Jefferies TMT Conference

Transcription

1 Jefferies TMT Conference Tarek Sherif, Chairman and CEO Cory Douglas, CFO May 9, Medidata Solutions, Inc. 1

2 Safe Harbor Statement This presentation contains 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. You are cautioned that such statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by which, such performance or results will have been achieved. 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 Medidata, see disclosures contained in Medidata's public filings with the Securities and Exchange Commission (the SEC ) including, the Risk Factors section of Medidata s most recent filings. You should consider these factors in evaluating the forwardlooking statements included in this presentation 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 Medidata Solutions, Inc. 2

3 Medidata Today Leading provider of cloud-based solutions for the life sciences industry Founded: 1999 Key Metrics (millions) $272.0 Headquarters: New York City CAGR = 21% $218.3 Location: 9 offices across U.S., U.K., Japan and China $184.5 $ % $140.4 Headcount: ~1,000 $105.7 Customers: Addressable Market Size: Public Co: 358 customers, includes over 90% of top biopharma companies Biopharma clinical development spend = $85+ billion NASDAQ: MDSO ~ $1.75B market cap 05/06/13 ~ $124M balance sheet cash * 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 (3.8) * Revenue Non-GAAP Operating Income 2013 Medidata Solutions, Inc. 3

4 Large and Diverse Customer Base Total Customers Biopharmaceutical Medical Devices CROs Academic Institutions 2013 Medidata Solutions, Inc. 4

5 Industry-Leading Retention Rates 350 Revenue retention rate % 90% New customers Continuing customers % 70% 60% % 40% 30% 20% 10% 0 Customer share of top 50 Biopharma Q % 64% 66% 70% 82% 82% 0% 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 2013 Medidata Solutions, Inc. 5

6 Growth in Multi-Product Deals Share of customers buying multiple products and new customer growth Percent 45% 40% 35% 30% Non-Rave Revenue increased 125% from Q to Q Total number of customers Share of customers buying two or more products Number of customers % 20% 15% 10% 5% % 4Q 09 2Q 10 4Q 10 2Q 11 4Q 11 2Q 12 4Q 12 1Q Medidata Solutions, Inc. 6

7 Track Record of Increasing Customer Penetration $150M Top 10 Pharma Enterprise re-up + add l products Full enterprise platform Single study EDC evaluation Add l divisions $25M Mid-Market Pharma Enterprise EDC + 5 add l products Single study Competitive account Study by Study add l volume 2013 Medidata Solutions, Inc. 7

8 Solving the Challenges of Clinical Development Medidata Clinical Cloud Phase I Phase II Phase III Phase IV Develop idea for therapy and test in lab 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 Regulatory approval 2013 Medidata Solutions, Inc. 8

9 Life Sciences Business Model Under Pressure Siloed, manual and inefficient processes Limited visibility into trial performance Lack of control over costs High spend on services and implementation Increasing complexity and international breadth of trials Slowing revenue growth Fewer blockbuster therapies Inability to leverage explosion of analytics and data Struggle to adapt to emerging world of highly targeted therapies 2013 Medidata Solutions, Inc. 9

10 Growth in Trial Complexity and Patients Per Trial Change in trial complexity, 2011 vs 2000 All TAs, all phases Percent change in units, % Enrolled Patients per New Drug Application (NDA), CAGR = 20% Source: Parexel Biopharmaceutical R&D Statistical Sourcebook, 2012/2013; Tufts CSDD, Tufts University School of Medicine 2013 Medidata Solutions, Inc. 10

11 Increasing Pharma Commitment to Innovation Improving environment for life sciences companies Significant growth in new drug applications filed with both FDA and EMA from 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 2013 Medidata Solutions, Inc. 11

12 Significant Life Sciences Market Opportunity Medidata sits at the intersection of science and technology 2012 Total life sciences spend on technology and clinical development is ~$125B+ Strong potential to expand technology as a share of overall R&D spend Global clinical development spend (phase I IV) = ~$85+B Total Life Sciences IT spend (Software, hardware, IT services) = ~$45B Potential for Medidata to expand software capabilities to move into areas currently addressed by IT services and hardware Significant opportunity to accelerate growth and achieve long-term revenue goals Sources: Gartner, Enterprise IT Spending by Vertical Industry Market, Worldwide, , Q1 2012, 12-APR Parexel Biopharmaceutical R&D Statistical Sourcebook 2012/2013; Medidata estimates 2013 Medidata Solutions, Inc. 12

13 Sales Growth and R&D Investment of Medidata Customers Outpacing That of Other Large Pharma sales growth, average R&D spend growth, average Customers of Oracle and other EDC vendors 3% Customers of Oracle and other EDC vendors 2% Medidata enterprise customers 5% Medidata enterprise customers 5% 0% 2% 4% 6% 0% 2% 4% 6% Source: Medidata sales, Parexel Sourcebook, Evaluate Pharma, Company 10Ks, Company annual reports Based on customers within top 25 biopharma ranked by R&D spend 2013 Medidata Solutions, Inc. 13

14 Medidata is a Big Data Company Medidata aggregates rich data inherently present in transactions, and leverages it to make our products smarter and provide greater insights to customers Clinical data Financial data Financial data Operational data Examples Share of protocol that are noncore to primary / secondary outcomes Pace of patient recruitment Cost of clinical procedures Quality of data for each investigative site 2013 Medidata Solutions, Inc. 14

15 Summary Large, Underpenetrated and Growing Addressable Market Market Leadership Highly Differentiated Vertical SaaS Model Strong Competitive Position 2013 Medidata Solutions, Inc. 15

16 Financial Review Cory Douglas, Chief Financial Officer 2013 Medidata Solutions, Inc. 16

17 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 2013 Medidata Solutions, Inc. 17

18 Proven Track Record of Revenue Growth and Profitability Key Metrics (millions) $272.0 CAGR = 21% $184.5 $166.4 $140.4 $ % Recurring revenue model with multi-year contracts High revenue and customer retention metrics $105.7 Non-Rave revenue is scaling rapidly (3.8) EBITDAO margins compare favorably with leading vertical SaaS peers * Revenue Non-GAAP Operating Income * 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 2013 Medidata Solutions, Inc. 18

19 Accelerating Revenue Growth 125% Revenue growth guidance: 24-26% in 2013 Aggressive investments fueling growth 99.9% revenue retention in 1Q % 26% 18% 19% FY12 YOY 1Q13 YOY FY12 YOY 1Q13 YOY 1Q13 YOY Total Revenue AS Revenue Non-Rave Revenue* *18% of Total Revenue 2013 Medidata Solutions, Inc. 19

20 Significant Non-Rave Growth Opportunity Record platform deal highlights non-rave opportunity across installed base Platform Deal Signed 2Q 2012 FY 2012 Revenue 14% 30% 70% 86% $100M+ Rave Revenue $218.3M Non-Rave Revenue 2013 Medidata Solutions, Inc. 20

21 Strong Gross Margin Performance Gross Margins (As % of total revenue) 69% 71% 71% 73% Strategic focus on increasing AS and decreasing need for followon PS to drive TCO advantage YTD 2013 AS margins highly scalable and poised to expand Recurring Revenue Margins (As % of total AS revenue) 81% 80% 81% 82% PS margins managed internally to mid 30% range PS focused on world class customer service as needed YTD Medidata Solutions, Inc. 21

22 Investing in Sustainable Growth Research & Development ($ Millions) Sales and Marketing ($ Millions) General & Administrative ($ Millions) $48 $19 $23 $26 $30 $42 $24 $27 $31 $36 $27 $32 $34 $37 $ % Revenue % Revenue % Revenue Medidata Solutions, Inc. 22

23 Strong Balance Sheet Cash and Investments ($ in millions) $122.6 $124.0 $107.7 $85.5 $ YTD 2013 Cash and investments up 12% year over year and 63% since IPO Scalable infrastructure and recurring revenue model generating strong cash growth Capital Expenditures ($ in millions) Leveraging cloud infrastructure Recurring cap ex needs minimal $6.8 $5.6 $4.8 $6.6 Non-recurring investments in NY and UK new office build out in Medidata Solutions, Inc. 23

24 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, Full Year Backlog 2013 Remaining Year Backlog* 80-90% AS Revenue Visibility (Annually) $ % AS Revenue Visibility (Quarterly) $156 $135 $ *Application services backlog for the remainder of the year (remaining backlog) as of March 31, Medidata Solutions, Inc. 24

25 Long-Term Target Model 1Q 2013 Long-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 Margin 23% Mid 30% Note: Refer to Reconciliation of GAAP to Pro Forma Results for Non-GAAP Operating Income calculations Medidata Solutions, Inc. 25

26 Guidance: Q2 and FY 2013 ($ in millions) Q FY 2013 Net Revenue $ $67.0 $270.0 $274.0 Professional Services Revenue Mid - High $40.0 Non-GAAP Operating Income Adjusted Non-GAAP Net Income GAAP Operating Income GAAP Net Income Effective Tax Rate 38% - 42% Note: Refer to Reconciliation of GAAP to Pro Forma Results for Non-GAAP Operating Income and Non-GAAP Net Income calculations Medidata Solutions, Inc. 26

27 Summary Significant revenue growth opportunity Investing to drive long-term growth Highly scalable cloud-based business model 2013 Medidata Solutions, Inc. 27

28 Questions 2013 Medidata Solutions, Inc. 28

29 Reconciliation of GAAP to Non-GAAP Results ($ in thousands) 2010 Q1 11 Q2 11 Q3 11 Q Q1 12 Q2 12 Q3 12 Q 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) ,300 6, Plus: Contingent consideration adjustment (2) 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, , , Plus: Plus: Plus: Plus: Stock-based Compensation Litigation settlement(1) Contingent consideration adjustment(2) Reversal of valuation allowance(3) 6,494 1,740 2,296 2,437 2,347 8,820 2,154 3,158 2,851 2,751 10,914 5, ,300 6, (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 Medidata Solutions, Inc. 29