Medidata first quarter revenues increase 24% to $50.4 million

Medidata Solutions (NASDAQ: MDSO), a leading global provider of cloud-based clinical technology solutions that enhance the efficiency of clinical development, today announced its financial results for the first quarter of 2012, and provided detailed financial guidance for the second quarter and full year 2012.

“Medidata's strong start to the year and record quarterly revenues reinforce our belief that we are well positioned to achieve our long-term top line growth targets”

"We started 2012 with outstanding execution, exceeding our expectations and building on last year's momentum," said Tarek Sherif, Medidata's chief executive officer. "Our growth is being driven by a combination of competitive wins and takeaways, expanding relationships with our CRO partners and growing interest in the Medidata clinical cloud."

First Quarter Highlights

• Revenues increased to $50.4 million, an increase of 24% year over year, exceeding the company's stated outlook range of $48.5 million to $49.5 million, as Medidata's platform continued to make strong market gains.
• Gross margins were 71%, up 3 percentage points compared with the same quarter last year.
• GAAP operating income increased 76% to $6.1 million. Non-GAAP operating income* increased 43% to $10.3 million.
• Medidata added 17 new customers globally, increasing the customer base to 287, up 24% year over year. Growth came from direct sales and through the CRO partner channel.
• Medidata's broad cloud-based platform saw strong demand from both new and existing customers in the first quarter: 24% of new customers purchased more than one product and 32% of customers use more than one product or additional modules.
• Medidata announced a major new version of Medidata Balance™, its randomization and clinical trial supply management solution, significantly broadening its addressable market, while offering advanced technology that enables transformation of a key area of the clinical process.
• FierceBiotech IT named Medidata President Glen de Vries one of 2011's "Top 10 Biotech Techies."

Mr. Sherif continued, "We are helping to shape the future of clinical development, as Medidata's platform increasingly becomes a standard in the life sciences industry. Given the changes happening in our industry, it is clear that we are in the early stages of a multi-year adoption cycle for our comprehensive cloud-based solution. Our ability to innovate and our team's great execution are driving our success and that of our customers, while building value for our shareholders."

Financial Highlights

Net revenues for the first quarter of 2012 were $50.4 million, compared with $40.8 million in the first quarter of 2011. The 24% increase in net revenues was due to a $5.0 million, or 15%, increase in revenues from application services and a $4.6 million, or 63%, increase in revenues from professional services.

Gross margins in the first quarter of 2012 were 71%, an increase of almost 3 percentage points over gross margins of 68% a year ago.

Non-GAAP operating income for the first quarter of 2012 increased 43% to $10.3 million, compared with $7.2 million a year ago. GAAP operating income for the quarter increased 76% to $6.1 million, compared with $3.5 million a year ago.

Non-GAAP net income for the first quarter of 2012 increased 22% to $6.5 million, or $0.26 per diluted share, compared with $5.3 million, or $0.21 per diluted share, in the first quarter of 2011. Adjusted non-GAAP net income for the first quarter of 2012 was $5.4 million, or $0.22 per diluted share, compared with $5.3 million, or $0.21 per diluted share, in the first quarter of 2011. GAAP net income for the first quarter of 2012 increased to $3.8 million, or $0.15 per diluted share, compared with $3.2 million, or $0.13 per diluted share, in the first quarter of 2011.

Total cash, cash equivalents and marketable securities were $111.2 million at the end of the first quarter, an increase of $3.5 million from the fourth quarter. The company generated cash flow from operations of $2.5 million.

Financial Outlook

For the full year 2012, the company now expects revenues to be between $213 and $217 million. Professional services revenues are expected to be in the mid $40 million range. Non-GAAP operating income is now expected to be between $51.5 and $54.5 million. Based on current estimates, this would equate to GAAP operating income between $32.0 and $35.0 million. Non-GAAP net income is now expected to be between $32.5 and $35.5 million. Based on current estimates, this would equate to GAAP net income between $19.5 and $22.5 million. The company now expects adjusted non-GAAP net income, which includes tax impact, primarily on stock-based compensation and amortization at a 40% effective tax rate, to be between $27.0 and $30.0 million.

Remaining application services backlog as of March 31, 2012 increased 34% to $107 million over the comparable period a year ago. This compares with a 2% decline in remaining application services backlog as of March 31, 2011 over the comparable prior period. The difference between the application services backlog and the balance of revenue guidance for the remainder of the year includes professional services revenue guidance and expected additional business from new and existing customers.

For the second quarter of 2012, the company expects revenues to be between $51.5 and $52.5 million. The company expects non-GAAP operating income to be between $10.0 and $11.0 million. Based on current estimates this would equate to GAAP operating income of $5.0 and $6.0 million. Non-GAAP net income is expected to be between $6.0 and $7.0 million. Based on current estimates, this would equate to GAAP net income of between $3.0 and $4.0 million. The company expects adjusted non-GAAP net income, which includes tax impact, primarily on stock-based compensation and amortization at a 40% effective tax rate, to be between $5.0 and $6.0 million.

While changes in the stock price could change the fully diluted share count, the company is assuming 25.3 and 25.4 million fully diluted shares in the second quarter and full year, respectively.

"Medidata's strong start to the year and record quarterly revenues reinforce our belief that we are well positioned to achieve our long-term top line growth targets," said Cory Douglas, chief financial officer. "Our business momentum continues to build based on our record remaining application services backlog, growing market leadership and our team's great progress delivering the Medidata clinical cloud."