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Veeva Announces Fiscal 2021 Third Quarter Results


Veeva Systems Inc. (NYSE: VEEV), a leading provider of industry cloud solutions for the global life sciences industry, today announced results for its fiscal third quarter ended October 31, 2020.

“Our customers are delivering innovations that will have positive, lasting impacts on human health,” said CEO Peter Gassner. “We are proud to work with these amazing companies, providing solutions that streamline drug development and enable them to support healthcare providers on the front lines.”

Fiscal 2021 Third Quarter Results:

  • Revenues: Total revenues for the third quarter were $377.5 million, up from $280.9 million one year ago, an increase of 34% year-over-year. Subscription services revenues for the third quarter were $302.9 million, up from $226.8 million one year ago, an increase of 34% year-over-year.
  • Operating Income and Non-GAAP Operating Income(1): Third quarter operating income was $101.3 million, compared to $80.8 million one year ago, an increase of 25% year-over-year. Non-GAAP operating income for the third quarter was $155.5 million, compared to $111.6 million one year ago, an increase of 39% year-over-year.
  • Net Income and Non-GAAP Net Income(1): Third quarter net income was $97.0 million, compared to $82.2 million one year ago, an increase of 18% year-over-year. Non-GAAP net income for the third quarter was $125.6 million, compared to $95.4 million one year ago, an increase of 32% year-over-year.
  • Net Income per Share and Non-GAAP Net Income per Share(1): For the third quarter, fully diluted net income per share was $0.60, compared to $0.52 one year ago, while non-GAAP fully diluted net income per share was $0.78, compared to $0.60 one year ago.

“I am very pleased with our financial outperformance in the quarter, which was a direct result of our strong vision and focused execution,” said CFO Brent Bowman. “As we look to the opportunities ahead, we plan to continue investing aggressively to hit our 2025 targets and drive a long runway of growth beyond.”

Recent Highlights:

  • Veeva Leads Digital Transformation in Life Sciences helping customers define new strategies in development and commercial. For example, it is now working with an innovative biopharma on their digital-first commercial launch strategy utilizing the full Veeva Commercial Cloud suite, including Data Cloud, Veeva Link, MyVeeva for Doctors, and Business Consulting. Digital transformation also fueled Veeva’s expanding leadership in core CRM, where it saw a record increase of 19 new CRM customers in the quarter. On the development side, new digital capabilities like remote monitoring in Veeva SiteVault have enabled clinical trials to continue for roughly 700 clinical research sites and will improve ongoing trial execution.
  • New Top 20 Win, Veeva Development Cloud Emerging as Industry Standard — More companies are adopting a growing range of products across Veeva Development Cloud. In Q3, a top 20 pharma selected multiple Development Cloud applications as their enterprise standard to streamline clinical operations, regulatory, and quality processes globally. The company’s move to unify on Veeva Vault will help increase efficiency and drive compliance.
  • Veeva Vault CTMS Adoption Accelerates as Companies Unify Clinical Operations Vault CTMS posted record new bookings in the quarter as 85 companies, including six top 20 pharmas, have now standardized on Vault CTMS in just over three years. Customer success, product excellence, and the ability to unify clinical operations are driving this rapid growth. Companies are looking for a modern CTMS solution, seamlessly integrated with eTMF, on a single cloud platform.

Financial Outlook:

Veeva is providing guidance for its fiscal fourth quarter ending January 31, 2021 as follows:

  • Total revenues between $378 and $380 million.
  • Non-GAAP operating income between $136 and $138 million(2).
  • Non-GAAP fully diluted net income per share between $0.67 and $0.68(2).

Veeva is providing guidance for its fiscal year ending January 31, 2021 as follows:

  • Total revenues between $1,446 and $1,448 million.
  • Non-GAAP operating income between $566 and $568 million(2).
  • Non-GAAP fully diluted net income per share between $2.83 and $2.84(2).

Veeva is providing guidance for its fiscal year ending January 31, 2022 as follows:

  • Total revenues between $1,700 and $1,720 million.
  • Subscription services revenues between $1,390 and $1,400 million.
  • Non-GAAP operating margin of roughly 37%(3).

Conference Call Information

What:

Veeva's Fiscal 2021 Third Quarter Results Conference Call

When:

Tuesday, December 1, 2020

Time:

1:30 p.m. PT (4:30 p.m. ET)

Online Registration:

www.directeventreg.com

 

Conference ID 3283186

Webcast:

ir.veeva.com

Investor Presentation Details

An investor presentation providing additional information and analysis can be found at ir.veeva.com.

___________

(1) This press release uses non-GAAP financial metrics that are adjusted for the impact of various GAAP items. See the section titled “Non-GAAP Financial Measures” and the tables entitled “Reconciliation of GAAP to Non-GAAP Financial Measures” below for details.

(2) Veeva is not able, at this time, to provide GAAP targets for operating income and fully diluted net income per share for the fourth fiscal quarter ending January 31, 2021 or fiscal year ending January 31, 2021 because of the difficulty of estimating certain items excluded from non-GAAP operating income and non-GAAP fully diluted net income per share that cannot be reasonably predicted, such as charges related to stock-based compensation expense. The effect of these excluded items may be significant.

(3) Veeva is not able, at this time, to provide GAAP targets for operating margin for the fiscal year ending January 31, 2022 because of the difficulty of estimating certain items excluded from non-GAAP operating income that cannot be reasonably predicted, such as charges related to stock-based compensation expense. The effect of these excluded items may be significant.

About Veeva Systems

Veeva Systems Inc. is the leader in cloud-based software for the global life sciences industry. Committed to innovation, product excellence, and customer success, Veeva serves more than 950 customers, ranging from the world’s largest pharmaceutical companies to emerging biotechs. Veeva is headquartered in the San Francisco Bay Area, with offices throughout North America, Europe, Asia, and Latin America. For more information, visit veeva.com.

Veeva uses its ir.veeva.com website as a means of disclosing material non-public information, announcing upcoming investor conferences, and for complying with its disclosure obligations under Regulation FD. Accordingly, you should monitor our investor relations website in addition to following our press releases, SEC filings, and public conference calls and webcasts.

Forward-looking Statements

This release contains forward-looking statements, including the quotations from management, the statements in “Financial Outlook,” and other statements regarding Veeva’s future performance, outlook, and guidance and the assumptions underlying those statements, market growth, the benefits from the use of Veeva’s solutions, our 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) the impact of the COVID-19 pandemic (including the impact to the life sciences industry, impact on general economic conditions, and government responses, restrictions, and actions related to the pandemic); (ii) breaches in our security measures or unauthorized access to our customers’ data; (iii) our expectation that the future growth rate of our revenues will decline; (iv) competitive factors, including but not limited to pricing pressures, consolidation among our competitors, entry of new competitors, the launch of new products and marketing initiatives by our existing competitors, and difficulty securing rights to access, host or integrate with complementary third party products or data used by our customers; (v) the rate of adoption of our newer solutions and the results of our efforts to sustain or expand the use and adoption of our more established applications, like Veeva CRM; (vi) fluctuation of our results, which may make period-to-period comparisons less meaningful; (vii) our ability to integrate Crossix Solutions Inc. and Physicians World, LLC into our business and achieve the expected benefits of the acquisitions, including as a result of the impact of the COVID-19 pandemic on these businesses; (viii) loss of one or more customers, particularly any of our large customers; (ix) system unavailability, system performance problems, or loss of data due to disruptions or other problems with our computing infrastructure; (x) our ability to attract and retain highly skilled employees and manage our growth effectively; (xi) failure to sustain the level of profitability we have achieved in the past as our costs increase; (xii) adverse changes in the life sciences industry, including as a result of customer mergers; (xiii) adverse changes in economic, regulatory, international trade relations, or market conditions, including with respect to natural disasters or actual or threatened public health emergencies; (xiv) a decline in new subscriptions that may not be immediately reflected in our operating results due to the ratable recognition of our subscription revenue; (xv) pending, threatened, or future legal proceedings and related expenses; and (xvi) our potential conversion to a Delaware public benefit corporation, including the expected impact, benefits, and risks of such a conversion.

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 filing on Form 10-Q for the period ended July 31, 2020. This is available on the company’s website at veeva.com under the Investors section and on the SEC’s website at 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.

VEEVA SYSTEMS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

 

October 31,
2020

January 31,
2020

Assets

 

 

Current assets:

 

 

Cash and cash equivalents

$

634,265

$

476,733

Short-term investments

956,167

610,015

Accounts receivable, net

183,435

389,690

Unbilled accounts receivable

53,235

32,817

Prepaid expenses and other current assets

25,895

21,869

Total current assets

1,852,997

1,531,124

Property and equipment, net

54,352

54,752

Deferred costs, net

35,472

35,585

Lease right-of-use assets

52,824

49,132

Goodwill

436,029

438,529

Intangible assets, net

119,165

134,601

Deferred income taxes, noncurrent

15,689

11,870

Other long-term assets

17,113

16,184

Total assets

$

2,583,641

$

2,271,777

 

 

 

Liabilities and stockholders equity

 

 

Current liabilities:

 

 

Accounts payable

$

21,324

$

19,420

Accrued compensation and benefits

28,906

25,619

Accrued expenses and other current liabilities

22,391

21,620

Income tax payable

2,555

5,613

Deferred revenue

331,166

468,887

Lease liabilities

11,050

10,013

Total current liabilities

417,392

551,172

Deferred income taxes, noncurrent

1,004

2,417

Lease liabilities, noncurrent

47,965

44,815

Other long-term liabilities

10,901

7,779

Total liabilities

477,262

606,183

Stockholders’ equity:

 

 

Class A common stock

2

1

Class B common stock

Additional paid-in capital

906,137

745,475

Accumulated other comprehensive income

3,502

460

Retained earnings

1,196,738

919,658

Total stockholders’ equity

2,106,379

1,665,594

Total liabilities and stockholders equity

$

2,583,641

$

2,271,777

VEEVA SYSTEMS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, except per share data)

(Unaudited)

 

Three months ended
October 31,

Nine months ended
October 31,

 

2020

2019

2020

2019

Revenues:

 

 

 

 

Subscription services(4)

$

302,938

 

$

226,760

 

$

856,675

$

642,187

 

Professional services and other(5)

74,581

 

54,161

 

211,633

150,386

 

Total revenues

377,519

 

280,921

 

1,068,308

792,573

 

Cost of revenues(3):

 

 

 

 

Cost of subscription services

45,845

 

31,964

 

132,457

93,822

 

Cost of professional services and other

57,152

 

41,365

 

162,624

115,228

 

Total cost of revenues

102,997

 

73,329

 

295,081

209,050

 

Gross profit

274,522

 

207,592

 

773,227

583,523

 

Operating expenses(3):

 

 

 

 

Research and development

79,992

 

52,575

 

212,282

148,694

 

Sales and marketing

57,982

 

45,524

 

172,909

130,962

 

General and administrative

35,243

 

28,693

 

109,085

78,042

 

Total operating expenses

173,217

 

126,792

 

494,276

357,698

 

Operating income

101,305

 

80,800

 

278,951

225,825

 

Other income, net

3,455

 

9,141

 

9,750

22,634

 

Income before income taxes

104,760

 

89,941

 

288,701

248,459

 

Provision for income taxes

7,801

 

7,696

 

11,621

13,523

 

Net income

$

96,959

 

$

82,245

 

$

277,080

$

234,936

 

 

 

 

 

 

Net income per share:

 

 

 

 

Basic

$

0.64

 

$

0.56

 

$

1.84

$

1.59

 

Diluted

$

0.60

 

$

0.52

 

$

1.73

$

1.49

 

 

 

 

 

 

Weighted-average shares used to compute net income per share:

 

 

 

 

Basic

150,993

 

148,157

 

150,322

147,467

 

Diluted

161,711

 

158,750

 

160,517

158,124

 

Other comprehensive income:

 

 

 

 

Net change in unrealized gains on available-for-sale investments

$

(1,230

)

$

753

 

$

1,198

$

2,176

 

Net change in cumulative foreign currency translation loss

(1,438

)

(487

)

1,844

(2,931

)

Comprehensive income

$

94,291

 

$

82,511

 

$

280,122

$

234,181

 

 

 

 

 

 

(3) Includes stock-based compensation as follows:

 

 

 

 

Cost of revenues:

 

 

 

 

Cost of subscription services

$

1,149

 

$

560

 

$

3,700

$

1,528

 

Cost of professional services and other

7,510

 

4,825

 

19,902

12,261

 

Research and development

17,685

 

9,899

 

45,523

25,732

 

Sales and marketing

10,711

 

6,882

 

30,089

19,207

 

General and administrative

11,918

 

7,155

 

36,032

19,719

 

Total stock-based compensation

$

48,973

 

$

29,321

 

$

135,246

$

78,447

 

 

 

 

 

 

(4) Includes subscription services revenues from the following product areas:

 

 

 

 

Veeva Commercial Cloud

$

152,466

 

$

115,201

 

$

439,858

$

333,591

 

Veeva Vault

150,472

 

111,559

 

416,817

308,596

 

Total subscription services

$

302,938

 

$

226,760

 

$

856,675

$

642,187

 

 

 

 

 

 

(5) Includes professional services and other revenues from the following product areas:

 

 

 

 

Veeva Commercial Cloud

$

29,115

 

$

18,589

 

$

83,109

$

52,381

 

Veeva Vault

45,466

 

35,572

 

128,524

98,005

 

Total professional services and other

$

74,581

 

$

54,161

 

$

211,633

$

150,386

 

VEEVA SYSTEMS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

Three months ended
October 31,

Nine months ended
October 31,

 

2020

2019

2020

2019

Cash flows from operating activities

 

 

 

 

Net income

$

96,959

 

$

82,245

 

$

277,080

 

$

234,936

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

7,525

 

3,845

 

22,720

 

11,626

 

Reduction of operating lease right-of-use assets

3,322

 

1,798

 

9,411

 

5,016

 

Accretion of discount on short-term investments

1,203

 

(722

)

1,688

 

(2,996

)

Stock-based compensation

48,973

 

29,321

 

135,246

 

78,447

 

Amortization of deferred costs

5,350

 

4,832

 

15,425

 

14,524

 

Deferred income taxes

(1,894

)

432

 

(3,532

)

1,771

 

Loss (Gain) on foreign currency from mark-to-market derivative

19

 

(74

)

14

 

(112

)

Bad debt (expense) recovery

(181

)

270

 

(60

)

(42

)

Changes in operating assets and liabilities:

 

 

 

 

Accounts receivable

37,448

 

28,319

 

206,214

 

186,633

 

Unbilled accounts receivable

(16,585

)

(9,515

)

(20,418

)

(12,777

)

Deferred costs

(6,177

)

(4,500

)

(15,312

)

(13,528

)

Income taxes payable

4,538

 

3,909

 

(453

)

4,858

 

Other current and long-term assets

8,195

 

5,610

 

(2,937

)

1,513

 

Accounts payable

3,060

 

1,253

 

(456

)

1,216

 

Accrued expenses and other current liabilities

1,541

 

(1,682

)

4,357

 

231

 

Deferred revenue

(90,291

)

(78,326

)

(137,980

)

(105,637

)

Operating lease liabilities

(3,229

)

(1,625

)

(8,496

)

(5,143

)

Other long-term liabilities

(4,373

)

(3,886

)

384

 

(2,270

)

Net cash provided by operating activities

95,403

 

61,504

 

482,895

 

398,266

 

Cash flows from investing activities

 

 

 

 

Purchases of short-term investments

(417,898

)

(190,695

)

(874,465

)

(628,784

)

Maturities and sales of short-term investments

158,628

 

194,661

 

528,194

 

571,398

 

Long-term assets

(3,316

)

(1,237

)

(8,456

)

(4,228

)

Net cash (used in) provided by investing activities

(262,586

)

2,729

 

(354,727

)

(61,614

)

Cash flows from financing activities

 

 

 

 

Reduction of lease liabilities - finance leases

79

 

(241

)

(420

)

(729

)

Proceeds from exercise of common stock options

6,186

 

1,607

 

25,245

 

8,618

 

Net cash provided by financing activities

6,265

 

1,366

 

24,825

 

7,889

 

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

(599

)

(487

)

2,683

 

(2,931

)

Net change in cash, cash equivalents, and restricted cash

(161,517

)

65,112

 

155,676

 

341,610

 

Cash, cash equivalents, and restricted cash at beginning of period

796,990

 

828,676

 

479,797

 

552,178

 

Cash, cash equivalents, and restricted cash at end of period

$

635,473

 

$

893,788

 

$

635,473

 

$

893,788

 

 

 

 

 

 

Supplemental disclosures of other cash flow information:

 

 

 

 

Excess tax benefits from employee stock plans

$

17,329

 

$

8,931

 

$

59,067

 

$

39,509

 

Non-GAAP Financial Measures

In Veeva’s public disclosures, Veeva has provided non-GAAP measures, which it defines as financial information that has not been prepared in accordance with generally accepted accounting principles in the United States, or GAAP. In addition to its GAAP measures, Veeva uses these non-GAAP financial measures internally for budgeting and resource allocation purposes and in analyzing its financial results. For the reasons set forth below, Veeva believes that excluding the following items provides information that is helpful in understanding its operating results, evaluating its future prospects, comparing its financial results across accounting periods, and comparing its financial results to its peers, many of which provide similar non-GAAP financial measures.

  • Stock-based compensation expenses. Veeva excludes stock-based compensation expenses primarily because they are non-cash expenses that Veeva excludes from its internal management reporting processes. Veeva’s management also finds it useful to exclude these expenses when they assess the appropriate level of various operating expenses and resource allocations when 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 expense for purchased intangible assets in connection with acquisitions of certain businesses and technologies. Amortization of intangible assets is a non-cash expense and is inconsistent in amount and frequency because it is significantly affected by the timing, size of acquisitions and the inherent subjective nature of purchase price allocations. Because these costs have already been incurred and cannot be recovered, and are non-cash expenses, Veeva excludes these expenses for its internal management reporting processes. Veeva’s management also finds it useful to exclude these charges when assessing the appropriate level of various operating expenses and resource allocations when budgeting, planning and forecasting future periods. Investors should note that the use of intangible assets contributed to Veeva’s revenues earned during the periods presented and will contribute to Veeva’s future period revenues as well.
  • Income tax effects on the difference between GAAP and non-GAAP costs and expenses. The income tax effects that are excluded relate to the imputed 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 to 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 provided 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 Veeva’s management about which items are adjusted to calculate its 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 its 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. Veeva encourages its investors and others to review its financial information in its entirety, not to rely on any single financial measure to evaluate its business, and to view its non-GAAP financial measures in conjunction with the most directly comparable GAAP financial measures. A reconciliation of GAAP to the non-GAAP financial measures has been provided in the tables below.

VEEVA SYSTEMS INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(Dollars in thousands)

(Unaudited)

 

The following tables reconcile the specific items excluded from GAAP metrics in the calculation of non-GAAP metrics for the periods shown below:

 

 

Three months ended
October 31,

Nine months ended
October 31,

 

2020

2019

2020

2019

Cost of subscription services revenues on a GAAP basis

$

45,845

 

 

$

31,964

 

 

$

132,457

 

 

$

93,822

 

 

Stock-based compensation expense

(1,149

)

 

(560

)

 

(3,700

)

 

(1,528

)

 

Amortization of purchased intangibles

(1,174

)

 

(688

)

 

(3,942

)

 

(2,043

)

 

Cost of subscription services revenues on a non-GAAP basis

$

43,522

 

 

$

30,716

 

 

$

124,815

 

 

$

90,251

 

 

 

 

 

 

 

Gross margin on subscription services revenues on a GAAP basis

84.9

 

%

85.9

 

%

84.5

 

%

85.4

 

%

Stock-based compensation expense

0.4

 

 

0.2

 

 

0.4

 

 

0.2

 

 

Amortization of purchased intangibles

0.4

 

 

0.4

 

 

0.5

 

 

0.3

 

 

Gross margin on subscription services revenues on a non-GAAP basis

85.7

 

%

86.5

 

%

85.4

 

%

85.9

 

%

 

 

 

 

 

Cost of professional services and other revenues on a GAAP basis

$

57,152

 

 

$

41,365

 

 

$

162,624

 

 

$

115,228

 

 

Stock-based compensation expense

(7,510

)

 

(4,825

)

 

(19,902

)

 

(12,261

)

 

Amortization of purchased intangibles

(138

)

 

 

 

(411

)

 

 

 

Cost of professional services and other revenues on a non-GAAP basis

$

49,504

 

 

$

36,540

 

 

$

142,311

 

 

$

102,967

 

 

 

 

 

 

 

Gross margin on professional services and other revenues on a GAAP basis

23.4

 

%

23.6

 

%

23.2

 

%

23.4

 

%

Stock-based compensation expense

10.1

 

 

8.9

 

 

9.4

 

 

8.2

 

 

Amortization of purchased intangibles

0.2

 

 

 

 

0.2

 

 

 

 

Gross margin on professional services and other revenues on a non-GAAP basis

33.7

 

%

32.5

 

%

32.8

 

%

31.6

 

%

 

 

 

 

 

Gross profit on a GAAP basis

$

274,522

 

 

$

207,592

 

 

$

773,227

 

 

$

583,523

 

 

Stock-based compensation expense

8,659

 

 

5,385

 

 

23,602

 

 

13,789

 

 

Amortization of purchased intangibles

1,312

 

 

688

 

 

4,353

 

 

2,043

 

 

Gross profit on a non-GAAP basis

$

284,493

 

 

$

213,665

 

 

$

801,182

 

 

$

599,355

 

 

 

 

 

 

 

Gross margin on total revenues on a GAAP basis

72.7

 

%

73.9

 

%

72.4

 

%

73.6

 

%

Stock-based compensation expense

2.3

 

 

1.9

 

 

2.2

 

 

1.7

 

 

Amortization of purchased intangibles

0.3

 

 

0.3

 

 

0.3

 

 

0.3

 

 

Gross margin on total revenues on a non-GAAP basis

75.3

 

%

76.1

 

%

74.9

 

%

75.6

 

%

 

 

 

 

 

Research and development expense on a GAAP basis

$

79,992

 

 

$

52,575

 

 

$

212,282

 

 

$

148,694

 

 

Stock-based compensation expense

(17,685

)

 

(9,899

)

 

(45,523

)

 

(25,732

)

 

Amortization of purchased intangibles

(29

)

 

 

 

(86

)

 

 

 

Research and development expense on a non-GAAP basis

$

62,278

 

 

$

42,676

 

 

$

166,673

 

 

$

122,962

 

 

 

 

 

 

 

Sales and marketing expense on a GAAP basis

$

57,982

 

 

$

45,524

 

 

$

172,909

 

 

$

130,962

 

 

Stock-based compensation expense

(10,711

)

 

(6,882

)

 

(30,089

)

 

(19,207

)

 

Amortization of purchased intangibles

(3,858

)

 

(802

)

 

(10,828

)

 

(2,530

)

 

Sales and marketing expense on a non-GAAP basis

$

43,413

 

 

$

37,840

 

 

$

131,992

 

 

$

109,225

 

 

 

 

 

 

 

General and administrative expense on a GAAP basis

$

35,243

 

 

$

28,693

 

 

$

109,085

 

 

$

78,042

 

 

Stock-based compensation expense

(11,918

)

 

(7,155

)

 

(36,032

)

 

(19,719

)

 

Amortization of purchased intangibles

(57

)

 

 

 

(170

)

 

 

 

General and administrative expense on a non-GAAP basis

$

23,268

 

 

$

21,538

 

 

$

72,883

 

 

$

58,323

 

 

 

 

 

 

 

VEEVA SYSTEMS INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (continued)

(Dollars in thousands, except per share data)

(Unaudited)

 

Three months ended
October 31,

Nine months ended
October 31,

 

2020

2019

2020

2019

Operating expense on a GAAP basis

$

173,217

 

 

$

126,792

 

 

$

494,276

 

 

$

357,698

 

 

Stock-based compensation expense

(40,314

)

 

(23,936

)

 

(111,644

)

 

(64,658

)

 

Amortization of purchased intangibles

(3,944

)

 

(802

)

 

(11,084

)

 

(2,530

)

 

Operating expense on a non-GAAP basis

$

128,959

 

 

$

102,054

 

 

$

371,548

 

 

$

290,510

 

 

 

 

 

 

 

Operating income on a GAAP basis

$

101,305

 

 

$

80,800

 

 

$

278,951

 

 

$

225,825

 

 

Stock-based compensation expense

48,973

 

 

29,321

 

 

135,246

 

 

78,447

 

 

Amortization of purchased intangibles

5,256

 

 

1,490

 

 

15,437

 

 

4,573

 

 

Operating income on a non-GAAP basis

$

155,534

 

 

$

111,611

 

 

$

429,634

 

 

$

308,845

 

 

 

 

 

 

 

Operating margin on a GAAP basis

26.8

 

%

28.8

 

%

26.1

 

%

28.5

 

%

Stock-based compensation expense

13.0

 

 

10.4

 

 

12.7

 

 

9.9

 

 

Amortization of purchased intangibles

1.4

 

 

0.5

 

 

1.4

 

 

0.6

 

 

Operating margin on a non-GAAP basis

41.2

 

%

39.7

 

%

40.2

 

%

39.0

 

%

 

 

 

 

 

Net income on a GAAP basis

$

96,959

 

 

$

82,245

 

 

$

277,080

 

 

$

234,936

 

 

Stock-based compensation expense

48,973

 

 

29,321

 

 

135,246

 

 

78,447

 

 

Amortization of purchased intangibles

5,256

 

 

1,490

 

 

15,437

 

 

4,573

 

 

Income tax effect on non-GAAP adjustments(1)

(25,587

)

 

(17,662

)

 

(80,650

)

 

(56,088

)

 

Net income on a non-GAAP basis

$

125,601

 

 

$

95,394

 

 

$

347,113

 

 

$

261,868

 

 

 

 

 

 

 

Diluted net income per share on a GAAP basis

$

0.60

 

 

$

0.52

 

 

$

1.73

 

 

$

1.49

 

 

Stock-based compensation expense

0.30

 

 

0.18

 

 

0.84

 

 

0.50

 

 

Amortization of purchased intangibles

0.03

 

 

0.01

 

 

0.10

 

 

0.02

 

 

Income tax effect on non-GAAP adjustments(1)

(0.15

)

 

(0.11

)

 

(0.51

)

 

(0.35

)

 

Diluted net income per share on a non-GAAP basis

$

0.78

 

 

$

0.60

 

 

$

2.16

 

 

$

1.66

 

 

________________________

(1)

For the three and nine months ended October 31, 2020 and 2019, management used an estimated annual effective non-GAAP tax rate of 21.0%.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20201201006142/en/

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