Medallia

Prospectus Summary

PROSPECTUS SUMMARY This summary highlights selected information that is presented in greater detail elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should read this entire prospectus carefully, including the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes thereto included elsewhere in this prospectus, before making an investment decision. Unless the context otherwise requires, the terms “Medallia,” “the company,” “we,” “us” and “our” in this prospectus refer to Medallia, Inc. and its consolidated subsidiaries. Our fiscal year ends on January 31 of each year.

Vision

We believe customers build the best products, employees build the best companies and together we build the best brands.

Overview

We created a new category of enterprise software, experience management, and we are the market leader. Our award-winning SaaS platform, the Medallia Experience Cloud, captures experience data from massive and expanding signal fields emitted by customers and employees on their daily journeys and it is a leader in the market for understanding and managing omni-channel experiences. We utilize our proprietary AI technology to analyze structured and unstructured data from these signal fields across human, digital and internet of things, or IoT, interactions at great scale to derive personalized and predictive insights that drive action with tremendous business results. 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.

Our platform captures and analyzes over 4.9 billion experiences annually and has performed 8 trillion calculations in a single day to drive business decisions. Our products have high adoption and are used extensively from the front line to the C-suite, enabling users to improve experiences in live time. Over half of our customers have more than 1,000 employees using our platform, which we believe is significantly higher adoption than many other experience management solutions available in the market.¹ Even more importantly, these individuals use our platform daily to drive their businesses, with 50% of our mobile monthly active users, or MAUs, using our mobile applications on a daily basis as of May 31, 2019.² We believe that our engagement metric illustrates the addictiveness of our applications, as it demonstrates that there is repeated, regular usage of our applications, which makes our platform even more powerful in delivering results for our customers. The Medallia platform has helped transform many of the world’s iconic brands and we believe our platform is mission-critical.

The success of today’s enterprises often depends on the experiences they deliver, and the cost of failure is high. The proliferation of digital and mobile technologies, along with greatly increased bandwidth, has vastly increased the number of engagement channels and the volume, variety and complexity of experience data. In addition, social media platforms amplify the impact of positive and negative experiences that enterprises deliver, further increasing the stakes for enterprises in the experience economy. This technology revolution has made meeting expectations for great experiences even more critical across all stakeholders of an enterprise and makes experience management critical to driving business success:

Many enterprises have not invested in the tools and technologies to systematically capture, analyze and derive actionable insights from experience signals. This creates gaps between the experiences that customers and employees expect and experiences that are actually delivered. We believe enterprises that are consistently able to identify these gaps and improve experiences will ultimately +win in the marketplace.

Our platform was purpose-built for customer experience, the largest segment of experience management and the most critical segment for enterprises to manage and master in order to drive transformational business impact. To continue to expand the experience management market and complement our customer experience offering, we have also developed powerful products for business, employee and product experiences to serve

enterprises of all sizes. Today, our platform spans and integrates all four areas of experience management, Customer Experience, or CX, Business Experience, or BX, Employee Experience, or EX, and Product Experience, or PX:

While our BX, EX and PX products are separate offerings, we view them as allowing us to further extend and increase the impact of our CX offering, the most critical element of experience management for the customers we serve. We believe enterprises that engage across all four areas of experience management build the best brands by reliably and comprehensively delivering great experiences. Our platform allows our customers to address experiences holistically, recognizing the interconnection of experience areas and unifying insights across these areas to maximize the depth of analysis and impact of actionable insights we provide. Our platform also has natural network effects that drive expansion and increase value across teams and departments. Forrester has recognized us as a leader in their customer feedback management evaluation and gave us top scores in the current offering and strategy categories.

We have built a predictable, scalable subscription revenue model. For the year ended January 31, 2019, and the three months ended April 30, 2019, we generated 79% and 77%, respectively, of our revenue from sales of subscriptions to our platform. As of April 30, 2019, we had 565 customers around the world and across a wide range of industries, compared to 469 customers as of April 30, 2018, representing a growth rate of 20%. For the years ended January 31, 2018 and 2019, our subscription revenue was $201.8 million and $246.8 million, respectively, representing year-over-year growth of 22%, and our revenue was $261.2 million and $313.6 million, respectively, representing year-over-year growth of 20%. For the three months ended April 30, 2018 and 2019, our subscription revenue was $55.6 million and $71.7 million, respectively, representing period-over-period growth of 29%, and our revenue was $70.7 million and $93.6 million, respectively, representing period-over-period growth of 32%. For the years ended January 31, 2018 and 2019, and the three months ended April 30, 2018 and 2019, our net loss was $70.4 million, $82.2 million, $27.5 million and $2.6 million, respectively, which reflects our substantial investments in our business focused on our large market opportunity. Our customers have demonstrated high loyalty to us because of the transformational impact that we are able to deliver for their businesses. Our dollar-based net revenue retention rate was 126%, 116%, 122% and 119% as of January 31, 2018 and 2019 and April 30, 2018 and 2019, respectively, on a trailing 12-month basis.⁸ See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a description of how we calculate customers and dollar-based net revenue retention rate.

Our Customers

Enterprises providing the best experiences run on Medallia. We are a strategic platform of choice for category-leading enterprises, including:⁹

We have a profound impact on our customers, often driving transformational change. Our platform enables enterprises of all sizes to drive a culture of customer-centricity across their entire organizations.

We believe our platform helps create competitive differentiation through the experiences enterprises provide to their customers and employees. We enable our customers to deliver operational excellence, accelerate innovation and boost brand loyalty through customer and employee engagement, turning detractors into promoters and buyers. We provide direct and measurable returns to our customers. In an April 2018 study that we commissioned, The Total Economic Impact^™ of Medallia Experience Cloud, Forrester Consulting quantified the benefits of using our platform:

We believe this is substantially greater than the economic benefits provided by other experience management solutions.

What Sets Us Apart

Category-defining experience management platform

At the forefront of innovation in our industry, we believe our platform provides the most comprehensive suite of products to address experience management and optimize outcomes at scale. Key features of our platform include:

Enterprise-wide adoption with best-in-class engagement

Over half of our customers have more than 1,000 employees using our platform, which we believe is significantly higher adoption than many other experience management solutions available in the market.¹⁵ Even more importantly, these individuals use our platform daily to drive their businesses, with 50% of mobile MAUs using our mobile applications on a daily basis as of May 31, 2019. We believe that our engagement metric illustrates the addictiveness of our applications, as it demonstrates that there is repeated, regular usage of our applications, which makes our platform even more powerful in delivering results for our customers. We have purpose-built our platform to help drive active engagement. For example, executives at many of our customers use our mobile application, Medallia Voices, regularly throughout the day.

Drives transformational business impact

We believe the magnitude and strategic nature of our impact on enterprises is unrivaled in the experience management industry. Our flexible platform and deep industry expertise have enabled us to create

more than 30 pre-packaged solutions that generate rapid time to value for enterprises, often within six to eight weeks. By enabling enterprises to rapidly eliminate experience gaps and deliver superior experiences, we garner customer loyalty for enterprises, driving top-line growth. By supplementing customer insights with employee feedback, we enable our customers to transform overall organizational culture towards customer- and employee-centricity.

Trends in Our Favor

Experience management is critical in today’s experience economy

The success of today’s enterprises depends largely on how they deliver experiences. As traditional sources of competitive advantages erode and barriers to entry collapse, new players are disrupting almost every sector, outmaneuvering and displacing those who do not consistently deliver great experiences. As a result, it is imperative for enterprises to understand, measure and improve all aspects of customer, business, employee and product experiences to drive competitive differentiation.

There has been a wholesale transfer of power to customers

Customers no longer passively accept the experiences that are offered, but are actively taking control of their own buying journeys. They have more choices than ever as enterprises leverage breakthroughs in digital technology to deliver personalized and valuable experiences to customers. With more choices, instant access to information and less incentive to be loyal, today’s customers are firmly in control of their relationships with enterprises, which must respond or risk losing those customers.

Enterprises struggle to capture and analyze experience signals at scale

The increase in digital and other engagement channels along with frequency of customer and employee interactions has spurred massive growth of experience signals. Enterprises need to capture and analyze this rapidly expanding universe of structured and unstructured data. Enterprises that rely on operational systems designed for transactional data alone lack predictive insights and personalization that comes from capturing and analyzing experience signals. Such deficiency can lead to a fragmented customer experience, increased customer complaints, high employee turnover and eventually brand degradation along with reduced growth and profitability.

Enterprises fail to retain and motivate talented employees

High demand for talented employees, coupled with increasing turnover costs, has made employee experience critical to engagement and retention. Similar to the customer journey, the advent of new technologies has increased the complexity of employee journeys and the number of channels through which employees engage with their employers. Employees also directly interact with and shape many customer experiences, so an active and engaged employee base is key to promoting great customer experiences.

Enterprises need a holistic platform with innovative technology to close experience gaps

In order to identify, assess and close experience gaps, enterprises need a comprehensive experience management platform that combines the complete signal set from experience data with operational data across customer, business, employee and product journeys. Technologies such as deep learning-based AI, text analytics and in-memory processing are key requirements of a successful experience management platform.

Alternative approaches have failed to adequately address experience management

We believe alternative approaches fail to adequately address experience management and that none of our competitors offer a comprehensive experience management platform. Alternative approaches include the use of:

By replacing these siloed approaches and point solutions, our customers are able to take a holistic approach to experience management, gather, understand and analyze massive signal fields to more accurately identify issues and opportunities, and derive actionable insights.

Market Opportunity

We believe experience management is at an early stage of adoption and will disrupt the traditional ways of managing customers, business relationships, employees and products through CRM, ERP and HCM systems, driving a cultural shift towards enhancing experiences rather than managing transactions. As such, we believe that the market opportunity for our Experience Management platform is vast, rapidly-growing and largely underpenetrated.

Based on industry data and an analysis of sales to our existing customers, we estimate the total addressable market for our Experience Management platform, including our products for CX, BX, EX and PX, to be approximately $68 billion in 2019. We estimated this opportunity using the total number of global enterprises with estimated annual revenue greater than $150 million, based on independent data from S&P Global Market Intelligence, segmented into two tiers (consisting of (1) enterprises with estimated annual revenue greater than $1.5 billion and (2) enterprises with estimated annual revenue between $150 million and $1.5 billion), and multiplying by the average annual contract value, or ACV, of subscriptions and managed services for our top 100 customers within each tier.¹⁶ Our estimate assumes that all enterprises within each tier would purchase our Experience Management platform at the same levels as the average of our top 100 customers in such tier; however, the actual total addressable market will vary depending on the adoption of our platform by enterprises and the purchase levels of such enterprises once they have adopted our platform.

We operate in a large and rapidly-growing market where enterprises are only beginning to understand the power of using experience data to run their businesses. Since experience data provides the “why” behind business results and sheds light on what companies can do to drive improved results, we anticipate that it will prove to be just as valuable to enterprises as operational data. As a result, we expect experience management solutions to continue to increase in value and our total addressable market to expand.

Our Growth Strategy

We intend to capitalize on our massive and growing market opportunity by executing on the following growth strategy:

Extend our technology leadership. We have a strong history of innovation and offer a comprehensive platform that addresses customer, business, employee and product experiences for enterprises of all sizes across multiple industries. We intend to continue to invest in building new products and features while extending our platform to bring the power of experience management to a broader range of enterprises, industries, geographies and use cases.

Drive sales to new customers. As of April 30, 2018 and 2019, we had 469 and 565 customers, respectively, including 26 and 32 of the Fortune Global 100,¹⁷ respectively, which we believe represents only a fraction of our total addressable customer base. As we extend our technology leadership, we also plan to continue to invest in sales and marketing to grow the number of customers. We have recently expanded our sales force to continue pursuing large enterprises and increase our efforts with mid-sized enterprises. In addition, we intend to continue to deepen our opportunity within existing verticals and expand to other verticals.

Drive cross-sell and up-sell. We believe there is a significant opportunity available to cross-sell and up-sell our various product offerings to existing customers. The mission-critical nature of our platform and enterprise-wide applicability and engagement drives adoption in additional divisions within enterprises and cross-sales of more products and modules.

Broaden and deepen our partner ecosystem. Our partner ecosystem extends our geographic coverage, accelerates the usage and adoption of our platform, augments our platform with complementary technology, promotes thought leadership and provides additional implementation resources. We intend to augment and deepen our relationships with global and regional services partners, as well as a range of complementary technology and go-to-market partners.

Continue international growth. During the year ended January 31, 2019 and the three months ended April 30, 2019, we generated 30% and 27%, respectively, of our revenue outside the United States and we see a significant opportunity to further expand the use of our platform in other regions. We intend to continue making substantial investments in building our global sales and marketing, service delivery and customer support capabilities to grow our business outside of the United States.

Risks Associated with Our Business

Our business is subject to numerous risks and uncertainties, including those highlighted in the section titled “Risk Factors” immediately following this prospectus summary. These risks include, but are not limited to, the following:

Channels for Disclosure of Information

Investors, the media and others should note that, following the completion of this offering, we intend to announce material information to the public through filings with the Securities and Exchange Commission, or the SEC, the investor relations page on our website (www.medallia.com), press releases, public conference calls and public webcasts.

The information disclosed by the foregoing channels could be deemed to be material information. As such, we encourage investors, the media, and others to follow the channels listed above and to review the information disclosed through such channels.

Any updates to the list of disclosure channels through which we will announce information will be posted on the investor relations page on our website.

Corporate Information

We originally incorporated as Berrypick, Inc. in California in July 2000 (which was renamed Medallia, Inc. in May 2001). We incorporated a wholly-owned subsidiary of Medallia, Inc. in Delaware in December 2009. In October 2010, we merged our California and Delaware corporations and the surviving entity was Medallia, Inc., a Delaware corporation. Our principal executive offices are located at 575 Market Street, Suite 1850, San Francisco, California 94105, and our telephone number is (650) 321-3000. Our website address is www.medallia.com. Information contained on, or that can be accessed through, our website does not constitute part of this prospectus and inclusions of our website address in this prospectus are inactive textual references only.

Medallia, the Medallia logo and our other registered or common law trademarks appearing in this prospectus are the property of Medallia, Inc. Other trademarks and trade names referred to in this prospectus are the property of their respective owners.

Implications of Being an Emerging Growth Company

We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting requirements that are otherwise applicable generally to public companies. These reduced reporting requirements include:

We may take advantage of these provisions until we are no longer an emerging growth company. We would cease to be an “emerging growth company” upon the earliest to occur of: (i) the last day of the fiscal year in which we have more than $1.07 billion in annual revenue; (ii) the date we qualify as a large accelerated filer, with at least $700 million of equity securities held by non-affiliates; (iii) the date on which we have, in any three-year period, issued more than $1.0 billion in non-convertible debt securities; and (iv) the last day of the fiscal year ending after the fifth anniversary of this offering. We may choose to take advantage of some but not all of these reduced reporting burdens. We have taken advantage of certain reduced reporting burdens in this prospectus. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold stock.

The JOBS Act permits an emerging growth company like us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We have elected to use this extended transition period until we are no longer an emerging growth company or until we affirmatively and irrevocably opt out of the extended transition period. As a result, our consolidated financial statements may not be comparable to the financial statements of companies that comply with new or revised accounting pronouncements as of public company effective dates.

See the section titled “Risk Factors—Risks Related to Our Business—We are an “emerging growth company,” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.”