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Why Medallia Stock Got Crushed Today

By Evan Niu, CFA - Mar 5, 2021 at 11:46AM

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The tech company reported fiscal fourth-quarter results and an acquisition.

What happened

Shares of Medallia (MDLA) have gotten crushed today, down by 27% as of 11:15 a.m. EST, after the company reported fiscal fourth-quarter earnings. The results were mixed relative to expectations, and Medallia said it would acquire Decibel.

So what

Revenue in the fourth quarter came in at $128 million, slightly ahead of the $124.6 million in sales that Wall Street analysts were modeling for. That resulted in an adjusted net loss of $1.4 million, or $0.01 per share, which was about what investors were expecting the company to lose. The software-as-a-service (SaaS) company, which analyzes consumer experiences on its platform, finished the quarter with $682.4 million in cash.

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Image source: Getty Images.

"During Q4, we achieved important milestones with quarterly subscription revenue exceeding $100 million and total annual revenue run rate exceeding the $500 million mark," CEO Leslie Stretch said in a statement. "We are out-innovating competitors and continue to invest in global sales coverage and product development."

Now what

Medallia has agreed to acquire Decibel, which specializes in digital experience analytics, for $160 million in cash. That deal is expected to close later this month.

In terms of guidance, revenue in the fiscal first quarter is expected to be in the range of $126 million to $128 million, which is shy of the consensus estimate of $128.6 million. That should result in an adjusted operating loss of $11 million to $12 million. Medallia expects revenue for the current fiscal year to be in the range of $563 million to $567 million.

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