Medidata Solutions Inc (MDSO), salesforce.com, inc. (CRM): I’m Buying This High-Flying Stock Now

The second variable that I’ll keep my eye on is the number of clients using more than one Medidata product. If this number grows, it tells me that Medidata’s customers, satisfied with what Rave has done for their customers, are willing to spend more for Medidata’s other offerings.

This metric has only been reported over the last four quarters, but it also shows remarkable growth for such a short time frame.

Source: SEC filings.

Though the company spends heavily on research and development, the business model is very profitable. Because of the cloud’s scalable nature, each additional customer incurs only a slight bump in spending, meaning that additional revenue goes right to the bottom-line profit. That’s why Medidata has been able to grow its gross margins from 48.9% in the second quarter of 2008 to 75.1% in the most recent quarter.

The article I’m Buying This High-Flying Stock Now originally appeared on Fool.com.

Fool contributor Brian Stoffel owns shares of Johnson & Johnson. The Motley Fool recommends Johnson & Johnson and salesforce.com. The Motley Fool owns shares of Johnson & Johnson. 

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