Domo's Uncertain Future
Domo Shares Plummet 14% After Q1 Revenue Miss and Strategic Review Concerns
Anonymous
Key Points
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Domo’s board said it believes pursuing a strategic transaction is the “best path to maximize shareholder value” after evaluating “a broad range of alternatives,” and CEO Josh James said the company is moving “from AI experimentation to AI embedded in everyday work,” adding that Domo’s “combination of data, applications, and AI agents” positions it for that shift.
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Beyond revenue, Domo reported quarter billings of $60.4 million (down from $63.9 million year-ago) and said cash and cash equivalents were $39.1 million as of April 30, 2026.
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One analyst update cited by TradingView cut Domo’s average 12-month price target from $6.00 to $5.50, with estimates ranging from $3.50 to $8.00; the updated target implies about 69% upside from the June 15 close, and the covering-analyst mix was 3 Buys, 2 Holds, and 1 Sell.
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A separate report quantified insider selling as roughly $3.8 million worth of shares sold over the prior three months.
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Quiver Quant reported that over the past six months, Domo insiders made 12 open-market trades: 11 sales and 1 purchase, including that RPD Fund Management LLC made one purchase (924,709 shares) and 11 sales (1,350,626 shares).
Domo's stock fell 14% in after-hours trading on June 15 after the business intelligence company reported first-quarter revenue of $79.4 million — just below the $79.8 million analysts expected. The miss was only part of the story. Domo also revealed it had breached a debt covenant and entered a forbearance agreement with its lenders, sparking a "going concern" warning and pushing shares even lower the following day, according to GuruFocus.
The board has now concluded that selling the company is the "best path to maximize shareholder value." Advanced negotiations for a strategic transaction are underway, though no deal has been announced.
Debt Breach Forces Forbearance and Going Concern Warning
During the quarter ending April 30, 2026, Domo failed to meet a minimum annualized recurring revenue (ARR) covenant in its credit agreement. That triggered a requirement to reclassify roughly $137 million in debt as a "current liability" — meaning it is technically due within a year, according to The Motley Fool. CFO Tod Crane confirmed the reclassification, which is standard GAAP accounting when a covenant is breached.
Lenders led by BlackRock agreed not to immediately demand repayment. Instead, they signed a forbearance agreement while Domo pursues a sale, Intellectia reported. But the arrangement is contingent on a deal closing. Cash on hand stood at just $39.1 million as of April 30 — a thin cushion against $137 million in reclassified debt.
Revenue and Billings Slide as AI Pivot Has Yet to Pay Off
Total revenue of $79.4 million was down 0.9% from a year ago. Subscription revenue — the core of Domo's business — fell 2% year over year to $69.8 million. Billings dropped to $60.4 million from $63.9 million in the same quarter last year, according to TradingView. These are the metrics investors watch most closely, and all three moved in the wrong direction.
CEO Josh James pointed to Domo's AI Agent Builder, launched in March, as evidence the company is moving "from AI experimentation to AI embedded in everyday work." But one Seeking Alpha analyst, Gary Alexander, pushed back — arguing Domo has "virtually zero growth catalysts" and that AI tools from rivals like Snowflake and Databricks may be eating into Domo's customer base, according to Seeking Alpha.
Analysts Cut Targets as Insiders Sell Millions in Shares
TD Cowen downgraded Domo from "Buy" to "Hold" on June 16, slashing its price target to $3.25, per GuruFocus. Citizens Bank also cut its target — from $3.50 to $2.25 — and kept an "Underperform" rating. Still, a separate TradingView consensus of five analysts showed 3 Buys, 2 Holds, and 1 Sell, with an average 12-month price target of $5.50, implying roughly 69% upside from the June 15 close.
Insider selling added to the negative signals. Over the past six months, Domo insiders made 12 open-market trades — 11 sales and just 1 purchase — according to Quiver Quant. RPD Fund Management, once a 10%-plus shareholder, sold 1,350,626 shares while buying only 924,709, offloading roughly $3.8 million worth of stock over the past three months and dropping below the key 10% reporting threshold.
Sale Process Advances but Domo Negotiates From a Weak Position
Domo's board initiated a formal strategic review back in February, hiring Jefferies LLC as its investment bank. The company's bright spots — gross retention improved 240 basis points to 86.7%, and it posted a positive non-GAAP operating margin of 6% — give potential buyers something to work with. But the forbearance deadline and thin cash reserves limit Domo's leverage at the table.
Potential acquirers could include large cloud players like Oracle or SAP, or private equity firms that specialize in distressed software deals, according to the Chronicle Journal. The key risk, as that outlet noted, is that any buyer knows Domo is under pressure — which could suppress the final price. With no financial guidance issued and a deal described only as "advanced," shareholders are left waiting.
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