Domo Operates in a Highly Competitive Business Environment

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Case Study: DOMO, INC.
Domo Inc. is a software as a service (SAAS) company headquartered in the United States. The company offers cloud-based business intelligence solutions for both enterprises and SMEs. Domo Inc. was listed in 2018 after successfully going through an initial; public offering (IPO). The company has a VGM Score of B based on its current stock value. However, valuation metrics show that Domo Inc. is overvalued (DOMO 2020). Its stocks have an F value score, suggesting that it's a bad pick for value-focused investors. However, Domo Inc.'s financials show that it can perform above market expectations given a growth score of A. Based on price changes and earnings projections, Domo's stock is the best bet for momentum investors, given a momentum score of A (DOMO 2021).
Business Review & Analysis
Q. What are the company's main products/revenue drivers?
The company's main products, which act as its main revenue drivers, can be categorized into functional groups that include connectors, data warehouses, Domo ETL, data analysis and visualization, collaboration, and artificial intelligence.
Data connectors: Domo provides first-class connectors, also known as Application Programming Interface (APIs). These API-based connectors include universal connectors that are linked to the Domo Appstore. These connectors enable real-time data synchronization across the business enterprise environment (SEC 2020).
Data warehouse: Domo runs a data warehouse referred to as Adrenaline. It's capable of storing large amounts of data and has the potential to organize it across different variables. It enables real-time simultaneous access to data silos at high speeds.
Domo ETL: The Company's flagship ETL product is Fusion. Domo ETL is the engine that powers customer data, thereby necessitating data cleansing. Domo leverages ion Magic ETL and hygiene algorithms (SEC 2020).
Data Analysis and visualization: Domo's data analytics enable enterprises to analyze, visualize and interact with big data through very high-resolution visualization systems. Its flagship data analytics product is Explorer that seamlessly performs data discovery on mobile platforms (SEC 2020).
Collaboration: Buzz is the company's leading collaboration and productivity platform. It's interoperable and integrates with all other Domo products. Key collaboration features include shat, sharing, chart generation, profiling, and product management.
Artificial Intelligence Algorithms: The product is called Mr. Roboto. It's built upon machine learning and artificial intelligence (AI) algorithms. The product can analyze incoming data, display trends, anomalies, and data correlations (SEC 2020).
Partner Ecosystem: The product is called Domo Appstore. Built on APIs and a set of advanced developer tool kits, the Appstore is an ecosystem built for partners who need real-time lead generation. The Appstore is an application development platform designed for modern enterprise business partners who need scalability.
Q. Who are its main competitors, and what are DOMO's advantages?
Domo operates in a highly competitive business environment. Despite its competitive strengths and opportunities, it has to grapple with a shrinking market share courtesy of growing competition in the cloud-based business intelligence market. Domo's competitors are in two categories, namely software and business intelligence companies. The software group consists of large companies that have traditionally developed off-the-shelf business intelligence products such as Microsoft, Oracle, SAP AG, and IBM. The business intelligence category comprises business analytics software firms like Tableau, Olik Technologies, Sisense, and Sciences Inc.
Domo also competes with cloud-based analytics providers such as salesforce Inc. and Infor Inc., both of which leverage SAAS architecture in their solutions. The top 5 competitors in business intelligence are Tableau, Grow, Heap, D3Js, and amCharts. These comps have a market share of 10.62%, 9.76%, 6.76%, 6.61%, and 5.84%, respectively. The percentage market share for the top 5 competitors represents 8,866, 8, 153, 5,642, 5,519 and 4, 874 domains, respectively. The competition comprises Microsoft Power BI with 4.65%, Panorama Necto with 4.56% and Quid with 4.52%, and Elastic Kibana with a 3.29% market share. The competitive environment comprises other players that are presented in the table below. Other competitors include Grafana, Silk, Google Data Studio, Splunk Cloud, Neo4j, Google BigQuery, PictoChart, Brain EKP, Velocity EHS, Analytica, and OpenText Actuate Analytics Designers (SEC 2020).
Competitive Strength/Advantages
To survive the competition, Domo Inc. needs to leverage its competitive strength to penetrate new markets. The competitive strength has been summarized in the table below.
Table 2: Domo Inc. Competitive Strength

Competitive Strength

Discussion

1

Mobile functionality

Mobile functionality enables data access and real-time collaboration on the Domo platform. As a result, data can be visualized on smartphones

2

Ease of Use functionalities

Domo products are designed for simplicity. Users don't need technical expertise to use them

3

Ease of Adoption

Due to simplicity, users can quickly start using the system. Offers self-service subscription and free trial

4

Scalability

It's built on a scalable cloud-based architecture. Data warehouse and connectors are accessible and scalable.

5

Proven Economic Value

Ease of deployment and cost savings. Employees have time to deal with value-added services

6

Proven Enterprise Readiness

Highly enhanced security on the enterprise platform is ideal for enterprise clients. Besides, security is paramount to Domo's growing enterprise portfolio that exceeds 500 clients.

7

Continuous Product Innovation

Domo Inc. heavily invests in research and development. R &D produce innovative products, e.g., native mobile applications, Data explorer, ETL Engine, and universal connectors above 1000.

8

Strong Industry Recognition

Domo is a strong brand associated with new generation cloud-native mobile solutions. Award-winning products and solutions. Domo has received multiple innovation awards as a top-ranking cloud-based solutions provider.

9

Expanding Third-Party Ecosystem

Domo's developer platform has grown into a partner ecosystem. It is a third-party development environment for App Development and Appstore.

SOURCE: SEC 2020
Q. How big is its market? What's DOMO's market share today? How much could it grow its market share in the next 3-5 years, and why?
In the entire industry, Domo Inc. has an estimated market share of 0.83%. However, the company's market share in the data visualization segment is 1.66%. The percentage market share is still lower as compared to dominant competitors like Tableau. In data visualization, Domo competes with over 215 companies that include Tableau, Grow, and Heap, among others. Each of the companies commands a market share of 10.62%, 9.76%, and 6.76%, respectively. Domo's data visualization engine is used by 842 companies, primarily drawn from the United States, UK, and Spain, representing 43.63%, 6.42, and 4.21% of Domo's total client base, respectively. At the start of 2019, Domo had 1700 customers drawn from a wide range of industries.
Domo Inc. has excellent growth potential. It can leverage its competitive strength and market drivers to accelerate growth. In the next 3-5 years, Domo is likely to grow its market share in the visualization segment from 1.66% to 3.5%. It can double the current growth leveraging its strong financial position and growth opportunities resulting from the Covid-19 pandemic. In the next 3-5 years, the company will have grown its customer base from the current 1700 customers to over 2000 customers accounting for 85% instead of the current 77% of the annual revenue. Domo has a significant market growth potential for its cloud-based business intelligence, AI, Machine learning, and data visualization solutions.
Q. What are DOMO's main growth drivers and strategies?
1. Growth Drivers
The company's main growth drivers are Technology and Innovation. These two act as growth catalysts which the company leverages to create innovative products that drive growth. The company's core products are its main growth drivers. The first key driver is a global presence that can be leveraged to attract dispersed global markets. The second driver is the wide product range used to expand the customer base and offset business losses. Thirdly, a robust online presence and social media footprint has helped the company establish and maintain strong customer relationships. Fourthly, a solid financial position has been a critical driver for investment. A highly developed, robust, and integrated technology infrastructure that has to boost operational efficiency. Competent human capital has been a crucial driver for growth and remains the company's key competitive advantage. Skilled and talented employees play an instrumental role in driving product innovation that has helped Domo differentiate itself from the competition. High product quality has also been a critical driver for growth since it creates brand loyalty while boosting performance in the highly competitive business intelligence market. Other key drivers for change include vertical integration and workplace diversity.
2. Growth Strategies
Domo's main growth strategies are:
1 Expand the customer base.
Domo plans to increase the customer base and the market share by aggressively targeting the underpenetrated market segment. The company achieves this by growing the customer portfolio by targeting large enterprises and SMEs. Secondly, Domo uses its global outreach outside the United States to drive market adoption for its platform....