mdso 2016 financial analyst day jl...
TRANSCRIPT
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Senior Director, Investor Relations
Anthony D’Amico
Safe Harbor StatementThis presentation contains “forward-looking statements” within the meaning of the Private Securities Litigation ReformAct of 1995 that involve significant risks and uncertainties about Medidata Solutions, Inc. (“Medidata”), including but notlimited to statements about Medidata’s forecast of financial performance, products and services, business model,strategy and growth opportunities, and competitive position. You are cautioned that such statements should not be readas a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or bywhich, such performance or results will have been achieved. Such statements are subject to risks and uncertainties thatcould 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 andoperating results; errors, interruptions or delays in our service or our Web hosting; the financial impact of any futureacquisitions; our ability to continue to release, and gain customer acceptance of, new and improved versions of ourproducts; changes in our sales and implementation cycles; competition; our ability to retain and expand our customerbase or increase new business from those customers; our ability to hire, retain and motivate our employees andmanage 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'spublic filings with the Securities and Exchange Commission (the “SEC”) including, the “Risk Factors” section ofMedidata’s most recent filings. You should consider these factors in evaluating the forward-looking statements includedin this presentation and not place undue reliance on such statements. The forward-looking statements are made as ofthe date hereof, and Medidata undertakes no obligation to update such statements as a result of new information.
Co-Founder, Chairman and CEOTarek Sherif
Co-Founder, PresidentGlen de Vries
Managing DirectorIan ShaferAccenture
Fireside Chat
Chief Operating OfficerMike Capone
Medidata
Break andProduct Demos
Chief Financial OfficerRouven Bergmann
Chief Operating OfficerMike Capone
Management Q&A
Co-Founder, Chairman and CEOTarek Sherif
AgendaInvestor RelationsAnthony D’Amico
Co-founder, Chairman & CEOTarek Sherif
Chief Financial OfficerRouven Bergmann
Break and Product Demos~10:05am – 10:35am
Chief Operating OfficerMike Capone
Management Q&A
Mike Capone & Ian Shafer
Co-founder, Chairman & CEOTarek Sherif
Co-founder & PresidentGlen de Vries
Fireside Chat – Medidata & Accenture
Tarek | Glen | Mike | Rouven
Lunch and Product Demos~12:25pm – 2:00pm
On Screen Video
Co-Founder, Chairman and CEO
Tarek Sherif
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Our Business Today
We Have Delivered Strong Growth
106 140
166 184 218
277
335
393
462
(4)24 39 46 47
67 74 89 105.5
2008 2009 2010 2011 2012 2013 2014 2015 2016E 1
Revenue (USD million)
1. Represents mid-point of 2016 guidance
EBITDAO (USD million)
Strong and consistent EBITDAO growth… …created significant shareholder value
MDSO NASDAQ
553%
191%
MDSO vs. NASDAQ, cumulative
Driven by Strong Fundamentals
350 397 486
611
789
2012 2013 2014 2015 2016*
Growth driven by new customers… ...as well as increased share of wallet
2012 2013 2014 2015 2016*
1.7x1.9x
2.3x
1.4x
1.0x
Revenue growth vs. 2012Top 30 Customers, 2016
Customers at year-end
* Through Q3 2016
Talent
• 85% employee engagement• Fortune 100 Best Places
to work for millennials
We Continue Investing in Core Capabilities
R&D Investment
• $500 million cumulative R&D investment since 2008
• Exceeds any player in the industry
GTM
• New platform branding –Architecture of Hope
• Doubled Customer event attendance – Symposium
§ Capitalized development cost per drug is $2.6B – growing at 8.5% over inflation
§ Trial complexity increasing – CRF pages per protocol up to 169 from 55 (207%) in a decade
Trials costly & inefficient
§ Over 200 clinical technology vendors – leading to siloed solutions landscape§ Single clinical trial can run on 7-25 different systems
Fragmented solutions landscape
Current State of Clinical Development
§ Healthcare data volume growing at 48% annually – reaching 2,314 exabytesby 2020
§ Insights from data not keeping pace due to poor data quality, lack of standards and insufficient integration
More data but lack of
insight
Medidata’s Unique Solution
IntegratedPlatform
Data andAnalytics
Industry Expertise
Ecosystem
Integrated Platform
Integrated Platform
• Single clinical trial can run on 7-25 different systems• 2/3 of customers believe technology integration is significant issue• Majority willing to trade functionality for integration
• Unified architecture providing solutions across the entire clinical research process
• Comprehensive reporting & analytics with one, single source of truth• Industry-leading depth and breadth
Why it Matters
Medidata’s Unique Solution
Leading Industry Expertise
• Highly regulated industry – >100 regulators worldwide• Increasing scientific complexity – more end-points (+85%) and
procedures (+70%) in a decade• Patient recruitment incredibly complex – 50% of sites under-enroll
• Supported 400+ regulatory inspections/client audits over last 6 years
• >16K person years of clinical development industry experience on staff
• >12K clinical trials run on Medidata platform to-date
Why it Matters
Medidata’s Unique Solution
Industry Expertise
Largest Life Sciences Eco-System
92 CRO Partners, including 19 of the top 20
7 Systems Integrator Partnerships –rapidly deepening
25 Strategic & Technology Partnerships – 8 added 2016 to-date
Unmatched Data & Analytics
• Healthcare data volume growing at 48% annually – reaching 2,314 exabytes by 2020
• Cost of bad data in healthcare is estimated at >$300 Billion annually in the US alone
• Huge opportunity for operational efficiency & scientific insights
• Unmatched scale – largest set of clinical trial data worldwide• Highest Quality – machine algorithms to help standardize• Innovation – new ways to ingest sensor and genomic data• Expertise – predictive modelers, biostatisticians and data scientists
Data & Analytics
Why it Matters
Medidata’s Unique Solution
Massive Industry Transformation§ Patient-centric data: in 2020, 478 million wearable electronic devices will be sold§ By 2019, 30% of hip & knee replacements monitored with wearables and IoT§ Precision medicine driven by technology & scientific advances, e.g. cost of
genomic sequencing down 96% in 5 years, 3D printing becoming ubiquitous
Transformation of medicine
§ Move from volume (treatment)-driven to value (outcomes)-driven care § Increased performance-based risk sharing today, e.g. Repatha and Entresto§ Medicare plans to make half of its payments based on performance agreements
by 2018
Evolving commercial
models
§ FDA developing regulatory platform to encourage innovation as part of US Precision Medicine initiative
§ ICH E6 standard will fundamentally change the way that trials are monitored
Regulatory changes
Outcomes-FocusedA N A L Y T I C S
MDSO Opportunity to Drive Healthcare Transformation
Digitally ConnectedP A T I E N T S
New Models in Life Sciences for § Discovery, § Development § and Commercialization
§ Personalized Medicine § Value Based Care
Core ResearchTRANSACTIONS
§ Clinical§ Operational§ Financial
MED
ICAL
PR
ECIS
ION
1:1
1:ALL
TAM
Medidata, Co-Founder and President
Glen de Vries
© 2016 Medidata Solutions, Inc. – Proprietary and Confidential
PLANSTUDY
OPTIMIZEOUTCOMES
SUPPORTSITES
CONDUCT STUDY
ENGAGEPATIENTS
© 2016 Medidata Solutions, Inc. – Proprietary and Confidential
CONDUCTSTUDY Rave EDC
Rave Web Services
Imaging
Data Management
Randomization
Medical Coding
Safety Data Transmission
© 2016 Medidata Solutions, Inc. – Proprietary and Confidential
Data and Medical Precision
Time
Info
rmat
ion
Pot
entia
l
Genotype
Total Phenotype
In-Clinic Physiology
Lab (Sample)
Data
Behavior
Imaging
Real WorldPhysiology
Cognition
Gene Sequence,
“’omics”
Medidata Clinical Trial Genomics
Introducing
On Screen Video
© 2016 Medidata Solutions, Inc. – Proprietary and Confidential
ENGAGEPATIENTS
SensorLink
AppConnect
© 2016 Medidata Solutions, Inc. – Proprietary and Confidential
© 2016 Medidata Solutions, Inc. – Proprietary and Confidential
SUPPORTSITES
Site Monitoring
Risk-Based Monitoring
Centralized Analytics
Payment Calculation
Financial Transparency
Disbursements
© 2016 Medidata Solutions, Inc. – Proprietary and Confidential
Site EHR/EMR
Studies Per SiteMedidata Platform Usage, January – August 2016
Number of Studies
% o
f Site
s
© 2016 Medidata Solutions, Inc. – Proprietary and Confidential
Announcing Medidata eConnect
SUPPORTSITES
eConnect
© 2016 Medidata Solutions, Inc. – Proprietary and Confidential
CONDUCTSTUDY
Digital Patient
Data
EDC
EMReSource
EHR
ImagesGenomics
Labs
© 2016 Medidata Solutions, Inc. – Proprietary and Confidential
OPTIMIZEOUTCOMES
© 2016 Medidata Solutions, Inc. – Proprietary and Confidential
PLANSTUDY
OPTIMIZEOUTCOMES
SUPPORTSITES
CONDUCT STUDY
ENGAGEPATIENTS
MEDIDATAData Augmented Platform
LIFE SCIENCES PROF.
§ 800 customers
§ 12,000+ Studies
§ 70+ Partners
HEALTHCARE PROFESSIONALS
§ 3,100,000+ Trial Subjects
§ 420,000+ Sponsor / Site
Relationships
PATIENTS
§ 835,000+
data points / day
© 2016 Medidata Solutions, Inc. – Proprietary and Confidential
OPTIMIZEOUTCOMES
Centralized Statistical
Analysis (CSA)Increased Data Quality
Machine Learning and
Targeted Monitoring
Scientific Insight
SyntheticControl Arms
Standardize, Pool and
Recycle Data
OPAL Diagnostics
Operational Efficiency
Benchmark and improve performance
DigitalBiomarkersmHealth
Algorithmic Patient
Monitoring
Precision Medicine
Clinical Trial Genomics
Integrate Genomic Data with Turnkey
Analytics
OPAL Site Selection
Better Site Performance
Cross-industry performance
metrics
© 2016 Medidata Solutions, Inc. – Proprietary and Confidential
Synthetic Control Arms
Multiple historic clinical trials in same indication
Access to patient level information allows filtering and matching of patients
Data exploration by subgroups
Patient Level Matched
Control Arm
© 2016 Medidata Solutions, Inc. – Proprietary and Confidential
PLANSTUDY
OPTIMIZEOUTCOMES
SUPPORTSITES
CONDUCT STUDY
ENGAGEPATIENTS
Real Business Outcomes
61% Increase in eCRF
reuse
33% Reduction in eCRF
design period
31% Reduction in non
enrolling sites
40% Improvement in enrollment
49% Reduction in
protocol complexity
7 Days reduction in monitoring
on-site days per year
34% Reduction in
SDV coverage
53% Reduction in subject visit to query close cycle time
Managing DirectorIan ShaferAccenture
Fireside Chat
Chief Operating OfficerMike Capone
Medidata
Break andProduct Demos
Chief Financial Officer
Rouven Bergmann
Momentum
Scaling Revenue and Profits
Strategy
Path to $1B+ Revenue
Investment Highlights
Opportunity
$10-$12BTotal Addressable Market
Momentum
Scaling Revenue and Profits
Great momentum in Q3…
1. Growth rates adjusted for contract modification in Q3’15.2. Calculated billings defined as revenue plus change in deferred revenue.3. Non-GAAP Operating Income (or EBITDAO) excludes stock based compensation expense, depreciation and amortization, and other non-GAAP adjustments.
Refer to “Reconciliation of GAAP to Pro Forma Results” for Non-GAAP Operating Income calculations.4. Represents subscription gross margin on a GAAP basis.
Q3 key performance indicators
TTM Operating Cash Flow
$79MSubscription Gross
Margin4
84.2%EBITDAO Margin3
24.4%
Total Revenue1
$120M
+20%y/y
Subscription Revenue1 $102M
+20%y/y
Calculated Billings2
$121M
+29%y/y
Number of Products Added by Customers
+80%y/y
Total Customers With 4+ Products
+33%y/y
… building on strong multi-year performance
218
277
335
393
462
47 67 74 89 105.5
2012 2013 2014 2015 2016E
Revenue (USD million)EBITDAO (USD million)
1. Represents mid-point of FY 2016 guidance for total revenue between $450 and $474 million and EBITDAO between $102 and $109 million as of 10/25/16.
1
Momentum driven by existing customers…
882 1,183
1,569
2,065
397 486 611 789
2013 2014 2015 Q3'16
1. Excludes acquired Imaging-only customers with limited cross-sell potential.
Number of Products DeployedNumber of Customers
2.2DENSITY
2.4DENSITY
2.6DENSITY
2.8DENSITY1
Total Customers
Momentum driven by existing customers…
1. Excludes acquired Imaging-only customers with limited cross-sell potential.
Number of Products DeployedNumber of Customers
2.2DENSITY
2.4DENSITY
2.6DENSITY
2.8DENSITY1
Total Customers
4.5DENSITY
5.6DENSITY
5.8DENSITY
6.6DENSITY
Top 30 Customers
2013 2014 2015 Q3’16
Multi Product % of New Customer Count
61%43%
2013
47%
2014 2015
78%
Q3’161
1. Excludes acquired Imaging-only customers with limited cross-sell potential.
… and by new customer platform adoption
4%20%
76%64%
22%
25%
57%
11% 21%
Q3'12 Q3'16
% of Total Customers1
1. Excludes acquired Imaging-only customers with limited cross-sell potential2. FY 2016 estimate
1 Product 2-3 Products 4+ Products
Subscription Revenue Contribution
20162
We are successful in selling our platform
2012 2013 2014 2015 2016
Customers grow with us over time
2.0x
2.9x
2.2x1.8x
Pre IPO incl. 2009
2013
2015 1.2x
2014
IPO to 2012
Note: Multiples represent growth relative to cohort’s first year in series starting in 2012.
Annualized subscription revenue by customer acquisition date
Opportunity
$10-$12BTotal Addressable Market
PLANSTUDY$0.5B
SUPPORTSITES
$3B
ENGAGEPATIENTS
$1.5B
CONDUCT STUDY$3B
$10–12B MARKET OPPORTUNITY
OPTIMIZEOUTCOMES
$3B+
Source: Medidata estimates
SUPPORTSITES
$3B
ENGAGEPATIENTS
$1.5B
CONDUCT STUDY$3B
OPTIMIZEOUTCOMES
$3B+PLANSTUDY$0.5B
$10–12B MARKET OPPORTUNITY
Need
Better planning & design for efficiency, simplicity and speed
Medidata Advantage
Industry-leading, cross-sponsor data, enabling optimized study design
Design Optimizer Grants Manager
Source: Medidata estimates
ENGAGEPATIENTS
$1.5B
CONDUCT STUDY$3B
OPTIMIZEOUTCOMES
$3B+PLANSTUDY$0.5B
SUPPORTSITES
$3B
$10–12B MARKET OPPORTUNITY
Need
Improve site performance and engagement, reduce risks, drive more predictable outcomes
Medidata Advantage
Leveraging real-time data across platform increasing accuracy and speed
RBM
Payments
TSDV
Source: Medidata estimates
SUPPORTSITES
$3B
CONDUCT STUDY$3B
OPTIMIZEOUTCOMES
$3B+PLANSTUDY$0.5B ENGAGE
PATIENTS$1.5B
Medidata Advantage
Regulatory compliant infrastructure to integrate patient-centric data
Need
Objective real-world patient data to drive therapy safety and efficacy
ePRO
SensorLink
AppConnect
$10–12B MARKET OPPORTUNITY
Source: Medidata estimates
SUPPORTSITES
$3B
ENGAGEPATIENTS
$1.5B
OPTIMIZEOUTCOMES
$3B+PLANSTUDY$0.5B
CONDUCT STUDY$3B
$10–12B MARKET OPPORTUNITY
Rave
Imaging
CTMS SafetyGateway
Balance Coder
Medidata Advantage
Superior customer ROI due to platform integration & innovation leadership
Need
Integrated, flexible platform to efficiently operate clinical trials across therapeutic areas, phases
Source: Medidata estimates
SUPPORTSITES
$3B
ENGAGEPATIENTS
$1.5B
CONDUCT STUDY$3B
PLANSTUDY$0.5B
OPTIMIZEOUTCOMES
$3B+
$10–12B MARKET OPPORTUNITY
Medidata Advantage
Industry leading data set, pure cloud-based and analytical expertise powered by AI
Need
Data analytics to optimize clinical outcomes and lower costs
CSA
Site Selection
Synthetic Control Arm
Opal Genomics
Source: Medidata estimates
PLANSTUDY$0.5B
SUPPORTSITES
$3B
ENGAGEPATIENTS
$1.5B
CONDUCT STUDY$3B
$10–12B MARKET OPPORTUNITY
OPTIMIZEOUTCOMES
$3B+
Source: Medidata estimates
Strategy
Path to $1B+ Revenue
Three key focus areas will fuel growth in 2017 and beyond
Density
Increase numberof products used byour customer base
Intensity
Expand usage of existing products across more trials,
therapeutic areas, geographies and phases
New Customers
Acquisition of new customers usingmultiple products
Strategic growth drivers
Today Density & Intensity 2020New
CustomersCustomers4+ products
78921%1
1,200+~40%+400
Products DeployedDensity
2,0652.81 +1,500 ~4,400
3.6~800
$462MTotal Revenue3 $1B+$100M+$450M
23%EBITDAO Margin3,4 27-30%
Our path to $1 Billion
ASF Revenueper Product2 1x ~1.3x+6% p.a.
1. Excludes acquired Imaging-only customers with limited cross-sell potential.2. Indexed to 2016, calculated individually for each product. Applied to product base with existing customers only – not applied to new customers.3. Represents mid-point of FY 2016 guidance for total revenue between $450 and $474 million and EBITDAO between $102 and $109 million as of 10/25/16.4. Non-GAAP Operating Income (or EBITDAO) excludes stock based compensation expense, depreciation and amortization, and other non-GAAP adjustments.
Refer to “Reconciliation of GAAP to Pro Forma Results” for Non-GAAP Operating Income calculations.
Driving our $12 billion opportunity
Current Revenue$462M1
$10-12B TAM
2020 Revenue:$1BN
3,500
Product Adoption
789
1,200
$450M
$100M Additional upsell potential
Cus
tom
ers New
customers
Grow density
Growintensity
1. Represents mid-point of FY 2016 guidance for total revenue between $450 and $474 million as of 10/25/16.
6x revenue potential with Top 30 customersCurrent product adoption of our Top 30 customers
2016 as % of Full Potential
% of 2016 Top 30 Revenue
20% 5% <5% 55% 5%
<10% <10% <5% >75% <5%
15%
100%
TOTAL PLAN STUDY
SUPPORT SITES
ENGAGE PATIENTS
CONDUCT STUDY
OPTIMIZE OUTCOMES
Long-Term Operating Model
Revenuey/y Growth Rate% Subscription
Gross Margin1
R&D % of Revenue1
S&M % of Revenue1
G&A % of Revenue1
393M
77%
24%
26%
20%
23%
462M
76%
25%
24%
17%
23%
1B+
Mid toHigh 70%s
Below or at 20%
Low 20%s
Below 15%
27-30%
Approx. 20% y/y
Mid toHigh 70%s
Mid to High 10%s
Mid to High 10%s
Low 10%s
Mid to High 30%s
2015 2016E 2020E$393M
17%86%
$462M18%85%
$1B+Approx. 20%Approx. 90%
LT
EBITDAO Margin2
1. Represents GAAP gross profit and GAAP R&D, S&M and G&A as a % of total revenue. 2. Non-GAAP Operating Income (or EBITDAO) excludes stock based compensation expense, depreciation and amortization, and other non-GAAP adjustments.
Refer to “Reconciliation of GAAP to Pro Forma Results” for Non-GAAP Operating Income calculations.
($ in millions) FY 20161,3
Net Revenue2 $450.0– $474.0Professional Services Revenue 68.0 - 70.0Non-GAAP Operating Income 102.0 - 109.0Adjusted Non-GAAP Net Income 54.5 – 59.0
Equivalent GAAP Operating Income 38.5 – 45.5Equivalent GAAP Net Income 16.5 – 21.0
Effective Tax Rate ~35%
2016 Guidance
1. 2016 guidance as of 10/25/16. Refer to “Reconciliation of GAAP to Pro Forma Results” for Non-GAAP Operating Income and Non-GAAP Net Income calculations.2. Represents management guidance for full-year 2016 total revenue between $450 - $474 million and professional services revenues between $68 - $70 million as of 10/25/15.3. While changes in the stock price could change the fully diluted share count, the company is assuming 57.3 million fully diluted shares.4. Adjusted subscription backlog equals subscription backlog plus outstanding intra-year renewals valued at an amount equal to the contracts to be renewed.
• Delivering on Initial 2016 Outlook
• 98% adjusted backlog coverage4 at guidance midpoint
Strong revenue visibility entering the year
334
290
12/31/159/30/15
Adjusted subscription backlog1 ($M) as ofprior year Q3/Q4
2016 Revenue Visibility as of:
+16%y/y
+19%y/y
347
12/31/20169/30/16
+20%y/y
+19%y/y
Subscription coverage 85%2
Adjusted subscription backlog equals subscription backlog plus outstanding intra-year renewals valued at an amount equal to the contracts to be renewed.Relative to currently implied mid-point of 2016 subscription revenue guidance.
2017 Revenue Visibility as of:
MomentumStrong & consistent
growth in financial and operational metics
StrategyClear path to $1B+
Revenue, supported by strategic drivers
Key Takeaways
OpportunitySuperior platform and
game-changing new products
© 2016 Medidata Solutions, Inc. – Proprietary and Confidential
Chief Operating Officer
Mike Capone
© 2016 Medidata Solutions, Inc. – Proprietary and Confidential
Attract Engineering and Business Talents
TALENT
Increase Customer & Partner Success and
Satisfaction
BUSINESS
Drive Technology Velocity and Vision
INNOVATION
Predictable Execution and Optimized Operating Model
OPERATIONALEXECUTION
Operations & Innovation
© 2016 Medidata Solutions, Inc. – Proprietary and Confidential
Sales Engine - Strengthened & PredictableQ1 2016$104.2MRevenue
+13% YoY
Q2 2016$114.6MRevenue
+17% YoY
Q3 2016$120M
Revenue +20% YoY*
+27%CRO BIDS
YoY Q3
Outstanding Momentum inMid-Market, Partner
and APAC
CRO Generated Growth: +28% Balance, +14% CTMS, +50% ePRO, +18% RBM 2016 YTD YoY Closed Deals
+14 CROs2016 YTD[6 in 2015]
Michael PrayEVP, Global Sales
Renee HartSVP, Partners
Mike WendellSVP, Global GTM
Christian Hebenstreit SVP, EMEA Leader
*Growth rate adjusted for contract modification in Q3’15
© 2016 Medidata Solutions, Inc. – Proprietary and Confidential
Professional Services - Differentiated Expertise+30%
Revenue Worldwide
YoY Q3
+17%Revenue
APACYoY Q3
+50%Revenue
EMEAYoY Q3
+37%Gross Profit
Worldwide YoY Q3
Solid Customer Satisfaction
99% Revenue Retention
Increasing Platform& Analytics Adoption
Analytics Growth, Study Migration
Broadening ExpertisePayments, Medical Writing,
Biostatisticsand Data Analytics
© 2016 Medidata Solutions, Inc. – Proprietary and Confidential
Marketing - (re)Built to Scale 40%
Marketing team
renewed
+60% YoY contribution
to active pipeline
+100% Symposia attendance
YoY
Goal = 20% incremental revenue is marketing sourced
10 Industry Awards+2 YoY
Simon MouyalSVP, CMO
Renewed Marketing Leadership team and new world-class Product Marketing team
Medidata 2016 Symposium Highlights
Introducing
On Screen Video
© 2016 Medidata Solutions, Inc. – Proprietary and Confidential
Unmatched Security Compliance
© 2016 Medidata Solutions, Inc. – Proprietary and Confidential
25% of Revenue
reinvested in R&D*
Technology – Innovation & Unification
New Office in Silicon Valley
Complete Data
Center Tech
Refresh
2016 Product Launches PaymentsAnalytics
EuropeanData Center
z
Ivan LatanisionVP, Product
z
Susan FinleyVP, QA
z
Clay StanleyVP, Engineering
Julie Iskow #64 on
InformationWeek ELITE
100
*2016 Estimate
Management Q&A
Co-Founder, Chairman and CEO
Tarek Sherif
Thank You
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($ in thousands) 2009 2010 2011 2012 2013 2014 2015 YTD Q3’16
GAAP Operating Income $8,777 $23,307 $22,557 $27,893 $23,888 $20,064 $29,232 $32,711
Plus: Depreciation and amortization 10,580 9,179 7,817 7,934 6,936 10,435 10,822 10,901
EBITDA 19,357 32,486 30,374 35,827 30,824 30,499 40,054 43,612
Plus: Stock-based Compensation 4,730 6,494 8,820 10,914 36,143 37,953 48,987 31,155
Plus: Litigation settlement (1) - - 6,300 - - - - -
Plus: Contingent consideration adjustment (2) - - 223 319 239 - - -
Plus: Wire transaction loss (3) - - - - - 5,784 - -
Non-GAAP Operating Income 24,087 38,980 45,717 47,060 67,206 74,236 89,041 74,767
Reconciliation of GAAP to Non-GAAP Financial Results
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 a pre-tax charge of $5.8 million associated with a previously announced international wire transfer fraud committed against the company and the related investigation costs.
($ in thousands) 2009 2010 2011 2012 2013 2014 2015 YTD Q3’16
GAAP Net Income $5,182 $22,817 $39,398 $18,020 $16,661 $6,092 $13,167 $18,143
Plus: Amortization 1,826 1,459 1,589 1,792 804 628 636 900
Plus: Stock-based Compensation 4,730 6,494 8,820 10,914 36,143 37,953 48,987 31,155
Plus: Litigation settlement (1) - - 6,300 - - - - -
Plus: Contingent consideration adjustment (2) - - 223 319 239 - - -
Plus: Wire transaction loss (3) - - - - - 5,784 - -
Plus: Reversal of valuation allowance (4) - - (19,037) - - - - -
Plus: Non-cash interest expense on convertible senior notes (5) - - - - 4,715 12,458 13,180 10,364
Tax impact on add-back items - - - (4,689) (16,760) (22,729) (25,121) (16,968)
Adjusted Non-GAAP Net Income 11,738 30,770 37,293 26,356 41,802 40,186 50,849 43,594
Reconciliation of GAAP to Non-GAAP Financial Results
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 a pre-tax charge of $5.8 million associated with a previously announced international wire transfer fraud committed against the company and the related investigation costs.4. Amount represents the effect of tax benefit recognized as a result of the reversal of the majority of the valuation allowance.5. Amount represents the non-cash interest expense associated with MDSO’s convertible senior notes issued in August 2013 and due August 2018.