Veeva : Q4 2023 Prepared Remarks

March 1, 2023

Q4 FY2023 Earnings Prepared Remarks

Peter Gassner, Founder, CEO

Brent Bowman, CFO

Legal Disclaimer

These prepared remarks contain forward-looking statements regarding Veeva's expected future performance and, in particular, includes statements regarding Veeva's products and services and guidance provided as of March 1, 2023 about Veeva's expected future financial results. Estimating guidance accurately for future periods is difficult. It involves assumptions and internal estimates that may prove to be incorrect and is based on plans that may change. Hence, there is a significant risk that actual results could differ materially from the guidance we have provided in these prepared remarks and we have no obligation to update such guidance. There are also numerous risks that have the potential to negatively impact our financial performance, including as a result of competitive factors, customer decisions and priorities, events that impact the life sciences industry, issues related to the security or performance of our products, issues that impact our ability to hire, retain and adequately compensate talented employees, and general macroeconomic and geopolitical events (including inflationary pressures, rising interest rates, currency exchange fluctuations, impacts related to Russia's invasion of Ukraine, and the pandemic).

We have summarized what we believe are the principal risks to our business in a section titled "Summary of Risk Factors" on pages 39 and 40 in our filing on Form 10-Q for the period ended October 31, 2022 which you can find here. Additional details on the risks and uncertainties that may impact our business can be found in the same filing on Form 10-Q and in our subsequent SEC filings, which you can access at sec.gov. We recommend that you familiarize yourself with these risks and uncertainties before making an investment decision.

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Veeva, Vault, and Crossix are registered trademarks of Veeva Systems Inc.

Q4 Business Update

Peter Gassner, Founder, CEO

Financial Results

The fourth quarter was a strong finish to the year for Veeva, delivering results ahead of our guidance. Total revenue was $563 million, up 16% year over year, and non-GAAP operating income was $209 million, or 37% of total revenue. Fiscal year revenue was $2.16 billion, up 16% year over year, and non-GAAP operating income was $830 million, or 39% of total revenue.

Looking Back at the Year

The past year was an important one for Veeva.

We got back together through customer summits, coworking, field kickoffs, and regional events. Connecting in person is key to building our intuition and forging strong bonds. I am especially proud of how we advanced the ways we get together with customers and each other, which are now optimized for deep connections and collaboration.

The breadth and depth of our solutions increased as we expand to support the most important areas of a life sciences company. We now have 10 major product areas and more than 30 major products, all on a path to product excellence. This product footprint is unique in the industry and is the fundamental driver of our deep industry partnership.

Picking the right big markets and executing with product excellence in each is something we have done very well over the years and that continued strong in fiscal 2023. It was a breakout year for clinical data management and we saw great traction in newer areas, including Veeva Vault Safety, Veeva Link, and Veeva Compass. We also set a course to move Veeva CRM to the Vault Platform which will give customers a better application over time and a common platform across commercial and R&D.

Overall, we made great progress in our vision to become the most strategic provider to life sciences.

Our partnership with the industry strengthened in all customer segments and geographies. Among the most significant was the first-of-its-kind,10-year partnership with Merck, who is taking a Veeva-first approach when our software and data are fit for purpose.

No Layoffs or Back to the Office Mandates

We have always operated the company with a disciplined, long-term approach to investing in the right people and the right markets for profitable growth and not swinging to extremes in difficult times or boom times.

We didn't over hire in the last few years or jump into speculative markets. We kept our teams lean and aren't planning to lay people off. Careful hiring helps us build high employee engagement and results in strong execution, innovation, and customer success.

Veeva Work Anywhere has been another positive for attracting and retaining the best talent and we are sticking with it. The team is productive and thriving with the flexibility to work at home or in the office on any given day.

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Commercial Solutions

Our expansion in commercial continues. In core CRM, we added 44 new customers in the year which included a number of SMBs in the fourth quarter. In fiscal 2023, Veeva CRM seats were unchanged year over year.

As expected, the evolution to hybrid customer engagement models leveraging digital is driving a roughly 10% reduction in field reps. These reductions began in the second quarter of fiscal 2022, the majority were completed by the end of fiscal 2023, and we anticipate additional reductions to take place through the end of fiscal 2024. We expect our growing market share and increasing commercial product adoption to more than offset the impact of rep reductions.

Vault CRM is off to a strong start in our customer communications and with product development. Since it's a backend platform change, the mobile app for field reps will remain the same, so no end user training will be needed. We plan to demo Vault CRM at Veeva Commercial Summit in early May and customers have appreciated the clarity and time to plan well ahead of the 2030 transition.

Commercial content is another area of strength and is key to our customers' digital engagement strategies. We added 90 new customers in the year and further expanded our leadership position.

Crossix ended the year with its second top 20 pharma committed to using Crossix analytics for all brands. While the advertising environment remains tough, causing slowing growth in the near-term, we are optimistic about long-term growth opportunities driven by new product innovations and our focus on enterprise-wide agreements.

Veeva Link ended the year strong with our fifth top 20 pharma selecting Veeva Link Key People for all therapeutic areas. Link Key Accounts and Link Workflow are growing with good early adopter customer engagement. Overall, Link is becoming a high leverage platform that will allow us to build a range of applications for real-time intelligence into the future.

I am very optimistic about what's ahead for Veeva Compass. We made great strides with the Compass Patient product this year, we're doubling down on resources focused in the data area, including a dedicated sales team for Compass, and the pipeline is growing. We're taking the right approach and time to deliver a better alternative to the legacy data provider and expect to release sales and prescriber data in early 2024.

Veeva Commercial Business Consulting had a record quarter and year. It's proving to be a very valuable service that leverages unique industrywide insights generated from Veeva product usage along with deep industry and product expertise. We have more than 180 people in Commercial Business Consulting today and are expanding into R&D.

R&D Solutions

The quarter and year were strong across the board for Veeva Development Cloud, which includes some of the most significant opportunities we see ahead.

Clinical operations grew to more than 470 Vault eTMF and 180 CTMS customers, which is also driving momentum in new areas including Veeva Site Connect and Study Training.

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It was an outstanding year in clinical data management as well, led by Vault EDC. Six top 20 pharmas have now selected Vault EDC for all new clinical trials going forward. Three closed in Q4 alone. These major multi-year agreements will contribute significant revenue over time and our EDC success will help advance our other early clinical data products, including RTSM and ePRO.

Clinical is a very big growth area for us. With the applications we have announced, we are only about 30% penetrated by revenue in clinical operations and less than 5% penetrated in clinical data.

Quality is another very large market opportunity for Veeva. In the year, we added more than 160 new customers and saw continued growth across the Vault Quality Suite. Validation Management, an add-on to QualityDocs, is progressing well with early adopters. We are also working on the fundamentals of Vault LIMS, a large and transformational product for quality and expect to have early adopters in the second half of 2023. We are very excited about LIMS and what it means for our future.

We continue to expand in regulatory, adding over 60 new customers in the year and increasing adoption of our newest Vault RIM offering, Vault Publishing.

Veeva Vault Safety matured significantly, and our first top 20 pharma is live. This has set us on a great path and our sales pipeline is increasing.

Finally, we are tracking well to plan in our Consumer Products and MedTech segments and establishing a strong reputation for delivering customer success.

Looking Ahead

The macro conditions in which we operate remain stable and we have not seen any significant changes since our last earnings call.

We expect fiscal 2024 revenue to be between $2.35 and $2.36 billion, or roughly 10% growth. Normalizing for one-time impacts related to the standardization of termination for convenience rights (TFC) and foreign currency (FX), growth would be about 15%.

We are also providing our initial guidance for fiscal 2025 to give additional context to the one-time, TFC standardization impacts to fiscal 2024. We expect fiscal 2025 revenue of at least $2.8 billion, representing about 19% growth. Normalizing for TFC, our growth expectation for fiscal 2025 would be at least 15%.

We are building a highly durable, growth business for the long term. We are early in the significant industry cloud opportunity ahead and we have an exceptional product innovation engine to meet it. It's this combination of opportunity and execution that positions us well for the future. We're looking forward to meeting our $3 billion annual revenue run rate target a year ahead of plan and driving strong growth well beyond 2025.

Peter Gassner, Founder, CEO

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