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Veeva Announces Fiscal 2023 First Quarter Results

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Total Revenues of $505.1M, up 16% Year Over Year; Subscription Services Revenues of $402.6M, up 18% Year Over Year

PLEASANTON, Calif., June 1, 2022 /PRNewswire/ -- Veeva Systems Inc. (NYSE: VEEV), a leading provider of industry cloud solutions for the global life sciences industry, today announced results for its first quarter ended April 30, 2022.

"It was a great quarter of innovation and deepening our strategic partnership with the industry," said CEO Peter Gassner. "We announced major new innovations, advanced in key areas that will have very positive impacts over the long term, and got the industry back together in person at Veeva Summit. Thanks to our customers for the energy and ideas as we challenge each other in our work to improve the lives of patients."

Fiscal 2023 First Quarter Results:

  • Revenues: Total revenues for the first quarter were $505.1 million, up from $433.6 million one year ago, an increase of 16% year over year. Subscription services revenues for the first quarter were $402.6 million, up from $341.1 million one year ago, an increase of 18% year over year.

  • Operating Income and Non-GAAP Operating Income(1): First quarter operating income was $127.7 million, compared to $128.4 million one year ago, a decrease of 1% year over year. Non-GAAP operating income for the first quarter was $199.6 million, compared to $181.4 million one year ago, an increase of 10% year over year.

  • Net Income and Non-GAAP Net Income(1): First quarter net income was $100.1 million, compared to $115.6 million one year ago, a decrease of 13% year over year. Non-GAAP net income for the first quarter was $159.8 million, compared to $146.9 million one year ago, an increase of 9% year over year.

  • Net Income per Share and Non-GAAP Net Income per Share(1): For the first quarter, fully diluted net income per share was $0.62, compared to $0.71 one year ago, while non-GAAP fully diluted net income per share was $0.99, compared to $0.91 one year ago.

"We are starting the year with a strong first quarter and have crossed the $2 billion revenue run rate mark," said CFO Brent Bowman. "Our multiple engines of long-term growth and innovation will continue to fuel strong expansion and customer success well into the future."

Recent Highlights:

  • Continued Strength and Growing Opportunity in Veeva Development Cloud — Progress to establish Veeva Development Cloud as the operating system for the product life cycle continued in the quarter. Partnering on this vision, in Q1 a top 20 pharma selected twelve Development Cloud products across clinical, quality, and regulatory as their enterprise standard. Product excellence and customer success are fueling expansion across the customer base and as of Q1, now more than 350 customers have at least two Development Cloud applications. With a long tail of growth ahead, the company is just 15% penetrated in the current $7 billion total addressable market opportunity on the R&D side.

  • Veeva Link Expands with New Applications for Real-time Intelligence — Veeva Link expands with four new data applications for commercial and medical teams. This expansion reflects the growing impact and potential of Veeva Link as the platform matures into a powerful foundation to build high-value data applications with speed and quality. Veeva Link also continued its strong growth with new customer wins as well as major enterprise expansions in the quarter.

  • Innovating in Data with a Common Architecture for the Industry — With a long-term commitment to bringing better data to the industry, all on a common data architecture, the company announced Veeva Data Cloud, as the overall brand for its growing family of data applications. This includes Veeva OpenData for customer reference data, Veeva Link for real-time intelligence, and Veeva Compass patient, prescriber, and sales data for the U.S. market. With better data on common data architecture sales, medical, and marketing teams can work together in a more coordinated, customer-centric, and compliant way.

  • Advancing the Industry to Commercial Excellence — Its first in-person summit of the year, the company brought together more than 1,400 attendees for Veeva Commercial Summit in Boston in early May. One of the largest commercial life sciences gatherings in the world, the event was an important forum for innovation and connection and key to advancing the industry toward commercial excellence. Veeva Summits are fundamental to Veeva's role as a strategic partner in bringing the industry together, fuel Veeva product excellence, and drive customer success.

Financial Outlook:

Veeva is providing guidance for its fiscal second quarter ending July 31, 2022 as follows:

  • Total revenues between $529 and $531 million.

  • Non-GAAP operating income between $201 and $203 million(2).

  • Non-GAAP fully diluted net income per share between $1.00 and $1.01(2).

Veeva is providing updated guidance for its fiscal year ending January 31, 2023 as follows:

  • Total revenues between $2,165 and $2,175 million.

  • Non-GAAP operating income of about $835 million(2).

  • Non-GAAP fully diluted net income per share of approximately $4.16(2).

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, June 1, 2022, and a replay of the call will be available on Veeva's investor relations website.

What:

Veeva Systems Fiscal 2023 First Quarter Results Conference Call

When:

Wednesday, June 1, 2022

Time:

2:00 p.m. PT (5:00 p.m. ET)

Online Registration:

https://conferencingportals.com/event/badXudFz



Webcast:

ir.veeva.com

___________

(1) 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.

(2) Veeva is not able, at this time, to provide GAAP targets for operating income and fully diluted net income per share for the second fiscal quarter ending July 31, 2022 or fiscal year ending January 31, 2023 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 and amortization of purchased intangibles. 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 June 1, 2022 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 as a result of competitive factors, customer decisions and priorities, events that impact the life sciences industry, issues related to the security or performance of our products, the pandemic, issues that impact our ability to hire, retain and adequately compensate talented employees, and general macroeconomic and geopolitical events (including inflationary pressures and impacts related to Russia's invasion of Ukraine). We have summarized what we believe are the principal risks to our business in a section titled "Summary of Risk Factors" on pages 13 and 14 in our filing on Form 10-K for the fiscal year ended January 31, 2022, 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-K 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:
Ato Garrett
Veeva Systems Inc.
925-271-4204
ir@veeva.com

Media Contact:
Maria Scurry
Veeva Systems Inc.
781-366-7617
pr@veeva.com

 

VEEVA SYSTEMS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)



April 30,
2022


January 31,
2022

Assets




     Current assets:




     Cash and cash equivalents

$      1,239,998


$      1,138,040

     Short-term investments

1,598,555


1,238,064

     Accounts receivable, net

329,677


631,134

     Unbilled accounts receivable

61,971


63,266

     Prepaid expenses and other current assets

45,094


36,679

          Total current assets

3,275,295


3,107,183

Property and equipment, net

53,816


54,495

Deferred costs, net

30,192


33,106

Lease right-of-use assets

48,887


49,640

Goodwill

439,877


439,877

Intangible assets, net

97,194


101,940

Deferred income taxes

40,674


5,097

Other long-term assets

25,287


25,127

Total assets

$      4,011,222


$      3,816,465





Liabilities and stockholders' equity




Current liabilities:




     Accounts payable

$           25,404


$           20,348

     Accrued compensation and benefits

33,214


33,834

     Accrued expenses and other current liabilities

33,931


36,109

     Income tax payable

50,984


7,761

     Deferred revenue

723,721


731,746

     Lease liabilities

11,606


10,981

          Total current liabilities

878,860


840,779

Deferred income taxes

1,725


2,216

Lease liabilities, noncurrent

42,462


43,607

Other long-term liabilities

19,900


18,226

          Total liabilities

942,947


904,828

Stockholders' equity:




     Class A common stock

2


2

     Class B common stock


     Additional paid-in capital

1,265,323


1,196,547

     Accumulated other comprehensive loss

(24,211)


(11,958)

     Retained earnings

1,827,161


1,727,046

          Total stockholders' equity

3,068,275


2,911,637

Total liabilities and stockholders' equity

$      4,011,222


$      3,816,465

 

VEEVA SYSTEMS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, except per share data)

(Unaudited)



Three months ended
April 30,



2022


2021


Revenues:





     Subscription services(3)

$ 402,632


$ 341,119


     Professional services and other(4)

102,470


92,454


          Total revenues

505,102


433,573


Cost of revenues(5):





     Cost of subscription services

58,953


51,217


     Cost of professional services and other

80,562


64,919


          Total cost of revenues

139,515


116,136


Gross profit

365,587


317,437


Operating expenses(5):





     Research and development

113,475


83,226


     Sales and marketing

76,115


64,610


     General and administrative

48,325


41,155


          Total operating expenses

237,915


188,991


Operating income

127,672


128,446


Other income, net

2,709


4,564


Income before income taxes

130,381


133,010


Provision for income taxes

30,266


17,443


Net income

$ 100,115


$ 115,567


Net income per share:





     Basic

$       0.65


$       0.76


     Diluted

$       0.62


$       0.71


Weighted-average shares used to compute net income per share:





     Basic

154,514


152,444


     Diluted

161,928


162,213


Other comprehensive income:





     Net change in unrealized loss on available-for-sale investments

$  (10,999)


$    (1,086)


     Net change in cumulative foreign currency translation loss

(1,254)


(2,213)


Comprehensive income

$   87,862


$ 112,268







(3) Includes subscription services revenues from the following product areas:





Veeva Commercial Solutions(6)

$ 227,724


$ 207,845


Veeva R&D Solutions(6)

174,908


133,274


Total subscription services

$ 402,632


$ 341,119







(4) Includes professional services and other revenues from the following product areas:





Veeva Commercial Solutions(6)

$   43,321


$   43,598


Veeva R&D Solutions(6)

59,149


48,856


Total professional services and other

$ 102,470


$   92,454


(6) Certain prior period product revenues have been adjusted to match current period presentation.






(5) Includes stock-based compensation as follows:





Cost of revenues:





     Cost of subscription services

$     1,277


$        906


     Cost of professional services and other

9,990


7,422


Research and development

25,823


16,837


Sales and marketing

16,893


11,555


General and administrative

13,151


11,769


Total stock-based compensation

$   67,134


$   48,489


 

VEEVA SYSTEMS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)



Three months ended
April 30,



2022


2021


Cash flows from operating activities





     Net income

$     100,115


$     115,567


     Adjustments to reconcile net income to net cash provided by operating activities:





          Depreciation and amortization

7,058


6,628


          Reduction of operating lease right-of-use assets

2,948


2,827


          Accretion of discount on short-term investments

1,056


1,542


          Stock-based compensation

67,134


48,489


          Amortization of deferred costs

5,993


6,355


          Deferred income taxes

(32,432)


5,242


          (Gain) loss on foreign currency from mark-to-market derivative

(582)


431


          Bad debt (recovery) expense

(25)


159


          Changes in operating assets and liabilities:





               Accounts receivable

301,482


301,732


               Unbilled accounts receivable

1,295


(4,161)


               Deferred costs

(3,079)


(4,290)


               Other current and long-term assets

(7,563)


2,737


               Accounts payable

5,121


(6,794)


               Accrued expenses and other current liabilities

(2,336)


6,967


               Income taxes payable

43,223


3,709


               Deferred revenue

(7,471)


(8,176)


               Operating lease liabilities

(2,031)


(2,748)


               Other long-term liabilities

1,121


2,169


          Net cash provided by operating activities

481,027


478,385


Cash flows from investing activities





     Purchases of short-term investments

(572,344)


(256,938)


     Maturities and sales of short-term investments

196,190


221,645


     Long-term assets

(2,333)


(2,656)


          Net cash used in investing activities

(378,487)


(37,949)


Cash flows from financing activities





     Changes in lease liabilities - finance leases


(286)


     Proceeds from exercise of common stock options

16,291


17,091


     Taxes paid related to net share settlement of equity awards

(14,999)



          Net cash provided by financing activities

1,292


16,805


Effect of exchange rate changes on cash, cash equivalents, and restricted cash

(1,874)


(2,765)


Net change in cash, cash equivalents, and restricted cash

101,958


454,476


Cash, cash equivalents, and restricted cash at beginning of period

1,141,225


731,712


Cash, cash equivalents, and restricted cash at end of period

$  1,243,183


$  1,186,188







Supplemental disclosures of other cash flow information:





     Excess tax benefits from employee stock plans

$         4,907


$       17,451


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.

  • Excess tax benefit. Excess tax benefit from employee stock plans are dependent on previously agreed-upon equity grants to our employees, vesting of those grants, stock price, and exercise behavior of our employees, which can fluctuate from quarter to quarter. Because these fluctuations are not directly related to our business operations, Veeva excludes excess tax benefit for its internal management reporting processes. Veeva management also finds it useful to exclude excess tax benefit when assessing the level of cash provided by operating activities. Given the nature of the excess tax benefit, Veeva believes excluding it allows investors to make meaningful comparisons between our operating cash flows from quarter to quarter and those of other companies.

  • Stock-based compensation expenses. Veeva excludes stock-based compensation expenses primarily because they are non-cash expenses that Veeva excludes from its internal management reporting processes. Veeva's management also finds it useful to exclude these expenses when they assess the appropriate level of various operating expenses and resource allocations when budgeting, planning and forecasting future periods. Moreover, because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use, Veeva believes excluding stock-based compensation expenses allows investors to make meaningful comparisons between our recurring core business operating results and those of other companies.

  • Amortization of purchased intangibles. Veeva incurs amortization expense for purchased intangible assets in connection with acquisitions of certain businesses and technologies. Amortization of intangible assets is a non-cash expense and is inconsistent in amount and frequency because it is significantly affected by the timing, size of acquisitions and the inherent subjective nature of purchase price allocations. Because these costs have already been incurred and cannot be recovered, and are non-cash expenses, Veeva excludes these expenses for its internal management reporting processes. Veeva's management also finds it useful to exclude these charges when assessing the appropriate level of various operating expenses and resource allocations when budgeting, planning and forecasting future periods. Investors should note that the use of intangible assets contributed to Veeva's revenues earned during the periods presented and will contribute to Veeva's future period revenues as well.

  • Income tax effects on the difference between GAAP and non-GAAP costs and expenses. The income tax effects that are excluded relate to the imputed tax impact on the difference between GAAP and non-GAAP costs and expenses due to stock-based compensation and purchased intangibles for GAAP and non-GAAP 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 non-GAAP basis)

Three months ended
April 30,



2022


2021


Net cash provided by operating activities on a GAAP basis

$  481,027


$  478,385


Excess tax benefits from employee stock plans

(4,907)


(17,451)


Net cash provided by operating activities on a non-GAAP basis

$  476,120


$  460,934







Reconciliation of Financial Measures (GAAP basis to non-GAAP basis)

Three months ended
April 30,



2022


2021


Cost of subscription services revenues on a GAAP basis

$ 58,953


$ 51,217


Stock-based compensation expense

(1,277)


(906)


Amortization of purchased intangibles

(1,090)


(895)


Cost of subscription services revenues on a non-GAAP basis

$ 56,586


$ 49,416







Gross margin on subscription services revenues on a GAAP basis

85.4 %


85.0 %


Stock-based compensation expense

0.3


0.3


Amortization of purchased intangibles

0.3


0.3


Gross margin on subscription services revenues on a non-GAAP basis

86.0 %


85.5 %







Cost of professional services and other revenues on a GAAP basis

$ 80,562


$ 64,919


Stock-based compensation expense

(9,990)


(7,422)


Amortization of purchased intangibles

(134)


(134)


Cost of professional services and other revenues on a non-GAAP basis

$ 70,438


$ 57,363







Gross margin on professional services and other revenues on a GAAP basis

21.4 %


29.8 %


Stock-based compensation expense

9.8


8.0


Amortization of purchased intangibles

0.1


0.2


Gross margin on professional services and other revenues on a non-GAAP basis

31.3 %


38.0 %







Gross profit on a GAAP basis

$  365,587


$  317,437


Stock-based compensation expense

11,267


8,328


Amortization of purchased intangibles

1,224


1,029


Gross profit on a non-GAAP basis

$  378,078


$  326,794







Gross margin on total revenues on a GAAP basis

72.4 %


73.2 %


Stock-based compensation expense

2.2


1.9


Amortization of purchased intangibles

0.2


0.3


Gross margin on total revenues on a non-GAAP basis

74.8 %


75.4 %







Research and development expense on a GAAP basis

$  113,475


$ 83,226


Stock-based compensation expense

(25,823)


(16,837)


Amortization of purchased intangibles

(28)


(28)


Research and development expense on a non-GAAP basis

$ 87,624


$ 66,361







Sales and marketing expense on a GAAP basis

$ 76,115


$ 64,610


Stock-based compensation expense

(16,893)


(11,555)


Amortization of purchased intangibles

(3,439)


(3,317)


Sales and marketing expense on a non-GAAP basis

$ 55,783


$ 49,738













Three months ended
April 30,



2022


2021







General and administrative expense on a GAAP basis

$ 48,325


$ 41,155


Stock-based compensation expense

(13,151)


(11,769)


Amortization of purchased intangibles

(55)


(55)


General and administrative expense on a non-GAAP basis

$ 35,119


$ 29,331







Operating expense on a GAAP basis

$  237,915


$  188,991


Stock-based compensation expense

(55,867)


(40,161)


Amortization of purchased intangibles

(3,522)


(3,400)


Operating expense on a non-GAAP basis

$  178,526


$  145,430







Operating income on a GAAP basis

$  127,672


$  128,446


Stock-based compensation expense

67,134


48,489


Amortization of purchased intangibles

4,746


4,429


Operating income on a non-GAAP basis

$  199,552


$  181,364







Operating margin on a GAAP basis

25.3 %


29.6 %


Stock-based compensation expense

13.3


11.2


Amortization of purchased intangibles

0.9


1.0


Operating margin on a non-GAAP basis

39.5 %


41.8 %







Net income on a GAAP basis

$  100,115


$  115,567


Stock-based compensation expense

67,134


48,489


Amortization of purchased intangibles

4,746


4,429


Income tax effect on non-GAAP adjustments(7)

(12,209)


(21,602)


Net income on a non-GAAP basis

$  159,786


$  146,883







Diluted net income per share on a GAAP basis

$     0.62


$     0.71


Stock-based compensation expense

0.41


0.30


Amortization of purchased intangibles

0.03


0.03


Income tax effect on non-GAAP adjustments(7)

(0.07)


(0.13)


Diluted net income per share on a non-GAAP basis

$     0.99


$     0.91










(7)  For the three months ended April 30, 2022 and 2021, management used an estimated annual effective non-GAAP

     tax rate of 21.0%.

 

Cision
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SOURCE Veeva Systems