A slash to its guidance and competition concerns pressured shares of cloud-data software company
Domo
on Friday and prompted an analyst to downgrade the stock.
Domo
(ticker: DOMO) was falling 39% to $10.45.
The company on Thursday reported a narrower-than-expected second-quarter adjusted loss but issued third-quarter guidance that missed analysts’ forecasts.
Domo
also trimmed revenue guidance for fiscal 2024, saying it anticipates revenue in a range of $316 million to $320 million from a prior range of $323 million to $330 million. It also expects an adjusted loss of between 39 cents and 47 cents a share, wider than the previous range.
Citing “new competitive challenges emerging,” TD Cowen analysts downgraded the stock to Market Perform from Outperform and trimmed their price target to $14 from $20.
“We think DOMO has become a victim of vendor consolidation given the tougher macro & elevated budget scrutiny,” the analysts wrote, explaining that management said some enterprise and prospective customers have been looking to consolidate separate business intelligence tools to pull back on costs. Competition—which analysts believe refers to
Microsoft
(MSFT) —also is a pain point as the company is expecting churn from a group of large customers in the second half of the year.
“Management also indicated that while it has been ramping up new sales teams to productivity and attrition has been low & ahead of expectations, productivity levels are not trending to historical levels, which we think may also be related to MSFT competition,” the TD Cowen analysts added.
Write to Emily Dattilo at [email protected]
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