Shares of Domo Inc. (DOMO) plummeted 12.64% in after-hours trading on Wednesday, despite the cloud-based data analytics company reporting better-than-expected second-quarter results. The sharp decline appears to be driven by a disappointing outlook for the upcoming quarter and full fiscal year.

For the second quarter, Domo reported revenue of $79.7 million, surpassing the analyst consensus estimate of $78 million. The company also achieved its first-ever positive non-GAAP earnings per share of $0.02, compared to the expected loss of $0.05 per share. This performance was supported by strong subscription remaining performance obligations (RPO) growth of 19% year-over-year and a record non-GAAP operating margin of 8%.

However, investors seemed to focus on Domo's guidance for the third quarter and full fiscal year 2026. The company expects Q3 revenue between $78.5 million and $79.5 million, with a non-GAAP net loss per share of $0.03 to $0.07. For the full year, Domo forecasts revenue of $316 million to $320 million and a non-GAAP net loss per share of $0.11 to $0.19. These projections appear to have fallen short of market expectations, triggering the sell-off.

Despite the negative reaction, Domo highlighted its progress in strategic initiatives. The company announced a strengthened partnership with Amazon Web Services (AWS) through a Strategic Collaboration Agreement aimed at driving rapid adoption of generative AI solutions. This move could potentially boost Domo's long-term growth prospects in the evolving AI-driven analytics market.