- Q2 Subscription Revenue of $92.8 Million, Up 25%
Year-over-Year
- Q2 Total Revenue of $115.5 Million, Up 21%
Year-over-Year
Medallia, Inc. (NYSE: MDLA), the global leader in experience
management, today announced financial results for the quarter ended
July 31, 2020.
“We posted strong second quarter results, with record
subscription and total quarterly revenue,” noted Leslie Stretch,
president and chief executive officer of Medallia. “We posted a
record number of go-lives during the quarter. We expanded our
offerings in telehealth, public sector and our new economy
offerings such as real-time customer alerts, contact-less
interactions and digital expansions.”
“The global acceleration of digital transformation has brought
customer experience to the forefront and has heightened the need
for customer intelligence. The intelligence of Medallia’s AI and
machine learning platform drives real-time insight into customer
behavior, drives customer retention and enhances ROI,” concluded
Stretch.
Financial Highlights for the Second Quarter of Fiscal
2021
- Total revenue for the quarter was $115.5 million, an increase
of 21% from the same period last year. Subscription revenue was
$92.8 million, an increase of 25% from the same period last
year.
- Loss from operations for the quarter was $34.5 million,
compared to loss from operations of $38.5 million in the same
period last year. Non-GAAP income from operations for the second
quarter was $2.5 million, compared to a loss of $2.4 million in the
same period last year.
- Net loss for the quarter was $35.2 million, or ($0.25) per
share, basic and diluted, compared to net loss of $38.3 million, or
($0.87) per share, basic and diluted, in the same period last year.
Non-GAAP net income was $1.0 million, or $0.01 per share, diluted,
compared to a non-GAAP net loss of $2.6 million, or ($0.06) per
share, basic and diluted, in the same period last year.
- Cash, cash equivalents and marketable securities were $347.5
million as of July 31, 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 include: 100%Open, Ace Hardware, Adelaide Brighton,
Banco BPM, Brightstar Corp, Cognex, Commercetools, Coupa, Dasher
Technologies, Economical Mutual Insurance Company, Epredia, Hong
Kong Express Airways, Idaho Board of Dentistry, MavenLink, Mitek
Systems, the Public Sector Commission in Western Australia, UAB
Health System, U.S. Department of Health & Human Services, Qual
Street, University of Sydney and Xsolis.
- Partnered with Adobe to deliver a complete view of the
end-to-end customer experience journey.
- Launched Medallia Total Healthcare Experience, including the
Consumer Assessment of Healthcare Providers and Systems (CAHPS and
HCAHPS) in partnership with Ipsos.
- Introduced Telemedicine suite streamlining telehealth and
optimizing patient experience.
- Achieved HIPAA compliance for Medallia Zingle.
- Launched Medallia Speech, bringing world leading speech
analytics to Medallia Experience Cloud.
- Introduced Service Experience Quickstart for ServiceNow.
- Opened a Singapore data center to support customer growth.
- Appointed James D. White, a seasoned business leader, to its
board of directors.
Financial Outlook
Medallia is providing the following guidance for the third
quarter ending October 31, 2020.
- Subscription revenue in the range of $94.6 million to $95.6
million.
- Total revenue in the range of $115.6 million to $117.6
million.
- GAAP loss from operations in the range of $34.8 million to
$29.3 million.
- Non-GAAP income from operations in the range of $200,000 to
$700,000.
Conference Call
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 2021 and our
outlook for the third 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, on calls and digital channels, over video and social media
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, create in-the-moment cross-sell and up-sell opportunities
and drive revenue-impacting business decisions, providing clear and
potent returns on investment.
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
primarily consists of lease exit costs related to our office
facilities.
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.
Non-GAAP Supplemental Financial Information
Subscription billings: We define subscription billings, a
non-GAAP financial measure, as total subscription revenue plus the
change in subscription deferred revenue and contract assets,
excluding acquired contract assets.
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, the statements under the heading
“Financial Outlook” above, the information provided in the
“Financial Outlook” section of the tables below, 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, acquisitions and
acquisition-related costs, restructuring and other expenses, and
income tax benefits 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 and our Quarterly Report on Form
10-Q filed with the SEC on June 9, 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)
July 31, 2020
January 31, 2020
Assets
Current assets:
Cash and cash equivalents
$
225,782
$
226,866
Marketable securities
121,741
116,833
Trade and other receivables, net of
allowance for doubtful accounts of $3,173 and $982 as of July 31,
2020 and January 31, 2020, respectively
85,767
150,661
Deferred commissions, current
25,425
22,455
Prepaid expenses and other current
assets
24,500
22,492
Total current assets
483,215
539,307
Property and equipment, net
38,717
34,879
Deferred commissions, noncurrent
56,120
51,540
Intangible assets, net
35,937
21,306
Goodwill
143,462
79,324
Other noncurrent assets
9,680
5,293
Total assets
$
767,131
$
731,649
Liabilities, and stockholders’
equity
Current liabilities:
Accounts payable
$
1,879
$
3,608
Accrued expenses and other current
liabilities
27,415
20,268
Accrued compensation
31,922
37,160
Revolving line of credit
43,000
—
Deferred revenue, current
206,806
263,115
Total current liabilities
311,022
324,151
Deferred revenue, noncurrent
1,051
1,407
Deferred rent, noncurrent
5,173
2,799
Other liabilities
13,782
5,496
Total liabilities
331,028
333,853
Stockholders’ equity:
Common stock
142
132
Additional paid-in capital
986,232
878,843
Accumulated other comprehensive loss
(1,571)
(206)
Accumulated deficit
(548,700)
(480,973)
Total stockholders’ equity
436,103
397,796
Total liabilities and stockholders’
equity
$
767,131
$
731,649
Medallia, Inc.
Consolidated Statements of
Operations
(in thousands, except per
share data)
(unaudited)
Three Months Ended July
31,
Six Months Ended July
31,
2020
2019
2020
2019
Revenue:
Subscription
$
92,831
$
74,547
$
181,823
$
146,259
Professional services
22,694
21,123
46,393
43,030
Total revenue
115,525
95,670
228,216
189,289
Cost of revenue:
Subscription
19,130
14,699
36,474
28,160
Professional services
22,042
20,184
44,261
39,318
Total cost of revenue
41,172
34,883
80,735
67,478
Gross profit
74,353
60,787
147,481
121,811
Operating expenses:
Research and development
27,790
22,693
60,169
42,309
Sales and marketing
51,942
46,470
103,957
80,085
General and administrative
29,137
30,076
50,635
39,914
Total operating expenses
108,869
99,239
214,761
162,308
Loss from operations
(34,516)
(38,452)
(67,280)
(40,497)
Interest income and other income
(expense), net
(448)
431
(273)
573
Loss before provision for income taxes
(34,964)
(38,021)
(67,553)
(39,924)
Provision for income taxes
234
263
174
919
Net loss
$
(35,198)
$
(38,284)
$
(67,727)
$
(40,843)
Net loss per share attributable to common
stockholders, basic and diluted
$
(0.25)
$
(0.87)
$
(0.49)
$
(1.10)
Weighted-average shares used in computing
net loss per share attributable to common stockholders, basic and
diluted
142,479
43,986
139,272
37,248
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 July
31,
Six Months Ended July
31,
2020
2019
2020
2019
Cost of revenue:
Subscription
$
2,411
$
1,192
$
4,372
$
1,521
Professional services
2,825
2,690
5,706
3,247
Operating expenses:
Research and development
5,101
3,658
17,412
5,241
Sales and marketing
10,002
8,477
20,538
9,976
General and administrative
16,673
20,071
25,266
20,146
Income tax benefits
(775)
(416)
(1,471)
(416)
Total
$
36,237
$
35,672
$
71,823
$
39,715
Medallia, Inc.
Condensed Consolidated
Statements of Cash Flows
(in thousands)
(unaudited)
Six Months Ended July
31,
2020
2019
Operating activities
Net loss
$
(67,727)
$
(40,843)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization
11,790
6,718
Amortization of deferred commissions
12,433
8,687
Stock-based compensation expense
56,438
43,141
Impairment (gain) on property and
equipment, and lease termination
—
(13,783)
Lease exit costs
7,634
—
Other
1,813
(560)
Changes in assets and liabilities:
Trade and other receivables
63,310
50,224
Deferred commissions
(19,983)
(15,785)
Prepaid expenses and other current
assets
(2,214)
(7,405)
Other noncurrent assets
(1,404)
(36)
Accounts payable
(2,912)
1,832
Deferred revenue
(57,766)
(39,198)
Accrued expenses and other current
liabilities
(4,295)
4,245
Other noncurrent liabilities
6,574
121
Net cash provided by (used in) operating
activities
3,691
(2,642)
Investing activities
Purchases of property, equipment and
other
(9,774)
(5,234)
Purchase of marketable securities
(139,196)
(76,122)
Maturities of marketable securities
133,473
23,125
Proceeds from sale of marketable
securities
1,100
511
Acquisitions, net of cash acquired
(80,372)
(19,540)
Net cash used in investing activities
(94,769)
(77,260)
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 revolving line of credit
43,000
—
Proceeds from exercise of stock
options
41,032
13,018
Proceeds from share purchase plan
10,267
—
Principal payments on capital leases
(2,117)
(1,469)
Repayment of debt assumed in acquisitions
and other
(2,139)
(2,297)
Net cash provided by financing
activities
90,043
399,492
Effect of exchange rate changes on cash
and cash equivalents
(49)
(47)
Net (decrease) increase in cash and cash
equivalents
(1,084)
319,543
Cash and cash equivalents at beginning of
period
226,866
44,876
Cash and cash equivalents at end of
period
$
225,782
$
364,419
Medallia, Inc.
GAAP to Non-GAAP
Reconciliations
(in thousands, except
percentages)
(unaudited)
Three Months Ended July
31,
Six Months Ended July
31,
2020
2019
2020
2019
Non-GAAP gross profit
reconciliation:
GAAP gross profit
$
74,353
$
60,787
$
147,481
$
121,811
GAAP gross margin
64
%
64
%
65
%
64
%
Add:
Stock-based compensation
3,665
3,559
7,258
4,403
Employer payroll tax expense related to
stock-based compensation
163
—
420
—
Amortization of acquired intangible
assets
1,408
323
2,400
365
Non-GAAP gross profit
$
79,589
$
64,669
$
157,559
$
126,579
Non- GAAP gross margin
69
%
68
%
69
%
67
%
Three Months Ended July
31,
Six Months Ended July
31,
2020
2019
2020
2019
Non-GAAP subscription revenue gross
profit reconciliation:
GAAP subscription revenue gross profit
$
73,701
$
59,848
$
145,349
$
118,099
GAAP subscription revenue gross margin
79
%
80
%
80
%
81
%
Add:
Stock-based compensation
946
869
1,855
1,156
Employer payroll tax expense related to
stock-based compensation
57
—
117
—
Amortization of acquired intangible
assets
1,408
323
2,400
365
Non-GAAP subscription revenue gross
profit
$
76,112
$
61,040
$
149,721
$
119,620
Non-GAAP subscription revenue gross
margin
82
%
82
%
82
%
82
%
Medallia, Inc.
GAAP to Non-GAAP
Reconciliations
(in thousands, except
percentages)
(unaudited)
Three Months Ended July
31,
Six Months Ended July
31,
2020
2019
2020
2019
Non-GAAP operating expense
reconciliation:
GAAP operating expenses
$
108,869
$
99,239
$
214,761
$
162,308
GAAP operating expenses, as a % of total
revenue
94
%
104
%
94
%
86
%
Add (subtract):
Stock-based compensation
(20,969)
(31,620)
(49,180)
(38,738)
Employer payroll tax expense related to
stock-based compensation
(1,606)
—
(3,565)
—
Amortization of acquired intangible
assets
(688)
(2)
(1,107)
(2)
Acquisition-related costs
(797)
(584)
(1,648)
(676)
Restructuring and other
(7,716)
—
(7,716)
4,053
Non-GAAP operating expenses
$
77,093
$
67,033
$
151,545
$
126,945
Non-GAAP operating expenses, as a % of
total revenue
67
%
70
%
66
%
67
%
Three Months Ended July
31,
Six Months Ended July
31,
2020
2019
2020
2019
Non-GAAP income (loss) from operations
reconciliation:
GAAP loss from operations
$
(34,516)
$
(38,452)
$
(67,280)
$
(40,497)
GAAP loss from operations, as a % of total
revenue
(30)
%
(40)
%
(29)
%
(21)
%
Add (subtract):
Stock-based compensation
24,634
35,179
56,438
43,141
Employer payroll tax expense related to
stock-based compensation
1,769
—
3,985
—
Amortization of acquired intangible
assets
2,096
325
3,507
367
Acquisition-related costs
797
584
1,648
676
Restructuring and other
7,716
—
7,716
(4,053)
Non-GAAP income (loss) from operations
$
2,496
$
(2,364)
$
6,014
$
(366)
Non-GAAP income (loss) from operations, as
a % of total revenue
2
%
(2)
%
3
%
—
%
Medallia, Inc.
GAAP to Non-GAAP
Reconciliations
(in thousands, except
percentages)
(unaudited)
Three Months Ended July
31,
Six Months Ended July
31,
2020
2019
2020
2019
Non-GAAP net loss
reconciliation:
GAAP net loss
$
(35,198)
$
(38,284)
$
(67,727)
$
(40,843)
GAAP net loss as a % of total revenue
(30)
%
(40)
%
(30)
%
(22)
%
Add (subtract):
Stock-based compensation
24,634
35,179
56,438
43,141
Employer payroll tax expense related to
stock-based compensation
1,769
—
3,985
—
Amortization of acquired intangible
assets
2,096
325
3,507
367
Acquisition-related costs
797
584
1,648
676
Restructuring and other
7,716
—
7,716
(4,053)
Income tax benefits
(775)
(416)
(1,471)
(416)
Non-GAAP net income (loss)
$
1,039
$
(2,612)
$
4,096
$
(1,128)
Non-GAAP net income (loss) as a % of total
revenue
1
%
(3)
%
2
%
(1)
%
Weighted average shares - basic
142,479
43,986
139,272
37,248
Weighted average shares - diluted
173,335
43,986
171,498
37,248
Medallia, Inc.
Non-GAAP Supplemental
Financial Information
(in thousands, except
percentages)
(unaudited)
Trailing Twelve Months Ended
July 31,
Subscription Billings
2020
2019
Subscription revenue
$
347,731
$
277,374
Increase in subscription deferred
revenue
34,450
36,332
(Increase) decrease in contract assets
(2,448)
3,442
Subscription billings
$
379,733
$
317,148
Subscription billings growth rate
20
%
33
%
Medallia, Inc. Financial Outlook (in
thousands, except percentages) (unaudited)
The guidance figures provided below and elsewhere in this press
release are forward-looking statements, reflect a number of
estimates, assumptions and other uncertainties, and are approximate
in nature because the Company's future performance is difficult to
predict. Such guidance is based on information available on the
date of this press release, and the Company assumes no obligation
to update.
REVENUE GUIDANCE
Three Months Ended October 31,
2020
Low
High
Subscription revenue
$94,600
$95,600
Total revenue
$115,600
$117,600
RECONCILIATION OF GAAP TO
NON-GAAP FORWARD LOOKING GUIDANCE MEASURES
Three Months Ended October 31,
2020
Low
High
GAAP loss from operations
$
(34,800)
$
(29,300)
Stock-based compensation
26,500
24,500
Employer payroll tax expense related to
stock-based compensation
2,000
1,000
Amortization of acquired intangible
assets
3,800
3,300
Acquisition-related costs
2,000
1,000
Restructuring and other
700
200
Non-GAAP income from operations
$
200
$
700
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200903005783/en/
Investor Relations Carolyn Bass ir@medallia.com
PR Contact: Valerie Beaudett press@medallia.com +1 (650)
400-7833
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