Domo, Inc. (DOMO): 5 FORCES Analysis [Nov-2025 Updated]

You're looking at Domo, Inc. right now, trying to figure out if this cloud-native platform, focused heavily on AI, can carve out a lasting space against the industry behemoths. Honestly, the numbers from fiscal year 2025 tell a clear story of pressure: with total revenue hitting $317.0 million but still running a net loss of $81.9 million, every competitive edge matters. We see supplier costs squeezing the gross margin down to 74%, and while high switching costs help, that 91% ARR net retention rate signals real customer churn risk you can't ignore. Before you decide on the investment thesis, you need to see exactly where the five forces are pushing Domo, Inc. the hardest-read on for the full, unvarnished breakdown of its competitive reality.

Domo, Inc. (DOMO) - Porter's Five Forces: Bargaining power of suppliers

You're looking at Domo, Inc.'s operational costs, and the supplier side of the equation is definitely showing some pressure points, especially given the platform's cloud-native architecture. The bargaining power of key infrastructure providers is a direct lever on your bottom line, and we saw that play out in the last fiscal year.

Domo relies heavily on major cloud hosting providers like Amazon Web Services (AWS) and Google Cloud Platform (GCP) to deliver its services. This dependence means Domo is subject to the pricing power and service terms dictated by these hyperscalers, who collectively control a massive portion of the market. As of the third quarter of 2025, AWS held a 29% share, Microsoft Azure 20%, and Google Cloud 13% of the worldwide cloud infrastructure market. When the top three players command over 60% of the market, their ability to dictate terms to a customer like Domo, Inc. is substantial.

This infrastructure dependency directly impacted profitability. Increased costs for third-party hosting services squeezed the gross margin to 74% in Fiscal Year 2025, a dip from the 76% margin reported the prior year. With total revenue for FY2025 at $317.0 million and cost of revenue at $81.0 million, that two-percentage-point margin compression represents a significant dollar amount in higher operating expenses that Domo, Inc. had to absorb.

Beyond the foundational infrastructure, Domo, Inc.'s platform strategy involves deep integration with other powerful data ecosystem players. Core technology partners like Snowflake and Databricks are also powerful players in the data ecosystem, and Domo's success is increasingly tied to their roadmaps and pricing. Domo has announced enhanced collaboration with Snowflake, including a 'Powered by Snowflake' managed offering and the general availability of Magic ETL Pushdown on Snowflake. While these integrations offer customers streamlined workflows, they also mean Domo, Inc. must maintain favorable commercial terms with these partners, as they are now central to the value proposition.

The supplier power extends to the human capital required to build and maintain the AI-forward platform. The specialized talent market for AI and data science remains a scarce, high-cost input. For instance, workers with demonstrable AI skills command a 56% wage premium, up from 25% the previous year, indicating escalating competition for this expertise. Furthermore, the average monthly AI budget across organizations is projected to rise to $85,521 in 2025, a 36% increase from 2024, reflecting the high investment required to keep pace with AI innovation, which includes securing this specialized talent. The US Bureau of Labor Statistics projects a 36% employment growth for data scientists between 2023 and 2033, underscoring sustained, high demand for the very skills Domo, Inc. needs to embed in its product.

The supplier forces are clear:

• Cloud infrastructure costs are a material factor, evidenced by the 74% FY2025 gross margin.
• The power of hyperscalers is reinforced by their combined 62% market share in Q3 2025.
• Strategic partners like Snowflake and Databricks hold leverage due to their essential role in the modern data stack.
• Talent costs are rising sharply, with AI skills commanding a 56% wage premium.

Domo, Inc. (DOMO) - Porter's Five Forces: Bargaining power of customers

You're looking at Domo, Inc. (DOMO) and wondering just how much leverage its customers have in setting terms. Honestly, the data suggests their power is significant, driven by a competitive market where alternatives are plentiful.

Customer power is high due to the intense competition and availability of alternatives. When you look at the gross retention figures, it paints a clear picture of the pressure. For instance, Domo, Inc. reported a gross retention rate of around 85% in Q4 of fiscal 2025. To be fair, the consumption customer cohort performed much better, with gross retention over 90% during fiscal 2025. Still, a 90% gross retention rate means that, on average, 10% of the customer base churns off the platform each year, which means Domo, Inc. needs a steady stream of new business just to stay flat on customer count. That dynamic definitely gives the buyer leverage.

Domo's ARR net retention rate was 91% for FY2025, indicating a measurable churn risk. While this is an improvement from prior periods, a net retention rate below 100% means that the revenue lost from customers reducing their spend or churning outright is greater than the expansion revenue gained from existing customers. For a platform that aims to be core to a business's data strategy, that 91% figure shows there's still measurable drag from customer contraction.

Switching costs are high due to data migration and re-training, which helps customer retention. You see evidence of this because Domo, Inc. has made aggressive strategic shifts to try and lock customers in, such as moving all customers to a consumption model and stopping the practice of charging for seats. These moves suggest that the previous, higher-friction pricing and deployment models were creating stickiness, but the current environment is forcing a change in structure. Still, migrating years of data infrastructure and re-training thousands of users on a new system is never a quick or cheap process for an enterprise.

The loss of a single large enterprise customer can significantly impact revenue given the 2,600+ customer base size. As of January 31, 2025, Domo, Inc. reported having over 2,600 customers. When your total customer base is in that range, the revenue concentration from the top tier of enterprise clients is usually high enough that losing just one or two major accounts-especially if they are on multi-year contracts-can create a material hole in the subscription revenue line. Finance: draft a sensitivity analysis on revenue impact if the top 5 customers represent over 15% of subscription revenue by next Tuesday.

Here is a quick look at some of the key retention metrics we are tracking:

Domo, Inc. (DOMO) - Porter's Five Forces: Competitive rivalry

You're looking at Domo, Inc. operating in a space where the giants play. Honestly, the competitive rivalry here is definitely intense, especially when you line Domo, Inc. up against scaled competitors like Microsoft Power BI and Salesforce Tableau. It's a David versus Goliath situation in terms of sheer corporate scale.

Here's the quick math on where Domo, Inc. stands financially for the full fiscal year 2025 (ended January 31, 2025). Domo, Inc.'s total revenue was reported at $317.0 million. That figure is dwarfed by the revenue of its largest rivals' parent companies; for instance, Microsoft, which owns Power BI, reported total revenue of $293.81B in the same period. So, you see the scale difference immediately.

The company is navigating this complicated landscape while operating at a GAAP net loss of $81.9 million for FY2025. Still, there are bright spots showing customer commitment, like the Subscription Remaining Performance Obligations (RPO) reaching $403.6 million as of January 31, 2025, which was up 14% year-over-year. Plus, the ARR net retention rate for the year was 91%.

Competition focuses on several key battlegrounds where Domo, Inc. must prove its worth against entrenched players. You need to watch these areas closely:

• AI/ML capabilities, with rivals pushing features like Copilot and Tableau GPT.
• Embedded analytics offerings and ease of integration.
• Pricing models, as Power BI is known for being more affordable, especially within the Microsoft ecosystem.
• Flexibility and visual design capabilities, where Tableau often holds an edge.

To put the scale into perspective, look at this comparison using the latest available full-year data points:

The fight is clearly over who can deliver the most immediate, cost-effective, and integrated intelligence. For Domo, Inc., maintaining that 91% ARR net retention rate while pushing innovative AI solutions is critical to holding ground against competitors who can bundle their offerings at a much lower perceived cost to the end-user.

Finance: draft 13-week cash view by Friday.

Domo, Inc. (DOMO) - Porter's Five Forces: Threat of substitutes

You're looking at the competitive landscape for Domo, Inc. (DOMO) and the substitutes are definitely a major factor in its growth story. The threat here isn't just from direct competitors; it's from tools that can do just enough for a user without needing a dedicated platform.

High threat from free or low-cost alternatives like advanced spreadsheets for basic reporting needs.

• Spreadsheets, like Excel and Google Sheets, remain the most widely used business analytics tools.
• Microsoft Power BI, a major substitute, has a 20.06% market share in the business intelligence market.
• Power BI's Pro version starts at a low entry point of $10/user/month.
• Domo, Inc.'s Subscription Revenue for Q3 Fiscal 2025 was $71.1 million.

Large cloud vendors bundle BI tools, creating a near-zero marginal cost substitute.

When a large vendor like Microsoft includes a BI tool, the marginal cost to the end-user organization is effectively zero if they are already paying for the core suite. This bundling strategy pressures Domo, Inc.'s pricing power. Tableau, now under Salesforce, holds 16.37% of the market, and Qlik Sense accounts for another 10% of the BI market share.

Specialized open-source tools and custom in-house development are viable substitutes for complex needs.

For organizations with strong internal development teams, building a solution is always an option, especially when commercial licensing costs are a concern. Open-source BI analytics tools are gaining traction because they offer powerful, customizable, and cost-effective alternatives. Many of these open-source options eliminate licensing costs entirely, making them free to use, or offer flat pricing structures that contrast with per-user commercial models. If you're looking at the total market, the global BI market size is projected to reach $36.82 billion in 2025.

The rise of specialized data science and AI platforms offers deeper analytical functionality.

The competitive set is moving beyond simple dashboarding into deeper predictive and generative AI capabilities. This shift means that specialized data science platforms, which offer more advanced modeling than a general BI tool, become a substitute for customers with complex analytical requirements. The pressure is on Domo, Inc. to keep pace, as evidenced by their reported Non-GAAP Operating Margin of 3% in Q3 Fiscal 2025, showing the cost of this continuous innovation.

• Global data volume is projected to reach 175 zettabytes by 2025.
• Domo, Inc.'s end-quarter gross retention was reported at 85%.
• Subscription RPO growth year-over-year was 3% as of October 31, 2024.

Domo, Inc. (DOMO) - Porter's Five Forces: Threat of new entrants

The barrier to entry for a new competitor looking to challenge Domo, Inc. in the enterprise analytics space remains substantial, though certain technological shifts are creating new avenues for smaller, specialized players. You have to consider the sheer scale of investment required just to keep pace with the current market leaders.

Capital requirements for cloud infrastructure and R&D for AI features create a high barrier.

Building a modern, scalable platform requires massive upfront and ongoing capital. Global public cloud spend is projected to exceed $679 billion in 2025, indicating the enormous scale of the underlying infrastructure required to support a global SaaS offering like Domo, Inc.'s. Furthermore, the race for AI superiority demands relentless investment. For Domo, Inc., research and development expenses increased by $2.9 million in the fiscal year ended January 31, 2025, compared to the prior year, showing the continuous financial commitment needed to integrate advanced AI/ML capabilities like those in Domo.AI. New entrants must commit capital not just to infrastructure but to matching the pace of AI feature development, which is now a core expectation for enterprise analytics platforms.

New entrants must offer a vast ecosystem of data connectors, over 1,000+ to be competitive.

Data integration is non-negotiable, and the breadth of connectivity acts as a significant moat. Domo, Inc. explicitly touts its ecosystem, noting it has over 1,000 pre-built connectors to unify data from ERPs, CRMs, and various cloud systems. A new entrant must replicate this massive library of integrations, which involves significant engineering effort and maintenance overhead to keep pace with evolving source system APIs. This extensive connector library is a key component of the platform functionality score in industry value matrices.

Here's a quick look at the competitive landscape Domo, Inc. operates within, showing the scale of the established players:

The trend toward embedded analytics and low-code apps lowers the technical entry bar for niche players.

While the overall platform cost is high, the democratization of analytics tools lowers the technical bar for specific use cases. The Low-Code Embedded Analytics Market is projected to reach $15,443.6 million in 2025. This growth is fueled by low-code/no-code platforms that allow business users to build their own analytics, reducing reliance on specialized IT teams. For a niche player, this means they don't need to build a full-suite BI platform; they can focus on embedding a specific, high-value analytical feature into a vertical application using accessible frameworks. Still, this only addresses niche competition, not a direct challenge to Domo, Inc.'s broad platform offering.

Established data warehouse and cloud companies can easily integrate BI capabilities, posing a constant threat.

The biggest threat comes from the infrastructure giants who are already embedded in the customer's environment. AWS, Microsoft Azure, and Google Cloud Platform (GCP) collectively control over 63% of the cloud infrastructure market as of Q2 2025. These providers are aggressively building out their native analytics and BI capabilities, often bundled or tightly integrated with their core data warehousing services. The Cloud segment of the Embedded Analytics Market is already dominant, estimated at 60% in 2025. For a customer already running on Azure, for example, leveraging native Microsoft BI tools presents a low-friction, cost-effective alternative to integrating a third-party solution like Domo, Inc., especially as these hyperscalers invest heavily in AI-ready infrastructure.