Q3 2024 Veeva Systems Inc Earnings Call
Participants
Brent R. Bowman; CFO; Veeva Systems Inc.
Gunnar Georg Hansen; Director of IR; Veeva Systems Inc.
Paul Shawah; EVP of Strategy; Veeva Systems Inc.
Peter P. Gassner; Founder, CEO & Director; Veeva Systems Inc.
Bradley Hartwell Sills; Director, Analyst; BofA Securities, Research Division
Brian Christopher Peterson; MD; Raymond James & Associates, Inc., Research Division
Craig Matthew Hettenbach; VP; Morgan Stanley, Research Division
David Howard Windley; MD & Equity Analyst; Jefferies LLC, Research Division
Dylan Tyler Becker; Research Analyst; William Blair & Company L.L.C., Research Division
Hannah Sable Rudoff; Research Analyst; Piper Sandler & Co., Research Division
Hoi-Fung Wong; Research Analyst; Oppenheimer & Co. Inc., Research Division
Jack Dawson Wallace; VP & Equity Research Analyst; Guggenheim Securities, LLC, Research Division
Jailendra P. Singh; Analyst; Truist Securities, Inc., Research Division
Joseph D. Vruwink; Senior Research Analyst; Robert W. Baird & Co. Incorporated, Research Division
Kirk Materne; Senior MD & Fundamental Research Analyst; Evercore ISI Institutional Equities, Research Division
Lucas Cole Romanski; Equity Research Associate; TD Cowen, Research Division
Rishi Nitya Jaluria; Analyst; RBC Capital Markets, Research Division
Ryan Michael MacDonald; Senior Analyst; Needham & Company, LLC, Research Division
Stanislav Berenshteyn; Senior Equity Analyst; Wells Fargo Securities, LLC, Research Division
Tyler Maverick Radke; VP & Senior Analyst; Citigroup Inc., Research Division
Unidentified Analyst
Presentation
Operator
Good day. My name is Krista, and I'll be your conference operator today. At this time, I would like to welcome everyone to Veeva Systems Fiscal 2024 Third Quarter Results Conference Call. (Operator Instructions).
I will now turn the conference over to Gunnar Hansen, Director, Investor Relations. Gunnar, you may begin your conference.
Gunnar Georg Hansen
Good afternoon, and welcome to Veeva's fiscal 2024 Third Quarter Earnings Conference Call for the quarter ended October 31, 2023. As a reminder, we posted prepared remarks on Veeva's Investor Relations website just after 1:00 p.m. Pacific today. We hope you have had a chance to read them before the call. Today's call will be used primarily for Q&A. With me today for Q&A are Peter Gassner, our Chief Executive Officer; Paul Shawah, EVP Commercial Strategy; and Brent Bowman, our Chief Financial Officer.
During this call, we may make forward-looking statements regarding trends, our strategies and the anticipated performance of the business, including guidance regarding future financial results. These forward-looking statements will be based on our current views and expectations and are subject to various risks and uncertainties. Our actual results may differ materially. Please refer to the risks listed in our earnings release and the risk factors included in our most recent filing on Form 10-Q. Forward-looking statements made during the call are being made as of today, December 6, 2023, based on the facts available to us today. If this call is replayed or viewed after today, the information presented during the call may not contain current or accurate information. Veeva disclaims any obligation to update or revise any forward-looking statements. We may discuss our guidance on today's call, but we will not provide any further guidance or updates on our performance during the quarter unless we do so in a public forum.
On the call, we may also discuss certain non-GAAP metrics that we believe aid in the understanding of our financial results. A reconciliation to comparable GAAP metrics can be found in today's earnings release and in the supplemental investor presentation, both of which are available on our website. With that, thank you for joining us, and I'll turn the call over to Peter.
Peter P. Gassner
Thank you, Gunnar, and welcome, everyone, to the call. We have solid Q3 with revenue and operating income ahead of guidance, including total revenue of $617 million and non-GAAP operating income of $235 million. As I shared in our prepared remarks, we had a number of great milestones and new product announcements in the quarter as we progressed in building our Industry Cloud for life sciences. With the growing set of high-value applications, data and services in R&D and commercial, we can help the industry become more efficient and effective across the even broader range of areas. We have a significant opportunity ahead and with a focus on product excellence and customer success, we're becoming an essential strategic partner to the industry.
Now we'll open up the call to your questions.
Question and Answer Session
Operator
(Operator Instructions). Our first question is from the line of Ken Wang from Oppenheimer.
Hoi-Fung Wong
Fantastic. My first question is for Peter, maybe Paul. At the Investor Day, you guys talked about getting an emotional commitment from customers to move over to Vault CRM. It looks like you got 2 written commitments now. Maybe give us some color into what went into that decision-making process for these large enterprises. And what kind of signal do you think this might send to the rest of the industry that are potentially looking at Vault CRM?
Paul Shawah
Ken, thanks for the question. This is Paul. Yes, so we're super excited about Bayer and GSK. You probably -- everybody on the call may have seen the press releases but we also have them join us during the keynote on the main stage at Europe Summit, which was last week. A super exciting survey.
Essentially answered your question on the main stage, which was why did they select Vault CRM. And it came for them, it came down to something very similar, which was innovation. They were -- they're thinking about the future. They are excited about the next generation of CRM. And for them, even I'll paraphrase what GSK said because they said it very concisely, it was this idea that Pharma CRM is not a commodity but it's a solved problem, thanks to Veeva. And with what that means is this is something that's very hard. It's difficult. It's something that they've done multiple CRM implementations in the past and it's not something they want to spend any energy on. They want a solution that works and that's proven and they want to be able to innovate and look forward. So that, in a nutshell, is the reason is it's innovation, it's looking forward. It's building for the future. So we are super excited to have both Bayer and GSK talk about their selection.
Hoi-Fung Wong
Got it. And then the follow-up for you, Brent. Just as we look at the billings number for the year, you guys trimmed it $40 million. Any way to help us segment how much of that might be the services piece, the FX piece? And I think you kind of mentioned there's a little bit of maybe some combination of duration and timing involved. But would just love to kind of understand what the moving pieces are that got you to that $40 million.
Brent R. Bowman
Yes, happy to, Ken. So about half of it is related to services, so the services reduction we talked about on Investor Day. The balance of it is really split into a couple of buckets. One is on the proportion of quarterly billers versus annual billers in our new business. So we had a higher mix of quarterly billers than we expected. And then the other portion of that is related to timing of deals. So some deals we expected to close in the Q4 time frame. Now it's going to be early fiscal year '25. And then to another extent, there was some FX headwinds as well, so relative to our prior expectations. So those are the pieces of it, but the biggest portion of it was clearly [flat] services.
Operator
Your next question comes from the line of Brian Peterson from Raymond James.
Brian Christopher Peterson
So I'll start with Brent. I think there's been some debate in the past on how the services business correlates to subscription. Is that a leading indicator or not? I've gotten the question from investors. So I love any perspective you have on how we should think about the correlation between subscription and services.
Brent R. Bowman
Yes, services. Brian, services is not a leading indicator and there's a number of reasons. There's the timing of deals. There's product requirements that are different between the type of product you're buying, customer-specific requirements. So that's not going to be a good leading indicator. And then on the subscription side, you have things like ramping deals and pricing and the like. So there a number of reasons why those 2 don't directly correlate and you shouldn't think of it that way.
Brian Christopher Peterson
Great. And maybe just as a follow-up, on the marketing and automation side. I thought it was an interesting part of the product announcements out at the Investor Day. How do we think about the ramp of that product? And any early feedback or thought process on what your customers are using today?
Peter P. Gassner
I'll take that one. Yes, a little -- we'll start the development of that next year in 2024. So I think that's one thing you're seeing from Veeva as a strategic partner. We have a lot of products across R&D and commercial data, software and services. So we're a very strategic partner to our customers. So in general, once we know we're going to do something, we let our customers know, so that they can do long-range planning around that. So in this case, you saw us announce that before we have established a development team, for example, for it. So it's very, very early and too early to say what the revenue ramp would be. In terms of what most of our customers are using, they might use Salesforce.com Marketing Cloud. They might use a product from Adobe. Some of the smaller customers will outsource this to agencies. But those are probably the -- those are the predominant products that are used.
Operator
Your next question comes from the line of Joe Vruwink from Baird.
Joseph D. Vruwink
In years past, just in the 3Q period, I think Veeva has had a fair amount of visibility and inclination just on the upcoming year because of where big pharma customers stand in their budgeting process. I'm wondering if you can maybe compare current visibility on that FY '25 revenue target versus what's been the case over recent history? And then just related to that topic since Brian, you were calling out some variables on just billings in this year. How do some of those things you called out maybe start to influence the puts and takes going into 2025?
Brent R. Bowman
Hi, Joe. So we reiterated the $2.75 billion and the visibility that we have, every day you move forward you have better visibility, and we have no less visibility than we had a year ago. So similar as we look out in front of us. And some things that to contemplate is we have some multiyear ramping deals that will contribute a larger amount next year. That's something that comes into play. But we have a long runway for growth. Our visibility is not less than it has been historically, it's at least as good, and we're confident in our ability to execute to the number.
Joseph D. Vruwink
That's great. And then I wanted to ask the outlook for the commercial segment. It's gone up more than I expected over the course of this year. And in the prepared remarks, I think you were referencing commercial content and like. So kind of a barbell in that, you have a very mature product growing nicely and what's still very early product growing nicely, there's understandably been a lot of focus on CRM of late. But how would you kind of frame performance from the non-CRM piece of commercial and kind of what you're seeing in market so far to drive what seems like has been upside to your original forecast?
Brent R. Bowman
Yes, Joe, it's Brent. I'll take that one as well. So we have increased that commercial number through the course of the year. And you put it quite nicely in that it's a combination of our more established products continuing to contribute revenue growth by content. And then our newer products like Link really kicking in nicely and we're still very early days there. And then the data products, I think you saw in Peter's prepared remarks, really coming along nicely. We're very early days, but we're optimistic in a very long journey there. So those are the things that we think about. And Crossix is another one that's contributing nicely as well to our growth.
Operator
Your next question comes from the line of Dylan Becker from William Blair.
Dylan Tyler Becker
Maybe staying on the theme of data here as well. Brent, you just called out Compass, maybe for Paul on that side. There's a lot of new customer momentum. I know we're releasing some new offerings there early next year. But how do you think about that enthusiasm, maybe kind of validating the strategy and some of the encouraging momentum from customers around that strategy as we think about that upcoming opportunity? I know it's beyond 2024. But as we think about kind of the going -- or having that kind of full suite as we think about early next year?
Paul Shawah
Yes. So it is a great validation of what we're doing. We have -- we're excited. We have a very clear product strategy with what we're doing in data and more broadly overall with Data Cloud. We're building a modern data platform. Compass is a key part of that. We started with patient data. We did announce the expansion of that portfolio at the beginning part of next year with Prescriber and National. So with those 3 products in Compass, we are well positioned to be the standard data provider for even the very largest pharma companies. And the momentum that you saw in the quarter is a good indicator for us. It's a good indicator that new customers are starting and trialing our data products but that existing customers are expanding, where we started with one brand and then we expand to an additional brand. So it is, in fact, a great validation product strategy, our commitment to getting product excellence. So we're on the right path with Compass. We feel good about that.
Dylan Tyler Becker
Got it. And then maybe for Peter, too, right? As you think about that evolution of Data Cloud to R&D, obviously, a lot of kind of pertinent use cases there. But how do you think about that data standardization playing in with the kind of work flow or process standardization in some of the momentum you're seeing in that clinical suite today? And maybe what the value can accrue from having kind of both the connected workflow and standardized data as we think about development life cycles as well.
Peter P. Gassner
Yes, I'm really excited about that. I think our clinical opportunity in data can be as large or maybe larger than our commercial one. It really can be large. Now we're much earlier, so that has to all be proven out. And there's a very strong, very strong synergy between our software in clinical and the data products that we can build.
So if you look at it big picture, I think Veeva has been working pretty hard at cleaning up the software side of life sciences over the last 15 years, and we've made a lot of progress, still more to go with adoption, but we've clearly got great footprint for it.
Now with Data Cloud, I see us cleaning up the industry data and harmonizing the industry data, and then we'll make our data and software work very well together. So that's really what we're talking about for the industry cloud, that it's a digital transformation, which is software and data all working together. So I'm very excited about it. I think the special sauce on the clinical side is -- the clinical data all on its own is not as valuable as clinical data that can work with clinical software. And I think we're going to revolutionize that area. It will just take some time.
Operator
Your next question comes from the line of Ryan MacDonald from Needham & Company.
Ryan Michael MacDonald
Maybe the first one for Brent. You talked about hiring fewer people in the quarter. And as we just look out into next year, what areas might you be adding still? And how you're thinking about the hiring environment or hiring plan, given that we're starting now to see more and more companies rightsize their organization structure heading into next year again?
Brent R. Bowman
Yes. So overall, our hiring strategy hasn't changed. We're focused on hiring for growth and we're going to focus on areas where we can drive customer success and innovation. So that's always been our approach. And we're going to do it in a disciplined way. You saw in Q3, we had a lower hiring quarter than you have seen in the recent past. And looking out to the balance of fiscal year '24, it's reasonable to expect that, that lower higher rate continues. I'm not going to get into fiscal year '25 at this point. In 90 days, we'll provide our traditional metrics, which would include operating income and margin. And obviously, headcount will be factored into that.
Ryan Michael MacDonald
Super helpful. I appreciate the color. Peter, maybe just a follow-up for you. You talked about in the prepared remarks about some of the lower clinical data products around CDB, RTSM, ePRO; and at your Analyst Day, you were talking about how this really expands the TAM within that area. As you start to speak with customers or prospective customers about some of these newer products, what sort of appetite are you seeing for -- from those customers around development or co-development on some of these newer areas and sort of willingness to make some of those earlier investments with you in innovation on the product road map amidst the evolving environment?
Peter P. Gassner
Yes. Great question about the clinical data software. You have EDC which is the core of it, the first thing and then you have others CDB, we have study training. We have ePRO and RTSM. Customers are generally going to be very conservative in that area. So really, we have to innovate first and then they will come along because this is -- these are their studies, right? And they plan these studies for a long time, so they're going to be pretty conservative. So I think it's an area that starts slowly, but then for the same reason why it starts slowly, then it develops momentum. And if customers end up having something that they really like, boy will they stick to -- with it.
And right now, the industry is not well served. If you look at the sort of, I would say, the professionalism of the ePRO applications out there or the RTSM applications out there, they're not of the level of professionalism of Veeva, of what Veeva is doing. Our products are getting there. So that's one thing, which is both the products and the services. And then I think the real topper is the integration, the process integration, for example, between our RTSM and ePRO. We had a discussion last week with some clinical leaders at a top 20 pharma. And when we were discussing the integration that we will do between our RTSM and our EDC and how that affects the prescreening -- the screening process and the ability to get patients into the right trials, this can be transformational.
In some cases, when that workflow breaks down, you might lose 6 months exclusivity on a blockbuster product because of the delay of a pivotal trial. That's money you never get back. That's the criticality of these systems, and it causes a little bit of conservatism, right?
Well, so I might use your RTSM. Who else is using your RTSM for all of your studies? Well, nobody is yet, you can be first. Well, hey, I'll just -- I'll wait and see on that. So it's that type of thing. Hard to get in there, really hard to get out if you're doing a good job.
Operator
Your next question comes from the line of Jack Wallace from Guggenheim Securities.
Jack Dawson Wallace
I just wanted to ask about Compass and the event around clients migrating to the Vault CRM platform. How much does Compass come up as a logical upsell here? And is it fair to think about the migration event being a natural upselling opportunity?
Peter P. Gassner
It's a great question, Jack, about Compass and Vault CRM. I would say they're not the same at all. They're quite disconnected. Compass in many ways, is a much more strategic decision because that really affects how you apply your resources. And in Compass we're reinventing how you can do data, so it's a much more strategic decision. It's related to analytics and its purchased at the brand level for brand analytics, so it has these dynamics. Also, for example, Compass is something we sell to companies that are 2 years sometimes away from having a field force. They're doing their planning involved of their market potential. So it's quite disconnected versus where CRM is. Hey, now you're ready to launch, you just need a system with the full functionality. Veeva, that's kind of a solved problem. So there would be the CRM playing into that. On Compass, well, gosh, we've been using IQVIA for 20 years. You're coming with a different approach. Well, hey -- they're really out of phase, and they don't depend on each other.
Now it's nice to have multiple products to be able to bring in to a customer, so you can provide the full commercial solution, be it the CRM, commercial content, Crossix for your media measurements, Link for your deep data, Compass. So we have a lot of things that can fit together. And especially for a smaller company, they will look for that partner, hey, I just -- I need to get all this in a hurry. But in general, those things aren't linked together, and I wouldn't view Vault CRM as a catalyst for Compass. The catalyst for Compass is going to be its product excellence and how well we do on our launch of Prescriber and National [annually].
Jack Dawson Wallace
That's helpful. And then one for Brent around billings. Just to put a bow around the change in terms and cadence of billings, help me with the math here. If we had a $12 million headwind in the third quarter. Does that mean about $6 million of billings from the third quarter slipped into the first half of next year? And then is that number of, say, $6 million to $9 million from the fourth so add it all up, $12 million to $15 million or so, that's just due to billing cadence got pushed into '25?
Brent R. Bowman
Yes. I'm not going to break down to the specific numbers, but I can give you like the directional numbers around this. So I said about half was services. And then there is the duration piece of it, right? So then the balance is split pretty much between 2 buckets with a little bit of FX. So that duration piece, that's a -- that's just a matter of over time when it's going to build. So we have more quarterly billers than we expected for our new business. So that's about 25%-ish of the residual. And then the other piece was literally the timing of deals. Again, some of that was deals that pushed out from the back half of the year into the first part of the year. So that's at the high level how to break down the buckets and that's been contemplated in our 2,750 (sic) [$2.75 billion] revenue number for fiscal year '25.
Operator
Your next question comes from the line of Stan Berenshteyn from Wells Fargo Securities.
Stanislav Berenshteyn
First, Peter or Paul, in the prepared remarks, it was mentioned you had solid bookings under Crossix including brand expansions. I recall that Crossix has seen some choppy demand in prior quarters. Is the reason that you're seeing a pickup of activity on this front?
Paul Shawah
I guess the reasons are some is just timing, how things laid out. Also just solid execution by the Crossix team on the product and on the sales and marketing. And I think some of our competitors also last year sort of maybe oversold what they could actually deliver. So we had a few potentials where the customers last year went for some things because they were promised quite a few things. Actual delivery didn't match. And so they, in some cases, went -- came back to Crossix. In some cases, they went to Crossix for the first time. So really just solid execution and some timing.
Stanislav Berenshteyn
Got it. And then maybe one for Brent. Services gross margin in the quarter, I think, was the highest in 8 quarters or so. Is there anything to call out here besides hiring? And how should we think about the progression going forward?
Brent R. Bowman
Yes. We're talking about from quarter-to-quarter, you're going to see vacillation in services margins. If you look forward in Q4, Q4 is a lower margin quarter because of holidays and you have less days to be utilized. But we're always going to focus on having the right amount of capacity to address the service demand we have. And we did a nice job of executing to that in Q3, we saw a little bit higher service margin in the quarter. So the range of margins you've seen over the last 4 to 8 quarters, that's probably a reasonable amount to think about. We're not looking to maximize it to 50% or anything like that.
Operator
Your next question comes from the line of David Windley from Jefferies.
David Howard Windley
Pharma company -- so as a backdrop, pharma companies have been trying to move commercial -- excuse me, commercial insights deeper into clinical development stages of their R&D. Veeva is unique in its span of solutions across clinical and commercial. I'm wondering how much you think about the integration of those solutions across clinical and commercial to drive stickiness of Veeva's solutions? How important is the transition of Vault in that effort? And how important is data in that effort?
Peter P. Gassner
It's Peter. I'll take that one. I would say the most important thing that Veeva can deliver in that area is data, data on a common data platform. So enabling pharma companies to have a common data architecture across specifically commercial and clinical. So talk about product classes in the same way, disease areas, therapeutic areas in the same way and so have a common vocabulary and a common source of truth for the data on both sides. And to be able to interact with key opinion leaders, the same view of commercial key opinion leader with a clinical key opinion leader. That's a key thing, the most important thing that Veeva can do. And I think we're really the only one setting out to do that.
The second one is enabling the process flow between commercial and clinical. So the connection between, for example, our CTMS system and our CRM system, that's useful. And then maybe potentially, the biggest barrier is process inside of pharmaceutical companies. Do they have processes? Do they have operating models? Do they have responsibility for enabling that flow? Our business consulting can really help there, especially as we're building up our business consulting in clinical, I think we're going to be experts at helping companies with their business process. Because you're right, I do feel, and I know most executives of large pharmaceutical companies feel that there's lost value because their integration, process integration between commercial and clinical is not where they'd like it to be.
David Howard Windley
Sorry, go ahead.
Peter P. Gassner
Just to give you one more. I don't -- I think you can't do that if you're not looking at a common view of the data. You won't be able to accomplish it. That's not [deficient] to make that connection happen, but I don't -- but I think it's necessary to make it happen.
David Howard Windley
That's great. As a follow-up and on a different topic, just on thinking about pipeline, funnel discussions for -- in your sales team. I think you've talked over multiple quarters as have others in life sciences, talked about slower decision-making, budget scrutiny. You mentioned in your prepared remarks IRA. Could you shed -- I mean, not that you haven't talked about it before, but give us the most updated view on how these kind of macroeconomic and IRA-related effects are affecting decision-making? And do you feel like that is getting worse or getting better?
Peter P. Gassner
Yes. In terms of interest rates, IRA, global conflicts. Over the last 60 days, I don't view it as getting worse or better per se, it's kind of staying stable. It does result in questioning on decision-making conservatism. It's kind of a damper on innovation for small biotechs who are, hey, maybe I'm going to start up a biotech company, I need to raise funding. Oh, maybe I can't get funding now. So I don't start that up. I don't create that research. So that's a little bit downward.
One of the things that has been happening through COVID and this downturn is some deferral things, right? Veeva is -- a lot of the things we do are core capabilities. You're trying to modernize your core capabilities. During COVID, sometimes they had other priorities. When there's uncertainty, like conflicts, interest rates, et cetera, interest rates, et cetera, okay, comparative shift a little bit. But I do feel there's more deferred maintenance building up, especially in sort of top 100 [lifetime] companies, more deferred modernization of systems that's going to have to be taken care of over the next 2, 3, 4 years. So I think there's some demand starting to get pent up.
Operator
Your next question comes from the line of Tyler Radke.
Tyler Maverick Radke
Apologies if you covered this. I've been jumping around a few earnings calls tonight. But I wanted to touch on the top 20 pharmas that you did migrate over to Vault CRM. I'm just curious, post that announcement, what's the interest in conversations been with others? And then if you could just share any milestones or other goals that you have in terms of the number of pharmas that you hope to have, call it, over the next few quarters or years?
Paul Shawah
Yes. Tyler, this is Paul. Yes. So in terms of you mentioned kind of migrations. These companies have announced their selection. The migration will follow. So we'll do a little bit of services work next year, but you can think of their migration starting in 2025. That's when we are -- we'll have early customers next year. You can think about that as a milestone. We'll have some early customers go through the migration process with us. We treat it like an early adopter program like we do with any other product. So that's what we'll use next year for, and then 2025, we'll be ready to scale. So that's what's next for these companies. They've announced their selection. They want to be able to communicate that internally and align their organization on what their go-forward strategy is. That's really important for them to get organized and focused and aligned. So they're -- they've shifted from decision mode to execution mode.
Now in terms of other companies, we're ready when they are, right? I think this has created some additional urgency or expanded our new Commercial Cloud has created some additional excitement and energy that moving to the Vault platform unlocked a lot of that innovation. But there's no time line. We're not forcing our customers to go on any particular time line. I do expect most will go starting in 2025, but 2026, '27, that's when you'll start to see the majority of customers moving.
Peter P. Gassner
I would if I just chime in there, a question about momentum. Our Customer Summit in Europe calls over 1,000 people there, right? And Bayer were there and GSK were there and they speak both in a large session and in smaller executive sessions. So it's certainly a momentum builder, right? Not only that they're going to Veeva [for] year end, but why? And what was their thought process? Because these companies are kind of leading the charge. The great reference selling there. Also things like we demo-ed -- we did a concept demo of service center for the first time live to the customers there. And I think that was very well received. So the vision starts to get clear and it's building the momentum.
Tyler Maverick Radke
Got it. And yes, sorry, I didn't mean migration, though I would have been impressive if you migrated those customers. And in weeks, I meant more the signing. So good to hear the excitement from other customers. Just as a follow-up, Brent, I know your favorite topic here on billings. But I guess 2 quick clarifications. Number one, as we think about the updated normalized billings guide for this year, and if you walk through some of the puts and takes that's driving it down. I guess the changes to billings terms and invoicing duration, wouldn't that be normalized, if you will, in the normalized billings? Or is the normalization just for TSC? And then I know you're not guiding the billings for FY '25, but just as we think about the historical relationship between revenue and billings and what does seem to be maybe some modest duration headwinds, anything to keep in mind there?
Brent R. Bowman
Sure. On your first part of your question, so what we normalize is we would normalize this for changes in our renewal base. So if you have an existing customer renewal base, they change frequency or they change duration, we normalize that out. So we take the noise out. What we do for new business is we do our best effort to model what we expect the profile of that new business to come in. And so what you're hearing me say is the expectation we had for new business, there was -- the actual fact pattern was a bit different. So we have more quarterly billers in that new business than we anticipated. We thought we'd have a bit more annual. So it's new business, not normalized. It's the renewal portion that we do normalize.
And then your second question is we contemplated in the billings that we are exiting fiscal year '24 in our reiterated fiscal year '25 total revenue number. So $2.75 billion, and we feel good about our ability to execute against that.
Operator
Your next question comes from the line of Gabriela Borges from Goldman Sachs.
Unidentified Analyst
This is Callie Valenti on for Gabriela. Just one for me and going to be again on the billings dynamic. But just related to the deals that you talked about being pushed from the back half of this year into early next year, there was clearly a change versus your initial expectations. And I know you said there's nothing incremental in the past 90 days on macro, but can you help us reconcile those 2 comments a little bit?
Brent R. Bowman
Yes. I mean you're going to have -- it's going to be customer by customer, right? There is no exact pattern, that you can say across the larger cohorts. And in the first half of the year, I recall, the actual -- we had favorable linearity. So from period to period, it's going to ebb and flow depending on the specific customer situation, what approvals they require, the size and scale and the complexity of the deal. So it's a continuation of what we've seen. Sometimes it's in your favor, sometimes it's not. And that's what we saw.
Operator
Your next question comes from the line of Kirk Materne from Evercore ISI.
Kirk Materne
Paul, just -- there's going to be a lot of discussion about migrations over the next couple of years. How should we think about sort of the services work around all this, meaning you're going to have a lot of customers, obviously, going through the migration process? How do you make sure that there's not sort of a bottleneck from a services perspective so that -- and maybe there's just not enough work, so that's not that big of a deal. But I was just kind of curious, how do you make sure that you had the right customers, especially your big ones, are aligned with either your own services capabilities or your GSI partners. Can you just talk about that a little bit?
Paul Shawah
Yes, sure. And one of the things we're laser focused on right now is making the migration as repeatable as possible, and that's going to include some product work that we're doing to automate some of the migration. But it also includes scaling out the Vault CRM services team, and we have people now dedicated and focused to that. Part of this is focus pays off. And this is the specific -- the kind of thing that we think about when we think about executing really well. Part of our strategy is to execute really well in this area, and we're putting dedicated people on it. And that's going to help us create the focus but also the team to expand and scale and support customers as they -- we know roughly what that time line looks like, so we'll be ready to support it.
And I would say the third part of it is enabling our partner ecosystem. So we are working closely to make sure that they know what our role is and they know what their role is and how they can help us and how we can scale, support customers really across the globe. Remember, this is the U.S., it's Europe, it's Asia, it's LatAm. So we have a lot of customers, and we're going to -- we're making sure that we're ready with our own tooling, our services and our partners.
Kirk Materne
Yes. And you mentioned that -- go ahead, please.
Peter P. Gassner
I'll just chime in there a little bit. One way to think about it is you had a big bolus of work around Veeva CRM between 2012 and 2017. Roughly speaking, maybe we move somewhere around half the market, a bit less than that from Siebel or Cegedim or some other things to lead this year. And that was a big bolus of work that was done by Veeva Services and our partners like Accenture and regional partners over a 5-year period. Now we have the year period from 2025 to 2030. And we probably have about as much work to do. Now we have more movement to do because we have to move 90% of the industry over, but the effort is less than -- significantly less than half of the effort and certainly in the migration of [plus now]. So we have to mobilize our own services and the partners to do that. But these are things that we know how to do.
Kirk Materne
That's helpful, Peter, for dimensionalizing that. And then, Brent, one more just on billing. In terms of the duration changes that you're seeing? Are these bigger customers that just want to break it up into bite-size pieces from a payments perspective, smaller customers just trying to save cash? I was just wondering if there's any commonality that you're seeing that's sort of hitting duration right now? I realize it fluctuates, but has anything changed, I guess, on that front?
Brent R. Bowman
Again, nothing fundamentally changed. I mean specifically, a couple of the large items were simple co-terms. So you have -- they're just co-terming to the number of deals they have onto a common date. So it's nothing more fundamental than that.
Operator
Your next question comes from the line of Jailendra Singh from Truist Securities.
Jailendra P. Singh
Given some of the macro issues you guys have talked about. I was just curious how are price increase conversations trending so far, especially in the environment when macro has got a little challenging? Making sure you still feel good about your 4% price increase expectations for next year.
Peter P. Gassner
I can take that one. overall, we're not doing price increases, we are doing -- we keep up with the CPI, and we're doing in a very customer-friendly way. So we're capping that by 4%. And we're doing that in arrears by giving the customers at least 8 months notice depending on when their order form is. So no, it's going well. And I definitely don't view it as a price increase. It's very predictable from Veeva. So the macro is not really affecting that.
Jailendra P. Singh
Then my follow-up is around the comment you had in your prepared remarks about data market and life science moving somewhat slower than the softer market, and you called out anticompetitive behavior from one of your peers. Can you elaborate more on that? Is that something you have observed more recently after your push in this market? And how does those market dynamics impact approach and generally just pushing this market?
Peter P. Gassner
Yes. I called out the behavior of our competitor IQVIA. No, that's not a dynamic. I've been aware of that for more than 10 years. And of course, IQ has been in court multiple times for this. So it's not a -- it's just not a new dynamic. I just felt in the prepared remarks to call it out. But in data, it can be a bit slower moving because of the conservative in that area -- conservatism in that area. That's understandable. And then the anticompetitive behavior of IQVIA also creates significant barriers there because let's say the customer is using the IQVIA data for 1 data product, and we're selling 1 data product. And our services are necessary to mix those 2 data products together to provide a solution for the customer as well. IQVIA is not going to allow us to do that. They're not going to grant, let's call it a third-party agreement. So that's what slows things down. But we're making great progress, and it's easier for a small company when they start up. So I think next year, you'll see some smaller companies commercializing for the first time that just decide, look, I'm going to be IQVIA free for my whole life, and I'm going to start out that way. I don't need to deal with that old stuff anymore. I think that's going to happen, but it's -- that's a long way from, hey, most of the top 20 using Veeva for most of their data products for most of their brands. That's a that's a 15-year journey.
Operator
Your next question comes from the line of Craig Hettenbach from Morgan Stanley.
Craig Matthew Hettenbach
Just following up on the Bayer and GSK commentary. Is there anything in particular about those customer relationships that made it logical for them to be early adopters on both CRM? And how are you thinking about the cadence for additional customers from an announcement perspective like next year?
Paul Shawah
Yes. quite good question. And every customer is unique. They're all in their own different stages, whether that's things related to their business or their pipeline or when they may have product launches. GSK and Bayer, we've had good, long-standing partnerships with both companies for a very long time. And they're thinking, they both had this idea of leading thinking. We want to put the decision-making process behind us, and we want to start focus on executing. They were confident, they did their due diligence. They very quickly became very confident in their answer and their approach, so they wanted to put a clear stake in the ground and make that decision and communicate it and now shift into execution mode. So I would say just a strong partnership. We've delivered very well and consistently for them for a very, very long time. They trust Veeva. So they're ready to move forward.
In terms of other customers and the rest of the market, we're certainly in conversations with the rest of top 20, all of the large enterprise companies, of course, our small and medium-sized customers. Many of those conversations have started. It's not a mathematical thing. You won't see -- we know we have the next roughly 5 or 6 years, but it's not mathematical. It's dependent upon many different factors and variables. So I would think of it as we're in that early summer stage right now, and then over time, we'll start to see it ramp in.
And some of these, you may not see announcements. I think the way to think about it is we'll provide updates when there's kind of a material update to give. You may not see an announcement from -- for every customer, but we when -- there's something material, we'll kind of let the [registry] know.
Craig Matthew Hettenbach
That's helpful, Paul. And then, Peter, you made a comment regarding the IRA in terms of smaller biotech innovation and that's certainly and focus here. I'm curious just your larger pharma companies, any feedback you're hearing from them, whether it's maybe trade-offs they're making as they kind of manage around this? Any feedback there?
Peter P. Gassner
Yes, they're looking at that in terms of their product planning, where will they invest. Hey, should they invest in that molecule, should they delay running a trial or accelerate running a trial. So certainly, it affects their planning. But pharma is good at that. They have to adjust to these factors, these government factors around the globe. And so I think they're adjusting and it may become the new normal in a year or two. So no dramatic change then, it's just causing some adjustments.
Operator
Your next question call comes from the line of Charles Rhyee from TD Cowen.
Lucas Cole Romanski
This is Lucas on for Charles. I want to ask about the development cloud and the subscription growth framework you guys have going forward. If I look back at the Investor Day slides, where you guys break out customers and products per customer. It shows that you guys are seeing fewer total products sold in the Development Cloud through fiscal first half. At the same time, you're guiding to 22% to 23% growth in 4Q after accounting for the impact of TFC, which is a step down from 3Q and 2Q. You guys have noted that you're not seeing an impact from macro on subs quite yet, but this is a notable step down in growth. Is this an indication that the segment is starting to mature a bit and that we think about this category growing at a more mature rate going forward? And then understand that we'll get guidance at the next print, but is this 22% growth rate ex-TFC, a good jumping off point for R&D subs growth in fiscal '25?
Brent R. Bowman
Yes. So to your point, we reiterated the fiscal year '25 guide at $2.75 billion. So clearly, that factors in subscription and services and the mix underneath that. What we did see was timing when you talk about in the year. So there's some timing that impacted fiscal year '24 that will have less of an impact on fiscal year '25. But importantly, we have a long runway for growth in front of us. We're very early days and across the portfolio, specifically in R&D and to your point, we'll get into the details in about 90 days.
Operator
Your next question comes from the line of Brent Bracelin from Piper Sandler.
Hannah Sable Rudoff
This is Hannah Rudoff on for Brent. Encouraged to hear about your early traction with Vault CRM. For those 6 non-Vault Veeva CRM customers you landed in the quarter, do most of them plan to migrate to Vault CRM before that 2030 deadline? Or is that even part of the discussion when you're signing with them?
Paul Shawah
Yes. So we did have -- we had a good strong quarter with CRM overall. So we had 9 wins. And you're right, some of them are on Veeva CRM. And each of those is a discussion with the customer, and what's right for them and based on their timing. And yes, of course, that's the strategy is to -- they'll start on Veeva CRM. And then at some point before 2030, they'll move over to Vault CRM. And certainly, for some of these customers that are now doing Veeva CRM, that transition path becomes pretty clear and very, very clean. So they have full awareness and knowledge and that's part of the strategy.
Hannah Sable Rudoff
Great. Super helpful. And then at your European Commercial Summit other than Vault CRM, what commercial developments were customers most excited to hear about?
Paul Shawah
Yes. Sure we do pick one. We had a very lively Europe summit. So -- and part of that is related to -- we now have our commercial products, our software products that are moving in all parts of the Vault platform. So that unlocks a lot of potential for us. So we were able to announce quite a bit. One is that Peter alluded to the service center demo. Remember, we announced that 5 or 6 months ago at our U.S. Summit and now we demo-ed it live. So really strong execution that resonated really well. The announcements around marketing and outpatient CRM were certainly appreciated. And then in the data space, we had a new data announcement around Pulse data, and Peter talked a lot about that during our Investor Day. But more broadly, what we're doing in data, the innovation we're bringing in data by creating this common data architecture. So you asked for one thing, I gave you 4 or 5, but it was really kind of an action-packed summit with lots of announcements and we created a lot of momentum in multiple different areas.
Peter P. Gassner
I think (inaudible) there was a lot of -- Paul, there was a lot of excitement around modular content in the commercial content area as well, right? That track was very lively because we've done things over the last year in modular product content and now it's getting adopted in the field, so there is great excitement over that one, too.
Paul Shawah
For sure -- and that -- and just to go into that a little bit deeper, that we're executing really well on the commercial content side and modular content. But as we think about what Vault allows us to do, it's bringing that content closer to the engagement channel. It's a platform that uniquely sorts both of those content and the engagement, whether it's the sales channel or field medical or even marketing in the future. So it's highly unique in that we're in a unique position to be able to solve that, that content distribution from the time you create it in a very modular efficient way all the way to the time it gets out to the end customer, whether it's a marketing channel or a sales channel. So yes, that was also an exciting announcement.
Operator
Your next question comes from the line of Brad Sills from Bank of America.
Bradley Hartwell Sills
Great. I wanted to ask about the comments on some of the deals flipping that affected the quarterly billings into the next year. Any more color there? I mean we typically hear about deals flipping and then they close in the subsequent quarter. So what are the puts and takes that are impacting that? And what gives you that confidence that these will close next year?
Peter P. Gassner
I will take that one. The feel is different, but I would say, by and large, just timing that gets pushed out by some random bounces of the ball and some conservatism and extra scrutiny. So that's what it is. What gives us confidence is the competitive environment is stronger than ever, right? So that is what gives us real confidence, both in each of our product areas and then customers seeing that, wow, we can bring complete solutions across R&D and commercial software and data.
Also, the customers being slightly a bit more conservative, they're not -- customers are spending less on speculative projects. So they tend to go more towards Veeva and core capabilities. So that's what gives me even more confidence about our strong market position. And then since our products aren't optional over time, I have a lot of confidence that our market share -- we're in a better market position than we were 12 months ago.
Bradley Hartwell Sills
Wonderful. And then if you could comment, please, Peter, on just the clinical deal pipeline and how that's been impacted. It would seem less impacted by the macro because it's trial-related but these are also big transformational projects, if it's a new customer, for example. So any commentary or observations on how the macro has impacted that clinical business, which is such a critical growth driver.
Peter P. Gassner
Yes. We have a small amount of our business in the clinical and the very small customers maybe that have under 500 employees, under 300 employees. So that certainly impacted because sometimes people can't get funding to do the trial or they maybe go out of business. So that's impacted specifically. Other than that, the general conservatism doesn't impact clinical any more than it would be regulatory or safety or quality. These are large infrastructure projects [we know you're] -- and they're just having a bit more scrutiny than they used to.
Operator
Your next question comes from the line of Richard Poland from RBC Capital Markets.
Rishi Nitya Jaluria
This is actually Rishi Jaluria from RBC. Not sure why it put my colleague's name. Actually wanted to ask 2 questions around generative AI. First, I would like to maybe drill a little bit into kind of a theme that we've been hearing more as we've been doing our conversation with partners and industry -- which is that as generative AI is working behind clinical trials, it is leading to maybe more of a tailwind towards personalized and precision medicine, which feels like not only should that benefit your CDMS platform, but even on the data side, what you have with Compass -- correct me if I'm wrong, it seems like it's maybe a little bit more tailored to that. So maybe if you could help us understand some of the trends that you're seeing out there and how that can play out. And then I have a follow-up.
Peter P. Gassner
In terms of the generative AI, honestly, I haven't seen a big impact in clinical. There was good experimentation and projects around helping to write or evaluate protocols, for example, but not using things like generative AI to do statistical analysis or predict where the patients are. I think there, the more appropriate tool which people are using and continue to use more and more data science. Really having the right data, running the right algorithms, being systematic about it. So yes, I just haven't seen that impact of generative AI. You see it more in other areas that relate to content creation and asking of questions, writing safety narratives, things like that.
Rishi Nitya Jaluria
Got it. No, that's really helpful. And then maybe just sticking on the theme of clinical and Gen AI, coming off the EU Commercial Summit. I'm sure you heard a lot of use cases from customers that they want to explore around Gen AI and the [clinical] side. I think a lot of those very straightforward. Maybe on clinical side, right? I mean you talked a little bit -- but I imagine there's a lot of data you have, as you put through for around content, including regulatory submissions to the FDA. I imagine there's probably use cases around, just have the language that people can use to expedite their approvals and so on and so forth. Maybe just to talk a little bit about what sort of use cases you're hearing from customers that they want you to be part of when it comes to the clinical side of the equation, that would be really helpful.
Peter P. Gassner
Yes. So -- some are just very straightforward what's called the clinical master data. [Who] are the investigators who are in the sites around the world and what is their patient characteristics like? That's hugely important for site selection, but also for recording your internal operations, how efficient are you. Then -- so that's what we call OpenData clinical.
Site base is the deep profiles around all the sites and investigators, all their specialties, all their activity. So that's again for more detailed site section. Then clinical pulse. That's something we've announced, which we'll be producing next year. And that's things like, okay, I'm a pharmaceutical company, and I picked these 2 milestones to measure. What's the time between my last patient visit and my lock of my clinical database. And I'm a pharmaceutical company, what's my time there. Okay. And now what's the industry's average time there? So that I can start to see. Am I ahead or behind there? What's my opportunity for improvement or not. And that's just one measurement. So I think it's those 3 areas that customers are excited about from Veeva, the clinical master data. The deep data, specifically around site selection, critically important. And then the clinical pulse to optimize their internal business processes and benchmarks against the industry.
Operator
We have no further questions in our queue at this time. I will now turn the call over to Peter Gassner, Chief Executive Officer, for closing remarks.
Peter P. Gassner
I'd like to close by thanking our customers for their trust and partnership and our employees for their continued commitment to our values and do the right thing, customer success, employee success and speed.
Operator
And this concludes today's conference call. Thank you for your participation.
