Model N Announces Breakthrough Results in Fiscal Year 2007

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Breakthrough Financial Results Delivering 68% Revenues Increase, Eleven Consecutive Cash-flow Positive Quarters, and GAAP Profitability in Second Half of Fiscal Year

Our company is committed to full adoption of Model N solutions, and we are confident that our partnership with Model N will continue to grow as we expand our ability to respond to complex customer requirements in a rapidly changing marketplace.

Model N, Inc., a leading provider of Revenue Management solutions, today reported record financial results for its Fiscal Year 2007, which ended on September 30th. The highlights for the financial results include:

  • Revenue growth of 68% over FY2006
  • Compounded annual growth rate of 70% over the last three years
  • Cash flow positive for each one of the quarters in FY2007; 11 consecutive quarters of cash flow positive operations
  • GAAP profitability in Q3 and Q4
  • An additional 61% in deferred revenues, establishing a strong foundation for FY2008

“Model N’s tremendous financial results are a clear indicator of the significant value Revenue Management brings to Model N customers and of the strength of the business model, as well as of the strong execution and financial discipline of the Model N management team,” said Jim Breyer, Managing Director of Accel Partners. “In today’s increasingly challenging global economy, competition and regulatory risk are driving the need for companies to have greater visibility and control over revenue than ever before. Model N is well-positioned with its first-mover advantage to be the leading solution provider in this emerging category.”

“While I am pleased with our financial results, I am even more thrilled with our customer success, our strategic progress, and our organizational growth in FY2007,” said Zack Rinat, Founder and CEO of Model N. “The wide adoption of our regulatory and commercial applications by over 30,000 users, enabling them to process over $50B of revenue in 50 countries, is the true measurement of the leadership position of our customers and Model N. We will continue the joint journey to make Revenue Management a core competitive advantage for our customers.”

Customer Momentum

For the fiscal year 2007, Model N increased its customer base by almost 25% and sold more than 50 applications. This accelerating growth is validation of the company’s unique approach, which combines industry-specific expertise with the only integrated suite of applications for Revenue Management that eliminates revenue leakage and reduces regulatory exposure. All of the company’s new customer acquisitions were competitive wins — either against major ERP vendors or other vertical-specific incumbents — further positioning Model N’s Revenue Management suite as the solution of choice for implementing corporate revenue and compliance strategy. Major customer wins included:

  • Leading Life Science companies Alpharma, Inc. and Solvay Pharmaceuticals, Inc. selected Model N solutions as part of their regulatory compliance roadmap for implementing the Deficit Reduction Act (DRA) final rule.
  • Major drug manufacturer Astellas Pharma US, Inc., deployed multiple applications in the Model N suite to administer its Managed Care institutional and government books of business.
  • Biotech leader Gilead Sciences and independent specialty pharmaceutical manufacturer Medicis expanded their existing Model N investments by adopting Model N Managed Care.
  • Several leading semiconductor and component manufacturers opted to deploy the Model N High Tech Revenue Management Suite in order to increase sales opportunities, boost gross margins, and enhance POS revenue recognition processes.
  • A major pharmaceutical research firm selected Model N to strengthen its Government Pricing and Medicaid Claims processes, and a specialty pharmaceutical company has opted to deploy Model N’s Government Pricing and FSS Compliance solutions.
  • An affiliate of a global top-ten pharmaceuticals company selected Model N’s Government Pricing solution.
  • A top-ten generics manufacturer chose to implement the entire Model N Pharmaceutical Revenue Management Suite to gain better visibility and control over its revenue life cycle. In addition, two existing customers have opted to expand their existing deployments to include the entire Model N Life Sciences Commercial Suite.

"By bringing greater visibility and rigor to our revenue management processes, Boston Scientific is better enabling its sales organizations to serve our customers," said Jim Walker, Senior Vice President of Corporate Sales at Boston Scientific Corporation. "Our company is committed to full adoption of Model N solutions, and we are confident that our partnership with Model N will continue to grow as we expand our ability to respond to complex customer requirements in a rapidly changing marketplace."

Product Innovation

Model N continued its track record of developing industry leading Revenue Management solutions by expanding its Commercial and Regulatory application suites. New solutions include:

  • Managed Care (Pharmaceutical Suite): Administers the entire commercial Managed Care and Medicare Part D contracts-to-claims-to-cash lifecycle
  • FSS Compliance (Pharmaceutical Suite): Provides end-to-end business process support while allowing the monitoring and disclosure of all pricing information in order to reduce risk of FSS non-compliance
  • Deal Analytics (High Tech Suite): Brings real-time, operational business intelligence to the price negotiation process with advanced customer and quote analysis functionality

Model N’s agility in addressing market needs is enabled by its fifth-generation technology platform, which is being deployed in mission-critical environments by some of the world’s largest pharmaceutical, medical technology, and high tech manufacturers. In addition, Model N has nurtured a highly effective dialog with its customers regarding product development and direction through its ongoing Customer Advisory Board and Lighthouse (early adopter) programs.

Global Expansion

Capitalizing on its growing customer and product momentum, Model N has been expanding its market reach and strengthening its executive leadership team. This fall, the company launched its European operations in London. The European office is headed by former SAP and Siebel executive Niels Skov, who is working closely with Model N leaders and partners to further the global implementation of Model N solutions among multinational customers as well as attract new business in the growing European marketplace.

In addition, the company augmented its executive management team with several strategic, senior-level hires and promotions. New additions to the Model N executive team include Ariel Zach, Vice President, Product Development; Richard Fitchen, General Manager, High Tech; and Kamal Ahluwalia, Vice President, Corporate Marketing. Executive promotions include naming Rene Larro Vice President of Core Product Management and Ali Tore Vice President of Life Science Product Management. The addition of senior leadership in the Product Development organization has also allowed co-founder Yarden Malka to return to his role as Chief Technology Officer, focusing on extending Model N’s technology advantage and lending his experience to building the European business.

Revenue Management Community

Model N’s increasing growth and brand recognition are evidence of the formation of a strong Revenue Management community of industry experts, business owners, and IT leaders. The company’s annual Revenue Management Summit has rapidly become the premier event for Revenue Management leaders to learn, share knowledge, and examine emerging industry trends, as reflected by the more than 300% increase in attending customers from 2006 to 2007. The upcoming Model N Revenue Management Summit this February 5 to 7, 2008, in Scottsdale, Arizona, will build on this foundation by offering an even more compelling conference program.

About Model N

Model N is a leader in Revenue Management solutions, offering an integrated suite of applications for analytics, pricing strategy and execution, contracts, compliance, rebates, fees and charge-backs optimized for the industry practices of Life Sciences and High Tech companies. Enabling the creation of a seamless, end-to-end process from price setting through settlements payment, Model N's uniquely integrated approach eliminates revenue leakage and delivers the visibility and controls needed to avoid the risks of non-compliance to government reporting regulations such as Sarbanes-Oxley and government pricing requirements. Customers include: Boston Scientific Corporation; Bristol-Myers Squibb Company; Cypress Semiconductor Corporation; Intersil Corporation; Linear Technology Corporation; Medtronic, Inc.; Microchip Technology, Inc.; Micron Technology Inc.; Ortho-Clinical Diagnostics, a Johnson & Johnson company; ON Semiconductor, Inc. and Pfizer, Inc. Model N is located in Redwood Shores, California. For additional information, visit http://www.modeln.com.

Media Contact:

Megan Reilly
Model N, Inc.
Tel: 650-610-4773
mreilly(@)modeln.com

Model N is a mark of Model N, Inc. All other company names mentioned are the property of their respective owners and are mentioned for identification purposes only.

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Model N
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