PLEASANTON, Calif., Aug. 28, 2024 /PRNewswire/ -- Veeva Systems Inc. (NYSE: VEEV), a leading provider of industry cloud solutions for the global life sciences industry, today announced results for its second quarter ended July 31, 2024.
"It was another quarter of great execution, with major product advances in clinical and CRM that position us well for the industry cloud opportunity we see ahead," said CEO Peter Gassner. "Thanks to the team's focus on product excellence and customer success, we also had some very strategic wins that can pave the way for future opportunities."
Fiscal 2025 Second Quarter Results:
"We delivered strong financial performance in the second quarter, driven by execution across the business," said interim CFO and Board Director Tim Cabral. "We have a large opportunity ahead in life sciences, and have the right product strategy and operating model to deliver profitable growth through 2030 and beyond."
Recent Highlights:
Financial Outlook:
Veeva is providing guidance for its fiscal third quarter ending October 31, 2024 as follows:
Veeva is providing updated guidance for its fiscal year ending January 31, 2025 as follows:
Conference Call Information
Prepared remarks and an investor presentation providing additional information and analysis can be found on Veeva's investor relations website at ir.veeva.com. Veeva will host a Q&A conference call at 2:00 p.m. PT today, August 28, 2024, and a replay of the call will be available on Veeva's investor relations website.
What: | Veeva Systems Fiscal 2025 Second Quarter Results Conference Call |
When: | Wednesday, August 28, 2024 |
Time: | 2:00 p.m. PT (5:00 p.m. ET) |
Online Registration: | |
Webcast: | ir.veeva.com |
(1) The customer contracting change that standardized termination for convenience (TFC) rights in our master subscription agreements resulted in a change in the timing of revenue for certain customer contracts and reduced revenues, operating income and non-GAAP operating income, and net income and non-GAAP net income in the second quarter of fiscal 2024. |
(2) This press release uses non-GAAP financial metrics that are adjusted for the impact of various GAAP items. See the section titled "Non-GAAP Financial Measures" and the tables entitled "Reconciliation of GAAP to Non-GAAP Financial Measures" below for details. |
(3) Veeva is not able, at this time, to provide GAAP targets for operating income and fully diluted net income per share for the third fiscal quarter ending October 31, 2024 or the fiscal year ending January 31, 2025 because of the difficulty of estimating certain items excluded from non-GAAP operating income and non-GAAP fully diluted net income per share that cannot be reasonably predicted, such as charges related to stock-based compensation expense. The effect of these excluded items may be significant. |
About Veeva Systems
Veeva is the global leader in cloud software for the life sciences industry. Committed to innovation, product excellence, and customer success, Veeva serves more than 1,000 customers, ranging from the world's largest pharmaceutical companies to emerging biotechs. As a Public Benefit Corporation, Veeva is committed to balancing the interests of all stakeholders, including customers, employees, shareholders and the industries it serves. For more information, visit veeva.com.
Veeva uses its ir.veeva.com website as a means of disclosing material non-public information, announcing upcoming investor conferences, and for complying with its disclosure obligations under Regulation FD. Accordingly, you should monitor our investor relations website in addition to following our press releases, SEC filings, and public conference calls and webcasts.
Forward-looking Statements
This release contains forward-looking statements regarding Veeva's expected future performance and, in particular, includes quotes from management and guidance, provided as of August 28, 2024, about Veeva's expected future financial results. Estimating guidance accurately for future periods is difficult. It involves assumptions and internal estimates that may prove to be incorrect and is based on plans that may change. Hence, there is a significant risk that actual results could differ materially from the guidance we have provided in this release and we have no obligation to update such guidance. There are also numerous risks that have the potential to negatively impact our financial performance, including issues related to the performance, availability, security, or privacy of our products, competitive factors, customer decisions and priorities, events that impact the life sciences industry, general macroeconomic and geopolitical events (including inflationary pressures, changes in interest rates, currency exchange fluctuations and impacts related to Russia's invasion of Ukraine and the Israel-Hamas conflict), and issues that impact our ability to hire, retain and adequately compensate talented employees. We have summarized what we believe are the principal risks to our business in a section titled "Summary of Risk Factors" on pages 35 and 36 in our filing on Form 10-Q for the period ended April 30, 2024 which you can find here. Additional details on the risks and uncertainties that may impact our business can be found in the same filing on Form 10-Q and in our subsequent SEC filings, which you can access at sec.gov. We recommend that you familiarize yourself with these risks and uncertainties before making an investment decision.
Investor Relations Contact: | Media Contact: | |
Gunnar Hansen | Maria Scurry | |
Veeva Systems Inc. | Veeva Systems Inc. | |
267-460-5839 | 781-366-7617 | |
This email address is being protected from spambots. You need JavaScript enabled to view it. | This email address is being protected from spambots. You need JavaScript enabled to view it. |
VEEVA SYSTEMS INC. | |||
July 31, | January 31, | ||
Assets | |||
Current assets: | |||
Cash and cash equivalents | $ 1,165,754 | $ 703,487 | |
Short-term investments | 3,719,324 | 3,324,269 | |
Accounts receivable, net | 364,719 | 852,172 | |
Unbilled accounts receivable | 39,432 | 36,365 | |
Prepaid expenses and other current assets | 78,614 | 86,918 | |
Total current assets | 5,367,843 | 5,003,211 | |
Property and equipment, net | 56,685 | 58,532 | |
Deferred costs, net | 23,439 | 23,916 | |
Lease right-of-use assets | 43,146 | 45,602 | |
Goodwill | 439,877 | 439,877 | |
Intangible assets, net | 53,339 | 63,017 | |
Deferred income taxes | 291,044 | 233,463 | |
Other long-term assets | 55,464 | 43,302 | |
Total assets | $ 6,330,837 | $ 5,910,920 | |
Liabilities and stockholders' equity | |||
Current liabilities: | |||
Accounts payable | $ 28,307 | $ 31,513 | |
Accrued compensation and benefits | 37,151 | 43,433 | |
Accrued expenses and other current liabilities | 32,801 | 32,980 | |
Income tax payable | 5,616 | 11,862 | |
Deferred revenue | 956,381 | 1,049,761 | |
Lease liabilities | 10,182 | 9,334 | |
Total current liabilities | 1,070,438 | 1,178,883 | |
Deferred income taxes | 591 | 2,052 | |
Lease liabilities, noncurrent | 43,912 | 46,441 | |
Other long-term liabilities | 31,198 | 38,720 | |
Total liabilities | 1,146,139 | 1,266,096 | |
Stockholders' equity: | |||
Class A common stock | 2 | 2 | |
Additional paid-in capital | 2,117,109 | 1,915,002 | |
Accumulated other comprehensive loss | (5,575) | (10,637) | |
Retained earnings | 3,073,162 | 2,740,457 | |
Total stockholders' equity | 5,184,698 | 4,644,824 | |
Total liabilities and stockholders' equity | $ 6,330,837 | $ 5,910,920 | |
VEEVA SYSTEMS INC. | |||||||
Three months ended July | Six months ended July | ||||||
2024 | 2023 | 2024 | 2023 | ||||
Revenues: | |||||||
Subscription services(4) | $ 561,277 | $ 470,637 | $ 1,095,232 | $ 885,183 | |||
Professional services and other(5) | 114,904 | 119,588 | 231,294 | 231,367 | |||
Total revenues | 676,181 | 590,225 | 1,326,526 | 1,116,550 | |||
Cost of revenues(6): | |||||||
Cost of subscription services | 78,791 | 71,169 | 156,939 | 138,744 | |||
Cost of professional services and other | 91,581 | 97,849 | 187,317 | 196,937 | |||
Total cost of revenues | 170,372 | 169,018 | 344,256 | 335,681 | |||
Gross profit | 505,809 | 421,207 | 982,270 | 780,869 | |||
Operating expenses(6): | |||||||
Research and development | 176,429 | 157,228 | 339,140 | 304,188 | |||
Sales and marketing | 101,528 | 96,995 | 198,829 | 185,498 | |||
General and administrative | 61,365 | 62,935 | 122,642 | 125,604 | |||
Total operating expenses | 339,322 | 317,158 | 660,611 | 615,290 | |||
Operating income | 166,487 | 104,049 | 321,659 | 165,579 | |||
Other income, net | 58,573 | 38,826 | 110,302 | 69,074 | |||
Income before income taxes | 225,060 | 142,875 | 431,961 | 234,653 | |||
Income tax provision | 54,019 | 31,247 | 99,256 | (8,496) | |||
Net income | $ 171,041 | $ 111,628 | $ 332,705 | $ 243,149 | |||
Net income per share: | |||||||
Basic | $ 1.06 | $ 0.70 | $ 2.06 | $ 1.52 | |||
Diluted | $ 1.04 | $ 0.68 | $ 2.02 | $ 1.49 | |||
Weighted-average shares used to compute net income per share: | |||||||
Basic | 161,708 | 160,396 | 161,566 | 160,129 | |||
Diluted | 164,564 | 163,284 | 164,497 | 162,989 | |||
Other comprehensive income: | |||||||
Net change in unrealized gain (loss) on available-for-sale investments | $ 25,175 | $ (8,891) | $ 6,314 | $ (3,463) | |||
Net change in cumulative foreign currency translation (loss) gain | (104) | 267 | (1,252) | 209 | |||
Comprehensive income | $ 196,112 | $ 103,004 | $ 337,767 | $ 239,895 | |||
(4) Includes subscription services revenues from the following product areas: | |||||||
Veeva Commercial Solutions | $ 271,810 | $ 243,430 | $ 533,126 | $ 482,754 | |||
Veeva R&D Solutions | 289,467 | 227,207 | 562,106 | 402,429 | |||
Total subscription services | $ 561,277 | $ 470,637 | $ 1,095,232 | $ 885,183 | |||
(5) Includes professional services and other revenues from the following product areas: | |||||||
Veeva Commercial Solutions | $ 45,068 | $ 47,319 | $ 93,840 | $ 92,183 | |||
Veeva R&D Solutions | 69,836 | 72,269 | 137,454 | 139,184 | |||
Total professional services and other | $ 114,904 | $ 119,588 | $ 231,294 | $ 231,367 | |||
(6) Includes stock-based compensation as follows: | |||||||
Cost of revenues: | |||||||
Cost of subscription services | $ 1,642 | $ 1,748 | $ 3,196 | $ 3,253 | |||
Cost of professional services and other | 13,176 | 14,216 | 25,711 | 26,938 | |||
Research and development | 48,984 | 45,292 | 90,727 | 84,198 | |||
Sales and marketing | 23,671 | 23,489 | 46,714 | 43,624 | |||
General and administrative | 20,903 | 18,150 | 37,939 | 35,601 | |||
Total stock-based compensation | $ 108,376 | $ 102,895 | $ 204,287 | $ 193,614 | |||
VEEVA SYSTEMS INC. | |||
Six months ended July | |||
2024 | 2023 | ||
Cash flows from operating activities | |||
Net income | $ 332,705 | $ 243,149 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 19,519 | 15,636 | |
Reduction of operating lease right-of-use assets | 5,508 | 6,025 | |
Accretion of discount on short-term investments | (14,254) | (10,783) | |
Stock-based compensation | 204,287 | 193,614 | |
Amortization of deferred cost | 7,651 | 9,301 | |
Deferred income taxes | (59,801) | (46,727) | |
Gain on foreign currency from mark-to-market derivative | (107) | (547) | |
Bad debt expense | 234 | 496 | |
Changes in operating assets and liabilities: | |||
Accounts receivable | 487,219 | 323,493 | |
Unbilled accounts receivable | (3,067) | 44,633 | |
Deferred costs | (7,174) | 61 | |
Other current and long-term assets | 4,344 | 9,245 | |
Accounts payable | (3,343) | 8,054 | |
Accrued expenses and other current liabilities | (5,517) | (1,129) | |
Income taxes payable | (6,246) | 19,197 | |
Deferred revenue | (103,652) | (36,083) | |
Operating lease liabilities | (4,666) | (4,290) | |
Other long-term liabilities | 2,750 | (2,373) | |
Net cash provided by operating activities | 856,390 | 770,972 | |
Cash flows from investing activities | |||
Purchases of short-term investments | (1,392,297) | (1,600,566) | |
Maturities and sales of short-term investments | 1,017,605 | 696,793 | |
Long-term assets | (11,528) | (12,551) | |
Net cash used in investing activities | (386,220) | (916,324) | |
Cash flows from financing activities | |||
Proceeds from exercise of common stock options | 34,834 | 38,228 | |
Taxes paid related to net share settlement of equity awards | (42,490) | (37,043) | |
Net cash (used in) provided by financing activities | (7,656) | 1,185 | |
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (1,252) | 309 | |
Net change in cash, cash equivalents, and restricted cash | 461,262 | (143,858) | |
Cash, cash equivalents, and restricted cash at beginning of period | 706,670 | 889,650 | |
Cash, cash equivalents, and restricted cash at end of period | $ 1,167,932 | $ 745,792 | |
Supplemental disclosures of other cash flow information: | |||
Excess tax benefits from employee stock plans | $ 4,262 | $ 65,300 | |
Non-GAAP Financial Measures
In Veeva's public disclosures, Veeva has provided non-GAAP measures, which it defines as financial information that has not been prepared in accordance with generally accepted accounting principles in the United States, or GAAP. In addition to its GAAP measures, Veeva uses these non-GAAP financial measures internally for budgeting and resource allocation purposes and in analyzing its financial results. For the reasons set forth below, Veeva believes that excluding the following items provides information that is helpful in understanding its operating results, evaluating its future prospects, comparing its financial results across accounting periods, and comparing its financial results to its peers, many of which provide similar non-GAAP financial measures.
There are limitations to using non-GAAP financial measures because non-GAAP financial measures are not prepared in accordance with GAAP and may be different from non-GAAP financial measures provided by other companies. The non-GAAP financial measures are limited in value because they exclude certain items that may have a material impact upon our reported financial results. In addition, they are subject to inherent limitations as they reflect the exercise of judgments by Veeva's management about which items are adjusted to calculate its non-GAAP financial measures. Veeva compensates for these limitations by analyzing current and future results on a GAAP basis as well as a non-GAAP basis and also by providing GAAP measures in its public disclosures.
Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Veeva encourages its investors and others to review its financial information in its entirety, not to rely on any single financial measure to evaluate its business, and to view its non-GAAP financial measures in conjunction with the most directly comparable GAAP financial measures. A reconciliation of GAAP to the non-GAAP financial measures has been provided in the tables below.
VEEVA SYSTEMS INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (Dollars in thousands) (Unaudited)
| |||||||
The following tables reconcile the specific items excluded from GAAP metrics in the calculation of non-GAAP metrics for the periods shown below: | |||||||
Reconciliation of Net Cash Provided by Operating Activities (GAAP basis to | Three months ended July | Six months ended July | |||||
2024 | 2023 | 2024 | 2023 | ||||
Net cash provided by operating activities on a GAAP basis | $ 92,874 | $ 265,036 | $ 856,390 | $ 770,972 | |||
Excess tax benefits from employee stock plans | (1,141) | (3,211) | (4,262) | (65,300) | |||
Net cash provided by operating activities on a non-GAAP basis | $ 91,733 | $ 261,825 | $ 852,128 | $ 705,672 | |||
Net cash used in investing activities on a GAAP basis | $ (113,842) | $ (618,930) | $ (386,220) | $ (916,324) | |||
Net cash (used in) provided by financing activities on a GAAP basis | $ (11,484) | $ 2,577 | $ (7,656) | $ 1,185 | |||
Reconciliation of Financial Measures (GAAP basis to non-GAAP basis) | Three months ended July | Six months ended July | |||||
2024 | 2023 | 2024 | 2023 | ||||
Cost of subscription services revenues on a GAAP basis | $ 78,791 | $ 71,169 | $ 156,939 | $ 138,744 | |||
Stock-based compensation expense | (1,642) | (1,748) | (3,196) | (3,253) | |||
Amortization of purchased intangibles | (1,123) | (1,126) | (2,222) | (2,216) | |||
Cost of subscription services revenues on a non-GAAP basis | $ 76,026 | $ 68,295 | $ 151,521 | $ 133,275 | |||
Gross margin on subscription services revenues on a GAAP basis | 86.0 % | 84.9 % | 85.7 % | 84.3 % | |||
Stock-based compensation expense | 0.3 | 0.4 | 0.3 | 0.3 | |||
Amortization of purchased intangibles | 0.2 | 0.2 | 0.2 | 0.3 | |||
Gross margin on subscription services revenues on a non-GAAP basis | 86.5 % | 85.5 % | 86.2 % | 84.9 % | |||
Cost of professional services and other revenues on a GAAP basis | $ 91,581 | $ 97,849 | $ 187,317 | $ 196,937 | |||
Stock-based compensation expense | (13,176) | (14,216) | (25,711) | (26,938) | |||
Amortization of purchased intangibles | (138) | (139) | (273) | (273) | |||
Cost of professional services and other revenues on a non-GAAP basis | $ 78,267 | $ 83,494 | $ 161,333 | $ 169,726 | |||
Gross margin on professional services and other revenues on a GAAP basis | 20.3 % | 18.2 % | 19.0 % | 14.9 % | |||
Stock-based compensation expense | 11.5 | 11.9 | 11.1 | 11.6 | |||
Amortization of purchased intangibles | 0.1 | 0.1 | 0.1 | 0.1 | |||
Gross margin on professional services and other revenues on a non-GAAP basis | 31.9 % | 30.2 % | 30.2 % | 26.6 % | |||
Gross profit on a GAAP basis | $ 505,809 | $ 421,207 | $ 982,270 | $ 780,869 | |||
Stock-based compensation expense | 14,818 | 15,964 | 28,907 | 30,191 | |||
Amortization of purchased intangibles | 1,261 | 1,265 | 2,495 | 2,489 | |||
Gross profit on a non-GAAP basis | $ 521,888 | $ 438,436 | $ 1,013,672 | $ 813,549 | |||
Gross margin on total revenues on a GAAP basis | 74.8 % | 71.4 % | 74.0 % | 69.9 % | |||
Stock-based compensation expense | 2.2 | 2.7 | 2.2 | 2.7 | |||
Amortization of purchased intangibles | 0.2 | 0.2 | 0.2 | 0.3 | |||
Gross margin on total revenues on a non-GAAP basis | 77.2 % | 74.3 % | 76.4 % | 72.9 % | |||
Research and development expense on a GAAP basis | $ 176,429 | $ 157,228 | $ 339,140 | $ 304,188 | |||
Stock-based compensation expense | (48,984) | (45,292) | (90,727) | (84,198) | |||
Amortization of purchased intangibles | (28) | (29) | (56) | (56) | |||
Research and development expense on a non-GAAP basis | $ 127,417 | $ 111,907 | $ 248,357 | $ 219,934 | |||
Three months ended July | Six months ended July | ||||||
2024 | 2023 | 2024 | 2023 | ||||
Sales and marketing expense on a GAAP basis | $ 101,528 | $ 96,995 | $ 198,829 | $ 185,498 | |||
Stock-based compensation expense | (23,671) | (23,489) | (46,714) | (43,624) | |||
Amortization of purchased intangibles | (3,546) | (3,555) | (7,014) | (6,995) | |||
Sales and marketing expense on a non-GAAP basis | $ 74,311 | $ 69,951 | $ 145,101 | $ 134,879 | |||
General and administrative expense on a GAAP basis | $ 61,365 | $ 62,935 | $ 122,642 | $ 125,604 | |||
Stock-based compensation expense | (20,903) | (18,150) | (37,939) | (35,601) | |||
Amortization of purchased intangibles | (57) | (57) | (113) | (112) | |||
Litigation settlement | — | — | (5,000) | — | |||
General and administrative expense on a non-GAAP basis | $ 40,405 | $ 44,728 | $ 79,590 | $ 89,891 | |||
Operating expense on a GAAP basis | $ 339,322 | $ 317,158 | $ 660,611 | $ 615,290 | |||
Stock-based compensation expense | (93,558) | (86,931) | (175,380) | (163,423) | |||
Amortization of purchased intangibles | (3,631) | (3,641) | (7,183) | (7,163) | |||
Litigation settlement | — | — | (5,000) | — | |||
Operating expense on a non-GAAP basis | $ 242,133 | $ 226,586 | $ 473,048 | $ 444,704 | |||
Operating income on a GAAP basis | $ 166,487 | $ 104,049 | $ 321,659 | $ 165,579 | |||
Stock-based compensation expense | 108,376 | 102,895 | 204,287 | 193,614 | |||
Amortization of purchased intangibles | 4,892 | 4,906 | 9,678 | 9,652 | |||
Litigation settlement | — | — | 5,000 | — | |||
Operating income on a non-GAAP basis | $ 279,755 | $ 211,850 | $ 540,624 | $ 368,845 | |||
Operating margin on a GAAP basis | 24.6 % | 17.6 % | 24.2 % | 14.8 % | |||
Stock-based compensation expense | 16.0 | 17.4 | 15.4 | 17.3 | |||
Amortization of purchased intangibles | 0.8 | 0.9 | 0.8 | 0.9 | |||
Litigation settlement | — | — | 0.4 | — | |||
Operating margin on a non-GAAP basis | 41.4 % | 35.9 % | 40.8 % | 33.0 % | |||
Net income on a GAAP basis | $ 171,041 | $ 111,628 | $ 332,705 | $ 243,149 | |||
Stock-based compensation expense | 108,376 | 102,895 | 204,287 | 193,614 | |||
Amortization of purchased intangibles | 4,892 | 4,906 | 9,678 | 9,652 | |||
Litigation settlement | — | — | 5,000 | — | |||
Income tax effect on non-GAAP adjustments(7) | (17,030) | (21,395) | (37,438) | (100,459) | |||
Net income on a non-GAAP basis | $ 267,279 | $ 198,034 | $ 514,232 | $ 345,956 | |||
Diluted net income per share on a GAAP basis | $ 1.04 | $ 0.68 | $ 2.02 | $ 1.49 | |||
Stock-based compensation expense | 0.66 | 0.63 | 1.24 | 1.19 | |||
Amortization of purchased intangibles | 0.03 | 0.03 | 0.06 | 0.06 | |||
Litigation settlement | — | — | 0.03 | — | |||
Income tax effect on non-GAAP adjustments(7) | (0.11) | (0.13) | (0.22) | (0.62) | |||
Diluted net income per share on a non-GAAP basis | $ 1.62 | $ 1.21 | $ 3.13 | $ 2.12 | |||
________________________ |
(7) For the three and six months ended July 31, 2024 and 2023, management used an estimated annual effective non-GAAP |
tax rate of 21.0%. |
| Last Trade: | US$211.66 |
| Daily Change: | -2.35 -1.10 |
| Daily Volume: | 374,670 |
| Market Cap: | US$34.360B |
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