Total Revenues of $55.0M, up 54%
Year-over-year; Subscription Services Revenues of $38.9M, up 95%
Year-over-year
Veeva Systems Inc. (NYSE: VEEV), a leading provider of industry
cloud solutions for the life sciences industry, today announced
results for its fiscal third quarter ended October 31, 2013.
Fiscal 2014 Third Quarter Results:
- Revenues: Total revenues for the
third quarter were $55.0 million, up from $35.8 million one year
ago, an increase of 54% year-over-year. Subscription services
revenues were $38.9 million, up from $20.0 million one year ago, an
increase of 95% year-over-year.
- Net income and non-GAAP net
income1: Third quarter net income was $6.5 million,
compared to $5.7 million one year ago, an increase of 13%
year-over-year. Non-GAAP net income for the third quarter was $8.3
million, compared to $6.0 million one year ago, an increase of 40%
year-over-year.
- Net income per share and non-GAAP
net income per share1: For the third quarter, fully
diluted net income per share was $0.05, while non-GAAP fully
diluted net income per share was $0.06.
“There are tremendous opportunities to move life sciences
companies from legacy applications to the cloud,” said chief
executive officer Peter Gassner. “Our results demonstrate strong
demand for industry cloud solutions and are a result of our focus
on customer success. The combination of these factors drove
top-line revenue growth and strong profitability.”
“We were pleased with the continued momentum in subscription
services revenues, which increased 95% year-over-year,” said CFO
Tim Cabral. “While making significant investments this quarter, we
demonstrated the leverage in our business. Gross margins increased
over 5 percentage points compared to last year, operating margin
was 18.2% and non-GAAP operating margin was 22.7%.”
Recent Highlights:
- Veeva Network Released – Veeva
Network, the industry’s first complete, cloud-based customer master
solution, became generally available in October. The company’s
newest product line, Veeva Network combines healthcare provider and
organization data with software and data stewardship services in
one solution that is seamlessly integrated with Veeva CRM.
- CRM Market Leadership – In its
2013 Life Sciences CRM Software Vendor Assessment, IDC Health
Insights named Veeva a CRM leader.
- 50th Veeva Vault
Customer – Veeva surpassed 50 customers for its regulated
content management product line.
- Initial Public Offering – On
October 16, 2013, Veeva became a public company, adding $216
million to its cash balance for the quarter, and listed its Class A
common shares on the New York Stock Exchange.
Financial Outlook:
Veeva is providing guidance for the fourth quarter of fiscal
2014 as follows:
- Total revenues between $57 and $58
million, an increase of 43% to 46% on a year-over-year basis. This
implies full fiscal year revenues of approximately $204 to $205
million representing annual growth of 58% to 59%.
- Non-GAAP fully diluted net income per
share between $0.05 and $0.06.
Conference Call Information
What: Veeva Systems’ Fiscal 2014 Third Quarter
Results Conference Call When: Thursday, December 5, 2013 Time: 1:30
p.m. PT (4:30 p.m. ET)
Live Call:
1-866-270-1533, domestic1-412-317-0797,
international
Webcast:
ir.veeva.com
1 Non-GAAP net income and non-GAAP fully diluted net income per
share exclude stock-based compensation expense, amortization of
purchased intangibles, and the tax effect of these excluded
expenses. See the sections titled, “Non-GAAP Financial Measures”
and the tables entitled “Reconciliation of GAAP to Non-GAAP
Financial Measures” below for details.
About Veeva
Veeva is a leader in cloud-based software for the global life
sciences industry. Committed to innovation, product excellence and
customer success, Veeva has over 170 customers, ranging from the
world’s largest pharmaceutical companies to emerging biotechs.
Founded in 2007, Veeva is headquartered in the San Francisco Bay
Area, with offices in Philadelphia, Barcelona, Budapest, London,
Paris, Beijing, Shanghai, Osaka, Tokyo, Sydney, and Singapore. For
more information, visit www.veeva.com.
Investor Relations ContactRick
Lund925-271-9816ir@veeva.com
Media ContactJeff Seedman310-330-6994pr@veeva.com
Forward-looking Statements
This release contains forward-looking statements, including
statements regarding Veeva's future financial performance, market
growth, the demand for and benefits from the use of Veeva's
solutions, strategies, and general business conditions. Any
forward-looking statements contained in this press release are
based upon Veeva's historical performance and its current plans,
estimates and expectations and are not a representation that such
plans, estimates, or expectations will be achieved. These
forward-looking statements represent Veeva's expectations as of the
date of this press announcement. Subsequent events may cause these
expectations to change, and Veeva disclaims any obligation to
update the forward-looking statements in the future. These
forward-looking statements are subject to known and unknown risks
and uncertainties that may cause actual results to differ
materially, including (i) adverse changes in general economic or
market conditions, particularly in the life sciences industry; (ii)
delays or reductions in information technology spending,
particularly in the life sciences industry; (iii) dependence on
revenues from our Veeva CRM solution, and the rate of adoption of
our new products; (iv) competitive factors, including but not
limited to pricing pressures, industry consolidation, entry of new
competitors and new applications and marketing initiatives by our
competitors; (v) our ability to manage our growth effectively; (vi)
our limited operating history, which makes it difficult to predict
future results; (vii) the development of the market for enterprise
cloud services, particularly in the life sciences industry; (viii)
acceptance of our applications and services by customers, including
renewals of existing subscriptions and purchases of subscriptions
for additional users and solutions; (ix) breaches in our security
measures or unauthorized access to our customers’ data; (x) our
expectation that the future growth rate of our revenues will
decline, and that as our costs increase, we may not be able to
generate sufficient revenues to sustain the level of profitability
we have achieved in the past or achieve profitability in the
future; (xi) loss of one or more key customers; (xii) dependence on
our agreement with salesforce.com to provide our Veeva CRM solution
to our customers; and (xiii) changes in sales that may not be
immediately reflected in our results due to our subscription
model.
Additional risks and uncertainties that could affect Veeva’s
financial results are included under the captions “Risk Factors”
and “Management’s Discussion and Analysis of Financial Condition
and Results of Operations,” in the company’s registration statement
on Form S-1 filed with the SEC on October 15, 2013, which is
available on the company’s website at www.veeva.com under the
Investors section and on the SEC’s website at www.sec.gov. Further
information on potential risks that could affect actual results
will be included in other filings Veeva makes with the SEC from
time to time.
Copyright © 2013 Veeva Systems Inc. All rights reserved. Veeva
and the Veeva logo are registered trademarks of Veeva Systems Inc.
Veeva Systems Inc. owns other registered and unregistered
trademarks.
VEEVA SYSTEMS INC. CONDENSED CONSOLIDATED BALANCE
SHEETS (In thousands)
October 31, January 31, 2013
2013(2) Assets (Unaudited) Current assets:
Cash and cash equivalents
$
257,141
$
31,890
Short-term investments 16,242 14,276 Accounts receivable, net
48,603 37,094 Deferred income taxes 1,721 1,169 Income tax
receivable 106 1,111 Note receivable–related party — 253 Other
current assets 4,635 1,097 Total current assets
328,448 86,890 Property and equipment, net 2,319 1,379 Capitalized
internal-use software, net 1,629 880 Goodwill 4,709 — Intangible
assets, net 6,964 — Other long-term assets 1,220 671
Total assets
$
345,289
$
89,820
Liabilities and stockholders’ equity Current
liabilities: Accounts payable
$
2,436
$
3,340
Accrued expenses 14,108 6,981 Income tax payable 195 5,183 Deferred
revenue 53,514 38,785 Total current liabilities
70,253 54,289 Deferred income taxes, noncurrent 2,508 441 Other
long-term liabilities 1,882 1,124 Total liabilities
74,643 55,854 Commitments and contingencies
Stockholders’ equity: Series A convertible preferred stock — 2,996
Series B convertible preferred stock — 3,937 Preferred stock — —
Common stock — — Class A common stock — — Class B common stock 1 —
Additional paid-in capital 228,339 2,101 Accumulated other
comprehensive income 11 5 Retained earnings 42,295
24,927 Total stockholders’ equity 270,646 33,966
Total liabilities and stockholders’ equity
$
345,289
$
89,820
(2) Amounts as of January 31, 2013 were derived from the
January 31, 2013 audited financial statements.
VEEVA SYSTEMS INC. CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME (In thousands, except per share data)
Three Months Ended October
31, Nine Months Ended October 31, 2013
2012 2013 2012 Revenues: (Unaudited)
Subscription services
$
38,935
$
19,969
$
100,935
$
49,171
Professional services and other 16,044 15,827
46,413 40,589 Total revenues 54,979 35,796
147,348 89,760
Cost of
revenues(3): Cost of subscription services 9,511
5,160 24,409 12,909 Cost of professional services and other
11,881 10,696 33,835 27,346 Total cost of
revenues 21,392 15,856 58,244 40,255
Gross profit 33,587 19,940 89,104
49,505
Operating expenses(3): Research and
development 6,585 3,605 18,469 9,946 Sales and marketing 11,467
5,316 28,739 13,304 General and administrative 5,550
2,235 13,900 5,584 Total operating expenses
23,602 11,156 61,108 28,834 Operating income
9,985 8,784 27,996 20,671 Other income (expense), net 125
74 (439) (337) Income before income taxes
10,110 8,858 27,557 20,334 Provision for income taxes 3,585
3,109 10,189 7,235
Net income
$
6,525
$
5,749
$
17,368
$
13,099
Net income attributable to Class A and Class B common
stockholders: Basic
$
2,339
$
1,062
$
4,613
$
2,331
Diluted
$
6,387
$
1,062
$
16,937
$
2,331
Net income per share attributable to Class A and Class B common
stockholders: Basic
$
0.07
$
0.05
$
0.16
$
0.12
Diluted
$
0.05
$
0.03
$
0.13
$
0.08
Weighted-average shares used to compute
earnings per share attributable to Class A and Class B common
stockholders:
Basic 35,802 20,743 28,519 19,834
Diluted 131,963 30,369 129,601 29,160
Other comprehensive income: Net change in unrealized gains
on available-for-sale investments
$
8
$
—
$
6
$
—
Comprehensive income
$
6,533
$
5,749
$
17,374
$
13,099
(3) Includes stock-based compensation as follows: Cost of
revenues: Cost of subscription services
$
49
$
1
$
58
$
2
Cost of professional services and other 230 30 458 81 Research and
development 429 65 895 155 Sales and marketing 488 34 970 97
General and administrative 890 51 1,655 155
VEEVA
SYSTEMS INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (In thousands)
Three Months Ended October 31,
Nine Months Ended October 31, 2013
2012 2013 2012
(Unaudited)
Cash flows from operating activities Net income
$
6,525
$
5,749
$
17,368
$
13,099
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization 774 174 1,552
536 Amortization of premiums on short-term investments 98 23 276 23
Stock-based compensation 2,086 181 4,036 490 Deferred income taxes
(86) (192) (259) (447) Bad debt expense (303) 123 (21) 345 Changes
in operating assets and liabilities: Accounts receivable (9,417)
(7,196) (9,852) (8,849) Income taxes (1,750) 2,541 (5,733) 3,379
Other current and non-current assets (1,224) (335) (2,117) (243)
Accounts payable 1,157 332 (946) 176 Accrued expenses 1,720 3,018
5,859 3,840 Deferred revenue 5,254 5,049 14,607 11,656 Long-term
liabilities 433 249 758 (193)
Net
cash provided by operating activities 5,267 9,716
25,528 23,812
Cash flows from investing
activities Purchases of short-term investments (4,315) (9,888)
(7,086) (9,888) Maturities and sales of investments 2,250 — 4,850 —
Purchases of property and equipment (460) (262) (1,561) (716)
Acquisitions, net of cash acquired — — (12,149) — Payments for
capitalized internal-use software (720) (257) (1,013) (590)
Proceeds from (issuance of) note receivable–related party — — 253
(2) Payments for restricted cash and deposits (5)
(64) (2) (359)
Net cash used in investing
activities (3,250) (10,471) (16,708)
(11,555)
Cash flows from financing activities
Proceeds from early exercise of common stock options 158 197 225
423 Proceeds from exercise of common stock options 95 37 472 78 Net
proceeds from initial public offering 216,263 —
215,734 —
Net cash provided by financing
activities 216,516 234 216,431 501
Net change in cash and cash equivalents 218,533 (521) 225,251
12,758 Cash and cash equivalents at beginning of period
38,608 30,159 31,890 16,880
Cash and cash
equivalents at end of period
$
257,141
$
29,638
$
257,141
$
29,638
Non-GAAP Financial Measures
Veeva has provided in this release financial information that
has not been prepared in accordance with generally accepted
accounting principles in the United States, or GAAP. This
information includes non-GAAP net income, non-GAAP fully diluted
net income per share, and non-GAAP operating margin. Veeva uses
these non-GAAP financial measures internally for budgeting and
resource allocation purposes and in analyzing its financial
results. Veeva believes they are useful to investors, as a
supplement to GAAP measures, as a means to evaluate
period-to-period comparisons, in evaluating Veeva's ongoing
operating results and trends and in comparing its financial
measures with other companies in Veeva's industry, many of which
present similar non-GAAP financial measures to investors. The
non-GAAP measures exclude expenses associated with stock-based
compensation, amortization of purchased intangibles, and the tax
effect of these excluded expenses.
As described above, Veeva may exclude the following items from
its non-GAAP measures:
- Stock-based compensation expenses.
Veeva excludes stock-based compensation expenses from its non-GAAP
measures primarily because they are non-cash expenses and
management finds it useful to exclude certain non-cash charges to
assess the appropriate level of various operating expenses to
assist in budgeting, planning and forecasting future periods.
Moreover, because of varying available valuation methodologies,
subjective assumptions and the variety of award types that
companies can use under FASB ASC Topic 718, Veeva believes
excluding stock-based compensation expenses allows investors to
make meaningful comparisons between our recurring core business
operating results and those of other companies.
- Amortization of purchased intangibles.
Veeva incurs amortization of acquisition-related purchased
intangible assets in connection with acquisitions of certain
businesses and technologies. Amortization of intangible assets is
inconsistent in amount and frequency and is significantly affected
by the timing and size of acquisitions. Management finds it useful
to exclude these variable charges to assess the appropriate level
of various operating expenses to assist in budgeting, planning and
forecasting future periods. Investors should note that the use of
intangible assets contributed to our revenues earned during the
periods presented and will contribute to our future period revenues
as well. Amortization of purchased intangible assets will recur in
future periods.
- Income tax effects on the difference
between GAAP and non-GAAP costs and expenses. The income tax
effects that are excluded from the non-GAAP measures relate to the
tax impact on the difference between GAAP and non-GAAP costs and
expenses due to stock-based compensation and purchased intangibles
for GAAP and non-GAAP measures.
There are limitations in using non-GAAP financial measures
because non-GAAP financial measures are not prepared in accordance
with GAAP and may be different from non-GAAP financial measures
used by other companies. The non-GAAP financial measures are
limited in value because they exclude certain items that may have a
material impact upon our reported financial results. In addition,
they are subject to inherent limitations as they reflect the
exercise of judgments by management about which charges are
excluded from the non-GAAP financial measures. Veeva compensates
for these limitations by analyzing current and future results on a
GAAP basis as well as a non-GAAP basis and also by providing GAAP
measures in our public disclosures.
Non-GAAP financial measures should not be considered in
isolation from, or as a substitute for, financial information
prepared in accordance with GAAP. Investors are encouraged to
review the reconciliation of these non-GAAP measures to their most
directly comparable GAAP financial measure and not to rely on any
single financial measure to evaluate our business. A reconciliation
of GAAP to the non-GAAP financial measures has been provided in the
tables below.
Veeva is not able to provide GAAP targets for its fourth quarter
fully diluted net income per share at this time because of the
difficulty of estimating certain items that are excluded from
non-GAAP fully diluted net income per share, such as charges
related to stock-based compensation expense and amortization of
acquisition related intangibles, the effect of which may be
significant.
Veeva Systems Inc. RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL MEASURES (In thousands) Three Months
Ended October 31, 2013 2012 (Unaudited) Cost of
subscription services revenues on a GAAP basis
$
9,511
$
5,160
Stock-based compensation expense (49) (1) Amortization of purchased
intangibles (353) — Cost of subscription services
revenues on a non-GAAP basis
$
9,109
$
5,159
Gross margin on subscription services revenues on a GAAP
basis 75.6
%
74.2 % Stock-based compensation expense 0.1 — Amortization of
purchased intangibles 0.9 — Gross margin on
subscription services revenues on a non-GAAP basis 76.6
%
74.2 % Cost of professional services and other
revenues on a GAAP basis
$
11,881
$
10,696
Stock-based compensation expense (230) (30) Amortization of
purchased intangibles (17) — Cost of professional
services and other revenues on a non-GAAP basis
$
11,634
$
10,666
Gross margin on professional services and other revenues on
a GAAP basis 25.9
%
32.4 % Stock-based compensation expense 1.5 0.2 Amortization of
purchased intangibles 0.1 — Gross margin on
professional services and other revenues on a non-GAAP basis
27.5
%
32.6 % Gross profit on a GAAP basis
$
33,587
$
19,940
Stock-based compensation expense 279 31 Amortization of purchased
intangibles 370 — Gross profit on a non-GAAP basis
$
34,236
$
19,971
Gross margin on total revenues on a GAAP basis 61.1
%
55.7 % Stock-based compensation expense 0.5 0.1 Amortization of
purchased intangibles 0.7 — Gross margin on total
revenues on a non-GAAP basis 62.3
%
55.8 % Research and development expense on a GAAP
basis
$
6,585
$
3,605
Stock-based compensation expense (429) (65) Research
and development expense on a non-GAAP basis
$
6,156
$
3,540
Sales and marketing expense on a GAAP basis
$
11,467
$
5,316
Stock-based compensation expense (488) (34) Amortization of
purchased intangibles (43) — Sales and marketing
expense on a non-GAAP basis
$
10,936
$
5,282
General and administrative expense on a GAAP basis
$
5,550
$
2,235
Stock-based compensation expense (890) (51) General
and administrative expense on a non-GAAP basis
$
4,660
$
2,184
Operating expense on a GAAP basis
$
23,602
$
11,156
Stock-based compensation expense (1,807) (150) Amortization of
purchased intangibles (43) — Operating expense on a
non-GAAP basis
$
21,752
$
11,006
Operating income on a GAAP basis
$
9,985
$
8,784
Stock-based compensation expense 2,086 181 Amortization of
purchased intangibles 413 — Operating income on a
non-GAAP basis
$
12,484
$
8,965
Operating margin on a GAAP basis 18.2
%
24.5 % Stock-based compensation expense 3.8 0.5 Amortization of
purchased intangibles 0.7 — Operating margin on a
non-GAAP basis 22.7
%
25.0 % Net income on a GAAP basis
$
6,525
$
5,749
Stock-based compensation expense 2,086 181 Amortization of
purchased intangibles 413 — Income tax effect on non-GAAP
adjustments (706) 24 Net income on a non-GAAP basis
$
8,318
$
5,954
Diluted net income per share on a GAAP basis
$
0.05
$
0.03
Stock-based compensation expense: 0.02 0.01 Amortization of
purchased intangibles:
—
— Income tax effect on non-GAAP adjustments (0.01)
—
Impact of assumed conversion of preferred stock(4)
—
0.01 Diluted net income per share on a non-GAAP basis
$
0.06
$
0.05
4 In computing the fully diluted shares for non-GAAP purposes,
the 85,000,000 shares of convertible preferred stock that was
issued and outstanding as of October 31, 2012 were assumed to be
converted to common shares.
Veeva Systems Inc.Investor RelationsRick Lund,
925-271-9816ir@veeva.comorMediaJeff Seedman,
310-330-6994pr@veeva.com
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