Investors said Domo was worth $2.28 billion — but when it has its IPO, it could be worth just $511 million

Domo CEO Josh James

caption
Domo CEO Josh James
source
YouTube/Domo

  • Domo, last valued at $2.28 billion, could go public at a valuation of $511 million – bad news for investors.
  • Domo updated its S-1 filing to say that it had undergone a reverse stock split: Every 15 shares of the company is now combined into one.
  • The updated filing gives a middle-of-the-range price of $20.50 per share, letting us calculate the new valuation.
  • Domo also says that it’s cutting off its business relationships with companies owned or co-owned by CEO Josh James.

When Domo filed to go public just a few weeks ago, its last known valuation was $2.28 billion. Now, in an updated filing with the SEC on Monday, Domo says that it could go public at a valuation of just $511 million – an unencouraging sign for the IPO.

Domo unveiled an expected price range on Monday for its upcoming IPO, with shares to be priced between $19 and $22 each. At the $20.50 per share midpoint of that range, Domo would be worth $511 million when it goes public.

That’s bad news for investors including BlackRock and Benchmark, which threw $689.7 million in total venture funding at Domo.

That’s not a great look for a company that’s already come under close scrutiny.

Domo also said in its updated filing that it had implemented 15-to-one reverse stock split. In other words, for every 15 shares that the company was going to offer on the public markets, Domo will now offer just one.

In its original filing, Domo said that it had $72 million in the bank, and had exhausted its credit. The filing warned that Domo needed to raise capital by August or else it will be forced to “significantly reduce operating expenses,” explaining why it would choose to go public even under these circumstances.

The original filing revealed that the company generated $108.5 million in revenue in 2017 – but recorded an overall net loss of $176.6 million. That’s still better than 2016, when Domo posted a net loss of $183.1 million on revenues of $74.5 million. All told, the filing says, Domo has accumulated a deficit of $803.3 million as of the end of April.

Also buried in the updated filing is word that Domo is ending its business relationships with companies owned or co-owned by Domo CEO Josh James.

The original filing showed that Domo had spent about $700,000 last year to lease a private plane from JJ Spud, a company controlled by James. Similarly, Domo had spent $300,000 in each of its last two fiscal years with a caterer co-owned by James and one of his brothers, and $200,000 at an interior design firm partially owned by James.

Domo terminated its agreement with JJ Spud this month, says the updated filing, and will not seek new business with the caterer or interior design firm.

The Domo IPO is under the microscope: CEO Josh James is well-known in the tech industry for founding Omniture, a data analytics startup which was sold to Adobe for $1.8 billion in 2009. Domo, founded in 2011, came out of stealth mode in 2015 with a $1 billion valuation and a lot of hype. When Domo does go public, under the ticker symbol “DOMO,” we’ll get to see if James’ next act is as successful as his last.

Are you a Domo insider with interesting stories to share? Contact me at mweinberger@businessinsider.com.