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    News, Awards & Press

    Veeva Announces Fiscal 2021 Second Quarter Results

    Download PDFTotal Revenues of $353.7M, up 33% Year-over-year;
    Subscription Services Revenues of $283.5M, up 30% Year-over-year

    PLEASANTON, CA – August 27, 2020 – Veeva Systems Inc. (NYSE: VEEV), a leading provider of industry cloud solutions for the global life sciences industry, today announced results for its fiscal second quarter ended July 31, 2020.

    “We are focused on helping the industry as the move to streamline drug development and enable digital engagement has gone from strategic imperative to operational necessity,” said CEO Peter Gassner. “Our team’s dedication to customer success, bringing creative solutions, and delivering significant product innovations with speed, is more important than ever as life sciences steps up to meet the challenge of a lifetime.”

    Fiscal 2021 Second Quarter Results:

    • Revenues: Total revenues for the second quarter were $353.7 million, up from $266.9 million one year ago, an increase of 33% year-over-year. Subscription services revenues for the second quarter were $283.5 million, up from $217.3 million one year ago, an increase of 30% year-over-year.
    • Operating Income and Non-GAAP Operating Income
      (1): Second quarter operating income was $90.1 million, compared to $73.9 million one year ago, an increase of 22% year-over-year. Non-GAAP operating income for the second quarter was $144.4 million, compared to $103.7 million one year ago, an increase of 39% year-over-year.
    • Net Income and Non-GAAP Net Income
      (1): Second quarter net income was $93.6 million, compared to $79.2 million one year ago, an increase of 18% year-over-year. Non-GAAP net income for the second quarter was $116.4 million, compared to $87.7 million one year ago, an increase of 33% year-over-year.
    • Net Income per Share and Non-GAAP Net Income per Share
      (1): For the second quarter, fully diluted net income per share was $0.58, compared to $0.50 one year ago, while non-GAAP fully diluted net income per share was $0.72, compared to $0.55 one year ago.

    “Demand for our products and services remains strong as life sciences companies pursue strategic initiatives across R&D and commercial,” said CFO Tim Cabral. “Given the opportunity ahead, we continue to invest for product excellence, customer success, and long-term growth.”

    Recent Highlights:

    • MyVeeva for Doctors to Make it Easy for Healthcare Professionals to Get the Information They Need — Unveiled at Veeva Commercial Summit, MyVeeva for Doctors is a website and mobile application that will give healthcare professionals access to contacts, content, and services from across pharma companies and brands – all in a single place. By having quick and easy access to the information they need, doctors can better help their patients. The new offering is targeted for release at the end of the year for the U.S. market.
    • Innovation and Product Excellence Drives Leadership in Clinical — The quarter marked a number of important milestones including Veeva Vault CTMS’s selection as the global standard by another top 20 pharma and its first top 7 CRO. The company also had a strategic Veeva Vault CDMS win for a number of complex oncology trials with a new top 20 pharma. Overall, more companies are turning to Veeva for its innovation in clinical, including more than 300 Vault eTMF and 70 Vault CTMS customers, and over 100 clinical trials have started on Vault CDMS.
    • Record Quarter for Veeva Vault Quality — Record sales of Vault Quality applications in the second quarter were fueled by a number of key wins and expansions. Building on their success with Veeva Vault, two top 20 pharma customers standardized on Vault QMS and another top 20 added Vault QualityDocs enterprise-wide. More than 120 customers with Vault QMS and QualityDocs can bring together quality work processes and quality documentation into a single system, enabled by Veeva Vault’s unique ability to support both content-centric and data-centric applications on a single platform.

    Financial Outlook:

    Veeva is providing guidance for its fiscal third quarter ending October 31, 2020 as follows:

    • Total revenues between $360 and $362 million.
    • Non-GAAP operating income between $138 and $140 million(2).
    • Non-GAAP fully diluted net income per share between $0.66 and $0.68(2).

    Veeva is providing guidance for its fiscal year ending January 31, 2021 as follows:

    • Total revenues between $1,415 and $1,420 million.
    • Non-GAAP operating income between $540 and $545 million(2).
    • Non-GAAP fully diluted net income per share between $2.64 and $2.67(2).

    Conference Call Information

    What:

     

    Veeva’s Fiscal 2021 Second Quarter Results Conference Call

    When:

     

    Thursday, August 27, 2020

    Time:

     

    1:30 p.m. PT (4:30 p.m. ET)

    Online Registration:

     

    www.directeventreg.com
    Conference ID 8170917

    Webcast:

     


    ir.veeva.com

    Investor Presentation Details

    An investor presentation providing additional information and analysis 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) Veeva is not able, at this time, to provide GAAP targets for operating income and fully diluted net income per share for the third fiscal quarter ending October 31, 2020 or fiscal year ending January 31, 2021 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. The effect of these excluded items may be significant.

    About Veeva Systems

    Veeva Systems Inc. is the leader in cloud-based software for the global life sciences industry. Committed to innovation, product excellence, and customer success, Veeva serves more than 900 customers, ranging from the world’s largest pharmaceutical companies to emerging biotechs. Veeva has more than 400 Commercial Cloud customers and more than 590 Development Cloud customers. Veeva is headquartered in the San Francisco Bay Area, with offices throughout North America, Europe, Asia, and Latin America. For more information, visit veeva.com.

    Veeva uses its ir.veeva.com website as a means of disclosing material non-public information, announcing upcoming investor conferences, and for complying with its disclosure obligations under Regulation FD. Accordingly, you should monitor our investor relations website in addition to following our press releases, SEC filings, and public conference calls and webcasts.

    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, outlook, and guidance and the assumptions underlying those statements, 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) the impact of the COVID-19 pandemic (including the impact to the life sciences industry, impact on general economic conditions, and government responses, restrictions, and actions related to the pandemic); (ii) breaches in our security measures or unauthorized access to our customers’ data; (iii) our expectation that the future growth rate of our revenues will decline; (iv) competitive factors, including but not limited to pricing pressures, consolidation among our competitors, entry of new competitors, the launch of new products and marketing initiatives by our existing competitors, and difficulty securing rights to access, host or integrate with complementary third party products or data used by our customers; (v) the rate of adoption of our newer solutions and the results of our efforts to sustain or expand the use and adoption of our more established applications, like Veeva CRM; (vi) fluctuation of our results, which may make period-to-period comparisons less meaningful; (vii) our ability to integrate Crossix Solutions Inc. and Physicians World, LLC into our business and achieve the expected benefits of the acquisitions, including as a result of the impact of the COVID-19 pandemic on these businesses; (viii) loss of one or more customers, particularly any of our large customers; (ix) system unavailability, system performance problems, or loss of data due to disruptions or other problems with our computing infrastructure; (x) our ability to attract and retain highly skilled employees and manage our growth effectively; (xi) failure to sustain the level of profitability we have achieved in the past as our costs increase; (xii) adverse changes in the life sciences industry, including as a result of customer mergers; (xiii) adverse changes in economic, regulatory, international trade relations, or market conditions, including with respect to natural disasters or actual or threatened public health emergencies; (xiv) a decline in new subscriptions that may not be immediately reflected in our operating 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 April 30, 2020. 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.

       

    July 31,


    2020

     

     

     

    January 31,


    2020

     

     

    Assets

     

     

     

     

     

     

     

     

    Current assets:

     

     

     

     

     

     

     

     

    Cash and cash equivalents

     

    $

    795,782

     

     

    $

    476,733

     

    Short-term investments

     

    699,707

     

     

    610,015

     

    Accounts receivable, net

     

    220,803

     

     

    389,690

     

    Unbilled accounts receivable

     

    36,650

     

     

    32,817

     

    Prepaid expenses and other current assets

     

    32,490

     

     

    21,869

     

    Total current assets

     

    1,785,432

     

     

    1,531,124

     

    Property and equipment, net

     

    52,576

     

     

    54,752

     

    Deferred costs, net

     

    34,645

     

     

    35,585

     

    Lease right-of-use assets

     

    51,286

     

     

    49,132

     

    Goodwill

     

    438,529

     

     

    438,529

     

    Intangible assets, net

     

    124,420

     

     

    134,601

     

    Deferred income taxes, noncurrent

     

    12,167

     

     

    11,870

     

    Other long-term assets

     

    17,354

     

     

    16,184

     

    Total assets

     

    $

    2,516,409

     

     

    $

    2,271,777

     

     

     

     

     

     

    Liabilities and stockholders equity

     

     

     

     

    Current liabilities:

     

     

     

     

    Accounts payable

     

    $

    16,476

     

     

    $

    19,420

     

    Accrued compensation and benefits

     

    27,494

     

     

    25,619

     

    Accrued expenses and other current liabilities

     

    22,763

     

     

    21,620

     

    Income tax payable

     

    2,464

     

     

    5,613

     

    Deferred revenue

     

    421,167

     

     

    468,887

     

    Lease liabilities

     

    11,118

     

     

    10,013

     

    Total current liabilities

     

    501,482

     

     

    551,172

     

    Deferred income taxes, noncurrent

     

    1,824

     

     

    2,417

     

    Lease liabilities, noncurrent

     

    46,187

     

     

    44,815

     

    Other long-term liabilities

     

    10,189

     

     

    7,779

     

    Total liabilities

     

    559,682

     

     

    606,183

     

    Stockholders’ equity:

     

     

     

     

    Class A common stock

     

    2

     

     

    1

     

    Class B common stock

     

     

     

     

    Additional paid-in capital

     

    850,776

     

     

    745,475

     

    Accumulated other comprehensive income

     

    6,170

     

     

    460

     

    Retained earnings

     

    1,099,779

     

     

    919,658

     

    Total stockholders’ equity

     

    1,956,727

     

     

    1,665,594

     

    Total liabilities and stockholders equity

     

    $

    2,516,409

     

     

    $

    2,271,777

     

     

    VEEVA SYSTEMS INC.
    CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
    (In thousands, except per share data)
    (Unaudited)

     

     

     

    Three months ended
    July 31,

     

    Six months ended
    July 31,

     

     

    2020

     

    2019

     

    2020

     

    2019

    Revenues:

     

     

     

     

     

     

     

     

    Subscription services(4)

     

    $

    283,502

     

     

    $

    217,312

     

     

    $

    553,737

     

    $

    415,427

     

    Professional services and other(5)

     

    70,181

     

     

    49,588

     

     

    137,052

     

    96,225

     

    Total revenues

     

    353,683

     

     

    266,900

     

     

    690,789

     

    511,652

     

    Cost of revenues(3):

     

     

     

     

     

     

     

     

    Cost of subscription services

     

    43,400

     

     

    31,480

     

     

    86,612

     

    61,858

     

    Cost of professional services and other

     

    53,804

     

     

    38,738

     

     

    105,472

     

    73,863

     

    Total cost of revenues

     

    97,204

     

     

    70,218

     

     

    192,084

     

    135,721

     

    Gross profit

     

    256,479

     

     

    196,682

     

     

    498,705

     

    375,931

     

    Operating expenses
    (3):

     

     

     

     

     

     

     

     

    Research and development

     

    70,053

     

     

    51,146

     

     

    132,290

     

    96,119

     

    Sales and marketing

     

    59,172

     

     

    45,821

     

     

    114,927

     

    85,438

     

    General and administrative

     

    37,173

     

     

    25,859

     

     

    73,842

     

    49,349

     

    Total operating expenses

     

    166,398

     

     

    122,826

     

     

    321,059

     

    230,906

     

    Operating income

     

    90,081

     

     

    73,856

     

     

    177,646

     

    145,025

     

    Other income, net

     

    2,881

     

     

    7,332

     

     

    6,295

     

    13,493

     

    Income before income taxes

     

    92,962

     

     

    81,188

     

     

    183,941

     

    158,518

     

    Provision for (benefit from) income taxes

     

    (589

    )

     

    1,946

     

     

    3,820

     

    5,827

     

    Net income

     

    $

    93,551

     

     

    $

    79,242

     

     

    $

    180,121

     

    $

    152,691

     

     

     

     

     

     

     

     

     

     

    Net income per share:

     

     

     

     

     

     

     

     

    Basic

     

    $

    0.62

     

     

    $

    0.54

     

     

    $

    1.20

     

    $

    1.04

     

    Diluted

     

    $

    0.58

     

     

    $

    0.50

     

     

    $

    1.12

     

    $

    0.96

     

     

     

     

     

     

     

     

     

     

    Weighted-average shares used to compute net income per share:

     

     

     

     

     

     

     

     

    Basic

     

    150,413

     

     

    147,510

     

     

    149,982

     

    147,116

     

    Diluted

     

    160,840

     

     

    158,675

     

     

    160,309

     

    158,339

     

    Other comprehensive income:

     

     

     

     

     

     

     

     

    Net change in unrealized gains on available-for- sale investments

     

    1,131

     

     

    461

     

     

    2,428

     

    1,423

     

    Net change in cumulative foreign currency translation loss

     

    2,893

     

     

    (1,742

    )

     

    3,282

     

    (2,444

    )

    Comprehensive income

     

    $

    97,575

     

     

    $

    77,961

     

     

    $

    185,831

     

    $

    151,670

     

     

     

     

     

     

     

     

     

     

    (3) Includes stock-based compensation as follows:

     

     

     

     

     

     

     

     

    Cost of revenues:

     

     

     

     

     

     

     

     

    Cost of subscription services

     

    $

    1,532

     

     

    $

    583

     

     

    $

    2,551

     

    $

    968

     

    Cost of professional services and other

     

    7,318

     

     

    4,458

     

     

    12,392

     

    7,436

     

    Research and development

     

    16,437

     

     

    9,509

     

     

    27,838

     

    15,833

     

    Sales and marketing

     

    11,186

     

     

    7,177

     

     

    19,378

     

    12,325

     

    General and administrative

     

    12,893

     

     

    6,643

     

     

    24,114

     

    12,564

     

    Total stock-based compensation

     

    $

    49,366

     

     

    $

    28,370

     

     

    $

    86,273

     

    $

    49,126

     

     

     

     

     

     

     

     

     

     

    (4) Includes subscription services revenues from the following product areas:

     

     

     

     

     

     

     

     

    Veeva Commercial Cloud

     

    $

    144,815

     

     

    $

    112,593

     

     

    $

    287,392

     

    $

    218,390

     

    Veeva Vault

     

    138,687

     

     

    104,719

     

     

    266,345

     

    197,037

     

    Total subscription services

     

    $

    283,502

     

     

    $

    217,312

     

     

    $

    553,737

     

    $

    415,427

     

     

     

     

     

     

     

     

     

     

    (5) Includes professional services revenues from the following product areas:

     

     

     

     

     

     

     

     

    Veeva Commercial Cloud

     

    $

    26,618

     

     

    $

    16,571

     

     

    $

    53,994

     

    $

    33,792

     

    Veeva Vault

     

    43,563

     

     

    33,017

     

     

    83,058

     

    62,433

     

    Total professional services

     

    $

    70,181

     

     

    $

    49,588

     

     

    $

    137,052

     

    $

    96,225

     

     

    VEEVA SYSTEMS INC.
    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    (In thousands)
    (Unaudited)

     

     

     

    Three months ended


    July 31,

     

    Six months ended


    July 31,

     

     

    2020

     

    2019

     

    2020

     

    2019

    Cash flows from operating activities

     

     

     

     

     

     

     

     

    Net income

     

    $

    93,551

     

     

    $

    79,242

     

     

    $

    180,121

     

     

    $

    152,691

     

    Adjustments to reconcile net income to net cash provided by operating activities:

     

     

     

     

     

     

     

     

    Depreciation and amortization

     

    7,317

     

     

    3,881

     

     

    15,195

     

     

    7,781

     

    Reduction of operating lease right-of-use assets

     

    3,092

     

     

    1,680

     

     

    6,089

     

     

    3,218

     

    Accretion of discount on short-term investments

     

    496

     

     

    (1,096

    )

     

    485

     

     

    (2,274

    )

    Stock-based compensation

     

    49,366

     

     

    28,370

     

     

    86,273

     

     

    49,126

     

    Amortization of deferred costs

     

    5,324

     

     

    4,843

     

     

    10,075

     

     

    9,692

     

    Deferred income taxes

     

    (504

    )

     

    921

     

     

    (1,638

    )

     

    1,339

     

    (Gain) Loss on foreign currency from mark-to-market derivative

     

    (98

    )

     

    42

     

     

    (5

    )

     

    (38

    )

    Bad debt (expense) recovery

     

    514

     

     

    (159

    )

     

    121

     

     

    (312

    )

    Changes in operating assets and liabilities:

     

     

     

     

     

     

     

     

    Accounts receivable

     

    14,606

     

     

    18,804

     

     

    168,766

     

     

    158,314

     

    Unbilled accounts receivable

     

    619

     

     

    1,982

     

     

    (3,833

    )

     

    (3,262

    )

    Deferred costs

     

    (5,793

    )

     

    (4,427

    )

     

    (9,135

    )

     

    (9,028

    )

    Income taxes payable

     

    (3,141

    )

     

    611

     

     

    (4,991

    )

     

    949

     

    Other current and long-term assets

     

    (11,683

    )

     

    (1,338

    )

     

    (11,132

    )

     

    (4,097

    )

    Accounts payable

     

    914

     

     

    379

     

     

    (3,516

    )

     

    (37

    )

    Accrued expenses and other current liabilities

     

    125

     

     

    2,672

     

     

    2,816

     

     

    1,913

     

    Deferred revenue

     

    (49,166

    )

     

    (35,225

    )

     

    (47,689

    )

     

    (27,311

    )

    Operating lease liabilities

     

    (2,456

    )

     

    (1,889

    )

     

    (5,267

    )

     

    (3,518

    )

    Other long-term liabilities

     

    2,237

     

     

    1,180

     

     

    4,757

     

     

    1,616

     

    Net cash provided by operating activities

     

    105,320

     

     

    100,473

     

     

    387,492

     

     

    336,762

     

    Cash flows from investing activities

     

     

     

     

     

     

     

     

    Purchases of short-term investments

     

    (267,749

    )

     

    (209,195

    )

     

    (456,567

    )

     

    (438,089

    )

    Maturities and sales of short-term investments

     

    229,224

     

     

    187,772

     

     

    369,566

     

     

    376,737

     

    Long-term assets

     

    (5,407

    )

     

    (1,378

    )

     

    (5,140

    )

     

    (2,991

    )

    Net cash used in investing activities

     

    (43,932

    )

     

    (22,801

    )

     

    (92,141

    )

     

    (64,343

    )

    Cash flows from financing activities

     

     

     

     

     

     

     

     

    Reduction of lease liabilities – finance leases

     

    (251

    )

     

    (239

    )

     

    (499

    )

     

    (488

    )

    Proceeds from exercise of common stock options

     

    9,278

     

     

    3,620

     

     

    19,059

     

     

    7,011

     

    Net cash provided by financing activities

     

    9,027

     

     

    3,381

     

     

    18,560

     

     

    6,523

     

    Effect of exchange rate changes on cash, cash equivalents, and restricted cash

     

    2,734

     

     

    (1,742

    )

     

    3,282

     

     

    (2,444

    )

    Net change in cash, cash equivalents, and restricted cash

     

    73,149

     

     

    79,311

     

     

    317,193

     

     

    276,498

     

    Cash, cash equivalents, and restricted cash at beginning of period

     

    723,841

     

     

    749,365

     

     

    479,797

     

     

    552,178

     

    Cash, cash equivalents, and restricted cash at end of period

     

    $

    796,990

     

     

    $

    828,676

     

     

    $

    796,990

     

     

    $

    828,676

     

     

     

     

     

     

     

     

     

     

    Supplemental disclosures of other cash flow information:

     

     

     

     

     

     

     

     

    Excess tax benefits from employee stock plans

     

    $

    22,123

     

     

    $

    17,026

     

     

    $

    41,738

     

     

    $

    30,578

     

    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 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 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.
    • Income tax effects on the difference between GAAP and non-GAAP costs and expenses. The income tax effects that are excluded relate to the imputed tax impact on the difference between GAAP and non-GAAP costs and expenses due to stock-based compensation and purchased intangibles 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.

     

    VEEVA SYSTEMS INC.
    RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
    (Dollars in thousands)
    (Unaudited)

     

    The following tables reconcile the specific items excluded from GAAP metrics in the calculation of non-GAAP metrics for the periods shown below:

     

     

     

    Three months ended


    July 31,

     

    Six months ended


    July 31,

     

     

    2020

     

    2019

     

    2020

     

    2019

    Cost of subscription services revenues on a GAAP basis

     

    $

    43,400

     

     

     

    $

    31,480

     

     

     

    $

    86,612

     

     

     

    $

    61,858

     

     

    Stock-based compensation expense

     

    (1,532

    )

     

     

    (583

    )

     

     

    (2,551

    )

     

     

    (968

    )

     

    Amortization of purchased intangibles

     

    (1,174

    )

     

     

    (688

    )

     

     

    (2,768

    )

     

     

    (1,355

    )

     

    Cost of subscription services revenues on a non-GAAP basis

     

    $

    40,694

     

     

     

    $

    30,209

     

     

     

    $

    81,293

     

     

     

    $

    59,535

     

     

     

     

     

     

     

     

     

     

     

    Gross margin on subscription services revenues on a GAAP basis

     

    84.7

     

    %

     

    85.5

     

    %

     

    84.4

     

    %

     

    85.1

     

    %

    Stock-based compensation expense

     

    0.5

     

     

     

    0.3

     

     

     

    0.5

     

     

     

    0.3

     

     

    Amortization of purchased intangibles

     

    0.4

     

     

     

    0.3

     

     

     

    0.4

     

     

     

    0.3

     

     

    Gross margin on subscription services revenues on a non-GAAP basis

     

    85.6

     

    %

     

    86.1

     

    %

     

    85.3

     

    %

     

    85.7

     

    %

     

     

     

     

     

     

     

     

     

    Cost of professional services and other revenues on a GAAP basis

     

    $

    53,804

     

     

     

    $

    38,738

     

     

     

    $

    105,472

     

     

     

    $

    73,863

     

     

    Stock-based compensation expense

     

    (7,318

    )

     

     

    (4,458

    )

     

     

    (12,392

    )

     

     

    (7,436

    )

     

    Amortization of purchased intangibles

     

    (138

    )

     

     

     

     

     

    (273

    )

     

     

     

     

    Cost of professional services and other revenues on a non-GAAP basis

     

    $

    46,348

     

     

     

    $

    34,280

     

     

     

    $

    92,807

     

     

     

    $

    66,427

     

     

     

     

     

     

     

     

     

     

     

    Gross margin on professional services and other revenues on a GAAP basis

     

    23.3

     

    %

     

    21.9

     

    %

     

    23.0

     

    %

     

    23.2

     

    %

    Stock-based compensation expense

     

    10.5

     

     

     

    9.0

     

     

     

    9.1

     

     

     

    7.8

     

     

    Amortization of purchased intangibles

     

    0.2

     

     

     

     

     

     

    0.2

     

     

     

     

     

    Gross margin on professional services and other revenues on a non-GAAP basis

     

    34.0

     

    %

     

    30.9

     

    %

     

    32.3

     

    %

     

    31.0

     

    %

     

     

     

     

     

     

     

     

     

    Gross profit on a GAAP basis

     

    $

    256,479

     

     

     

    $

    196,682

     

     

     

    $

    498,705

     

     

     

    $

    375,931

     

     

    Stock-based compensation expense

     

    8,850

     

     

     

    5,041

     

     

     

    14,943

     

     

     

    8,404

     

     

    Amortization of purchased intangibles

     

    1,312

     

     

     

    688

     

     

     

    3,041

     

     

     

    1,355

     

     

    Gross profit on a non-GAAP basis

     

    $

    266,641

     

     

     

    $

    202,411

     

     

     

    $

    516,689

     

     

     

    $

    385,690

     

     

     

     

     

     

     

     

     

     

     

    Gross margin on total revenues on a GAAP basis

     

    72.5

     

    %

     

    73.7

     

    %

     

    72.2

     

    %

     

    73.5

     

    %

    Stock-based compensation expense

     

    2.5

     

     

     

    1.9

     

     

     

    2.2

     

     

     

    1.6

     

     

    Amortization of purchased intangibles

     

    0.4

     

     

     

    0.3

     

     

     

    0.4

     

     

     

    0.3

     

     

    Gross margin on total revenues on a non-GAAP basis

     

    75.4

     

    %

     

    75.9

     

    %

     

    74.8

     

    %

     

    75.4

     

    %

     

     

     

     

     

     

     

     

     

    Research and development expense on a GAAP basis

     

    $

    70,053

     

     

     

    $

    51,146

     

     

     

    $

    132,290

     

     

     

    $

    96,119

     

     

    Stock-based compensation expense

     

    (16,437

    )

     

     

    (9,509

    )

     

     

    (27,838

    )

     

     

    (15,833

    )

     

    Amortization of purchased intangibles

     

    (29

    )

     

     

     

     

     

    (57

    )

     

     

     

     

    Research and development expense on a non-GAAP basis

     

    $

    53,587

     

     

     

    $

    41,637

     

     

     

    $

    104,395

     

     

     

    $

    80,286

     

     

     

     

     

     

     

     

     

     

     

    Sales and marketing expense on a GAAP basis

     

    $

    59,172

     

     

     

    $

    45,821

     

     

     

    $

    114,927

     

     

     

    $

    85,438

     

     

    Stock-based compensation expense

     

    (11,186

    )

     

     

    (7,177

    )

     

     

    (19,378

    )

     

     

    (12,325

    )

     

    Amortization of purchased intangibles

     

    (3,568

    )

     

     

    (825

    )

     

     

    (6,970

    )

     

     

    (1,728

    )

     

    Sales and marketing expense on a non-GAAP basis

     

    $

    44,418

     

     

     

    $

    37,819

     

     

     

    $

    88,579

     

     

     

    $

    71,385

     

     

     

     

     

     

     

     

     

     

     

    General and administrative expense on a GAAP basis

     

    $

    37,173

     

     

     

    $

    25,859

     

     

     

    $

    73,842

     

     

     

    $

    49,349

     

     

    Stock-based compensation expense

     

    (12,893

    )

     

     

    (6,643

    )

     

     

    (24,114

    )

     

     

    (12,564

    )

     

    Amortization of purchased intangibles

     

    (57

    )

     

     

     

     

     

    (113

    )

     

     

     

     

    General and administrative expense on a non-GAAP basis

     

    $

    24,223

     

     

     

    $

    19,216

     

     

     

    $

    49,615

     

     

     

    $

    36,785

     

     

     

     

     

     

     

     

     

     

     

    VEEVA SYSTEMS INC.
    RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (continued)
    (Dollars in thousands, except per share data)
    (Unaudited)

     

     

     

    Three months ended


    July 31,

     

    Six months ended


    July 31,

     

     

    2020

     

    2019

     

    2020

     

    2019

    Operating expense on a GAAP basis

     

    $

    166,398

     

     

     

    $

    122,826

     

     

     

    $

    321,059

     

     

     

    $

    230,906

     

     

    Stock-based compensation expense

     

    (40,516

    )

     

     

    (23,329

    )

     

     

    (71,330

    )

     

     

    (40,722

    )

     

    Amortization of purchased intangibles

     

    (3,654

    )

     

     

    (825

    )

     

     

    (7,140

    )

     

     

    (1,728

    )

     

    Operating expense on a non-GAAP basis

     

    $

    122,228

     

     

     

    $

    98,672

     

     

     

    $

    242,589

     

     

     

    $

    188,456

     

     

     

     

     

     

     

     

     

     

     

    Operating income on a GAAP basis

     

    $

    90,081

     

     

     

    $

    73,856

     

     

     

    $

    177,646

     

     

     

    $

    145,025

     

     

    Stock-based compensation expense

     

    49,366

     

     

     

    28,370

     

     

     

    86,273

     

     

     

    49,126

     

     

    Amortization of purchased intangibles

     

    4,966

     

     

     

    1,513

     

     

     

    10,181

     

     

     

    3,083

     

     

    Operating income on a non-GAAP basis

     

    $

    144,413

     

     

     

    $

    103,739

     

     

     

    $

    274,100

     

     

     

    $

    197,234

     

     

     

     

     

     

     

     

     

     

     

    Operating margin on a GAAP basis

     

    25.4

     

    %

     

    27.6

     

    %

     

    25.7

     

    %

     

    28.4

     

    %

    Stock-based compensation expense

     

    14.0

     

     

     

    10.6

     

     

     

    12.5

     

     

     

    9.6

     

     

    Amortization of purchased intangibles

     

    1.4

     

     

     

    0.6

     

     

     

    1.5

     

     

     

    0.6

     

     

    Operating margin on a non-GAAP basis

     

    40.8

     

    %

     

    38.8

     

    %

     

    39.7

     

    %

     

    38.6

     

    %

     

     

     

     

     

     

     

     

     

    Net income on a GAAP basis

     

    $

    93,551

     

     

     

    $

    79,242

     

     

     

    $

    180,121

     

     

     

    $

    152,691

     

     

    Stock-based compensation expense

     

    49,366

     

     

     

    28,370

     

     

     

    86,273

     

     

     

    49,126

     

     

    Amortization of purchased intangibles

     

    4,966

     

     

     

    1,513

     

     

     

    10,181

     

     

     

    3,083

     

     

    Income tax effect on non-GAAP adjustments(1)

     

    (31,521

    )

     

     

    (21,379

    )

     

     

    (55,063

    )

     

     

    (38,426

    )

     

    Net income on a non-GAAP basis

     

    $

    116,362

     

     

     

    $

    87,746

     

     

     

    $

    221,512

     

     

     

    $

    166,474

     

     

     

     

     

     

     

     

     

     

     

    Diluted net income per share on a GAAP basis

     

    $

    0.58

     

     

     

    $

    0.50

     

     

     

    $

    1.12

     

     

     

    $

    0.96

     

     

    Stock-based compensation expense

     

    0.31

     

     

     

    0.17

     

     

     

    0.54

     

     

     

    0.31

     

     

    Amortization of purchased intangibles

     

    0.03

     

     

     

    0.01

     

     

     

    0.06

     

     

     

    0.02

     

     

    Income tax effect on non-GAAP adjustments(1)

     

    (0.20

    )

     

     

    (0.13

    )

     

     

    (0.34

    )

     

     

    (0.24

    )

     

    Diluted net income per share on a non-GAAP basis

     

    $

    0.72

     

     

     

    $

    0.55

     

     

     

    $

    1.38

     

     

     

    $

    1.05

     

     

    ________________________

    (1)

     

    For the three and six months ended July 31, 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