Medallia Reports Record First Quarter Fiscal 2022 Revenue

  • Q1 Subscription Revenue of $106.1 Million, up 19% Year-over-Year
  • Q1 Total Revenue of $131.4 Million, up 17% Year-over-Year

SAN FRANCISCO–(BUSINESS WIRE)–Medallia, Inc. (NYSE: MDLA), the global leader in customer and employee experience, today announced financial results for the quarter ended April 30, 2021.

“I’m pleased with our performance in Q1. In addition to record subscription revenue we had our highest number of quarterly go-lives ever, as we added more new enterprise and mid-market customers,” said Leslie Stretch, President and CEO of Medallia. “We have more sales capacity and more product than at any other time in our history and more industry analysts validating our innovation leadership. We have strong geographic and vertical end-markets and more mature and effective alliances. Following record attendance at our Experience 21 conference we are focused on execution for the rest of the year and we see an opportunity to accelerate our subscription growth.”

Financial Highlights for the First Quarter of Fiscal 2022

  • Total revenue for the quarter was $131.4 million, an increase of 17% from the same period last year. Subscription revenue was $106.1 million, an increase of 19% from the same period last year.
  • Loss from operations for the quarter was $(50.1) million, compared to loss from operations of $(32.8) million in the same period last year. Non-GAAP loss from operations for the first quarter was $(10.5) million, compared to $3.5 million income from operations in the same period last year.
  • Net loss for the quarter was $(52.4) million, or $(0.34) per share, basic and diluted, compared to net loss of $(32.5) million, or $(0.24) per share, basic and diluted, in the same period last year. Non-GAAP net loss was $(12.1) million, or $(0.08) per share, basic and diluted, compared to non-GAAP net income of $3.1 million, or $0.02 per share, diluted, in the same period last year.
  • Cash, cash equivalents and marketable securities were $540.5 million as of April 30, 2021.

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 with customers, including: Avianca Airlines, Chalhoub Group, Continental Properties, Coyote Logistics, Entain Group, Franciscan Health, Freemans Grattan Holdings (FGH), Hewlett Packard Enterprise, Marks & Spencer, Oracle, PHC Corporation of North America, Reale Mutua, Southwestern Health Resources, Terex, The Container Store, Valentino, Victoria University, Visier and Yorkshire Building Society.
  • Several new product announcements at Experience including Adaptive Text Analytics, Market Research Suite, Medallia Digital Suite, Medallia Developer Network and Total Experience Profiles.
  • Recognized as a leader in The Forrester Wave™: Customer Feedback Management Platforms.
  • Achieved HITRUST CSF® Certification to manage risk, improve security posture, and meet compliance requirements.
  • Achieved FedRAMP High Authorization.
  • Medallia for ServiceNow’s HR Service Delivery platform (HRSD) has received certification with ServiceNow.
  • Recognized as the Adobe Digital Experience Global ISV Partner of the Year.
  • Recognized by Comparably as one of the best places to work in the San Francisco Bay Area.

Financial Outlook

Medallia is providing the following guidance for the second fiscal quarter ending July 31, 2021 and for the full fiscal year ending January 31, 2022 (stated in millions, except percentages):

 

 

Q2 of FY2022 Ending

July 31, 2021

 

FY 2022 Ending

January 31, 2022

Subscription revenue

 

$113.0 to $114.0

 

$467.0 to $471.0

Subscription revenue growth YoY

 

22% to 23%

 

22% to 23%

Total revenue

 

$137.0 to $139.0

 

$566.0 to $570.0

Total revenue growth YoY

 

19% to 20%

 

19%

GAAP loss from operations

 

$(57.0) to $(48.0)

 

$(206.4) to $(186.4)

Non-GAAP loss from operations

 

$(12.5) to $(11.5)

 

$(22.0) to $(20.0)

Conference Call

Medallia will host a conference call at 1:30 p.m. PT (4:30 p.m. ET) today to discuss the first quarter of fiscal 2022 results and outlook for the second fiscal quarter and full fiscal year 2022. 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 customer, employee, citizen and patient experience. The company’s award-winning SaaS platform, Medallia Experience Cloud, is becoming the experience system of record that makes all other applications customer and employee aware. The platform captures billions of experience signals across interactions including all voice, video, digital, IoT, social media and corporate messaging tools. Medallia uses proprietary artificial intelligence and machine learning technology to automatically reveal predictive insights that drive powerful business actions and outcomes. Medallia customers 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. 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 weighted average basic and diluted shares. 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. 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 expense 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 transaction and integration related costs associated with acquisition activities.

Option acceleration payments related to acquisition. We exclude costs related to option acceleration payments from an acquisition from our non-GAAP financial measures. These costs include payments as part of the close of an acquisition.

Restructuring and other. We exclude restructuring and other from certain of our non-GAAP financial measures. Restructuring and other primarily consists of lease impairments and net expenses related to leased properties which we cease to occupy. Any losses and gains associated with these activities are generally unrelated to financial and operational performance in any particular period and we believe the exclusion of such losses and gains provides for a more useful comparison of operational performance in comparative periods that may or may not include such losses and gains.

Amortization of debt issuance costs. We exclude costs related to the amortization of debt issuance costs from certain of our non-GAAP financial measures. Under GAAP, we are required to amortize the issuance costs over the term of the debt. The amortization of the debt issuance costs is a non-cash item, and we believe the exclusion of this expense will provide for a more useful comparison of our operational performance in different periods.

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 and certain discrete and one-time events.

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, amortization of debt issuance costs and income tax benefits, and the impact of the ongoing COVID-19 pandemic and related public health measures 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 or inability 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 periodic reports we filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K filed with the SEC on March 22, 2021, 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.

© 2021 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)

 

 

 

April 30, 2021

 

January 31, 2021

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

283,939

 

 

$

428,328

 

Marketable securities

 

256,598

 

 

254,061

 

Trade and other receivables, net

 

103,312

 

 

181,431

 

Deferred commissions, current

 

32,366

 

 

31,107

 

Prepaid expenses and other current assets

 

30,607

 

 

23,835

 

Total current assets

 

706,822

 

 

918,762

 

Property and equipment, net

 

42,416

 

 

40,668

 

Operating lease right-of-use assets

 

36,808

 

 

39,050

 

Deferred commissions, noncurrent

 

69,571

 

 

68,929

 

Goodwill

 

412,480

 

 

262,942

 

Intangible assets, net

 

83,547

 

 

60,623

 

Other noncurrent assets

 

11,509

 

 

10,675

 

Total assets

 

$

1,363,153

 

 

$

1,401,649

 

Liabilities and stockholders’ equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

16,349

 

 

$

11,904

 

Accrued expenses and other current liabilities

 

43,619

 

 

39,756

 

Accrued compensation

 

33,171

 

 

42,292

 

Deferred revenue, current

 

263,846

 

 

293,231

 

Total current liabilities

 

356,985

 

 

387,183

 

Convertible senior notes, net

 

560,276

 

 

448,064

 

Deferred revenue, noncurrent

 

2,337

 

 

1,396

 

Lease liability, noncurrent

 

45,285

 

 

47,631

 

Other liabilities

 

14,509

 

 

9,134

 

Stockholders’ equity:

 

 

 

 

Common stock

 

151

 

 

150

 

Additional paid-in capital

 

1,057,084

 

 

1,136,534

 

Accumulated other comprehensive loss

 

1,299

 

 

1,186

 

Accumulated deficit

 

(674,773

)

 

(629,629

)

Total stockholders’ equity

 

383,761

 

 

508,241

 

Total liabilities and stockholders’ equity

 

$

1,363,153

 

 

$

1,401,649

 

Medallia, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

 

 

 

Three Months Ended April 30,

 

 

2021

 

2020

Revenue:

 

 

 

 

Subscription

 

$

106,071

 

 

$

88,992

 

Professional services

 

25,303

 

 

23,699

 

Total revenue

 

131,374

 

 

112,691

 

Cost of revenue:

 

 

 

 

Subscription

 

24,156

 

 

17,344

 

Professional services

 

23,542

 

 

22,219

 

Total cost of revenue

 

47,698

 

 

39,563

 

Gross profit

 

83,676

 

 

73,128

 

Operating expenses:

 

 

 

 

Research and development

 

30,637

 

 

32,379

 

Sales and marketing

 

72,980

 

 

52,015

 

General and administrative

 

30,113

 

 

21,498

 

Total operating expenses

 

133,730

 

 

105,892

 

Loss from operations

 

(50,054

)

 

(32,764

)

Other income (expense), net

 

(1,593

)

 

175

 

Loss before provision for income taxes

 

(51,647

)

 

(32,589

)

Provision for (benefits from) income taxes

 

774

 

 

(60

)

Net loss

 

$

(52,421

)

 

$

(32,529

)

 

 

 

 

 

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

 

$

(0.34

)

 

$

(0.24

)

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

 

156,364

 

 

135,993

 

GAAP to Non-GAAP adjustments include stock-based compensation expense and related employer payroll tax expense, amortization of acquired intangible assets, acquisition-related costs, amortization of debt issuance costs, option acceleration payments, restructuring and other, and income tax benefits as follows:

 

 

Three Months Ended April 30,

 

 

2021

 

2020

Cost of revenue:

 

 

 

 

Subscription

 

$

3,584

 

 

$

1,961

 

Professional services

 

2,383

 

 

2,881

 

Operating expenses:

 

 

 

 

Research and development

 

4,858

 

 

12,311

 

Sales and marketing

 

12,365

 

 

10,536

 

General and administrative

 

16,340

 

 

8,593

 

Other income (expense), net

 

827

 

 

 

Benefits from income taxes

 

(23

)

 

(696

)

Total

 

$

40,334

 

 

$

35,586

 

 

 

 

 

 

Medallia, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

 

 

 

 

 

Three Months Ended April 30,

 

 

2021

 

2020

Operating activities

 

 

 

 

Net loss

 

$

(52,421

)

 

$

(32,529

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

10,111

 

 

5,468

 

Amortization of deferred commissions

 

7,931

 

 

6,081

 

Non-cash lease expense

 

2,778

 

 

2,832

 

Stock-based compensation expense

 

23,601

 

 

31,804

 

Amortization of debt issuance costs

 

827

 

 

 

Other

 

5,915

 

 

845

 

Changes in assets and liabilities:

 

 

 

 

Trade and other receivables

 

81,679

 

 

81,689

 

Deferred commissions

 

(9,832

)

 

(4,345

)

Prepaid expenses and other current assets

 

(6,428

)

 

(3,399

)

Other noncurrent assets

 

(125

)

 

(892

)

Accounts payable

 

1,905

 

 

(2,726

)

Deferred revenue

 

(35,700

)

 

(39,248

)

Accrued expenses and other current liabilities

 

(13,659

)

 

(19,778

)

Other noncurrent liabilities

 

(2,249

)

 

(2,689

)

Net cash provided by operating activities

 

14,333

 

 

23,113

 

Investing activities

 

 

 

 

Purchases of property, equipment and other

 

(6,484

)

 

(5,374

)

Purchase of marketable securities

 

(55,877

)

 

(22,748

)

Maturities of marketable securities

 

49,500

 

 

76,423

 

Proceeds from sale of marketable securities

 

3,500

 

 

600

 

Acquisitions, net of cash acquired

 

(163,762

)

 

(25,209

)

Net cash (used in) provided by investing activities

 

(173,123

)

 

23,692

 

Financing activities

 

 

 

 

Proceeds from revolving line of credit

 

 

 

43,000

 

Proceeds from exercise of stock options

 

7,584

 

 

19,180

 

Proceeds from share purchase plan

 

7,953

 

 

10,267

 

Principal payments on financing leases

 

(1,514

)

 

(1,041

)

Net cash provided by financing activities

 

14,023

 

 

71,406

 

Effect of exchange rate changes on cash and cash equivalents

 

378

 

 

(380

)

Net (decrease) increase in cash and cash equivalents

 

(144,389

)

 

117,831

 

Cash and cash equivalents at beginning of period

 

428,328

 

 

226,866

 

Cash and cash equivalents at end of period

 

$

283,939

 

 

$

344,697

 

 

 

 

 

 

Medallia, Inc.

GAAP to Non-GAAP Reconciliations

(in thousands, except percentages)

(unaudited)

 

 

 

 

 

 

 

Three Months Ended April 30,

 

 

2021

 

2020

Non-GAAP gross profit reconciliation:

 

 

 

 

 

 

 

 

 

GAAP gross profit

 

$

83,676

 

 

$

73,128

 

GAAP gross margin

 

64

%

 

65

%

 

 

 

 

 

Add:

 

 

 

 

Stock-based compensation

 

3,072

 

 

3,593

 

Employer payroll tax expense related to stock-based compensation

 

262

 

 

257

 

Amortization of acquired intangible assets

 

2,633

 

 

992

 

Non-GAAP gross profit

 

$

89,643

 

 

$

77,970

 

Non-GAAP gross margin

 

68

%

 

69

%

 

 

 

 

 

 

 

 

Three Months Ended April 30,

 

 

2021

 

2020

Non-GAAP subscription revenue gross profit reconciliation:

 

 

 

 

 

GAAP subscription revenue gross profit

 

$

81,915

 

 

$

71,648

 

GAAP subscription revenue gross margin

 

77

%

 

81

%

 

 

 

 

 

Add:

 

 

 

 

Stock-based compensation

 

854

 

 

909

 

Employer payroll tax expense related to stock-based compensation

 

97

 

 

60

 

Amortization of acquired intangible assets

 

2,633

 

 

992

 

Non-GAAP subscription revenue gross profit

 

$

85,499

 

 

$

73,609

 

Non-GAAP subscription revenue gross margin

 

81

%

 

83

%

 

Medallia, Inc.

GAAP to Non-GAAP Reconciliations

(in thousands, except percentages)

(unaudited)

 

 

 

 

 

 

 

Three Months Ended April 30,

 

 

2021

 

2020

Non-GAAP operating expense reconciliation:

 

 

 

 

 

 

 

 

 

GAAP operating expenses

 

$

133,730

 

 

$

105,892

GAAP operating expenses, as a % of total revenue

 

102

%

 

94

%

 

 

 

 

 

Add (subtract):

 

 

 

 

Stock-based compensation

 

(20,529

)

 

(28,211

)

Employer payroll tax expense related to stock-based compensation

 

(1,340

)

 

(1,959

)

Amortization of acquired intangible assets

 

(2,228

)

 

(419

)

Acquisition-related costs

 

(2,620

)

 

(851

)

Option acceleration payments

 

(5,396

)

 

 

Restructuring and other

 

(1,450

)

 

 

Non-GAAP operating expenses

 

$

100,167

 

 

$

74,452

 

Non-GAAP operating expenses, as a % of total revenue

 

76

%

 

66

%

 

 

 

 

 

 

 

Three Months Ended April 30,

 

 

2021

 

2020

Non-GAAP income (loss) from operations reconciliation:

 

 

 

 

 

GAAP loss from operations

 

$

(50,054

)

 

$

(32,764

)

GAAP loss from operations, as a % of total revenue

 

(38

)%

 

(29

)%

 

 

 

 

 

Add (subtract):

 

 

 

 

Stock-based compensation

 

23,601

 

 

31,804

 

Employer payroll tax expense related to stock-based compensation

 

1,602

 

 

2,216

 

Amortization of acquired intangible assets

 

4,861

 

 

1,411

 

Acquisition-related costs

 

2,620

 

 

851

 

Option acceleration payments

 

5,396

 

 

 

Restructuring and other

 

1,450

 

 

 

Non-GAAP income (loss) from operations

 

$

(10,524

)

 

$

3,518

 

Non-GAAP income (loss) from operations, as a % of total revenue

 

(8

)%

 

3

%

Medallia, Inc.

GAAP to Non-GAAP Reconciliations

(in thousands, except percentages)

(unaudited)

 

 

 

 

 

 

 

Three Months Ended April 30,

 

 

2021

 

2020

Non-GAAP net income (loss) reconciliation:

 

 

 

 

 

 

 

 

 

GAAP net loss

 

$

(52,421

)

 

$

(32,529

)

 

 

 

 

 

Add (subtract):

 

 

 

 

Stock-based compensation

 

23,601

 

 

31,804

 

Employer payroll tax expense related to stock-based compensation

 

1,602

 

 

2,216

 

Amortization of acquired intangible assets

 

4,861

 

 

1,411

 

Acquisition-related costs

 

2,620

 

 

851

 

Option acceleration payments

 

5,396

 

 

 

Restructuring and other

 

1,450

 

 

 

Amortization of debt issuance costs

 

827

 

 

 

Income tax benefits

 

(23

)

 

(696

)

Non-GAAP net income ( loss)

 

$

(12,087

)

 

$

3,057

 

 

 

 

 

 

Weighted average shares:

 

 

 

 

Basic

 

156,364

 

 

135,993

 

Diluted

 

156,364

 

 

169,659

 

Contacts

Investor Relations:

Carolyn Bass

ir@medallia.com

Austin DeArman

press@medallia.com
202-341-9181

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