Q1 2021 Earnings Call

[music].

Until that time your lots of every place for music. Thank you for your patience.

[music].

You're quite a further systems. Please press star zero.

Yeah, the converts or to your speaker today brick one head of Investor Relations. Thank you. Please go ahead.

Good afternoon, and welcome to be was fiscal 2021 first quarter earnings call for the quarter ended April Thirtyth 2020.

With me on todays call, our Peter Gassner, our Chief Executive Officer, Paul shower, SVP of commercial cloud and Tim Kabral, Our Chief Financial Officer.

During the course of this conference call, we will make forward looking statements regarding trends or strategies and the anticipated performance of the business. These forward looking statements will be based on management's current views and expectations and are subject to various risks and uncertainties, including those related to the impacts of cobot 19 on our business the life sciences industry and glow.

<unk> economic conditions or actual results may differ materially.

Please refer to the risks listed in our earnings release and the risk factors included in our most recent filings on form 10-K, which is available on the company's website at <unk> Dot com under the investors section and on the Fccs web site at Si Si Dot Gov.

Forward looking statements made during the call are being made as of today May 28, 2020 based on the Sox available to us today.

This call is replayed or viewed after today the information presented during the call may not contain current or accurate information.

Veeva disclaims any obligation to update or revise any forward looking statements. We will provide guidance on todays call, but will not provide any further guidance or updates on our performance during the quarter unless we do so in a public forum. The guidance. We will provide today is in part based on our assumptions as to the macroeconomic environment in which we will be operating in a few.

Sure, including the timing and piece of recovery from any negative effects caused by cobot 19, such matters that are beyond our control and our assumptions may not be correct.

On the call. We will also discuss certain non-GAAP metrics that we believe eight in the understanding of our financial results a reconciliation to comparable GAAP metrics can be found in today's earnings release, which is available on our website and as an exhibit to the form 8-K filed with the FCC just before this call.

One final note concurrent with our earnings release, we have posted an investor presentation on our IR website contains a summary of our Q1 and recent historical financial results and our updated guidance. We will continue to provide these materials on a quarterly basis going forward as helpful reference for those interested in our business with that.

Thank you for joining us and I will turn it over to Peter.

Thank you Rick and thanks to everyone joining us today.

Before I give an update on the business I would like to extend our sympathies to all those who have been affected by the pandemic I'd also like to thank our customers, who are supporting health care professionals in patients and working around the clock to produce diagnostic equipment vaccines and treatments for covert 19.

We had a strong first quarter with results coming in ahead of our guidance total revenue was 337 million up 38% year over year.

Subscription revenue grew 36% year over year in our non-GAAP operating margin was 39%.

We are slightly decreasing the top end of our full year total revenue guidance by 10 million to 1.395 billion in raising our full year top in operating income guidance by 10 million to 510 million.

This is due to changes related to cope with 19 in certain segments of the business, particularly in positions world and the Krasik series, where in person events has largely stock and advertising is down. This also reflects lower costs related to travel.

And we'll discuss our guidance in more detail in his section.

This crisis has caused significant disruption or this has also promote the innovation throughout the industry end of either which over time will be beneficial for life sciences and towards either.

I'm more confident than ever in our long term opportunity and our ability to achieve our 3 billion dollar revenue target and 2025.

The effects of the pandemic have been far reaching and the world is looking to life sciences companies for solutions.

The industry is less affected financially than many others and remains relatively strong overall, but it's certainly a time a significant change as many of the industry process, it's become more virtual.

Healthcare providers and patients are delaying many non essential visits and elective procedures when comparing February to April the U.S. using krasik data.

Doctor visits were down by more than 50%.

This is impacting some life sciences companies more than others, depending on their product portfolio.

Many clinical trials have been delayed to avoid nonessential patient visits doctors in person visits by sales reps or clinical research associates. The doctors have also largely stuff.

These changes are causing patients doctors in the industry to rapidly adopt digital strategy.

Seth City is creating innovation.

Using Krasik stated, we see that Tele medicine increased rapidly in the U.S. from less than 1% of Doctor visits in February to more than 30% of visits in April.

Doctors and patients are getting used to a mix of in person and digital interaction and are finding it productive.

Using veeva Pos data for Veeva CRM, we see that in the U.S. remote meetings between pharma and doctors with either gauge our up more than 30 times and approved email communications are up more than two times from February to April.

Doctors are telling us they find digital meetings effective and they look forward to a mix it in person and digital interactions once things get back to normal.

It's good to see the healthcare systems and the life sciences industry evolving so rapidly.

It was a very busy quarter for Veeva, we executed our first ever entirely remote product releases in both CRM in bulk we made major changes to our product plan to release, new digital capabilities customers need most right now.

And our team in the field did an outstanding job supporting customers around the globe, ensuring the existing program stayed on track getting them like quickly with new digital capability and helping with many cobot 19 related special projects.

We also quickly and effectively turned all our customers summit through the ended the year into virtual events.

Q1 has been our greatest corridor of innovation, so far with innovations coming in all areas of the company from product to sales services and marketing right through to HR and finance I'm. So proud of the Veeva team and I'm personally thankful to be working around so many bright people executing together as a team.

I'd like to touch on two big new areas of innovation.

Data cloud and my Diva.

We had a major an announcement for commercial in March with Veeva data cloud plan for the U.S. by year end.

Good day to cloud will bring a better solution for patient data to the industry.

This is a large underserved area and ripe for disruption.

The other markets. We've entered we aim to bring much needed innovation.

He the data cloud is powered by the cross exceeded platform, which gives us a distinct advantage. It's a world class technology platform built for the development and delivery of large scale patient data and analytics all in a private cc Wei.

Customer feedback on data cloud, it's been very positive and we've already signed our first two early adopters for pilot one emerging biotech and one top 20 pharma.

Overtime, we will expand data cloud to more data offerings in countries like Krasik data platform could be as important in asset to be either as default platform.

But just as we saw with fall would take us many years to become the market leader, we're starting in a focused way around patient data for the U.S. market. We will concentrate on early adopters success and product excellence and grow from there.

Just two weeks ago at our R&D customer somewhat we announced my vivo for clinical trial. This is our first patient facing application. It will help patients to the clinical trial process, managing medications and appointments to participating in remote doctor visit.

My vivo unable clinical research sites around the world to eliminate paper deliberate better patient experience.

The product is planned for released in Q4, and it will be free for clinical research sites.

I'd be that has the potential to remove most of the paper from the clinical trial process and transform the patient site and sponsor experience.

We're very excited about my view.

We also Rick acted quickly in the quarter to add remotes sample requests management to be even engage remote source monetary could be the site called our solution for clinical research sites.

We're already seeing significant use of these new digital capabilities.

Overall, we are changing our product road map to add more digital capabilities and products and we're helping customers to find and operational lives there new digital strategy.

It's an exciting time to be in the industry and that either.

In uncertain times people look to join high quality companies and companies look to partner with other high quality companies.

We're seeing both trends play out towards either.

We have been able to attract great new talent and see an increase in qualified inbound candidates in faster interview cycles.

Customer relationships, that's always been strong, but now they're getting even stronger.

We are deepening our partnerships and seeing greater collaboration around long term roadmap.

Customers appreciate how well Veeva has executed and gone extra mile in this time of change.

Now I'd like to share a few additional highlights for the quarter by area.

It was a very active quarter for commercial cloud.

Even CRM continued to gain market share as we added 10, new SMB logos in the quarter, Utah further expansions that enterprise customers.

Open data also had a record number of wins in the quarter.

Adoption of approved email engage meeting was very strong.

And commercial cloud expanded in important ways in digital and with data cloud as I mentioned earlier and also with the Krasik beef better connect sales and marketing.

We are bringing veeva CRM field activity data into the Krasik stevia marketing analytics solution to give brand marketers insights into how sales and marketing activities are working together.

Example, brands can see the impact of media campaigns on doctors recently called on by the field.

We have a bold vision for commercial cloud.

The acquisition of Krasik and the announcement of data cloud is a big start.

Commercial cloud is about connecting customer facing teens, leveraging data and digital and solving for the specific needs of each major countries and regions.

This is the type of strategic partners the industry needs in commercial.

Approach is resonating and giving us the opportunity to engage an even broader strategic planning with our customers.

Turning to vault.

We just held our very first virtual summit two weeks ago.

Who is our R&D event for Europe, and the feedback was very positive.

We more than tripled attendance from last year, and we're pleased to see the online that that was really effective in advancing customer success and for restaurant Sally.

Looking at both development cloud progress.

Customers continue to adopt more vault applications.

<unk> quality suite is a good example, and had a very strong quarter highlighted by another top 20 pharma selecting qualitydocs as their enterprise sand.

This marks the 11th top 20 to select quality dock.

Clinicals another area, where customers are standardizing on more vault applications overtime.

This quarter, an existing top 20 pharma customer for Cdms. He Tms and study started up will round out the full vault clinical suite by adopting CTM that.

Additionally, another European top 20 decided to adopt he came after the study startup as its enterprise standard after standardizing on rim in Q4.

We also announced that five of the seven tops heroes have joined a vault Cdms partner program. This is a very significant announcement and shows increasing momentum of our cdms product sponsors NCR also like see that vault cdms has the potential to transform clinical data management.

Now onto our work outside life Sciences, and cosmetics and consumer goods.

These industries as experienced major impacts from covert 19.

Cosmetic companies, who have seen a significant drop in demand well CPG companies selling essential products have benefited from consumers stockpiling I've seen higher demand for certain products.

Our team continues to execute well this quarter and new top 10, CPG company selected quality one for an initial deployment.

Since the onset as attending this customer has experienced a rapid spike in demand.

To secure their supply chains, they needed to quickly established and track testing and auditing information for their suppliers.

Our team was able to deliver a supplier quality management system within three weeks.

So our outside of life Sciences business is experiencing some disruption due to cope with 19 I'm very proud of how they've continued to build deepens the reputation for customer success and as a trusted partner within these new industries.

I'm also happy to announce that we've completed our search for our new CFO.

They will start at Veeva in early June.

We will issue a formal announcement share further details at that time.

And then staying on to ensure a smooth transition and will remain under advisor to the company. After the transition is complete.

These live in tough times for everyone, but it's been inspiring to see what the industry and the Veeva teams have accomplished it's such a short amount of time I've never been more confident and be this feature.

With that I'd like to turn it over to Tim.

Thanks, Peter before I begin I want to refer you to the investor presentation available on our higher web site for a summary of our Q1 financial results and our updated guidance.

Given the detailed included in that presentation My comments on our Q1 results will be brief.

I'm very pleased with our Q1 performance.

The financial results were strong I was most impressed with our teams response to the coven 19 pandemic.

Our office space staff quickly pivoted to working from home and our teams in the field showed tremendous execution on both the surfaces and sales side during the quarter.

And every one went the extra mile to support our customers.

I'll first share some color on how those efforts impacted our Q1 results then I will talk in more detail about our outlook for the rest of the year.

We entered the first quarter with significant momentum.

Decryption revenue benefited from strong bookings in both commercial cloud involved.

Services had a record quarter, primarily driven by volt demand with good contribution from Veeva CRM Encaje meeting projects.

This was partially offset by cancellations related in person speaker events, which impacted our recently acquired physicians world business.

Operating margin outperformance in Q1 was mainly due to revenue exceeding our expectations.

While we saw cost savings in the quarter, primarily from less travel those were merced, mostly offset by fees related to the cancellation of our in person customer and employee events. This year.

Calculated billings for the quarter slightly exceeded our guidance. However in the corner a large customer change from an annual to quarterly billing cycle, which decreased Q when calculated billings by roughly 10 million.

Please note this change does not affect our full year billing and it's not related to covert 19 as the change was made well before shelter in place orders were widespread.

We also had a strong cash flow corner with cash from operations coming in at 282 million, which included 20 million in excess tax benefit related to equity compensation.

Q1, typically represents over 50% of cash from operations and this Q1 was no exception.

Our expectation for full year cash flow from operations, excluding the excess tax benefit has been revised down slightly to about 450 million due to the lower expected billings for the year, which I will comment on later.

Before I do want to guidance I would like to address the impact of covert 19 on our business and our observations on the impact to the industry lease terms.

The life Sciences industry has not been has negatively impacted some other industries.

Many of our customers have indicated that they expect a recovery to begin in the second half a year and in most cases are not changing their appetite for continued investment.

Our approach to guidance is informed by the sound luck.

Well the life Sciences industry remains relatively healthy our customers have needed to make certain adjustments.

For example, our commercial cloud customers are pushing out their advertising spend and canceling in person speaker events.

This is mainly negatively impacted our crosstex and physicians world businesses, respectively.

Meanwhile, we are seeing customers shift our focus to enable field reps to maintain virtual contact with doctors, which has benefited commercial cloud.

And as Peter also mentioned certain segments of our target markets have been more impacted than others by covert 19, specifically pre commercial fnbs contract research organizations med device and cosmetics companies.

Combined these represent a small portion of our recurring revenue base, but that exposure to these segments well have a modest impact of that business. This year.

Based on this new market environment, we've reduced our topline guidance to account for those impacted customer segments and changing industry dynamics.

We have also widened our range to account for the increased uncertainty.

For the full year, we expect total revenue to be 1 billion spend on 80 million to 1.395 billion.

This brings the top end of guidance down by 10 million from a quarter ago.

We now expect Crosstex and physicians world to contribute 90 to 95 million for the year, which is down 15 million from our previous guide.

Subscription revenue is expected to be roughly 1.135 billion for the full year.

Commercial cloud will contribute about 580 million in subscription revenue.

This includes 76 to 78 million from Cross X.

Within commercial cloud headwinds in the crossings business are partially offset by strength in CRM add ons.

Please note, we do not expect any material benefits from adoption of Veeva CRM engage meeting in fiscal 21.

We are currently providing this product to our customers free of charge to address the covert 19 crisis, and we need to be flexible and the timing of when we start charging customers for their continued use of this product.

Vault subscription revenue is now expected to be roughly 555 million with the reduction of 5 million driven by the customer segments I mentioned earlier.

Professional services is anticipated to be 245 to 260 million.

This includes unexpected eight to 9 million dollar reduction in the physicians world business, which is partially offset by strength in vault and commercial cloud project demand.

For the full year, we anticipate non-GAAP operating income to be between 500, and 510 million a non-GAAP operating margin has over 36%.

We expect to realize cost savings around travel and our move to virtual customer events through the end of the year, while still maintaining our aggressive hiring plan.

We're now targeting a full year EPS of $2 in 50 to $2.55 on a fully diluted share count of approximately 161 million.

Calculated billings for the year are expected to be 1.465 billion to 1.480 billion.

This includes reductions to the Crosstex and physicians World business is impacted customer segments as mentioned earlier and potential coven 19 related billing terms changes.

Q2 calculated billings is projected to be about 280 million with Q4 billings expected to make up more than 40% of this year's totals.

In Q2, we expect total revenue of 339 to 341 million and professional services have 63 to 64 million.

Please note that sequential total revenue growth in Q2 will be muted relative to previous years.

This is due to unexpected greater impact of coking 19 Q2.

Krasik seasonality and Q1 revenue benefited from an extra day of revenue recognition in the corner.

We expect non-GAAP operating income to be 126, 228 million and we expect non-GAAP EPS of 63 to 64 cents based on a fully diluted share count of approximately 861 million in.

In summary, we are fortunate to serve the life Sciences industry.

Their work to address depend on that is inspiring and shines a spotlight on the industry's importance I.

I am proud Veeva has been able to quickly step up to help our customers and the team continues to find ways to move the industry's forward.

Thank you for joining the call today, and I will turn it back to the operator for your questions.

Thank you at this time I'd like to remind everyone in order to ask a question. Please press star one on your telephone keypad, we'll pause for some motorparts acuity roster.

Your first question comes from Brent Bracelin with Piper Sandler Your line is open.

Great.

One for Peter and a quick follow up for Tim Peter Thanks for the thanks for the.

Oh industry stats here, 50% reduction and doctor visits or the patient visits relative to telemedicine now 30% increase.

My question really is around what are you changing to the product road map as you think about this this new world, where there's less physical visits more digital kinda Dr. Tele medicine visits one of the type of things that you need to add to the platform so kind of make it more digitally friendly.

Yeah. Thanks to the question in terms of the Telemeter telemedicine and Doctor visits yes from from February to April 50% reduction in Doctor visits and that's something we see from the Krasik stayed in near real time, one or two days lag. So that's a tremendous asset that we have in.

And Krasik, it's I just wanted to take a moment there to recognize yeah. That's a tremendous asset we're going to leverage that in many ways now the other one that 30% what that was is of the doctor visits in April.

30% of them, we're done by Tele medicine.

So and that was up from less than 1% in February so clearly what it means is patients and doctors are interacting with each other over the internet.

Life Sciences sees that and they have to adapt to that so what we're doing is more investment in either engage and other digital things in the in the commercial area to enable more virtual interactions between health care providers and doctors rather than all of that happened to be in the office and then we announced.

My Veeva for clinical trials and that's so software that will clinical research research sites to interact more remotely with their patients when they need to so they can have a mix of in office and virtual visits and then last thing was adding the remote site and monitoring to the arts.

Site called product to allow the clinical research associates from pharma to view the patient records remotely instead of having to go there and view them on the paper.

So those are some things we're doing in general what it means is we will we will enable pharma to be more virtual and more digital on the R&D side.

In clinical, particularly and then in the commercial side. So that they can have a mix of in person and digital.

Overall like these that will make the industry.

Overall that will make the industry more efficient and that's what I'm excited about it will make the industry more efficient and who bring more information to doctors and it'll make it more convenient for patients.

So its really a good thing overall, even though it's it's rough the cobot 19 definitely that very hard to go through.

But the the benefit of it is this increased moved to digital which will help everybody in health care ecosystem.

It sounds like these are unique additional add on teachers. This isn't going to be a wholesale change took on the platforms is at the right where the frame it.

Well I would say you know, it's it's a major.

I would say evolution of all our products and some of them are gonna be new products as well. So yes, its evolution will bring our customers there for sure but this will result in.

In making existing products better and overtime. This will result in new products and are already has been in my Veeva.

Great and Super helpful. There and then to just him as we think about the calculated billings guide here for Q2 280 million, but that does imply a little moderation here from what 30% billings growth to 20% what's factored in there are you factoring in.

Larger deal delays.

Just trying to just to understand what you saw like in April so far in may as it relates to what's baked into the assumptions for a slight moderation here and billings in the short run.

Yes, Brent I would say a couple things and certainly we haven't seen or.

Any material change in demand or in the early may time period, but as it relates to the guide two things are contributing to that number one over the last year.

The underlying renewal base for Q2 has reduced relative to other quarters. So Q1 has gone up quite a bit in Q2 is has gone down a little bit so that impacts the overall calculated billings number.

You also see some assumption in there to what I talked about in my prepared remarks, Frank which was around the potential for customers requesting change in payment timing, whether that's annual to quarterly and whether that's.

Primarily its annual to quarterly that we're talking about their brand. So those two contributed to it would you have as I said, a little bit of seasonality in the crossings business that is slightly impacted not as well.

Hello helpful color, we all have not challenges with work from home lines, a little loud with the family here, but I appreciate the called on the comments. Thank you.

Thanks Brent.

[noise]. Your next question comes from Kirkman churn with Evercore I see your line is open.

Oh, yeah, thanks very much.

Peter I was just curious obviously your client base is taking on a lot right now and you just talking about how they're thinking about managing all the new projects and studies going on in addition to going through digital transformation, meaning you know one would be concerned that they're dealing with so much from a science perspective.

Dealing with that plus I T and evolving digital perspective might be too much or for them to handle frankly keeps talking about how there may be dealing with that because I I think that serve one that I think thats really impressive about your results is that yeah, yeah. While they have budget. The question would be do they have the ability to sort of take on these digital transformation projects.

You got the same time, they're doing some so many other things thanks.

Yeah, Chris I think.

Yeah, our customers doing a great job first of all you know, they're working really hard. So that's you know bottom line I think they're working extra hard they're working you know there rising to the challenge so lot of nights and weekends, so they really going after it.

But they also thinking long cycle, that's nature of the business that they know that they want to have a drug approved six years from now they have to get going now so they they thinking long long term cycles.

They continue to do things now there are emergency projects. It happened with cobot. They have a drug candidate they have to pivot after do this and that they have to produce a nice new diagnostic et cetera. So there are emergency projects, but that's not for especially for larger pharmaceutical company. That's not the that's not the preponderance of what that.

Working on a their population maybe they're working on 10% of the people are working on emergency projects. The rest of the 90% are working.

On the long term things that they need to do to be successful as a provider of medicine to society and that's a long term game now those emergency projects. Some of those will go in our favor a new clinical trial that uses our or type of system or.

No. There is a company that's doing that's producing ventilators for the first time and fit coalition of quite a few companies they needed distributed quality system and they needed in three week. Okay. We're the only one that can do that right. So we benefited from that emergency project, sometimes they'll be an emergency projects. They don't relate to what were.

Business process change et cetera, and then maybe one of our long term investment type projects will be delayed because of that but that's that's on the margin and probably for us the puts and takes are about equal.

Okay. That's helpful color, maybe just one quick one quick one from Tim Tim is your customers yeah from a commercial perspective start thinking about selling more virtually you'll have it veeva in that respect you think that you. All can do more you know in terms of virtual selling not only in the near term, but maybe in the long term and you have any thoughts I guess on how.

That might impact sort of your your efficiency from a cost of customer acquisition perspective, maybe not in that CAC perspective, but just from a sales and marketing leverage perspective, just any or I know, it's early but I just kind of curious if you're getting that I thought thanks.

Well I'll I'll start with that one and then we can have Tim as well, yes, certainly a visit is accompanying that's built on customer intimacy customer relationships, our deep for us and we've had our in person so minutes and our account executives live in the region there visiting customers off and of course, we can't do that now, but we've been a very bird.

Total company turns of using zoom another products. So well continue to do that we had our customer at first customer sentiment virtually was quite effective it at spreading knowledge. So I think largely will will be okay. You know will be okay with that everybody likes to see people in person.

Missing our employees and our customers, but also we're also confident in life Sciences industry, you know, they're gonna have a treatment they're gonna have a vaccine for this I I believe it's a matter of time and then and then we'll we'll get back to a more normal mix so of digital and in person, which is where we were before cobot Tim.

Particularly as it relates to finance and this is I'll pass it over to you.

Sure Yeah, Kirk I would echo what Peter said I think given the depth of relationships that we have not only with our customers, but this industry in general really enables us to address.

A remote work environment, I think relatively more effectively than I would say horizontal companies or companies that don't have a that gap and the intimacy of relationships that we have with the industry. So I would say Kirk over the last 10 ish weeks, we really haven't seen.

In any impact to me to work remotely in terms of.

Our sales processes.

Okay. Thanks very much.

[noise]. Your next question comes from Sandy Troffer with Suntrust. Your line is open.

Thank you very much I guess the first question is is on the data cloud.

Peter You commented obviously, it's early but this could just could be a very significant long term opportunity in terms of the release it sort of came at a time when there's probably a lot of distraction, but I'd love to hear.

Thank you said you have one top 20 pharma company in one smaller biotech or or early stage company signed up but just what is the response been like what are you know why did people want to take a look at it because the main competitor out there a lot of that data has been intensely operationalized in such a very difficult.

Decision I would think too to pull it out or switch so to the extent you can get some comments on what's getting customers to take a look at it and admittedly there may have been a lot of distraction, but what is the general commentary or feedback been from customers. Thanks.

Thanks, Thanks, and yet we launched in March no that was something plant that was something planned even before the acquisition closed I look across fixing we you know we mobilized the new development team around data cloud, we did a lot of things and we announced data cloud six months to the day. After the acquisition was announced now.

What happened to be in the middle of March in independent make when you know there were a lot of eyes on that on on many of the thing, but we decided hey. This is a long term thing we don't know when the pandemic stopping or starting we need to go forward. This is a long term thing. So we see we launched it was it was sort of certainly noticed but when you long something big in new like this.

For most people hate the proof in the putting you go you know you're going to do something let's see if you can do it now the premise that were on is that the industry needs choice, a which I believe this cheap true when they have not had choice and b that it needs innovation, So I view.

No the existing data solutions. They they really are not modern there the equivalent of clients or software when it either started and yes, it's very difficult to approve those entrench players in those days it was a difficult uproot those deeply entrenched clients or type of things, but you come with a better solution you get early adopters.

And that starts to snowball I feel that's what will happen here. It's the innovation that people are looking for in innovation in terms of timeliness and accuracy pacing data and completeness. The type of thing that I talked about with the telemedicine. How we knew in two days then we could track it daily that's what life.

Sciences would like to track about the new right interactions of their medicines with patients and doctors all in the privacy safe way they can't do that today.

In terms of I'll give a little color on the too early adopters.

One of them as a group of brand in a in a large top 20 pharmaceutical company they happened to be focusing on on a relatively rare blood disorder and that product is already in the market and their mapping patient journey.

Replacing anything there mapping patient journey switch they couldn't do before with their data sources and they're doing a double check on whether they're targeting the right positions.

Now the other companies a platform company, it's a precision medicine platform company going you know what that means is their engineering different types of DNA and are in a their platform company with many candidates don't have any candidates on the market yet, but they have some candidates close to what they're doing towards patient journey.

And and physician targeting and overall patient population, they're trying to find out how many patients really can they target and how many doctors are really seeing those patients, but they don't have any product on the market. Yet. So those are good examples of things that are going on with data cloud.

Just focusing and help those customers be really really successful in innovate and then I believe our business will grow from there.

Great that she's minutes, that's really helpful.

Commentary I guess my follow the on the CR, though announcement or the discussion about the five of seven tiaras, who are on the signing up for a partnership program one I want to make sure I understand our these customers it doesn't sound like there, they're becoming enterprise customers, but maybe there just willing to.

To be more committed or looking more aggressively at a it's a Z veeva Cdms system and then when you think when I speak about since I've covered the CRM is there obviously under some near term pressure, but they're all expecting a rebound theres going to be ethic, a real sense of urgency for speed innovation.

Getting trials restarted.

Do you think there things about your platform that will in the new environment as people are looking for more more speed more flexibility or do you think you guys have it differentiation is gonna be even greater as we start to see the trials come back. Thanks.

Yeah.

So the as it as it relates to see arrows in our Cdms or E. D. C product. There's also a large a couple large incumbents there. So overall the CV ciro business, yeah, it's going to have a little little dip now clinical trial slow down it's kind of a boom and they start up right. So that they say that's the overall dining.

Thanks, and then with see arose, especially the large ones and the small ones, they're very customer focused companies.

They are service oriented companies that really want to give the best service for their customers. What's happened in what's driven this so five out of the seven no they're not enterprise deals. There. They are large see arose that are now prepared to offer their clinical trial services on b with technology prepared to build study in the.

The tools prepared to operate the EBIT technology for the companies that don't want to operate themselves, which which would largely be I'm not the smaller biotech and what's happening there as these companies.

Sponsors small sponsors are coming to them say hey, we were interested in your Ciro services, we really want you to use even technology that kids euros to pay attention now why are the sponsors asking for that simply we can we can build studies faster than the competition now sometimes four weeks instead of an.

Average at 12, and we can build more flexible studies for example, oncology studies have amendments the existing state of the Aarding. The industry is that data has to be unloaded and loaded for a new amendment it doesn't happen in our system.

So it's better technology no change takes time. This is a risk avoid area of life Sciences. So it's not going to come all at once nor do we know where do we want all the customers that want our largest clinical trial in EDI see a huge trial with the company their biggest trial it ever.

Was set to start in March was delayed actually but good news is actually going to have it state plans have its first patient in in the first week of June here. So just a few days. So that's what really what we're focused on is the customer success in the Cdms market.

Thanks, so much of the comments Peter.

Thanks.

[noise]. Your next question comes from Brian Peterson with Raymond James Your line is open.

Hi, Thanks for taking the questions. So first I wanted to hit on how some of your customers may be utilizing some of the commercial cloud technology, a there've been some stats out there on the engage meeting usage and I think it's it seen a rapid adoption is there anything that you can share on how that's trended and I was also curious.

Well as they're thinking about more of a digital motion or are there any potential headwinds from headcount cuts that could impact your business any thoughts there.

Hey, Brian. Thanks. This is Paul I'll take that one and you're right I mean, but first I want to just trying to take a step back on the engage side and just.

He was super proud and Super pleased with Veeva team for coming together and being able to help the industry. If you think about what's happening out there as the sales channel has fundamentally shutdown was largely shut down pretty much across the globe is starting to open up a little bit in different markets in countries and segments and we've been able I hope the industry turn.

In that channel back home and we've been able to help them do that through things like approved email and engage so feels really good to be able to help them move you know hope movie industry up lead the industry really getting to digital a whole lot faster, which is a you know just testament to the product team the product quality our sort.

Services, So really pleased about about that movement, that's happened and you're right to really significant kind of adoption.

One way that we think about the adoption is it was just utilization and that's really most important it's the most important metric because you know yeah theres a lot of change so it doesn't matter. So much how many people have access to it it really matters. How many are using it and we're seeing that utilization. If you look at February compared with.

April the utilization has increased by 30, yes. So we're really pleased with with that shift in the industry is really starting to and I understand and appreciate and acting in each week, we're continuing to see more and more adoption in more and more utilization the product and that's what we're focused on right. Now is just continuing that that adoption.

Helping our customers be able to to get the most out of using engaged.

That's good to hear it maybe one for Peter you know, we've kinda gone through a an earnings season here and we've heard different messages from from different software companies I'm. Just curious if he came out on the call that a you're very coughing into that 3 billion dollar target I'm curious how do you think about hiring in the pace of investments over that.

Long term framework has there been any change near term or just curious how you think about the pace of investments. Thanks guys.

Yeah.

Let's see at high level, Yeah, I'm quite you know I'm more confident than ever in the 3 billion and that's because.

Part of it is just passage of time, we're getting closer to 2025 and no bad things happen part of it is that but but part of it is you know we spend a lot of time building a great team here a break a great culture and innovation engine and now you see this tremendous stress 0.3 months.

And that's one good companies and good management teams that are prepared step up and so that's what I've felt and seen it even if this innovation that will lead to better customer relationships better innovation. So that's why I'm feeling you know quite confidence in the future and gosh I didn't write it down.

And so feel confident 2025 in the future, but you had a specific question there and I didn't write it down excuse me.

No I guess I was sort of referencing how you're thinking about hiring right. So I hiring are already started rice with hiring freezes and obviously people are thinking differently short term long term so curious to get your thoughts on that.

Yeah hiring so my message is that if any of you have people out there that would like to work at Veeva specially extra to the software engineering et cetera. We are hiring yeah, we're definitely hiring because of the innovation that's going on so we're hiring we are finding into good hiring environment to getting good quality candidates.

And the interview process, a little faster. So we think that it's a great time load up on great talent you know in times of stress like this there was a flight to quality and companies want to do business with quality companies that they can count on and people want to work for quality companies that they can.

Down on so I think it's going to be a real boost for hiring.

Great. Thanks, Peter.

[noise]. Your next question comes from Rishi Jaluria with D.A. Davidson Your line is open.

Hey, guys. Thank you for taking my questions glad everyone's Ah stay safe and 10, certainly going to Miss working with you are looking forward to working with your successor, hopefully they tend not to live up to the high standard you've said what wanted to start I by asking.

Peter in the prepared remarks, you talked about some of the headwinds that some customers are facing from a you know non essential visits and elective procedures I met and even some delays in certain trials I'm wondering to get a sense for what are you seeing in Asia and the reason I started because they're ahead of us on the curve in.

In terms of a you know reopenings right I mean elective procedures and electric like the visits are a lot in Japan and little bit more close to business as usual than we're seeing here I'm. So if we think of that is kind of an indication to future wanted to get a sense for for what does that you know what are you seeing from your customers out there and maybe what sort of conclusion it seem to be dropping.

Vascular business here in the future and they've got a follow up.

I think it as it relates to a little different by region, China being different than Japan, and Korea for example, but in general it's a it's a vigilant it's a return to.

Gradually too.

Hey guarded.

Wave going about your normal business certainly much more.

Not the big large group events clean clean your hands more temptation et cetera, because everybody knows there's no vaccine yet because no highly effective treatment. So you have to be have to be careful so they're getting about their business, but there is being more careful I would expect that.

In the U.S. and other countries, that's where we're going to slowly return to that are very careful returned to visiting people staying away from large groups and and people just being a little more careful now than we would need to the vaccines or the effective treatments before we can fully get back to larger group gathering.

Got it that that's helpful.

And then you know what you're seeing some pretty impressive adoption of of some of their virtual engagement products right Engager talked about 30 times, a remote meeting side of print email up to action February to April a dozen sophocles, how you're thinking about how long lasting these changes are going to.

Be in the life Sciences industry is this something that seeing a steep adoption because it's a necessity and hopefully the near medium term post vaccine things go kind of back to normal or is this a long lasting irreversible change in a more these ah Ah customers are gonna be adopting.

<unk> engagement solutions on a greater basis no matter what happens next.

Yeah. That's that's a good one you know I think what we're seeing is really an acceleration of what the industry was going to go through anyways, just over a longer period at home. So the the industry was on track was on pace to adopt digital and we saw about adoption. It was it was steadily increasing.

And you know with coated with locked down the industry was now force to accelerate that and I see I think we saw if you're probably two or three years of digital transformation happening within just a couple of months what what's been remarkable is I have never seen in my career you know this shift over literally.

Three months.

The industry movie that fast to turn on digital channels. So it was quite remarkable one from a technology standpoint, and I will call out shamelessly. The you know the vivo product team and the people who may not technology to allow our customers to be able to turn at all but also to our customers for putting the foundation in place.

To be ready and be prepared so the shift happened before faster.

I do think obviously, we can't predict what what happens with its pandemic, but I think it's going to make the industry more efficient we're already seeing some of those benefits or the product is working are getting really deep engagement with customers and I, just like with Tele health and Kevin Tele Medicine, we're seeing more patients do test telemedicine and.

I actually like so they're going to do more of it I think that same analogy is true here, where doctors are more comfortable engaging digitally where farmers more comfortable engaging digitally and don't you don't do more they have been overtime for starting to see the really appreciate the benefits of moving to two digital faster.

Our current that's helpful. Thank you so much guys.

Your next question comes from Ken Wong with Guggenheim Securities. Your line is open.

Great. Thanks for taking my question, we <unk> Peter you mentioned my Veeva earlier, and just wondering how how this product could potentially help your cdms push and then just kind of based on what it sounds like it it's targeted very much toward the clinical trials, but do you see a potential for this product to shift to more.

Into more of the traditional dr. patient kinda Tele health manner, I know, that's not really a market you guys typically catering, but it does seem like something that could be comfortable any any thoughts there.

Oh, Yeah, I'm first might be the that's really about enabling the clinical research sites and patients with thousands of them.

Around the world and really just transforming the clinical research process for the whole industry and when I say industries. There I mean, the patients clinical research sites and sponsors everybody involved and there's a tremendous amount of the excitement in that Enviva. You know, we're going to bring helped bring medicines to critical medicines.

[music] patients faster than they otherwise would and that's that's a really great appealing.

And that will help our business in the life Sciences area in the clinical area, Yes, we're giving the products for free to clinical research sites, but that'll that'll overtime. However, I believe have a great <unk> business to our clinical business overall within life Sciences, Cdms TTM Oh.

Our whole clinical operations sweet.

So.

That is one and then sorry I didn't read that your your second question was.

I see that going into more tele health and that type of thing yeah. Yeah. That's what my Veeva is to enable a remote visit from a doctor to to a patient in the clinical trial, but I don't see veeva going into the Tele medicine business broadly, which is that's a that's something different I think you.

See so the people that provide the m. ours and other things for that for the normal caregiving. Yeah. That's that's not for US at this time, we you know we wouldn't be in that area. Some of the technology ideas of the same but it's a really different market and yes.

We have to focus and that's not an area we would focus on.

Got it. Thanks, Thanks for that color and then a quick one for you Tim in terms of the billings.

Reduction.

Any any sense for in terms of the inorganic part it should we just assume similar to what you're seeing on the revenue side in terms of whats coming out and then any quantification of what you guys are baking in for the change in billings term and how that could be a duck it that could weigh down oh, how much that way down the the billing.

[noise], Yeah, Ken I do you think you're right. The revenue guidance is a good proxy for billings for those two businesses.

So I think that's how I would think about it we haven't talked about I want to quantify yet the billings terms, there's so much uncertainty there China.

Trying to really gauge exactly where that's going to land what I would say is as I said, there's a bit of a slight shift in a little bit more assumption around.

Payment timing changes that will impact Delhi.

All of the one we saw in Q1, where a customer now this wasn't Kobe related of course, but a customer change from annual to quarterly billings. So we have some in there, but not wanting to quantified at this point.

Great. Thanks, a lot [noise].

[noise]. Your next question goes from stands Lupski with Morgan Stanley. Your line is open.

Perfect. Thank you so much guys up maybe we can at very high level help us help to characterize essentially what you saw in your business as far as a you know engagement with customers prospects in the sell side.

You know within within March April in what you're seeing quarter to date may and I would presume that those interactions right now because it seems like the sales interactions.

Varied quite drastically between your CPG customers versus your your pharmaceutical customers. That's you know <unk>.

What everybody is looking for its kind of like the second derivative right is the is the second derivative improving within like the CBG space right is the is the both side of the business you know hasn't seen didn't see an uptick in sales activity and in the March April timeframe. That's continuing into May and then I have a quick.

Follow up.

Hi, Paul I'll pick that one to the sales and engagement a inside of life Sciences I think it's it's been high our candidate consistent.

Gosh busier than ever helping customers, helping communicate getting them information they need I would say myself and the executive team boy, we've been on on zooms more customers than we had before can you just a time of like an intense pressure cooker right.

Information, so nice sales engagements I do think they'll they'll bear fruit over the long term, we have long sales cycles, we developed relationships.

Terms in CPG I that also happening in CPG, but I think CPG had more relatively speaking to the percentage of what they had going on they had more emergency projects more more supply chain things that they had to go on so yes.

Conversations probably strengthened a bit maybe not so much as they did in life Sciences.

Got it and then on moving over to Volte and the drug trials although.

Yeah, we we everybody's listening and hearing all the drug trials that you had kind of came to a oh sudden pause do shutdowns, but as far as the kind of like the economic impact to Veeva the.

If I recall that you know, there's just there's not necessarily usage components within volte, a we'll move on the on the on the drug trial side.

And if anything is the right to characterize the Volte may have benefited a little bit from all the additional all additional drug trials that.

Would you would need to start in order to support coated development.

Yes, and then Tim So I would say is you're right on the the data operation side or clinical data operation side, where we have.

A large penetration as we've talked about with each M.F. and starting to get some good adoption on some of the so many other products we've introduced.

It's not necessarily clinical trial driven in terms of the demand there. It is more innovation driven it is more driving to more effectiveness and efficiency to help start trials and help manage them overtime on the CMS side as you know when a clinical data management side were.

Still in the very early innings of that journey and focused on our early adopters. So.

This doesn't impact our revenue in a material way, except for I won't say well not anything in immature away Stan as I talked about there are certain segments, where we're seeing a little bit of impact and not a informed us on our slight reduction in the vault.

Guidance for the year.

[noise]. Your next question comes from Bob on surgery with William Blair. Your line is open.

Hey, guys. Thanks for squeezing me in here I appreciate that glad you're all safe and well I wanted to touch a little bit on the CR Roe announcement.

I think it's a question earlier, but that sort of be sort of answered that there's smaller budget companies that may want to use events are they tell us Yardley my work would be though I guess when I look the larger pharma company that have bought somebody other pieces en masse CGM Matt.

Is there a network effect there would they be integration across those pieces with cdms are easy what I'm going to call. It right now and that sort of plays out where they say hey, if you don't want to clinical trial, we want you to existing all because integrates that it works that we use a better we have it just all that like you know pick a large pharma that's already done central place you're doing trials with.

Cdms <unk> is there are not looking like did you see that at all is that something its could play out or am I thinking about that incorrectly.

[noise] above and this is Peter yeah, you're thinking about it correctly, we we were referred to that as the clinical suite.

Customers are seeing it if they can have the sort of straight through processing and prebuilt integrations from our clinical data management suite to our clinical operations suite and have a fooled me the end and experience in the clinical there's material benefits and productivity, where there for their people for their operational people.

In there I T <unk>, so and that's more pronounced in the larger companies because they have more scale and so then and more integration and optimization.

Gives them more benefits, though.

That's exactly the network effect to network effect between clinical operations and between clinical data management and then if you get at a higher level, there's really a network effect between having your whole development cloud on view.

The quality and manufacturing the regulatory clinical operations.

Clinical data management.

And now since we've introduced safety and have some customers live on safety. They see the potential of it could get integrated suite of thing and that's compelling it's a compelling message and that's driving some of the demand.

Got it ought to go so maybe the standardization at some point at the CR Rose and then I just got someone touched competitively.

Obviously, you have competitors in the CMS you see space I wanted and specifically actually does have a product for data capture from patients again slightly different than yours.

I understand if you've seen any competitive reaction from them that had been acquired.

But now it's been a wealth required you've had the top.

Can I phase three clinical trial, when you've had muffled when you do see space, where CMS, they sorry, obsolescence and what you're seeing in the competitive environment. There. Thank you.

Mm Hmm, the competitive environment haven't king or any particular change I think all companies. At this time are focused on I think care their customers in there and internal operations.

It's it's still the same.

And I think our advantage on it is we have a units that because the basics, we have 100% cloud based real time real cloud clinical data management system.

There's two other large competitors in history that don't have that.

Every clinical data management customer reviews on exactly the same release, that's not the case with the with the other two it's real cloud technology and its newer and more honored more modern and then integrated with the whole suite.

So those are lasting advantages and from now it's just you know.

Customer success and focusing on that until we really haven't seen any changes in the competitive environment. We have seen I would say at our R&D summit two weeks ago, our first virtual summit, which was gosh triple B attendance from last year was a really great summit, there's a couple impactful presentations by customers good.

Hi, its customers you know in certainly in the top 50 companies and they just where about the basics we were able to build our studies in four weeks you know much faster than we could before and we're we're very happily happy with the nimbleness and the way we can run an agile trial. So those.

Those customer success stories, and those public forums, they can change that competitive dynamics in <unk> in our favor overtime.

[noise] in our last question comes from Sterling Auty with Jpmorgan. Your line is open.

Yeah, Thanks, Hi, guys and Tim If this is your final earnings call. This is certainly one way to go out with a pandemic. So congratulations on the grade tenure.

Just wondering if we could unpack the vault performance in the quarter from from this perspective, given some of the headwinds you're seeing in clinical wondering what the key drivers in demand in terms of how much of this is coming from new customer versus the expansion in existing customer.

As one look and then separate a separate from that just what are the key drivers in terms of within maybe the R&D areas. Specifically what are the use cases that you're seeing most prevalently you gave some examples but I wonder if you just from a high level characterize it. Thank you.

Well [noise].

Hey, Sterling to support comment on me and you know that the key drivers from an industry perspective, and then I'll turn it over to tend to talk a little bit about the performance. So I.

I think Tim alluded to this a little bit earlier with the idea that you know we're not so dependent on a you know trial by trial. So as individual trials are being paused or delayed in generally we're not seeing cancellations is really just a shifting.

That generally doesn't have an impact so the uinta projects that were working on these are projects in deals that have been budgeted and that have Dan.

In the pipeline for some period of time. So that you know that is kind of continued momentum.

There was also a sense that [noise].

In times like these you need to be more efficient. So there is a little bit of a tailwind just in terms of companies thinking about you know accelerating some of these projects, where they're able to improve efficiency improved productivity. So I think that's a bit of the the tailwind that were that we're seeing as well.

I'll turn it over to Kinda talk a little about the performance.

Sure. Thanks, Paul and Sterling just so you know the plan is for this to be my second to last earnings call.

I intend to join you guys in August as well so in terms of the performance in the last 10 weeks or so we really haven't seen or looking at Q1. Early Q2, we really haven't seen a material shift in the contribution of revenue from new versus.

Up sell or cross sell opportunities to Paul's point, I think the momentum of our pipeline coming into the quarter and throughout the quarter hasn't been quite good on both fronts. So there's no material change or a change in shape from that perspective.

While we are seeing.

Modest impact on the clinical side for the comments, we talked about it's still a very strong and quality and regulatory continue to be strong as well. So the three <unk> Ah you know the three engines of growth or still the same as we've seen a pre pandemic if that makes sense.

<unk>.

It does and then one housekeeping follow up just to make sure that wrong same page how much revenue did that extra day in the quarter contribute. So we can think about the to sequentials the right way.

Yeah about 3 million. So the leap year day February 29, you know roughly or subscription run rate is about 3 million a day.

So.

Perfect. Thank you.

[laughter] I turn the call batch the presenters for any closing remarks.

So thank you everyone for joining the call today I'd like to thank our customers one more time for all the work you're doing to combat depend demick.

I'd like to thank the entire V team for all your work supporting those customers I'm really proud to work with you every day, thanks very much.

[noise]. This concludes today's conference call you may now disconnect.

[music].