Business Context and Reporting Period
Company: DOMO, INC.
Filing Type: Form 10-Q (Unaudited)
Reporting Period: Three months ended April 30, 2026
Business Overview: Domo provides a cloud-based AI and data products platform connecting enterprise users with real-time data. The company operates as a single segment and is transitioning its revenue model to consumption-based pricing, which accounted for 89% of Annual Recurring Revenue (ARR) as of the period end.
Key Financial Metrics
| Metric (in thousands) | Q1 2026 | Q1 2025 |
|---|---|---|
| Total Revenue | $79,403 | $80,111 |
| Gross Profit | $58,543 | $59,443 |
| Gross Margin | 74% | 74% |
| Net Loss | $(14,170) | $(18,052) |
| Net Loss Per Share (Basic & Diluted) | $(0.33) | $(0.45) |
| Operating Cash Flow | $5,170 | $3,951 |
| Cash and Cash Equivalents (End of Period) | $39,057 | $47,180 |
| Total Debt (Current) | $137,105 | $0 |
| Accumulated Deficit | $(1,561,050) | $(1,505,590) |
Material Changes vs. Prior Period
- Revenue Decline: Total revenue decreased by 1% ($708k) year-over-year. Subscription revenue fell 2% due to a $4.2 million net decrease from existing customers, partially offset by $2.6 million from new customers. Professional services revenue increased 10%.
- Improved Loss Profile: Net loss narrowed by 22% to $14.2 million, driven by a reduction in operating expenses and a $2.1 million gain from the remeasurement of warrant liability.
- Expense Reduction: Total operating expenses decreased 6% to $69.5 million. Sales and marketing expenses dropped 5%, and R&D expenses dropped 7%, largely due to reduced employee-related costs and stock-based compensation.
- Debt Reclassification: Due to a covenant breach, the entire term loan balance of approximately $136.6 million was reclassified from long-term to current debt.
Outlook, Risks, and Contingencies
- Going Concern Doubt: The filing explicitly states there is substantial doubt about the company's ability to continue as a going concern. Cash on hand ($39.1 million) is insufficient to repay the accelerated debt ($136.6 million).
- Covenant Default: As of April 30, 2026, the company was not in compliance with the minimum annualized recurring revenue covenant under its credit facility. This gives lenders the right to accelerate repayment.
- Forbearance Agreement: On June 12, 2026, the company entered a forbearance agreement with lenders. This agreement does not waive the default but delays enforcement actions contingent on the company entering a definitive purchase agreement by July 31, 2026, and completing a transaction by November 30, 2026.
- Strategic Transaction: Management is in advanced negotiations regarding a potential sale of the company. No definitive agreement has been executed.
- Liquidity Constraints: The company has an at-the-market equity offering program for up to $150 million, but no shares have been sold to date. Management concluded that current plans do not alleviate the substantial doubt regarding going concern status.
Investor Verification Checklist
- Transaction Status: Verify if a definitive agreement for the sale of the company has been signed by the July 31, 2026 deadline.
- Debt Acceleration: Monitor whether lenders exercise their right to accelerate the $136.6 million debt if the forbearance conditions are not met.
- Cash Burn: Assess the runway of the $39.1 million cash balance against operating cash outflows and the $5.9 million in fees paid for the forbearance agreement.
- Customer Churn: Investigate the drivers behind the 6% decrease in total customer count and the $4.2 million net revenue decrease from existing customers.
- Equity Dilution: Review any future equity issuances under the at-the-market program or as part of a strategic transaction.