DOMO — Q2 2026 Financial Report Analysis

Domo's quarter ended July 31, 2026 (its fiscal second quarter of 2027, calendar Q2 2026) is the last one it reported as an operating software company. Revenue fell 3.7% to $76.8 million and the net loss shrank to $9.6 million from $22.9 million. The quarter's real news was elsewhere, though. Domo had breached a loan covenant and was operating under a lender forbearance with a going-concern warning. On July 22 it agreed to sell substantially all of its business to Progress Software for a headline $400 million in cash. The sale closed on September 22, 2026. The listed company kept only its tax losses and was renamed Huckleberry.ai (Nasdaq: HUCK, from September 24). It received about $221.0 million in cash at closing.

Results for the quarter

RPO is contracted revenue that customers have committed to but that hasn't been recognized yet. Gross retention is the share of contract value up for renewal that actually renewed.

Why revenue shrank

The filing breaks the subscription decline into two parts. Revenue from existing customers fell by a net $8.3 million, including customers who left. New customers added $5.9 million. Total customer count was lower than a year earlier, at "over 2,300". Professional services revenue slipped to $6.4 million from $7.0 million because some other contracts had been delivered in the year-ago quarter. For the half-year, revenue was $156.2 million, down 2.3%.

Billings tell the sharper story. They were down 13.2% in the quarter and 9.5% for the half-year ($121.5 million vs $134.2 million). Deferred revenue was $146.2 million at July 31 (current plus non-current), against $180.9 million at January 31. Part of that drop is seasonal, since Domo bills mostly annually and in advance. Still, falling billings and RPO point to more revenue decline ahead, not a recovery.

Where the margin gains came from

• Gross margin rose 2.3 points to 77.1% because subscription costs fell to $11.4 million from $14.1 million. Most of that was a $2.1 million drop in third-party web hosting costs, and the filing says this was "partially as a result of a one-time credit received". Some of the margin gain will not repeat.
• Sales and marketing fell 18% to $28.9 million, down from 44% of revenue to 38%. Employee costs were $2.9 million lower (fewer staff, less stock pay) and demand-generation marketing was $2.5 million lower.
• Research and development fell 6% to $17.8 million.
• General and administrative rose 19% to $15.0 million. Professional and legal fees were $4.1 million higher, driven by a $5.0 million increase in transaction-related costs for the sale process.

What the headline numbers hide

• Most of the smaller net loss had nothing to do with operations. The net loss shrank by $13.3 million. Of that, $10.2 million came from the warrant liability: the warrants are revalued as the share price moves, and that charge was $10.4 million a year ago against $0.3 million this quarter. The operating loss improved by only $4.9 million. Other expense, mostly interest, got worse: interest expense rose to $7.4 million from $5.1 million as the forbearance fee was charged off over the shortened loan term.
• Per-share figures were helped by dilution. The weighted-average share count rose 13% to 46.0 million, so the loss per share fell faster (63%) than the loss itself (58%).
• Stock-based compensation was $9.0 million, or 11.8% of revenue, down from $13.2 million (16.6%) a year ago. Domo published no earnings release or adjusted figures for this quarter. Adding back stock pay alone would turn the $2.4 million operating loss into a profit of about $6.7 million. That figure also still includes the extra deal costs in G&A.
• The business was using cash. Operating cash flow for the half-year was -$1.2 million, against +$7.3 million a year earlier. Capital spending was $3.5 million. Cash fell to $25.1 million from $43.0 million at January 31, after a $5.8 million forbearance fee paid to lenders and $3.8 million of payments on short-term financing. Receivables fell to $47.6 million from $85.5 million. That is normal for a business that bills annually as invoices get paid, but it means the cash pile was not being refilled by new billings.
• The debt is why the company had to sell. At April 30 and again at July 31, Domo failed the minimum annualized-recurring-revenue covenant in its loan. That gave lenders the right to demand $138.3 million of principal and fees, against $25.1 million of cash. Under the June 12 forbearance, Domo had to sign a sale agreement by July 31 and close one by November 30, 2026, and the sale proceeds had to repay the loan in full. The 10-Q carries a going-concern warning (substantial doubt about the company's ability to keep operating for the next year) on that basis.

Takeaway: This was a shrinking business made to look better by cost cuts and a one-time hosting credit, and the loan covenant breach left the company with no choice but to sell. For shareholders, the quarter's numbers matter less than one figure: the roughly $221.0 million received at closing on a $400 million headline price. That cash, plus the tax losses the company kept, is what remains of the company.

What comes next

Huckleberry.ai no longer owns the Domo software business. Progress Software does. What the listed company kept, according to the 10-Q, is its net operating loss carryforwards and other tax attributes (past losses that can reduce tax on future profits), insurance policies, assets of certain foreign entities it retained, and some other assets. It also kept certain liabilities, including accrued payroll and commissions. The 10-Q says the company "does not intend to liquidate" and plans to stay public. The closing 8-K refers to "opportunities for value creation and to return capital to stockholders" but gives no plan or amount. In July the board adopted a tax benefits preservation plan that deters anyone from acquiring 4.9% or more of the shares. Its purpose is to avoid an "ownership change" under tax rules that would sharply limit use of the tax losses.

Our own arithmetic, not a company figure: the $221.0 million received, divided by the roughly 47.0 million shares outstanding at September 1 plus about 1.0 million restricted shares whose vesting was brought forward to closing, comes to about $4.60 per share. That is a gross number. It comes before the liabilities Huckleberry kept, its running costs and any taxes or fees not yet disclosed.

What to watch next:

1. The first post-sale 10-Q (the quarter ending October 31, 2026). It should show the gain or loss on the sale, the cash left after retained liabilities, and the size of the tax losses.
2. Whether the board announces a cash distribution or buyback, or an acquisition meant to use the tax losses.
3. Any post-closing price adjustment under the purchase agreement.