Domo Inc (DOMO) 2021 Q1 法說會逐字稿

Welcome to Domo's First Quarter FY '21 Earnings Call. (Operator Instructions) Please be advised that today's conference is being recorded. (Operator Instructions)

And with that, I will hand the call over to Peter Lowry, Domo's Vice President of Investor Relations.

Good afternoon, and welcome. On the call today, we have Josh James, our Founder and CEO; Bruce Felt, our CFO; and Julie Kehoe, our Chief Communications Officer. Julie will lead off with our safe harbor statement and then onto the call. Julie?

Our press release was issued after the market close and is posted in the Investor Relations section of our website, where this call is also being webcast.

Statements made on this call include forward-looking statements related to our business under federal security laws, including statements about financial projections, the plans and expectations for our go-to-market strategy, our expectations for our sales and new business initiatives; the impact of COVID-19 on our business and our financial condition. These statements are subject to a variety of risks, uncertainties and assumptions. For a discussion of these risks and uncertainties, please refer to documents we file with the SEC in particular, today's press release, our most recently filed annual report on Form 10-K and our most recently filed quarterly report on Form 10-Q. These documents contain and identify important risk factors and other information that may cause our actual results to differ materially from those contained in our forward-looking statements.

In addition, today's -- during today's call, we will discuss non-GAAP financial measures, which we believe are useful as supplemental measures of Domo's performance. Other than revenue, unless otherwise stated, we will be discussing our results of operations on a non-GAAP basis. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from GAAP results. Please refer to the tables in our earnings press release for a reconciliation of our non-GAAP financial measures to the most directly comparable GAAP measure.

With that, let me hand it over to Josh. Josh?

Thank you, Julie. Hello, everyone, and thanks for joining us for the call. Before I begin discussing the quarter, I want to express that the safety of our employees, their families and our customers has been a top priority as we operate through this health crisis. Our people have been working from home in a fully distributed fashion since mid-March. I'm incredibly proud of how quickly they've adapted, especially the great care they've shown our customers and the rapid delivery of solutions for the new challenges our customers are facing. Many of the challenges at the moment have highlighted the unique strengths of our platform. I'm very pleased with our Q1 results, particularly given the backdrop. In Q1, we posted a 23% increase in subscription revenue, a 19% year-over-year increase in total revenue and much better-than-expected billings and cash flow. And mostly, I'm excited about the guidance and the position it puts us in for the future.

On the call today, I'm going to focus on a few items. A brief update of our positioning in a COVID-19 environment, Q1 highlights, including how we are helping our new and existing customers navigate the current environment, an update on our current -- excuse me, an update on our cost reduction plan and recent industry recognition. In terms of our relevance in the COVID-19 environment or any environment where speed and rapid response become important, our core value proposition of BI leverage at cloud scale in record time well positions us to benefit from the digital transformation trend in general. And specifically, the rapid pace of change that COVID-19 requires by creating apps that automate workflow or create new capabilities.

Our positive position is reinforced by our ability to support work-from-home initiatives and by the value we provide to a well-diversified customer base. BI leverage means unleashing all of the data within an organization without having to rip out existing infrastructure and getting more value from those investments. In many cases, the data customers need now to manage how they operate is different than what they needed before this pandemic. Integrating this data and making it actionable is one of our core strengths. We also think that being cloud-based is certainly a tailwind in a work-from-home environment. Cloud scale means significantly greater data capacity, something that differentiates us from our mostly on-premise competitors. Cloud also means simplicity in adoption and expansion for new and existing customers.

Also, Domo's platform can scale to support the growing needs of our customers in an elastic manner. In record time means that because of our integrated platform, our initial time to value with a customer can be measured in days or weeks instead of quarters or years. And our ability to deliver value in new projects with existing customers can be minutes or hours. Domo was built for a broadly distributed or remote and digitally connected workforce. Domo supports distributed work in a collaborative way, which is critical in times like this. Our mobile-first solution provides businesses and business users the real-time data they need to make timely, effective decisions and allows teams and cross-functional units to collaborate around that data.

In an unparalleled way, our platform also allows for the rapid development of intelligent applications that leverage data to automate workflows and modernize business processes. These intelligent applications are one of our key points of differentiation against any other player in the space. And they bring data to life in a way that transforms the experience users have interacting with the data. This can be as simple as a one-click connection to massive amounts of data via our connector apps to rapidly automate and modernize workflows, whether they be existing business processes such as order entry to completely new processes like PPP -- sorry, PPE inventory management, personal protective equipment inventory management, contact tracing, temperature scanning and auditing wellness of employees, all enabled by the Domo platform.

Now I'll talk about some of the highlights of the quarter, including how we are helping our customers navigate the current environment. One of the highlights was our new initiative to help state governments manage their response to COVID-19. This initiative demonstrates our platform's ability to help customers quickly adapt. We started our COVID-19 response by having our rapid response team create, over the weekend, a free public-facing global COVID-19 tracking app. That's been repeated by many to be the best, including Jim Cramer, who said it was a vastly superior, much more real-time side about COVID than others that are publicly available. It taps into a vast set of published data sources. And while we made this tracker free to everyone, more than 700 existing customers of ours have embedded data from it into their own Domo dashboards, demonstrating the importance of these new data sources in helping our customers understand how to operate in this environment.

Integration partners are delivering data solutions to their customers using Domo's COVID-19 data as well as the Domo platform. The COVID-19 tracker is also a great illustration of how Domo excels at connecting massive amounts of disparate data into a consumable package to help executives understand their environment in real time, so they can make better decisions about what to do next. In many cases, we would see reports on CNN from Johns Hopkins that we knew were not as up-to-date as they could be, and it demonstrates when you have big businesses or large amounts of money or critical supply chain information or lives at stake, you really should be using Domo.

After our success with our public-facing site, we were asked by other leaders to take the expertise we bring to the world's largest companies and to create a COVID-19 Crisis Command Center for the state of Utah. And by the way, again, our team voraciously delivered it. They delivered an initial V1 in 72 hours over the weekend. So this Crisis Command Center gives governor and other executives real-time information to help them manage a swift and coordinated response from key metrics such as testing and tracking data, state entry data from the Department of Transportation, state entry into the state, PPE inventory and current hotspots for active cases. We also delivered a series of apps, including a governor's app to deliver the metrics he cares about most, such as transmission rates, infection stats and testing capacity right to his phone or iPad in Governor Herbert's case.

Given the success of Utah's deployment, we also signed command center contracts with the states of Nebraska and Iowa, and governors are now asking us to expand the data in their command centers to include economic insights such as SBA loan and unemployment data and also other health data and state lab data. The feedback we have received from the states has been amazing. We believe that the successful launches in Iowa, Nebraska and Utah position us further for growth in those government contracts and in the government contracts market.

Moving to the next phase of this pandemic, the decisions the private sector is now faced with is how to execute and maintain a safe return to the office, bringing together new and varied data types, orchestrating new processes and maintaining consistent communication with employees. So with that, we've introduced a Get Back to Work solution, kind of all around the future of work, which includes apps that can be rapidly deployed to give the private sector, customers, the ability to gather, see and act on all the new information they need to build trust with their employees as they orchestrate a safe return to the office. The apps deliver value for both the employer and the employee.

Domo's Get Back to Work solution includes capabilities for a company to monitor temperature scanning and contact tracing as well as a CEO app to give top leadership real-time understanding of the state of their company and employees with regard to the pandemic impact. Apps focusing on employee experience are designed to instill confidence in returning to the workplace. These apps allow employees to do self-assessments and also provide a dedicated communication channel between themselves and management. These and other apps, such as apps for training and compliance and workforce productivity are all possible because of the Domo platform's ability to create leverage from any data source and make it easily accessible and actionable in record time. Our company was built for this time. Our platform delivers real-time data at cloud scale in record time. So in hours and days matter, there is no solution like Domo, and we invite you to go and check out these new apps and this new initiative at getbacktowork.com.

Our platform delivers real-time data at cloud scale in record time. This platform got us into a global COVID-19 tracking over a weekend. It got us into states with command center apps, also over a weekend, and we crushed it because the states needed to handle large and complicated data from so many sources distributed to everyone inside their state organization and all of their citizens through cloud scale and they needed it, of course, in record time, over the weekend. And our platform enabled us to build and deliver the PPE app and the governor app. This platform also got us into this Get Back to Work and even bigger space, the future of work that, again, is characterized by massive volumes of data and massive amounts of people where cloud scale is imperative, the data that is needed from so many new sources and so many new types. The platform connects to device data and systems and spreadsheets and then makes it easy to distribute that data to users for transparency. The platform enables all of that. These apps are not a diversion. There are door openers to the entire platform, and they show and demonstrate the power of the entire platform.

Another highlight for us in the quarter was seeing our customers use Domo to rapidly respond to the changes for their own operating environment due to COVID-19. One example is Harmons, an upscale grocery supermarket chain here in Utah. In mid-March, Harmon saw that spam, yes, that spam, spam and other items that usually don't show up on inventory report but were flying off the shelves. Now using Domo, Harmons was able to quickly request from its major national distributor, the then current 4,000 most important items to Harmons customers earlier than any other grocery store, ensuring inventory. Harmons was also able to give a local bread supplier access to a Domo dashboard so they could understand in real time what was selling and what was being thrown away and keep Harmons stores well stocked. These moves allowed Harmons to get a jump on the supply chain and again secure the right inventory that would allow it to serve its customers better than the competition.

Another example of how we're seeing increased usage during this time is Gant Travel, a corporate travel management company. Gant credited Domo for helping minimize any major disruptions to its own business as COVID-19 hit the broader travel industry obviously very hard. Because Domo automates many BI-critical tasks, Gant was already operating without the extra headcount required for manual processes that many have to do, such as client reporting. So it didn't need to make a dramatic cut to its workforce. Gant also have been using Domo's embedded analytics product to deliver on fly, services that suddenly became more valuable to its customers in this environment as cash preservation became keen. Gant was able to deliver real-time insights into the status and value of unused tickets, refunds and number of uncanceled reservations across currencies and through rapidly changing policies of travel vendors.

One difficult decision that we had to make in the quarter was to significantly reduce our operating expenses. We recognized the potential impact COVID-19 could have on our business, and at our analyst briefing at Domopalooza, we announced that we had reduced operating expenses by $5 million, with plans in place based on an economic downturn comparable to the one in 2008, 2009, for an additional $30 million cut. Now our ongoing assessment was that it was prudent to prepare for a downturn to protect our balance sheet. And so we announced the additional $30 million expense reduction. Now that scenario was based upon us preparing for a downside scenario for our new business to potentially be 20% less than what our original plan was. And our expense reductions remain in place, and we expect to meet our 35% -- or sorry, our $35 million reduction target.

Now it's always hard to cut heads because of the human toil it has on individuals and their families, and we are doing everything we can to mitigate the negative impact on them. We now have 25% of those folks who already have jobs, and we've provided outplacement services to assist those impacted through the hiring of dedicated recruiters, creating a job referral network and providing one-to-one coaching for resume writing and interview skills. We also let employees, of course, keep their laptops as a tool to make it easier in their job search.

I'm proud of our team for pivoting to produce a very successful 100% online Domopalooza in under 2 weeks. As the first B2B conference to go completely digital, we set a high bar. More than 9,000 people pre-registered and more than 12,000 viewed the event within 24 hours of the live show. Now this was 4 to 5x increase in the engagement over our typical in-person conference. We learned many things we will be able to incorporate into future in-person Domopalooza conferences to make them more productive experiences with much larger and a more augmented reach. At this year's Domopalooza, we also announced new product features and enhancements to bring additional increased capabilities to the Domo business cloud and help unlock the value of an organization's start data by making it more consumable, usable and actionable scale. These announcements included ubiquitous machine learning and more powerful data management tools, and no-code drag and drop development environment to empower data-driven app creation and support for AWS SageMaker Autopilot to drive machine learning insights for everyone in the business.

We continue to receive a wave of third-party recognition, which is validation for our platform, particularly in this environment where speed and business agility are imperative for customers. Some of these awards included Business Intelligence Solution of the Year in the 2020 Data Breakthrough Awards, the #1 vendor ranking for the fourth consecutive year. I'm going to say that again. The #1 vendor ranking for the fourth consecutive year in the Dresner Advisory Services 2020 Cloud Computing and Business Intelligence Market Study as well as the #1 vendor ranking in their 2020 market study for Self-Service Business Intelligence. And for the third consecutive year, TrustRadius gave Domo top-rated awards based on customer reviews for both BI tools as well as data discovery and visualization platforms.

And lastly, we were named to the Women Tech Council's 2020 Shatter List for helping break the glass ceiling in technology. I was pleased to announce in the quarter the addition of a public company CIO, Joy Driscoll Durling of Vivint to our Board of Directors. As CIO of a Domo customer, her insights will be value invaluable as we look to our next phase of growth. I'd also like to highlight that since taking the ParityPledge that we helped create in 2017, we have increased the number of women leaders on our Board from 0 to 3. They used to be all venture capital investors, and now we have 3 women leaders on our Board. This diversity of thought and experience makes us a stronger company.

And as we all know, diversity and inclusion is not just about gender. We stand with the black community for equality and justice. In October 2017, I appointed a Director of Diversity to help Domo build a welcoming culture for everyone. And early this year, we initiated an internship program with HBCUs to welcome black students into tech. As the events of the past weeks and days have shown us, we have a long way to go as a country. And we're committed to doing our part to help advance meaningful conversation and change at Domo and in our communities. Black Lives Matter.

So in closing, I'd just like to reiterate how proud I am of our employees who have not paused for a moment in delivering the value of our platform, to help our customers operate most effectively in a challenging environment.

And with that, I'll turn it over to Bruce.

Thank you, Josh. We had a strong Q1, continuing the momentum that we experienced in Q3 and Q4 of last year. I'll now review the details behind our performance, followed by providing second quarter and fiscal 2021 full year guidance. Our Q1 billings of $46.5 million, a year-over-year increase of over 13%, was driven by our ability to quickly adjust our go-to-market efforts toward companies in the healthiest sectors of the economy. And relatedly, we were able to, in a matter of a few days, adapt our product to respond to governments in need of data to manage the crisis. Specifically to our government response, we were able to close $4.5 million of recurring new business selling our COVID-19 Crisis Command Center during the quarter.

At the same time, we generally benefited by having a low percentage of our business from very small companies, a sales force already conditioned to primarily selling via the phone and an installed base that has a considerable amount of white space for us to further expand into. In addition, our renewal rates were above 85% in a seasonally slow quarter. And given the economic environment, we're pleased with this outcome. We have 57% of our customers under multiyear contracts at the end of Q1. Our remaining performance obligations, or RPO, grew 17% compared to the same quarter last year.

Q1 revenue was $48.6 million, a year-over-year increase of 19%. Subscription revenue represented 87% of total revenue, reflecting our focus on specifically growing recurring revenue. International revenue in the quarter represented 24% of total revenue compared to 25% in Q4. Our subscription gross margin was 79%, up more than 2 percentage points from 77% in Q1 of last year, rapidly approaching the important 80% milestone. We were able to make that progress against a 60-plus percent annualized spike in customer usage volume that we've experienced since the pandemic began. Nevertheless, we plan to obtain additional leverage out of our subscription cost of revenue over time as we continue to effectively manage our data center operations through finding efficiencies, better utilization of certain services and optimizing how our software performs in data centers.

In Q1, operating expenses decreased by 9% from last year, even though revenue increased by 19% year-over-year. In fact, looking even further back, our quarterly OpEx is about $15 million lower than 2 years ago when the company had a much smaller scale of revenue. I would point out that the vast majority of our $35 million in fiscal '21 cost reductions, which are reductions against our original plan, will be realized in Q2 through Q4, and the impact of those reductions in Q1 was minimal. The net effect of increased revenue while effectively managing costs allowed us to improve our operating margins by 34 percentage points from the same quarter last year. Our net loss was $18.4 million and net loss per share was $0.65. This is based on 28.5 million weighted average shares outstanding, basic and diluted.

Turning now to our balance sheet. As of April 30, we had cash, cash equivalents and short-term investments of approximately $88 million. To reiterate what we've told you numerous times since going public, we are confident we can and will be cash flow positive with plenty of cash remaining on the balance sheet when that occurs. We continue to look for ways to further reduce our cash burn and our discipline around this effort is firm.

Our adjusted net cash used in operations was $9.3 million, an improvement of $6 million over the prior quarter and a 58% reduction compared to Q1 of the prior year. Adjusted cash flow from operations excludes the impact of $3.7 million of share purchases under our employee stock purchase plan. The amount is included as a positive amount in our GAAP cash flow from financing section of our cash flow statement and an offsetting negative amount in our GAAP cash flow from operations section with no net effect on our cash balance. Note that there will not be a share purchase under employee stock purchase plan in Q2.

Now to discuss what we expect in Q2 and for the full year. Like many other public companies have communicated to you over the last few months, the uncertain economic environment makes it difficult to guide beyond the current quarter because of the wide variety of factors and possible economic scenarios. So rather than a firm guide for the rest of the year, we'll provide an update to our COVID-19 downside case that we used for reducing costs. For cost-cutting purposes, we modeled a 20% downturn in our new business compared to last year and an 80% renewal rate. That led to a billings number for cost-cutting purposes of about $190 million for the year. Since then, we have overperformed in Q1, whereby Q1 new business actually grew over last year, plus we realized an above 85% renewal rate versus our 80% model.

The combination of these 2 factors led to a total billings speed relative to our model in Q1 alone of about $7 million. Adding that $7 million billings outperformance in Q1 to our previous down 20% model for the year of approximately $190 million of billings, now points to billings for the year to be around $197 million. If we can exceed our $40 million Q2 billings number in that model, we can improve that annual outlook.

As of right now, we're tracking above the $40 million. However, we cannot predict with certainty how the rest of the quarter will develop, so we suggest using just $40 million for Q2 billings planning. Our $40 million number does not include the closing of any new Crisis Command Center deals because the focus and requirements of states are constantly changing and selling into that changing set of needs is very hard to predict. Having said that, we're responding to the evolving needs of governments and at the same time, focusing on the needs of commercial entities in this environment. So we're hopeful it yields some positive contribution in Q2.

On expenses, we're planning on our Q2 operating expenses to decrease by about $2 million to $3 million from Q1 levels and remain close to that level of OpEx for the rest of the quarters this year. We expect Q2 adjusted net cash used in operations of approximately $7 million and expect full year adjusted net cash used in operations of approximately $30 million. We believe we'll be able to exit this year with a quarterly cash burn rate that is low enough to provide confidence we will comfortably reach self-funding sustainability.

Now the formal guidance. For the second quarter of fiscal '21, we expect GAAP revenue to be in the range of $48.5 million to $49.5 million. We expect non-GAAP net loss per share, basic and diluted, of $0.48 to $0.52. This assumes 29 million weighted average shares outstanding, basic and diluted. For the full year of fiscal '21, we expect GAAP revenue to be in the range of $194 million to $200 million, representing year-over-year growth of 12% to 15%. We expect non-GAAP net loss per share, basic and diluted, of $1.96 to $2.06. This assumes 29.2 million weighted average shares outstanding, basic and diluted.

In closing, we're pleased with our results for Q1 and feel prepared to successfully navigate through these uncertain times. With that, we'll open up the call for questions. Operator?

(Operator Instructions) Our first question comes from Sanjit Singh with Morgan Stanley.

This is actually [Chris] on for Sanjit. Thank you for the question and congratulations on a really good, solid quarter and really appreciate the detailed assumptions you've been disclosing behind the guidance. Can you maybe talk about kind of the progression of business and demand trends throughout the quarter, especially as we zero in maybe on -- from early April to quarter end and then what you've seen since in May and through early June? That would be really helpful.

Sure.

Yes, thanks for the question, [Chris]. I'll answer this briefly, Bruce, and then let you give a lot of details. I mean I think from last quarter, at the beginning, things were looking good, and we gave the guidance that we gave, and we felt pretty good about things. And then as it became apparent that COVID was going to have a meaningful impact on the world and accordingly, on our business, we kind of went into panic mode for a minute, certainly, and it was all hands on deck.

If our travel customers and finance customers and other customers are soft in business, what are they buying? And it became pretty apparent quickly that with our platform and the ability to pull data from all kinds of sources and be able to give people access to data in real time when these moments, certainly when days are mattering, it's -- it was -- it presented itself an opportunity to us. And I started with that track that we created, and then it really went into these different states, and we were talking to a lot of different states at different times. And we were helping with our state we were -- I brought in probably about 10 million different pieces of PPE that I facilitated and helped the state procure. And we were just right in the middle of these conversations.

And because of that, it became apparent that they needed data, and they needed an answer. They needed to know what was going on. They were making decisions blindly. They didn't know if they should open states, close states, when they can get back to work, et cetera. And they were really struggling. That's -- they weren't built to do that. And so we were able to say, yes, we can help you out. And thankfully, there were some contracts that we were able to get. And we did such a good job with Utah. They were calling other governors for us and introducing us. And our team, it was quite amazing the effort that they put in. We went -- we normally have company meetings where we will highlight a few employees and say, this is -- here's the few employees that really stood out this quarter.

And we had a Zoom virtual company meeting and highlighted about 80 people that had pulled multiple all-nighters instead of the usual 8 or 10 people that get highlighted. We said instead of pulling multiple all-nighters that need to be highlighted. And it just showed like everyone was ready and willing and wanted to help, and we did some masterful service for these customers. And it changed the course of how they responded to things and it helped them save lives, which was really kind of cool. And in the process, they had money and we're willing to pay for it, and we need to be paid because instead of selling other types of solutions, we were selling solutions that were focused on the command center. So that was kind of how that step all evolved.

And then it was really interesting to see different parts of the world respond in different ways. And Japan was closed down early and working from home early, and they were still closing deals, and Japan did really well for us. So a lot of really interesting news, but mostly, it was a quarter that really highlighted the power of the platform that we have. And if you can do it for large Fortune 500 companies and CEOs of Fortune 500 companies and CXOs of Fortune 500 companies, you can certainly do it for governors and any federal employees as well. So we were really excited how much it shined a great light on the technology and the platform that we have. Bruce?

Yes. And to build on that, in March, when we were at our user conference -- at our customer conference, and we said, we haven't seen anything yet, but we're prepared to cut costs as soon as we do, and then as you know, we decided to cut the costs anyway and that was just for the abundance of caution. Then we went into April -- and March finished out fine. We went into April, and we had some of the fastest sales cycles we've ever had with these crisis command centers, so April was strong. And now we're into May. Well, we finished May. And I can tell you that May was off to a good start. So we are pleased with our performance at the beginning of Q2. And we, like everybody else, is still worried about what may happen in the economy, how it may impact our customers, how it might impact us. But we're happy to be here today just saying that the pacing is good, and they closed out well. So I think that puts us in as good a position as you can be, just given the economic environment.

Yes. And then I would add that what this -- I talked about a little bit in the prepared remarks, but what this command center allowed us to do is to be right in the middle of the conversation, a very important conversation now that not just some state governments but it's every single company in the world is trying to figure out how to get back to work. And it leads to a whole set of questions that they've never had to answer before -- that they've never been prepared to answer before. And so because we're in the middle with the COVID tracker and with all the success we've had with our state command centers, we're getting asked, how can we get back to work? How can we do contact tracing? How can we understand that our facilities are being cleaned? How can we be transparent to our employees and give them confidence that they can come in? How -- what kind of tools and systems do our facilities managers need? And then how do we expose all of this to our executives in real time?

So if someone gets sick that they can easily see what kind of information we have, and we need it now in real time. And then as we start opening back up and you need to go visit a customer, we've got customers that they're out in their cars and trucks visiting their customers. They're flying to see their customers. And you find out all of a sudden that, that was a hotspot that you went to or before you go, you want to check if it's a hotspot. Well, we have that data and our customers -- 700 of our customers are using that data. So it's -- Get Back to Work is a real initiative that we are extremely prepared for relative to any other company that we've seen because of this platform that we have and the rapid ability to create solutions and applications to answer questions that's all based on data that's coming from hundreds or thousands of sources. That's what we do. So we're really excited about our ability to actually provide great value to our customers right now, and we think it should benefit our business.

Got it. That's really helpful. Could I tack on a follow-up question? So I think you mentioned earlier in the script, $4.5 million of recurring business from the Crisis Command Center. At the same time, you have less headcount now, but you've slightly raised the revenue -- full year revenue guidance. Is this more a function of stronger-than-anticipated contribution from deals like the Crisis Command Center? Or are you kind of embedding assumptions around improved sales force productivity?

Well, I would say that one is without the crisis command centers, the core business still is within guidance. So we're happy with that. The renewal rate -- the renewal string that really had none of this in there also performed better than last year. The May results, the renewal rates are even coming in stronger. And the new business comment of how we're off to a good start in May does not include any of these new products. So I would say that we were happy that we'll call before we had the opportunity of these new products, we still had a business that was strong and appropriate and valuable in the market.

And in this environment, we just happened to also have the benefit of not a lot of exposure to the troubled industries, not an incredible amount of business coming from very, very small companies. And as I said on the call also, just the benefit of being able to -- being used to, very well conditioned to selling over the telephone. So I think all these are just contributing factors to helping us finish the quarter strong and getting off to a good start in the new quarter.

Well, and I think the other thing that you've talked about before, Bruce, is that this doesn't include -- guidance doesn't include any of the big deals. So there's big deals out there, too. They may or may not come through. We don't put them in our projections. There's more state deals that we're talking to that may or may not come through. Like Bruce said in his prepared remarks, not including those in our projections, but then in terms of how we're feeling, I think that we're as well positioned as just about any company to do well in this kind of environment. And Bruce talked about that a lot, too, but we're seeing it. Work-from-home? Oh, that's what we do. Oh, that's what we enable. You need data to every employee? Oh, that's what we enable. So we're having customers call us quite a bit and saying, "Hey, we need you guys to do this additional item for us as well". So we think that we can do really well in this environment.

Our next question comes from Brad Zelnick with Crédit Suisse.

It's Marco on the line for Brad Zelnick. I just wanted to ask again just about the command center. And it's great to hear some of the state wins that you had in the quarter. Can you talk about just the opportunity that you see there going forward? And even as we start to exit the pandemic, is that something that there's a potential for account expansion?

Yes. So I think it's one of these situations where they have a real problem right now. We can fix it right now, and we can fix it fast and provide some tremendous value. The moment that we got in there, though, all of our SWAT teams that are in there helping these customers, their #1 initiative besides solve the current need is let's get more data in there. Let's get other additional items in there so that when it comes time for renewal, we're in a fantastic position to not only renew it, but potentially even upsell them to some other products and services. And we're already seeing that.

I mean these governors are very, very happy. It would be you should -- would be happy to encourage you to talk to any governors you can get a hold of that are using our product because their teams are excited. They're genuinely excited. When Bruce does follow-up calls with some of the investors, you should ask for some of the quotes of the things that our customers are saying, but it's transforming the way that these governments are running. It's not just about the pandemic. But -- so the pandemic comes along, then they're like, "Oh, okay, what about PPP loans? How are we doing on that front?" Well, there's a whole new set of data, a whole new set of constituents.

And then we're talking to state labs, and they're like, okay, here's the state lab data for COVID, but we have 20 other things that we're tracking. Can we get that data out as well? And then a state comes to us and says, "Is there any way we can just break up this data, distribute it by county, so each county health department can see what's going on?" Yes. We have something called Domo Everywhere. That's what we do. And these states are kind of, in some cases, laughing, thinking about what the county health department leaders are going to say when they get data for their own county and it's not -- it's -- they've never had it in the first place. The fact that they would get it, and it's real time for tests that have taken place the day before, it's just mind-boggling to them. So we think there's some real opportunities here. We've got 3 fantastic flagship customers. And I think that we're going to have a decent opportunity to build a really cool government business out of this.

That's helpful. And just as a follow-up, I wanted to ask if you could provide any comment on Ian's progress since he transitioned to the role of CRO?

Yes, I think we're really excited about Ian. We've been -- we had the advantage of being able to watch him run Europe and watch them interact with the executive team and challenge different people in the executive team, me included, and have very strong opinions about the way that things should be run. He's brought a tremendous amount of follow-through and organization, which is something that we needed more of certainly. And both Ian and John Mellor have really partnered together to say, where can we get more efficiency, what's working, what's not working? How can we double down on the places where we're getting the response that we need? How can we hold people accountable? Let's get the right managers there, and we're just continuing to optimize.

And actually, we continue to see the pipeline grow. We've -- the pipeline is doing great. It's just a question of when our customers -- when's the environment going to be that customers are closing at rates that we've seen historically. But if that's the case, then we're in a great position. So yes, we've been very, very, very pleased with Ian. And I hope he doesn't use this against me privately, but he's been doing a great job.

Our next question comes from Jennifer Lowe with UBS.

Great. And congrats on the quarter guys. Maybe just to start. So it sounds like you're seeing a lot of momentum around these use cases that are very catered to the current environment. I'm just curious, as you looking at your pipeline, how meaningful is things like return to work in terms of the deal volumes you're seeing relative to more traditional business? And what do the sales cycles and the new versus existing mix look like for that relative to sort of your historical mix?

Yes. I think when we give guidance, it's not based on us having a big chunk of our opportunities coming from these new opportunities for these new initiatives. They're based on selling our platform and because we can predict that. We've got quarters and quarters to look out of history to see how these things close and to know what those conversations feel like. And we really look to Ian and the sales organization to tell us what's going to close. And so that's what we've handicapped. In addition to that, any big deals or any of these new initiatives would all be gravy. And we're excited about -- we're really excited about them. The sales cycles, they are faster. People are trying to figure out how to get to work now. And we look at the conversations that we're having on Get Back to Work. And we can be talking to world-renowned SIs, consulting organizations or Fortune 500 companies.

And we see, based on the repeats conversations and follow-up conversations that we're having, how well equipped and organized and how much knowledge, frankly, that we have in the space, given that we've done so much in this space already from the COVID tracker to helping these states. I mean we're talking about taking -- putting together a whole army of organization and helping a state figure out how to respond to, how to open and which county should open and where they need more testing and how to organize PPE and people -- you're having thousands of people that are donating PPE, and then they're buying PPE from all kinds of different distributors. And then they've got all these constituents that they need to hand that out to, whether it's care homes or hospitals, or frontline responders.

Those are big complicated problems that we have solved amazingly well. And so now when you want to talk about getting back to work, well, guess who is well versed in the whole conversation. Hundreds of people at my company are well versed in this conversation. So it's put us in a position to know a lot. And then on top of that, this platform is just so well versed at responding rapidly for rapid development to create a solution that sits on top of something where you need to have this leverage of all the data and business intelligence that you have -- you need to have it at cloud scale, massive scale, not just in terms of data, but in terms of people. And then you need to have it in rapid time.

Iowa has hundreds and thousands of people that are looking at their data in real time. All of their citizens are coming to the site and looking at what's going on. So it's really been a monumental achievement that I don't think should be underrepresented in any way, and it's putting us in a great position to get some additional upside from Get Back to Work, which is going to help us talk about the future of work as a whole. And all of that would be gravy to the numbers that we gave you.

Okay. Great. And maybe just one last one for me, I think, probably for Bruce. Looking at sort of the cost-cutting, it sounds like the cost cuts were predicated on a sort of a downside scenario. So far that downside scenario hasn't quite played out as it could have. It sounds like you're doing a bit better. So if you think about sort of that split and what that might look like in a few quarters, is there sort of an expectation that the cuts are made and maybe get to profitability a bit faster if the revenues come in better than a downside case? Or could we see start spending again? How should we think about the time horizon there?

Well, we are going to be cautious about adding back any crop until we get more clarity on maybe how the macro environment develops. So in the short run, most of our performance is going to help our cash position. At some point, as we get clarity on how the macro is going to play out and we get responses to these offerings, that may very well suggest to us that we ought to be leaning in a little bit more. And what we likely would do in that case is we'd be adding sales capacity first. I don't think there'd be a cross-board spending, but sales capacity might be a smart place to put the investments to be prepared for next year if we're able to kind of -- if we're able to continue to navigate given this tough macro well. And that we don't want to be caught too flat-footed when we come out of this.

But in the short run, a lot of it falls to the bottom line and the longer -- in the medium term, as we look to next year, we're definitely going to build some capacity but it won't be a dramatic increase in costs. I think we'll do it cautiously. And if we do really feel like there's incredible traction and pipeline building that requires more feet on the street right now. Yes, we'll do that, but I don't think there'll be that dramatic to the net cash flow position of the company, at least not this year.

Our next question comes from Pat Walravens with JMP Securities.

Great. And congratulations, Josh and Bruce on the quarter. So Josh, just sort of rewinding a little bit. Pre the COVID-19 crisis, it felt like the major areas of focus were running some focused sales plays that Mellor come up with, which is like sales operations, marketing operations, financial operations, and then really improving the partnership motion. And in particular, you guys were talking about the Snowflake partnership and the Microsoft partnership. So has COVID-19 Work From Home Command Center completely changed those focuses for the entire sales force. And also, can you update us on the status of those partnerships?

Josh is muted, so -- Josh?

Sorry. Yes. I would say, no, it's in the opposite, Pat. It's -- the sales players are performing really well. And our salespeople now are all trained up and they're running these plays and we're seeing performance out of these plays. We're gravitating to the ones that are the most effective. And the partnerships as well. We just had another sales training on Snowflake. We've got additional announcements with them. And we're also seeing with our ability to respond to rapidly in the marketplace. We're getting a lot more phone calls from partners. So partner network isn't massively moving the dial for us yet, but there's a lot of things going on that I think will move the dial, and we're certainly becoming more relevant in that world.

Okay. Great. And then, Bruce, can we just drill down a little bit on -- more on the retention rate? In particular, what are you seeing sort of SMB versus enterprise? And what are you doing in terms of concessions for customers? And how does that fit in?

Yes. Retention rates, there hasn't really been a significant difference between enterprise and corporate, mostly because corporates acted a lot like enterprise. I mean the deal sizes are $50,000 plus. And the company size is on the larger side. So -- and we're also -- I mean, as we're into the new quarter, our renewal rates are up to where we want them to be. Q1 used to be seasonally slow, but right now, they're tracking at the kind of rates that we're really happy about, and that's blended corporate and enterprise.

And then on your other question, yes, we have had the -- basically the smallest businesses and the most troubled industries have asked for concessions. And we have accommodated short-term requests, I would say, to the tune of about $1.5 million that we've already absorbed in the quarter. But we have preserved, if not increased, the total contract values in those cases. So we feel like we've done the right thing to really help customers in need but we have not really diminished the value of that stream to us. So that's the magnitude of what we have had to address so far.

Our next question comes from Derrick Wood with Cowen and Company.

It's Andrew Sherman on for Derrick. Congrats on a great quarter. You mentioned the strength in grocery and the quick shift that rev's made to those strong sectors. Maybe what other sectors are you seeing some strength from? And what is your mix of those in total?

Well, we have an extremely diversified industry distribution. And fundamentally, unless it's really a challenged industry, which is a minority of our kind of exposure. And even within things like retail, groceries are strong, but especially retail might not be. Those that have great e-commerce presence, I think, are still reasonably strong. We're finding all the other industries are basically still quite engaged with us. And keep in mind, everybody is working from home. They all need the data to run the business. They're getting very used to doing it electronically. We're mobile. We're fast. We're at scale. We're very self-service. And all that just plays really nicely into this environment.

I mean I don't know who's going to be installing software on servers. I just don't think any of that's going on. So we are -- we have a great profile for companies that just have to get their hands on data and the perfect profile for somebody that needs it right now real time and has to bring together multiple data sources really quickly. And frankly, that's just a universal need. And we think businesses in general are looking in that area at least not really cutting and some of them just by necessity are really leaning into it. I mean I just heard today of a furniture store in North Carolina, who had shut down for up to now are about to reopen, and we're about to do a deal with them. And why? Well, they just have to have the data to really manage the business even more aggressively as they reopen. So that's the kind of response we're getting across all the industry. So not really a significant difference, I think, between industries, but I think they just all have that general need.

Great. Maybe for Josh. You've done a lot of webinars with C-level executives over the past few months. Do you think the lightbulb there is finally going off and that this environment can be the catalyst for change that they needed to get -- to realize that they need a real-time solution?

Yes, for sure. And I think just digital transformation, it's an initiative that a lot of times some of the CXOs, they wait from other people that are responsible for it. But this has really forced them to know real-time information about their people, about their whole business. And when you open back up, there's going to be changes, and the data is going to change that day, and they want to understand what's going on that day. And so it's really opened their eyes in many cases, it's -- especially in cases where we're already in a customer, and we have big upsells on the table. It's helping to create a lot more opportunities, big upsell opportunities. So we're excited about that for us as well.

And I'll add some of those upsell opportunities are replacing just plain old tools, the whole set that you would mention, if you said who might be in the market, the same market as us, it's becoming quite obvious they cannot rise to the challenge of today. And so some of these are just outright replacements, even though that's not what we're in the mission to do, but that's what our customers are telling us.

Our next question comes from Bhavan Suri with William Blair.

I guess, Josh, I want to touch really quickly. And then by the way, congrats, nice job here. And thank you for all the support you're doing for what's happening with COVID. Yes, at the Analyst Day last year, you outlined kind of the -- or this year, your fiscal 2020 sales playbook focused the efforts on the 5 specific personas within the organization. Just an update on level of traction you're having with that new playbook model? And has there been any changes? Because obviously, there's been dramatic changes in COVID, but the persona model was very compelling as you think about the broad swath of what you offer. So I try to understand, like, how is that playing out? Or have you guys fine-tuned that?

Yes, why don't we let Ian -- can you turn Ian's line on and let Ian answer that question? Operator?

His line is now open.

Go ahead, Ian.

Ian's you might be muted on your own phone.

All right. Just ask -- let's just ask Bruce the question. I'll answer the other one.

I'll just ask Bruce that question. Sure.

I'll answer that question and Ian can pile on. But we think it's extremely helpful and important to narrow the focus towards personas that can really move the needle for us. And the benefit of doing that is we can put a lot of resources behind these more narrow plays and get a lot of intelligence about the space and how these departments work. And it's kind of necessary when you have a platform like what we do that can be applied anywhere and everywhere.

So that's just my question because you've tried to find this out this motion. That's exactly just the question, because you've tried to look at this motion multiple times, right? Should we just sell virally? Should we go enterprise? Should we go commercial? Should we define it by saying, "Hey, if I go to a large company, you can pick pieces like that's why I'm asking the question, which is like, has that new messaging and the persona motion resonated? So I think you're getting to it. Sorry.

Bruce, can you hear?

Yes. We can hear you. Go ahead, Ian.

Sorry about that. I'm not sure what happened with the earlier attempt for me to answer. Yes, absolutely, it's resonated really well for us. We definitely have seen with the sales plays and the work that we're doing with John Mellor on the way that we distribute the information that we have, the way that we contact customers, the way that we engage, the language that we're using, the plays and the personas have been really great on several fronts.

One, for the sense that we are coming in and we are working, and we have use case and value propositions that solves business challenges that they aren't able to answer. And the second point is it then works the same way that Josh mentioned, which we do then have this viral element where once people see what we do and how quickly we can do it, we certainly expand our use base with inside the existing customers that we have as well. So the focus helps us to get in. And then the virality helps us move out and wider to other use cases as well.

Great. That was helpful. And then one quick one. And maybe, Ian, it's for you or for Josh, but on pricing. You've pivoted, and we've talked about this in past calls about from traditional seat-based pricing to like the platform model. And so this idea of providing a much broader suite and let's just get people using it, and that will drive growth. And as you said, expansion. Just how is that resonating? Is that playing out as we thought? Or is that still a process at pretty early stages?

So the pricing, we're very pleased with the way that the sales team are operating in a way that the model is executing for us. So we have seen some great traction with the enterprise accounts, strategic accounts. We're seeing pricing certainly the value that we're bringing, being less of a challenge for us. And I think that probably all plays back to the fact with the sales plays. We execute well. We show the value to the business user, and we provide a return to the organizations. As we demonstrate the return to the organizations, there's less pressure on us with regards to the cost or the pricing model that we have.

Thank you. This concludes our question-and-answer session. Ladies and gentlemen, today's conference is now over. Thank you for participating. You may now disconnect.

Thank you, everybody.