Data analytics specialist Domo‘s (DOMO 4.46%) stock took off like a rocket in May, particularly after the company posted the results of its inaugural quarter of fiscal 2026 near the end of the month. Investors piled into the stock, with the bullish momentum getting a little extra fuel with a spate of analyst price target bumps. During the month, Domo’s shares surged nearly 71% higher, according to data provided by S&P Global Market Intelligence.
A convincing full-year bottom-line guidance beat
For its first three weeks, May was actually rather uneventful and unexciting for Domo. That changed on May 21, when the company posted those first-quarter results just after market close. Total was almost entirely unchanged from the same period one year ago, at a shade over $80 million, while in a more positive development non-GAAP (adjusted) net loss narrowed to $3.6 million ($0.09 per share) from the first quarter of fiscal 2025’s $12.3 million deficit. Domo’s fiscal first quarter ended on April 30.
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Another financial figure worth mentioning is the company’s remaining performance obligations (RPOs) from its subscriptions — the funds it is due from clients for the remaining part of their subscriptions. During the quarter, total RPOs climbed a robust 24% to $408 million.
Both revenue and profitability beat the consensus analyst estimates, if not spectacularly. On average, those pundits were modeling slightly more than $78 million on the top line, and a deeper adjusted net loss of $0.11 per share.
But as savvy investors are acutely aware, stocks usually trade on future potential, no matter how good or bad their trailing results. This was the difference maker and stock price booster for Domo, as the company’s profitability guidance for both its current quarter and the full fiscal year looked good next to pundit projections.
Management believes it will post revenue of $77.5 million to $78.5 million for the quarter; the consensus analyst estimate is slightly under the lower number in that range. The company is also forecasting an adjusted net loss of $0.03 to $0.07 per share, against the average prognosticator estimate of a $0.07 shortfall.
As for the entirety of fiscal 2026, Domo should earn $312 million to $320 million on the top line, filtering down to an adjusted net loss (again) of $0.18 to $0.26 per share. The consensus analyst estimate falls within that spectrum at $313.1 million. However, the company’s expected loss is well narrower than the pundit consensus of $0.33 per share.
Positive and negative takes on Domo
In the wake of that earnings report, several analysts reacted quickly in raising their price targets on Domo, or (in one case) reiterating a bullish take. One of the more assertive raisers was Cantor Fitzgerald’s Yi Fu Lee, who added $5 to his existing level for a new one at $17 per share. He maintained his overweight (in other words, buy) recommendation on the stock.
I like the fact that the RPO figure grew at a hearty double-digit rate for Domo in the quarter, but that’s not enough for me to be drawn to the stock. The company’s bottom line is still notably in the red and it counts on that situation continuing, and I’d prefer some hope for profitability before long.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
