Q2 2024 Veeva Systems Inc Earnings Call
Please wait the conference will begin shortly.
[music].
Good afternoon, and welcome to Bpi's fiscal 2024 second quarter earnings Conference call for the quarter ended July 31, 2023, as a reminder, we've posted prepared remarks on <unk> Investor Relations website, just after one PM Pacific today, We hope you have had a chance to read them before the call.
Today's call will be used primarily for Q&A with me today for Q&A are Peter Gassner, Our Chief Executive Officer, Paul Chawla, EVP commercial strategy and Brian Sullivan, Our Chief Financial Officer.
During the call we may make forward looking statements regarding trends, our strategies and the anticipated performance of the business, including guidance regarding future financial results. These forward looking statements will be based on our current views and expectations and are subject to various risks and uncertainties. Our actual results may differ materially.
Please refer to the risks listed in our earnings release and the risk factors included in our most recent filing on Form 10-Q.
Forward looking statements made during the call are being made as of today August 32023 based on the facts available to US today. If this call is replayed or viewed after today. The information presented during the call may not contain current or accurate information.
EBIT disclaims any obligation to update or revise any forward looking statements. We may discuss our guidance on today's call, but we will not provide any further guidance or updates on our performance during the quarter unless we do sell in a public forum.
On the call. We May also discuss certain non-GAAP metrics that we believe aid in the understanding of our financial results a reconciliation to comparable GAAP metrics can be found in today's earnings release and in the supplemental investor presentation, both of which are available on our website with that thank you for joining us and I'll turn the call over to Peter.
Thank you Gunnar and welcome everyone to the call.
We had another strong quarter delivering results ahead of guidance, including total revenue of $590 million and non-GAAP operating income of $212 million.
And commercial I'm excited about our first thoughts CRM customer win and planned general availability date in April 2024.
That's really strong progress by the Veeva team as we deliver the next generation of CRM.
We also saw great activity and clinical both with our established products and our newer products in clinical operations and clinical data management.
At this point, we'll open up the call to your questions.
Thank you if you have a question. Please press star one on your telephone keypad, if you need to withdraw your question simply press Star one again.
Your first question comes from the line of Joe <unk> with Baird. Your line is open.
Great Hi, everyone I guess I wanted to start with the news this week on vault CRM signing its first new customer.
And really the question with the go live later this year that does strike me as a bed earlier of a timetable I think in the past there was talk of 'twenty 'twenty four maybe ahead of the summit next year. So if I'm right on maybe the us being a bit earlier of a timetable just any views on why is that.
<unk> be the case and then does that at all influence kind of how you think about launch and strategy progressing from that point onward.
Hi, Joe Yes. This is Paul thanks for the question.
So yes, we are.
We're certainly very excited to announce our first customer win this in early adopter. They will go live that's the plan in Q4. This year. It is a little bit earlier than we had expected, but fall CRM is progressing really well. That's the product team has has really delivered with excellence over the last year since we announced it.
CRM. So we're excited with the progress we're excited where we're headed in terms of the timing is generally in line with what we talked about so.
We'll look at Nuc, all new customers. After April of next year. So that's what the general availability date means.
We'll have our first migration starting in 2025, and we will expect to migrate most of our customers in 2026 through 2028, so that fundamentally doesn't change that much but yes, youre right. Its a good indicator of the progress we're making.
Okay, that's great and then.
Just pertaining to the strengths and EDC with the wins this quarter and then really the highlighting of the broader clinical data management strategy in the in the prepared remarks. So when you step back and look at all of this would you say.
Really no different than what Veeva is now done several times over its history in terms of product leadership lighthouse account wins, and then building out the suite or just given the size and consequence of this category.
Would you maybe start highlighting different things in terms of strategy the consequences going forward about your clinical data specifically.
Okay, well I'll take that one.
Broader clinical overall, which is kind of collaborations in clinical data management and they kind of.
Hey go together.
A few high level thoughts when we started a new product area. We have plans I mean, you always try to do our best and sometimes we exceed those.
Internal goals for ourselves and sometimes we fall short I think in the clinical area, we probably exceeded what we so far what we thought we would set out to do when we first got into our first pieces of clinical with CPM with really ETF.
In 2012 and teach them asking 2016.
So we're a bit we're a bit ahead and then I'll.
All product areas are important by clinical assist a very very big one so maybe in that way, it's a good point.
Important than others.
A long long way of saying, we're really happy with our progress and we've executed well, we've probably got some.
Had some good luck or along the way as well and we know we just really have to focus on our customer success.
And then we'll do just fine.
Great. Thank you very much.
Your next question comes from the line of Ken Wong with Oppenheimer <unk> Company. Your line is open.
Great Fantastic first question for Bryan.
Just wanted to understand the moving pieces on the billing side exceptionally strong in Q2 held the line four for the full year just wondering if maybe some pull forward some realignments like what what what what drove those the.
Those moving pieces.
I cannot see uptake.
I'll take that one so from a full year perspective, we reiterated our full year Billings guide. So we're growing at about 15% and what we've always said when you look at any one quarter. It can be move a little bit. So in Q2, we are pleased to see some benefit from some linearity of some deals so a little bit better.
Deal timing those deals we expected to close within the year. It just happened to close in Q2, so that's not going to impact the full year number, but we would rather have the business earlier than later, so overall happy with the execution.
Got it it makes a ton of sense.
And then for Peter.
You guys touched on SMB softness I think thats, something you called out a year ago, but it did sound like it was more towards the commercial side. When you first called it out would you say you have seen any any impact or more meaningful impact on clinical hold roughly the same in terms of how that SMB exposure.
Weighed on the business.
Yeah.
Well.
I think we always knew that the <unk>.
Macro would affect our commercial and SMB and particularly the smaller S&P emerging biotech because when the funding environment is.
Down.
They might not be able to fund their clinical trials get the money they need to expand so overall I would say, it's playing out as we as we expected.
Yes.
Don't know when things will change who knows they may change in the future, but you won't know that until they change.
Now to our business as we expected.
Got it okay. Thanks for the color.
Your next question comes from the line of Rishi <unk> with RBC capital markets. Your line is open.
Hey, Thanks for taking my question. This is Richard polling on duration.
So.
Just one for me on.
<unk>.
China exposure that you called out an incentive that prepared remarks.
And you said that you've kind of factored that into guidance just wanted to get a little bit of clarification on what exactly is factored into guidance on that side.
Yeah, Hey, this is Paul I can answer that just a little context, I think it might be helpful. On China. This is regard in regards to some regulations that have come about over the last couple of years, which impact how data is transferred outside of outside of China, which starts to impact Veeva CRM Veeva CRM is predominant.
CRM that's used for most of the multinationals in the Chinese market. So what it's doing is it's forcing us to rethink their solution. We have a solution for them in the Chinese market and Thats, our China SFA product in terms of the size of the impact of this this is not material. It's all factored in but it's really not a material impact either this year and next year.
So maybe that's how to think about it.
Alright, thank you.
Yeah.
Your next question comes from the line of Brian Peterson with Raymond James Your line is open.
Hey, gentlemen, congrats on the strong quarter.
Wanted to double click on on the bulk CRA because it gives us the win this quarter I am curious you did announce some other wins this quarter.
We progressed towards GAA should we expect to hear more of that kind of net new CRM win being bolt or would they still kind of grow with the salesforce CRM any any way to kind of level set expectations there.
Yes, it's a good question and it will be customer specific so we'll think very deeply and worked very closely with our customers. We're obviously very transparent about our direction.
For some companies Veeva CRM is the right thing to do and that's what we will sell to them and work with them, but I do think it's a fair way to think about it as we get closer to that April date, and certainly after that April date, it will start to become more <unk> intervention of all CRM and eventually all and exclusively all CRM for new for that's for new.
Customers.
Great. Thank you.
Your next question comes from the line of Dylan Becker with William Blair. Your line is open.
Hey, gentlemen, I appreciate you taking the question here, maybe for Peter to you emphasize the multi product kind of strategy effort. It seems like as you guys are going wider youre also going deeper functionally I think you called out a number of new solutions that have the potential to be larger markets than kind of what some of your respective offerings. Currently have yes, how do you think about that in context.
The durability of kind of the growth equation and what Veeva can look like over time as you go deeper from a functional perspective.
Thanks Carolyn.
Yes, it's a really good way you you said that.
One of our special thing consistent multi product company approach, our operating model that allows us to do that so excellence in an area like clinical quality or safety.
We have a lot of economy in those areas. We can go deep in those areas and provide the full suite.
And it does not just the surface level.
So.
If we look accident clinical.
Not been a company that has attempted to do the full broad suite of clinical applications.
Such as visa is trying nobody's nobody has attempted that before let alone succeeded at it. So it is absolutely our strategy to go in each area with autonomy.
Deep in each area with excellent applications. The main ones that people need and then have things align across areas on a common set of values, how we operate as a company.
How we strive for product excellence, how we do controls so that we see if we have.
Some customer success issues.
What's that.
One of the reasons why were durable as we're optimizing for the whole.
And customers appreciate that they pay no when we sell them, let's say our <unk> solution.
We care deeply about the success not only for the reputation of our TSM business, but for the reputation of the overall veeva, which is much more than the art TSM business. So in other words we.
We have more to lose.
We have unhappy customer in an area. So we will work harder to protect that which is what the customers want and thats.
That's the beauty of our operating model.
Got it that's super helpful and maybe just kind of.
Piggybacking off of that too I think the R&D summit coming up here in a handful of weeks to support these kind of maturing product offerings 2000 attendees I guess is it maybe.
Maybe for Peter Paul highlight kind of the importance of what that event can be as you build out that customer and product excellence into not only the existing platform set but obviously some of these newer initiatives you guys are going after thank you.
Yes customer summit in Boston for R&D in the U S coming up here in a couple of weeks.
And we'll have about 2000 people, it's absolutely one of our key reference selling events now referenced selling goes on all the time across the globe every day people talking to other people hey, what about those either products. What do you think about that or are you having a good experience not a good experience I am thinking about using it what do you think that's.
Selling but it happens really in a hurry in the in the customer summits, because theres 2000 people in their their their time is focused and they have.
Fortuitous run ins with each other in the hallways unplanned pollination, that's a little bit difficult to get without a physical event.
I think you.
You saw that not just with you, but with other companies during the Covid price crisis. There was initially a.
Massive spread of information everybody getting on zoom, but then after a while you know this information didn't spread as much because there werent. This these spontaneous interactions happening so.
You're right to say, it's a massive cross selling event.
Great. Thank you guys I appreciate it.
Your next question comes from the line of Ryan Macdonald with Needham <unk> Company. Your line is open.
Alright, Thanks for taking my questions and congrats on a nice quarter, Peter maybe first for you great to see the continued success with compass patient and starting to get more wins. There can you just talk about.
How you are sort of driving that success in an environment that seems to be quite tough in terms of data and investment right now given the tight budgets.
Okay.
Yes for comfort so I'm very excited about that now in terms of the wins.
And those wins are going to are going to happen.
When there are a lot of companies wanting to buy a lot of data products and sometimes they buy multiple data product.
Some by some data from company, a and some data from company B and competency that's going to happen. So the wins itself. They don't excite me that much that's that's relatively easy to happen.
What excites me is our product vision and the product team.
Put together and the goal or setting out we're setting out to have a unique highly integrated highly excellent suite of data products encompass to link to open data and to be the leader in life Sciences data.
Nobody else has set out to do that over the last as far as I know over the last 20 years, because they can't get the NIM question a leader so we're setting out to do that.
And then we have the product team an architecture, that's really clean.
Making a clean new way thing is sort of like.
These clients are and we're coming out with cloud, we're coming out with something fundamentally cleaner.
And.
The real thing is getting getting the enthusiasm for the early customers.
Hearing not so much what theyre, saying, but why they are saying it.
The early intuition here is that it could be something great.
If we execute well.
Okay, maybe just a quick follow up on that I mean from the customers. You've won so far do you get the sense that they're sort of committed and bought into the broader product strategy with the additional datasets coming out where you can start to have.
Take that multi product adoption to sort of consolidate more umbrella.
No I wouldn't say the customers right.
So our committed yet I do think they see the potential this Mike this might be really get this could be very differentiated there is potential here and I should keep my eyes on it.
I would no uncommitted because we haven't released these major products, which are mature.
Prescriber encompass snaps national.
So we have to deliver those customers have to start working with them.
On them with quality.
Month after month after month after month.
That's how people really get.
Enthused about it.
Your next question comes from the line of Tyler Radke with Citi. Your line is open.
Yes, thanks for taking the question. So if I look at the full year guidance, obviously, a lot of the metrics.
Yeah pretty pretty unchanged. It did look like you slightly took up.
The commercial.
Guidance, but in the core it seemed like R&D at least outperformed consensus so.
I know, it's not big changes, but but could you just talk to that.
The modest changes you're expecting for the full year outlook.
I guess to the extent macro is impacting the business are you seeing it more in R&D versus commercial thank you.
Yes, So hey, Tyler so what we did is we increased our full year subscriptions guide by about $5 million.
That was driven in the commercial space. So what we saw in the commercial space as we saw some favorable linearity with some deals close a little bit earlier.
So thats, what youre seeing kind of slow through to the full year R&D basically played out exactly as expected. So we're executing well there.
Linearity of the deals are as expected. So that's kind of what you see from a subscription perspective the macro.
No real surprises when we set out the year, we said it was going be a continuation of what we've been seeing so not better not worse and we saw that in the first half and we expect that in the second half as well.
Got it.
Maybe another follow up for you Brent is that as I think about the billings guidance.
Your expectations for normalized billings versus calculated billings I think last quarter you were.
We're expecting more of a headwind on the.
The normalized billings about $8 million headwind.
This quarter it seemed like it maybe turned out to be a tailwind if im reading those science correctly could you just talk through.
Kind of what you saw in the quarter from a normalized billings perspective that differ relative to your original guidance.
I guess, if theres any changes for the for the full year. Thank you.
Yes, so from a normalized billings so just to make sure we're level set so what we're doing there is for our renewal business, we normalized for changes in frequency. That's when the customer goes from annual to quarterly or vice versa and also for things like co terms. So that renewal business. That's what we're focused on is taking that noise out of the equation. So looking at normalized.
This is the best way to look at the number now theres always going to be movements between calculated in that because you know what our customer.
They co term or change that dose.
Term billing term changes is what youre seeing in there, but that doesn't impact that normalized number that's just an adjustment to calculate it so I.
I wouldn't be so worried about that eight versus three I'd look at the full year. The full year, we're growing at 15% and we feel good about it.
Great. Thank you.
Sure.
Your next question comes from the line of Brent Breslin with Piper Sandler Your line is open.
Thank you good afternoon.
First for Peter I wanted to double click into the clinical data management space maybe talk.
About some pretty strong momentum with <unk> pro and Rts, Sam Thank you framed that as an opportunity bigger than EDC.
What are the catalysts that you think can drive broader adoption of <unk> pro and <unk>.
We're this is still largely push or are we starting to see kind of customer poll.
Okay.
Good questions <unk> first I would say there are areas, where these are two areas of our life sciences is going to be cautious.
Randomization and trial supply management.
Very very critical if thats gone incorrectly you could have patient safety problems you could.
You could wipe out a significant part of the investment in your whole whole trial. So there can be cautious the company's here I'm going to try some trials first and see how it goes rightfully. So and then the <unk> area that patient reported outcomes.
Patient facing things, so again, they're going to be extra extra sensitive on that.
So I think what the way it will play out.
Now people experiment and cut first trial in time trial at a time and.
If they like it.
Try a little more and if they like it.
What we see may happen over the.
Coming years play out as they might look for an enterprise standard for example, an enterprise standard for randomization and trial supply management and they really haven't done that before.
Because of the.
Where the market dynamics have been late January would kick randomization and trial supply management on a trial by trial basis and have multiple vendors almost as if they were using a contract research organization.
Our innovation in the way we're doing it we're set up for scale such that a company might say, hey, I am going with people with all my trial Randomization and trial management.
And in IPOH overtime that May also play out as well, where they could use us not selecting on a trial by trial, who has the best approach for this or for that.
We would like to over time earn the right to have an enterprise an enterprise agreement. That's one for the April and then the second we're a big fan of what's called a bring your own device, meaning that the patient will use their own web browser or their own.
They are on Android and put their own app on it rather than a pharmaceutical company provisioning specific iPad application.
So we've done a lot of things too to me.
Make that happen and make that work really well, which by the way of course, you Couldnt do 10 years ago. When you started are you couldnt do that so we're taking a new approach. We think it's better that will take time for it to work its way through the system in the company.
Sponsors into euros to get comfortable with that.
We're taking the innovative approach.
And we hope to have the innovative result.
Got it very very clear and if you become the standard obviously.
Again, there my last question for Brent here.
Just looking at net cash.
On pace to eclipse $4 billion for the first time in the second half of the year.
You are now looking at generating $1 billion in cash flow annually here.
What are the plans for that excess cash position.
Is there an opportunity to maybe accelerate your product plan, that's ambitious with more tech tuck ins.
How do you think about that $4 billion in the second half go into 5 billion end of next year.
What's the appropriate uses for that cash would be thanks.
Yes, sure so Brian yes, so youre right, we can run a profitable business and we're generating a good amount of cash and now we're at about $3 9 billion, but we're focused we're focused on M&A M&A as a use of cash.
We see the right acquisition, that's what we're going to do but as always in Veeva fashion, we're going to be disciplined about it and our strategy and our approach and we have done a few deals in the past and we've been successful on those deals. So that's really our focus right now is to really to invest for growth and M&A is a big part of that.
Thank you for that.
Your next question comes from the line of Jack Wallace with Guggenheim Securities. Your line is open.
Hey, Thanks for taking my questions Brent first one for you.
Diving into the rest of the Billings guide my right.
Inferring here that it looks like there's a little bit of a mix shift towards more subscription billings versus services.
And the read there would be from the.
The services guide to the lower half of the prior range.
And then within that is that if that is the case is that related to some of the larger deals that you are either signed this year. We anticipate the signed later in the year.
That may need less of Veeva resources during implementation.
Yes, there's a few moving pieces there like if you take a big step back.
In the area here services was down a little bit so that will have a small impact a small impact on billings, but what you saw happen in Q2 with some favorability right. So the visibility we have the business is still the same visibility. It's just we closed some deals a little bit earlier.
That takes some of the pressure on the back half when you look at the growth rates. So we're very happy with.
The visibility we have in.
The growth rates, we see in that in that business, which is in that metric which is 15%.
Excellent Thanks, and then Peter and Paul.
<unk> about the.
You kind of competitive landscape in commercial.
Have we seen since last quarter in terms of activity from Salesforce and essentially then IQ.
In and around the.
Public migration taking place.
Yes, I can I can talk about that so.
Yeah, we haven't.
As it relates to Salesforce.
Really business as usual they've done a good partner they continue to support our existing customers I expect they're going to continue to do that.
Through the end of our agreement so.
So thats business as usual as far as that goes.
In terms of the competitive landscape.
Landscape I can't comment on their direction their plans.
I can tell you is this is this.
This is really hard to building a a pharma CRM, it's a really deep life sciences specific application. It's it's complex it's different in different parts of the globe, Brazil is different than Japan is different in Italy.
So it's really a it's a different beast from what sales forces are accustomed to doing.
And then there is the full commercial cloud. So we have CRM, we have full commercial cloud or software those data. They all inter operate and work together and nobody else really has that.
So as far as.
My perspective on Salesforce I don't see this as an attractive market for them.
You asked about <unk>. We are also nothing has really changed there we haven't seen any any difference we still win most of the deals we won eight smbs in the quarter.
Maybe one one thing to think about as you kind of think about a longer term here also one data point to put things into perspective, Veeva CRM and our add ons is roughly 25% of our total revenue and.
We expect to move to the vast majority of that over to Volte CRM over let's say the next five years. So just a way to frame kind of what that looks like yes. There is the competitive landscape and that may change, but that's how we're thinking about it we expect to move the vast majority over and focus on our horse and Thats. The next generation of share.
That's helpful. Thanks, and then just quick last one here.
What should we be anticipating in terms of migration costs.
Maybe on the on the back end side versus also the implementation side.
So I'm sorry can you repeat you were talking about the migration path can you just repeat the question just wanted to.
The costs for migrating customers.
Incremental to the existing.
Our expense base.
Got it so yeah cost cost for migrating so the way to think about it is the cost is there is a lot of variables that are going to go into what that cost looks like in one big one will be the approach that customers take from a lift and shift to something that may be more optimizing around business process.
The way I would think about it is we're building a lot of the tools to make that migration a whole lot easier so the cost of.
Just moving to vault CRM estimate could be 20% of the total cost of trying to do something new and built some new offering. So we have a we have a significant advantage because our customers are going to get everything we've delivered and Veeva CRM involved here on day one.
It's what happens with our existing customers plus we'll get more on top of that so it's a much more efficient way.
And it's a much better way ultimately will deliver a better application.
Thank you so much I appreciate it.
Your next question comes from the line of Craig Hudson back with Morgan Stanley . Your line is open.
Yes. Thank you.
Can you touch on the ramping nature of some of the larger wins in EDC and how you think about that in terms of layering onto the growth rate.
Brent do you want to take that one yes, I'm happy to happy to take that one. So if you think about these large EDC deals. These are these are not single year deals. These are multiple multi year arrangements, which could be 345 years. So think about it in the first year, it's not going to be.
Let's get an amount and.
As you get into year, three four and five it'll become much more material revenue will follow that billings.
Path as well so those two will be aligned as you look forward, that's kind of a way to think about it.
And then just switching gears back to some of the questions on the data business in commercial can you touch on just how youre thinking about just from a timeline perspective, when you could see some inflection in that business.
Well I'll take that one.
The real inflection I do think it will be.
Of course, it's going to be customer success wise and product excellence and that I think.
We will have a pretty good view of about 12 months from now really know that.
That is going to lead the financial significance by by a long way.
It will be multiple years from now before.
Comfort is not going to be a $50 million business, even at $50 million business. So it's not going to be any.
That anytime anytime soon anytime in the next few years. So that's that's how long in the past.
As things are.
The leading indicator will be customer success.
The customers and it would start probably with a very small biotechs, who can who would say hey, I run my business and I don't use any IQ via data products.
Hi, This is the video data products.
And I'm happy with that.
April to see things that I couldnt see before.
That's when you know you have something.
Those are the things that we're really looking for everyday.
Optimized for trying to listen core.
I'm trying to make changes so we can arrive at that.
Next year.
Got it thank you.
Your next question comes from the line of Joanne dressing with <unk> Securities. Your line is open.
Thank you and congrats on a strong quarter first I want to better understand the margin trends in the quarter, which came in nicely ahead of your quarterly guidance. When you had just put dfc and FX impact just trying to understand what drove the upside there and it looks like you're only raising the EBIT guide for the full year to reflect the outperformance in the quarter.
Thinking about those cost trends in second half.
Yes. So yes. Thank you so we're real happy with the performance in Q2, and you're right. We did flow through that outperformance in op income about $10 million for the full year. So we increased our full year number by 10 so.
At a 38% in the quarter and that's really about just great focused execution across every one at veeva all functions. So really good execution and so we're real pleased with that and if you look at our full year guide.
We are guiding to about 37% remember theres, a little bit of seasonality in Q4, but other than that it's just purely about execution and we're going to continue to focus on investing in areas that makes sense that can accelerate our value to our customers.
Okay and then following up on the question on macro fund asked earlier with respect to the funding environment, putting pressure on smaller biotech companies I understand your fiscal 'twenty guidance does not assume any change there, but what are you assuming in your fiscal 'twenty five outlook assume you are you assuming any improvement in trends there and then my broader.
A question on macro is that I completely understand that <unk> products are core to pharma R&D, but that's all to peers and competitors have been talking about shrinking R&D budgets for bottomline cut down on discretionary spending what gives you comfort that these trends will not start spilling over to Europe focused area, just trying to understand the comfort there.
Yes, let me kick that might take the first one so.
In our guidance, we've assumed that the macro environment will continue so we don't expect it to get better nor do we expect it to get worse fiscal year 'twenty fives, a long ways out, but that's that's our base assumption as you think about our guide.
I'll take the second part of that.
The life science industry, it's a healthy industry, there's always going to be some level of ups and downs in a quarter or quarter to quarter as it relates to clinical trial activity, but as we look out over the next couple of years, we are seeing.
Growth in R&D budgets on average around 3% growth in R&D spend.
So it's a healthy industry.
Certainly see a little bit of.
Kind of ups and downs and as far as that impact on our business I don't expect that to be material given.
That focus is on the smaller segment of our business and we're a little bit more elas centric.
Thank you.
Your next question comes from the line of Dan Bernstein with Wells Fargo Securities. Your line is open.
Hi, Thanks for taking my questions.
In the prepared remarks, you called out vivo link as contributing to commercial subscription growth in the quarter. Brent could you maybe give us an update on the IRR under link and then Peter or Paul can you share with US what are some of the newer products under link.
Yes so.
Not going to get into specific AAR values, but just what's important is linked to as a big opportunity for us.
We're executing well my first application link for key people is getting really good traction and you're seeing that as a driver to our revenue growth. So.
It's one of the that is one of the primary drivers you saw in Q2 and for the balance of the year from our from our commercial revenue growth perspective.
Okay.
Al.
Alright.
Betsy.
Sorry for the Audi or are there kind of a low ratio.
This is Peter I'll talk about link overall, we started out looking like for key people and when we were building that we're also building the Lincoln platform. So that we could expand it to different solution areas and Youre seeing that you started seeing that last year. So.
Link for key accounts for multiple countries link for scientific awareness for medical inside link workflow and then over into the clinical area, We've announced link trial base and linked site base. So we've really announced a broad broad set of products now each of those products, they're going to take a long time to mature.
As Brent said.
The bulk of our link revenue I don't have the exact number but let's say.
Probably more than 90% right now.
The link for key people.
We think it can be a broad broad set of solutions that can add cigna.
Significant value, but we'll have to see we'll have to see can we make excellent application can make it makes customers happy.
We are very mature and linky people a lot more customers to sell into the product is very mature.
As far as the market leading product.
We have to see if we can get there with our other Lincoln products.
Got it and then maybe just a quick one on <unk>, obviously, that's sort of choppy our business quarter to quarter, but can you share with us any trends you're seeing as it relates to pharma marketing activities and demand. Thanks.
Marketing no broad level trends that we haven't seen before just increased scrutiny.
Marketing is it spending I would say there was increased scrutiny, especially even more than it was a couple of years ago, but it continues to go well for us across six.
And it's going to have its ups and downs quarter to quarter, but.
As companies they want to reach their customers in the U S specific thing two ways face to face and through digital.
They're always going to use both methods.
Marketing is a big part of the cross sections, the leading measurement solution.
I think we have a good long term business there.
Our focus is to integrate cross X more tightly with CRM so that.
It becomes more towards enterprise license agreements and then became comes a little bit less of a standalone measurement tool.
Great. Thanks, so much.
Your next question comes from the line of <unk> Kalia with Barclays. Your line is open.
Okay, Great Hey, guys. Thanks for thanks for taking my questions here.
Apologies in advance if these questions have been asked me I'm going to try it anyway.
Peter maybe first for you.
Great to see the growth in the EDC customer base I think we said we added eight right.
In the quarter, maybe the question for you is are there any commonalities that you're seeing across some of those wins, whether it's coming from one or two specific competitors or maybe a common reasoning that youre seeing those customers choose to switch any observations that you would make.
Just as you look at a bigger EDC customer base now.
Yes.
Yes, there are some commonalities I would say.
The bulk of them are either coming from these data, which as you know.
Leading.
Bye bye volume in industry solution, where theyre coming from.
A series of smaller competitors that are targeted for the SMB.
As it relates to too many data I would say that like the ADC solution from Veeva, but they also like the integration with our current cooperation suite.
In the <unk> solution why they like our solution better at times sometimes.
And that will be the primary driver.
Specific what I would call meat and potatoes things for example.
When you do a study amendment, we changed the design of the study.
Many times with competitive solutions, you have to unload the data reload debate as a site can clinical research site can't upgrade during that time with veeva because of the newer architecture that doesn't happen.
So our April two two the use of our tooling our customers can build their studies can define their studies dramatically faster.
Two four weeks instead of a week and then the way the system works has less custom programming.
There's customer programming needed in these other solutions that it's expensive, but also error prone specialized skill you don't need that you can define that in EBIT. So these.
He has very specific things and then as to why they would use veeva instead of maybe smaller SMB solutions I think again, they would like to get solutions from one partner that fits together.
And that's what we do a good example of that is we have a great clinical trial management system and we have a great <unk> system you don't have to use both if you use both our better together, our <unk> system and our TSM system.
The work fine if you don't have our ABC they don't require our ADC at all.
<unk> Standalone and nobody else has done that before right nobody else that Hasnt EDC product.
If you have all of our products. The integration is even better and it's just easier to get these solutions from an integrated solution from one company.
That that's what it is.
What we're seeing people want a broad clinical partner.
All of the applications are excellent.
And that's what they can find and veeva.
Got it got it that makes a lot of sense, Brian maybe for my follow up for you and again apologies. If this has already been asked but.
Some competitors during the quarter talked about maybe some some lower clinical trial volume.
Just kind of industry wide.
And that potentially impacting their revenue maybe just to level set for all of US can you just remind us how much of the <unk> business if any at all.
<unk> is dependent on sort of near term in quarter clinical trial volume then we can sort of get a sense for veeva has exposure to that to that potential trend.
Hi.
So minimal very small amount is going to be variable based on near term trial volumes. If you think about our six top 20 EDC wins those are typically multiyear predefined ramping deals so they're going to they're not going to move with the ebb and flow of our near term trial volume. So I would say that has that.
Minimal impact and kind of how we go to market and contract with our customers.
Very helpful. Thanks, guys.
Your next question comes from the line of Brad Sills with Bank of America Securities. Your line is open.
Hey, this is Carly on for Brad I know we've talked about.
The fiscal year guidance or and I guess does that imply.
And then kind of assuming current macro to continue I. Just wanted you know digging a little deeper into I guess specific or a product right.
I know you guys pointed out smaller biotech customers impacting EBIT, but just wondering going forward looking at the second half what segments do you expect to be impacted more than the other perhaps and maybe some that are going to recover sooner than the other which were offset.
Some of that weaker macro.
Just want to learn.
Larry.
Okay, Great that's fair.
Yes, so it's kind of it starting at the top the macro can we expect it to be a continuation of what we saw in the first half in the back half. If you look at our full year guide and you look at R&D, we are growing that business about 28% adjusted for termination for convenience. So that's a very healthy business growing nicely and we continue to execute.
And we see the.
The strength to be broad based across clinical quality and.
In safety and the rest of the businesses and regulatory so broad based strength there.
The macro what's going to impact both commercial and R&D, but nothing more than what we've been seeing so we're happy with.
The execution, we have broadly across the portfolio.
Got it and then just a follow up for me if I may.
You definitely have broad solution stack 35 products.
Looking beyond the macro here, perhaps 20.
<unk> you.
Or are you not $2 8 billion target.
So just wondering.
<unk> products are there any renting warm meaningfully in the pipeline.
My country anymore to the growth going forward.
Yes, so we.
We reiterated reiterated the $2 8 billion, we're not going to get into specific splits of the product portfolio, but as Peter has indicated in his prepared remarks, nor are less than 20% penetrated broadly and across R&D. So the beauty of being <unk>.
Multi product company and have 35, plus major products as you have broad based strength and that's what we're seeing we see a broad opportunity and it's up to us to execute to that.
Got it okay. Thank you.
Your next question comes from the line of Charles <unk> with TD Cowen.
TD Cowen sorry, your line is open.
Hi, Hi, this is Lucas on for Charles Thanks for taking the questions.
Our questions have been asked so I guess a longer term question around vault CRM as we understand it bringing the CRM product onto your own platform gives you guys the ability of the <unk>.
To develop some add ons or added functionality that your customers may be currently go into other vendor support.
So two questions I guess.
I would like to hear what sort of functionality. This may entail, maybe that's asking too far down the road map, but would be curious to hear how you guys are thinking about this opportunity and then two is the timelines.
Four.
When you guys may look to add such functionality.
Yeah, Hey, Lucas this is Paul.
The way I would think about it first and foremost.
The decision was mainly about having complete control over the platform. The application. So we can deliver on customer success.
That's the highest level.
We want to make sure that we can do what we need to do to deliver the very best application and the best customer experience.
That's the decision at the highest level now beyond that that means we may be able to unlock new functionality and we've announced some of that already.
Not going to introduce new announcements or new things that we may do in the future, but one really interesting one that's been.
Really well received by our customers is this idea of how do we help the industry become more.
More service centric, enabling some of these new therapies, new complex medicines complex therapies, it's important for doctors to be able to get information inbound.
From from Life Sciences, and service center will allow them to do that so that's just one example.
I would expect our model as we continue to innovate so I would expect that over time, we'll do we'll do new things on Volte CRM that we havent done before but Thats standard Veeva operating model.
Okay I appreciate it that was it thank.
Thank you.
There are no further questions at this time I will turn the call back to Peter for closing remarks.
Yeah.
Thank you everyone for joining the call today and thank you to our customers for your continued partnership and to the Veeva team for your outstanding work in the quarter.
Thank you.
This concludes today's conference call. Thank you for joining you may now disconnect your lines.
Please wait the conference will begin shortly.
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