Company: Medallia, Inc.
Symbol: MDLA
Description: They created a new category of enterprise software, experience management, and they are the market leader.
Shares: 14.5 million
Price Range: $16.00-$18.00
Market Cap: $1.95bn – $2.2bn
Trade Date: Friday, 7/19
Underwriter(s): BofA Merrill Lynch, Citigroup, Wells Fargo Securities Credit Suisse
Co-Manager(s): Oppenheimer, William Blair, Needham, Craig Hallum Capital Group, Roth Capital
Terms Added: 7-8-19
7/15/19, 9:35am ET — Medallia, Inc. (MDLA) — Channel checks just completed, are currently revealing according to underwriter guidance that the deal is multiple-times oversubscribed with the underwriter additionally indicating that there is “currently” no price sensitivity. The underwriter states that the books are scheduled to close Wednesday at 4pm in anticipation for a Friday debut. It would not at all “surprise us” to see this offering price at the high-end or above the existing range or even see a possible amended filing increasing the range. There is a very strong appetite for software IPOs like Medallia and recent deals in this sector have outperformed. This company boasts very large and well-known customers: Delta Air Lines, Target, Exxon Mobil, Hilton and Bank of America (to name a few).
Revenue increased from $201.8m to $246.8 million for the years ended January 31, 2018 and 2019 representing 22% growth. For the three months ending April 30, 2019, the company had $71.7m in revenues (+28.9% vs. 2018 period). Net loss in the three months ended April 30, 2019 was just $2.6m versus $27.5m for the three months ended April 30, 2018. Strong positives about the company include high recurring revenues (+90%) and high net retention rate (+119%). A strike against the company is the SaaS revenue growth slowed to 22% last fiscal year from 33% in the prior year sparking a change in the CEO in August 2018. The company believes it can re-accelerate to the typical 25%-30% growth range with the new management team. Medallia comps to Qualtrics who was acquired a few days prior to its scheduled IPO debut by SAP for $8bn.
We are electing to raise the rating on this IPO from a ‘3’ to a ‘4’. Please monitor for additional potential information. Rating = 4.
7/16/19, 10:25am ET — Medallia, Inc. (MDLA) — Channel checks just completed, are currently revealing according to underwriter guidance that the deal is now “double-digits times oversubscribed” (north of 10x). The underwriters are currently guiding $1-$2 above the prevailing $16-$18 range. This IPO is highly-likely the “deal of the week”. Rating = 4.
7/17/19, 9:50am ET — Medallia, Inc. (MDLA) — Channel checks just completed, are currently revealing according to underwriter guidance that the deal is now many multiple-times oversubscribed. The underwriters are now guiding to a “$20 or higher” pricing (prevailing range is $16-$18). Rating = 4.
7/18/19, 9:10am ET — Medallia, Inc. (MDLA) — Channel checks just completed, are currently revealing according to underwriter guidance that the deal remains many multiple-times oversubscribed. The underwriters continue to guide to a “$20 or higher” pricing (prevailing range is $16-$18). Rating = 4.
Medallia, Inc. (MDLA) has priced an upsized 15.5mm shares at an above range price of $21.00. Debut date…7/19
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