Veeva Systems Inc Q2 2025 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Saket Kalia - Barclays - Analyst : Okay. Great. Nice job on the quarter. Peter, maybe just to start with you. Can we just talk a little bit about the latest with Vault CDMS? Maybe touch on sort of how some of those ramps are going with some of the top 20 pharmas that have adopted the tool, and maybe we could touch on sort of how the pipeline looks for continued share gains in that market.

Question: Saket Kalia - Barclays - Analyst : That's great. That's great to hear. Tim, maybe for my follow-up for you. Great to see the guide for commercial subscription revenue go up for this year. Can you just maybe touch on sort of the size and growth profile of maybe what we've called the non-CRM part of commercial, right? Basically, those businesses that aren't tied to Veeva CRM. Does that make sense?

Question: Saket Kalia - Barclays - Analyst : Very helpful. Thanks, guys.

Question: Ken Wong - Oppenheimer - Analyst : Great. Fantastic. The first question for you, Tim. I realize demand trends aren't always linear like we investors like. Can you help us think through kind of what's going on with the R&D subscription line? You guys trimmed it a quarter ago. You bumped it back up. Like what changed relative to 3 months ago that gives you guys this renewed confidence?

Question: Ken Wong - Oppenheimer - Analyst : Got it. Perfect. And then Peter or Paul, just circling back to the Vault CRM wins, again, 14 customers, that's a fantastic outcome. You also mentioned next release of Vault CRM in Q4 and then kind of the migration timeline. Any reason to think that the next version of Vault CRM is like that will have an impact on deployment timeline? So I guess in short, would a delay of that release somehow fall when your customers will start to migrate?

Question: Ken Wong - Oppenheimer - Analyst : All right, guys. Thanks for the insight, guys.

Question: Brian Peterson - Raymond James - Analyst : Congrats on the quarter. I'll keep it to one. So obviously, good to see the Service Center launch. I know it's early days there, but I'm curious. How would you define success in that market? And as we're thinking about revenue contributions over the next few years, any way to kind of stack rank that contribution versus other things that you have in the offer?

Question: Brian Peterson - Raymond James - Analyst : Great. Thanks, Paul.

Question: Rishi Jaluria - RBC Capital Markets - Analyst : I've got 2. First, Peter, in your prepared remarks, you talked about some of the early traction you're seeing with the AI Partner Program. Can you maybe talk about what are some of the use cases you've seen so far? And maybe philosophically, as you see some of these use cases get built out and maybe even start to see some early adoption, is there a point at which that may inform your own internal road map and you have the flexibility to maybe accelerate some plans in terms of integrating gen AI into the platform? And then I've got a quick follow-up.

Question: Rishi Jaluria - RBC Capital Markets - Analyst : Yes. Got it. That's really helpful. And then just in terms of some of the adjacencies in here, and we talked about Service Center or Campaign Manager I know comes out later this year. You've had some kind of signs of early traction and early interest. Maybe can you help us understand, number one, with some of the success you're seeing with Service Center early, is this generally a greenfield? Is this displacement? And how should we be thinking about the advantages that these products have even on a standalone basis relative to incumbent vendors?

Question: Rishi Jaluria - RBC Capital Markets - Analyst : Wonderful, thank you.

Question: Tyler Radke - Citi - Analyst : Peter, it's encouraging to see the beaten raise here and particularly despite some services weakness. I'm wondering if you attribute some of the strength that you saw in new bookings as a function of the environment getting slightly better. I know last quarter, you called out headwinds, but I didn't see anything too much about the macro. And certainly, some of the results from your publicly traded peers in life sciences would indicate we're maybe moving off the bottom. So just curious if you've seen any project acceleration, anything that makes you more optimistic about the overall environment by the end of the second half.

Question: Tyler Radke - Citi - Analyst : Great. That's helpful. And maybe a follow-up for Tim. Just as I look at the moving pieces in the guide, can you just walk through the services piece? And then as I think about the guide mostly coming from commercial, is it the new CRM wins that you talked about in the quarter, was that the biggest driver of the commercial raise? Or was it other pieces of the portfolio that outperformed on the commercial side?

Question: Tyler Radke - Citi - Analyst : Thank you for the color, and Tim, I hope we can continue to work together in the future. Thanks.

Question: Stan Berenshteyn - Wells Fargo Securities - Analyst : So in the prepared remarks, you called out a top 20 biopharma win in R&D, I think, standardizing on RIM and CTMS. Could you just walk us through how long did it take for this deal to work itself through the pipeline? And maybe just generally, how active is your pipeline with other large pharma potentially looking to standardize multiple Vault product suites?

Question: Stan Berenshteyn - Wells Fargo Securities - Analyst : Helpful. Maybe just a quick follow-up on the Crossix strength that you're seeing. Anything to call out related to the election cycle? Or is there more reliance by clients on omnichannel marketing that maybe you're benefiting from? I'm just wondering if you're seeing anything incremental just seasonally from the election cycle. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 28, 2024 / 9:00PM, VEEV.N - Q2 2025 Veeva Systems Inc Earnings Call

Question: Brent Bracelin - Piper Sandler - Analyst : One question on top 20 deal activity and a follow-up on margins. Peter, I get the stronger execution and a little luck this quarter helping you. But just curious, what's driving the top 20 wins? It looks like you got some in safety, quality, Link Key People, R&D, it feels like a bit of a change from last quarter. And just curious if it's vendor consolidation that's resonating out there? Any sort of additional color you can point to why the deals closed this quarter would be super helpful. And then a quick follow-up for Tim.

Question: Brent Bracelin - Piper Sandler - Analyst : Helpful color there. And then, Tim, as a follow-up on margins, I think op margins were the highest we've seen in 3 years. Great to see that back trending above 40%. It looks like the biggest factor there was gross margin improvement. Can you just talk a little bit about what's driving that? Is it just mix shift? And how should we think about that going forward?

Question: Brent Bracelin - Piper Sandler - Analyst : Makes sense. Great to see you. Thanks, guys.

Question: Dylan Becker - William Blair & Company - Analyst : Really nice job here. Maybe for Peter, starting with you. You called out Site Connect in the prepared remarks. And so wondering if we could get some more context on kind of the extension of the clinical offering. We've talked about other channels, ePRO, eCOA, recruitment in the past, and there's a long runway within the existing tool set. But how should we think about kind of maybe more of the early, early emerging solutions within clinical, if that's the right way of thinking about it?

Question: Dylan Becker - William Blair & Company - Analyst : No, that was -- it was, yes, just around kind of other early-stage solutions in clinicals. But I think, yes, the Site Connect piece covers it. It was more around ePRO, eCOA, all the other areas of recruitment, RTSM, some of the other areas we talked about in clinical.

Question: Dylan Becker - William Blair & Company - Analyst : Okay, great. Thanks, Peter.

Question: Jack Wallace - Guggenheim Securities - Analyst : Congrats on a strong quarter and the outlook. Peter and Paul, I wanted to ask about the -- how the migration conversations are coming along. And look, you've got a competitor that's made some noise about a takeaway. But it sounds like you're winning pretty much every new Vault deal that's out there. I guess, one, how are the conversations progressing with your largest customers and their -- those timelines? And two, are you hearing any noise from your other competitors around any AI-based functionality that they're thinking is going to be a way to pick off a couple of customers? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 28, 2024 / 9:00PM, VEEV.N - Q2 2025 Veeva Systems Inc Earnings Call

Question: Jack Wallace - Guggenheim Securities - Analyst : Thank, Paul. Really appreciate it. And if I could sneak a quick one in on Compass, it's been 8 months since the launch of Prescriber and National. Just wondering how conversations with clients at a high level are progressing. And if any of your larger customers have deemed the data to be compensation grade. And if not yet, at this point, what a timeline would look like for that determination.

Question: Jack Wallace - Guggenheim Securities - Analyst : Got it. Thank you so much. Congrats again. Thank you.

Question: Callie Valenti - Goldman Sachs - Analyst : Congrats on the quarter. Just a higher-level one for me to start with. When you look at your addressable market today, just curious like what product suite do you see the most opportunity to continue developing functionality in over time? Is that kind of more of the R&D side of the business versus the commercial? And any kind of specific products you would call out?

Question: Callie Valenti - Goldman Sachs - Analyst : Yes, that makes sense. And then just other quick follow-up. Just wanted to ask you, as science continues to evolve at kind of a rapid clip, how do you think about your solutions, particularly some of the trial-facing ones evolving with that and just kind of some of the flexibility that you've built into those solutions to deal with that?

Question: Craig Hettenbach - Morgan Stanley - Analyst : I wanted to touch on capital allocation. As your cash balance continues to build up, any update on the strategy there and opportunity to put that to work?

Question: Craig Hettenbach - Morgan Stanley - Analyst : Okay. And then as my follow-up, just touching on headcount, up 1% year-over-year. I'm sure some of that is just some of the services weakness in terms of response to that. But just more broadly, how are you thinking about headcount and kind of going into next year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 28, 2024 / 9:00PM, VEEV.N - Q2 2025 Veeva Systems Inc Earnings Call

Question: Craig Hettenbach - Morgan Stanley - Analyst : That's helpful. Thanks.

Question: Ryan MacDonald - Needham & Co. - Analyst : Congrats on a great quarter. Peter, I wanted to talk about safety a bit. Obviously, it's continuing to have nice success there. But as it was mentioned in the prepared remarks, it's a complicated segment with customers resistant to change. Just curious, as you're continuing to have safety conversations with those prospective customers, is there some great unlock that we should kind of look for to sort of help drive this modernization into the cloud in safety versus on-prem in that segment of the market? And as you think about the next 12 to 24 months, is there a catalyst in your view that sort of unlocks that opportunity or maybe hastens the wave of innovation there?

Question: Ryan MacDonald - Needham & Co. - Analyst : Helpful color there, Peter. Maybe as a follow-up question, just wanted to touch on Vault Basics just real quick. I know it's a small -- sort of smaller segment of the business in terms of your exposure. But obviously, it's been one that if we look over the last 12 months has been more volatile in the earlier-stage biotech. Just curious, if you think about some of the early success here or maybe momentum that Vault Basics gives you at the lower end of that market can turn that earlier-stage segment into more of a growth engine over the next couple of years for Veeva.

Question: Ryan MacDonald - Needham & Co. - Analyst : Makes sense. Appreciate the call. Congrats again. Thank you.

Question: Jenny Cao - Truist Securities - Analyst : This is Jenny Cao on for Jailendra Singh at Truist Securities. Just a question on professional service. Well, first, congrats on a nice quarter. But it seems the professional services part of Veeva solutions continued to be a weak spot in the report this quarter. Is that still because customers kind of see professional services as discretionary and are still continuing to delay certain services? And then for the part where customers are contracting directly with third-party vendors, is that driven by some initiatives to [ bid ] costs or be more efficient? What do you think is driving that?

Question: Jenny Cao - Truist Securities - Analyst : Thanks for that correction, and just a follow-up. I remember since November last year, Veeva was seeing some elongated deal cycles and deal timing. Since then, have you seen any of the delayed decision-making come back in the last 10 months? Like for the deals that weren't substituted by their own internal solutions, like what has been a typical time frame for that to come back, if you have seen any?

Question: David Larsen - BTIG - Analyst : Congratulations on the strong quarter. Can you talk a little bit about the competitive environment, especially on the clinical side? It sounds like you've made a lot of advancements on the clinical side over the years. So is your portfolio suite at least comparable to like Phase Forward and Medidata and eResearch Technologies? Do you have all of those modules that those competitors have now? And if not, when would you expect to have them?

Question: David Larsen - BTIG - Analyst : Okay. Great. And then, Peter, from your perspective, how important is it to have the commercial and the clinical side all on one single sort of Vault database? Some people I've talked to in the channel say, on the biopharma side, you really have 2 different kind of companies in a way. You got the commercial sales side, and then you got the research side. So having everything on Vault maybe doesn't really matter. My view is different. I think it matters a lot. Can you maybe just talk a little bit about that from your perspective, Peter?

Question: David Larsen - BTIG - Analyst : Great. Thanks very much.