Domo (DOMO) Q1 2026: Subscription RPO Jumps 24% as Consumption Model Fuels Durable Growth

May 21, 2025 | By EarningsIQ Research

Domo’s Q1 delivered a step-function in subscription RPO growth and contract duration, validating its consumption model pivot and ecosystem strategy. The company’s operating leverage inflection, stronger retention, and AI-driven product adoption signal a structurally improved trajectory as billings and margins both exit the year at 5%. With ecosystem partners beginning to drive as much pipeline as all other sources combined, Domo’s transition appears to be unlocking compounding growth and stickier customer relationships.

Summary

• Consumption Model Drives Retention: Shift to usage-based pricing and unlimited access is raising customer stickiness and platform adoption.
• Ecosystem Pipeline Surges: Cloud data warehouse (CDW) partnerships now generate pipeline on par with traditional channels, accelerating deal flow and contract size.
• AI Agent Adoption Accelerates: Rapid uptake of Agent Catalyst and AI-driven workflows is deepening engagement and expanding use cases across the customer base.

Performance Analysis

Domo’s Q1 results demonstrated a clear inflection in both operating leverage and forward revenue visibility, anchored by the company’s successful transition to a consumption-based business model. Total revenue reached $80.1 million, with billings at $63.9 million, both ahead of guidance. The standout metric was subscription remaining performance obligations (RPO) up 24% year over year, a marked acceleration from the prior quarter’s 14% pace, with long-term subscription RPO up 61%. This reflects not only larger, multi-year contracts, but also deeper customer trust and platform reliance.

Retention and sales efficiency both improved materially. Gross retention rose to 86% (from 85% in Q4), net retention increased for the third straight quarter, and salesforce productivity was up over 60% year over year. Notably, over 70% of annual recurring revenue (ARR) is now on the consumption model, with consumption customers demonstrating higher retention and product adoption. Domo also posted its first-ever positive Q1 operating margin, with adjusted free cash flow turning positive and subscription gross margin holding at 81.6%.

• Contract Duration Tailwind: Multi-year deals and rising RPO signal customers’ willingness to commit longer-term, supporting durable growth and margin expansion.
• Sales Productivity Surges: Ecosystem pipeline and AI-driven demand are driving higher close rates and larger deal sizes.
• Cash Flow and Margin Inflection: Positive adjusted free cash flow and operating margin validate the model’s scalability and cost discipline.

Underlying these results is a structurally improved business model, with management guiding to 5% billings growth and 5% operating margin exiting FY26, and doubling those rates by FY27. The company’s Rule of 40 profile is strengthening, with both growth and profitability levers now contributing.

Executive Commentary

Strategic Positioning

1. Consumption Model Unlocks Platform Adoption

Domo’s shift from seat-based to consumption-based pricing, where customers pay for usage rather than per-user licenses, is proving transformative. This approach eliminates paywalls, enabling customers to access the full platform and experiment with advanced features, including AI agents, without friction. As a result, adoption of new capabilities is accelerating, and customers are more likely to expand use cases and contract size over time. With 70% of ARR now on consumption and a path toward 90% by year-end, this model is structurally raising retention and wallet share.

2. Ecosystem Partnerships Drive Pipeline and Scale

Integration with cloud data warehouse (CDW) partners—including Snowflake, Databricks, Oracle, Google, and others—has become a cornerstone of Domo’s go-to-market motion. Partner-sourced leads and deals moving through the pipeline were up more than 200% from last quarter (from just one CDW partner), and management expects partner-driven pipeline to match all other marketing sources combined by year-end. These partnerships not only expand Domo’s reach into large enterprise accounts, but also create stickier, CIO-blessed integrations that are resilient to IT stack changes.

3. AI Agent Catalyst Accelerates Customer Engagement

The launch of Agent Catalyst and Domo’s focus on AI-driven workflows have sparked rapid customer adoption, with over 200 customers signing up for AI agent training at Domo Palooza and more than 6,000 registering for the recent AI innovation summit. Customers are building and deploying AI agents in minutes, automating real-world business processes and surfacing new use cases that drive incremental consumption. This positions Domo as a critical enabler for organizations seeking to operationalize AI at scale.

4. Multi-Year Contracts and RPO Expansion

Multi-year contracts are now the norm rather than the exception, with total subscription RPO growth of 24% and long-term RPO up 61%. This shift is driven by deeper customer trust, broader platform adoption, and the flexibility of the consumption model. Longer contract durations provide visibility into future revenue, reduce churn risk, and support greater operating leverage.

5. Operational Efficiency and Rule of 40 Progress

Cost discipline and measured investment in ecosystem partnerships are driving steady margin expansion, with management targeting 5% operating margin by year-end and 10% by the end of FY27. Subscription gross margin remains robust, and positive free cash flow is now a recurring feature. The company’s improving Rule of 40 profile (growth plus margin) is a key signpost for investors seeking sustainable SaaS models.

Key Considerations

Domo’s Q1 marks a decisive turning point, with the company’s revamped business model, ecosystem strategy, and AI innovation all converging to drive durable, profitable growth. Investors should weigh both the opportunities and the execution dependencies that come with this transition.

Key Considerations:

• Consumption Model Adoption: Over 70% of ARR is now on usage-based pricing, with higher retention and faster adoption of new features compared to legacy seat-based contracts.
• Ecosystem Pipeline Impact: CDW partnerships are now driving as much pipeline as all other channels combined, but execution across multiple partners remains a work in progress.
• AI Differentiation: Agent Catalyst and AI-driven workflows are expanding Domo’s role from data visualization to operational automation, deepening customer reliance on the platform.
• Retention and Contract Length: Sequential improvement in gross and net retention, plus longer contract terms, are supporting margin expansion and revenue visibility.
• Margin and Cash Flow Inflection: First-ever Q1 positive operating margin and free cash flow validate the scalability of the new model, but sustained discipline is required as growth investments resume.

Risks

Execution risk remains as Domo ramps ecosystem partnerships and accelerates AI-driven adoption, with partner contributions still uneven across the CDW landscape. Macro headwinds and customer hesitancy persist, which could impact pipeline conversion and renewal rates. Retention improvement is still underway, and any reversal could pressure margin expansion and growth targets. Investors should monitor the pace of consumption model adoption and the stickiness of AI-driven use cases as leading indicators.

Forward Outlook

For Q2, Domo guided to:

• Billings of $69 to $70 million
• GAAP revenue of $77.5 to $78.5 million
• Non-GAAP net loss per share of $0.03 to $0.07

For full-year 2026, management raised guidance:

• Billings of $312 to $322 million
• GAAP revenue of $312 to $320 million
• Non-GAAP net loss per share of $0.18 to $0.26

Management emphasized that billings growth is expected to exit the year at 5%, with operating margin also at 5%, and a path to 10% for both metrics by the end of FY27. Key drivers for guidance include continued ecosystem pipeline growth, rising consumption adoption, and steady improvements in retention and contract length.

• Partner pipeline expected to match all other sources combined
• Consumption ARR on track to reach 90% by year-end

Takeaways

Domo’s business model transformation is now translating into tangible financial and operational gains, with subscription RPO and retention metrics validating the pivot. Ecosystem partnerships and AI-driven adoption are compounding, but execution across partners and sustained retention improvement remain critical watchpoints.

• Model Validation: Subscription RPO and contract duration gains confirm the new consumption model is working, supporting durable, profitable growth.
• Ecosystem and AI as Growth Engines: Partner pipeline and Agent Catalyst adoption are expanding Domo’s addressable market and deepening customer relationships.
• Watch Retention and Partner Diversification: Continued improvement in gross retention and broader partner execution will determine the pace and durability of the growth trajectory.

Conclusion

Domo’s Q1 2026 results provide strong evidence that its consumption model and ecosystem strategy are delivering compounding improvements in customer stickiness, contract length, and forward revenue visibility. The company is now structurally positioned for profitable growth, but must sustain retention gains and scale partner execution to realize its full potential.

Industry Read-Through

Domo’s successful shift to consumption-based pricing and ecosystem-led pipeline generation is a leading indicator for SaaS and analytics peers navigating similar transitions. The rapid adoption of AI agents and workflow automation highlights a broader enterprise trend: customers now demand platforms that enable operational efficiency and real business value from AI, not just dashboards. Vendors that can integrate deeply with cloud data warehouses and remove adoption barriers are likely to gain share as enterprises replatform for AI-driven decision making. The model’s success also underscores the importance of flexible pricing, robust partner ecosystems, and a relentless focus on customer outcomes for long-term SaaS growth.

DOMO Technology Software Consumption Model AI Agents Ecosystem Cloud Data Warehouse Retention