Domo announced an Initial Public Offering last week with lackluster performance numbers that was met with skepticism among investors and tech industry analysts.
The filing led to renewed derision over the hype which surrounds high profile tech companies and again called into question a growing trend toward an imbalance of power which favors startup CEOs over board members.
The Salt Lake City based Domo is a mobile-based operating system for small business owners was founded in 2012 by CEO Josh James. Users, primarily small business owners, submit the entirety of their business data to the system, which displays a compilation of necessary information on mobile devices.
According to reports detailing Domo’s own business transactions, the company raised almost $700 million, delivers an ARR of $106.7 million, an accumulated deficit of $803.3 million (as of April 30, 2018), long term debt of $96.1 million (as of April 30, 2018) and operating cash burn of $148.7 million in its fiscal year ending January 31, 2018. One statistic that alarmed would be investors was the fact that the company’s marketing and sales budget was higher than revenues for every quarter reported in the filing.
Other investors and analysts found more cause for concern with the company’s expenditures. According to one report, the costs included $600,000 for catering services and a leasing agreement for a private jet at the cost of $3,276 per flight hour, totaling $1.8 million in actual fees.
The results of the announcement have led many in the industry to push back against the popular trend in startup financing circles of allowing CEOs to have unassailable control of their companies. The arrangement puts investors in a difficult situation in events where profits fail to materialize. Domo was valued at $2 billion in 2015 by venture investors.