Q3 2021 Medallia Inc Earnings Call
Thursday
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Good afternoon, and welcome to the medallions third quarter fiscal 2020-2021 earnings conference call joining us today for today's call on the value of CEO and CFO wage at this time. All participants are in a listen-only mode after the speaker's presentation. There will be a question-and-answer session to ask a question during the session. You will need to press star one on your telephone with that. I would like to turn the call over to roxeanne holding for introductory remarks.
Thank you, Mike. Welcome to Medallia third quarter fiscal 2021 earnings conference call. We issued our earnings release the short time ago and furnish the form 8-k to the SEC to talk to the press release. Please see the investors section on our website with me today on the call is Leslie stretch president and CEO of Medallion before we begin please remember. I just call we will be making forward-looking statements about the operations and future results of Medallia that may very and involve many assumptions risks and uncertainties including those related to the page nineteen pandemic to the extent possible our forward-looking statements speak to take into account the impact of COVID-19. However, the crisis that this pandemic has created a very fluid and the situation is 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.
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Differ materially from those expressed or implied on our forward-looking statements for a discussion of our risk factors associated with the forward-looking statements. Please refer to the text in the company name issue today and to our periodic reports filed with the SEC including our form 10-q dated September 9th, 2020. We disclaim any obligation to update any forward-looking statements on the call today. We will refer to both gaap and non-gaap financial measures the non-revenue financial figures discussed today are non-gaap unless off at the measure is stated as a gap number. Please refer to today's press release for a Reconciliation of gaap to non-gaap financial performance and additional disclosures regarding these officers additional in conjunction with the release of earnings report. We have posted on our website at Medallion under the investor relations section additional charge that identified. Yep.
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We Believe will agent understanding and evaluating our performance over time now, I'll turn the call over to Leslie
Good afternoon, everyone before I begin my prepared remarks. I would like to thank for their hard work in 2020.
By the quote from Alan Webber in our earnings, press release companies seek to engage their customers and employees with more intent than ever. It's Crystal Clear the customer employee feedback going from Broad and deep information sources, including digital dialogues voice video and ideas provides organizations with powerful insights and directions in recent research. It's like nine future Enterprise agenda elements. It was reported that customer experience programs had written from 8 position to second in the priority list in the last year.
With a unique ability to capture organize and distribute feedback deliver a powerful insights and create critical actions is key to our future growth and existing new and Emerging Markets month.
I was very pleased with our performance in the quarter. We continue to operate a completely virtual business and had our best new logo quarter ever increasingly. We see customers asking for one provider a voice of customer or employee as well as market research text analytics social listening video voice ideas and messaging I believe that Medallia is unique and having all of these Technologies today.
And our operating income exceeded expectations again, we grew our sales revenue by 22% We added 64 new logos in our business and our mid-market boat continues to deliver. We had over ninety go lines almost a 40% increase from two three last year. We also had more than 20 partner reputations including some of the larger projects.
You don't have over 1000 Enterprise customers. Are you local accident? The underlines the importance of our broader signal capture deep engagement technology and robust Communications capability off your logos accounting for almost 50% of new bookings as compared to approximately 35% for prior courses new logos included. Your Telecom Jaguar Land Rover Columbia Key Bank in North America National Bank of Canada Radisson hotels in the US a major Electronics manufacturer in Singapore nganh trong this company in Central America our first new logo with our new partner itself Modesto in Brazil giving us two of the top three banks in Brazil and five of the top 10 banks in Latin America wage also signed Woodside Homes in Utah and Jackson Hewitt Tax Services in the public sector, we have notable wins at the GSA female City of Tempe city of San Diego and
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During the time that makes a large pharmaceutical company plans to use the digital to provide vaccine information to healthcare providers and patients McDonald's in Australia is already using the values for contact rep.
Are you those with strong multi-year renewal cross-selling upsell action? And these are ensuring you get a million dollars total contract value and major Japanese conglomerate expanded wage in a five million dollars total contract value agreement a major technology hardware company in nine million in total contract value and one of the world's largest consumer technology and Communications businesses with the three million dollars a total contract value. Well has also had some retailers again with you. Commitments wondering renewed for over six million dollars in total contract value and another for over 3 million on the cruise liner used for four million dollars in total contract value.
Turning to our acquire technology contributions from ins are small so far, but and I'm very pleased with new bookings from our acquire Technologies resulting in good new logos off some seven-figure commitments in addition. The industry Owners Group are commanded our approach to building out a platform in this manner specifically we've made for technology-focused October this year that expand feedback signal capture on the engagement and action-oriented capabilities of our platform. We work closely with our customers. You see these is essential experience management Technologies off. The rest of our platform is a key competitive differentiator as evidenced by our new logo and competitive windbreaks success and pleased about our recently strengthened contact center offering combining the power of medallion with our new speech on Frontline engagement capabilities.
Since we have signed several deals the Box financial institutions a seven-figure deal with a large retailer along with several other six-figure jobs range of the articles are usually additional Stella connect. The contact center agents has been well received by customers showing good promise 44 & Beyond sell off the power of feedback to the lifetime environment of the contact center and specifically as potent capabilities for the new virtual service Central Central world that is emerging today. This opportunity is informed of the future and Estella capability of the central element of our partnership with five nights, which we announced this week.
Forcella, we've already sold it the e-commerce division of three large retail customers. How did one of the world's largest game Publishers Riot games and stockx one of the fastest growing e-commerce companies these deal with significant on their own but importantly represent you entry points from Italia score experienced pilot offering
same 360 recently acquired additional use case is the Quick Serve restaurant states, which is pivotal curbside pickup and delivery. There's also an emerging retail proposition the proposition as well understood by existing but all your customers and this is the natural cross-sell. These are our Acquisitions are important not just because of their contribution to the Future new cross-sell up-sell buildings, but because they bring home customers the contract making it simpler to Cross Cemetery experience class and Medallion digital to new prospects.
I'd like to know it's noteworthy that are digital.
Capture technology and the value experience close to seeing dramatic growth of digital signals. We have some of our largest digital programs go live in Q3, including one of the largest Canadian Banks and one of them just Automotive manufacturers in the world and one of the largest consumer electronics companies in the world specifically a large US Bank has rolled out. The technology is over thirty million mobile app users. And this is a use case we can repeat everywhere.
You haven't really seen it at least fifty percent increase in our digital customers.
Combining digital technology with the. Experience card to sell the connect delivers real savings and speed of resolution and contact center use cases one large Property and Casualty insurer realized in one area a 28% reduction in wasteful and time-consuming call center calls as a result of deployment values, which is in another case a major retailer deployed Medallia digital feedback combined the web analytics. Okay customer experience. Are you call her since discovering and resolving quickly a single issue that was worth the potential five million dollars per month in Lost Revenue both these examples proving to clear off our Solutions.
On the product support for the speeds with seventy languages being added to our portfolio are messaging platform single the compliance in the quarter. We enhanced without representation middle of a sentence based adapted surveys delivering smarter customer interactions Foster and increasing customer response rates.
And Seasons Grayson's and I need customer lifecycle mapping in our customer success module.
Employee Engagement experience without it our digital employee experience solution and able to get in the moment feedback from employees for a Microsoft digital interaction. Just this November wage with one of our largest employee experience implementations of a three hundred thousand employees of a company on the platform.
we started our integrator implemented technology Partnerships in the closer we now have forty implementation products 70% increase from a year ago our service quick start solution for service now offers for customers to share in the moment feedback medallions have one connector brings together with Alex best-in-class experience insights the tableaus advanced analytics and data visualization capabilities Dead return twice a new partner agreement with article an emphasis in Medallia partner to close Jaguar Land Rover and Newland I highlighted earlier
We still continued acceleration with Deloitte. We find a new reseller agreement and had several joint wins with the voice government practice. Additionally. We signed over a dozen you is be partners including busy. It's so in love with Erica and KPMG in the UK.
A Professional Services business continues to be a strong differentiating for us, and this is made clear by direct feedback from our customers in our own Medallion. We again delivered a strong go line revenue enlarged. Thank you free.
Is that please?
We mentioned industry analysts are very posted about our technology roadmap this week. We were promptly named the leader of the inaugural darker magic Corporate Drive space and received the highest placement for completeness of digits long. You can download a copy of the report from our website. We're thrilled be named the leader and recognized for our vision. We believe this result is a testament to our customers who helped shape our vision and roadmap that are employed all the best in the business. It's clear that we have the deepest functionality for collecting and analyzing direct indirect and infirm feedback and that we have strong partner relationships. We also can confirm that we have the highest. I need the client programs with over 1000 users as well as the highest average number of departments for clients using our software at an old experience management vendors.
Recognize that are unique capability for operationalizing course of customers scale and our ability to measure the business value achieved from customer experience.
So with three pandemic quarters behind us, we're pleased with the company's consistent performance. We see solid growth in our business. We have had a strong start that you or again underlined by 7 a.m. Until already executed. And so we're providing today a high-level preliminary deal for coming year our projections reflect our confidence in our Diversified end-user markets product roadmap and Technology package inside our projections. Do not depend on a significant recovery in the travel and Hospitality space where we have a strong presence as we grow we intend to continue to invest in Samsung marketing and product to meet the needs of a very significant Market opportunity. I'll now hand over the road sign for her report on our financial performance in Q3 and forward projections.
Thank you, Leslie and good afternoon. Everyone pre-recorded strong financial results in Q3 including record total revenue and record Revenue as a quick reminder unless otherwise noted all numbers except Revenue mentioned during my remarks today are non-gaap. You can find a Reconciliation from gaap to non-gaap results in today's press release total revenue for Q3 with a hug and 21 million dollars an increase of $18 or 17% over Q3 of fiscal 2020 in Q3 subscription revenues were ninety six point nine million an increase of Seventeen million or 22% year-over-year Q3 included approximately 600,000 of subscription revenue from the acquisition sense 365 which was announced subsequent to the earnings call and thus was not contemplated in our prior guidance as we've noted on the past few calls. We have modified subscription terms flexible Pig.
Or invoicing terms in exchange for extension of existing contract for certain customers hardest hit by the pain demek on average the extension. Was for 1 year consistent with what we projected on our last earnings call. The modified description terms have negatively impacted our subscription Revenue in Q3 by approximately 1 million dollars and by approximately $2 million dollars on a year-to-date basis. We expect a similar impact in Q4 of fiscal 2021 and in q1 fiscal 2022 as we lost this it's important to keep in mind that this has no impact on our long-term current economics.
Add a reminder.
Here the majority of our contracts are multi-year irrevocable include contracted minimum and we expect our customers to honor their agreement Professional Services revenues is $20,000 for the quarter which increased 3% year-over-year recurring managed Services Revenue accounts. For more than 50% of our total Professional Services revenue office is consistent with recent quarters as a result recurring Revenue continues to be at 90% of total revenue turning to some key metrics. We continue these these wage growth in new logos. We ended the quarter with over a thousand Enterprise customers. It increases really 45% year-over-year in Q3. We added 64 new Enterprise has been approximately 100 from our Acquisitions of Stella connect and cents 360 for the 12 months ended October 31st. 2020 are dollar based off.
Right, 115% customer m&a and bankruptcy drove the change in our net retention rate. We believe are strong net retention rate underscores the underwire platform come by and our ability to retain and steadily expanding businesses within our existing customer base.
Teresa RTO or remaining performance obligation as I have shared with you previously. Our our metrics may be impacted by contract duration and extension as well as time rolls of multi-year contracts. So while our po provides for strong visibility, it may fluctuate from quarter-to-quarter as of October 31st, total are played with 732 million dollars an increase of 25% year-over-year current RPO, which is the amount we expect to recognized as Revenue over the next 12 months total $300 million an increase of 19% year-over-year non-current RPO total 386 million an increase of 31% year-over-year. We are now I have for comparables in the non-current RPO metric on a versus a year-ago basis as a result of our success last year in signing multi-year renewal.
I'll now turn to our non-gaap gross margins and operating expenses subscription gross margin subscription. Revenue margin was 81.1% compared to 85.5% in the year-ago quarter in Q3 Professional Services. Gross. Margin was 16.1% compared to 16.5% in Q3, home of the last year. We continue to focus on building out our partner ecosystem. So we expect Professional Services gross margin will rank between 10 to 12% in Q4.
Sales and marketing expenses in Q3 for forty six point three million or 38% of Revenue are engaged senses were 22.9 million to the quarter or 93% of Revenue R&D remains an important investment area of the expander platform. G&A expenses were eleven point two million or 9% of Revenue in the quarter. We expected life on the G&A line over the longer term.
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Operating margin in the quarter was 1.7% compared to a negative 2% in the year-ago quarter. Non-gaap net income was 1.1 million compared to a loss of $600,000 in Q3 of last year.
Turning to the balance sheet. We ended the quarter with 657.1 million in cash and cash equivalents current and non-current marketable securities wage increase in cash included the proceeds of approximately $497 from the convertible note offering in September in connection with the convert in order to reduce potential dilution. We purchase a capped call that upon conversion. The notes will not be diluted until the stock price is $58.30 per share or dead higher.
Subscription deferred revenue was 172.1 Million it increase of 21% over the prior-year.
Let's move on to discuss description Billings, which we Define and subscription Revenue plus changes sequential description deferred revenue and contract assets. As you know, there are a wide variety of factors that influence this metric. Therefore quarter-to-quarter fluctuations in Billings should not be taken as an indication of changes in future revenues. We believe that the 12-months subscription Billings growth rate, even more meaningful measure of our performance for Q3 of fiscal 2021 are trailing 12-month subscription Billings growth rate was 20% off on a trailing 12-month basis subscription Billings were negatively impacted by approximately five million dollars due to new bookings with invoice interns that ramp over a multi-year.
No turning the cash bro. We use 14.9 million in cash from operations during the quarter representing an operating cash flow margin of negative 12% off from the negative 18% We generated in Q3 of last year as a reminder historically experienced seasonality cash flow from operations, given that over 50% of our Billings occur in the fourth quarter as a result. Our operating cash flow has been positive in q1 and Q2 for followed by cash flow from operations being negative in bulb you two and three and it has as it has been for the past few years. We anticipate the seasonality to continue
moving to guidance
for Q4. We are projecting total refuse to be between 123.5 and 125.5 million dollars representing growth rate of twelve thirteen fourteen percent year-over-year. We expect subscription Revenue to be in the range of 100.5 to 100 and 1.5 million dollars representing growth. I can use 18% year-over-year for Q4. We expect non-gaap operating income to be in the range of $200,000 to $700,000.
Other income and expense to be an expense between $500,000 and $800,000 primarily due to interest expense associated with a convert and reduced interest rate in births.
You project income taxes to be in the range of five hundred thousand two hundred million dollars. We anticipate States equated shares outstanding to be approximately $151 million am fully diluted with it shares outstanding to be approximately 180 million.
Finally, we anticipate our Capital expenditures in Q4 to be approximately five million dollars primarily related to enhancing our data centers to meet our customer's demands dead on full year basis. We are projecting total revenue of 472.7 to 474.7 million dollars representing a growth rate of $17.50 Professional Services. Revenue growth is projected to be in the low single-digits as we have significantly expanded the number of delivery Partners this year as well as we discussed previously owned in addition. We continue to reduce implementation costs through our pre-configured industry package Solutions.
For fiscal 2021. We are projecting subscription revenue of 379.3 to 380.3 million dollars representing a subscription Revenue birth rate of 22% over the prior-year note that we estimate that the Tobin confessions will create a headwind of approximately three million dollars.
We expect the acquisition to be made into three to contribute a little over 1% to our fiscal 2021 subscription revenue for fiscal 2021 that we expect basic weighted shares outstanding to be approximately $145 million and fully diluted weighted shares outstanding to be approximately $170 Million Dead.
Looking ahead while we have not finalized our fiscal 2022 planning cycle. We'd like to provide a preliminary outlook for next year. As we remain confident in our active Faith Diversified end-user Market product roadmap and Leadership position for fiscal 2022. We expect total revenue to be approximately $555 off my subscription revenue of approximately $457 in conclusion customer intelligence has become an integral part of digital transformation in a critical area of software spend. We are committed to maintaining our Innovative Edge and the opportunity to invest in R&D and our go-to-market efforts.
Leslie and I will now take your question operator.
At this time, I would like to inform everyone in order to ask a question, press star one on your telephone keypad to withdraw your question, press the pound or wage. Please stay on the line while we can pile the Q&A roster. Your first question comes from the line of Brad's on from credits. Please please go ahead. Thank you so much for taking my questions and congrats on a on a nice quarter maybe for Leslie Leslie. It's more of your customers touch points with their customers and users. Go more digital vs. Physical and and would likely only be more so digital into the future. How is that changing the needs of customer experience management? Does it make it easier for you to help close the the back Loop and I like the value of your Solutions. How is it helping us at all drive more business?
Are you?
A great question. So thank you. I think that the digital story really plays into our early Investments. We invested earlier than anybody else in the digital technology. If you think about it with people every customer Journey on every employee Journey has not changed its become more intense as short as faster. It's more urgent and all that speaks to technologies that serve that communication situation and so our conversations technology our digital technology are instant voice video and so on or really create much more effective powerful responses took a survey survey still important, but if that's all you got in your facts and not that is a different type of communication needs and longer winded and more orientated for the physical world. And so I think of UR beautiful positioned actually in mind you with the spectrum of digital capture that we have everything speeded up Journeys have changed everything shorter. Everything's more intense and are highlighted in the prepared wage.
Box that we had 50% growth and digital customers and I highlighted some of the the large digital rollouts that are an effect of what you you just described in your question.
Thanks, Leslie and maybe just in follow-up for Roxanne Roxanne. Can you show us what your assumptions are for the initial physical 22 guide that you've shared thanks wage system twenty-two together our guidance and as you know, we're still in our planning process. We really looked up the strength of the business that we've experienced in the last two quarters and also the strength in our pipeline. I'm from what I'm seeing. I'm confident with what we have provided for our fiscal fy20 to guidance and you know, we posted 22% over guiding to a 22% wage growth rate this year and we're excited about what we see overall and he's not anticipating that there would be any significant recovery in travel or hospitality and I'm twenty-two
Excellent. Thank you so much for taking my question.
Your next question comes from the line of Phil Winslow from Wells Fargo, please go ahead thanks for taking my my question. I really want to drill into the employee experience that would suck your highlight over the past couple of quarters. We've heard some of them in front of their vendors before the traditional HTM space about today's success in return to work applications. So a question for both utilizing and Roxanne, but when you're talking to customers by the employer Xperience, what are you hearing from them in terms of sort of planning for return returned to work and also tying that together with with customer experience and then just one quick follow-up to that I think the situation and so is that this whole situation is highlighted the need to communicate more effectively and faster with normal moderate and exciting media instead of the annual 360 wage you which is kind of a domain of the traditional way chocolate is to be honest instead of what we're seeing is people want to create see species for employee groups and different constituencies. They want to have Global Communication book.
Virtual communication they want to have the ability to toggle between anonymity and id'd communication and dialogues and they want to be able to ask questions at any time and not depend on on a structure so old-school survey and so that's really coming to the fore and we mentioned I think on our last call that we've added quite a number.
For all of you large employee experience a customer is not highlighted in my prepared remarks red one very large would not allowed to name. Number one, very large deployment just gone live. And so I think it's really critical but I think in everybody that I talk to Everyday even yesterday talking to a major organization, it's number one priority to create jobs, but this connected tissue and at the moment there are served by 360-degree renews periodic surveys or I would regard as old technology of it. So I think we're very well positioned but it sucks the teacher of the people of the future. I think people were caught out and not having this type of communications capability in place as the pandemic began and so don't think we're going to go back to once a year off asking our colleagues our employees our team members, you know, how they think we're doing or how things are going to go away. It's got to be a consistent kind of safe communication Play song.
digital technology creates that
Yeah, then just one follow-up, but you got it from a customer wins this quarter one of which was actually in the hospitality Hotel restaurant. Obviously something more impacted in Industries here, which I think probably some people that that they'd be spending anything right now. But what do you think about the resort when you do business with some of these impact issues? What are they telling you about why they are prioritizing spend on on Medallion now.
Well over the prior reasons and the employee context all of those messages really applied to customers to deeper more persistent connection and the hospitality off the corporate side of hospitality is Roxanne said, you know, we don't expect and we're not planning on a return there. We don't need that to make the projection but the domestic travel and Leisure Travel sector has had some recovery but this particular business, you know, it's a decent-size commitment as well. They just want to be ready for not phased return the domestic travel of the budget traveler and the corporate traveler and so on and they actually do have some decent occupancy. So they do need the feedback. They have tried other surveys Technologies in the past and they want to move to the modern all integrated platform voice video et cetera all of the offerings that we have for my also.
I'd like to get renewals. And the reason I highlighted those renewals is because some of them were in what we consider to be stressed areas, and I know that you know and embarrass or identify any company they're dead but it's important that even in distress times. They're making multimillion-dollar commitments to this digital technology that's been very encouraging and that demons been there that renewal team large renewal has been there throughout the year.
Thank you. Your next question comes from the line of Tom Roderick from stifel, please go ahead. Roxanne. Thanks for taking my question so long, I guess I'd like to start with you. I mean you rattle off a number of the seven and eight-figure deal renewals and the quarter number of different Industries. And you know, if if we think back to Thursday the March quarter and and the feedback at that point, I remember you calling out that you know, large deals work for harder to come by you work. You got to focus a little bit more on midsize deals and pairing them down. And then what we saw in the summer and then certainly what it seems like in the fall is sort of a renewal of this large deal activity. So I was hoping you could sort of more broadly speak to the demand environment for those seven and eight-figure Deals and in particular if you could sort of a joke about those renewals where you seeing, you know notable up cells from from customers cross cells where they purchasing more expanding usage as part of the renewals just more commentary on some of those big
Your deals that you highlighted be really helpful. Thank you.
Question sir. This is no actually buy an encyclical terms of our biggest renewal quarter of Q3 is not a big fan of course, but that's another reason. I wanted to highlight those wage renewals. But I think the key thing in my prepared remarks is that nearly 50% of the buildings came from us and you competitive wins in many cases where we saw survey market research firm players putting in Mobile deals and they weren't successful. We were we won the Lion's Share of the Enterprise logos. And so we had that we have the renewals and we also have this now year old very young age the market business meeting performing as well. And so it's really across the Spectrum. It's you know, our goal was to have nice even Keel no drama course, we're we're getting something from it Market wage rules are solid and we're getting some decent share and actually more than our fair share of the Enterprise deals. So I think that Q4 is actually an interesting quarter for us, you know, it's one of our bigger issue.
Score one of our other Compares but I think the new business and renewal and up-sell and cross-sell mix will continue by the key highlight was nearly fifty percent from the new bookings in Q3, which is wonderful. Well done on that Roxanne follow up for you. Just I think if I heard you correctly and I know you've been getting a lot of questions about the the acquisition contributions. I think you might need 1% of fiscal 21 revenues coming from Acquisitions. So perhaps you could repeat that but then independent of that knowing that some of those Acquisitions were more back-end loaded when they closed and how they'll contribute the Gap revenues could you age is sort of a like-for-like compare of of how we ought to think about that those those Acquisitions contributing to your initial look at twenty-two and and and if the answer is we can't project what they're going to do or we don't know exactly perhaps we could just take an annualized look at at what those Acquisitions were in cumulative fashion and and apply that but just any more commentary you can have as you constructed. Yep.
Guidance thank you. What I shared on the call is that the revenue from the acquired revenue from the Acquisitions is very in material when we make these Acquisitions. We are working for technology and we are looking for an opportunity to really take this and grow it as we have is Leslie shared with you on the call that we've had two very successful with with our medallions speech product. We've had several six-figure and we've had seven super deals. We are very focused on using this technology to build out the best possible platform wage and you're seeing that you're seeing that in the industry remarks, you're seeing that in our new logos and you're seeing that in the feedback that we get from our customers and as we shared with you previously when we make these Acquisitions, we do work closely with our customers, cuz the amount that it impacts this year is normal and the amount that it pick impact next year is nominal but we're focused on is building out this platform and our ability to continue to cost almost all these different Technologies.
Accessories we have at this point really helpful. Thank you. I'll jump back and thank you.
Maxine congrats on the next quarter here, I guess queue for me. First of all Leslie you announced a partnership with five nine this week and you know, the company's been active values faith in the contact center space trying to I guess not your way in there was a couple of Acquisitions you talk about that relationship what it gives you and maybe where your functionality in the contact center starts or ends wage is where there's this today is very questions. Well, I'm brand new Partnerships of Justinian's so I think there's a multitude of listed under with the signals that can be collected them outside of the cult Medical Center. They give a much richer view of the customer you combine that feedback with some of the absolutely vital data pipelines collapse think of all the money that they cannot collect and you got a much more powerful picture of customer and and we have some good joint customers and some good joint initiatives underway early days in the partnership wage.
Your next question comes from the line of Scott Burke from meeting and Company, please go ahead.
Makes perfect sense to have that that connection are spelling connect products is really complementary again because it's using the feedback data sources through the coaching the live internet coaching scripts and ideas and distribute those two now distributed virtual service center people. So I think the combination actually helps deliver this idea off service probably just responding contact center environments. Those are changing concerned five nights has a leader in that space of really happy with that partnership.
God is helpful. And then last question on the internet price 2020 and 2019 has been active for you guys. Did you look for it over the next twelve to eighteen months off the pace of Acquisitions for the company changed materially or you didn't really just be an opportunistic in terms of what you see out there at any one point in time thinking, you know without giving everything away. I mean, I think there are Technologies wage really like that some of which were building we're building more than we buy or building a ton of things. I gave some small summary of some of the product developments on the way of the moment but there's always opportunities the market presents opportunities that we're always on the lookout, you know, we have to be there are some there are the beauty of this platform is that there are a number of signals. The number of AI Technologies number of data technologies that we really like and so I expect that we will we'll continue right now. We're about focusing in on execution for the remainder of this year, but I expect us to control
You as other science companies do to take opportunities as a when they arise they're well-financed to do that. You know, it's just part of our process and approach but right now let's check this on executing for the remainder of the year.
Great congrats and participate in my questions. Thank you. Your next question comes from the line of dead. Hi. Thanks guys. Good evening. And thanks for taking my question. I also just wanted to touch on the renewals Leslie and and and recognizing that obviously I mentioned half of the the new plug-ins came from new logos. I'm just curious. So I you know, you mentioned the cruise line and I guess it's a follow-up to Tom's question and you didn't want to call at any particular industry, but, you know, four million dollar, you know, multi-year renewal weather particularly distressed industry. I'm just curious with all of the the the technology tuck-ins that you guys have made out for, you know the past year, you know, very small Revenue contribution right now when you look at something like a cruise line or other distressed Industries when you come into a renewal
For those sorts of customers how much additional?
Yeah, the leverage does it gives you guys and how much of an opportunity does it give you to, you know Park Innovative new technologies with those customers who might you know, otherwise be home maybe looking at down spend in this environment. And then I had a quick follow-up question. I think the we certainly are breakfast offerings in our modularization of the operation tips is fungibility gives us the ability to add value been a big feature things have been more apples for apples types of rules and actually bought these companies believe they have Futures and they they have started out quite Bright Futures actually and so they are very positive about the about their future and this is part of their investment to be connected deeply for the future. So we actually do expect, you know, we haven't have much revenue from the opposition's mean do they actually expect are selling process so looking because the result dead
We don't expect that to use them as concessions to keep people on the hood. We're not announcing. But so I would say in travel and Hospitality. We don't we're not depending on some magical vaccine given recovery. There are things out there are projections, but actually what we've seen in dialogues with that that sector which is very important is the people are determined, you know, they're going to law and they don't have a dialogue with their customers right now. Even if it's a quieter time for them to prepare for the future. What do you what do you expect from DP and safety? What do you expect from the way we conduct our operations to the Future and then it post-pandemic so it won't to have that dialogue. So they really need the technology and the connection.
Great, that's helpful, Leslie. Thank you. And then Rock and I think you said that on the Billings had been was a five million dollar impact them to to you know Billings that had gone into a multi-year contracts. I'm just curious if you know that is also a component of some of the relief that you guys are both are providing the customers and I apologize. They keep think you might have alluded to that previously but you know the ability to to to renew over a longer time frame. Thank you. So what I was referring to what I was talking about, the Billings impact is that we have had limited situations with new customers that we ramp the invoicing over time. So we we had met invoice and less than the first time we have voiced them in the second here. And so you're seeing that that is providing some headwinds. And so what we're really focused on is all customers at this point in all Industries. We think we have a product dead.
That everyone can use that is essential not only today but is essential in the future and you know, we're working with every customer, you know, we have new customers who life sciences and health customers, for example that using the value and using this technology is completely different. And so if we have if we're providing ramped building and that helps them as they become adults, they continue to grow and build their platform that's very effective for both of us. So we're really pleased about what we're seeing overall.
Really great. That's helpful.
Thanks again guys. Thank you.
Your next question comes from the line of Richard from Roth Capital, please go ahead. Thanks her turning back to acquisition potential seen a fairly expensive ones, you know completed of Late by another vendor of material scale. How do you see price expectations? Um, I'll change, you know, in sort of companies are talking to you think it's still rational or is there some of that rationality sort of dissipating in your Communications wage question, of course, we were outbid in the flag deal goes, you know, didn't quite that. They're all trying to find enough money under the server. But you know, we all know our history is Imagine team as as you know, it's not to be rational by ourselves. We were very frugal with our investors and customers money. Overall. We're looking at Birth
Be like early stage winners and Technology the ten minutes of invested much in sales and marketing is probably don't have a lot of Revenue contribution in the early days. We've done very well in that if you look back at our digital product that was an acquisition long ago. It's done extremely. Well, if you look at our ideas technology some very well messaging and so on and so, you know, we we're going to keep that kind of Target criteria. If you like, We do talk to your private companies by they'd always probably companies always think there were, you know way more than they may really be because they haven't had the discipline at the public market making money off looking at Billings looking at a growing a business consistently and steadily and so, you know, we're not interested in over paying, you know, we're not like that and all that scale yet. We're interested in smartphone know what you got a few things going to reveal them to our competitors will always listen to this call, you know, so we we we are going to keep that kind of criteria right now. It's about executing wage.
Thank you for you know sending us up for next year. And actually I read more mid-market and sales people around the globe. You know, we've got some pretty stiff targets. We actually have enough sales capacity to do our projections. Shouldn't be that we should stop investing in sales and marketing and we've got a big Bill program underway. Our road map is massive and they're spending a lot of time and money on that. And so all of those things are important.
And turn back to when you just touched on a little bit but in your wounds of people like FEMA or GSA who maybe they're a bit more active in a cool that type of environment but I don't tend to think of a government agencies is particularly interested in service and what people think of them given their monopolies or position. So maybe he works through sort of the mentality behind dealing with federal or or any government entities versus Private Industry, but you see there and how broadly you think you can penetrate those types of markets things off a question. I thank you for that. And I respectfully disagree with you on this one rich. We're I think the federal state local and education academic is really important outcome for that month. We have seen also great programs and I've mentioned for this Q4 already a good view my sign deal great progress in health care and Life Sciences think patient experience. Why should citizen expense?
Different I can tell you from the hard work of our government team and also some of the brilliant government, uh colleagues that we brought into the Dahlia.
Every tier of government as passionate about citizen experiences at the moment patient experience and they absolutely want to Avail themselves of the very best technology. And so we positioned ourselves on qualification of through the right commercial structures to make it easy for governments require cost-effective up-to-the-minute citizen experience technology versus the old-school stuff that used to be there. But I was certainly academic Mark and actually we only gave a few logos on the core. We actually had more success than that. We didn't report on the call. You want to name the agencies but also the academic Market you had a couple of survey players. They're frankly shooting fish in a barrel and frankly over charging higher education for simple syrup Services. We intend to have a crack at that market. There's absolutely nothing to lose for his going after that too. And that's part of our investment in sales and marketing around the world as well. It's a good job.
Okay. I'm actually enthusiastic about our progress. We have almost nothing in the sector a year ago and this year the government team have started to really make great strides forward. Federal and state and local and I mentioned a couple of those. I think it's a big opportunity actually great question. Thank you. Great. Thanks.
Your next question comes from the line up Bryan Schwartz from Oppenheimer & Company, please go ahead. Yeah. Hi. Thanks take my questions this afternoon. Good job on the corner here Leslie phone number for you. It has to do with the investment profile here for next year. It's really question on the sales and hiring are there any particular product areas and to our geographies that you see that there's a big opportunity where it's more of a function that the company just doesn't have enough sales bandwidth today. I realize you got to expand everywhere. So I understand that but but is there anything that stands out to you in that van in terms of either geographies or product lines?
Yeah, I'm actually a great question. Actually, I don't you know, I can't believe some of the newer Vehicles there were having great success in health care and Life Sciences. There's a lot more to do in in both of those markets melted Federal. I mentioned geographically, you know, the big regions Latin America actually had a nice recovery includes where you were the big reasons for other India, which had a great month also, uh a pack which is a phenomenal business of great leadership of 18 I bet and so we're investing in all of those. I don't want to go into too much detail where the competitors says. I'm going to read the transcript and all that obviously the grades, uh opportunities in those regions and frankly competitive opportunities to that. We see we see this truck at this location and just people not catching up with the Spectrum the digital spectrum that we've created. So there's a there's a gap that we can exploit so definitely a pack in the bath.
You know, and of course always all day long North America.
Expansion number you kind of thought you talked about it in in your introductory comments. Why why you know, it had some pressure here this quarter, but my question is do you feel that this sort of mid-20s range is an area that the company would bottom out out at you know, I know there's still a lot of uncertainty out there in the market. I don't want to have you down too much but do you feel better that that metric would normalize here in the quarters ahead. Thanks. So historically we have been in the mid-to-high teens. We had a great quarter not only from a local perspective or also from an expansion perspective. And as I shared on the call our net retention rate was impacted by some customers who have filed for bankruptcy or merge with another company or work, However, when I look ahead we've shared before that we think ultimately we should be able to get this net retention rate over a hundred and twenty percent. We have over a thousand customers at this point. We had a dog
Percent of our bookkeeper came from new logos. So and we have a very robust product portfolio with fifteen different modules that we can cost. So and it's not just crossed off the expansion and you heard what else to talk about a magic partner and the other analysts feedback that we have received in regards to the fact that we have the most robust platform with the most individuals on Thursday and use most broadly throughout the department of these organizations. So I'm optimistic about what we can do in the future. I'm optimistic about what I see. We have a thousand new customer a thousand customers that we can continue to cross selling up till 2 while we continue to add your local. Thank you for taking my questions today ma'am.
Thank you for that call Leslie and 1/4 Roxanne. Just a quick one on the the Dollar Baby.
Your next question comes from the line of the vents. Are you from William Blair, please go ahead.
Great. Thank you for taking my questions and let me grab specially on the the new logo at the service really solid. I want to talk a little bit on the partner system, you know outside of your bed to require collaboration company, you know, obviously partnered with Adobe sales for service now as well as SS eyes, you know Leslie. This has been part of your plan coming aboard you add the partnership. I guess just give us an update on how it's performing according to your expectations both being the software Partnerships as well as the delivery Partnerships.
Yeah, actually, I'm quite pleased I can see pretty early days. But most of these are less than a year in the making and somebody just don't know if you wants to so it's very early days off must be very pleased to go to channel team and just the appetite with these Partners, you know, we were in our second year actually with Adobe now, that's probably the longest one and also service manager operations. I see collaboration, you know, that's good collaboration in the field and some of these large deals you'll see sales for service. Now do be all they want. They're all in there. So having these Integrations of life and in some cases actually revenue-sharing agreements is a good thing and it's really bolstered are win rates. No doubt about I think I attribute the increase in the new bookings percentage off. So those Partnerships I wouldn't single out any one of them. I don't think that's appropriate until you but those are probably the top ones but we got some great New farmers market wage.
Which is super partner company is off we done very well with I'm very pleased with the systems integrators particularly the work of Accenture. And also we need the lights where wage so many meaningful traction that
But again, it's early days, you know so far so good. And I think we are the only really credible open Enterprise partner in the state wage. And we don't do anything that any of these companies do we don't have any pretensions to do that? All right. I think that is important as we operate with the journeys New Deals scenarios that we see
Yeah. That actually leads me to my my second question was sort of I guess a broader question and adjustment. So you don't do SF a sales force automation. For example, you don't do any Commerce but customer experience touches a lot of things right? It does include a little bit on marketing. It's certainly encroaches on Communications a little bit. It certainly encourages on not just the analytic of analyzing what people are doing but then also the action like Goldberg this to fix it like, you know, someone just going to Hotel it gets routed through a technology and someone gets to call them. How do you think about that sort of, you know encroaching on the biggest space because obviously the category itself is a pretty Nathan the whole overall customers. So there's lots of people playing in it's an optimist and how you think about the Box you set yourself and which is bigger than where you watched a obviously but but how do you sort of Define that that'd be great to understand?
Yeah, I know. It's a great great question. I think that the core for us is really getting to the truth of feedback as creating safe spaces for feedback doing it digitally doing it fast and the current environment understanding the customer Journey for Change and nobody really does that, you know, simple surveys don't do that. They're certainly part of the equation but they're by no means the whole story. It's all of this other signal capture that the customers want they they do, you know, the customer driven road map, but right now it actually for the foreseeable future of it plenty of room for us even with our messaging technology. It's not you know, it doesn't may I speak to a Toyota and the underlying transport there that are great partner. We we don't against any of these and as you say we don't do SFA, you know, we don't do any of those things and actually marketing is how bout you, you know, you want to send out marketing campaigns with the benefit of feedback about individual customers. That's a massive scaling computational challenge, right identified individual customer understand wage.
Feedback in the situation in context before you try and send a selling something else for a marketing campaign, you know those he's one of the best of that and you can see back to remove those wage campaigns really powerful. So it's a great compliment. We got plenty of room from a numerous you saying? It's an Asian market. It's really just emerging into the digital feedback Market that it really should have been all along. I think plenty of room to maneuver for the foreseeable future next few years.
About it. That's really helpful. Thanks guys. Thanks for calling us your questions. Thank you. Your next question comes from the line, please go ahead. Hey guys. Thanks for checking the questions. You're thinking about you know, whether it's bookings our Billings Q4 is obviously typically a very important quarter for Medallion from a package option volume perspective and not the same time. We've seen kind of varying degrees of success across the broader software and tax base with companies such as yourselves who are more exposed to a larger Enterprise traffic. So Leslie kind of wondering if you could double click on some proof points or customer anecdotes, that would help us gauge your confidence level closing out the year. I mean last quarter in this quarter, you mentioned larger deals and even some adults and also study that experience initiatives are sort of rising priority among CEOs and so forth. So it's evident. You're seeing pockets of strength there and large deals are still happening, but just kind of help us gauge.
That's a risk for customers may be wanting to wait for slightly better operating environments or just sense of urgency around getting large deals done. Especially here in Q4. Well, I think that's a realistic view of the world and also off tonight and you know, we moved into new markets this year that we were really not in health care and Life Sciences most notably in certain lyrics
so you are government sector stocks