Huckleberry.ai, Inc. Q2 FY2027 earnings

Domo entered a definitive Asset Purchase Agreement on July 22, 2026 to sell substantially all of its assets to Progress Software for $400 million in cash, but closing is subject to conditions and there is no assurance it will be completed on the anticipated timeline or at all. The agreement includes a $13.5 million termination fee payable under specified circumstances and a downward purchase price adjustment if cash acquired at closing is below a $25.0 million threshold.

Domo was not in compliance with the minimum annualized recurring revenue covenant under its credit facility as of April 30, 2026 and July 31, 2026, giving lenders the right to accelerate $138.3 million of principal and related fees. Cash and cash equivalents of $25.1 million as of July 31, 2026 would not be sufficient to repay the term loan upon acceleration, and management concluded substantial doubt exists about the company's ability to continue as a going concern.

The forbearance agreement with lenders does not waive the underlying default and remains conditioned on completing the Asset Sale no later than November 30, 2026. If the forbearance terminates or expires without replacement or extension, lenders could declare all outstanding obligations immediately due and payable, materially harming liquidity and financial condition.

Following the closing of the Asset Sale, Domo will no longer have an operating business and will retain cash proceeds and net operating loss carryforwards. Future success will depend on the board identifying and completing an acquisition of assets to derive benefit from the NOLs, and there is no assurance any such transaction will be identified, negotiated, completed or successful.

Total revenue decreased 3.7% to $76.8 million for the quarter and 2.3% to $156.2 million year to date, with subscription revenue down 3% for the quarter. Total customer count decreased from July 31, 2025 to July 31, 2026, deferred revenue decreased 6.0% to $146.2 million, and total RPO declined to $410.8 million as of July 31, 2026 from $430.9 million as of July 31, 2025.

Prevailing macroeconomic conditions have elongated the software sales cycle, increased deal scrutiny and made renewal discussions more challenging. Enterprise sales cycles range from approximately six months to multiple years, and quarterly sales are heavily weighted toward the last few weeks of the quarter, increasing the likelihood that sizeable transactions slip beyond the forecasted period.

With 91% of annual recurring revenue now utilizing the consumption-based service, customers may use less data than originally contemplated in their contracts, resulting in lower net retention in future years. As AI tools are added, Domo may not accurately predict customer demand, and heavier-than-anticipated usage could incur increased operational costs that may not be recovered in an appropriate timeframe.

Domo faces intense competition from large vendors such as Microsoft, Amazon Web Services, Oracle, SAP, Salesforce and IBM that may bundle data management and analytics products at significant discounts or no charge. AI features also raise evolving legal and regulatory risks, including the EU AI Act and the Utah Artificial Intelligence Policy Act, as well as potential liability for inaccurate or biased outputs.

Domo adopted a Tax Benefits Preservation Plan on July 22, 2026 with a 4.9% ownership trigger to protect its NOLs, but there is no assurance it will prevent an ownership change under Section 382. An ownership change would substantially limit use of the $1,289.3 million federal and $1,414.7 million state NOL carryforwards as of January 31, 2026, potentially impairing the value of those assets.

The pursuit and pendency of the Asset Sale could divert management's attention and result in the loss of key management personnel or employees, or deterioration of relationships with employees. Domo also expects to continue to incur significant transaction costs, including $5.0 million of transaction-related costs recorded in general and administrative expense for the three and six months ended July 31, 2026.

Joshua G. James, founder and chief executive officer, beneficially controlled approximately 76% of the voting power of outstanding capital stock as of July 31, 2026 through Class A shares. He has pledged all of his Class A and Class B shares to secure a loan, and a default could result in lenders selling pledged shares into the market, adversely affecting the stock price or triggering changes to corporate governance provisions.