Q3 2025 Veeva Systems Inc Earnings Call
Please wait the conference will begin shortly.
[music].
Thank you for standing by.
In jail and it will be a conference operator today.
Speaker Change: At this time I would like to welcome everyone to the Veeva systems fiscal 2025 third quarter results Conference call.
Speaker Change: All lines have been placed on mute to prevent any background noise.
Speaker Change: After the Speakers' remarks, there will be a question and answer session.
If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad.
Speaker Change: If you would like to withdraw your question just star one again.
Speaker Change: I would now like turn the conference over to Gunnar Hansen Director of Investor Relations you may begin.
Gunnar Hansen: Good afternoon, and welcome to <unk> fiscal 2023rd quarter earnings Conference call for the quarter ended October 31, 2024, as a reminder, we've posted prepared remarks on Veeva as Investor Relations website, just after one P. M. Pacific today, We hope you have had a chance to read them before the call.
Gunnar Hansen: Today's call will be primarily used for Q&A with me today for Q&A are Peter Gassner, Our Chief Executive Officer, Paul Shower, EVP strategy, and Brian Van Wagner, Our Chief Financial Officer.
Gunnar Hansen: During this call we may make forward looking statements regarding trends, our strategies and the anticipated performance of the business, including guidance regarding future financial results.
Gunnar Hansen: These forward looking statements will be based on our current views and expectations and are subject to various risks and uncertainties.
Gunnar Hansen: Actual results may differ materially.
Gunnar Hansen: Please refer to the risks listed in our earnings release and the risk factors included in our most recent filing on Form 10-Q.
Gunnar Hansen: Forward looking statements made during the call are being made as of today December 5th 2024 based on the facts available to us today.
At this call is replayed or viewed after today the information presented during the call may not contain current or accurate information.
Gunnar Hansen: EBIT disclaims any obligation to update or revise any forward looking statements.
We may discuss our guidance on today's call, but will not provide any further guidance or updates on our performance during the quarter unless we do so in a public forum.
Gunnar Hansen: 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.
Speaker Change: Thank you for joining us and I'll turn the call over to Peter.
Peter Gassner: Thank you, Gary and welcome everyone to the call queue.
Peter Gassner: Q3 was another strong quarter of execution and innovation.
Peter Gassner: We delivered financial results above our guidance with total revenue of 699 million and non-GAAP operating income of $304 million.
Peter Gassner: It's a really great quarter of execution by the Veeva team.
Peter Gassner: Broad based adoption in all areas of development cloud.
Peter Gassner: <unk> had a number of significant milestones and commercial including great progress on bulk CRM.
Peter Gassner: It's an exciting time as we look ahead to our 2030 goals.
Well now open up the call to your questions.
Peter Gassner: Yeah.
Speaker Change: Thank you the floor is now open for questions. If you have dialed in and we'd like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue if.
Speaker Change: If you would like to withdraw your question simply press Star one again.
Speaker Change: If you are called upon to ask question and are listening via a loudspeaker new device. Please pickup your handset and ensure that your phone is not on mute when asking your question we.
Speaker Change: We do request for today's session that you do limit yourself to one question and one follow up.
Speaker Change: Your first question comes from the line second caveat with Barclays. Your line is open.
Speaker Change: Okay, Great Hey, guys. Thanks for taking my questions here and nice job this quarter.
Speaker Change: Peter maybe just to start with you.
To your point Veeva.
Speaker Change: It did have some nice innovation this quarter, particularly with vault CRM.
So I was wondering as you talk to customers about their migration away from Veeva CRM and away from other potential competitors.
Speaker Change: What's sort of the future what are the future roadmaps that you're sort of speaking to them around the benefits of vault CRM I guess as we all sort of wonder about the effort involved in moving off of Veeva CRM. What are you talking about the main benefits when moving to vault CRM if that makes sense.
Yes excellent question ill try to keep that Chris.
Speaker Change: One of the benefits is it.
Speaker Change: Is it really an important one that they've always appreciated from Veeva is continuous innovation that features.
You see the Veeva CRM team that great EBIT CRM product team product management team, who has been keeping that.
That industry, leading application for the years, that's now on Bulks CRM. So the way to stay on that innovation train is to be on box here and so there they're looking forward to that.
Speaker Change: The other one is the idea of a platform per customer centricity that can span sales medical marketing and service a single view of the record so that they can both be more efficient with their customers, but also more respectful.
Speaker Change: <unk>.
Sure.
Speaker Change: In life Sciences, you have smaller biotechs. They may have 200 people in their company you have large biopharma. They may have 50000 people in their company and over 20000 people in their field.
Speaker Change: So there is there is different levels of appetite or change you can change 200 people faster than you can change 20000 people.
Speaker Change: So quite a small biotechs. They are looking forward to like Wow, we can just jump on and we can just be clean on that quickly with a larger and larger companies.
Speaker Change: It's in place they will look to be enthused about well there's potential there we could change to that when we want to if need be delivered that in the way we think.
Speaker Change: Theyre going to so they view it as optionality.
Speaker Change: Got it got it Super helpful.
Speaker Change: Brian maybe maybe for my follow up for you.
Speaker Change: It was great to see the strong Q4 billings outlook remain largely unchanged of course on the back of a strong Q3 as well maybe the question is can you just talk a little bit about how much. The CB EMS ramps are contributing to that and and how you sort of think about CBS as a driver.
Speaker Change: For billings going into next year as well even anecdotally.
Speaker Change: Yeah, Thanks, Doug so.
Speaker Change: I think we're not going to get into the specific detail.
Speaker Change: Billings information by product area, but overall within Cvs I'd say, it's playing out about as we expected.
Speaker Change: A lot of the CMS growth as pre defined multiyear ramps and so those are largely proceeding as expected.
Speaker Change: And then more broadly in Q4, and generally going forward I think our growth in our billings are driven more by a broad base of products than any one product in particular.
Speaker Change: Very helpful. Thanks, guys.
Speaker Change: Your next question comes from the line of Ken Wong of Oppenheimer. Your line is open.
Ken Wong: Great. Thanks for taking my question. This first one.
Ken Wong: It could be Peter Paul.
Speaker Change: <unk>, an ml MLR bought as potentially being a second well it will be a separate license.
Speaker Change: One I guess, what what kind of early interest are you getting there and then two when we think about the potential monetization is it going to be comparable to one of your commercial modules, which I think in the past you've said is it 10% to 15% uplift or or is this something more value add and something you can charge higher for.
Yeah, Hey, Ken Thanks for the question this is Paul.
Speaker Change: So.
Speaker Change: I was at our Europe Summit event, where we announced MLR something we've been we've been thinking about evaluating for some time, we think we can.
Speaker Change: Help advance how our customers get their commercial content approved and do that more efficiently.
Speaker Change: What this is about providing tax using gen AI to understand and provide insights as to what parts of the content they need to spend time on what parts of the content. They can move very quickly.
Speaker Change: So there's a lot of excitement. This is this is a really core process for life Sciences companies. So a lot of excitement. There. We are planning on this will be a separate license it will be the way to think about it as roughly an add on to what we're providing in promo maps.
Speaker Change: And then in terms of sizing and the monetization.
Speaker Change: <unk>, we're still working through the details on that but.
Speaker Change: But theres a ton of excitement from our existing customers. We look forward to getting some early customers started on that as we go into next year.
Speaker Change: Got it perfect and then and then Brian.
In the prepared remarks, you guys touched on kind of good billings upside driven by services and you know when I think about the year. That's the first part of the year, perhaps some push out and services now you're calling out potentially some better services anything to read into that or or again, maybe more just kind of a one off.
Speaker Change: Off timing dynamic.
Speaker Change: Thanks, Ken I think overall really pleased with the execution from the team on both the subscription and services side in the quarter. We saw several projects complete or progress more quickly than we had previously expected and so that's the main driver of the beat on revenue and billings for services.
Speaker Change: I think you'll recall that the earlier part of the year, we had several different factors impacting performance one of which was subcontractor revenue.
Speaker Change: So I think what we're seeing now is stabilizing of that database and pleased with the team's work in Q3 and as we look ahead.
Speaker Change: Okay fantastic. Thanks, a lot guys.
Speaker Change: Your next question comes from the line of drove ruling of Baird. Your line is open.
Speaker Change: Hi, great. Thanks for taking my questions.
Speaker Change: The prepared remarks, there was mentioned that Veeva is making progress on several large strategic partnership opportunities and development cloud I wanted to see if these are maybe similar in scope to have veeva has come to work with the likes of Merck and beyond what was discussed on their kind of those large strategic engaged.
Speaker Change: Hence.
Speaker Change: Got it.
Speaker Change: If not or if so can you maybe speak to any commonality in terms of the discussions you are having the type of solutions are and objectives that sponsors are looking to achieve.
Speaker Change: As possible by just leveraging these out in a greater way.
Peter Gassner: Yes. This is Peter I'll take that one.
Speaker Change: I wanted to say this carefully I would say similar but not the same.
Speaker Change: And Merck again similar in that.
Speaker Change: Strategic level and then.
Speaker Change: Across product lines.
Speaker Change: But each each one is different in its own way part of that has to do with we have more products that are mature now then if you. If you look when we do we have a great program with <unk>.
Speaker Change: The one medicine Boehringer Ingelheim that one medicine program.
Speaker Change: No that was it.
Years ago really when the Genesis of that started.
Speaker Change: We have more products now in the <unk>.
Speaker Change: Cynical in the quality area that are mature so.
Speaker Change: The discussion is now.
Speaker Change: It's more expansive we have more products to talk about.
Speaker Change: <unk>.
Speaker Change: And then and then sometimes these discussions are going to be very particular, it might be just in the clinical area, but it might be across all of the clinical product or it might be focused on the regulatory and the quality and the clinical operations area, but again those are those are bigger areas.
Speaker Change: They used to be so suddenly there is similar but different just as.
Speaker Change: All of the top 20 pharma companies are different from each other they have different cultures different product portfolios.
Speaker Change: Have different objectives and they have different people.
Speaker Change: They're not all going to be the same.
Yes.
Okay. That's very helpful. Thanks, Peter.
Speaker Change: And then I guess I'll ask NIE biannual question, Kevin customers are well into their budgeting for the new year.
Speaker Change: Visibility at this point in terms of some of those plans are coming together.
Speaker Change: How does your visibility on the intended performance in 2020 effects compared to what you normally have at this point in time, not asking for a number but just kind of how visibility compares and would you maybe say, it's any better or worse fiber too.
Speaker Change: Things like ramping agree enhance that.
Speaker Change: <unk> are just the state of active discussions with customers.
This is Peter.
Speaker Change: I would say.
Speaker Change: Marginally better visibility.
Speaker Change: As compared to a year ago, I think our customers have settled into this macro environment.
Speaker Change: A little bit more.
Speaker Change: I also think we have more we have more bites at the Apple every year, we have more mature products. So therefore.
Speaker Change: No one particular thing that swing things, one way or the other and as you mentioned we have these ramps so I would say slightly more visibility, but nothing dramatically different.
Speaker Change: Great. Thank you very much.
Speaker Change: Thanks.
Speaker Change: Question comes from the line of Brian Peterson of Raymond James Your line is open.
Brian Peterson: Hi, gentlemen, thanks for taking my question and congrats on the strong quarter.
Peter Gassner: Peter I just wanted to hit on the regulatory backdrop, I know theres a lot of potential changes coming out of Trump administration at least that are being discussed I'd love to understand what your customer feedback has been there and how you think about the potential implications to veeva under a new administration.
Speaker Change: Paul you want to take that one yes.
Paul shower: Yeah, Peter I'll take that one so Brian thanks for the question.
Paul shower: First it's very early right, there's still a lot of things that need to be settled out as it relates to the administration change.
Speaker Change: <unk> nomination is need to be confirmed priorities need to be established all of that sort of soften our customers are accustomed to this right they've seen administration changes before they.
Speaker Change: I know that in some cases, there is some uncertainty and things may change in the future and what we see is our customers are just focused on what they need to do they have priorities. They have work that needs to get done right now and they are focused on that so we're not really seeing any change in how customers are making decisions on how they're thinking about projects.
Remember a lot of these projects that they have with us have been planned well in advance. These are mission critical systems. So.
Things are largely continuing as planned and I think as things change as things become reality the industry will.
Speaker Change: React accordingly, but so far it's business as usual.
Speaker Change: Got it and maybe a follow up for Brian the margin upside. This quarter was really impressive just anything that you would call out in terms of timing of expenses in the third quarter would appreciate any perspective, there. Thanks guys.
Speaker Change: Hey, Bryan Thanks for the question this is Brian as well.
Speaker Change: So in Q3, I think the revenue outperformance roughly speaking about half driven by the revenue beat and then a quarter driven by the timing of expenses in the quarter remaining quarter driven by continued expense discipline. So on those those timing elements that you asked about just some things that we expected to.
Speaker Change: Hit in Q3 that will instead move into Q4 or into Q1, and we always expect some variability there, but but nothing specific.
Speaker Change: Your next question comes from the line of Ryan Macdonald of Needham <unk> Company. Your line is open.
Speaker Change: Alright, Thanks for taking my questions Peter maybe I just wanted to ask on the on the Boehringer deal on the large volte win there.
Speaker Change: Just curious as to what the <unk>.
Speaker Change: Center or thoroughness of the evaluation process that maybe they were going through and how that compares to other perspective migrations in the pipelines from the top 20, I'm just trying to understand maybe how deep they are sort of evaluating other <unk>.
Speaker Change: <unk> solutions in the marketplace versus just sort of it being a veeva only type discussion at this point. Thanks.
Yes, thanks for the question Ryan.
Speaker Change: I'll take this one.
Speaker Change: First of all the Behringer Ingelheim announcement was super exciting and innovative company.
Speaker Change: You may have heard the fireside discussion I had with their CIO Mark yes talking about the innovation.
Speaker Change: What they have in front of them over the next five years or so in terms of product launches.
Speaker Change: They're looking they were looking for.
Consistency a partner that can execute they talked about that in that conversation you heard them, saying that a lot of vendors promise a lot of things in vivo is one that has consistently delivered for them over the long term and thats not something to be.
Speaker Change: Taken for granted right. So that's it's really about execution and then of course, the full innovation roadmap and where we're headed.
Speaker Change: Did they do a thorough analysis, absolutely you're right and then all of these customers are thinking deeply they all have their own process every customer is a little bit different and unique some customers will make decisions for different reasons.
Speaker Change: So youll see different decision, making but I would say in some respects their thorough in their own ways, but there are these decisions are made by people.
Speaker Change: Which means there is naturally differences and how they how they make decisions.
Paul Thanks, very much maybe just a follow up for Brian.
Speaker Change: Obviously with the rollout of these generative AI applications.
Speaker Change: A few of them being.
Speaker Change: Sort of it included at no additional charge.
Speaker Change: How should we think about how that impacts gross margins going into your into next year understanding that obviously, we're not giving guidance yet for next year, but.
Just generally how you think that as the adoption and usage of that the <unk> apps grows over the next year.
Speaker Change: Any sort of impact we should expect from a margin perspective. Thanks.
Speaker Change: Thanks, Peter do you want to take that one.
Speaker Change: Yes.
I will take that.
Speaker Change: Generally.
Speaker Change: We announced two Gen AI solutions, one we call it CRM bot and the other one MLR bought MLR, but we will charge for and Thats, where we will host and run a large language model not our own lockers language model right will use one from that.
Speaker Change: Big Tech providers, but we will be paying for the compute power for that and so we will be charging for that.
The CRM, but that's where we will hook, our CRM system into the customer's own large language model, but they are running and Thats, where we will we will not charge for them, we will not incur.
Speaker Change: <unk> cost so.
Speaker Change: There we have to use significant compute power.
Well, it's likely charge.
Speaker Change: And where we don't we most likely won't.
Speaker Change: We won't be any material impact to our gross margin in general Brian.
Speaker Change: You've given your thoughts on the gross margin profile for 2030, and we don't we don't.
AI is not going to change that that's all factored in.
Speaker Change: I appreciate the clarification thanks Peter.
Speaker Change: Thanks.
Speaker Change: Your next question comes from the line of Anne Samuel of Jpmorgan. Your line is open.
Anne Samuel: Hi, Thanks, so much for taking the question you highlighted that your safety solutions are approaching a tipping point and I was wondering if maybe you could provide a little bit more color about what that means and then could you just remind us of the relative size of this market, what's the unmet need and where veeva is differentiated here.
Anne Samuel: Yeah.
Speaker Change: So it's more of a feeling you know when you are approaching a tipping point, it's a little bit different than being at the tipping point. So it's it's the level of depth.
Customer conversations, we're having and multiple multiple large customers.
Speaker Change: Every year the legacy systems that they are using or are aging a little bit and every year, our cloud based solutions are getting.
Speaker Change: Better and Theyre getting more optimized and more people are using them.
Speaker Change: And.
Speaker Change: It's kind of like that you have a feeling that the tipping point is coming we've also filled out our suite of course safety processing application, which we've had for some time now we have safety signal in safety workbench available there.
Speaker Change: Those are the things they need.
Speaker Change: And in terms of what they're looking for is a they do on a cloud based system because they don't.
Speaker Change: The idea of doing upgrades and taking changes and if that stuff is not appealing.
Speaker Change: These systems are our legacy and aging so there's one just modernization.
Speaker Change: But the second one is advanced automation.
Speaker Change: Within the safety system to do things without annual information and intervention and then across systems. For example between clinical data management and safety systems. There's a lot of innovation that we can do because we have both sides of those applications. So they're looking for automation not to take the people totally out of the <unk>.
Speaker Change: Loop because the people have to be in the loop to know what's going on so that they can cure notice and act appropriately, but pre them up.
Speaker Change: The redundant activities that they don't seem to be doing.
Speaker Change: That's really helpful. Thank you and then maybe just one more.
Speaker Change: Noted that your customers are as you said settling into the current macro.
Speaker Change: I was wondering you know are you viewing this as the new normal.
Speaker Change: And if not what are you monitoring early signs of an inflection from here and which areas of your business would really see a change for us. Thanks.
Speaker Change: Yes, I think this level of uncertainty that we have in the macro is now what people are accustomed to now.
Speaker Change: I guess it could change, but we won't know it's changing unless it unless it does change we haven't detected that so they are just sort of settling in.
Speaker Change: Getting work done actually co who is not that long ago and that was a real shock to the system that was very very not normal and then the two contracts that we had started that was also very very not abnormal.
Speaker Change: But now people are getting a little bit more used to these things the highest net shape for a while.
Speaker Change: Tom May have gotten used to very low interest rates now it's back to okay well.
Speaker Change: Interest is not pretty anymore.
Speaker Change: Hi.
I don't want to call it really the new normal, but I guess it is.
Speaker Change: No.
Speaker Change: Really helpful. Thank you.
Speaker Change: Your next question comes from the line of Dave Windley of Jefferies. Your line is open.
Speaker Change: Hi, Thank you and I apologize for background noise. If it comes through I was wondering I understand you answered the question about changes in administration earlier, but theoretically if.
Speaker Change: If appointments were approved and if appointments followed through on some of their desires and direct to consumer advertising.
Speaker Change: <unk> eliminated how would that impact your business model positively or negatively.
Speaker Change: Yeah, Hey, Hey, Dan Thanks for the question. So your question actually the way you framed it.
Speaker Change: It was interesting right. There's a lot of ifs there theres a lot of things that would actually has to happen for that to become a reality.
Speaker Change: The nominations the priority of the policy potentially even legislation to make that happen. So it would be it would be a lot has to happen, but it would certainly be a major change right and probably something Thats challenge right. Just the idea of changing access to patients rights information for example could become.
Speaker Change: A barrier to that kind of thing happening.
Speaker Change: So what would have to happen but.
Speaker Change: And I think it would likely be challenged in terms of what happens to our business. I think this is the kind of thing that if it were in I think it would take many many years.
Because it's being challenged so I don't expect any near term impact on our business and I haven't seen our customers really reacting and any sort of negative way, even given some of the commentary that's been out there. So.
Speaker Change: Sure.
Speaker Change: I think it's kind of deal with it when it happens and I think that's how our customers are thinking about it and focus on the near term.
Speaker Change: Your next question comes from the line of Kirk <unk> of Evercore.
Speaker Change: Your line is open.
Hi, This is bill on for Kirk and thanks for taking my question.
Prayer remarks, you noted that cross docks has been driving commercial growth.
Speaker Change: What factors that play would you say are driving this performance.
Okay.
Speaker Change: Uh huh.
Speaker Change: I think really good execution by the cross 16.
Speaker Change: Real innovation that they are doing particularly in the audience is area.
Speaker Change: With the.
Speaker Change: Micro audiences getting more fine tuned also our data network is growing all the time, we have our data network, we leverage that for Compass and cross six so our data network is getting more rich all the time as we as we add more data sources.
Speaker Change: Competition in those markets we're sure.
Speaker Change: I think our competition has had some stumbles in the last year or two maybe made some promises that they couldnt deliver on these it tends to do.
Speaker Change: Well right.
Speaker Change: When a new player comes into a market makes a lot of promises and then doesn't do well.
Speaker Change: That creates the tail that creates a tailwind for us so.
That's a positive.
Speaker Change: Also the integration with our CRM product I think is something that customers are noticing the integration with the rest of this.
Speaker Change: But overall classics the main driver of our strength.
Speaker Change: It's not the main driver of our strength in commercial it's one of the drivers, but the CRM products the commercial content products.
Speaker Change: <unk> had a good quarter et cetera <unk> was.
Speaker Change: It was one of the wheels on the train.
Speaker Change: Great. Thanks for taking my questions.
Speaker Change: Thank you.
Speaker Change: Your next question comes from the line of Gabriela Borges of Goldman Sachs. Your line is open.
Hi, Good afternoon. Thank you I think just wondering how Paul Paul I wanted to revisit the discussion on commercial growth and specifically on what's happening with the seat count dynamic versus the add ons and the upsell dynamic within the Capex commercial maybe just give us an update on how the <unk> are up.
Speaker Change: Playing out and to what extent, you're still seeing pressure in seat counts and to what extent initial confidence that you can offset any C comp pressure.
Speaker Change: Thank you.
Speaker Change: Yeah. So I think your question is about seat count and as well as in core CRM also as it relates to the add ons.
Speaker Change: So overall the market is relatively stable. So we over the last couple of years, you've heard us talk about some of the shifts in the dynamics as the industry has become a little more digital we saw some reductions that has generally stabilized out so.
Speaker Change: Although you may see individual companies, adding or reducing their rep counts on average the industry is relatively stable. So I don't expect much change there as it relates to our add on products. We continue to make progress there, meaning the attach rates become higher as every quarter goes on we tend to it.
Speaker Change: Increase our attach rates with some of those products.
Speaker Change: Higher attach rates, others still have more room to grow.
Speaker Change: So that's the way to think about it I think it will be relatively stable over the next couple of years as it relates to our market perspective, I think the market's out on your steady state.
Yes that makes a lot of sense. Thank you. The follow up is on your learning so far from the CRM conversions Q well that you've already done.
Speaker Change: I will just highlight Ross what do you think what are you next today that you didn't know a year or two ago.
Speaker Change: The customer transition is helpful. Ken how is that helping navigate some of the conversations on the graph.
Yeah. So.
Speaker Change: <unk>.
Speaker Change: A significant difference from where we were two years ago to wherever you are today two years ago. It was really it was an idea we had our idea and our strategy was just being formed and to where we are today is a kind of remarkable difference in terms of what we've been able to achieve now a product in market that's out.
Speaker Change: Full functionality.
Speaker Change: Have our first early migrations, which are plan plan to be wise.
Speaker Change: The technical go lives going happening this year and then some big migrations happening next year. So we've learned a lot I would say.
Speaker Change: Around the migration tooling.
We've built in migration tooling and now we have confidence that we.
Speaker Change: We know what that needs to do we know you always find things as you go along right you learn as you go along and we.
Speaker Change: Things that didn't work and we fix it and now the migration is migration tooling and technologies in a good place we've learned ways to help make it even more disruptive or even less disruptive for customers.
Speaker Change: So I think we feel really good about that and then I think maybe the third thing is just thinking about particularly for small and mid sized customers, how they're able to really take advantage of that move to volte share them very quickly and then turning on some of this new innovation very fast some of our new products like service Center campaign manager and then over time.
As like the connectivity was all promo amounts.
Speaker Change: The integration with the tighter connectivity with things like Microsoft teams and outlook and everything else. So.
Speaker Change: We've learned a lot and we're executing better and we get better and better each quarter that goes on.
Speaker Change: Great. Thanks for the color.
Speaker Change: Yeah.
Speaker Change: Your next question comes from the line of Brent break Lynn Piper Sandler Your line is open.
Speaker Change: Yes.
Speaker Change: Thank you good afternoon.
Speaker Change: Reading through the prepared remarks here and the commentary on the call so far.
Speaker Change: Something reads and feels a little different relative to the top 20 appetite to lean into the broader visa portfolio here I know historically, you've talked about the top 20.
Speaker Change: Governor being maybe engaging one product a year, but I get the sense that maybe there is.
Speaker Change: A greater sense of urgency to move off of legacy and embrace maybe multiple products.
Talk me through the the level of dialogue you are having across our whole portfolio with these top 20 is that the right read or or is it a misread.
Speaker Change: I think that Reed.
Speaker Change: More comprehensive doing at things is probably pretty particular to the development cloud area, because that's where our sweet most most mature and most most proven but I would say in that area, yes, I wouldn't say dramatically more.
Speaker Change: Going fast and going all in but a bit more than it was a year ago.
Speaker Change: The reasons for that are pretty mechanical because every year, if we deliver more products more high quality products and have one more year of track record of customer success.
Speaker Change: Reinforcing the function and that gives us a lot.
Speaker Change: That gives us a tailwind where there's also a big responsibility. So for example, when the Tio Boehringer Ingelheim said.
Speaker Change: Hello, everybody at Veeva.
Speaker Change: We go with bigger because your step works can you deliver on like you said, we take that pretty seriously.
Speaker Change: A big responsibility so we got a.
Speaker Change: We got to deliver what we said we're going to do so every year, we do that.
Speaker Change: Trust increases and trust us.
Speaker Change: This accelerator as it should be.
Speaker Change: Helpful Color and then maybe Brian for you.
Brian Peterson: 43.5% operating margin. This is kind of the the highest we've seen out of Eva on record.
Brian Peterson: The biggest beat versus your guide and in three years.
Speaker Change: A bit of a hot start for you for the first quarter out of the gate, but how should we think about the the cost discipline you put in place in the quarter and leverage and it just you guide obviously implies youre going to have some additional expenses here in Q4, but walk us through the the philosophy on cost discipline and.
Leverage you showed this quarter and what it means here as we think about next year.
Speaker Change: Hey, Brent Thanks for the question, it's a nice start certainly, but really a testament to the great execution from the Veeva team more than half of that outperformance on the margin as I mentioned is due to the revenue side and so thats outstanding execution across our sales team our services teams the product teams.
Speaker Change: The team is working to create value for our customers every day. So we're continuing to be really pleased with the execution on that front and then as far as the second part of your question around our philosophy around cost management and.
Speaker Change: No real change that I would say to that that philosophy, we think about managing costs on a period by period basis, we make investments in growth as we feel we need to.
Speaker Change: And there happened to be a few expenses this quarter that moved out to other quarters.
Speaker Change: And then that ongoing cost discipline that you've heard from us in the past. So overall strong execution from the team on both the top and the bottom line.
Speaker Change: Helpful. Thank you.
Speaker Change: Your next question comes from the line of Stan Bernstein of Wells Fargo. Your line is open.
Stan Bernstein: Alright, thanks for taking my questions.
Speaker Change: First with respect to follow up on vault CRM at the Investor Day, you had suggested more top 20 commitments likely to be announced over the next six months or so so clearly these conversations are maturing now as you reflect on these discussions youre, having with clients what have been the gating factors to get these commitments and with wallet share I'm already out in the.
Speaker Change: A wild as you say how is the hurdle for these commitments come down at all.
Stan Bernstein: Yeah, Hey, Stan.
Speaker Change: First of all.
Speaker Change: Cited about where we are we got our fourth top 20 commitment.
Speaker Change: Executing really well we're pleased with the progress there I do continue to expect additional commitments over the next several months.
Speaker Change: Yes.
Speaker Change: It's a significant advantage, having a real product having a product in the market. We have customers lie we have customers migrating to it.
Speaker Change: We're innovating in the product in many different ways and I got to hear a lot about that innovation our customers reaction on innovation.
Speaker Change: In person at our customer summit event everything from what Peter talked about sales marketing and medical and a single vault, that's foundational different our AI strategy, we talked about how we're executing well against that.
Speaker Change: So.
Speaker Change: The sense I would say, yes, each deal that we have we make a little more progress, but but certainly I would also kind of balanced out with every customer is a little bit different they optimize for different things, we're certainly not going to win every deal.
Speaker Change: But we still expect to win the vast majority of the <unk>.
Speaker Change: Deals that are out there.
Speaker Change: We're pleased with kind of where things stand in the progress we're making so far.
Speaker Change: 'twenty and beyond.
Speaker Change: Great and then quickly on your pivot towards horizontal enterprise applications. When can we expect a more concrete product strategy that youll be able to share with us. Thanks.
Speaker Change: Yeah, I'll take that one in terms of the new markets horizontal horizontal business applications. We're taking that platform specific approach there in terms of any update in terms of exactly what application area or customer segment.
Speaker Change: No specific timeline for that.
We'll just have to let that play out we'll let you know when we have more information available.
Speaker Change: Great. Thank you.
Speaker Change: Your next question comes from the line of Tyler Radke of Citi. Your line is open.
Tyler Radke: Yes, thanks for taking the question here.
Okay.
Tyler Radke: About FY 'twenty, six I know, you're not giving formal guidance, but just any way of framing.
Tyler Radke: How we should think about the growth in the context of this year and in your long term targets.
As we think about the macro environment clearly.
Speaker Change: The numbers have been very resilient.
Speaker Change: But just given you do have longer sales cycles have you seen any change in sort of that.
Early stages of those of those larger deals that.
Speaker Change: Maybe maybe layering in towards the back half of next year for instance that you would call out. Thank you.
Speaker Change: Hey, Tyler so as Peter covered I think we've got probably a little bit better visibility to next year marginally speaking than prior years, but we're not giving FY 'twenty six guidance at this time, we'll do that after the Q4 results overall for the year.
Speaker Change: For our updated guidance reflects subscription growth of about 15%. So really pleased with that growth rate against our long term growth targets.
Speaker Change: Okay.
Speaker Change: Your next question comes from the line of Craig heading back of Morgan Stanley. Your line is open.
Thanks, just going back to the horizontal strategy and the strength in the core business margin profile today, how do you think about that in terms of perhaps getting a little bit more leverage to make some of these investments as you get that going.
Speaker Change: Yes, I'll take that one.
Speaker Change: Well.
Speaker Change: Firstly, just has to do the right thing by the customers and Thats about keeping lean teams product excellence delivering a lot of values and you see that in our financial profile, we spend almost twice as much in product as we do in sales and marketing. So that's really really our focus being efficient.
Speaker Change: And then for the horizontal business applications.
Speaker Change: It's not really that we need dollars to invest there. It's really you need a small team and a tiger team.
Speaker Change: Very focused teams so.
Yes.
We certainly have the capital to all of the cash flow that we would need to invest in the new markets horizontal business applications with the additional revenue what we have coming in mostly we're going to put that into customer support and customer success, and new products and filling out our existing products and inside of black.
Speaker Change: Sciences. So that's basically the way the way to think about that the revenue and life Sciences were really stay in life Sciences.
Speaker Change: Got it got it and then I just had a follow up question on services as that market looks to be stabilizing how do you think about that unlike a multi year profile from a growth even if its a range like what's a reasonable growth assumption in services looking out the next couple of years.
Brian Peterson: Hey, Craig this is Brian So I think as with the revenue guidance, we won't give specific guidance on services revenue until after our Q4 results but.
Brian Peterson: But happy with how the team are continuing to execute and the momentum we saw coming out of Q3.
Speaker Change: Okay. Thanks.
Speaker Change: Your next question comes from the line of DJ Hynes of Canaccord. Your line is open.
Speaker Change: Hey, guys congrats on a nice quarter, Hey, Paul one of the questions that picked up since Salesforce reported earlier this week that they called out life Sciences cloud as a component of three of our top 10 deals in the quarter I'm not asking you to speak for them.
Speaker Change: But as you see what's happening at your customers is there any sense that salesforce is showing up more often.
Speaker Change: Yes, I mean, it's certainly in our larger customers there.
Speaker Change: The vast majority of our customers, having conversations and that's perhaps no surprise right that's not something.
Speaker Change: We were surprised about.
Speaker Change: Expect it to see that in.
Speaker Change: In terms of are they showing up more frequently I don't know that theres a change we certainly still see them in the market and they are the primary competitor I think as I alluded to before.
Speaker Change: <unk> is out of the game your product Sunset.
Speaker Change: We're competing with Salesforce, they don't have a product yet.
Speaker Change: So that's really who is.
Speaker Change: Who are the primary competitors at this point.
Speaker Change #100: Yeah, Yeah, Okay, and then Brian a follow up for you can you just remind me of the impact that CFC has on margins this year and whether theres any normalization of reversal that we should be thinking about as we set our models for next year.
Speaker Change #101: Yes, so on the PSC side recall, that's predominantly our revenue side normalization. So it impacts the margins a bit but I think we are certainly excited to jump into next year and to stop having both normalized for TFC and non normalized for DST results to report.
Speaker Change #101: On the revenue side, it impacted the growth rate year over year by about 2%.
Speaker Change #102: Okay alright, thank you.
Speaker Change #103: Your next question comes from the line of <unk> Singh of true Securities. Your line is open.
Thank you and thanks for taking my questions I want to go back to a board CRM.
Speaker Change #103: <unk> signed up towards the top biopharma commitment.
Speaker Change #103: Can you confirm whether it's an existing CRM customer or your new CRM customer and related to that can you remind us what is the average length of time from a customer commitment to wall to migration to win that lives on the platform. If it is largely based on customer preferences, how do they typically think about when they want to migrate post commitment.
Speaker Change #104: Yes, Joe Indra, So let me take that second part first around migration.
Speaker Change #105: I would say it varies.
Speaker Change #105: Pretty significantly by the size and complexity of the customer.
Speaker Change #105: If you're a top 20 customer, it's likely very very different than a small or mid sized customer a small customer maybe migrated in let's say four weeks or six weeks.
Speaker Change #105: And as you expand up to a top 20 that can take.
Speaker Change #105: Closer to two years, alright, so we see that difference in terms of their timing when they make a commitment the commitment depends on on their timeframe, we're not doing anything unnatural to try to force our commitment and Theres a lot of things that they have to think about.
What's happening in their own business, the timing of let's say launches that they have should they do the migration before a launch our after our launch.
Speaker Change #105: So those those kinds of things come into play so each customer has a little bit different they optimized for slightly different different things.
Speaker Change #105: But.
Speaker Change #105: Our strategy is to make us minimally disruptive and as easy as possible to get them to a decision, but also to the migration.
Speaker Change #105: Whether it's a new customer or existing CRM customer.
Speaker Change #105: Okay.
Speaker Change #106: Is that a question Paul was the top 20 win was that a new customer for us or an existing yeah yeah.
Speaker Change #107: Yes, so the top 20 that we just announced was an existing customer. So that was I think you are referring to the behringer ingelheim announcements is that what you're referring to I'm sorry, yes, yes. So.
Speaker Change #107: Beringer Knowhow and there has been a very long term customer for Veeva.
Speaker Change #107: In commercial and then over the last several years last couple of years in R&D also.
Speaker Change #107: We've worked very closely with them in the commercial side made them successful with Veeva CRM and they are putting their trust in us for Volte CRM for the long term so yes existing customer.
Speaker Change #108: And my follow up is on the <unk>.
Speaker Change #108: Decent exploration net headcount increase in the quarter.
Speaker Change #109: Anything to read into that I mean, clearly youre seeing some good momentum here any particular areas. You guys are focused on with respect to head count additions or is it more across the board.
Brian Peterson: Hey, this is Brian I'll take that question.
Brian Peterson: We were happy to see head count increase in the quarter, we're continuing to make investments in growth, it's broad based but certainly in our product areas is a key focus as we look ahead to next year.
Brian Peterson: And something we were pleased with the execution around the hiring of.
Speaker Change #110: Thanks, guys.
Speaker Change #111: Your next question comes from the line of Andrew de Gasperi of BNP Paribas. Your line is open.
Speaker Change #112: Thanks for fitting me in I just had two questions first on the migration of these customers to evolve CRM.
Speaker Change #112: Just wondering can we start seeing an impact to gross margin in other words that royalty that you paid for salesforce for Veeva CRM is that going to improve.
Speaker Change #112: Over the next two years as these customers migrate.
Speaker Change #112: Or should we see this sort of improve later.
Speaker Change #112: The agreement ends.
Speaker Change #112: There is some secular change in gross margins as we look out but these recall are pretty long range migrations theres still a long time to go in the default migration story, both the decisions that customers are making as well as their migration away from <unk>.
We've a CRM on the Salesforce platform towards fault CRM on the vault platform and so that adjustment that shift to margins over time and that improvement will take some time for you to see in the results and really spread out between now and 2030.
Thanks, and then just on the direct to consumer advertising comments you made earlier.
Speaker Change #113: If you can remind us I mean is it cross X. The one product that really is focused on that or is there others within the commercial cloud portfolio and.
Speaker Change #113: Maybe if you could add in as well.
Speaker Change #114: Is that really.
Speaker Change #114: In terms of the strength that you saw this year as this has been a change versus previous year.
Speaker Change #114: Yes classic as the one from David.
What's involved with that.
Direct to consumer advertising.
Speaker Change #114: And the audiences around that now its direct to consumer but it's also to the health care providers as well so it's not across the system not only in direct to consumer.
Speaker Change #114: And <unk> been performing well for us.
Speaker Change #114: But also what's been performing well presses CRM and the add ons the commercial content and also our data products Datacom will be the link and the the campus. So in the commercial area, we had pretty broad based strength.
Speaker Change #115: Great. Thank you.
Okay.
Speaker Change #116: Your next question comes from the line of David Larsen of BTG. Your line is open.
Speaker Change #117: Hi, congratulations on the very good quarter.
Speaker Change #118: The Roes have obviously reported some challenges obviously, you're not a CRO doing the clinical trials, but you do sell into that space can you maybe just talk about you know what.
Speaker Change #119: The difference is there why are they seeing challenges, but you're not and has there been any impact to like things like study training.
Speaker Change #119: Four site connect or any more of those clinical trial related focus.
Alex: Alex Thank you.
Peter Gassner: Peter I'll take that one.
Peter Gassner: Zero.
Peter Gassner: They do make a lot of.
Peter Gassner: Their revenue is associated with particular studies, so as a customer is planning a study.
Peter Gassner: And then they are deciding to go forward and then they're they're bidding out services and the CRO selection wins the services. That's a long that's the law.
Speaker Change #121: Long lag time, you told us zero revenue and they get revenue from that from those studies.
Speaker Change #121: Studies over the next year or two years or even three years.
Speaker Change #121: So.
Speaker Change #121: Say, a year or so ago two years ago, one year ago, there were more customers facing uncertainty and certainly smaller customers facing funding issues and so they were stopping planned trials. They don't usually stop the trials that were in flight.
Speaker Change #121: As they were maybe stopping some planned trials that would have turned into the CRO revenue maybe this year.
So that's maybe my best estimate of what Youre seeing from this heroes.
Now how does that affect the EBIT it doesn't really because most of our revenue is not on a study by study basis heroes.
Speaker Change #121: It's a good channel for us and some of that is study by study for example, the EDC a study by study.
Speaker Change #121: As a nation and trials supply management. This study by study for us in the <unk>, but for example, our <unk> product and our Cts product. Those are long term enterprise license agreements that are not affected by the ups and downs of studying volumes. So we're not.
Speaker Change #121: Not 100% insulated from the ups and downs in studies, but but pretty darn close.
Speaker Change #122: Thanks, very much and then for vault CRM wins I think there were 14 in the quarter that seems like a very good number they were like three and five and five in fiscal <unk> and <unk> 24, and <unk> 25 <unk>.
Speaker Change #123: <unk> it sounds like a lot is that a new sort of steady state and why is there such an uptick thanks.
Speaker Change #124: Yes, so I think it was it might've been 13, if I remember the exact number correctly, but yes.
Speaker Change #124: Yes, we see roughly that amount in the quarter in fact, I think it was 13 year exactly.
Speaker Change #124: Roughly that amount.
Speaker Change #124: Each quarter I think about it as these are companies most likely that are choosing for them.
Speaker Change #124: <unk> system.
Speaker Change #124: Most customers that have products in market already they already have some sort of system. Yes. There are still some of them to win but the vast majority of the 13 are pre commercial companies. They may be getting their field medical teams are getting prepared for their commercial launch.
Speaker Change #124: And that's what we're winning and we're winning virtually all of those those deals that are out there.
Speaker Change #124: <unk>.
Speaker Change #124: That's super exciting for us and a lot of these customers will continue to grow and expand.
Speaker Change #124: They go from their pre commercial stage into something Thats commercial and even larger.
Speaker Change #124: But yes, we're winning our win rate is very very high.
Speaker Change #125: Thanks very much.
Speaker Change #126: Your next question comes from line of Charles <unk> of TD Cowen Your line is open.
Speaker Change #127: Yes, thanks for taking the question.
Speaker Change #128: Wanted to ask about obviously with the Walgreens strategic partnership.
Speaker Change #128: Maybe talk about a little bit more where you think you are in your journey and adding data sources, the compass and data cloud in general and maybe just give us a sense on how you feel sort of your competitive position in the market. There is currently.
I'll take that one Peter.
Speaker Change #129: We're always looking for new data sources.
Speaker Change #129: <unk>.
Speaker Change #129: When you look at that and we're patiently evaluate things and when we see an opportunity to increase our data network.
We'll take that and if it's a reasonable opportunity.
Speaker Change #129: So Walgreens was a great partnership because it could happen and there's more of those we can do in terms of our competitive position with our data network. I think we have the strongest data network in the industry I remember that powers campus and it also powers cross it and it's a patient first David metric. So we're giving.
A lot of data that has to do with patient data not just retail pharmacy data. So I feel really really comfortable with where we're at and the number of data sources, we have and the way we do the matching of the patient data across multiple sources in a very accurate way.
Speaker Change #129: And that leads us to be able to make great products in both comfort measurement and audience, but also in projects, but also in <unk>.
Speaker Change #129: For our patient product.
Speaker Change #129: Scriber product.
Speaker Change #129: Those are pretty disruptive products for the industry. There is a way that they've been doing things for them for multiple years, we're bringing out a bit of a disruptive way to.
Speaker Change #129: Change takes time, but.
Speaker Change #129: Every quarter, we're adding more customers and more customers for compass patient then.
Speaker Change #129: Got a flywheel going there, it's a little flywheel.
Speaker Change #129: Right now, but it spending and I'm very happy with it.
Speaker Change #130: That's helpful and maybe just to follow up on Cross X. Obviously, a key driver of growth in commercial can you give us a sense what the <unk> growth rate has been through the first three quarters relative to the 11% growth for commercial.
Speaker Change #131: Just give us a sense of it as a breakdown or is it in line any color there would be helpful. Thanks.
Speaker Change #131: Yeah.
Brian Peterson: Hey, this is Brian I'll take that one we won't get into specific product level growth rates, but overall pleased with how the cross six team has performed this year and executed against the market opportunity, it's a really strong and healthy growing market and we're continuing to take share in that and something that we hope to continue going forward.
Okay. Thank you.
Speaker Change #132: Your next question comes from the line of Brad Sills of Bank of America. Your line is open.
Brad Sills: Great. Thank you so much.
Brad Sills: Wanted to ask a question on just the general demand environment. It sounds like things are fairly stable that maybe some green shoots that you're seeing in the big pharma.
Speaker Change #134: I think in some of the prepared remarks.
Speaker Change #134: Segment of the commercial business, if im not im sorry in the R&D business, if I'm reading that properly. So are you seeing any kind of indications that things might be turning positive here just in the general spending environment. Thank you.
Speaker Change #135: I think it's.
Speaker Change #136: It's a good environment for Veeva.
Speaker Change #136: Hey, Great I think it's stabilized.
So as we compare to a year ago, it's a bit better but these are these are long term capabilities, especially in the development cloud and with the larger customers long term capabilities that they are putting in so its not going to have dramatic ups and downs, but what I'm encouraged about is the trains. These are big trains and Theyre moving and.
Speaker Change #136: That's what we need to support our 2030 goals and our <unk> and our goal is to add more value to the industry. Overall. So I was encouraged really encouraged with the progress. This last quarter I was encouraged and energized by the individual.
Discussions with the Veeva team was having with senior executives and that I was having with senior executives. So it was a good quarter.
Speaker Change #137: That's great to hear and then anything any update on the re platforming effort.
How do you feel about taking that to some of the larger accounts and getting to the point where you.
Speaker Change #137: You are comfortable doing that and any kind of early indications of how thats going thank you.
Speaker Change #137: Okay.
Speaker Change #137: The re platforming of Veeva CRM onto Volte here.
Speaker Change #138: Very comfortable with that.
Speaker Change #138: We announced two years ago.
Speaker Change #138: Of course, you are not.
Speaker Change #138: Comfortable with anything when you announce it.
Speaker Change #138: Two years ago, you announced the plan in <unk>.
Speaker Change #138: <unk> plan and you have to execute on it so you better be paranoid at that time for.
Speaker Change #138: For obvious reasons and we work with.
Folk.
Speaker Change #138: We have live customers now.
Speaker Change #138: We have so many of the product features that we needed into the platform.
Speaker Change #138: We adapted the existing CRM product.
Where we need it.
Speaker Change #138: Full functionality as compared.
Speaker Change #138: Bach Chairman this core functionality as compared to <unk> <unk>.
Speaker Change #138: And we have these two new applications campaign manager and service Center.
So it's definitely ready and we're really excited P&L, if you would've told me.
Speaker Change #138: Two years ago, if you had said hey, here's where youll be two years from now I would be <unk>.
Speaker Change #138: That in a heartbeat I'd be ecstatic. It means the bears didn't come out data, we got through the forest.
Speaker Change #138: I'm very happy with that.
Peter Gassner: That's great to hear thanks Peter.
Thanks.
Speaker Change #139: Your next question comes from the line of Steven Valiquette of Mizuho Securities. Your line is open.
Speaker Change #140: Great. Thanks, Good afternoon, thanks for taking the questions that's going to be covering the company again.
Speaker Change #140: Just a couple of questions here first on the development cloud on the back of our initiation. We did some channel checks on the industry R&D spending trends et cetera, and one of the questions I wanted to ask on that was actually just touched on on the last question, but maybe just to drill in a little bit deeper I mean, it does look like a clinical trial starts globally are actually growing again.
Now for the last two quarters after declining for a year over year for a couple of years. So I'm just curious as a follow up question around that do you guys actually look carefully data points like that or do you just focus more on your own customer discussions et cetera that you just alluded to as far as your assessment of the marketplace and then the only other quick follow up question really is just at the analyst day.
Speaker Change #140: A few weeks ago.
Speaker Change #140: The way you guys wrote down your total revenue base by customer type was just a little bit different this year than it was last year. So I'm, hoping you can just remind us again what percent of your total book of business relates to CRO customers just from a percentage of revenue standpoint, I recall with no more than 5% last year, but just want to confirm if that was still the case currently thanks.
Speaker Change #141: Yeah, Hey, Steven Let me take the first question and I'll turn it over to Brian to talk a little bit about CRE CLO revenue what percent that is.
Speaker Change #142: Sure I'll start yeah, we certainly pay attention a lot. It's one one metric of many but I just talking to you from over indexing on any single metric. We certainly don't do that you heard Peter talk a little bit about how we're insulated from some of the near term changes in clinical trial volumes. As an example, so we don't over index. There obviously over the long term that matters in the near.
Speaker Change #142: Term, it's not so important because most of our deals and our customers' buying patterns are more for enterprise capabilities than they are for clinical trial starts. So yes, we pay attention, but not not not a single metric is the most important.
Speaker Change #143: I'll turn it over to Brian to talk a little about.
Brian Peterson: Answering your second question on <unk> revenue.
Brian Peterson: Yes, so on the second part of your question around CRM revenue, specifically at Investor Day, as you saw we embedded the Sierra channel within.
Brian Peterson: Top 20 enterprise and SMB.
Brian Peterson: So it's a little bit harder for the year over year comparison, but the last time, we disclosed that it was about 5% of revenue and it has not materially changed from that.
Speaker Change #144: Got it okay alright, thank you.
Speaker Change #145: This concludes our Q&A session.
I will turn the conference back over to Veeva CEO, Peter Gassner for closing remarks.
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 you may now disconnect.
Speaker Change #146: Please wait the conference will begin shortly.
Speaker Change #145: Yes.
Speaker Change #145: [music].
Speaker Change #145: Okay.
Speaker Change #145: Yes.
Speaker Change #145: [music].
Speaker Change #145: Yes.
Speaker Change #145: Yes.
Speaker Change #145: [music].
Yes.
Speaker Change #145: [music].