Industry insiders think $927 million Domo is the next big cloud acquisition – but sources say CEO Josh James has rebuffed encouragement to sell and wants to prove he's 'not just a founder, but a CEO'
Data analysis software company Domo has faced challenges during the pandemic, but its stock closed up more than 10% after the company reported better-than-expected first-quarter earnings despite the coronavirus crisis. Domo is expected by many analysts to be the next big cloud acquisition target. As one analyst recently told Business Insider, Domo is "one of those companies that it's kind of surprising that it hasn't been acquired yet." But banking and tech industry sources told CEO Josh James, who has majority voting power, has been reluctant to sell despite encouragement from bankers. James has always "wanted to prove he's not just a founder, but a CEO," one source said. James said at a Domo conference in March that he doesn't want to sell, but would be open to inbound interest from a would-be acquirer if the deal made sense and it was the right time. Do you have information about Domo or another tech company? Contact this reporter via encrypted messaging app Signal (+1-425-344-8242) or email (email@example.com). Visit Business Insider's homepage for more stories.
Domo, a Utah-based data-analytics company currently valued on the public markets at just shy of $1 billion, is expected by many analysts to be the next big cloud acquisition target. But sources tell Business Insider the company's CEO Josh James, who has majority voting power, is reluctant to sell — despite encouragement from bankers. The company faced hurdles early on in the coronavirus crisis, slashing its headcount by a reported 10% as part of a $30 million cost-saving plan, even as Morgan Stanley speculated that the situation might exacerbate some of Domo's pre-existing problems when it came to its closing deals. But Domo seems to have rebounded, with the company reporting better-than-expected first-quarter results on Thursday. Shares closed more than 10% higher on Friday, sending its market cap up to about $925 million — quadruple what it was at its 52-week low. Meanwhile, the company was in the spotlight amid the crisis, with Vice President Mike Pence highlighting the company's work with the Iowa state government to expand access to COVID-19 testing. Regardless of Domo's newly-solid footing, however, it's long been eyed as a potential takeover target. Earlier this year, analysts identified Domo as a likely candidate to be the next big cloud acquisition, especially after Salesforce bought Tableau, a major rival to the company, and Google snatched up the similar Looker. As one analyst recently told Business Insider, Domo is "one of those companies that it's kind of surprising that it hasn't been acquired yet." Industry analyst Ray Wang of Constellation Research identified SAP and Google as potential acquirers, while other names that have come up include Amazon Web Services and Salesforce. Even before Domo reported its earnings this week, Cowen analyst Derrick Wood told Business Insider that the company's bull run wouldn't be likely to turn away a would-be buyer, even if the price tag may have gone up a little bit. Wang recently estimated that Domo could fetch a price tag as high as $1.5 billion in a potential acquisition. But James has been heavily disinclined to sell, two banking sources told Business Insider. He would apparently prefer that Domo builds a tech empire of its very own: He's always "wanted to prove he's not just a founder, but a CEO," said a source who works for a Domo competitor. Domo declined to comment on potential M&A activity. "Josh has said numerous times he would love to be running Domo when he's 70 years old; but he's also said numerous times he will always look at any acquisition offer that comes along as it is the responsibility that he has to shareholders," Domo spokeswoman Julie Kehoe said. "It is a fact that in some cases for some companies it makes sense to join forces with an acquirer." Independent streak Sources tell Business Insider that James sees himself as a big name like Salesforce CEO Marc Benioff in the making, and has always wanted to prove he can be a successful CEO, not just a founder who sells his companies — and Domo's recent rebound helps make the case for staying independent. The two bankers, who have worked with Domo in the past, told Business Insider that James has indicated he wanted Domo to stay independent. James owned nearly all of Domo's voting power at the time of the company's IPO in June 2018. Prior to Domo, James was best known for selling his previous company Omniture to Adobe for $1.8 billion in 2009. He was resistant to making that deal at first: A securities filing from the Omniture acquisition shows James first declined Adobe CEO Shantanu Narayen's advances, saying he preferred to discuss "partnership opportunities." Narayen kept pressing, and two months later, James relented and formal acquisition talks began. James now wishes he kept the company independent, a source close to the company said. Bankers have informally approached James with encouragement to sell Domo, but James has rebuffed the idea, the two banking sources say. Kehoe, the Domo spokeswoman, said "Josh feels great about the acquisition of Omniture to Adobe and how it became a bright shining star and a big chunk of Adobe's overall strategy and business. Josh and his team built it into a mature, meaningful, standalone business after running it for thirteen years and three years as a public company. It was the second biggest SaaS company after Salesforce and was on pace to do a robust $500m in revenue. It was profitable and already kicking off $100m a year in cash flow." James has also shown signs in the last several months of being at least open to discussions about a possible acquisition. Asked during the company's Domopalooza conference in March whether it was time to considering selling the business to a larger vendor like SAP or Oracle or Microsoft, James said: "We always take inbounds when we come. I'm certainly not opposed to selling the company. He added: "Do I want to sell? No, I don't want to sell, but there's the reality of also having to face whatever is taking place with your ability to execute out there in the marketplace." He also said, "I didn't sell Omniture too early. I sold Omniture when we felt like we should have sold Omniture and it was the right time." So who would buy? Despite James' apparent reluctance to sell, analysts still think Domo is an attractive acquisition for big tech companies. The acquisitions of Tableau and Looker prove that data analytics is a hot market, with Domo as one of the last large independent companies. This means that Domo could be a benefit to just about any buyer. SAP seems like a likely suitor. Domo Chief Financial Officer Bruce Felt's previous company SuccessFactors, where he was also CEO, sold to SAP for $3.4 billion back in 2012. Meanwhile, Domo frequently partners with SAP-owned Qualtrics, which is also headquartered in the Provo, Utah area. On the other hand, Constellation analyst Wang thinks that neither Salesforce nor Amazon Web Services may be especially inclined to buy. Salesforce just spent $15.3 billion on Tableau in its biggest deal ever, meaning it might be disinclined to write another large check for a similar company, Wang notes. AWS, meanwhile, rarely makes large acquisitions, preferring instead to build technology in-house as much as possible, Wang said. Got a tip? Contact Ashley Stewart via email at firstname.lastname@example.org, message her on Twitter @ashannstew, or send her a secure message through Signal at 425-344-8242.Join the conversation about this story » NOW WATCH: We tested a machine that brews beer at the push of a button
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Berkshire Hathaway and Salesforce are poised to invest $250 million or more in Snowflake stock, and experts say it's a sign that the market for managing data is only getting hotter
Summary List Placement Salesforce and Berkshire Hathaway have both agreed to purchase $250 million in shares...Summary List Placement Salesforce and Berkshire Hathaway have both agreed to purchase $250 million in shares in Snowflake's IPO, according to an amended filing released on Tuesday. The data warehousing company initially filed to go public last month, in what's become one of the most-anticipated public debuts for a tech company this year. News of the investment came as Snowflake also set an initial price range for its shares of $75 to $85. Based on that range, Snowflake would be valued between $20.9 billion and $23.7 billion at the time of its IPO, as our colleagues at Markets Insider previously reported. In an amended S-1 filing, Snowflake says that Salesforce and Berkshire Hathaway are each expected to purchase 3.1 million shares, which at $80 per share — the midpoint of its range — adds up to the $250 million figure. Berkshire Hathaway is also purchasing another 4 million Class A shares from former Snowflake CEO Bob Muglia in a secondary transaction, set at the IPO price for each share. That could cost $303 million to $344 million based on the expected price range, so Berkshire Hathaway's total investment in Snowflake shares could be up to $550 million to $590 million in total, as Markets Insider reported. Snowflake's last private valuation was $12.4 billion in February after a funding round that notably included Salesforce Ventures, the cloud software giant's investment arm. Analysts say Salesforce and Berkshire Hathaway's investment shows just how important data has become to businesses and the need for technology like Snowflake's to manage it. They say it gives Snowflake's business validation from both the tech community and investor community. For Salesforce specifically, it also lays the foundation for a stronger partnership with Snowflake down the line. The importance of data The hype around Snowflake's IPO comes in part because of the fast-growing market for helping companies manage and analyze their data. Salesforce itself recently made a big bet on that market with its $15.7 billion purchase of Tableau. "As companies are trying to streamline massive volumes of data, across many different sources and platforms and tools and technology and make all that data usable, Snowflake's technology is becoming increasingly important," said Futurum Research analyst Dan Newman. So for Salesforce and Berkshire Hathaway, it's a way to get in relatively early on a company that's widely anticipated to build a strong position for itself in that market. Snowflake also has partnerships with Amazon Web Services and Microsoft Azure, the two largest cloud providers, meaning that its avenues for growth are strong. "With the large addressable market opportunity as companies continue to move costly, rigid, and proprietary data warehouses to the cloud, there's still a lot of growth opportunity for Snowflake," said Rebecca Wettemann, an analyst at Valoir. Berkshire Hathaway's involvement, and that of its famous CEO Warren Buffett, can be taken as an important seal of approval from the investment community ahead of the official IPO, Newman added. It's rare for Warren Buffett to invest in tech companies, which makes it even more significant, as Market's Insider's Theron Mohame notes. A 'complementary' investment for Salesforce For Salesforce in particular, Snowflake is very "complementary" to its own customer relationship management software, Newman said. The investment could "benefit the company as its users turn to Snowflake to warehouse data, to integrate, streamline, and use as part of their Salesforce platform," he added. Its investment is also an overall validation from the tech community in Snowflake's business. Salesforce likely has a strong self-interest in investing in Snowflake to build on its existing partnership, analysts told Business Insider. "Salesforce in particular would have a vested interest in creating an integrated offering with Snowflake," Nucleus Research analyst Dan Elman said. "Customers themselves have been moving to use Snowflake more and more. So partnering with that brand kind of shows that they're in tune with what's going on in the market and changing customer preferences." Valoir's Wettemann points out that Salesforce has a track record of investing in companies that are complementary to Salesforce's own offerings. Sometimes, those investments set the stage for an acquisition down the line, as we've seen with companies like Vlocity and MuleSoft — both one-time Salesforce Ventures investments that were later bought entirely. As of June, Snowflake already has some integrations with Tableau and other Salesforce applications, making it possible to analyze data across both platforms. Elman expects that partnership to grow given this new investment in the IPO. Ultimately, however, Newman says that the investment says as much as the broader market as it does about any virtue of Snowflake and its technology: "People are very excited about both their specific product and service, but also the marketplace in which Snowflake is operating." Got a tip? Contact this reporter via email at email@example.com or Signal at 925-364-4258. (PR pitches by email only, please.) You can also contact Business Insider securely via SecureDrop.Join the conversation about this story » NOW WATCH: Epidemiologists debunk 13 coronavirus myths
Welcome to this week's edition of Trending, the newsletter where we highlight BI Prime's biggest tech...Welcome to this week's edition of Trending, the newsletter where we highlight BI Prime's biggest tech stories. I'm Alexei Oreskovic, Business Insider's West Coast bureau chief and global tech editor. If this is your first time here, this is how you can get Trending in your inbox every week. This week: From the tower of Salesforce to the kingdom of magic, change is in the air Did someone make Tuesday the official day of CEO goodbyes? Within the span of minutes after the markets closed on Tuesday, Walt Disney CEO Bob Iger and Salesforce co-CEO Keith Block each announced they were stepping down. (If you need a third to make it a trend, Jason Droege, the head of Uber Eats, delivered his adieu by tweet on Tuesday too). Iger has teased his exit from the top job at Disney for years. The surprise was that he finally went through with it. Block, on the other hand, was only 18 months into a co-CEO job alongside Salesforce founder Marc Benioff — a gig that was by all indications supposed to end with Block taking over the candy shop eventually. The timing of these CEO departures is, of course, coincidental. But they say something about the unpredictable nature and dynamics of CEO successions. When you're the boss, it's hard to say goodbye. And that's even more so in the world of tech, where founder-CEOs have more clout (with or without dual-class stock structures) than in other businesses. Whatever the assumptions were about Block being the heir to the Benioff throne, the reality, as Paayal Zaveri reports, is that Benioff and co-founder Parker Harris are still extremely engaged in how the company is run. Benioff may have other interests in philanthropy and public policy, but he's still firing on all cylinders at Salesforce. If it sounds familiar, that's because we've seen this movie before. Larry Ellison is putatively the Chairman and Chief Technology Officer at Oracle, with Safra Catz as CEO (and until recently Mark Hurd, who died in October, serving alongside Catz as co-CEO). These CEO jobs are not just titular. Catz, and Block, truly run major transnational corporations. But the ultimate power at the company lies elsewhere. At one point, Dell had an "Office of the CEO" comprised of Kevin Rollins as chief executive and Michael Dell as Chairman. Michael Dell was said to be preparing for a second act in something new; perhaps politics, people speculated. The second act turned out to be Dell taking over as CEO again, and transforming the PC maker into an enterprise services business. Paayal points to a new crop of rising stars at Salesforce, including ex-Facebook CTO Bret Taylor and Adam Selipsky, the chief of recent Salesforce acquisition Tableau. Some analysts reckon these execs are more suitable heirs to Benioff's freewheeling company and corporate culture than the buttoned-down Block. But I've got a feeling that no matter who has the CEO title, Salesforce will remain a Marc Benioff production for a long time to come. Read the full story here: The sudden departure of Salesforce co-CEO Keith Block could show how Marc Benioff is preparing a new generation of talent to take the reins at the cloud giant A shopping list for Satya Speaking of CEO successions, the reign of Satya Nadella has become one of the most remarkable turnaround stories in modern tech history. Microsoft may not have been in imminent danger of collapse, but it was stuck in a funk that even Bill Gates, who served as Chairman during the troubled years prior to Nadella becoming CEO, could not find a way out of. Nadella's transformation of Microsoft is a story that's still being written. Microsoft has evolved from a PC software company to an enterprise cloud computing giant. And the company has made some significant acquisitions, including GitHub and LinkedIn. And analysts expect Satya to keep shopping — to the tune of $2 billion this year, according to one analyst. Ashley Stewart takes a look at some of the next potential acquisition targets that Microsoft could go after. The list is based on speculation and analysis from people who follow the sector closely — there's nothing to suggest deal discussions are underway with any of these companies. Some of the names on the list are big players themselves, others less so. Read the full story here: Here are the 11 companies that experts think Microsoft could try to acquire in 2020, including Salesforce, Twilio, and Workday Here are some of the latest tech highlights: Walmart just took a big step in its move to break Amazon's control over 3rd-party sellers and is officially letting sellers sign up for its fulfillment service Tech startups have a new 'exit' strategy. Why private equity firms have started plowing billions into acquiring startups. This ex-con hacker just made over $100,000 in a single day helping companies plug up their cybersecurity Suddenly losing her job inspired this marketing pro to start a project to help Chicago's laid-off tech workers find their next gig — and break the shame of layoffs A leaked video shows the head of Microsoft's competitor to Amazon's Twitch telling employees to stay positive, not 'complain and nag' And more goodies from across the BI newsroom: WeWork paid over $2 million in cash to a woman who threatened to expose claims of sex, illegal drugs, and discrimination in a horrifying 50-page document Inside the $1 billion race to develop breakthrough batteries that could store up to 40% more energy and revolutionize our phones, cars, and planes The 21 most influential digital creators based in New York who rule Instagram, YouTube, and other social-media platforms That's it for this week. As always, thanks for reading, and remember, if you like this newsletter, tell your friends and colleagues they can sign up here to receive it. — AlexeiJoin the conversation about this story » NOW WATCH: Inside the US government's top-secret bioweapons lab
Salesforce touted its acquisition of Tableau in its latest earnings call, but integrating the data-analytics company might be more challenging than expected
Salesforce's third quarter earnings were the company's first since acquiring Tableau earlier this year, but it's...Salesforce's third quarter earnings were the company's first since acquiring Tableau earlier this year, but it's still unclear how exactly Tableau will be integrated and what impact it will have on the company's bottom line. Co-CEO Keith Block said on the earnings call with investors that Salesforce intends to use the same playbook to integrate Tableau as it did with MuleSoft. "We are just beginning this integration process, but we have clear synergies from a distribution, product development and cultural standpoint," Block said. However, that integration might be more challenging than expected, says Daniel Newman, the founding partner and principal analyst at Futurum Research. He highlights Tableau's legacy on premise nature versus Salesforce's cloud first beginnings as a potential hurdle in integrating the two platforms. Newman further highlights that, overall, acquisitions like Tableau will be important to fuel the company's growth going forward if it wants to meet its goal of doubling the company in five years. Click here for more BI Prime stories. Salesforce delivered its first quarterly report card since it closed the biggest acquisition in its history, and questions about Tableau — the analytics firm Salesforce bought for $15.3 billion — were a big focus of Tuesday's earnings conference call. While Saleforce's Q3 results beat on the top and bottom lines, expenses from the acquisition of Tableau weighed slightly on the company's results. More importantly, analysts are still trying to get a sense of how Tableau will fit into the company's product line and help Salesforce achieve ambitious growth targets announced to great fanfare last month. Coming off the heels of its annual Dreamforce conference in San Francisco last month, co-CEO Marc Benioff said on an earnings call with investors that he was surprised at the customer reception to Tableau he saw there. "So many of our customers have Tableau, I could not believe it," Benioff said on the call. "They don't have a direct relationship with Tableau ... the number of chief executive officers and CIOs who will directly came to me and my management team and ask us to go wall-to-wall with Tableau has far exceeded any expectations that we could have had." Salesforce acquired Tableau for $15.3 billion earlier this year — the company's largest acquisition ever, with the goal of adding data analytics and visualization capabilities to its product offerings. This was a year after it acquired MuleSoft for $6.5 billion. On the earnings call, co-CEO Keith Block highlighted the importance of collecting and analyzing data from systems that collect it, and said Tableau will help provide that service to Salesforce customers. Tableau is different than Mulesoft However, that integration might be more challenging than expected, Daniel Newman, the founding partner and principal analyst at Futurum Research, told Business Insider. While Salesforce was created as a cloud company, not requiring a heavy infrastructure lift, Tableau is different, he said. More than two-thirds of Tableau's customers still use an on premise model as opposed to using its service in the cloud, Newman said. Therefore the integration might be harder than expected and require more investment than its acquisition of Mulesoft, which was more of a logical acquisition, he added. Some observers found reassurance in Tableau's performance in the quarter. Rob Oliver, a senior research analyst at Baird Equity Research, told Business Insider that Tableau came in above expectations this quarter, given that the two companies have just started integrating. On Tuesday's earnings call, Block said Salesforce intends to run the same playbook for Tableau as it did with the Mulesoft acquisition. He also highlighted the impact Tableau is having on customers like Nissan, Morgan Stanley and Home Depot and the potential opportunity there. "We are just beginning this integration process, but we have clear synergies from a distribution, product development and cultural standpoint," Block said. Tableau brought an additional $308 million in revenue to Salesforce's subscription and support services for the quarter, which totaled $4.24 billion. Overall, acquisitions like Tableau will be important to fuel the company's growth going forward, Futurum Research's Newman said. During its investor day last month, Salesforce said it intends to double the company's size in five years, forecasting $35 billion in revenue for FY 2024. Although the company is growing and delivering earnings that are consistently slightly beating estimates, that alone is not enough to provide the necessary growth Newman said. "Ambitions to double the company, will be heavily dependent on the company making additional acquisitions," he said. Got a tip? Contact this reporter via email at firstname.lastname@example.org or Signal at 925-364-4258. You can also contact Business Insider securely via SecureDrop.Join the conversation about this story » NOW WATCH: 9 items to avoid buying at Costco