Q1 FY2021 Earnings - Seeking Alpha

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Q1 FY2021 EarningsJune 2020

Forward-Looking Statements & Non-GAAP Financial MeasuresThis presentation 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, as amended.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 they contain wordssuch as "may,“ “might,” "will," "should,” "expects," "plans," "anticipates,” “going to,” "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential" or "continue" or thenegative of these words or other similar terms or expressions that concern Medallia's expectations, strategy, priorities, plans or intentions. Forward-looking statements in this presentation include, but arenot limited to, statements regarding Medallia’s future financial and operating performance, including its outlook and guidance. To the extent possible, our forward-looking statements seek to take intoaccount the impact of COVID-19. However, the crisis that this pandemic has created is very fluid, and the situation is constantly evolving. If any of the risks or uncertainties related to the forward-lookingstatements develop or if any of the assumptions related to the forward-looking statements prove incorrect, actual results could differ materially from those projected, expressed, or implied by our forwardlooking statements. The forward-looking statements contained in this presentation are also subject to other risks and uncertainties, including those more fully described in Medallia filings with the Securitiesand Exchange Commission, including Medallia’s prospectus filed with the SEC pursuant to Rule 424(b)(4), dated July 18, 2019, and in our Annual Report on Form 10-K filed with the SEC on March 19,2020. The forward-looking statements in this presentation are based on information available to Medallia as of the date hereof, and Medallia disclaims any obligation to update any forward-lookingstatements, except as required by law. Actual results may differ materially from those presently reported. All forward-looking statements in this presentation are based on information available to us as ofthe 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 representation1 780Strong subscription revenue growth at scaleQuarterly subscription revenue 86.2customers2 89.0Est. 89.5 90.5 45%of customers with1,000 usersMobile dailyengagement4 74.5 67.98 of the Top 10 60.1 63.2 55.6Enterprise grade platform7 of the Top 10Global hospitality50% 79.7 71.7Global communications and media companies1Pervasive usage and daily habit3companies17 of the Top 10Global banks16.1B8TExperiences analyzedannuallyCalculationsin a single day6 of the Top 10Global insurance companies15 of the Top 10Global automotive 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’21 Q2 FY’21GuidanceNote: 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,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

Go To Market Partner EcosystemGlobal ISVsGlobal SIs, Consultingand Market ResearchVertical and TechnologyPartnersRegional and DeliveryPartnersMedallia Copyright 20204

AI-Powered Experience Management Drives ROICapture 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 20205

Customers on Average Integrate with 25 SystemsEnterprise Operational/Transactional DataMKTG/CRMITSM/ERPHCM/HRMSOTHER25Integrationson AverageeCommerceSystems15%Surveys 20%OtherSignals 80%LegacySystemsCustomer Engagement SystemsContactCentersSocial Media100s of sitesEmployee SignalsMedallia Copyright 20206

Consolidate Siloed Vendors Into Medallia Drives ROIIn ustomerSuccessPlatformsCapture SignalsAnalyzeDrive ActionSocialListeningWeb-basedChat a Copyright 20207

Connecting CX and EX Drives ROIThe Forrester WaveTMThe Forrester New WaveTMCustomer Feedback ManagementPlatforms, Q1 2020EX Management Platforms For LargeEnterprises, Q1 2020“Medallia reference clients praise the vendor for itstechnology and ability to grow and scale with theirbusiness. They are also fond of the vendor’s abilityto drive engagement in the platform at scale: Itsreference clients had upward of 50,000 dashboardusers — the most of any vendor in this evaluation.”“Medallia’s reference customers praised the solutionfor its ability to perform analysis and focus attention inthe areas that matter most, the flexibility of the platform,and the support and guidance they received from thevendor.”The Forrester Wave is copyrighted by Forrester Research, Inc. Forrester and Forrester Wave are trademarks of Forrester Research, Inc. The Forrester Wave is a graphicalrepresentation of Forrester's call on a market and is plotted using a detailed spreadsheet with exposed scores, weightings, and comments. Forrester does not endorse anycompany, product, or service depicted in the Forrester Wave. Information is based on best available resources. Opinions reflect judgment at the time and are subject tochange.Source: The Forrester Wave TM: Customer Feedback Management Platforms, Q1 2020 and The Forrester New Wave TM: EX Management Platforms for Large EnterprisesMedallia Copyright 20208

Medallia is Mission Critical Driving High Financial ReturnMaintaining a strong customer experience in crisis requires rapid research to understand changing dynamics and new pain points as well as agile innovation toaddress them. Customer leaders who master that approach will create value for consumers .- McKinsey, April 2020 (1)“Medallia has opened up a world of realcustomer feedback and inspired us toimprove important processes that have aquantifiable impact on our bottomline.”“We’ve reduced incoming customer callsby several million. When you account forthe cost per call, the payback on ourinvestment in Medallia was realized withinone month.”“Medallia’s tools have transformed ourfocus on our customers’ needs. For us, theverbatim customer feedback is gold”."Thanks to the voice of customer datacaptured by Medallia, we are able toidentify and eliminate bottlenecks in ourdigital customer journeys resulting inincreased conversion and lower exitrates.”(1 )“Adapting customer experience in the time of coronavirus”“Medallia has had a huge impact from the timeof purchase of a Samsung product, to setup,install it, use, it, need help with it, all the waythough that lifecycle, Medallia is there measuringthe entire customer journey. It’s now become apart of the DNA of the company.”“We’ve tracked 40 million fewerissues that customers haveexperienced than last year.”Medallia Copyright 20209

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 202010

Top Global Brands Run on MedalliaAutomotive andtransportationBanking andfinancial servicesEnergy, industrial andservicesHospitality andrestaurantsInsuranceRetail andconsumer goodsTechnology,telecommunicationsand mediaGap, Inc.Medallia Copyright 202011

Broad Vertical RepresentationOther7%Hospitality9%Retail and Auto20%Insurance6%Communications, Mediaand Telecom12%Finance and Banking29%Technology,Manufacturing andServices17%Cumulative ACV SaaS Managed Services as of January 31, 2020Medallia Copyright 202012

Platform Provides Cross-Sell and Up-Sell Opportunitieswith Multiple Incremental OfferingsVoice(Siri, onsSocialPromoterCustomerSuccessZingleDigital(IoT, in romoteMobile AppExperienceDataPlatform(XDP)Add-ons / onsOperationalSupportSystemsIoTSystemsSystem IntegrationsServiceCloudsCore bCXJourneysAverage attach rate todayis only 3 ics(ThemeExplorer)13 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 202013

Customer CountAnnual Customer CountQuarterly Customer Count �19FY’20Q1 FY’19Q2 FY’19Q3 FY’19Q4 FY’19Q1 FY’20Q2 FY’20Q3 FY’20Q4 FY’20Q1 FY’21Note: Does not include small business customers from our partner ecosystem.Medallia Copyright 202014

Total Revenue Growth at ScaleAnnual Total RevenueQuarterly Total Revenue(in millions)(in millions)120 28%450 402.5400 93.6 95.7 86.490 81.280 313.6 75.4 70.730070 261.22506090%20091%150 112.7 103.1100 20%350 0%10%9%Q1 FY’19Q2 FY’19Q3 FY’19Q4 FY’19Q1 FY’20Q2 FY’20Q3 FY’20Q4 FY’20Q1 FY’21*High visibility 90% of total revenue is recurringSubscription Revenue Managed Services Revenue* Based on trailing twelve monthsProfessional Services Implementation RevenueMedallia Copyright 202015

Compelling Subscription Revenue Growth at ScaleAnnual RevenueQuarterly Revenue(in millions)(in millions) 26% 86.2 89.0Est. 89.5 - 90.5 79.7 312.2 22% 71.7 74.5 67.9 246.8 63.2 60.1 201.8FY’18 55.6FY’19FY’20Q1 FY’19Q2 FY’19Q3 FY’19Q4 FY’19Q1 FY’20Q2 FY’20Q3 FY’20Q4 FY’20Q1 FY’21Medallia Copyright 2020Q2 FY’21Guidance16

Non-GAAP Operating MarginAnnual Non-GAAPOperating MarginQuarterly Non-GAAP OperatingMargin3%3%2%Est. 2%0%-1%-2%-2%Q2 FY’20Q3 FY’20-11%-15%-20%FY’18FY’19FY’20-29%Q1 FY’19-28%Q2 FY’19Q3 FY’19Q4 FY’19Q1 FY’20Q4 FY’20Q1 FY’21Medallia Copyright 2020Q2 FY’21Guidance17

SaaS Deferred RevenueAnnual SaaS Deferred RevenueQuarterly SaaS Deferred Revenue(in millions)(in millions) 23% 222.9 192.9 222.9 175.4 156.2 175.4 141.8Q2 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’20Q4 FY’20Medallia Copyright 2020Q1 FY’2118

Cash Flow from OperationsAnnual Cash FlowQuarterly Cash Flow(in millions)(in millions) 23.1 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’20Q4 FY’20Medallia Copyright 2020Q1 FY’2119

Long-Term Margin Framework(1)1.2.FY’19FY’20Subscription revenue 246.8M 312.2MSubscription revenue growth22%26%Total revenue 313.6M 402.5MTotal revenue growth20%28%Non-GAAP operating income( 47.7M)( 2.4M)Non-GAAP operating margin(15%)(1%)LT Target225% - 30%20% plusSee appendix for a reconciliation of GAAP to Non-GAAP to financial measures.Long-Term Target model is forward-looking, and subject to significant business, economic, regulatory and competitive uncertainties and contingencies, many of which are beyond the control ofthe Company and its management, and are based upon assumptions with respect to future decisions, which are subject to change. Actual results will vary and those variations may be material.For discussion of some of the important factors that could cause these variations, please consult the “Risk Factors” section of our prospectus filed with the SEC pursuant to Rule 424(b)(4) datedJuly 18, 2019, and in our Annual Report on Form 10-K filed with the SEC on March 19, 2020, both of which may be obtained on the Investor Relations section of Medallia’s ec-filings/default.aspx). Nothing in this presentation should be regarded as a representation by any person that these goals will be achieved and theCompany undertakes no duty to update its goals, except as required by law.Medallia Copyright 202020

Investor RelationsAddress:Medallia, Inc.575 Market StreetSan Francisco, CA 94105Contact:Carolyn BassMarket Street PartnersEmail:IR@Medallia.comMedallia Copyright 202021

AppendixMedallia Copyright 2020

GAAP to Non-GAAP ReconciliationQ1 FY'19Q2 FY'19Q3 FY'19Q4 FY'19Q1 FY'20Q2 FY'20Q3 FY'20Q4 FY'20Q1 FY'21Subscription Gross Profit ReconciliationTotal Subscription 6.8312.2GAAP Subscription Gross Profit( ) Stock-based compensation expense( ) Employer payroll tax expense related to stock-based compensation( ) Amortization of acquired intangibles assetsNon-GAAP Subscription Gross .1%81.2%80.3%1.0%0.0%0.6%81.9%Gross Profit ReconciliationTotal 2313.6402.5GAAP Gross Profit( ) Stock-based compensation expense( ) Employer payroll tax expense related to stock-based compensation( ) Amortization of acquired intangibles assetsNon-GAAP Gross 0.1%64.3%63.9%3.0%0.0%0.5%67.4% MM except where notedGAAP Subscription Gross Margin( ) Stock-based compensation expense %( ) Employer payroll tax expense related to stock-based compensation %( ) Amortization of acquired intangibles assets %Non-GAAP Subscription Gross MarginGAAP Gross Margin( ) Stock-based compensation expense %( ) Employer payroll tax expense related to stock-based compensation %( ) Amortization of acquired intangibles assets %Non-GAAP Gross MarginFY'18FY'19FY'20Note: Totals may not sum due to roundingMedallia Copyright 202023

GAAP to Non-GAAP ReconciliationQ1 FY'19Q2 FY'19Q3 FY'19Q4 FY'19Q1 FY'20Q2 FY'20Q3 FY'20Q4 FY'20Q1 FY'21R&D ExpensesGAAP R&D(-) Stock-based compensation expense(-) Employer payroll tax expense related to stock-based compensation(-) Acquisition-related costsNon-GAAP R&DNon-GAAP R&D % of 77.619.3%S&M ExpensesGAAP S&M(-) Stock-based compensation expense(-) Employer payroll tax expense related to stock-based compensation(-) Amortization of acquired intangibles assets(-) Acquisition-related costsNon-GAAP S&MNon-GAAP S&M % of 151.437.6%G&A ExpensesGAAP G&A(-) Stock-based compensation expense(-) Employer payroll tax expense related to stock-based compensation(-) Restructuring and other(-) Acquisition-related costsNon-GAAP G&ANon-GAAP G&A % of 4.611.1%Operating Income ReconciliationGAAP Operating Income( ) Stock-based compensation expense( ) Employer payroll tax expense related to stock-based compensation( ) Amortization of acquired intangibles assets( ) Restructuring and other( ) Acquisition-related costsNon-GAAP Operating 0.6% MM except where notedGAAP Operating Margin( ) Stock-based compensation expense %( ) Employer payroll tax expense related to stock-based compensation %( ) Amortization of acquired intangibles assets %( ) Restructuring and other %( ) Acquisition-related costs %Non-GAAP Operating MarginFY'18FY'19FY'20Medallia Copyright 2020Note: Totals may not sum due to rounding24

Thank You

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. 55.6 60.1 63.2 67.9 71.7 74.5 79.7 86.2 89.0

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