According to a Verified Research Market report, the global customer experience management market is expected to grow at 17% CAGR to $17.5 billion by 2027. Analysts believe that the increased demand for personalized experience by customers across different industries and the adoption of technological advancements within cloud, big data analytics and AI will help drive this growth. Medallia (NYSE: MDLA) announced its fiscal third quarter results last month and the company is leveraging acquisitions and integrations to meet the growing demand.
Revenues for the third quarter grew 17% to $121 million, ahead of the market’s forecast of $116.9 million. Adjusted net income of $1.1 million or $0.01 per share was significantly better than the market’s forecast of a loss of $0.01 per share for the quarter.
By segment, revenues from subscription services grew 21.5% to $96.9 million and revenues from professional services grew 3% to $24.02 million.
It expects to end the fourth quarter with revenues of $123.5-$125.5 million. The Street was looking for revenues of $124.59 million for the quarter.
Medallia’s Acquisition and Integration
During the quarter, Medallia announced the acquisition of contact center coaching automation platform, Stella Connect, for $100 million. Stella Connect is a real-time feedback, coaching, and quality management platform for customer service teams. It drives improved return on investment by automating the process of coaching interactions in the contact center and increasing focus on customer experience for higher customer retention and cross-sell.
With the acquisition, Medallia is adding several capabilities to the virtual service center including a feedback connection with the contact center’s live-time environment. The new solution has been well-received by the market and Medallia has already been able to sell the new solution into the e-commerce division of three large retail customers, add one of the largest game publishers, and one of the fastest growing e-commerce companies. Prior to the acquisition, Stella Connect was privately held and had raised $50 million from investors including Toba Capital, Norwest Venture Partners, Gotham Ventures, Zendesk, Alumni Ventures Group, Battery Ventures, Green D Ventures, Harbert Growth Partners, Forté Ventures, and Comcast Ventures.
Medallia also announced an integration with People.ai. The integration will enhance customer and prospect engagement during critical moments in the sales cycle. It will provide Medallia clients the opportunity to automatically register and update customer contacts throughout the sales and service journey. Joint clients will be able to improve customer satisfaction and quickly realize ROI. People.ai’s AI capabilities allow it to collect customer contacts and role information from normal business communication flows whenever a business engages with its customers. With the detailed prospect and customer contact data in Salesforce, sales teams on Medallia will now be able to collect insights and take actions during important sales moments with more ease.
Medallia’s stock is currently trading at $31.78 with a market capitalization of $4.77 billion. It was trading at a 52-week high of $40.20 in August. The stock has recovered from the low of $16.04 if had fallen to in March last year.
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