Medallia shares soar as enterprise software IPO streak continues

Shares of customer-intelligence provider Medallia (MDLA) are soaring in their public debut. A day after the company sold 15.5 million shares at $21 each, the surged as much as 88% to a high of $39.54 on Friday.

Medallia monitors feedback from customers using tools including social media, devices and the Internet of things, and it provides it to clients, who in turn can make changes in real time to respond.

CEO Leslie Stretch told Yahoo Finance’s On the Move that Medallia is much more complex than a survey company.

“We’re a platform that utilizes machine learning to capture all of the signals that customers emit every day when they’re consuming products and services. Survey is really the old experience economy,” he said. “Our customers want to capture that information and effect experiences as they happen.”

Hot environment for enterprise software IPOs

Demand for enterprise software IPOs this year has been strong. On Thursday, shares of health-care software company Phreesia (PHR) rose 39% in their first day of trading. Cybersecurity firm Crowdstrike (CRWD), which yesterday reported its first earnings as a public company, has seen its stock rise more than 40% since its offering in mid-June. Video-conferencing software provider Zoom Communications (ZM) has sped higher by more than 50%.

Of course, not every tech IPO this year has been a success story so far. Shares of Slack (WORK) have fallen about 8% since their debut.

‘Just one day in the life of the company’

Medallia’s Stretch said his team wasn’t preoccupied with the market environment.

“The process to go public is rigorous and quite long,” he said. “We’re really interested in innovating with our customers and being independent, having our independent source of finance to spend on product. So we didn’t really try to time it. It’s a good start, but it’s just one day in the life of the company.”

He also said he’s not yet focused on profitability. According to Medallia’s prospectus, the company’s revenue for the year ended January 31 rose by 20% to $313.6 million. Its net loss widened to $82.2 million.

“There’s a big market to go after,” Stretch said. “Our bottom line improved massively since our CFO took that to task. We believe in profitable growth long term, but right now the market’s there to invest in product and innovation and go to market. That’s our priority for now. But it’s quite a healthy P&L, I like the shape of it, and I like our opportunity to invest.”

Julie Hyman is the co-anchor of On the Move on Yahoo Finance.

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