Medallia Reports Record Fourth Quarter Fiscal 2021 Revenue

• Fiscal Year 2021 Subscription Revenue of $382.6 Million, up 23% Year-over-Year; Fiscal Year 2021 Total Revenue of $477.2 Million, up 19% Year-over-Year
• Q4 Subscription Revenue of $103.8 Million, Up 20% Year-over-Year; Q4 Total Revenue of $128.0 Million, up 16% Year-over-Year

SAN FRANCISCO–(BUSINESS WIRE)–March 4, 2021–Medallia Inc. (NYSE: MDLA), the global leader in experience management, today announced financial results for the quarter and year ended January 31, 2021.

“During Q4, we achieved important milestones with quarterly subscription revenue exceeding $100 million and total annual revenue run rate exceeding the $500 million mark,” said Leslie Stretch, President and CEO of Medallia. “We are out-innovating competitors and continue to invest in global sales coverage and product development. Markets are being disrupted by exponential forces putting customers and employees at the center of digital transformation. Medallia is the only platform that makes all other applications customer and employee aware, transforming value for partners, customers, citizens, patients and employees.”

Financial Highlights for the Fourth Quarter of Fiscal 2021

• Total revenue for the quarter was $128.0 million, an increase of 16% from the same period last year. Subscription revenue was $103.8 million, an increase of 20% from the same period last year.
• Loss from operations for the quarter was $41.2 million, compared to loss from operations of $32.8 million in the same period last year. Non-GAAP income from operations for the fourth quarter was $549,000, compared to $3,000 in the same period last year.
• Net loss for the quarter was $48.8 million, or $(0.32) per share, basic and diluted, compared to net loss of $31.9 million, or $(0.25) per share, basic and diluted, in the same period last year. Non-GAAP net loss was $1.4 million, or $(0.01) per share, basic and diluted, compared to non-GAAP net income of $491,000, or $0.00 per share, basic and diluted, in the same period last year.
• Cash, cash equivalents and marketable securities were $682.4 million as of January 31, 2021.

Financial Highlights for the Full Fiscal Year 2021

• Total revenue for fiscal year 2021 was $477.2 million, an increase of 19% from the prior year. Subscription revenue was $382.6 million, an increase of 23% from the prior year.
• Loss from operations for the fiscal year 2021 was $138.0 million, compared to loss from operations of $114.9 million in fiscal year 2020. Non-GAAP income from operations for the fiscal year 2021 was $8.6 million, compared to a loss of $2.4 million in the same period last year.
• Net loss for the fiscal year 2021 was $148.7 million, or $(1.03) per share, basic and diluted, compared to net loss of $112.3 million, or $(1.35) per share, basic and diluted, in the same period last year. Non-GAAP net income was $3.9 million, or $0.02 per share, diluted, compared to non-GAAP net loss of $1.6 million, or $(0.02) 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
  
• Announced recent wins with customers, including: A&W Canada, Aimbridge Hospitality, ARC Europe Group, Avast, Dave & Buster’s, Federal Student Aid, Focus Brands, Huhtamäki Oyj, Office Depot Mexico, Nebraska’s Emergency Management Agency, OXXO, Reachdesk, Saks Fifth Avenue, Salvatore Ferragamo, Volvo Cars and Y-12 Federal Credit Union.
• Acquired Decibel, a leader in digital experience analytics.
• Fastest growing ISV within Salesforce’s ecosystem.
• ServiceNow named Medallia application developer partner of the year.
• Acknowledged by Adobe as the fastest growing and most widely engaged tech partner in Adobe’s revenue sharing program.
• Medallia for Microsoft Dynamics 365 is now live on Microsoft’s AppSource.
• Signed IBM as a new go-to-market partner.
• Achieved HIPAA compliance for LivingLens video feedback.
• Announced an integration with Slack to revolutionize employee engagement and collaboration.
  
  Financial Outlook
  Medallia is providing the following guidance for the first quarter ending April 30, 2021 and for the full year ending January 31, 2022 (stated in millions, except percentages).
  
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  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 2021 results and outlook for the first 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.
  
  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 related implications from the adoption of Accounting Standards Codification Topic 842.
  
  Amortization of debt discount and issuance costs. We exclude costs related to the amortization of debt discount together with the issuance costs of the debt from certain of our non-GAAP financial measures. Under GAAP, we are required to separately account for liability (debt) and equity (conversion option) components of the convertible senior notes that were issued in a private placement in September 2020 and recognize the effective interest expense on our convertible senior notes and amortize the issuance costs over the term of these notes. The expense for the amortization of debt discount and debt issuance costs is a non-cash item, and we believe the exclusion of this interest 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 discount and issuance costs 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 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 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 December 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.
  
  © 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.
  
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