How Do Domo’s Growth And Valuation Compare To Anaplan?

DOMO: Domo logo
DOMO
Domo

The business intelligence software industry is intensively competitive, with players having to constantly innovate and differentiate their features in order to attract and retain customers. Domo, which is reeling under the pressure of marketing expenses leading to a negative impact on its valuation post-IPO, is spending heavily on R&D and marketing in order to compete with larger players. Anaplan is one such competitor, and targets both small and mid-size companies along with large enterprises. Founded in 2006, Anaplan’s cloud-based business intelligence platform now has more than 850 customers in 13 countries. While Anaplan’s customer base is smaller than Domo’s, it generated much higher revenues compared to Domo in 2017. Further, Anaplan achieved cash flow break-even in 2016 while Domo is still struggling to cover its high marketing expenses.

Our interactive dashboard compares Anaplan and Domo in terms of key metrics and business drivers, and analyzes how these companies may grow in the future:

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Domo had around 1200 customers in 2016, which grew by nearly 27% to over 1500 in 2017. Anaplan registered nearly 30% growth in customers between this period, adding 200 new customers and growing them from 660 to 850. However, Anaplan’s customer base is much smaller compared to Domo, indicating that Domo’s customer growth was more rapid given its larger base.

Anaplan’s revenue per customer is almost three times that of Domo, and the company has also been able to grow its revenues per customer at a faster rate than Domo. Between 2016-2017, Domo’s subscription revenue per customer grew by 18% while Anaplan registered a 29% increase in the same period. This indicates that Anaplan’s product has a strong appeal among its customer base, though the fact that Anaplan is an older and more established company is also a factor. The company stated that it launched several unique products and apps in 2017 and created communities for its customers and partners. Its unique proposition of connected planning is attracting interest from several large enterprises. The company has strong partnerships with consulting giants such as Accenture, Bain and McKinsey, which enables it to generate healthy revenues.

Based on their valuation numbers, both Anaplan and Domo command similar revenue multiples, indicating that revenue growth expectations for both companies are likely fairly similar. Note that we look at revenue multiples in this case due to Domo’s operating losses (so using P/E or EBITDA multiples is not practical).

Anaplan achieved cash flow break-even in 2016, while Domo’s operating expenses are still around 300% of its revenues. While Domo is still struggling to manage its cash flows and become profitable, Anaplan has a strong base of customers and a growth strategy in place, with positive cash flows. Intense competition in this segment is likely to continue, and for now it appears that Anaplan has the upper hand.

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