Press Releases

Veeva Announces Fiscal 2020 Third Quarter Results

Total Revenues of $280.9M, up 25% Year-over-year;
Subscription Services Revenues of $226.8M, up 27% Year-over-year

PLEASANTON, CA — November 26, 2019 — 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, 2019.

“It was a very exciting quarter. We delivered great results, significantly expanded in new and existing areas, and welcomed Crossix and Physicians World to the Veeva team,” said CEO Peter Gassner. “Our focus on innovation, customer success, and ability to execute across multiple large markets sets us up for strong growth well into the future.”

Fiscal 2020 Third Quarter Results:

  • Revenues: Total revenues for the third quarter were $280.9 million, up from $224.7 million one year ago, an increase of 25% year-over-year. Subscription services revenues for the third quarter were $226.8 million, up from $178.2 million one year ago, an increase of 27% year-over-year.
  • Operating Income and Non-GAAP Operating Income
    (1): Third quarter operating income was $80.8 million, compared to $63.1 million one year ago, an increase of 28% year-over-year. Non-GAAP operating income for the third quarter was $111.6 million, compared to $84.8 million one year ago, an increase of 32% year-over-year.
  • Net Income and Non-GAAP Net Income
    (1): Third quarter net income was $82.2 million, compared to $64.1 million one year ago, an increase of 28% year-over-year. Non-GAAP net income for the third quarter was $95.4 million, compared to $70.6 million one year ago, an increase of 35% 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 $0.52, compared to $0.41 one year ago, while non-GAAP fully diluted net income per share was $0.60, compared to $0.45 one year ago.

“Our outperformance in both Veeva Commercial Cloud and Veeva Vault reflects the tremendous opportunity we have in life sciences,” said CFO Tim Cabral. “We’re continuing our investments to drive customer success and long-term growth in our aim to become the most strategic partner to the industry.”

Recent Highlights:

  • Veeva Acquires Crossix and Physicians World — The company recently closed two acquisitions, adding new solutions to Veeva Commercial Cloud. Crossix, the leader in privacy-safe patient data and analytics, provides complementary solutions and enables expansion into new areas. With the acquisition of Physicians World, a trusted provider of events services, Veeva addresses the industry’s growing demand for world-class events management software and services, all from one vendor.
  • Customer Success in Commercial Cloud Drives Market Share Gains — Veeva continued to expand its Commercial Cloud business with key wins. A top 50 pharma selected Veeva CRM for their European markets based upon their success in the U.S. Another top 50 pharma selected Veeva OpenData in the U.S. to improve field force effectiveness.
  • Veeva Development Cloud Adoption Deepens In the quarter, a top 20 pharma selected Veeva Vault QualityDocs as their enterprise standard, marking the first Veeva R&D application for this long-standing Commercial Cloud customer. The quarter also saw a major milestone with Veeva Vault CDMS now rolling out in a large-scale Phase 3 trial for more than 12,000 patients across 700 sites and 32 countries.

Financial Outlook:

Veeva is providing guidance for its fiscal fourth quarter ending January 31, 2020 as follows:

  • Total revenues between $296 and $299 million.
  • Non-GAAP operating income between $100 and $101 million(2).
  • Non-GAAP fully diluted net income per share between $0.51 and $0.52(2).

Veeva is providing guidance for its fiscal year ending January 31, 2020 as follows:

  • Total revenues between $1,088 and $1,091 million.
  • Non-GAAP operating income between $409 and $410 million(2).
  • Non-GAAP fully diluted net income per share between $2.16 and $2.17(2).

The guidance above reflects the impact from the acquisitions of Crossix and Physicians World to Veeva’s fiscal fourth quarter and fiscal year ending January 31, 2020 as follows:

  • Subscription revenue between $10 and 11 million(3).
  • Services revenue between $3 and 4 million.
  • Total revenues between $13 and $15 million(3).
  • Non-GAAP operating loss of $6 million(2).
  • Calculated billings of ~$30 million.

Conference Call Information:

What:

Veeva’s Fiscal 2020 Third Quarter Results Conference Call

When:

Tuesday, November 26, 2019

Time:

1:30 p.m. PT (4:30 p.m. ET)

Live Call:

1-833-235-5654, domestic

 

1-647-689-4160, international

 

Conference ID 637 9736

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, 2020 or fiscal year ending January 31, 2020 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) Revenue associated with Crossix and Physicians World includes purchase accounting adjustments.

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 800 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, 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)our expectation that the future growth rate of our revenues will decline; (iii)fluctuation of our results, which may make period-to-period comparisons less meaningful; (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) our ability to integrate Crossix Systems Inc. and Physicians World LLC into our business and achieve the expected benefits of the acquisitions; (vii) loss of one or more customers, particularly any of our large customers; (viii) system unavailability, system performance problems, or loss of data due to disruptions or other problems with our computing infrastructure; (ix) our ability to attract and retain highly skilled employees and manage our growth effectively; (x) failure to sustain the level of profitability we have achieved in the past as our costs increase; (xi) adverse changes in economic, regulatory, or market conditions, particularly in the life sciences industry, including as a result of customer mergers; (xii) a decline in new subscriptions that may not be immediately reflected in our operating results due to the ratable recognition of our subscription revenue; and (xiii) pending, threatened, or future legal proceedings and related expenses.

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, 2019. 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.

® 2019 Veeva Systems Inc. All rights reserved. Veeva and the Veeva logo are trademarks of Veeva Systems Inc. Veeva Systems Inc. owns other registered and unregistered trademarks.

VEEVA SYSTEMS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

October 31,

2019

 

January 31,

2019

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

892,581

 

 

$

550,971

 

Short-term investments

602,407

 

 

539,190

 

Accounts receivable, net

116,874

 

 

303,465

 

Unbilled accounts receivable

30,899

 

 

18,122

 

Prepaid expenses and other current assets

15,360

 

 

21,666

 

Total current assets

1,658,121

 

 

1,433,414

 

Property and equipment, net(3)

53,290

 

 

54,966

 

Deferred costs, net

29,873

 

 

30,869

 

Lease right-of-use assets(3)

24,055

 

 

 

Goodwill

95,804

 

 

95,804

 

Intangible assets, net

19,948

 

 

24,521

 

Deferred income taxes, noncurrent

6,455

 

 

5,938

 

Other long-term assets

12,895

 

 

8,254

 

Total assets

$

1,900,441

 

 

$

1,653,766

 

 

 

 

 

Liabilities and stockholders equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

9,914

 

 

$

9,110

 

Accrued compensation and benefits

15,977

 

 

15,324

 

Accrued expenses and other current liabilities

15,707

 

 

16,145

 

Income tax payable

7,195

 

 

4,086

 

Deferred revenue

250,674

 

 

356,357

 

Lease liabilities(3)

7,430

 

 

 

Total current liabilities

306,897

 

 

401,022

 

Deferred income taxes, noncurrent

9,042

 

 

6,095

 

Lease liabilities, noncurrent(3)

19,882

 

 

 

Other long-term liabilities

6,055

 

 

8,900

 

Total liabilities

341,876

 

 

416,017

 

Stockholders’ equity:

 

 

 

Class A common stock

1

 

 

1

 

Class B common stock

 

 

 

Additional paid-in capital

704,915

 

 

617,623

 

Accumulated other comprehensive income

173

 

 

928

 

Retained earnings(3)

853,476

 

 

619,197

 

Total stockholders’ equity

1,558,565

 

 

1,237,749

 

Total liabilities and stockholders equity

$

1,900,441

 

 

$

1,653,766

 

_______________________

(3)

The Company adopted ASU 2016-02, “Leases” (Topic 842) using the modified retrospective method as of February 1, 2019 and elected the transition option that allows the Company not to restate the comparative periods in their financial statements in the year of adoption.

VEEVA SYSTEMS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, except per share data)

(Unaudited)

 

Three months ended

October 31,

 

Nine months ended

October 31,

 

2019

 

2018

 

2019

 

2018

Revenues:

 

 

 

 

 

 

 

Subscription services

$

226,760

 

 

$

178,214

 

 

$

642,187

 

 

$

503,809

 

Professional services and other

54,161

 

 

46,517

 

 

150,386

 

 

126,078

 

Total revenues

280,921

 

 

224,731

 

 

792,573

 

 

629,887

 

Cost of revenues
(4):

 

 

 

 

 

 

 

Cost of subscription services

31,964

 

 

28,335

 

 

93,822

 

 

87,394

 

Cost of professional services and other

41,365

 

 

33,039

 

 

115,228

 

 

93,361

 

Total cost of revenues

73,329

 

 

61,374

 

 

209,050

 

 

180,755

 

Gross profit

207,592

 

 

163,357

 

 

583,523

 

 

449,132

 

Operating expenses
(4):

 

 

 

 

 

 

 

Research and development

52,575

 

 

40,001

 

 

148,694

 

 

116,024

 

Sales and marketing

45,524

 

 

37,699

 

 

130,962

 

 

110,306

 

General and administrative

28,693

 

 

22,563

 

 

78,042

 

 

62,934

 

Total operating expenses

126,792

 

 

100,263

 

 

357,698

 

 

289,264

 

Operating income

80,800

 

 

63,094

 

 

225,825

 

 

159,868

 

Other income, net

9,141

 

 

4,606

 

 

22,634

 

 

10,087

 

Income before income taxes

89,941

 

 

67,700

 

 

248,459

 

 

169,955

 

Provision for income taxes

7,696

 

 

3,615

 

 

13,523

 

 

11,274

 

Net income

$

82,245

 

 

$

64,085

 

 

$

234,936

 

 

$

158,681

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

Basic

$

0.56

 

 

$

0.44

 

 

$

1.59

 

 

$

1.10

 

Diluted

$

0.52

 

 

$

0.41

 

 

$

1.49

 

 

$

1.02

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

Basic

148,157

 

 

144,737

 

 

147,467

 

 

143,765

 

Diluted

158,750

 

 

156,025

 

 

158,124

 

 

155,706

 

Other comprehensive income:

 

 

 

 

 

 

 

Net change in unrealized gains on available-for-sale investments

$

753

 

 

$

33

 

 

$

2,176

 

 

$

695

 

Net change in cumulative foreign currency translation loss

(487

)

 

(1,153

)

 

(2,931

)

 

(3,534

)

Comprehensive income

$

82,511

 

 

$

62,965

 

 

$

234,181

 

 

$

155,842

 

_______________________

(4) Includes stock-based compensation as follows:

 

Cost of revenues:

 

 

 

 

 

 

 

Cost of subscription services

$

560

 

 

$

405

 

 

$

1,528

 

 

$

1,166

 

Cost of professional services and other

4,825

 

 

2,782

 

 

12,261

 

 

7,767

 

Research and development

9,899

 

 

5,820

 

 

25,732

 

 

16,282

 

Sales and marketing

6,882

 

 

4,825

 

 

19,207

 

 

13,743

 

General and administrative

7,155

 

 

6,086

 

 

19,719

 

 

17,689

 

Total stock-based compensation

$

29,321

 

 

$

19,918

 

 

$

78,447

 

 

$

56,647

 

VEEVA SYSTEMS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

Three months ended

October 31,

 

Nine months ended

October 31,

 

2019

 

2018

 

2019

 

2018

Cash flows from operating activities

 

 

 

 

 

 

 

Net income

$

82,245

 

 

$

64,085

 

 

$

234,936

 

 

$

158,681

 

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

 

 

 

 

 

 

 

Depreciation and amortization

5,643

 

 

3,383

 

 

16,642

 

 

10,477

 

Accretion of discount on short-term investments

(722

)

 

(848

)

 

(2,996

)

 

(1,380

)

Stock-based compensation

29,321

 

 

19,918

 

 

78,447

 

 

56,647

 

Amortization of deferred costs

4,832

 

 

4,595

 

 

14,524

 

 

13,697

 

Deferred income taxes

432

 

 

1,824

 

 

1,771

 

 

2,642

 

Gain on foreign currency from mark-to-market derivative

(74

)

 

(19

)

 

(112

)

 

(182

)

Bad debt expense (recovery)

270

 

 

84

 

 

(42

)

 

262

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

28,319

 

 

21,658

 

 

186,633

 

 

134,353

 

Unbilled accounts receivable

(9,515

)

 

(5,212

)

 

(12,777

)

 

(6,641

)

Deferred costs

(4,500

)

 

(4,504

)

 

(13,528

)

 

(11,426

)

Income taxes payable

3,909

 

 

1,029

 

 

4,858

 

 

525

 

Other current and long-term assets

5,610

 

 

(6,018

)

 

1,513

 

 

(9,527

)

Accounts payable

1,253

 

 

2,982

 

 

1,216

 

 

3,520

 

Accrued expenses and other current liabilities

(1,682

)

 

406

 

 

231

 

 

(3,698

)

Deferred revenue

(78,326

)

 

(62,860

)

 

(105,637

)

 

(70,616

)

Lease liabilities

(1,625

)

 

 

 

(5,143

)

 

 

Other long-term liabilities

(3,886

)

 

1,053

 

 

(2,270

)

 

1,620

 

Net cash provided by operating activities

61,504

 

 

41,556

 

 

398,266

 

 

278,954

 

Cash flows from investing activities

 

 

 

 

 

 

 

Purchases of short-term investments

(190,695

)

 

(214,839

)

 

(628,784

)

 

(589,070

)

Maturities and sales of short-term investments

194,661

 

 

130,137

 

 

571,398

 

 

447,947

 

Purchases of property and equipment

(881

)

 

(4,163

)

 

(3,167

)

 

(5,558

)

Capitalized internal-use software development costs

(356

)

 

(495

)

 

(1,061

)

 

(1,009

)

Net cash provided by (used in) investing activities

2,729

 

 

(89,360

)

 

(61,614

)

 

(147,690

)

Cash flows from financing activities

 

 

 

 

 

 

 

Reduction of lease liabilities – finance leases

(241

)

 

 

 

(729

)

 

 

Proceeds from exercise of common stock options

1,607

 

 

4,867

 

 

8,618

 

 

19,728

 

Net cash provided by financing activities

1,366

 

 

4,867

 

 

7,889

 

 

19,728

 

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

(487

)

 

(1,154

)

 

(2,931

)

 

(3,530

)

Net change in cash, cash equivalents, and restricted cash

65,112

 

 

(44,091

)

 

341,610

 

 

147,462

 

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

828,676

 

 

512,940

 

 

552,178

 

 

321,387

 

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

$

893,788

 

 

$

468,849

 

 

$

893,788

 

 

$

468,849

 

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.
  • Deferred compensation associated with the Zinc Ahead business acquisition. The Zinc Ahead share purchase agreement, as revised, called for share purchase consideration to be deferred and paid at a rate of one-third of the deferred consideration amount per year to certain former Zinc Ahead employee shareholders and option holders who remain employed with Veeva on each deferred consideration payment date. In accordance with GAAP, these payments are being accounted for as deferred compensation and the expense is recognized over the requisite service period. Veeva’s management views this deferred compensation expense as an unusual acquisition cost associated with the Zinc Ahead acquisition and finds it useful to exclude it in order to assess the appropriate level of various operating expenses to assist in budgeting, planning and forecasting future periods. Veeva believes excluding this deferred compensation expense may allow investors to make more meaningful comparisons between its recurring operating results and those of other companies.
  • 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, purchased intangibles, and deferred compensation associated with the Zinc Ahead business acquisition 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.

Beginning with the fiscal quarter ended April 30, 2019, Veeva no longer excludes the effects of capitalization of internal-use software development expenses and the subsequent amortization of the capitalized expenses in its non-GAAP financial measures. Prior periods have been adjusted to reflect this change, and the effect of this change is not material for any period previously presented.

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.

VEEVA SYSTEMS INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(Dollars in thousands)

(Unaudited)

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

October 31,

 

Nine months ended

October 31,

 

2019

 

2018

 

2019

 

2018

Cost of subscription services revenues on a GAAP basis

$

31,964

 

 

$

28,335

 

 

$

93,822

 

 

$

87,394

 

Stock-based compensation expense

(560

)

 

(405

)

 

(1,528

)

 

(1,166

)

Amortization of purchased intangibles

(688

)

 

(690

)

 

(2,043

)

 

(2,397

)

Cost of subscription services revenues on a non-GAAP basis

$

30,716

 

 

$

27,240

 

 

$

90,251

 

 

$

83,831

 

 

 

 

 

 

 

 

 

Gross margin on subscription services revenues on a GAAP basis

85.9

%

 

84.1

%

 

85.4

%

 

82.7

%

Stock-based compensation expense

0.2

 

 

0.2

 

 

0.2

 

 

0.2

 

Amortization of purchased intangibles

0.4

 

 

0.4

 

 

0.3

 

 

0.5

 

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

86.5

%

 

84.7

%

 

85.9

%

 

83.4

%

 

 

 

 

 

 

 

 

Cost of professional services and other revenues on a GAAP basis

$

41,365

 

 

$

33,039

 

 

$

115,228

 

 

$

93,361

 

Stock-based compensation expense

(4,825

)

 

(2,782

)

 

(12,261

)

 

(7,767

)

Deferred compensation associated with Zinc Ahead acquisition

 

 

(4

)

 

 

 

(14

)

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

$

36,540

 

 

$

30,253

 

 

$

102,967

 

 

$

85,580

 

 

 

 

 

 

 

 

 

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

23.6

%

 

29.0

%

 

23.4

%

 

25.9

%

Stock-based compensation expense

8.9

 

 

6.0

 

 

8.2

 

 

6.2

 

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

32.5

%

 

35.0

%

 

31.6

%

 

32.1

%

 

 

 

 

 

 

 

 

Gross profit on a GAAP basis

$

207,592

 

 

$

163,357

 

 

$

583,523

 

 

$

449,132

 

Stock-based compensation expense

5,385

 

 

3,187

 

 

13,789

 

 

8,933

 

Amortization of purchased intangibles

688

 

 

690

 

 

2,043

 

 

2,397

 

Deferred compensation associated with Zinc Ahead acquisition

 

 

4

 

 

 

 

14

 

Gross profit on a non-GAAP basis

$

213,665

 

 

$

167,238

 

 

$

599,355

 

 

$

460,476

 

 

 

 

 

 

 

 

 

Gross margin on total revenues on a GAAP basis

73.9

%

 

72.7

%

 

73.6

%

 

71.3

%

Stock-based compensation expense

1.9

 

 

1.4

 

 

1.7

 

 

1.4

 

Amortization of purchased intangibles

0.3

 

 

0.3

 

 

0.3

 

 

0.4

 

Gross margin on total revenues on a non-GAAP basis

76.1

%

 

74.4

%

 

75.6

%

 

73.1

%

 

 

 

 

 

 

 

 

Research and development expense on a GAAP basis

$

52,575

 

 

$

40,001

 

 

$

148,694

 

 

$

116,024

 

Stock-based compensation expense

(9,899

)

 

(5,820

)

 

(25,732

)

 

(16,282

)

Deferred compensation associated with Zinc Ahead acquisition

 

 

(71

)

 

 

 

(289

)

Research and development expense on a non-GAAP basis

$

42,676

 

 

$

34,110

 

 

$

122,962

 

 

$

99,453

 

 

 

 

 

 

 

 

 

Sales and marketing expense on a GAAP basis

$

45,524

 

 

$

37,699

 

 

$

130,962

 

 

$

110,306

 

Stock-based compensation expense

(6,882

)

 

(4,825

)

 

(19,207

)

 

(13,743

)

Amortization of purchased intangibles

(802

)

 

(977

)

 

(2,530

)

 

(2,901

)

Deferred compensation associated with Zinc Ahead acquisition

 

 

(10

)

 

 

 

(40

)

Sales and marketing expense on a non-GAAP basis

$

37,840

 

 

$

31,887

 

 

$

109,225

 

 

$

93,622

 

 

 

 

 

 

 

 

 

General and administrative expense on a GAAP basis

$

28,693

 

 

$

22,563

 

 

$

78,042

 

 

$

62,934

 

Stock-based compensation expense

(7,155

)

 

(6,086

)

 

(19,719

)

 

(17,689

)

General and administrative expense on a non-GAAP basis

$

21,538

 

 

$

16,477

 

 

$

58,323

 

 

$

45,245

 

 

 

 

 

 

 

 

 

VEEVA SYSTEMS INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (continued)

(Dollars in thousands, except per share data)

(Unaudited)

 

 

Three months ended

October 31,

 

Nine months ended

October 31,

 

2019

 

2018

 

2019

 

2018

Operating expense on a GAAP basis

$

126,792

 

 

$

100,263

 

 

$

357,698

 

 

$

289,264

 

Stock-based compensation expense

(23,936

)

 

(16,731

)

 

(64,658

)

 

(47,714

)

Amortization of purchased intangibles

(802

)

 

(977

)

 

(2,530

)

 

(2,901

)

Deferred compensation associated with Zinc Ahead acquisition

 

 

(81

)

 

 

 

(329

)

Operating expense on a non-GAAP basis

$

102,054

 

$

82,474

 

 

$

290,510

 

 

$

238,320

 

 

 

 

 

 

 

 

 

Operating income on a GAAP basis

$

80,800

 

$

63,094

 

 

$

225,825

 

 

$

159,868

 

Stock-based compensation expense

29,321

 

 

19,918

 

 

78,447

 

 

56,647

 

Amortization of purchased intangibles

1,490

 

 

1,667

 

 

4,573

 

 

5,298

 

Deferred compensation associated with Zinc Ahead acquisition

 

 

85

 

 

 

 

343

 

Operating income on a non-GAAP basis

$

111,611

 

 

$

84,764

 

 

$

308,845

 

 

$

222,156

 

 

 

 

 

 

 

 

 

Operating margin on a GAAP basis

28.8

%

 

28.1

%

 

28.5

%

 

25.4

%

Stock-based compensation expense

10.4

 

 

8.9

 

 

9.9

 

 

9.0

 

Amortization of purchased intangibles

0.5

 

 

0.7

 

 

0.6

 

 

0.8

 

Deferred compensation associated with Zinc Ahead acquisition

 

 

 

 

 

 

0.1

 

Operating margin on a non-GAAP basis

39.7

%

 

37.7

%

 

39.0

%

 

35.3

%

 

 

 

 

 

 

 

 

Net income on a GAAP basis

$

82,245

 

$

64,085

 

$

234,936

 

$

158,681

Stock-based compensation expense

29,321

 

19,918

 

 

78,447

 

 

56,647

 

Amortization of purchased intangibles

1,490

 

1,667

 

4,573

 

5,298

Deferred compensation associated with Zinc Ahead acquisition

 

85

 

 

343

Income tax effect on non-GAAP adjustments(1)

(17,662

)

 

(15,153

)

 

(56,088

)

 

(37,497

)

Net income on a non-GAAP basis

$

95,394

 

 

$

70,602

 

 

$

261,868

 

 

$

183,472

 

 

 

 

 

 

 

 

 

Diluted net income per share on a GAAP basis

$

0.52

 

 

$

0.41

 

 

$

1.49

 

 

$

1.02

 

Stock-based compensation expense

0.18

 

 

0.13

 

 

0.50

 

 

0.36

 

Amortization of purchased intangibles

0.01

 

 

0.01

 

 

0.02

 

 

0.03

 

Deferred compensation associated with Zinc Ahead acquisition

 

 

 

 

 

 

 

Income tax effect on non-GAAP adjustments(1)

(0.11

)

 

(0.10

)

 

(0.35

)

 

(0.23

)

Diluted net income per share on a non-GAAP basis

$

0.60

 

 

$

0.45

 

 

$

1.66

 

 

$

1.18

 

________________________

(1)

For the three and nine months ended October 31, 2019 and 2018, management used an estimated annual effective non-GAAP tax rate of 21.0%.

 

Investor Relations Contact:
Veeva Systems Inc.
Rick Lund, 925-271-9816
ir@veeva.com

Media Contact:
Veeva Systems Inc.
Roger Villareal, 925-264-8885
pr@veeva.com