Domo, Inc. announced on July 22, 2026, that its board of directors has adopted a tax benefits preservation plan, a type of shareholder rights plan commonly known as a "poison pill," structured specifically to protect the company's valuable net operating loss carryforwards (NOLs) and other tax attributes. The plan took effect immediately and is scheduled to remain in place until July 20, 2029, unless it expires earlier under the conditions described in the plan.
How the plan works
Under the plan, Domo will distribute one preferred stock purchase right for each outstanding share of its Class A and Class B common stock held as of August 4, 2026. Initially, these rights are not exercisable and will trade automatically with the common stock. They become exercisable and separate from the common stock only if a person or group acquires, or announces a tender offer that would result in acquiring, beneficial ownership of 4.9% or more of Domo's outstanding common stock without board approval.
If such a triggering event occurs, each right held by stockholders other than the acquiring person would entitle its holder to purchase shares of Domo common stock at a 50% discount to market value. The acquiring person's rights would become void. This dilution mechanism is designed to make it prohibitively expensive for any stockholder to cross the 4.9% threshold without negotiating with the board.
Why the board acted
Domo holds NOLs and other tax attributes that could significantly reduce future U.S. federal income tax obligations. Under Section 382 of the Internal Revenue Code, if the company experiences an "ownership change," defined as a more than 50-percentage-point increase in ownership by 5% shareholders over a rolling three-year period, its ability to use those NOLs would be substantially limited and delayed. The board determined that preserving these tax assets is in the best interests of the company and its stockholders, particularly as Domo continues to evaluate strategic alternatives.
The company previously disclosed in February 2026 that it had initiated a formal process to explore strategic alternatives to maximize shareholder value, and in June 2026 it reported that advanced negotiations were underway regarding a potential transaction. The rights plan explicitly states that it is not expected to interfere with any merger or other business combination approved by the board.
Key exceptions and board flexibility
The plan includes several important exceptions. Stockholders who already own 4.9% or more of the common stock at the time the plan was adopted are grandfathered at their current ownership level, provided they do not acquire additional shares that increase their percentage ownership. The board also retains the discretion to exempt any person or group whose ownership would not jeopardize the NOLs, and it may grant exemptions upon request if it determines doing so is in the company's best interests.
The board may redeem the rights at any time before a triggering event occurs for $0.001 per right, effectively terminating the plan. After a triggering event but before an acquiring person reaches 50% ownership, the board may exchange the rights for common stock on a one-for-one basis rather than allowing the dilution mechanism to operate.
The rights will expire on the earliest of July 20, 2029, redemption or exchange by the company, the closing of a board-approved merger or acquisition, or a board determination that the NOLs have been utilized or are no longer materially at risk.