Startups

Business analytics firm Domo closes at $27.30/share, up 30% after raising $193M in its muted IPO

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Domo, the business analytics company based out of Utah, today became the latest enterprise tech company to go public, and it did so with a small pop. Trading on Nasdaq as DOMO, the company opened at $23.80/share, up 13 percent on its initial pricing of $21. Last night, the company announced that it had raised $193 million through a sale of 9,200,000 shares of Class B common stock at the initial price, valuing the company at around $511 million.

The stock fared better as the day went on, closing at $27.30, up 30 percent on its opening price.

Amid a climate that has been generally positive for tech IPOs lately, it’s a cautiously positive start for a company that has been on a rocky road leading up to its IPO: as a startup, Domo was valued as high as $2 billion, meaning its IPO valuation saw some 75 percent of that value erased.

There have always been a lot of high expectations for Domo, which was in stealth mode for five years and came out of it with a $1 billion valuation. Josh James, the company’s founder and CEO, previously had founded Omniture, the online marketing and web analytics firm, which was acquired by Adobe for $1.8 billion in 2009.

And Domo itself taps into one recurring theme within the enterprise IT zeitgeist: there are now hundreds of cloud-based services collecting and producing data about our businesses, and so there is a demand for companies that can harness and make sense of that data, and provide good inroads for people to “read” it more easily (companies like Slack also are tapping into this idea, albeit for a different purpose).

Domo says it brings in information from some 500 different sources, by way of APIs and other integrations, to produce data visualizations and other insights into how an organization operates, and while one of its key targets are C-level executives who want “big picture” insights, the product positions itself as suitable for a wide array of users and industries.

But as many have pointed out, this isn’t the whole story. The company has been burning money quickly, and its annual recurring revenue hasn’t been that strong compared to how much money it has raised (pre-IPO, nearly $690 million). For the strongest enterprise startups, these are metrics that usually have closer parity, if ARR is not altogether outpacing how much the company has raised.

For skeptics, Domo still has to prove itself as a business longer term, and now that it’s going to the public markets for money, it will be doing so with more scrutiny.

According to its S-1 filing, Domo’s revenues in the year that ended January 31 were $108.5 million, up from $74.5 million, with net losses of $176.6 million (versus $183 million for the same period a year before). The company says that as of April 30, 2018, it had more than 1,500 businesses as customers, including 385 with more than $1 billion in revenue. The company makes about 80 percent of its revenues from subscriptions with the rest from professional services.

The company, however, has dismissed a lot of the nay sayers who raise concerns and note the strong competition, which includes the likes of Tableau, Microsoft and SAP.

“Customers are buying our software,” said James today. “When you’re a Fortune 50 retailer, and you log in, the CEO, sometimes 15 times a day, this is a really good utility we’re providing…There are some disbelievers out there, but we just need to go out there and focus on our customers.”

Updated with stock price and commentary from Domo.

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