From the error, it seems that the recipient email server doesn't accept your email. Please kindly check if set up SPF, DKIM and DMARC for your custom domain in Microsoft 365 completely. Please also make sure if your network bypassed Office 365 URLs and IP address ranges which help to deliver email to other mail systems.
You could run message trace for this message to check if something can be found from the message trace.
Besides, if the issue just happens on the specific domain (recipient), the most possible issue is that the their mail system had the policy to block your messages, please try to contact your recipient to check the issue, and add your domain into allow list if possible.