Veeva Announces Fiscal 2023 Second Quarter Results

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."

• 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."

• 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.

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⁾.

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.

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.

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
[email protected]

Media Contact:
Maria Scurry
Veeva Systems Inc.
781-366-7617
[email protected]

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 benefits. Excess tax benefits 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 benefits for its internal management reporting processes. Veeva management also finds it useful to exclude excess tax benefits when assessing the level of cash provided by operating activities. Given the nature of the excess tax benefits, Veeva believes excluding it allows investors to make meaningful comparisons between our operating cash flows from quarter to quarter and those of other companies.
  
  
  
• Impact of tax legislation. Veeva excludes the direct cash payments associated with the newly effective tax legislation requiring the capitalization of certain research and development expenses for purposes of calculating non-GAAP operating cash flows. Veeva does not believe the impact resulting from changes in the tax treatment of research and development costs to be indicative of its operating performance, nor does Veeva management consider such impact in assessing the level of cash provided by operating activities. Accordingly, Veeva believes excluding the impact of this change in tax law provides for better evaluation of its current operating performance and comparison to past operating results.
  
  
  
• 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.

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

SOURCE Veeva Systems