Press release

Veeva Announces Fiscal 2020 Second Quarter Results

0
Sponsored by Businesswire

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, 2019.

“Veeva passed the billion-dollar annual revenue run rate milestone this quarter with a strong runway of growth ahead,” said CEO Peter Gassner. “I am incredibly proud of the team for the customer success focus, execution, and innovation that enabled us to achieve this goal a year and a half ahead of the target we laid out in 2015.”

Fiscal 2020 Second Quarter Results:

  • Revenues: Total revenues for the second quarter were $266.9 million, up from $209.6 million one year ago, an increase of 27% year-over-year. Subscription services revenues for the second quarter were $217.3 million, up from $169.6 million one year ago, an increase of 28% year-over-year.
  • Operating Income and Non-GAAP Operating Income(1): Second quarter operating income was $73.9 million, compared to $52.8 million one year ago, an increase of 40% year-over-year. Non-GAAP operating income for the second quarter was $103.7 million, compared to $74.4 million one year ago, an increase of 39% year-over-year.
  • Net Income and Non-GAAP Net Income(1): Second quarter net income was $79.2 million, compared to $50.3 million one year ago, an increase of 58% year-over-year. Non-GAAP net income for the second quarter was $87.7 million, compared to $61.5 million one year ago, an increase of 43% 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 $0.50, compared to $0.32 one year ago, while non-GAAP fully diluted net income per share was $0.55, compared to $0.39 one year ago.

“Veeva Vault also hit an important milestone this quarter, as it now represents more than half of our total revenue,” said CFO Tim Cabral. “We’re in the very early innings of a significant opportunity to help the industry and are investing for customer success and continued strong growth.”

Recent Highlights:

  • Commercial Cloud Enables the Move to Digital Engagement Strength in Veeva Commercial Cloud contributed to the company’s outperformance in the quarter. This included new multichannel CRM wins and expansions. For example, Veeva CRM Engage had one of its best quarters ever and doubled its customer count since last year. Current customers also expanded their use of the product in Q2, including 4 top 20 pharmas.
  • Top 20 Medical Device Company Selects Veeva Vault as Enterprise Standard The customer is standardizing on Veeva Vault across clinical, quality, regulatory, and commercial. They selected Veeva for its unique ability to provide best-in-class solutions, all on a single, modern cloud platform. The rollout will encompass eight applications and will include newer Veeva Vault offerings for CDMS, CTMS, and training.
  • Adoption of Veeva Vault Quality Continues Across the Industry As of Q2, more than 100 companies have chosen Veeva Vault QMS and 230 have chosen Veeva Vault QualityDocs to streamline quality processes and documentation. In the quarter, the company also signed another top 20 pharma for Vault QualityDocs, its 10th top 20 pharma.

Financial Outlook:

Veeva is providing guidance for its fiscal third quarter ending October 31, 2019 as follows:

  • Total revenues between $274 and $275 million.
  • Non-GAAP operating income between $103 and $104 million(2).
  • Non-GAAP fully diluted net income per share between $0.54 and $0.55(2).

Veeva is providing guidance for its fiscal year ending January 31, 2020 as follows:

  • Total revenues between $1,062 and $1,065 million.
  • Non-GAAP operating income between $401 and $404 million(2).
  • Non-GAAP fully diluted net income per share between $2.11 and $2.13(2).

Other News:

Today we also announced our CFO, Tim Cabral, is retiring in 2020 after a 30-year career and 10 years at Veeva. A search for his replacement is underway and Cabral is staying at Veeva through the hiring and onboarding the new CFO to ensure a smooth transition.

Conference Call Information:

What:

Veeva’s Fiscal 2020 Second Quarter Results Conference Call

When:

Tuesday, August 27, 2019

Time:

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

Live Call:

1-833-235-5654, domestic

 

1-647-689-4160, international

 

Conference ID 268 5597

Webcast:

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, 2019 or fiscal year ending January 31, 2020 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 775 customers, ranging from the world’s largest pharmaceutical companies to emerging biotechs. 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.

Forward-looking Statements

This release contains forward-looking statements, including the quotations from management, the statements in “Financial Outlook,” and other statements regarding Veeva’s future performance, market growth, the benefits from the use of Veeva’s solutions, our strategies, and general business conditions. Any forward-looking statements contained in this press release are based upon Veeva’s historical performance and its current plans, estimates and expectations and are not a representation that such plans, estimates, or expectations will be achieved. These forward-looking statements represent Veeva’s expectations as of the date of this press announcement. Subsequent events may cause these expectations to change, and Veeva disclaims any obligation to update the forward-looking statements in the future. These forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially, including (i) breaches in our security measures or unauthorized access to our customers’ data; (ii) our expectation that the future growth rate of our revenues will decline; (iii) fluctuation of our results, which may make period-to-period comparisons less meaningful; (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) loss of one or more customers, particularly any of our large customers; (vii) system unavailability, system performance problems, or loss of data due to disruptions or other problems with our computing infrastructure; (viii) our ability to attract and retain highly skilled employees and manage our growth effectively; (ix) failure to sustain the level of profitability we have achieved in the past as our costs increase; (x) adverse changes in economic, regulatory, or market conditions, particularly in the life sciences industry, including as a result of customer mergers; (xi) 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 (xii) 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, 2019. 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.

® 2019 Veeva Systems Inc. All rights reserved. Veeva and the Veeva logo are trademarks of Veeva Systems Inc.

Veeva Systems Inc. owns other registered and unregistered trademarks.

VEEVA SYSTEMS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

 

July 31,

2019

 

January 31,

2019

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

827,468

 

 

$

550,971

 

Short-term investments

604,688

 

 

539,190

 

Accounts receivable, net

145,463

 

 

303,465

 

Unbilled accounts receivable

21,384

 

 

18,122

 

Prepaid expenses and other current assets

21,835

 

 

21,666

 

Total current assets

1,620,838

 

 

1,433,414

 

Property and equipment, net(3)

54,354

 

 

54,966

 

Deferred costs, net

30,205

 

 

30,869

 

Lease right-of-use assets(3)

18,920

 

 

 

Goodwill

95,804

 

 

95,804

 

Intangible assets, net

21,438

 

 

24,521

 

Deferred income taxes, noncurrent

6,499

 

 

5,938

 

Other long-term assets

11,795

 

 

8,254

 

Total assets

$

1,859,853

 

 

$

1,653,766

 

 

 

 

 

Liabilities and stockholders equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

8,613

 

 

$

9,110

 

Accrued compensation and benefits

18,003

 

 

15,324

 

Accrued expenses and other current liabilities

15,302

 

 

16,145

 

Income tax payable

5,241

 

 

4,086

 

Deferred revenue

329,053

 

 

356,357

 

Lease liabilities(3)

6,729

 

 

 

Total current liabilities

382,941

 

 

401,022

 

Deferred income taxes, noncurrent

8,444

 

 

6,095

 

Lease liabilities, noncurrent(3)

15,518

 

 

 

Other long-term liabilities

7,933

 

 

8,900

 

Total liabilities

414,836

 

 

416,017

 

Stockholders’ equity:

 

 

 

Class A common stock

1

 

 

1

 

Class B common stock

 

 

 

Additional paid-in capital

673,878

 

 

617,623

 

Accumulated other comprehensive income

(93

)

 

928

 

Retained earnings(3)

771,231

 

 

619,197

 

Total stockholders’ equity

1,445,017

 

 

1,237,749

 

Total liabilities and stockholders equity

$

1,859,853

 

 

$

1,653,766

 

_______________________

(3)

The Company adopted ASU 2016-02, “Leases” (Topic 842) using the modified retrospective method as of February 1, 2019 and elected the transition option that allows the Company not to restate the comparative periods in their financial statements in the year of adoption.

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,

 

2019

 

2018

 

2019

 

2018

Revenues:

 

 

 

 

 

 

 

Subscription services

$

217,312

 

 

$

169,592

 

 

$

415,427

 

 

$

325,595

 

Professional services and other

49,588

 

 

40,017

 

 

96,225

 

 

79,561

 

Total revenues

266,900

 

 

209,609

 

 

511,652

 

 

405,156

 

Cost of revenues(4):

 

 

 

 

 

 

 

Cost of subscription services

31,480

 

 

29,146

 

 

61,858

 

 

59,059

 

Cost of professional services and other

38,738

 

 

30,080

 

 

73,863

 

 

60,322

 

Total cost of revenues

70,218

 

 

59,226

 

 

135,721

 

 

119,381

 

Gross profit

196,682

 

 

150,383

 

 

375,931

 

 

285,775

 

Operating expenses(4):

 

 

 

 

 

 

 

Research and development

51,146

 

 

38,826

 

 

96,119

 

 

76,023

 

Sales and marketing

45,821

 

 

38,222

 

 

85,438

 

 

72,607

 

General and administrative

25,859

 

 

20,517

 

 

49,349

 

 

40,371

 

Total operating expenses

122,826

 

 

97,565

 

 

230,906

 

 

189,001

 

Operating income

73,856

 

 

52,818

 

 

145,025

 

 

96,774

 

Other income, net

7,332

 

 

3,342

 

 

13,493

 

 

5,481

 

Income before income taxes

81,188

 

 

56,160

 

 

158,518

 

 

102,255

 

Provision for income taxes

1,946

 

 

5,874

 

 

5,827

 

 

7,659

 

Net income

$

79,242

 

 

$

50,286

 

 

$

152,691

 

 

$

94,596

 

 

 

 

 

 

 

 

 

Net income attributable to common stockholders, basic and diluted:

$

79,242

 

 

$

50,286

 

 

$

152,691

 

 

$

94,596

 

 

 

 

 

 

 

 

 

Net income per share attributable to common stockholders:

 

 

 

 

 

 

 

Basic

$

0.54

 

 

$

0.35

 

 

$

1.04

 

 

$

0.66

 

Diluted

$

0.50

 

 

$

0.32

 

 

$

0.96

 

 

$

0.61

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

Basic

147,510

 

 

143,748

 

 

147,116

 

 

143,271

 

Diluted

158,675

 

 

155,416

 

 

158,339

 

 

155,227

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

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

$

461

 

 

$

357

 

 

$

1,423

 

 

$

662

 

Net change in cumulative foreign currency translation loss

(1,742

)

 

(1,572

)

 

(2,444

)

 

(2,381

)

Comprehensive income

$

77,961

 

 

$

49,071

 

 

$

151,670

 

 

$

92,877

 

_______________________

(4) Includes stock-based compensation as follows:

 

 

 

 

 

 

 

 

Cost of revenues:

 

 

 

 

 

 

 

Cost of subscription services

$

583

 

 

$

416

 

 

$

968

 

 

$

761

 

Cost of professional services and other

4,458

 

 

2,657

 

 

7,436

 

 

4,985

 

Research and development

9,509

 

 

5,795

 

 

15,833

 

 

10,462

 

Sales and marketing

7,177

 

 

4,830

 

 

12,325

 

 

8,918

 

General and administrative

6,643

 

 

6,020

 

 

12,564

 

 

11,603

 

Total stock-based compensation

$

28,370

 

 

$

19,718

 

 

$

49,126

 

 

$

36,729

 

VEEVA SYSTEMS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

Three months ended

July 31,

 

Six months ended

July 31,

 

2019

 

2018

 

2019

 

2018

Cash flows from operating activities

 

 

 

 

 

 

 

Net income

$

79,242

 

 

$

50,286

 

 

$

152,691

 

 

$

94,596

 

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

 

 

 

 

 

 

 

Depreciation and amortization

5,561

 

 

3,498

 

 

10,999

 

 

7,094

 

Accretion of discount on short-term investments

(1,096

)

 

(353

)

 

(2,274

)

 

(532

)

Stock-based compensation

28,370

 

 

19,718

 

 

49,126

 

 

36,729

 

Amortization of deferred costs

4,843

 

 

4,583

 

 

9,692

 

 

9,102

 

Deferred income taxes

921

 

 

868

 

 

1,339

 

 

818

 

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

42

 

 

(186

)

 

(38

)

 

(163

)

Bad debt expense (recovery)

(159

)

 

(58

)

 

(312

)

 

178

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

18,804

 

 

43,103

 

 

158,314

 

 

112,695

 

Unbilled accounts receivable

1,982

 

 

2,858

 

 

(3,262

)

 

(1,429

)

Deferred costs

(4,427

)

 

(3,371

)

 

(9,028

)

 

(6,922

)

Income taxes

611

 

 

1,992

 

 

949

 

 

(504

)

Other current and long-term assets

(1,338

)

 

(2,796

)

 

(4,097

)

 

(3,509

)

Accounts payable

379

 

 

(1,443

)

 

(37

)

 

538

 

Accrued expenses and other current liabilities

2,672

 

 

(1,540

)

 

1,913

 

 

(4,104

)

Deferred revenue

(35,225

)

 

(30,406

)

 

(27,311

)

 

(7,756

)

Lease liabilities

(1,889

)

 

 

 

(3,518

)

 

 

Other long-term liabilities

1,180

 

 

60

 

 

1,616

 

 

567

 

Net cash provided by operating activities

100,473

 

 

86,813

 

 

336,762

 

 

237,398

 

Cash flows from investing activities

 

 

 

 

 

 

 

Purchases of short-term investments

(209,195

)

 

(181,069

)

 

(438,089

)

 

(374,231

)

Maturities and sales of short-term investments

187,772

 

 

141,266

 

 

376,737

 

 

317,810

 

Purchases of property and equipment

(1,092

)

 

(686

)

 

(2,286

)

 

(1,395

)

Capitalized internal-use software development costs

(286

)

 

(284

)

 

(705

)

 

(514

)

Net cash used in investing activities

(22,801

)

 

(40,773

)

 

(64,343

)

 

(58,330

)

Cash flows from financing activities

 

 

 

 

 

 

 

Reduction of lease liabilities – finance leases

(239

)

 

 

 

(488

)

 

 

Proceeds from exercise of common stock options

3,620

 

 

7,022

 

 

7,011

 

 

14,861

 

Net cash provided by financing activities

3,381

 

 

7,022

 

 

6,523

 

 

14,861

 

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

(1,742

)

 

(1,565

)

 

(2,444

)

 

(2,376

)

Net change in cash, cash equivalents, and restricted cash

79,311

 

 

51,497

 

 

276,498

 

 

191,553

 

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

749,365

 

 

461,443

 

 

552,178

 

 

321,387

 

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

$

828,676

 

 

$

512,940

 

 

$

828,676

 

 

$

512,940

 

 

Non-GAAP Financial Measures

In Veeva’s public disclosures, Veeva has provided non-GAAP measures, which it defines as financial information that has not been prepared in accordance with generally accepted accounting principles in the United States, or GAAP. In addition to its GAAP measures, Veeva uses these non-GAAP financial measures internally for budgeting and resource allocation purposes and in analyzing its financial results. For the reasons set forth below, Veeva believes that excluding the following items from its non-GAAP financial measures provides information that is helpful in understanding its operating results, evaluating its future prospects, comparing its financial results across accounting periods, and comparing its financial results to its peers, many of which provide similar non-GAAP financial measures.

  • Stock-based compensation expenses. Veeva excludes stock-based compensation expenses from its non-GAAP measures primarily because they are non-cash expenses that Veeva excludes from its internal management reporting processes. Veeva’s management also finds it useful to exclude these expenses when they assess the appropriate level of various operating expenses and resource allocations when budgeting, planning and forecasting future periods. Moreover, because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use under FASB ASC Topic 718, Veeva believes excluding stock-based compensation expenses allows investors to make meaningful comparisons between our recurring core business operating results and those of other companies.
  • Amortization of purchased intangibles. Veeva incurs amortization expense for purchased intangible assets in connection with acquisitions of certain businesses and technologies. Amortization of intangible assets is a non-cash expense and is inconsistent in amount and frequency because it is significantly affected by the timing, size of acquisitions and the inherent subjective nature of purchase price allocations. Because these costs have already been incurred and cannot be recovered, and are non-cash expenses, Veeva excludes these expenses for its internal management reporting processes. Veeva’s management also finds it useful to exclude these charges when assessing the appropriate level of various operating expenses and resource allocations when budgeting, planning and forecasting future periods. Investors should note that the use of intangible assets contributed to Veeva’s revenues earned during the periods presented and will contribute to Veeva’s future period revenues as well.
  • Deferred compensation associated with the Zinc Ahead business acquisition. The Zinc Ahead share purchase agreement, as revised, called for share purchase consideration to be deferred and paid at a rate of one-third of the deferred consideration amount per year to certain former Zinc Ahead employee shareholders and option holders who remain employed with Veeva on each deferred consideration payment date. In accordance with GAAP, these payments are being accounted for as deferred compensation and the expense is recognized over the requisite service period. Veeva’s management views this deferred compensation expense as an unusual acquisition cost associated with the Zinc Ahead acquisition and finds it useful to exclude it in order to assess the appropriate level of various operating expenses to assist in budgeting, planning and forecasting future periods. Veeva believes excluding this deferred compensation expense from its non-GAAP measures may allow investors to make more meaningful comparisons between its recurring operating results and those of other companies.
  • Income tax effects on the difference between GAAP and non-GAAP costs and expenses. The income tax effects that are excluded from the non-GAAP measures relate to the imputed tax impact on the difference between GAAP and non-GAAP costs and expenses due to stock-based compensation, purchased intangibles, and deferred compensation associated with the Zinc Ahead business acquisition for GAAP and non-GAAP measures.

There are limitations to using non-GAAP financial measures because non-GAAP financial measures are not prepared in accordance with GAAP and may be different from non-GAAP financial measures provided by other companies. The non-GAAP financial measures are limited in value because they exclude certain items that may have a material impact upon our reported financial results. In addition, they are subject to inherent limitations as they reflect the exercise of judgments by Veeva’s management about which items are adjusted to calculate its non-GAAP financial measures. Veeva compensates for these limitations by analyzing current and future results on a GAAP basis as well as a non-GAAP basis and also by providing GAAP measures in its public disclosures.

Beginning with the fiscal quarter ended April 30, 2019, Veeva no longer excludes the effects of capitalization of internal-use software development expenses and the subsequent amortization of the capitalized expenses in its non-GAAP financial measures. Prior periods have been adjusted to reflect this change, and the effect of this change is not material for any period previously presented.

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,

 

2019

 

2018

 

2019

 

2018

Cost of subscription services revenues on a GAAP basis

$

31,480

 

 

$

29,146

 

 

$

61,858

 

 

$

59,059

 

Stock-based compensation expense

(583

)

 

(416

)

 

(968

)

 

(761

)

Amortization of purchased intangibles

(688

)

 

(806

)

 

(1,355

)

 

(1,707

)

Cost of subscription services revenues on a non-GAAP basis

$

30,209

 

 

$

27,924

 

 

$

59,535

 

 

$

56,591

 

 

 

 

 

 

 

 

 

Gross margin on subscription services revenues on a GAAP basis

85.5

%

 

82.8

%

 

85.1

%

 

81.9

%

Stock-based compensation expense

0.3

 

 

0.2

 

 

0.3

 

 

0.2

Amortization of purchased intangibles

0.3

 

 

0.5

 

 

0.3

 

 

0.5

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

86.1

%

 

83.5

%

 

85.7

%

 

82.6

%

 

 

 

 

 

 

 

 

Cost of professional services and other revenues on a GAAP basis

$

38,738

 

 

$

30,080

 

 

$

73,863

 

 

$

60,322

 

Stock-based compensation expense

(4,458

)

 

(2,657

)

 

(7,436

)

 

(4,985

)

Deferred compensation associated with Zinc Ahead acquisition

 

(5

)

 

 

 

(10

)

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

$

34,280

 

 

$

27,418

 

 

$

66,427

 

 

$

55,327

 

 

 

 

 

 

 

 

 

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

21.9

%

 

24.8

%

 

23.2

%

 

24.2

%

Stock-based compensation expense

9.0

 

 

6.6

 

 

7.8

 

6.3

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

30.9

%

 

31.5

%

 

31.0

%

 

30.5

%

 

 

 

 

 

 

 

 

Gross profit on a GAAP basis

$

196,682

 

 

$

150,383

 

 

$

375,931

 

 

$

285,775

 

Stock-based compensation expense

5,041

 

 

3,073

 

 

8,404

 

 

5,746

 

Amortization of purchased intangibles

688

 

 

806

 

 

1,355

 

 

1,707

 

Deferred compensation associated with Zinc Ahead acquisition

 

5

 

 

 

 

10

 

Gross profit on a non-GAAP basis

$

202,411

 

 

$

154,267

 

 

$

385,690

 

 

$

293,238

 

 

 

 

 

 

 

 

 

Gross margin on total revenues on a GAAP basis

73.7

%

 

71.7

%

 

73.5

%

 

70.5

%

Stock-based compensation expense

1.9

 

 

1.5

 

 

1.6

 

1.5

Amortization of purchased intangibles

0.3

 

 

0.4

 

 

0.3

 

0.4

Gross margin on total revenues on a non-GAAP basis

75.9

%

 

73.6

%

 

75.4

%

 

72.4

%

 

 

 

 

 

 

 

 

Research and development expense on a GAAP basis

$

51,146

 

 

$

38,826

 

 

$

96,119

 

 

$

76,023

 

Stock-based compensation expense

(9,509

)

 

(5,795

)

 

(15,833

)

 

(10,462

)

Deferred compensation associated with Zinc Ahead acquisition

 

(109

)

 

 

 

(218

)

Research and development expense on a non-GAAP basis

$

41,637

 

 

$

32,922

 

 

$

80,286

 

 

$

65,343

 

 

 

 

 

 

 

 

 

Sales and marketing expense on a GAAP basis

$

45,821

 

 

$

38,222

 

 

$

85,438

 

 

$

72,607

 

Stock-based compensation expense

(7,177

)

 

(4,830

)

 

(12,325

)

 

(8,918

)

Amortization of purchased intangibles

(825

)

 

(977

)

 

(1,728

)

 

(1,924

)

Deferred compensation associated with Zinc Ahead acquisition

 

 

(15

)

 

 

 

(30

)

Sales and marketing expense on a non-GAAP basis

$

37,819

 

 

$

32,400

 

 

$

71,385

 

 

$

61,735

 

 

 

 

 

 

 

 

 

General and administrative expense on a GAAP basis

$

25,859

 

 

$

20,517

 

 

$

49,349

 

 

$

40,371

 

Stock-based compensation expense

(6,643

)

 

(6,020

)

 

(12,564

)

 

(11,603

)

Deferred compensation associated with Zinc Ahead acquisition

 

 

 

 

 

General and administrative expense on a non-GAAP basis

$

19,216

 

 

$

14,497

 

 

$

36,785

 

 

$

28,768

 

 

 

 

 

 

 

 

 

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,

 

2019

 

2018

 

2019

 

2018

Operating expense on a GAAP basis

$

122,826

 

 

$

97,565

 

 

$

230,906

 

 

$

189,001

 

Stock-based compensation expense

(23,329

)

 

(16,645

)

 

(40,722

)

 

(30,983

)

Amortization of purchased intangibles

(825

)

 

(977

)

 

(1,728

)

 

(1,924

)

Deferred compensation associated with Zinc Ahead acquisition

 

(124

)

 

 

 

(248

)

Operating expense on a non-GAAP basis

$

98,672

 

 

$

79,819

 

 

$

188,456

 

 

$

155,846

 

 

 

 

 

 

 

 

 

Operating income on a GAAP basis

$

73,856

 

 

$

52,818

 

 

$

145,025

 

 

$

96,774

 

Stock-based compensation expense

28,370

 

 

19,718

 

 

49,126

 

 

36,729

 

Amortization of purchased intangibles

1,513

 

 

1,783

 

 

3,083

 

 

3,631

 

Deferred compensation associated with Zinc Ahead acquisition

 

 

129

 

 

 

 

258

 

Operating income on a non-GAAP basis

$

103,739

 

 

$

74,448

 

 

$

197,234

 

 

$

137,392

 

 

 

 

 

 

 

 

 

Operating margin on a GAAP basis

27.6

%

 

25.2

%

 

28.4

%

 

23.9

%

Stock-based compensation expense

10.6

 

9.4

 

9.6

 

9.0

Amortization of purchased intangibles

0.6

 

0.8

 

0.6

 

 

0.9

Deferred compensation associated with Zinc Ahead acquisition

 

0.1

 

 

 

0.1

Operating margin on a non-GAAP basis

38.8

%

 

35.5

%

 

38.6

%

 

33.9

%

 

 

 

 

 

 

 

 

Net income on a GAAP basis

$

79,242

 

 

$

50,286

 

 

$

152,691

 

 

$

94,596

 

Stock-based compensation expense

28,370

 

 

19,718

 

 

49,126

 

 

36,729

 

Amortization of purchased intangibles

1,513

 

 

1,783

 

 

3,083

 

 

3,631

 

Deferred compensation associated with Zinc Ahead acquisition

 

 

129

 

 

 

 

258

 

Income tax effect on non-GAAP adjustments(1)

(21,379

)

 

(10,462

)

 

(38,426

)

 

(22,344

)

Net income on a non-GAAP basis

$

87,746

 

 

$

61,454

 

 

$

166,474

 

 

$

112,870

 

 

 

 

 

 

 

 

 

Diluted net income per share on a GAAP basis

$

0.50

 

 

$

0.32

 

 

$

0.96

 

 

$

0.61

 

Stock-based compensation expense

0.17

 

 

0.13

 

 

0.31

 

 

0.24

 

Amortization of purchased intangibles

0.01

 

 

0.01

 

 

0.02

 

 

0.02

 

Deferred compensation associated with Zinc Ahead acquisition

 

 

 

 

 

 

 

Income tax effect on non-GAAP adjustments(1)

(0.13

)

 

(0.07

)

 

(0.24

)

 

(0.14

)

Diluted net income per share on a non-GAAP basis

$

0.55

 

 

$

0.39

 

 

$

1.05

 

 

$

0.73

 

________________________

(1)

 

For the three and six months ended July 31, 2019 and 2018, management used an estimated annual effective non-GAAP tax rate of 21.0%.