DOMO

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How DOMO rewrote its risk factors

10-K ITEM 1A · FY2025 → FY2026

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New in FY2026

We incurred net losses of $75.6 million, $81.9 million and $59.3 million for the years ended January 31, 2024, 2025 and 2026, respectively, and had an accumulated deficit of $1,546.9 million at January 31, 2026.
We have incurred cumulative and recurring losses from operations since inception and had an accumulated deficit of $1,546.9 million as of January 31, 2026.
We have also experienced negative or close to breakeven cash flows from operating activities, including cash used by operating activities of $9.1 million and cash provided by operating activities of $7.9 million for the years ended January 31, 2025 and 2026, respectively.
As of January 31, 2026, we had $43.0 million of cash and cash equivalents, which were held for working capital purposes.
A strategic transaction, whether or not consummated, could have an adverse effect on our business, results of operations and financial condition.
In February 2026, we announced that our board of directors initiated a formal process to explore strategic alternatives to maximize shareholder value.
The pursuit of such strategic transactions could involve risks to our operations and financial results, whether or not such transaction is ultimately consummated.
Such risks could include: • Diversion of management’s attention away from our business; • Significant transaction costs, which may or may not be recovered in the future and which may be incurred even if such strategic transaction fails to close or is otherwise unsuccessful; • Dilution of our equity interests or a decrease in the value of our common stock; • A change in control or a shareholder’s acquisition of a controlling stake in our business, which could trigger certain rights and remedies available to our contractual counterparties; • Restrictions on our ability to raise additional capital, incur indebtedness or control decisions regarding our operations and management; • Loss of key management personnel or employees, or the deterioration of our relationships with our employees; • Disruption to our relationships with customers, contract counterparties and other stakeholders; • Negative publicity or harm to our reputation; and • Legal proceedings and substantial costs associated with litigation.
Any one or more of these factors or other risks could could have a material adverse effect on our financial condition.
Our operating results and key metrics could vary significantly from quarter to quarter as a result of various factors, some of which are outside of our control, including: • the expansion of our customer base; • the size, duration and terms of our contracts with both existing and new customers; • the introduction of products and product enhancements by competitors, and changes in pricing for products offered by us or our competitors; • customers delaying purchasing decisions in anticipation of new products or product enhancements by us or our competitors or otherwise; • changes in customers’ budgets; • seasonal variations in our sales, which have generally historically been highest in our fourth fiscal quarter and lowest in the first fiscal quarter; • the timing of satisfying revenue recognition criteria, particularly with regard to large transactions; • the amount and timing of payment for expenses, including infrastructure costs to deliver our platform, research and development, sales and marketing expenses, employee benefit and stock-based compensation expenses and costs related to Domopalooza, our annual user conference that occurs in our first fiscal quarter; • costs related to the hiring, training and maintenance of our direct sales force; • the timing and growth of our business, in particular through the hiring of new employees and international expansion; and • general economic and political conditions, both domestically and internationally, including the impacts of pandemics or other catastrophic events, military conflicts (including the Russian invasion of Ukraine, and hostilities in the Middle East, inflation, and adverse impacts to the financial services industry, as well as economic conditions specifically affecting industries in which our customers operate.
For example, the Tax Cuts & Jobs Act of 2017 eliminated the ability to deduct research and development expenditures annually and instead required taxpayers to capitalize and amortize those expenditures over five or fifteen years.
The One Big Beautiful Bill Act (or OBBBA), enacted on July 4, 2025, made a number of changes to U.S. federal income tax law, including allowing taxpayers to deduct certain U.S. research and development expenditures (while continuing to require taxpayers to capitalize and amortize foreign research and development expenditures), changing the calculation and deductibility of global intangible low-taxed income (renamed Net CFC Tested Income) and foreign derived intangibles income (renamed Foreign-Derived Deduction Eligible Income) for taxable years beginning after December 31, 2025, reinstating 100% deductibility of bonus depreciation for property placed in service after January 19, 2025, and changing the calculation of deductible business interest expense to include depreciation and amortization, among other changes.
While we do not anticipate any material impact to our financial statements, primarily due to the full valuation allowance on net deferred tax assets, and no material permanent tax differences are expected, we are continuing to analyze the potential impact of the OBBBA and other legislation on our operations, business and financial performance.
The OECD and participating jurisdictions have agreed to a “side-by-side” elective safe harbor that exempts electing U.S.-parented multinational entities from certain provisions of Pillar Two for fiscal years beginning on or after January 1, 2026.
As of January 31, 2026, we had net operating loss (NOL) carryforwards for federal and state income tax purposes of approximately $1,289.3 million and $1,414.7 million, respectively, which may be available to offset taxable income in the future.
We recognize subscription revenue ratably over the term of the contract period.
The initial terms of our customer contracts typically vary in length between one and five years, and our customers have no obligation to renew their subscriptions after the expiration of their initial subscription periods.
Risks Related to Our Products, Solutions and Industry We face intense competition, and we may not be able to compete effectively, which could reduce demand for our platform and adversely affect our business, growth, revenue and market share.
Our current primary competitors generally fall into the following categories: • large enterprise software and cloud platform vendors, including suppliers of traditional business intelligence and cloud services that provide one or more capabilities competitive with our products, such as Microsoft Corporation, Amazon Web Services, Inc., Oracle Corporation, SAP AG, Salesforce, Inc., and IBM. • specialized business analytics software companies, such as Tableau Software, Inc.
(acquired by Salesforce, Inc.), Qlik Technologies, Looker (acquired by Alphabet, Inc.), Strategy Inc.
(formerly MicroStrategy), ThoughtSpot, Alteryx, Informatica, Sisense, and Tibco Software, Inc. • cloud-native data integration and analytics providers, such as Sigma Computing, FiveTran, Matillion, Databricks, and Infor, Inc.
For example, Salesforce acquired Tableau Software in August 2019 and Alphabet acquired Looker Data Sciences in February 2020.
While 84% of our annual recurring revenue is now utilizing the platform as a consumption-based service, it is relatively new to our business and therefore contains inherent risks.
Revenue recognized for certain customers may be negatively impacted due to our consumption-based pricing model.
Additionally, as we implement artificial intelligence tools on our platform, we may not be able to accurately predict customer demand of these tools, and if certain customers use these tools more than we anticipate, we may incur increased operational costs that may not be recovered in an appropriate timeframe.
We believe our partner ecosystem will become increasingly important to our business as we continue its expansion.
If our partners decide to internally adopt tools that we provide or find other ways that will reduce their need for our platform, such as by adopting artificial intelligence tools offered by our competitors in lieu of purchasing our services, that could result in lower volume of usage, which could adversely impact our financial performance.
Our platform also provides real-time write-back capabilities to customer environments, including to the internet of things (IoT) products and services.
The development of IoT presents security, privacy and execution risks.
Our ability to grow is also subject to the risks and opportunities presented by future disruptive technologies.
If new technologies, such as those relating to artificial intelligence, emerge or improve such that they are, or are perceived to be, able to deliver business intelligence solutions or otherwise perform similar functions as our platform at lower prices, more efficiently, more conveniently or more securely, such technologies could adversely affect our ability to compete.
Market and consumer perceptions of the future competitiveness of the SaaS industry are uncertain, which could negatively impact the market price or volatility of our stock and impair our ability to raise capital.
Risks Related to Our Personnel and Operations If we fail to effectively align, develop and expand our sales and marketing capabilities with our pricing structure and increase sales efficiency, our ability to increase our customer base and increase acceptance of our platform could be harmed.
To increase the number of customers and increase the market acceptance of our platform, we will need to align and expand our sales and marketing operations, including our domestic and international sales force, with our pricing structure and increase sales efficiency.
We are aligning our cost structure to better reflect significant product and business model innovation with the expectation that go-to-market operations in our consumption-based business model will be more efficient and require less investment.
We have experienced and may continue to experience changes to our management and board, which may create uncertainties and could harm our business.
Changes to strategic or operating goals, which can often occur with the appointment of executives and directors can create uncertainty, can negatively impact our ability to execute quickly and effectively, and may ultimately be unsuccessful.
In addition, executive leadership and director transition periods are often difficult as such executives and directors gain more detailed knowledge of our operations, and friction can result from changes in strategy and management style.
Management and board changes may inherently cause some loss of institutional knowledge, which can negatively affect strategy and execution.
Employees may be more likely to leave us if the shares they own or the shares underlying their equity awards have significantly appreciated or depreciated in value.

and 55 more.

Gone since FY2025

We incurred net losses of $105.6 million, $75.6 million and $81.9 million for the years ended January 31, 2023, 2024 and 2025, respectively, and had an accumulated deficit of $1,487.5 million at January 31, 2025.
We have incurred cumulative and recurring losses from operations since inception and had an accumulated deficit of $1,487.5 million as of January 31, 2025.
We have also experienced negative or close to breakeven cash flows from operating activities, including cash provided by operating activities of $2.6 million and cash used in operating activities of $9.1 million for the years ended January 31, 2024 and 2025, respectively.
As of January 31, 2025, we had $45.3 million of cash and cash equivalents, which were held for working capital purposes.
Our operating results and key metrics could vary significantly from quarter to quarter as a result of various factors, some of which are outside of our control, including: • the expansion of our customer base; • the size, duration and terms of our contracts with both existing and new customers; • the introduction of products and product enhancements by competitors, and changes in pricing for products offered by us or our competitors; • customers delaying purchasing decisions in anticipation of new products or product enhancements by us or our competitors or otherwise; • changes in customers’ budgets; • seasonal variations in our sales, which have generally historically been highest in our fourth fiscal quarter and lowest in the first fiscal quarter; • the timing of satisfying revenue recognition criteria, particularly with regard to large transactions; • the amount and timing of payment for expenses, including infrastructure costs to deliver our platform, research and development, sales and marketing expenses, employee benefit and stock-based compensation expenses and costs related to Domopalooza, our annual user conference that occurs in our first fiscal quarter; • costs related to the hiring, training and maintenance of our direct sales force; • the timing and growth of our business, in particular through the hiring of new employees and international expansion; and • general economic and political conditions, both domestically and internationally, including the impacts of pandemics or other catastrophic events, military conflicts (including the Russian invasion of Ukraine, and hostilities between Israel and Hamas), inflation, and adverse impacts to the financial services industry, as well as economic conditions specifically affecting industries in which our customers operate.
For example, the Tax Cuts & Jobs Act of 2017 eliminated the ability to deduct research and development expenditures currently and instead requires taxpayers to capitalize and amortize those expenditures over five or fifteen years.
As of January 31, 2025, we had net operating loss (NOL) carryforwards for federal and state income tax purposes of approximately $1,183.2 million and $1,364.4 million, respectively, which may be available to offset taxable income in the future.
For example, on March 10, 2023, Silicon Valley Bank (SVB) was closed and placed in receivership and subsequently, additional financial institutions have been placed into receivership.
Prior to SVB’s closure, we had approximately $12.4 million in deposit accounts with SVB and an additional $18.3 million subject to SVB sweep account arrangements (with amounts held in custodial accounts with third-party financial institutions).
As a result of U.S. government intervention, we subsequently regained access to our accounts at SVB, and Silicon Valley Bridge Bank has assumed SVB’s obligations to honor our standby letter of credit.
However, there remains significant uncertainty surrounding the impact of these bank closures on the broader financial system.
Moreover, there is no guarantee that the U.S. government will intervene to provide access to uninsured funds in the future in the event of the failure of other financial institutions, or that they would do so in a timely fashion.
In such an event, parties with which we have commercial agreements, including customers and suppliers, may be unable to satisfy their obligations to, or enter into new commercial arrangements with us.
We recognize subscription revenue ratably over the term of the subscription period.
The initial terms of our customer contracts typically vary in length between one and three years, and our customers have no obligation to renew their subscriptions after the expiration of their initial subscription periods.
A majority of our annual recurring revenue is up for renewal during the fiscal year ending January 31, 2026.
For instance, in December 2017, researchers identified significant CPU architecture vulnerabilities commonly known as “Spectre” and “Meltdown” that have required software updates and patches, including for providers of public cloud services, to mitigate such vulnerabilities and such updates and patches have required servers to be offline and potentially slow their performance.
Risks Related to Our Products and Solutions We face intense competition, and we may not be able to compete effectively, which could reduce demand for our platform and adversely affect our business, growth, revenue and market share.
Our current primary competitors generally fall into the following categories: • large software companies, including suppliers of traditional business intelligence products that provide one or more capabilities that are competitive with our products, such as Microsoft Corporation, Oracle Corporation, SAP AG and IBM; • business analytics software companies, such as Tableau Software, Inc.
(acquired by salesforce.com, inc.), Qlik Technologies, Looker Data Sciences, Inc.
(acquired by Alphabet, Inc.), MicroStrategy, ThoughtSpot, Alteryx, Informatica, Sisense, Inc., and Tibco Software, Inc.; and • SaaS-based products or cloud-based analytics providers such as Amazon Web Services, Sigma Computing, Fivetran, Matillion, salesforce.com, inc. and Infor, Inc.
For example, salesforce.com, inc. acquired Tableau Software, Inc. in August 2019 and Alphabet Inc. acquired Looker Data Sciences, Inc. in February 2020.
While more than 68% our annual recurring revenue is now utilizing the platform as a consumption-based service, it is relatively new to our business and therefore contains inherent risks.
Revenue recognized for certain customers may be negatively impacted due to our new consumption-based pricing model.
Additionally, we believe our partner ecosystem will become increasingly important to our business as we continue its expansion.
If our partners decide to internally adopt tools that we provide or find other ways that will reduce their need for our platform, that could result in lower volume of usage, which could adversely impact our financial performance.
Our platform also provides real-time write-back capabilities to customer environments, including to IoT products and services.
The development of the internet of things (IoT) presents security, privacy and execution risks.
Our ability to grow is also subject to the risk of future disruptive technologies.
If new technologies, such as those relating to artificial intelligence, emerge or improve such that they are able to deliver business intelligence solutions or otherwise perform similar functions as our platform at lower prices, more efficiently, more conveniently or more securely, such technologies could adversely affect our ability to compete.
Risks Related to Our Personnel and Operations If we fail to effectively align, develop and expand our sales and marketing capabilities with our new pricing structure and increase sales efficiency, our ability to increase our customer base and increase acceptance of our platform could be harmed.
To increase the number of customers and increase the market acceptance of our platform, we will need to align and expand our sales and marketing operations, including our domestic and international sales force, with our new pricing structure and increase sales efficiency.
We are aligning our cost structure to better reflect significant product and business model innovation with the expectation that go-to-market operations in our new consumption-based business model will be more efficient and require less investment.
We have experienced changes to our management and board, which creates uncertainties and could harm our business.
Changes to strategic or operating goals, which can often times occur with the appointment of new executives and directors, can create uncertainty, may negatively impact our ability to execute quickly and effectively, and may ultimately be unsuccessful.
In addition, executive leadership and director transition periods are often difficult as the new executives and directors gain more detailed knowledge of our operations, and friction can result from changes in strategy and management style.
Management and board changes may inherently causes some loss of institutional knowledge, which can negatively affect strategy and execution.
Employees may be more likely to leave us if the shares they own or the shares underlying their vested options have significantly appreciated in value relative to the original purchase prices of the shares or the exercise prices of the options, or, conversely, if the exercise prices of the options that they hold are significantly above the market price of our common stock.
If we are unable to appropriately incentivize and retain our employees through equity compensation, or if we need to increase our compensation expenses in order to appropriately incentivize and retain our employees, our business, operating results, financial condition and cash flows would be adversely affected and the ownership of existing shareholders would be diluted.
For example, approximately 79%, and 80% of our total revenue for the years ended January 31, 2024 and 2025, respectively, was derived from sales within the United States.

and 50 more.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2025 ↗, FY2026 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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