Veeva Systems Inc Q3 2025 Earnings Call Summary

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

Question: Saket Kalia - Barclays - Analyst : Okay. Great. Hey, guys. Thanks for taking my questions here, and nice job this quarter. Peter, maybe just to start with you, to your point, Veeva did have some nice innovation this quarter, particularly with Vault CRM. So I was wondering, as you talk to customers about their migration away from Veeva CRM and away from other potential competitors, what sort of the future -- what are the future road maps that you're sort of speaking to them around the benefits of Vault CRM? I guess, as we all sort of wonder about the effort involved in moving off of Veeva CRM, what are you talking about the main benefits when moving to Vault CRM, if that makes sense?

Question: Saket Kalia - Barclays - Analyst : Got it. Super helpful. Brian, maybe for my follow-up for you. It was great to see the strong Q4 billings outlook remain largely unchanged, of course, on the back of a strong Q3 as well. Maybe the question is, can you just talk a little bit about how much the CDMS ramps are contributing to that? And how you sort of think about CDMS as a driver for billings going into next year as well, even anecdotally?

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

Question: Ken Wong - Oppenheimer & Co., Inc. - Analyst : Great. Thanks for taking my question. This first one, just could be Peter or Paul. You touched on MLR bot as potentially being a second -- well, it will be a separate license. One, I guess, what kind of early interest are you getting there? And then two, when we think about the potential monetization, is it going to be comparable to one of your Commercial modules, which I think in the past, you've said is a 10% to 15% uplift? Or is this something more value-add and something you can charge higher for?

Question: Ken Wong - Oppenheimer & Co., Inc. - Analyst : Got it, perfect. And then, Brian, also in the prepared remarks, you guys touched on kind of good billings upside driven by services. And when I think about the year -- first part of the year, perhaps some pushout in services. Now, you're calling out potentially some better services. Anything to read into that? Or again, maybe more just kind of one-off timing dynamic?

Question: Ken Wong - Oppenheimer & Co., Inc. - Analyst : Okay, fantastic. Thanks a lot, guys.

Question: Joe Vruwink - Robert W. Baird & Co., Inc. - Analyst : Great. Thanks for taking my questions. In the prepared remarks, there was mention that Veeva is making progress on several large strategic partnership opportunities in Development Cloud. I wanted to see if these are maybe similar in scope to how Veeva has come to work with the likes of Merck and BI and what was discussed under kind of those large strategic engagements? And if not or if so, can you maybe speak to any commonality in terms of the discussions you're having the type of solutions or end objectives that sponsors are looking to achieve and see as possible by just leveraging Veeva in a greater way?

Question: Joe Vruwink - Robert W. Baird & Co., Inc. - Analyst : Okay. That's very helpful. And then, I guess, I'll ask my annual question just given customers are well into their budgeting for the new year. Veeva typically has good visibility at this point in terms of how some of those plans are coming together. How does your visibility on intended performance in 2026 compared to what you normally have at this point in time? Not asking for a number, but just kind of how visibility compares? And would you maybe say it's any better or worse by virtue of things like ramping agreements that you know are coming or just the state of active discussions with customers?

Question: Joe Vruwink - Robert W. Baird & Co., Inc. - Analyst : Great. Thank you very much.

Question: Brian Peterson - Raymond James - Analyst : Hi, gentlemen. Thanks for taking the question, and congrats on the strong quarter. Peter, I just certainly wanted to hit on the regulatory backdrop. I know there's a lot of potential changes coming in the Trump administration, at least that are being discussed. I'd love to understand what your customer feedback has been there? And how you think about the potential implications to Veeva under a new administration?

Question: Brian Peterson - Raymond James - Analyst : Got it. And maybe a follow-up for Brian. The margin upside this quarter was really impressive. Just anything that you would call out in terms of timing of expenses in the third quarter? I would appreciate any perspective there. Thanks, guys.

Question: Ryan MacDonald - Needham & Company Inc. - Analyst : Peter, maybe I just wanted to ask on the Boehringer Ingelheim deal on the large Vault win there. Just curious as to what the tender or thoroughness of the evaluation process that maybe they were going through and how that compares to other prospective migrations in the pipeline from the top 20? Just trying to understand maybe how deep they are sort of evaluating other solutions in the marketplace versus just sort of being a Veeva-only type discussion at this point? Thanks.

Question: Ryan MacDonald - Needham & Company Inc. - Analyst : Helpful, thanks very much. Maybe just a follow-up for Brian. Obviously, with the rollout of these generative AI applications, a few of them being sort of included at no additional charge. How should we think about how that impacts gross margins going into next year, understanding that, obviously, we're not giving guidance yet for next year? But just generally, how you think that as the adoption and usage of that, the GenAI apps grows over the next year, any sort of impact we should expect from a margin perspective? Thanks.

Question: Ryan MacDonald - Needham & Company Inc. - Analyst : Appreciate the clarification. Thanks you.

Question: Anne Samuel - JPMorgan - Analyst : Hi, thanks so much for taking the question. You highlighted that your safety solutions are approaching a tipping point. And I was wondering if maybe you could provide a little bit more color about what that means. And then could you just remind us of the relative size of this market? What's the unmet need? And where Veeva is differentiated here? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 05, 2024 / 10:00PM, VEEV.N - Q3 2025 Veeva Systems Inc Earnings Call

Question: Anne Samuel - JPMorgan - Analyst : That's really helpful. Thank you. And then maybe just one more. You noted that your customers are, as you said, settling into the current macro. And I was wondering, are you viewing this as the new normal? And if not, what are you monitoring for early signs of an inflection from here? And which areas of your business would really see a change first? Thanks.

Question: Anne Samuel - JPMorgan - Analyst : Really helpful. Thank you.

Question: Dave Windley - Jefferies - Analyst : So hi. Thank you, and I apologize for any background noise if it comes through. I was wondering -- I understand you answered the question about changes in administration earlier. But theoretically, if appointments were approved and if appointments followed through on some of their desires and direct-to-consumer advertising was eliminated, how would that impact your business model possibly related? Thanks.

Question: Gabriela Borges - Goldman Sachs - Analyst : Hi, good afternoon. Thank you. I think this one is for Paul. Paul, why don't we visit the discussion on commercial growth and specifically on what's happening with the seat count dynamic versus the add-on and the upsell dynamic within seat count based commercial? Maybe just give us an update on how those two factors are playing out? And to what extent you're still seeing pressure in seat count? And to what extent you feel confident that you can offset any seat count pressure without? Thank you.

Question: Gabriela Borges - Goldman Sachs - Analyst : Yeah. That makes a lot of sense. Thank you. The follow-up is on your lending so far from the CRM conversions to Vault that you've already done. Maybe just highlight for us, what do you know today that you didn't know a year or two ago using the customer transition to Vault? And how is that helping you navigate some of the conversations on the ground?

Question: Gabriela Borges - Goldman Sachs - Analyst : Great to hear. Thanks for that, Paul.

Question: Brent Bracelin - Piper Sandler Companies - Analyst : Thank you. Good afternoon. Reading through the prepared remarks here and the commentary on the call so far, something reads and feels a little different relative to the top 20 appetite to lean into the broader Veeva portfolio here. I know, historically, you've talked about the top 20 governor being maybe engaging one product a year, but I get the sense that maybe there's a greater sense of urgency to move off of legacy and embrace maybe multiple products. Walk me through the level of dialogue you're having across the whole portfolio with these top 20. Is that the right read or is it a misread?

Question: Brent Bracelin - Piper Sandler Companies - Analyst : Helpful color. And then maybe, Brian, for you, 43.5% operating margin. This is kind of the highest we've seen out of Veeva on record. The biggest beat versus your guide in three years. A bit of a hot start for you for the first quarter out of the gate. But how should we think about the cost discipline you put in place in the quarter and leverage and it just -- your guide obviously implies you're going to have some additional expenses here in Q4. But walk us through the philosophy on cost discipline and leverage you showed this quarter and what it means here as we think about 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. DECEMBER 05, 2024 / 10:00PM, VEEV.N - Q3 2025 Veeva Systems Inc Earnings Call

Question: Brent Bracelin - Piper Sandler Companies - Analyst : Helpful. Thank you.

Question: Stan Berenshteyn - Wells Fargo Securities, LLC - Analyst : Hi, thanks for taking my questions. First, I would just like to follow up on Vault CRM. At the Investor Day, you had suggested more top 20 commitments likely to be announced over the next 6 months or so. So clearly, these conversations are maturing. Now as you reflect on these discussions you're having with clients, what have been the gating factors to get these commitments? And with Vault CRM already out in the wild, as you say, how is the hurdle for these commitments come down at all?

Question: Stan Berenshteyn - Wells Fargo Securities, LLC - Analyst : Great. And then quickly on your pivot toward horizontal enterprise applications, when can we expect a more concrete product strategy that you'll be able to share with us? Thanks.

Question: Stan Berenshteyn - Wells Fargo Securities, LLC - Analyst : Great. Thank you.

Question: Tyler Radke - Citi - Analyst : Yeah. Thanks for taking the question here. If you think about FY26, I know you're not giving formal guidance, but just any way of framing how we should think about the growth in the context of this year and your long-term targets? And as we think about the macro environment, clearly, your numbers have been very resilient. But just given you do have longer sales cycles, have you seen any change in sort of the early stages of those larger deals that maybe layering in towards the back half of next year, for instance, that you would call out? Thank you.

Question: Craig Hettenbach - Morgan Stanley - Analyst : Thanks. Just going back to the horizontal strategy and the strength in the core business margin profile today, how do you think about that in terms of perhaps giving you a little bit more leverage to make some of these investments as you get that going? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 05, 2024 / 10:00PM, VEEV.N - Q3 2025 Veeva Systems Inc Earnings Call

Question: Craig Hettenbach - Morgan Stanley - Analyst : Got it. And then I just had a follow-up question on services. Is that market looks to be stabilizing? How do you think about that on like a multiyear profile from a growth, even if it's a range? Like what's a reasonable growth assumption in services looking out next couple of years?

Question: Craig Hettenbach - Morgan Stanley - Analyst : Okay. Thanks.

Question: David Hynes - Canaccord Genuity - Analyst : Hey, guys. Congrats on nice quarter. Hey, Paul, one of the questions I've picked up since Salesforce reported earlier this week is that they called out life sciences cloud is a component of 3 of their top 10 deals in the quarter. I'm not asking you to speak for them. But as you see what's happening at your customers, is there any sense that Salesforce is showing up more often?

Question: David Hynes - Canaccord Genuity - Analyst : Yeah, okay. And then, Brian, a follow-up for you. Can you just remind me of the impact that TFC has on margins this year? And whether there's any normalization or reversal that we should be thinking about as we set our models for next year?

Question: David Hynes - Canaccord Genuity - Analyst : Okay. All right. Thank you.

Question: Jailendra Singh - Truist Securities - Analyst : Thank you, and thanks for taking my questions. I want to go back to Vault CRM. Congrats on the fourth top biopharma commitment. Can you confirm whether it's an existing CRM customer or your new CRM customer? And related to that, can you remind us what is the average length of time from a customer commitment to evolve, to migration, to when they are live on the platform? If it is largely based on customer preferences, how do they typically think about when they want to migrate post commitment?

Question: Jailendra Singh - Truist Securities - Analyst : And whether it's a new customer or an existing CRM customer?

Question: Jailendra Singh - Truist Securities - Analyst : Yeah.

Question: Jailendra Singh - Truist Securities - Analyst : And my follow-up is on the decent acceleration in net head count increase in the quarter. Anything to read into that? I mean, clearly, you're seeing some good momentum here. Any particular areas you guys are focused on with respect to head count additions or is it more across the board?

Question: Jailendra Singh - Truist Securities - Analyst : Thanks, guys.

Question: Andrew DeGasperi - BNP Paribas Exane - Analyst : Thanks. I just had two questions. First, on the migration of these customers to Vault CRM. I was just wondering, do we start seeing an impact to gross margin? In other words, that royalty that you pay for Salesforce for Veeva CRM, is that going to improve over the next two years as these customers migrate? Or should we see this sort of improve later as the agreement ends?

Question: Andrew DeGasperi - BNP Paribas Exane - Analyst : Thanks. And then just on the direct-to-consumer advertising comments you made earlier. I just -- if you could remind us, I mean, is it Crossix the one product that really is focused on that or is there others within the commercial cloud portfolio? And maybe if you could add in as well, is that really -- in terms of the strength that you saw this year, has this been a change versus previous year?

Question: Andrew DeGasperi - BNP Paribas Exane - Analyst : Great. Thank you.

Question: David Larsen - BTIG - Analyst : Hi. Congratulations on the very good quarter. The CROs have obviously reported some challenges. Obviously, you're not a CRO doing the clinical trials, but you do sell into that space. Can you maybe just talk about what the difference is there? Why are they seeing challenges that you are not? And has there been any impact to like things like Study Training or Site Connect or any more of those clinical-trial-related focused products? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 05, 2024 / 10:00PM, VEEV.N - Q3 2025 Veeva Systems Inc Earnings Call

Question: David Larsen - BTIG - Analyst : Thanks very much. And then for Vault CRM wins, I think there were 14 in the quarter. That seems like a very good number. They were like three and five and five in fiscal 3Q and 4Q of '24 and 1Q of '25. 14 sounds like a lot. Is that a new sort of steady state? Thanks.

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

Question: Charles Rhyee - TD Cowen - Analyst : Yeah, thanks for taking my questions. I wanted to ask about, obviously, with the Walgreens strategic partnership, maybe talk about a little bit more where you think you are in your journey in adding data sources to Compass and Data Cloud in general? And maybe just give us a sense on how you feel sort of your competitive position in the market there is currently?

Question: Charles Rhyee - TD Cowen - Analyst : That's helpful. And maybe just a follow-up on Crossix. Obviously, a key driver of growth in commercial. Can you give us a sense what the Crossix growth rate has been through the first three quarters relative to the 11% growth for commercial? Just give us a sense it -- is it great or is it in line? Any color there would be helpful. Thanks.

Question: Charles Rhyee - TD Cowen - Analyst : Okay, thank you.

Question: Brad Sills - BofA Global Research - Analyst : Great. Thank you so much. I wanted to ask a question on just the general demand environment. It sounds like things are fairly stable, but maybe some green shoots that you're seeing in the big pharma. I think in some of the prepared remarks, segment of the commercial business, if I'm not -- I'm sorry, the R&D business, if I'm reading that properly. So are you seeing any kind of indications that things might be turning positive here just in the general spending environment? Thank you.

Question: Brad Sills - BofA Global Research - Analyst : That's great to hear. And then anything -- any update on the re-platforming effort? How do you feel about taking that to some of the larger accounts? Are you getting to the point where you're comfortable doing that? And any kind of early indications of how that's going? Thank you.

Question: Brad Sills - BofA Global Research - Analyst : That's great to hear. Thanks, Peter.

Question: Steven Valiquette - Mizuho Securities USA - Analyst : Great, thanks. Good afternoon, and thanks for taking the questions. Good to be covering the company again. Just a couple of questions here. First, on the Development Cloud. On the back of our initiation, we did some channel checks on industry R&D spending trends, et cetera. And one of the questions I wanted to ask on that was actually just touched on, on the last question, but maybe just to drill in a little bit deeper. I mean, it does look like clinical trial starts globally are actually growing again now for the last two quarters after declining for year over year for a couple of years. So I'm just curious as the follow-up question around that, do you guys actually look carefully at data points like that or do you just focus more on your own customer discussions, et cetera, that you just alluded to as far as your assessment of the marketplace? And then the only other quick follow-up question really is just at the Analyst Day a few weeks ago, the way you guys broke down your total revenue base by customer type was just a little bit different this year than it was last year. So I'm hoping you can just remind us again, what percent of your total book of business relates to CRO customers just from a percentage of revenue standpoint? I recall it was no more than 5% last year, but I just wanted to confirm if that was still the case currently. Thanks.

Question: Steven Valiquette - Mizuho Securities USA - Analyst : Got it. Okay. All right. Thank you.