- Record Total Revenue of $95.7 Million, Up 27%
Year-over-Year
- Record Subscription Revenue of $74.5
Million, Up 24% Year-over-Year
Medallia Inc. (NYSE: MDLA), the global leader in experience
management, today announced financial results for the quarter ended
July 31, 2019.
“I was very pleased with our first quarter performance as a
public company. In Q2, our total revenue growth rate increased to
27%, compared to 18% in Q2 of the prior year,” said Leslie Stretch,
president and CEO, Medallia. “Customer experience is at the
forefront of digital transformation. World class companies across
multiple industries choose Medallia, including Anaplan, Janus
Henderson Investors, Kelly Services and Samsung.”
Stretch continued, “This quarter we held our annual user
conference, Medallia Experience, the CX event of the year and a
catalyst for our continued growth and innovation. At Experience we
announced several new product enhancements to the Medallia
Experience Cloud platform, including new Artificial Intelligence
models to predict customer churn and suggest improvement actions,
as well as CX360 Profiles integrating all signals in live time at a
customer specific level.”
Financial Highlights for the Second Quarter of Fiscal
2020
- Total revenue for the quarter was $95.7 million, an increase of
27% from the same period last year. Subscription revenue was $74.5
million, an increase of 24% from the same period last year.
- Loss from operations for the quarter was $38.5 million,
compared to loss from operations of $27.6 million in the same
period last year. Non-GAAP loss from operations for the second
quarter was $2.4 million, compared to a non-GAAP loss from
operations of $21.0 million in the same period last year.
- Net loss for the quarter was $38.3 million, or ($0.87) per
share, basic and diluted, compared to net loss of $28.1 million, or
($1.08) per share, basic and diluted, in the same period last year.
Non-GAAP net loss was $2.6 million, or ($0.06) per share, basic and
diluted, compared to non-GAAP net loss of $21.6 million, or ($0.83)
per share, basic and diluted, in the same period last year.
- Cash, cash equivalents and marketable securities were $417.4
million as of July 31, 2019, which included $320.4 million in net
proceeds from our initial public offering and concurrent private
placement, net of underwriting discounts and commissions and other
offering costs.
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.
Business Highlights for the Second Quarter of Fiscal
2020
- Medallia unveiled CX360 Profiles, which provides all experience
and operational signals at a customer-specific level.
- Medallia announced Journey analytics, which provides full
visibility into a customer’s journey.
- Medallia expanded its Artificial Intelligence capabilities to
include churn prediction scoring and suggested improvement
actions.
- Medallia acquired Strikedeck, a business-to-business customer
success platform that will further augment Medallia’s leadership in
business-to-business customer experience management. Medallia also
acquired Cooladata, a next generation cloud-based behavioral
analytics platform and Promoter.io, a customer sentiment platform
for small and medium sized businesses.
- Rob Bernshteyn, the Chief Executive Officer and Chairman of the
Board of Coupa Software, was appointed to Medallia's Board of
Directors.
Conference Call
In conjunction with this announcement Medallia will host a
conference call at 1:30 p.m. PT (4:30 p.m. ET) today to discuss the
second quarter of fiscal 2020 and our outlook for the third quarter
of fiscal 2020 and the full fiscal year 2020. The conference call
will be available via live webcast and replay at the Investor
Relations section of Medallia’s website:
https://investor.medallia.com/overview/default.aspx.
About Medallia
Medallia 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 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, please 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, non-GAAP subscription revenue gross profit, non-GAAP
operating expenses, non-GAAP loss from operations, non-GAAP net
loss and non-GAAP net 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.
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.
Taxes related to acquisitions. 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.
Note on Forward-Looking Statements
The forward-looking statements included in this press release
and in the accompanying conference call, including for example,
discussion of our commercial prospects, partnerships, estimates of
future revenues, operating income/loss and expenses, stock-based
compensation expenses, amortization of acquired intangible assets,
acquisition-related costs, restructuring and other expenses, 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 file with the
Securities and Exchange Commission, including our prospectus filed
with the SEC pursuant to Rule 424(b)(4) dated July 18, 2019 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.
© 2019 Medallia, Inc. All rights reserved. Medallia, the
Medallia logo, and the names and marks associated with Medallia’s
products are trademarks of Medallia and/or its affiliates. Other
company and product names may be trademarks of their respective
owners.
Medallia, Inc. Condensed Consolidated Balance Sheets (in thousands)
(unaudited)
July 31, January 31,
2019
2019
Assets Current assets: Cash and cash equivalents
$
364,419
$
44,876
Marketable securities
53,018
—
Trade and other receivables, net of allowance for doubtful accounts
of $524and $253 as of July 31, 2019 and January 31, 2019,
respectively
55,797
106,120
Deferred commissions, current
18,248
15,874
Prepaid expenses and other current assets
22,673
15,595
Total current assets
514,155
182,465
Property and equipment, net
25,042
42,989
Deferred commissions, noncurrent
40,451
35,727
Goodwill and intangible assets, net
39,708
17,050
Other noncurrent assets
2,868
1,953
Total assets
$
622,224
$
280,184
Liabilities and stockholders’ equity (deficit) Current
liabilities: Accounts payable
$
2,818
$
1,007
Accrued expenses and other current liabilities
18,262
12,840
Accrued compensation
22,049
19,708
Deferred revenue, current
171,586
210,666
Total current liabilities
214,715
244,221
Deferred revenue, noncurrent
834
1,151
Deferred rent, noncurrent
2,593
37,182
Other liabilities
6,551
4,188
Total liabilities
224,693
286,742
Stockholders’ equity (deficit): Convertible preferred stock
—
72
Preferred stock
—
—
Common stock, Class A
—
30
Common stock, Class B
—
—
Common stock
127
—
Additional paid-in capital
809,014
363,076
Accumulated other comprehensive loss
(2,127
)
(1,096
)
Accumulated deficit
(409,483
)
(368,640
)
Total stockholders’ equity (deficit)
397,531
(6,558
)
Total liabilities and stockholders’ equity (deficit)
$
622,224
$
280,184
Medallia, Inc. Condensed Consolidated Statements of Operations (in
thousands except per share data) (unaudited)
Three Months
EndedJuly 31, Six Months EndedJuly 31,
2019
2018
2019
2018
Revenue: Subscription
$
74,547
$
60,099
$
146,259
$
115,682
Professional services
21,123
15,327
43,030
30,410
Total revenue
95,670
75,426
189,289
146,092
Cost of revenue: Subscription
14,699
11,968
28,160
23,403
Professional services
20,184
17,591
39,318
33,776
Total cost of revenue
34,883
29,559
67,478
57,179
Gross profit
60,787
45,867
121,811
88,913
Operating expenses: Research and development
22,693
22,409
42,309
45,585
Sales and marketing
46,470
38,623
80,085
74,053
General and administrative
30,076
12,404
39,914
23,920
Total operating expenses
99,239
73,436
162,308
143,558
Loss from operations
(38,452
)
(27,569
)
(40,497
)
(54,645
)
Interest income and other income (expense), net
431
154
573
18
Loss before provision for income taxes
(38,021
)
(27,415
)
(39,924
)
(54,627
)
Provision for income taxes
263
732
919
1,048
Net loss
$
(38,284
)
$
(28,147
)
$
(40,843
)
$
(55,675
)
Net loss per share attributable to common stockholders, basic
anddiluted
$
(0.87
)
$
(1.08
)
$
(1.10
)
$
(2.20
)
Weighted-average shares used in computing net loss per
shareattributable to common stockholders, basic and diluted
43,986
25,970
37,248
25,345
Medallia, Inc. GAAP to Non-GAAP Adjustment Summary
(in thousands) (unaudited) GAAP to Non-GAAP adjustments include
stock-based compensation, amortization of acquired intangible
assets, acquisition-related costs, restructuring and other and tax
benefit related to acquisitions as follows:
Three Months
Ended Six Months Ended July 31, July 31,
2019
2018
2019
2018
Cost of revenue: Subscription
$
1,192
$
363
$
1,521
$
877
Professional services
2,690
719
3,247
1,242
Operating expenses: Research and development
3,658
1,909
5,241
3,440
Sales and marketing
8,477
1,755
9,976
4,180
General and administrative
20,071
1,780
20,146
3,659
Provision for income taxes
(416)
—
(416)
—
Total
$
35,672
$
6,526
$
39,715
$
13,398
Medallia, Inc. Condensed Consolidated Statements of Cash Flows (in
thousands) (unaudited)
Six Months Ended July 31,
2019
2018
Operating activities Net loss
$
(40,843
)
$
(55,675
)
Adjustments to reconcile net loss to net cash used in operating
activities: Depreciation and amortization
6,718
7,021
Amortization of deferred commissions
8,687
6,127
Stock-based compensation expense
43,141
13,121
Impairment (gain) on property and equipment and lease termination
(13,783
)
— Other
(560
)
(450
)
Changes in assets and liabilities: Accounts receivable
50,224
53,074
Deferred commissions
(15,785
)
(6,610
)
Prepaid expenses and other current assets
(7,405
)
966
Other noncurrent assets
(36
)
(229
)
Accounts payable
1,832
2,535
Deferred revenue
(39,198
)
(32,881
)
Accrued expenses and other current liabilities
4,245
(1,357
)
Other noncurrent liabilities
121
577
Net cash used in operating activities
(2,642
)
(13,781
)
Investing activities Purchases of property, equipment and
other
(5,234
)
(4,107
)
Purchase of marketable securities
(76,122
)
(18,684
)
Maturities of marketable securities
23,125
21,900
Proceeds from sale of investments
511
— Acquisitions, net of cash acquired
(19,540
)
— Net cash used in investing activities
(77,260
)
(891
)
Financing activities Proceeds from Initial Public Offering,
net of issuance costs, underwriters discounts and commissions, and
concurrent private placement
320,392
— Proceeds from Series F convertible preferred stock, net of
issuance costs
69,848
— Proceeds from exercise of stock options
13,018
4,252
Principal payments on capital lease obligations
(1,469
)
— Repayment of debt assumed in acquisition
(2,297
)
— Net cash provided by financing activities
399,492
4,252
Effect of exchange rate changes on cash and cash equivalents
(47
)
(215
)
Net increase (decrease) in cash and cash equivalents
319,543
(10,635
)
Cash and cash equivalents at beginning of period
44,876
42,699
Cash and cash equivalents at end of period
$
364,419
$
32,064
Medallia, Inc GAAP to Non-GAAP
Reconciliations (in thousands, except percentages) (unaudited)
Three Months Ended Six
Months Ended July 31, July 31,
2019
2018
2019
2018
Non-GAAP gross profit reconciliation:
GAAP gross profit
$
60,787
$
45,867
$
121,811
$
88,913
GAAP gross margin
64%
61%
64%
61%
Add (subtract): Stock-based compensation
3,559
1,040
4,403
1,842
Amortization of acquired intangible assets
323
42
365
277
Non-GAAP gross profit
$
64,669
$
46,949
$
126,579
$
91,032
Non- GAAP gross margin
68%
62%
67%
62%
Three Months Ended Six
Months Ended July 31, July 31,
2019
2018
2019
2018
Non-GAAP subscription revenue gross profit reconciliation:
GAAP subscription revenue gross
profit
$
59,848
$
48,131
$
118,099
$
92,279
GAAP subscription revenue gross margin
80%
80%
81%
80%
Add (subtract): Stock-based compensation
869
321
1,156
600
Amortization of acquired intangible assets
323
42
365
277
Non-GAAP subscription revenue gross profit
$
61,040
$
48,494
$
119,620
$
93,156
Non-GAAP subscription revenue gross margin
82%
81%
82%
81%
Three Months Ended
Six Months Ended July 31,
July 31,
2019
2018
2019
2018
Non-GAAP operating expense reconciliation:
GAAP operating expenses
$
99,239
$
73,436
$
162,308
$
143,558
GAAP operating expenses, as a % of total revenue
104%
97%
86%
98%
Add (subtract): Stock-based compensation
(31,620)
(5,444)
(38,738)
(11,279)
Amortization of acquired intangible assets
(2)
—
(2)
—
Acquisition-related costs
(584)
—
(676)
—
Restructuring and other
—
—
4,053
—
Non-GAAP operating expenses
$
67,033
$
67,992
$
126,945
$
132,279
Non-GAAP operating expenses, as a % of total revenue
70%
90%
67%
91%
Medallia, Inc GAAP to Non-GAAP Reconciliations (in
thousands, except percentages) (unaudited)
Three Months Ended Six Months Ended
July 31, July 31,
2019
2018
2019
2018
Non-GAAP operating income (loss) reconciliation:
GAAP operating loss
$
(38,452)
$
(27,569)
$
(40,497)
$
(54,645)
GAAP operating loss, as a % of total revenue
(40)%
(37)%
(21)%
(37)%
Add (subtract): Stock-based compensation
35,179
6,484
43,141
13,121
Amortization of acquired intangible assets
325
42
367
277
Acquisition-related costs
584
—
676
—
Restructuring and other
—
—
(4,053)
—
Non-GAAP operating loss
$
(2,364)
$
(21,043)
$
(366)
$
(41,247)
Non-GAAP operating loss, as a % of total revenue
(2)%
(28)%
(0)%
(28)%
Three Months Ended Six
Months Ended July 31, July 31,
2019
2018
2019
2018
Non-GAAP net loss reconciliation:
GAAP net loss
$
(38,284)
$
(28,147)
$
(40,843)
$
(55,675)
GAAP net loss as a % of total revenue
(40)%
(37)%
(22)%
(38)%
Add (subtract): Stock-based compensation
35,179
6,484
43,141
13,121
Amortization of acquired intangible assets
325
42
367
277
Acquisition-related costs
584
—
676
—
Restructuring and other
—
—
(4,053)
—
Tax benefit related to acquisitions
(416)
—
(416)
—
Non-GAAP net loss
$
(2,612)
$
(21,621)
$
(1,128)
$
(42,277)
Non-GAAP net loss as a % of total revenue
(3)%
(29)%
(1)%
(29)%
Weighted average shares -
basic and diluted
43,986
25,970
37,248
25,345
Medallia, Inc Non-GAAP Supplemental
Financial Information (in thousands, except percentages)
(unaudited)
Trailing Twelve Months Ended July
31, Subscription Billings
2019
2018
Subscription revenue
$
277,374
$
221,088
Change in subscription deferred revenue and contract assets
(unbilled receivables)
39,774
16,753
Subscription billings
$
317,148
$
237,841
Subscription billings growth rate
33%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190905005956/en/
Investor Relations Contact Carolyn Bass ir@medallia.com
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