- Record revenue of $137.4 million,
representing 20% year-over-year growth
- GAAP net income of $8.3 million, or
$0.14 per diluted share, up 33% year-over-year
- Cash flow from operations of $38.2
million, representing 31% year-over-year growth
Medidata (NASDAQ:MDSO), the leading global provider of
cloud-based solutions and data analytics for clinical research,
today announced its financial results for the second quarter of
2017.
"As our second quarter and first half year results show, our
investments in innovation and talent are paying off, creating value
and establishing Medidata as the trusted partner of choice for life
sciences," said Tarek Sherif, Medidata's chairman and chief
executive officer. "Clinical research continues to grow more
complex, and our ability to deliver the leading end-to-end cloud
platform, apply advanced analytics and augment this technology with
our deep life sciences expertise, empowers our customers to meet
this challenge, pursue opportunities, and ultimately improve
patient outcomes."
Second Quarter 2017 Results
- Total revenue for the second quarter of
2017 was $137.4 million, an increase of $22.8 million, or 20%,
compared with $114.6 million in the second quarter of 2016.
Subscription revenue was $114.3 million, an increase of $17.5
million, or 18%, compared with the same period last year.
- Professional services revenue for the
second quarter of 2017 was $23.1 million, an increase of $5.3
million, or 30%, compared with $17.9 million in the second quarter
of 2016.
- GAAP operating income for the quarter
was $13.7 million, up 23%, compared with $11.1 million in the
second quarter of 2016. Non-GAAP operating income1 for the second
quarter of 2017 increased to $32.1 million, up 27%, compared with
$25.4 million a year ago.
- GAAP net income for the second quarter
of 2017 was $8.3 million, or $0.14 per diluted share, up 33%,
compared with $6.2 million, or $0.11 per diluted share, in the
second quarter of 2016. Adjusted non-GAAP net income1 for the
second quarter of 2017 was $18.8 million, or $0.31 per diluted
share, up 27%, compared with $14.8 million, or $0.26 per diluted
share, in the second quarter of 2016. See the non-GAAP
reconciliation included in this release for full details of the
non-GAAP adjustments.
- Cash flow from operations was $38.2
million in the second quarter of 2017, an increase of $9.0 million,
or 31%, compared with $29.2 million a year ago. For the six-month
period ending June 30, cash flow from operations was $60.7 million
in 2017, an increase of $17.7 million, or 41%, compared with $43.0
million in 2016.
- Total cash, cash equivalents, and
marketable securities were $535.0 million at the end of the second
quarter, compared with $515.2 million on December 31, 2016.
Additional Highlights
- Remaining adjusted subscription
backlog2 as of June 30, 2017 was $223 million, an increase of $34
million, or 18%, compared with $189 million a year ago.
- The Medidata Clinical Cloud® expanded
through general availability of two new regulated content
management (RCM) solutions - standard operating procedure (SOP)
management and electronic trial master file (eTMF) archive.
Customers have already begun to adopt these solutions, including
the recently announced agreement with Theracos to deploy eTMF and
eTMF archive.
- Medidata became the first technology
vendor selected by the American Society of Clinical Oncology (ASCO)
to present its scientific innovation at their annual conference,
the premier cancer-focused scientific meeting. ASCO published two
separate scientific findings, which highlight Medidata's ability to
help clients accelerate clinical research, providing them unique
value derived from our rich data assets and advanced data
analytics. Medidata collaborated with Roche and Professor Don
Berry, from The University of Texas MD Anderson Cancer Center,
around our Synthetic Control Arm (SCA) offering for new findings in
acute myeloid leukemia. Medidata partnered with Jason Mezey,
associate professor at Cornell University and Weill Cornell Medical
College, to present findings in breast cancer, with our Clinical
Trial Genomics (CTG) offering.
- Medidata’s revenue retention rate3 was
nearly 100%.
“Building upon a very strong first quarter, our business
momentum continued in Q2, highlighted by 20% total revenue growth,
31% operating cash flow growth, and 120 bps of EBITDAO margin
expansion,” said Rouven Bergmann, Medidata’s chief financial
officer. “As evident in our financial results, customers are
increasingly adopting Medidata’s integrated platform to drive
digital innovation enabling high-powered data discovery,
benchmarking, adaptive trial designs, predictive analytics and
machine learning.”
Financial Outlook
For the full-year 2017, the Company is maintaining its
previously stated total revenue and profitability guidance ranges,
as follows:
- Total revenue between $538 and $562
million, representing up to 21% year-over-year growth at constant
currency.
- Professional services revenue is now
expected to be in the low $80 million dollar range, compared with
the prior expectation of approximately $75 million. This reflects
strong demand across many customers implementing the platform, data
analytics, and strategic services.
- GAAP operating income between $61 and
$69 million. Non-GAAP operating income4, which excludes the impact
of depreciation, amortization of intangible assets, and stock-based
compensation expense, between $131 and $139 million.
- GAAP net income between $31 and $36
million. Adjusted non-GAAP net income4, which excludes the impact
of stock-based compensation, non-cash interest expense associated
with convertible senior notes, and amortization, tax-effected at a
40% rate, between $69 and $74 million.
- While changes in the stock price could
change the fully diluted share count, the Company is assuming 59.5
million fully diluted shares.
The operating and net income measures above reflect the
Company’s non-GAAP financial guidance and the corresponding GAAP
equivalents to its guidance.
Conference Call
The Company plans to host its investor conference call today at
8:00 a.m. Eastern time. The investor conference call will be
available via live webcast on the “Investor” section of Medidata’s
website at http://investor.mdsol.com. To participate by telephone,
domestic participants may dial 877-303-2528 and international
participants may dial 847-829-0023. Those interested in
participating in the conference call should dial in at least 10
minutes prior to the call to register. Participants can also join
the call via a simultaneous live audio webcast, which will be made
available on the “Investor” section of Medidata’s website at
http://investor.mdsol.com. A replay of the conference call can be
accessed until Tuesday, August 1, 2017 by dialing 800-585-8367
domestically or 404-537-3406 internationally, with the passcode
46890165. An archive of the call will also be hosted on the
“Investor” section of Medidata’s website,
http://investor.mdsol.com, for a limited period of time.
About Medidata
Medidata is reinventing global drug and medical device
development by creating the industry's leading cloud-based
solutions for clinical research. Through our advanced applications
and intelligent data analytics, Medidata helps advance the
scientific goals of life sciences customers worldwide, including
over 850 global pharmaceutical companies, biotech, diagnostic and
device firms, leading academic medical centers, and contract
research organizations.
The Medidata Clinical Cloud® brings a new level of quality and
efficiency to clinical trials that empower our customers to make
more informed decisions earlier and faster. Our unparalleled
clinical trial data assets provide deep insights that pave the way
for future growth. The Medidata Clinical Cloud is the primary
technology solution powering clinical trials for 18 of the world's
top 25 global pharmaceutical companies and is used by 18 of the top
25 medical device developers—from study design and planning through
execution, management and reporting.
Cautionary Statement
Certain statements made in this press release are
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995 that involve significant
risks and uncertainties about Medidata Solutions, Inc.
(“Medidata”), including, but not limited to, statements about
Medidata’s forecast of financial performance, products and
services, business model, strategy and growth opportunities, and
competitive position. Such statements are subject to risks and
uncertainties that could cause actual performance or results to
differ materially from those expressed in these statements. In
particular, the risks and uncertainties include, among other
things, risks associated with possible fluctuations in our
financial and operating results; errors, interruptions or delays in
our service or our web hosting; integration activities, performance
and financial impact of acquired companies; our ability to continue
to release, and gain customer acceptance of, new and improved
versions of our products; changes in our sales and implementation
cycles; competition; our ability to retain and expand our customer
base or increase new business from those customers; our ability to
hire, retain, and motivate our employees and manage our growth;
regulatory developments; litigation; and general developments in
the economy. For additional disclosure regarding these and other
risks faced by the Company, see disclosures contained in Medidata’s
public filings with the Securities and Exchange Commission,
including the “Risk Factors” section of Medidata’s Annual Report on
Form 10-K for the year ended December 31, 2016. You should consider
these factors in evaluating the forward-looking statements included
in this press release and not place undue reliance on such
statements. The forward-looking statements are made as of the date
hereof, and Medidata undertakes no obligation to update such
statements as a result of new information.
(1) Non-GAAP Financial InformationMedidata provides non-GAAP
operating income, net income, and net income per share applicable
to common stockholders data as additional information for its
operating results. These measures are not in accordance with, or an
alternative for, generally accepted accounting principles and may
be different from non-GAAP measures used by other companies.
Non-GAAP operating income excludes the impact of depreciation,
amortization of intangible assets associated with acquisitions,
stock-based compensation expense, and adjustments to the fair value
of contingent consideration. Adjusted non-GAAP net income excludes
the tax-effected impact of amortization of intangible assets
associated with acquisitions, stock-based compensation expense,
non-cash interest expense on convertible senior notes, and
adjustments to the fair value of contingent consideration.
Management uses these non-GAAP measures to evaluate its financial
results, develop budgets, manage expenditures, and as an important
factor in determining variable compensation. In addition, investors
frequently have requested information from management regarding
depreciation, amortization, and other non-cash charges, such as
share-based compensation, and management believes, based on
discussions with investors, that these non-GAAP measures enhance
investors’ ability to assess Medidata’s historical and projected
future financial performance. While management believes these
non-GAAP financial measures provide useful supplemental information
to investors, there are limitations associated with the use of
non-GAAP financial measures. One limitation of non-GAAP operating
income is that it excludes depreciation and amortization, which
represents the periodic costs of certain capitalized tangible and
intangible assets used in generating revenues in our business.
Medidata compensates for these limitations by using these non-GAAP
financial measures as supplements to GAAP financial measures and by
reviewing the reconciliations of the non-GAAP financial measures to
their most comparable GAAP financial measures. Investors are
encouraged to review the reconciliations of these non-GAAP
financial measures to the comparable GAAP results, which are
attached to this press release.
(2) Adjusted subscription backlog equals subscription backlog
plus outstanding intra-year renewals valued at an amount equal to
the contracts to be renewed.(3) Revenue retention rate is
calculated as the percentage of prior year revenue attributable to
customers retained in the current year.(4) A tabular reconciliation
of forward-looking non-GAAP financial measures to the most
comparable forward-looking GAAP measures is attached to this press
release.
MEDIDATA SOLUTIONS, INC. CONSOLIDATED STATEMENTS
OF OPERATIONS (Unaudited) (Amounts in thousands, except per
share data) Three Months Ended June
30, Six Months Ended June 30, 2017
2016 2017 2016 Revenues Subscription $
114,291 $ 96,760 $ 221,361 $ 186,728 Professional services 23,123
17,850 42,874 32,120 Total revenues
137,414 114,610 264,235 218,848 Cost of revenues (1)(2)
Subscription 17,017 15,600 34,146 29,929 Professional services
14,903 13,457 28,388 23,796 Total cost
of revenues 31,920 29,057 62,534 53,725 Gross profit 105,494 85,553
201,701 165,123 Operating costs and expenses Research and
development (1) 35,884 28,267 65,821 56,495 Sales and marketing
(1)(2) 32,784 27,609 62,893 53,067 General and administrative (1)
23,083 18,531 47,071 37,777 Total
operating costs and expenses 91,751 74,407 175,785
147,339 Operating income 13,743 11,146 25,916 17,784
Interest and other income (expense) Interest expense (4,383 )
(4,183 ) (8,710 ) (8,310 ) Interest income 1,328 932 2,499 1,804
Other income (expense), net — 3 — (1 ) Total
interest and other expense, net (3,055 ) (3,248 ) (6,211 ) (6,507 )
Income before income taxes 10,688 7,898 19,705 11,277 Provision for
income taxes 2,438 1,688 (3 ) 1,937 492
(3 ) Net income $ 8,250 $ 6,210 (3 ) $ 17,768
$ 10,785 (3 ) Earnings per share Basic $ 0.15 $ 0.11
(3 ) $ 0.32 $ 0.20 (3 ) Diluted $ 0.14
$ 0.11 (3 ) $ 0.30 $ 0.19 (3 ) Weighted
average common shares outstanding Basic 56,433 55,392 56,254 55,255
Diluted 59,835 56,875 (3 ) 59,051 56,813 (3 ) (1)
Stock-based compensation expense included in cost of revenues and
operating costs and expenses is as follows: Cost of revenues $
1,246 $ 1,239 $ 2,415 $ 2,449 Research and development 3,427 2,323
6,262 4,517 Sales and marketing 1,836 1,839 3,011 3,716 General and
administrative 6,183 5,046 11,325 10,015
Total stock-based compensation $ 12,692 $ 10,447
$ 23,013 $ 20,697 (2) Amortization of
intangible assets included in costs of revenues and operating costs
and expenses is as follows: Cost of revenues $ 1,022 $ 314 $ 1,476
$ 393 Sales and marketing 119 85 202 109
Total amortization of intangible assets $ 1,141 $ 399
$ 1,678 $ 502
(3) The three and six months ended June
30, 2016 have been recast to reflect our early adoption of
Accounting Standards Update (ASU) No. 2016-09, Improvements to
Share-Based Payment Accounting, consistent with the quarterly
information presented in our Annual Report on Form 10-K for the
year ended December 31, 2016.
MEDIDATA SOLUTIONS, INC.
Reconciliation of GAAP Operating Income
and GAAP Net Income toNon-GAAP Operating Income and Adjusted
Non-GAAP Net Income (Unaudited)
(Amounts in thousands, except per share data)
Three Months Ended June 30, Six Months Ended June
30, 2017 2016 2017
2016 Operating income: GAAP operating income $ 13,743 $
11,146 $ 25,916 $ 17,784 GAAP operating margins 10.0 % 9.7 % 9.8 %
8.1 % Stock-based compensation 12,692 10,447 23,013 20,697
Depreciation and amortization 5,589 3,766 10,065 6,983 Contingent
consideration adjustment (1) 58 — 58 —
Non-GAAP operating income $ 32,082 $ 25,359 $ 59,052
$ 45,464 Non-GAAP operating margins 23.3 % 22.1 %
22.3 % 20.8 % Net income: GAAP net income $ 8,250 $ 6,210 (4 ) $
17,768 $ 10,785 (4 ) Stock-based compensation 12,692 10,447 23,013
20,697 Amortization 1,141 399 1,678 502 Non-cash interest expense
on convertible senior notes (2) 3,648 3,455 7,246 6,863 Contingent
consideration adjustment (1) 58 — 58 — Tax impact on add-back items
(3) (7,016 ) (5,721 ) (12,798 ) (11,225 ) Adjusted non-GAAP net
income $ 18,773 $ 14,790 (4 ) $ 36,965 $
27,622 (4 ) GAAP basic earnings per share $ 0.15 $
0.11 (4 ) $ 0.32 $ 0.20 (4 ) GAAP diluted
earnings per share $ 0.14 $ 0.11 (4 ) $ 0.30 $
0.19 (4 ) Adjusted Non-GAAP basic earnings per share $ 0.33
$ 0.27 (4 ) $ 0.66 $ 0.50 (4 ) Adjusted
Non-GAAP diluted earnings per share $ 0.31 $ 0.26 (4
) $ 0.63 $ 0.49 (4 ) (1) Amount represents the
change in fair value of acquisition-related contingent
consideration liabilities. (2) Amount represents non-cash
interest expense, including amortization of debt discount and
issuance costs, on our 1.00% convertible senior notes issued during
the third quarter of 2013. We exclude this incremental non-cash
interest expense for purposes of calculating adjusted non-GAAP net
income. We believe that excluding these expenses from our non-GAAP
measures is useful to investors because such incremental non-cash
interest expense does not generate a cash outflow for the Company
and the debt issuance costs do not represent a cash outflow for the
Company except in the period the notes were issued; therefore both
are not indicative of our continuing operations. (3) Tax
impact calculated using a 40% tax rate. (4) The three and
six months ended June 30, 2016 have been recast to reflect our
early adoption of ASU No. 2016-09, consistent with the quarterly
information presented in our Annual Report on Form 10-K for the
year ended December 31, 2016.
The table above presents a reconciliation
of GAAP to non-GAAP operating income, net income, and net income
per share applicable to common stockholders for the three and six
months ended June 30, 2017 and 2016. Non-GAAP operating income
excludes the impact of depreciation, amortization of intangible
assets associated with acquisitions, stock-based compensation
expense, and adjustments to the fair value of contingent
consideration. Adjusted non-GAAP net income excludes the
tax-affected impact of amortization of intangible assets associated
with acquisitions, stock-based compensation expense, non-cash
interest expense on convertible senior notes, and adjustments to
the fair value of contingent consideration.
MEDIDATA SOLUTIONS, INC. CONSOLIDATED
BALANCE SHEETS (Unaudited) (Amounts in thousands, except per
share data) June 30, 2017
December 31,2016
ASSETS Current assets: Cash and cash equivalents $ 110,708 $
93,519 Marketable securities 256,401 281,285 Accounts receivable,
net of allowance for doubtful accounts of $1,298 and $1,041,
respectively 111,233 115,216 Prepaid commission expense 3,511 1,842
Prepaid expenses and other current assets 30,846 20,382 Deferred
income taxes — 6,536 Total current assets 512,699
518,780 Restricted cash 5,513 5,760 Furniture, fixtures and
equipment, net 71,162 58,461 Marketable securities, long-term
167,896 140,418 Goodwill 47,678 30,780 Intangible assets, net
20,014 5,090 Deferred income taxes, long-term 41,268 40,415 Other
assets 22,625 18,181 Total assets $ 888,855 $
817,885
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable $ 12,257 $ 6,202 Accrued payroll and
other compensation 19,630 29,260 Accrued expenses and other 34,120
20,958 Deferred revenue 86,314 75,911 Total current
liabilities 152,321 132,331 Noncurrent liabilities:
1.00% convertible senior notes, net 270,647 263,401 Deferred
revenue, less current portion 2,159 1,703 Deferred tax liabilities
124 322 Other long-term liabilities 20,812 18,138
Total noncurrent liabilities 293,742 283,564 Total
liabilities 446,063 415,895 Commitments and
contingencies Stockholders' equity: Preferred stock, par value
$0.01 per share; 5,000 shares authorized, none issued and
outstanding — — Common stock, par value $0.01 per share; 200,000
shares authorized; 62,578 and 61,393 shares issued; 58,503 and
57,733 shares outstanding, respectively 626 614 Additional paid-in
capital 454,856 418,497 Treasury stock, 4,075 and 3,660 shares,
respectively (128,991 ) (114,204 ) Accumulated other comprehensive
loss (3,826 ) (5,276 ) Retained earnings 120,127 102,359
Total stockholders' equity 442,792 401,990
Total liabilities and stockholders' equity $ 888,855 $
817,885
MEDIDATA SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Amounts in thousands) Six Months Ended
June 30, 2017 2016 Cash flows from
operating activities Net income $ 17,768 $ 10,785 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation and amortization 10,065 6,983 Stock-based compensation
23,013 20,697 Amortization of discounts or premiums on marketable
securities 757 1,700 Deferred income taxes 2,535 (1,164 )
Amortization of debt issuance costs 639 639 Amortization of debt
discount 6,607 6,224 Provision for doubtful accounts 526 508 (Gain)
loss on fixed asset disposal (2 ) 4 Change in fair value of
contingent consideration 58 — Changes in operating assets and
liabilities: Accounts receivable 4,058 (7,729 ) Prepaid commission
expense (4,661 ) (2,931 ) Prepaid expenses and other current assets
(13,031 ) 3,040 Other assets 1,171 (3,583 ) Accounts payable 4,490
(1,932 ) Accrued payroll and other compensation (10,122 ) (4,302 )
Accrued expenses and other 5,313 7,715 Deferred revenue 10,634
9,206 Other long-term liabilities 884 (2,814 ) Net cash
provided by operating activities 60,702 43,046 (1 )
Cash flows from investing activities Purchase of furniture,
fixtures and equipment (16,642 ) (13,425 ) Purchase of
available-for-sale securities (157,228 ) (144,136 ) Proceeds from
sale of available-for-sale securities 154,117 154,784 Acquisition
of businesses, net of cash acquired (22,941 ) (17,142 )
Net cash used in investing activities
(42,694 ) (19,919 ) Cash flows from financing activities Proceeds
from exercise of stock options 9,057 1,691 Proceeds from employee
stock purchase plan 4,248 3,385 Acquisition of treasury stock
(14,785 ) (13,797 ) Repayment of notes payable — (100 ) Net
cash used in financing activities (1,480 ) (8,821 ) (1 ) Effect of
exchange rate changes on cash, cash equivalents and restricted cash
414 397 Net increase in cash, cash equivalents and
restricted cash 16,942 14,703 Cash, cash equivalents and restricted
cash – Beginning of period 99,279 55,472 (2 ) Cash,
cash equivalents and restricted cash – End of period $ 116,221
$ 70,175 (2 ) (1) The consolidated statement of cash
flows for the six months ended June 30, 2016 has been adjusted to
reflect our early adoption of ASU No. 2016-09 during the third
quarter of 2016, resulting in an offsetting increase of $5,048
thousand to net cash provided by operating activities and net cash
used in financing activities. (2) As a result of our early
adoption of ASU. No. 2016-18 during the first quarter of 2017, the
consolidated statement of cash flows for the six months ended June
30, 2016 has been adjusted to include restricted cash in beginning-
and end-of-period cash.
MEDIDATA SOLUTIONS,
INC.
Reconciliation of Forward-Looking GAAP
Operating Income Guidance and GAAP Net Income Guidance
toNon-GAAP Operating Income Guidance and Adjusted Non-GAAP
Net Income Guidance (Unaudited)
(Amounts in millions, except per share data)
Estimated Full-Year2017
GAAP operating income: $61 - $69 Stock-based compensation (1) 47
Depreciation and amortization (1) 23 Non-GAAP operating income $131
- $139 GAAP net income: $31 - $36 Stock-based compensation
(1) 47 Amortization (1) 2 Non-cash interest expense on convertible
senior notes (1) 15 Tax impact on add-back items (2) (26) Adjusted
non-GAAP net income $69 - $74 (1) Represents the
estimated midpoint of our guidance range. (2) Tax impact estimated
using a 40% rate.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170718005497/en/
Investors:Medidata SolutionsAnthony D’Amico,
732-767-4331adamico@mdsol.comorMedia:Medidata SolutionsErik Snider,
646-362-2997esnider@mdsol.com
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