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Medidata Solutions Inc  (NASDAQ:MDSO)
Q3 2018 Earnings Conference Call
Oct. 18, 2018, 8:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, ladies and gentlemen, welcome to the Medidata Third Quarter 2018 Conference Call and Webcast. At this time, all participants are in a listen-only mode. Later, there will be a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to turn the conference over to Betsy Frank, Head of Investor Relations. Ma'am, you may begin.

Betsy Frank -- Head of Investor Relations

Thank you, Shannon. Good morning, everyone. Thank you for joining Medidata's third quarter earnings call. I'm here today with our Chairman and Chief Executive Officer Tarek Sherif; our President, Glen de Vries; and our Chief Financial Officer, Rouven Bergmann. They will each deliver remarks and then we will open it up for your questions.

But first I would like to remind you that elements of this discussion are forward-looking and based on our best view of the business as we see it today. I refer you to our detailed disclaimers set forth in the press release and our filings with the SEC. Forward-looking statements are subject to risks that could cause actual results to differ from expectations. We disclaim any obligation to update or revise these. We will also discuss some non-GAAP financial measures that we think help to explain our underlying performance. Today's press release provides a reconciliation of US GAAP to these measures. And with that, I will turn the call over to Tarek.

Tarek Sherif -- Chairman and Chief Executive Officer

Thanks Betsy, and thank you all for joining us this morning. We had a strong third quarter both financially and operationally. I'm very proud of our team's execution in a quarter that is typically impacted by seasonal factors. Revenue grew 18% and EBITDA margin was over 25%. Our positive results are reflective of the health of our business. We're seeing good momentum positioning us well to achieve our full-year plan and laying the foundation for healthy growth in 2019.

Our results demonstrate the durability and resilience of our core franchise. To that point, we are gaining market share in our Rave business. In fact, we've seen an acceleration in revenue growth driven by higher win rates and we're seeing better attach of our integrated solutions. With over 1,100 customers currently running nearly 5,000 studies in a 130 countries, we are the largest cloud company in clinical development. We continue to build a solid foundation that will drive future growth. Our reach, it is truly global as evidenced by high-profile deals we signed with the largest sponsors in China and Korea this quarter. The continued strength and predictability of professional services demonstrate our deep domain knowledge and the value our customers see in working with us. Highlighting this fact is sustainability of this revenue even if some of our largest implementations have already gone live. Moreover, the fundamentals of our business and the industry overall are very positive as innovation, efficiency, and digital transformation are priorities for our customers .

Now let's go a little bit deeper on our results. Our core business is healthy and we are expanding our market share. We now have over 15,000 trials on Rave. This number has doubled over the past four years and growth is accelerating. This is in part due to many of our high-profile enterprise wins as sponsors ramp their study starts. It also reflects our success in addressing the needs of mid-sized and smaller customers. The data repository we're building as a result of this is by far the largest and most comprehensive in the industry. To put it in perspective, we have about 4.5 million subjects and nearly 600,000 sponsor site relationships. We believe we're currently in the earliest stages of unlocking its value.

With larger enterprise deals tend to get a lot of focus, it's important to note that our single study business is very healthy, both unique bids and our win rate on Rave hit all-time highs this quarter. In our efforts to drive incremental platform adoption, we're always looking for opportunities to attach additional products to Rave, single study or enterprise. Today, we're seeing significant momentum with RTSM and ePRO among others both with sponsors and with partners. Our attach rates are accelerating due to the maturity of these solutions and focused execution. By example, this quarter, we signed 13 new ePRO customers and 31 RTSM customers. Glen's going to talk about the significance of this a little bit later.

At a higher level, we are well positioned to meet the complex needs of the industry in accelerating their digital transformation. One proof point comes from platform deals we signed this quarter and over the past several years. Typical customers start with Rave and expand toward the platform. However, companies with more aggressive plans to transform the way they innovate are more likely to adopt the full platform at their entry point. I mentioned that we signed the largest sponsor in China this quarter, that was a platform win, and we had our first platform win with a mid-tier CRO in the US.

One quarter end, the integration of SHYFT is going well and we're seeing some healthy trends emerging. We signed three new sponsors, one new partner and had the highest number of new deals this quarter. We're seeing all the right synergies fall into place. We've made good progress on integrating the back-office. We're seeing a lot of new sales opportunities and our two sales organizations are working together, leveraging existing relationships. While we are addressing a new market with different buyers, our sales forces are working together to create awareness around SHYFT. As the partner channel continues to grow in strategic importance for Medidata, we're confident that SHYFT can add value to these relationships as well.

I also want to note that one of our core thesis for the acquisition was around the importance of real world evidence. This is a key focus area for life science companies today and we are having a lot of conversations around Quantum, SHYFT's RWE platform. We're confident in Quantum's prospects for becoming a standard in the industry over time.

Finally, I want to highlight some important third-party validation we received this quarter. First, we were recognized in Fortune's 100 fastest growing companies for the second year in a row. And second, we were certified by the Great Place To Work Institute. I'm proud of our employees and I'm proud of the culture we've cultivated.

In summary, our good Q3 results put us on track to execute on our full-year plan, which represents healthy top line growth and a healthy margin expansion. We have all the elements in place to be successful in 2019 and are well positioned to achieve our longer-term growth goals.

With that, I'll turn it over to Glen.

Glen de Vries -- President

Thanks, Tarek. I am just back from the Global Site Solutions Summit, it was over this past weekend. That's up from the organization of the Society of Clinical Research Sites and got to meet with quite literally hundreds of investigators and site staff, good representative sample of our largest user community. We are universally pretty much part of their workflow and that's a great place to be in our industry, but I prefer the Tarek's comments. Today, I really want to focus on our direct customers and the CROs and the sponsors and explain why some of these trends are happening. Our platform strategy is one about being functionally broad and being deep where the platform behind research for patients, people are getting access to the most innovative therapies being developed around the world and you just can't shallowly address capabilities in that world. The functional, the scientific, the regulatory details are important and our focus is on on how those details get automated, they get automated easily, scalably and globally and that is why you see the momentum in the adoption of our platform beyond EDC. Tarek specifically mentioned ePRO and RTSM and let me go into little more detail about why these are such a natural extensions of what we do with Rave.

Let me start with ePRO. Nobody has the unified cloud approach that we have. You build your study once in Rave, ePRO is automatically deployed. Patients get their connectivity to the study via consumer app stores. Study designs are pushed out to them automatically and then all the data collected from those patients is seamlessly automatically integrated with Rave EDC. We had 24 patient cloud deals closed this quarter, including the 13 new ePRO customers that Tarek mentioned. And again, this is not just for simple stuff. We had recently extended our long-term relationship with the National Cancer Institute, which you probably already know about and they have around 300 studies running with us. The relationship is going to grow to be more than double that volume, and their Medidata footprint, because of what I was just describing, now includes ePRO as well.

Let me give you a similar explanation around RTSM, Randomization and Trial Supply Management, to be clear, that's the supply management around what is being tested in research. We've taken a uniquely integrated and configuration-driven approach to RTSM as well. This is a complicated, a traditionally complex and customization heavy space. It's also said a critical piece of virtually any research project. If you look at our momentum there, again it's both direct sponsor business as well as our CRO channel. In Q3, 13 different CRO partners implemented Randomization and Trial Supply Management along with Rave EDC and that is just a small fraction of the 245 RTSM studies that we started over the last 12 months.

As Tarek mentioned some recent high-profile wins in APAC. One of them was Hengrui, that's the largest pharma company in China. They run more than 70 studies in Asia and the US, Forbes listed them as one of the top 100 world's most innovative companies. This is also a great example of our global delivery capabilities and global compliance efforts, but this is also about our platform strategy. So Hengrui replaced their legacy vendor with Medidata Rave for the core of their clinical data management inclusive of course of EDC, but they also included RTSM and they're not just adopting us for clinical data management capabilities, they are also implementing our CTMS and eTMF solutions as part of their enterprise agreement.

So hopefully that gives you a sense of why our strategy is working the way we want it to work, and with those comments, I'll hand the call over to Rouven.

Rouven Bergmann -- Chief Financial Officer

Thanks, Glen. As you heard from Tarek, this quarter demonstrated the resilience of our business highlighted by 18% total revenue growth, strong profitability, and a nearly 2x sequential increase in operating cash flow. The accelerated subscription revenue growth by more than 100 basis points over the last quarter to 17% year-over-year.

Our growth drivers of density, intensity, and new customer wins continue to propel us forward. It's more than 1,100 customers on our platform. We have been adding on average nearly 50 net new customers per quarter since 2016. We're gaining market share in Rave by increasing our win rates and we're participating in more bids, but at the same point we're attaching more products. So essentially we are growing our share of wallet with every new deal.

Let me back this up with some numbers. Tarek mentioned unique bids are at an all-time high, meanwhile win rates have improved substantially since the beginning of 2017 and are now well north of 50%. And attach rates have improved meaningfully. Year-over-year, we have nearly doubled bookings for multi-product single study deals. So as you can see, these trends are stellar. Our Rave franchise is stronger than ever before. We are not only gaining market share by adding new customers, we're also very focused on expanding our existing enterprise relationships. Our revenue retention rate remained at record levels of 99.8% and our renewals over the past 12 months have generated a 28% uplift above prior contract volume. Both density and intensity contributed to this.

These strong trends driving top line growth also translate to healthy demand for our professional services business, up 22% in the quarter at a margin of over 33%. But I do not expect the growth rate to remain at this level. So please keep this in mind when updating your models. What's important to understand is sustainability and the stickiness of this offering.

What gives me confidence to say this? So when you look at our top 30 customers, their services engagement with us going back more than a decade on average. So there's real longevity here that drives the engagement and expanded use of our solutions and that's why this is such a great business.

Moving on to profitability. The combination of strong top line growth, healthy gross margins and focused investments led again to strong operating profit growth. EBITDA was $41.4 million with a margin of 25.3% despite a full quarter acquisition impact of SHYFT. Excluding this dilutive impact, our EBITDA margin in Q3 would have increased by 100 basis points year-over-year and this is in line with our pre-acquisition plan. Gross margin at 74.2% declined by approximately 300 basis points, primarily driven by purchase accounting related to the acquisition and a higher contribution of service revenue from SHYFT. The mismatch between revenue and expenses has the largest impact on gross margins. This is temporary and we expect gross margins will begin to expand again later next year. Non-GAAP net income is up 28% year-over-year and non-GAAP EPS is up 24%. We are expanding our profits as we grow our business and the scale we see now includes the SHYFT investment.

Moving on to the balance sheet. We entered the quarter was $218 million in cash and investments after paying down the $287 million convert. Operating cash flow was $33 million for the quarter, more than the past two quarters combined and putting us on track to exceed 80 million for the full year. Collections in the first weeks of October give us further confidence in exceeding this level.

As we've shared with you in the past, billings can fluctuate due to the timing of invoicing. Calculated billings were up 26% year-over-year and 16% on a trailing 12 months basis. Strong growth this quarter is associated with the study-by-study billings for which the majority go through our partners. DSOs went down slightly quarter-over-quarter to 73. I expect that over the next quarter or two DSOs will trend down in the mid to high 60s range with collections trending strong.

CapEx was $9.4 million in line with our full year expectations of $40 million. Now one additional point before moving on to the outlook. As the executive sponsor of SHYFT, I am extremely proud to see how well our teams are working together, be it product, sales, marketing or services creating new opportunities for our customers and value for our shareholders.

Now turning to our full-year outlook. Remaining adjusted subscription backlog for this year grew 19% to $139 million. In aggregate, adjusted subscription backlog plus remaining professional service revenue provides coverage of almost 98% to the total revenue guidance midpoint of $636 million. This plan now considers professional services revenue to be in the range of $98 million to $99 million for the year given the strong performance year-to-date.

So as you can see, we are on the path to achieving the midpoint of our guidance, and I feel good about where we stand, provided that our coverage is more than 350 basis points higher when compared to this time last year. And finally, I look forward to seeing all of you at our Investor Day next week, where we will focus the conversation on our long-term opportunity and execution.

Now, thank you again, and we'll now be happy to take your questions.

Questions and Answers:

Operator

Thank you. (Operator Instructions) Our first question comes from Sterling Auty with JPMorgan. Your line is open.

Sterling Auty -- JP Morgan Chase -- Analyst

Yes, thanks. Hi guys. Curious if you can -- curious if you can give us a sense of the SHYFT contribution in the quarter because we really want to try to get a sense of what was the organic subscription growth in the quarter and how did that compare versus what we saw in June?

Rouven Bergmann -- Chief Financial Officer

Yeah, hi, Sterling, good morning. Yeah, let me give you some additional color. And I think when you listened to the prepared remarks, we've been very focused on our core business which all represents organic growth. And not on the strong Rave results, but also our ability to upsell and cross-sell at the time of renew with 28% increase compared to par value at every renew. This is our core business, right. So this contributes to organic growth. As it relates to SHYFT and the financial implications of SHYFT and I think that's where you're looking -- material and core of your question is, really let's start with the profitability part because I think that's where we need to focus on, because that's where the majority of the impact from a financial perspective is.

Because of purchase accounting, we had to write down SHYFT's revenue and backlog, and as we said, all the way along, there's only $5 million to $6 million of incremental revenue that we have acquired from the SHYFT acquisition. And that $5 million to $6 million is spread over the remaining term in 2018, since the close of the acquisition. So it essentially affects a little bit the second quarter, very tiny, the third and the fourth quarter and a good portion of this is also professional services revenue. So it's not all subscription.

And -- but really the focus is on the bottom line because we have to recognize all the expenses while we only get a fraction of the revenue into our P&L in 2018 and I think that's where you see the dilution coming through, but at the same point in time, we're also already showing scale. Now if you just exclude SHYFT -- the SHYFT impact and you look at the bottom line results, there is about 200 -- over 200 basis points dilution to the quarter, as it relates to the EBITDA margin. And that's really where that impacts us.

And from a revenue perspective, I'm not prepared to breakout SHYFT versus Medidata. We are executing very well together. We are looking at joint opportunities of course since the close of the acquisition, we've been adding pipeline, we've been starting to sign deals, but they are starting small, because it's a small company that we've acquired and I expect that to really contribute in '19 and later into '20.

Sterling Auty -- JP Morgan Chase -- Analyst

Okay, great. And then the one follow-up would be then looking at the subscription line as you laid out all the elements in the prepared remarks, I think if we look at the guidance to the midpoint of the 636, investors are wondering relative to the comments that you made last quarter about reacceleration in that subscription line, I think should they be anticipating that that happens more in the first half of 2019 or later and what are the drivers to help that happen?

Rouven Bergmann -- Chief Financial Officer

Yes. No, I think, first, Sterling, we see that the third quarter results already show acceleration of actually 130 basis points in growth sequentially. We are -- sequential growth is actually in subscriptions 5%. But if you compare the growth rates of Q3 -- Q3 versus Q2, it's actually 130 higher growth rate that we put up in the third quarter. Now, if we look at -- to your point, if we look now to the 636 as the midpoint of our guidance, also now with the updated $98 million to $99 million contribution from professional services, I expect the second half of the year to show subscription revenue growth around 18% and that is acceleration.

Operator

Thank you. Our next question comes from Jamie Stockton with Wells Fargo. Your line is open.

Jamie Stockton -- Wells Fargo -- Analyst

Yeah, good morning. Thanks for taking my question. I guess maybe the first one, your comments about the momentum for Patient Cloud. I think that's one of the platforms that you guys have noted, has the potential to be maybe as impactful from a revenue standpoint per study as Rave. I guess maybe, is that right or are there circumstances where that could be the case? And then maybe if you could just give us some sense for whether or not we're seeing that as the most significant driver of the non-Rave portfolio right now?

Glen de Vries -- President

So, yeah, you're really getting at ASP I guess for that and it can be as large as Rave or it could be in the range of 70% to 80% of your typical ASP and Rave, it really depends on the study much. Right now, I'd say on average, it's probably about 70% to 80%, but it could be a 100%. So there is a potential for substantial growth and substantial contribution there. I wouldn't say it's the only large contributor. I mean we did call out Randomization and Trial Supply Management could -- again there we're seeing a lot of momentum in terms of the attach rate and the sort of -- if you look at our pipeline where bookings came from, where we expect bookings to come from, good contribution is there. That's not to say our other products aren't contributing.

On a quarterly basis, we'd like to highlight certain areas I think around ePRO we really differentiate in the market and we are starting to feel that in the marketplace, we're seeing customers I think quite -- quite happy with the offering that we have, and it is differentiated and the same thing with RTSM, it took us a while to get to market parity because that wasn't established market versus the ePRO market, which is a newer market. But now we're seeing our attach rates improve there and we expect that to continue.

Jamie Stockton -- Wells Fargo -- Analyst

Okay. And then maybe just one more quick one. It feels like you guys have been highlighting success in the Asia-Pacific region for a while now, from a contracting standpoint. If I delve into kind of the geographic numbers that you've disclosed in your filings, it feels like the business is still being very much driven by what's going on domestically though. So I guess my question would be, have we started to see maybe in this most recent quarter, the actual financial impact of the success in Asia-Pac in the numbers or is that really more something that has to come from here?

Glen de Vries -- President

Yeah, I think we're going to start to see more of it. I mean that the size of the deals in Asia-Pac are starting to increase. Remember, it was a relatively young market especially China, but the speed with which that is changing is pretty dramatic and it's -- they're achieving a certain level of maturity in terms of what they are doing from an innovation and development perspective and that means that I think we're going to start to see our ASP's move higher. We're going to see substantially more business coming up there. The base is broadening and so over '19 and '20, we've established a very good reputation in that market. We have a -- I think we have a great footprint and we expect the economics to follow over time.

Operator

Thank you. Our next question comes from George Hill with RBC. Your line is open.

George Hill -- RBC Capital Markets -- Analyst

Good morning guys and thanks for the color. I guess, Rouven and Tarek, I would ask historically we've seen the professional services growth be a good leading indicator by (inaudible) seen somewhere between 12 months and 18 months of future subscription revenue growth. However, if we kind of look back over the last 12 months to 18 months, that tie is starting to break down or at least we just haven't seen the subscription growth reaccelerate. I guess, is there anything different that's being sold in the professional services book or are we just seeing an elongation from that correlation or kind of has something changed?

Glen de Vries -- President

Yeah, I mean to some degree, you're making a good point, which is that we are selling more strategic services into our customers, as some of our other non-Rave products are being adopted in that. While that revenue is sticky, it is -- I wouldn't go as far as to say there is a breakdown between sort of the growth in services and subscription growth because as Rouven pointed out, we're starting to see that reaccelerate. But we are also seeing a different kind of it -- our customers are buying a different kind of service from us, and that's something that we wanted to see all along, because again it helps in terms of making our platform more sticky and then -- and our customers seeing more value from it. So there are service wrappers that we're putting around some of our more sophisticated solutions.

Tarek Sherif -- Chairman and Chief Executive Officer

I think it's relevant even in some of the things we talked about today, in fact the matter is the existing ePRO markets and vendors, now for long-term existing people who are doing what they call the IRT or IVRS now really part of this world of RTSM. We're doing things with pretty weak or customized technology and it was a kind of tiny segment of technology core with a lot of services around it, but what the customer wants is what they got from them, just with a much stronger technology core, we see our professional services as a way to take all of our strength intact and get right up to those customer expectations and that creates another kind of stickiness that fits into this equation.

George Hill -- RBC Capital Markets -- Analyst

Okay. Thanks. Maybe I can hit you with a quick follow-up, which is, there has been a lot of news probably since June from other companies trying to get involved in the clinical research technology space outside of EDC where I think you guys are kind of the unquestioned leader. I guess, can you talk about what you're seeing in the competitive market for the non-EDC products and the impact it's having on sales cycles?

Glen de Vries -- President

Sure. As you know, a lot of -- there are number of solutions that we have where we were attacking already matured markets. I think that RTSM's a good example, CTMS is another good example. And I think the level of competitiveness is probably not that different than what we've seen historically, you might switch names around here and there, but it's still -- they were all highly competitive and we were coming into those markets as a new vendor with products in some cases that weren't that mature. As our products have matured, our competitiveness has gone up, and our win rates have gone up and so that's kind of the trend that we point to. And then, I'm kind of bifurcating these opportunities, then there is the newer markets where I would put ePRO into that. I would certainly put our analytic solutions into it.

There are some competitors in ePRO, I don't think they have the same level of -- the same kind of solution we do, and we think we're going to be very competitive there. I think initially our entry into that market would take some time, but we're finding -- we're kind of finding our stride there and then if you look at what we're doing from an analytics perspective, we really pretty much don't have any competitors, right. It's -- we're dealing with sales cycles that are -- that revolve around solutions that are either internally based or perceptions even that are internally based, but it's not like we have direct competitors there.

Tarek Sherif -- Chairman and Chief Executive Officer

I just will add on the kind of the basic, whether it is EDC or not EDC, research is not single dimensional, the way I think some people talk about it, and I actually think the kind of attach rates that we're talking about today and one of the reasons we wanted to focus on that, is to emphasize how important being that multi-dimensional platform that can handle traditional data collection as well as some of these new ways that people want to measure safety and efficacy, you've got to be able to handle all the dimensions for clients to be relevant in their research portfolio, and when we talk about our competitive position, that is such an important differentiator for us.

So we're just as excited about virtual trials as other people, you've heard us talk about that in detail. But the point is that we can do a trial that's partially virtual, we can have a leading ePRO solution at the same time as we can have the best way to get data directly from the sites. That's the key to our core business.

Operator

Thank you. Our next question comes from Brian Essex with Morgan Stanley. Your line is open.

Brian Essex -- Morgan Stanley -- Analyst

Hi, good morning and thank you for taking my question. I was wondering if we dig in a little bit in the billings, maybe just a follow-on to Sterling's question. How seasonal are those and maybe Rouven, if we can get a sense of the impact of SHYFT on the billings side in terms of how much might have been kind of roll off from written off deferred and how do we think about that on organic basis?

Rouven Bergmann -- Chief Financial Officer

Yeah. Let's start with the last part first. The billings implication from SHYFT, It's very, very tiny. So that's not the driver. As I said in my prepared remarks, really what has driven the uptake in this quarter is the strong momentum we have seen through our study-by-study business that we typically orchestrate through our partner channel. And you know the strong -- we talked a lot about the strong relationships we have with our CROs and how we've evolved our partnerships and relationships over time and that's characteristic to this. So typically those stellar CROs that we work with have committed and fixed contracts with us and their billing cycles there is some level of volatility to this because we typically invoice them based on their consumption and so as we have started and signed new contracts, it takes some time to ramp them up. And so that was what was kind of little bit of a headwind to us in the second quarter, also where we were going through the cycle of an uptick, which we are now getting the benefit from in the third quarter. That's really what's driving that.

Brian Essex -- Morgan Stanley -- Analyst

Got it. That's helpful. And maybe just a follow-up on -- last quarter, I think you noted a pretty I think 24% renewal rate. I think this quarter there is a little bit of a different call out in your press release on net revenue retention rate, nearly a 100%, how are renewals trending and how much of a contribution was that in the quarter and how do we think about revenue retention as it's trended over the past couple of years?

Rouven Bergmann -- Chief Financial Officer

Yes, Brian, absolutely. The revenue retention rate is a metric that we used consistently over the years and I think it's important for investors and analysts to understand to the reflection of the stickiness of and in our customer relationships we have with, we very rarely lose a customer, and that's why the revenue retention rate is almost a 100% and after some feedback we received following the second quarter call, we decided to put that back and into the additional highlights of the press release. The renewal metric where we compare the renewal to par value for every quarter and we give this now as a trailing 12 months metric, just because with also renewals, there is some seasonality to renewals that the number of renewals and volume of renewals can change in any given quarter because of timing of renewals and that's why it makes sense to look at this over 12 months trailing period. And in my prepared remarks, I mentioned that on average over the last 12 months, we have increased the renew -- the value from renewals compared to par by 28% and that comes from adding more products, but also running more clinical trials. So both metrics are very strong.

Glen de Vries -- President

So, Brian, I just want to add, just because there have been a couple of questions around this. I think one of the things that we tried to get across in our prepared remarks is the industry is really healthy right now and our win rates are going up. So the core of the business, the Rave EDC business is actually reaccelerating in the midst of this and there's fundamental strength in our business, we're seeing a lot more bids and we're winning a lot more bids and we're increasing our attach rate, and I think you can sort of draw the conclusions you want from the impact that would have on subscription currently and into the future.

Operator

Thank you. Our next question comes from Sandy Draper with SunTrust. Your line is open.

Sandy Draper -- SunTrust -- Analyst

Thank you very much for taking the question. I guess the first one and maybe for Rouven or Tarek and actually Glen brought up a little bit on the -- on the services side, I think it's been commented before, it sort of continues to be a positive surprise on the services side, I think a lot of people sometimes think of services just as implementation. So one, maybe if you could sort of talk a little bit more about what beyond implementation are you really doing for the customer and also what's the typical duration of a services project? Is this something that typically rolls six months to nine months, goes for 18 months to 24 months. I mean, is there a way to think about the durability of those services projects?

Rouven Bergmann -- Chief Financial Officer

Yeah. Sandy, good morning. I'd start off and probably hand it over to Glen or Tarek following with some more comments, but first I want to maybe give some more context around what really drove the big growth this quarter. Just as kind of have more based on information for us to have the conversation. And to really drop the number this quarter was adverse, and we talked about, Jamie asked this question around the relevance of Asia. So, Asia was a big contributor to growth in our professional services number this quarter and that I think we see for the first time, which now really reflects the momentum we've generated there. That's one big contributor. The partner business secondly has been a large contributor to growth this quarter. And I also want to quickly touch on our enterprise segment within professional services. Over the last two years, we talked a lot about the large-scale implementations we have done and that are under way, and those -- and I think that's very, very important to note they are now starting to kind of trend down and we've completed those transformational projects and high-scale projects, and at the same point in time, those enterprise professional services revenues still stay at a very high level and are very solid. So initially going back two years ago, we actually weren't really sure if there is going to be a drop-off at some point in time because these large-scale implementations are going to wind down at some point, but that's not happening. And that brings me to the other part of your question around the longevity of those arrangements. I was -- in my prepared remarks, talking about the top 30 customers where we have services relationships that go back to more than 10 years, and I will talk more in detail about this in a separate section at our -- my Financial Analyst Day presentation. So I don't want to take too much thunder away from that because it's a deep-dive topic for this part. But what's really important is that we've been growing our services revenue with those top 30 customers steadily over the last 10 years while at the same point in time our margin has gone up very significantly in the last -- over that period of time as well. So that really represents the type of relationship and the financial strength we have in our services business and I hand over to Glen.

Glen de Vries -- President

Yeah, I'll make a quick comment around why some of these service engagements continue from a industry perspective. So it's not like traditional software-as-a-service platform, where you implement it and then you're off and running. These clients are changing their therapeutic focus, they're deciding to take different approaches to what types of data they're going to integrate into a clinical trial. There is an ongoing guidance that we and they have realized is a productive piece of having us as part of their infrastructure. And so that drives some of these continuing relationships and to put one of my answers before around ePRO and RTSM in the same context, it could've been with another vendor that a client was saying, this is how I want my randomization to work, this is how I want my supplies to work, and that vendor would take that "spec" and run off and build custom software and use duct tape in the hope to put something together for them. All it takes to deliver that order in the Medidata platforms is some pointing and clicking. But the customer still may not have the organization to do that pointing and clicking. They still may want to describe to the Medidata services person how they want that randomization and that supply to be set up and we can just do it that much more efficiently because the core of our technology is so strong. I do think that's why we're so strong in the partner market because it's a great opportunity for a contract research organization to take some of that underlying services and turn it into better margin. So hopefully that kind of scratches the itch from another perspective as well.

Tarek Sherif -- Chairman and Chief Executive Officer

So I'm going to get in on this act too. I have a comment that sort of thinking about something as Glen was talking, which is really one of the things that keeps coming up is you know, what's our competitive situation like, there have been some questions that come up about EDC. I think those are pretty much irrelevant given the results we're seeing, but part of what really differentiates us and has made entry into this market difficult for typical software vendors is you need to have a lot of deep domain expertise in your services organization, it's not good enough to just hand over the software and assume that everything is going to go well because the implementations are difficult, the ongoing support requires a lot of domain experience, you're doing it on a global basis with complex science and so I think that's why you've seen the industry gravitate to us away from other competitors and that's why our win rates are going up. That's why we're so sticky. So in the core of our business, that marriage between having the right software and having the right services people really is a combination that's very difficult to beat. And that's, I think that's -- that's been a big contributor to our success.

Sandy Draper -- SunTrust -- Analyst

Okay. That was all -- all that was really helpful, I appreciate that. And maybe just one quick follow-up. When we think about 2019 renewals, can you sort of characterize and I would just give a broad range of sort of average, high or low, how would you think about -- what's up for renewals going into '19? Is this a big renewal year, an average year or a pretty light year?

Rouven Bergmann -- Chief Financial Officer

Yeah, no, I would -- Sandy, I would start -- let's focus on Q4. Right. So Q4, there are some big enterprise renewals that we are currently working through, that are very well on track, and and that's really what's going to matter as we're transitioning over into 2019 because every one of those renewals with a potential to upside contribute to backlog and that sets us up for a nice transition into 2019 , but with -- I'm not -- we are not concerned about our ability to renew enterprise deals. If you look at our revenue retention rate, if you look at our strong uptick, uplift at renewals, all of this points to the -- to our competitiveness and strength.

Operator

Thank you. Our next question comes from Scott Berg with Needham. Your line is open.

Scott Berg -- Needham -- Analyst

Hi, Rouven, thanks for taking my question. I have one and then a follow-up. I just would like to (Technical Difficulty)

Rouven Bergmann -- Chief Financial Officer

Scott, you just faded out, I don't know if you can hear us.

Scott Berg -- Needham -- Analyst

Okay. Is that any better? I'm sorry about that.

Rouven Bergmann -- Chief Financial Officer

Yeah. Yes, that's much better.

Scott Berg -- Needham -- Analyst

Fantastic. Tarek, I think you've made the comment on or maybe it was Glen, I was just off once, this quarter was the highest number of deals ever in a quarter and I just wondered to see if you can help us quantify that maybe with some any additional data in terms of maybe attach rates or ASPs, obviously a lot of that -- lot of deals is great, but seriously how that maybe stacking up against prior quarters in terms of (Technical Difficulty).

Glen de Vries -- President

Yeah. Just -- just to clarify, so it said it was the highest number of unique bid or bids that we've had, and that in the SHYFT business, we saw the number -- the highest number of signed deals that they've had. I don't actually have the metric for our total number of signed deals. I know that I -- based on sort of the strength we're seeing in the business -- our win rates definitely up and I don't have quantitative -- anything quantitative I can share with you right now but ASPs. But I would argue with -- I would argue that they're pretty healthy.

We're not -- we're not seeing any kind of pricing degradation or anything like that happening. In fact, given our attach rates going up, our ASPs are moving higher because if you're selling Rave plus ePRO or Rave plus RTSM, you're going to see an uplift of 50%, 60%, 70% something like that. When you sign one or if both, it will be higher than that.

Scott Berg -- Needham -- Analyst

Got it. Very helpful, thank you. And then on the follow-up perspective, Rouven, you had talked about professional services guidance for the year, which I think, by my math was roughly $3 million higher than your prior guidance, that is then walked up a couple of quarters now, I know you're maintaining your overall revenue guidance, which is -- which is the big band. So certainly would accomplish a couple of million dollar change, but I guess I wanted to see what's going on in the business and I guess drive that number higher over a two-quarter span because I don't remember seeing that any of your guidance last couple of years where you've been constantly walking in professional services that much.

Rouven Bergmann -- Chief Financial Officer

Yeah so, to add to what I just -- and we need to build on the question before when Sandy asked that kind of going to the similar point, the one thing to add of course as well is that SHYFT professional services has contributed in the third quarter, and of course, that is net incremental. We don't have that in our -- in any comparable basis. So the like-for-like comparison is there a little off, right. So that's an additional data point that you need to consider that has driven the professional services number up, besides everything else that Tarek and I and Glen just mentioned around the momentum we have in the services business, there is a contribution from SHYFT as well reflected in the third quarter. It's a first full quarter since the close of the acquisition. And you're right, this was just -- so this time, it's a big jump up and we are now planning to see like $98 million to $99 million from professional services and so that reflects all of those elements. I hope that's clarifying your question.

Operator

Thank you. Our next question helps from David Windley with Jefferies. Your line is open.

David Windley -- Jefferies -- Analyst

Hi, thanks. Probably follow-ups from me. So, Rouven, wondering if, based on the guidance and parameters you've laid out, wondering if it would be reasonable for us to look at SHYFT as something like $2.5 million a quarter, you said 5 to 6, small amount in 2Q, maybe $2.5 million each of the remaining two quarters and then half or more, are we thinking kind of more than half of that is in professional services. Is that reasonable?

Rouven Bergmann -- Chief Financial Officer

No, the professional -- so overall it's reasonable, so the $5 million to $6 million, that is the acquired revenue in our backlog that we took over with the acquisition of SHYFT and that's what we are recognizing as the part that we had to write down, that's what we are recognizing in Q3 and Q4, but the professional services part is much more than the number you referred to. Professional services for that part is more in the range of 30% to 40% of the total revenue of $5 million to $6 million. So there's a bigger impact to professional services that you probably think today is.

David Windley -- Jefferies -- Analyst

Sorry, so professional services is 30% to 40% or app services is 30% to 40%?

Rouven Bergmann -- Chief Financial Officer

No, professional services is around -- around 40% of the $5 million to $6 million is professional services revenue.

David Windley -- Jefferies -- Analyst

Got it, OK. Probably a question that Glen will jump on, but I'm wondering, you're talking about ePRO and some Patient Cloud, what is Medidata doing or seeing in eCOA?

Glen de Vries -- President

Yeah. So yeah, you're right, I'm going to jump all over that. So we actually do both ePRO and eCOA and there's probably a bunch of people in our Patient Cloud team who every time I just say ePRO, not ePRO, eCOA are going to demand that I put a quarter in a cookie jar somewhere, but they -- we think that eCOA is an increasingly important tool in clinical development. We're not in the eSource space where you see people trying to kind of replace the full electronic health record infrastructure at a site. We have people who push data in from eSource platforms, but that's kind of something we see as a temporary step along the way to better and better as you've also heard us talk about in the past, direct actual EHR to the clinical data management, the brave back end future, but having a tool that is being used by not only a patient but by a physician in real-time to collect data that's going to be used for an endpoint, that's a 100% part of what we can do and what I was referring to is our ePRO solution works the same way, deployed the same way. I mean, in fact, the site can have a tablet where they do eCOA and eConsent and actually it's one of our strengths in that market is that we can just do all that in one piece of infrastructure.

Operator

Thank you. Our next question comes from Donald Hooker with KeyBanc. Your line is open.

Donald Hooker -- KeyBanc -- Analyst

Great, good morning. Just question, kind of some follow-up questions as well. In terms of bookings mix and trends, I mean, you guys seem to be emphasizing single study work that you're -- single study relationships that you're developing. I assume that's just with smaller kind of start-up emerging biotech companies or biopharma companies. Is there a big change there in the percentage or mix toward that? Is that kind of a new trend? And are there any kind of implications in terms of price and margin from that?

Glen de Vries -- President

No, I think -- Donald, I think what we're doing is just highlighting the strength of the business across the board. We obviously have enterprise deals that we signed and our renewal rates are good. We haven't had a big top 25 to announce, but we're doing quite well in the mid-market. So I wouldn't make the assumption that it's just single studies with small organizations, we are -- we do see a lot of bid volume through the channel and that's great. I mean that's healthy. But we're also still signing enterprise deals.

I think one of the things you also have to think about is that historically the single study is the lead end to us being able to sign an enterprise agreement because we then bundle multiple studies and upsell that and so I think we're really just talking about the breadth of our business, we're not overly leveraged to single studies and we're not overly leveraged to enterprise. I think they're both contributing to the growth in the bookings right now, I would say that overall win rates up. That's good. And attach rates are moving higher and there's good momentum there and I think that'll be -- that's something that we've talked about wanting to do for some time and we're starting to see that actually happen in a -- with a lot of momentum, which I think bodes well for the future.

Donald Hooker -- KeyBanc -- Analyst

Got you. And then I guess I think yesterday Oracle looks like it's planning to acquire goBalto and a lot of focus I hear all the time around the front end of the clinical trial, patient enrollment, feasibility studies and things like that. You guys haven't really commented much on that, but do you -- have you seen momentum there? Can you talk about the front -- you consider more on the front end of your solutions that kind of demand trends or where you're seeing traction or where you hope to see more traction?

Glen de Vries -- President

So we do do stuff in the kind of clinical trial planning world and when people are using our platform, there's Site Master Data Management. We help them look at study designs and think about both from a practical perspective what sites to work with and also from a more mathematical perspective, what's a good model to think about from an enrollment trend. I mean we have a great data source for that, but yeah, actually, I'll just specifically address goBalto. I mean, I think they do a lot of stuff that's complementary to us, we've always really liked those guys, we're really happy for them, and we're actually an old bunch of accounts together where I think there's great opportunity for us to be collaborating.

I'm excited about the fact that hopefully those guys now have little more gas in the tank and we can put some leverage into how we can work with some of their really cool study start-up stuffs. So I was just actually with some -- some of the goBalto people at the Society of Clinical Research site. So I think what they do is largely complementary, it's not like we're absent in the space of thinking about starting up a trial. And again, we actually saw that as a positive thing for our clients in the industry.

Operator

Thank you. Our next question comes from Sean Wieland with Piper Jaffray. Your line is open.

Sean Wieland -- Piper Jaffray -- Analyst

Hi, thanks. I guess most of my questions have been answered. On SHYFT, can you just maybe talk about since the last quarter since you've acquired the business more from a strategic basis of how that's positioned both to cross-sell within your existing base of enterprise accounts and then how that has strategically positioned you to win more deals as we look out into 2019?

Glen de Vries -- President

Sure. I mean we're just getting started with this product with -- with how we align from a sales perspective. Obviously, we said the integration is going well. We've got the back-office stuff well in hand. Sales organizations are working together, I think we expect to be -- to be more synergies as we get into 2019, but it does -- it does change the tenor of the conversations we're having. There is a lot of focus right now on real world evidence, there aren't any scalable platforms out in the marketplace currently, and so that's creating a a lot of conversations within our existing base and actually quite frankly with other companies who haven't historically been Medidata customers certainly run around EDC.

So I think there's a lot of strategic value in that for us. On the commercial side, that business is starting to ramp and I think SHYFT being part of a larger well capitalized company and being able to sort of accelerate their development plans and get them into more accounts again, we are seeing that starting to ramp, obviously you know 2019 is going to be a big year for us. We're seeing some wins now, but we're also seeing the pipeline really starting to grow and I think that's important and the partner channel as well.

So I think it's definitely elevated the conversation in certain parts of organization, it's given us an entree into organizations we haven't historically been able to penetrate from from an EDC perspective. So there's a lot more work to be done, but I think there's a lot of opportunities out there for us as well.

Operator

Thank you. Our next question comes from Gene Mannheimer with Dougherty & Company. Your line is open.

Gene Mannheimer -- Dougherty & Company -- Analyst

Thanks. Good morning and thanks for taking the questions. Can you -- can you talk a little bit about the strength of Rave relative to your total subscription revenue growth? So I know that historically Rave has been a low to mid teens grower and maybe that's dropped off a bit in the first half, but how should we think about that going forward relative to the total subscription pie?

And my follow-up would be on SHYFT. Rouven, if you said that revenue in from SHYFT is more professional services centric than is the mix of your core business, tell us how that becomes accretive in 2019? Thank you.

Rouven Bergmann -- Chief Financial Officer

Okay, let's start with the Rave question first. Thanks, Gene. And yes typically and I think we've been very consistent to say our Rave business around 12% to 15% grower and it can vary from quarter to quarter depending on the mix of deals. And that's not any different right now. Again, I reiterate what Tarek said, we've been so focused on this here also to reiterate the strength of this business that there is no doubt that Rave is winning market share and that we are expanding our share of water through the Rave opportunities because when you think about the attach opportunity every time we sell Rave EDC it creates an opportunity to add RTSM, to add ePRO, to add Payments, to eTMF, it creates multiple opportunities at our customers and that's why this is so strategic and important, but the 12% to 15% growth is really related to the Rave EDC part and that's been consistent and it's doing very well.

So that was the first part. Gene, can you repeat the second question again, I don't remember?

Gene Mannheimer -- Dougherty & Company -- Analyst

Sure. Just relates to the margin profile of SHYFT in the mix of professional services (Multiple Speakers)?

Rouven Bergmann -- Chief Financial Officer

Okay. Yeah. So I think we've -- when you look around -- SHYFT of course it's much earlier in their life cycle than where we are, there is a higher service component in delivering their services. So there is a service engineering team, a professional services team, that's also why their cost of revenue part is higher than what you typically see on a percent basis for Medidata core. And that's -- then on the flip side driving a higher percent of professional service as a percent of total revenue, it's around 40% and -- but that is something -- that's the status quo.

When you look forward and of course, we are very focused with our investment to provide for the scale and drive this more toward subscription revenue growth and we think that we can -- through the investments we are making and the scale that we are providing, we can bring those two curves pretty much together into the same territory where we are with Medidata today over time.

Operator

Thank you. And this concludes the question-and-answer session. I'll now like to turn the call back over to Tarek Sherif for closing remarks.

Tarek Sherif -- Chairman and Chief Executive Officer

Again thanks for joining us today and I'm looking forward to seeing many of you next week at our next conference in New York City with more than a thousand other life science leaders and those of you who can't attend can watch it on the web and otherwise we'll see you on our Q4 call. Thanks again.

Operator

Ladies and gentlemen, this concludes today's conference. Thanks for your participation, have a wonderful day.

Duration: 57 minutes

Call participants:

Betsy Frank -- Head of Investor Relations

Tarek Sherif -- Chairman and Chief Executive Officer

Glen de Vries -- President

Rouven Bergmann -- Chief Financial Officer

Sterling Auty -- JP Morgan Chase -- Analyst

Jamie Stockton -- Wells Fargo -- Analyst

George Hill -- RBC Capital Markets -- Analyst

Brian Essex -- Morgan Stanley -- Analyst

Sandy Draper -- SunTrust -- Analyst

Scott Berg -- Needham -- Analyst

David Windley -- Jefferies -- Analyst

Donald Hooker -- KeyBanc -- Analyst

Sean Wieland -- Piper Jaffray -- Analyst

Gene Mannheimer -- Dougherty & Company -- Analyst

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