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Veeva Announces Fiscal 2023 Second Quarter Results

·13 min read
Cision

Total Revenues of $534.2M, up 17% Year Over Year; Subscription Services Revenues of $428.6M, up 17% Year Over Year

PLEASANTON, Calif., Aug. 31, 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 second quarter ended July 31, 2022.

"Our innovation engine is delivering more value to our customers than ever as we continue making progress with established and newly launched products in commercial and R&D," said CEO Peter Gassner. "We are early in a large and growing opportunity and look forward to expanding our position as the strategic technology partner to the life sciences industry across their most critical functions."

Fiscal 2023 Second Quarter Results:

  • Revenues: Total revenues for the second quarter were $534.2 million, up from $455.6 million one year ago, an increase of 17% year over year. Subscription services revenues for the second quarter were $428.6 million, up from $366.4 million one year ago, an increase of 17% year over year.

  • Operating Income and Non-GAAP Operating Income(1): Second quarter operating income was $101.1 million, compared to $124.6 million one year ago, a decrease of 19% year over year. Non-GAAP operating income for the second quarter was $202.0 million, compared to $191.6 million one year ago, an increase of 5% year over year.

  • Net Income and Non-GAAP Net Income(1): Second quarter net income was $90.6 million, compared to $108.9 million one year ago, a decrease of 17% year over year. Non-GAAP net income for the second quarter was $166.2 million, compared to $152.7 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 second quarter, fully diluted net income per share was $0.56, compared to $0.67 one year ago, while non-GAAP fully diluted net income per share was $1.03, compared to $0.94 one year ago.

"Veeva's durable business model delivered another quarter of solid revenue growth and strong profitability," said CFO Brent Bowman. "We are very confident in our competitive position and we are performing well financially as we track ahead of our 2025 targets."

Recent Highlights:

  • Leading Through Innovation in Commercial — Veeva continues to expand its leadership through product excellence and customer success in core and new product areas. This quarter saw a significant Veeva CRM release with major innovations to optimize content use across channels to enable efficient and compliant hybrid engagement models.

  • A Record Number of Customers for Veeva Quality — This quarter saw a major milestone with Veeva Vault Quality, as more than 500 customers are now using at least one Vault Quality Suite product, including more than 200 Vault Training customers. Strong momentum in the second quarter included a record 52 Vault Quality customer wins and significant progress on Vault QMS projects with enterprise customers. New product innovations in Vault LIMS and Vault Validation Management are progressing well and will start working with early-adopter customers later this year.

  • Groundbreaking Insights from Veeva Business Consulting — Veeva Business Consulting published the Veeva Pulse Field Trends Report, a first-ever industrywide view of global customer engagement based upon more than 130 million quarterly HCP interactions. With a unique foundation of data-driven insights and a deep knowledge of Veeva products, Veeva Business Consulting had a record revenue quarter and is quickly becoming a strategic resource to help customers realize their digital transformation.

  • Victory for Employee Rights and the Industry — In a major win for employee rights and the life sciences industry, a federal court dismissed the baseless trade secret lawsuit Medidata filed against Veeva in 2017, blocking Medidata's attempt to stifle innovation and free flow of talent. Finding that Medidata was unable to substantiate its claims against Veeva, the judge ended the proceedings and rejected the suit midway through the jury trial. Veeva has been a long-standing supporter of employee rights and the movement to ban the use of non-compete agreements. Medidata's abusive lawsuit further underscores the need for greater protection of worker rights to freely change employers, which promotes fair competition and economic growth.

Financial Outlook:

Veeva is providing guidance for its fiscal third quarter ending October 31, 2022 as follows:

  • Total revenues between $545 and $547 million.

  • Non-GAAP operating income between $209 and $211 million(2).

  • Non-GAAP fully diluted net income per share between $1.07 and $1.08(2).

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

  • Total revenues between $2,140 and $2,145 million.

  • Non-GAAP operating income of about $820 million(2).

  • Non-GAAP fully diluted net income per share of approximately $4.17(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, August 31, 2022, and a replay of the call will be available on Veeva's investor relations website.

What:

Veeva Systems Fiscal 2023 Second Quarter Results Conference Call

When:

Wednesday, August 31, 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 third fiscal quarter ending October 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 August 31, 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, fluctuations in foreign currency exchange rates, 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 37 and 38 in our filing on Form 10-Q for the period ended April 30, 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-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:
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)



July 31,
2022


January 31,
2022

Assets




Current assets:




Cash and cash equivalents

$ 1,140,246


$ 1,138,040

Short-term investments

1,778,861


1,238,064

Accounts receivable, net

313,219


631,134

Unbilled accounts receivable

77,778


63,266

Prepaid expenses and other current assets

46,038


36,679

Total current assets

3,356,142


3,107,183

Property and equipment, net

52,409


54,495

Deferred costs, net

27,877


33,106

Lease right-of-use assets

58,539


49,640

Goodwill

439,877


439,877

Intangible assets, net

92,288


101,940

Deferred income taxes

62,059


5,097

Other long-term assets

27,392


25,127

Total assets

$ 4,116,583


$ 3,816,465





Liabilities and stockholders' equity




Current liabilities:




Accounts payable

$ 30,915


$ 20,348

Accrued compensation and benefits

36,609


33,834

Accrued expenses and other current liabilities

30,714


36,109

Income tax payable

5,143


7,761

Deferred revenue

684,642


731,746

Lease liabilities

11,366


10,981

Total current liabilities

799,389


840,779

Deferred income taxes

1,657


2,216

Lease liabilities, noncurrent

52,106


43,607

Other long-term liabilities

19,500


18,226

Total liabilities

872,652


904,828

Stockholders' equity:




Class A common stock

2


2

Class B common stock


Additional paid-in capital

1,353,502


1,196,547

Accumulated other comprehensive loss

(27,335)


(11,958)

Retained earnings

1,917,762


1,727,046

Total stockholders' equity

3,243,931


2,911,637

Total liabilities and stockholders' equity

$ 4,116,583


$ 3,816,465

VEEVA SYSTEMS INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands, except per share data)
(Unaudited)



Three months ended
July 31,


Six months ended
July 31,


2022


2021


2022


2021

Revenues:








Subscription services(3)

$ 428,649


$ 366,436


$ 831,281


$ 707,555

Professional services and other(4)

105,569


89,158


208,039


181,612

Total revenues

534,218


455,594


1,039,320


889,167

Cost of revenues(5):








Cost of subscription services

64,035


53,909


122,988


105,126

Cost of professional services and other

87,634


68,188


168,196


133,107

Total cost of revenues

151,669


122,097


291,184


238,233

Gross profit

382,549


333,497


748,136


650,934

Operating expenses(5):








Research and development

134,008


94,899


247,483


178,125

Sales and marketing

89,617


71,789


165,732


136,399

General and administrative

57,832


42,185


106,157


83,340

Total operating expenses

281,457


208,873


519,372


397,864

Operating income

101,092


124,624


228,764


253,070

Other income, net

8,398


1,666


11,107


6,230

Income before income taxes

109,490


126,290


239,871


259,300

Provision for income taxes

18,889


17,432


49,155


34,875

Net income

$ 90,601


$ 108,858


$ 190,716


$ 224,425

Net income per share:








Basic

$ 0.58


$ 0.71


$ 1.23


$ 1.47

Diluted

$ 0.56


$ 0.67


$ 1.17


$ 1.38

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








Basic

154,951


153,090


154,736


152,768

Diluted

162,132


162,765


162,499


162,636

Other comprehensive income:








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

$ (2,224)


$ (217)


$ (13,223)


$ (1,303)

Net change in cumulative foreign currency translation loss

(900)


(165)


(2,154)


(2,378)

Comprehensive income

$ 87,477


$ 108,476


$ 175,339


$ 220,744









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








Veeva Commercial Solutions(6)

$ 236,356


$ 218,128


$ 464,080


$ 425,973

Veeva R&D Solutions(6)

192,293


148,308


367,201


281,582

Total subscription services

$ 428,649


$ 366,436


$ 831,281


$ 707,555









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








Veeva Commercial Solutions(6)

$ 44,424


$ 38,968


$ 87,745


$ 82,567

Veeva R&D Solutions(6)

61,145


50,190


120,294


99,045

Total professional services and other

$ 105,569


$ 89,158


$ 208,039


$ 181,612

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









(5) Includes stock-based compensation as follows:








Cost of revenues:








Cost of subscription services

1,693


1,316


$ 2,970


2,222

Cost of professional services and other

13,818


9,541


$ 23,808


16,963

Research and development

38,901


22,315


64,724


39,152

Sales and marketing

24,031


15,115


40,924


26,670

General and administrative

17,599


14,098


30,750


25,867

Total stock-based compensation

$ 96,042


$ 62,385


$ 163,176


$ 110,874

VEEVA SYSTEMS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)



Three months ended
July 31,


Six months ended
July 31,


2022


2021


2022


2021

Cash flows from operating activities








Net income

$ 90,601


$ 108,858


$ 190,716


$ 224,425

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








Depreciation and amortization

7,228


6,880


14,286


13,508

Reduction of operating lease right-of-use assets

3,020


2,874


5,968


5,701

(Accretion) amortization of discount on short-term investments

(507)


1,743


549


3,285

Stock-based compensation

96,042


62,385


163,176


110,874

Amortization of deferred costs

5,736


6,474


11,729


12,829

Deferred income taxes

(20,881)


6,953


(53,313)


12,195

Loss on foreign currency from mark-to-market derivative

1,768


2


1,186


433

Bad debt (recovery) expense

146


(22)


121


137

Changes in operating assets and liabilities:








Accounts receivable

16,312


(21,409)


317,794


280,323

Unbilled accounts receivable

(15,807)


267


(14,512)


(3,894)

Deferred costs

(3,421)


(3,802)


(6,500)


(8,092)

Other current and long-term assets

(3,513)


(3,866)


(11,076)


(1,129)

Accounts payable

5,540


5,031


10,661


(1,763)

Accrued expenses and other current liabilities

(475)


2,216


(2,811)


9,183

Income taxes payable

(45,841)


(3,726)


(2,618)


(17)

Deferred revenue

(39,998)


(49,783)


(47,469)


(57,959)

Operating lease liabilities

(3,081)


(2,913)


(5,112)


(5,661)

Other long-term liabilities

517


903


1,638


3,072

Net cash provided by operating activities

93,386


119,065


574,413


597,450

Cash flows from investing activities








Purchases of short-term investments

(433,073)


(422,680)


(1,005,417)


(679,618)

Maturities and sales of short-term investments

250,531


187,324


446,721


408,969

Acquisitions, net of cash and restricted cash acquired


(2,133)



(2,133)

Long-term assets

(1,663)


(5,325)