Progress Software buys Domo's AI and data platform business for $400 million

Progress Software said it will acquire Domo's AI and data platform business for $400 million.

According to Progress Software, the plan is to take Domo's platform and combine it with the Progress Data Platform to expand the total addressable market.

The deal is structured as an asset purchase meaning Progress Software acquires Domo's assets and only certain liabilities. Domo will remain publicly listed and change its name and ticker after the close of the deal.

Domo in June reported first quarter revenue of $79.4 million, which missed estimates. The company also said it was pursuing strategic alternatives and issued a going concern warning.

Yogesh Gupta, CEO of Progress Software said the acquisition will boost its strategy to be a data and context platform to enable AI. "Domo’s product capabilities, coupled with their team’s expertise in cloud architectures and analytics, are highly complementary to our expanding Progress data platform capabilities that significantly improve the security, governance and cost of our customers’ AI initiatives," said Gupta.

Domo add 2,400 business customers as well as cloud data warehouse partnerships. Domo's AI and data platform business includes:

• Integrations and more than 1,000 pre-built connectors to enterprise systems.
• Business intelligence apps.
• Tools for data transformation.

Progress Software said its revenue and non-GAAP earnings will be within the guidance given on its second quarter earnings call. Progress Software reported earnings of $21.07 million in the second quarter with revenue of $253.46 million, up 7% from a year ago.

The company is projecting revenue of $990 million to $1 billion for 2026.

As for Domo, the company said it will retain $900 million in net operating loss carryforwards and $246 million in cash. Domo said it will look for ways to monetize its operating loss carryforwards, consider potential transactions and pay off its credit revolver. The structure of the Progress Software purchase is set up to reduce the likelihood of an ownership change, which would limit Domo's ability to harvest its tax losses. Domo CEO Josh James is the controlling shareholder and will remain so when the Progress Software deal is complete.