MDLA: Adding Medallia to Investing Ideas (Short Side)

Medallia Inc. (MDLA) is a Hedgeye Technology Best Idea Short.

Leslie (MDLA CEO) is predictable. This acquisition of Stella Connect keeps 4Q above 20% revenue growth. Stella is a perfect MDLA acquisition: raised $50MM+ over 12 years, acquired for $100MM, and MDLA CFO pretends MDLA can "make Stella great again". MDLA needs one more to get them there for 1Q22. But the next one will be smaller ($10MM annual revenue; should cost $50-60MM) and Leslie will be sure to remind all of us that he only does technology tuck-ins.

MOST IMPORTANT ELEMENTS FROM EPS:

• Reported Billings grew 21% Y/Y. But not if you strip out the M&A impact. Then it’s 11% Y/Y.
• Subscription Revenue grew 25% Y/Y. But not if you strip out M&A impact. Then it’s 14% Y/Y.
• SaaS Billings grew 25% Y/Y. But not if you strip out M&A impact. Then it’s 13% Y/Y.
• & Using calculated Deferred Revenue, rather than reported, plus stripping out M&A impact to revenue in the Q, gets 9% Y/Y Total Billings Growth.