Medidata MDSO, the leading global provider of cloud-based solutions for clinical research in life sciences, today announced its financial results for the second quarter of 2015 and reiterated its revenue and profitability guidance.
"Our strong results this quarter and year to date highlight our ability to capitalize on the growing opportunities in our space and reflect great execution by the Medidata team," said Tarek Sherif, Medidata's chairman and chief executive officer. "Record sales, growing customer adoption and profitability are being driven by innovative new and established life sciences companies turning to our cloud-based platform and data analytics to optimize their clinical development programs. Medidata is helping its clients to navigate the shift to the cloud, allowing the drug development industry to capitalize on a period of unprecedented innovation in science, connectivity and deep data, and helping speed life-enhancing drugs to market for the patients who need them."
Second Quarter 2015 Results
- Total revenue for the second quarter of 2015 was $98.1 million, an increase of $14.9 million, or 18%, compared with $83.2 million in the second quarter of 2014. Subscription revenue was $83.9 million, an increase of $15.0 million, or 22%, compared with the same period last year. This represents sequential growth in recurring subscription revenue of 7%.
- GAAP operating income for the quarter was $5.0 million, compared with $7.1 million in the second quarter of 2014. Non-GAAP operating income1 for the second quarter of 2015 increased to $21.8 million, up 18% compared with $18.4 million a year ago.
- GAAP net income for the second quarter of 2015 was $1.5 million, or $0.03 per diluted share, compared with a net income of $2.3 million, or $0.04 per diluted share, in the second quarter of 2014. Adjusted non-GAAP net income1 for the second quarter of 2015 was $12.1 million, or $0.22 per diluted share, compared with $9.4 million, or $0.17 per diluted share, in the second quarter of 2014. See the non-GAAP reconciliation included in this release for full details of the non-GAAP adjustments.
- Total cash, cash equivalents and marketable securities were $472.4 million at the end of the second quarter of 2015, an increase of $53.9 million, or 13%, compared with $418.5 million at the end of the second quarter of 2014.
- Cash flow from operations was $11.9 million in the second quarter of 2015, compared with $24.1 million a year ago. For the six-month period ending June 30, cash flow from operations was $28.7 million in 2015, compared with $17.8 million in 2014.
Additional Highlights
- Medidata added a record 52 new customers during the second quarter of 2015, increasing Medidata's total customer base to 539, up 23% year over year. This includes the impact of 19 customers being consolidated with other existing Medidata customers.
- 61% of customers had committed to multiple products at the end of the second quarter of 2015, up from 54% at the end of the second quarter of 2014, driven by strong adoption of Medidata Rave®, Medidata Coder®, Medidata Balance® and Medidata's Risk-Based Monitoring (RBM) Solutions.
- Billings were a second quarter record $106 million, up 36% year over year.
- Adjusted subscription backlog2 for the remainder of the year as of June 30, 2015 increased to $161 million, up $26 million, or 19%, year over year.
- Medidata's overall revenue retention rate was nearly 100%. Over the past several years, the retention rate for its large enterprise customers is 100%.
"Our strong business performance in the first half of the year positions us well to achieve our full-year objectives," said Rouven Bergmann, Medidata's chief financial officer. "We expect increased profitability, operating margin expansion and strong cash flows in 2015. Going forward, we will continue to invest strategically to help our growing customer base move their mission-critical development efforts into the cloud while simultaneously driving Medidata's long-term sustainable growth."
Financial Outlook
For the full-year 2015, the Company expects the following:
- Revenues between $392.0 and $412.0 million, representing between 17% and 23% year-over-year growth.
- Professional services revenues in the range of $58.0 and $60.0 million.
- Our total revenue guidance recognizes stronger first half-year subscription revenue and longer duration delivery cycles of high impact strategic customer projects within professional services.
- Non-GAAP operating income between $90.0 and $96.0 million. Based on current estimates, this would equate to GAAP operating income between $28.0 and $31.0 million.*
- Adjusted non-GAAP net income, which includes the tax affected adjustments primarily from stock-based compensation, non-cash interest expense associated with convertible senior notes and amortization at a 40% effective tax rate, between $47.0 and $50.5 million. Based on current estimates, this would equate to GAAP net income between $9.0 and $11.0 million.*
- While changes in the stock price could change the fully diluted share count, the company is assuming 56.3 million fully-diluted shares.
*The current estimated GAAP equivalents to our non-GAAP guidance reflect the impact of approximately $5.0 million on a pre-tax basis of additional stock-based compensation expense relative to our prior outlook.
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 4, 2015, by dialing 800-585-8367 domestically or 404-537-3406 internationally, with the passcode 80354484. 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 the leading global provider of cloud-based solutions for clinical research in life sciences, transforming clinical development through its advanced applications and intelligent data analytics. The Medidata Clinical Cloud® brings new levels of productivity and quality to the clinical testing of promising medical treatments, from study design and planning through execution, management and reporting. We are committed to advancing the competitive and scientific goals of global customers, which include over 90% of the top 25 global pharmaceutical companies; innovative biotech, diagnostic and device firms; leading academic medical centers; and contract research organizations.
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; 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, 2014. 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 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, and stock-based compensation expense. Adjusted non-GAAP net income excludes the impact of tax-affected amortization of intangible assets associated with acquisitions, stock-based compensation expense, and non-cash interest expense on convertible senior notes. 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.
MEDIDATA SOLUTIONS, INC. | ||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) | ||||||||||||||||||
(Amounts in thousands, except per share data) | ||||||||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||||
Revenues | ||||||||||||||||||
Subscription |
$ | 83,929 | $ | 68,947 | $ | 162,678 | $ | 132,758 | ||||||||||
Professional services | 14,155 | 14,276 | 27,846 | 27,105 | ||||||||||||||
Total revenues | 98,084 | 83,223 | 190,524 | 159,863 | ||||||||||||||
Cost of revenues (1)(2) | ||||||||||||||||||
Subscription | 12,354 | 11,221 | 23,827 | 22,307 | ||||||||||||||
Professional services | 10,557 | 9,753 | 21,260 | 19,466 | ||||||||||||||
Total cost of revenues | 22,911 | 20,974 | 45,087 | 41,773 | ||||||||||||||
Gross profit | 75,173 | 62,249 | 145,437 | 118,090 | ||||||||||||||
Operating costs and expenses | ||||||||||||||||||
Research and development (1) | 22,519 | 17,311 | 44,430 | 35,100 | ||||||||||||||
Sales and marketing (1)(2) | 25,724 | 20,425 | 50,042 | 41,157 | ||||||||||||||
General and administrative (1) | 21,943 | 17,373 | 42,512 | 34,419 | ||||||||||||||
Total operating costs and expenses | 70,186 | 55,109 | 136,984 | 110,676 | ||||||||||||||
Operating income | 4,987 | 7,140 | 8,453 | 7,414 | ||||||||||||||
Interest and other income (expense) | ||||||||||||||||||
Interest expense | (3,997 | ) | (3,827 | ) | (7,955 | ) | (7,608 | ) | ||||||||||
Interest income | 612 | 420 | 1,146 | 815 | ||||||||||||||
Other (expense) income, net | (34 | ) | (28 | ) | (68 | ) | 6 | |||||||||||
Total interest and other expense, net | (3,419 | ) | (3,435 | ) | (6,877 | ) | (6,787 | ) | ||||||||||
Income before income taxes | 1,568 | 3,705 | 1,576 | 627 | ||||||||||||||
Provision for income taxes | 55 | 1,409 | (94 | ) | 146 | |||||||||||||
Net income | $ | 1,513 | $ | 2,296 | $ | 1,670 | $ | 481 | ||||||||||
Earnings per share | ||||||||||||||||||
Basic | $ | 0.03 | $ | 0.04 | $ | 0.03 | $ | 0.01 | ||||||||||
Diluted | $ | 0.03 | $ | 0.04 | $ | 0.03 | $ | 0.01 | ||||||||||
Weighted average common shares outstanding | ||||||||||||||||||
Basic | 53,647 | 52,457 | 53,453 | 52,284 | ||||||||||||||
Diluted | 56,191 | 54,828 | 56,050 | 54,998 | ||||||||||||||
(1) Stock-based compensation expense included in cost of revenues and operating costs and expenses is as follows: | ||||||||||||||||||
Cost of revenues | $ | 1,311 | $ | 1,027 | $ | 2,559 | $ | 2,099 | ||||||||||
Research and development | 2,013 | 817 | 3,799 | 1,729 | ||||||||||||||
Sales and marketing | 2,460 | 1,060 | 4,827 | 3,411 | ||||||||||||||
General and administrative | 8,352 | 5,726 | 14,621 | 11,090 | ||||||||||||||
Total stock-based compensation | $ | 14,136 | $ | 8,630 | $ | 25,806 | $ | 18,329 | ||||||||||
(2) Amortization of intangible assets included in costs of revenues and operating costs and expenses is as follows: | ||||||||||||||||||
Cost of revenues | $ | 180 | $ | 111 | $ | 359 | $ | 219 | ||||||||||
Sales and marketing | 30 | 30 | 59 | 60 | ||||||||||||||
Total amortization of intangible assets | $ | 210 | $ | 141 | $ | 418 | $ | 279 | ||||||||||
MEDIDATA SOLUTIONS, INC. | ||||||||||||||||||
Reconciliation of GAAP Operating Income and GAAP Net Income to |
||||||||||||||||||
(Amounts in thousands, except per share data) | ||||||||||||||||||
Three Months Ended |
Six Months Ended |
|||||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||||
Operating income: | ||||||||||||||||||
GAAP operating income | $ | 4,987 | $ | 7,140 | $ | 8,453 | $ | 7,414 | ||||||||||
GAAP operating margins | 5.1 | % | 8.6 | % | 4.4 | % | 4.6 | % | ||||||||||
Stock-based compensation | 14,136 | 8,630 | 25,806 | 18,329 | ||||||||||||||
Depreciation and amortization | 2,637 | 2,609 | 5,190 | 5,144 | ||||||||||||||
Non-GAAP operating income | $ | 21,760 | $ | 18,379 | $ | 39,449 | $ | 30,887 | ||||||||||
Non-GAAP operating margins | 22.2 | % | 22.1 | % | 20.7 | % | 19.3 | % | ||||||||||
Net income: | ||||||||||||||||||
GAAP net income | $ | 1,513 | $ | 2,296 | $ | 1,670 | $ | 481 | ||||||||||
Stock-based compensation | 14,136 | 8,630 | 25,806 | 18,329 | ||||||||||||||
Amortization | 210 | 141 | 418 | 279 | ||||||||||||||
Non-cash interest expense on convertible senior notes (1) | 3,273 | 3,102 | 6,501 | 6,162 | ||||||||||||||
Tax impact on add-back items (2) | (7,048 | ) | (4,749 | ) | (13,090 | ) | (9,908 | ) | ||||||||||
Adjusted non-GAAP net income | $ | 12,084 | $ | 9,420 | $ | 21,305 | $ | 15,343 | ||||||||||
GAAP basic earnings per share | $ | 0.03 | $ | 0.04 | $ | 0.03 | $ | 0.01 | ||||||||||
GAAP diluted earnings per share | $ | 0.03 | $ | 0.04 | $ | 0.03 | $ | 0.01 | ||||||||||
Adjusted Non-GAAP basic earnings per share | $ | 0.23 | $ | 0.18 | $ | 0.40 | $ | 0.29 | ||||||||||
Adjusted Non-GAAP diluted earnings per share | $ | 0.22 | $ | 0.17 | $ | 0.38 | $ | 0.28 |
(1) 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.
(2) 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 six months ended June 30, 2015 and 2014. Non-GAAP operating income excludes the impact of depreciation, 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, stock-based compensation expense, and non-cash interest expense on convertible senior notes.
MEDIDATA SOLUTIONS, INC. | |||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) | |||||||||
(Amounts in thousands, except per share data) | |||||||||
June 30, 2015 | December 31, 2014 | ||||||||
ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 43,366 | $ | 39,517 | |||||
Marketable securities | 222,625 | 233,284 | |||||||
Accounts receivable, net of allowance for doubtful accounts of $1,945 and $1,517, respectively | 93,507 | 68,475 | |||||||
Prepaid commission expense | 2,232 | 2,819 | |||||||
Prepaid expenses and other current assets | 15,701 | 13,661 | |||||||
Deferred income taxes | 4,158 | 96 | |||||||
Total current assets | 381,589 | 357,852 | |||||||
Restricted cash | 5,582 | 5,118 | |||||||
Furniture, fixtures and equipment, net | 42,491 | 38,579 | |||||||
Marketable securities, long-term | 206,426 | 183,842 | |||||||
Goodwill | 19,083 | 19,025 | |||||||
Intangible assets, net | 1,394 | 1,816 | |||||||
Deferred income taxes, long-term | 8,004 | 8,066 | |||||||
Other assets | 7,756 | 7,919 | |||||||
Total assets | $ | 672,325 | $ | 622,217 | |||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||
Current liabilities: | |||||||||
Accounts payable | $ | 2,766 | $ | 3,738 | |||||
Accrued payroll and other compensation | 15,430 | 15,574 | |||||||
Accrued expenses and other | 16,086 | 12,638 | |||||||
Deferred revenue | 80,583 | 62,890 | |||||||
Total current liabilities | 114,865 | 94,840 | |||||||
Noncurrent liabilities: | |||||||||
1.00% convertible senior notes, net | 246,748 | 240,886 | |||||||
Deferred revenue, less current portion | 933 | 1,374 | |||||||
Deferred tax liabilities | 232 | 238 | |||||||
Other long-term liabilities | 21,069 | 20,180 | |||||||
Total noncurrent liabilities | 268,982 | 262,678 | |||||||
Total liabilities | 383,847 | 357,518 | |||||||
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; 57,567 and 56,301 shares |
576 | 563 | |||||||
Additional paid-in capital | 339,408 | 301,465 | |||||||
Treasury stock, 2,282 and 1,888 shares, respectively | (61,204 | ) | (45,049 | ) | |||||
Accumulated other comprehensive loss | (1,604 | ) | (1,912 | ) | |||||
Retained earnings | 11,302 | 9,632 | |||||||
Total stockholders' equity | 288,478 | 264,699 | |||||||
Total liabilities and stockholders' equity | $ | 672,325 | $ | 622,217 | |||||
MEDIDATA SOLUTIONS, INC. | ||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | ||||||||||
(Amounts in thousands) | ||||||||||
Six Months Ended |
||||||||||
2015 | 2014 | |||||||||
Cash flows from operating activities | ||||||||||
Net income | $ | 1,670 | $ | 481 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
Depreciation and amortization | 5,190 | 5,144 | ||||||||
Stock-based compensation | 25,806 | 18,329 | ||||||||
Amortization of discounts or premiums on marketable securities | 2,502 | 2,714 | ||||||||
Deferred income taxes | (5,846 | ) | (3,146 | ) | ||||||
Amortization of debt issuance costs | 639 | 639 | ||||||||
Amortization of debt discount | 5,862 | 5,523 | ||||||||
Excess tax benefit associated with equity awards | (3,712 | ) | (2,648 | ) | ||||||
Provision for doubtful accounts | 550 | 266 | ||||||||
Changes in operating assets and liabilities: | ||||||||||
Accounts receivable | (33,894 | ) | (18,328 | ) | ||||||
Prepaid commission expense | (123 | ) | 657 | |||||||
Prepaid expenses and other current assets | (3,303 | ) | 1,018 | |||||||
Other assets | 1,497 | 87 | ||||||||
Accounts payable | (702 | ) | 2,476 | |||||||
Accrued payroll and other compensation | 196 | (7,134 | ) | |||||||
Accrued expenses and other | 4,439 | 5,437 | ||||||||
Deferred revenue | 27,085 | 3,588 | ||||||||
Other long-term liabilities | 889 | 2,711 | ||||||||
Net cash provided by operating activities | 28,745 | 17,814 | ||||||||
Cash flows from investing activities | ||||||||||
Purchase of furniture, fixtures and equipment | (5,925 | ) | (11,602 | ) | ||||||
Purchase of available-for-sale securities | (140,856 | ) | (113,019 | ) | ||||||
Proceeds from sale of available-for-sale securities | 126,632 | 141,214 | ||||||||
Net (increase) decrease in restricted cash | (464 | ) | 226 | |||||||
Net cash (used in) provided by investing activities | (20,613 | ) | 16,819 | |||||||
Cash flows from financing activities | ||||||||||
Proceeds from exercise of stock options | 5,199 | 1,885 | ||||||||
Proceeds from employee stock purchase plan | 2,960 | 2,513 | ||||||||
Excess tax benefit associated with equity awards | 3,712 | 2,648 | ||||||||
Payment of acquisition-related earn-out | — | (704 | ) | |||||||
Repayment of obligations under capital leases | (17 | ) | (39 | ) | ||||||
Acquisition of treasury stock | (16,154 | ) | (28,058 | ) | ||||||
Repayment of notes payable | — | (85 | ) | |||||||
Net cash used in financing activities | (4,300 | ) | (21,840 | ) | ||||||
Effect of exchange rate changes on cash and cash equivalents | 17 | 71 | ||||||||
Net increase in cash and cash equivalents | 3,849 | 12,864 | ||||||||
Cash and cash equivalents - Beginning of period | 39,517 | 22,328 | ||||||||
Cash and cash equivalents - End of period | $ | 43,366 | $ | 35,192 | ||||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20150721005536/en/
Medidata Solutions
Investors:
Hulus Alpay, 212-419-1025
halpay@mdsol.com
or
Media:
Nicole
Pariser, 212-659-1069
npariser@mdsol.com
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