The return of Josh James - as founder reclaims CEO seat, what's next for Domo?

Stuart Lauchlan Profile picture for user slauchlan March 7, 2023
He's back! Domo founder Josh James has returned to the CEO role at a time when the macro-economic climate is making life tougher for enterprise software firms.

Josh James

Josh James is back as CEO of Domo, just short of a year after stepping down from the top spot at the  analytics firm he founded back in 2010. He had handed over the role to the firm’s former Chief Strategy Director John Mellor last March. No reason was given for Mellor departing, other than for him to say: 

When I became CEO, my focus was to drive ongoing innovation for customers and further drive a disciplined go-to-market strategy. One year later, we have optimized our business to tighter internal alignment and advanced our strategy for growth, all while striving to build and promote a culture of inclusivity at the highest level…After being a steward of the company for the last year and help me put the company in a better place, I feel like it's a good time for Josh to run this. 

As for James himself, he stated: 

 I love Domo. I know this business, and I'm excited to hit the ground running.

It was a day of changes at the firm with a number of new executive appointments, including David Jolly as CFO who succeeds Bruce Belt, and Jeff Skousen as Chief Revenue Officer, who takes over from Brit Ian Tickle, with James commenting that he feels it’s important that the latter role is held by someone in the US. 

The changes were announced in tandem with Domo’s latest quarterly earnings. For Q4, the firm turned in a net loss of $19.8 million, down from a loss of $33.2 million for the comparable year ago quarter, while revenue was up 14% year-on-year to $79.5 million. For the full year, a net loss of $105.6 million was up on last year’s loss of $102.1 million, while revenue for the year was up 20% to $308.6 million. 


The returning CEO pointed to the by now familiar commentary from enterprise software firms about the impact of the macro-economic environment:

It's no secret that the macro has added complexity to the software sales process for tech companies in general, elongating deal cycles, increasing deal scrutiny and responding to end customer challenges. Like others, we saw that as well in Q4.

But, he argued, the company is well-positioned for the coming fiscal ’24: 

As companies have become more conservative with spending, they must do more with what they have. And in many cases, they must do more with less. Our sales teams are hearing this from many customers and prospects. As we move into our fiscal year 2024 and beyond, I believe businesses will want to continue to prove rapid ROI as they make decisions, and this is where digital transformation comes in. The industry has been talking about digital transformation for more than 20 years.

I've seen this firsthand. However, digital transformation won't fulfill its promise until people are using data in ways that they don't even have to think of as BI. Since Domo was founded more than 10 years ago, our vision has been to put data to work for people across entire organizations to transform the way businesses are managed. In the early days, that looked like BI, analytics and dashboards. But traditional BI is not going to solve the adoption challenge that exists inside organizations. If we have to teach store managers or truck drivers, how to be data analysts, well, then we have failed. 

He added: 

The future is to deliver new data experiences that work the way people do…These will be human first experiences that deliver personalized insights and put those insights in the context of the job that person is doing, then connect those insights to other internal systems, so it's not just passive consumption of data.

It's action that leverages their time more efficiently and effectively so they can multiply their impact faster. It's like the story of a scrap manager at an aluminum products company, who is saving his time, his company tens of millions of dollars a year by using Domo to shave 10 minutes of the time it takes each truck to move through the production process, or it's the restaurant store manager who is using Domo to deliver better and more profitable customer experiences, and operations people using Domo to improve employee satisfaction by significantly reducing the time it takes to get tips from thousands of daily transactions, deposited into the bank accounts of more than 4,000 individual employees.

But organizations have millions of processes that are not modernized, he noted, meaning they are slow and costing money: 

As an example, our team had a recent conversation with a very large enterprise that's still using Lotus Notes. Today, the solution that we set out to create more than 10 years ago is becoming a primary ingredient in business performance, which means there is opportunity everywhere for what we do. The barriers to digital transformation and growth are less about technology and more about a human's ability to use that technology in the context of their job. It's about being able to run your business from your phone. This is where Domo shines. We believe the steps we are making now across the business will make us ready to accelerate more quickly, especially when the external environment picks up.

My take

An unexpected return for James. During the post-earnings analyst call he made an interesting comment in passing about the sales team management being excited that he’s coming back, “especially just going to go out and talk to a bunch of customers and close some deals.” James also made reference to the firm having had capacity issues with the sales force: 

Last year, it was a variety of reasons why we ended up churning quite a few salespeople, and that just hit us quite hard in the capacity front. You wake up and you're looking at the quarter… and there's just not the capacity there. So even if your sales teams [are] all performing the way you'd expect, there just weren't enough numbers, because of that retention issue that we had last year. That retention issue seems to already be getting fixed. If you look at just what's happened in the first 5 or 6 weeks of the new year, we’re definitely in a better position relative to where we were last year and how we were trending.

Indeed, Domo enters its Q1 ’24 with more pipeline than a year ago, according to CFO Jolley. The firm has also seen a 30% year-on-year increase in customers with an ARR [Annual Recurring Revenue] north of $500,000 and a similar percentage rise for those with an ARR of over $1 million, noted James: 

Our biggest customers are are renewing and upgrading and upselling. And I think, if you look at a year where growth was anaemic for most software companies, it was difficult compared to the previous year, but yet we had a 30% increase in the number of customers that are paying us over $1 million. And then the band between $500 million and $1 million, we had a 30% increase in those number of customers as well. So that's pretty exciting to see the commitment that we're getting from our customers.

So, welcome back Josh James - it’s like you’ve never been away! Doubtless we’ll find out more about what comes next at the Domopalooza conference at the end of this month. 

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