It was 9 a.m., the pop music was blaring, the strobe lights were flashing, the freestyle rapper was waiting in the wings and Joshua James was smiling.
“I’m so relieved to be back live,” said James, founder and once-again CEO of Utah tech company and business analytics platform Domo. He spoke to some 1,500 people gathered in the Grand America’s ballroom Wednesday for the opening of Domopalooza, the firm’s three-day user conference, being held in person for the first time since 2019.
The event also marked the first time James, 50, addressed an in-person audience since reclaiming the CEO job last year. During his opening talk at the Salt Lake City hotel, he didn’t mention the turnover in his company’s leadership over the last two years, which include his abrupt 2022 departure and his equally sudden return.
Instead, James — his hair slicked back, his gray double-breasted suit and shirt collar both unbuttoned, his voice loud enough to fill the Delta Center — touted his company’s “strategic initiatives,” including a focus on artificial intelligence, which James said will help push Domo into the future.
“A.I. is only as good as the data that it has access to,” James said. “By using Domo, you really are so much more ready for A.I. than anybody else in the industry.”
Financial disclosures and public filings with the Securities and Exchange Commission suggest the company is stabilizing after several years of turbulence. It has nearly 200 more employees than it did two years ago — up to almost 970. Domo also did better than expected financially last year, according to earning statements.
“For the first time, we were operating margin positive for the full fiscal year,” James told investors and financial analysts in an earnings call earlier this month.
Industry analyst Doug Henschen — who traveled to Salt Lake City for Domopalooza — said the company has kept pace with industry trends, even among “market head-winds” that have caused tech companies around the country to tighten their belts.
Its competitors are big, Henschen said, “but Domo has always been an innovator.”
Domo gained fame in Utah as one of the state’s few “unicorns” — private startups valued at $1 billion or more — before it went public in 2018. It also made headlines as one of the companies awarded a no-bid state contract worth millions of dollars at the start of the coronavirus pandemic, as part of the state’s TestUtah initiative. That effort later faced scrutiny for its cost, effectiveness and transparency.
Domo also got a tax incentive from the state, worth up to $23 million over 10 years, in 2021 to expand its Utah office — a deal James suggested the company may not have qualified for, as it had no plans to move out of state. An investigation found no misconduct by Domo, which had agreed to add up to 2,230 new Utah jobs over the years of the deal.
(Rick Egan | The Salt Lake Tribune) Domo CEO Joshua James speaks during the Wednesday morning general session of Domopalooza, at the Grand America Hotel, on Wednesday, March 27, 2024.
No ‘golden parachute,’ but an open door
James resigned suddenly in March 2022, shortly after his comment about Domo’s tax credit eligibility got him in hot water.
The company did not offer an explanation for James’ resignation, saying only in a news release that a “leadership transition” was meant to “leverage the breadth and depth of the company’s existing talent to promote continued growth.”
James’ separation agreement shows he did not receive some of the major perks departing founders often receive, University of Utah law professor Jeff Schwartz told The Salt Lake Tribune at the time. Schwartz, who reviewed documents filed with the SEC, said James’ departure “is certainly not ... some type of golden parachute type of agreement, where [James is] getting some huge severance from leaving the company.”
James got no severance or bonuses upon leaving, public filings show. “If anything, it looks very reasonable from the company’s perspective,” Schwartz said in 2022.
James also gave up his seat on the company’s board. He was replaced by Carine Clark, who is still the executive chair.
James and the company had already come under scrutiny for the company’s “dual-class” stock arrangement, which splits stock into “Class A” common stock and “Class B” common stock. Class A stock holders have more votes per share — 40 to one. And James has the lion’s share of voting power. According to the company’s 2023 annual report, James controlled roughly 81% of voting power “and therefore is able to control all matters submitted to our stockholders for approval.”
Several shareholders have also sued James and Domo for securities fraud in Utah and in Delaware, according to SEC filings and court documents. The cases were dismissed.
James’ abrupt departure set off a period of executive instability at Domo. By December 2022, Bruce Felt had resigned as chief financial officer, and was replaced in March 2023 — when James returned — by David Jolley. Catherine Wong resigned as chief operating officer and executive vice president of engineering in January 2023, less than a year after stepping into the role.
John Mellor, who succeeded James as CEO, resigned in March 2023, a year after taking the job, and James came back to lead the company. Again, Domo gave little explanation for Mellor’s departure, saying only in a news release that he “seamlessly stepped into the CEO role ... at a critical time for Domo” and thanking him for his “dedicated service.”
The company said in public filings that there were “no disagreements between Mr. Mellor and the Company on any matter relating to the Company’s operations, policies or practices” that led to his resignation.
Mellor’s departure included an $875,000 severance. According to his LinkedIn page, Mellor lives in Park City and is “taking some time off to recharge” after his departure. He did not respond to a request for comment; his separation agreement included a non-disparagement clause.
Around the same time, in early 2023, three board members resigned. Two were replaced by current members Dan Strong and Renée Soto.
James said of his return that he was “encouraged and invigorated,” according to a news release at the time.
“Thanks to [Mellor’s] hard work and stewardship, Domo has a sizable and healthy pipeline with strong demand for our products and services continuing into 2023,” James said in the news release.
(Rick Egan | The Salt Lake Tribune) Carine Clark, Domo Executive Chair of the Board says a few words during the Wednesday morning's general session of Domopalooza, at the Grand America Hotel, on Wednesday, March 27, 2024.
Stock falls, but recent signs of optimism
Domo’s stock value was on a decline before Mellor took over — it dropped sharply at the end of 2021, from a high of $97 per share to around $44. By the time he left, share price had fallen another 64%. As of Tuesday afternoon, Domo stock prices were down to $8.96 per share.
Still, the company has claimed it is performing better than expected. After three years of net losses, the last quarter has brought some optimism, James said in an earnings call March 7.
“We exceeded guidance for key top-line metrics in Q4, including revenue, subscription revenue and billings,” James said.
The company’s total revenue increased 3% compared to 2023, and subscription-based revenue increased 5%, according to SEC filings.
It’s not as dramatic an increase as its 2022 earnings, which were up 20% compared to the previous year — but it also lost less money in 2023, according to SEC filings. Domo reported a net loss of $75.6 million in 2023, less than the $105 million it lost the previous year.
The industry at large is struggling, Henschen said. Domo’s competitors are big names, like Microsoft and Tableau. It’s not surprising that Domo’s financials have been “flat, overall,” he said, “but margins have been improving.”
Henschen said part of Domo’s success — or at least its sustainability — is in its early focus on consumption-based licensing, which charges subscribers based on how and how much they use the data, rather than per individual user. Companies who fail to adapt that model, and instead charge “per seat,” have struggled to keep pace, Henschen said.
“If you force companies to pay per-seat, the way to cut costs is to reduce the number of people who have access to the data,” Henschen said.
Instead, Domo’s customer base grew in 2023 from 2,300 to 2,500. Customer retention was steady from 2021-2023, filings show, hovering around 90%.
James told investors and analysts that Domo’s consumption customer base has doubled over the last two quarters, and consumption deals accounted for almost all of the new revenue in the fourth quarter. He also celebrated the model at Domopalooza.
“We’re putting the power of the product in your hands,” James told the crowd.
The annual user conference was mostly an appeal to Domo customers past, present and future, and a chance to roll out the company’s “dozens and dozens of updates,” James said. Those include an updated app studio, new “automation superpowers” meant to streamline workflows, and especially “AI innovations.”
James said in the earnings call that the company plans to invest more heavily in AI and hire new talent to lead the charge.
“I feel optimistic that with the substantial transformations that we’ve made, our strategic initiatives will create meaningful momentum and let us bring the full value of Domo to customers at a much more rapid pace,” James said.
— Former Tribune reporter Becky Jacobs contributed to this report.
Shannon Sollitt is a Report for America corps member covering business accountability and sustainability for The Salt Lake Tribune. Your donation to match our RFA grant helps keep her writing stories like this one; please consider making a tax-deductible gift of any amount today by clicking here.
