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Medallia Reports Record Fourth Quarter Fiscal 2020 Financial Results

03/12/2020
  • Fiscal Year 2020 Total Revenue of $402.5 Million, up 28% Year-over-Year; Q4 Total Revenue of $110.1 Million, Up 27% Year-over-Year
  • Fiscal Year 2020 Subscription Revenue of $312.2 Million, up 26% Year-over-Year; Q4 Subscription Revenue of $86.2 Million, Up 27% Year-over-Year

SAN FRANCISCO--(BUSINESS WIRE)--March 12, 2020--Medallia, Inc. (NYSE: MDLA), the global leader in experience management, today announced financial results for the quarter and year ended January 31, 2020.

“We capped off our first year as a public company with accelerated annual subscription revenue growth while extending our innovative and unique experience platform,” commented Leslie Stretch, president and CEO, Medallia. “Recent wins include AkzoNobel, Cloudera, Freddie Mac, Freshii, Luigi Lavazza, Mazda Canada, Ryder, Samsung U.K., Smashburger and XP Investimentos, among others.”

Stretch continued, “We plan to generate positive cash flow from operations for the full fiscal 2021 year. In addition, we plan to be break-even on a non-GAAP basis in fiscal 2021. With a healthy cash balance, disciplined financial management and a phenomenal and growing customer base, I believe we are well positioned to lead the customer experience domain.”

Financial Highlights for the Fourth Quarter of Fiscal 2020

  • Total revenue for the quarter was $110.1 million, an increase of 27% from the same period last year. Subscription revenue was $86.2 million, an increase of 27% from the same period last year.
  • Loss from operations for the quarter was $32.8 million, compared to loss from operations of $9.3 million in the same period last year. Non-GAAP income from operations for the fourth quarter was $3,000, compared to $2.4 million in the same period last year.
  • Net loss for the quarter was $31.9 million, or $(0.25) per share, basic and diluted, compared to net loss of $9.9 million, or $(0.34) per share, basic and diluted, in the same period last year. Non-GAAP net income was $0.5 million, or $0.00 per share, diluted, compared to non-GAAP net income of $1.7 million, or $0.02 per share, diluted, in the same period last year.
  • Cash, cash equivalents and marketable securities were $343.7 million as of January 31, 2020.

Financial Highlights for the Full Fiscal 2020

  • Total revenue for fiscal year 2020 was $402.5 million, an increase of 28% from the prior year. Subscription revenue was $312.2 million, an increase of 26% from the prior year.
  • Loss from operations for the fiscal year 2020 was $114.9 million, compared to loss from operations of $80.4 million in fiscal year 2019. Non-GAAP loss from operations for the fiscal year 2020 was $2.4 million, compared to $47.7 million in the same period last year.
  • Net loss for the fiscal year 2020 was $112.3 million, or $(1.35) per share, basic and diluted, compared to net loss of $82.2 million, or $(3.07) per share, basic and diluted, in the same period last year. Non-GAAP net loss was $1.6 million, or $(0.02) per share, basic and diluted, compared to non-GAAP net loss of $49.5 million, or $(1.85) per share, basic and diluted, in the prior year.

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

  • Achieved Federal Risk and Authorization Management Program (FedRAMP) certification, further validating the company’s depth in delivering highly secure, leading solutions for consumer, employee and government experience management.
  • Launched the Medallia Sales and Service Experience App, available on Salesforce AppExchange.
  • Named a leader in The Forrester Wave™: Customer Feedback Management Platforms, Q1 2020.
  • Recognized as the most advanced employee experience platform in the guiding analytics category of the People Analytics Technology report by research firm RedThread Research.
  • Acquired LivingLens, a video feedback platform, to humanize feedback and bring the voice of the customer and employee to life.
  • Announced three new innovative capabilities at NRF 2020, arming retailers with powerful insights to create world-class customer experiences, including Rival Intelligence for Medallia Social, Medallia pre-configured retail applications and Medallia’s Retail Theme Analytics.

Conference Call

Medallia will host a conference call at 1:30 p.m. PT (4:30 p.m. ET) today to discuss the fourth quarter and fiscal 2020 results and outlook for the first quarter and full fiscal year 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 facility exit costs.

Income tax benefits. We exclude income 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 income tax benefits related to our stock option exercise deductions.

Trailing twelve month subscription billings. We calculate subscription billings as total subscription revenue plus the change in subscription deferred revenue and contract assets (unbilled receivables) in the period. We measure subscription billings on a trailing twelve month basis because subscription billings vary from quarter to quarter due to invoice timing.

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 and the “Financial Outlook” section, 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, timing and size of orders, relative growth of our recurring revenue, potential decreases in customer spending, uncertainty regarding purchasing trends in the cloud software market, customer cancellations or non-renewal of maintenance contracts or on-demand services, 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 prospectus filed with the SEC pursuant to Rule 424(b)(4) dated July 18, 2019 and in our quarterly report on Form 10-Q dated December 11, 2019, both of which may be obtained on the Investor Relations section of Medallia’s website (https://investor.medallia.com/financials/sec-filings/default.aspx). Actual results may differ materially from those presently reported. All forward-looking statements in this press release are based on information available to us as of the date hereof. We assume no obligation 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)

   

January 31,
2020

 

January 31,
2019

Assets

       

Current assets:

       

Cash and cash equivalents

 

$

226,866 

   

$

44,876 

 

Marketable securities

 

116,833 

   

— 

 

Trade and other receivables, net of allowance for doubtful accounts of $982 and $253 as of January 31, 2020 and 2019, respectively

 

150,661 

   

106,120 

 

Deferred commissions, current

 

22,455 

   

15,874 

 

Prepaid expenses and other current assets

 

22,492 

   

15,595 

 

Total current assets

 

539,307 

   

182,465 

 

Property and equipment, net

 

34,879 

   

42,989 

 

Deferred commissions, noncurrent

 

51,540 

   

35,727 

 

Intangible assets, net

 

21,306 

   

305 

 

Goodwill

 

79,324 

   

16,745 

 

Other noncurrent assets

 

5,293 

   

1,953 

 

Total assets

 

$

731,649 

   

$

280,184 

 

Liabilities and stockholders’ equity (deficit)

       

Current liabilities:

       

Accounts payable

 

$

3,608 

   

$

1,007 

 

Accrued expenses and other current liabilities

 

20,268 

   

12,840 

 

Accrued compensation

 

37,160 

   

19,708 

 

Deferred revenue, current

 

263,115 

   

210,666 

 

Total current liabilities

 

324,151 

   

244,221 

 

Deferred revenue, noncurrent

 

1,407 

   

1,151 

 

Deferred rent, noncurrent

 

2,799 

   

37,182 

 

Other liabilities

 

5,496 

   

4,188 

 

Total liabilities

 

333,853 

   

286,742 

 

Stockholders’ equity (deficit):

       

Convertible preferred stock

 

— 

   

72 

 

Common stock, Class A

 

— 

   

30 

 

Common stock

 

132 

   

— 

 

Additional paid-in capital

 

878,843 

   

363,076 

 

Accumulated other comprehensive loss

 

(206)

   

(1,096)

 

Accumulated deficit

 

(480,973)

   

(368,640)

 

Total stockholders’ equity (deficit)

 

397,796 

   

(6,558)

 

Total liabilities and stockholders’ equity (deficit)

 

$

731,649 

   

$

280,184 

 
         

Medallia, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

   

Three Months Ended January 31,

 

Twelve Months Ended January 31,

   

2020

 

2019

 

2020

 

2019

Revenue:

               

Subscription

 

$

86,160 

   

$

67,874 

   

$

312,168 

   

$

246,797 

 

Professional services

 

23,940 

   

18,510 

   

90,295 

   

66,845 

 

Total revenue

 

110,100 

   

86,384 

   

402,463 

   

313,642 

 

Cost of revenue:

               

Subscription

 

16,913 

   

12,603 

   

61,369 

   

47,948 

 

Professional services

 

22,203 

   

16,718 

   

83,820 

   

67,953 

 

Total cost of revenue

 

39,116 

   

29,321 

   

145,189 

   

115,901 

 

Gross profit

 

70,984 

   

57,063 

   

257,274 

   

197,741 

 

Operating expenses:

               

Research and development

 

27,348 

   

19,692 

   

95,978 

   

86,272 

 

Sales and marketing

 

53,559 

   

30,378 

   

180,711 

   

138,674 

 

General and administrative

 

22,843 

   

16,299 

   

95,515 

   

53,239 

 

Total operating expenses

 

103,750 

   

66,369 

   

372,204 

   

278,185 

 

Loss from operations

 

(32,766)

   

(9,306)

   

(114,930)

   

(80,444)

 

Interest income and other income (expense), net

 

555 

   

(234)

   

3,129 

   

(11)

 

Loss before provision for (benefits from) income taxes

 

(32,211)

   

(9,540)

   

(111,801)

   

(80,455)

 

Provision for (benefits from) income taxes

 

(341)

   

408 

   

532 

   

1,779 

 

Net loss

 

$

(31,870)

   

$

(9,948)

   

$

(112,333)

   

$

(82,234)

 

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

 

$

(0.25)

   

$

(0.34)

   

$

(1.35)

   

$

(3.07)

 

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

 

129,365 

   

28,861 

   

83,269 

   

26,770 

 
                 

Medallia, Inc.

GAAP to Non-GAAP Reconciliations

(in thousands, except percentages)

(unaudited)

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 January 31,

 

Twelve Months Ended January 31,

   

2020

 

2019

 

2020

 

2019

Cost of revenue:

               

Subscription

 

$

1,834 

   

$

264 

   

$

4,933 

   

$

1,504 

 

Professional services

 

2,876 

   

557 

   

8,943 

   

2,379 

 

Operating expenses:

               

Research and development

 

6,889 

   

1,718 

   

18,422 

   

7,563 

 

Sales and marketing

 

10,251 

   

1,780 

   

29,327 

   

6,813 

 

General and administrative

 

10,919 

   

7,356 

   

50,922 

   

14,472 

 

Income tax benefits

 

(408)

   

— 

   

(1,783)

   

— 

 

Total

 

$

32,361 

   

$

11,675 

   

$

110,764 

   

$

32,731 

 
                 
         
   

Twelve Months Ended January 31,

   

2020

 

2019

Operating activities

       

Net loss

 

$

(112,333)

   

$

(82,234)

 

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

       

Depreciation and amortization

 

15,611 

   

13,856 

 

Amortization of deferred commissions

 

19,030 

   

13,201 

 

Stock-based compensation expense

 

109,456 

   

27,858 

 

Impairment (gain) on property and equipment and lease termination

 

(13,783)

   

3,398 

 

Other

 

(698)

   

(417)

 

Changes in assets and liabilities:

       

Trade and other receivables

 

(43,268)

   

(16,383)

 

Deferred commissions

 

(41,424)

   

(27,218)

 

Prepaid expenses and other current assets

 

(6,198)

   

2,176 

 

Lease incentive receivables

 

— 

   

635 

 

Other noncurrent assets

 

(252)

   

(853)

 

Accounts payable

 

2,097 

   

877 

 

Deferred revenue

 

49,749 

   

42,935 

 

Accrued expenses and other current liabilities

 

20,282 

   

6,809 

 

Other noncurrent liabilities

 

137 

   

163 

 

Net cash used in operating activities

 

(1,594)

   

(15,197)

 

Investing activities

       

Purchases of property, equipment and other

 

(22,009)

   

(11,259)

 

Purchase of marketable securities

 

(182,389)

   

(18,684)

 

Maturities of marketable securities

 

65,853 

   

34,840 

 

Proceeds from sale of marketable securities

 

511 

   

1,296 

 

Acquisitions, net of cash acquired

 

(76,532)

   

— 

 

Other

 

(1,500)

   

— 

 

Net cash provided by (used in) investing activities

 

(216,066)

   

6,193 

 

Financing activities

       

Proceeds from initial public offering, net of issuance costs, underwriters discounts and commissions, and concurrent private placement

 

319,572 

   

— 

 

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

 

69,848 

   

— 

 

Payment for employee taxes withheld upon release of restricted stock units

 

(17,907)

   

— 

 

Proceeds from exercise of stock options

 

34,009 

   

12,093 

 

Payment on capital leases

 

(3,540)

   

(708)

 

Repayment of debt assumed in acquisition

 

(2,297)

   

— 

 

Net cash provided by financing activities

 

399,685 

   

11,385 

 

Effect of exchange rate changes on cash and cash equivalents

 

(35)

   

(204)

 

Net increase in cash and cash equivalents

 

181,990 

   

2,177 

 

Cash and cash equivalents at beginning of period

 

44,876 

   

42,699 

 

Cash and cash equivalents at end of period

 

$

226,866 

   

$

44,876 

 
                 
   

Three Months Ended January 31,

 

Twelve Months Ended January 31,

   

2020

 

2019

 

2020

 

2019

Non-GAAP gross profit reconciliation:

               
                 

GAAP gross profit

 

$

70,984 

   

$

57,063 

   

$

257,274 

   

$

197,741 

 
                 

GAAP gross margin

 

64 

%

 

66 

%

 

64 

%

 

63 

%

Add (subtract):

               

Stock-based compensation

 

3,823 

   

779 

   

11,882 

   

3,522 

 

Employer payroll tax expense related to stock-based compensation

 

   

— 

   

119 

   

— 

 

Amortization of acquired intangible assets

 

880 

   

42 

   

1,875 

   

361 

 

Non-GAAP gross profit

 

$

75,694 

   

$

57,884 

   

$

271,150 

   

$

201,624 

 

Non- GAAP gross margin

 

69 

%

 

67 

%

 

67 

%

 

64 

%

                 
   

Three Months Ended January 31,

 

Twelve Months Ended January 31,

   

2020

 

2019

 

2020

 

2019

Non-GAAP subscription revenue gross profit reconciliation:

                 

GAAP subscription revenue gross profit

 

$

69,247 

   

$

55,271 

   

$

250,799 

   

$

198,849 

 
                 

GAAP subscription revenue gross margin

 

80 

%

 

81 

%

 

80 

%

 

81 

%

Add (subtract):

               

Stock-based compensation

 

954 

   

222 

   

3,058 

   

1,143 

 

Amortization of acquired intangible assets

 

880 

   

42 

   

1,875 

   

361 

 

Non-GAAP subscription revenue gross profit

 

$

71,081 

   

$

55,535 

   

$

255,732 

   

$

200,353 

 

Non-GAAP subscription revenue gross margin

 

82 

%

 

82 

%

 

82 

%

 

81 

%

                 
   

Three Months Ended January 31,

 

Twelve Months Ended January 31,

   

2020

 

2019

 

2020

 

2019

Non-GAAP operating expense reconciliation:

               
                 

GAAP operating expenses

 

$

103,750 

   

$

66,369 

   

$

372,204 

   

$

278,185 

 

Add (subtract):

               

Stock-based compensation

 

(25,336)

   

(7,426)

   

(97,574)

   

(24,336)

 

Employer payroll tax expense related to stock-based compensation

 

(823)

   

— 

   

(1,369)

   

— 

 

Amortization of acquired intangible assets

 

(326)

   

— 

   

(441)

   

— 

 

Acquisition-related costs

 

(1,027)

   

— 

   

(2,793)

   

— 

 

Restructuring and other

 

(547)

   

(3,428)

   

3,506 

   

(4,512)

 

Non-GAAP operating expenses

 

$

75,691 

   

$

55,515 

   

$

273,533 

   

$

249,337 

 
                 
   

Three Months Ended January 31,

 

Twelve Months Ended January 31,

   

2020

 

2019

 

2020

 

2019

Non-GAAP loss from operations reconciliation:

 
                 

GAAP loss from operations

 

$

(32,766)

   

$

(9,306)

   

$

(114,930)

   

$

(80,444)

 

Add (subtract):

               

Stock-based compensation

 

29,159 

   

8,205 

   

109,456 

   

27,858 

 

Employer payroll tax expense related to stock-based compensation

 

830 

   

— 

   

1,488 

   

— 

 

Amortization of acquired intangible assets

 

1,206 

   

42 

   

2,316 

   

361 

 

Acquisition-related costs

 

1,027 

   

— 

   

2,793 

   

— 

 

Restructuring and other

 

547 

   

3,428 

   

(3,506)

   

4,512 

 

Non-GAAP income (loss) from operations

 

$

   

$

2,369 

   

$

(2,383)

   

$

(47,713)

 
             
   

Three Months Ended January 31,

 

Twelve Months Ended January 31,

   

2020

 

2019

 

2020

 

2019

Non-GAAP net loss reconciliation:

               
                 

GAAP net loss

 

$

(31,870)

   

$

(9,948)

   

$

(112,333)

   

$

(82,234)

 

Add (subtract):

               

Stock-based compensation

 

29,159 

   

8,205 

   

109,456 

   

27,858 

 

Employer payroll tax expense related to stock-based compensation

 

830 

   

— 

   

1,488 

   

— 

 

Amortization of acquired intangible assets

 

1,206 

   

42 

   

2,316 

   

361 

 

Acquisition-related costs

 

1,027 

   

— 

   

2,793 

   

— 

 

Restructuring and other

 

547 

   

3,428 

   

(3,506)

   

4,512 

 

Income tax benefits

 

(408)

   

— 

   

(1,783)

   

— 

 

Non-GAAP net income ( loss)

 

$

491 

   

$

1,727 

   

$

(1,569)

   

$

(49,503)

 
                 

Weighted average shares:

               

Basic

 

129,365 

   

28,861 

   

83,269 

   

26,770 

 

Diluted

 

171,436 

   

112,996 

   

83,269 

   

26,770 

 
     
   

Trailing Twelve Months Ended January 31,

   

2020

 

2019

Subscription billings:

       

Subscription revenue

 

$

312,168 

   

$

246,797 

 
         

Increase in subscription deferred revenue

 

47,549 

   

39,095 

 

Decrease in contract assets (unbilled receivables)

 

1,052 

   

3,575 

 

Subscription billings

 

$

360,769 

   

$

289,467 

 
         

Subscription billings growth rate

 

25 

%

 

24 

%

Contacts
Investor Relations
Carolyn Bass
ir@medallia.com

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

Categories: Press Releases
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