UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934


Date of Report (Date of earliest event reported):  February 8, 2018

Medidata Solutions, Inc.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction
of incorporation)

001-34387
(Commission
File Number)
13-4066508
(IRS Employer
Identification No.)


350 Hudson Street, 9th Floor

New York, New York
(Address of principal executive offices)

10014
(Zip Code)


Registrant’s telephone number, including area code: (212) 918-1800

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   


Item 2.02.      Results of Operations and Financial Condition.

On February 8, 2018, Medidata Solutions, Inc. issued a press release announcing its financial results for the quarter and year ended December 31, 2017.  A copy of the press release is furnished herewith as Exhibit 99.1, and is incorporated herein by reference.

In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including the exhibits, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01.      Financial Statements and Exhibits.

(d)  Exhibits.

99.1 Press release issued by Medidata Solutions, Inc. on February 8, 2018, furnished herewith.


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

MEDIDATA SOLUTIONS, INC.
 

Date: February 8, 2018

 

By:

/s/ MICHAEL I. OTNER

Name:

 

Michael I. Otner

Title:

 

Executive Vice President, General Counsel and Secretary


EXHIBIT INDEX

Exhibit No.   Description

99.1

Press release issued by Medidata Solutions, Inc. on February 8, 2018, furnished herewith.

Exhibit 99.1

Medidata Reports Record Full-Year and Fourth Quarter 2017 Results

NEW YORK--(BUSINESS WIRE)--February 8, 2018--Medidata (NASDAQ:MDSO) today announced its financial results for the fourth quarter and full year 2017 and provided detailed financial guidance for the full year 2018.

“We had an exceptional year in 2017, driven by strong financial and operational execution, and the largest increase in total multi-year subscription backlog in our history," said Tarek Sherif, Medidata's chairman and chief executive officer. "Medidata’s expanding market opportunity in clinical development is being driven by an explosion of new potential cures, increasingly complex clinical trials and an evolving regulatory environment. Our strategy and R&D investments continue to pay off as we see high demand for our eClinical capabilities and pioneering analytics, none of which competitors can offer on a unified platform.”

Fourth Quarter 2017 Results


Full-Year 2017 Results

Additional Highlights:

“I am pleased with our performance in 2017. We made solid progress in building scale and operational strength, and achieved a significant milestone with over $1 billion in total subscription backlog,” said Rouven Bergmann, Medidata’s chief financial officer. “We enter 2018 with good visibility to achieve our targets. We are confident about our long-term opportunity creating value for our customers and shareholders.”


Financial Outlook

For the full-year 2018, the Company now expects:

The operating and net income measures above reflect Medidata’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 Thursday, February 22, 2018 by dialing 800-585-8367 domestically or 404-537-3406 internationally, with the passcode 3294637. 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's unified platform, pioneering analytics, and unrivaled expertise power the development of new therapies for over 1,000 pharmaceutical companies, biotech, medical device firms, academic medical centers and contract research organizations around the world. The Medidata Clinical Cloud® connects patients, physicians and life sciences professionals. Companies on the Medidata platform are individually and collaboratively reinventing the way research is done to create smarter, more precise treatments. For more information: www.mdsol.com

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 Medidata, 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) Total multi-year subscription backlog is unadjusted for renewals.

(2) Non-GAAP Financial Information
Medidata 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, wire transaction recovery, 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, wire transaction recovery, 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.

(3) On September 18, 2014, Medidata discovered that it had been the subject of a fraud involving the transfer of $4.8 million to an overseas account. Medidata commenced legal action, alleging that its insurer had wrongly denied coverage with regard to the loss. On July 21, 2017, the United States District Court for the Southern District of New York granted Medidata’s motion for summary judgment, and denied the insurer’s motion. In light of this ruling, operating costs and expenses for the full year ended December 31, 2017 include recognition of the amount that is probable to be recovered, up to the amount of the originally recorded loss. Any potential recovery amounts that are in excess of the amount of the loss, such as interest, have not been recognized.

(4) Adjusted subscription backlog equals subscription backlog plus outstanding intra-year renewals valued at an amount equal to the contracts to be renewed.

(5) Revenue retention rate is calculated as the percentage of prior year revenue attributable to customers retained in the current year.

(6) Growth rates based on 2017 revenue after full retrospective adoption of Accounting Standards Codification (ASC) 606. Supplemental information about the anticipated impact of ASC 605 to 606 transition on prior period results is attached to this press release.

(7) 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 December 31, Twelve Months Ended December 31,
2017   2016 2017   2016
Revenues
Subscription $ 119,756 $ 105,981 $ 459,528 $ 394,269
Professional services 21,461   18,491   86,004   69,112  
Total revenues 141,217 124,472 545,532 463,381
Cost of revenues (1)(2)
Subscription 17,958 16,112 69,235 62,136
Professional services 14,747   13,544   57,558   50,473  
Total cost of revenues 32,705 29,656 126,793 112,609
Gross profit 108,512 94,816 418,739 350,772
Operating costs and expenses
Research and development (1) 36,536 28,072 138,564 112,595
Sales and marketing (1)(2) 31,952 28,434 126,273 109,290
General and administrative (1) 23,552 20,812 94,324 78,678
Wire transaction recovery (3)     (4,770 )  
Total operating costs and expenses 92,040   77,318   354,391   300,563  
Operating income 16,472 17,498 64,348 50,209
Interest and other income (expense)
Interest expense (4,648 ) (4,758 ) (17,765 ) (17,288 )
Interest income 1,687 1,573 5,717 4,382
Other (expense) income, net (66 ) 19   (73 ) 11  
Total interest and other expense, net (3,027 ) (3,166 ) (12,121 ) (12,895 )
Income before income taxes 13,445 14,332 52,227 37,314
Provision for income taxes (323 ) 3,492   7,847   8,331  
Net income $ 13,768   $ 10,840   $ 44,380   $ 28,983  
Earnings per share
Basic $ 0.24   $ 0.19   $ 0.79   $ 0.52  
Diluted $ 0.23   $ 0.19   $ 0.74   $ 0.51  
Weighted average common shares outstanding
Basic 56,724 55,783 56,473 55,492
Diluted 60,245 57,637 59,765 57,249
(1) Stock-based compensation expense included in cost of revenues and operating costs and expenses is as follows:
Cost of revenues $ 1,306 $ 822 $ 4,873 $ 4,425
Research and development 3,580 2,414 13,314 9,223
Sales and marketing 1,958 1,725 6,833 7,074
General and administrative 5,947   5,042   22,793   20,436  
Total stock-based compensation $ 12,791   $ 10,003   $ 47,813   $ 41,158  
(2) Amortization of intangible assets included in costs of revenues and operating costs and expenses is as follows:
Cost of revenues $ 1,094 $ 314 $ 3,664 $ 1,021
Sales and marketing 120   83   441   276  
Total amortization of intangible assets $ 1,214   $ 397   $ 4,105   $ 1,297  
(3) Operating costs and expenses for the twelve months ended December 31, 2017 include the probable insurance recovery of amounts associated with the previously recognized 2014 wire transaction loss.
 

MEDIDATA SOLUTIONS, INC.
Reconciliation of GAAP Operating Income and GAAP Net Income to

Non-GAAP Operating Income and Adjusted Non-GAAP Net Income (Unaudited)

(Amounts in thousands, except per share data)
   
Three Months Ended December 31,   Twelve Months Ended December 31,
2017   2016 2017   2016
Operating income:
GAAP operating income $ 16,472 $ 17,498 $ 64,348 $ 50,209
GAAP operating margins 11.7 % 14.1 % 11.8 % 10.8 %
Stock-based compensation 12,791 10,003 47,813 41,158
Depreciation and amortization 7,135 4,448 24,053 15,349
Wire transaction recovery (1) (4,770 )
Contingent consideration adjustment (2) 159     319    
Non-GAAP operating income $ 36,557   $ 31,949   $ 131,763   $ 106,716  
Non-GAAP operating margins 25.9 % 25.7 % 24.2 % 23.0

%

Net income:
GAAP net income $ 13,768 $ 10,840 $ 44,380 $ 28,983
Stock-based compensation 12,791 10,003 47,813 41,158
Amortization 1,214 397 4,105 1,297
Wire transaction recovery (1) (4,770 )
Contingent consideration adjustment (2) 159 319
Non-cash interest expense (3) 3,762 3,550 14,706 13,914
Tax impact on add-back items (4) (7,170 ) (5,580 ) (24,869 ) (22,548 )
Adjusted non-GAAP net income $ 24,524   $ 19,210   $ 81,684   $ 62,804  
GAAP basic earnings per share $ 0.24   $ 0.19   $ 0.79   $ 0.52  
GAAP diluted earnings per share $ 0.23   $ 0.19   $ 0.74   $ 0.51  
Adjusted Non-GAAP basic earnings per share $ 0.43   $ 0.34   $ 1.45   $ 1.13  
Adjusted Non-GAAP diluted earnings per share $ 0.41   $ 0.33   $ 1.37   $ 1.10  

 

(1) Operating costs and expenses for the twelve months ended December 31, 2017 include the probable insurance recovery of amounts associated with the previously recognized 2014 wire transaction loss. We exclude these amounts for the purposes of calculating non-GAAP operating income and adjusted non-GAAP net income because we believe they are not indicative of our continuing operations or meaningful when comparing current to past results.
 
(2) Amount represents the change in fair value of acquisition-related contingent consideration liabilities.
 
(3) Non-cash interest expense includes amortization of debt discount and issuance costs on our 1.00% convertible senior notes issued in 2013 and amortization of issuance costs on our credit agreement entered into in 2017. 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, nor do the debt issuance costs represent a cash outflow except in the period of issuance; therefore both are not indicative of our continuing operations.
 
(4) Tax impact calculated using a 40% 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 and twelve months ended December 31, 2017 and 2016. Non-GAAP operating income excludes the impact of stock-based compensation, depreciation, amortization of intangible assets associated with acquisitions, wire transaction recovery, and adjustments to the fair value of contingent consideration. Adjusted non-GAAP net income excludes the tax-affected impact of stock-based compensation, amortization of intangible assets associated with acquisitions, wire transaction recovery, adjustments to the fair value of contingent consideration, and non-cash interest expense.
 

 
MEDIDATA SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(Amounts in thousands, except per share data)
   
December 31, December 31,
2017 2016
ASSETS
Current assets:
Cash and cash equivalents $ 237,325 $ 93,519
Marketable securities 246,967 281,285
Accounts receivable, net of allowance for doubtful accounts of $1,454 and $1,041, respectively 110,685 115,216
Prepaid commission expense 5,352 1,842
Prepaid expenses and other current assets 37,287 20,382
Deferred income taxes   6,536  
Total current assets 637,616 518,780
Restricted cash 5,518 5,760
Furniture, fixtures and equipment, net 88,091 58,461
Marketable securities, long-term 179,041 140,418
Goodwill 47,435 30,780
Intangible assets, net 17,587 5,090
Deferred income taxes, long-term 40,847 40,415
Other assets 29,979   18,181  
Total assets $ 1,046,114   $ 817,885  
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,009 $ 6,202
Accrued payroll and other compensation 32,537 29,260
Accrued expenses and other 31,041 20,958
Deferred revenue 77,434 75,911
1.00% convertible senior notes, net 278,094    
Total current liabilities 424,115   132,331  
Noncurrent liabilities:
1.00% convertible senior notes, net 263,401
Term loan, net 97,841
Deferred revenue, less current portion 5,256 1,703
Deferred tax liabilities 99 322
Other long-term liabilities 21,371   18,138  
Total noncurrent liabilities 124,567   283,564  
Total liabilities 548,682   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; 62,801 and 61,393 shares issued; 58,607 and 57,733 shares outstanding, respectively 628 614
Additional paid-in capital 486,147 418,497
Treasury stock, 4,194 and 3,660 shares, respectively (132,705 ) (114,204 )
Accumulated other comprehensive loss (3,377 ) (5,276 )
Retained earnings 146,739   102,359  
Total stockholders' equity 497,432   401,990  
Total liabilities and stockholders' equity $ 1,046,114   $ 817,885  
 

MEDIDATA SOLUTIONS, INC.  
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Amounts in thousands)
  Twelve Months Ended December 31,
2017   2016
Cash flows from operating activities
Net income $ 44,380 $ 28,983
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 24,053 15,349
Stock-based compensation 47,813 41,158
Amortization of discounts or premiums on marketable securities 1,438 2,757
Deferred income taxes 3,296 5,895
Amortization of debt issuance costs 1,291 1,278
Amortization of debt discount 13,415 12,636
Provision for doubtful accounts 1,089 1,116
Loss on fixed asset disposal 72 3
Changes in fair value of contingent consideration 319
Changes in operating assets and liabilities:
Accounts receivable 4,043 (25,172 )
Prepaid commission expense (7,094 ) (2,108 )
Prepaid expenses and other current assets (17,986 ) 185
Other assets (1,270 ) (8,735 )
Accounts payable (3,014 ) 2,825
Accrued payroll and other compensation 2,089 7,343
Accrued expenses and other 1,751 14,220
Deferred revenue 4,851 (1,050 )
Other long-term liabilities 1,210   (7,914 )
Net cash provided by operating activities 121,746   88,769  
Cash flows from investing activities
Purchase of furniture, fixtures and equipment (44,621 ) (25,656 )
Purchase of available-for-sale securities (303,641 ) (266,361 )
Proceeds from sale of available-for-sale securities 297,297 271,796
Acquisition of businesses, net of cash acquired (22,941 ) (17,186 )
Purchase of cost method investment (4,124 ) (4,000 )
Net cash used in investing activities (78,030 ) (41,407 )

(1)

Cash flows from financing activities
Proceeds from exercise of stock options 10,207 5,495
Proceeds from employee stock purchase plan 9,378 6,864
Acquisition of treasury stock (18,499 ) (15,570 )
Repayment of notes payable (100 )
Borrowings under term loan facility 100,000
Payments of credit facility financing costs (1,997 )  
Net cash provided by (used in) financing activities 99,089   (3,311 )
Effect of exchange rate changes on cash, cash equivalents and restricted cash 759   (244 )
Net increase in cash, cash equivalents and restricted cash 143,564 43,807
Cash, cash equivalents and restricted cash – Beginning of period 99,279   55,472  

(1)

Cash, cash equivalents and restricted cash – End of period $ 242,843   $ 99,279  

(1)

(1) 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 twelve months ended December 31, 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 to
Non-GAAP Operating Income Guidance and Adjusted Non-GAAP Net Income Guidance (Unaudited)

(Amounts in millions)
  Estimated Full-Year
2018
GAAP operating income: $63.5 - $73.5
Stock-based compensation (1) 60.0
Depreciation and amortization (1) 33.0
Contingent consideration adjustment (1) 0.5
Non-GAAP operating income $157.0 - $167.0
 
GAAP net income: $42.0 - $50.0
Stock-based compensation (1) 60.0
Amortization (1) 5.0
Non-cash interest expense (1) 10.0
Contingent consideration adjustment (1) 0.5
Tax impact on add-back items (2) (19.0)
Adjusted non-GAAP net income $98.5 - $106.5
 
(1) Represents the estimated midpoint of our guidance range.
(2) Tax impact estimated using a 25% rate.
 
 
MEDIDATA SOLUTIONS, INC.
Anticipated Impact of Transition from ASC 605 to ASC 606
(Unaudited)
(Amounts in thousands, except per share data)
 
  Twelve Months Ended December 31, 2017   Twelve Months Ended December 31, 2016

As Reported
Under ASC
605

 

Anticipated
Under ASC
606

  Change

As Reported
Under ASC
605

 

Anticipated
Under ASC
606

  Change
GAAP results:        
Revenues
Subscription $ 459,528 $ 457,824 $ (1,704 ) $ 394,269 $ 388,997 $ (5,272 )
Professional services 86,004   86,381   377   69,112   69,496   384  
Total revenues $ 545,532 $ 544,205 $ (1,327 ) $ 463,381 $ 458,493 $ (4,888 )
 
Operating costs and expenses
Sales and marketing $ 126,273 $ 124,138 $ (2,135 ) $ 109,290 $ 105,925 $ (3,365 )
 
Operating income $ 64,348 $ 65,156 $ 808 $ 50,209 $ 48,686 $ (1,523 )
Operating margin 11.8 % 12.0 % 0.2 % 10.8 % 10.6 % (0.2 )%
 
Provision for income taxes $ 7,847 $ 5,459 $ (2,388 ) $ 8,331 $ 7,782 $ (549 )
 
Net income $ 44,380 $ 47,576 $ 3,196 $ 28,983 $ 28,009 $ (974 )
 
Earnings per share
Basic $ 0.79   $ 0.84   $ 0.05 $ 0.52   $ 0.50   $ (0.02 )
Diluted $ 0.74   $ 0.80   $ 0.06 $ 0.51   $ 0.49   $ (0.02 )
 
Non-GAAP metrics:
Non-GAAP operating income $ 131,763 $ 132,571 $ 808 $ 106,716 $ 105,193 $ (1,523 )
Non-GAAP operating margin 24.2 % 24.4 % 0.2 % 23.0 % 22.9 % (0.1 )%
 
Adjusted non-GAAP net income $ 81,684 $ 84,880 $ 3,196 $ 62,804 $ 61,830 $ (974 )
Adjusted non-GAAP basic earnings per share $ 1.45   $ 1.50   $ 0.05 $ 1.13   $ 1.11   $ 0.02
Adjusted non-GAAP diluted earnings per share $ 1.37   $ 1.42   $ 0.05 $ 1.10   $ 1.08   $ 0.02

 

The table above presents the anticipated impact of our January 1, 2018 full retrospective adoption of the new revenue guidance in Accounting Standards Codification ("ASC") 606 on the affected line items of our consolidated statements of operations for the twelve months ended December 31, 2017 and 2016. This information is provided as a supplement to our consolidated statements of operations to enable investors to understand the relationship between our historical results as reported under ASC 605 and our forward-looking guidance under ASC 606.

 

MEDIDATA SOLUTIONS, INC.
Anticipated Impact of Transition from ASC 605 to ASC 606 (Unaudited)
(Amounts in thousands, except per share data)
       
Three Months Ended March 31, Three Months Ended June 30, Three Months Ended September 30, Three Months Ended December 31,
2017 2017 2017 2017
 

As Reported
Under ASC
605

 

Anticipated
Under ASC
606

  Change

As Reported
Under ASC
605

 

Anticipated
Under ASC
606

  Change

As Reported
Under ASC
605

 

Anticipated
Under ASC
606

  Change

As Reported
Under ASC
605

 

Anticipated
Under ASC
606

  Change
GAAP results:                
Revenues
Subscription $ 107,070 $ 107,893 $ 823 $ 114,291 $ 112,904 $ (1,387 ) $ 118,411 $ 117,271 $ (1,140 ) $ 119,756 $ 119,756 $
Professional services 19,751   19,751     23,123   23,123     21,669   21,674   5   21,461   21,833   372  
Total revenues $ 126,821 $ 127,644 $ 823 $ 137,414 $ 136,027 $ (1,387 ) $ 140,080 $ 138,945 $ (1,135 ) $ 141,217 $ 141,589 $ 372
 
Operating costs and expenses
Sales and marketing $ 30,109 $ 30,226 $ 117 $ 32,784 $ 32,479 $ (305 ) $ 31,428 $ 29,996 $ (1,432 ) $ 31,952 $ 31,437 $ (515 )
 
Operating income $ 12,173 $ 12,879 $ 706 $ 13,743 $ 12,661 $ (1,082 ) $ 21,960 $ 22,257 $ 297 $ 16,472 $ 17,359 $ 887
Operating margin 9.6 % 10.1 % 0.5 % 10.0 % 9.3 % (0.7 )% 15.7 % 16.0 % 0.3 % 11.7 % 12.3 % 0.6 %
 
Provision for income taxes $ (501 ) $ (257 ) $ 244 $ 2,438 $ 2,065 $ (373 ) $ 6,233 $ 6,331 $ 98 $ (323 ) $ (2,680 ) $ (2,357 )
 
Net income $ 9,518 $ 9,980 $ 462 $ 8,250 $ 7,541 $ (709 ) $ 12,844 $ 13,043 $ 199 $ 13,768 $ 17,012 $ 3,244
 
Earnings per share
Basic $ 0.17   $ 0.18   $ 0.01 $ 0.15   $ 0.13   $ (0.02 ) $ 0.23   $ 0.23   $ $ 0.24   $ 0.30   $ 0.06
Diluted $ 0.16   $ 0.17   $ 0.01 $ 0.14   $ 0.13   $ (0.01 ) $ 0.21   $ 0.22   $ 0.01 $ 0.23   $ 0.28   $ 0.05
 
Non-GAAP metrics:
Non-GAAP operating income $ 26,970 $ 27,676 $ 706 $ 32,082 $ 31,000 $ (1,082 ) $ 36,154 $ 36,451 $ 297 $ 36,557 $ 37,444 $ 887
Non-GAAP operating margin 21.3 % 21.7 % 0.4 % 23.3 % 22.8 % (0.5 )% 25.8 % 26.2 % 0.4 % 25.9 % 26.4 % 0.5 %
 
Adjusted non-GAAP net income $ 18,192 $ 18,654 $ 462 $ 18,773 $ 18,064 $ (709 ) $ 20,195 $ 20,394 $ 199 $ 24,524 $ 27,768 $ 3,244
Adjusted non-GAAP basic earnings per share $ 0.32   $ 0.33   $ 0.01 $ 0.33   $ 0.32   $ (0.01 ) $ 0.36   $ 0.36   $ $ 0.43   $ 0.49   $ 0.06
Adjusted non-GAAP diluted earnings per share $ 0.31   $ 0.32   $ 0.01 $ 0.31     $ 0.30     $ (0.01 ) $ 0.33     $ 0.34     $ 0.01   $ 0.41   $ 0.46   $ 0.05

 

The table above presents the anticipated impact of our January 1, 2018 full retrospective adoption of the new revenue guidance in ASC 606 on the affected line items of our consolidated statements of operations for the three-month periods ended March 31, 2017; June 30, 2017; September 30, 2017; and December 31, 2017. This information is provided as a supplement to our consolidated statements of operations to enable investors to understand the relationship between our historical results as reported under ASC 605 and our forward-looking guidance under ASC 606.

 

 
MEDIDATA SOLUTIONS, INC.
Anticipated Impact of Transition from ASC 605 to ASC 606 (Unaudited)
(Amounts in thousands, except per share data)
       
Three Months Ended March 31, Three Months Ended June 30, Three Months Ended September 30, Three Months Ended December 31,
2016 2016 2016 2016
 

As Reported
Under ASC
605

 

Anticipated
Under ASC
606

  Change

As Reported
Under ASC
605

 

Anticipated
Under ASC
606

  Change

As Reported
Under ASC
605

 

Anticipated
Under ASC
606

  Change

As Reported
Under ASC
605

 

Anticipated
Under ASC
606

  Change
GAAP results:                
Revenues
Subscription $ 89,968 $ 91,223 $ 1,255 $ 96,760 $ 96,333 $ (427 ) $ 101,560 $ 100,462 $ (1,098 ) $ 105,981 $ 100,979 $ (5,002 )
Professional services 14,270   14,270     17,850   17,935   85   18,501   18,501     18,491   18,790   299  
Total revenues $ 104,238 $ 105,493 $ 1,255 $ 114,610 $ 114,268 $ (342 ) $ 120,061 $ 118,963 $ (1,098 ) $ 124,472 $ 119,769 $ (4,703 )
 
Operating costs and expenses
Sales and marketing $ 25,458 $ 24,489 $ (969 ) $ 27,609 $ 26,121 $ (1,488 ) $ 27,789 $ 25,977 $ (1,812 ) $ 28,434 $ 29,338 $ 904
 
Operating income $ 6,638 $ 8,862 $ 2,224 $ 11,146 $ 12,292 $ 1,146 $ 14,927 $ 15,641 $ 714 $ 17,498 $ 11,891 $ (5,607 )
Operating margin 6.4 % 8.4 % 2.0 % 9.7 % 10.8 % 1.1 % 12.4 % 13.1 % 0.7 % 14.1 % 9.9 % (4.2 )%
 
Provision for income taxes $ (1,196 ) $ (141 ) $ 1,055 $ 1,688 $ 2,235 $ 547 $ 4,347 $ 4,866 $ 519 $ 3,492 $ 822 $ (2,670 )
 
Net income $ 4,575 $ 5,744 $ 1,169 $ 6,210 $ 6,809 $ 599 $ 7,358 $ 7,553 $ 195 $ 10,840 $ 7,903 $ (2,937 )
 
Earnings per share
Basic $ 0.08   $ 0.10   $ 0.02 $ 0.11   $ 0.12   $ 0.01 $ 0.13   $ 0.14   $ 0.01 $ 0.19   $ 0.14   $ (0.05 )
Diluted $ 0.08   $ 0.10   $ 0.02 $ 0.11   $ 0.12   $ 0.01 $ 0.13   $ 0.13   $ $ 0.19   $ 0.14   $ (0.05 )
 
Non-GAAP metrics:
Non-GAAP operating income $ 20,105 $ 22,329 $ 2,224 $ 25,359 $ 26,505 $ 1,146 $ 29,303 $ 30,017 $ 714 $ 31,949 $ 26,342 $ (5,607 )
Non-GAAP operating margin 19.3 % 21.2 % 1.9 % 22.1 % 23.2 % 1.1 % 24.4 % 25.2 % 0.8 % 25.7 % 22.0 % (3.7 )%
 
Adjusted non-GAAP net income $ 12,832 $ 14,001 $ 1,169 $ 14,790 $ 15,389 $ 599 $ 15,972 $ 16,167 $ 195 $ 19,210 $ 16,273 $ (2,937 )
Adjusted non-GAAP basic earnings per share $ 0.23   $ 0.25   $ 0.02 $ 0.27   $ 0.28   $ 0.01 $ 0.29   $ 0.29   $ $ 0.34   $ 0.29   $ (0.05 )
Adjusted non-GAAP diluted earnings per share $ 0.23   $ 0.25   $ 0.02 $ 0.26     $ 0.27     $ 0.01 $ 0.28     $ 0.28     $   $ 0.33   $ 0.28   $ (0.05 )

 

The table above presents the anticipated impact of our January 1, 2018 full retrospective adoption of the new revenue guidance in ASC 606 on the affected line items of our consolidated statements of operations for the three-month periods ended March 31, 2016; June 30, 2016; September 30, 2016; and December 31, 2016. This information is provided as a supplement to our consolidated statements of operations to enable investors to understand the relationship between our historical results as reported under ASC 605 and our forward-looking guidance under ASC 606.

 

CONTACT:
Medidata Solutions
Investors:
Betsy Frank, 917-522-4620
bfrank@mdsol.com
or
Media:
Erik Snider, 646-362-2997
esnider@mdsol.com