According to a Grand View Research report published earlier this year, the global customer experience management market is expected to grow at 18% CAGR to reach $23.6 billion by 2027 driven by the continued adoption of digital technologies. Medallia (NYSE: MDLA) announced its fiscal first quarter results last month, but despite the optimistic industry outlook, the company failed to impress the market.
Medallia’s Financials
Revenues for the quarter grew 20% to $112.7 million, ahead of the market’s forecast of $107 million. Adjusted net income of $3.1 million or $0.02 per share was significantly better than the market’s forecast of a loss of $0.02 per share for the quarter.
By segment, revenues from subscription services grew 24% over the year to $89 million and revenues from professional services grew from $21.9 million last year to $23.7 million.
But the company failed to meet the market’s expectations on the outlook. It did not provide an outlook for the year, but it expects to end the second quarter with revenues of $109-$111 million. The Street was looking for revenues of $113 million for the quarter.
Medallia’s Growing Partnerships
Medallia continued to drive growth by extending its partnerships with other technology services providers. During the last quarter, it added Guidewire and Veeva Systems to its partner network.
Its partnership with Veeva Systems will let them deliver an integrated solution with Veeva CRM Suggestions that will put customer insights into the hands of sales reps during critical sales moments. The integration between Medallia and Veeva will help sales reps deliver meaningful and powerful dialogues based on practitioner insights. Medallia has been focused on building vertical focused offerings, and the tie-up with Veeva will help it expand its medical services offerings.
Last quarter it also joined the Guidewire PartnerConnect Solution’s Alliance Program that provides property and casualty insurers running Guidewire access to a curated group of third-party solutions.
Medallia’s Acquisitions
Despite the market turmoil, Medallia continued on its acquisition spree. Last quarter, it announced the acquisition of Voci, a real-time speech to text platform, for an estimated $59 million. Pittsburgh, Pennsylvania-based Voci was set up in 2008 to help organizations analyze their audio for in-depth voice of the customer insights. Its solutions are used to track call center performance metrics by leveraging speech recognition, natural language processing, and machine learning technologies. Voci’s offerings help its customers safeguard their audio and monitor call center agents for compliance purposes.
Medallia plans to integrate Voci’s AI-based technology within its analytics platform. It believes that Voci’s AI and deep learning capabilities when integrated with Medallia Experience Cloud can provide customers with more accurate insights from customer calls such as emotion, sentiment, and voice biometrics to help contact centers provide a significantly better customer experience.
Prior to the acquisition, Voci had raised $18 million in 9 rounds of funding from investors including Harbert Growth Partners, Grotech Ventures, Pittsburgh Equity Partners, Innovation Works, Carnegie Mellon University, and BlueTree Allied Angels. Its last funding round was held in 2018 when it raised $8 million at an undisclosed valuation.
Medallia’s stock is currently trading at $27.93 with a market capitalization of $3.9 billion. It was trading at a 52-week high of $44.72 nearly a year ago. The stock has recovered from the 52-week low of $16.04 it had fallen to in March this year. Medallia had listed in July last year by raising $326 million at a valuation of $2.5 billion and at a stock price of $21. Prior to the listing, Medallia had raised $325 million in funding from Sequoia, Wasatch Advisors, and RGM capital. It had reached a valuation of $1.25 billion in 2015.