Last Update 19 Apr 26

Fair value Increased 4.84%

DOMO: Sale Review And Flat Revenue Outlook Will Drive Long-Term Upside Potential

Narrative Update on Domo

Domo's updated analyst price target moves to $6.50 from $6.20 as analysts factor in recent target cuts tied to flat revenue expectations, cautious views on growth, and the ongoing review of potential alternatives for the business.

Analyst Commentary

Recent Street research on Domo centers on lower price targets, flat revenue expectations, and the potential impact of the ongoing review of alternatives for the business. Analysts are weighing healthy recent execution in areas like renewals against questions about long term growth and valuation.

Bullish Takeaways

Bullish analysts point to strong Q4 execution, with results that beat revenue and billings expectations, as support for the current business model and customer retention.
Some see healthy multi year renewals and improvements in key metrics as signs that the core product still has solid adoption, which they view as supportive for potential buyers and longer term value.
Certain bullish analysts argue that Domo's technology has meaningful value and could attract interest from private equity or corporate buyers, with suggested take out ranges that sit above some of the latest trimmed targets.
Even with reduced targets, a few analysts maintain more positive ratings, indicating they see room for upside if execution on revenue growth improves or a transaction occurs at levels they consider attractive.

Bearish Takeaways

Bearish analysts frame Domo as a growth challenged SaaS business, with the company expecting flat revenue in FY27 and only modest EPS growth, which weighs on growth oriented valuation cases.
Several price target cuts cite the company's decision not to provide FY27 guidance while it evaluates alternatives, which these analysts view as adding uncertainty around execution and future growth visibility.
Some bearish analysts point to management's outlook for about flat topline year over year while alternatives are explored, and see this as a reason for a more cautious stance on near term upside potential.
Certain research notes reference lower overall software multiples as part of the reason for trimming targets, suggesting that even with ongoing cost and product efforts, the external valuation backdrop is a constraint.

What's in the News

Domo's board initiated a formal review of multiple alternatives, including a possible sale, strategic investment, or business combination. The company hired Jefferies and Goodwin Procter to advise on the process and stated there is no assurance of any specific outcome. (Considering Multiple Strategic Alternatives)
The company reaffirmed fiscal 2026 revenue guidance of US$317.5m to US$318.5m. (Corporate Guidance)
RPD Fund Management disclosed an investment in Domo shares, calling them undervalued at the time of purchase and beginning discussions with the board and management on operational and strategic options to support shareholder value. (Investor Activism)
Domo was removed from the S&P Software & Services Select Industry Index, which may matter if you track index based funds and benchmarks. (Index Constituent Drop)
Multiple product announcements highlighted new AI and data capabilities, including an AI orchestration framework, App Catalyst for app creation with natural language prompts, and upgrades to Magic ETL, governance tools, and business intelligence features. (Product Related Announcements)

Valuation Changes

Fair Value: updated analyst fair value rises slightly to $6.50 from $6.20.
Discount Rate: assumed discount rate edges lower to 10.81% from 11.59%, implying a somewhat lower required return in the updated model.
Revenue Growth: modeled revenue growth rate shifts to 2.85% from 2.43%.
Net Profit Margin: projected net profit margin is essentially unchanged, moving to 11.39% from 11.36%.
Future P/E: assumed future P/E multiple increases to 12.31x from 10.63x in the revised framework.

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Key Takeaways

Strategic alliances and robust AI integration drive stronger sales pipeline, positioning Domo to capitalize on the industry's cloud migration and rising demand for data monetization.
Adoption of consumption-based pricing and international expansion fuel stable, high-quality revenue, with cost discipline and operational efficiency supporting margin and earnings improvement.
Increasing reliance on major platform partners and market consolidation threaten Domo's growth, pricing power, and long-term independence amid rising competition and shifting industry dynamics.

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?

Domo's strategic partnerships with major cloud data warehouse (CDW) providers and hyperscalers (Snowflake, Databricks, Google, AWS, Oracle) are gaining traction, with enhanced integrations and joint go-to-market motions producing a significant increase in high-quality sales pipeline. These deeper partnerships enable Domo to leverage the ongoing industry migration from on-premises to cloud-based analytics, driving future revenue growth and improving deal conversion rates.
The rapid enterprise shift toward deploying advanced AI and LLM-powered analytics is accelerating demand for Domo's end-to-end platform, which natively integrates AI, data integration, workflow automation, and governance. Benefiting from organizations' need to monetize growing volumes of data and capitalize on AI-driven insights, this increases Domo's total addressable market and positions it for sustained revenue expansion.
Adoption of a consumption-based pricing model (over 75% of ARR, targeting ~90% by year-end) is catalyzing multi-year, larger contracts and enabling easier expansion-especially for wall-to-wall use cases across customer organizations. Early signs indicate higher net revenue retention (108% for new consumption customers), supporting higher long-term revenues and greater earnings predictability.
International markets-particularly Japan-are experiencing outsized growth, with record ACV and exceptionally high retention, demonstrating Domo's ability to capture global demand for democratized analytics and adding a stable, high-quality revenue stream that supports top-line growth and gross margin improvement.
Improved operational efficiency (record operating margin, positive free cash flow, rising subscription gross margins) reflects successful execution on cost discipline, operating leverage, and focus on higher-value multi-year contracts. As Domo continues to scale with efficient customer acquisition and stronger retention, these trends point to expanding net margins and improved long-term earnings prospects.

Domo Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Domo's revenue will grow by 2.8% annually over the next 3 years.
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 11.4% in 3 years.
If Domo's profit margin were to converge on the industry average, you could expect earnings to reach $39.5 million (and earnings per share of $0.71) by about April 2029, up from -$59.3 million today.
In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 12.4x on those 2029 earnings, up from -2.9x today. This future PE is lower than the current PE for the US Software industry at 29.7x.
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 10.81%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

Growing partnerships and deep integration with cloud data warehouse (CDW) vendors and hyperscalers risk increasing Domo's dependency on a few large platform partners; any strategic changes, shifts in incentives, or competing offerings by these partners could jeopardize Domo's channel sales and limit revenue visibility.
The cloud analytics and BI market continues consolidating around large, ecosystem-based platforms (e.g., Microsoft, Google, Salesforce, AWS)-a trend that may marginalize independent vendors like Domo, potentially capping its market share and putting downward pressure on growth and long-term revenue.
The pivot to a consumption-based pricing model exposes Domo to possible volatility in customer usage patterns; if customers optimize spend or shift workloads to integrated solutions offered by larger platforms, expansion rates may stall, impacting net revenue retention and dampening top-line growth.
Domo's current improvements in operating margin and free cash flow have been driven largely by disciplined cost management and strategic partnerships; if sustaining growth necessitates higher sales and marketing expenditure to compete against better-capitalized peers, operating margins and earnings could come under pressure.
Domo's innovation roadmap relies heavily on advanced AI-driven analytics, but rapid commoditization of AI features in broader platforms and open-source tools risks eroding Domo's competitive differentiation and pricing power, threatening future revenue growth and gross margin expansion.

Valuation

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

The analysts have a consensus price target of $6.5 for Domo based on their expectations of its future earnings growth, profit margins and other risk factors.
However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $9.0, and the most bearish reporting a price target of just $3.5.
In order for you to agree with the analysts, you'd need to believe that by 2029, revenues will be $346.9 million, earnings will come to $39.5 million, and it would be trading on a PE ratio of 12.4x, assuming you use a discount rate of 10.8%.
Given the current share price of $3.8, the analyst price target of $6.5 is 41.5% higher.
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

AnalystConsensusTarget 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 AnalystConsensusTarget 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 AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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