Q2 2021 Medallia Inc Earnings Call
Joining us stay for today's call, our Medallia CEO, Leslie stretch and CFO box and almost.
Oh, let's turn the call over trucks for introductory remarks succeed.
Thank you Jesse Walkington medallion second quarter fiscal 2021 earnings Conference call. We issued our earnings release, a short can go and furnish the related 8-K to the FCC to exit the press release. Please see the Investor Relations section of our website with me today on the color gladly stretch president and CEO Mike.
Before we begin please remember during the course of this call me they make forward looking statements about the operations in future results of medallions that need berries and involve many assumptions risks and uncertainties, including those related to the cobot 19 pandemic to the extent possible are forward looking statements seek to pay.
Take into account the impact of 'cause. It 19. However, the crisis that this endemic has created it varies really and the situation that's constantly evolving if any of the risks or uncertainties related to the forward looking statements develop or any of the assumptions related to the forward looking statements prove incorrect.
Actual results could differ materially from those expressed or implied on a forward looking statements.
Discussion about risk factors associated with the forward looking statements. Please refer to the tax and the company's press release issued today and to our periodic reports filed with the FCC include have form 10-Q dated June nine 2020, we disclaim any obligation to update any forward looking statement.
On the call today, we will refer to both GAAP and non-GAAP financial measures the non revenue financial figures discussed today our non-GAAP.
I stated that the measure as a GAAP number please refer to todays press release for the reconciliation of GAAP to non-GAAP financial performance and additional disclosures regarding these measures.
Additionally, in conjunction with the release of our earnings report, we have posted on our website at medallion dotcom under the Investor Relations section additional church that identified trended metric performance that we believe will aid in understanding when evaluating our performance over time now I'll turn the call over to wisely.
Thank you also.
Good afternoon, everyone.
Oh, I'm sorry, it's unhealthy.
Bore begin I'd like to thank each and every medallions for their hard work into them, so far and Twentytwenty.
I was pleased about progress in Q2, we saw a company operate successfully as a virtual business, where you have records lost revenues up 24% year over year record total revenue up 21% year over year, roughly 57 enterprise customers in Q2, ending the quarter with 839 or Orange County.
Got a record 146 customer go lives versus 100, QR all executed virtually <unk>.
As we indicated in our last earnings call, we executed a $14 million total contract value renewal in the quarter in Q2 under 17 million total contract value renewal quarter again in Q2, both in financial services. Additionally, in Q2, we signed a 9 million total contract value outlook for a major dressbarn fracture and expanded to make.
To retailers voice of employee program for 700000 per year I don't looks at a major health care provider what over 10 million total contract value. These large multiyear commitments are evidence of the London expanded opportunities we have on the sticky masterbatch solutions that once implemented enterprise wide.
Our new autonomy sales motion E commerce, telling how digital work from anywhere sectors showed great call. Much. However, we've seen some hospitality feedback volumes increased significantly as this sector makes some progress on this bodes very well probably.
Well the same time many of our retail customers had record E Commerce and bought online pick up in store performance strengthening our opportunity pipeline in that sector too.
Our employee experience solution from seen increased traction given to work from home trajectory understanding employee feedback is more important than ever retaining and motivating talk Poland is top of mind for executives. We currently have nearly 100 enterprises using medallion employee experience ranging from billion dollar fortuneone hundred companies to mid market players.
This is up from approximately 25 customers using onboard experience a year ago.
I've got just one year ago, we established our new Midmarket sales team, because my dog and scalable and you slot for Lightbridge Barco is a whole sotheby's today.
I'm proud to report to you that we ended the quarter with over 400 Midmarket customers. We're pleased with our early success in this exciting segment.
Each quarter selected an industry or region or product line to focus on this quarter I would like to highlight our traction in three new vertical markets for Medallia public sector healthcare and life Sciences.
First our public sector business, a long term investment market from a dollar.
Early signs of success with notable wins and go lives, including the U.S. Department of health and human services now using Medallia crowded city to generate and advanced new ideas to improve experiences run diverse set of health initiatives.
Since our last earnings call the National Health service in the UK has expanded usage to new areas organization building on their Crowdsourcing success orbit testing Twentytwenty project.
The American Red Cross is leveraging modality to assess the availability of P.E. across the communities. They serve and this is intended to accelerate actions first anything associated with the <unk>, but preventing the spread and in part to cope with 90.
We shouldn't have San Diego is using medallia employee experience and citizen experience like Doug foreign dry docks.
We'll accelerate experience improvements throughout the city.
We are proud the Idaho Department of Veterans Affairs was launched Medallia to help our battery <unk> energy I'm sure. They have access to all benefits on services and the state.
Our new healthcare vertical so im sorry did you ever quarter. This market. That's been exclusively served by legacy surveys on those.
We continue to expand our product offerings on investments in health care, including the addition of two new patient experience experts this quarter, who were previously season patient experience officers a prominent healthcare systems in the U.S.
In the quarter, we signed at University of Alabama, Medicine, a leading academic health player using medallion out to deliver 21st century patient experience beyond simple sherbet.
Additionally, following a very successful initial implementation north Western medicine signed a multiyear agreements to expand medallion across the business.
Alluding inpatient experience, how they're deploying our video technology living loans. It was part of the mission to deliver a leading innovative patient experience.
We also introduced in the quarter medallion sort of health care experience partnered with Upsells to enable healthcare systems to all stations to report on their health care experiences and the current highly regulated patient experience surveys caps and H. Josh.
Same time, one of the world's largest health care in consumer package goods companies expanded its relationship with Medallia to understand the effectiveness of their internal liking services, which is critical for companies given the work from anywhere World. We're now in.
Turning to our life Sciences progress a top three global Pharmaceuticals company selected medallion living loans to capture video from physicians and patients Greg powerful show real but in spot action and change last establishing a single halt to store anonymized over the old conference on other made Smartside company chose look on the speech utilizing our.
You speech to text capabilities.
Let me just spot like a few other wins and different industries.
Twitter selected modality to improve experiences and the critical digital support function, which handles 150 million plus cases parana.
Three m. made a multiyear commitment to deploy the full suite of modality products as part of a broad initiative to transform their end to end customer experience on the top three Italian bank selected modality experience cloud digital on progress with that you could liver, winning digital experiences and collaborate and take action based on employee ideas.
I'm pleased with the progress in our alliances business, we signed 11, new partners in Q2, Guidewire people AI corals method, we signed two regional systems integrators in Japan, and gain innovation and the public sector.
We signed for customer experience advisory firms in the U.S. Asia Pacific anemia.
On the quarter, we launched our digital disruption quick start system with Adobe at the same time medallion Adobe announced integration between without experience quote on Adobe experience platform.
In August replaced the new listing in the Salesforce Dot com up exchange showcasing our closed loop service for Salesforce does that already mentioned, we launched with all your total health care with themselves.
In August we launched service experience Quickstart preserve it's not.
Today I'm pleased to announce the acquisition of Silicon as I previously discussed we'd originally planned rebid. The M&A later this year early next year, but after discussions with our customers. It was clear that stellar was a unique asset now's the time to make this move.
It's becoming clear that the contact center has to reinvent itself virtually I'm with a much stronger service orientation.
Bonding modality, which teleconnect turns feedback into direct in the mobile action.
Just for the contact center, but for old frontline agents in any industry.
Stellar connect automates the process of coaching key customer interactions with the contact center, reducing unnecessary and costly dialogues increasing focus on priority customers, whilst allowing companies to retain and cross sell customers.
All of this is don virtually reducing the need for physical contact center, an important capability in the new autonomy.
Lets contact center agents from around the world could not work anywhere. This is especially critical stellars used by brands that range from disruptive stocks walks through the billion dollar companies.
Yes, tea Lemonade Lululemons Postmates riot games with Williams Sonoma.
Customers you start to connect to provide feedback coaching reward some quality assurance roll customer interactions, including both digital and web. Furthermore, by combining Stella with our AI driven medallions speech technology, we move towards the completely virtual contact center driving higher stop retention massive ROI.
Looking forward.
Our performance in Q2 underscores the critical in Paris, with a customer intelligence feedback and experience to action.
The customers at the center of digital transformation.
Instantly to know more about their customers not less legacy survey companies that delivered tested response rates are becoming irrelevant.
Our customers demand technology that can guarantee more signal capture deliver much higher response rates on more customer interactions at the same time, we combine small analysis to drive action for medallions rich experience data.
In Q3, we probably good starting in August and we've already signed one the world's largest retailers for medallion speech and its seven figure plots annual contract value agreement, which is an important milestone for this new solution.
I'll handover Roxanne review of our financial performance and outlook.
Thank you likely and good afternoon, everyone reported strong financial results in Q2, including including record total revenue and record cash revenue as a quick reminder, unless otherwise noted all numbers, except revenue mentioned during my remarks today. Our non-GAAP you can find a reconciliation from GAAP to non-GAAP results in today's press release.
Total revenue for Q2, with 115.5 million, an increase of 19.9 million or 21% over Q2 fiscal 2020 in Q2, SaaS revenues were 92.8 million, an increase of 18.3 million or 25% year over here.
As a reminder, on our last call. We shared that we were working with certain customers in industries hardest hit by the pandemic, who requested modified subscription terms flexible payment in Boise terms in exchange for extensions of their existing contracts.
On average the extension period was for one additional year.
As we projected on the last earnings call. The modified subscription terms negatively impacted Q2, SaaS revenue by approximately $1 million, we expect a similar quarterly impact for the remainder of this fiscal year.
The tightness in invoicing flexibility is a near term headwinds cash flow and believe that said is important to keep in mind that just had no impact on our total rpls or long term current economic.
As a reminder, the majority of our contracts are multiyear irrevocable inc., we contracted minimum and we expect our customers honor their agreements modality is strategic to our customers, who view us as essential to reduce operating costs dried revenue and improve customer retention, we believe strongly and partnering with our customers.
And we believe we will emerge stronger together.
Professional services revenue was 22.7 million for the quarter, which increased 7% year over year.
Lovely noted once again this quarter, we have experienced a significant increase in deployment with an approximately 60% increase in Q2 over Q2 of the prior year and be 46% sequential increase.
Recurring managed services revenue accounts for more than 50% of our total professional services revenue, which has been consistent with recent quarters. As a result recurring revenue consisting of staff and managed services continues to be at 90% of total revenue.
Turning to some key metrics, our new customer growth was strong we ended the quarter with 839 enterprise customers an increase of 37% year over year. This includes 20 customers from our acquisition of BOCI.
Medallions provides a high ROI to our customers is evident evidenced by our strong renewal rates for the 12 months ended July 31st Twentytwenty. Our dollar base net retention rate was 117% consistent with the prior quarter. We believe our strong retention rate underscores the ROI or platform provides.
And our ability to retain and steadily expand business within our existing customer base.
Turning to RPL or remaining performance obligation as I have shared with you before arfield metrics may be impacted by contract duration and extension as well as timing of renewal of large multiyear contracts. So wall art he'll provide for strong visibility it may fluctuate from quarter to quarter.
As of July 31st our total written any performance obligation or total RPL was $728 million, an increase of 33% year over year, an incremental step up of over $97 million from the prior quarter the largest quarterly sequential increase.
And we started tracking this metric seven quarters ago.
In addition, current RPL, which is not we expect to recognize as revenue over the next 12 months totaled 341 million an increase of 20% year over year, we actually recognized approximately 40% of total RPL excuse me, 47% of total archeo over the next 12 months.
Non current RPL, which is the amount we expect to recognize beyond the next 12 months totaled $387 million, an increase of 47% year over year. This is the result of our success signing a large number multiyear contracts over the last 12 month.
I'll now turn to our non-GAAP gross margins and operating expenses South.
Gross margin was 82% consistent with this year ago corridor, we believe our subscription margins are among the best in class for SaaS companies.
In Q2 professional services gross margin was 15.3% compared to 17.2% in Q2 of the last year, we continue to focus on driving more professional services to our ecosystem.
Along with sub contracting so that we continue we so we anticipate professional services gross margin will range between 10% to 12% for the remainder of the year.
Sales and marketing expenses in Q2 were 41.9 million or 36% of revenue.
R&D expenses were 22.7 million for the quarter or 20% of revenue.
R&D remains an important investment area as we expand our platform with new features and capabilities each quarter.
<unk> expenses were 12.5 million or 11% of revenue in the quarter, we expect additional leverage on the Genie line over the longer term.
Non-GAAP operating income in second quarter was $2.5 million compared to a loss of 2.4 million in Q2 fiscal 2020. Similarly, non-GAAP operating margin in the quarter was 2.2% compared to a negative 2.5% in a year ago corridor.
Non-GAAP net income was $1 million compared to a loss of $2.6 million in Q2 of last year.
We incurred a non-GAAP income tax expense of $1 million in Q2, which is in line with the same period last year.
Our GAAP net income includes a 7.6 million dollar charge to gionee related to our decision to sublease or San Mateo office any portion of our pleasant.
We have recently signed a pen to take over the plus a portion of the plus into space.
Turning to the balance sheet, we ended Q2 with 347.5 million in cash cash equivalents and marketable securities.
Decrease of 60 million from the prior quarter, primarily related to the acquisition of BOCI.
Seth deferred revenue was 179.9 million an increase of 24% over SaaS deferred revenue in Q2 of the prior year.
Let's move on to discuss that calculated billings, which we define it staffed revenue plus change in sequential stuff deferred and contract asset.
As you know there are a wide variety of factors that influence this metric therefore quarter to quarter fluctuations in calculated billings should not be taken as an indication of future changes of changes in future 11.
For example, billings will fluctuate quarter to quarter due to the timing of renewals and annual contracted billing.
As we have communicated to you we believe that the 12 month trailing SaaS billings growth rate is a more meaningful measure of our performance.
For Q2 fiscal two.
Our trailing 12 months stuff billings growth rate was 20% as I discussed earlier, a modified payment terms and invoicing flexibility is creating a near term headwinds to staff billing for example in Q2 SaaS billings was negatively impacted by approximately $2.5 million.
Primarily due to bookings within the quarter with invoicing terms that ramp over a multiyear period.
Now turning to cash flow.
We used to 19.4 million in cash from operations during the quarter, representing an operating cash flow margin of negative, 17%, a 500 basis points.
As a reminder, we've historically experience seasonality cash flow from operation given that over 40% of our billings occur in the fourth quarter.
As a result, our operating cash flow has been positive in Q1 Q4, followed by cash flow from operations being negative in both Q2 in Q3 as it has been in the past few years, we anticipate the seasonality to continue this year.
Moving to guide.
Well, we see incremental improvement in Q2 over Q1 in several metrics the uncertainty of the effect of the pandemic remain in contact we are only providing guidance for Q3.
Let me touch upon the acquisition of Stella connect this is a technology focused acquisitions and we will have a haircut applied opening deferred revenue balance.
As a result, our Q3 guidance remain minimal.
Our Q3 guidance assumes minimal revenue and billings contribution from Stella, although we will be absorbing the full operating expense impact.
For Q3, we are projecting total revenue to baby.
Addition, we will continue to invest in product innovation and key vertical go to market initiatives.
We expect operating income and expense to be an expense between 500000 and $1 million, primarily due to the reduced interest rate environment. We expect in come tax expenses to be in the range of 500000 to $1 million.
We expect basic weighted shares outstanding to be approximately 147.5 million and fully diluted weighted shares outstanding to be approximately 174 million.
Finally, we anticipate our capital expenditures in Q3 to be approximately $5 million, primarily related to enhancing our datacenter capabilities.
Please on an operating income basis.
In conclusion, we will balance growth and profitability by continuing a financially disciplined approach customer intelligence has become an integral part of digital transformation and is a critical area of software spent we are committed to maintaining our innovative hedge and the opportunity to invest in.
R&D and go to market efforts.
Lastly, and I will now take your questions operator.
Thank you at this time that you're like asked a question. Please press Star then one layer telephone keypad again star one can you first question.
So just want to compile the acuity roster.
Your first question goes from Rob Oliver with Baird. Your line is open.
Great. Thank you guys very much for taking my question, Hi, Leslie Hell or high Roxanne.
I just wanted to ask on partnerships Leslie when you you laid out youre kind of strategic plan as you guys were coming public.
He was a bunch of things it was increasing the signals.
You know revamping the go to market and also.
The partnership's bigger part of that go to market in you sign some some really meaningful partnerships along the way in a bunch more this quarter really impressive just wanted to get a sense for.
You are feeling as to where you are now which partnerships are driving.
Both rejected deals for you.
Which excite you going forward and then I just had a quick follow up.
Yes, thanks, Rob so.
I really like a whole play I like the.
The large scale cloud partners like Adobe and Salesforce in service now very much like the vertical players that were developing also will be or that we did labar quarter in our guidance for Alibaba and I like it's also in the market reserves or market research leader there turnarounds, we are super partner, but it's really broad spectrum.
We are no.
We're still early days here very broad spectrum polymer contribution to our business and our cost of errors and great cooperation in the field and virtually it seems to be by the customer world easier to have more meaningful dialogues and creating meaningful go to market.
Builds, which we've done and I like the geographic soluble too.
Two new Geoscience systems integrators in Japan in the quarter on Japan, I think it's a very interesting early stage market for us and also with gains in the public sector I got one too. So there's not much identified about I think is developing really well I'm really pleased I think it's a very special part of our business is good.
Doing well.
Okay, Great get Thats really helpful. Thanks, Leslie and then rocks and just a quick follow up for you on just two issues. One was the I think you said, the two and half million headwind to subscription billings.
What can you just made maybe maybe touch on that a little bit and then.
I think there was.
Seven plus million dollar.
Exit cost on leasing leases and.
I just.
Wanted to know if there was anything you guys were considering rate relative to office space. I know you guys have how do we work in the past or are you reconsidering your commitment to office space given the pandemic. Appreciate it guys. Thank you very much.
Thanks for the question, Rob So first of all on the billings as I shared in the prepared remarks, we did in entering the contracts with ramp Bill billing. So these billings had lower invoicing in the first year and then be invoicing increases as the years go on and these are multi year very vocal contracts.
So I just wanted to highlight for you that we are being flexible and we're working with customers and this did have an impact and if I wish to adjust our trailing 12 month.
Billings growth rate it would be 21% for these items with regards to your question for the $7.6 million of exiting.
Facility. So we had two facility.
First is our San Mateo facility, you're right. We were formally in will be workspace. There we have been so successful working.
Actually and we've obviously been working very closely with our employee base to understand how they intend to work in the future and as a result, we see ourselves in the tail space will be more of a collaboration safe. Therefore, we are looking to sublease that base now in Pleasanton, we did sublease.
A portion of our office space that we signed recently here over the last couple of weeks.
So thats the charge that you see in the income statement on a GAAP basis.
Great. Thank you guys both very much appreciate it.
Europe.
Your next question goes from Brad Zelnick with Credit Suisse. Your line is open.
Excellent. Thank you so much for taking the questions.
First maybe I guess from for Leslie if we look to the strength in customer adds since last quarter.
Really nice improvement.
Just.
Digging into that a little bit wanting to understand I imagine some of this is the success that you're having down market, but beyond that is it fair to say that you're trying to land smaller deals and enterprise as well and if so how should we think about the progression of expansions.
Okay. Great question first of all I, just want to say on repeat what I said in prior quarters I still think these are small beer numbers. So I think we've got.
Much more exciting numbers ahead of us in terms of customer ads, because we really just begun the mid market business. So it's important to qualify now having said that as the quality of the odds already like in this quarter. You know Q1 was a tough period draws April was a tough period. We're now in Q2, where we've run the business virtually on it.
It's been an exciting quarter, there's no doubt about it and so.
Is the quality of the odds I rattled off some of the names and.
In the prepared remarks.
But I think the main point to make is be agility of the platform. The one point. So we can make the partner loan.
Excuse me this is the operator.
Color. This is the operator back first you will recall I have your first and last name. Please.
Color. This is the operator of access you out of the call I have your first loss name. Please.
If you're on mute please on mute.
Survey players, who are really serving out kind of poor response rates.
Our net promoter score outcomes for their customers poor analytics and no action.
These are great opportunities in our sales force or are hungry, we don't salespeople, who either quotes or by chunks or higher or do big deals. We got back capability. So I'm really pleased about where we're getting too.
Thanks, Leslie and I don't know if this is better for you or Roxanne, but just as we think about the pipeline I appreciate that youre guiding us only to Q3, yeah, I think the entire world lack visibility with all the uncertainty.
That lies ahead, but anything that you can share with us real time as you think about visibility into the pipeline and even the cadence of business coming off of last quarter and into into the current quarter and as you see it possibly playing out three ended the year.
Well I think ill, let rolls are implemented Americas should give us the balance here, but I get we gave some clues gave some im sorry, we had a good start here to Q3 and we are told about.
The significant seven figure speech due to reduced the routing validates about story beautifully grows.
I think.
Looking forward to.
Hi, good second half products, we're still in the pandemic were so low.
Living this way and I think for the considerable future of exciting thing about this is no longer a work from home world. It's a work from anywhere world, that's really important not as important when it comes to look at this acquisition that we've announced today stellar connect that it's going to further enable work from anywhere for huge working populations where hundreds.
Two trapped in the contact center Rosa.
So we have seen not only improvements in our pipeline year, we were very clear on the Q.
One call about what we had seen in the April timeframe. We've also seen and we've proven that previously we've driven this in the pandemic that we're actually able to land and expand and we do that successful with our new customers. In addition to adding new logos.
However, it is unclear we don't know what is going to happen in the future from a broader economic perspective, but what we do see promising is that we have seen a continual progression of improvement in not only the pipeline, but the activities of deals that we are closing on a monthly basis.
So we had a very strong Q1 revenue growth rate, we had a strong Q2 revenue growth rate, we're optimistic about the future. However, we are still in the pandemic, which has had broad economic impacts on the entire world.
Congrats on all the strong execution amidst the uncertainty and thanks for taking the questions.
Thank you Bridget.
Your next question comes from Phil Winslow with Wells Fargo. Your line is open.
Hey, Thanks stream for taking my question Congrats on a strong OSAT buildings, where in particular, despite those headwinds you mentioned in addition, as the tough comp.
One of the metrics are really stood out to me was the that JAKKS customer account growth, obviously supercharged growth year over year. I guess question for you Ludlum, maybe brought out of your touch chime in too I mean, how much is call it be reopening.
When playing into Upselling, he acts to that CX customers or that sort of full view of the experience across a few and and is that one of things driving to accelerate acceleration here in this new business or the opportunity as we got to go forward.
I think it's great question, I think and so I wouldn't characterize it as reopening on characterize as adjustment to work from anywhere.
You think about that connection deep connection with your employees near team is really important and traditional HR spectrum feedback platforms 360 platforms were built for the old growth. This is bill for the in the moment connectivity that we've enjoyed the customer experience world and I attribute.
The growth.
I think there's still a long way to go I think there's many more opportunities by the ability to use voice to use video to connect to not way and now is to add in a coaching dimension to the connectivity is so important deep connective tissue at this time for employees, it's vital and we've also we're investing in a we're adding great skills.
And so I mentioned in the prepared remarks.
Got it lenders also a follow up I mean, you mentioned.
Video voice covered conversations that sort of these multiple channels. That's medallion now offers as far the platform just with dependence on the change in the customer behaviors and we've heard from service does vendors here more messaging more chat et cetera.
How is or your body platform resonating and position yourself competitively versus some others out there.
Yes, so I think the.
Every single customer on employee journey patient journey. So this journey has changed.
And changed in some cases for the better.
So low emotion transactions have become high emotion.
Simple transactions have become sophisticated and complicated and so way points on journeys of multiplied. So feedback is more important than ever understanding how you're designing ideal customer journeys and how you're making it work, but also taking action on feedback feedback is pointless with our action.
And so there's really no de during the platform play in doing the understanding the customer intelligence play.
We are working on their survey businesses Bacon say, one thing, but theyre doing an offer their server as market research and some of them with markets that are really.
Challenged academia and so.
We're in a different place, we're about understanding where about signal capture.
We will go into survey situations massively improve response rates through additional signals are just through understanding customer journeys and a better way I think those things are all playing.
And so the growth for the business and into our pipeline of opportunities.
Great. Thanks for the good work.
Thank you.
Your next question comes as Scott Berg with Needham Your line is open.
Hey, Leslie interaction and congrats on a good quarter.
I guess.
Yes, I just wanted to start on some of your mid market traction you talk about 400, plus customers year really after starting those initiatives.
Are you seeing those customers purchase anything materially different than the your large enterprise customers, whether it's a module or what that cadence looks like any color on maybe the traction there would be great.
We are great question and.
Obviously surprising the number of mid market customers that have gone for medallion experience card.
We normally thing they go for simple survey or digital or one module, but why can't small businesses have that same three dimensional radar scope of the customer or the employee and so we're making as easy as we can for any size of business together to power the platform. So.
Really exciting, but we're seeing great traction in the ideas solution providers to improve traction and video obviously, we've had our first.
Significant transactions and medallion speech, the voice technology combined with our text analytics solution, but we already have.
So it's across the board.
In the field or Andro and they can play.
Our customers are ready for one capture technology or for text analytics or for the understanding platform. They can take another and so there's plenty in the bag for a virtual Androgel sales force.
Great quite helpful. And then from a follow up perspective, you're obviously, adding on more partners.
You mentioned some of the geographic focus partners outside of the us.
When you look at those partnerships in areas with maybe different languages are different.
Requirements. There is does that was a challenge to the platform longer term or do you think language is really not in inhibitor to some of those international customer usage.
Well I think thats pretty insightful, because we've just been looking I actually dusted last week beauty of the current environment is I can do customer tours around the world. All the time last week was re before last excuse me was Asia Pacific.
Were obviously, we're beginning to open up Japan, now modalities available and massive language library, but there is always another language was always another opportunity on so technically battles and present any challenges what's interesting is that communication.
Actually I have to say, we've been using video technology with simultaneous translation and some of our.
Colin foreign language interactions, but will be going on with customers and prospects and thats turned out to be much more successful actually than I expected more successful on more than a traveling road show in a region, which is counter to everyone's intuition. So.
I think we do have a big language initiative for all of the modules to be available in every major language dilate usage iridium around the world is very important to US there are new markets to open our Portuguese and Brazil of course.
It would be a great business area for us and we've started to do some trinza some transactions in that country.
Great. That's all got congrats again.
Thanks, so much.
Your next question comes from Tom Brad Broderick with Stifel. Your line is open.
As I have a fan thank you for taking my questions. So let's if we go back 90 days ago, you are really emphasizing that.
The nature of your sales team sort of had to be adaptive and flexible today to the time that we ran at the time, you're really emphasizing more mid size deals in land and focus on the expand later and yet here. We are early September it sounds like you had a number of pretty substantial key seven figure eight figure TCV type away.
End has your approach to managing and coaching the sales team changed at all from that desire to see them going after some of that perhaps shorter sales cycle mid sized opportunities is it more of a green light to go elephant hunting again, just tell me a little bit more about how you and your sales leaders are thinking about the construction of that pipeline and.
And they go to market.
Yes, we're very welcome. So a question I think the the.
For us we never said to the.
The Big game hunters operated outweigh stop stopped doing that we just can't adding agile virtual sellers. So those guys were still motoring, they're still going for it.
But never changed but for sure.
In Q1, especially in April people were.
From state of shock in some industries and so we're stopping the big view traction across the board off.
Exclusively so we never Cauterized.
The fact, we have as many big view big game hunters or more than we had before but we have expanded to your question. The midmarket capability, but we've also said look there's no shame and eating your quota and bite size chunks you know.
And also there is a very very lucrative market.
And the low end if I call. It that has been served by legacy survey companies, who say they do one thing, but they actually do another they do survey they do market research they sell to academia. They have a lot of services right and those businesses my opinion aren't getting good value for money for those customers. We now have self service agility that can do.
So we're letting our people solar go after.
Yes, Thats really helpful. Thank Leslie.
When Roxanne just with respect to the stellar acquisition totally understand that this will be a quarter of integration. So the minimal at the cotton the context on minimal revenue and billings contribution. This quarter is helpful. Can you provide any sense as to what they were looking at as at an annual run rate.
$300 million is not insignificant.
Chunk of money to spend on something so it seems like they perhaps had a some sort of run rate, but could you provide us with just maybe any historicals on the revenue side number of employees the idea of how much.
Pardon me this the operator I put it from the conference together your information for you there.
Colleagues for their please limit your phone to pick up the handset.
Employees today, and we are very focused on what the technology that we can bring to our customer base, especially when we combine this with speech and we think we can really virtual contact center. So yes, we paid $100 million on the multi.
Well, we paid was significantly less than our multiple and keep in mind that the contact center space is a very attractive space at this point time from an acquisition perspective. So I don't see that this is going to have a significant impact for this year, but what I am excited about is our office.
Community to turn this into something much bigger than it is today, because we absolutely believe that this coupled with our experience cloud coupled with our speech, we will have a whole new entrant into the contact center that as the contact centers virtual.
And as we go through the new World that were in that we can really continue to expand and it's why we stated in his prepared remarks. We this is something that we did specifically in response to discussions we had with our customer base now from an operating income perspective, you know sharing with you that it's not that big.
My estimate is that the impact the drag that it will have on their operating income is about a million dollars per quarter.
That's really really helpful. Thank you Roxanne. Thank you I think that's great.
Thank you.
Your next question comes from Brian Schwartz with Oppenheimer <unk> co. Your line is open.
Yes, hi, thanks for taking my questions. This afternoon, and I could jump on the bookings in the corridor that a couple of questions on that you know the first for you Lastly, I believe even when when you start add you were bringing you were going to bring into the sales force kind of been up selling motion and I. Thank plan when covert 19 had you even pick.
With that even at a.
For more stronger way to relay on look into the install base top seldom. So I'm just wondering the speed at which these add ideals are coming and if you're seeing a compression.
In them or maybe even compression from your initial new customer sale on when they come back for add ons expansions versus you know maybe before the started this year and before.
Well actually.
I gave some examples installed the prepared remarks are.
Really quite significant renewals, which had expansion.
So I think people.
Use our products for use the solutions and understand the value that's being generated.
Or looking for more promos, which is really exciting when we're well engagement trends they are looking for more.
So really that's what I'm seeing but also there's new business opportunity those nice new business. Those people we've been using survey. Those this customer survey is not customer experience, even say as often as you like it is not customer experience market researchers not customer experience, that's something different whereby intelligence the intelligence plays because.
Coming more and more.
Significant and so thats, taking this into these new logos and we landed a good chunk of new logos, we got the Midmarket.
Really underway now a real real business contributing business, there's a big opportunity in new so.
It's neither one or the other we have to do both but I like the land and expand motion that's been created.
Fair to say, it's been new from Medallia sales team has taken a run with it.
And with the progress that we're making so far.
Thank you and then lastly, and the.
I highlight in your your introductory commentary that you had a seven figure.
Each win and all I guess now just wondering if that was in new customer or if that lives in upsell deal.
Well this or not so actually on what's interesting about it.
Is that the traditional voice players there and contact center are not giving the customer the facility to deeply analyze transcribed voice to text deeply on aligns customer sentiment on those goals and not data those billions of minutes of data that we analyzed by can.
Binding our upstream exploration text analytics technology with BOCI, which is the technology now called modality of speech.
So I'm very excited about the prospects for the business.
And then my last question I, just wanted to ask on the acquisition with Stella can that cannot so on I think we're all aware massive Jan you know it's been one of the big beneficiaries with coping 19 in the market. We've been hearing that from a lot of companies out there and the interesting as we're hearing about that develop.
That being reported by the customer service vendors in the contact center. So clearly there is a big opportunity there, but how do you think this plays out between say more of that the marketing core focus buyers versus those customer service buyers.
And do things from the competition standpoint that you know in the future you could run up against them more as you look to further penetrate the contact center. Thank you.
Thank you as a great question.
I think that actually we're doing something you were taking all of our data on we're putting it into the feedback platform and creating the opportunity for deep analysis of a very rich data set that was hit or to not mind at all.
Yes, what we are doing and so the does that space at the moment in terms of speech in terms of recording in terms of transcription is quite fragmented actually and bringing it together with feedback creates creating something new and new innovation and then when we added Stella we have the ability to create and the moment automated coaching.
On the fly to turn the contact center agents into a smart service professional which is what they all really wants to be on I think that's transformational customers have been trying to do that themselves I think the our industry needs to do and that's why we're combining these technologies.
Thank you very much.
Thank you.
And your next question comes from Bob on Sorry, with William Blair. Your line is open.
Great. Thank you guys. Thanks for taking my question and congrats really nice job there.
I've been Roxanne and team.
I wanted to just really quickly on one of the solutions you launched in Q1, just quick start you know obviously quick implementations ROI critical just have you seen traction with that mm, which mark and use cases are you seeing some of the early adoption quickstart.
And then a quick follow up on some of the ROI related topics.
So we have seen from when you look at the overall Quickstart, we've offered quickstart and various industries, we've offered quickstart.
Some of them they've been really focused about returning to the newly time. So first is the employee experience quickstart, we have a fulfillment quickstart, which is focused on pickup and delivery we have under our employee experience Quickstart. We have a quick start that it's focused on how do you interact with furloughed employees.
How do you handle employees when they are returning to the workplace. After they have been furloughed and those are just so many examples of the Quickstart. We also have really expanded or the new economy in tele health and so we really saying that the ability to implement.
Some of these items in Q3 to seven days maximum and the ability to expand your overall footprint over time.
If you sell Chile has really helped and we've seen an increase in the pipeline not only from our quick Sir.
We've also seen an increase in our pipeline from the trials that we put out there that you heard us talk about earlier when we refer to them as till the trials and then we have some other specific trials that we started.
That's that's really helpful. And then and then one quick one here.
When we look at competition, if we take out sort of.
The typical ones I think there. The question I have is you've seen up a number of folks. Okay. We'll we'll have purchased from the data angle. So let's build a datawarehouse type offerings and let's pull to get a lot of data survey data and social data.
Maybe even some sentiment data and then create dashboards and things like that I guess have you seen any of those guys impact the business or is that just so far sort of like consulting approach customer approach as not a product or or too difficult to productize in the way you have that you don't see them elections answered what you're seeing that's based on guys to purchase on the data angle.
I think thats, a really important discussion I think that's where the market moves, especially in the new economy in the work from anywhere economy.
The business as usual survey approach doesn't cut it we look at the world is capture understanding Cray action Unruh action to the person that can take it on in the capture space, which is actually pretty straight forward. If you're just doing a couple of capture technologies you can't deliver response rates the customers need you can't deliver the understood.
Funding you absolutely have to do not just survey, but digital social media listening at massive scale you have to out in video you have to do voice you have to be able to do conversations tax walks out we charge the full spectrum and that has now taken for granted and then the understanding platform that combines all about data.
I look subtrends and customer cohorts can produce million in billion dollar decisions for companies.
I mean, no inventory this is sort of market terms by real estate decisions based on feedback and then the routing of action based on feedback is non trivial I don't believe any of the service vendors can touch it I just don't believe they can do it it's non trivial dealing with complex hierarchies in the workplace dealing with massive scale is.
Non trivial technical problem and the value sold so that's the way we look at this.
Got it got it great. Thanks, taking my questions guys really appreciate you're going to man.
Thank you.
Your next question comes from true faster with Citi. Your line is open.
Hey, guys. Thanks for taking the question I have a follow up on M&A and.
So you've acquired eight or nine companies over the long.
Excuse me. This is the operator of access you would have the conference May I have your first unless they misspelling. Please.
Color man have your first unless they misspelling. Please.
Which unity now or how do we think about what else you need to satisfy the appetite there.
Well I don't look it's a great question, we were always looking we're acquisitive and we're always looking.
Great technologies that are an interesting thing about this domain as it lends itself to this because we can see our experience platform surrounded by other signals that some we'd like to partner with and go to market with some we would like to own and so we're always doing their analysis to be pointed in answer to your question Rick.
Very interested in the whole realm of on solicited feedback has very important to us.
On has relevance today more than ever across all industries and there are some machine learning and other technology.
Then to capture technologies that interest does but we've been a critical tuck in specialists for most part and I think I mean is these these on how these integrations are not heavy workloads as what I'm trying to say on the you should expect us to continue to look at some small tuck ins as we go through the rest of this year.
Okay, Thats really helpful. Thanks, and just one follow up.
At the outset of when covered.
Came into the defray here you said you had relatively small exposure to impacted industries, just given your comments on linear already change between the pace of business at the end of April versus what you saw at the end of this quarter.
Are you continuing to see conservatism from those impacted verticals in for sales and marketing resources, where you have dedicated people. They're focused have you have you had just shift people away from focusing on those verticals and focus on where opportunity lies here today.
Yes, I think thats a great discussion so.
I'll start with bricks and mortar retail that's a really important segment because the pivot is really going fiercely.
E Commerce.
We've been to some degree of a bit of a beneficiary of that so we stay connected than I could give you. Some really specific examples where we stay connected and Thats really worked well for us and problem transport. We have small exposure, we have no less than a dozen airlines out of the 700 in the world or so today using the.
Form and I think there are opportunities and I think the consumer clients actually leap way because cokers where.
A big players armed where there's still a.
Challenges in hospitality, we've actually seen feedback volumes coming back and like I mentioned that my prepared remarks, and so obviously for me personally I'd say that starts with a lot of those segments and so some of our.
Account management teams and.
On top sellers, because we believe that they will come back and different forms honored there's great opportunity there, but right now you know, we're having our growth without much contribution from those segments, which is very significant they just need to come back in a small way.
For us to benefit so we're staying in touch, we're supporting and helping them and being flexible.
As they go through this journey.
Super helpful. Thanks, a lot.
Thank you.
Your next question comes from Brett No block with their incurred capital. Your line is open.
Hi, Thanks for taking my question I really appreciate it.
In terms of the mid market expansion, obviously, it was a strong quarter with kind of mid market.
I guess what are you seeing in terms of sales cycles relative to the enterprise, you're seeing shorter sales cycles, there and there's been any change in that process and it's not sure. If you said this or not but maybe what percentage of new deals are coming from this kind of expanding partner ecosystem that you guys are building.
Yeah, we haven't given a percentage of bookings or something like that for partner, yet, where we hope to garner nodes, 50% to 60% of of our bookings influenced or touched by far about ecosystem that we're building were year into building it and I feel very successfully.
In terms of the speed.
Agility, you know a lot of the smaller deals happen fairly quickly leads are quite urgent.
We just did a a.
Hey messaging using our single technology, we just did a messaging deal a couple of weeks ago, just literally a few days six figure deal because of the urgency of the situation that was related to.
Interaction or people physical interaction of people and the business. So it was very important we just did a actually to our prior question are we estimate is that.
A new customer nay pack in airline that rolled out.
One of the Quickstart programs, there Ross arm was talking about pretty quickly.
So.
We have a manufacturer a midwest manufacturer, who moved very quickly for a contactless solution for employee interaction.
Gone curbside pickup deals going very quickly fulfillment deals growing quickly.
Employ a return to work that doesn't mean return to physical places that means returned to work through work the work for anywhere world that we believe done.
So you can see here in the mid market expansion. The they're small quick deals quick lines, but we don't want to expand later on.
Alright. Thanks.
Your next question comes Rich Altria with Roth Capital. Your line is open and please limit yourself to one question.
In the interests of time.
Thanks.
Hey focus on the sales and marketing side, just from a high level, how hard is going to try to find new channels to redirect spending away from some of the effect of things in the past. The obviously can't do right now like you know shows and conferences et cetera. It are you finding good new avenues to.
Deploy on into.
You think will be effective sort of as Dave you pick up some experience in thanks.
Yes, sorry, there by the limit rich long question there but.
Look.
I think there the question is.
What channels and mediums and marketing.
This is really an interesting.
Unprecedented phenomenon, but our ability to travel the world virtually used on doing two to three times as many customer on prospects interactions, which I love I enjoy very.
Very much on I think it's very important and some of the strategic deals for our C level exactly be engaged with our customers see level of excitement.
The level all contact as higher it's sea levels no I believe in top down selling get into the talk and then help help the teams, but once you actually get something done through to support their executives and that is turning out to be a lot better. We're seeing we had more kind of these that our virtual conference whenever we are running.
Monster crosses with our customers constantly aside I'm not sure if I see on the other software company running as many master causes with customers as we are I think we're doing a great Joel.
With that were really exploiting digital media.
We're doing low cost advertising, even low cost television, we're doing some about introducing new outbound deals.
It's highly creative and we're putting the medallion brand in front of as many Ceos as we can and does a lot more to do.
Your next question comes from dressing Chung with Bank of America. Your line is open.
Hi, Thanks for taking my question.
Yeah, I did an impressive number of quarters.
If customers this quarter can you comment on the trends that you're seeing in June July and even I guess, then are you seeing any change in telling from customers as well.
Yeah, Great question I think.
Who have adjusted we've still got challenged sectors, obviously, hospitality and travel, but actually there's opportunity in those sectors, which is very significant I. Just gave an example question or two ago about a new airline at this time.
So there is opportunity.
I gave some color on the prepared remarks on our how I feel we've started in August and actually called out one of the seven figure deals that we did.
So I feel good about the business I feel bullish and you've got to temper that with pandemic presents us with on those inside of though for the future holds I know the our solution set is resonating with it facilitates work from anywhere the deep connective tissue of feedback for employee and customer is faisel.
You can see that in these very large renewal and upsells that we've been able to do.
Theres just so much to go for.
On the we're investing still in sales and marketing, we're growing nicely and so that's I'm looking at things.
Got it.
Thank you.
And your last question comes from Terry Tillman lets choice to Securities. Your line is open.
Hi, This is actually make on for Terry. Thanks for taking my question I was wondering if you dig a bit deeper into the strategic value instantly recent acquisitions. It seems like they are definitely driving some meaningful upside I can be considering the medallion speech you called out earlier. So is it bears the definitions and more so helping on the expansions that are they bring in meaningful new customers as well.
It's both they are.
Bringing customers.
Customer base May buy video or May borrow ideas and then discover modalities.
They had the chance to replace oftentimes fairly tepid sort of survey technology with our experience club.
Which is very exciting for them. They had the chance to go from one type of signal capture survey.
So our conversations on social listening add voice video.
And that's exciting for customer experience and employee experience patient experience students experienced professionals.
So it's really across the spectrum.
Got it thanks guys.
Yeah.
And with that ill turn the call back to the presenters for any closing remarks.
Well, thanks, very much for joining us stay safe look forward to talking to in a few months time.
This concludes today's conference call you may now disconnect.
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