According to a Markets and Markets report, the customer experience management market is estimated to grow from $8.5 billion in 2020 to $14.9 billion by 2025 at a CAGR of 11.8%. Medallia (NYSE: MDLA), a leading player in the market, recently announced its fourth quarter results that surpassed market expectations.

Medallia’s Financials

Fourth quarter revenues grew 16% to $128 million, ahead of the market’s forecast of $124.6 million. Adjusted net loss was $1.4 million or $(0.01) per share, equivalent to the market’s estimates.

By segment, revenues from subscription services grew 20% to $103.8 million and revenues from professional services grew from $23.9 million last year to $24.2 million.

For the fiscal year, Medallia’s revenues grew 19% to $477.2 million and EPS was $0.02.

It expects to end the current quarter with revenues of $126-$128 million. The Street was looking for revenues of $127.39 million for the quarter.

Medallia’s Acquisition

During the quarter, Medallia continued to grow inorganically. It announced the acquisition of London-based Decibel for an estimated $160 million. Founded in 2014 by Ben Harris and Timothy de Paris, Decibel processes behavioral metrics, allowing companies to get an understanding of what the user’s on-page experience is like. Its digital experience analytics solution captures and quantifies experience data to identify revenue-impacting problem areas on both websites and apps.

With this acquisition, Medallia plans to improve its customer experience and engagement platform that will include always-on, unsolicited digital feedback. Organizations will be able to get a single view of the journey followed by its customers and prospective customers across various channels of interaction.

According to an IDC report, companies are expected to spend over $1.6 trillion this year in accelerating their digital transformation. A significant portion of this spend is expected to go toward improving the overall customer experience. Medallia’s acquisition of Decibel will help companies improve their digital journeys.

Prior to the acquisition, Decibel had raised $66 million in four rounds of funding from investors Perwyn, VentureForGood, Draper Esprit, Eight Roads Ventures, Upscale, and Sigma Prime Ventures. Being privately held, Decibel did not share its financial details.

Medallia is not the only player in the customer experience segment. Others like Qualtrics, Verint are also focusing on expanding their offerings. Medallia does have high adoption in the market boasting of the highest percentage of clients with more than 1,000 users on its software. It is also known to offer deeper functionality for collecting and analyzing direct, indirect and inferred feedback, and has been building its portfolio through acquisitions and partnerships. But some believe that it lags in its ability to offer self-service capabilities to its customers.

Medallia’s stock is currently trading at $29.49 with a market capitalization of $4.58 billion. It hit at a 52-week high of $48.28 in February and a 52-week low of $18.37 in March last year.