What You Need to Know About the Medallia IPO

We have covered the upcoming IPOs of note – WeWork, Postmates – but another company about to IPO that should readers should be aware of is Medallia. In its S-1, Medallia states that it intends to raise $246.5 million at the midpoint of the filing range, which would give the company a post-IPO market capitalization of $2.1 billion, a decrease from its previous Series F round valuation of $2.4 billion. Sequoia Capital is the company’s largest shareholder with over 44.4 million shares equaling around 41% of Medallia’s stock. The company’s husband and wife founder, Amy Pressman and Borge Hald, hold 16.66 million shares.

Founded in 2001, Medallia sells an AI-powered SaaS that analyzes customer information and feedback to make predictive insights. “Using our technology, enterprises 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,” the company’s prospectus reads. Medallia’s platform is B2C and B2B and gathers data through multiple mediums like SMS, email, phone calls and IoT devices usually through surveys.

Intending to trade under the symbol MDLA on NYSE, Medallia has earned $261.2 million in total revenue and a net loss of $70.36 million in the year ending Jan. 31, 2018. In the year ending Jan. 31, 2019, the company incurred a net loss of $82.2 million (up 16.8%) on total revenues of $313.6 million (up 20%).

Medallia boasts clients from across multiple industries such as Exxon Mobil XOM, KIA Motors, Macy’s M, Hilton HLT, Samsung, Delta DAL and many more. The company booked most of its revenue from North American companies, but it does have small revenues from Europe, Middle East and Africa. All told, in its S-1, the company believes the total marketplace is worth $68 billion. Statista’s data disagrees with this number seeing the CRM market to be worth %30 billion around 2022 with a CAGR of 1.9%.

Wall Street loves subscription models like Medallia because they offer more solid revenues. The company’s year end financial showed that 78% of revenue came from subscribers. Furthermore, SurveyMonkey will be a direct comparison for Medallia, and it may slightly edge out SVMK as the later saw losses of $154 million compared to Medallia’s $82.2. Medallia’s balance sheet also might give it the edge over SurveyMonkey as the company has no financial debt and 72% of the company’s assets are current assets. The bigger story on Medallia is that sequential revenues are accelerating and would make a solid acquisition for companies synergistic companies like Salesforce CRM.

If readers are interested in jumping in, keep in mind that the float will be on the smaller side so there could be volatility.