Download - Jefferies TMT Conference Solutions... · © 2013 Medidata Solutions, Inc. 1 TarekSherif, Chairman and CEO Cory Douglas, CFO May 9, 2013 Jefferies TMT Conference ... Non-Rave revenue

2013 Medidata Solutions, Inc. 1 2013 Medidata Solutions, Inc.

Tarek Sherif, Chairman and CEO

Cory Douglas, CFO

May 9, 2013

Jefferies TMT Conference


Safe Harbor Statement

This presentation contains forward-looking statements within the meaning of the Private SecuritiesLitigation Reform Act of 1995 that involve significant risks and uncertainties about Medidata Solutions, Inc.(Medidata), including but not limited to statements about Medidatas forecast of financial performance,products and services, business model, strategy and growth opportunities, and competitive position. You arecautioned that such statements should not be read as a guarantee of future performance or results, and willnot necessarily be accurate indications of the times at, or by which, such performance or results will havebeen achieved. Such statements are subject to risks and uncertainties that could cause actual performanceor results to differ materially from those expressed in these statements. In particular, the risks anduncertainties include, among other things, risks associated with possible fluctuations in our financial andoperating results; errors, interruptions or delays in our service or our Web hosting; the financial impact of anyfuture acquisitions; our ability to continue to release, and gain customer acceptance of, new and improvedversions of our products; changes in our sales and implementation cycles; competition; our ability to retainand expand our customer base or increase new business from those customers; our ability to hire, retain andmotivate our employees and manage our growth; regulatory developments; litigation; and generaldevelopments in the economy.

For additional disclosure regarding these and other risks faced by Medidata, see disclosures contained inMedidata's public filings with the Securities and Exchange Commission (the SEC) including, the RiskFactors section of Medidatas most recent filings. You should consider these factors in evaluating the forward-looking statements included in this presentation and not place undue reliance on such statements. Theforward-looking statements are made as of the date hereof, and Medidata undertakes no obligation to updatesuch statements as a result of new information.

2013 Medidata Solutions, Inc. 3 2013 Medidata Solutions, Inc. 3

New York City

1999

9 offices across U.S., U.K., Japan and China

Biopharma clinical development spend =

$85+ billion

NASDAQ: MDSO

~ $1.75B market cap 05/06/13

~ $124M balance sheet cash

~1,000

358 customers, includes over 90% of top

biopharma companies

Medidata Today

* Represents mid-point of management guidance Note: Refer to Reconciliation of GAAP to Pro Forma Results for Non-GAAP Operating Income and Non-GAAP Net Income calculations Source: Biopharmaceutical R&D Statistical Sourcebook 2012/2013, Medidata estimates

$105.7

$140.4

$166.4

$184.5

$218.3

$272.0

(3.8)

24.1 39.0

45.7 47.1

62.5

2008 2009 2010 2011 2012 2013*

Key Metrics(millions)

Revenue Non-GAAP Operating Income

Founded:

Headquarters:

Location:

Customers:

AddressableMarket Size:

Public Co:

Leading provider of cloud-based solutions for the life sciences industry

Headcount:

CAGR = 21%

25%


Large and Diverse Customer Base

Biopharmaceutical

Medical Devices CROs Academic Institutions

173

219

275

350

2009 2010 2011 2012

Total Customers


Industry-Leading Retention Rates

Note: Top 50 Biopharma ranked by R&D spend and number of trials; same 2012 list of top 50 used for analysis in each year

80

134156

189

248

341

68

39

63

86

102

17

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

50

100

150

200

250

300

350

2008 2009 2010 2011 2012 1Q 2013

350

275

219

173

148

Customer share of top 50 Biopharma

82%70%66%64%64%

New customersContinuing customers

Revenue retention rate

358

82%


Growth in Multi-Product Deals

0

50

100

150

200

250

300

350

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

4Q 09 2Q 10 4Q 10 2Q 11 4Q 11 2Q 12 4Q 12 1Q 13

Share of customers buying two or more products

Total number of customers

Share of customers buying multiple products and new customer growth

Percent Number of customersNon-Rave Revenue increased 125% from Q1 2012 to Q1 2013


Track Record of Increasing Customer Penetration

$150M

Single study

EDCevaluation

Addldivisions

Enterprise re-up +

addl products

Full enterprise platform

Top 10 Pharma

$25MMid-Market Pharma

Single study

Competitiveaccount

Study by Study addl

volume

Enterprise EDC + 5 addl

products


Solving the Challenges of Clinical Development

Regulatory approval

Evaluate therapy for safety

Evaluate therapy for efficacy

Evaluate therapy on large

populations for efficacy and safety

Evaluate therapy for long-term safety / new

indications

Develop idea for

therapy and test in lab

Medidata Clinical Cloud

Phase IPhase I Phase IIPhase II Phase IIIPhase III Phase IVPhase IV


Life Sciences Business Model Under Pressure

Siloed, manual and inefficient processes

Limited visibility into trial performance

High spend on services and implementation

Increasing complexity and international breadth of trials

Fewer blockbuster therapies

Inability to leverage explosion of analytics and data

Struggle to adapt to emerging world of highly targeted therapies

Lack of control

over costs

Slowing revenue growth


Growth in Trial Complexity and Patients Per Trial

Source: Parexel Biopharmaceutical R&D Statistical Sourcebook, 2012/2013; Tufts CSDD, Tufts University School of Medicine

Enrolled Patients per New Drug Application (NDA), 2007-2011

CAGR = 20%

Change in trial complexity, 2011 vs 2000All TAs, all phasesPercent change in units, %


Increasing Pharma Commitment to Innovation

Improving environment for life sciences companies

Significant growth in new drug applications filed with both FDA and EMA from 2010-2012

39 new drugs and biologic products were approved by the FDA, a 15-year record in 2012

Emerging market growth is expected to be particularly strong with significant increases in sales, R&D spend, and new trials/approvals from domestic biopharmaceutical companies

Biopharma leadership plans for 2013 R&D investment

Source: FDA CDER reports; Battelle / R&D Magazine estimates and forecast


Significant Life Sciences Market Opportunity

Sources: Gartner, Enterprise IT Spending by Vertical Industry Market, Worldwide, 2010-16, Q1 2012, 12-APR-122012 Parexel Biopharmaceutical R&D Statistical Sourcebook 2012/2013; Medidata estimates

Total Life Sciences IT spend (Software,

hardware, IT services) = ~$45B

Global clinical

development

spend (phase I

IV) = ~$85+B

Potential for Medidata to expand software capabilitiesto move into areas currently addressed by IT services and hardware

Strong potential to expand technology as a share of overall R&D spend

2012 Total life sciences spend on technology and clinical development is ~$125B+

Significant opportunity to accelerate growth and

achieve long-term revenue goals

Medidata sits at the intersection of science and technology


Sales Growth and R&D Investment of Medidata Customers Outpacing That of Other Large Pharma

Source: Medidata sales, Parexel Sourcebook, Evaluate Pharma, Company 10Ks, Company annual reports Based on customers within top 25 biopharma ranked by R&D spend

2010-2011 R&D spend growth, average2010-2011 sales growth, average

5%

3%

0% 2% 4% 6%

Medidata

enterprisecustomers

Customers of

Oracle and otherEDC vendors

5%

2%

0% 2% 4% 6%

Medidata

enterprisecustomers

Customers of

Oracle and otherEDC vendors


Financial data

Operational data

Financial data

Clinical data

Medidata is a Big Data Company

Examples Share of protocol that are non-

core to primary / secondary outcomes

Pace of patient recruitment

Cost of clinical procedures

Quality of data for each

investigative site

Medidata aggregates rich data inherently present in transactions, and leverages it to make our products smarter and provide greater insights to customers

2013 Medidata Solutions, Inc. 15

Summary

Large, Underpenetrated and Growing Addressable Market

Market Leadership

Highly Differentiated Vertical SaaS Model

Strong Competitive Position

2013 Medidata Solutions, Inc. 16

Financial Review

Cory Douglas, Chief Financial Officer


Financial Highlights

Recurring revenue model with good visibility

Accelerating and sustainable revenue growth

Significant operating leverage and investing

aggressively to drive growth

Proven track record of profitability

Generating solid cash-flow and strong balance sheet


Recurring revenue model with multi-year contracts

High revenue and customer retention metrics

Non-Rave revenue is scaling rapidly

EBITDAO margins compare favorably with leading vertical SaaS peers

Proven Track Record of Revenue Growth and Profitability

$105.7

$140.4

$166.4

$184.5

$218.3

$272.0

(3.8)

24.1

39.0 45.7 47.1

62.5

2008 2009 2010 2011 2012 2013*

Key Metrics(millions)

Revenue Non-GAAP Operating Income

CAGR = 21%

* Represents mid-point of management guidance Note: Refer to Reconciliation of GAAP to Pro Forma Results for Non-GAAP Operating Income and Non-GAAP Net Income calculations Source: Parexel Biopharmaceutical R&D Statistical Sourcebook 2012/2013, Medidata estimates

25%


Accelerating Revenue Growth 125%

Total Revenue AS Revenue Non-Rave Revenue*

*18% of Total Revenue

18%19%

32%

1Q13

YOY

1Q13

YOY

1Q13

YOY

FY12

YOY

FY12

YOY

Revenue growth guidance: 24-26% in 2013

Aggressive investments fueling growth

99.9% revenue retention in 1Q 2013

26%


30%

70%

Rave Revenue Non-Rave Revenue

Significant Non-Rave Growth Opportunity

Record platform deal highlights non-Rave opportunity across installed base

86%

14%

$100M+ $218.3M

FY 2012 RevenuePlatform Deal Signed 2Q 2012


69% 71% 71%73%

2010 2011 2012 YTD 2013

Gross Margins(As % of total revenue)

Strategic focus on increasing AS and decreasing need for follow-on PS to drive TCO advantage

AS margins highly scalable and poised to expand

PS margins managed internally to mid 30% range

PS focused on world class customer service as needed

Strong Gross Margin Performance

81% 80% 81% 82%

2010 2011 2012 YTD 2013

Recurring Revenue Margins (As % of total AS revenue)


$24 $27

$31

$36

$48

2008 2009 2010 2011 2012

Investing in Sustainable Growth

Research & Development($ Millions)

18.3

16.015.5

16.0

19.4

2008 2009 2010 2011 2012

% Revenue

$19$23

$26$30

$42

2008 2009 2010 2011 2012

22.9

19.6

18.5

19.6

21.9

2008 2009 2010 2011 2012

Sales and Marketing($ Millions)

% Revenue

26.0

22.6

20.720.1

17.2

2008 2009 2010 2011 2012

General & Administrative($ Millions)

% Revenue

$27 $32

$34 $37 $38

2008 2009 2010 2011 2012


$6.8

$5.6$4.8

$6.6

2009 2010 2011 2012

Capital Expenditures($ in millions)

$76.0 $85.5

$107.7

$122.6 $124.0

2009 2010 2011 2012 YTD 2013

Cash and Investments($ in millions)

Cash and investments up 12% year over year and 63% since IPO

Scalable infrastructure and recurring revenue model generating strong cash growth

Leveraging cloud infrastructure

Recurring cap ex needs minimal

Non-recurring investments in NY and UK new office build out in 2013

Strong Balance Sheet


$107

$156

2012 2013

90-95% AS Revenue Visibility(Quarterly)

2013 Remaining Year Backlog*

$135

$186

2012 2013

80-90% AS Revenue Visibility(Annually)

2013 Full Year Backlog

AS Backlog Growth and Visibility

Significant portion of recognized revenue achieved through beginning of period backlog

High level of visibility into future periods

$186 million in full year application services backlog as of January 1, 2013

*Application services backlog for the remainder of the year (remaining backlog) as of March 31, 2013


Long-Term Target Model

Note: Refer to Reconciliation of GAAP to Pro Forma Results for Non-GAAP Operating Income calculations.

1Q 2013Long-Term Target

Revenue Growth (y-o-y) 26% 20%

Gross Margin 73% Mid 70%

R&D as a % of Revenue 19% 16%

S&M as a % of Revenue 23% 18%

G&A as a % of Revenue 20% 12%

Non-GAAP

Operating Income Margin23% Mid 30%


Guidance: Q2 and FY 2013

Note: Refer to Reconciliation of GAAP to Pro Forma Results for Non-GAAP Operating Income and Non-GAAP Net Income calculations.

($ in millions) Q2 2013 FY 2013

Net Revenue $65.5 - $67.0 $270.0 $274.0

Professional Services Revenue Mid - High $40.0

Non-GAAP Operating Income 14.0 15.0 61.0 64.0

Adjusted Non-GAAP Net Income 7.0 8.0 31.5 34.5

GAAP Operating Income 3.5 4.5 23.0 26.0

GAAP Net Income 1.5 2.5 13.5 16.5

Effective Tax Rate 38% - 42%


Summary

Significant revenue growth opportunity

Investing to drive long-term growth

Highly scalable cloud-based business model


Questions


Reconciliation of GAAP to Non-GAAP Results

($ in thousands) 2010 Q1 11 Q2 11 Q3 11 Q4 11 2011 Q1 12 Q2 12 Q3 12 Q4 12 2012 Q1 13

GAAP Operating Income $23,307 $3,474 $10,723 $7,568 $792 $22,557 $6,116 $5,688 $6,839 $9,250 27,893 $7,092

Plus: Depreciation and Amortization

9,179 2,022 1,940 1,940 1,915 7,817 1,994 2,034 1,969 1,937 7,934 1,851

EBITDA 32,486 5,496 12,663 9,508 2,707 30,374 8,110 7,722 8,808 11,187 35,827 8,943

Plus: Stock-based Compensation

6,494 1,740 2,296 2,437 2,347 8,820 2,154 3,158 2,851 2,751 10,914 5,205

Plus: Litigation Settlement(1)

- - - - 6,300 6,300 - - - - - -

Plus: Contingent consideration adjustment (2)

- - - - 223 223 80 80 117 42 319 60

Non-GAAP Operating Income

38,980 7,236 14,959 11,945 11,577 45,717 10,344 10,960 11,776 13,980 47,060 14,208

GAAP Net Income 22,817 3,186 9,997 7,482 18,733 39,398 3,770 3,604 4,053 6,593 18,020 5,700

Plus: Amortization 1,459 361 339 444 445 1,589 447 448 447 450 1,792 394

Plus: Stock-based Compensation

6,494 1,740 2,296 2,437 2,347 8,820 2,154 3,158 2,851 2,751 10,914 5,205

Plus: Litigation settlement(1)

- - - - 6,300 6,300 - - - - - -

Plus: Contingent consideration adjustment(2)

- - - - 223 223 80 80 117 42 319 60

Plus: Reversal of valuation allowance(3)

- - - - (19,037) (19,037) - - - - - -

Non-GAAP Net Income 30,770 5,287 12,632 10,363 9,011 37,293 6,451 7,290 7,468 9,836 31,045 11,359

(1) Amount represents the effect of the settlement of litigation with Datasci(2) Amount represents the effect of changes in fair value of contingent consideration liability.(3) Amount represents the effect of tax benefit recognized as a result of the reversal of the majority of the valuation allowance.

Download - Jefferies TMT Conference Solutions... · © 2013 Medidata Solutions, Inc. 1 TarekSherif, Chairman and CEO Cory Douglas, CFO May 9, 2013 Jefferies TMT Conference ... Non-Rave revenue

Top Related