Fiscal Year 2018 Total Revenues of $685.6M, up 26% Year-over-year;
Q4
Total Revenues of $184.9M, up 23% Year-over-year
Fiscal Year 2018 Subscription Services Revenues of $554.4M, up 28%
Year-over-year;
Q4 Subscription Services Revenues of
$150.9M, up 26% Year-over-year
PLEASANTON, Calif.--(BUSINESS WIRE)--
Veeva Systems Inc. (NYSE: VEEV), a leading provider of industry cloud
solutions for the global life sciences industry, today announced results
for its fiscal fourth quarter and full year ended January 31, 2018.
“The fourth quarter was a strong finish to another great year for
Veeva,” said CEO Peter Gassner. “We have a proven track record of
increasing value for customers through innovation and are in the early
stages of more major growth opportunities than at any point in our
history. This combined with our disciplined execution sets us up for
continued strong growth well into the future.”
Fiscal 2018 Fourth Quarter Results:
-
Revenues: Total revenues for the fourth quarter were $184.9
million, up from $150.2 million one year ago, an increase of 23%
year-over-year. Subscription services revenues for the fourth quarter
were $150.9 million, up from $119.5 million one year ago, an increase
of 26% year-over-year.
-
Operating Income and Non-GAAP Operating Income(1):
Fourth quarter operating income was $34.9 million, compared to
$32.5 million one year ago, an increase of 7% year-over-year. Non-GAAP
operating income for the fourth quarter was $51.6 million, compared to
$46.2 million one year ago, an increase of 12% year-over-year.
-
Net Income and Non-GAAP Net Income(1): Fourth
quarter net income was $33.7 million, compared to $21.7 million one
year ago, an increase of 55% year-over-year. Non-GAAP net income for
the fourth quarter was $35.5 million, compared to $32.7 million one
year ago, an increase of 8% 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
$0.22, compared to $0.15 one year ago, while non-GAAP fully diluted
net income per share was $0.23, compared to $0.22 one year ago.
“The combination of strong sales performance in the fourth quarter and
momentum in Vault contributed to a healthy raise in our revenue and
profit guidance for fiscal 2019,” said CFO Tim Cabral. “As we look
ahead, the increasingly strategic nature of our customer relationships
and growing product portfolio gives us further confidence in our
longer-term top and bottom line targets.”
Recent Highlights:
-
Continued Customer Success and New Customer Additions(2)
— Veeva’s focus on customer success enabled another year of top
tier subscription revenue retention of 121% for fiscal 2018. The
company also ended the year with 625 total customers, up from 517 last
year. This included 311 Veeva Commercial Cloud customers, up from 270
last year, and 449 Veeva Vault customers, up from 334 last year.
-
Customers Adopt Veeva Vault at a Record Pace — In the quarter,
for the first time, Veeva had double-digit new customer additions in
each area of Vault — clinical, quality, regulatory and commercial.
This included two top 20 pharmaceutical companies that expanded from
Veeva Vault eTMF into new areas of Veeva Development Cloud. One was
the first top 20 to select Veeva Vault QMS. The other committed to
standardize on the full Veeva Vault RIM suite and Veeva Vault
QualityDocs.
-
Two Top 10 Pharma Customers Expanding Veeva CRM Globally — In
the fourth quarter, two top 10 pharmaceutical companies committed to
expanding usage of Veeva CRM in emerging markets, moving Veeva toward
becoming their global standard. The company is also seeing growing
regional adoption in other areas of Veeva Commercial Cloud, including
strategic wins for Veeva CRM Events Management and Veeva Align in the
quarter.
Financial Outlook:
As of February 27, 2018, Veeva is providing guidance for the quarter
ending April 30, 2018 and for the year ending January 31, 2019. Guidance
is based on the new revenue recognition standard ASC 606.
Veeva is providing guidance for its fiscal first quarter ending April
30, 2018 as follows:
-
Total revenues between $188 and $189 million.
-
Non-GAAP operating income between $58 and $59 million(3).
-
Non-GAAP fully diluted net income per share between $0.30 and $0.31(3).
Veeva is providing guidance for its fiscal year ending January 31, 2019
as follows:
-
Total revenues between $815 and $820 million.
-
Non-GAAP operating income between $250 and $255 million(3).
-
Non-GAAP fully diluted net income per share between $1.30 and $1.33(3).
Conference Call Information:
|
|
|
|
|
What:
|
|
Veeva’s Fiscal 2018 Fourth Quarter and Full Year Results Conference
Call
|
|
|
|
|
|
When:
|
|
Tuesday, February 27, 2018
|
|
|
|
|
|
Time:
|
|
1:30 p.m. PT (4:30 p.m. ET)
|
|
|
|
|
|
Live Call:
|
|
1-833-235-5654, domestic
|
|
|
|
|
|
|
|
1-647-689-4160, international
|
|
|
|
|
|
|
|
Conference ID 839 8886
|
|
|
|
|
|
Webcast:
|
|
ir.veeva.com
|
|
|
|
|
Investor Presentation Details:
An investor presentation providing information and analysis on the
impact of Accounting Standards Update (“ASU”) 2014-09, “Revenue from
Contracts with Customers” (Topic 606) on the Company’s results can
be found at ir.veeva.com.
__________
(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, Veeva
OpenData, Veeva Oncology Link, Veeva Network Customer Master and Veeva
Network Product Master. Veeva Vault customers are those customers that
have at least one Vault product.
(3) 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, 2018 or fiscal year ending January
31, 2019 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, capitalization of internal-use
software development expenses and the subsequent amortization of the
capitalized expenses. The effect of these excluded items may be
significant.
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 more than 600 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 veeva.com.
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, 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) historical
fluctuation of our quarterly results and our limited operating history,
which make 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 or unauthorized access to our customers’ data; (iv) system
unavailability, performance problems, or loss of data due to disruptions
or other problems with our data center operations or computing
infrastructure; (v) dependence on revenues from our Veeva CRM solution,
and the rate of adoption of our new products; (vi) acceptance of our
applications and services by customers, including renewals of existing
subscriptions and purchases of subscriptions for additional users and
solutions; (vii) our ability to retain Zinc Ahead customers and achieve
the expected results from our acquisition of Zinc Ahead; (viii) loss of
one or more key customers; (ix) adverse changes in general economic or
market conditions, particularly in the life sciences industry; (x)
delays or reductions in information technology spending, particularly in
the life sciences industry, including as a result of mergers in the life
sciences industry; (xi) the development of the market for enterprise
cloud services, particularly in the life sciences industry; (xii)
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; (xiii) our ability to manage our growth
effectively; (xiv) changes in sales that may not be immediately
reflected in our results due to the ratable recognition of our
subscription revenue; and (xv) pending, threatened, or future legal
proceedings and related expenses.
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, 2017. 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.
|
|
|
VEEVA SYSTEMS INC.
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
(In thousands)
|
|
(Unaudited)
|
|
|
|
|
|
January 31,
|
|
January 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
Assets
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
320,183
|
|
$
|
217,606
|
|
Short-term investments
|
|
|
441,779
|
|
|
301,266
|
|
Accounts receivable, net
|
|
|
233,731
|
|
|
182,816
|
|
Prepaid expenses and other current assets
|
|
|
12,443
|
|
|
10,177
|
|
Total current assets
|
|
|
1,008,136
|
|
|
711,865
|
|
Property and equipment, net
|
|
|
52,284
|
|
|
49,907
|
|
Goodwill
|
|
|
95,804
|
|
|
95,804
|
|
Intangible assets, net
|
|
|
31,490
|
|
|
39,283
|
|
Deferred income taxes, noncurrent
|
|
|
6,969
|
|
|
16,460
|
|
Other long-term assets
|
|
|
5,804
|
|
|
4,057
|
|
Total assets
|
|
$
|
1,200,487
|
|
$
|
917,376
|
|
|
|
|
|
|
|
Liabilities and stockholders’ equity
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable
|
|
$
|
6,944
|
|
$
|
5,677
|
|
Accrued compensation and benefits
|
|
|
17,054
|
|
|
12,007
|
|
Accrued expenses and other current liabilities
|
|
|
13,152
|
|
|
12,310
|
|
Income tax payable
|
|
|
2,080
|
|
|
3,228
|
|
Deferred revenue
|
|
|
275,446
|
|
|
213,562
|
|
Total current liabilities
|
|
|
314,676
|
|
|
246,784
|
|
Deferred income taxes, noncurrent
|
|
|
7,307
|
|
|
12,974
|
|
Other long-term liabilities
|
|
|
6,977
|
|
|
4,964
|
|
Total liabilities
|
|
|
328,960
|
|
|
264,722
|
|
Stockholders’ equity:
|
|
|
|
|
|
Class A common stock
|
|
|
1
|
|
|
1
|
|
Class B common stock
|
|
|
—
|
|
|
—
|
|
Additional paid-in capital
|
|
|
515,272
|
|
|
439,658
|
|
Accumulated other comprehensive income
|
|
|
1,404
|
|
|
111
|
|
Retained earnings
|
|
|
354,850
|
|
|
212,884
|
|
Total stockholders’ equity
|
|
|
871,527
|
|
|
652,654
|
|
Total liabilities and stockholders’ equity
|
|
$
|
1,200,487
|
|
$
|
917,376
|
|
|
|
|
|
|
|
|
|
VEEVA SYSTEMS INC.
|
|
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
|
(In thousands, except per share data)
|
|
(Unaudited)
|
|
|
|
|
|
Three months ended
January 31,
|
Fiscal Year Ended
January 31,
|
|
|
|
|
2018
|
|
|
|
2017
|
|
|
|
2018
|
|
|
|
2017
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Subscription services
|
|
$
|
150,886
|
|
|
$
|
119,498
|
|
|
$
|
554,446
|
|
|
$
|
434,316
|
|
|
Professional services and other
|
|
|
34,033
|
|
|
|
30,655
|
|
|
|
131,125
|
|
|
|
109,727
|
|
|
Total revenues
|
|
|
184,919
|
|
|
|
150,153
|
|
|
|
685,571
|
|
|
|
544,043
|
|
|
Cost of revenues(4):
|
|
|
|
|
|
|
|
|
|
Cost of subscription services
|
|
|
29,769
|
|
|
|
25,300
|
|
|
|
110,465
|
|
|
|
94,386
|
|
|
Cost of professional services and other
|
|
|
29,148
|
|
|
|
21,170
|
|
|
|
100,974
|
|
|
|
79,295
|
|
|
Total cost of revenues
|
|
|
58,917
|
|
|
|
46,470
|
|
|
|
211,439
|
|
|
|
173,681
|
|
|
Gross profit
|
|
|
126,002
|
|
|
|
103,683
|
|
|
|
474,132
|
|
|
|
370,362
|
|
|
Operating expenses(4):
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
37,007
|
|
|
|
26,102
|
|
|
|
132,051
|
|
|
|
96,750
|
|
|
Sales and marketing
|
|
|
37,215
|
|
|
|
32,781
|
|
|
|
130,898
|
|
|
|
116,803
|
|
|
General and administrative
|
|
|
16,893
|
|
|
|
12,270
|
|
|
|
60,391
|
|
|
|
48,841
|
|
|
Total operating expenses
|
|
|
91,115
|
|
|
|
71,153
|
|
|
|
323,340
|
|
|
|
262,394
|
|
|
Operating income
|
|
|
34,887
|
|
|
|
32,530
|
|
|
|
150,792
|
|
|
|
107,968
|
|
|
Other income (expense), net
|
|
|
3,033
|
|
|
|
(243
|
)
|
|
|
7,842
|
|
|
|
1,667
|
|
|
Income before income taxes
|
|
|
37,920
|
|
|
|
32,287
|
|
|
|
158,634
|
|
|
|
109,635
|
|
|
Provision for income taxes
|
|
|
4,214
|
|
|
|
10,580
|
|
|
|
16,668
|
|
|
|
40,831
|
|
|
Net income
|
|
$
|
33,706
|
|
|
$
|
21,707
|
|
|
$
|
141,966
|
|
|
$
|
68,804
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to common stockholders, basic and diluted:
|
|
$
|
33,706
|
|
|
$
|
21,707
|
|
|
$
|
141,966
|
|
|
$
|
68,801
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share attributable to common stockholders:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.24
|
|
|
$
|
0.16
|
|
|
$
|
1.01
|
|
|
$
|
0.51
|
|
|
Diluted
|
|
$
|
0.22
|
|
|
$
|
0.15
|
|
|
$
|
0.92
|
|
|
$
|
0.47
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares used to compute net income per share
attributable to common stockholders:
|
|
|
Basic
|
|
|
141,652
|
|
|
|
136,313
|
|
|
|
140,311
|
|
|
|
135,698
|
|
|
Diluted
|
|
|
154,467
|
|
|
|
147,834
|
|
|
|
153,681
|
|
|
|
147,578
|
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
Net change in unrealized gains (losses) on available-for-sale
investments
|
|
$
|
(1,478
|
)
|
|
$
|
(196
|
)
|
|
$
|
(1,793
|
)
|
|
$
|
(153
|
)
|
|
Net change in cumulative foreign currency translation gain (loss)
|
|
|
1,860
|
|
|
|
(12
|
)
|
|
|
3,086
|
|
|
|
92
|
|
|
Comprehensive income
|
|
$
|
34,088
|
|
|
$
|
21,499
|
|
|
$
|
143,259
|
|
|
$
|
68,743
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4) Includes stock-based compensation as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
Cost of subscription services
|
|
$
|
353
|
|
|
$
|
318
|
|
|
$
|
1,448
|
|
|
$
|
1,109
|
|
|
Cost of professional services and other
|
|
|
2,366
|
|
|
|
1,714
|
|
|
|
8,476
|
|
|
|
6,002
|
|
|
Research and development
|
|
|
4,866
|
|
|
|
3,494
|
|
|
|
17,782
|
|
|
|
11,937
|
|
|
Sales and marketing
|
|
|
4,138
|
|
|
|
3,882
|
|
|
|
16,288
|
|
|
|
13,271
|
|
|
General and administrative
|
|
|
3,140
|
|
|
|
2,278
|
|
|
|
10,055
|
|
|
|
8,479
|
|
|
Total stock-based compensation
|
|
$
|
14,863
|
|
|
$
|
11,686
|
|
|
$
|
54,049
|
|
|
$
|
40,798
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VEEVA SYSTEMS INC.
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(In thousands)
|
|
(Unaudited)
|
|
|
|
|
|
Three months ended
January 31,
|
Fiscal Year Ended
January 31,
|
|
|
|
|
2018
|
|
|
|
2017
|
|
|
|
2018
|
|
|
|
2017
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
33,706
|
|
|
$
|
21,707
|
|
|
$
|
141,966
|
|
|
$
|
68,804
|
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
Depreciation and amortization
|
|
|
3,656
|
|
|
|
3,481
|
|
|
|
14,277
|
|
|
|
13,825
|
|
|
Amortization of premiums on short-term investments
|
|
|
182
|
|
|
|
482
|
|
|
|
1,389
|
|
|
|
1,852
|
|
|
Stock-based compensation
|
|
|
14,863
|
|
|
|
11,686
|
|
|
|
54,049
|
|
|
|
40,798
|
|
|
Deferred income taxes
|
|
|
6,608
|
|
|
|
(4,114
|
)
|
|
|
4,366
|
|
|
|
(5,073
|
)
|
|
Loss on foreign currency from market-to-market derivative
|
|
|
146
|
|
|
|
—
|
|
|
|
265
|
|
|
|
—
|
|
|
Bad debt expense
|
|
|
27
|
|
|
|
10
|
|
|
|
(242
|
)
|
|
|
130
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(157,464
|
)
|
|
|
(117,178
|
)
|
|
|
(50,673
|
)
|
|
|
(38,148
|
)
|
|
Income taxes
|
|
|
(6,583
|
)
|
|
|
(2,063
|
)
|
|
|
(2,520
|
)
|
|
|
911
|
|
|
Other current and long-term assets
|
|
|
(942
|
)
|
|
|
3,607
|
|
|
|
(2,492
|
)
|
|
|
831
|
|
|
Accounts payable
|
|
|
(321
|
)
|
|
|
699
|
|
|
|
1,396
|
|
|
|
1,113
|
|
|
Accrued expenses and other current liabilities
|
|
|
5,200
|
|
|
|
3,104
|
|
|
|
7,149
|
|
|
|
336
|
|
|
Deferred revenue
|
|
|
102,074
|
|
|
|
75,576
|
|
|
|
61,773
|
|
|
|
56,208
|
|
|
Other long-term liabilities
|
|
|
1,368
|
|
|
|
915
|
|
|
|
3,818
|
|
|
|
2,424
|
|
|
Net cash provided by (used in) operating activities(5)
|
|
|
2,520
|
|
|
|
(2,088
|
)
|
|
|
234,521
|
|
|
|
144,011
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
Purchases of short-term investments
|
|
|
(87,139
|
)
|
|
|
(41,062
|
)
|
|
|
(437,858
|
)
|
|
|
(314,847
|
)
|
|
Maturities and sales of short-term investments
|
|
|
90,438
|
|
|
|
43,849
|
|
|
|
293,621
|
|
|
|
225,600
|
|
|
Purchases of property and equipment
|
|
|
(1,503
|
)
|
|
|
(2,551
|
)
|
|
|
(9,633
|
)
|
|
|
(6,923
|
)
|
|
Capitalized internal-use software development costs
|
|
|
(400
|
)
|
|
|
(343
|
)
|
|
|
(1,734
|
)
|
|
|
(584
|
)
|
|
Changes in restricted cash and deposits
|
|
|
—
|
|
|
|
—
|
|
|
|
(202
|
)
|
|
|
102
|
|
|
Net cash provided by (used in) investing activities
|
|
|
1,396
|
|
|
|
(107
|
)
|
|
|
(155,806
|
)
|
|
|
(96,652
|
)
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
Proceeds from exercise of common stock options
|
|
|
3,610
|
|
|
|
4,361
|
|
|
|
20,773
|
|
|
|
12,362
|
|
|
Restricted stock units acquired to settle employee tax withholding
liability
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
(14
|
)
|
|
Excess tax benefits from employee stock plans
|
|
|
—
|
|
|
|
9,379
|
|
|
|
—
|
|
|
|
25,628
|
|
|
Net cash provided by financing activities(5)
|
|
|
3,610
|
|
|
|
13,739
|
|
|
|
20,773
|
|
|
|
37,976
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
1,861
|
|
|
|
(16
|
)
|
|
|
3,089
|
|
|
|
92
|
|
|
Net change in cash and cash equivalents
|
|
|
9,387
|
|
|
|
11,528
|
|
|
|
102,577
|
|
|
|
85,427
|
|
|
Cash and cash equivalents at beginning of period
|
|
|
310,796
|
|
|
|
206,078
|
|
|
|
217,606
|
|
|
|
132,179
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
320,183
|
|
|
$
|
217,606
|
|
|
$
|
320,183
|
|
|
$
|
217,606
|
|
|
|
|
|
|
|
|
|
|
|
_______
(5) During the year ended January 31, 2018, the Company
adopted ASU 2016-09, “Compensation-Stock Compensation: Improvements to
Employee Share-Based Payment.” This adoption resulted in a $8.6 million
and $45.8 million increase in net cash provided by operating activities
and a corresponding decrease in net cash provided by financing
activities for the three months and year ended January 31, 2018,
respectively.
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 from its non-GAAP financial measures 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 from its non-GAAP measures 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.
-
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. Veeva’s
internal management reporting processes exclude both the
capitalization of software (which would otherwise result in a
reduction in net research and development operating expenses) and the
amortization of capitalized software (which would otherwise result in
an increase in cost of subscription revenues) when preparing budgets,
plans and reviewing internal performance. 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 business
acquisition. The Zinc Ahead share purchase agreement, as revised,
called for share purchase consideration to be deferred and paid at a
rate of one-third of the deferred consideration amount per year to
certain former Zinc Ahead employee shareholders and option holders who
remain employed with Veeva on each deferred consideration payment
date. In accordance with GAAP, these payments are being accounted for
as deferred compensation and the expense is recognized over the
requisite service period. Veeva’s management views this deferred
compensation expense as an unusual acquisition cost associated with
the Zinc Ahead acquisition and finds it useful to exclude it in order
to assess the appropriate level of various operating expenses to
assist in budgeting, planning and forecasting future periods. Veeva
believes excluding this deferred compensation expense from its
non-GAAP measures may allow investors to make more meaningful
comparisons between its recurring 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 imputed 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
business acquisition 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:
|
|
|
VEEVA SYSTEMS INC.
|
|
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
|
|
(Dollars in thousands)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Three months ended
January 31,
|
Fiscal Year Ended
January 31,
|
|
|
|
|
2018
|
|
|
|
2017
|
|
|
|
2018
|
|
|
|
2017
|
|
|
Cost of subscription services revenues on a GAAP basis
|
|
$
|
29,769
|
|
|
$
|
25,300
|
|
|
$
|
110,465
|
|
|
$
|
94,386
|
|
|
Stock-based compensation expense
|
|
|
(353
|
)
|
|
|
(318
|
)
|
|
|
(1,448
|
)
|
|
|
(1,109
|
)
|
|
Amortization of purchased intangibles
|
|
|
(924
|
)
|
|
|
(1,077
|
)
|
|
|
(3,911
|
)
|
|
|
(4,337
|
)
|
|
Amortization of internal-use software
|
|
|
(166
|
)
|
|
|
(132
|
)
|
|
|
(619
|
)
|
|
|
(663
|
)
|
|
Cost of subscription services revenues on a non-GAAP basis
|
|
$
|
28,326
|
|
|
$
|
23,773
|
|
|
$
|
104,487
|
|
|
$
|
88,277
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin on subscription services revenues on a GAAP basis
|
|
|
80.3
|
%
|
|
|
78.8
|
%
|
|
|
80.1
|
%
|
|
|
78.3
|
%
|
|
Stock-based compensation expense
|
|
|
0.2
|
|
|
|
0.3
|
|
|
|
0.3
|
|
|
|
0.3
|
|
|
Amortization of purchased intangibles
|
|
|
0.6
|
|
|
|
0.9
|
|
|
|
0.7
|
|
|
|
1.0
|
|
|
Amortization of internal-use software
|
|
|
0.1
|
|
|
|
0.1
|
|
|
|
0.1
|
|
|
|
0.1
|
|
|
Gross margin on subscription services revenues on a non-GAAP basis
|
|
|
81.2
|
%
|
|
|
80.1
|
%
|
|
|
81.2
|
%
|
|
|
79.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Cost of professional services and other revenues on a GAAP basis
|
|
$
|
29,148
|
|
|
$
|
21,170
|
|
|
$
|
100,974
|
|
|
$
|
79,295
|
|
|
Stock-based compensation expense
|
|
|
(2,366
|
)
|
|
|
(1,714
|
)
|
|
|
(8,476
|
)
|
|
|
(6,002
|
)
|
|
Deferred compensation associated with Zinc Ahead acquisition
|
|
|
(6
|
)
|
|
|
(6
|
)
|
|
|
(22
|
)
|
|
|
(29
|
)
|
|
Cost of professional services and other revenues on a non-GAAP basis
|
|
$
|
26,776
|
|
|
$
|
19,450
|
|
|
$
|
92,476
|
|
|
$
|
73,264
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin on professional services and other revenues on a GAAP
basis
|
|
|
14.4
|
%
|
|
|
30.9
|
%
|
|
|
23.0
|
%
|
|
|
27.7
|
%
|
|
Stock-based compensation expense
|
|
|
6.9
|
|
|
|
5.7
|
|
|
|
6.5
|
|
|
|
5.5
|
|
|
Gross margin on professional services and other revenues on a
non-GAAP basis
|
|
|
21.3
|
%
|
|
|
36.6
|
%
|
|
|
29.5
|
%
|
|
|
33.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit on a GAAP basis
|
|
$
|
126,002
|
|
|
$
|
103,683
|
|
|
$
|
474,132
|
|
|
$
|
370,362
|
|
|
Stock-based compensation expense
|
|
|
2,719
|
|
|
|
2,032
|
|
|
|
9,924
|
|
|
|
7,111
|
|
|
Amortization of purchased intangibles
|
|
|
924
|
|
|
|
1,077
|
|
|
|
3,911
|
|
|
|
4,337
|
|
|
Amortization of internal-use software
|
|
|
166
|
|
|
|
132
|
|
|
|
619
|
|
|
|
663
|
|
|
Deferred compensation associated with Zinc Ahead acquisition
|
|
|
6
|
|
|
|
6
|
|
|
|
22
|
|
|
|
29
|
|
|
Gross profit on a non-GAAP basis
|
|
$
|
129,817
|
|
|
$
|
106,930
|
|
|
$
|
488,608
|
|
|
$
|
382,502
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin on total revenues on a GAAP basis
|
|
|
68.1
|
%
|
|
|
69.1
|
%
|
|
|
69.2
|
%
|
|
|
68.1
|
%
|
|
Stock-based compensation expense
|
|
|
1.5
|
|
|
|
1.3
|
|
|
|
1.4
|
|
|
|
1.3
|
|
|
Amortization of purchased intangibles
|
|
|
0.5
|
|
|
|
0.7
|
|
|
|
0.6
|
|
|
|
0.8
|
|
|
Amortization of internal-use software
|
|
|
0.1
|
|
|
|
0.1
|
|
|
|
0.1
|
|
|
|
0.1
|
|
|
Gross margin on total revenues on a non-GAAP basis
|
|
|
70.2
|
%
|
|
|
71.2
|
%
|
|
|
71.3
|
%
|
|
|
70.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expense on a GAAP basis
|
|
$
|
37,007
|
|
|
$
|
26,102
|
|
|
$
|
132,051
|
|
|
$
|
96,750
|
|
|
Stock-based compensation expense
|
|
|
(4,866
|
)
|
|
|
(3,494
|
)
|
|
|
(17,782
|
)
|
|
|
(11,937
|
)
|
|
Capitalization of internal-use software
|
|
|
400
|
|
|
|
345
|
|
|
|
1,733
|
|
|
|
586
|
|
|
Deferred compensation associated with Zinc Ahead acquisition
|
|
|
(108
|
)
|
|
|
(109
|
)
|
|
|
(435
|
)
|
|
|
(434
|
)
|
|
Research and development expense on a non-GAAP basis
|
|
$
|
32,433
|
|
|
$
|
22,844
|
|
|
$
|
115,567
|
|
|
$
|
84,965
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing expense on a GAAP basis
|
|
$
|
37,215
|
|
|
$
|
32,781
|
|
|
$
|
130,898
|
|
|
$
|
116,803
|
|
|
Stock-based compensation expense
|
|
|
(4,138
|
)
|
|
|
(3,882
|
)
|
|
|
(16,288
|
)
|
|
|
(13,271
|
)
|
|
Amortization of purchased intangibles
|
|
|
(977
|
)
|
|
|
(975
|
)
|
|
|
(3,879
|
)
|
|
|
(3,879
|
)
|
|
Deferred compensation associated with Zinc Ahead acquisition
|
|
|
(17
|
)
|
|
|
(23
|
)
|
|
|
(60
|
)
|
|
|
(77
|
)
|
|
Sales and marketing expense on a non-GAAP basis
|
|
$
|
32,083
|
|
|
$
|
27,901
|
|
|
$
|
110,671
|
|
|
$
|
99,576
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expense on a GAAP basis
|
|
$
|
16,893
|
|
|
$
|
12,270
|
|
|
$
|
60,391
|
|
|
$
|
48,841
|
|
|
Stock-based compensation expense
|
|
|
(3,140
|
)
|
|
|
(2,278
|
)
|
|
|
(10,055
|
)
|
|
|
(8,479
|
)
|
|
Deferred compensation associated with Zinc Ahead acquisition
|
|
|
(3
|
)
|
|
|
(4
|
)
|
|
|
(15
|
)
|
|
|
(2,275
|
)
|
|
General and administrative expense on a non-GAAP basis
|
|
$
|
13,750
|
|
|
$
|
9,988
|
|
|
$
|
50,321
|
|
|
$
|
38,087
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VEEVA SYSTEMS INC.
|
|
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
|
|
(Dollars in thousands)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Three months ended
January 31,
|
Fiscal Year Ended
January 31,
|
|
|
|
|
2018
|
|
|
|
2017
|
|
|
|
2018
|
|
|
|
2017
|
|
|
Operating expense on a GAAP basis
|
|
$
|
91,115
|
|
|
$
|
71,153
|
|
|
$
|
323,340
|
|
|
$
|
262,394
|
|
|
Stock-based compensation expense
|
|
|
(12,144
|
)
|
|
|
(9,654
|
)
|
|
|
(44,125
|
)
|
|
|
(33,687
|
)
|
|
Amortization of purchased intangibles
|
|
|
(977
|
)
|
|
|
(975
|
)
|
|
|
(3,879
|
)
|
|
|
(3,879
|
)
|
|
Capitalization of internal-use software
|
|
|
400
|
|
|
|
345
|
|
|
|
1,733
|
|
|
|
586
|
|
|
Deferred compensation associated with Zinc Ahead acquisition
|
|
|
(128
|
)
|
|
|
(136
|
)
|
|
|
(510
|
)
|
|
|
(2,786
|
)
|
|
Operating expense on a non-GAAP basis
|
|
$
|
78,266
|
|
|
$
|
60,733
|
|
|
$
|
276,559
|
|
|
$
|
222,628
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income on a GAAP basis
|
|
$
|
34,887
|
|
|
$
|
32,530
|
|
|
$
|
150,792
|
|
|
$
|
107,968
|
|
|
Stock-based compensation expense
|
|
|
14,863
|
|
|
|
11,686
|
|
|
|
54,049
|
|
|
|
40,798
|
|
|
Amortization of purchased intangibles
|
|
|
1,901
|
|
|
|
2,052
|
|
|
|
7,790
|
|
|
|
8,216
|
|
|
Capitalization of internal-use software
|
|
|
(400
|
)
|
|
|
(345
|
)
|
|
|
(1,733
|
)
|
|
|
(586
|
)
|
|
Amortization of internal-use software
|
|
|
166
|
|
|
|
132
|
|
|
|
619
|
|
|
|
663
|
|
|
Deferred compensation associated with Zinc Ahead acquisition
|
|
|
134
|
|
|
|
142
|
|
|
|
532
|
|
|
|
2,815
|
|
|
Operating income on a non-GAAP basis
|
|
$
|
51,551
|
|
|
$
|
46,197
|
|
|
$
|
212,049
|
|
|
$
|
159,874
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin on a GAAP basis
|
|
|
18.9
|
%
|
|
|
21.7
|
%
|
|
|
22.0
|
%
|
|
|
19.8
|
%
|
|
Stock-based compensation expense
|
|
|
8.0
|
|
|
|
7.8
|
|
|
|
7.9
|
|
|
|
7.5
|
|
|
Amortization of purchased intangibles
|
|
|
1.0
|
|
|
|
1.3
|
|
|
|
1.1
|
|
|
|
1.6
|
|
|
Capitalization of internal-use software
|
|
|
(0.2
|
)
|
|
|
(0.2
|
)
|
|
|
(0.3
|
)
|
|
|
(0.1
|
)
|
|
Amortization of internal-use software
|
|
|
0.1
|
|
|
|
0.1
|
|
|
|
0.1
|
|
|
|
0.1
|
|
|
Deferred compensation associated with Zinc Ahead acquisition
|
|
|
0.1
|
|
|
|
0.1
|
|
|
|
0.1
|
|
|
|
0.5
|
|
|
Operating margin on a non-GAAP basis
|
|
|
27.9
|
%
|
|
|
30.8
|
%
|
|
|
30.9
|
%
|
|
|
29.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Net income on a GAAP basis
|
|
$
|
33,706
|
|
|
$
|
21,707
|
|
|
$
|
141,966
|
|
|
$
|
68,804
|
|
|
Stock-based compensation expense
|
|
|
14,863
|
|
|
|
11,686
|
|
|
|
54,049
|
|
|
|
40,798
|
|
|
Amortization of purchased intangibles
|
|
|
1,901
|
|
|
|
2,052
|
|
|
|
7,790
|
|
|
|
8,216
|
|
|
Capitalization of internal-use software
|
|
|
(400
|
)
|
|
|
(345
|
)
|
|
|
(1,733
|
)
|
|
|
(586
|
)
|
|
Amortization of internal-use software
|
|
|
166
|
|
|
|
132
|
|
|
|
619
|
|
|
|
663
|
|
|
Deferred compensation associated with Zinc Ahead acquisition
|
|
|
134
|
|
|
|
142
|
|
|
|
532
|
|
|
|
2,815
|
|
|
Income tax effect on non-GAAP adjustments
|
|
|
(14,890
|
)
|
|
|
(2,669
|
)
|
|
|
(60,294
|
)
|
|
|
(12,759
|
)
|
|
Net income on a non-GAAP basis
|
|
$
|
35,480
|
|
|
$
|
32,705
|
|
|
$
|
142,929
|
|
|
$
|
107,951
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income allocated to participating securities on a GAAP basis
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(3
|
)
|
|
Net income allocated to participating securities from non-GAAP
adjustments
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1
|
|
|
Net income allocated to participating securities on a non-GAAP basis
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(2
|
)
|
|
Net income attributable to common stockholders on a non-GAAP basis
|
|
$
|
35,480
|
|
|
$
|
32,705
|
|
|
$
|
142,929
|
|
|
$
|
107,949
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per share on a GAAP basis
|
|
$
|
0.22
|
|
|
$
|
0.15
|
|
|
$
|
0.92
|
|
|
$
|
0.47
|
|
|
Stock-based compensation expense
|
|
|
0.10
|
|
|
|
0.08
|
|
|
|
0.36
|
|
|
|
0.27
|
|
|
Amortization of purchased intangibles
|
|
|
0.01
|
|
|
|
0.01
|
|
|
|
0.05
|
|
|
|
0.06
|
|
|
Capitalization of internal-use software
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.01
|
)
|
|
|
—
|
|
|
Amortization of internal-use software
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Deferred compensation associated with Zinc Ahead acquisition
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.02
|
|
|
Income tax effect on non-GAAP adjustments
|
|
|
(0.10
|
)
|
|
|
(0.02
|
)
|
|
|
(0.39
|
)
|
|
|
(0.09
|
)
|
|
Diluted net income per share on a non-GAAP basis
|
|
$
|
0.23
|
|
|
$
|
0.22
|
|
|
$
|
0.93
|
|
|
$
|
0.73
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20180227006560/en/
Source: Veeva Systems Inc.