Q4 FY2020 Earnings - Seeking Alpha

Q4 FY2020 EarningsMarch 2020

Forward-Looking Statements & Non-GAAP Financial MeasuresThis presentation includes contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, asamended. Forward-looking statements generally relate to future events or Medallia's future financial or operating performance. In some cases, you can identify forward looking statements because theycontain words such as "may,“ “might,” "will," "should,” "expects," "plans," "anticipates,” “going to,” "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential" or"continue" or the negative of these words or other similar terms or expressions that concern Medallia's expectations, strategy, priorities, plans or intentions. Forward-looking statements in this presentationinclude, but are not limited to, statements regarding Medallia’s future financial and operating performance, including its outlook and guidance. Medallia’s expectations and beliefs regarding these mattersmay not materialize, and actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. The forward-looking statementscontained in this presentation are also subject to other risks and uncertainties, including those more fully described in Medallia filings with the Securities and Exchange Commission, including Medallia’sprospectus filed with the SEC pursuant to Rule 424(b)(4), dated July 18, 2019, and in our Quarterly Report on Form 10-Q filed December 11, 2019. The forward-looking statements in this presentation arebased on information available to Medallia as of the date hereof, and Medallia disclaims any obligation to update any forward-looking statements, except as required by law. Actual results may differmaterially from those presently reported. All forward-looking statements in this presentation are based on information available to us as of the date hereof.In addition to financial information presented in accordance with U.S. generally accepted accounting principles (“GAAP”), this presentation includes certain non-GAAP financial measures. These non-GAAPmeasures are presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with GAAP. Our management uses thesenon-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 ourongoing 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 helpinvestors 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 differfrom 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 toours.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 informationprepared 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 arerequired by GAAP to be recorded in our financial statements. Please see the reconciliation tables at the end of this presentation for the reconciliation of GAAP and non-GAAP results. Managementencourages investors and others to review Medallia’s financial information in its entirety and not rely on a single financial measure.This presentation contains statistical data, estimates and forecasts that are based on independent industry publications or other publicly available information, as well as other information based on ourinternal sources. This information involves many assumptions and limitations, and you are cautioned not to give undue weight to such information. We have not independently verified the accuracy orcompleteness of the information contained in the industry publications and other publicly available information. Accordingly, we make no representations as to the accuracy or completeness of thatinformation nor do we undertake to update such information after the date of this presentation.Medallia Copyright 20202

Medallia is the Market Leader in Experience ManagementBroad vertical representation1Strong subscription revenue growth at scaleQuarterly subscription revenue 750 86.2customers2Est. 87.0 88.0 79.7 71.7 74.5 67.9Pervasive usage and daily habit350% 45%of customers with1,000 usersMobile dailyengagement4Enterprise grade platform 63.28 of the Top 10 60.1Global communications and media companies1 55.66.1B8T7 of the Top 10Global hospitality companies1Experiences analyzedannually7 of the Top 10Calculationsin a single dayPartner EcosystemGlobal banks16 of the Top 10Global insurance companies1Q1 FY’19 Q2 FY’19 Q3 FY’19 Q4 FY’19 Q1 FY’20 Q2 FY’20 Q3 FY’20 Q4 FY’20 Q1 FY’21Guidance5 of the Top 10Global automotive companies1Note: Dollars in millions1.2.3.4.Rankings are determined by last twelve months revenue; industry descriptions are based on Forbes Media LLC, or Forbes, Global 2000: The World’s Largest Public Companies, June 2018. Information excludes enterprises headquartered in China, a market that Medallia has not materially entered.For purposes of calculating our customer count, in situations where a customer has multiple subsidiaries or divisions, each entity that is invoiced as a separate entity is treated as a separate customer.Statistics provided as of January 31, 2020, unless otherwise indicated.As of January 31, 2020. Represents mobile daily active users (DAU) divided by mobile monthly active users (MAU). We define a DAU as a user who logged in and accessed our platform via either of our primary mobile applications,Medallia Mobile 2 or Medallia Mobile 3, any time in a single day. We define a mobile MAU as a user who logged in and accessed our platform via either of our primary mobile applications, Medallia Mobile 2 or Medallia Mobile 3, any time in the last 30 days as of the date of measurement.Medallia Copyright 20203

The Medallia Advantage: AI-Powered Experience ManagementCapture Every SignalAnalyze and Predict BehaviorOperationalize and Drive ActionSolicited FeedbackUnsolicited FeedbackCongratulationsProduct cess ChangeUnstructuredEscalateReplyOperational DataCRMERPHRISPOSAI and Machine Learning Text Analytics InMemory Analytics NLP Journeys ProfilesObserved BehaviorDynamic Org HierarchyIn-Memory AnalyticsPersonal Dashboards and ReportsIOT signalsVisit PatternsEvent DataMedallia Copyright 20204

The Most Comprehensive and Diversified Signal PlatformEnterprise Operational/Transactional DataMKTG/CRMITSM/ERPHCM/HRMSOTHER25Integrationson AverageeCommerceSystemsLegacySystems15%Surveys 20%OtherSignals 80%Customer Engagement SystemsSocial MediaCall Centers100s of sitesEmployee SignalsMedallia Copyright 202055

Value Proposition – Consolidate Siloed VendorsInto Medallia PlatformIn ustomerSuccessPlatformsCapture SignalsAnalyzeDrive ActionSocialListeningWeb-basedChat a Copyright 20206

Broad Vertical RepresentationOther7%Hospitality9%Retail and Auto13%Insurance6%Communications, Mediaand Telecom12%Technology,Manufacturing andServicesCumulative ACV SaaS Managed Services17%Finance and Banking29%Medallia Copyright 20207

Top Global Brands Run on MedalliaAutomotive andtransportationBanking andfinancial servicesEnergy, industrial andservicesHospitality andrestaurantsInsuranceRetail andconsumer goodsTechnology,telecommunicationsand mediaGap, Inc.Medallia Copyright 20208

Medallia Drives Proven ImpactTotal economic impact ofMedallia Experience Cloud 36M3 yearimpactKey findings6x ROI over3 years 6 monthpaybackBreakdown: 20 million from net income due to customerexperience improvements 14 million from operational efficiencies 2 million from previous solution cost avoidanceForrester believes the findings are relevant androbust for both smaller and larger organizations.Based on six customer interviewsSource: Forrester April 2018 report, “The Total Economic Impact TM of Medallia Experience Cloud," which we commissioned.Medallia Copyright 20209

Accelerating Go-To-Market Strategy2k companiesGlobal 2000Large enterprises( 1.5B revenue, excl.Global 2000)16k companiesHistorical Go-toMarket FocusReference customers 68Bmarket opportunity in 20191 1%market penetration90k companiesMid-sized enterprises( 150M- 1.5B revenue)1.For market opportunity calculation, please refer to our prospectus.Medallia Copyright 202010

Platform Provides Cross-Sell and Up-Sell Opportunitieswith Multiple Incremental OfferingsVoice(Siri, terCustomerSuccessZingleDigital(IoT, in romoteMobile AppExperienceDataPlatform(XDP)Add-ons / onsOperationalSupportSystemsIoTSystemsSystem IntegrationsServiceCloudsCore bCXJourneysAverage attach rate todayis only 3 ics(ThemeExplorer)12 moduleswith multiple MSystemsLoyaltyCross-sell opportunities ofat least 3 for every 1spent on the platform2Based on the average attach rate of a representative sample of our customers as of our fiscal year ended January 31, 2020.Based on our calculations of potential customer spend, determined based on assumptions regarding our customer base and its spending habits and potential, as well as the average customer spend on certain add-onmodules, all as of our fiscal year ended January 31, 2020.Medallia Copyright 202011

Customer CountAnnual Customer CountQuarterly Customer Count FY’20Q1 FY’19Q2 FY’19Q3 FY’19Q4 FY’19Q1 FY’20Q2 FY’20Q3 FY’20Q4 FY’20Note: Does not include small business customers from our partner ecosystem.Medallia Copyright 202012

Total Revenue Growth at ScaleAnnual Total RevenueQuarterly Total Revenue(in millions)(in millions)120 28%450 402.5400 93.6 95.7 86.490 81.280 313.7 75.5 70.730070 261.12506090%20091%150 103.1100 20%350 0%Q1 FY’19Q2 FY’19Q3 FY’19Q4 FY’19Q1 FY’20Q2 FY’20Q3 FY’20Q4 FY’20*High visibility 90% of total revenue is recurringSubscription Revenue Managed Services Revenue* Based on trailing twelve monthsProfessional Services Implementation RevenueMedallia Copyright 202013

Compelling Subscription Revenue Growth at ScaleAnnual RevenueQuarterly Revenue(in millions)(in millions) 22%-24% 86.2Est. 382.0 - 387.0 387.0Est. 87.0 - 88.0 79.7 26% 71.7 74.5 67.9 312.2 63.2 22% 60.1 246.8 55.6 201.8FY’18FY’19FY’20FY’21 GuidanceQ1 FY’19Q2 FY’19Q3 FY’19Q4 FY’19Q1 FY’20Q2 FY’20Q3 FY’20Q4 FY’20Medallia Copyright 2020Q1 FY’21Guidance14

Non-GAAP Operating MarginAnnual Non-GAAPOperating MarginQuarterly Non-GAAP OperatingMargin3%2%0%-1%-2%-2%Est. -2% to -1%-11%-15%-20%FY’18FY’19FY’20-29%Q1 FY’19-28%Q2 FY’19Q3 FY’19Q4 FY’19Q1 FY’20Q2 FY’20Q3 FY’20Q4 FY’20Medallia Copyright 2020Q1 FY’21Guidance15

SaaS Deferred RevenueAnnual SaaS Deferred RevenueQuarterly SaaS Deferred Revenue(in millions)(in millions) 27% 222.9 222.9 175.4 156.2 175.4 141.8Q2 FY’20Q3 FY’20 122.3 136.3FY’18 145.4FY’19FY’20Q1 FY’19 109.1 106.4Q2 FY’19Q3 FY’19Q4 FY’19Q1 FY’20Medallia Copyright 2020Q4 FY’2016

Cash Flow from OperationsYTD Cash FlowQuarterly Cash Flow(in millions)(in millions) 20.8 19.5 19.5 18.2 (1.6) (18.4) (20.9) (21.0) (15.2)FY’19 (34.6)FY’20Q1 FY’19Q2 FY’19Q3 FY’19Q4 FY’19Q1 FY’20Q2 FY’20Q3 FY’20Medallia Copyright 2020Q4 FY’2017