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Medallia Reports Record Revenue in First Quarter Fiscal 2021

06/02/2020
  • Q1 Total Revenue of $112.7 Million, Up 20% Year-over-Year
  • Q1 Subscription Revenue of $89.0 Million, Up 24% Year-over-Year
  • Generated Operating Cash Flow of $23.1 Million in Q1

 

SAN FRANCISCO--(BUSINESS WIRE)--June 2, 2020--Medallia, Inc. (NYSE: MDLA), the global leader in experience management, today announced financial results for the quarter ended April 30, 2020.

“We delivered strong first quarter results despite the impact of COVID-19. I’m proud of the way we’ve delivered exceptional service to our customers and their employees,” commented Leslie Stretch, president and CEO, Medallia. “All customer and employee journeys have changed in this new environment. Companies need a comprehensive understanding of their customers to make fast decisions.”

“For the full fiscal 2021 year, we’re committed to non-GAAP profitability on an operating income basis,” Stretch continued. “We continue to deepen our experience platform with voice, video, messaging, ideas, IoT signal capture and journey analysis to create insights at massive scale and in real-time. Our unique platform, extensive global customer base, committed partner ecosystem, and strong financial position sets us up for long-term success.”

 

Financial Highlights for the First Quarter of Fiscal 2021

  • Total revenue for the quarter was $112.7 million, an increase of 20% from the same period last year. Subscription revenue was $89.0 million, an increase of 24% from the same period last year.
  • Loss from operations for the quarter was $32.8 million, compared to loss from operations of $2.0 million in the same period last year. Non-GAAP income from operations for the first quarter was $3.5 million, compared to $2.0 million in the same period last year.
  • Net loss for the quarter was $32.5 million, or $(0.24) per share, basic and diluted, compared to net loss of $2.6 million, or $(0.08) per share, basic and diluted, in the same period last year. Non-GAAP net income was $3.1 million, or $0.02 per share, diluted, compared to non-GAAP net income of $1.5 million, or $0.01 per share, diluted, in the same period last year.
  • Cash, cash equivalents and marketable securities were $407.5 million as of April 30, 2020.

 

For information regarding the non-GAAP financial measures discussed in this press release, please see the section titled “Non-GAAP Financial Measures.” Reconciliations between GAAP and non-GAAP financial measures are provided in the tables of this press release.

 

Recent Company Highlights

  • Recent wins with Arnott’s Biscuits, Hitachi Vantara, Hyland, Maersk, MSA Safety, Pandora, Panera Bread, Pinsent Masons, and Shipt, among others.
  • Hosted Medallia Experience ’20 virtually, the company’s annual user conference, for over 7,700 participants.
  • Extended our partner relationships with the addition of Guidewire, Microsoft and Veeva Systems.
  • Acquired Voci, a real-time speech to text platform, to deliver a rich single view of the customer that can power an exceptional customer experience.
  • Introduced the new Insights Suite bringing video communication and crowdsourcing to consumer insights and providing access to the market research industry.
  • Partnered with the International Chamber of Commerce (ICC) and the World Health Organization (WHO) to leverage Medallia’s Experience Cloud software to connect 45 million businesses across 140 countries to assess the business impact of COVID-19.
  • Established a crowdsourcing platform for the National Health Service of England (NHS) that would take four to six weeks in normal circumstances, in 24 hours.
  • Recognized as a leader in The Forrester New Wave™: Employee Experience Management For Large Enterprises.

 

Conference Call

Medallia will host a conference call at 1:30 p.m. PT (4:30 p.m. ET) today to discuss the first quarter of fiscal 2021 and our outlook for the second quarter of fiscal 2021. The conference call will be available via live webcast and replay at the Investor Relations section of Medallia’s website: https://investor.medallia.com/events-and-presentations/default.aspx.

About Medallia

Medallia (NYSE: MDLA) is the pioneer and market leader in Experience Management. Medallia’s award-winning SaaS platform, the Medallia Experience Cloud, leads the market in the understanding and management of experience for customers, employees and citizens. Medallia captures experience signals created on daily journeys in person, digital and Internet of Things (IoT) interactions and applies proprietary AI technology to reveal personalized and predictive insights that can drive action with tremendous business results. Using Medallia Experience Cloud, customers can reduce churn, turn detractors into promoters and buyers, and create in-the-moment cross-sell and up-sell opportunities, providing clear and potent returns on investment. For more information visit www.medallia.com.

Non-GAAP Financial Measures

In addition to financial measures prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), this press release and the accompanying tables contain, and the conference call will contain, non-GAAP financial measures, including non-GAAP gross profit and gross margin, non-GAAP subscription revenue gross profit and gross margin, non-GAAP operating expenses, non-GAAP income (loss) from operations, non-GAAP net income (loss) and non-GAAP net income (loss) per share, basic and diluted. Our management uses these non-GAAP financial measures internally in analyzing our financial results and believes they are useful to investors, as a supplement to the corresponding GAAP financial measures, in evaluating our ongoing operational performance and trends and in comparing our financial measures with other companies in the same industry, many of which present similar non-GAAP financial measures to help investors understand the operational performance of their businesses. However, it is important to note that the particular items we exclude from, or include in, our non-GAAP financial measures may differ from the items excluded from, or included in, similar non-GAAP financial measures used by other companies in the same industry. In addition, other companies may utilize metrics that are not similar to ours.

The non-GAAP financial information is presented for supplemental informational purposes only and is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. There are material limitations associated with the use of non-GAAP financial measures since they exclude significant expenses and income that are required by GAAP to be recorded in our financial statements. Please see the reconciliation tables at the end of this release for the reconciliation of GAAP and non-GAAP results. Management encourages investors and others to review Medallia’s financial information in its entirety and not rely on a single financial measure.

We adjust the following items from one or more of our non-GAAP financial measures:

Stock-based compensation expense. We exclude stock-based compensation expense, which is a non-cash expense, from certain of our non-GAAP financial measures because we believe that excluding this item provides meaningful supplemental information regarding operational performance. In particular, companies calculate stock-based compensation expense using a variety of valuation methodologies and subjective assumptions.

Employer payroll tax related to stock-based compensation. We exclude cash expenses for employer payroll taxes related to stock-based compensation, from certain of our non-GAAP financial measures because we believe that excluding this item provides meaningful supplemental information regarding operational performance. In particular, this expense is tied to the exercise or vesting of underlying equity awards and the price of our common stock at the time of exercise or vesting, which may vary from period to period independent of the operating performance of our business.

Amortization of acquired intangible assets. We exclude amortization of acquired intangible assets, which is a non-cash expense, from certain of our non-GAAP financial measures. Our expenses for amortization of intangible assets are inconsistent in amount and frequency because they are significantly affected by the timing, size of acquisitions and the inherent subjective nature of purchase price allocations. We exclude these amortization expenses because we do not believe these expenses have a direct correlation to the operation of our business.

Acquisition-related costs. We exclude costs related to acquisitions from our non-GAAP financial measures. These costs include legal and transactional costs associated with acquisition activities.

Restructuring and other. We exclude restructuring and other from certain of our non-GAAP financial measures. Restructuring and other consists of exit costs related to our former headquarters in San Mateo.

Income tax benefits. We exclude tax benefits related to acquisitions from our non-GAAP financial measures. These tax benefits realized consist of the change in the valuation allowance resulting from acquisitions. In addition, we exclude tax benefits related to our stock option exercise deductions.

Note on Forward-Looking Statements

The forward-looking statements included in this press release and in the accompanying conference call, including for example, the quotations of management, statements about achieving operating profitability on a non-GAAP basis in fiscal 2021, strategies, discussion of our commercial prospects, partnerships, estimates of future revenues, operating income/loss and expenses, stock-based compensation expense and related employer payroll tax expense, amortization of acquired intangible assets, acquisition-related costs, restructuring and other expenses, income tax benefits, and acquisitions, reflect management’s best judgment based on factors currently known and involve risks and uncertainties. These risks and uncertainties include, but are not limited to, potential disruption of customer purchase decisions resulting from global economic conditions including from an economic downturn or recession in the United States or in other countries around the world, timing and size of orders, relative growth of our recurring revenue, potential decreases in customer spending, including as a result of the COVID-19 pandemic and related public health measures, uncertainty regarding purchasing trends in the cloud software market, customer cancellations or non-renewal of maintenance contracts or on-demand services, developments in and the duration of the COVID-19 pandemic and the resulting impact on our business and operations, and the business of our customers and partners, including the economic impact of safety measures to mitigate the impacts of COVID-19, our potential inability to manage effectively any growth we experience, our ability to develop new products and services, increased competition or new entrants in the marketplace, potential impact of acquisitions and investments, changes in staffing levels, and other risks detailed in registration statements and periodic reports we filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K filed with the SEC on March 19, 2020, which may be obtained on the Investor Relations section of Medallia’s website (https://investor.medallia.com/financials/sec-filings/default.aspx). Additionally, these forward-looking statements involve risk, uncertainties, and assumptions, including those related to the impacts of COVID-19 on our business and global economic conditions. Many of these assumptions relate to matters that are beyond our control and are changing rapidly, including, but not limited to, the timeframes for and severity of social distancing and other mitigation requirements, the impact of COVID-19 on our customers’ purchasing decisions and the length of our sales cycles, particularly for customers in certain industries highly affected by COVID-19. Significant variation from the assumptions underlying our forward-looking statements could cause our actual results to vary, and the impact could be significant. All forward-looking statements in this press release are based on information available to us as of the date hereof. We undertake no obligation, and do not intend, to update the information contained in this press release or the accompanying conference call, except as required by law.

© 2020 Medallia, Inc. All rights reserved. Medallia®, the Medallia logo, and the names and marks associated with Medallia’s products are trademarks of Medallia. All other trademarks are the property of their respective owners.

Medallia, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

unaudited

   

April 30, 2020

 

January 31, 2020

Assets

       

Current assets:

       

Cash and cash equivalents

 

$

344,697 

   

$

226,866 

 

Marketable securities

 

62,832 

   

116,833 

 

Trade and other receivables, net of allowance for doubtful accounts of $2,043 and $982 as of April 30, 2020 and January 31, 2020, respectively

 

67,645 

   

150,661 

 

Deferred commissions, current

 

22,792 

   

22,455 

 

Prepaid expenses and other current assets

 

28,625 

   

22,492 

 

Total current assets

 

526,591 

   

539,307 

 

Property and equipment, net

 

36,274 

   

34,879 

 

Deferred commissions, noncurrent

 

49,467 

   

51,540 

 

Intangible assets, net

 

25,091 

   

21,306 

 

Goodwill

 

98,241 

   

79,324 

 

Other noncurrent assets

 

6,252 

   

5,293 

 

Total assets

 

$

741,916 

   

$

731,649 

 

Liabilities, and stockholders’ equity

       

Current liabilities:

       

Accounts payable

 

$

1,791 

   

$

3,608 

 

Accrued expenses and other current liabilities

 

19,556 

   

20,268 

 

Accrued compensation

 

18,224 

   

37,160 

 

Revolving line of credit

 

43,000 

   

— 

 

Deferred revenue, current

 

221,600 

   

263,115 

 

Total current liabilities

 

304,171 

   

324,151 

 

Deferred revenue, noncurrent

 

4,292 

   

1,407 

 

Deferred rent, noncurrent

 

5,741 

   

2,799 

 

Other liabilities

 

4,191 

   

5,496 

 

Total liabilities

 

318,395 

   

333,853 

 

Stockholders’ equity:

       

Common stock

 

139 

   

132 

 

Additional paid-in capital

 

939,841 

   

878,843 

 

Accumulated other comprehensive loss

 

(2,957)

   

(206)

 

Accumulated deficit

 

(513,502)

   

(480,973)

 

Total stockholders’ equity

 

423,521 

   

397,796 

 

Total liabilities and stockholders’ equity

 

$

741,916 

   

$

731,649 

 

Medallia, Inc

Consolidated Statements of Operations

(in thousands, except per share data)

unaudited

   

Three Months Ended April 30,

   

2020

 

2019

         
         

Revenue: 

       

Subscription

 

$

88,992 

   

$

71,712 

 

Professional services

 

23,699 

   

21,907 

 

Total revenue

 

112,691 

   

93,619 

 

Cost of revenue: 

       

Subscription

 

17,344 

   

13,461 

 

Professional services

 

22,219 

   

19,134 

 

Total cost of revenue

 

39,563 

   

32,595 

 

Gross profit 

 

73,128 

   

61,024 

 

Operating expenses: 

       

Research and development

 

32,379 

   

19,616 

 

Sales and marketing

 

52,015 

   

33,615 

 

General and administrative

 

21,498 

   

9,838 

 

Total operating expenses 

 

105,892 

   

63,069 

 

Loss from operations 

 

(32,764)

   

(2,045)

 

Interest income and other income (expense), net 

 

175 

   

142 

 

Loss before provision for (benefits from) income taxes 

 

(32,589)

   

(1,903)

 

(Benefits from) provision for income taxes

 

(60)

   

656 

 

Net loss 

 

$

(32,529)

   

$

(2,559)

 

Net loss per share attributable to common stockholders, basic and diluted

 

$

(0.24)

   

$

(0.08)

 

Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted

 

135,993 

   

30,430 

 

GAAP to Non-GAAP Reconciliations

 

GAAP to Non-GAAP adjustments include stock-based compensation expense and related employer payroll tax expense, amortization of acquired intangible assets, acquisition-related costs, restructuring and other, and income tax benefits as follows:

   

Three Months Ended April 30,

   

2020

 

2019

Cost of revenue:

       

Subscription

 

$

1,961 

   

$

329 

 

Professional services

 

2,881

 

557

Operating expenses:

       

Research and development

 

12,311

 

1,583

Sales and marketing

 

10,536

 

1,500

General and administrative

 

8,593

 

75

Income tax benefit

 

(696)

   

— 

 

Total

 

$

35,586 

   

$

4,044 

 

Medallia Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

         
   

Three Months Ended April 30,

   

2020

 

2019

Operating activities

       

Net loss

 

$

(32,529)

   

$

(2,559)

 

Adjustments to reconcile net loss to net cash provided by operating activities:

       

Depreciation and amortization 

 

5,468 

   

3,178 

 

Amortization of deferred commissions

 

6,081 

   

4,178 

 

Stock-based compensation expense

 

31,804 

   

7,962 

 

Impairment (gain) on property and equipment, and lease termination

 

— 

   

(13,783)

 

Other

 

845 

   

494 

 

Changes in assets and liabilities:

       

Trade and other receivables

 

81,689 

   

55,281 

 

Deferred commissions

 

(4,345)

   

(6,702)

 

Prepaid expenses and other current assets

 

(5,809)

   

(891)

 

Other noncurrent assets

 

(892)

   

(100)

 

Accounts payable

 

(2,726)

   

736 

 

Deferred revenue

 

(39,248)

   

(25,135)

 

Accrued expenses and other current liabilities

 

(20,277)

   

(4,246)

 

Other noncurrent liabilities

 

3,052 

   

(171)

 

Net cash provided by operating activities

 

23,113 

   

18,242 

 

Investing activities

       

Purchases of property, equipment and other

 

(5,374)

   

(1,852)

 

Purchase of marketable securities

 

(22,748)

   

(68,726)

 

Maturities of marketable securities

 

76,423 

   

— 

 

Proceeds from sale of marketable securities

 

600 

   

511 

 

Acquisitions, net of cash acquired

 

(25,209)

   

— 

 

Net cash provided by (used in) investing activities

 

23,692 

   

(70,067)

 

Financing activities

       

Proceeds from Series F convertible preferred stock, net of issuance costs

 

— 

   

69,848 

 

Proceeds from revolving line of credit

 

43,000 

   

— 

 

Proceeds from exercise of stock options

 

19,180 

   

5,276 

 

Proceeds from share purchase plan

 

10,267 

   

— 

 

Principal payments on capital leases

 

(1,041)

   

(624)

 

Deferred issuance costs

 

— 

   

(3,053)

 

Net cash provided by financing activities

 

71,406 

   

71,447 

 

Effect of exchange rate changes on cash and cash equivalents

 

(380)

   

(42)

 

Net increase in cash and cash equivalents

 

117,831 

   

19,580 

 

Cash and cash equivalents at beginning of period

 

226,866 

   

44,876 

 

Cash and cash equivalents at end of period

 

$

344,697 

   

$

64,456 

 

Medallia, Inc.

GAAP to Non-GAAP Reconciliations

(in thousands, except percentages)

(unaudited)

   

Three Months Ended April 30,

   

2020

 

2019

Non-GAAP gross profit reconciliation:

       
         

GAAP gross profit

 

$

73,128 

   

$

61,024 

 
         

GAAP gross margin

 

65 

%

 

65 

%

Add:

       

Stock-based compensation

 

3,593 

   

844 

 

Employer payroll tax expense related to stock-based compensation

 

257 

   

— 

 

Amortization of acquired intangible assets

 

992 

   

42 

 

Non-GAAP gross profit

 

$

77,970 

   

$

61,910 

 

Non- GAAP gross margin

 

69 

%

 

66 

%

         
         
   

Three Months Ended April 30,

   

2020

 

2019

Non-GAAP subscription revenue gross profit reconciliation:

       
         

GAAP subscription revenue gross profit

 

$

71,648 

   

$

58,251 

 
         

GAAP subscription revenue gross margin

 

81 

%

 

81 

%

Add:

       

Stock-based compensation

 

909 

   

287 

 

Employer payroll tax expense related to stock-based compensation

 

60 

   

— 

 

Amortization of acquired intangible assets

 

992 

   

42 

 

Non-GAAP subscription revenue gross profit

 

$

73,609 

   

$

58,580 

 

Non-GAAP subscription revenue gross margin

 

83 

%

 

82 

%

Medallia, Inc.

GAAP to Non-GAAP Reconciliations

(in thousands, except percentages)

(unaudited)

   

Three Months Ended April 30,

   

2020

 

2019

Non-GAAP operating expense reconciliation:

       
         

GAAP operating expenses

 

$

105,892 

   

$

63,069 

 

GAAP operating expenses, as a % of total revenue

 

94 

%

 

67 

%

Add (subtract):

       

Stock-based compensation

 

(28,211)

   

(7,118)

 

Employer payroll tax expense related to stock-based compensation

 

(1,959)

   

— 

 

Amortization of acquired intangible assets

 

(419)

   

— 

 

Acquisition-related costs

 

(851)

   

(92)

 

Restructuring and other

 

— 

   

4,052 

 

Non-GAAP operating expenses

 

$

74,452 

   

$

59,911 

 

Non-GAAP operating expenses, as a % of total revenue

 

66 

%

 

64 

%

Medallia, Inc.

GAAP to Non-GAAP Reconciliations

(in thousands, except percentages)

(unaudited)

   

Three Months Ended April 30,

   

2020

 

2019

Non-GAAP income (loss) from operations reconciliation:

       
         

GAAP loss from operations

 

$

(32,764)

   

$

(2,045)

 

GAAP loss from operations, as a % of total revenue

 

(29)

%

 

(2)

%

Add (subtract):

       

Stock-based compensation

 

31,804 

   

7,962 

 

Employer payroll tax expense related to stock-based compensation

 

2,216 

   

— 

 

Amortization of acquired intangible assets

 

1,411 

   

42 

 

Acquisition-related costs

 

851 

   

92 

 

Restructuring and other

 

— 

   

(4,052)

 

Non-GAAP income from operations

 

$

3,518 

   

$

1,999 

 

Non-GAAP income from operations, as a % of total revenue

 

%

 

%

         
         
   

Three Months Ended April 30,

   

2020

 

2019

Non-GAAP net loss reconciliation:

       
         

GAAP net loss

 

$

(32,529)

   

$

(2,559)

 

GAAP net loss as a % of total revenue

 

(29)

%

 

(3)

%

Add (subtract):

       

Stock-based compensation

 

31,804 

   

7,962 

 

Employer payroll tax expense related to stock-based compensation

 

2,216 

   

— 

 

Amortization of acquired intangible assets

 

1,411 

   

42 

 

Acquisition-related costs

 

851 

   

92 

 

Restructuring and other

 

— 

   

(4,052)

 

Income tax benefit

 

(696)

   

— 

 

Non-GAAP net income

 

$

3,057 

   

$

1,485 

 

Non-GAAP net income as a % of total revenue

 

%

 

%

         

Weighted average shares - basic

 

135,993 

   

30,430 

 

Weighted average shares - diluted

 

169,659 

   

133,210 

 

Medallia, Inc.

Non-GAAP Supplemental Financial Information

(in thousands, except percentages)

(unaudited)

 

 

   

Trailing Twelve Months Ended April 30,

Subscription Billings

 

2020

 

2019

Subscription revenue

 

$

329,448 

   

$

262,926 

 
         

Increase in subscription deferred revenue

 

36,632 

   

33,959 

 

Decrease in contract assets ( unbilled revenue)

 

1,373 

   

2,356 

 

Subscription billings

 

$

367,453 

   

$

299,241 

 
         

Subscription billings growth rate

 

23 

%

 

30 

%

 

Contacts
Investor Relations
Carolyn Bass
ir@medallia.com

PR Contact:
Valerie Beaudett
press@medallia.com
+1 (650) 400-7833

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