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Veeva(VEEV) - 2025 Q3 - Quarterly Report
VEEVVeeva(VEEV)2024-12-09 21:05
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Revenue Growth - Total revenues for the three months ended October 31, 2024, increased to 699.207million,upfrom699.207 million, up from 616.505 million in the same period in 2023[14] - Subscription services revenue for the three months ended October 31, 2024, increased to 580.850million,upfrom580.850 million, up from 494.912 million in the same period in 2023[14] - Veeva's total revenues for the nine months ended October 31, 2024, were 2,025.7million,comparedto2,025.7 million, compared to 1,733.1 million for the same period in 2023, representing a 16.9% increase[79] - Subscription services revenues for the nine months ended October 31, 2024, were 1,676.1million,upfrom1,676.1 million, up from 1,380.1 million in the same period in 2023, a 21.4% increase[79] - Commercial Solutions revenues for the nine months ended October 31, 2024, were 811.5million,comparedto811.5 million, compared to 733.9 million in 2023, a 10.6% increase[79] - R&D Solutions revenues for the nine months ended October 31, 2024, were 864.6million,upfrom864.6 million, up from 646.2 million in 2023, a 33.8% increase[79] - Total revenues for the nine months ended October 31, 2024 were 2,025,733thousand,comparedto2,025,733 thousand, compared to 1,733,055 thousand for the same period in 2023[108] - Total revenues for the three months ended October 31, 2024 increased by 83millionto83 million to 699.2 million, driven by a 86millionincreaseinsubscriptionservicesrevenuespartiallyoffsetbya86 million increase in subscription services revenues partially offset by a 3 million decrease in professional services and other revenues[109] - Subscription services revenues for the three months ended October 31, 2024 increased by 17% to 580.9 million, with R&D Solutions contributing 59 million and Commercial Solutions contributing 27million[109]−TotalrevenuesfortheninemonthsendedOctober31,2024increasedby27 million[109] - Total revenues for the nine months ended October 31, 2024 increased by 293 million to 2.03billion,drivenbya2.03 billion, driven by a 296 million increase in subscription services revenues partially offset by a 3milliondecreaseinprofessionalservicesandotherrevenues[110]NetIncomeandProfitability−NetincomeforthethreemonthsendedOctober31,2024,roseto3 million decrease in professional services and other revenues[110] Net Income and Profitability - Net income for the three months ended October 31, 2024, rose to 185.808 million, compared to 135.158millioninthesameperiodin2023[14]−GrossprofitforthethreemonthsendedOctober31,2024,was135.158 million in the same period in 2023[14] - Gross profit for the three months ended October 31, 2024, was 524.818 million, compared to 448.823millioninthesameperiodin2023[14]−OperatingincomeforthethreemonthsendedOctober31,2024,roseto448.823 million in the same period in 2023[14] - Operating income for the three months ended October 31, 2024, rose to 181.353 million, up from 128.489millioninthesameperiodin2023[14]−DilutednetincomepershareforthethreemonthsendedOctober31,2024,was128.489 million in the same period in 2023[14] - Diluted net income per share for the three months ended October 31, 2024, was 1.13, compared to 0.83inthesameperiodin2023[14]−NetincomefortheninemonthsendedOctober31,2024,was0.83 in the same period in 2023[14] - Net income for the nine months ended October 31, 2024, was 518.5 million, compared to 378.3millionforthesameperiodin2023[18]−NetincomefortheninemonthsendedOctober31,2024was378.3 million for the same period in 2023[18] - Net income for the nine months ended October 31, 2024 was 518,513 thousand, compared to 378,307thousandforthesameperiodin2023[108]−OperatingincomefortheninemonthsendedOctober31,2024was378,307 thousand for the same period in 2023[108] - Operating income for the nine months ended October 31, 2024 was 503,012 thousand, compared to 294,070thousandforthesameperiodin2023[108]−IncomebeforeincometaxesforthethreemonthsendedOctober31,2024,increasedby42294,070 thousand for the same period in 2023[108] - Income before income taxes for the three months ended October 31, 2024, increased by 42% to 242,290 thousand compared to 170,676thousandinthesameperiodin2023[127]−NetincomeonaGAAPbasisfortheninemonthsendedOctober31,2024,was170,676 thousand in the same period in 2023[127] - Net income on a GAAP basis for the nine months ended October 31, 2024, was 518,513 thousand, up from 378,307thousandinthesameperiodin2023[138]−DilutednetincomepershareonaGAAPbasisfortheninemonthsendedOctober31,2024,was378,307 thousand in the same period in 2023[138] - Diluted net income per share on a GAAP basis for the nine months ended October 31, 2024, was 3.15, compared to 2.32inthesameperiodin2023[138]AssetsandLiabilities−TotalassetsasofOctober31,2024,grewto2.32 in the same period in 2023[138] Assets and Liabilities - Total assets as of October 31, 2024, grew to 6.452853 billion, up from 5.910920billionasofJanuary31,2024[13]−TotalcurrentassetsasofOctober31,2024,increasedto5.910920 billion as of January 31, 2024[13] - Total current assets as of October 31, 2024, increased to 5.447160 billion, up from 5.003211billionasofJanuary31,2024[13]−TotalliabilitiesasofOctober31,2024,decreasedto5.003211 billion as of January 31, 2024[13] - Total liabilities as of October 31, 2024, decreased to 951.450 million, down from 1.266096billionasofJanuary31,2024[13]−Stockholders′equityasofOctober31,2024,increasedto1.266096 billion as of January 31, 2024[13] - Stockholders' equity as of October 31, 2024, increased to 5.501403 billion, up from 4.644824billionasofJanuary31,2024[13]−Totalstockholders′equityincreasedto4.644824 billion as of January 31, 2024[13] - Total stockholders' equity increased to 5.5 billion as of October 31, 2024, up from 4.6billionatthebeginningoftheperiod[16]−Accumulatedothercomprehensivelossdecreasedto4.6 billion at the beginning of the period[16] - Accumulated other comprehensive loss decreased to 6.5 million as of October 31, 2024, from 10.6millionatthebeginningoftheperiod[16]−Retainedearningsincreasedto10.6 million at the beginning of the period[16] - Retained earnings increased to 3.3 billion as of October 31, 2024, up from 2.7billionatthebeginningoftheperiod[16]−Totaladditionalpaid−incapitalincreasedto2.7 billion at the beginning of the period[16] - Total additional paid-in capital increased to 2.2 billion as of October 31, 2024, up from 1.9billionatthebeginningoftheperiod[16]−Veeva′sshort−terminvestmentsasofOctober31,2024,totaled1.9 billion at the beginning of the period[16] - Veeva's short-term investments as of October 31, 2024, totaled 4,018.475 million, with corporate notes and bonds making up the largest portion at 2,220.879million[27]−Thecompany′sdeferredcostswere2,220.879 million[27] - The company's deferred costs were 23 million as of October 31, 2024, with amortization expenses of 4millionforthethreemonthsendedOctober31,2024[30]−Veeva′spropertyandequipment,net,amountedto4 million for the three months ended October 31, 2024[30] - Veeva's property and equipment, net, amounted to 55.695 million as of October 31, 2024, with land improvements and building improvements contributing 22.392million[31]−Goodwillremainedunchangedat22.392 million[31] - Goodwill remained unchanged at 440 million as of both October 31, 2024, and January 31, 2024[33] - Intangible assets as of October 31, 2024, totaled 177.042million,withanetvalueof177.042 million, with a net value of 48.527 million after accumulated amortization of 128.515million[34]−Estimatedfutureamortizationexpenseforintangibleassetsfrom2025to2029andthereaftertotals128.515 million[34] - Estimated future amortization expense for intangible assets from 2025 to 2029 and thereafter totals 48.527 million[35] - Accrued expenses as of October 31, 2024, amounted to 34.634millionforcompensationandbenefits,and34.634 million for compensation and benefits, and 30.906 million for other current liabilities[36] - Financial assets measured at fair value as of October 31, 2024, totaled 4.298billion,with4.298 billion, with 275.389 million in Level 1 and 4.022billioninLevel2[41]CashFlowandInvestments−CashflowsfromoperatingactivitiesfortheninemonthsendedOctober31,2024,were4.022 billion in Level 2[41] Cash Flow and Investments - Cash flows from operating activities for the nine months ended October 31, 2024, were 1.02 billion, up from 853.6millionin2023[18]−Totalcash,cashequivalents,andrestrictedcashattheendoftheperiodwere853.6 million in 2023[18] - Total cash, cash equivalents, and restricted cash at the end of the period were 1.05 billion, compared to 746.9millionattheendofthesameperiodin2023[18]−NetcashusedininvestingactivitiesfortheninemonthsendedOctober31,2024,was746.9 million at the end of the same period in 2023[18] - Net cash used in investing activities for the nine months ended October 31, 2024, was 684.4 million, compared to 989.6millionin2023[18]−ProceedsfromtheexerciseofcommonstockoptionsfortheninemonthsendedOctober31,2024,were989.6 million in 2023[18] - Proceeds from the exercise of common stock options for the nine months ended October 31, 2024, were 65.1 million, compared to 52.2millionin2023[18]−NetcashprovidedbyoperatingactivitiesonaGAAPbasisfortheninemonthsendedOctober31,2024,was52.2 million in 2023[18] - Net cash provided by operating activities on a GAAP basis for the nine months ended October 31, 2024, was 1,020,507 thousand, compared to 853,570thousandinthesameperiodin2023[138]−Cash,cashequivalents,andshort−terminvestmentstotaled853,570 thousand in the same period in 2023[138] - Cash, cash equivalents, and short-term investments totaled 5.1 billion as of October 31, 2024, with 62millionheldoutsidetheUnitedStates[139]−NetchangeincashandcashequivalentsfortheninemonthsendedOctober31,2024,was62 million held outside the United States[139] - Net change in cash and cash equivalents for the nine months ended October 31, 2024, was 340,019 thousand, compared to a net decrease of 142,755thousandinthesameperiodin2023[139]−Operatingcashinflowsprimarilyfromsubscriptionservicesandprofessionalservices,withthefirstquarterbeingseasonallystrongestduetoannualsubscriptionbillings[145]−Netcashprovidedbyoperatingactivitiesincreasedby142,755 thousand in the same period in 2023[139] - Operating cash inflows primarily from subscription services and professional services, with the first quarter being seasonally strongest due to annual subscription billings[145] - Net cash provided by operating activities increased by 167 million to 1,021millionfortheninemonthsendedOctober31,2024,drivenbyincreasedsalesandcashcollections[146]−Cashflowsfromoperatingactivitiesexpectedtobesubstantiallylessinthefourthquarteroffiscalyear2025duetotaxpaymentsrelatedtotheTaxCutsandJobsActof2017[147]−Netcashusedininvestingactivitiesdecreasedby1,021 million for the nine months ended October 31, 2024, driven by increased sales and cash collections[146] - Cash flows from operating activities expected to be substantially less in the fourth quarter of fiscal year 2025 due to tax payments related to the Tax Cuts and Jobs Act of 2017[147] - Net cash used in investing activities decreased by 305 million to 684millionfortheninemonthsendedOctober31,2024,duetoincreasedproceedsfrommaturitiesandsalesofshort−terminvestments[149]−Netcashprovidedbyfinancingactivitiesincreasedby684 million for the nine months ended October 31, 2024, due to increased proceeds from maturities and sales of short-term investments[149] - Net cash provided by financing activities increased by 11 million to 5millionfortheninemonthsendedOctober31,2024,primarilyduetoincreasedproceedsfromemployeestockoptionexercises[150][151]−Cash,cashequivalents,andshort−terminvestmentstotaled5 million for the nine months ended October 31, 2024, primarily due to increased proceeds from employee stock option exercises[150][151] - Cash, cash equivalents, and short-term investments totaled 5.1 billion as of October 31, 2024, held primarily in demand deposit accounts, money market funds, and U.S. treasury securities[157] - An immediate 100-basis points increase in interest rates would result in a 58millionmarketvaluereductionintheinvestmentportfolioasofOctober31,2024[159]ExpensesandCosts−ResearchanddevelopmentexpensesfortheninemonthsendedOctober31,2024were58 million market value reduction in the investment portfolio as of October 31, 2024[159] Expenses and Costs - Research and development expenses for the nine months ended October 31, 2024 were 511,551 thousand, compared to 465,466thousandforthesameperiodin2023[108]−SalesandmarketingexpensesfortheninemonthsendedOctober31,2024were465,466 thousand for the same period in 2023[108] - Sales and marketing expenses for the nine months ended October 31, 2024 were 297,524 thousand, compared to 282,269thousandforthesameperiodin2023[108]−GeneralandadministrativeexpensesfortheninemonthsendedOctober31,2024were282,269 thousand for the same period in 2023[108] - General and administrative expenses for the nine months ended October 31, 2024 were 195,001 thousand, compared to 187,887thousandforthesameperiodin2023[108]−CostofsubscriptionservicesrevenuesfortheninemonthsendedOctober31,2024were187,887 thousand for the same period in 2023[108] - Cost of subscription services revenues for the nine months ended October 31, 2024 were 239,577 thousand, compared to 213,179thousandforthesameperiodin2023[108]−CostofprofessionalservicesandotherrevenuesfortheninemonthsendedOctober31,2024were213,179 thousand for the same period in 2023[108] - Cost of professional services and other revenues for the nine months ended October 31, 2024 were 279,068 thousand, compared to 290,184thousandforthesameperiodin2023[108]−Totalstock−basedcompensationfortheninemonthsendedOctober31,2024was290,184 thousand for the same period in 2023[108] - Total stock-based compensation for the nine months ended October 31, 2024 was 322,146 thousand, compared to 294,840thousandforthesameperiodin2023[108]−ResearchanddevelopmentexpensesforthethreemonthsendedOctober31,2024increasedby294,840 thousand for the same period in 2023[108] - Research and development expenses for the three months ended October 31, 2024 increased by 11 million to 172.4million,primarilyduetoanincreaseinemployeecompensation−relatedcosts[116]−SalesandmarketingexpensesfortheninemonthsendedOctober31,2024increasedby172.4 million, primarily due to an increase in employee compensation-related costs[116] - Sales and marketing expenses for the nine months ended October 31, 2024 increased by 15 million to 297.5million,primarilyduetoanincreaseinemployeecompensation−relatedcosts[120]−GeneralandadministrativeexpensesforthethreemonthsendedOctober31,2024increasedby297.5 million, primarily due to an increase in employee compensation-related costs[120] - General and administrative expenses for the three months ended October 31, 2024 increased by 10 million to 72.4million,primarilyduetoanincreaseinemployeecompensation−relatedcosts[122]−CostofsubscriptionservicesforthethreemonthsendedOctober31,2024increasedby72.4 million, primarily due to an increase in employee compensation-related costs[122] - Cost of subscription services for the three months ended October 31, 2024 increased by 8 million to 82.6million,primarilyduetoanincreaseincomputinginfrastructurecosts[113]−Thecompanyexpectscostofsubscriptionservicestoincreaseintheneartermduetoincreasedusageofsubscriptionservices[114]−Stock−basedcompensationexpensefortheninemonthsendedOctober31,2024,was82.6 million, primarily due to an increase in computing infrastructure costs[113] - The company expects cost of subscription services to increase in the near term due to increased usage of subscription services[114] - Stock-based compensation expense for the nine months ended October 31, 2024, was 322,146 thousand, up from 294,840thousandinthesameperiodin2023[138]−AmortizationofpurchasedintangiblesfortheninemonthsendedOctober31,2024,was294,840 thousand in the same period in 2023[138] - Amortization of purchased intangibles for the nine months ended October 31, 2024, was 14,490 thousand, slightly down from 14,558thousandinthesameperiodin2023[138]GeographicRevenueDistribution−NorthAmericaaccountedfor14,558 thousand in the same period in 2023[138] Geographic Revenue Distribution - North America accounted for 1,192.0 million of total revenues for the nine months ended October 31, 2024, representing 58.8% of total revenues[83] - Europe contributed 586.9milliontototalrevenuesfortheninemonthsendedOctober31,2024,accountingfor29.0586.9 million to total revenues for the nine months ended October 31, 2024, accounting for 29.0% of total revenues[83] - Asia Pacific revenues for the nine months ended October 31, 2024, were 196.0 million, making up 9.7% of total revenues[83] - Middle East, Africa, and Latin America revenues for the nine months ended October 31, 2024, were $50.8 million, representing 2.5% of total revenues[83] - Geographic mix of subscription services revenues for the three months ended October 31, 2024 was 59% from North America, 28% from Europe, and 13% from other locations, primarily Asia Pacific[109] - International sales accounted for 41% of total revenues in fiscal year 2024, with expansion efforts facing challenges such as localization, data privacy laws, and longer sales cycles[184] - Approximately 2% of total revenue is attributable to China, with potential negative impact on CRM business due to data localization requirements[203] Risks and Challenges - Legal proceedings involving non-compete agreements with Medidata, IQVIA, and Sparta Systems, with trial set for June 16, 2025[168] - Risks include potential security breaches, competitive markets, reliance on key customers, and macroeconomic factors such as inflation and geopolitical conflicts[171] - Security breaches or unauthorized access to customer data could lead to significant liabilities and reputational damage, potentially causing customers to reduce or stop using the company's solutions[174] - The company processes sensitive data, including health and non-health data for U.S. patients, and faces elevated risks of cyber-attacks due to geopolitical tensions like the Russia-Ukraine conflict and Israel-Hamas conflict[174] - The company's top 10 customers accounted for 28%, 29%, and 31% of total revenues in fiscal years 2024, 2023, and 2022, respectively, making the loss of any key customer impactful[179] - The company plans to migrate Veeva CRM customers from the Salesforce platform to its own Veeva Vault platform by September 1, 2030, which could lead to business disruptions and customer loss[181] - The company faces intense competition from providers like IQVIA, Salesforce, and Oracle, with new market entrants and evolving AI technologies increasing competitive pressures[176] - Defects or disruptions in the company's solutions could result in diminished demand, reduced revenues, and substantial liability[180] - The company's sales cycles are long and unpredictable, with new applications and markets requiring significant investment without guaranteed success[183] - The company's newer solutions, such as data and analytics offerings, face uncertainty in market adoption, which could impact revenue growth[177] - The company's reliance on third-party computing infrastructure and network providers exposes it to risks of service disruptions and performance issues[180] - The company's business could be adversely affected by changes in the regulatory environment of the life sciences industry, including potential limitations on direct-to-consumer advertising and drug pricing reforms[197] - Consolidation within the life sciences industry could lead to reductions in user subscriptions or non-renewal of customer subscription orders[197] - The company's ability to attract and retain highly skilled employees is critical to its growth plan, with competition for such employees being intense[186] - The company's "Work Anywhere" policy may present long-term challenges in maintaining employee productivity and collaboration[186] - The company's business could be disrupted by catastrophic events such as natural disasters, cyber-attacks, or armed conflicts, potentially affecting its operations and results[188] - The company's future acquisitions could divert management's attention, result in additional dilution to stockholders, and disrupt operations, potentially adversely affecting operating results[189] - Reduction in funding for early-stage life sciences companies since 2022 has led to reduced sales and may continue to affect financial results[199] - Veeva CRM and Commercial Solutions sales negatively impacted by life sciences companies reducing sales representatives in favor of digitally-enabled sales channels[199] - Veeva Network and Veeva Nitro sales negatively affected by IQVIA restrictions on data uploads and usage[206] - Compliance with GDPR and UK GDPR imposes significant data protection obligations and potential penalties for noncompliance[203] - Veeva Crossix products may see reduced demand due to modifications in response to the Washington My Health My Data Act[204] - Potential delays in solution releases due to complex validation procedures required for regulatory compliance[200] - Increased costs and resource allocation needed to comply with evolving global data privacy and cybersecurity regulations[204] - Risk of reduced demand for solutions if third-party data providers like IQVIA restrict data uploads and usage[206] - Potential negative impact on customer relationships and business due to regulatory investigations or claims related to data privacy and cybersecurity[204] - Veeva Systems relies on third-party providers like Salesforce and Amazon Web Services for computing infrastructure, with potential risks of service disruptions impacting business operations[207] - Veeva CRM is currently dependent on Salesforce's platform, but the company plans to migrate customers to Vault CRM by September 2025, with a wind-down period until September 2030[209] - Salesforce terminated certain competition restrictions in May 2023, allowing it to promote third-party products competitive with Veeva CRM, potentially impacting Veeva's market position[209] - Veeva CRM Engage Meeting application uses a critical partner tool from Zoom Video Communications, and reliance on third-party software poses risks of functionality issues or increased costs[210] - Veeva's solutions incorporate open-source software, with potential risks of unanticipated license conditions or requirements to release proprietary source code[211] - Open-source software use may lead to greater risks due to lack of warranties or controls, potentially reducing the value of Veeva's solutions[212] - Salesforce and Amazon Web Services have experienced significant service outages in the past, which could adversely affect Veeva's customer experience[207] - Rapid business expansion or increased customer demand could strain Veeva's systems, potentially leading to service failures or reduced service levels[207] - Veeva's agreements with third-party computing infrastructure providers may not include service level credits matching those offered to customers, increasing financial risks[207] - Salesforce and IQVIA announced a partnership to jointly market a life sciences CRM solution, creating direct competition for Veeva CRM[209]