Medidata Solutions 8-K Medidata Solutions Reports Record Fourth Quarter and Full Year 2010 Results

Exhibit 99.2

(NASDAQ: MDSO)

SUPPLEMENTAL RECONCILIATION AND GUIDANCE PRESENTATION
FOR THE PERIOD ENDED DECEMBER 31, 2010
Tuesday, March 15, 2011

Investor Relations Contact:
Hulus Alpay
(212) 419-1025
halpay@mdsol.com

Table of contents:

Page 3 - Fourth quarter and full year 2010 results of operations - reported and pro forma

Page 4 - Fourth quarter and full year 2010 reconciliation table

Page 5 - Historical reconciliation information - reported and pro forma

Page 6 - Summary of first quarter and full year guidance for 2011

MEDIDATA SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
	Three Months Ended December 31,										Twelve Months Ended December 31,
	2010 As Reported			2010 Pro Forma(1)				2009 As Reported			2010 As Reported			2010 Pro Forma(1)				2009 As Reported
	(unaudited)			(unaudited)				(unaudited)						(unaudited)
Revenues
Application services	$	39,981		$	36,758		(a)	$	28,396		$	136,395		$	133,172		(a)	$	102,541
Professional services		7,388			7,388				9,157			30,031			30,031				37,859
Total revenues		47,369			44,146				37,553			166,426			163,203				140,400
Cost of revenues
Application services		7,268			7,268				6,231			26,400			26,400				23,752
Professional services		6,376			6,376				6,309			25,847			25,847				26,219
Total cost of revenues		13,644			13,644				12,540			52,247			52,247				49,971
Gross profit		33,725			30,502				25,013			114,179			110,956				90,429
Operating costs and expenses:
Research and development		6,308			6,308				5,640			25,772			25,772				22,534
Sales and marketing		7,808			7,698		(b)		7,285			30,721			30,611		(b)		27,452
General and administrative		9,700			9,700				8,994			34,379			34,379				31,666
Total operating costs and expenses		23,816			23,706				21,919			90,872			90,762				81,652
Operating income		9,909			6,796				3,094			23,307			20,194				8,777
Interest and other income (expense):
Interest expense		(42	)		(42	)			(109	)		(237	)		(237	)			(1,856	)
Interest income		91			91				59			379			379				132
Other income (expense), net		115			115				(48	)		273			273				(12	)
Total interest and other income (expense), net		164			164				(98	)		415			415				(1,736	)
Income before income taxes		10,073			6,960				2,996			23,722			20,609				7,041
Provision for income taxes		(3,251	)		2,027		(c)		1,257			905			6,183		(c)		1,859
Net income	$	13,324		$	4,933			$	1,739		$	22,817		$	14,426			$	5,182
Earnings per share:
Basic	$	0.57		$	0.21			$	0.08		$	0.99		$	0.63			$	0.33
Diluted	$	0.55		$	0.20			$	0.07		$	0.95		$	0.60			$	0.25
Weighted average common shares outstanding:
Basic		23,193			23,193				22,420			22,958			22,958				14,864
Diluted		24,376			24,376				23,854			24,062			24,062				20,736

(1) These non-GAAP pro forma results exclude the impact of the acceleration of revenue related to the termination of a government contract on behalf of the National Cancer Institute (NCI) and the tax benefit impact resulting from our increase in federal net operating loss carryforwards limitation.  Medidata believes that these pro forma disclosures provide useful information assisting investors to more easily compare fourth quarter and full year 2010 results with results of other periods. Pro forma presentation represents:

(a)	excluding $3.2 million of one-time revenue acceleration resulting from NCI contract termination;
(b)	excluding $0.1 million of commission expense assoicated with the revenue acceleration per (a);
(c)	excluding approximately $5 million of income tax impact in connection with the tax benefit recognized from the increase in federal NOL limitation. Pro forma is based on 30% annual effective tax rate.

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MEDIDATA SOLUTIONS, INC.
Reconciliation of GAAP Operating Income and GAAP Net Income to Non-GAAP Operating Income, Non-GAAP Net Income and Adjusted Non-GAAP Net Income (unaudited) (Amounts in thousands, except per share data)
		Three Months Ended December 31,						Twelve Months Ended December 31,
		2010			2009			2010			2009
Operating income:
GAAP operating income		$	9,909		$	3,094		$	23,307		$	8,777
GAAP operating margins			20.9	%		8.2	%		13.9	%		6.2	%
	Depreciation and amortization		2,134			2,770			9,179			10,580
	Stock-based compensation		1,839			1,302			6,494			4,730
Non-GAAP operating income		$	13,882		$	7,166		$	38,980		$	24,087
Non-GAAP operating margins			29.3	%		19.1	%		23.4	%		17.2	%
Net income:
GAAP net income		$	13,324		$	1,739		$	22,817		$	5,182
	Stock-based compensation		1,839			1,302			6,494			4,730
	Amortization		364			456			1,459			1,826
Non-GAAP net income			15,527			3,497			30,770			11,738
Tax impact on stock-based
	compensation and amortization (1)		1,725			-			-			-
Adjusted non-GAAP net income		$	17,252		$	3,497		$	30,770		$	11,738
GAAP basic earnings per share		$	0.57		$	0.08		$	0.99		$	0.33
GAAP diluted earnings per share		$	0.55		$	0.07		$	0.95		$	0.25
Non-GAAP basic earnings per share		$	0.67		$	0.16		$	1.34		$	0.77
Non-GAAP diluted earnings per share		$	0.64		$	0.15		$	1.28		$	0.57
Adjusted non-GAAP basic earnings per share		$	0.74		$	0.16		$	1.34		$	0.77
Adjusted non-GAAP diluted earnings per share		$	0.71		$	0.15		$	1.28		$	0.57

(1) Amount for the three months ended December 31, 2010 represents the reversal of prior quarters' tax impact on stock-based compensation and amortization.

*Non-GAAP Financial InformationMedidata provides Non-GAAP operating income, net income, adjusted net income and net income per share applicable to common stockholders data as additional information for its operating results. These measures are not in accordance with, or an alternative for, generally accepted accounting principles and may be different from Non-GAAP measures used by other companies.  Non-GAAP operating income excludes the impact of depreciation, amortization of purchased intangible assets and acquisition-related charges and stock-based compensation expense.  Non-GAAP net income excludes the impact of amortization of intangible assets associated with acquisitions and stock-based compensation expense. Adjusted non-GAAP net income excludes the impact of tax affected amortization of intangible assets associated with acquisitions and stock-based compensation expense.  Management uses these Non-GAAP measures to evaluate its financial results, develop budgets, manage expenditures, and as an important factor in determining variable compensation. In addition, investors frequently have requested information from management regarding depreciation and amortization and non-cash, share-based compensation charges and management believes, based on discussions with investors, that these Non-GAAP measures enhance investor’s ability to assess Medidata’s historical and project future financial performance.  While management believes these Non-GAAP financial measures provide useful supplemental information to investors, there are limitations associated with the use of Non-GAAP financial measures. One limitation of Non-GAAP operating income is that it excludes depreciation and amortization, which represents the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in our business. Medidata compensates for these limitations by using these non-GAAP financial measures as supplements to GAAP financial measures and by reviewing the reconciliations of the Non-GAAP financial measures to their most comparable GAAP financial measures. Investors are encouraged to review the reconciliations of these Non-GAAP financial measures to the comparable GAAP results, which are attached to this press release.

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MEDIDATA SOLUTIONS, INC.
Reconciliation of GAAP Operating Income and GAAP Net Income to Non-GAAP Operating Income, Non-GAAP Net Income and Adjusted Non-GAAP Net Income (unaudited) (Amounts in thousands, except per share data)
		Actual																												Pro Forma(1)
		Quarter Ended										Year Ended			Quarter Ended												Year Ended			Quarter Ended			Year Ended
		Mar. 31, 2009		Jun. 30, 2009		Sep. 30, 2009			Dec. 31, 2009			Dec. 31, 2009			Mar. 31, 2010			Jun. 30, 2010			Sep. 30, 2010			Dec. 31, 2010			Dec. 31, 2010			Dec. 31, 2010			Dec. 31, 2010
Operating income:
GAAP operating income		$	2,288	$	773	$	2,622		$	3,094		$	8,777		$	2,944		$	4,408		$	6,046		$	9,909		$	23,307		$	6,796		$	20,194
GAAP operating margins			6.7 %		2.3 %		7.4	%		8.2	%		6.2	%		7.9	%		10.9	%		14.8	%		20.9	%		13.9	%		15.4	%		12.4	%
	Depreciation and amortization		2,550		2,591		2,669			2,770			10,580			2,593			2,218			2,234			2,134			9,179			2,134			9,179
	Stock-based compensation		1,003		920		1,505			1,302			4,730			1,150			1,658			1,847			1,839			6,494			1,839			6,494
Non-GAAP operating income		$	5,841	$	4,284	$	6,796		$	7,166		$	24,087		$	6,687		$	8,284		$	10,127		$	13,882		$	38,980		$	10,769		$	35,867
Non-GAAP operating margins			17.4 %		12.6 %		19.3	%		19.1	%		17.2	%		17.8	%		20.5	%		24.6	%		29.3	%		23.4	%		24.4	%		22.0	%
Net income:
GAAP net income		$	1,694	$	200	$	1,549		$	1,739		$	5,182		$	1,864		$	2,965		$	4,664		$	13,324		$	22,817		$	4,933		$	14,426
	Stock-based compensation		1,003		920		1,505			1,302			4,730			1,150			1,658			1,847			1,839			6,494			1,839			6,494
	Amortization		457		456		457			456			1,826			365			365			365			364			1,459			364			1,459
Non-GAAP net income			3,154		1,576		3,511			3,497			11,738			3,379			4,988			6,876			15,527			30,770			7,136			22,379
Tax impact of stock-based compensation and amortization			-		-		-			-			-			(523	)		(715	)		(487	)		1,725			-			(661	)		(2,386	)
Adjusted non-GAAP net income		$	3,154	$	1,576	$	3,511		$	3,497		$	11,738		$	2,856		$	4,273		$	6,389		$	17,252		$	30,770		$	6,475		$	19,993
GAAP basic earnings per share		$	0.22	$	0.01	$	0.07		$	0.08		$	0.33		$	0.08		$	0.13		$	0.20		$	0.57		$	0.99		$	0.21		$	0.63
GAAP diluted earnings per share		$	0.10	$	0.01	$	0.06		$	0.07		$	0.25		$	0.08		$	0.13		$	0.20		$	0.55		$	0.95		$	0.20		$	0.60
Non-GAAP basic earnings per share		$	0.43	$	0.20	$	0.16		$	0.16		$	0.77		$	0.15		$	0.22		$	0.30		$	0.67		$	1.34		$	0.31		$	0.97
Non-GAAP diluted earnings per share		$	0.18	$	0.09	$	0.15		$	0.15		$	0.57		$	0.14		$	0.21		$	0.29		$	0.64		$	1.28		$	0.29		$	0.93
Adjusted non-GAAP basic earnings per share		$	0.43	$	0.20	$	0.16		$	0.16		$	0.77		$	0.13		$	0.19		$	0.28		$	0.74		$	1.34		$	0.28		$	0.87
Adjusted non-GAAP diluted earnings per share		$	0.18	$	0.09	$	0.15		$	0.15		$	0.57		$	0.12		$	0.18		$	0.27		$	0.71		$	1.28		$	0.27		$	0.83
Estimated effective tax rate used in tax impact calculation			- %		- %		-	%		-	%		-	%		35	%		35	%		22	%		-	%		-	%		30	%		30	%

(1)These non-GAAP pro forma results exclude the impact of the acceleration of revenue related to the termination of a government contract on behalf of the National Cancer Institute (NCI) and the tax benefit impact resulting from our increase in federal net operating loss carryforwards limitation.  Medidata believes that these pro forma disclosures provide useful information assisting investors to more easily compare fourth quarter and full year 2010 results with results of other periods. Pro forma presentation represents:

(a)	excluding $3.2 million of one-time revenue acceleration resulting from NCI contract termination;
(b)	excluding $0.1 million of commission expense assoicated with the revenue acceleration per (a);
(c)	excluding approximately $5 million of income tax impact in connection with the tax benefit recognized from the increase in federal NOL limitation. Pro forma is based on 30% annual effective tax rate.

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MEDIDATA SOLUTIONS, INC.
Summary of First Quarter and Full Year Guidance for 2011* (Amounts in thousands)
	Guidance				Guidance
	Quarter Ending March 31,				Year Ending December 31,
	2011				2011
	Low		High		Low		High
Total revenues	$	40,500	$	41,500	$	180,000	$	188,000
GAAP operating income	$	3,000	$	4,000	$	26,000	$	30,000
Non-GAAP operating income/EBITDAO	$	7,000	$	8,000	$	43,000	$	47,000
GAAP net income	$	3,000	$	4,000	$	25,000	$	29,000
Non-GAAP net income	$	5,000	$	6,000	$	35,000	$	39,000

*Information only valid as of March 15, 2011

Cautionary StatementThe guidance presented here in constitutes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  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 the Company, see disclosures contained in Medidata's public filings with the Securities and Exchange Commission including, the “Risk Factors” section of Medidata’s Annual Report on Form 10-K for the year ended December 31, 2010. You should consider these factors in evaluating the forward-looking statements included in this press release 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.

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