Veeva Announces Fiscal 2021 First Quarter Results

	Three months ended April 30,
	2020			2019
Operating expense on a GAAP basis	$	154,661		$	108,080
Stock-based compensation expense	(30,814		)	(17,393		)
Amortization of purchased intangibles	(3,486		)	(903		)
Operating expense on a non-GAAP basis	$	120,361		$	89,784

Operating income on a GAAP basis	$	87,565		$	71,169
Stock-based compensation expense	36,907			20,756
Amortization of purchased intangibles	5,215			1,570
Operating income on a non-GAAP basis	$	129,687		$	93,495

Operating margin on a GAAP basis	26.0		%	29.1		%
Stock-based compensation expense	11.0			8.5
Amortization of purchased intangibles	1.5			0.6
Operating margin on a non-GAAP basis	38.5		%	38.2		%

Net income on a GAAP basis	$	86,570		$	73,449
Stock-based compensation expense	36,907			20,756
Amortization of purchased intangibles	5,215			1,570
Income tax effect on non-GAAP adjustments⁽¹⁾	(23,542		)	(17,047		)
Net income on a non-GAAP basis	$	105,150		$	78,728

Diluted net income per share on a GAAP basis	$	0.54		$	0.47
Stock-based compensation expense	0.23			0.13
Amortization of purchased intangibles	0.04			0.01
Income tax effect on non-GAAP adjustments⁽¹⁾	(0.15		)	(0.11		)
Diluted net income per share on a non-GAAP basis	$	0.66		$	0.50

________________________
⁽¹⁾ For the three months ended April 30, 2020 and 2019, management used an estimated annual effective non-GAAP tax rate of 21.0%.

Investor Relations Contact:
Veeva Systems Inc.
Rick Lund, 925-271-9816
ir@veeva.com

Media Contact:
Veeva Systems Inc.
Roger Villareal, 925-264-8885
pr@veeva.com

	April 30, 2020		January 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	720,776	$	476,733
Short-term investments	660,199		610,015
Accounts receivable, net	235,923		389,690
Unbilled accounts receivable	37,269		32,817
Prepaid expenses and other current assets	21,105		21,869
Total current assets	1,675,272		1,531,124
Property and equipment, net	52,886		54,752
Deferred costs, net	34,176		35,585
Lease right-of-use assets	46,923		49,132
Goodwill	438,529		438,529
Intangible assets, net	129,403		134,601
Deferred income taxes, noncurrent	11,701		11,870
Other long-term assets	15,729		16,184
Total assets	$	2,404,619	$	2,271,777

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	15,041	$	19,420
Accrued compensation and benefits	27,064		25,619
Accrued expenses and other current liabilities	23,405		21,620
Income tax payable	4,441		5,613
Deferred revenue	470,262		468,887
Lease liabilities	10,127		10,013
Total current liabilities	550,340		551,172
Deferred income taxes, noncurrent	1,673		2,417
Lease liabilities, noncurrent	42,430		44,815
Other long-term liabilities	9,140		7,779
Total liabilities	603,583		606,183
Stockholders’ equity:
Class A common stock	2		1
Class B common stock	—		—
Additional paid-in capital	792,660		745,475
Accumulated other comprehensive income	2,146		460
Retained earnings	1,006,228		919,658
Total stockholders’ equity	1,801,036		1,665,594
Total liabilities and stockholders’ equity	$	2,404,619	$	2,271,777

	Three months ended April 30,
	2020		2019
Revenues:
Subscription services	$	270,235	$	198,115
Professional services and other	66,871		46,637
Total revenues	337,106		244,752
Cost of revenues ⁽³⁾:
Cost of subscription services	43,212		30,378
Cost of professional services and other	51,668		35,125
Total cost of revenues	94,880		65,503
Gross profit	242,226		179,249
Operating expenses ⁽³⁾:
Research and development	62,237		44,973
Sales and marketing	55,755		39,617
General and administrative	36,669		23,490
Total operating expenses	154,661		108,080
Operating income	87,565		71,169
Other income, net	3,414		6,161
Income before income taxes	90,979		77,330
Provision for income taxes	4,409		3,881
Net income	$	86,570	$	73,449

Net income per share:
Basic	$	0.58	$	0.50
Diluted	$	0.54	$	0.47

Weighted-average shares used to compute net income per share:
Basic	149,541		146,708
Diluted	159,474		157,910
Other comprehensive income:
Net change in unrealized gains on available-for- sale investments	$	1,297	$	962
Net change in cumulative foreign currency translation loss	389		(702		)
Comprehensive income	$	88,256	$	73,709
_______________________ ⁽³⁾Includes stock-based compensation as follows:
Cost of revenues:
Cost of subscription services	$	1,019	$	385
Cost of professional services and other	5,074		2,978
Research and development	11,401		6,325
Sales and marketing	8,192		5,152
General and administrative	11,221		5,916
Total stock-based compensation	$	36,907	$	20,756

	Three months ended April 30,
	2020			2019
Cash flows from operating activities
Net income	$	86,570		$	73,449
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	7,878			3,900
Reduction of operating lease right-of-use assets	2,997			1,538
Accretion of discount on short-term investments	(11		)	(1,178		)
Stock-based compensation	36,907			20,756
Amortization of deferred costs	4,751			4,849
Deferred income taxes	(1,134		)	418
(Gain) Loss on foreign currency from mark-to-market derivative	93			(80		)
Bad debt recovery	(393		)	(153		)
Changes in operating assets and liabilities:
Accounts receivable	154,160			139,510
Unbilled accounts receivable	(4,452		)	(5,244		)
Deferred costs	(3,342		)	(4,601		)
Income taxes payable	(1,850		)	338
Other current and long-term assets	551			(2,759		)
Accounts payable	(4,430		)	(416		)
Accrued expenses and other current liabilities	2,691			(759		)
Deferred revenue	1,477			7,914
Operating lease liabilities	(2,811		)	(1,629		)
Other long-term liabilities	2,520			436
Net cash provided by operating activities	282,172			236,289
Cash flows from investing activities
Purchases of short-term investments	(188,818		)	(228,894		)
Maturities and sales of short-term investments	140,342			188,965
Purchases of property and equipment	267			(1,194		)
Capitalized internal-use software development costs	—			(419		)
Net cash used in investing activities	(48,209		)	(41,542		)
Cash flows from financing activities
Reduction of lease liabilities – finance leases	(248		)	(249		)
Proceeds from exercise of common stock options	9,781			3,391
Net cash provided by financing activities	9,533			3,142
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	548			(702		)
Net change in cash, cash equivalents, and restricted cash	244,044			197,187
Cash, cash equivalents, and restricted cash at beginning of period	479,797			552,178
Cash, cash equivalents, and restricted cash at end of period	$	723,841		$	749,365

	Three months ended April 30,
	2020			2019
Cost of subscription services revenues on a GAAP basis	$	43,212		$	30,378
Stock-based compensation expense	(1,019		)	(385		)
Amortization of purchased intangibles	(1,594		)	(667		)
Cost of subscription services revenues on a non-GAAP basis	$	40,599		$	29,326

Gross margin on subscription services revenues on a GAAP basis	84.0		%	84.7		%
Stock-based compensation expense	0.4			0.2
Amortization of purchased intangibles	0.6			0.3
Gross margin on subscription services revenues on a non-GAAP basis	85.0		%	85.2		%

Cost of professional services and other revenues on a GAAP basis	$	51,668		$	35,125
Stock-based compensation expense	(5,074		)	(2,978		)
Amortization of purchased intangibles	(135		)	—
Cost of professional services and other revenues on a non-GAAP basis	$	46,459		$	32,147

Gross margin on professional services and other revenues on a GAAP basis	22.7		%	24.7		%
Stock-based compensation expense	7.6			6.4
Amortization of purchased intangibles	0.2			—
Gross margin on professional services and other revenues on a non-GAAP basis	30.5		%	31.1		%

Gross profit on a GAAP basis	$	242,226		$	179,249
Stock-based compensation expense	6,093			3,363
Amortization of purchased intangibles	1,729			667
Gross profit on a non-GAAP basis	$	250,048		$	183,279

Gross margin on total revenues on a GAAP basis	71.9		%	73.2		%
Stock-based compensation expense	1.8			1.4
Amortization of purchased intangibles	0.5			0.3
Gross margin on total revenues on a non-GAAP basis	74.2		%	74.9		%

Research and development expense on a GAAP basis	$	62,237		$	44,973
Stock-based compensation expense	(11,401		)	(6,325		)
Amortization of purchased intangibles	(28		)	—
Research and development expense on a non-GAAP basis	$	50,808		$	38,648

Sales and marketing expense on a GAAP basis	$	55,755		$	39,617
Stock-based compensation expense	(8,192		)	(5,152		)
Amortization of purchased intangibles	(3,402		)	(903		)
Sales and marketing expense on a non-GAAP basis	$	44,161		$	33,562

General and administrative expense on a GAAP basis	$	36,669		$	23,490
Stock-based compensation expense	(11,221		)	(5,916		)
Amortization of purchased intangibles	(56		)	—
General and administrative expense on a non-GAAP basis	$	25,392		$	17,574

Veeva Announces Fiscal 2021 First Quarter Results

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Veeva Announces Fiscal 2021 First Quarter Results

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