UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________________

FORM 10-Q

 _____________________________________

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File Number: 001-34387

Medidata Solutions, Inc.
(Exact name of registrant as specified in its charter)
Delaware	13-4066508
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
350 Hudson Street, 9th Floor
New York
New York	10014
(Address of principal executive offices)	(Zip Code)
(212)	918-1800
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Common stock, par value	$0.01	MDSO	The NASDAQ Stock Market LLC
(Title of each class)		(Trading symbol)	(Name of each exchange on which registered)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    ☒  Yes   ☐  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    ☒  Yes    ☐  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one)

Large Accelerated Filer	☒		Accelerated Filer	☐
Non-Accelerated Filer	☐	(Do not check if a smaller reporting company)	Smaller Reporting Company	☐
			Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   ☐  Yes    ☒  No

As of July 31, 2019, the registrant had 62,456,410 shares of common stock outstanding.

MEDIDATA SOLUTIONS, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED June 30, 2019

TABLE OF CONTENTS

		Page
PART I	FINANCIAL INFORMATION	2
Item 1.	Financial Statements (Unaudited)	2
	Condensed Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018	3
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2019 and 2018	4
	Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2019 and 2018	5
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2019 and 2018	6
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	27
Item 4.	Controls and Procedures	28
PART II	OTHER INFORMATION	29
Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3.	Defaults upon Senior Securities	32
Item 4.	Mine Safety Disclosures	32
Item 5.	Other Information	32
Item 6.	Exhibits	33
SIGNATURES		34

- 1 -

PART I - FINANCIAL INFORMATION

Item 1.     Financial Statements (Unaudited)

- 2 -

MEDIDATA SOLUTIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

	June 30, 2019			December 31, 2018
	(Amounts in thousands, except per share data)
ASSETS
Current assets:
Cash and cash equivalents	$	139,104		$	105,440
Marketable securities	66,914			135,105
Accounts receivable, net of allowance for doubtful accounts of $2,018 and $1,999, respectively (1)	198,166			170,744
Capitalized contract costs	24,426			22,247
Prepaid expenses and other current assets	37,615			28,949
Total current assets	466,225			462,485
Restricted cash	7,223			7,205
Operating lease assets (2)	83,554			—
Furniture, fixtures and equipment, net	114,210			98,983
Goodwill	213,976			216,017
Intangible assets, net	26,406			29,546
Deferred tax assets	53,475			45,982
Other assets	58,697			52,994
Total assets	$	1,023,766		$	913,212
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	10,672		$	7,482
Accrued payroll and other compensation	34,047			51,270
Accrued expenses and other	41,298			37,487
Operating lease liabilities (2)	15,318			—
Deferred revenue	80,435			74,463
Total current liabilities	181,770			170,702
Noncurrent liabilities:
Term loan, net	84,844			88,366
Deferred revenue, noncurrent	2,291			3,843
Deferred tax liabilities	101			99
Operating lease liabilities, noncurrent (2)	92,611			—
Other long-term liabilities	1,690			18,754
Total noncurrent liabilities	181,537			111,062
Total liabilities	363,307			281,764
Commitments and contingencies
Stockholders’ equity:
Preferred stock, par value $0.01 per share; 5,000 shares authorized, none issued and outstanding	—			—
Common stock, par value $0.01 per share; 200,000 shares authorized; 67,916 and 66,103 shares issued; 62,461 and 61,348 shares outstanding, respectively	679			661
Additional paid-in capital	629,451			574,667
Treasury stock, 5,455 and 4,755 shares, respectively	(198,003		)	(152,849		)
Accumulated other comprehensive loss	(4,544		)	(4,869		)
Retained earnings	232,876			213,838
Total stockholders’ equity	660,459			631,448
Total liabilities and stockholders’ equity	$	1,023,766		$	913,212
(1) Unbilled receivables of $51,421 and $38,601, respectively, are included in accounts receivable as of June 30, 2019 and December 31, 2018.
(2) Figures as of June 30, 2019 reflect the Company's January 1, 2019 adoption of Accounting Standards Update ("ASU") No. 2016-02, Leases. For additional details, see Note 1, "Summary of Significant Accounting Policies — Recently Adopted Accounting Pronouncements."

The accompanying notes are an integral part of the condensed consolidated financial statements.

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MEDIDATA SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
	(Amounts in thousands, except per share data)
Revenues
Subscription	$	150,006		$	130,486		$	296,881		$	257,305
Professional services	30,454			25,419			57,083			47,798
Total revenues	180,460			155,905			353,964			305,103
Cost of revenues (1)(2)
Subscription	29,306			21,602			56,034			41,943
Professional services	20,296			15,899			39,571			31,860
Total cost of revenues	49,602			37,501			95,605			73,803
Gross profit	130,858			118,404			258,359			231,300
Operating costs and expenses
Research and development (1)	48,475			40,789			94,964			78,311
Sales and marketing (1)(2)	44,388			37,106			87,784			73,967
General and administrative (1)	36,090			27,672			68,724			52,859
Total operating costs and expenses	128,953			105,567			251,472			205,137
Operating income	1,905			12,837			6,887			26,163
Interest and other income (expense)
Interest expense	(1,110		)	(5,700		)	(2,220		)	(11,275		)
Interest income	599			2,328			1,544			4,416
Other income, net	381			7,729			353			7,633
Total interest and other (expense) income, net	(130		)	4,357			(323		)	774
Income before income taxes	1,775			17,194			6,564			26,937
Income tax (benefit) provision	(6,118		)	605			(12,474		)	23
Net income	$	7,893		$	16,589		$	19,038		$	26,914
Earnings per share
Basic	$	0.13		$	0.29		$	0.32		$	0.47
Diluted	$	0.13		$	0.27		$	0.31		$	0.44
Weighted average common shares outstanding
Basic	60,081			57,448			59,888			57,252
Diluted	62,372			60,874			62,191			60,564
(1) Stock-based compensation expense included in cost of revenues and operating costs and expenses is as follows:
Cost of revenues	$	2,871		$	1,506		$	5,254		$	2,774
Research and development	5,005			3,319			9,254			6,173
Sales and marketing	6,046			2,917			11,472			5,561
General and administrative	7,973			7,377			15,579			13,766
Total stock-based compensation	$	21,895		$	15,119		$	41,559		$	28,274
(2) Amortization of intangible assets included in cost of revenues and operating costs and expenses is as follows:
Cost of revenues	$	1,365		$	1,205		$	2,729		$	2,299
Sales and marketing	505			231			1,011			351
Total amortization of intangible assets	$	1,870		$	1,436		$	3,740		$	2,650

The accompanying notes are an integral part of the condensed consolidated financial statements.

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MEDIDATA SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
	(Amounts in thousands)
Net income	$	7,893		$	16,589		$	19,038		$	26,914
Other comprehensive income (loss)
Foreign currency translation adjustments	(605		)	(1,954		)	(233		)	(684		)
Unrealized gain (loss) on marketable securities	221			719			753			(307		)
Other comprehensive (loss) income	(384		)	(1,235		)	520			(991		)
Income tax related to unrealized gain or loss on marketable securities	(57		)	(180		)	(195		)	(122		)
Other comprehensive (loss) income, net of tax	(441		)	(1,415		)	325			(1,113		)
Comprehensive income, net of tax	$	7,452		$	15,174		$	19,363		$	25,801

The accompanying notes are an integral part of the condensed consolidated financial statements.

- 5 -

MEDIDATA SOLUTIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	Six Months Ended June 30,
	2019			2018
Cash flows from operating activities	(Amounts in thousands)
Net income	$	19,038		$	26,914
Adjustments to reconcile net income to net cash provided by operating activities
Amortization of intangible assets and depreciation	22,175			16,218
Stock-based compensation	41,559			28,274
Amortization of operating lease assets (1)	6,112			—
Amortization of capitalized contract costs	13,319			9,491			(2)
Amortization of discounts or premiums on marketable securities	55			50
Realized loss on available-for-sale marketable securities	27			—
Deferred income taxes	(5,963		)	106
Amortization of debt issuance costs	217			856
Amortization of debt discount	—			7,015
Provision for doubtful accounts	881			763
Loss on fixed asset disposal	166			127
Gain recognized on step acquisition	—			(7,648		)
Changes in fair value of contingent consideration	240			7
Changes in operating assets and liabilities:
Accounts receivable	(28,303		)	(27,247		)
Capitalized contract costs	(19,339		)	(16,696		)	(2)
Prepaid expenses and other current assets	(8,666		)	(3,008		)
Other assets	(1,862		)	1,591
Accounts payable	1,185			1,753
Accrued payroll and other compensation	(20,166		)	(8,909		)
Accrued expenses and other	6,795			3,236
Deferred revenue	4,420			(9,572		)
Operating lease liabilities (1)	(7,966		)	—
Other long-term liabilities	6,484			455
Net cash provided by operating activities	30,408			23,776
Cash flows from investing activities
Purchases of furniture, fixtures and equipment	(32,366		)	(19,520		)
Purchase of domain name	(600		)	—
Purchases of available-for-sale securities	—			(69,214		)
Proceeds from sale of available-for-sale securities	68,862			137,786
Acquisition of business, net of cash acquired	—			(178,568		)
Net cash provided by (used in) investing activities	35,896			(129,516		)
Cash flows from financing activities
Proceeds from exercise of stock options	3,912			6,351
Proceeds from employee stock purchase plan	7,895			6,345
Acquisition of treasury stock	(40,594		)	(18,257		)
Term loan principal payments	(2,500		)	(1,250		)
Payment of acquisition-related earn-outs	(1,233		)	(4,087		)
Payment of credit facility financing costs	—			(175		)
Net cash used in financing activities	(32,520		)	(11,073		)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(102		)	(209		)
Net increase (decrease) in cash, cash equivalents and restricted cash	33,682			(117,022		)
Cash, cash equivalents and restricted cash – Beginning of period	112,645			242,843
Cash, cash equivalents and restricted cash – End of period	$	146,327		$	125,821
(1) Figures for the six months ended June 30, 2019 reflect the Company's January 1, 2019 adoption of ASU No. 2016-02, Leases. For additional details, see Note 1, "Summary of Significant Accounting Policies — Recently Adopted Accounting Pronouncements."
(2) Change in prior period to conform to current period presentation.

The accompanying notes are an integral part of the condensed consolidated financial statements.

- 6 -

MEDIDATA SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED (Unaudited)

	Six Months Ended June 30,
	2019			2018
Supplemental disclosures of cash flow information:
Cash paid (received) during the period for:
Interest	$	1,994		$	3,263
Income taxes	$	(382	)	$	2,253
Noncash investing activities:
Furniture, fixtures, and equipment acquired but not yet paid for at period-end	$	5,628		$	3,054

The accompanying notes are an integral part of the condensed consolidated financial statements.

- 7 -

MEDIDATA SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Company — Medidata Solutions, Inc., together with its consolidated subsidiaries (collectively, the "Company"), is the leading global provider of cloud-based solutions for clinical research in life sciences, offering platform technology that transforms clinical development and increases the value of its customers' research investments. The Company was organized as a New York corporation in June 1999 and reincorporated as a Delaware corporation in May 2000.

Except to the extent updated or described below, the Company’s significant accounting policies as of June 30, 2019 are the same as those at December 31, 2018, which are included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, filed with the Securities and Exchange Commission (“SEC”) on March 1, 2019.

Merger Agreement — On June 11, 2019, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") with Dassault Systèmes SE ("Dassault Systèmes"), Dassault Systèmes Americas Corp. (the "Parent"), and 3DS Acquisition 6 Corp. (the "Merger Sub"), providing for, among other things, subject to the terms and conditions of the Merger Agreement, the acquisition of the Company by the Parent at a price of $92.25 per share in cash, without interest, through the Merger Sub and into the Company (the "Merger"), with the Company surviving the Merger as a wholly owned subsidiary of the Parent.

On July 19, 2019, the Company filed its definitive proxy statement on Schedule 14A with the SEC for a special meeting of its stockholders to be held on August 16, 2019 in connection with the Merger. The transaction is expected to close during the second half of 2019, subject to certain conditions including regulatory and shareholder approvals. Until the close of the transaction, the Company will continue to operate independently.

A description of the material terms of the Merger Agreement is available on the Company's Current Report on Form 8-K filed with the SEC on June 13, 2019; the full text of the Merger Agreement has been filed as Exhibit 2.1 thereto, and has been incorporated by reference as Exhibit 2.1 to this Quarterly Report on Form 10-Q.

Basis of Presentation — The accompanying interim condensed consolidated balance sheets as of June 30, 2019 and December 31, 2018, the condensed consolidated statements of operations for the three and six months ended June 30, 2019 and 2018, the condensed consolidated statements of comprehensive income for the three and six months ended June 30, 2019 and 2018, and the condensed consolidated statements of cash flows for the six months ended June 30, 2019 and 2018 are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the SEC for interim financial reporting. Accordingly, certain information and footnote disclosures have been condensed or omitted pursuant to SEC rules that would ordinarily be required by U.S. GAAP for complete financial statements. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto for the fiscal year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 1, 2019.

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments consisting of normal recurring accruals considered necessary to present fairly the Company’s financial position as of June 30, 2019, results of its operations for the three and six months ended June 30, 2019 and 2018, comprehensive income for the three and six months ended June 30, 2019 and 2018, and cash flows for the six months ended June 30, 2019 and 2018. The results of operations for the three and six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019.

Accounts Receivable — Accounts receivable are recorded at original invoice amount less an allowance that management believes will be adequate to absorb estimated losses on uncollectible accounts. This allowance is based on an evaluation of the collectability of accounts receivable and prior bad debt experience. Accounts receivable are written off when deemed uncollectible. Unbilled receivables consist of revenue recognized in excess of billings, substantially all of which is expected to be billed and collected within one year. As of June 30, 2019 and December 31, 2018, unbilled accounts receivable of $51.4 million and $38.6 million, respectively, were included in accounts receivable on the Company's condensed consolidated balance sheets.

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MEDIDATA SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Leases — At the inception of an arrangement, the Company evaluates the existence and type of lease; the Company has determined that all of its leases are operating leases, which are recognized as operating lease assets and operating lease liabilities on its condensed consolidated balance sheet as of June 30, 2019 (subsequent to the adoption of Accounting Standards Codification ("ASC") 842, Leases on January 1, 2019). Operating lease assets represent the right to use an underlying asset over the lease term, and operating lease liabilities represent the obligation to make lease payments. Some of the Company's leases contain options to extend or terminate; the Company is reasonably certain that it will not exercise these options and does not consider them in the determination of the lease term.

Leases with an initial term of twelve months or less are not recorded on the balance sheet; the Company recognizes the related expense on a straight-line basis over the lease term. For leases beginning in 2019 and later, the Company accounts for lease components together with nonlease components. Operating lease assets and liabilities are recognized based on the present value of the remaining lease payments as of the commencement date. As the majority of its leases do not provide an implicit interest rate, the Company uses the estimated incremental borrowing rate that would be required to secure a loan from a third-party lender over the relevant term. For further information, see Note 9, “Leases."

Income Taxes — The Company’s interim period provision for income taxes is computed by using an estimate of the annual effective tax rate, adjusted for discrete items taken into account in the relevant period, if any. Each quarter, the annual effective income tax rate is recomputed and if there are material changes in the estimate, a cumulative adjustment is made.

Recently Adopted Accounting Pronouncements — In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, Leases, which replaces previous lease guidance in its entirety with ASC 842 and requires lessees to recognize lease assets and lease liabilities for those arrangements classified as operating leases under previous guidance, with the exception of leases with a term of twelve months or less. The Company adopted ASU No. 2016-02 on January 1, 2019 using the additional transition method, which allows prior periods to be presented under previous lease accounting guidance. Refer to Note 9, "Leases," for related disclosures.

In February 2018, the FASB issued ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which permits companies to reclassify disproportionate tax effects in accumulated other comprehensive income caused by the U.S. Tax Cuts and Jobs Act enacted in December 2017 to retained earnings. ASU No. 2018-02 is effective for annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods. The Company adopted ASU No. 2018-02 on January 1, 2019, and the adoption did not have a material impact on its condensed consolidated financial statements.

Recently Issued Accounting Pronouncements — There have been no changes in the expected dates of adoption or estimated effects on the Company's consolidated financial statements of recently issued accounting pronouncements from those disclosed in the Company’s Annual Report on Form 10-K.

2. REVENUES

Disaggregation of Revenue

The following tables provide information about the Company's revenues, disaggregated by geographical market and revenue type, for the three and six months ended June 30, 2019 and 2018 (in thousands):

	Three Months Ended June 30,
	2019						2018
	Subscription		Professional Services		Total		Subscription		Professional Services		Total
Revenues:
United States	$	111,245	$	22,222	$	133,467	$	99,646	$	18,526	$	118,172
Rest of Americas	1,680		232		1,912		1,689		277		1,966
Total Americas	112,925		22,454		135,379		101,335		18,803		120,138
Japan	7,392		1,825		9,217		7,665		1,261		8,926
Rest of Asia Pacific	6,849		2,382		9,231		3,875		1,243		5,118
Total Asia Pacific	14,241		4,207		18,448		11,540		2,504		14,044
Europe, Middle East and Africa	22,840		3,793		26,633		17,611		4,112		21,723
Total	$	150,006	$	30,454	$	180,460	$	130,486	$	25,419	$	155,905

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MEDIDATA SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

	Six Months Ended June 30,
	2019						2018
	Subscription		Professional Services		Total		Subscription		Professional Services		Total
Revenues:
United States	$	220,081	$	39,739	$	259,820	$	195,811	$	34,510	$	230,321
Rest of Americas	3,483		471		3,954		1,998		481		2,479
Total Americas	223,564		40,210		263,774		197,809		34,991		232,800
Japan	18,289		4,298		22,587		15,777		3,055		18,832
Rest of Asia Pacific	12,853		4,118		16,971		7,576		2,381		9,957
Total Asia Pacific	31,142		8,416		39,558		23,353		5,436		28,789
Europe, Middle East and Africa	42,175		8,457		50,632		36,143		7,371		43,514
Total	$	296,881	$	57,083	$	353,964	$	257,305	$	47,798	$	305,103

The above tables present revenues according to the region in which they were generated, separately displaying those individual countries that, in any of the periods presented, constituted 5% or more or of total revenues. All of the Company's performance obligations are transferred to customers over time; as a result, no disaggregation of revenues by timing of revenue recognition is provided.

Contract Balances

The following table provides information about changes in the Company's deferred revenue balances during the six months ended June 30, 2019 and 2018 (in thousands):

	Deferred Revenue
	2019			2018
Balance as of January 1	$	78,306		$	82,631
Revenue recognized that was included in deferred revenue at the beginning of the period	(59,735		)	(71,137		)
Revenue recognized that was not included in deferred revenue at the beginning of the period	(283,164		)	(233,400		)
Increases due to invoicing	341,248			297,161
Revenue recognized in excess of billings (billings in excess of revenue recognized)	12,820			(680		)
Other	(6,749		)	1,493
Balance as of June 30	$	82,726		$	76,068

Aside from the accounts receivable presented on its condensed consolidated balance sheets, the Company did not have any material contract assets for any of the periods presented.

Transaction Price Allocated to the Remaining Performance Obligations

As of June 30, 2019, the Company has unsatisfied performance obligations associated with subscription services that extend through 2030. The total multi-year transaction price allocated to unsatisfied subscription performance obligations is approximately $1,042 million as of June 30, 2019. Of this amount, approximately $290 million, $440 million, and $312 million are expected to be recognized in 2019, 2020, and thereafter, respectively.

As of June 30, 2019, the total transaction price allocated to unsatisfied professional services performance obligations is immaterial.

Costs to Obtain and Fulfill a Contract with a Customer

Sales commissions earned are considered incremental and recoverable costs of obtaining a contract with a customer and therefore are capitalized as contract costs. Capitalized contract costs were $66.0 million and $60.0 million as of June 30, 2019 and December 31, 2018, respectively. The current portion of capitalized contract costs is represented by capitalized contract costs on the Company's consolidated balance sheets; the long-term portion is included in other assets. 

Amortization of capitalized contract costs was $6.7 million and $4.6 million for the three months ended June 30, 2019 and 2018, respectively and $13.3 million and $9.5 million for the six months ended June 30, 2019 and 2018, respectively. There have been no impairment losses related to capitalized contract costs.

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MEDIDATA SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

3. STOCKHOLDERS' EQUITY

Common Stock — Common stockholders are entitled to one vote for each share of common stock held. Common stockholders may receive dividends if and when the board of directors determines, at its sole discretion.

Treasury Stock — From time to time, the Company grants nonvested restricted stock awards ("RSAs"), restricted stock units ("RSUs"), and performance-based restricted stock units ("PBRSUs") to its employees pursuant to the terms of its Second Amended and Restated 2017 Long-Term Incentive Plan, as Amended ("2017 Plan") and formerly pursuant to the terms of its Second Amended and Restated 2009 Long-Term Incentive Plan ("2009 Plan”). Under the provisions of the 2017 Plan and 2009 Plan, unless otherwise elected, participants fulfill their related income tax obligation by having shares withheld at the time of vesting. On the date of vesting, the Company divides the participant's income tax withholding obligation in dollars by the closing price of its common stock and withholds the resulting number of vested shares. The shares withheld are then transferred to the Company's treasury stock at cost. During the six months ended June 30, 2019 and 2018, the Company withheld 452,021 shares at an average price of $74.99 and 271,585 shares at an average price of $67.23, respectively, in connection with the vesting of equity awards.

In addition, with regard to stock options granted under the 2009 Plan, option holders may pay option exercise price and applicable income tax obligations in shares with express approval by the Company's board of directors. Withheld shares are transferred to the Company's treasury stock at cost. During the six months ended June 30, 2019, the Company withheld 123,363 shares at an average price of $91.22 in connection with the net exercise of stock options.

Nonvested restricted stock awards forfeited by plan participants are transferred to the Company's treasury stock at par. During the six months ended June 30, 2019 and 2018, 124,746 and 189,668 forfeited shares, respectively, were transferred to treasury stock at their par value of $0.01.

Accumulated Other Comprehensive Loss — For the six months ended June 30, 2019 and 2018, reclassifications of items from accumulated other comprehensive loss to net income were insignificant.

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MEDIDATA SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The following reconciliations present significant changes in the components of stockholders' equity for the three and six months ended June 30, 2019 and 2018 (in thousands):

								Accumulated other comprehensive loss
(amounts in thousands)	Common stock		Additional paid-in capital		Treasury stock			Foreign currency translation adjustments			Unrealized gains (losses) on marketable securities			Retained earnings		Total
Balance - January 1, 2019	$	661	$	574,667	$	(152,849	)	$	(4,255	)	$	(614	)	$	213,838	$	631,448
Comprehensive income, net	—		—		—			372			394			11,145		11,911
Stock-based compensation	—		19,730		—			—			—			—		19,730
Issuance of shares under stock-based compensation plans	13		2,328		—			—			—			—		2,341
Acquisition of treasury stock in connection with vesting of awards	—		—		(28,704		)	—			—			—		(28,704		)
Balance - March 31, 2019	$	674	$	596,725	$	(181,553	)	$	(3,883	)	$	(220	)	$	224,983	$	636,726
Comprehensive income, net	—		—		—			(605		)	164			7,893		7,452
Stock-based compensation	—		21,974		—			—			—			—		21,974
Issuance of shares under stock-based compensation plans	5		10,751		—			—			—			—		10,756
Acquisition of treasury stock in connection with vesting of awards and exercise of options	—		—		(16,449		)	—			—			—		(16,449		)
Forfeiture of nonvested restricted stock awards	—		1		(1		)	—			—			—		—
Balance - June 30, 2019	$	679	$	629,451	$	(198,003	)	$	(4,488	)	$	(56	)	$	232,876	$	660,459

								Accumulated other comprehensive loss
(amounts in thousands)	Common stock		Additional paid-in capital		Treasury stock			Foreign currency translation adjustments			Unrealized gains (losses) on marketable securities			Retained earnings		Total
Balance - January 1, 2018	628		486,147		(132,705		)	(2,459		)	(918		)	161,917		512,610
Comprehensive income, net	—		—		—			1,270			(968		)	10,325		10,627
Stock-based compensation	—		13,214		—			—			—			—		13,214
Issuance of shares under stock-based compensation plans	9		2,357		—			—			—			—		2,366
Acquisition of treasury stock in connection with vesting of awards	—		—		(16,614		)	—			—			—		(16,614		)
Balance - March 31, 2018	$	637	$	501,718	$	(149,319	)	$	(1,189	)	$	(1,886	)	$	172,242	$	522,203
Comprehensive income, net	—		—		—			(1,954		)	539			16,589		15,174
Stock-based compensation	—		15,190		—			—			—			—		15,190
Issuance of shares under stock-based compensation plans	6		10,427		—			—			—			—		10,433
Acquisition of treasury stock in connection with vesting of awards	—		—		(1,644		)	—			—			—