Veeva Announces Fiscal 2021 Third Quarter Results

December 1, 2020 |

10 min read

Veeva Systems Inc., a leading provider of industry cloud solutions for the global life sciences industry, announced results for its fiscal third quarter ended October 31, 2020.

Dec. 1, 2020 21:05 UTC

Total Revenues of $377.5 million, up 34% Year-over-year;

Subscription Services Revenues of $302.9 million, up 34% Year-over-year

PLEASANTON, Calif.--(BUSINESS WIRE)-- Veeva Systems Inc. (NYSE: VEEV), a leading provider of industry cloud solutions for the global life sciences industry, today announced results for its fiscal third quarter ended October 31, 2020.

“Our customers are delivering innovations that will have positive, lasting impacts on human health,” said CEO Peter Gassner. “We are proud to work with these amazing companies, providing solutions that streamline drug development and enable them to support healthcare providers on the front lines.”

Fiscal 2021 Third Quarter Results:

Revenues: Total revenues for the third quarter were $377.5 million, up from $280.9 million one year ago, an increase of 34% year-over-year. Subscription services revenues for the third quarter were $302.9 million, up from $226.8 million one year ago, an increase of 34% year-over-year.
Operating Income and Non-GAAP Operating Income⁽¹⁾: Third quarter operating income was $101.3 million, compared to $80.8 million one year ago, an increase of 25% year-over-year. Non-GAAP operating income for the third quarter was $155.5 million, compared to $111.6 million one year ago, an increase of 39% year-over-year.
Net Income and Non-GAAP Net Income⁽¹⁾: Third quarter net income was $97.0 million, compared to $82.2 million one year ago, an increase of 18% year-over-year. Non-GAAP net income for the third quarter was $125.6 million, compared to $95.4 million one year ago, an increase of 32% year-over-year.
Net Income per Share and Non-GAAP Net Income per Share⁽¹⁾: For the third quarter, fully diluted net income per share was $0.60, compared to $0.52 one year ago, while non-GAAP fully diluted net income per share was $0.78, compared to $0.60 one year ago.

“I am very pleased with our financial outperformance in the quarter, which was a direct result of our strong vision and focused execution,” said CFO Brent Bowman. “As we look to the opportunities ahead, we plan to continue investing aggressively to hit our 2025 targets and drive a long runway of growth beyond.”

Recent Highlights:

Veeva Leads Digital Transformation in Life Sciences helping customers define new strategies in development and commercial. For example, it is now working with an innovative biopharma on their digital-first commercial launch strategy utilizing the full Veeva Commercial Cloud suite, including Data Cloud, Veeva Link, MyVeeva for Doctors, and Business Consulting. Digital transformation also fueled Veeva’s expanding leadership in core CRM, where it saw a record increase of 19 new CRM customers in the quarter. On the development side, new digital capabilities like remote monitoring in Veeva SiteVault have enabled clinical trials to continue for roughly 700 clinical research sites and will improve ongoing trial execution.

New Top 20 Win, Veeva Development Cloud Emerging as Industry Standard — More companies are adopting a growing range of products across Veeva Development Cloud. In Q3, a top 20 pharma selected multiple Development Cloud applications as their enterprise standard to streamline clinical operations, regulatory, and quality processes globally. The company’s move to unify on Veeva Vault will help increase efficiency and drive compliance.

Veeva Vault CTMS Adoption Accelerates as Companies Unify Clinical Operations — Vault CTMS posted record new bookings in the quarter as 85 companies, including six top 20 pharmas, have now standardized on Vault CTMS in just over three years. Customer success, product excellence, and the ability to unify clinical operations are driving this rapid growth. Companies are looking for a modern CTMS solution, seamlessly integrated with eTMF, on a single cloud platform.

Financial Outlook:

Veeva is providing guidance for its fiscal fourth quarter ending January 31, 2021 as follows:

Total revenues between $378 and $380 million.
Non-GAAP operating income between $136 and $138 million⁽²⁾.
Non-GAAP fully diluted net income per share between $0.67 and $0.68⁽²⁾.

Veeva is providing guidance for its fiscal year ending January 31, 2021 as follows:

Total revenues between $1,446 and $1,448 million.
Non-GAAP operating income between $566 and $568 million⁽²⁾.
Non-GAAP fully diluted net income per share between $2.83 and $2.84⁽²⁾.

Veeva is providing guidance for its fiscal year ending January 31, 2022 as follows:

Total revenues between $1,700 and $1,720 million.
Subscription services revenues between $1,390 and $1,400 million.
Non-GAAP operating margin of roughly 37%⁽³⁾.

Conference Call Information

What:		Veeva’s Fiscal 2021 Third Quarter Results Conference Call
When:		Tuesday, December 1, 2020
Time:		1:30 p.m. PT (4:30 p.m. ET)
Online Registration:		www.directeventreg.com
		Conference ID 3283186
Webcast:		ir.veeva.com

Investor Presentation Details

An investor presentation providing additional information and analysis can be found at ir.veeva.com.

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⁽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 fourth fiscal quarter ending January 31, 2021 or fiscal year ending January 31, 2021 because of the difficulty of estimating certain items excluded from non-GAAP operating income and non-GAAP fully diluted net income per share that cannot be reasonably predicted, such as charges related to stock-based compensation expense. The effect of these excluded items may be significant.

⁽³⁾ Veeva is not able, at this time, to provide GAAP targets for operating margin for the fiscal year ending January 31, 2022 because of the difficulty of estimating certain items excluded from non-GAAP operating income that cannot be reasonably predicted, such as charges related to stock-based compensation expense. The effect of these excluded items may be significant.

About Veeva Systems

Veeva Systems Inc. is the leader in cloud-based software for the global life sciences industry. Committed to innovation, product excellence, and customer success, Veeva serves more than 950 customers, ranging from the world’s largest pharmaceutical companies to emerging biotechs. Veeva is headquartered in the San Francisco Bay Area, with offices throughout North America, Europe, Asia, and Latin America. 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, including the quotations from management, the statements in “Financial Outlook,” and other statements regarding Veeva’s future performance, outlook, and guidance and the assumptions underlying those statements, market growth, the benefits from the use of Veeva’s solutions, our strategies, and general business conditions. Any forward-looking statements contained in this press release are based upon Veeva’s historical performance and its current plans, estimates, and expectations and are not a representation that such plans, estimates, or expectations will be achieved. These forward-looking statements represent Veeva’s expectations as of the date of this press announcement. Subsequent events may cause these expectations to change, and Veeva disclaims any obligation to update the forward-looking statements in the future. These forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially, including (i) the impact of the COVID-19 pandemic (including the impact to the life sciences industry, impact on general economic conditions, and government responses, restrictions, and actions related to the pandemic); (ii) breaches in our security measures or unauthorized access to our customers’ data; (iii) our expectation that the future growth rate of our revenues will decline; (iv) competitive factors, including but not limited to pricing pressures, consolidation among our competitors, entry of new competitors, the launch of new products and marketing initiatives by our existing competitors, and difficulty securing rights to access, host or integrate with complementary third party products or data used by our customers; (v) the rate of adoption of our newer solutions and the results of our efforts to sustain or expand the use and adoption of our more established applications, like Veeva CRM; (vi) fluctuation of our results, which may make period-to-period comparisons less meaningful; (vii) our ability to integrate Crossix Solutions Inc. and Physicians World, LLC into our business and achieve the expected benefits of the acquisitions, including as a result of the impact of the COVID-19 pandemic on these businesses; (viii) loss of one or more customers, particularly any of our large customers; (ix) system unavailability, system performance problems, or loss of data due to disruptions or other problems with our computing infrastructure; (x) our ability to attract and retain highly skilled employees and manage our growth effectively; (xi) failure to sustain the level of profitability we have achieved in the past as our costs increase; (xii) adverse changes in the life sciences industry, including as a result of customer mergers; (xiii) adverse changes in economic, regulatory, international trade relations, or market conditions, including with respect to natural disasters or actual or threatened public health emergencies; (xiv) a decline in new subscriptions that may not be immediately reflected in our operating results due to the ratable recognition of our subscription revenue; (xv) pending, threatened, or future legal proceedings and related expenses; and (xvi) our potential conversion to a Delaware public benefit corporation, including the expected impact, benefits, and risks of such a conversion.

Additional risks and uncertainties that could affect Veeva’s financial results are included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the company’s filing on Form 10-Q for the period ended July 31, 2020. This is available on the company’s website at veeva.com under the Investors section and on the SEC’s website at sec.gov. Further information on potential risks that could affect actual results will be included in other filings Veeva makes with the SEC from time to time.

VEEVA SYSTEMS INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited)

	October 31, 2020		January 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	634,265	$	476,733
Short-term investments	956,167		610,015
Accounts receivable, net	183,435		389,690
Unbilled accounts receivable	53,235		32,817
Prepaid expenses and other current assets	25,895		21,869
Total current assets	1,852,997		1,531,124
Property and equipment, net	54,352		54,752
Deferred costs, net	35,472		35,585
Lease right-of-use assets	52,824		49,132
Goodwill	436,029		438,529
Intangible assets, net	119,165		134,601
Deferred income taxes, noncurrent	15,689		11,870
Other long-term assets	17,113		16,184
Total assets	$	2,583,641	$	2,271,777

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	21,324	$	19,420
Accrued compensation and benefits	28,906		25,619
Accrued expenses and other current liabilities	22,391		21,620
Income tax payable	2,555		5,613
Deferred revenue	331,166		468,887
Lease liabilities	11,050		10,013
Total current liabilities	417,392		551,172
Deferred income taxes, noncurrent	1,004		2,417
Lease liabilities, noncurrent	47,965		44,815
Other long-term liabilities	10,901		7,779
Total liabilities	477,262		606,183
Stockholders’ equity:
Class A common stock	2		1
Class B common stock	—		—
Additional paid-in capital	906,137		745,475
Accumulated other comprehensive income	3,502		460
Retained earnings	1,196,738		919,658
Total stockholders’ equity	2,106,379		1,665,594
Total liabilities and stockholders’ equity	$	2,583,641	$	2,271,777