NEW YORK, Aug 12, 2010 (BUSINESS WIRE) -- Medidata Solutions (NASDAQ: MDSO), a leading global provider of SaaS-based clinical technology solutions that enhance the efficiency of customers' clinical development, today announced its financial results for the second quarter 2010 and provided financial guidance for the third quarter and full year 2010.
"Medidata posted excellent growth in the second quarter, gaining market share and demonstrating significant scalability and margin leverage in our operating model," said Tarek Sherif, chairman and chief executive officer of Medidata. "Importantly, the drum beat for improved efficiency and cost containment in their operations continues to grow louder from our customers, as they seek to accelerate productivity gains throughout their clinical development efforts. Our reputation for quality, innovation and customer enablement is clearly driving our momentum in the marketplace, as our customers leverage our expanding suite of products to achieve their goals. Given the strength of our product offerings and our operational strength, we are very well positioned to continue to capitalize on our current market success."
Net revenues for the second quarter of 2010 were $40.3 million, an increase of $6.3 million, or 19%, compared with $34.0 million in the second quarter of 2009. The increase in revenues was due to a $7.6 million, or 31%, increase in revenues from application services, partially offset by a decline in revenues from professional services, which continues to represent a smaller portion of the company's total revenue. Medidata's changing business mix reflects the company's strategy to lower the total cost of ownership for its clients by reducing the total amount of follow-on professional services they incur.
Medidata's net revenue growth in the second quarter of 2010 was driven by new customer additions, cross-selling to existing customers and increased usage by multi-year, multi-study and study-by-study customers across the globe.
Gross margins in the second quarter of 2010 were 68%, an increase of 5 percentage points over gross margins of 63% a year ago, and a 2 percentage point sequential improvement. Medidata's margin expansion continues to be fueled by the accelerating market acceptance of Medidata's product and professional services strategy, as well as its focus on effectively managing its cost of revenues.
"Medidata's consistent and strong performance extends throughout our financial results and across all key metrics," noted Bruce Dalziel, Medidata's chief financial officer. "The company's revenue visibility and growth, coupled with our inherently scalable platform and business model, are driving our financial results. At this point our margins are comparable to larger SaaS peers, and there is further opportunity for us to scale profitably."
Income before taxes increased to $4.6 million in the second quarter of 2010, compared with $0.4 million in the second quarter of 2009.
Non-GAAP operating income* for the second quarter of 2010 increased 93% to $8.3 million, compared with $4.3 million in the second quarter of 2009. GAAP operating income for the quarter was $4.4 million, compared with $0.8 million a year ago.
Non-GAAP net income for the second quarter of 2010 increased 217% to $5.0 million, or $0.21 per diluted share, compared with $1.6 million, or $0.09 per diluted share, in the second quarter of 2009. This compares with previous non-GAAP net income guidance on May 13, 2010 of between $3.0 - $4.0 million, which excludes any tax impact on stock-based compensation and amortization. Including the tax impact on stock-based compensation and amortization at a 35% effective tax rate, adjusted non-GAAP net income for the second quarter of 2010 increased 171% to $4.3 million, or $0.18 per diluted share, compared with $1.6 million, or $0.09 per diluted share, in 2009.
GAAP net income for the quarter was $3.0 million, or $0.13 per diluted share, compared with $0.2 million, or $0.01 per diluted share, in the second quarter of 2009.
Income tax expense increased $1.4 million to $1.6 million in the second quarter of 2010 from $0.2 million in the comparable period. The increase was primarily driven by domestic income tax incurred in 2010.
Diluted shares for the second quarter of 2010 were 23.7 million, compared with 17.8 million in the comparable quarter a year ago, reflecting the issuance of an additional 6.3 million shares in conjunction with the company's initial public offering in June 2009.
Total cash, cash equivalents and marketable securities were $86 million at the end of the second quarter versus $89 million at the end of the fourth quarter 2009. The decrease was primarily driven by the timing of cash payments associated with multi-year software-related fees and equipment purchases during the first half of the year, as well as the impact from company-wide bonus payments during the first quarter.
For the full year 2010, the company now expects revenues to be between $161 and $164 million, compared with previous guidance of $160 and $164 million. Non-GAAP operating income is now expected to be between $31 and $33 million, compared to previous guidance of between $29 and $31 million. Based on current estimates, this would equate to GAAP operating income between $15.5 and $17.5 million. Non-GAAP net income is now expected to be between $17.5 and $19.5 million, compared to previous guidance of between $16.5 and $18.5 million. Based on current estimates, this would equate to GAAP net income between $9.5 and $11.5 million. The company now expects adjusted non-GAAP net income, which includes the tax impact on stock-based compensation and amortization at a 35% effective tax rate, to be between $15 and $17 million, compared to previous guidance of between $14.5 and $16.5 million.
The company will be providing both non-GAAP net income and adjusted non-GAAP net income for the balance of the year for convenience in comparing its operating performance over time.
Total remaining backlog for 2010 was $75 million at the end of the second quarter. Remaining year backlog represents the amount of contractual revenue already booked, which is expected to be recognized during the remainder of the year.
For the third quarter of 2010, the company expects revenues to be between $40 and $41 million. The company expects non-GAAP operating income to be between $7 and $8 million. Based on current estimates this would equate to GAAP operating income of $2.5 and $3.5 million. Non-GAAP net income is expected to be between $3.5 and $4.5 million. Adjusted non-GAAP net income, which includes the tax impact on stock-based compensation and amortization at a 35% effective tax rate, is expected to be between $3 and $4 million. Based on current estimates this would equate to GAAP net income of between $1.5 and $2.5 million.
While changes in the stock price could change the fully diluted share count, the company is assuming 24.1 million fully diluted shares in both the third quarter and full year, respectively.
Mr. Sherif concluded, "Medidata's second quarter was marked by our exceptional performance on many fronts, as we achieved record financial results, witnessed continued success with our channel partners and continued to drive both greater operational efficiencies and momentum in our product development efforts. Our vision of an end-to-end clinical development solution - and our execution in growing our suite of software-as-a-service products that enable it - is leading our industry. We believe that our unified solution, with unmatched interoperability, provides us with a significant competitive advantage, positioning us well to grow our role as a leader in bringing clinical technology innovation to our industry."
The company plans to host its investor conference call today at 5:00 p.m. Eastern Time to discuss its financial results for the first quarter and its outlook for the second quarter and full year 2010. The investor conference call will be available via live webcast on the "Investor" section of Medidata's web site 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 web site at http://investor.mdsol.com. A replay of the conference call can be accessed until Thursday, August 26, 2010 by dialing 800-642-1687 domestically or 706-645-9291 internationally, with the passcode 88088050. An archive of the call will also be hosted on the "Investor" section of Medidata's web site, http://investor.mdsol.com, for a limited period of time.
About Medidata Solutions Worldwide
Medidata Solutions (www.mdsol.com) is a leading global provider of SaaS-based clinical development solutions that enhance the efficiency of customers' clinical trials. For over 10 years, Medidata has consistently brought next-generation innovation to the life science industry to lower the total cost of clinical development through informed trial planning and management, optimized clinical processes and platform interoperability. Medidata's advanced solutions address key functions throughout the clinical development process including protocol development (Medidata Designer(R)), trial planning and management (Medidata Grants Manager(R), Medidata CRO Contractor(R)), user and learning management (iMedidata(TM)), randomization and clinical supply management (Medidata Balance(TM)), monitoring (Medidata Rave Monitor, Medidata Rave Targeted SDV), Serious Adverse Events capture (Medidata Rave Safety Gateway) and clinical data capture, management and reporting (Medidata Rave(R)). Our diverse customer base spans biopharmaceutical companies, medical device and diagnostic companies, academic and government institutions, CROs and other research organizations, and includes more than 20 of the top 25 global pharmaceutical companies as well as organizations of all sizes developing life-enhancing medical treatments and diagnostics.
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; the financial impact of any future acquisitions; 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, 2009. 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.
*Non-GAAP Financial Information
Medidata provides Non-GAAP operating income, net income, adjusted 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 purchased intangible assets and acquisition-related charges and stock-based compensation expense. Non-GAAP net income excludes the impact of amortization of intangible assets associated with acquisitions and stock-based compensation expense. There was no material tax benefit to stock based compensation and amortization prior to December 2009 when calculating non-GAAP net income because the company's net operating loss carry-forwards were available to fully offset its taxable income. Adjusted non-GAAP net income excludes the impact of tax affected amortization of intangible assets associated with acquisitions and stock-based compensation expense. 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 and amortization (tax and non tax affected) and non-cash, share-based compensation charges and management believes, based on discussions with investors, that these Non-GAAP measures enhance investor's ability to assess Medidata's historical and project 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.
|MEDIDATA SOLUTIONS, INC.|
|CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)|
|(Amounts in thousands, except per share data)|
Three Months Ended
Six Months Ended
|Cost of revenues|
|Total cost of revenues||12,819||12,684||25,395||24,967|
|Operating costs and expenses:|
|Research and development||6,680||5,789||13,014||11,286|
|Sales and marketing||7,927||6,745||15,420||13,458|
|General and administrative||8,479||8,037||16,774||14,858|
|Total operating costs and expenses||23,086||20,571||45,208||39,602|
|Interest and other (expense) income:|
|Other income (expense), net||164||(3||)||133||(8||)|
|Total interest and other income (expense), net||197||(372||)||179||(784||)|
|Income before income taxes||4,605||401||7,531||2,277|
|Provision for income taxes||1,640||201||2,702||383|
|Earnings per share:|
|Weighted average common shares outstanding:|
(1) Diluted shares for the three months ended June 30, 2010 were 23,685,843, as compared to 17,769,446 in the same period in 2009. The change is primarily due to 6.3 million shares of common stock issuance upon the IPO on June 24, 2009.
|MEDIDATA SOLUTIONS, INC.|
Reconciliation of GAAP Operating Income and GAAP Net Income to
Non-GAAP Operating Income, Non-GAAP Net Income
and Adjusted Non-GAAP Net Income
(Amounts in thousands, except per share data)
Three Months Ended
Six Months Ended
|GAAP operating income||$||4,408||$||773||$||7,352||$||3,061|
|GAAP operating margins||10.9||%||2.3||%||9.4||%||4.5||%|
|Depreciation and amortization||2,218||2,591||4,811||5,141|
|Non-GAAP operating income||$||8,284||$||4,284||$||14,971||$||10,125|
|Non-GAAP operating margins||20.5||%||12.6||%||19.2||%||15.0||%|
|GAAP net income||$||2,965||$||200||$||4,829||$||1,894|
|Non-GAAP net income||4,988||1,576||8,367||4,730|
Tax impact on stock-based compensation and amortization (1)
|Adjusted non-GAAP net income||$||4,273||$||1,576||$||7,129||$||4,730|
|GAAP basic earnings per share||$||0.13||$||0.01||$||0.21||$||0.23|
|GAAP diluted earnings per share||$||0.13||$||0.01||$||0.20||$||0.11|
|Non-GAAP basic earnings per share||$||0.22||$||0.20||$||0.37||$||0.62|
|Non-GAAP diluted earnings per share||$||0.21||$||0.09||$||0.35||$||0.27|
|Adjusted non-GAAP basic earnings per share||$||0.19||$||0.20||$||0.31||$||0.62|
|Adjusted non-GAAP diluted earnings per share||$||0.18||$||0.09||$||0.30||$||0.27|
|(1) Tax impact calculated using a 35% effective tax rate|
The table above presents a reconciliation of GAAP to non-GAAP operating income, net income and net income per share applicable to common stockholders for the three months and six months ended June 30, 2010 and 2009. Non-GAAP operating income excludes the impact of depreciation, amortization of intangible assets associated with acquisitions and stock-based compensation expense. Non-GAAP net income excludes the impact of amortization of intangible assets associated with acquisitions and stock-based compensation expense. Adjusted non-GAAP net income excludes the impact of tax affected amortization of intangible assets associated with acquisitions and stock-based compensation expense.
|MEDIDATA SOLUTIONS, INC.|
|CONDENSED CONSOLIDATED BALANCE SHEET|
|(Amounts in thousands, except per share data)|
|Cash and cash equivalents||$||19,223||$||39,449|
|Accounts receivable, net of allowance for doubtful accounts of $267 and $197, respectively||18,998||18,887|
|Prepaid commission expense||3,062||3,045|
|Prepaid expenses and other current assets||6,978||3,566|
|Deferred income taxes||139||139|
|Total current assets||113,269||101,652|
|Marketable securities - long-term||2,112||13,072|
|Furniture, fixtures and equipment, net||11,463||12,960|
|Intangible assets, net||3,674||4,404|
|LIABILITIES AND STOCKHOLDERS' EQUITY|
|Accrued payroll and other compensation||7,329||10,837|
|Accrued expenses and other||5,279||7,543|
|Capital lease obligations||1,338||2,735|
|Total current liabilities||89,896||94,030|
|Deferred revenue, less current portion||22,226||27,868|
|Capital lease obligations, less current portion||308||781|
|Other long-term liabilities||541||498|
|Total noncurrent liabilities||23,075||29,147|
|Commitments and contingencies|
Preferred stock, par value $0.01 per share; 5,000 shares authorized, none issued and outstanding
Common stock, par value $0.01 per share; 100,000 shares authorized, 23,765 and 22,900 shares issued; 23,737 and 22,895 shares outstanding, respectively
|Additional paid-in capital||117,849||113,674|
|Treasury stock, 28 and 5 shares, respectively||(400||)||(69||)|
|Accumulated other comprehensive loss||(317||)||(246||)|
|Total stockholders' equity||28,843||20,232|
|Total liabilities and stockholders' equity||$||141,814||$||143,409|
|MEDIDATA SOLUTIONS, INC.|
|CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)|
|(Amounts in thousands)|
Six Months Ended
|Cash flows from operating activities:|
|Adjustments to reconcile net income to net cash provided by operating activities:|
|Depreciation and amortization||4,811||5,141|
|Amortization of discounts or premiums on marketable securities||576||-|
|Excess tax benefit associated with stock-based compensation awards||(549||)||-|
|Deferred income taxes||29||28|
|Amortization of debt issuance costs||27||67|
|Changes in operating assets and liabilities:|
|Prepaid commission expense||(17||)||(236||)|
|Prepaid expenses and other current assets||(3,412||)||(470||)|
|Accrued payroll and other compensation||(3,508||)||(1,077||)|
|Accrued expenses and other||(1,103||)||661|
|Other long-term liabilities||8||36|
|Net cash provided by operating activities||2,962||12,137|
|Cash flows from investing activities:|
|Purchases of furniture, fixtures and equipment||(4,447||)||(2,151||)|
|Purchases of available-for-sale marketable securities||(33,374||)||-|
|Proceeds from sale of available-for-sale securities||15,499||-|
|Decrease in restricted cash||-||13|
|Net cash used in investing activities||(22,322||)||(2,138||)|
|Cash flows from financing activities:|
|Proceeds from exercise of stock options||827||3|
|Excess tax benefit associated with stock-based compensation awards||549||-|
|Repayment of obligations under capital leases||(1,870||)||(2,486||)|
|Acquisition of treasury stock||(331||)||-|
|Payment of debt issuance costs||(21||)||-|
|Proceeds from initial public offering, net of underwriting discounts and commissions||-||82,026|
|Payment of costs associated with initial public offering||-||(2,563||)|
|Payment of preferred stock accumulated accrued dividends||-||(2,282||)|
|Repayment of debt obligation||-||(750||)|
|Net cash (used in) provided by financing activities||(846||)||73,948|
|Net (decrease) increase in cash and cash equivalents||(20,206||)||83,947|
|Effect of exchange rate changes on cash and cash equivalents||(20||)||32|
|Cash and cash equivalents -- Beginning of period||39,449||9,784|
|Cash and cash equivalents -- End of period||$||19,223||$||93,763|
SOURCE: Medidata Solutions
Hulus Alpay, 212-419-1025
Lois Paul & Partners
Susan McCarron, 781-782-5767
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