Good afternoon and welcome to Veeva's Fiscal 2022 Third Quarter Earnings Conference Call for the quarter ended October 31, 2021. As a reminder, we posted prepared remarks on Veeva's Investor Relations website just after 1:00 p.m. Pacific today. We hope you've had a chance to read them before the call. Today's call will be used primarily for Q&A. With me today for Q&A are Peter Gassner, our Chief Executive Officer; Paul Shawah, EVP Commercial Strategy; and Brent Bowman, our Chief Financial Officer. During the course of this call, we may make forward-looking statements regarding trends, our strategies and the anticipated performance of the business. These forward-looking statements will be based on our current views and expectations and are subject to various risks and uncertainties. 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. Forward-looking statements made during the call are being made as of today December 1, 2021 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 may discuss our guidance on today’s call, but we will not provide any further guidance or updates on our performance during the quarter unless we do so in the public form. On the call, we may 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 website. With that, thank you for joining us. And I'll turn the call over to Peter.

Thank you, Ato, and welcome to the call, everyone. It was another great quarter for Veeva with strength across the business and results above our guidance. Total revenue was up 26% to $476 million. Subscription revenue was also up 26% to $381 million. Non-GAAP operating income was $199 million or 42% of total revenue. As noted in my prepared remarks, we had a very good quarter in commercial with particular strength in core CRM, Crossix analytics, and Veeva Link. In the R&D area, we saw continued strength across the board in Veeva Development Cloud. We will now open the call up for your questions.

[Operator Instructions] Your first question comes from the line of Stan Zlotsky with Morgan Stanley.

Hey, guys. Good afternoon and thank you so much for taking our questions. Maybe just starting high-level, in the quarter, what did you see as far as the -- any shift in buying patterns? And I know you call that on the prepared remarks that I think an incremental $2 million headwind to billings in the quarter. Is there anything more to call out one-time that happened in the quarter?

Oh, hey, Stan, it's Brent. No, in the quarter we're very pleased overall with the broad base strength we saw in the business. The one anomaly that I called out was we expected about a $14 million of one-time items to billings that came in at 16. But other than that, nothing else. I'm happy with the overall momentum and strength of the business.

Got it. Got it. And then as far as the way we should be thinking about guidance for Q4, any other shifts to note other than I think you mentioned the incremental $10 million of the essential shifts from renewables that we're going to be pulling pushing out into Q1 versus Q4. Anything else that we need to be mindful of as far as that quarter, any kind of underlying demand trends or anything else?

Yes, so in addition to the item the $2 million you called out, so again, we're very pleased with the broad base strength. A couple of items, just to be mindful of is that the ACV, booking linearity was a benefit towards the first half and the second half. If you remember, we had our strongest two booking quarters in Q4 '21 and Q1 '22. So that has an impact. In addition, the CRM attrition is starting to flow through, as we expect, and that does have an impact on revenue as well. So those are the things that be mindful of. But all in all, we've never been happier with our competitive positioning and how we look at the opportunity ahead.

Got it. Thank you so much, guys.

Your next question comes from Dylan Becker with William Blair.

Hey, guys, nice job in the quarter and appreciate you taking the questions here. I guess maybe starting with Paul on the commercial side. So nice to see some additional wins with early adopters on Data Cloud, but I wanted to maybe dig in into the value with some of the releases coming up here next year with prescriber and sales data to really kind of tighten that feedback loop for these pharmaceutical companies. And I guess maybe just kind of that seems like a key driver of value here. But we'd love to kind of understand how you guys are thinking about this opportunity for those three components and data sets to really come together in Data Cloud as we think about 2022 and beyond.

Yes, thanks so much for the question. Yes, so you're right. Overall, with Data Cloud, we're really excited about the potential that we have really significant market, big market where we have patient data, which is available today in the U.S market. And as you referenced, we're going to have prescriber data in Q1 of next year and sales data in Q2 of next year. So, we're excited to expand that portfolio. When we do that, what that allows us to do is to be -- we could be that sole provider for life sciences company for the vast majority of their data. And that's where we're approaching. Today, we have patient data, which is highly differentiated, we have a number of early customers who are proving out the value proposition of patient day of Veeva's patient data in the market. They're finding more patients, they’re finding more targets. Data is more robust in many cases, and what exists in the marketplace. So, our hypothesis has always been we can create a better data set and we're proving that out in the market. So, we're super excited about where we're going with Data Cloud.

Okay, great. That's helpful. And then maybe one for Peter as well. So, we've seen a lot of kind of recent innovation across the quality well, and I think you kind of highlighted it on the Analyst Day about a month ago around that kind of broader opportunity set. So, I guess maybe the potential to kind of dig into that applicability here expanding again outside of potentially life sciences verticals, maybe something again, that shakes out more around that kind of 2025 timeframe. But thinking of how you guys are viewing kind of the innovation cadence in quality and the long-term opportunity of that suite in itself.

Yes, quality we're very excited about is turning out to be a very broad business for us. So we added product surveillance, actually, that was a year or so ago, that's specific to MedTech, now adding validation and QC limbs for automating the quality control laboratory. So, it's pretty, pretty broad. And it has some products that are quite mature and doing well in the market, quality docs and even QMS now we've had for a long time. And then QC limbs, which is also a really big new product and we're just building that one. So, it has a combination of products that are mature and products that are just brand new. And that's targeted at life sciences, but quality is one of those products that goes outside a little bit, service providers to life sciences, its contract manufacturers, et cetera, CROs. So, lots of people need our quality suite. It can be a big business for us, that's for sure.

Great. Thank you guys for taking the question.

Your next question comes from Ken Wong with Guggenheim Securities.

Great. Thanks for taking my question. A couple of CRM questions for me. The first one, I think I found the script that you guys mentioned, maybe introducing a MedTech CRM. Is this a greenfield opportunity for you guys? Or is this just mildly additive by providing existing customers with a new experience? What's the right way to think about that particular product?

Yes, Ken, it is a -- it's a new opportunity for us. Today we sell Veeva CRM for pharma into the pharma and biotech industry. And that's built on Salesforce.com, the Salesforce platform and that's going well, and none of that changes. So you can think of the pharma side as we're going to continue to execute as we have them. And what we announced differently was really for the MedTech space. So think of MedTech as this could be anything from a company that sells on a heavy medical equipment all the way down to surgical gloves. So, it's a broad industry, and it's a bit of a different area for Veeva in CRM. We've been selling to MedTech for the past couple of years primarily are vault, R&D applications and we're doing really well. We have over 100 customers where we sell to R&D, that's the big opportunity and MedTech is really the R&D space. But what we're doing in CRM is we're creating an industry-specific application for MedTech. We're building an industry cloud for MedTech. So, it's a -- it is -- it's new and additive.

Got it. Super helpful. And then I also couldn't help, but notice that there was a mention of a top 20 enterprise customer. I guess my understanding was you guys had pretty much locked up everyone except for Roche and I recall, Matt used to say it was a bounty on that last enterprise Domino. I guess, should we think that you can vote it out? Or is this just some derivative of another enterprise customer that from a regional perspective? What's the happenings there?

Yes, this is one we're proud of. It's -- I won't give -- I won't comment on specific customers. But I will say that we do have all the top 20. Some, at least somewhere in the globe, at this point, all the major markets. So we're really proud of this win. This is one that -- these things take time, right? We've been executing, as you heard in Peters remarks we have been executed really well in CRM. We've had really strong market share gains this quarter. We added the enterprise top 20, which you just referenced, that's in the U.S market. We had some competitive wins and takeaways elsewhere in Latin America and expansions in Japan. So, we're executing on all cylinders in core CRM, and more broadly in commercial. Yes, so really happy with that progress.

Got it. Fantastic, guys. Thanks for taking my questions.

Your next question is from Brian Peterson with Raymond James.

Hi, gentlemen. Thanks for taking the question. So I wanted to hit on the sales rep productions at some of your customers. I'm just curious versus where we were 90 days ago, how has that progressed? And how should we think about the impact of those reductions in fiscal year '23 versus fiscal year '22?

Yes, I could give you an update. So just as a reminder, we talked about roughly a 10% reduction happening through the end of fiscal year '24 with most of it happening by the end of next year. With regards to this quarter in particular, it was relatively light. We saw very small rep reductions, we do anticipate we'll see more in Q4, and also most of it happening through the end of next year.

Okay, got it. That's helpful. And maybe just kind of a derivative on that. It's interesting we're starting to hear about rep reductions, you could think about maybe a move to digital. And I'm curious when you're engaging with your customers on the commercial side call, like, are they talking about spending more technology and software with you. So, even though we're seeing this reduction, should we still think about spend levels overall going up? How do we kind of think about that, that dynamic?

Yes, they're very much related, because the reason they're able to have the productivity gains is because they're becoming more digital. So, what what's happening across the industry and what happened largely over the last couple of years that we've been, we've been driving this shift to help our customers become more digital and more productive, more efficient. And now they have those productivity gains and they get to decide how they take advantage of those gains. Either they can reach deeper into the customer base, or they can take some as reductions, and it's not a science and it takes a little while, which is why you see it playing out over time. But yes, there's certainly a correlation as they consume more of our products, as they become more digital, there are the efficiency gains, which they get the benefit of.

Thanks a lot.

Sure.

[Operator Instructions] Your next question comes from Sterling Auty with J.P. Morgan.

Hi, this is Drew on for Sterling. I was wondering if you could speak to the pipeline of new add-on products, particularly within CRM or anywhere else that you're seeing add-on?

Yes, I can talk to that. The add-ons continue to progress really well. Over the last 12 to 18 months, you saw some acute spikes with some very specific add-ons. I would say that the tip of the spear add-ons helping our customers get to digital and you saw that spike with engage. So we've moved much of the industry to some of the new -- newer add-ons like Engage. But we're seeing strength more broadly across that, because they're all taken together, all of those add-ons help our customers be more efficient. They help them become more digital, they help them generate data better and operate differently. So, yes, we're seeing strength not only in core CRM, but also in the add-ons more broadly.

Got it. Thank you.

Your next question is from Stephanie Davis with SVB Leerink.

Hey, guy, congrats on the quarter and thanks for taking my question. I just want to call that the prepared remarks had a bunch of SMB wins. So I was hoping you could talk to traction in that end market. How should we think about the relative go-forward opportunity in SMB, just given both broader contracts and the scales IPO activity that we've been seeing lately?

Yes, the SMB space is, it's a really important market. I mean, this is where you have some of the most innovative, interesting companies, biotechs, often launching their first medicine and this could be something that's highly specialized oncology, rare disease. So we are able to -- in many cases, start very early in the development cycle with our Vault products, which is most often where we would start anything from clinical to regulatory, and anything else across the spectrum. And then as they get closer to launch, often promote them into our commercial product set. So, yes, we're having really good strength in that space. Now, going forward, I anticipate we'll continue to have that strength, and those customers have the unique advantage of having a clean slate. So going with development cloud, going with commercial cloud becomes really obvious, and really a whole lot easier for them compared to what somebody that may have some legacy systems tied to them. So, yes, it's a big value proposition with those small customers, we are making great progress there.

That touches on my follow-up. Are there then some products within your suite, they're much more likely to add-on or attach to earlier than some of your established relationships? And how can we think about that up in the near-term?

There are and it depends on where they are in their lifecycle. So certainly earlier -- much earlier in the lifecycle, you would start with some of the products in Development Cloud, which is likely where they would start in quality, in clinical, advancing to areas like regulatory. And then as they become closer to commercial, they actually often start with their medical affairs teams, because that's the first part of the organization that can see it and start positioning in the marketplace. And then they expand to the commercial product area. So it's really we can help them along that entire spectrum.

Super helpful. Thank you.

Your next question is from Ryan MacDonald with Needham.

Thanks for taking my questions. I guess my first one is really around the Crosssix wins in the omni-channel analytics. Just curious to see what sort of momentum you're seeing in that space in terms of purchase decisions. Obviously, as digital becomes more important of an investment channel with those rep reductions physically. Thanks.

Yes, you're exactly right, which is driving a lot of the momentum. Crosssix it's really the very best product in the marketplace. So that has been -- we've been building and maturing that product for a very long time and it's doing well in the market. We expect to continue down that trajectory. We're also innovating in the Crosssix space. So if you remember, we did some really innovative things where we took some of the interesting data that comes out of CRM, and we enhance it in Crosssix, which is what our customers are looking for. They're looking to us for that kind of innovation. So it's going well. And you're right, the big driver is as our customers are doing more digital, there's more of a need to measure and understand what's working and what's not working. And that's why they turn the Crosssix. So we're excited about that. That'll continue to be a big contributor and grower for us over the next several years.

Great. And then maybe as a follow-up, I thought it was interesting in the prepared remarks around Data Cloud and sort of the discovery of new use cases or new types of data within your customers thus far. Just be curious to hear some examples of some of those new use cases. Thanks.

Yes. So the -- we started with the patient data, that's what we have in the marketplace today, longitudinal patient data, and we're expanding to the other datasets that we talked -- that I mentioned earlier. And our customers are able to patient [indiscernible] is super valuable to a life sciences company, particularly for some of these newer, more specialized precision medicines, as they need to have really good and deep visibility in what’s happening to that patient across the journey. How are they getting diagnosed, what are some of the indicators that that may mean they have a medicine that they'd be able to treat that patient for longer term. So it really helps you can think about that patient data to help identify where patients may be. You can think about it as helping them to think about what treatments they're on, and when they may transition them over to their -- to a medicine. You can also think about it as segmenting and targeting customers. So those are some really specific use cases that our early customers are all using and taking advantage of today. And they're seeing really good results with.

Great. Thanks for the color.

Sure.

[Operator Instructions] Your next question comes from Brent Bracelin with Piper Sandler.

Hi all. This is Hannah Rudoff on for Brent today. Thanks for taking my questions. First one is kind of a follow-up on the last question. I think in the past, you've talked about customers maybe being able to find around 10% more targets using your patient data than using a legacy competitor data. I guess where do you see that number going once you have all three data sets rolled out?

Yes, that's a good question. It will depend on certainly the therapeutic area and where we're competing, who we're competing with, where you're comparing it to, we do believe, because we're taking a modern approach, we're using technology, we're able to find the data that others are not able to find, and we're able to match those datasets together and create something really robust. So that's why we've been able to find additional patients, additional health care professionals and targets because of that. Do I see it? It may range, right? It's going to range. In some cases, it may be higher, it may be not as much. But we're pleased that the customers are getting the value that we thought they would get out of Data Cloud and it's only going to go in the right direction as we continue to invest more heavily in data.

Great. And then how are you thinking about headcount going into next year?

Yes, I'll take that. So, we're pleased with our journey towards 10,000 employees in 2025. We have a very aggressive targets, and we're focused on building the organization to drive customer success and innovation. So, we're leaning in to investing in our people.

Thank you.

Your next question comes from Brad Sills with Bank of America.

Oh, great. Thanks, guys for taking the question here. Congratulations on a nice quarter. I wanted to ask about any deals this quarter in that top 50 segment for clinical CTMS, CDMS? How did that fare during the quarter? Thank you.

Yes, I mean, we continue to -- clinical continues to go really well for us. CDMS, as you know, we continue to add customers. We had some [indiscernible] are doing more trials, we're doing more oncology trials also as we're going along, those are some more complex, you need to be a little bit more adaptive, which is why they're looking to something that's more flexible, like CDMS. So we continue to make progress every quarter, adding more trials, making progress in the enterprise also. And then with some of the more established products like ETMF, continues to perform well. And our customers are also expanding and looking at areas like CTMS. So clinical is really proud of where that's going. And then of course, customers believe in our vision for digital trials, and the clinical foundations are really important part of that.

Great to hear. And then also, if I may, just an update on the regulatory business that, that's the Vault that has been you'd launched earliest and seen a lot of traction over the years. How well penetrated is that installed base? In other words, what's the runway to cross-sell and upsell that into the base from here?

Yes, you're right. It was one of the earlier ones and it's still -- there's still a whole lot of runway left in regulatory. And also think about regulatory, it is a suite of products like the other areas. So we have submissions, and the ability to archive and publish submissions and registrations. So it's a number of products and you're really seeing two dynamics. One dynamic is where customers who may have started with submissions, registrations and they're expanding publishing. So we're seeing expansion from existing customers to buy additional apps. And then you're also seeing you saw on Peter scripted comments that we had our first enterprise kind of go all in with the regulatory suite. So those two dynamics are playing out, and certainly a lot of runway left there.

Great to hear. Thanks, Paul.

And Brad, I would say a little more color in the second half of this year, end of Q2 and Q3 here. And frankly, the start of Q4, we've seen a lot of good momentum in the clinical data management. I think that's been, as I reflect a real pride spot. Now, particularly with large enterprises that doesn't turn into orders or close deals right away, because that's a risk averse area has long runway, but that's a real bright spot, our progress in CDMS in this so far, this calendar year.

Excellent. Thanks, Peter.

There are no further questions at this time. I'll now hand it over to the management for the closing remarks.

All right. Thank you, everyone for joining today's call. I'd like to thank our customers for their continued partnership and the Veeva team for their commitment to customer success. Thank you.

This concludes today's conference call. You may now disconnect.