NEW YORK – Feb. 12, 2019 – Medidata (NASDAQ: MDSO) today announced its financial results for the fourth quarter of 2018.
“In 2018, we expanded our market leadership in life sciences, and proved that our unique data and AI capabilities can reinvent the way treatments are developed and commercialized,” said Tarek Sherif, chairman and chief executive officer, Medidata. “Our strong fourth quarter results capped a year of solid execution. Greater platform adoption, high customer satisfaction and our unique company culture, coupled with our performance, give us great momentum heading into 2019.”
Fourth Quarter 2018 Results
- Total revenue was $167.2 million, an increase of 18% compared with $141.6 million in the fourth quarter of 2017
- Subscription revenue was $141.3 million, an increase of 18% compared with the fourth quarter of 2017. Professional services revenue was $25.9 million, an increase of 18% compared with the fourth quarter of 2017
- GAAP operating income was $11.0 million and non-GAAP operating income1 was $36.6 million, representing a GAAP and non-GAAP operating margin of 6.6% and 21.9%, respectively
- GAAP net income was $14.3 million, or $0.23 per diluted share, compared with $17.0 million, or $0.28 per diluted share, in the fourth quarter of 2017. Non-GAAP net income1 was $27.7 million, or $0.45 per diluted share, compared with $27.8 million, or $0.46 per diluted share, in the fourth quarter of 2017. See the non-GAAP reconciliation included in this release for full details of the non-GAAP adjustments
Full-Year 2018 Results
- Total revenue was $635.7 million, an increase of 17% compared with $544.2 million in 2017
- Subscription revenue was $535.7 million, an increase of 17% from the prior year. Professional services revenue was $100.0 million, an increase of 16% compared with 2017
- GAAP operating income was $3 million and non-GAAP operating income1 was $148.8 million, representing a GAAP and non-GAAP operating margin of 8.1% and 23.4%, respectively
- GAAP net income was $51.9 million, or $0.85 per diluted share, compared with $47.6 million, or $0.80 per diluted share, in 2017. Non-GAAP net income1 was $104.3 million, or $1.71 per diluted share, compared with $84.9 million, or $1.42 per diluted share, in 2017. See the non-GAAP reconciliation included in this release for full details of the non-GAAP adjustments
- Total cash and marketable securities were $240.5 million at the end of 2018, compared with $663.3 million on December 31, 2017, driven by the acquisition of SHYFT and cash settlement of convertible notes
Additional Highlights:
- Adjusted 2019 subscription backlog2 as of December 31, 2018 was $560 million, an increase of 17% compared with $480 million a year ago. Adjusted subscription backlog, together with professional services revenue guidance, provides 91% coverage of total revenue based on the midpoint of full-year 2019 total revenue guidance range
- Entered a strategic alliance with Cognizant in which Cognizant will develop and deliver a comprehensive set of managed services and solutions utilizing Medidata’s software application offerings. The agreement exemplifies the power of Medidata’s technology combined with the expertise of the most advanced partner ecosystem in life science
- Presented with representatives of the FDA and Johns Hopkins at the Friends of Cancer Research annual meeting, demonstrating how Medidata’s synthetic control arm can use historical data to replicate outcomes of a randomized control arm
- As presented at the annual American Society of Hematology meeting, Medidata’s Rave Omics - a machine learning capability - discovered previously unknown patient subgroups that had a three times higher response rate to a particular therapy
- Revenue retention rate4 was nearly 100% for the full year
“We closed 2018 on a strong note, highlighted by Q4 subscription revenue growth of 18% and strong bookings as our total backlog grew to nearly $1.2 billion,” said Rouven Bergmann, chief financial officer, Medidata. “Turning our focus to the future, it is clear that we are uniquely positioned to capitalize on the opportunity ahead of us, and we remain focused on building momentum across our portfolio.”
Financial Outlook
For 2019, the Company now expects:
- Total revenue between $734 and $746 million, representing 16% growth at the midpoint
- Subscription revenue between $619 and $631 million, representing 17% growth at the midpoint
- Professional services revenue of approximately $115 million
- GAAP operating income between $49 and $57 million. Non-GAAP operating income5, which excludes the impact of depreciation, amortization of intangible assets, and stock-based compensation expense, between $175 and $183 million
- GAAP net income between $39 and $46 million. Non-GAAP net income5, which excludes the impact of stock-based compensation, amortization, non-cash interest expense, cash compensation from acquisition-related agreements, and any contingent consideration fair value adjustments, tax-effected at a 25% rate, between $107 and $114 million
- While changes in the stock price could change the fully diluted share count, Medidata is assuming 62.5 million fully diluted shares
The operating and net income measures above reflect Medidata’s non-GAAP financial guidance and the most directly comparable GAAP equivalents to its guidance.
Conference call details:
Time: Today, February 12, 8 a.m. ET
Conference ID: 9289627
Live dial-in: 1-877-303-2528, domestic; 1-847-829-0023, international
Webcast: investor.mdsol.com
Replay: 1-800-585-8367, domestic
1-404-537-3406, international
About Medidata
Medidata is leading the digital transformation of life sciences, with the world's most used platform for clinical development, commercial, and real-world data. Powered by artificial intelligence and delivered by the #1 ranked industry experts, the Intelligent Platform for Life Sciences helps pharmaceutical, biotech, medical device companies, and academic researchers accelerate value, minimize risk and optimize outcomes. Medidata serves more than 1,000 customers and partners worldwide and empowers more than 100,000 certified users everyday to create hope for millions of patients. Discover the future of life sciences: www.medidata.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. Among other things, the risks and uncertainties include those associated with possible fluctuations in our financial and operating results; integration activities, performance and financial impact of acquired companies; our ability to retain and expand our customer base or increase new business from those customers; and our ability to continue to release, and gain customer acceptance of, new and improved versions of our products. 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, 2017. 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, new developments or otherwise, except as required by law.
(1) Non-GAAP Financial Information
Medidata provides non-GAAP operating income, net income, and net income per share data as a supplement to its operating results. These measures are not in accordance with, or an alternative to, generally accepted accounting principles (GAAP), and may be different from non-GAAP measures used by other companies. 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, 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 inherent limitations associated with the use of non-GAAP financial measures. Investors are encouraged to review the attached reconciliations of these non-GAAP financial measures to the nearest comparable GAAP measures.
(2) Adjusted subscription backlog equals subscription backlog plus outstanding intra-year renewals valued at an amount equal to the contracts to be renewed.
(3) Total multi-year subscription backlog is unadjusted for renewals.
(4) Revenue retention rate is calculated as the percentage of prior year revenue attributable to customers retained in the current year.
(5) A tabular reconciliation of forward-looking non-GAAP financial measures to the most comparable forward-looking GAAP measures is attached to this press release.
Click here to download the press release, financial tables and non-GAAP reconciliation.
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