Q3 2026 Veeva Systems Inc Earnings Call
Speaker #1: All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session.
Speaker #1: If you would like to ask a question at that time, please press star, the number one on your telephone keypad. If you would like to withdraw your question at any time, simply press star, one again.
Speaker #1: I would now like to turn the call over to Gunnar Hansen, Head of Investor Relations.
Speaker #1: go ahead. Good
Speaker #2: Good afternoon. Welcome to Veeva's fiscal 2026 third quarter earnings conference call for the quarter ended October 31, 2025. As a reminder, we posted prepared remarks on Veeva's Investor Relations website just after 1:00 PM Pacific today.
Speaker #2: 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 Shawa, EVP Strategy; and Brian Van Wagner, our Chief Financial Officer.
Speaker #2: 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.
Speaker #2: These forward-looking statements will be based on our current views and expectations and our subject to various risks and uncertainties. Our actual results may differ materially.
Speaker #2: Please refer to the risk listed in our earnings release and the risk factors included in our most recent filing on Form 10Q. Forward-looking statements made during the call are being made as of today, November 20th, 2025.
Speaker #2: 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.
Speaker #2: Veeva disclaimed 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 so in a public forum.
Speaker #2: 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 #2: With that, thank you for joining us, and I'll turn the call over to Peter.
Speaker #3: Thank you, Gunnar, and welcome everyone to the call. We had an excellent Q3 with strength across the business and results above our guidance. Total revenue in the quarter was $811, and non-GAAP operating income was $365 million.
Speaker #3: Veeva AI is a major initiative for Veeva, and we're making excellent progress. We think Veeva AI can be significant for customers, the industry, and Veeva.
Speaker #3: We're also executing well in delivering significant innovation across all product areas, including Vault CRM, Cross-X, clinical, and safety. We'll now open up the call to your
Speaker #1: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star then the number one on your telephone keypad to raise your hand and enter the queue.
Speaker #1: If you would like to withdraw your question at any time, simply press star, one again. Your first question comes from the line of Sakat Kalia with Barclays.
Speaker #1: Your line is open.
Speaker #4: Okay,
Speaker #4: Great. Hey guys, thanks for taking my questions here, and I appreciate the prepared remarks that were posted. Brian, maybe I’d love to start with you and just hit one of the points in the prepared remarks kind of head-on, where I think we said that 14 of the top 20 customers are expected to migrate to Vault CRM.
Speaker #4: And, and so, and so six are potentially opting for other solutions. Now, there's clearly the potential to, for, for win-back as, as we said, but maybe, maybe the first question is, how do you sort of think about the size of, of the revenue that might be at risk from those six customers on the CRM side?
Speaker #4: And how do you think about the timeline of that, of that potentially, you know, kind of transitioning?
Speaker #5: Hey, hey, Sakat. I'm not going to size it, and there is the potential for win-back, as you said. But maybe taking a step back.
Speaker #5: CRM accounts for about 20% of total revenue today, down from about 25% two years ago. This decline is because other product areas have been growing. In the shorter term, we understand that these are multi-year projects that will take a long time to execute.
Speaker #5: So, no impact is expected this year, and likely nothing material for next year either. Longer term, we don't expect any impact on our 2030 goals.
Speaker #5: It's a diverse business, and that means there's a lot of paths to get there, and we're, we're still on track.
Speaker #4: Got it. Got it. That's super helpful, actually. Peter, maybe, maybe for you, on the other side of the business, I'd love to talk about R&D a little bit with you.
Speaker #4: Of course, one of your competitors talk, talked about, winning back a top 20 on, on the EDC side. I was wondering just since we're on, we're, we're all together, can you just talk about that and, and maybe just comment on kind of the, the state of the union in that EDC market in terms of the competitive landscape and, and, and your pipeline for, for further market share gains?
Speaker #3: Yeah, we did have one customer that said they were going to go back to their previous provider. Now, they're still a broad clinical customer for us, and even in the EDC area.
Speaker #3: So we'll just have to see how that goes. That's not a trend I see. I think we're still trending very well in clinical, and we have a number of opportunities in the pipeline for EDC, both with large sponsors and with CROs because most customers are looking for an integrated solution across clinical operations and clinical data because it just makes sense. That's how you drive efficiency, and efficiency is the name of the game.
Speaker #3: This particular customer has more of an integrated architecture of their own. For example, they have a custom CTMS solution and a variety of other things.
Speaker #3: So, at this point, it was sort of a more a decision that was, you know, something that we don't see repeating in other places.
Speaker #3: Now, then also the thing that I'm very excited about is our innovation in clinical, our next-generation innovation in clinical that we have in the kitchen.
Speaker #3: That will help the life sciences companies bridge between sponsors and all the way out into clinical research sites, and also really help in patient recruiting over time.
Speaker #3: So the future is very bright in clinical. This one, you know, honestly, is a bit of an aberration.
Speaker #1: Your next question comes from the line of Joe V. Vrewink with Baird. Your line is now open.
Speaker #1: open. Hi,
Speaker #6: great. Thanks for taking my questions. I, I wanted to dig a bit more into the, CRM topic. you know, obviously, attrition carries an implication on revenue over time, but I, I sit here today and I think commercial subscription revenues have been raised by about $60 million year to date, and then every Vault CRM customer you're retaining, you know, now has the opportunity to add service center and marketing automation and Veeva AI, so how should we think about all of that netting together?
Speaker #6: And I mean, is it the case where ultimately you're netting out and there's an increment here? I think the market is focusing on kind of a lost value to Sakat's question, but how to think about the offsets and the equation over the next five years?
Speaker #2: So, you're, you're absolutely right. I think there, there's been a lot of focus on, you know, what there is to lose. I think there's a lot of potential in what we've created, the innovation that we've delivered in some of the areas that you mentioned, like, service center and, and marketing and, patient CRM is some of the new products.
Speaker #2: but then also in, in AI. so, yes, each customer that, that we retain, we have the, the potential to sell a lot of these products and, and new innovations, and I, I expect that over time, those customers will adopt more broadly the CRM suite, all the add-ons that are part of that.
Speaker #2: we're, we're starting to see some of that happen already with some of the customers who've committed to, to Vault CRM starting to add additional products on.
Speaker #2: so that, that's, that's really good. I think we'll also have the potential to win some of these customers back. We've talked about that in, in detail.
Speaker #2: So I, yeah, I feel good about the upside, as much as there is some potential attrition from some of the customers that we've, that decided to do something different.
Speaker #3: Yeah. And this is Peter. I'll just add that we've focused on the top 20 because that's how we do some things when we talk to the financial community. But it is important to remember we have about 400 customers.
Speaker #3: so it's pretty distributed in, in what we do. So our, our CRM business is very healthy and our, our win rate and our conversion rate is very, very strong and stronger in the, in the smaller market because not the smaller customers, they don't, they don't have this appetite for a custom build.
Speaker #3: It's just not the risk they want to take or what they want to do, and they get a lot of other parts of Veeva. Also, just on a side note, while we did have 20 of the top 20 customers, 20 of the top 20 were our customers in some fashion for CRM; two of them were mainly IQVIA customers.
Speaker #3: So, you know, that's, it's not to say, you know, that we're not gonna gain some new customers here, right? And that can be significant as well.
Speaker #3: Bottom line is what you should take away is, CRM business is, is healthy and it is an important part of Veeva, but it's, it's not the major it's not the largest part of Veeva anymore.
Speaker #3: That's, that's for
Speaker #3: sure. Okay.
Speaker #6: That's great, Colin. Thank you both. Maybe one on Veeva AI. You know, you had a few summits within the last quarter. I think you've also been making the rounds on forums, gathering feedback from your customers.
Speaker #6: I guess what stood out to you both in terms of, I'll say, positive reception, but then also maybe any pushback or, or things where you walk away and you have more, you know, you need to work on, you know, coming out of this initial experience with AI?
Speaker #2: Well, I, I think our customers are, you know, they're looking for practical solutions now, right? They're looking for solutions that can add value, you know, rapidly sort of getting out of this experimentation phase.
Speaker #2: And they want to use partners where partners can help them. So, they want to use Microsoft where Microsoft can help them. They want to use Anthropic where Anthropic can help them.
Speaker #2: And they know where Veeva can help them: in helping to automate industry-specific applications with AI. That deep domain knowledge and the business process consulting around it.
Speaker #2: So how do you enable insight generation in CRM through your field team by the use of compliant free text? Okay. That's a, that's a very specific thing.
Speaker #2: How do you dramatically increase the efficiency of safety case processing for adverse events? Okay. That's a very specific question. So that's what they're looking to us for, and that's what we deliver.
Speaker #2: That's what we specialize in. In terms of what they would like differently, you know, just like everybody else, can this be robust and promo proven and working tomorrow?
Speaker #2: You know, for all cases. And so they just want us to go faster, but there's really rampant alignment on directions. Veeva is setting out to do exactly what they want Veeva to do; we just have to get there.
Speaker #2: And the customers also have to be able to adopt and do that change management work, which, that's not easy either. That’s not going to happen overnight.
Speaker #2: That's one of our advantages: we have a great business consulting team, so we have that integrated together. Our product team, our selling team, and our business consulting team work together to deliver AI value.
Speaker #2: That's going to be more holistic than others, and that's how you're going to have to do it in industry-specific solutions. The customers are not going to want to knit together consulting over here and software over there and AI over here.
Speaker #2: They're not, they're not gonna wanna do that over the long term.
Speaker #1: Your next question comes from a line of Brian Peterson with Raymond James. Your line is.
Speaker #1: open. thanks
Speaker #4: for taking the question. And, and Peter, maybe a follow-up to, to your last answer, but as we think about AI and how that will impact your products going forward, do you, do you think that we'll see more of a monetization in terms of commercial where we've already kinda seen some aspects of that today, maybe more broadly in software, but, but I'm curious, what do you think that opportunity could be in R&D where there seems to be more of an opportunity of innovation?
Speaker #4: Any, any color on, like, how to think about that opportunity from AI?
Speaker #2: I think it'll be not exactly, but broadly, you know, even across the board. So, with some areas, a bit more than a bit more than others, safety, I think it's a, a big opportunity to, to reduce the amount of labor needed also in certain areas of the clinical.
Speaker #2: In, in commercial, it's more about insight generation and, and market advantage, and in terms of, you know, faster insights. In regulatory, it's again, it's about speed.
Speaker #2: So the value is probably similar across all areas, but the way it's going to be implemented is different. Some are going to focus on insight and agility.
Speaker #2: Some is gonna, focus on a humans don't need to do that particular work
Speaker #2: anymore. Got
Speaker #4: Got it. And maybe Paul, a follow-up for you. I think there's been some debate broadly on AI and how that may impact sales reps or, like, how efficient sales reps could be.
Speaker #4: Like, as you talk to some of your customers, how are they thinking about the size of their sales force with the implementation of AI?
Speaker #4: Like, w-w-what do you think that looks like going forward? Thanks.
Speaker #4: guys. Yeah.
Speaker #3: I mean, we have seen some of the reductions that have played out over the past couple of years that we have talked about.
Speaker #3: We've kind of predicted roughly about 10%. It ended up being a little bit less than that. The way to think about it is the customers that they're calling on, the HCPs, the number of doctors hasn't fundamentally changed.
Speaker #3: You still need people. You need a base level of sales reps to build those relationships, cover those doctors, and deliver the information and service that they need.
Speaker #3: So I think the industry is cautious and thoughtful about making significant changes or adjustments. So I think, there is put a lot of potential for productivity gains and effectiveness gains.
Speaker #3: But I think it will likely be stable, at least for the next couple of years. We're not hearing of any AI-related reductions.
Speaker #3: It's more related to specific, you know, ramping up for launches or ramping down because of a pipeline challenge. But I think that's the normal course of.
Speaker #3: business. Your next question comes from a line
Speaker #1: of Alexey Gogolev with JP Morgan. Your line is open.
Speaker #5: Hello, everyone. thank you for letting me ask a question. Peter, I, I have the, my first question, maybe appreciate the comments, you made and prepared remarks that you have not observed material change to customer buying behaviors, but could you double-click on the demand environment and, the financial health of the pharma and market?
Speaker #3: Yeah. So, the industry overall is pretty healthy. You know, we've had a bit of chaos in the political environment with tariffs and other things, and certainly conflicts, but the industry has gotten, I guess, used to that.
Speaker #3: And so I, I, I'm seeing no changes in the end market. The science is still rapidly evolving, right? There are many, many uncured diseases that are seriously affecting people's quality of life.
Speaker #3: You know, the death of a child or a young parent, right? That happens. And the industry's working hard to be able to cure some of those things.
Speaker #3: And there's demand for that, so I'm pretty optimistic about the industry overall. It's pretty steady, right?
Speaker #3: now. Thank you, Peter.
Speaker #5: And a very quick follow-up on the comments first. Congrats on another commitment for WorldCRM. So, you suggested that you're looking to win another four out of the remaining six undecided.
Speaker #5: Do you have any verbal indications from those clients?
Speaker #5: already? No.
Speaker #2: I, I, you know, I wouldn't get we'll, we'll probably let you know when, when we've been notified. We've been we'll, we'll let you know in general, but we won't get into the, you know, fine-tune of that.
Speaker #2: Okay. You know, we have some things that we think, and we have some things that we think we think, but, you know, we, we won't get any, more fine-grained than that.
Speaker #2: Okay. You know, we have some things that we think, and we have some things that we think we think, but, you know, we, we won't get any, more fine-grained than
Speaker #1: Your next question comes from a line of Ken Wong with Oppenheimer.
Speaker #1: Thank you for taking my question.
Speaker #6: This first one is for Paul. Cross-ex again called out as a pocket of strength. Is there any way to help put a little context around it?
Speaker #6: Was that consistent with Q2? Is it starting to normalize or level off? H-how should we think about, you know, the kind of the cross-ex.
Speaker #6: dynamic? Yeah.
Speaker #3: It was in line with our expectations. You've seen nice outperformance of CrossEx in the first couple of quarters of the year, and we expected that to continue to play out.
Speaker #3: The measurement business is very stable, and we have continued to perform well there. The audiences segment, which can be a little more variable, has also delivered really nicely.
Speaker #3: So, yeah, CrossEx continues to be a nice growth driver, and we expect it to be that. Although there may be some variability, we expect that to be a nice driver over the next several years.
Speaker #6: Perfect. And then Brian, 115 customers live on Vault CRM, including, you know, I think some top 20s, kind of in the motions. How should we think about when you might see some gross margin tailwind as you start to work off of the Salesforce royalties?
Speaker #6: What's the right timeframe for something like that?
Speaker #3: Yeah. There are some puts and takes in the short to midterm there, Ken. So, you know, recall that in the next couple of years, as we have other customers going through their migration, there are some customers where we have both the Veeva CRM on Salesforce royalties and the AWS hosting costs.
Speaker #3: So, we'll see some customers rolling off, some that have a mix. So, I would say, it's a modest headwind, actually, over the next year or two.
Speaker #3: but, but pretty immaterial in the grand scheme of things. You can see that the, the gross margins on subscriptions were, essentially, stable, slightly up year over year.
Speaker #3: So it's not a significant impact over the next couple of years, and then it starts to roll off a few years from now.
Speaker #1: Your next question comes from Stan Bernstein with Wells Fargo Securities, LLC. Your line is open.
Speaker #1: Your next question comes from Stan Bernstein with Wells Fargo Securities, LLC. Your line is open. Yes, hi.
Speaker #7: Thanks for taking my questions. Well, first, a follow-up on cross-ex. I'm just curious, given the regulatory focus on direct-to-consumer advertising, have you seen any changes in where audience targeting is happening on the platforms?
Speaker #7: I-is it changing, at all?
Speaker #3: I would say, and I can take, yeah, I'll take that one, Paul. I think the thing that—and I was listening about cross-ex—thing to know is that digital overall, digital marketing spending is going up, both in consumer and in HCP.
Speaker #3: It's because there are better digital avenues to reach people, and you're seeing that with things like OpenEvidence and Doximity's new AI offering, right? So there's increasing effective use of that channel. And then with CrossEx specifically, what's going on is, as that channel gets more important, measurement, audiences, and optimization get more and more important. That's one thing.
Speaker #3: And cross-ex is becoming more of a standard. So there's really a compounding effect of the excellence that we're developing in cross-ex. You know, cross-ex will be a, you know, that's gonna be a growing business for us.
Speaker #3: You know, you should think of that as a well-growing business for the foreseeable future. You know, three, four, five years, type of thing. This is we've put some serious innovation in cross-ex over the past years.
Speaker #3: we've invested heavily in the data network because that's a data network that we share with, with, with Compass. Compass is cross-ex share that data network.
Speaker #3: So it's, digital's becoming more important, not less important. You know, that you will see maybe regulations around consumer TV ads, but overall, digital is growing.
Speaker #3: It's a very effective means to meet people, and you need to measure and optimize that. And that's what's cross-ex.
Speaker #3: does. Very helpful.
Speaker #7: Thank you. And maybe a quick follow-up on your sales pipeline. I'm curious about a couple of comments here. First, I think historically, Peter, you've called out safety and regulatory as, you know, potentially having a little bit less of a predictable sales cycle, maybe a bit longer than usual.
Speaker #7: Any changes there from customers in the sales pipeline on those products? And then, maybe related to this, I'm just curious: are you seeing anything coming from the IQVIA partnership, any clients potentially coming through that pipeline?
Speaker #7: Thanks.
Speaker #3: yeah. For the safety and regulatory, they are, especially in the large companies, that those are usually long sales cycles, customers know they're making 10-year decisions plus.
Speaker #3: So these are very serious ones. So I don't see any change there. We have a lot of momentum in the safety area.
Speaker #3: That's one thing I would say. And then the AI and safety can kind of be a game changer as well, so that might drive a little faster adoption there.
Speaker #3: And in terms of Reg, IQVIA, it's been great having that partnership. So, the revenue impact takes a while to see on these partnerships, but the positive customer experience is really heartening.
Speaker #3: I think it's, you know, giving IQVIA the comer a little spring in their step. This partnership with Veeva is certainly giving Veeva a spring in our step as well.
Speaker #3: It's a very positive, macro-level trend for the business, especially on the commercial side. The two big macro-level positive trends for us on the commercial side are three.
Speaker #3: As this increasing investment in digital and AI continues, you will see CrossEx taking advantage of that, and you'll see other things from Veeva over time, where a lot of our revenue and our future growth will come as it relates to digital.
Speaker #3: The IQVIA partnership making the interop, more easier. That'll help our data business. That'll help our software business. And then the freedom that we're getting, to develop our solutions without having to worry about the Salesforce platform and the li and the limitations.
Speaker #3: All of these things are really going to be unleashing us on the commercial side. And then for IQVIA, on the clinical side, that's been great too.
Speaker #3: Just more customer confidence in Veeva and IQVIA can bring solutions to our joint customers.
Speaker #1: Your next question comes from the line of Dylan Becker with William Blair. Your line is open.
Speaker #8: Hey, gentlemen. I appreciate it. Maybe, Peter, starting with you too, if we kind of think about the service strength you hinted at this, as it relates to business consulting, but maybe the need for change management that you're seeing in kind of the strong services outlook. How that, or how you maybe think about the implications of that maybe driving more kind of wall-to-wall, broad-based platform adoption in the future, the role that business consulting can play in driving kind of the broader platform momentum over time, whether that's commercial or R&D.
Speaker #3: Yeah. If you look at Viva at a very high level, you know, where we started, pharmaceutical CRM, built on Salesforce.com, myself and my neighbor in our front yard, you know, my ne you know, in our front yards, which we joined.
Speaker #3: So there's two people and one product, right? Now we have 7,000 people in a lot of products. The way we have software that basically reports directly to me.
Speaker #3: We have the data business that reports to me, and we have a consulting business. That consulting business, Remo, reports to me. So that's how we're building the industry cloud for life sciences.
Speaker #3: There these three things working together, which is a lot of skills we have and capabilities we have to have in Viva. We have to be an excellent consulting company.
Speaker #3: We have to be an excellent data company. We have to be an excellent software company. And we have to manage the interplay of those three things.
Speaker #3: But that's what our customers want. They would rather have Veeva be the general contractor and fit this together. Sometimes I would talk to customers, and I would say, "Well, if Veeva has 100 things, the nice thing is you might buy one thing today, but you can be assured that that one thing five years from now will fit into all the other Veeva things that you have." Versus if you buy 100 things from 100 different vendors, those 100 things are moving in 100 different directions, and you'll be replacing pieces and parts forever.
Speaker #3: So that's what we're bringing: a more comprehensive solution across data software and the consulting, the operating models, so that it fits together for life sciences.
Speaker #3: I guess that's why sometimes people underestimate what we'll end up doing for life sciences. It's a pretty significant thing, and it's not anything that any other vendor has actually ever tried to do for an industry so far.
Speaker #3: So that's why we're pretty excited about what we're doing.
Speaker #8: Certainly. No, and that makes sense. And maybe you just kind of teased this, and so I'd be remiss if I didn't kind of double-click on the momentum in safety.
Speaker #8: I know you. You called out another top 20 customer, and I think another top 20 go-live there, alongside the fact that it's maybe the opportunity that's most ripe for labor disruption.
Speaker #8: I guess I know these are still long-term decisions, but how you think about kind of the innovation you're delivering to the safety space and how that's met with receptivity, from a, a decisioning perspective as you have kind of more of these proof points and validation points at market.
Speaker #8: Thank you.
Speaker #3: I, I, I think safety people, people are really excited about our architecture and how we're doing things. Not only the core safety processing, but the AI that sits on top of that and the analytics i that go along with it, the analytical application.
Speaker #3: So, people think that's good. People are very hesitant to change their safety systems. It's such a core system, and it's been so complex. So, we're still in the early customer phase of that.
Speaker #3: I'm hopeful that, you know, we'll get into the middle majority phase here in a couple of years, and then we'll have the late adopter phase.
Speaker #3: I, you know, I'm just very optimistic on it, but gosh, people don't change these things very, very fast. They just don't. Because there's it's such a critical area, and there's not a lot of push from above the safety teams.
Speaker #3: Because it's such a critical area, and they've got it. So, you know, we just have to wait for the right time, and then every project has to be successful in that.
Speaker #3: That's really what we're focused on. It's probably surprising it would be surprising to many people how complex a global drug safety system is when you're coordinating with all the health authorities around the world, all the constantly changing regulations.
Speaker #3: I mean, just to give you an example, there's a lot of special functionality for vaccines that you need, and over-the-counter medicines. You know, each therapeutic area has its own things, and each country has its own things.
Speaker #3: So, it's complex. We've spent, I guess it's getting close to, what, eight years or so building this thing now. So, that's a real competitive.
Speaker #3: moat. Your next question comes
Speaker #1: From Tyler Radke with City. Your line is open.
Speaker #9: Yeah. Thank you very much for, taking the question. Pe-Peter, just going back to the, top CRM, top 20 customers there, you referenced that this was like kind of unique customer, kind of one-off examples.
Speaker #9: I was wondering if you could elaborate on this. Is this something specific to their negotiations or the discounts they'd be getting with another vendor?
Speaker #9: if you could just sort of talk through that and, and then maybe the timeframe on when you think you could win them
Speaker #9: back. Yeah.
Speaker #3: I think, you know, when we say customers, there are specific situations. In a very large company, there will be individual people, and there'll be dynamics between people. And there will be how those people feel and where their cultural alignment is.
Speaker #3: You know, sometimes logic is only part of it. So, that's what I was referring to. There's no particular pattern there; it's just customer-specific, you know, humans, right?
Speaker #3: And some might just say, "I just want to try something new," right? "I just want to try something new." We may think that's logical or not logical, right?
Speaker #3: Some people want to go with something that's proven, and some people just want to try something new. So you've got all those kinds of dynamics going on.
Speaker #3: And then in terms of the win-backs, you know, you never know when that happens. Usually, it comes with, honestly, executive turnover, right? There's an executive turnover, and somebody has a different idea.
Speaker #3: Also, it can come in sometimes, you know, vendor not delivering. You know, the current solution not delivering or project failure, and then it can come in a hurry.
Speaker #3: It might come in one year. It might come in ten years, you know? In general, these will be more of a custom-build type of thing with Salesforce, and those, you know, on the outside, those could have a ten-year lifespan, but they might only have a one-year lifespan.
Speaker #3: So, I just have to see how that goes. I do have a lot of confidence that the custom building really hasn't proven to be the way forward for most things over the years, and so that's what gives me a lot of comfort.
Speaker #3: But again, I don't want to over-index on that. We're just talking about these top 20s for transparency. Our CRM business is very healthy. You know, we're winning some top 20s that we didn't have.
Speaker #3: We're, we're going to lose some that we had, and we may win them back. But overall, you know, the business is, is.
Speaker #3: good. Yeah.
Speaker #9: And for sure, over 100 customers live is a good proof point. Maybe, Brian, just on the margin side, it looks like hiring ticked up again a little bit this quarter relative to kind of the trends we saw last year.
Speaker #9: You know, help us just understand, you know, where those heads are focused, and then anything you would call out in terms of how to think about margin expansion into next year.
Speaker #1: Yeah, absolutely. So the two main areas that we're hiring in are our product and then in our services team. You heard us speak to some of the services hiring coming out of Q2 with the large class for our college development program.
Speaker #1: so we're continuing to invest in the services business, both core professional services and business consulting, continuing to invest in, in the product. and there were some impact on, on the services margin in particular in this quarter, but, we're really pleased with the overall performance of the business, and as those, you know, new hires start to ramp and, and build a project, that, that will lend itself down over time.
Speaker #1: Your next question comes from the line of Charles Reed with TD Cowen.
Speaker #10: Yeah, thanks for taking the question. Peter, obviously, you know, continuing to get these wins in Development Cloud, with starting stuff and study training.
Speaker #10: For these clients, you know, I guess in Development Cloud, among the top 20 by farmer, what's the average number of Veeva Development Cloud products do they have on average?
Speaker #10: And, and where would you see is the tipping point? Because if I recall a couple of years back, you know, there was an announcement that Merck was going to move to sort of a full Veeva environment over time.
Speaker #10: Just, just trying to get a sense of what you would consider someone being sort of a full Viva on the development on the R&D side.
Speaker #10: Like, what does that look like?
Speaker #10: like? Yeah.
Speaker #3: And as it relates to Merck, there was a strategic partnership we announced. There was not a not really that they would use Viva everywhere, but a strategic partnership that we that we announced.
Speaker #3: Now, in terms of development cloud, I, you know, I don't have any particular figures to share with you in terms of percentages or number of applications.
Speaker #3: It depends on the area. So in the ETMF area, we actually have 20 out of the top 20 now that have selected us. That's really important.
Speaker #3: We can use that standardization to drive AI and industry standardization and help the industry and help the regulators. That's, you know, what's going on there.
Speaker #3: And then newer areas such as RTSM for the randomization and trial supply management. We don't have any top 20 that has selected us for an enterprise standard yet or an ECOA, you know?
Speaker #3: Nobody yet because those are those are quite, new and safety just a few. So it just depends. we have a lot of our you know, we have definitely more opportunities to, to go in development cloud than, than we've consumed now.
Speaker #3: So surprisingly, it's still in the early days of development cloud for two reasons. One is these are super important systems that take time.
Speaker #3: You can't change them out all at once. You put them in most of them, and you keep them for 15 years. The other is we're adding more applications.
Speaker #3: So RTSM is new. ECOA is new. The whole area of quality control, LIMS, is brand new. We just had our first early adopter in the top 20 for two manufacturing sites.
Speaker #3: So, it's a lot. It's a lot more to do, I guess. It's still early, surprisingly. These things take.
Speaker #3: time. That, that's helpful.
Speaker #10: Thank you. And maybe just to follow up there, someone had asked earlier about, you know, one of your competitors kind of winning back an EDC client. But, you know, what does the overall competitive landscape look like currently?
Speaker #10: 'Cause it seems like one of your other main competitors in development and R&D, you know, seems to be focused a little bit elsewhere in healthcare. Just curious how you're seeing the overall competitive landscape kind of shaping up currently.
Speaker #10: Thanks.
Speaker #3: Yeah. We certainly have competitors in each area. You know, there are competitors specific to randomization and trial supply management, and there are competitors specific to regulatory and clinical operations and EDC.
Speaker #3: But, but we don't really have a competitor that's trying to do an overall development cloud like we're doing. So I feel like we just have to execute really well, concentrate on excellence in each area, focus on our integrations, and leverage our account partnership.
Speaker #3: So we have to compete with ourselves to push ourselves for excellence, for humbleness, for great hiring. The advantage that we have is we have a core platform that’s used across all these applications.
Speaker #3: So we can really invest in the platform, and there's commonality in the platform. We have first mover advantage. We had this idea back in really 2012, and, you know, we have a lot of core capabilities around it.
Speaker #3: If you're a competitor, as we are, we have to execute and continue to improve and stay.
Speaker #3: Humble. Ladies and gentlemen, due to time constraints...
Speaker #1: Allotted for questions, we please ask you to limit yourself to one question. Thank you. Your next question comes from the line of Craig Hissenbach with Morgan Stanley.
Speaker #1: Your line is open.
Speaker #2: Yes, thank you. On CrossSix, before the acceleration this year, I think the business has grown roughly in the low to mid-teens. You talked about some of the drivers that are driving growth above that.
Speaker #2: Do you think in the next couple of years it reverts back to kind of that mid-teens level, or do you think some of these drivers can kind of sustain stronger growth in the next few years?
Speaker #1: Hey, Craig. This is Brian. Overall, we are really pleased with the progress of CrossSix. Growth has been very healthy there for the full year to date.
Speaker #1: It's a large market with a long runway for growth, both in the measurement business and in the audiences business. We're not going to break out a specific long-range growth rate for each product area, but we think there's still plenty of room for that business to grow, and it's executing very well right now.
Speaker #1: Your next question comes from the line of David Hines with Canaccord Genuity. Your line is open.
Speaker #4: Hey, guys. Thank you for taking the question. Paul, maybe you could talk a little bit about how you're balancing go-to-market initiatives on the commercial side of the business, and maybe how you see it evolving over time.
Speaker #4: I mean, obviously, CrossSix is doing really well. I have to think CRM migration is kind of front and center of your mind right now, especially as kind of these last top 20s make their decision.
Speaker #4: You've tempered expectations around cross-sell during this migration period, but you have a ton of new products, right? Service Center, Campaign Manager, Patient CRM.
Speaker #4: Like, when do you lean in on those products a little bit more with the top 20s, and just maybe talk about kind of how you balance all this and see it evolving over time?
Speaker #3: Yeah, David, it's a good question. And maybe at a higher level, we have dedicated teams in each of these areas—dedicated strategy teams and product teams—and they're all focused on their different areas, so they're able to move the product forward and advance customer discussions.
Speaker #3: In some cases, there are dedicated sales teams. So, it's not, you know, we don't necessarily have to just focus on one thing and not focus on something else.
Speaker #3: We're able to kind of focus in multiple areas. but you're, you're correct, right? There's a this the, the migration thing is, the transition of customers over to Vault CRM.
Speaker #3: That is creating, in some cases, slowing things down. In other cases, it's actually creating opportunities for us. We're seeing, as customers are making that decision, they're looking at their data, and maybe it's time that we switch out our customer reference data because Veeva has better data in this area or their master data management with the network.
Speaker #3: And, and Nitro are now coming becoming opportunities. So as they're going through the migration, they're thinking about they're thinking more broadly. because they're trying to get to broader efficiencies and they're able to get there as they adopt more pieces of commercial cloud.
Speaker #3: So it's, we're able to focus in multiple areas. It does create openings for us, to continue to ex-expand in each of these areas. And, it's, you know, as you, you've heard, there's kind of some stable businesses and there's other areas that are that are growing a little bit faster.
Speaker #3: We're going to continue to drive and push in each area because we can add a lot of value when they put all these pieces together.
Speaker #3: together. Your next
Speaker #1: Question comes from the line of Andrew Degasperi with BNP Paribas. Your line is open.
Speaker #5: Thanks for taking my question. I wanted to ask the top 20 CRM questions in a different way, in particular how it relates to your 2030 targets.
Speaker #5: I know you mentioned that it doesn't impact that, your capability to reach it. And I was just wondering why is that the case?
Speaker #5: Is it because you either, the mi, the sort of lower expectations is mostly tied to a very small number of clients that have decided to go a different way, like one or two?
Speaker #5: Or is it a factor that you have these other Vault CRM customers that are smaller? The 100-plus that you've listed could also be contributing and offsetting some of that potential weakness you would see in that business?
Speaker #1: Hey, Andrew. This is Brian. I'll take this one. So wh-when you when you step back, there, there are a few things. Some, some of what you touched on.
Speaker #1: One is that the top 20 is certainly not the entirety of the CRM market. And you heard Peter speak to the fact that that overall business is very healthy.
Speaker #1: We've got enterprise customers and SMB customers. We still expect to win the vast majority of customers or to retain that. We will have the opportunity to win some of these customers back, and we think that's likely to come through.
Speaker #1: And then the third and probably the biggest one is that this is a diverse business. It's not only a CRM business. The CRM suite is about 20% of total revenue today.
Speaker #1: So the other 80% is continuing to perform really well. It's growing well. And there were always multiple paths to, to 2030. And so when we step back and look at the progress that we're making, we feel, you know, very good about the progress and how we're tracking out to the 2030 goals.
Speaker #5: Yeah, the way to think about it is the commercial is the part of the business, right? Our total addressable market and clinicals are even a bit bigger than that.
Speaker #5: And then there's quality, safety, manufacturing, and other things. And then, inside of the commercial, the CRM suite is a part of that.
Speaker #5: But it's certainly not the majority of it; it's the minority of the commercial area. And we have to see how things, you know, play out.
Speaker #5: It's not unforeseen that CrossSix can be as big as the whole CRM suite by 2030 as well, right? That's, you know, it's a good business, the CRM, and it's a strong business for us. But the CRM suite itself, and the number of field reps and things, that's not a growing business.
Speaker #5: That's kind of a stable, stable business. So that's where Veeva started, but it's not our determinant at all for 2030.
Speaker #1: Your next question comes from Jeff Garrow with Stevens. Your line is open.
Speaker #1: open. Yeah.
Speaker #6: Good afternoon. Thanks for taking the question. I want to ask about the comments in the prepared remarks on the quality cloud opportunity expanding. Is that expansion by reaching new customer types, or is it more of a reference to product expansion?
Speaker #6: And is there any further remarks on specific drivers of your success in quality with labs in CDMOs? That will be helpful. Thanks.
Speaker #5: Yeah, I'll take that one. This is Peter. It's, yeah, quality is one of these areas where we can reach a lot of customers, a lot of different customers.
Speaker #5: CDMOs, you know, other regulated, highly regulated services, industries that are close to life sciences. Our success has been we have three main core products, all on a common platform.
Speaker #5: We have the quality documentation, which is used mainly in pharmaceutical manufacturing for engineering in Europe, standard operating procedures, and your changes around that, your quality management system for, you know, deviations and CAPAs, etc.
Speaker #5: And your GXP training, your validated training environment. So we’re the only vendor that has all three all on a common platform. So that’s what’s really driving a lot of the growth in addition.
Speaker #5: We have some new products there, batch release, and computer systems validation. And we're very excited about LIMS. We announced that early, early customer in LIMS, the Laboratory Information Management System.
Speaker #5: That's used to test the medicine as it's being manufactured. And that's a growth area because there are new manufacturing plants being built.
Speaker #5: Because of a variety of reasons, le-let alone, you know, political reasons, etc. So new manufacturing plants being built. And the medicine and the and the manufacturing of these medicines is becoming more expensive and, and more complicated.
Speaker #5: And there, there are two main solutions used out in that area. And they're both on-premise hosted solutions that are not modern. Critically important, but not modern.
Speaker #5: So we have a real greenfield opportunity there. If you look at life sciences, they will generally research and find a molecule.
Speaker #5: They will run clinical trials. They will commercialize the product. But along the way, before they put that medicine even in the first human, they have to manufacture it, first in a small volume, and then in a large volume.
Speaker #5: And so that manufacturing area is critically important. And you're manufacturing something that's going to be either ingested by a human or put right into their bloodstream.
Speaker #5: So it's super important how you do that. It's a great growing area for us: quality in the manufacturing.
Speaker #5: space. Your next question comes from
Speaker #1: Jalindra Singh with Truist Securities. Your line is open.
Speaker #7: Thank you. And thanks for taking my questions. I want to follow up on the macro environment question earlier. You did note in the prepared remarks that the guidance raise is driven by improved visibility into Q4.
Speaker #7: Can you elaborate on that? Is it stronger renewal activity, upsell momentum, or new logo wins? And related to that, we have seen some good clarity for the pharma industry in recent months with all the discussion with the administration.
Speaker #7: Do you get a sense, based on your conversations, that we could see a potential uptick in client buying trends in the coming year or so?
Speaker #1: Brian. I'll, I'll take this one. So, yeah, I think there was really good execution coming out of Q3. We had some earlier timing of deal closures than we expected, which contributed to some of the outperformance in the quarter and the raise in Q4 and therefore for the full year.
Speaker #1: Overall, I think there is broad strength across the business on the commercial side. We saw CrossSix continue to perform well, but also the SMB commercial side had stronger performance than the other areas of our commercial business.
Speaker #1: Strong performance in R&D, which tends to be more predictable, but we saw strong performance in R&D. And then strong performance as well in our services business and really across professional services and business consulting.
Speaker #1: So we're very pleased with the momentum coming out of Q3 and what we see coming into the quarter. I think beyond that, we'll factor that into our guidance for next year, which we'll release, you know, following the fourth quarter here.
Speaker #1: but, but feeling good about the execution of the business as we enter the final quarter of the year. Your next question comes from Steven Vallequette with Mizuho Securities.
Speaker #1: Your
Speaker #1: line is open. Yeah.
Speaker #8: Thanks for taking the question. So, yeah, I guess for me, the, you know, my primary question was also going to be on your comments about the unique customer-specific factors, you know, driving a few less of the Vaults CRM wins.
Speaker #8: Obviously, you talked about that already. But really, my, my quick follow-up question is, you know, since it sounds like it really is truly scattered across these customer-specific factors, are there any learnings for Veeva from all of this?
Speaker #8: You know, either on, you know, Vault CRM product design or on pricing or just Viva, not really change anything going forward, you know, on the go-to-market strategy?
Speaker #8: Just, just in the back of all this.
Speaker #8: Thanks. it's a good
Speaker #7: Question on the learnings. Yeah. We did, you know, look through that. No. I think, A, there's, you know, we did things the way we wanted to do things with customer success in mind.
Speaker #7: And we've gotten our top 20s live, and, you know, I guess we thought more customers would, you know, 90% of customers maybe would put weight on that, and some customers didn't.
Speaker #7: They just, you know, they just wanted to try something new. So, no particular learning. I would say there's a lot of enthusiasm around the Viva team.
Speaker #7: The product and services team. Because, you know, it's kind of distracting to try to resell all those top 20 customers all at once, right, in a very short period of time.
Speaker #7: And you're competing with a product that doesn't really exist yet, along with a lot of promises and things like that. So that's kind of distracting a little bit.
Speaker #7: But we're largely through that. So now, you know, we used to have 18 out of the top 20; now we're maybe going to have 14 or so.
Speaker #7: And now it's back to business as usual, really focusing on customer success. But with a difference. Now we are entering the age of AI.
Speaker #7: You know, probabilistic computing is really going to drive and change what a CRM system can do. This is giving people a lot of excitement. The Vault CRM of 2026, 2027, and 2028 is not going to be like the Veeva CRM of 2022 and 2023.
Speaker #7: So, that's where the real excitement is.
Speaker #1: Your next question comes from Gabriella Borges with Goldman Sachs. Your line is open.
Speaker #9: Hi. Good afternoon. Thank you. For Paul and Peter, I wanted to get your thoughts on the risks that the CRM market becomes more competitive over time.
Speaker #9: For example, could the large competitor that has 6 out of the top 20, could they use that as a beachhead to expand their presence over time without a roadmap that will improve over time?
Speaker #9: Or, for example, the 14 that have committed to Veeva, could they be thinking about the structure of the ecosystem changing? So, for example, a year from now, or three years from now, could they consider competition?
Speaker #9: So maybe just give us a little bit of a sense of your conviction on the long term and how Veeva can continue to have the dominant position that it has in the event that the competitive environment does change more structurally on the commercial side.
Speaker #9: Thank
Speaker #9: you. Yeah.
Speaker #3: So, as we think about other areas in commercial, they’re generally separate decisions from CRM. Now, we’ve actually done something unique. You know, the people who make decisions and we’ve content and CrossSix and Data Cloud.
Speaker #3: We've connected all of those pieces together. One around Vault CRM is generally different than commercial. One of the reasons we moved to Vault CRM is to make it feel more like Development Cloud.
Speaker #3: So when you buy into Veeva, you have these really mission-critical areas: CrossSix. You're seeing how important that is. Commercial content that we have all plumbed up together.
Speaker #3: So, we create a lot of value. I think the customers that do decide to buy into Vault and Veeva will get additional value.
Speaker #3: The synergy of having everything on a common platform, where they know everything is just going to work together. We've made a long-term commitment to life sciences.
Speaker #3: I think what we're seeing Salesforce is, you know, kind of just entering. They have a very new product in the CRM space.
Speaker #3: They don't have everything that we've talked about— all of the other software products, commercial content across its business, all of the data assets. What Peter has talked about earlier with business consulting, so we're building just something that's fundamentally very different than what Salesforce is trying to do.
Speaker #3: So I think that's a very significant competitive advantage for us, and I think that's why we feel really confident about our long-term market position.
Speaker #3: 'Cause one, we're going to have a better CRM and a CRM suite area. But it's all going to be connected together. And building the industry cloud, bringing all of those pieces together.
Speaker #3: So, I feel good about the competitive position. I'm happy with where it's shaking out. Obviously, you'd love to win every customer, but we're executing well really across all the.
Speaker #3: commercial. Your
Speaker #1: Your next question comes from Tucker Remmers with Jefferies. Your line is open.
Speaker #10: Hi. Thanks for taking my question. So my question revolves around the development of AI agents in the clinical suite. I just want to get a sense of how soon you think you could develop some clinical AI agents?
Speaker #10: What examples can you give? And how can Veeva monetize that in the future? Thank you.
Speaker #10: you. Yeah.
Speaker #3: We have, we, we've published our roadmap around our agents. We're going to have agents in literally all of our software applications as we get through 2026.
Speaker #3: We started this year. We'll have them in Commercial and CRM, and commercial content. Next year, in roughly the first quarter, April, it'll be in Safety and Quality.
Speaker #3: And then through the end of the year, we'll have agents in clinical operations. And then, by the end of the year, clinical data management.
Speaker #3: We think it's one of those potentially transformative areas in clinicals. It's our largest single opportunity. The clinical business has a lot of potential to just streamline.
Speaker #3: A lot of core processes, EPMF, you know, when you're just taking in a document and scanning through that and making sense of that with an agent. As an example, just replacing core human labor with agents.
Speaker #3: So there's a lot of potential for productivity. That's just one example. But I think we see that pretty consistently across the broader clinical area. So, I'm super excited about AI because we've actually accelerated our agent roadmap.
Speaker #3: And we'll have it in, like I said, virtually every application area as we get through 2026.
Speaker #1: Your next question comes from a line of David Larson with BTIG. Your line is open.
Speaker #5: Hi. Just going back to these top 20 biopharma clients, W-W, can you maybe—I'm just having a tough time believing that with your R&D capabilities, if you have 20 of the top 20 on your electronic trial master file platform, that's where all of the R&D flows out of.
Speaker #5: Like, did these four already sign with Salesforce? Or did they just sort of verbally tell you they're gonna go with Salesforce? How sort of final are those decisions?
Speaker #5: And then we keep saying, "You may win them back." Like, how would that work? Is there, like, a trial period they have with Salesforce?
Speaker #5: Thanks very
Speaker #5: much. I'll take that one.
Speaker #10: So in terms of this, this is around the CRM product, right, of what we announced, the Salesforce ones, particularly around our CRM product. And again, if I just reiterate, that's about 20% of our business today.
Speaker #10: Two years ago, it was about 25% of it. You know, we're not going to give a direction of what percentage of our business it would be in 2030.
Speaker #10: But you could, you know, that's going to be significantly less than 20%. So it's a minor part of our business. That's nothing to do with our clinical business, right?
Speaker #10: Nothing to do with our clinical business. In terms of the win-back, how does that work? Well, you know, when you roll out a pharmaceutical CRM system, you'll do it by region, and you might have a failure in one of those implementations.
Speaker #10: So you might say, "Well, okay. I'm not gonna use Salesforce in that other region. I'll go over to Veeva." Or you might have a failure in your first region.
Speaker #10: And you're gonna say, "Well, I'll, I'll I'm gonna cancel that overall." Or you might have an executive change, and they might have a different idea of what they want to do.
Speaker #10: But also, you know, you might run with that system for more of a custom-built system for three years, five years, or seven years.
Speaker #10: And then you feel like, "Okay. That's run at the end of the life. We have a custom system. And the industry has moved on."
Speaker #10: And we want to move back onto a more industry-standard system. Because with Salesforce, it’s a very open platform. So the IT teams sometimes can build exactly what they want.
Speaker #10: And the system integrators kind of feed into that as well. See, then we end up with a very custom system. So it's got nothing—this top 20 things got nothing to do with the bulk of our business, especially clinical.
Speaker #10: And the win-backs happen over time, as they naturally.
Speaker #10: would. Your next question
Speaker #1: Comes from Sean Dodge with BMO Capital Markets. Your line is open.
Speaker #5: Okay, great. Thanks. M-maybe just on the Veeva Basics offering you rolled out—it was about, I think, a little over a year back. Y-you had a release a few weeks ago that there are about 100 clients that have selected that.
Speaker #5: I, I, I just was wondering how we should think about sizing the longer-run opportunity for Veeva in that part of the end market.
Speaker #5: Obviously, R&D budgets for small biotechs are small. But on the other hand, there are a lot of them. So just maybe, kind of thinking about what does that have the potential to be a real needle mover for Veeva at some point here soon?
Speaker #3: Viva because it helps the, the smaller end of the of the life sciences industry. And that's, that's critical. So for example, it's a very important thing in the clinical side for our larger customers.
Speaker #3: Because when they need to evaluate an acquisition and that acquisition is using Veeva Basics in the clinical area, they're going to be much more organized and much easier to automate. So, Vault Basics helps, and Veeva Basics helps the industry grow overall.
Speaker #3: And that's going to help Veeva. In terms of how significant it can be, it's not going to be the significant part of our revenue driver.
Speaker #3: It's, you know, it's a part of the overall ecosystem. We have 100 customers now. I don't know where that ends up, but it's not impossible that we have 1,000 customers on basics over time, with the different offerings.
Speaker #3: So you know, it's a great business. And more than anything, it's the right thing to do. Giving a professional solution to these small biotechs so that in the unlikely event that their business really takes off and their molecule really takes off and they're going to be the next Pfizer, okay, they don't have to change systems.
Speaker #3: They can just graduate from basics, right in place, and get enterprise, Viva. So, super excited about the innovation that's happening in Viva basics.
Speaker #1: Thank you. With no further questions, Q, I'd like to turn the conference back over to the CEO, Peter Gassner, for closing.
Speaker #1: Thank you, everyone, for joining the call.
Speaker #5: Today, I want to express my gratitude to our customers for your continued partnership, and to the Veeva team for your outstanding work in the quarter. Thank you.