Ladies and gentlemen, thank you for standing by, and welcome to the Veeva Systems Fiscal 2021 Third Quarter Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, Ato Garrett, Senior Director, Investor Relations. Thank you, and please go ahead.

Good afternoon, and welcome to Veeva's fiscal 2021 third quarter earnings call for the quarter ended October 31, 2020. With me on today's call are Peter Gassner, our Chief Executive Officer; Paul Shawah, EVP, Strategy; and Brent Bowman, our Chief Financial Officer. During the course of this conference call, we will make forward-looking statements regarding trends, our strategies, and the anticipated performance of the business. These forward-looking statements will be based on management's current views and expectations and are subject to various risks and uncertainties, including those related to the impacts of COVID-19 on our business, the life sciences industry, and global economic conditions. Our actual results may differ materially. Please refer to the risks listed in our earnings release and the risk factors included in our most recent filing on Form 10-Q, which is available on the company's Web site at www.veeva.com under the Investors section, and on the SEC Web site at www.sec.gov. Forward-looking statements made during the call today are being made as of today, December 1, 2020, based on the facts available to us today. If this call is replayed or viewed after today, the information presented during the call may not contain current or accurate information. Veeva disclaims any obligation to update or revise any forward-looking statements. We will provide guidance on today's call, but we'll not provide any further guidance or updates on our performance during the quarter unless we do so in a public forum. The guidance we will provide today is in part based on our current assumptions as to the macroeconomic environment in which we will be operating in the future, including the timing and pace of recovery from any negative effects caused by COVID-19. Such matters that are beyond our control and our assumptions may not be correct and may change rapidly. On the call, we will also discuss certain non-GAAP metrics that we believe aid in the understanding of our financial results. A reconciliation to comparable GAAP metrics can be found in today's earnings release and in the supplemental investor presentation, both of which are available on our Web site. A reconciliation can also be found as an exhibit to the Form 8-K filed with the SEC just before this call. With that, thank you for joining us, and I'll turn it over to Peter.

Thank you, Ato. Before we get started, I'd like to extend our sympathies to everyone affected by the pandemic, and our gratitude to all those working to help in so many ways, including our customers. The industry has produced effective vaccine candidates, rapid diagnostics, and approved treatments, all in a matter of months. We are proud to be working with these amazing companies, and I'm proud of how the Veeva team has stepped up to help. Now, turning to Q3. We had another quarter of consistent execution and results ahead of guidance. Total revenue was $378 million, up 34% year-over-year. Subscription revenue also grew 34% year-over-year and non-GAAP operating margin was 41%. We are pleased with our results and how we're expanding customer relationships during a major digital transformation. We've been able to help customers with immediate needs to open up digital channels in commercial and clinical, and we're also helping them to find the right digital models for the long-term. For example, on the commercial side, we recently announced the strategic partnership with an emerging biopharma to help them define and execute an innovative digital-first commercial model. They will utilize the full commercial cloud, including Veeva CRM, Data Cloud, Veeva Link, MyVeeva, and Business Consulting. That level of trust and confidence in our ability to deliver came through strongly in our Q3 new wins and expansions. We added 19 new CRM customers, our biggest quarterly increase yet. We continue to grow market share and had multiple international expansions in CRM with existing customers. We also progressed well in our newer areas, including Data Cloud, MyVeeva for Doctors, and Veeva Link. We expect these products will set us up for a long runway of growth in commercial. It's an exciting time in commercial and a time of change. We think…

Thanks, Peter. Q3 was a quarter of very strong execution. Bookings and services performance were both better than expected, with notable acceleration in Development Cloud applications like CTMS and QMS that are early in the reference selling cycle. This led to outperformance in both subscription and services revenue. This strong demand in bookings and services also led to a calculated billings total that was $26 million above our guidance for the quarter. Billings also benefited from better than expected billing duration for the business closed in Q3. Hiring performance in Q3 was also especially strong. We ended the quarter with 4,304 employees, a net increase of 280 from Q2. Much of this increase in headcount was within our Vault services teams and in our product teams, especially those product teams working on newer applications like CDMS safety, Data Cloud, and MyVeeva. Q3 operating margin benefited from roughly 250 basis points of pandemic-related cost savings from reduced travel and customer events that have moved to virtual, a level similar to the previous quarter. We anticipate a comparable benefit to operating margins in Q4 and into the beginning of next year. Turning to guidance for the fourth quarter, total revenue is expected to be $378 million to $380 million with subscription revenue of roughly $315 million and services revenue of $63 million to $65 million. Note that this implies a sequential drop in services revenue of about $10 million to $12 million from the third quarter, while our services business always has a high degree of variability. There are a couple of reasons for the size of this change. The biggest factor is our normal seasonal pattern resulting from fewer billable days around the holidays and our field kickoff. Our digital events business also has a similar seasonal pattern with fewer events…

[Operator Instructions] Our first question comes from Bhavan Suri with William Blair. Your line is open.

Hey, guys. Thanks for taking my question, and really nice job there. Maybe Peter, we'll start with you. We've now seen sort of a handful of vaccine candidates come to market and hopefully have them broadly disseminated over the next several months. I guess, as that's happened, I'd love to know if you are seeing how the appetite from existing potential customers might have shifted or has it shifted to sort of think about transforming the clinical technology as the platform, so sort of the idea that we want to adopt all of the Veeva platform. You mentioned one customer who had chosen to do that. But I'd like to just sort of understand sort of even within the existing base and new logo sort of has there been a shift now there's sort of a sense of light at the end of the tunnel, has there been some sense that maybe we should start accelerating initiatives? Are you seeing any of that or is that too early? Because you sort of said you're not a beneficiary of COVID or not a large beneficiary of COVID. But coming out of this, it feels like digitization, cloud, and the integrated platform would make sense. I would love to see if you're hearing or seeing anything, any color from existing and new customers around that?

Got it. Bhavan, about the vaccine candidates, I think, that is overall largely progressing as the life sciences industry would have expected. I think they're now thinking for the major markets that they're in. Mostly, people are going to be vaccinated sometime next year. And I think if you were to just gone back to sort of the May-ish time zone or so that would have been broadly in line with what the life science industry overall would have expected, so there's no surprises there. The major shift I think that's happening is the realization that digital is very important no the commercial side and on the clinical side. So that's probably the major beneficiary, not so much seeing the light at the end of the COVID tunnel, I think, that was anticipated. But I think the life sciences industry right now feels more comfortable with digital and will invest more in digital overall than they -- as opposed to the way they would be thinking maybe last March or April.

Got it.

And that'll help us as you -- broadly speaking, that'll help us, but it's not in a particular quarter, it's not a short-term thing, I think, it's a secular shift to have more digitization coming.

Yes. And then just to follow-up on that. You sort of talked about sort of the setup here, but I think of MyVeeva for Doctors, love to know any early takeaways of MyVeeva for Patients coming out. When you offer this level of connectivity that really isn't available today and make that flow of information better, I'd love to understand what you're hearing from your customers as you talk to them about MyVeeva for Patients sort of the excitement, the interest levels, any color there would be really helpful? Thank you.

Yes. It's really helping our -- MyVeeva, both MyVeeva for Doctors, MyVeeva for Patients is about helping our customers connect more efficiently with their customers. So there is a lot of enthusiasm there, but there's heavy change management as well. So that's something that'll take some time to work through. So it's not -- it's a business process change, particularly on the clinical side, lots of technology, and on the commercial side. So I think slow and steady uptake there, because that's a major shift. So it’s too early to give it any type of a ramp.

Fair enough. Nice job, guys. Thanks for taking my questions.

Thanks.

Our next question is from Christopher Merwin with Goldman Sachs. Your line is open.

Hi, thanks so much for taking my question. I wanted to ask you about the growth in CRM customers. I think you had a record increase of 19 new customers. Was that more commercial -- kind of small commercial ones or just curious, any other detail you can share about that nice step up there in customer count? Thanks.

Yes, Christopher, thanks. This is Paul. So, yes, we're really pleased. The 19 that Peter referenced was 19 net new CRM wins, so this is in a core CRM space, and we're seeing that really great strength in our U.S. SMB market. So these are -- many of them are pre-commercial companies, companies that are looking to launch. Others are those that are on a legacy CRM system, and they're choosing Veeva. And I think there's a couple of things that are driving this. One is the industry is looking to become more digital and more efficient, and they trust Veeva as the partner to get them there, because we've delivered on that over the last several months and over several years really. And I think the other thing is just the trust in Veeva as a strategic partner. So they need to get to digital quicker and relying on Veeva as a partner to get them there, so great momentum in CRM. We've had -- and so specifically those are kind of net new CRM wins.

Got it. And maybe just as a quick follow-up to that, I mean, you've seen better and better add-on adoption with those wins, and are those winning larger than they have before or anything you'd call out there?

We do, in fact. So what is typically happening today, which is different than, let's say, two -- one or two or even three years ago is companies that three or four years ago may have come in looking for a CRM system, and they walked away with CRM and maybe one or two add-ons. What is more common today is they're looking for a broader and more strategic partner, and they're buying more products upfront, so certainly Veeva CRM and then many add-ons at the same time. Typically, all of the digital add-ons like Approved Email and Engage, they're just -- they're looking to go more digital much faster. So we are seeing uptick in CRM, but also the related add-ons as well.

Okay, great. Thank you.

Our next question is from Ken Wong with Guggenheim Securities. Your line is open.

Great. Thanks for taking my question, guys. This is building a bit on Chris' question just now. Peter or Paul, can you guys perhaps talk about the competitive landscape in the CRM Commercial Cloud area? Anything you're seeing from customers during the pandemic that you think perhaps might help or hurt your competitive position here?

Yes, it's going really well. And as evidenced by some of the numbers, first and foremost, we talked about the net new -- the record number of net new CRM wins. As a start, I would say, the overall dynamics are roughly the same, meaning, we continue to win most deals. We're increasing market share. The one thing that has changed in the competitive landscape is, over the last quarter, is we've had two replacements of IQVIA's new OCE product. So that's the product that they built on Salesforce.com, it's been out in the marketplace for a couple years now. That's a new dynamic for us that hasn't happened before. And what we're seeing across the market is that companies are trying it. It hasn't met their expectations from a product or from a services standpoint, and they're looking to get the digital by looking to a partner that can execute and that that they can trust. So, we have -- we've had those two replacements, and I expect that those will -- those are hard, they take time. But I'm expecting those will -- we'll see more and more of those over time.

Great. Thanks a lot, Paul, and maybe one for you, Brent, you touched on some gross margin headwinds as you guys start to build up the Data Cloud product. Just wondering if you might be able to help quantify what that hit might be to gross margins, and as we think about our numbers going forward, is that more of a one-time hit, is that something that will continue to build over time? Any color there would be helpful?

Yes, as we look at gross margins going out, so there's a number of investments, so you mentioned the Data Cloud. That is something that we'll be building over time over a couple years, and we're not going to breakout specifically how much that would be, but that's been factored in to our ops margin projections for next year, our guide, as well as factored into our 2025 guide. So, I guess I'd leave you with that, from that perspective.

Great, thanks a lot.

Our next question is from Bryan Peterson with Raymond James. Your line is open.

Hi, everyone. Thanks for taking the question. So I actually wanted to start with the efforts outside of life sciences. You referenced another large CPG win this quarter. I'm not sure who wants to take this, but I know there's a gradual kind of go-to-market build focus on early adopters, but has the inbound interest from large customers been quicker than you have expected, and does that potentially accelerate that timeline on the go-to-market side?

Hi, Bryan. I would say not quicker than I expected. This is a relatively -- it's a very sticky application area that we're in there, quality and manufacturing regulatory claims management, so it's hard to get in, and hard to get out. So this is not something that they will jump on. So it's steady, it's how we expected it. Pandemic really has not affected us in there, other than a temporary thing here in the cosmetics market because that's been a hard-hit sector.

Okay, and maybe just a follow-up, and Peter, I think I made the comment on fiscal year '22, that you were expecting the field sales reps to maybe be down about 10%. I want to make sure I heard that right, and I'm curious, is that broad-based across the customer base or is that in some instances they're down more, and some are in line. Just, I guess I'm trying to think about that for fiscal year '22, and then how that's kind of factored in to your longer-term targets?

Yes, Bryan, I'll actually have Paul take that one.

Yes, I'll give some commentary on that. First, the overall 10% number, so the way that we think about that is really based on multiple conversations with customers. We're always in very strategic discussions with customers, and thinking about what the future of the sales force looks like, but also based on Veeva estimates as well, it's what we believe as we look out at the market, and we help the industry become more efficient and more digital. This move to digital is really, really good for Veeva. So as we're -- as companies adopt more and more of the products in Veeva Commercial Cloud, including products like Approved Email and Engage, they become more efficient, and we're trying to drive that, we're embracing that shift. And you'll also see that shift in our innovation. So as we -- we're trying to accelerate it with new products, like MyVeeva for Doctors, helping the industry get to digital faster and more efficiently. So we have, I guess, maybe the one bigger point to think about is we've -- we're super confident in the targets still for 2025, because we've always contemplated some level of reduction. We're just -- what we're seeing is that the reduction is happening a little bit at an accelerated pace compared to where we thought it would be because the industry is moving to digital faster.

Thanks, Paul.

[Multiple Speakers] -- add on that…

Well, sorry, Peter.

Sorry, and just to add on there, Bryan, the specific one about some customers more than others, not really so much, I would say it doesn't depend on therapeutic areas so much, although the more broad-based general medicines might have a little more reduction, that specialty areas might have a little less, and then there will be always company-specific factors, but there's no macro trend there why it would affect one customer more than another.

Thank you.

Our next question is from Stan Zlotsky with Morgan Stanley. Your line is open.

Hey, guys. Good afternoon and thank you so much for taking my questions, and congratulations on a very strong quarter. Peter, maybe one for you, you mentioned in your prepared remarks there's potential for global sales headcount in pharma to decline by 10% next year. When you're talking to your existing customers and thinking about how they're spend with Veeva, Veeva's Commercial Cloud would trend. How are they thinking about the strategic positioning of your product and in order to frankly just enable them to sell, versus the potential headwind of less receipts?

Yes, Stan, as they reduce receipts, what's happening is the selling motion is becoming more digital and more technology-enabled. So, that's a good trend for Veeva because they'll be spending a bit more on technology and data to power that technology, and a little bit less on the people, so that's a good trend for us, so the overall we're happy about the Commercial Cloud growth for, we'll certainly grow Commercial Cloud next year and on into 2025. Because of that trend that's in our favor actually, this is -- as Paul mentioned this is something we knew, we knew it's going to come, we thought it would come a little more gradually, and the COVID has been kind of a little boost on it.

Got it, got it. That makes sense, and then, on billings right duration I would guess this is for Brent, you mentioned that you saw a little bit of a benefit in Q3 to billings, due to slow longer duration. Could you dig into that a little bit, and anything to note on FX or anything else one time that you saw in Q3 billings?

Yes, I'll answer your second question first. So regarding FX, very minimal tailwind on FX, so nothing to release to note there, and then on the duration, it's really a factor, a function of the customer and the specific deal and sometimes in Q3, you often see coterminous fields, we saw a few less coterminous, and that created the duration tailwind that I spoke of.

All right, thank you so much.

Next question is from Rishi Jaluria with D.A. Davidson. Your line is open.

Hey guys thanks for taking my questions and nice to see continued strong execution. I wanted to start maybe with talking about CRM Engage at the virtual analyst; they recently gave us some really impressive numbers on Engage meetings growth this year. I think you said, 891% growth on Engage meetings started with when you gave that number, just how should we be thinking about that, how should we think about traction with the Engage business next year especially as the Engage meetings, free period, and December 31st and kind of putting that in context as well with the commentary around that 10% reduction in the field sales force that you expect next year? And then, I got a follow-up.

All right, let me take that one first. So, the Engage trend continues to go really well, companies are continuing to adopt, they're continuing to learn how to use it right. This isn't -- this is a change in a lot of change management involved in becoming more digital. So, our customers are getting better, we're helping them, we're providing, not only the software and the technology, but also the domain expertise and the business guidance around doing Engage and using it really efficiently. We are where our customers are seeing value. We're well into that and into the discussions around renewals. Those are happening as that the free period ends at the end of the year. We expect the majority of companies that started with free Engage are going to continue in the next year, because it's working. This is -- the product is working in the marketplace and they trust us as a strategic partner. So, most companies will continue with that. Your question was also about next year. I do expect that most companies will continue, but they wouldn't -- they won't get a full deployment this year, they'll reach a significant amount of their users, but I think most companies you'll see also expansion opportunity next year, and even into the year follow as well.

Okay, got it. That's helpful, and then, just on the preliminary outlook for next year. I guess a little surprised on seeing the subscription revenue target because that's closer to 19% growth and I know historically there's been kind of the discussion of sustaining and 20% plus subscription growth rate for the foreseeable future. Just want to maybe get a sense for what assumptions are baked into the outlook on this subscription fund right. I mean, especially talking about the fact that you're on target to do 24% organic subscription growth this year ex Crossix and physicians world, I'm talking about 19% growth next year, maybe help us understand that and any moving pieces that might be a good thing there.

Sure. I'm happy to. So, first I'm very pleased by the strong demand and their ability for us to drive customer success. So, this guide for next year lines us up very well for us to get our 2025 targets, not going to get into any splits regarding what's under the hood on that, that's typical that would come in our Q4 call. So I'm not going to give you any color around that, but we're very positive and feel good about the growth we're seeing in the bulk space, as well as the continued growth in the commercial space.

All right, great. Thank you, guys.

Our next question is from Sandy Draper with Truist Securities. Your line is open.

Thanks so much. A lot of my questions have been asked and answered. So maybe just one on the Data acquisition and the cost there, when you're looking at finding new data sources and connections? Are you trying to go to customers or data sources that that others are in a sense that you're going to try to get exclusive rights to data as this data sources that other people data connectivity or system connectivity, and finding a way that others can? I'm just trying to understand the approach to building that that data set and how they think about, I know you're not going to specifically carve out costs, but how to think about cost versus what you're paying versus what maybe a competitor might pay? Thanks.

Yes, I'll take that one. We'll keep that a little bit close to the best Data acquisition, Data production strategy. So that's a bit of proprietary things that we're doing, that's very unique to Data Cloud, and that's one of the reasons why we really think we found a jewel in the Crossix and the Crossix Data platform, because the way it ingests, the way it matches the patient data is quite unique, but I will give you some broad brush, we hope to come in data cost less than our competitors, and we hope to have more data sources. So multiple triangulations of each different data transaction in the healthcare system, because when you think about it, when there's interaction between the patient and the doctor payer, multiple people have copies of that information because of our technology, we're able to piece that together, so we get multiple views on it, and at a lower cost, because we're not dependent on any one particular view, so very happy about that. Then if we step back, what is actually going on with Data Cloud. It's a real difference in how we're making the state of the data products, it says different as moving from client server to cloud software. So we're focusing on the longitudinal patient data, the real picture of the patient as they flow through healthcare events in the same longitudinal view from the prescribers point of view. So I would say, it's not going to be too valid to compare us either to the entrench way of doing things, because we're going to do a fundamentally different thing.

Got it. That's really helpful, I guess that maybe will lead me to my follow-up, Peter, in terms of so it sounds like once you have to build the dataset, but there may be an education process, because the intense way of doing things is by definition and trends, and so, you're going to have to get behavioral change and get people to change things that they've been doing for years and years and years. So I guess the first step is build the data set to a point and then it's really educating the market about why you think you're going to have something better, is that a reasonable way to think about it?

Absolutely, it'll follow the classic early adopter cycle that you find when you're doing true innovation because you'll have to find those people that they want to be early on the product maturity lifecycle, but also open to a way of doing things fundamentally different. Now, oftentimes, that'll happen with small biotechs, we're really, really looking for that edge, you'll find that larger companies may be more conservative, and maybe rightly so they have a larger boat to steer. So they'll be gradual. I didn't want to connect the dots to between Data Cloud and our CRM win, as Paul mentioned, customers looking for product and a customer they can trust, which is true, but also especially the small biotechs, they're now seeing that vision of Data Cloud well, maybe I can get the complete commercial package together; Data Insights, analytics, technology, all from Veeva. So I think the Data Cloud business will have a positive effect on our CRM business over time, and it's already even showing today.

Great, that's really helpful commentary, Peter. I appreciate it.

Thank you.

Our next question is from Saket Kalia with Barclays. Your line is open.

Okay, great. Hey, thanks for taking my questions here guys. Maybe first for you, Peter, I think the uptake on CTMS is great to see in Vault clinical. I think it was something like 75 customers in just three years of availability, and I'm curious, how would you compare this ramp in CTMS to CDMS and perhaps how each ramp could be different in terms of adoption then and perhaps bookings contribution? Does that make sense?

Yes. Sorry, I was trying to get myself off mute. Let's see. They are quite a different applications. One thing is CTMS built. They were started roughly the same time CTMS in terms of the applications themselves at Veeva, CTMS maybe a year, a little more here. So before CDMS, CTMS was built on the base of the clinical operations suite that we had from CTMS. So that gave it a head start, and overall CDMS is a, I would guess a harder or a deeper application to build. So CTMS gotten mature faster than CDMS [technical difficulty] directly connects to the clinical research site. So there'll be a little more hesitant there. They have to build their studies. So we'll start with a few trials studies that will be a little more cautious. So it's a more cautious market. CDMS also, we had them build Veeva's reputation in the clinical data management area that's what we've [technical difficulty] for about six or seven years. So it was well established. So that's why CTMS goes faster than CDMS, but make no mistake. One of the best indicators of future CDMS [technical difficulty] how it relates to Vault, one of the ways you could think about that, how we're doing that in our framework is setting up AI as series of Vault that can handle a task that is a well-formed task, so that a human doesn't have to handle it. You mentioned safety data AI, that where that plays is the intake of a case. So some words come in either through an email or some other form, those words have to be read and understand well, what is actually going on here? What product is this case about? What actual -- how do I code the complaint that it's about? How I seen a duplicate before? So that's a pretty high volume thing and that's where we can apply safety.ai on it. You'll see other areas involved, another area you'll see next year is classifying documents in that come into an inbox as it relates to a clinical trial. That's another relatively high volume area that needs to be done, and that's something where a Vault can handle it. You'll see that in the quality suite over time as well in terms of product complaints, which is different than a safety event that is I didn't enjoy this product. This product had a bad color et cetera. That's a product packaging was off et cetera. That's a complaint. So it's things like that where you'll see that automation over time.

Okay. That's great, and I wanted to make sure I'm just totally clear on the outlook for Engage. Paul, when you talk about most of the growth kind of happening this year is that just insight on the potential new users that you already have visibility on and kind of the contribution of those new users from a financial standpoint will therefore slow when next fiscal year, fiscal 2022 is, is that the right sequencing?

Yes. So when I was referencing companies that have turned on free Engage and will continue to renew, and that will end up being the larger contribution. When you look at the overall size of the engaged market, the bump that we'll see this year will be larger than the bump that we see next year, and even perhaps the year beyond that as well, because many of our customers have turned on for Engage, and we expect the majority of them to continue with a renewable. So we'll see a significant increase of this year, and then, and over time more of our customers, those same companies will expand their usage of Engage, but also net new companies will happen as well, the companies that haven't turned on Engage yet for whatever reason, will start to turn it on over time.

And maybe Joe, if I might be able to add, that'll manifest itself as a bump in billings this fiscal year, and then you will see that revenue contribution in fiscal year '22, just to be clear.

Okay, great. Thank you.

Next question is from Ryan MacDonald with Needham. Your line is open.

I'm Ryan MacDonald on Scott Berg. Thanks for taking my question. At the Analyst Day, Brent, I believe slide showing modules per customer trends by year with penetration increasing from 2.41 in fiscal '20 to 2.5 to recently. As the company looks at subscription growth expectations, moving forward, but expanding -- you are expanding your penetration by less than a quarter of module annually. How should we think about the view of the cross-sell cadence to be over the near-term to drive 20% plus subscription growth? This is just not a penetration need to increase or decrease to achieve these growth rates?

I think you'll -- you should expect to see a consistent cadence of additional upsell within our install base, with the balance of new business as well, so I don't think the motion from that perspective, you should expect to change for us to be able to hit the targets that we've established.

Excellent, and as a follow-up, it's great to see the cross excess starting to come in above initial expectations for this year and sort of recovering a bit, but if we look at look at the expectations for physician's world, it seems like those have remained I think relatively consistent. As we are now starting to get visibility into a vaccine, how are you starting to think about the recovery for that physician's world business and perhaps some assumptions that you're looking at going into calendar year '21? Thanks.

I'll take that into the traditional world that will. Excuse me, gentlemen. That'll recover sort of with I think with the vaccine where people feel comfortable, broadly speaking in the face-to-face event, so we're looking towards sometime towards the end of next year I think that would be a reasonable expectation for the physician to begin. Now having said that, we are starting to get really momentum and starting to lead a bit in innovation we're doing around digital. So there's a potential that in the long-term as we look at maybe not next year, but the following year, I believe you're going to be gaining market share there and adding more value with both digital and face-to-face events and other services around that. So, I'm pretty bullish on the physician world business. It'll have another nine months, of a little lagging in fact right now.

Excellent, thanks again.

Our next question is from Brad Sills with Bank of America Merrill Lynch. Your line is open.

Oh, great. Hey, guys. Thanks for taking my question. I wanted to ask about clinical top 50, it's been a market segment that you've seen some real progress and recently. Can you remind us kind of where we are in the replacement cycle for that particular segment, are we are -- you've got a number of wins there already in the top 20 category? Should we expect more of those types of wins or we are you looking at the next tier down, where you can see more progress. You've been on this very steady kind of reference selling approach there, it seems like you've got the references now and so perhaps we could see a tipping point of replacement, so any color you can provide on kind of where we are in that cycle. Thank you.

Yes. It's an important system for the clinical operations and then the clinical data management. In the clinical there's those two areas: clinical operations, clinical data management. In clinical data management, we are very, very early just -- we have a handful of customers very, very early, so it's basically mostly Greenfield has legacy players out there that we have to replace and that'll happen over the next really literally 5 and 10 years, the long road. In clinical operations, we have our eTMF, which has pretty good market share that was our first, but out of those top 50 I don't have the exact number of how many these are eTMF, but there is still a decent amount to go that we have to get. Then there's more in CTMS, and there's Payments, which is a new module, Studies are relatively new module, their study startup, but the big thing in clinical, the clinical network, that's a whole new, whole new leg of applications, and that applies to the Top 50, and also, all the other clinical applications. So we're very early days in clinical, you only really have one you truly roughly materially penetrated application and that eTMF and has a way to go, it's early days.

Got it. Thanks, Peter, and then, you mentioned your expectation for kind of consistent growth in outside Life Sciences, it sounds like pretty balanced across CPG, chemicals, cosmetics, is that just a function of kind of awareness needs to build in that category in order for you to see more acceleration there, is it just go to market resources, is it product, maybe we just don't need to expect that business to really ramp and there's because there's so much opportunity within Life Sciences, but I guess any color on kind of what's driving that more kind of balanced, steady growth in that business?

First of all, we're happy with that growth numbers, we gave at the Analyst Day. So it's closed pretty nicely, when you look at it, $100 million or so in that neighborhood by 2025. Now, what happens there is that's a slow and steady growing industry there, it's you've got a lot of capital costs, it's not one that's prone to jump very quickly, and it has a natural adoption lifecycle. Companies have investments in previous technologies, they need to see those through, write those off, and it tends to be very cautious and capital efficient industry. So that's what's going on there, and now it's not to, we need more feet on the street or something like that, or product in the system. That record selling cycle, you only have so many early adopters, middle majority, and then you have late adopters.

Got it. Thanks so much, Peter.

Thank you.

Our next question is from Stephanie Davis with SVB Leerink. Your line is open.

Thank you for taking my questions, and congrats on the quarter. Just a quick question, given some of the startups we're seeing in the space. There's a growing number of drug development phase and IT startups, what are your IT and M&A priorities in these adjacent markets with that in mind, and you'll be lower bounds for assets that you could or would acquire either on scale or product maturity, as many of them are relatively new?

Thanks, Stephanie. In terms of M&A, that's something we always keep our eye on, we're always looking in general, we would like to, if we can find something that is in a market that we would like to go into, we can find a seed of innovation that will provide us with a boost, or a boost of either technology or in the core knowledge, we will do that, or where we can find something that's supplied to a certain area, and we feel like we can acquire that asset, those people that fit with our culture, and then give them a bigger canvas to play on, so that they can accomplish more. The best example I have there, it's with the Crossix, Crossix for marketing analytics that has tremendous data platform behind it, when we combine Crossix with Veeva, then we can take on the full life sciences Data Play, which is 10 times larger than marketing analytics on market there. So there's not a specific area that we're looking at, or that I can talk about now, but we're always looking and keeping an eye on it.

All right. Understood and then following up with some of the earlier questions about your Data product, how real is the trend towards real world evidence? And when can we see maybe some offerings that are a little bit more laid out within your solution?

Yes, in terms of real world evidence, that's a real thing, right. You have your sort of non-real world or traditional data that might be used for sales compensation, targeting and planning that type of thing, and then you have a real world evidence, which can be used in the commercial side, but also in R&D side. So that is real. Our focus is not in the real world evidence versus in the commercial data. So we got to get that right. Now that asset we have in the Crossix data platform. Absolutely that's going to be relevant -- real data in the future, and we wouldn't do it in a very integrative way, but first thing is first, then that's a longitudinal patient data that we'll get that going, and then we'll expand from there.

Would you more likely to sell off that data for now or keep it yourself and look at them invasion and development a little bit later?

Oh, yes. We would not sell any raw data rights. We have a long time selling that caustic data network, that data platform, and we'll continue to do it and then build it. We use that for our internal use in our consulting group that may be used that, but then we'll use it to make products for customers, but it's not a type of thing where we would OEM or something like that.

I understand. Thanks a lot.

Thank you.

Our last question is from Sterling Auty with J.P. Morgan. Your line is open.

Yes, thanks. Hi guys. So, super high-level question to start, you know, with the outcome of the Presidential Election, assuming it holds as is and the potential for the runoffs in Georgia, is there anything that you're keeping an eye on from a regulatory or legislative action that you think would have direct impact one way or the other, either on the business or to your customers that could impact your business in the next year or two?

Yes. Hi, Sterling. Thanks for your question. So, I mean, we're certainly keeping an eye on what is happening with the election and also what happens around legislation and policy as our customers, but the reality is, the industry is a big industry. It's a global industry. These kinds of things elections happen all the time. Legislation changes, policy changes all the time and it tends to be balanced out by a lot of the innovation that happens in the industry innovating a new medicines and really everybody focused on driving patient outcomes and doing the right thing for patients. So that's a long way to say that, some of these changes they tend to be a wash with the innovation. We haven't seen any impact yet on our customers, and we don't really expect any impact of some of those changes in the political landscape over the near-term either.

All right, excellent, and then one follow-up question, there was a couple of questions around CTMS, and I'm just kind of curious, has anything changed in the competitive landscape in terms of your head that one legacy strong fold with Oracle, Siebel, CTMS, -- metadata had an offering, but you kind of came in and I think we're doing a better job waiting. Is anything changed in terms of any other vendors that you're seeing more active in that space or any change to kind of win rates or displacements?

Sterling, no new entrance that we're aware of; no change to the competitive dynamics, we're really replacing the client server there. I guess the only caveat is customers are seeing that Veeva has success in CTMS at scale at the large enterprise. So, that's sort of a de-risk for people, and I think many customers are thinking, "When would I go to see the CTMS? When does it make sense to --" because at this point I think they have the best alternative to the market and the proven solution.

Got it. Thank you, guys.

Thanks, Sterling.

And this does conclude Veeva's Q&A session. I'll now turn the call back over to Peter for any closing remarks.

Thank you all for joining us today. I'd also like to extend a special thanks to Rick Lund for all his years of service and contributions at Veeva. This is Rick's last earnings call with us and we wish him well, and his next role as a CFO, and I wish you all a happy holiday season, and we look forward to talking with you next year. Thank you.

This concludes today's conference call and you may now disconnect.