2013 Medidata Solutions, Inc. 1 2013 Medidata Solutions, Inc.
Tarek Sherif, Chairman and CEO
Cory Douglas, CFO
May 9, 2013
Jefferies TMT Conference
2013 Medidata Solutions, Inc. 2 2013 Medidata Solutions, Inc.
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%
2013 Medidata Solutions, Inc. 4 2013 Medidata Solutions, Inc. 4
Large and Diverse Customer Base
Biopharmaceutical
Medical Devices CROs Academic Institutions
173
219
275
350
2009 2010 2011 2012
Total Customers
2013 Medidata Solutions, Inc. 5 2013 Medidata Solutions, Inc. 5
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%
2013 Medidata Solutions, Inc. 6 2013 Medidata Solutions, Inc. 6
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
2013 Medidata Solutions, Inc. 7 2013 Medidata Solutions, Inc. 7
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
2013 Medidata Solutions, Inc. 8 2013 Medidata Solutions, Inc. 8
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
2013 Medidata Solutions, Inc. 9 2013 Medidata Solutions, Inc. 9
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
2013 Medidata Solutions, Inc. 10 2013 Medidata Solutions, Inc. 10
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, %
2013 Medidata Solutions, Inc. 11 2013 Medidata Solutions, Inc.
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
2013 Medidata Solutions, Inc. 12 2013 Medidata Solutions, Inc. 12
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
2013 Medidata Solutions, Inc. 13 2013 Medidata Solutions, Inc. 13
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
2013 Medidata Solutions, Inc. 14 2013 Medidata Solutions, Inc. 14
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
2013 Medidata Solutions, Inc. 17 2013 Medidata Solutions, Inc.
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. 18 2013 Medidata Solutions, Inc. 18
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%
2013 Medidata Solutions, Inc. 19 2013 Medidata Solutions, Inc. 19
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%
2013 Medidata Solutions, Inc. 20 2013 Medidata Solutions, Inc. 20
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
2013 Medidata Solutions, Inc. 21 2013 Medidata Solutions, Inc. 21
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)
2013 Medidata Solutions, Inc. 22 2013 Medidata Solutions, Inc. 22
$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
2013 Medidata Solutions, Inc. 23 2013 Medidata Solutions, Inc. 23
$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
2013 Medidata Solutions, Inc. 24 2013 Medidata Solutions, Inc. 24
$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
$186 million in full year application services backlog as of January 1, 2013
*Application services backlog for the remainder of the year (remaining backlog) as of March 31, 2013
2013 Medidata Solutions, Inc. 25 2013 Medidata Solutions, Inc. 25
Long-Term Target Model
Note: Refer to Reconciliation of GAAP to Pro Forma Results for Non-GAAP Operating Income calculations.
1Q 2013Long-Term Target
Revenue Growth (y-o-y) 26% 20%
Gross Margin 73% Mid 70%
R&D as a % of Revenue 19% 16%
S&M as a % of Revenue 23% 18%
G&A as a % of Revenue 20% 12%
Non-GAAP
Operating Income Margin23% Mid 30%
2013 Medidata Solutions, Inc. 26 2013 Medidata Solutions, Inc. 26
Guidance: Q2 and FY 2013
Note: Refer to Reconciliation of GAAP to Pro Forma Results for Non-GAAP Operating Income and Non-GAAP Net Income calculations.
($ in millions) Q2 2013 FY 2013
Net Revenue $65.5 - $67.0 $270.0 $274.0
Professional Services Revenue Mid - High $40.0
Non-GAAP Operating Income 14.0 15.0 61.0 64.0
Adjusted Non-GAAP Net Income 7.0 8.0 31.5 34.5
GAAP Operating Income 3.5 4.5 23.0 26.0
GAAP Net Income 1.5 2.5 13.5 16.5
Effective Tax Rate 38% - 42%
2013 Medidata Solutions, Inc. 27 2013 Medidata Solutions, Inc. 27
Summary
Significant revenue growth opportunity
Investing to drive long-term growth
Highly scalable cloud-based business model
2013 Medidata Solutions, Inc. 28 2013 Medidata Solutions, Inc. 28
Questions
2013 Medidata Solutions, Inc. 29 2013 Medidata Solutions, Inc. 29
Reconciliation of GAAP to Non-GAAP Results
($ 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.