Veeva Announces Fourth Quarter and Fiscal Year 2021 Results

Veeva Systems Inc. (NYSE: VEEV), a leading provider of industry cloud solutions for the global life sciences industry, today announced results for its fourth quarter and fiscal year ended January 31, 2021.

“It was a transformational year for life sciences and for Veeva. The industry delivered breakthroughs in diagnostics, therapies, and vaccines during a global pandemic,” said CEO Peter Gassner. “I am proud of the Veeva team's execution and commitment. We innovated faster than ever before to help our customers adapt quickly in support of doctors and patients around the world.”

Fiscal 2021 Fourth Quarter Results:

• Revenues: Total revenues for the fourth quarter were $396.8 million, up from $311.5 million one year ago, an increase of 27% year-over-year. Subscription services revenues for the fourth quarter were $322.8 million, up from $254.1 million one year ago, an increase of 27% year-over-year.
• Operating Income and Non-GAAP Operating Income⁽¹⁾: Fourth quarter operating income was $98.8 million, compared to $60.4 million one year ago, an increase of 64% year-over-year. Non-GAAP operating income for the fourth quarter was $153.2 million, compared to $103.4 million one year ago, an increase of 48% year-over-year.
• Net Income and Non-GAAP Net Income⁽¹⁾: Fourth quarter net income was $102.9 million, compared to $66.2 million one year ago, an increase of 56% year-over-year. Non-GAAP net income for the fourth quarter was $126.1 million, compared to $85.5 million one year ago, an increase of 47% year-over-year.
• Net Income per Share and Non-GAAP Net Income per Share⁽¹⁾: For the fourth quarter, fully diluted net income per share was $0.64, compared to $0.42 one year ago, while non-GAAP fully diluted net income per share was $0.78, compared to $0.54 one year ago.

Fiscal Year 2021 Results:

• Revenues: Total revenues for the fiscal year ended January 31, 2021 were $1,465.1 million, up from $1,104.1 million one year ago, an increase of 33% year-over-year. Subscription services revenues were $1,179.5 million, up from $896.3 million one year ago, an increase of 32% year-over-year.
• Operating Income and Non-GAAP Operating Income⁽¹⁾: Fiscal year 2021 operating income was $377.8 million, compared to $286.2 million one year ago, an increase of 32% year-over-year. Non-GAAP operating income for fiscal year 2021 was $582.8 million, compared to $412.2 million one year ago, an increase of 41% year-over-year.
• Net Income and Non-GAAP Net Income⁽¹⁾: Fiscal year 2021 net income was $380.0 million, compared to $301.1 million one year ago, an increase of 26% year-over-year. Non-GAAP net income for fiscal year 2021 was $473.2 million, compared to $347.4 million one year ago, an increase of 36% year-over-year.
• Net Income per Share and Non-GAAP Net Income per Share⁽¹⁾: For fiscal year 2021, fully diluted net income per share was $2.36, compared to $1.90 one year ago, while non-GAAP fully diluted net income per share was $2.94, compared to $2.19 one year ago.

“Our record results in Q4 and the year reflect our continued ability to deliver for the industry and our deep commitment to customer success,” said CFO Brent Bowman. “We are investing aggressively for the sizable market opportunity we see across all our major product areas.”

Recent Highlights:

• Year of Innovation, Growth, and Expanding Strategic Relationships with Customers — Veeva ended the year with 993 customers, up from 861 the year prior. Veeva Commercial Cloud grew to 432 customers, up from 390, and Veeva Vault increased to 852 customers, up from 715⁽²⁾. Subscription revenue retention was 124% for the year⁽³⁾. Customer growth and expansion were fueled by Veeva’s continued innovation across R&D and commercial to help the customers streamline drug development and move to a digital-first commercial model.
• Record Bookings Quarter and Year for Veeva Commercial Cloud and Veeva Development Cloud — Veeva again expanded its leadership position in commercial, posting record Commercial Cloud bookings for the fourth quarter and fiscal 2021. This was marked by outperformance across Commercial Cloud, with particular strength in Veeva CRM Engage Meeting in Q4. Veeva Development Cloud also had record bookings for the quarter and year fueled by widespread momentum.
• Veeva Becomes a Public Benefit Corporation — Following an overwhelming majority vote, Veeva was the largest-ever and first publicly traded company to become a public benefit corporation (PBC). As a PBC, Veeva’s legal charter now reflects its commitment to all stakeholders, including customers, employees, and shareholders. The move aligns with Veeva’s long-term mission to help life sciences companies in their crucial work to improve and extend life.

Financial Outlook:

Veeva is providing guidance for its fiscal first quarter ending April 30, 2021 as follows:

• Total revenues between $408 and $410 million.
• Non-GAAP operating income between $157 and $159 million⁽⁴⁾.
• Non-GAAP fully diluted net income per share between $0.77 and $0.78⁽⁴⁾.

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

• Total revenues between $1,755 and $1,765 million.
• Non-GAAP operating income of about $655 million⁽⁴⁾.
• Non-GAAP fully diluted net income per share of approximately $3.20⁽⁴⁾.

Conference Call Information

Investor Presentation Details

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

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⁽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⁾ The combined customer counts for Veeva Commercial Cloud and Veeva Vault exceed the total customer count in each year because some customers subscribe to products in both areas. Veeva Commercial Cloud customers are those customers that have at least one of the following products: Veeva CRM, Veeva CLM, Veeva CRM Approved Email, Veeva CRM Engage, Veeva Align, Veeva CRM Events Management (including services delivered via Physicians World), Veeva Nitro, Veeva Andi, Veeva OpenData, Veeva Link, Veeva Network Customer Master, Veeva Crossix, or Veeva Data Cloud. Veeva Vault customers are those customers that have at least one Vault product.

⁽³⁾ We calculate our annual subscription services revenue retention rate for a particular fiscal year by dividing (i) annualized subscription revenue as of the last day of that fiscal year from those customers that were also customers as of the last day of the prior fiscal year by (ii) the annualized subscription revenue from all customers as of the last day of the prior fiscal year. Annualized subscription revenue is calculated by multiplying the daily subscription revenue recognized on the last day of the fiscal year by 365. This calculation includes the impact on our revenues from customer non-renewals, deployments of additional users or decreases in users, deployments of additional solutions or discontinued use of solutions by our customers, and price changes for our solutions.

⁽⁴⁾ Veeva is not able, at this time, to provide GAAP targets for operating income and fully diluted net income per share for the first fiscal quarter ending April 30, 2021 or fiscal year ending January 31, 2022 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.

About Veeva Systems

Veeva is the global leader in cloud software for the life sciences industry. Committed to innovation, product excellence, and customer success, Veeva serves more than 975 customers, ranging from the world’s largest pharmaceutical companies to emerging biotechs. As a Public Benefit Corporation, Veeva is committed to balancing the interests of all stakeholders, including customers, employees, shareholders and the industries it serves. 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) 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; (iv) 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; (v) our expectation that the future growth rate of our revenues will decline; (vi) loss of one or more customers, particularly any of our large customers; (vii) fluctuation of our results, which may make period-to-period comparisons less meaningful; (viii) adverse changes in the life sciences industry, including as a result of customer mergers; (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 economic, regulatory, international trade relations, or market conditions, including with respect to natural disasters or actual or threatened public health emergencies; (xiii) a decline in new subscriptions that may not be immediately reflected in our operating results due to the ratable recognition of our subscription revenue; (xiv) pending, threatened, or future legal proceedings and related expenses; and (xv) our recent conversion to a Delaware public benefit corporation, including the expected impact, benefits, and risks of our 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 October 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.

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.

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

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