Last Update 09 Jun 26

DOMO: Flat Revenue Outlook And Sale Review Will Shape Future Rerating Potential

Analysts have trimmed their average price targets on Domo to a range of $6 to $8, citing flat revenue expectations, higher discount rates and a higher assumed future P/E multiple, while still pointing to factors like AI partnerships and multi-year renewals as potential supports for the story.

Analyst Commentary

Recent Street research on Domo reflects a more cautious tone, with several bearish analysts cutting price targets into the mid single digit range and framing current levels as more in line with muted growth expectations and execution risk.

Across these reports, the common thread is that while Q4 results and multi-year renewals were viewed as solid, flat revenue expectations and uncertainty around the company’s evaluation of alternatives have become central to how risk and valuation are being framed.

Bearish Takeaways

Multiple bearish analysts reduced price targets to between US$6 and US$8, arguing that a flat topline outlook and lower software sector multiples justify a tighter valuation range.
Some bearish analysts describe Domo as a growth challenged SaaS business and characterize around US$7 per share as a fair takeout level, which signals limited assumed upside in their base cases.
Bullish Q4 data points like multi-year renewals and upside versus internal expectations are being discounted by bearish analysts who want clearer evidence of sustained revenue growth before assigning higher multiples.
The decision to withhold longer term guidance while the company reviews alternatives is seen by bearish analysts as adding execution and visibility risk. This, in turn, keeps sentiment restrained around both growth and potential M&A outcomes.

What's in the News

Domo’s AI and Data Products Platform is now available on Google Cloud Marketplace, allowing customers to purchase and deploy Domo using existing Google Cloud commitments and connect directly to BigQuery, Vertex AI and Gemini, according to a client announcement.
The company introduced upgrades to Magic ETL, including a redesigned authoring canvas, new troubleshooting tools such as Disable Tiles and Run to Here, row count observability, and a previewed AI Assistant to help configure JSON connectors, based on product related announcements.
Domo expanded admin and governance tools with features such as User Impersonation, Native App Distribution for branded mobile apps, Global PDP Policies, column masking, Nav Configs and Workspaces to manage data access and user experience at scale, according to product related announcements.
A major update to the core business intelligence experience added Worksheets, Report Builder for PDF, Data Models, semantic layer enhancements and App Studio improvements, with several features already generally available and others in beta or coming to beta, based on product related announcements.
Domo was dropped from the S&P Software & Services Select Industry Index and separately announced that Nine Entertainment Co. selected its AI and data platform to consolidate analytics tools, modernize its data stack and support governed self service reporting, according to index and client announcements.

Valuation Changes

Fair Value: The assessed fair value remains unchanged at $3.5, indicating no adjustment to the central valuation anchor in this framework.
Discount Rate: The discount rate has risen slightly from 10.80% to 11.27%, reflecting a higher required return being applied to future cash flows.
Revenue Growth: The assumed $revenue growth rate has fallen significantly from 7.18% to 3.22%, pointing to a more cautious outlook for top line expansion in the model.
Net Profit Margin: The projected net profit margin has edged up from 11.73% to 12.04%, implying a modestly higher expected level of profitability on $revenue.
Future P/E: The future P/E multiple has increased from 4.9x to 6.3x, meaning the valuation model now assumes a higher earnings multiple for Domo over time.

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Key Takeaways

Rapid adoption of AI analytics and open-source alternatives threatens Domo's customer base, pricing power, and overall long-term revenue potential.
Rising regulatory compliance costs and consistent unprofitability may compress margins and constrain future investment or shareholder returns.
Expanded cloud partnerships, innovative AI analytics, and a shift to consumption pricing are improving growth, retention, operating efficiency, and setting a path for sustainable profitability.

Catalysts

About Domo

Operates a cloud-based modern AI and data products platform in North America, Western Europe, Australia, Japan, and India.What are the underlying business or industry changes driving this perspective?

The rapid proliferation of AI-native analytics platforms threatens to make traditional business intelligence tools like Domo less attractive to enterprises, which could erode Domo's revenue growth as customers migrate to more advanced, integrated solutions with superior automation, directly impacting long-term revenue prospects.
Escalating global data privacy regulations, including stricter US legislation and evolving GDPR and CCPA frameworks, will likely require substantial increases in compliance investments by Domo, resulting in higher ongoing costs that compress future net margins.
A persistent lack of GAAP profitability raises the risk that Domo will need to dilute shareholders or cut critical investments if operating losses continue, leading to structurally weaker net margins and limiting any potential for improved long-term earnings.
The accelerating migration of customers to open-source and freemium business intelligence solutions undermines Domo's ability to maintain pricing power, which will likely drive down average contract values and create headwinds for EPS growth and revenue expansion over time.
Intensifying vendor consolidation among large enterprises favors the likes of Microsoft, Google, and Salesforce, marginalizing standalone BI players like Domo and shrinking its total addressable market, further restricting Domo's potential for sustainable revenue growth and ultimately capping future profitability.

Domo Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

This narrative explores a more pessimistic perspective on Domo compared to the consensus, based on a Fair Value that aligns with the bearish cohort of analysts.
The bearish analysts are assuming Domo's revenue will grow by 3.2% annually over the next 3 years.
The bearish analysts are not forecasting that Domo will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Domo's profit margin will increase from -18.6% to the average US Software industry of 12.0% in 3 years.
If Domo's profit margin were to converge on the industry average, you could expect earnings to reach $42.2 million (and earnings per share of $0.76) by about June 2029, up from -$59.3 million today.
In order for the above numbers to justify the price target of the more bearish analyst cohort, the company would need to trade at a PE ratio of 6.3x on those 2029 earnings, up from -2.5x today. This future PE is lower than the current PE for the US Software industry at 28.2x.
The bearish analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 11.27%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

Domo's accelerating partnerships and deep ecosystem integrations with leading cloud data warehouse providers such as Snowflake, Databricks, Oracle, Google, and others are generating a rapidly expanding pipeline, higher partner-sourced conversion rates, and significant new enterprise deal flow, all of which are expected to drive future revenue growth and improve profitability.
The recent and ongoing transition to a consumption-based pricing model removes adoption barriers, enables broader and deeper product usage across customers, and has led to higher sales force productivity, improved customer retention, longer contract lengths, and expanding contract values, which should directly benefit recurring revenue and net margins over time.
Strong product innovation in AI-driven analytics, including launches like Agent Catalyst and advanced agentic automation capabilities, are demonstrating rapid and tangible value for customers and are fueling adoption, setting Domo up to capitalize on secular trends in AI and automation, strengthening its competitive position and earnings prospects.
Subscription remaining performance obligations (RPO) grew 24% year-over-year, with long-term RPO up 61%, and cohorts on consumption pricing demonstrating higher retention and upsell activity, which derisks forward-looking revenue visibility and supports a sustained improvement in operating margin and earnings quality.
Management's focus on operational efficiency has resulted in positive adjusted free cash flow, expanding operating margins, and the expectation of exiting the current and next year with 5% and 10% billings growth as well as operating margin, marking a notable improvement in financial discipline and signaling a credible path toward sustained profitability.

Valuation

How have all the factors above been brought together to estimate a fair value?

The assumed bearish price target for Domo is $3.5, which represents up to two standard deviations below the consensus price target of $6.0. This valuation is based on what can be assumed as the expectations of Domo's future earnings growth, profit margins and other risk factors from analysts on the more bearish end of the spectrum.
However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $8.0, and the most bearish reporting a price target of just $3.5.
In order for you to agree with the more bearish analyst cohort, you'd need to believe that by 2029, revenues will be $350.7 million, earnings will come to $42.2 million, and it would be trading on a PE ratio of 6.3x, assuming you use a discount rate of 11.3%.
Given the current share price of $3.29, the analyst price target of $3.5 is 6.0% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystLowTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystLowTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystLowTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Rising Compliance Costs And AI Disruption Will Erode Margins