News

Medallia Reports Record Fourth Quarter Fiscal 2020 Financial Results

  • 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)–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 Adjustment Summary
(in thousands)
(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 expense

(408)

(1,783)

Total

$ 32,361

$ 11,675

$ 110,764

$ 32,731

Medallia, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
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 receivable

 

(43,268)

 

(16,383)

Deferred commissions

 

(41,424)

 

(27,218)

Prepaid expenses and other current assets

 

(6,198)

 

2,176

Lease incentives receivable

 

 

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 of employee taxes withheld upon vesting of restricted stock units

 

(17,907)

 

Proceeds from exercise of stock options

 

34,009

 

12,093

Payment of 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

Medallia, Inc.
GAAP to Non-GAAP Reconciliations
(in thousands, except percentages)
(unaudited)
 
 
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

 

7

 

 

 

 

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:
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

$

3

 

$

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

 

Medallia, Inc.
Non-GAAP Supplemental Financial Information
(In thousands, except for percentages)
(unaudited)
 
 
Trailing Twelve Months Ended
January 31,
Subscription billings

2020

2019

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

Contacts

Investor Relations

Carolyn Bass

ir@medallia.com

PR Contact:

Valerie Beaudett

press@medallia.com
+1 (650) 400-7833

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