Key facts
- Progress Software will purchase Domo's AI and data business for $400 million.
- Domo will continue as a separate public company after the deal closes.
- Josh James will lead the remaining Domo entity.
- The remaining company will have $246 million in cash and over $900 million in net operating loss carryforwards.
- Domo shares increased by about 30% on Thursday.
Progress Software has agreed to acquire Domo's core AI and data businesses for $400 million, marking a significant shift for the tech executive Josh James. The deal will see Progress, a public software company valued at approximately $1.5 billion, take over most of Domo's operations and employees, along with some of its liabilities.
Following the acquisition, Domo will continue to exist as a separate publicly traded company under a different name and ticker, with its founder and CEO, Josh James, at the helm. This move comes after Domo faced business and leadership challenges, including executive departures and past legal issues for James.
The remaining Domo entity will retain substantial assets, including $246 million in cash and over $900 million in net operating loss (NOL) carryforwards. NOLs allow companies to reduce future tax liabilities by utilizing past losses. Domo, which has reported consistent quarterly losses since its 2018 IPO, has outlined a plan to preserve and utilize these tax assets, though it cautioned that full utilization might not be possible.
Domo's board is actively seeking ways to leverage these NOLs for value generation. With its cash reserves and lack of debt, the standalone company plans to explore potential transactions that capitalize on its AI and automation expertise, or potentially return capital to shareholders. The announcement led to a roughly 30% surge in Domo's shares on Thursday, valuing the remaining company at nearly $190 million, which was less than its cash on hand.