time, nullifying all data in the Domo platform and preventing access to their sensitive customer data. Domo Sandbox enables the creation of new content without upsetting day-to-day operations.
A majority of our annual recurring revenue is up for renewal during the fiscal year ending January 31, 2024. 16 We primarily generate sales through our direct sales team, which includes both inside sales and field sales personnel. Currently, most all of our sales and professional services activities are being conducted remotely.
Approximately 60% of our annual recurring revenue is up for renewal during the fiscal year ending January 31, 2025. We primarily generate sales through our direct sales team, which includes both inside sales and field sales personnel. Most all of our sales and professional services activities are conducted remotely. We also updated our freemium offering.
As of January 31, 2023, 65% of our customers were under multi-year contracts, compared to 62% and 60% of customers as of January 31, 2022 and 2021, respectively. This transition to a higher percentage of multi-year contracts, among both new and existing customers, has enhanced the predictability of our subscription revenue.
As of January 31, 2024, 66% of our customers were under multi-year contracts on a dollar-weighted basis, compared to 65% and 62% of customers as of January 31, 2023 and 2022, respectively. The high percentage revenue from multi-year contracts, among both new and existing customers, has enhanced the predictability of our subscription revenue.
The Domo platform delivers six core benefits, and from the combination of these six, customers benefit from a seventh; a virtuous cycle of optimization. Executive and Outcome Focused Mobile Solution From the beginning, we targeted CEOs as key users of our platform. That concept has fundamentally influenced every aspect of the Domo platform from architecture to user experience.
Executive and Outcome Focused Mobile Solution From the beginning, we targeted CEOs as key users of our platform. That concept has fundamentally influenced every aspect of the Domo platform from architecture to user experience.
Each profile contains clearly defined access privileges, which can be turned on or off by default, and privileges and roles can be fully tailored to align with an organization’s unique policy. 15 Logging and Monitoring Administrators can easily monitor global activity across Domo with our Activity Logs console.
Each profile contains clearly defined access privileges, which can be turned on or off by default, and privileges and roles can be fully tailored to align with an organization’s unique policy.
Content can be shared in portals, web properties, or inside applications. • Collaboration : Buzz is our standalone collaboration and productivity suite that integrates seamlessly with Domo's other features.
Content can be shared in portals, web properties, or inside applications. Customers can also provision full Domo instances for their partners/customers seeded with content and data from them. • Collaboration : Buzz is our standalone collaboration and productivity suite that integrates seamlessly with Domo's other features.
Unlike some solutions that require separate tools to extract, transform and load, or ETL, data, Fusion permits users of all skill levels to clean and combine data within our platform.
Domo Magic ETL: Data Transformation Our self-service ETL toolset, Fusion, enables users to easily join, aggregate and cleanse data from multiple sources. Unlike some solutions that require separate tools to extract, transform and load, or ETL, data, Fusion permits users of all skill levels to clean and combine data within our platform.
As a result, data-driven knowledge proliferates throughout an organization as more employees become capable of contributing to shared, collaborative analysis. When freed from the constraints of traditional business intelligence tools, these employees tend to not only become increasingly productive, but also feel more connected to the broader organization.
When freed from the constraints of traditional business intelligence tools, these employees tend to not only become increasingly productive, but also feel more connected to the broader organization.
Our Technology Our solution is comprised of seven core elements: • connectors; • data warehouse and fast query engine; • Domo ETL; • data analysis and visualization tools; 11 • collaboration tools; • artificial intelligence algorithms; and • apps and partner ecosystem.
Our Technology Our solution is comprised of nine core elements: • connectors; • data warehouse and fast query engine; 12 • Domo Magic ETL; • data analysis and visualization tools; • embedded analytics; • collaboration tools; • Domo AI; • automation workflows; and • apps and partner ecosystem.
The platform also is designed to help IT leaders deliver value rapidly to the business by seamlessly complementing their existing systems and infrastructure and unlocking value from their fragmented data and systems. While developing our platform, we have been focused on four key pillars as described below.
The platform also is designed to help IT leaders deliver value rapidly to the business by seamlessly complementing their existing systems and infrastructure and unlocking value from their fragmented data and systems.
We actively pursue registration of our trademarks and service marks in the United States and abroad. As of January 31, 2023, we owned 119 issued U.S. patents and two pending U.S. patent applications.
We actively pursue registration of our trademarks and service marks in the United States and abroad. As of January 31, 2024, we owned 115 issued U.S. patents and four pending U.S. patent applications. We also owned ten patents in the European Union, three patents in Great Britain, five patents in Canada and one patent in Japan.
We have sole ownership of all of our U.S. patents and pending U.S. patent applications. Our applications use “open source” software. Open source software is made available to the general public in source code form for use, modification and redistribution on an “as-is” basis under the terms of a non-negotiable license.
Open source software is made available to the general public in source code form for use, modification and redistribution on an “as-is” basis under the terms of a non-negotiable license. We also rely on other technology that we license from third parties.
Domo's federated query functionality supports several top cloud data warehouse engines and allows customers to query and visualize data that lives in their data warehouses without duplicating it. 12 Domo ETL: Data Transformation Our self-service ETL toolset, Fusion, enables users to easily join, aggregate and cleanse data from multiple sources.
Domo's federated query functionality supports several top cloud data warehouse engines and allows customers to query and visualize data that lives in their data warehouses without duplicating it.
Administrators can see which data sources are updating, identify potential problems, understand existing data relationships, and gauge the size of each data source, all in one visually engaging platform. Domo Bring Your Own Key, or BYOK, provides the ability to rotate encryption keys numerous times a day.
The Domo Data Warehouse is a dynamic 3D management console that enables IT professionals to interact with and curate every data source in Domo. Administrators can see which data sources are updating, identify potential problems, understand existing data relationships, and gauge the size of each data source, all in one visually engaging platform.
On top of the flexibility, it provides subsecond average query response time, enabling real-time consumption of information. The speed and flexibility at this layer differentiate between Domo from traditional solutions offered by our competitors.
On top of the flexibility, it provides subsecond average query response time, enabling real-time consumption of information.
Each of the core pieces of the Domo platform has been engineered from the ground up to be extensible and accessible through APIs and SDKs.
Benchmarks and Applications — Ecosystem We built the Domo platform with the explicit goal that it be extended and leveraged by a rich ecosystem of partners, developers, business experts and entrepreneurs. Each of the core pieces of the Domo platform has been engineered from the ground up to be extensible and accessible through APIs and SDKs.
These tools and technologies are typically provided by separate vendors today. Domo's Business Cloud brings all of them together to help companies leverage their business intelligence across various processes, at scale, in as fast as minutes or seconds.
Domo's Business Cloud brings all of them together to help companies leverage their business intelligence across various processes, at scale, in as fast as minutes or seconds. 8 The Domo platform delivers six core benefits, and from the combination of these six, customers benefit from a seventh; a virtuous cycle of optimization.
We believe this will be a meaningful source of future lead generation as application creation investment thresholds are high. As of January 31, 2023, we had more than 2,500 organizations as customers. We employ a land, expand, and retain business model and typically enter into enterprises within a specific division or for a specific use case.
As of January 31, 2024, we had more than 2,600 organizations as customers. We employ a land, expand, and retain business model and typically enter into enterprises within a specific division or for a specific use case. As our users see the value of our platform and user engagement increases, we expand our footprint within their organization.
We provide the assurance of leading security and compliance certifications, including those relating to SOC 1, SOC 2, HITRUST, HIPAA and more. Benchmarks and Applications — Ecosystem We built the Domo platform with the explicit goal that it be extended and leveraged by a rich ecosystem of partners, developers, business experts and entrepreneurs.
We provide the assurance of leading security and compliance certifications, including those relating to SOC 1, SOC 2, HITRUST, HIPAA and more.
All of Your People Our platform enables every type of employee to connect to, analyze, and leverage data from their smartphone. When everyone can use data, the value of the data increases significantly and everyone is equipped with a common set of facts across all levels of an organization.
When everyone can use data, the value of the data increases significantly and everyone is equipped with a common set of facts across all levels of an organization. As a result, data-driven knowledge proliferates throughout an organization as more employees become capable of contributing to shared, collaborative analysis.
Over time, as customers recognize the value of our platform, we increasingly engage with CIOs and other executives to facilitate broad enterprise adoption. A majority of our customers subscribe to our services through multi-year contracts.
Over time, as customers recognize the value of our platform, we increasingly engage with CIOs and other executives to facilitate broad enterprise adoption. We recently began offering our platform as a consumption-based service. Customers have an annual purchase commitment, utilizing a tiered pricing structure, which is paid upfront, and is based on an estimated volume of usage.
Chat, sharing, organizational charts, profiles, and project management all help foster an engaged and curious workforce, so that anyone in an organization can participate in improving the business. 6 • Artificial Intelligence Algorithms : Domo's suite of data science leverages machine learning algorithms, predictive analytics, and other artificial intelligence technologies to create alerts, detect anomalies, optimize queries, and suggest areas of interest to help people focus on what matters most.
Chat, sharing, organizational charts, profiles, and project management all help foster an engaged and curious workforce, so that anyone in an organization can participate in improving the business.
Explorer is a data discovery tool that seamlessly works on mobile as well as on wall monitors in executive offices or manufacturing facility floors. Domo Everywhere is a set of embedded analytics tools that enable organizations to easily and securely deliver data experiences to customers, partners and vendors.
Domo also supports (out of the box) fine-grained control over presentation on a small mobile screen. Embedded Analysis Domo Everywhere is a set of embedded analytics tools that enable organizations to easily and securely deliver data experiences to customers, partners and vendors, without having to recreate new or special datasets.
Removed
Domo's federated query functionality supports several top cloud data warehouse engines and allows customers to query and visualize data that lives in their data warehouses without duplicating it. • Domo ETL : Fusion is our data transformation engine that sorts customer data, making it possible for any dataset connected to Domo to be cleansed, combined and prepared for use leveraging Magic ETL, Data Flows and hygiene algorithms. • Data Analysis and Visualization : Our Explorer analytics suite allows users to analyze, display, share and interact with data through pixel-perfect visualizations.
Added
Domo Cloud Amplifier extends the native integrations to all functionality in Domo allowing users to leverage alerting, Magic ETL transformation, Domo AI and more while data remains at rest within a source cloud.
Removed
These machine learning and AI tools constantly scan incoming data to identify trends, anomalies and correlations, providing alerts and initiating business processes. • Partner Ecosystem : With the Domo Appstore, APIs and developer tool kits, Domo enables an ecosystem of partners to quickly build intelligent applications on the platform.
Added
Cloud Amplifier is currently available for Snowflake (including Snowflake on Azure), Databricks (including Databricks on Azure), Google Big Query, AWS Redshift and Dremio. • Domo Magic ETL : Magic ETL is Domo's low code data transformation tool enabling customers to combine and enrich data so it can drive business impact.
Removed
As our users see the value of our platform and user engagement increases, we expand our footprint within their organization.
Added
Magic includes basic transformation tiles but also allows more advanced users to leverage SQL and Python/R scripts. Data can be blended from multiple clouds as well as Excel files or other data sources loaded to Domo. • Data Analysis and Visualization : The Domo analytics suite allows users to analyze, display, share and interact with data through pixel-perfect visualizations.
Removed
Domo Pages and Collections allow everyone to consume and organize data in ways that are meaningful and personalized to them. It’s easy to drag-and-drop, re-size and group reports, which we refer to as cards, into collections, and build slideshows to share both internally or externally.
Added
Domo visualizations seamlessly work on mobile as well as on wall monitors in executive offices or manufacturing facility floors. Domo Bricks allows users to extend to unlimited visualization options including viz libraries such as D3, Plotly, MapBox, Chart.js and more. Domo alerts allow for proactive monitoring of data based on specific thresholds and security settings.
Removed
Domo Stories allows users to combine cards, text, and images in a dashboard to tell a powerful story about the data. Rather than simply arranging cards on a page, users can customize page layouts to emphasize certain points and guide other users through analysis of the data.
Added
Domo's App Studio provides low 6 code tooling for developing next level visualizations and apps including custom themes, bespoke navigation, forms for data collection and more.
Removed
Other sharing tools include Publication Groups, which enable everyone to securely share filtered views of data with other individuals and groups, send a single card or a slideshow of cards through scheduled emails, enabling everyone to share valuable information with teams or external stakeholders. 13 Domo Everywhere is a set of embedded analytics tools that enable organizations to easily and securely deliver data experiences to customers, partners and vendors, without having to recreate new or special datasets.
Added
More experienced developers can use the Domo App Dev Framework to create custom apps built on top of the data and governance of Domo. • Embedded Analytics : Domo Everywhere is a set of embedded analytics tools that enable organizations to easily and securely deliver data experiences to customers, partners and vendors.
Removed
Artificial Intelligence Algorithms Through a suite of data science, which leverages machine learning algorithms, artificial intelligence and predictive analytics, Domo creates alerts, detects anomalies, optimizes queries, and suggests areas of interest to help people focus on what matters most.
Added
Domo also provides integration points with both Microsoft Teams and Slack. • Domo AI : Domo AI provides a comprehensive AI and machine learning infrastructure including a Jupyter workspace integration and AutoML capabilities for building models in Domo.
Removed
We are also developing additional artificial intelligence capabilities to enable users to develop benchmarks and indexes based on data in the Domo platform, as well as automatic write back to other systems. Domo was designed and built from the ground up to deliberately and seamlessly combine all the traditional disparate technologies into a single system.
Added
Domo AI Model Management allows for the hosting, deployment, and training of models both built in Domo or hosted by third parties including Open AI, Amazon Bedrock, Databricks and Hugging Face. These models can be accessed via inference end points or used in Magic ETL, workflows and apps.

… 44 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

147 edited+50 added−21 removed300 unchanged
Biggest changeAny violation of the FCPA or other applicable anti-bribery, anti-corruption laws, and anti-money laundering laws could result in whistleblower complaints, adverse media coverage, investigations, loss of export privileges, severe criminal or civil sanctions, a significant diversion of management's resources and attention or suspension or debarment from U.S. government contracts, all of which may have a material adverse effect on our reputation, business, operating results and prospects. 38 Risks Related to Privacy and Cybersecurity We are subject to governmental laws, regulation and other legal obligations, particularly those related to privacy, data protection and information security, and any actual or perceived failure to comply with such obligations could impair our efforts to maintain and expand our customer base, causing our growth to be limited and harming our business.
Biggest changeAny violation of the FCPA or other applicable anti-bribery, anti-corruption laws, and anti-money laundering laws could result in whistleblower complaints, adverse media coverage, investigations, loss of export privileges, severe criminal or civil sanctions, a significant diversion of management's resources and attention or suspension or debarment from U.S. government contracts, all of which may have a material adverse effect on our reputation, business, operating results and prospects.
On February 26, 2015, the Federal Communications Commission, or the FCC, reclassified broadband internet access services in the United States as a telecommunications service subject to some elements of common carrier regulation, including the obligation to provide service on just and reasonable terms, and adopted specific net neutrality rules prohibiting the blocking, throttling or “paid prioritization” of content or services.
On February 26, 2015, the Federal Communications Commission (the FCC) reclassified broadband internet access services in the United States as a telecommunications service subject to some elements of common carrier regulation, including the obligation to provide service on just and reasonable terms, and adopted specific net neutrality rules prohibiting the blocking, throttling or “paid prioritization” of content or services.
Within the E.U., in May 2018, a far-reaching regulation governing data and privacy practices called the General Data Protection Regulation, or GDPR, became effective. The GDPR includes stringent operational requirements for processors and controllers of personal data and imposes significant penalties for non-compliance of up to the greater of €20 million or 4% of global annual revenues.
Within the E.U., in May 2018, a far-reaching regulation governing data and privacy practices called the General Data Protection Regulation (GDPR) became effective. The GDPR includes stringent operational requirements for processors and controllers of personal data and imposes significant penalties for non-compliance of up to the greater of €20 million or 4% of global annual revenues.
Noncompliance with laws and regulations relating to privacy and security of personal information, including HIPAA, or with contractual obligations, including under any business associate agreement, may lead to significant fines, civil and criminal penalties, and other liabilities. The U.S. Department of Health and Human Services, or HHS, audits the compliance of business associates and enforces HIPAA privacy and security standards.
Noncompliance with laws and regulations relating to privacy and security of personal information, including HIPAA, or with contractual obligations, including under any business associate agreement, may lead to significant fines, civil and criminal penalties, and other liabilities. The U.S. Department of Health and Human Services (HHS) audits the compliance of business associates and enforces HIPAA privacy and security standards.
Acquisitions involve many risks, including the following: • an acquisition may negatively affect our operating results, financial condition or cash flows because it may require us to incur charges or assume substantial debt or other liabilities, may cause adverse tax consequences or unfavorable accounting treatment, may expose us to claims and disputes by third parties, including intellectual property claims and disputes, or may not generate sufficient financial return to offset additional costs and expenses related to the acquisition; • we may encounter difficulties or unforeseen expenditures in integrating the business, technologies, products, personnel or operations of any company that we acquire, particularly if key personnel of the acquired company decide not to work for us; • an acquisition may disrupt our ongoing business, divert resources, increase our expenses and distract our management; • an acquisition may result in a delay or reduction of customer purchases for both us and the company we acquired due to customer uncertainty about continuity and effectiveness of service from either company; • we may encounter difficulties in, or may be unable to, successfully sell any acquired products; • an acquisition may involve the entry into geographic or business markets in which we have little or no prior experience or where competitors have stronger market positions; • the potential strain on our financial and managerial controls and reporting systems and procedures; • potential known and unknown liabilities associated with an acquired company; 37 • if we incur debt to fund such acquisitions, such debt may subject us to material restrictions on our ability to conduct our business as well as financial maintenance covenants; • the risk of impairment charges related to potential write-downs of acquired assets or goodwill in future acquisitions; • to the extent that we issue a significant amount of equity or convertible debt securities in connection with future acquisitions, existing stockholders may be diluted and earnings per share may decrease; and • managing the varying intellectual property protection strategies and other activities of an acquired company.
Acquisitions involve many risks, including the following: • an acquisition may negatively affect our operating results, financial condition or cash flows because it may require us to incur charges or assume substantial debt or other liabilities, may cause adverse tax consequences or unfavorable accounting treatment, may expose us to claims and disputes by third parties, including intellectual property claims and disputes, or may not generate sufficient financial return to offset additional costs and expenses related to the acquisition; • we may encounter difficulties or unforeseen expenditures in integrating the business, technologies, products, personnel or operations of any company that we acquire, particularly if key personnel of the acquired company decide not to work for us; • an acquisition may disrupt our ongoing business, divert resources, increase our expenses and distract our management; • an acquisition may result in a delay or reduction of customer purchases for both us and the company we acquired due to customer uncertainty about continuity and effectiveness of service from either company; • we may encounter difficulties in, or may be unable to, successfully sell any acquired products; • an acquisition may involve the entry into geographic or business markets in which we have little or no prior experience or where competitors have stronger market positions; • the potential strain on our financial and managerial controls and reporting systems and procedures; • potential known and unknown liabilities associated with an acquired company; • if we incur debt to fund such acquisitions, such debt may subject us to material restrictions on our ability to conduct our business as well as financial maintenance covenants; • the risk of impairment charges related to potential write-downs of acquired assets or goodwill in future acquisitions; • to the extent that we issue a significant amount of equity or convertible debt securities in connection with future acquisitions, existing stockholders may be diluted and earnings per share may decrease; and • managing the varying intellectual property protection strategies and other activities of an acquired company.
Enhancements and changes to our platform could fail to attain sufficient market acceptance for many reasons, including: • failure to predict market demand accurately in terms of platform functionality and capability or to supply features that meets this demand in a timely fashion; • inability to operate effectively with the technologies, systems or applications of existing or potential customers; • defects, errors or failures; • negative publicity about their performance or effectiveness; • delays in releasing new enhancements and additional features to our platform to the market; • the introduction or anticipated introduction of competing products; 30 • an ineffective sales force; • poor business conditions for our end-customers, causing them to delay purchases; • challenges with customer adoption and use of our platform on mobile devices or problems encountered in developing or supporting enhancements to our mobile applications; and • the reluctance of customers to purchase subscriptions to software incorporating open source software.
Enhancements and changes to our platform could fail to attain sufficient market acceptance for many reasons, including: • failure to predict market demand accurately in terms of platform functionality and capability or to supply features that meets this demand in a timely fashion; • inability to operate effectively with the technologies, systems or applications of existing or potential customers; • defects, errors or failures; • negative publicity about their performance or effectiveness; • delays in releasing new enhancements and additional features to our platform to the market; • the introduction or anticipated introduction of competing products; • an ineffective sales force; • poor business conditions for our end-customers, causing them to delay purchases; • challenges with customer adoption and use of our platform on mobile devices or problems encountered in developing or supporting enhancements to our mobile applications; and • the reluctance of customers to purchase subscriptions to software incorporating open source software.
Any failure or perceived failure by us to comply with federal, state, or foreign laws, regulations, policies, legal or contractual obligations, industry standards, regulatory guidance or other actual or asserted obligations relating to privacy, data protection, information security, marketing, or consumer communications may result in governmental investigations and enforcement actions, claims, demands, and litigation by private entities, fines, penalties, and other liabilities, harm to our reputation and adverse publicity, and could cause our customers and partners to lose trust in us, which could materially affect our business, operating results, and financial condition.
Any failure or perceived failure by us to comply with federal, state, or foreign laws, regulations, policies, legal or contractual obligations, industry standards, regulatory guidance or other actual or asserted obligations relating to privacy, data protection, information security, marketing, or consumer communications may result in governmental investigations and 43 enforcement actions, claims, demands, and litigation by private entities, fines, penalties, and other liabilities, harm to our reputation and adverse publicity, and could cause our customers and partners to lose trust in us, which could materially affect our business, operating results, and financial condition.
These provisions include the following: • our dual-class common stock structure, which provides our holders of Class A common stock with the ability to significantly influence the outcome of matters requiring stockholder approval, even if they own significantly less than a majority of the shares of our outstanding Class A common stock and Class B common stock; • when the outstanding shares of Class A common stock represent less than a majority of the total combined voting power of our Class A and Class B common stock, or the voting threshold date, our board of directors will be classified into three classes of directors with staggered three-year terms, and directors will only be able to be removed from office for cause; • our amended and restated bylaws provide that, following the voting threshold date, approval of stockholders holding two-thirds of our outstanding voting power voting as a single class will be required for stockholders to amend or adopt any provision of our bylaws; • our stockholders are able to take action by written consent for any matter until the voting threshold date; • following the voting threshold date, vacancies on our board of directors will be able to be filled only by our board of directors and not by stockholders; • only the chairman of our board of directors, chief executive officer, a majority of our board of directors or, until the voting threshold date, a stockholder (or group of stockholders) holding at least 50% of the combined voting power of our Class A and Class B common stock are authorized to call a special meeting of stockholders; • certain litigation against us can only be brought in Delaware; 49 • our amended and restated certificate of incorporation authorizes undesignated preferred stock, the terms of which may be established and shares of which may be issued, without the approval of the holders of common stock; and • advance notice procedures apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders.
These provisions include the following: • our dual-class common stock structure, which provides our holders of Class A common stock with the ability to significantly influence the outcome of matters requiring stockholder approval, even if they own significantly less than a majority of the shares of our outstanding Class A common stock and Class B common stock; • when the outstanding shares of Class A common stock represent less than a majority of the total combined voting power of our Class A and Class B common stock, or the voting threshold date, our board of directors will be classified into three classes of directors with staggered three-year terms, and directors will only be able to be removed from office for cause; • our amended and restated bylaws provide that, following the voting threshold date, approval of stockholders holding two-thirds of our outstanding voting power voting as a single class will be required for stockholders to amend or adopt any provision of our bylaws; • our stockholders are able to take action by written consent for any matter until the voting threshold date; • following the voting threshold date, vacancies on our board of directors will be able to be filled only by our board of directors and not by stockholders; • only the chairman of our board of directors, chief executive officer, a majority of our board of directors or, until the voting threshold date, a stockholder (or group of stockholders) holding at least 50% of the combined voting power of our Class A and Class B common stock are authorized to call a special meeting of stockholders; • certain litigation against us can only be brought in Delaware; 53 • our amended and restated certificate of incorporation authorizes undesignated preferred stock, the terms of which may be established and shares of which may be issued, without the approval of the holders of common stock; and • advance notice procedures apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders.
While we have established a formal third party security risk assessment process to address security risks for our company relating to our key third party service providers, our ability to monitor our service providers’ security measures is limited, and, in any event, third parties may be able to circumvent those security measures or our own security measures, resulting in unavailability of or unauthorized access to, misuse, acquisition, disclosure, loss, alteration, destruction, or other processing of our and our customers’ data, including confidential, sensitive, and other information about individuals.
While we have established a formal third party security risk assessment process 44 to address security risks for our company relating to our key third party service providers, our ability to monitor our service providers’ security measures is limited, and, in any event, third parties may be able to circumvent those security measures or our own security measures, resulting in unavailability of or unauthorized access to, misuse, acquisition, disclosure, loss, alteration, destruction, or other processing of our and our customers’ data, including confidential, sensitive, and other information about individuals.
Our success in this area will depend on a wide range of factors, some of which are beyond our control, including the following: • the efficacy of our marketing efforts; • our ability to maintain a high-quality, innovative and error- and bug-free platform; 43 • our ability to obtain new customers and retain and increase usage by existing customers; • our ability to maintain high customer satisfaction; • the quality and perceived value of our platform; • our ability to obtain, maintain and enforce trademarks and other indicia of origin that are valuable to our brand; • our ability to successfully differentiate our platform from competitors’ products; • actions of competitors and other third parties; • our ability to provide customer support and professional services; • any actual or perceived security breach or data loss, or misuse or perceived misuse of our platform; • positive or negative publicity; • interruptions, delays or attacks on our platform; • challenges with customer adoption and use of our platform on mobile devices or problems encountered in developing or supporting enhancements to our mobile applications; and • litigation or regulatory related developments.
Our success in this area will depend on a wide range of factors, some of which are beyond our control, including the following: • the efficacy of our marketing efforts; • our ability to maintain a high-quality, innovative and error- and bug-free platform; • our ability to obtain new customers and retain and increase usage by existing customers; • our ability to maintain high customer satisfaction; 47 • the quality and perceived value of our platform; • our ability to obtain, maintain and enforce trademarks and other indicia of origin that are valuable to our brand; • our ability to successfully differentiate our platform from competitors’ products; • actions of competitors and other third parties; • our ability to provide customer support and professional services; • any actual or perceived security breach or data loss, or misuse or perceived misuse of our platform; • positive or negative publicity; • interruptions, delays or attacks on our platform; • challenges with customer adoption and use of our platform on mobile devices or problems encountered in developing or supporting enhancements to our mobile applications; and • litigation or regulatory related developments.
Because the techniques used and vulnerabilities exploited to obtain unauthorized access or to sabotage systems change frequently and generally are not identified until they are launched against a target, we may be unable to anticipate these techniques or vulnerabilities or implement adequate preventative measures. We may also experience security breaches that may remain undetected for an extended period.
Because the techniques used and vulnerabilities exploited to obtain unauthorized access or to sabotage systems change frequently and generally are not identified until they are launched against a target, we may be unable to anticipate these techniques or vulnerabilities or implement adequate preventative measures. We may also experience security breaches and incidents that remain undetected for an extended period.
As a result, we may be unable to attract new customers at rates or on terms that would be favorable or comparable to prior periods, which could negatively affect the growth of our revenue. 26 Even if we do attract customers, the cost of new customer acquisition may prove so high as to prevent us from achieving or sustaining profitability.
As a result, we may be unable to attract new customers at rates or on terms that would be favorable or comparable to prior periods, which could negatively affect the growth of our revenue. Even if we do attract customers, the cost of new customer acquisition may prove so high as to prevent us from achieving or sustaining profitability.
Any failure by us to compete successfully in any one of these or other 29 areas may reduce the demand for our platform, as well as adversely affect our business, operating results and financial condition. Moreover, current and future competitors may also make strategic acquisitions or establish cooperative relationships among themselves or with others.
Any failure by us to compete successfully in any one of these or other areas may reduce the demand for our platform, as well as adversely affect our business, operating results and financial condition. Moreover, current and future competitors may also make strategic acquisitions or establish cooperative relationships among themselves or with others.
Given the sustained flow of investment funds into passive strategies that seek to track certain indexes, exclusion from stock indexes would likely preclude investment by many of these funds and could make our Class B common stock less attractive to other investors. As a result, the market price of our Class B common stock could be adversely affected.
Given the sustained flow of investment funds into passive strategies 50 that seek to track certain indexes, exclusion from stock indexes would likely preclude investment by many of these funds and could make our Class B common stock less attractive to other investors. As a result, the market price of our Class B common stock could be adversely affected.
Any failure to maintain high-quality customer support, or a market perception that we do not maintain high-quality support, could adversely affect our reputation and our ability to sell our services to existing and prospective customers. If our or our customers' access to data becomes limited, our business, results of operations and financial condition may be adversely affected.
Any failure to maintain high-quality customer support, or a 34 market perception that we do not maintain high-quality support, could adversely affect our reputation and our ability to sell our services to existing and prospective customers. If our or our customers' access to data becomes limited, our business, results of operations and financial condition may be adversely affected.
In addition, certain open source licenses, like the GNU Affero General Public License, or AGPL, may require us to offer for no cost the components of our platform that incorporate the open source software, to make available source code for modifications or derivative works we create by incorporating or using the open source software, or to license our modifications or derivative works under the terms of the particular open source license.
In addition, certain open source licenses, like the GNU Affero General Public License may require us to offer for no cost the components of our platform that incorporate the open source software, to make available source code for modifications or derivative works we create by incorporating or using the open source software, or to license our modifications or derivative works under the terms of the particular open source license.
In July 2017, FTSE Russell announced that it plans to require new constituents of its indexes to have greater than 5% of the company's voting rights in the hands of public stockholders, and S&P Dow Jones announced that it will no longer admit companies with multiple-class share structures to 46 certain of its indexes.
In July 2017, FTSE Russell announced that it plans to require new constituents of its indexes to have greater than 5% of the company's voting rights in the hands of public stockholders, and S&P Dow Jones announced that it will no longer admit companies with multiple-class share structures to certain of its indexes.
Changes in our pricing and subscription models subject us to a number of uncertainties, including our ability to plan for and model future growth and make accurate projections regarding our future performance. Changes to our pricing and subscription models may also expose to unexpected or unintended effects, including increased user dissatisfaction, reputational harm and difficulty obtaining or retaining customers.
Moreover, changes in our pricing and subscription models subject us to a number of uncertainties, including our ability to plan for and model future growth and make accurate projections regarding our future performance. Changes to our pricing and subscription models may also expose to unexpected or unintended effects, including increased user dissatisfaction, reputational harm and difficulty obtaining or retaining customers.
Despite precautions taken during such processes and procedures, any unsuccessful data transfers may impair customers’ use of our platform, and we may experience costs or downtime in connection with the transfer of data to other facilities, which may lead to, among other things, customer dissatisfaction and non-renewals.
Despite precautions taken during such processes and procedures, any unsuccessful data transfers may impair customers’ use of our platform, and we may experience costs or 30 downtime in connection with the transfer of data to other facilities, which may lead to, among other things, customer dissatisfaction and non-renewals.
We may be required to adjust our subscription or pricing models in response to these changes, which could adversely affect our financial performance. If we fail to adapt and respond effectively to rapidly changing technology, evolving industry standards and changing customer needs or requirements, our solutions may become less competitive.
We may be required to adjust our subscription or pricing models in response to these changes, which could adversely affect our financial performance. 32 If we fail to adapt and respond effectively to rapidly changing technology, evolving industry standards and changing customer needs or requirements, our solutions may become less competitive.
We could be required to expend significant capital and other resources to alleviate problems caused by such actual or perceived security breaches or other incidents and to remediate our systems, we could be exposed to a risk of loss, litigation or regulatory action and possible liability, and our ability to operate our business may be impaired.
We could be required to expend significant capital and other resources to alleviate problems caused by such actual or perceived security breaches, incidents, or other events and to remediate our systems, we could be exposed to a risk of loss, litigation or regulatory action and possible liability, and our ability to operate our business may be impaired.
Even if we are successful in defending 44 against allegations of intellectual property infringement, litigation may be costly and may divert the time and other resources of our management. Additionally, customers may not purchase our platform if they are concerned that they may infringe or otherwise violate third-party intellectual property rights.
Even if we are successful in defending against allegations of intellectual property infringement, litigation may be costly and may divert the time and other resources of our management. Additionally, customers may not purchase our platform if they are concerned that they may infringe or otherwise violate third-party intellectual property rights.
If any of these were to occur there would be a negative and potentially significant impact to our financial 31 performance. Lastly, our ability to generate new applications, and improve our current solutions may be limited if and to the extent resources are necessarily allocated to address issues related to the performance of existing solutions.
If any of these were to occur there would be a negative and potentially significant impact to our financial performance. Lastly, our ability to generate new applications, and improve our current solutions may be limited if and to the extent resources are necessarily allocated to address issues related to the performance of existing solutions.
Employees may be more likely to leave us if the shares they own or the shares underlying their vested options have significantly appreciated in value relative to the original purchase prices of the shares or the exercise prices of the options, or, conversely, if the exercise prices of the options that they hold are significantly above the market price of our common stock.
Employees may be more likely to leave us if the shares they own or the shares underlying their vested options have significantly appreciated in value relative to the original purchase prices of the shares or the exercise prices of the options, or, conversely, if the exercise prices of the options that they hold are significantly above the market price of our 37 common stock.
The CCPA requires covered companies to, among other things, provide disclosures to California consumers and afford such consumers new abilities to opt-out of certain sales of personal information. Additionally, the California Privacy Rights Act, or CPRA, was approved by California voters in the November 3, 2020 election.
The CCPA requires covered companies to, among other things, provide disclosures to California consumers and afford such consumers new abilities to opt-out of certain sales of personal information. Additionally, the California Privacy Rights Act (CPRA) was approved by California voters in the November 3, 2020 election.
We may incur significant costs to attract and retain qualified personnel, including significant expenditures related to salaries and benefits 34 and compensation expenses related to equity awards, and we may lose new employees to competitors or other companies before we realize the benefit of our investment in recruiting and training them.
We may incur significant costs to attract and retain qualified personnel, including significant expenditures related to salaries and benefits and compensation expenses related to equity awards, and we may lose new employees to competitors or other companies before we realize the benefit of our investment in recruiting and training them.
We enter into business associate agreements with our customers who require them in order to comply with the Health Insurance Portability and Accountability Act, or HIPAA, and the Health Information Technology for Economic and Clinical Health Act, and therefore we are directly subject to certain provisions of HIPAA applicable to business associates.
We enter into business associate agreements with our customers who require them in order to comply with the Health Insurance Portability and Accountability Act (HIPAA) and the Health Information Technology for Economic and Clinical Health Act, and therefore we are directly subject to certain provisions of HIPAA applicable to business associates.
For these reasons, we may not be able to utilize a material portion of the NOLs, even if we attain profitability, which could potentially result in increased future tax liability to us and could adversely affect our operating results and financial condition.
For these reasons, we may not be able to utilize a material portion of our NOLs, even if we attain profitability, which could potentially result in increased future tax liability to us and could adversely affect our operating results and financial condition.
Standard Contractual Clauses, or the SCCs, to protect data exports between the E.U. and the U.S. have been subject to legal challenges in the E.U, and on July 16, 2020, the Court of Justice of the European Union, or CJEU, Europe's highest court, held in the “Schrems II” case that the E.U.-U.S.
Standard Contractual Clauses (the SCCs) to protect data exports between the E.U. and the U.S. have been subject to legal challenges in the E.U, and on July 16, 2020, the Court of Justice of the European Union (the CJEU), Europe's highest court, held in the “Schrems II” case that the E.U.-U.S.
We cannot guarantee that our systems and networks or those of our vendors or service providers have not been compromised or that they do not contain exploitable defects or bugs that could result in a breach of or disruption to our systems and networks or the systems and networks of third parties that support us and our services.
We cannot guarantee that our systems and networks or those of our vendors or service providers have not been compromised or that they do not contain exploitable defects or bugs that could result in a breach or compromise of or disruption to our systems and networks or the systems and networks of third parties that support us and our services.
On June 28, 2021, the European Commission announced a decision of “adequacy” concluding that the United Kingdom ensures an equivalent level of data protection to the GDPR, which provides some relief regarding the legality of 39 continued personal data flows from the European Economic Area to the United Kingdom.
On June 28, 2021, the European Commission announced a decision of “adequacy” concluding that the United Kingdom ensures an equivalent level of data protection to the GDPR, which provides some relief regarding the legality of continued personal data flows from the European Economic Area to the United Kingdom.
In particular, Section 404 of the Sarbanes-Oxley Act, or Section 404, requires us to perform system and process evaluation and testing of our internal controls over financial reporting to allow management to report on, and our independent registered public accounting firm potentially to attest to, the effectiveness of our internal controls over financial reporting.
In particular, Section 404 of the Sarbanes-Oxley Act (Section 404) requires us to perform system and process evaluation and testing of our internal controls over financial reporting to allow management to report on, and our independent registered public accounting firm potentially to attest to, the effectiveness of our internal controls over financial reporting.
Typically, agreements with channel partners are non-exclusive, meaning our channel partners may offer customers the products of several different companies, including products that compete with our platform. They may also cease marketing our platform with limited or no notice and with little or no 27 penalty.
Typically, agreements with channel partners are non-exclusive, meaning our channel partners may offer customers the products of several different companies, including products that compete with our platform. They may also cease marketing our platform with limited or no notice and with little or no penalty.
An 25 ownership change under Section 382 of the Code could affect our ability to utilize the NOLs to offset our income. Furthermore, our ability to utilize NOLs of companies that we have acquired or may acquire in the future may be subject to limitations.
An ownership change under Section 382 of the Code could affect our ability to utilize the NOLs to offset our income. Furthermore, our ability to utilize NOLs of companies that we have acquired or may acquire in the future may be subject to limitations.
Expanding our international operations will subject us to a variety of risks and challenges, including: • the need to make significant investments in people, solutions and infrastructure, typically well in advance of revenue generation; • the need to localize and adapt our application for specific countries, including translation into foreign languages and associated expenses; • potential changes in public or customer sentiment regarding cloud-based services or the ability of non-local enterprises to provide adequate data protection, particularly in the European Union, or the E.U.; • technical or latency issues in delivering our platform; • dependence on certain third parties, including resellers with whom we do not have extensive experience; • the lack of reference customers and other marketing assets in regional markets that are new or developing for us, as well as other adaptations in our market generation efforts that we may be slow to identify and implement; • unexpected changes in regulatory requirements, taxes or trade laws; • differing labor regulations, especially in the E.U., where labor laws are generally more advantageous to employees as compared to the United States, including deemed hourly wage and overtime regulations in these locations; • challenges inherent in efficiently managing an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits and compliance programs; • difficulties in maintaining our company culture with a dispersed and distant workforce; • difficulties in managing a business in new markets with diverse cultures, languages, customs, legal systems, alternative dispute systems and regulatory systems; • currency exchange rate fluctuations and the resulting effect on our revenue and expenses, and the cost and risk of entering into hedging transactions if we choose to do so in the future; • limitations on our ability to reinvest earnings from operations in one country to fund the capital needs of our operations in other countries; • limited or insufficient intellectual property protection, or the risk that our products may conflict with, infringe or otherwise violate foreign intellectual property; • political instability, terrorist activities or military conflicts, including Russia's invasion of Ukraine; • requirements to comply with foreign privacy, information security, and data protection laws and regulations and the risks and costs of non-compliance; • likelihood of potential or actual violations of domestic and international anticorruption laws, such as the U.S.
Expanding our international operations will subject us to a variety of risks and challenges, including: • the need to make significant investments in people, solutions and infrastructure, typically well in advance of revenue generation; • the need to localize and adapt our application for specific countries, including translation into foreign languages and associated expenses; • potential changes in public or customer sentiment regarding cloud-based services or the ability of non-local enterprises to provide adequate data protection, particularly in the European Union (the E.U.); • technical or latency issues in delivering our platform; • dependence on certain third parties, including resellers with whom we do not have extensive experience; • the lack of reference customers and other marketing assets in regional markets that are new or developing for us, as well as other adaptations in our market generation efforts that we may be slow to identify and implement; • unexpected changes in regulatory requirements, taxes or trade laws; • differing labor regulations, especially in the E.U., where labor laws are generally more advantageous to employees as compared to the United States, including deemed hourly wage and overtime regulations in these locations; 38 • challenges inherent in efficiently managing an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits and compliance programs; • difficulties in maintaining our company culture with a dispersed and distant workforce; • difficulties in managing a business in new markets with diverse cultures, languages, customs, legal systems, alternative dispute systems and regulatory systems; • currency exchange rate fluctuations and the resulting effect on our revenue and expenses, and the cost and risk of entering into hedging transactions if we choose to do so in the future; • limitations on our ability to reinvest earnings from operations in one country to fund the capital needs of our operations in other countries; • limited or insufficient intellectual property protection, or the risk that our products may conflict with, infringe or otherwise violate foreign intellectual property; • political instability, terrorist activities or military conflicts (including the Russian invasion of Ukraine and hostilities between Israel and Hamas); • requirements to comply with foreign privacy, information security, and data protection laws and regulations and the risks and costs of non-compliance; • likelihood of potential or actual violations of domestic and international anticorruption laws, such as the U.S.
Additionally, new, changed, modified or newly interpreted or applied tax laws could increase our customers’ and our compliance, operating and other costs, as well as the costs of our platform. Any or all of these events could harm our business and operating results.
Additionally, new, modified or newly interpreted or applied tax laws could increase our customers’ and our compliance, operating and other costs, as well as the costs of our platform. Any or all of these events could harm our business and operating results.
The occurrence of any of these events may harm our business. Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement and other losses.
The occurrence of any of these events may harm our business. 48 Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement and other losses.
Generally accepted accounting principles in the United States are subject to interpretation by the Financial Accounting Standards Board, the Securities and Exchange Commission, or SEC, and various bodies formed to promulgate and interpret appropriate accounting principles.
Generally accepted accounting principles in the United States are subject to interpretation by the Financial Accounting Standards Board, the Securities and Exchange Commission (SEC) and various bodies formed to promulgate and interpret appropriate accounting principles.
We have discovered and expect we will continue to discover errors, failures and bugs in our platform and anticipate that certain of these errors, failures and bugs will only be discovered and remediated after deployment to customers.
We have discovered and expect we will continue to discover errors, 46 failures and bugs in our platform and anticipate that certain of these errors, failures and bugs will only be discovered and remediated after deployment to customers.
Additionally, in recent periods the U.S. has experienced a labor shortage, which has contributed to an environment of escalating wages and salaries, which may also adversely affect our expenses and operating costs. 50 To the extent subscriptions to our platform are perceived by customers and potential customers to be discretionary, our revenue may be disproportionately affected by delays or reductions in general information technology spending.
Additionally, in recent periods the U.S. has experienced a labor shortage, which has contributed to an environment of escalating wages and salaries, which may also adversely affect our expenses and operating costs. 54 To the extent subscriptions to our platform are perceived by customers and potential customers to be discretionary, our revenue may be disproportionately affected by delays or reductions in general information technology spending.
For example, on March 10, 2023, Silicon Valley Bank, or SVB, was closed and placed in receivership and subsequently, additional financial institutions have been placed into receivership.
For example, on March 10, 2023, Silicon Valley Bank (SVB) was closed and placed in receivership and subsequently, additional financial institutions have been placed into receivership.
Our operating results and key metrics could vary significantly from quarter to quarter as a result of various factors, some of which are outside of our control, including: • the expansion of our customer base; • the size, duration and terms of our contracts with both existing and new customers; • the introduction of products and product enhancements by competitors, and changes in pricing for products offered by us or our competitors; • customers delaying purchasing decisions in anticipation of new products or product enhancements by us or our competitors or otherwise; • changes in customers’ budgets; • seasonal variations in our sales, which have generally historically been highest in our fourth fiscal quarter and lowest in the first fiscal quarter; • the timing of satisfying revenue recognition criteria, particularly with regard to large transactions; • the amount and timing of payment for expenses, including infrastructure costs to deliver our platform, research and development, sales and marketing expenses, employee benefit and stock-based compensation expenses and costs related to Domopalooza, our annual user conference that occurs in our first fiscal quarter; • costs related to the hiring, training and maintenance of our direct sales force; • the timing and growth of our business, in particular through the hiring of new employees and international expansion; and • general economic and political conditions, both domestically and internationally, including the impacts of pandemics or other catastrophic events, the Russian invasion of Ukraine, inflation, and adverse impacts to the financial service services industry, as well as economic conditions specifically affecting industries in which our customers operate.
Our operating results and key metrics could vary significantly from quarter to quarter as a result of various factors, some of which are outside of our control, including: • the expansion of our customer base; • the size, duration and terms of our contracts with both existing and new customers; • the introduction of products and product enhancements by competitors, and changes in pricing for products offered by us or our competitors; • customers delaying purchasing decisions in anticipation of new products or product enhancements by us or our competitors or otherwise; • changes in customers’ budgets; • seasonal variations in our sales, which have generally historically been highest in our fourth fiscal quarter and lowest in the first fiscal quarter; • the timing of satisfying revenue recognition criteria, particularly with regard to large transactions; • the amount and timing of payment for expenses, including infrastructure costs to deliver our platform, research and development, sales and marketing expenses, employee benefit and stock-based compensation expenses and costs related to Domopalooza, our annual user conference that occurs in our first fiscal quarter; • costs related to the hiring, training and maintenance of our direct sales force; • the timing and growth of our business, in particular through the hiring of new employees and international expansion; and • general economic and political conditions, both domestically and internationally, including the impacts of pandemics or other catastrophic events, military conflicts (including the Russian invasion of Ukraine, and hostilities between Israel and Hamas), inflation, and adverse impacts to the financial service services industry, as well as economic conditions specifically affecting industries in which our customers operate.
The laws and regulations relating to privacy and data security are evolving, can be subject to significant change, and may result in ever-increasing regulatory and public scrutiny and escalating levels of enforcement and sanctions. For example, California in 2018 enacted the California Consumer Privacy Act, or CCPA, which went into effect on January 1, 2020.
The laws and regulations relating to privacy and data security are evolving, can be subject to significant change, and may result in ever-increasing regulatory and public scrutiny and escalating 41 levels of enforcement and sanctions. For example, California in 2018 enacted the California Consumer Privacy Act (CCPA), which went into effect on January 1, 2020.
We and our service providers may also face difficulties or delays in identifying, remediating, and 41 otherwise responding to cyberattacks and other security breaches and incidents.
We and our service providers may also face difficulties or delays in identifying, remediating, and otherwise responding to cyberattacks and other security breaches and incidents.
Additionally, any such event, or any perception that any such event has occurred, may result in a loss of business, severe reputational or brand damage adversely affecting customer, partner, or investor confidence, regulatory investigations, demands, and orders, litigation or other claims, demands, or proceedings by governmental authorities or private parties, indemnity obligations, damages for contract breach, penalties for violation of applicable laws, regulations, or contractual obligations, and significant costs for remediation that may include liability for stolen assets or information and repair of system damage that may have been caused, incentives offered to customers or other business partners in an effort to maintain business relationships after a breach or other incident, and other liabilities, as well as harm to our sales efforts and expansion into existing and new markets.
Additionally, any such breach or incident, or unauthorized use of company resources, or any perception that any such event has occurred, may result in a loss of business, severe reputational or brand damage adversely affecting customer, partner, or investor confidence, regulatory investigations, demands, and orders, litigation or other claims, demands, or proceedings by governmental authorities or private parties, indemnity obligations, damages for contract breach, penalties for violation of applicable laws, regulations, or contractual obligations, and significant costs for remediation that may include liability for stolen assets or information and repair of system damage that may have been caused, incentives offered to customers or other business partners in an effort to maintain business relationships after a breach, incident, or other event, and other liabilities, as well as harm to our sales efforts and expansion into existing and new markets.
Any person or entity purchasing or otherwise acquiring any interest in any of our securities shall be deemed to have notice of and consented to this provision.
Any person or entity purchasing, holding or otherwise acquiring any interest in any of our securities shall be deemed to have notice of and consented to this provision.
These expenditures may not result in additional revenue or the growth of our business. If we fail to continue to grow revenue or to achieve or sustain profitability, the market price of our Class B common stock could be adversely affected. 21 We have been growing and expect to continue to invest in our growth for the foreseeable future.
These expenditures may not result in additional revenue or the growth of our business. If we fail to continue to grow revenue or to achieve or sustain profitability, the market price of our Class B common stock could be adversely affected. 23 We have been growing and expect to continue to invest in our growth for the foreseeable future.
We register the offer and sale of all shares of common stock that we may issue under our equity compensation plans; as a result, these shares can generally be freely sold in the public market upon issuance, subject to compliance with applicable 48 securities laws.
We register the offer and sale of all shares of common stock that we may issue under our equity compensation plans; as a result, these shares can generally be freely sold in the public market upon issuance, subject to compliance with applicable 52 securities laws.
There is no guarantee that we will be able to 24 generate sufficient cash flow or sales to meet these financial covenants or pay the principal and interest on any such debt. Furthermore, there is no guarantee that future working capital, borrowings or equity financing will be available to repay or refinance any such debt.
There is no guarantee that we will be able to 26 generate sufficient cash flow or sales to meet these financial covenants or pay the principal and interest on any such debt. Furthermore, there is no guarantee that future working capital, borrowings or equity financing will be available to repay or refinance any such debt.
In general, under Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, a corporation that undergoes an "ownership change" (as defined under Section 382 of the Code and applicable Treasury Regulations) is subject to limitations on its ability to utilize its pre-change NOLs to offset our future taxable income.
In general, under Section 382 of the Internal Revenue Code of 1986, as amended (the Code), a corporation that undergoes an "ownership change" (as defined under Section 382 of the Code and applicable Treasury Regulations) is subject to limitations on its ability to utilize its pre-ownership change NOLs to offset its future taxable income.
Data Privacy Framework, or DPF, which would permit transfers of personal data from the E.U. to the U.S., by participating entities.
Data Privacy Framework (DPF), which would permit transfers of personal data from the E.U. to the U.S., by participating entities.
Moreover, large customers, which are the focus of our direct sales efforts, may demand greater price discounts. In an inflationary environment, our costs may increase and we may not be able to adjust our pricing models accordingly, which could adversely impact our financial performance.
Further, large customers, which are the focus of our direct sales efforts, may demand greater price discounts. In an inflationary environment, our costs may increase and we may not be able to adjust our pricing models accordingly, which could adversely impact our financial performance.
In addition, a significant majority of our costs are expensed as incurred, while revenue is 23 generally recognized over the life of the customer agreement. As a result, increased growth in the number of our customers could result in our recognition of more costs than revenue in the earlier periods of the terms of our agreements.
In addition, a significant majority of our costs are expensed as incurred, while revenue is 25 generally recognized over the life of the customer agreement. As a result, increased growth in the number of our customers could result in our recognition of more costs than revenue in the earlier periods of the terms of our agreements.
We have begun to expand internationally and plan to continue to expand our 35 international operations as part of our growth strategy.
We have begun to expand internationally and plan to continue to expand our international operations as part of our growth strategy.
New hires require significant training and time before they achieve full productivity, particularly in new 33 sales territories.
New hires require significant training and time before they achieve full productivity, particularly in new sales territories.
Further, United Kingdom data protection law imposes restrictions on personal data transfers to the U.S., similar to those imposed by the GDPR, and the United Kingdom’s Information Commissioner’s Office issued new standard contractual clauses, effective March 21, 2022, that are required to be implemented. We have certified under the E.U.-U.S. Privacy Shield and the Swiss-U.S.
Further, United Kingdom data protection law imposes restrictions on personal data transfers to the U.S., similar to those imposed by the GDPR, and the United Kingdom’s Information Commissioner’s Office issued new standard contractual clauses, effective March 21, 2022, that are required to be implemented. We previously were certified under the E.U.-U.S. Privacy Shield and the Swiss-U.S.
We cannot predict the timing, strength or duration of any economic slowdown, instability or recovery, generally or within any particular industry. If the economic conditions of the general economy or industries in which we operate do not improve, or worsen from present levels, our business, operating results, financial condition and cash flows could be adversely affected.
We cannot predict the timing, strength or duration of any economic slowdown, instability or recovery, generally or within any particular industry. If the economic conditions of the general economy or industries in which we operate do not improve, or worsen from present levels, our business, operating results, financial condition and cash flows could be adversely affected. 55 Item 1B.
Negative general macroeconomic conditions in both in the United States and abroad, including conditions resulting from changes in gross domestic product growth, financial and credit market fluctuations, rising inflation, a recession, political deadlock, natural catastrophes, pandemics, military conflict (including the Russian invasion of Ukraine) and terrorist attacks, whether in the United States, Europe, the Asia Pacific region or elsewhere, could cause a decrease in business investments, including corporate spending on business intelligence software in general and negatively affect the rate of growth of our business.
Negative general macroeconomic conditions in both in the United States and abroad, including conditions resulting from changes in gross domestic product growth, financial and credit market fluctuations, rising inflation, a recession, political deadlock, natural catastrophes, pandemics, military conflict (including the Russian invasion of Ukraine and hostilities between Israel and Hamas) and terrorist attacks, whether in the United States, Europe, the Asia Pacific region or elsewhere, could cause a decrease in business investments, including corporate spending on business intelligence software in general and negatively affect the rate of growth of our business.
We also use and rely on several open source libraries and packages, and certain libraries and packages generated by artificial intelligence, while developing our product and if such libraries or packages are vulnerable and are exploited, our ability to address such vulnerabilities in a timely manner may be limited and may result in disruptions to our platform or operations and in unavailability of or unauthorized access to, misuse, acquisition, disclosure, loss, alteration, destruction, or other processing of our and our customers’ data, including confidential, sensitive, and other information about individuals.
We also use and rely on several open source libraries and packages, and certain libraries and packages while developing our product and if such libraries or packages are vulnerable and are exploited, our ability to address such vulnerabilities in a timely manner may be limited and may result in disruptions to our platform or operations and in unavailability of or unauthorized access to, misuse, acquisition, disclosure, loss, alteration, destruction, or other processing of our and our customers’ data, including confidential, sensitive, and other information about individuals.
Additionally, there have been and may continue to be significant supply chain cyber-attacks generally, and our third-party service providers may be targeted or impacted by such attacks.
Additionally, there have been and may continue to be significant supply chain cyber-attacks generally, and our third-party service providers (and business partners) may be targeted or impacted by such attacks.
There is also a risk that due to regulatory changes, such as suspensions on the use of NOLs or other unforeseen reasons, our existing NOLs could expire or otherwise be unavailable to reduce future income tax liabilities, including for state tax purposes.
There is also a risk that due to regulatory changes, such as suspensions on the use of NOLs or other unforeseen reasons, our existing NOLs could expire or otherwise be unavailable to reduce future income tax liabilities for federal and state tax purposes.
Furthermore, if we issue additional equity securities, stockholders will experience dilution, and the new equity securities could have rights senior to 22 those of our common stock.
Furthermore, if we issue additional equity securities, stockholders will experience dilution, and the new equity securities could have rights senior to 24 those of our common stock.
Our amended and restated bylaws provide that, unless we consent in writing to the selection of an alternative forum, the sole and exclusive forum for (1) any derivative action or proceeding brought on our behalf, (2) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, or other employees to us or our stockholders, (3) any action arising pursuant to any provision of the Delaware General Corporation Law, or the certificate of incorporation or the amended and restated bylaws or (4) any other action asserting a claim that is governed by the internal affairs doctrine shall be the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the federal district court for the District of Delaware), in all cases subject to the court having jurisdiction over indispensable parties named as defendants.
Our amended and restated bylaws provide that, unless we consent in writing to the selection of an alternative forum, the sole and exclusive forum for (1) any derivative action or proceeding brought on our behalf, (2) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, or other employees to us or our stockholders, (3) any action arising pursuant to any provision of the Delaware General Corporation Law, or the certificate of incorporation or the amended and restated bylaws, (4) any action to interpret, apply, enforce, or determine the validity of our certificate of incorporation or bylaws or (5) other action asserting a claim that is governed by the internal affairs doctrine shall be the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, another state court in Delaware or the federal district court for the District of Delaware), in all cases subject to the court having jurisdiction over indispensable parties named as defendants.
James, our founder and chief executive officer, beneficially owns all of our outstanding shares of Class A common stock through Cocolalla, LLC, of which he is the managing member, and as of January 31, 2023, beneficially controlled approximately 81% of the voting power of our outstanding capital stock and therefore is able to control all matters submitted to our stockholders for approval.
James, our founder and chief executive officer, beneficially owns all of our outstanding shares of Class A common stock through Cocolalla, LLC, of which he is the managing member, and as of January 31, 2024, beneficially controlled approximately 80% of the voting power of our outstanding capital stock and therefore is able to control all matters submitted to our stockholders for approval.
As a result of U.S. government intervention, we subsequently regained access to our accounts at SVB, and Silicon Valley Bridge Bank has assumed SVB’s obligations to honor our standby letter of credit. However, there remains significant uncertainty surrounding the resolution of SVB and the impact of SVB’s closure on the broader financial system.
As a result of U.S. government intervention, we subsequently regained access to our accounts at SVB, and Silicon Valley Bridge Bank has assumed SVB’s obligations to honor our standby letter of credit. However, there remains significant uncertainty surrounding the impact of these bank closures on the broader financial system.
The regulatory environment applicable to the collection, use, and other processing of personal data of residents of the E.U., United Kingdom, Switzerland, and other foreign jurisdictions, and our actions taken in response, may cause us to be required to undertake additional contractual negotiations and otherwise to assume additional liabilities or incur additional costs, and could result in our business, operating results, and financial condition being harmed.
The regulatory environment applicable to the collection, use, and other processing of personal data of residents of the E.U., United Kingdom, Switzerland, Brazil, the PRC, and other foreign jurisdictions, and our actions taken in response, may cause us to be required to undertake additional contractual negotiations, modify policies and procedures, and otherwise to assume additional liabilities or incur additional costs, and could result in our business, operating results, and financial condition being harmed.
A majority of our annual recurring revenue is up for renewal during the fiscal year ending January 31, 2024.
A majority of our annual recurring revenue is up for renewal during the fiscal year ending January 31, 2025.
Foreign Corrupt Practices Act, or the FCPA, and the U.K.
Foreign Corrupt Practices Act (the FCPA), and the U.K.
Historically, we have generated a substantial majority of our revenue from customers inside the United States. For example, approximately 77%, and 78% of our total revenue for the years ended January 31, 2022 and 2023, respectively, was derived from sales within the United States.
Historically, we have generated a substantial majority of our revenue from customers inside the United States. For example, approximately 78%, and 79% of our total revenue for the years ended January 31, 2023 and 2024, respectively, was derived from sales within the United States.
Demand for our platform is affected by a number of factors, many of which are beyond our control, such as continued market acceptance of our platform for existing and new use cases, the timing of development and release of new applications and features, technological change, growth or contraction in our addressable market, and accessibility across mobile devices, operating systems, and applications, and macroeconomic changes, including the impact of the COVID-19 pandemic, on the demand for technology solutions like ours.
Demand for our platform is affected by a number of factors, many of which are beyond our control, such as continued market acceptance of our platform for existing and new use cases, the timing of development and release of new applications and features, technological change, growth or contraction in our addressable market, and accessibility across mobile devices, operating systems, and applications, and macroeconomic changes, including the impact of public health epidemics or pandemics on the demand for technology solutions like ours.
The state NOLs will expire depending upon the various rules in the states in which we operate. A lack of future taxable income could adversely affect our ability to utilize these NOLs before they expire.
The state NOLs will expire depending on the various rules in the state jurisdictions in which we operate. A lack of future taxable income could adversely affect our ability to utilize these NOLs before they expire.
The success of our business depends in part on our ability to protect and enforce our intellectual property rights. Our success is dependent, in part, upon protecting our proprietary technology. As of January 31, 2023, we had 119 issued U.S. patents covering our technology and two patent applications pending for examination in the United States.
The success of our business depends in part on our ability to protect and enforce our intellectual property rights. Our success is dependent, in part, upon protecting our proprietary technology. As of January 31, 2024, we had 115 issued U.S. patents covering our technology and four patent applications pending for examination in the United States.
The following factors, in addition to other risks described in this report, may have a significant effect on our Class B common stock price: • actual or anticipated fluctuations in revenue and other operating results, including as a result of the addition or loss of any number of customers; • announcements by us or competitors of significant technical innovations, acquisitions, strategic partnerships, joint ventures or capital commitments; 47 • the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections; • failure of securities analysts to initiate or maintain coverage of us, changes in ratings, key metrics and financial estimates and the publication of other news by any securities analysts who follow our company, or our failure to meet these analyst estimates or the expectations of investors; • changes in operating performance and stock market valuations of cloud-based software or other technology companies, or those in our industry in particular; • the size of our public float; • price and volume fluctuations in the trading of our Class B common stock and in the overall stock market, including as a result of trends in the economy as a whole or in the technology industry; • the impact of the COVID-19 pandemic, including on the global economy, our results of operations, enterprise software spending and business continuity; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business or industry, including those relating to data privacy and data security; • lawsuits threatened or filed against us for claims relating to intellectual property, employment issues or otherwise; • actual or perceived data breach or data loss, misuse or perceived misuse of our platform; • changes in our board of directors or management; • short sales, hedging and other derivative transactions involving our Class B common stock; • sales of large blocks of our common stock including sales by our executive officers, directors and significant stockholders; and • other events or factors, including changes in general economic, industry and market conditions and trends, as well as any natural disasters that may affect our operations.
The following factors, in addition to other risks described in this report, may have a significant effect on our Class B common stock price: • actual or anticipated fluctuations in revenue and other operating results, including as a result of the addition or loss of any number of customers; • announcements by us or competitors of significant technical innovations, acquisitions, strategic partnerships, joint ventures or capital commitments; 51 • the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections; • failure of securities analysts to initiate or maintain coverage of us, changes in ratings, key metrics and financial estimates and the publication of other news by any securities analysts who follow our company, or our failure to meet these analyst estimates or the expectations of investors; • changes in operating performance and stock market valuations of cloud-based software or other technology companies, or those in our industry in particular; • the size of our public float; • price and volume fluctuations in the trading of our Class B common stock and in the overall stock market, including as a result of trends in the economy as a whole or in the technology industry; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business or industry, including those relating to data privacy and data security; • lawsuits threatened or filed against us for claims relating to intellectual property, employment issues or otherwise; • actual or perceived data breach or data loss, or misuse or perceived misuse of our platform; • changes in our board of directors or management; • short sales, hedging and other derivative transactions involving our Class B common stock; • sales of large blocks of our common stock including sales by our executive officers, directors and significant stockholders; and • other events or factors, including those resulting from war, incidents of terrorism, public health epidemics or pandemics, bank failures, changes in general economic, industry and market conditions and trends, natural disasters, or responses to any of these events or factors that may affect our operations.
Our renewal rates may decline or fluctuate as a result of a number of factors, including leadership changes within our customers resulting in loss of sponsorship, limited customer resources, pricing changes by us or competitors, customer satisfaction with our platform and related applications, the acquisition of customers by other companies, procurement or budgetary decisions, and deteriorating general economic conditions, including as a result of the COVID-19 pandemic.
Our renewal rates may decline or fluctuate as a result of a number of factors, including leadership changes within our customers resulting in loss of sponsorship, limited customer resources, pricing changes by us or competitors, customer satisfaction with our platform and related applications, the acquisition of customers by other companies, procurement or budgetary decisions, and deteriorating general economic conditions, including as a result of public health epidemics or pandemics.
Complying with the GDPR, the CCPA, and other data protection laws and regulations may cause us to incur substantial operational costs or require us to modify our data handling practices.
Complying with the GDPR, the CCPA, and other laws and regulations governing privacy, data protection, and information security may cause us to incur substantial operational costs or require us to modify our data handling practices.
If we cannot adequately train new employees, including our direct sales force, or if new employees are not as productive as quickly as we would like, sales may decrease or customers may lose confidence in the knowledge and capability of our employees. In addition, we may make direct investments in our international business.
If we cannot adequately train new employees, including our direct sales force, or if new employees are not as productive as quickly as we would like, sales may decrease or customers may lose confidence in the knowledge and capability of our employees.
In addition, depending on the nature and timing of any such dispute, a resolution of a legal matter could materially affect our future operating results, our cash flows or both. We have recently experienced management and board turnover, which creates uncertainties and could harm our business. In March 2022, we announced the resignation of Joshua G.
In addition, depending on the nature and timing of any such dispute, a resolution of a legal matter could materially affect our future operating results, our cash flows or both. We have experienced management and board turnover, which creates uncertainties and could harm our business. In March 2023, we announced John Mellor's resignation and the re-appointment of Joshua G.
Should any of these statements be untrue, become untrue, or be perceived to be untrue, even if through circumstances beyond our reasonable control, we may face claims, including claims of unfair or deceptive trade practices, and related investigations, enforcement actions or other proceedings, brought by the FTC, state, local, or foreign regulators, and private litigants, which may result in fines, penalties, and other liabilities, and which may have a material adverse effect on our business, including our financial condition, operating results, and reputation. 42 Real or perceived errors, failures, or bugs in our platform could adversely affect our operating results and growth prospects.
Should any of these statements be untrue, become untrue, or be perceived to be untrue, even if through circumstances beyond our reasonable control, we may face claims, including claims of unfair or deceptive trade practices, and related investigations, enforcement actions or other proceedings, brought by the FTC, state, local, or foreign regulators, and private litigants, which may result in fines, penalties, and other liabilities, and which may have a material adverse effect on our business, including our financial condition, operating results, and reputation.
We receive, store, and otherwise process personal information and other data from and about customers and other individuals in addition to our employees and service providers. Our handling of data is subject to a variety of laws and regulations, including regulation by various government agencies, such as the U.S.
We receive, store, and otherwise process personal information and other data from and about customers and other individuals in addition to our employees and service providers. Our handling of data is subject to a variety of laws and regulations, including regulation by various government agencies, such as the U.S. Federal Trade Commission (FTC) and various state, local, and foreign agencies.
Additionally, actual, potential, or anticipated attacks may cause us to incur increasing costs, including costs to deploy additional personnel and protection technologies, train employees and engage third-party experts and consultants.
Additionally, actual, potential, or anticipated attacks, security breaches or incidents, or other events, may cause us to incur increasing costs, including costs to deploy additional personnel and protection technologies, train employees and engage third-party experts and consultants.

… 138 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed0 unchanged
Biggest changeItem 2. Properties Our headquarters is located in American Fork, Utah. Our current facility has approximately 220,062 square feet under leases that expire between April 2023 and May 2027. We also lease space in various locations throughout the United States for sales and professional services personnel.
Biggest changeItem 2. Properties Our headquarters is located in American Fork, Utah. Our current facility has approximately 191,765 square feet under leases that expire in May 2027. We also lease space in various locations throughout the United States for sales and professional services personnel. Our foreign subsidiaries lease office space for their operations and sales and professional services personnel.
Our foreign subsidiaries lease office space for their operations and sales and professional services personnel. We believe the facilities we lease are sufficient to meet our needs for the immediate future.
We believe the facilities we lease are sufficient to meet our needs for the immediate future.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+1 added−11 removed0 unchanged
Biggest changeManagement believes that the outcome of these proceedings will not have a material impact on the Company's financial condition, results of operations, or liquidity.
Biggest changeItem 3. Legal Proceedings The Company is involved in legal proceedings from time to time arising in the normal course of business. Management believes that the outcome of these proceedings will not have a material impact on the Company's financial condition, results of operations, or liquidity.
Removed
Item 3. Legal Proceedings State Securities Class Action In November 2019, a securities class action complaint captioned Volonte v.
Added
See "Note 12—Commitments and Contingencies" of our condensed consolidated financial statements included elsewhere in this Annual Report on Form 10-K for more information regarding our legal proceedings. Item 4. Mine Safety Disclosures Not applicable. 59 PART II
Removed
Domo, Inc., et. al , Case No. 19-04-01778, was filed by a stockholder of the Company in the Fourth Judicial District Court for the County of Utah in the State of Utah against the Company, certain of the Company's current and former officers and directors, and the underwriters of the Company's June 2018 initial public offering alleging violations of Sections 11, 12 and 15 of the Securities Act of 1933 in connection with the Company's initial public offering and seeking unspecified damages.
Removed
On August 19, 2020, the defendants filed a motion to dismiss the Volonte complaint. On April 13, 2021, the court granted the motion and dismissed the complaint. On April 25, 2021, the plaintiff filed a motion to amend or alter judgment or for reconsideration. On June 2, 2021, the court denied the plaintiff's motion.
Removed
On June 14, 2021, the plaintiff filed a notice of appeal. On October 14, 2021, the plaintiff/appellant filed his principal brief in the Utah Court of Appeals (Appellate Case No. 20210399-CA). The appeal was fully briefed as of January 20, 2022, and the court heard oral argument from the parties on May 12, 2022.
Removed
On March 9, 2023, the court affirmed the district court's dismissal of the complaint. The Company believes this lawsuit is without merit and intends to defend the case vigorously. The Company is unable to estimate a range of loss, if any, that could result were there to be an adverse final decision in this case.
Removed
If an unfavorable outcome were to occur, it is possible that the impact could be material to the Company's results of operations in the period(s) in which any such outcome becomes probable and estimable. Delaware Shareholder Derivative Lawsuit In August 2021, a shareholder derivative complaint captioned Zalvin v.
Removed
James, et al ., Case No. 2021-0672-KSJM, purportedly brought on behalf of the Company, was filed in the Delaware Court of Chancery against the Company’s CEO and certain current and former directors alleging that they breached their fiduciary duties by awarding the Company’s CEO allegedly excessive equity awards in 2020 and 2021.
Removed
The lawsuit seeks rescission of the equity awards, unspecified damages, and attorney’s fees and costs. Since the lawsuit is purportedly brought on behalf of the Company, and the Company is only a nominal defendant, the alleged damages were allegedly suffered by the Company.
Removed
A rescission of any equity awards would return the equity to the Company and a payment of any damages would be paid to the Company, minus any attorney’s fees. The Company has indemnification and advancement obligations to the defendants in connection with this lawsuit.
Removed
On October 6, 2021, defendants and the Company, as nominal defendant, filed a motion to dismiss the Zalvin complaint. The motion was fully briefed as of February 4, 2022. On June 3, 2022, the parties filed a stipulation and agreement of compromise, settlement, and release.
Removed
On September 21, 2022, the court entered an order providing final approval of the settlement, dismissing the claims with prejudice, and entering judgment. Other Litigation The Company is involved in other legal proceedings from time to time arising in the normal course of business.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+1 added−1 removed3 unchanged
Biggest changeThe graph set forth below compares the cumulative total return to stockholders on our Class B common stock relative to the cumulative total returns of the Standard & Poor’s 500 Index, or the S&P 500, and the S&P 500 Information Technology Index between June 29, 2018 (the date our Class B common stock commenced trading) through January 31, 2023.
Biggest changeThe graph set forth below compares the cumulative total return to stockholders on our Class B common stock relative to the cumulative total returns of the Standard & Poor’s 500 Index, or the S&P 500, the S&P 500 Information Technology Index, and the Russell 2000 Index.
Our Class A common stock is not listed or traded on any stock exchange. Holders of Record As of January 31, 2023, there was one holder of record of our Class A common stock and 91 holders of record of our Class B common stock.
Our Class A common stock is not listed or traded on any stock exchange. Holders of Record As of January 31, 2024, there was one holder of record of our Class A common stock and 90 holders of record of our Class B common stock.
Issuer Purchases of Equity Securities None. 55 Item 6. Reserved.
Issuer Purchases of Equity Securities None. 61 Item 6. Reserved.
The comparisons are based on historical data and are not indicative of, nor intended to forecast, the future performance of our Class B common stock. 54 Comparison of Cumulative Total Return Company/Index Jan 31, 2019 Jan 31, 2020 Jan 31, 2021 Jan 31, 2022 Jan 31, 2023 Domo, Inc. $ 99 $ 89 $ 232 $ 172 $ 57 S&P 500 101 122 144 177 162 S&P 500 Information Technology 96 141 193 244 205 (1) Base period Unregistered Sales of Equity Securities and Use of Proceeds Unregistered Sales of Equity Securities None.
The comparisons are based on historical data and are not indicative of, nor intended to forecast, the future performance of our Class B common stock. 60 Comparison of Cumulative Total Return Company/Index Jan 31, 2019 Jan 31, 2020 Jan 31, 2021 Jan 31, 2022 Jan 31, 2023 Jan 31, 2024 Domo, Inc. $ 99 $ 89 $ 232 $ 172 $ 57 $ 40 S&P 500 101 122 144 177 162 196 S&P 500 Information Technology 96 141 193 244 205 308 Russell 2000 91 98 126 123 118 119 Unregistered Sales of Equity Securities and Use of Proceeds Unregistered Sales of Equity Securities None.
Removed
All values assume a $100 initial investment at market close on June 29, 2018. The initial public offering price of our Class B common stock, which had a closing stock price of $27.30 on June 29, 2018, was $21.00 per share. Data for the S&P 500 and the S&P 500 Information Technology Index assume reinvestment of dividends.
Added
During the year ended January 31, 2024, we included the Russell 2000 Index as we believe it is a more comparable metric that aligns with the size of our market capitalization. All values assume a $100 initial investment, and all data for the S&P 500 and the S&P 500 Information Technology Index assume reinvestment of dividends.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

94 edited+19 added−26 removed63 unchanged
Biggest changeBecause of the uncertainty of the realization of the deferred tax assets, we have a full valuation allowance for domestic net deferred tax assets, including net operating loss carryforwards and tax credits related primarily to research and development. 61 Results of Operations The following tables set forth selected consolidated statements of operations data and such data as a percentage of total revenue for each of the periods indicated: Year Ended January 31, 2021 2022 2023 (in thousands) Revenue: Subscription $ 183,645 $ 223,010 $ 271,290 Professional services and other 26,535 34,951 37,355 Total revenue 210,180 257,961 308,645 Cost of revenue: Subscription (1) 36,656 40,907 43,295 Professional services and other (1) 20,092 26,239 29,783 Total cost of revenue 56,748 67,146 73,078 Gross profit 153,432 190,815 235,567 Operating expenses: Sales and marketing (1) 117,335 143,722 173,300 Research and development (1) 66,474 81,027 95,093 General and administrative (1) 42,708 54,536 56,047 Total operating expenses 226,517 279,285 324,440 Loss from operations (73,085) (88,470) (88,873) Other expense, net (1) (11,140) (14,102) (15,499) Loss before income taxes (84,225) (102,572) (104,372) Provision for (benefit from) income taxes 409 (461) 1,179 Net loss $ (84,634) $ (102,111) $ (105,551) ________________ (1) Includes stock-based compensation expense as follows: Year Ended January 31, 2021 2022 2023 (in thousands) Cost of revenue: Subscription $ 1,213 $ 2,819 $ 2,676 Professional services and other 843 1,753 1,822 Sales and marketing 10,936 21,241 30,636 Research and development 9,095 15,853 24,335 General and administrative 11,218 18,155 23,680 Other expense, net 444 705 710 Total $ 33,749 $ 60,526 $ 83,859 62 Year Ended January 31, 2021 2022 2023 Revenue: Subscription 87 % 86 % 88 % Professional services and other 13 14 12 Total revenue 100 100 100 Cost of revenue: Subscription 17 16 14 Professional services and other 10 10 10 Total cost of revenue 27 26 24 Gross margin 73 74 76 Operating expenses: Sales and marketing 56 56 56 Research and development 32 31 31 General and administrative 20 21 18 Total operating expenses 108 108 105 Loss from operations (35) (34) (29) Other expense, net (5) (5) (5) Loss before income taxes (40) (39) (34) Provision for (benefit from) income taxes — — — Net loss (40) % (39) % (34) % Discussion of the Years Ended January 31, 2022 and 2023 Revenue Year Ended January 31, 2022 2023 $ Change % Change (in thousands) Revenue: Subscription $ 223,010 $ 271,290 $ 48,280 22 % Professional services and other 34,951 37,355 2,404 7 Total revenue $ 257,961 $ 308,645 $ 50,684 20 Percentage of revenue: Subscription 86 % 88 % Professional services and other 14 12 Total 100 % 100 % The increase in subscription revenue was primarily due to a $29.7 million increase from new customers and a $18.6 million net increase from existing customers.
Biggest changeBecause of the uncertainty of the realization of the deferred tax assets, we have a full valuation allowance for domestic net deferred tax assets, including net operating loss carryforwards and tax credits related primarily to research and development. 67 Results of Operations The following tables set forth selected consolidated statements of operations data and such data as a percentage of total revenue for each of the periods indicated: Year Ended January 31, 2022 2023 2024 (in thousands) Revenue: Subscription $ 223,010 $ 271,290 $ 285,500 Professional services and other 34,951 37,355 33,489 Total revenue 257,961 308,645 318,989 Cost of revenue: Subscription (1) 40,907 43,295 46,045 Professional services and other (1) 26,239 29,783 29,425 Total cost of revenue 67,146 73,078 75,470 Gross profit 190,815 235,567 243,519 Operating expenses: Sales and marketing (1)(2) 143,722 173,300 163,902 Research and development (1) 81,027 95,093 85,049 General and administrative (1)(2) 54,536 56,047 49,449 Total operating expenses 279,285 324,440 298,400 Loss from operations (88,470) (88,873) (54,881) Other expense, net (1) (14,102) (15,499) (19,431) Loss before income taxes (102,572) (104,372) (74,312) Provision for (benefit from) income taxes (461) 1,179 1,257 Net loss $ (102,111) $ (105,551) $ (75,569) ________________ (1) Includes stock-based compensation expense as follows: Year Ended January 31, 2022 2023 2024 (in thousands) Cost of revenue: Subscription $ 2,819 $ 2,676 $ 2,810 Professional services and other 1,753 1,822 1,735 Sales and marketing 21,241 30,636 25,015 Research and development 15,853 24,335 19,520 General and administrative 18,155 23,680 14,565 Other expense, net 705 710 703 Total $ 60,526 $ 83,859 $ 64,348 68 (2) Includes executive officer severance as follows: Year Ended January 31, 2022 2023 2024 (in thousands) Sales and marketing $ — $ 620 $ 750 General and administrative — — 1,553 Total executive officer severance $ — $ 620 $ 2,303 Year Ended January 31, 2022 2023 2024 Revenue: Subscription 86 % 88 % 90 % Professional services and other 14 12 10 Total revenue 100 100 100 Cost of revenue: Subscription 16 14 14 Professional services and other 10 10 10 Total cost of revenue 26 24 24 Gross margin 74 76 76 Operating expenses: Sales and marketing 56 56 51 Research and development 31 31 27 General and administrative 21 18 15 Total operating expenses 108 105 93 Loss from operations (34) (29) (17) Other expense, net (5) (5) (6) Loss before income taxes (39) (34) (23) Provision for (benefit from) income taxes — — — Net loss (39) % (34) % (23) % Discussion of the Years Ended January 31, 2023 and 2024 Revenue Year Ended January 31, 2023 2024 $ Change % Change (in thousands) Revenue: Subscription $ 271,290 $ 285,500 $ 14,210 5 % Professional services and other 37,355 33,489 (3,866) (10) Total revenue $ 308,645 $ 318,989 $ 10,344 3 Percentage of revenue: Subscription 88 % 90 % Professional services and other 12 10 Total 100 % 100 % 69 The increase in subscription revenue was primarily due to a $25.8 million increase from new customers and a $11.6 million net decrease from existing customers.
Over the longer term, we plan to continue investing in, among other things, growth opportunities, 65 product development, and sales and marketing. If available funds are insufficient to fund our future activities or execute on our strategy, we may raise additional capital through equity, equity-linked and debt financing, to the extent such funding sources are available.
Over the longer term, we plan to continue investing in, among other things, growth opportunities, product development, and sales and marketing. If available funds are insufficient to fund our future activities or execute on our strategy, we may raise additional capital through equity, equity-linked and debt financing, to the extent such funding sources are available.
Contract acquisition costs for renewal contracts are not commensurate with contract acquisition costs for initial contracts and are recorded as expense when incurred if the period of benefit is one year or less. If the period of benefit is greater than one year, costs are deferred and then amortized on a straight-line basis over the period of benefit.
Contract acquisition costs for renewal contracts are not commensurate with contract acquisition costs for initial contracts and are recorded as expense when incurred 75 if the period of benefit is one year or less. If the period of benefit is greater than one year, costs are deferred and then amortized on a straight-line basis over the period of benefit.
The majority of our subscription agreements have multi-year contractual terms and a smaller percentage have annual contractual terms. Revenue is recognized ratably over the related contractual term beginning on the date that the platform is made available to a customer.
The majority of our subscription-based agreements have multi-year contractual terms and a smaller percentage have annual contractual terms. Revenue is recognized ratably over the related contractual term beginning on the date that the platform is made available to a customer.
Other Expense, Net Other expense, net consists primarily of interest expense related to long-term debt, It also includes the effect of exchange rates on foreign currency transaction gains and losses, foreign currency gains and losses upon remeasurement of intercompany balances, and sublease income.
Other Expense, Net Other expense, net consists primarily of interest expense related to long-term debt, It also includes the effect of exchange rates on foreign currency transaction gains and losses, foreign currency gains and losses upon remeasurement of intercompany balances, and interest income.
Revenue is recognized when control of these services is transferred to customers in an amount that reflects the consideration to which we expect to be entitled to in exchange for those services, net of sales taxes.
Revenue is 74 recognized when control of these services is transferred to customers in an amount that reflects the consideration to which we expect to be entitled to in exchange for those services, net of sales taxes.
You should read the following discussion and analysis of our financial condition and results of operations together with the consolidated financial statements and related notes that are included elsewhere in this Annual Report on Form 10-K. Our fiscal year ends on January 31. References to fiscal 2023, for example, refer to the fiscal year ended January 31, 2023.
You should read the following discussion and analysis of our financial condition and results of operations together with the consolidated financial statements and related notes that are included elsewhere in this Annual Report on Form 10-K. Our fiscal year ends on January 31. References to fiscal 2024, for example, refer to the fiscal year ended January 31, 2024.
We have a $100 million credit facility, all of which had been drawn as of January 31, 2023. Since inception, we have financed operations primarily from cash collected from customers for our subscriptions and services, periodic sales of convertible preferred stock, our initial public offering and to a lesser extent, debt financing.
We have a $100 million credit facility, all of which had been drawn as of January 31, 2024. Since inception, we have financed operations primarily from cash collected from customers for our subscriptions and services, periodic sales of convertible preferred stock, our initial public offering and to a lesser extent, debt financing.
Revenue recognition is determined through the following steps: • Identification of the contract, or contracts, with a customer • Identification of the performance obligations in the contract • Determination of the transaction price • Allocation of the transaction price to the performance obligations in the contract • Recognition of revenue when, or as, performance obligations are satisfied Subscription Revenue Subscription revenue primarily consists of fees paid by customers to access our cloud-based platform, including support services.
Revenue recognition is determined through the following steps: • Identification of the contract, or contracts, with a customer • Identification of the performance obligations in the contract • Determination of the transaction price • Allocation of the transaction price to the performance obligations in the contract • Recognition of revenue when, or as, performance obligations are satisfied Subscription Revenue Revenue from subscription-based agreements primarily consists of fees paid by customers to access our cloud-based platform, including support services.
Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to publicly 56 update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to publicly 62 update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
For the years ended January 31, 2021, 2022 and 2023, no single customer accounted for more than 10% of our total revenue, nor did any single organization when accounting for multiple subsidiaries or divisions which may have been invoiced separately.
For the years ended January 31, 2022, 2023 and 2024, no single customer accounted for more than 10% of our total revenue, nor did any single organization when accounting for multiple subsidiaries or divisions which may have been invoiced separately.
Per the amendment, we are required to comply with a financial covenant requiring us to maintain a minimum balance of unrestricted cash and cash equivalents equal to $10.0 million until our six-month adjusted cash flow is greater than zero.
Per the amendment, we were required to comply with a financial covenant requiring us to maintain a minimum balance of unrestricted cash and cash equivalents equal to $10.0 million until our six-month adjusted cash flow is greater than zero.
Ongoing concerns about the health of the U.S. and global economies may cause certain existing and potential customers to reduce or delay technology spending or, as discussed below, seek payment or other concessions from us, which may materially and negatively impact our operating results, financial condition and prospects. Furthermore, the United States has been experiencing historically elevated rates of inflation.
Ongoing concerns about the health of the U.S. and global economies may cause certain existing and potential customers to reduce or delay technology spending or, seek payment or other concessions from us, which may materially and negatively impact our operating results, financial condition and prospects. Furthermore, the United States has been experiencing historically elevated rates of inflation.
Significant components of cash outflows included $141.2 million for personnel costs and $55.2 million for marketing programs and events, third-party costs to provide our platform and outsourced professional services. Net cash provided by operating activities during the year ended January 31, 2022 consisted of cash collected from customers of $284.7 million exceeding the $284.3 million of cash outflows.
Net cash provided by operating activities during the year ended January 31, 2022 consisted of cash collected from customers of $284.7 million exceeding the $284.3 million of cash outflows. Significant components of cash outflows included $171.0 million for personnel costs and $55.0 million for marketing programs and events, third-party costs to provide our platform and outsourced professional services.
This covenant is measured quarterly on a three-month trailing basis. Upon the occurrence of an event of default, such as non-compliance with covenants, any outstanding principal, interest and fees become due immediately. We were in compliance with the covenant terms of the credit facility at January 31, 2022 and January 31, 2023.
This covenant is measured quarterly on a three-month trailing basis. Upon the occurrence of an event of default, such as non-compliance with covenants, any outstanding principal, interest and fees become due immediately. We were in compliance with the financial covenant terms of the credit facility on January 31, 2023 and January 31, 2024.
As of January 31, 2023, 65% of our customers were under multi-year contracts on a dollar-weighted basis compared to 62% and 60% of customers as of January 31, 2022 and 2021, respectively. The high percentage revenue from multi-year contracts, among both new and existing customers, has enhanced the predictability of our subscription revenue.
As of January 31, 2024, 66% of our customers were under multi-year contracts on a dollar-weighted basis compared to 65% and 62% of customers as of January 31, 2023 and 2022, respectively. The high percentage revenue from multi-year contracts, among both new and existing customers, has enhanced the predictability of our subscription revenue.
Research and development expense as a percentage of total revenue was 32% and 31% for the years ended January 31, 2021 and 2022, respectively, compared to 31% for the year ended January 31, 2023. Key Business Metric Billings Billings represent our total revenue plus the change in deferred revenue in a period.
Research and development expense as a percentage of total revenue was 31% and 31% for the years ended January 31, 2022 and 2023, respectively, compared to 27% for the year ended January 31, 2024. Key Business Metric Billings Billings represent our total revenue plus the change in deferred revenue in a period.
Our customer count increased 11% from January 31, 2022 to January 31, 2023. For the purpose of this comparison, new customers are defined as those added since the end of the prior year quarter. Revenue from existing customers is presented net of churn.
Our customer count increased 3% from January 31, 2023 to January 31, 2024. For the purpose of this comparison, new customers are defined as those added since the end of the prior year quarter. Revenue from existing customers is presented net of churn.
Capitalized Internal-Use Software Costs We capitalize certain costs related to development of our platform incurred during the application development stage. Costs related to preliminary project activities and post-implementation activities are expensed as incurred. Maintenance and training costs are also expensed as incurred.
Capitalized Internal-Use Software Costs We capitalize certain costs related to development of our platform incurred during the application development stage. Costs related to preliminary project activities and post-implementation activities are expensed as incurred. Maintenance and training costs are also expensed as incurred. Capitalized costs are included in property and equipment.
Our contractual relationships with channel partners do not allow returns, rebates, or price concessions. 68 The price of subscriptions is generally fixed at contract inception and therefore, our contracts do not contain a significant amount of variable consideration.
Our contractual relationships with channel partners do not allow returns, rebates, or price concessions. Pricing is generally fixed at contract inception and therefore, our contracts do not contain a significant amount of variable consideration.
The transactional impacts of foreign currency are recorded as foreign currency losses (gains) in the consolidated statements of operations. Provision for (Benefit from) Income Taxes Provision for (benefit from) income taxes consists primarily of income taxes related to foreign and state jurisdictions in which we conduct business.
The transactional impacts of foreign currency are recorded as foreign currency losses (gains) in the consolidated statements of operations. Income Taxes Income taxes consists primarily of income taxes related to foreign and state jurisdictions in which we conduct business.
They include, but are not limited to, statements about: • our ability to attract new customers and retain and expand our relationships with existing customers; • our future financial performance, including our expectations regarding our revenue, cost of revenue, gross profit, operating expenses, key metrics, ability to generate cash flow and ability to achieve and maintain future profitability; • the anticipated trends, market opportunity, growth rates and challenges in our business and in the business intelligence software market; • the efficacy of our sales and marketing efforts; • our ability to compete successfully in competitive markets; • our ability to respond to and capitalize on rapid technological changes; • our expectations and management of future growth; • our ability to enter new markets and manage our expansion efforts, particularly internationally; • our ability to develop new product features; • our ability to attract and retain key employees and qualified technical and sales personnel; • our ability to effectively and efficiently protect our brand; • our ability to timely scale and adapt our infrastructure; • the effect of general economic and market conditions on our business; • the impact of the coronavirus pandemic, including on the global economy, our results of operations, enterprise software spending, and business continuity; • our ability to protect our customers' data and proprietary information; • our ability to maintain, protect, and enhance our intellectual property and not infringe upon others’ intellectual property; and • our ability to comply with all governmental laws, regulations and other legal obligations.
They include, but are not limited to, statements about: • our ability to attract new customers and retain and expand our relationships with existing customers; • our future financial performance, including our expectations regarding our revenue, cost of revenue, gross profit, operating expenses, key metrics, ability to generate cash flow and ability to achieve and maintain future profitability; • the potential impact on our business transitioning to a consumption-based pricing model; • the anticipated trends, market opportunity, growth rates and challenges in our business and in the business intelligence software market; • the efficacy of our sales and marketing efforts; • our ability to compete successfully in competitive markets; • our ability to respond to and capitalize on rapid technological changes; • our expectations and management of future growth; • our ability to enter new markets and manage our expansion efforts, particularly internationally; • our ability to develop new product features; • our ability to attract and retain key employees and qualified technical and sales personnel; • our ability to effectively and efficiently protect our brand; • our ability to timely scale and adapt our infrastructure; • the effect of general economic and market conditions on our business; • our ability to protect our customers' data and proprietary information; • our ability to maintain, protect, and enhance our intellectual property and not infringe upon others’ intellectual property; and • our ability to comply with all governmental laws, regulations and other legal obligations.
Net cash used in investing activities during the year ended January 31, 2023 consisted primarily of $6.6 million of capitalized development costs related to internal-use software and $1.3 million of purchased property and equipment. Financing Activities Our financing activities have consisted primarily of proceeds received from stock option exercises and our employee stock purchase plan.
Net cash used in investing activities during the year ended January 31, 2024 consisted primarily of $8.6 million of capitalized development costs related to internal-use software and $3.2 million of purchased property and equipment. Financing Activities Our financing activities consisted primarily of proceeds received from stock option exercises and our employee stock purchase plan.
As a result, the profitability of a customer to our business in any particular period depends in part upon how long a customer has been a subscriber and the degree to which it has expanded its usage of our platform. From inception through January 31, 2023, we have invested $730.4 million in the development of our platform.
As a result, the profitability of a customer to our business in any particular period depends in part upon how long a customer has been a subscriber and the degree to which it has expanded its usage of our platform. From inception through January 31, 2024, we have invested $824.1 million in the development of our platform.
The following table sets forth our billings for the years ended January 31, 2021, 2022 and 2023: Year Ended January 31, 2021 2022 2023 Billings (in thousands) $ 232,688 $ 296,464 $ 323,772 There is a disproportionate weighting toward annual billings in the fourth quarter, primarily as a result of large enterprise account buying patterns.
The following table sets forth our billings for the years ended January 31, 2022, 2023 and 2024: Year Ended January 31, 2022 2023 2024 Billings (in thousands) $ 296,464 $ 323,772 $ 321,093 There is a disproportionate weighting toward annual billings in the fourth quarter, primarily as a result of large enterprise account buying patterns.
The remaining amount consisted primarily of $4.9 million of capitalized development costs related to internal-use software and $0.8 million of purchased property and equipment. Net cash used in investing activities during the year ended January 31, 2022 consisted primarily of $6.0 million of capitalized development costs related to internal-use software and $0.5 million of purchased property and equipment.
Net cash used in investing activities during the year ended January 31, 2022 consisted primarily of $6.0 million of capitalized development costs related to internal-use software and $0.5 million of purchased property and equipment.
Revenue from customers with billing addresses in the United States comprised 76%, 77% and 78% of our total revenue for the years ended January 31, 2021, 2022 and 2023, respectively.
Revenue from customers with billing addresses in the United States comprised 77%, 78% and 79% of our total revenue for the years ended January 31, 2022, 2023 and 2024, respectively.
For more information regarding our credit facility, see Note 11 "Credit Facility" to the consolidated financial statements in Item 8 of Part II. In addition, we have obligations under leases for office space. For more information regarding our lease obligations, see Note 8 "Leases" to the consolidated financial statements in Item 8 of Part II.
Our primary commitment is related to obligations under our credit facility. For more information regarding our credit facility, see Note 11 "Credit Facility" to the consolidated financial statements in Item 8 of Part II. In addition, we have obligations under leases for office space.
Capitalized costs are included in property and equipment. 69 Capitalized internal-use software is amortized mostly as subscription cost of revenue, with a smaller portion related to operations amortized as research and development within operating expenses. All capitalized internal-use software is amortized on a straight-line basis over its estimated useful life, which is generally three years.
Capitalized internal-use software is amortized mostly as subscription cost of revenue, with a smaller portion related to operations amortized as research and development within operating expenses. All capitalized internal-use software is amortized on a straight-line basis over its estimated useful life, which is generally three years.
The following table sets forth our ARR net retention rate for each of the eight quarters in the period ended January 31, 2023: Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 All Customers 109 % 109 % 108 % 110 % 108 % 107 % 107 % 101 % ARR net retention rate enables measurement of the progress of our business initiatives and is used by management to make operational decisions.
The following table sets forth our ARR net retention rate for each of the eight quarters in the period ended January 31, 2024: Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024 All Customers 108 % 107 % 107 % 101 % 100 % 98 % 95 % 91 % ARR net retention rate enables measurement of the progress of our business initiatives and is used by management to make operational decisions.
Liquidity and Capital Resources As of January 31, 2023, we had $66.5 million of cash, cash equivalents, and restricted cash which were held for working capital purposes, of which $3.7 million was restricted cash. Our cash and cash equivalents consist primarily of cash, money market funds, and certificates of deposit.
Liquidity and Capital Resources As of January 31, 2024, we had $60.9 million of cash, cash equivalents, and restricted cash which were held for working capital purposes, of which $3.7 million was restricted cash. Our cash and cash equivalents consist primarily of cash, money market funds and certificates of deposit.
We have incurred significant net losses since our inception, including net losses of $84.6 million, $102.1 million and $105.6 million for the years ended January 31, 2021, 2022 and 2023, respectively, and had an accumulated deficit of $1,330.0 million at January 31, 2023.
We have incurred significant net losses since our inception, including net losses of $102.1 million, $105.6 million and $75.6 million for the years ended January 31, 2022, 2023 and 2024, respectively, and had an accumulated deficit of $1,405.6 million at January 31, 2024.
To address these challenges, we provide a modern cloud-based business intelligence platform that digitally connects everyone at an organization – from the CEO to frontline employees – with all the people, data and systems in an organization, giving them access to real-time data and insights and allowing them to manage their business from their smartphones.
To address these challenges, we provide a modern cloud-based data experience platform that digitally connects everyone at an organization – from the CEO to frontline employees – with all the people, data and systems in an organization, giving them access to real-time data and insights and allowing them to put data to work for everyone so they can multiply their impact on the business.
Each term loan requires that we pay only interest until the maturity date. A portion of the interest that accrues on the outstanding principal of each term loan is payable in cash on a monthly basis, which portion accrues at a floating rate equal to the greater of (1) 7.0% and (2) three-month LIBOR plus 5.5% per year.
A portion of the interest that accrues on the outstanding principal of each term loan is payable in cash on a monthly basis, which portion accrues at a floating rate equal to the greater of (1) 7.0% and (2) Adjusted Term SOFR plus 5.5% per year.
As of January 31, 2023, we had over 2,500 customers. Enterprise customers accounted for 55%, 53% and 49% of our revenue for the years ended January 31, 2021, 2022 and 2023, respectively.
As of January 31, 2024, we had over 2,600 customers. Enterprise customers accounted for 56%, 52% and 49% of our revenue for the years ended January 31, 2022, 2023 and 2024, respectively.
Consequently, we use an expected dividend yield of zero. 70 Recent Accounting Pronouncements See Note 2 "Summary of Significant Accounting Policies" of our consolidated financial statements in Item 8 of Part II of this Annual Report on Form 10-K for more information regarding recent accounting pronouncements. 71
Recent Accounting Pronouncements See Note 2 "Summary of Significant Accounting Policies" of our consolidated financial statements in Item 8 of Part II of this Annual Report on Form 10-K for more information regarding recent accounting pronouncements. 77
Historical Cash Flow Trends Year Ended January 31, 2021 2022 2023 (in thousands) Net cash (used in) provided by operating activities $ (15,872) $ 379 $ (10,890) Net cash provided by (used in) investing activities 12,240 (6,517) (7,996) Net cash provided by (used in) financing activities 13,095 (561) 2,424 Operating Activities Net cash used in operating activities consisted primarily of cash we invest in our personnel, timing and amounts we use to fund marketing programs and events to expand our customer base, the costs to provide our cloud-based platform and related outsourced professional services to our customers.
For more information, see Note 18 "Subsequent Events." Historical Cash Flow Trends Year Ended January 31, 2022 2023 2024 (in thousands) Net cash provided by (used in) operating activities $ 379 $ (10,890) $ 2,583 Net cash used in investing activities (6,517) (7,996) (11,760) Net cash (used in) provided by financing activities (561) 2,424 3,471 Operating Activities Our operating activities consisted primarily of payments we received from our customers, cash we invest in our personnel, timing and amounts we use to fund marketing programs and events to expand our customer base, the costs to provide our cloud-based platform and related outsourced professional services to our customers.
In connection with the slowing growth rate, we've taken steps to better align our sales team and focus on controlling costs, which we expect will result in improved margins, sustained positive cash flow and efficient growth in the long term.
In response to these dynamics, we have taken and intend to continue to take steps to better align our sales team and focus on controlling costs, which we expect will result in improved margins, sustained positive cash flow and efficient growth in the long term.
Impact of Macroeconomic Conditions and COVID-19 Prevailing macroeconomic conditions have impacted, and may continue to impact, our business and those of our customers in a manner that we may not be able to quantify or isolate from other drivers of our performance.
We expect to incur losses for the foreseeable future and may not be able to achieve or sustain profitability. Impact of Macroeconomic Conditions Prevailing macroeconomic conditions have impacted, and may continue to impact, our business and those of our customers in a manner that we may not be able to quantify or isolate from other drivers of our performance.
We have never declared or paid any cash dividends and do not presently plan to pay cash dividends in the foreseeable future.
We have never declared or paid any cash dividends and do not presently plan to pay cash dividends in the foreseeable future. Consequently, we use an expected dividend yield of zero.
ARR net retention rate is a performance metric and should be viewed independently of revenue and deferred revenue, and is not intended to be a substitute for, or combined with, any of these items.
ARR net retention rate is a performance metric and should be viewed independently of revenue and deferred revenue, and is not intended to be a substitute for, or combined with, any of these items. In fiscal 2024 our net retention trended lower as a result of slowing growth in upsells.
As of January 31, 2023, the interest rate was approximately 10.3%. In addition to the 10.3%, a fixed rate equal to 2.5% per year accrues on the outstanding principal of each term loan and is added to the principal amount of the outstanding term loan on a monthly basis.
In addition to the 11.1%, a fixed rate equal to 2.5% per year accrues on the outstanding principal of each term loan and is added to the principal amount of the outstanding term loan on a monthly basis.
We use this method due to limited stock option exercise history. For the ESPP, the expected term is the beginning of the offering period to the end of each purchase period. • Expected Volatility .
The expected term is determined using the simplified method, which is calculated as the midpoint of the option’s contractual term and vesting period. We use this method due to limited stock option exercise history. For the ESPP, the expected term is the beginning of the offering period to the end of each purchase period. • Expected Volatility .
The extent of this variability depends on a number of factors including the size and timing of upsells and cancellations relative to the initial subscriptions.
Our ability to successfully upsell and the impact of cancellations may vary from period to period. The extent of this variability depends on a number of factors including the size and timing of upsells and cancellations relative to the initial subscriptions.
Significant components of cash outflows included $171.0 million for personnel costs and $55.0 million for marketing programs and events, third-party costs to provide our platform and outsourced professional services. Net cash used in operating activities during the year ended January 31, 2023 consisted of cash collected from customers of $314.4 million exceeding the $325.3 million of cash outflows.
Significant components of cash outflows included $193.9 million for personnel costs and $67.5 million for marketing programs and events, third-party costs to provide our platform and outsourced professional services. 73 Net cash provided by operating activities during the year ended January 31, 2024 consisted of cash collected from customers of $338.0 million exceeding the $335.4 million of cash outflows.
We typically invoice our customers annually in advance for subscriptions to our platform. A majority of our annual recurring revenue is up for renewal during the fiscal year ending January 31, 2024. Remaining performance obligations (RPO) represents the remaining amount of revenue we expect to recognize from existing non-cancelable contracts, whether billed or unbilled.
We typically invoice our customers annually in advance for subscriptions to our platform. Remaining performance obligations (RPO) represents the remaining amount of revenue we expect to recognize from existing non-cancelable contracts, whether billed or unbilled. As of January 31, 2024 total RPO was$373.3 million.
Our gross retention rate was 88%, 90% and 89% for the 12 months ended January 31, 2021, 2022 and 2023, respectively. The primary metric that we use to monitor customer retention and growth is annual recurring revenue (ARR) net retention rate. ARR represents the total annualized contract value of active customer subscription contracts as of the measurement date.
The primary metric that we use to monitor customer retention and growth is annual recurring revenue (ARR) net retention rate. ARR represents the total annualized contract value of active customer subscription contracts as of the measurement date.
Subsequent to the IPO, we determine the fair value of common stock as of each grant date using the market closing price of our Class B common stock on the date of grant. • Expected Term . The expected term is determined using the simplified method, which is calculated as the midpoint of the option’s contractual term and vesting period.
Subsequent to the IPO, we determine the fair value of common stock as of each grant date using the market closing price of our Class B common stock on the date of grant. 76 • Expected Term .
Discussion of the Years Ended January 31, 2021 and 2022 For a discussion of the year ended January 31, 2022 compared to the year ended January 31, 2021, please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended January 31, 2022.
In the long term, we expect income tax expense to increase in conjunction with higher taxable income from our international subsidiaries. 71 Discussion of the Years Ended January 31, 2022 and 2023 For a discussion of the year ended January 31, 2023 compared to the year ended January 31, 2022, please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended January 31, 2023.
It currently takes multiple years for our customers to fully embrace the power of our platform. We believe that as customers deploy greater volumes and sources of data for multiple use cases, the unique features of our platform can address the needs of everyone within their organization.
We believe that as customers deploy greater volumes and sources of data for multiple use cases, the unique features of our platform can address the needs of everyone within their organization. We are still in the early stages of expanding within many of our customers.
These investments may also include extending the functionality and effectiveness of our platform through improvements to the Domo Appstore and developer toolkits, which enable customers and partners to quickly build and deploy custom applications. The amount of new investments required to achieve our plans is expected to decrease as a percentage of revenue compared to historical years.
These investments may also include extending the functionality and effectiveness of our platform through improvements to the Domo Appstore and developer toolkits, which enable customers and partners to quickly build and deploy custom data applications.
For these contracts, individual performance obligations are accounted for separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis.
Contracts with Multiple Performance Obligations Most of our contracts with new customers contain multiple performance obligations, generally consisting of subscriptions and professional services. For these contracts, individual performance obligations are accounted for separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis.
We expect interest expense to increase modestly due to an increasing principal balance and anticipated higher market interest rates.
We expect interest expense to increase modestly due to an increasing principal balance and anticipated higher market interest rates. We expect foreign currency gains and losses could become more pronounced due to current market volatility.
Professional services arrangements are billed in advance, and revenue from these arrangements is recognized as the services are provided, generally based on hours incurred. Training and education revenue is also recognized as the services are provided. Contracts with Multiple Performance Obligations Most of our contracts with new customers contain multiple performance obligations, generally consisting of subscriptions and professional services.
Other revenue includes training and education. Professional services arrangements are billed in advance, and revenue from these arrangements is recognized as the services are provided, generally based on hours incurred. Training and education revenue is also recognized as the services are provided.
Although we are not currently a party to any agreement or letter of intent with respect to potential investments in, or acquisitions of, complementary businesses, services or technologies, we may enter into these types of arrangements in the future, which could also require us to seek additional equity financing, incur indebtedness, or use cash resources.
For additional information, see the section of this report captioned “Risk Factors—Risks Related to Our Financial Position and Capital Needs—Adverse events or perceptions affecting the financial services industry could adversely affect our operating results, financial condition and prospects.” Although we are not currently a party to any agreement or letter of intent with respect to potential investments in, or acquisitions of, complementary businesses, services or technologies, we may enter into these types of arrangements in the future, which could also require us to seek additional equity financing, incur indebtedness, or use cash resources.
Our sales strategy depends on our ability to continue to attract and retain top talent, to increase our pipeline of business, and to enhance sales productivity. We focus on productivity per quota-carrying sales representative and the time it takes our sales representatives to reach full productivity.
Our sales strategy depends on our ability to continue to attract and retain top talent, to increase our pipeline of business, and to enhance sales productivity.
We calculate our gross retention rate by taking the dollar amount of annual contract value (ACV) that renews in a given period divided by the ACV that was up for renewal in that same period. The ACV of multi-year contracts is also considered in the calculation based on the period in which the annual anniversary of the contract falls.
An important metric that we use to evaluate our performance in retaining customers is gross retention rate. We calculate our gross retention rate by taking the dollar amount of annual contract value (ACV) that renews in a given period divided by the ACV that was up for renewal in that same period.
Sales and marketing expense as a percentage of total revenue was 56% and 56% for the years ended January 31, 2021 and 2022, respectively, compared to 56% for the year ended January 31, 2023.
We have taken steps to better align our sales and marketing spending and headcount to efficiently grow and attract new customers. Sales and marketing expense as a percentage of total revenue was 56% and 56% for the years ended January 31, 2022 and 2023, respectively, compared to 51% for the year ended January 31, 2024.
Our business model focuses on obtaining new customers and maximizing the lifetime value of those customer relationships. We recognize subscription revenue ratably over the term of the subscription period.
The amount of RPO expected to be recognized as revenue in the next twelve months was $241.2 million as of January 31, 2024. Our business model focuses on obtaining new customers and maximizing the lifetime value of those customer relationships. We recognize subscription revenue ratably over the term of the subscription period.
The increase in professional services and other revenue was primarily due to a higher volume of billable hours delivered. 63 Cost of Revenue, Gross Profit and Gross Margin Year Ended January 31, 2022 2023 $ Change % Change (in thousands) Cost of revenue: Subscription $ 40,907 $ 43,295 $ 2,388 6 % Professional services and other 26,239 29,783 3,544 14 Total cost of revenue $ 67,146 $ 73,078 $ 5,932 9 Gross profit $ 190,815 $ 235,567 $ 44,752 23 Gross margin: Subscription 82 % 84 % Professional services and other 25 20 Total gross margin 74 76 The increase in cost of subscription revenue was primarily due to a $4.0 million increase in our third-party web hosting services, partially offset by a $1.3 million decrease in employee-related costs and a $0.2 million decrease in data center costs.
Cost of Revenue, Gross Profit and Gross Margin Year Ended January 31, 2023 2024 $ Change % Change (in thousands) Cost of revenue: Subscription $ 43,295 $ 46,045 $ 2,750 6 % Professional services and other 29,783 29,425 (358) (1) Total cost of revenue $ 73,078 $ 75,470 $ 2,392 3 Gross profit $ 235,567 $ 243,519 $ 7,952 3 Gross margin: Subscription 84 % 84 % Professional services and other 20 12 Total gross margin 76 76 The increase in cost of subscription revenue was primarily due to a $3.5 million increase in our third-party web hosting services, partially offset by a $1.9 million decrease in data center costs.
While these efforts often require a substantial commitment and upfront costs, we believe our investment in product, customer support, customer success and professional services will create opportunities to expand our customer relationships over time. Our ability to drive growth and generate incremental revenue depends heavily on our ability to retain our customers and increase their usage of our platform.
We actively engage with our customers to assess whether they are satisfied and fully realizing the benefits of our platform. While these efforts often require a substantial commitment and upfront costs, we believe our investment in product, customer support, customer success and professional services will create opportunities to expand our customer relationships over time.
We expect our revenue growth rate to decline in the near term, due in part to the effects of the macroeconomic environment which has elongated the software sales cycle and increased deal scrutiny.
Notwithstanding our ongoing shift to a consumption-based pricing model, we expect our revenue to be negatively impacted in the near term, due in part to the effects of the macroeconomic environment which has elongated the software sales cycle, increased deal scrutiny, and made renewal discussions more challenging.
In addition, we are required to comply with a financial covenant based on the ratio of our outstanding indebtedness to our annualized recurring revenue.
The credit facility is secured by substantially all of our assets. In addition, we are required to comply with a financial covenant based on the ratio of our outstanding indebtedness to our annualized recurring revenue. The maximum ratio is 0.500 on January 31, 2023 through the maturity date.
Professional services and other revenue primarily consists of implementation services sold with new subscriptions, as well as professional services sold separately, including training and education. Professional services are generally billed in advance and revenue from these arrangements is recognized as the services are performed. Our professional services engagements typically span from a few weeks to several months.
Amounts for the annual purchase commitments do not carry over beyond each annual commitment period. 66 Professional services and other revenue primarily consists of implementation services sold with new subscriptions, as well as professional services sold separately, including training and education. Professional services are generally billed in advance and revenue from these arrangements is recognized as the services are performed.
In order to accelerate customer growth, we intend to further develop our partner ecosystem by establishing agreements with more software resellers, systems integrators and other partners to provide broader customer and geographic coverage.
To drive growth among both our enterprise and corporate customers, we intend to further develop our partner ecosystem by establishing agreements with more software resellers, systems integrators and other partners to provide broader customer and geographic coverage. We believe we are underpenetrated in the overall market and have significant opportunity to expand our customer base over time.
We believe we are underpenetrated in the overall market and have significant opportunity to expand our customer base over time. 58 Customer Upsell and Retention We employ a land, expand, and retain sales model, and our performance depends on our ability to retain customers and expand the use of our platform at existing customers over time.
Customer Upsell and Retention We employ a land, expand, and retain sales model, and our performance depends on our ability to retain customers and expand the use of our platform at existing customers over time. It currently takes multiple years for our customers to fully 64 embrace the power of our platform.
Our enterprise customers generated revenue of $115.4 million, $137.5 million, and $152.4 million for the years ended January 31, 2021, 2022 and 2023, respectively, or year-over-year growth of 19% and 11%, respectively.
Our enterprise customers generated revenue of $143.6 million, $160.6 million, and $155.7 million for the years ended January 31, 2022, 2023 and 2024, respectively, or year-over-year growth of 12% and decline of 3%, respectively.
Over the long term, we expect sales and marketing expense to decrease as a percentage of revenue. Research and development expenses increased primarily due to a $11.3 million increase in employee-related costs, attributable to higher headcount and stock-based compensation, of which $8.8 million related to stock-based compensation. Contract labor increased by $1.1 million.
We expect sales and marketing expense as a percentage of revenue to remain consistent in the near term and decrease in the long term. Research and development expenses decreased primarily due to a $6.6 million decrease in employee-related costs. Capitalized software increased by $2.0 million, which decreases expense.
Investing Activities Our investing activities consisted primarily of property and equipment purchases, which include capitalized development costs related to internal-use software. 67 Net cash provided by investing activities during the year ended January 31, 2021 consisted primarily of $29.2 million of maturities of short-term investments, offset by $11.1 million of purchases of short-term investments.
Net cash used in investing activities during the year ended January 31, 2023 consisted primarily of $6.6 million of capitalized development costs related to internal-use software and $1.3 million of purchased property and equipment.
Critical Accounting Policies and Estimates We prepare our consolidated financial statements in accordance with generally accepted accounting principles in the United States, or GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that are inherently uncertain and that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures.
The preparation of these consolidated financial statements requires us to make estimates and assumptions that are inherently uncertain and that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected.
We work closely with our customers to drive increased engagement with our platform by identifying new use cases through our customer success teams, as well as in-platform, self-guided experiences. We actively engage with our customers to assess whether they are satisfied and fully realizing the benefits of our platform.
In addition, we believe our partner ecosystem will become increasingly important over time. We work closely with our customers to drive increased engagement with our platform by identifying new use cases through our customer success teams, as well as in-platform, self-guided experiences.
In the event that LIBOR is unavailable, interest will accrue at a floating rate equal to the greater of (1) 7.0% and (2) the U.S. prime rate plus 2.75% per year. LIBOR is expected to be replaced as an index rate in financial transactions by an alternative benchmark rate in the near future.
Adjusted Term SOFR is defined as the greater of (a) 0.0% and (b) Term SOFR plus 0.26161%. In the event that SOFR is unavailable, interest will accrue at a floating rate equal to the greater of (1) 7% and (2) the Alternate Base Rate plus 2.75% per year.
Income Taxes Year Ended January 31, 2022 2023 $ Change % Change (in thousands) (Benefit from) provision for income taxes $ (461) $ 1,179 $ 1,640 (356) % Income taxes increased due to smaller allowable deductions during the year ended January 31, 2023.
Income Taxes Year Ended January 31, 2023 2024 $ Change % Change (in thousands) Provision for income taxes $ 1,179 $ 1,257 $ 78 7 % Income taxes increased primarily due to higher taxable income from our international subsidiaries during the year ended January 31, 2024.
Our corporate 57 customers generated revenue of $94.8 million, $120.5 million, and $156.2 million for the years ended January 31, 2021, 2022 and 2023, respectively, or year-over-year growth of 27% and 30%, respectively.
Our corporate customers generated revenue of $114.4 million, $148.0 million, and $163.3 million for the years ended January 31, 2022, 2023 and 2024, respectively, or year-over-year growth of 29% and 10%, respectively.
Research and development expense as a percentage of revenue remained flat in the year ended January 31, 2023 compared to the year ended January 31, 2022. In the long term, we expect that research and development expense to decline as a percentage of total revenue as we leverage our research and development organization.
Research and development expense as a percentage of revenue decreased from 31% in the year ended January 31, 2023 to 27% in the year ended January 31, 2024. We expect research and development expense as a percentage of revenue to increase slightly in the near term and remain consistent in the long term.
We are still in the early stages of expanding within many of our customers. We have invested in platform capabilities and online support resources that allow our customers to expand the use of our platform in a self-guided manner.
We have invested in platform capabilities and online support resources that allow our customers to expand the use of our platform in a self-guided manner. Our professional services, customer support and customer success functions also support our sales force by helping customers to successfully deploy our platform and implement additional use cases.
Significant components of cash outflows included $193.9 million for personnel costs and $67.5 million for marketing programs and events, third-party costs to provide our platform and outsourced professional services.
Significant components of cash outflows included $182.6 million for personnel costs and $79.2 million for marketing programs and events, third-party costs to provide our platform and outsourced professional services. Investing Activities Our investing activities consisted primarily of property and equipment purchases, which included capitalized development costs related to internal-use software.
Critical accounting policies and estimates are those that we consider critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management's judgments and estimates. Revenue Recognition We derive revenue primarily from subscriptions to our cloud-based platform and professional services.
We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. Critical accounting policies and estimates are those that we consider critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management's judgments and estimates.
With that objective in mind, we allocate our customer success and customer support resources to align with maximizing the retention and expansion of our subscription revenue. An important metric that we use to evaluate our performance in retaining customers is gross retention rate.
Our ability to drive growth and generate incremental revenue depends heavily on our ability to retain our customers and increase their usage of our platform. With that objective in mind, we allocate our customer success and customer support resources to align with maximizing the retention and expansion of our subscription revenue.
The credit facility permits us to incur up to $100 million in term loan borrowings, all of which had been drawn as of January 31, 2023. The term loan maturity date is April 1, 2025 with a closing fee of $7.0 million, which is in addition to the $5.0 million amendment fee described above.
During the fiscal year ended January 31, 2024, the term loan maturity date was April 1, 2025 with a closing fee of $7.0 million, which is in addition to the $5.0 million amendment fee described above. Each term loan requires that we pay only interest until the maturity date.

… 59 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+1 added−3 removed6 unchanged
Biggest changeAs of January 31, 2023, the interest rate was approximately 10.3%. In addition to the 10.3%, a fixed rate equal to 2.5% per year accrues on the outstanding principal of each term loan and is added to the principal amount of the outstanding term loan on a monthly basis.
Biggest changeIn addition to the 11.1%, a fixed rate equal to 2.5% per year accrues on the outstanding principal of each term loan and is added to the principal amount of the outstanding term loan on a monthly basis. Interest rate risk also reflects our exposure to movements in interest rates associated with our borrowings.
Inflation Risk We do not believe that inflation has had a material effect on our business, financial condition or results of operations to date. For example, our subscription contracts often contain pricing terms that are tied to the Consumer Price Index, and our pricing policy for renewals not tied to CPI is designed to approximate changes in CPI.
Inflation Risk We do not believe that inflation has had a material effect on our business, financial condition or results of operations to date. For example, our subscription contracts often contain pricing terms that are tied to the Consumer Price Index (CPI), and our pricing policy for renewals not tied to CPI is designed to approximate changes in CPI.
If our costs were to become subject to significant inflationary pressure, we may not be able to fully offset these higher costs with price increases. Our inability or failure to do so could adversely affect our business, financial condition and results of operations. 72
If our costs were to become subject to significant inflationary pressure, we may not be able to fully offset these higher costs with price increases. Our inability or failure to do so could adversely affect our business, financial condition and results of operations. 78
A portion of the interest that accrues on outstanding principal of each term loan is payable in cash on a monthly basis, which portion accrues at a floating rate equal to the greater of (1) 7.0% and (2) three-month LIBOR plus 5.5% per year.
A portion of the interest that accrues on outstanding principal of each term loan is payable in cash on a monthly basis, which portion accrues at a floating rate equal to the greater of (1) 7.0% and (2) Adjusted Term SOFR plus 5.5% per year.
We do not enter into investments for trading or speculative purposes. Due to the short-term nature of these instruments, we believe that we do not have any material exposure to changes in the fair value of our investment portfolio as a result of changes in interest rates. Decreases in interest rates, however, would reduce future interest income.
Due to the short-term nature of these instruments, we believe that we do not have any material exposure to changes in the fair value of our investment portfolio as a result of changes in interest rates. Decreases in interest rates, however, would reduce future interest income.
We have a credit facility that permits us to incur up to $100 million in term loan borrowings, all of which had been drawn as of January 31, 2023. The term loans mature on April 1, 2025.
We have a credit facility that permits us to incur up to $100 million in term loan borrowings, all of which had been drawn as of January 31, 2024. During the fiscal year ended January 31, 2024, the term loan maturity date was April 1, 2025.
A hypothetical change in interest rates of 100 basis points after January 31, 2023 would not have a material impact on the fair value of our outstanding debt, even at the borrowing limit, or in the returns on our cash.
At January 31, 2024, we had total debt outstanding with a carrying amount of $113.5 million, which approximates fair value. A hypothetical change in interest rates of 100 basis points after January 31, 2024 would not have a material impact on the fair value of our outstanding debt, even at the borrowing limit, or in the returns on our cash.
These risks primarily include interest rate sensitivities as follows: Interest Rate Risk As of January 31, 2023, we had $66.5 million of cash, cash equivalents, and restricted cash, which were held for working capital purposes, of which $3.7 million was restricted cash. Our cash and cash equivalents consist primarily of cash, money market funds, and certificates of deposit.
These risks primarily include interest rate foreign currency exchange rate, and inflation sensitivities as follows: Interest Rate Risk As of January 31, 2024, we had $60.9 million of cash, cash equivalents, and restricted cash, which were held for working capital purposes, of which $3.7 million was restricted cash.
In the event that LIBOR is unavailable, interest will accrue at a floating rate equal to the greater of (1) 7.0% and (2) the U.S. prime rate plus 2.75% per year. LIBOR is expected to be replaced as an index rate in financial transactions by an alternative benchmark rate in the near future.
In the event that SOFR is unavailable, interest will accrue at a floating rate equal to the greater of (1) 7.0% and (2) the Alternate Base Rate plus 2.75% per year. As of January 31, 2024, the interest rate was approximately 11.1%.
Removed
While our loan agreement currently provides for a fallback from LIBOR to the U.S. prime rate, it is possible that we may amend our loan agreement to provide for a methodology to effect a transition from LIBOR to a new benchmark rate.
Added
Our cash and cash equivalents consist primarily of cash, money market funds, and certificates of deposit. We do not enter into investments for trading or speculative purposes.
Removed
It is not possible to predict the effect or timing of any establishment of a successor benchmark rate or its effect on our loan agreement or our business generally. The transition from LIBOR could result in our interest costs increasing and our access to capital could change, which could adversely affect our results of operations and cash flows.
Removed
Interest rate risk also reflects our exposure to movements in interest rates associated with our borrowings. At January 31, 2023, we had total debt outstanding with a carrying amount of $108.6 million, which approximates fair value.

Other DOMO 10-K year-over-year comparisons