EX-99.1 2 a52088606_ex991.htm EXHIBIT 99.1
Exhibit 99.1


Medallia Reports Record Second Quarter Fiscal 2020 Financial Results

  • Record Total Revenue of $95.7 Million, Up 27% Year-over-Year
  • Record Subscription Revenue of $74.5 Million, Up 24% Year-over-Year 

SAN FRANCISCO--(BUSINESS WIRE)--September 5, 2019--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 $524
and $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 Ended
July 31,

Six Months Ended
July 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 and
diluted

$

(0.87

)


$

(1.08

)


$

(1.10

)


$

(2.20

)

Weighted-average shares used in computing net loss per share
attributable 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%






 

Contacts

Investor Relations Contact
Carolyn Bass
ir@medallia.com