Veeva Announces Fiscal 2022 First Quarter Results

PLEASANTON, Calif., May 27, 2021 /PRNewswire/ — Veeva Systems Inc. (NYSE: VEEV), a leading provider of industry cloud solutions for the…

PLEASANTON, Calif., May 27, 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 first quarter ended April 30, 2021.

«The team’s focus on customer success and product excellence continues to drive Veeva’s outstanding results,» said CEO Peter Gassner. «Our innovations in data, software, and services are helping the industry move to a new digital-first model.»

Fiscal 2022 First Quarter Results:

  • Revenues: Total revenues for the first quarter were $433.6 million, up from $337.1 million one year ago, an increase of 29% year over year. Subscription services revenues for the first quarter were $341.1 million, up from $270.2 million one year ago, an increase of 26% year over year.
  • Operating Income and Non-GAAP Operating Income(1): First quarter operating income was $128.4 million, compared to $87.6 million one year ago, an increase of 47% year over year. Non-GAAP operating income for the first quarter was $181.4 million, compared to $129.7 million one year ago, an increase of 40% year over year.
  • Net Income and Non-GAAP Net Income(1): First quarter net income was $115.6 million, compared to $86.6 million one year ago, an increase of 33% year over year. Non-GAAP net income for the first quarter was $146.9 million, compared to $105.2 million one year ago, an increase of 40% 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 $0.71, compared to $0.54 one year ago, while non-GAAP fully diluted net income per share was $0.91, compared to $0.66 one year ago.

«It was an outstanding start to the year,» said CFO Brent Bowman. «We are building a durable position across both R&D and commercial, which reflects our role as a strategic technology provider to the industry.»

Recent Highlights:

  • New and Existing Customer Relationships Drive Strong Growth — The company added a record 59 new customers in the first quarter, bringing total customer count to more than 1,000. Q1 was an outstanding bookings quarter fueled by strong results in Veeva Vault and Veeva Commercial Cloud. Demand remains robust as customers increasingly partner with Veeva to modernize their technology infrastructure and move to a digital first model.
  • Record New Customer Additions for Vault Quality — Vault Quality had an outstanding quarter which included record bookings for Veeva Vault Quality Suite and significant wins in Veeva Vault QualityDocs, Vault QMS, and Vault Training. Among these was Veeva’s sixth Vault QMS win with a top 20 pharmaceutical company, which is their first Veeva Development Cloud application.
  • Enabling the Industry with Better Ways of Working — Veeva is advancing how customers operate with the industry’s first Quality Reference Model. Going beyond software, Veeva is providing customers a technology enabled best practice model as the standard for the industry based upon extensive experience with more than 300 Vault QualityDocs deployments.

Financial Outlook:

Veeva is providing guidance for its fiscal second quarter ending July 31, 2021 as follows:

  • Total revenues between $450 and $452 million.
  • Non-GAAP operating income between $175 and $177 million(2).
  • Non-GAAP fully diluted net income per share between $0.85 and $0.86(2).

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

  • Total revenues between $1,815 and $1,825 million.
  • Non-GAAP operating income of about $710 million(2).
  • Non-GAAP fully diluted net income per share of approximately $3.49(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, May 27, 2021, and a replay of the call will be available on Veeva’s investor relations website.

What:

Veeva’s Fiscal 2022 First Quarter Results Conference Call

When:

Thursday, May 27, 2021

Time:

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

Online Registration:

www.directeventreg.com


Conference ID 8145598

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, 2021 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.

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) 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) 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; (iv) 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; (v) our expectation that the future growth rate of our revenues will decline; (vi) loss of one or more customers, particularly any of our large customers; (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) 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 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-K for the period ended January 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 Garrett

Veeva Systems Inc.

925-271-4204

ir@veeva.com  

Media Contact:

Deivis Mercado

Veeva Systems Inc.

925-226-8821

pr@veeva.com  

VEEVA SYSTEMS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)



April 30,

2021


January 31,

2021

Assets




Current assets:




Cash and cash equivalents

$

1,184,980



$

730,504


Short-term investments

965,453



933,122


Accounts receivable, net

262,327



564,387


Unbilled accounts receivable

51,367



47,206


Prepaid expenses and other current assets

30,939



35,607


Total current assets

2,495,066



2,310,826


Property and equipment, net

52,248



53,650


Deferred costs, net

40,007



42,072


Lease right-of-use assets

53,776



56,917


Goodwill

436,029



436,029


Intangible assets, net

110,166



114,595


Deferred income taxes

13,845



14,100


Other long-term assets

21,012



17,878


Total assets

$

3,222,149



$

3,046,067






Liabilities and stockholders equity




Current liabilities:




Accounts payable

$

18,858



$

23,253


Accrued compensation and benefits

31,720



30,410


Accrued expenses and other current liabilities

32,716



30,982


Income tax payable

6,299



2,590


Deferred revenue

608,673



616,992


Lease liabilities

11,280



11,725


Total current liabilities

709,546



715,952


Deferred income taxes

6,488



1,835


Lease liabilities, noncurrent

48,672



51,393


Other long-term liabilities

12,459



10,567


Total liabilities

777,165



779,747


Stockholders’ equity:




Class A common stock

2



2


Class B common stock




Additional paid-in capital

1,032,063



965,670


Accumulated other comprehensive income (loss)

(2,304)



992


Retained earnings

1,415,223



1,299,656


Total stockholders’ equity

2,444,984



2,266,320


Total liabilities and stockholders equity

$

3,222,149



$

3,046,067


 

VEEVA SYSTEMS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, except per share data)

(Unaudited)



Three months ended

April 30,


2021


2020

Revenues:




Subscription services(3)

$

341,119



$

270,235


Professional services and other(4)

92,454



66,871


Total revenues

433,573



337,106


Cost of revenues(5):




Cost of subscription services

51,217



43,212


Cost of professional services and other

64,919



51,668


Total cost of revenues

116,136



94,880


Gross profit

317,437



242,226


Operating expenses(5):




Research and development

83,226



62,237


Sales and marketing

64,610



55,755


General and administrative

41,155



36,669


Total operating expenses

188,991



154,661


Operating income

128,446



87,565


Other income, net

4,564



3,414


Income before income taxes

133,010



90,979


Provision for income taxes

17,443



4,409


Net income

$

115,567



$

86,570






Net income per share:




Basic

$

0.76



$

0.58


Diluted

$

0.71



$

0.54






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




Basic

152,444



149,541


Diluted

162,213



159,474


Other comprehensive income:




Net change in unrealized gain (loss) on available-for- sale investments

$

(1,086)



$

1,297


Net change in cumulative foreign currency translation gain (loss)

(2,213)



389


Comprehensive income

$

112,268



$

88,256






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




Veeva Commercial Cloud

$

168,458



$

142,577


Veeva Vault

172,661



127,658


Total subscription services

$

341,119



$

270,235






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




Veeva Commercial Cloud

$

36,026



$

27,376


Veeva Vault

56,428



39,495


Total professional services and other

$

92,454



$

66,871






(5) Includes stock-based compensation as follows:




Cost of revenues:




Cost of subscription services

$

906



$

1,019


Cost of professional services and other

7,422



5,074


Research and development

16,837



11,401


Sales and marketing

11,555



8,192


General and administrative

11,769



11,221


Total stock-based compensation

$

48,489



$

36,907


 

VEEVA SYSTEMS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)



Three months ended

April 30,


2021


2020

Cash flows from operating activities




Net income

$

115,567



$

86,570


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




Depreciation and amortization

6,628



7,878


Reduction of operating lease right-of-use assets

2,827



2,997


Accretion (amortization) of discount on short-term investments

1,542



(11)


Stock-based compensation

48,489



36,907


Amortization of deferred costs

6,355



4,751


Deferred income taxes

5,242



(1,134)


Gain on foreign currency from mark-to-market derivative

431



93


Bad debt (expense) recovery

159



(393)


Changes in operating assets and liabilities:




Accounts receivable

301,732



154,160


Unbilled accounts receivable

(4,161)



(4,452)


Deferred costs

(4,290)



(3,342)


Income taxes payable

3,709



(1,850)


Other current and long-term assets

2,737



551


Accounts payable

(6,794)



(4,430)


Accrued expenses and other current liabilities

6,967



2,691


Deferred revenue

(8,176)



1,477


Operating lease liabilities

(2,748)



(2,811)


Other long-term liabilities

2,169



2,520


Net cash provided by operating activities

478,385



282,172


Cash flows from investing activities




Purchases of short-term investments

(256,938)



(188,818)


Maturities and sales of short-term investments

221,645



140,342


Long-term assets

(2,656)



267


Net cash used in investing activities

(37,949)



(48,209)


Cash flows from financing activities




Reduction of lease liabilities – finance leases

(286)



(248)


Proceeds from exercise of common stock options

17,091



9,781


Net cash provided by financing activities

16,805



9,533


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

(2,765)



548


Net change in cash, cash equivalents, and restricted cash

454,476



244,044


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

731,712



479,797


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

$

1,186,188



$

723,841






Supplemental disclosures of other cash flow information:




Excess tax benefits from employee stock plans

$

17,451



$

19,615


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:

VEEVA SYSTEMS INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(Dollars in thousands)

(Unaudited)



Three months ended April 30,


2021


2020

Cost of subscription services revenues on a GAAP basis

$

51,217



$

43,212


Stock-based compensation expense

(906)



(1,019)


Amortization of purchased intangibles

(895)



(1,594)


Cost of subscription services revenues on a non-GAAP basis

$

49,416



$

40,599






Gross margin on subscription services revenues on a GAAP basis

85.0

%


84.0

%

Stock-based compensation expense

0.3



0.4


Amortization of purchased intangibles

0.2



0.6


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

85.5

%


85.0

%





Cost of professional services and other revenues on a GAAP basis

$

64,919



$

51,668


Stock-based compensation expense

(7,422)



(5,074)


Amortization of purchased intangibles

(134)



(135)


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

$

57,363



$

46,459






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

29.8

%


22.7

%

Stock-based compensation expense

8.0



7.6


Amortization of purchased intangibles

0.2



0.2


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

38.0

%


30.5

%





Gross profit on a GAAP basis

$

317,437



$

242,226


Stock-based compensation expense

8,328



6,093


Amortization of purchased intangibles

1,029



1,729


Gross profit on a non-GAAP basis

$

326,794



$

250,048






Gross margin on total revenues on a GAAP basis

73.2

%


71.9

%

Stock-based compensation expense

1.9



1.8


Amortization of purchased intangibles

0.3



0.5


Gross margin on total revenues on a non-GAAP basis

75.4

%


74.2

%





Research and development expense on a GAAP basis

$

83,226



$

62,237


Stock-based compensation expense

(16,837)



(11,401)


Amortization of purchased intangibles

(28)



(28)


Research and development expense on a non-GAAP basis

$

66,361



$

50,808






Sales and marketing expense on a GAAP basis

$

64,610



$

55,755


Stock-based compensation expense

(11,555)



(8,192)


Amortization of purchased intangibles

(3,317)



(3,402)


Sales and marketing expense on a non-GAAP basis

$

49,738



$

44,161






General and administrative expense on a GAAP basis

$

41,155



$

36,669


Stock-based compensation expense

(11,769)



(11,221)


Amortization of purchased intangibles

(55)



(56)


General and administrative expense on a non-GAAP basis

$

29,331



$

25,392






Operating expense on a GAAP basis

$

188,991



$

154,661


Stock-based compensation expense

(40,161)



(30,814)


Amortization of purchased intangibles

(3,400)



(3,486)


Operating expense on a non-GAAP basis

$

145,430



$

120,361






Operating income on a GAAP basis

$

128,446



$

87,565


Stock-based compensation expense

48,489



36,907


Amortization of purchased intangibles

4,429



5,215


Operating income on a non-GAAP basis

$

181,364



$

129,687






Operating margin on a GAAP basis

29.6

%


26.0

%

Stock-based compensation expense

11.2



11.0


Amortization of purchased intangibles

1.0



1.5


Operating margin on a non-GAAP basis

41.8

%


38.5

%





Net income on a GAAP basis

$

115,567



$

86,570


Stock-based compensation expense

48,489



36,907


Amortization of purchased intangibles

4,429



5,215


Income tax effect on non-GAAP adjustments (6)

(21,602)



(23,542)


Net income on a non-GAAP basis

$

146,883



$

105,150






Diluted net income per share on a GAAP basis

$

0.71



$

0.54


Stock-based compensation expense

0.30



0.23


Amortization of purchased intangibles

0.03



0.04


Income tax effect on non-GAAP adjustments(6)

(0.13)



(0.15)


Diluted net income per share on a non-GAAP basis

$

0.91



$

0.66


________________________

(6)

For the three months ended April 30, 2021 and 2020, management used an estimated annual effective non-GAAP tax rate of 21.0%.

 

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SOURCE Veeva Systems