Fiscal Year 2016 Total Revenues of $409.2M, up 31% Year-over-year; Q4
Total Revenues of $114.3M, up 31% Year-over-year
Fiscal Year 2016 Subscription Services Revenues of $316.3M, up 36%
Year-over-year; Q4 Subscription Services Revenues of $90.4M, up 36%
Year-over-year
PLEASANTON, Calif.--(BUSINESS WIRE)--
Veeva Systems Inc. (NYSE: VEEV), a leading provider of industry cloud
solutions for life sciences, today announced results for its fiscal
fourth quarter and full year ended January 31, 2016.
“It was another excellent year for Veeva, and I’m especially pleased to
close fiscal 2016 with an outstanding quarter fueled by great demand
across our expanding solution set,” said CEO Peter Gassner. “As Veeva
enters its 10th year, we believe we are well positioned for strong
multi-year growth. Through our customer success focus and the strategic
nature of our industry cloud, we are poised to exceed half a billion in
revenue this year.”
Fiscal 2016 Fourth Quarter Results:
-
Revenues: Total revenues for the fourth quarter were
$114.3 million, up from $87.0 million one year ago, an increase of 31%
year-over-year. Subscription services revenues for the fourth quarter
were $90.4 million, up from $66.5 million one year ago, an increase of
36% year-over-year.
-
Operating income and non-GAAP operating income(1):
Fourth quarter operating income was $15.2 million, compared to
$20.7 million one year ago, a decrease of 26% year-over-year. Non-GAAP
operating income for the fourth quarter was $25.2 million, compared to
$25.3 million one year ago.
-
Net income and non-GAAP net income(1): Fourth
quarter net income was $17.6 million, compared to $13.3 million one
year ago, an increase of 32% year-over-year. Non-GAAP net income for
the fourth quarter was $21.9 million, compared to $16.8 million one
year ago, an increase of 31% 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
$0.12, compared to $0.09 one year ago, while non-GAAP fully diluted
net income per share was $0.15, compared to $0.12 one year ago.
Fiscal Year 2016 Results:
-
Revenues: Total revenues for the fiscal year ended
January 31, 2016 were $409.2 million, up from $313.2 million one year
ago, an increase of 31% year-over-year. Subscription services revenues
were $316.3 million, up from $233.1 million one year ago, an increase
of 36% year-over-year.
-
Operating income and non-GAAP operating income(1):
Fiscal year 2016 operating income was $78.6 million, compared to
$70.0 million one year ago, an increase of 12% year-over-year.
Non-GAAP operating income for fiscal year 2016 was $108.6 million,
compared to $86.3 million one year ago, an increase of 26%
year-over-year.
-
Net income and non-GAAP net income(1): Fiscal
year 2016 net income was $54.5 million, compared to $40.4 million one
year ago, an increase of 35% year-over-year. Non-GAAP net income for
fiscal year 2016 was $74.5 million, compared to $53.2 million one year
ago, an increase of 40% year-over-year.
-
Net income per share and non-GAAP net income per share(1):
For fiscal year 2016, fully diluted net income per share was
$0.38, compared to $0.28 one year ago, while non-GAAP fully diluted
net income per share was $0.51, compared to $0.37 one year ago.
“The fourth quarter was our best bookings quarter to date, marked by
record Vault sales and exceptional CRM performance,” said CFO Tim
Cabral. “Even in a very strong CRM bookings quarter, for the first time
ever, non-CRM bookings exceeded CRM bookings.”
Fiscal Year 2016 and Recent Highlights:
-
Strong Customer Growth Across All Product Lines(2) –
Veeva ended its fiscal year with 400 total customers, up from 276 last
year. This included 212 Veeva CRM customers, 219 Veeva Vault
customers, 35 Veeva Network customers, and 70 Veeva OpenData customers.
-
Momentum in Commercial Cloud – In the fourth quarter, a
top 10 pharma standardized on Veeva Commercial Cloud globally. As of
year-end, 32 companies, including 12 of the top 50 are now leveraging
Veeva for improved customer data, commercial content, and customer
engagement.
-
Vault Expansion Continues – Exiting the fourth quarter,
Vault achieved an annualized total revenue run rate(3) of
$100 million, and total Vault revenue grew by more than 100% in fiscal
year 2016.
-
Customer Success Drives High Revenue Retention(4) –
Veeva continued to achieve notably high subscription services
revenue retention rates of 125% for the fiscal year 2016.
Financial Outlook:
Veeva is providing guidance for its fiscal first quarter ending April
30, 2016 as follows:
-
Total revenues between $114.5 and $116.0 million.
-
Non-GAAP operating income between $25.5 and $26.0 million.
-
Non-GAAP fully diluted net income per share of $0.11.
Veeva is providing guidance for its fiscal year ending January 31, 2017
as follows:
-
Total revenues between $508.0 and $513.0 million.
-
Non-GAAP operating income between $122.5 and $127.5 million.
-
Non-GAAP fully diluted net income per share between $0.54 and $0.56.
Conference Call Information:
|
|
What:
|
|
Veeva’s Fiscal 2016 Fourth Quarter and Full Year Results Conference
Call
|
|
|
|
When:
|
|
Tuesday, March 1, 2016
|
|
|
|
Time:
|
|
1:30 p.m. PT (4:30 p.m. ET)
|
|
|
|
Live Call:
|
|
1-877-201-0168, domestic
|
|
|
1-647-788-4901, international
|
|
|
Conference ID 1667 5746
|
|
|
|
Webcast:
|
|
ir.veeva.com
|
__________
(1) This press release uses non-GAAP financial metrics that
are adjusted for the impact of various GAAP items. See the sections
titled “Non-GAAP Financial Measures” and the tables entitled
“Reconciliation of GAAP to Non-GAAP Financial Measures” below for
details.
(2) The customer counts by product line exceed the total
customer count because some customers subscribe to multiple product
lines. Total customer count also includes 40 unique Zinc Ahead customers.
(3) We calculate our annualized revenue run-rate for a
product or customer as of the end of a given quarter by totaling two
values: (i) the daily subscription revenue for the product or customer
recognized on the last day of the fiscal quarter, multiplied by 365, and
(ii) the associated professional services revenue for the quarter,
multiplied by four.
(4) 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.
About Veeva Systems
Veeva Systems Inc. is a leader in cloud-based software for the global
life sciences industry. Committed to innovation, product excellence, and
customer success, Veeva has 400 customers, ranging from the world's
largest pharmaceutical companies to emerging biotechs. Veeva is
headquartered in the San Francisco Bay Area, with offices in Europe,
Asia, and Latin America. For more information, visit www.veeva.com.
Forward-looking Statements
This release contains forward-looking statements, including statements
regarding Veeva's future financial outlook and financial performance,
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) our limited operating history, which makes it difficult to
predict future results; (ii) our expectation that the future growth rate
of our revenues will decline, and that as our costs increase, we may not
be able to generate sufficient revenues to sustain the level of
profitability we have achieved in the past or achieve profitability in
the future; (iii) breaches in our security measures, unauthorized access
to our customers’ data, or system availability or performance problems
associated with our data centers or computing infrastructure; (iv)
dependence on revenues from our Veeva CRM solution, and the rate of
adoption of our new products; (v) acceptance of our applications and
services by customers, including renewals of existing subscriptions and
purchases of subscriptions for additional users and solutions; (vi) our
ability to integrate the Zinc Ahead business, retain Zinc Ahead
customers and achieve the expected results from our acquisition of Zinc
Ahead; (vii) loss of one or more key customers; (viii) adverse changes
in general economic or market conditions, particularly in the life
sciences industry; (ix) delays or reductions in information technology
spending, particularly in the life sciences industry, including as a
result of mergers in the life sciences industry; (x) the development of
the market for enterprise cloud services, particularly in the life
sciences industry; (xi) competitive factors, including but not limited
to pricing pressures, industry consolidation, difficulty securing rights
to access, host or integrate with complementary third party products or
data used by our customers, entry of new competitors and new
applications and marketing initiatives by our competitors; (xii) our
ability to manage our growth effectively; and (xiii) changes in sales
that may not be immediately reflected in our results due to the ratable
recognition of our subscription revenue.
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, 2015. This is available on the company’s website at http://www.veeva.com
under the Investors section and on the SEC’s website at www.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)
|
|
|
January 31,
|
|
|
2016
|
|
2015
|
Assets
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
132,179
|
|
$
|
129,253
|
Short-term investments
|
|
|
214,024
|
|
|
268,620
|
Accounts receivable, net
|
|
|
144,798
|
|
|
92,661
|
Deferred income taxes
|
|
|
—
|
|
|
4,815
|
Prepaid expenses and other current assets
|
|
|
10,223
|
|
|
6,488
|
Total current assets
|
|
|
501,224
|
|
|
501,837
|
Property and equipment, net
|
|
|
47,469
|
|
|
28,203
|
Capitalized internal-use software, net
|
|
|
979
|
|
|
1,240
|
Goodwill
|
|
|
95,544
|
|
|
4,850
|
Intangible assets, net
|
|
|
47,500
|
|
|
4,904
|
Deferred income taxes, noncurrent
|
|
|
9,359
|
|
|
—
|
Other long-term assets
|
|
|
3,724
|
|
|
3,856
|
Total assets
|
|
$
|
705,799
|
|
$
|
544,890
|
|
|
|
|
|
Liabilities and stockholders’ equity
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Accounts payable
|
|
$
|
4,600
|
|
$
|
3,886
|
Accrued compensation and benefits
|
|
|
12,451
|
|
|
6,497
|
Accrued expenses and other liabilities
|
|
|
11,059
|
|
|
8,939
|
Income tax payable
|
|
|
750
|
|
|
3,241
|
Deferred revenue
|
|
|
157,419
|
|
|
112,960
|
Total current liabilities
|
|
|
186,279
|
|
|
135,523
|
Deferred income taxes, noncurrent
|
|
|
10,622
|
|
|
170
|
Other long-term liabilities
|
|
|
3,649
|
|
|
2,364
|
Total liabilities
|
|
|
200,550
|
|
|
138,057
|
Stockholders’ equity:
|
|
|
|
|
Class A common stock
|
|
|
1
|
|
|
—
|
Class B common stock
|
|
|
—
|
|
|
1
|
Additional paid-in capital
|
|
|
361,691
|
|
|
317,881
|
Accumulated other comprehensive income
|
|
|
172
|
|
|
26
|
Retained earnings
|
|
|
143,385
|
|
|
88,925
|
Total stockholders’ equity
|
|
|
505,249
|
|
|
406,833
|
Total liabilities and stockholders’ equity
|
|
$
|
705,799
|
|
$
|
544,890
|
|
|
|
|
|
|
|
VEEVA SYSTEMS INC.
|
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
(In thousands, except per share data)
|
(Unaudited)
|
|
|
For the three months ended January 31,
|
|
For the fiscal year ended January 31,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Revenues:
|
|
|
|
|
|
|
|
|
Subscription services
|
|
$
|
90,404
|
|
|
$
|
66,535
|
|
|
$
|
316,314
|
|
|
$
|
233,063
|
|
Professional services and other
|
|
|
23,866
|
|
|
|
20,477
|
|
|
|
92,907
|
|
|
|
80,159
|
|
Total revenues
|
|
|
114,270
|
|
|
|
87,012
|
|
|
|
409,221
|
|
|
|
313,222
|
|
Cost of revenues(5):
|
|
|
|
|
|
|
|
|
Cost of subscription services
|
|
|
20,215
|
|
|
|
15,210
|
|
|
|
71,180
|
|
|
|
55,005
|
|
Cost of professional services and other
|
|
|
19,529
|
|
|
|
15,946
|
|
|
|
71,034
|
|
|
|
60,653
|
|
Total cost of revenues
|
|
|
39,744
|
|
|
|
31,156
|
|
|
|
142,214
|
|
|
|
115,658
|
|
Gross profit
|
|
|
74,526
|
|
|
|
55,856
|
|
|
|
267,007
|
|
|
|
197,564
|
|
Operating expenses(5):
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
20,097
|
|
|
|
11,742
|
|
|
|
65,976
|
|
|
|
41,156
|
|
Sales and marketing
|
|
|
27,086
|
|
|
|
15,328
|
|
|
|
80,984
|
|
|
|
56,203
|
|
General and administrative
|
|
|
12,132
|
|
|
|
8,103
|
|
|
|
41,458
|
|
|
|
30,239
|
|
Total operating expenses
|
|
|
59,315
|
|
|
|
35,173
|
|
|
|
188,418
|
|
|
|
127,598
|
|
Operating income
|
|
|
15,211
|
|
|
|
20,683
|
|
|
|
78,589
|
|
|
|
69,966
|
|
Other income (expense), net
|
|
|
(400
|
)
|
|
|
(1,660
|
)
|
|
|
28
|
|
|
|
(2,780
|
)
|
Income before income taxes
|
|
|
14,811
|
|
|
|
19,023
|
|
|
|
78,617
|
|
|
|
67,186
|
|
Provision for (benefit from) income taxes
|
|
|
(2,779
|
)
|
|
|
5,697
|
|
|
|
24,157
|
|
|
|
26,803
|
|
Net income
|
|
$
|
17,590
|
|
|
$
|
13,326
|
|
|
$
|
54,460
|
|
|
$
|
40,383
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to common stockholders, basic and diluted:
|
|
$
|
17,580
|
|
|
$
|
13,288
|
|
|
$
|
54,413
|
|
|
$
|
40,138
|
|
|
|
|
|
|
|
|
|
|
Net income per share attributable to common stockholders:
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.13
|
|
|
$
|
0.10
|
|
|
$
|
0.41
|
|
|
$
|
0.31
|
|
Diluted
|
|
$
|
0.12
|
|
|
$
|
0.09
|
|
|
$
|
0.38
|
|
|
$
|
0.28
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares used to compute net income per share
attributable to common stockholders:
|
|
|
Basic
|
|
|
133,097
|
|
|
|
130,345
|
|
|
|
132,020
|
|
|
|
127,713
|
|
Diluted
|
|
|
145,192
|
|
|
|
144,737
|
|
|
|
144,977
|
|
|
|
144,204
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
Net change in unrealized losses on available-for-sale investments
|
|
$
|
(68
|
)
|
|
$
|
47
|
|
|
$
|
(181
|
)
|
|
$
|
76
|
|
Net change in cumulative foreign currency translation gain (loss)
|
|
|
215
|
|
|
|
3
|
|
|
|
327
|
|
|
|
(69
|
)
|
Comprehensive income
|
|
$
|
17,737
|
|
|
$
|
13,376
|
|
|
$
|
54,606
|
|
|
$
|
40,390
|
|
|
|
|
|
|
|
|
|
|
__________
|
|
|
|
|
|
|
|
|
(5) Includes stock-based compensation as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues:
|
|
|
|
|
|
|
|
|
Cost of subscription services
|
|
$
|
167
|
|
|
$
|
92
|
|
|
$
|
563
|
|
|
$
|
273
|
|
Cost of professional services and other
|
|
|
1,101
|
|
|
|
561
|
|
|
|
3,858
|
|
|
|
2,272
|
|
Research and development
|
|
|
2,202
|
|
|
|
1,141
|
|
|
|
7,249
|
|
|
|
3,844
|
|
Sales and marketing
|
|
|
2,054
|
|
|
|
931
|
|
|
|
6,861
|
|
|
|
3,221
|
|
General and administrative
|
|
|
1,633
|
|
|
|
1,359
|
|
|
|
5,727
|
|
|
|
4,715
|
|
Total stock-based compensation
|
|
$
|
7,157
|
|
|
$
|
4,084
|
|
|
$
|
24,258
|
|
|
$
|
14,325
|
|
VEEVA SYSTEMS INC.
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In thousands)
|
(Unaudited)
|
|
|
For the three months ended January 31,
|
|
Fiscal Year Ended January 31,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
17,590
|
|
|
$
|
13,326
|
|
|
$
|
54,460
|
|
|
$
|
40,383
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
Depreciation and amortization
|
|
|
3,615
|
|
|
|
986
|
|
|
|
8,464
|
|
|
|
3,929
|
|
Amortization of premiums on short-term investments
|
|
|
598
|
|
|
|
832
|
|
|
|
2,804
|
|
|
|
2,176
|
|
Stock-based compensation
|
|
|
7,157
|
|
|
|
4,084
|
|
|
|
24,258
|
|
|
|
14,325
|
|
Deferred income taxes
|
|
|
(5,598
|
)
|
|
|
(4,192
|
)
|
|
|
(5,906
|
)
|
|
|
(4,268
|
)
|
Bad debt expense
|
|
|
(2
|
)
|
|
|
186
|
|
|
|
201
|
|
|
|
227
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(69,495
|
)
|
|
|
(47,606
|
)
|
|
|
(46,653
|
)
|
|
|
(34,455
|
)
|
Income taxes
|
|
|
(5,953
|
)
|
|
|
5,515
|
|
|
|
(3,352
|
)
|
|
|
3,326
|
|
Other current and long-term assets
|
|
|
(605
|
)
|
|
|
(1,008
|
)
|
|
|
134
|
|
|
|
(4,652
|
)
|
Accounts payable
|
|
|
(1,368
|
)
|
|
|
1,234
|
|
|
|
(494
|
)
|
|
|
1,290
|
|
Accrued expenses and other current liabilities
|
|
|
1,405
|
|
|
|
(3,545
|
)
|
|
|
5,042
|
|
|
|
(754
|
)
|
Deferred revenue
|
|
|
54,772
|
|
|
|
28,292
|
|
|
|
39,357
|
|
|
|
45,580
|
|
Other long-term liabilities
|
|
|
1,284
|
|
|
|
476
|
|
|
|
1,793
|
|
|
|
467
|
|
Net cash provided by operating activities
|
|
|
3,400
|
|
|
|
(1,420
|
)
|
|
|
80,108
|
|
|
|
67,574
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
Purchases of short-term investments
|
|
|
(51,247
|
)
|
|
|
(68,227
|
)
|
|
|
(313,357
|
)
|
|
|
(401,955
|
)
|
Maturities and sales of short-term investments
|
|
|
67,431
|
|
|
|
59,553
|
|
|
|
364,968
|
|
|
|
156,860
|
|
Purchases of property and equipment
|
|
|
(2,105
|
)
|
|
|
(459
|
)
|
|
|
(21,153
|
)
|
|
|
(26,531
|
)
|
Acquisitions, net of cash acquired
|
|
|
—
|
|
|
|
—
|
|
|
|
(126,183
|
)
|
|
|
—
|
|
Purchases of intangible assets
|
|
|
—
|
|
|
|
—
|
|
|
|
(568
|
)
|
|
|
—
|
|
Capitalized internal-use software development costs
|
|
|
(237
|
)
|
|
|
(112
|
)
|
|
|
(431
|
)
|
|
|
(413
|
)
|
Changes in restricted cash and deposits
|
|
|
38
|
|
|
|
12
|
|
|
|
41
|
|
|
|
21
|
|
Net cash used in investing activities
|
|
|
13,880
|
|
|
|
(9,233
|
)
|
|
|
(96,683
|
)
|
|
|
(272,018
|
)
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
Proceeds from early exercise of common stock options
|
|
|
—
|
|
|
|
—
|
|
|
|
10
|
|
|
|
—
|
|
Proceeds from exercise of common stock options
|
|
|
1,783
|
|
|
|
1,499
|
|
|
|
5,921
|
|
|
|
5,813
|
|
Net proceeds from offerings
|
|
|
—
|
|
|
|
(323
|
)
|
|
|
—
|
|
|
|
34,172
|
|
Proceeds from Employee Stock Purchase Plan
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,951
|
|
Restricted stock units acquired to settle employee tax withholding
liability
|
|
|
—
|
|
|
|
(15
|
)
|
|
|
(6
|
)
|
|
|
(15
|
)
|
Excess tax benefits from employee stock plans
|
|
|
4,559
|
|
|
|
6,610
|
|
|
|
13,527
|
|
|
|
25,341
|
|
Net cash provided by financing activities
|
|
|
6,342
|
|
|
|
7,771
|
|
|
|
19,452
|
|
|
|
71,262
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
(37
|
)
|
|
|
—
|
|
|
|
49
|
|
|
|
(72
|
)
|
Net change in cash and cash equivalents
|
|
|
23,585
|
|
|
|
(2,882
|
)
|
|
|
2,926
|
|
|
|
(133,254
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
108,594
|
|
|
|
132,135
|
|
|
|
129,253
|
|
|
|
262,507
|
|
Cash and cash equivalents at end of period
|
|
$
|
132,179
|
|
|
$
|
129,253
|
|
|
$
|
132,179
|
|
|
$
|
129,253
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Measures
Veeva has provided in this release financial information that has not
been prepared in accordance with generally accepted accounting
principles in the United States, or GAAP. This information primarily
includes non-GAAP operating income, non-GAAP operating margin, non-GAAP
net income, and non-GAAP fully diluted net income per share. Veeva uses
these non-GAAP financial measures internally for budgeting and resource
allocation purposes and in analyzing its financial results. Veeva
believes these measures are useful to investors, as a supplement to GAAP
measures, as a means to evaluate period-to-period comparisons, in
evaluating Veeva's ongoing operating results and trends and in comparing
its financial measures with other companies in Veeva's industry, many of
which present similar non-GAAP financial measures to investors. These
non-GAAP measures are adjusted for the impact of expenses associated
with stock-based compensation, amortization of purchased intangibles,
capitalization of expenses associated with development of internal-use
software and the subsequent amortization of the capitalized expenses,
deferred compensation associated with the Zinc Ahead acquisition, and
the tax effect of all of these non-GAAP adjustments.
As described above, Veeva may exclude the following items from its
non-GAAP measures:
-
Stock-based compensation expenses. Veeva excludes stock-based
compensation expenses from its non-GAAP measures primarily because
they are non-cash expenses and management finds it useful to exclude
certain non-cash charges to assess the appropriate level of various
operating expenses to assist in 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 inconsistent in amount and frequency and is
significantly affected by the timing and size of acquisitions.
Management finds it useful to exclude these variable charges to assess
the appropriate level of various operating expenses to assist in
budgeting, planning and forecasting future periods. Investors should
note that the use of intangible assets contributed to our revenues
earned during the periods presented and will contribute to our future
period revenues as well. Amortization of purchased intangible assets
will recur in future periods.
-
Capitalization of internal-use software development expenses and the
subsequent amortization of the capitalized expenses. Veeva capitalizes
certain costs incurred for the development of computer software for
internal use and then amortizes those costs over the estimated useful
life. Capitalization and amortization of software development costs
can vary significantly depending on the timing of products reaching
technological feasibility and being made generally available.
Moreover, because of the variety of approaches taken and the
subjective assumptions made by other companies in this area, Veeva
believes that excluding the effects of capitalized software costs
allows investors to make more meaningful comparisons between our
operating results and those of other companies.
-
Deferred compensation associated with the Zinc Ahead acquisition. The
Zinc Ahead share purchase agreement called for $10.0 million in share
purchase consideration to be deferred and paid to certain former Zinc
Ahead employees at a rate of one-third of the deferred consideration
amount per year only in the event such former Zinc Ahead employees
remain employed by Veeva on each deferred consideration payment date.
Pursuant to GAAP, these payments are being accounted for as deferred
compensation and the expense is recognized over the requisite service
period. Veeva believes excluding these deferred compensation expenses
from our non-GAAP measures may allow investors to make more meaningful
comparisons between our recurring business operating results and those
of other companies.
-
Income tax effects on the difference between GAAP and non-GAAP costs
and expenses. The income tax effects that are excluded from the
non-GAAP measures relate to the tax impact on the difference between
GAAP and non-GAAP costs and expenses due to stock-based compensation,
purchased intangibles, capitalized internal-use software, and deferred
compensation associated with the Zinc Ahead acquisition for GAAP and
non-GAAP measures.
There are limitations in 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 used 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 management
about which items are adjusted to calculate our 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 our 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. Investors are encouraged to review the reconciliation of
these non-GAAP measures to their most directly comparable GAAP financial
measure and not to rely on any single financial measure to evaluate our
business. A reconciliation of GAAP to the non-GAAP financial measures
has been provided in the tables below.
Veeva is not able, at this time, to provide GAAP targets for operating
income and fully diluted net income per share for the first quarter and
full year of its fiscal year ending January 31, 2017 because of the
difficulty of estimating certain items that are excluded from non-GAAP
operating income and non-GAAP fully diluted net income per share, such
as charges related to stock-based compensation expense, capitalization
of internal-use software development expenses and the subsequent
amortization of the capitalized expenses, amortization of
acquisition-related intangibles, and deferred compensation associated
with the Zinc Ahead acquisition, the effect of which may be significant.
The following table reconciles the specific items excluded from GAAP net
income in the calculation of non-GAAP net income and non-GAAP net income
per share for the periods shown below:
VEEVA SYSTEMS INC.
|
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
|
(Dollars in thousands)
|
(Unaudited)
|
|
|
For the three months ended January 31,
|
|
For the fiscal year ended January 31,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Cost of subscription services revenues on a GAAP basis
|
|
$
|
20,215
|
|
|
$
|
15,210
|
|
|
$
|
71,180
|
|
|
$
|
55,005
|
|
Stock-based compensation expense
|
|
|
(167
|
)
|
|
|
(92
|
)
|
|
|
(563
|
)
|
|
|
(273
|
)
|
Amortization of purchased intangibles
|
|
|
(1,081
|
)
|
|
|
(370
|
)
|
|
|
(2,778
|
)
|
|
|
(1,478
|
)
|
Amortization of internal-use software
|
|
|
(168
|
)
|
|
|
(186
|
)
|
|
|
(755
|
)
|
|
|
(818
|
)
|
Cost of subscription services revenues on a non-GAAP basis
|
|
$
|
18,799
|
|
|
$
|
14,562
|
|
|
$
|
67,084
|
|
|
$
|
52,436
|
|
|
|
|
|
|
|
|
|
|
Gross margin on subscription services revenues on a GAAP basis
|
|
|
77.6
|
%
|
|
|
77.1
|
%
|
|
|
77.5
|
%
|
|
|
76.4
|
%
|
Stock-based compensation expense
|
|
|
0.2
|
|
|
|
0.1
|
|
|
|
0.2
|
|
|
|
0.1
|
|
Amortization of purchased intangibles
|
|
|
1.2
|
|
|
|
0.6
|
|
|
|
0.9
|
|
|
|
0.6
|
|
Amortization of internal-use software
|
|
|
0.2
|
|
|
|
0.3
|
|
|
|
0.2
|
|
|
|
0.4
|
|
Gross margin on subscription services revenues on a non-GAAP basis
|
|
|
79.2
|
%
|
|
|
78.1
|
%
|
|
|
78.8
|
%
|
|
|
77.5
|
%
|
|
|
|
|
|
|
|
|
|
Cost of professional services and other revenues on a GAAP basis
|
|
$
|
19,529
|
|
|
$
|
15,946
|
|
|
$
|
71,034
|
|
|
$
|
60,653
|
|
Stock-based compensation expense
|
|
|
(1,101
|
)
|
|
|
(561
|
)
|
|
|
(3,858
|
)
|
|
|
(2,272
|
)
|
Deferred compensation
|
|
|
(9
|
)
|
|
|
—
|
|
|
|
(12
|
)
|
|
|
—
|
|
Cost of professional services and other revenues on a non-GAAP
basis
|
|
$
|
18,419
|
|
|
$
|
15,385
|
|
|
$
|
67,164
|
|
|
$
|
58,381
|
|
|
|
|
|
|
|
|
|
|
Gross margin on professional services and other revenues on a GAAP
basis
|
|
|
18.2
|
%
|
|
|
22.1
|
%
|
|
|
23.5
|
%
|
|
|
24.3
|
%
|
Stock-based compensation expense
|
|
|
4.6
|
|
|
|
2.8
|
|
|
|
4.2
|
|
|
|
2.9
|
|
Deferred compensation
|
|
|
0.0
|
|
|
|
—
|
|
|
|
0.0
|
|
|
|
—
|
|
Gross margin on professional services and other revenues on a
non-GAAP basis
|
|
|
22.8
|
%
|
|
|
24.9
|
%
|
|
|
27.7
|
%
|
|
|
27.2
|
%
|
|
|
|
|
|
|
|
|
|
Gross profit on a GAAP basis
|
|
$
|
74,526
|
|
|
$
|
55,856
|
|
|
$
|
267,007
|
|
|
$
|
197,564
|
|
Stock-based compensation expense
|
|
|
1,268
|
|
|
|
653
|
|
|
|
4,421
|
|
|
|
2,545
|
|
Amortization of purchased intangibles
|
|
|
1,081
|
|
|
|
370
|
|
|
|
2,778
|
|
|
|
1,478
|
|
Amortization of internal-use software
|
|
|
168
|
|
|
|
186
|
|
|
|
755
|
|
|
|
818
|
|
Deferred compensation
|
|
|
9
|
|
|
|
—
|
|
|
|
12
|
|
|
|
—
|
|
Gross profit on a non-GAAP basis
|
|
$
|
77,052
|
|
|
$
|
57,065
|
|
|
$
|
274,973
|
|
|
$
|
202,405
|
|
|
|
|
|
|
|
|
|
|
Gross margin on total revenues on a GAAP basis
|
|
|
65.2
|
%
|
|
|
64.2
|
%
|
|
|
65.2
|
%
|
|
|
63.1
|
%
|
Stock-based compensation expense
|
|
|
1.1
|
|
|
|
0.8
|
|
|
|
1.1
|
|
|
|
0.8
|
|
Amortization of purchased intangibles
|
|
|
1.0
|
|
|
|
0.4
|
|
|
|
0.7
|
|
|
|
0.5
|
|
Amortization of internal-use software
|
|
|
0.1
|
|
|
|
0.2
|
|
|
|
0.2
|
|
|
|
0.2
|
|
Deferred compensation
|
|
|
0.0
|
|
|
|
—
|
|
|
|
0.0
|
|
|
|
—
|
|
Gross margin on total revenues on a non-GAAP basis
|
|
|
67.4
|
%
|
|
|
65.6
|
%
|
|
|
67.2
|
%
|
|
|
64.6
|
%
|
|
|
|
|
|
|
|
|
|
Research and development expense on a GAAP basis
|
|
$
|
20,097
|
|
|
$
|
11,742
|
|
|
$
|
65,976
|
|
|
$
|
41,156
|
|
Stock-based compensation expense
|
|
|
(2,202
|
)
|
|
|
(1,141
|
)
|
|
|
(7,249
|
)
|
|
|
(3,844
|
)
|
Capitalization of internal-use software
|
|
|
237
|
|
|
|
113
|
|
|
|
431
|
|
|
|
413
|
|
Deferred compensation
|
|
|
(108
|
)
|
|
|
—
|
|
|
|
(146
|
)
|
|
|
—
|
|
Research and development expense on a non-GAAP basis
|
|
$
|
18,024
|
|
|
$
|
10,714
|
|
|
$
|
59,012
|
|
|
$
|
37,725
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing expense on a GAAP basis
|
|
$
|
27,086
|
|
|
$
|
15,328
|
|
|
$
|
80,984
|
|
|
$
|
56,203
|
|
Stock-based compensation expense
|
|
|
(2,054
|
)
|
|
|
(931
|
)
|
|
|
(6,861
|
)
|
|
|
(3,221
|
)
|
Amortization of purchased intangibles
|
|
|
(985
|
)
|
|
|
(43
|
)
|
|
|
(1,530
|
)
|
|
|
(172
|
)
|
Deferred compensation
|
|
|
(18
|
)
|
|
|
—
|
|
|
|
(24
|
)
|
|
|
—
|
|
Sales and marketing expense on a non-GAAP basis
|
|
$
|
24,029
|
|
|
$
|
14,354
|
|
|
$
|
72,569
|
|
|
$
|
52,810
|
|
|
|
|
|
|
|
|
|
|
General and administrative expense on a GAAP basis
|
|
$
|
12,132
|
|
|
$
|
8,103
|
|
|
$
|
41,458
|
|
|
$
|
30,239
|
|
Stock-based compensation expense
|
|
|
(1,633
|
)
|
|
|
(1,359
|
)
|
|
|
(5,727
|
)
|
|
|
(4,715
|
)
|
Deferred compensation
|
|
|
(698
|
)
|
|
|
—
|
|
|
|
(938
|
)
|
|
|
—
|
|
General and administrative expense on a non-GAAP basis
|
|
$
|
9,801
|
|
|
$
|
6,744
|
|
|
$
|
34,793
|
|
|
$
|
25,524
|
|
|
|
|
|
|
|
|
|
|
VEEVA SYSTEMS INC.
|
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (continued)
|
(Dollars in thousands, except per share data)
|
(Unaudited)
|
|
|
For the three months ended January 31,
|
|
For the fiscal year ended January 31,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Operating expense on a GAAP basis
|
|
$
|
59,315
|
|
|
$
|
35,173
|
|
|
$
|
188,418
|
|
|
$
|
127,598
|
|
Stock-based compensation expense
|
|
|
(5,889
|
)
|
|
|
(3,431
|
)
|
|
|
(19,837
|
)
|
|
|
(11,780
|
)
|
Amortization of purchased intangibles
|
|
|
(985
|
)
|
|
|
(43
|
)
|
|
|
(1,530
|
)
|
|
|
(172
|
)
|
Capitalization of internal-use software
|
|
|
237
|
|
|
|
113
|
|
|
|
431
|
|
|
|
413
|
|
Deferred compensation
|
|
|
(824
|
)
|
|
|
—
|
|
|
|
(1,108
|
)
|
|
|
—
|
|
Operating expense on a non-GAAP basis
|
|
$
|
51,854
|
|
|
$
|
31,812
|
|
|
$
|
166,374
|
|
|
$
|
116,059
|
|
|
|
|
|
|
|
|
|
|
Operating income on a GAAP basis
|
|
$
|
15,211
|
|
|
$
|
20,683
|
|
|
$
|
78,589
|
|
|
$
|
69,966
|
|
Stock-based compensation expense
|
|
|
7,157
|
|
|
|
4,084
|
|
|
|
24,258
|
|
|
|
14,325
|
|
Amortization of purchased intangibles
|
|
|
2,066
|
|
|
|
413
|
|
|
|
4,308
|
|
|
|
1,650
|
|
Capitalization of internal-use software
|
|
|
(237
|
)
|
|
|
(113
|
)
|
|
|
(431
|
)
|
|
|
(413
|
)
|
Amortization of internal-use software
|
|
|
168
|
|
|
|
186
|
|
|
|
755
|
|
|
|
818
|
|
Deferred compensation
|
|
|
833
|
|
|
|
—
|
|
|
|
1,120
|
|
|
|
—
|
|
Operating income on a non-GAAP basis
|
|
$
|
25,198
|
|
|
$
|
25,253
|
|
|
$
|
108,599
|
|
|
$
|
86,346
|
|
|
|
|
|
|
|
|
|
|
Operating margin on a GAAP basis
|
|
|
13.3
|
%
|
|
|
23.8
|
%
|
|
|
19.2
|
%
|
|
|
22.3
|
%
|
Stock-based compensation expense
|
|
|
6.3
|
|
|
|
4.7
|
|
|
|
5.9
|
|
|
|
4.6
|
|
Amortization of purchased intangibles
|
|
|
1.8
|
|
|
|
0.4
|
|
|
|
1.0
|
|
|
|
0.5
|
|
Capitalization of internal-use software
|
|
|
(0.2
|
)
|
|
|
(0.1
|
)
|
|
|
(0.1
|
)
|
|
|
(0.1
|
)
|
Amortization of internal-use software
|
|
|
0.2
|
|
|
|
0.2
|
|
|
|
0.2
|
|
|
|
0.3
|
|
Deferred compensation
|
|
|
0.7
|
|
|
|
—
|
|
|
|
0.3
|
|
|
|
—
|
|
Operating margin on a non-GAAP basis
|
|
|
22.1
|
%
|
|
|
29.0
|
%
|
|
|
26.5
|
%
|
|
|
27.6
|
%
|
|
|
|
|
|
|
|
|
|
Net income on a GAAP basis
|
|
$
|
17,590
|
|
|
$
|
13,326
|
|
|
$
|
54,460
|
|
|
$
|
40,383
|
|
Stock-based compensation expense
|
|
|
7,157
|
|
|
|
4,084
|
|
|
|
24,258
|
|
|
|
14,325
|
|
Amortization of purchased intangibles
|
|
|
2,066
|
|
|
|
413
|
|
|
|
4,308
|
|
|
|
1,650
|
|
Capitalization of internal-use software
|
|
|
(237
|
)
|
|
|
(113
|
)
|
|
|
(431
|
)
|
|
|
(413
|
)
|
Amortization of internal-use software
|
|
|
168
|
|
|
|
186
|
|
|
|
755
|
|
|
|
818
|
|
Deferred compensation
|
|
|
833
|
|
|
|
—
|
|
|
|
1,120
|
|
|
|
—
|
|
Income tax effect on non-GAAP adjustments
|
|
|
(5,641
|
)
|
|
|
(1,123
|
)
|
|
|
(10,017
|
)
|
|
|
(3,573
|
)
|
Net income on a non-GAAP basis
|
|
$
|
21,936
|
|
|
$
|
16,773
|
|
|
$
|
74,453
|
|
|
$
|
53,190
|
|
|
|
|
|
|
|
|
|
|
Net income allocated to participating securities on a GAAP basis
|
|
$
|
(10
|
)
|
|
$
|
(38
|
)
|
|
$
|
(47
|
)
|
|
$
|
(245
|
)
|
Net income allocated to participating securities from non-GAAP
adjustments
|
|
|
(2
|
)
|
|
|
(10
|
)
|
|
|
(18
|
)
|
|
|
(77
|
)
|
Net income allocated to participating securities on a non-GAAP basis
|
|
|
(12
|
)
|
|
|
(48
|
)
|
|
|
(65
|
)
|
|
|
(322
|
)
|
Net income attributable to common stockholders on a non-GAAP basis
|
|
$
|
21,924
|
|
|
$
|
16,725
|
|
|
$
|
74,388
|
|
|
$
|
52,868
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per share on a GAAP basis
|
|
$
|
0.12
|
|
|
$
|
0.09
|
|
|
$
|
0.38
|
|
|
$
|
0.28
|
|
Stock-based compensation expense
|
|
|
0.05
|
|
|
|
0.04
|
|
|
|
0.16
|
|
|
|
0.10
|
|
Amortization of purchased intangibles
|
|
|
0.01
|
|
|
|
—
|
|
|
|
0.03
|
|
|
|
0.01
|
|
Capitalization of internal-use software
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Amortization of internal-use software
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.01
|
|
Deferred compensation
|
|
|
0.01
|
|
|
|
—
|
|
|
|
0.01
|
|
|
|
—
|
|
Income tax effect on non-GAAP adjustments
|
|
|
(0.04
|
)
|
|
|
(0.01
|
)
|
|
|
(0.07
|
)
|
|
|
(0.03
|
)
|
Diluted net income per share on a non-GAAP basis
|
|
$
|
0.15
|
|
|
$
|
0.12
|
|
|
$
|
0.51
|
|
|
$
|
0.37
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20160301006964/en/
Source: Veeva Systems Inc.