PR Newswire | Dec 1, 2021 04:06PM EST

12/01 15:05 CST

Veeva Announces Fiscal 2022 Third Quarter ResultsTotal Revenues of $476.1M, up 26% Year Over Year; Subscription Services Revenues of $380.7M, up 26% Year Over Year PLEASANTON, Calif., Dec. 1, 2021

PLEASANTON, Calif., Dec. 1, 2021 /PRNewswire/ -- Veeva Systems Inc. (NYSE: VEEV), a leading provider of industry cloud solutions for the global life sciences industry, today announced results for its third quarter ended October 31, 2021.

"Innovation and consistent execution have us tracking ahead of our 2025 targets and set us up for significant growth beyond," said CEO Peter Gassner. "As the strategic partner to the life sciences industry in its move to new digital and specialty models, we are proud our work will help patients get the therapies they need faster and easier."

Fiscal 2022 Third Quarter Results:

* Revenues: Total revenues for the third quarter were $476.1 million, up from $377.5 million one year ago, an increase of 26% year over year. Subscription services revenues for the third quarter were $380.7 million, up from $302.9 million one year ago, an increase of 26% year over year. * Operating Income and Non-GAAP Operating Income(1): Third quarter operating income was $132.7 million, compared to $101.3 million one year ago, an increase of 31% year over year. Non-GAAP operating income for the third quarter was $199.4 million, compared to $155.5 million one year ago, an increase of 28% year over year. * Net Income and Non-GAAP Net Income(1): Third quarter net income was $105.9 million, compared to $97.0 million one year ago, an increase of 9% year over year. Non-GAAP net income for the third quarter was $158.2 million, compared to $125.6 million one year ago, an increase of 26% 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 $0.65, compared to $0.60 one year ago, while non-GAAP fully diluted net income per share was $0.97, compared to $0.78 one year ago.

"Our focus on customer success delivered another great quarter with top and bottom line results that exceeded our guidance," said CFO Brent Bowman. "We are excited about the large and expanding market opportunity ahead and are investing aggressively across our people and products to support strong growth in the years ahead."

Recent Highlights:

* Veeva Data Cloud Innovation - Veeva is investing in the significant long-term opportunity for Veeva Data Cloud with new data assets and delivery methods. Data Cloud's new portal takes a modern, self-service approach where customers can define their own data subscriptions and delivery methods. Veeva also added new Data Cloud early adopters in Q3 for its patient data offering. * Transforming Regulatory for Greater Speed and Compliance - Continued customer success and the need to unify regulatory processes globally for greater speed and compliance drove further Veeva Vault RIM growth. Q3 saw a major milestone in Veeva's reference selling model, with its first enterprise customer now live with all four Vault RIM Suite applications. There were also two notable top 20 wins, one for Vault Registrations and one for Vault Publishing. * Another Quarter of Expanding Commercial Leadership - Veeva once again saw share gains through new wins and as existing customers expanded within Veeva Commercial Cloud. Seven 7-figure deals in the quarter came in a number of areas including Veeva CRM, Veeva Crossix, and Veeva Link. Veeva CRM also had 15 new SMB wins, enterprise expansions, and strength internationally with two major field forces in Asia standardizing on the product.

Financial Outlook:

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

* Total revenues between $478 and $480 million. * Non-GAAP operating income of about $181 million(2). * Non-GAAP fully diluted net income per share of approximately $0.88(2).

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

* Total revenues between $1,843 and $1,845 million. * Non-GAAP operating income of about $753 million(2). * Non-GAAP fully diluted net income per share of approximately $3.69(2).

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

* Total revenues between $2,150 and $2,170 million. * Subscription services revenues between $1,735 and $1,745 million. * Non-GAAP operating margin of roughly 38%(3).

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, December 1, 2021, and a replay of the call will be available on Veeva's investor relations website.

What: Veeva Systems Fiscal 2022 Third Quarter Results Conference Call

When: Wednesday, December 1, 2021

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

Online www.directeventreg.com Registration:

Conference ID 6998914

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 fourth fiscal quarter ending January 31, 2022 or fiscal year ending January 31, 2022 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, 2023 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 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, 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) breaches in our security measures or unauthorized access to our customers' data; (ii) 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; (iii) 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; (iv) our expectation that the future growth rate of our revenues will decline; (v) loss of one or more customers, particularly any of our large customers; (vi) our ability to attract and retain highly skilled employees and manage our growth effectively; (vii) fluctuation of our results, which may make period-to-period comparisons less meaningful; (viii) adverse changes in the life sciences industry, including as a result of customer mergers; (ix) 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); (x) system unavailability, system performance problems, or loss of data due to disruptions or other problems with our computing infrastructure; (xi) failure to sustain the level of profitability we have achieved in the past as our costs increase; (xii) adverse changes in economic, regulatory, international trade relations, or market conditions, including with respect to natural disasters or actual or threatened public health emergencies; (xiii) a decline in new subscriptions that may not be immediately reflected in our operating results due to the ratable recognition of our subscription revenue; (xiv) pending, threatened, or future legal proceedings and related expenses; and (xv) our recent conversion to a Delaware public benefit corporation, including the expected impact, benefits, and risks of our 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, 2021. 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.

Investor Relations Contact:Ato GarrettVeeva Systems Inc.925-271-4204 ir@veeva.com

Media Contact:Deivis MercadoVeeva Systems Inc.925-226-8821pr@veeva.com



VEEVA SYSTEMS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)



October 31, January 31, 2021 2021

Assets

Current assets:

Cash and cash equivalents $1,149,946$730,504

Short-term investments 1,201,541 933,122

Accounts receivable, net 211,046 564,387

Unbilled accounts receivable 67,970 47,206

Prepaid expenses and other current assets 29,292 35,607

Total current assets 2,659,795 2,310,826

Property and equipment, net 53,463 53,650

Deferred costs, net 34,091 42,072

Lease right-of-use assets 50,499 56,917

Goodwill 437,261 436,029

Intangible assets, net 102,559 114,595

Deferred income taxes 4,884 14,100

Other long-term assets 24,934 17,878

Total assets $3,367,486$3,046,067



Liabilities and stockholders' equity

Current liabilities:

Accounts payable $25,605 $23,253

Accrued compensation and benefits 32,116 30,410

Accrued expenses and other current liabilities36,131 30,982

Income tax payable 14,477 2,590

Deferred revenue 417,755 616,992

Lease liabilities 10,803 11,725

Total current liabilities 536,887 715,952

Deferred income taxes 1,941 1,835

Lease liabilities, noncurrent 45,237 51,393

Other long-term liabilities 14,060 10,567

Total liabilities 598,125 779,747

Stockholders' equity:

Class A common stock 2 2

Class B common stock - -

Additional paid-in capital 1,145,147 965,670

Accumulated other comprehensive income (loss) (5,738) 992

Retained earnings 1,629,950 1,299,656

Total stockholders' equity 2,769,361 2,266,320

Total liabilities and stockholders' equity $3,367,486$3,046,067







VEEVA SYSTEMS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, except per share data)

(Unaudited)



Three months ended Nine months ended October 31, October 31,

2021 2020 2021 2020

Revenues:

Subscription services^(4) $380,738$302,938$1,088,293$856,675

Professional services and 95,373 74,581 276,985 211,633 other^(5)

Total revenues 476,111 377,519 1,365,278 1,068,308

Cost of revenues^(6):

Cost of subscription 59,648 45,845 164,774 132,457 services

Cost of professional 69,916 57,152 203,023 162,624 services and other

Total cost of revenues 129,564 102,997 367,797 295,081

Gross profit 346,547 274,522 997,481 773,227

Operating expenses^(6):

Research and development 98,635 79,992 276,760 212,282

Sales and marketing 72,423 57,982 208,822 172,909

General and administrative 42,781 35,243 126,121 109,085

Total operating expenses 213,839 173,217 611,703 494,276

Operating income 132,708 101,305 385,778 278,951

Other income, net 824 3,455 7,054 9,750

Income before income taxes 133,532 104,760 392,832 288,701

Provision for income taxes 27,663 7,801 62,538 11,621

Net income $105,869$96,959 $330,294 $277,080

Net income per share:

Basic $0.69 $0.64 $2.16 $1.84

Diluted $0.65 $0.60 $2.03 $1.73

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

Basic 153,514 150,993 153,020 150,322

Diluted 163,034 161,711 162,663 160,517

Other comprehensive income:

Net change in unrealized gain (loss) on $(2,741)$(1,230)$(4,044) $1,198 available-for- sale investments

Net change in cumulative foreign currency translation(308) (1,438) (2,686) 1,844 gain (loss)

Comprehensive income $102,820$94,291 $323,564 $280,122



^(4) Includes subscription services revenues from the following product areas:

Veeva Commercial Solutions^ $223,183$189,874$649,156 $547,341(7)

Veeva R&D Solutions^(7) 157,555 113,064 439,137 309,334

Total subscription services $380,738$302,938$1,088,293$856,675



^(5) Includes professional services and other revenues from the following product areas:

Veeva Commercial Solutions^ $41,675 $36,613 $124,241 $104,859(7)

Veeva R&D Solutions^(7) 53,698 37,968 152,744 106,774

Total professional services $95,373 $74,581 $276,985 $211,633and other

^(7) Certain prior period product revenues have been adjusted to match current period presentation.



^(6) Includes stock-based compensation as follows:

Cost of revenues:

Cost of subscription $1,292 $1,149 $3,514 $3,700 services

Cost of professional 9,616 7,510 26,579 19,902 services and other

Research and development 22,311 17,685 61,463 45,523

Sales and marketing 15,102 10,711 41,772 30,089

General and administrative 13,724 11,918 39,591 36,032

Total stock-based $62,045 $48,973 $172,919 $135,246compensation







VEEVA SYSTEMS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)



Three months ended Nine months ended October 31, October 31,

2021 2020 2021 2020

Cash flows from operating activities

Net income $105,869 $96,959 $330,294 $277,080

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

Depreciation and 6,899 7,525 20,407 22,720 amortization

Reduction of operating 2,855 3,322 8,556 9,411 lease right-of-use assets

Accretion of discount on 1,574 1,203 4,859 1,688 short-term investments

Stock-based compensation 62,045 48,973 172,919 135,246

Amortization of deferred 6,597 5,350 19,426 15,425 costs

Deferred income taxes (2,021) (1,894) 10,174 (3,532)

Loss (gain) on foreign currency from (65) 19 368 14 mark-to-market derivative

Bad debt (expense) 58 (181) 195 (60) recovery

Changes in operating assets and liabilities:

Accounts receivable 72,147 37,448 352,470 206,214

Unbilled accounts (16,870) (16,585) (20,764) (20,418) receivable

Deferred costs (3,353) (6,177) (11,445) (15,312)

Other current and 4,407 8,195 3,278 (2,937) long-term assets

Accounts payable 4,028 3,060 2,265 (456)

Accrued expenses and other(537) 1,541 8,646 4,357 current liabilities

Income taxes payable 12,010 4,538 11,993 (453)

Deferred revenue (141,083) (90,291) (199,042) (137,980)

Operating lease (2,941) (3,229) (8,602) (8,496) liabilities

Other long-term 1,340 (4,373) 4,412 384 liabilities

Net cash provided by 112,959 95,403 710,409 482,895 operating activities

Cash flows from investing activities

Purchases of short-term (256,008) (417,898)(935,626) (874,465)investments

Maturities and sales of 248,093 158,628 657,062 528,194 short-term investments

Acquisitions, net of cash and restricted cash - - (2,133) - acquired

Long-term assets (2,314) (3,316) (10,295) (8,456)

Net cash used in investing(10,229) (262,586)(290,992) (354,727)activities

Cash flows from financing activities

Reduction of lease liabilities - finance - 79 (384) (420) leases

Proceeds from exercise of 5,368 6,186 43,310 25,245 common stock options

Taxes paid related to net share settlement of equity(21,414) - (36,510) - awards

Net cash (used in) provided by financing (16,046) 6,265 6,416 24,825 activities

Effect of exchange rate changes on cash, cash (1,469) (599) (4,414) 2,683 equivalents, and restricted cash

Net change in cash, cash equivalents, and 85,215 (161,517)421,419 155,676 restricted cash

Cash, cash equivalents, and restricted cash at 1,067,916 796,990 731,712 479,797 beginning of period

Cash, cash equivalents, and restricted cash at end$1,153,131$635,473$1,153,131$635,473of period



Supplemental disclosures of other cash flow information:

Excess tax benefits from $10,404 $17,329 $45,464 $59,067 employee stock plans

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.

* 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 under FASB ASC Topic 718, 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.

The following tables reconcile the specific items excluded from GAAP metrics in the calculation of non-GAAP metrics for the periods shown below:

Three months ended Nine months ended October 31, October 31,

2021 2020 2021 2020

Cost of subscription services revenues on a $59,648 $45,845 $164,774 $132,457 GAAP basis

Stock-based compensation(1,292) (1,149) (3,514) (3,700) expense

Amortization of (1,005) (1,174) (2,826) (3,942) purchased intangibles

Cost of subscription services revenues on a $57,351 $43,522 $158,434 $124,815 non-GAAP basis



Gross margin on subscription services 84.3 %84.9 %84.9 %84.5 %revenues on a GAAP basis

Stock-based compensation0.3 0.4 0.3 0.4 expense

Amortization of 0.3 0.4 0.3 0.5 purchased intangibles

Gross margin on subscription services 84.9 %85.7 %85.5 %85.4 %revenues on a non-GAAP basis



Cost of professional services and other $69,916 $57,152 $203,023 $162,624 revenues on a GAAP basis

Stock-based compensation(9,616) (7,510) (26,579) (19,902) expense

Amortization of (139) (138) (411) (411) purchased intangibles

Cost of professional services and other $60,161 $49,504 $176,033 $142,311 revenues on a non-GAAP basis



Gross margin on professional services 26.7 %23.4 %26.7 %23.2 %and other revenues on a GAAP basis

Stock-based compensation10.1 10.1 9.6 9.4 expense

Amortization of 0.1 0.2 0.1 0.2 purchased intangibles

Gross margin on professional services 36.9 %33.7 %36.4 %32.8 %and other revenues on a non-GAAP basis



Gross profit on a GAAP $346,547 $274,522 $997,481 $773,227 basis

Stock-based compensation10,908 8,659 30,093 23,602 expense

Amortization of 1,144 1,312 3,237 4,353 purchased intangibles

Gross profit on a $358,599 $284,493 $1,030,811 $801,182 non-GAAP basis



Gross margin on total 72.8 %72.7 %73.1 %72.4 %revenues on a GAAP basis

Stock-based compensation2.3 2.3 2.2 2.2 expense

Amortization of 0.2 0.3 0.2 0.3 purchased intangibles

Gross margin on total revenues on a non-GAAP 75.3 %75.3 %75.5 %74.9 %basis



Research and development$98,635 $79,992 $276,760 $212,282 expense on a GAAP basis

Stock-based compensation(22,311) (17,685) (61,463) (45,523) expense

Amortization of (29) (29) (85) (86) purchased intangibles

Research and development expense on a non-GAAP $76,295 $62,278 $215,212 $166,673 basis



Sales and marketing $72,423 $57,982 $208,822 $172,909 expense on a GAAP basis

Stock-based compensation(15,102) (10,711) (41,772) (30,089) expense

Amortization of (3,464) (3,858) (10,210) (10,828) purchased intangibles

Sales and marketing expense on a non-GAAP $53,857 $43,413 $156,840 $131,992 basis



General and administrative expense $42,781 $35,243 $126,121 $109,085 on a GAAP basis

Stock-based compensation(13,724) (11,918) (39,591) (36,032) expense

Amortization of (57) (57) (169) (170) purchased intangibles

General and administrative expense $29,000 $23,268 $86,361 $72,883 on a non-GAAP basis











Three months ended Nine months ended October 31, October 31,

2021 2020 2021 2020

Operating expense on a $213,839 $173,217 $611,703 $494,276 GAAP basis

Stock-based compensation(51,137) (40,314) (142,826) (111,644) expense

Amortization of (3,550) (3,944) (10,464) (11,084) purchased intangibles

Operating expense on a $159,152 $128,959 $458,413 $371,548 non-GAAP basis



Operating income on a $132,708 $101,305 $385,778 $278,951 GAAP basis

Stock-based compensation62,045 48,973 172,919 135,246 expense

Amortization of 4,694 5,256 13,701 15,437 purchased intangibles

Operating income on a $199,447 $155,534 $572,398 $429,634 non-GAAP basis



Operating margin on a 27.9 %26.8 %28.3 %26.1 %GAAP basis

Stock-based compensation13.0 13.0 12.7 12.7 expense

Amortization of 1.0 1.4 1.0 1.4 purchased intangibles

Operating margin on a 41.9 %41.2 %42.0 %40.2 %non-GAAP basis



Net income on a GAAP $105,869 $96,959 $330,294 $277,080 basis

Stock-based compensation62,045 48,973 172,919 135,246 expense

Amortization of 4,694 5,256 13,701 15,437 purchased intangibles

Income tax effect on (14,394) (25,587) (59,147) (80,650) non-GAAP adjustments^(8)

Net income on a non-GAAP$158,214 $125,601 $457,767 $347,113 basis



Diluted net income per $0.65 $0.60 $2.03 $1.73 share on a GAAP basis

Stock-based compensation0.38 0.30 1.06 0.84 expense

Amortization of 0.03 0.03 0.08 0.10 purchased intangibles

Income tax effect on (0.09) (0.15) (0.36) (0.51) non-GAAP adjustments^(8)

Diluted net income per share on a non-GAAP $0.97 $0.78 $2.81 $2.16 basis

________________________

^ For the three and nine months ended October 31, 2021 and 2020, management(8) used an estimated annual effective non-GAAP tax rate of 21.0%.

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SOURCE Veeva Systems