Ladies and Gentlemen, thank you for standing by and welcome to Veeva's fiscal 2020 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. I would now like to hand the conference call over to Rick Lund, Head of Investor Relations. Thank you, please go ahead.

Good afternoon. And welcome to Veeva's fiscal 2020 third quarter earnings call for the quarter ended October 31, 2019. With me on today's call are Peter Gassner, our Chief Executive Officer; Paul Shawah, SVP of Commercial Cloud; and Tim Cabral, 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. 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 website at veeva.com under the Investors section and on the SEC's website at www.sec.gov. Forward-looking statements made during the call are being made as of today, November 26, 2019. 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 will not provide any further guidance or updates on our performance during the quarter unless we do so in a public forum. 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, which is available on our website and as an exhibit to the Form 8-K filed with the SEC just before this call. As you may have also seen in our earnings press release, we intend to begin using our website as a channel of public disclosure consistent with Regulation FD. Going forward please monitor our Investor Relations website, in addition to following our press releases, SEC filings and public conference calls and webcasts. Finally I'd like to remind everyone that we recently closed two acquisitions. Both of those transactions closed at the beginning of the fourth quarter and therefore did not impact our third quarter results. However the forward-looking guidance that we provide today will include financial results for these acquired companies. Details for how we expect those acquisitions to impact the fourth quarter of this year can be found in today's earnings press release. With that, thank you for joining us and I will turn it over to Peter.

Good afternoon and thanks to everyone for joining us today. Q3 was another strong quarter. Results came in ahead of our guidance, thanks to great execution by our teams across all areas of the business. Total revenue was $281 million, up 25% year-over-year. Subscription revenue grew 27% and our non-GAAP operating margin was 40%. I'll share a few highlights starting with Commercial Cloud. It was a very exciting quarter for our commercial business. We entered new areas with the acquisitions of Crossix and Physicians World. We continued our momentum with new customers and delivered success with existing customers. We furthered our leadership in core CRM winning a number of new enterprise and SMB customers. For example, a top 50 pharma selected us as their standard in Europe to replace IQVIA based upon their experience with IQVIA and their success with Veeva CRM in the U.S. market. Not only are we continuing to add more CRM customers, we consistently deliver on our commitment to their success. 14 small and mid-sized CRM customers went live in Q3 across the U.S. and Europe. In SMB, Veeva CRM implementations typically take just four to six weeks. These projects are faster and more reliable because of the quality of our software and our services. It was another great quarter for the rest of commercial cloud as well. We saw particular strength in events management and OpenData. Customers are continuing to make the switch to OpenData and I'm also pleased to see large customers expanding their use of OpenData across markets. For example, a top 50 pharma selected Veeva OpenData for the U.S. operations and two other top 50 pharmas are each in the process of rolling out OpenData to 30 countries. We focus on customer success, openness, and operating as a true partner to the industry. In contrast, IQVIA uses anti-competitive tactics and its monopoly power and data to restrict customer choice. This harms the industry and ultimately harms patients. In the past quarter, we have seen IQVIA’s anti-competitive tactics become more extreme, especially as it relates to their one key data offering. I'm pleased to report that customers are starting to stand up to IQVIA on these issues and many are considering moving to OpenData. We're also extending commercial cloud with two significant acquisitions. The Crossix acquisition closed at the beginning of this month and things are off to a strong start. The team has a great cultural fit with exceptional leadership. Crossix brings depth in patient data and data science to Veeva. The operational integration is going well and we're starting to refine and execute our plans for new products and tight integration between Crossix, Veeva CRM, and OpenData. Our customers are excited about the potential. I look forward to the impact that this can have on the industry over the long-term. This month, we also acquired Physicians World, a leading provider of speaker bureau services for the U.S. market, which complements our events management software offerings. Events is an area where speaker services and events software go hand-in-hand because of the complexity of logistics and compliance when organizing a physician-led educational event. Physicians World has been a strategic partner for many years. We have a long track record of success together. Now we’ve joined forces to make it easy for our customers to get industry-leading cloud software and services from a single vendor. I'm really happy to welcome the Physicians World team to Veeva. These acquisitions made for a very busy quarter. I want to thank our corporate development, finance, legal, IT, HR, and product teams for putting in the extra hours to make this happen with speed and quality. Shifting gears to Veeva Vault. One of the major highlights of the quarter and our year was Veeva R&D summit, which had record attendance growing more than 40% to over 2,000 people. There's real transformation underway supported by Veeva Development Cloud. For the first time the industry has a suite of applications that span the full drug development lifecycle all in a single cloud platform. It was great to see so many customers showcase their successes and to work with them as they look towards the future. Vault had another excellent quarter across enterprise and SMB. I'll touch on just a few highlights in quality and clinical. A top 20 pharma in Europe selected QualityDocs as their enterprise standard to manage quality documentation. Their long-standing commercial customer and QualityDocs is their first Veeva R&D application. They struggled with a host of legacy applications in R&D and QualityDocs is now the first step in their digital transformation. We see a similar dynamic in clinical, where companies are turning to Veeva Vault as they modernize and unify their system landscapes. For instance, a top 20 pharma customer also in Europe selected Veeva Vault steady startup enterprise wide in Q3. We now have six top 20 pharma standardize on steady startup to streamline trial execution. In CDMS we have been awarded our first large-scale Phase 3 trial with an existing top 20 pharma customer. This is a very large study. It will cover more than 12,000 patients across roughly 700 sites in 32 countries. Congratulations to the CDMS team. Getting such a large study is a testament to the innovation that the team is bringing to market and to their hard work making early customers successful. It's a great milestone and speaks to the maturity of our products and services. CDMS is advancing faster than we initially expected, thanks to great partnerships with our early customers. I expect to be out of early adopter mode by the end of next year and continue our measured expansion and product innovation from there. I will also share a few updates on Vault outside of life sciences. Overall I'm pleased with the team's progress to ensure customer success and product excellence. They've got their focus and are executing well against the opportunity in quality and regulatory for the chemicals, cosmetics, and CBD markets. To put things in perspective that market, our initial market outside of life sciences is roughly the same size as our CDMS market. In October, we held our second annual customer event for CPG, Chemicals, and Cosmetics hosting more than 50 companies in Chicago. Also in the quarter the team progressed well in our newer areas. We signed our fourth early adopter another CPG company for the new Veeva Claims application. And we had a major milestone and regulatory with our first CPG customer go live. We are now in active discussions with seven of the top 20 CPG companies. We're still in early adopter mode in this market and will be for another year or more. But this level of activity especially with large enterprises tells us that we're on the right track for long-term success. In all we had a great quarter and are progressing well against our long-term goals. Our focus on innovation and customer success and our ability to execute across multiple large markets positions us well to be the strategic technology partner to life sciences and to reach our $3 billion revenue run rate target in 2025. And now, I will turn it over to Tim for a discussion of our financial performance.

Thanks, Peter. Q3 was another quarter of strong financial results. Total revenue was $281 million, up from $225 million one year ago, a 25% increase. We continue to see strength in both Vault and Commercial Cloud. For Q3 of this year Vault represented 52% of total revenue, up from 48% in Q3 of last year. Subscription revenue grew 27% to $227 million from $178 million last year. Vault contributed 49% of subscription revenue, up from 44% a year ago, indicative of both expansion of Vault usage within our existing customers and new customer additions. Note that the recognition of unbilled revenue from multiyear orders with ramping fees was a 110 basis point tailwind to year-over-year growth in the quarter. Services revenue was $54 million, up 16% from $47 million one year ago. As a reminder, Q4 has fewer billable days due to the holidays in our field kickoff, which will impact our services revenue and services gross margin. Our non-GAAP operating income was roughly $112 million, a 40% operating margin exceeding the high end of our guidance. Top-line strength mostly drove this outperformance. We achieved another record hiring quarter with 185 net new employees joining Veeva in Q3, bringing our total headcount to 3,012, up from 2,482 one year ago. Moving to the balance sheet, deferred revenue was $251 million, compared to $329 million at the end of Q2. This resulted in calculated billings of $193 million in the quarter, which was ahead of our guidance of $185 million. This outperformance was driven by a strong bookings quarter and better-than-expected services revenue. Please remember that there are numerous factors that make year-over-year comparisons of this metric highly variable on a quarterly basis. Therefore, we do not believe it is a good indicator of the underlying momentum of our business and we do not manage to it internally. Our subscription revenue guidance and calculated billings guidance for the full fiscal year are the best indicators of our momentum. Looking ahead, we expect calculated billings between $500 million to $505 million in Q4, and roughly $1,175 million for the full year. Elsewhere on the balance sheet, we exited Q3 with over $1.5 billion in cash and short-term investments, up from over $1.4 billion at the end of Q2. This increase was driven by our performance in cash from operations, which came in at about $62 million and included $9 million in excess tax benefit related to equity compensation. For the full year, we now expect cash from operations to be roughly $360 million, excluding this excess tax benefit. Please know this full-year number includes one quarter of estimated impact from Crossix and Physicians World, which tend to have net cash outflows in Q4. Before going into our guidance, I'd like to provide some details around our recent acquisitions of Physicians World and Crossix. We acquired Physicians World for approximately $40 million in cash, and granted retention equity awards valued at $15 million. Physicians World has a revenue run rate in the low $20 million and is growing in the single digits with operating margins in the mid-single digits. Nearly all of Physicians World revenue will be reported under professional services. In addition to the previously disclosed details of the Crossix acquisition, please note that almost all of Crossix revenue will be reported under subscription revenue with the remainder over the next two to three quarters. Lastly, these acquisitions have reduced our cash balance by about $470 million, which will be reflected in our Q4 balance sheet. We're very excited to have both of these teams join Veeva and plan to invest in both businesses going forward. Both deals closed at the beginning of Q4, and our forward-looking guidance incorporates the impact of both acquisitions. In today's press release, we give detailed information about our expectations for how these acquisitions will impact our financial results for the fourth quarter. But please know that we won't be breaking this out separately next year and beyond, as we will be deeply integrating these new solutions into our Commercial Cloud business. Now, I'd like to share our guidance for Q4 and fiscal 2020. In Q4, we expect revenue between $296 million and $299 million and non-GAAP operating income of $100 million to $101 million. We expect the acquisitions to have a headwind of roughly 400 basis points to non-GAAP operating margin in Q4. Non-GAAP net income per share is expected to be $0.51 to $0.52, based on a fully diluted share count of approximately 159 million. For the year, we expect total revenue in the range of $1,088 million to $1,091 million. We anticipate subscription revenue to be in the range of $888 million to $889 million. For the full year, we now anticipate organic Commercial Cloud subscription revenue growth of about 14% and Vault subscription revenue growth of about 43%. For fiscal 2020, we expect non-GAAP operating income of $409 million to $410 million, a margin of roughly 37%. We expect the acquisitions to have a headwind of roughly 120 basis points to non-GAAP operating margin for the full year. We are now targeting non-GAAP net income per share for the year between $2.16 and $2.17, based on a fully diluted share count of approximately 158 million. Let me wrap up by sharing our initial outlook for fiscal 2021. Please note we are still in the process of finalizing the plan and will provide our formal guidance on the Q4 earnings call. Currently, our initial outlook for total revenue is between the range of $1,380 million and $1,390 million for fiscal 2021. Within this guide, we expect subscription revenue to be in the range of $1,140 million to $1,145 million. Based on our early spending plans, we see non-GAAP operating margins of 35% to 36% for the full year, with the impact of Crossix and Physicians World, resulting in roughly 250 basis points of headwind. In summary, it was another great quarter. The team's outstanding and consistent performance has set us on track to reach our target of $3 billion in total revenue by calendar 2025. As always, thank you for joining the call. And I will now turn it back to the operator for questions.

Our first question comes from Sterling Auty with JP Morgan. Your line is open.

Yes, thanks. Hi, guys. You mentioned IQVIA in the prepared remarks. We've gotten a number of questions regarding the competitive displacements in the CRM side. Could you just maybe go into a little bit more detail into those situations and just how you're seeing that competition shaping up?

Yes, hey, Sterling. Hi, this is Paul, thanks for the question. I'll address that. They announced, I believe their number was 70 wins historically and mentioned two small divisions of large enterprise customers. These situations will occur based on IQVIA's aggressive discounting and pricing strategies, along with account-specific factors. I don't perceive this as a trend. In fact, Veeva is gaining market share, and I'm very pleased with the progress we've made in our core CRM. Over the past few quarters, particularly this quarter, we've grown market share largely due to our success in the small and medium-sized business segment. Pre-commercial customers are selecting Veeva, as they trust us as a vendor and partner for their launch, while existing customers are expanding their engagement with us. I'm really satisfied with our progress, and our strategy remains consistent. We are still focusing on customer success, product innovation, and long-term execution, which I believe is what our customers are looking for.

That's great. One follow up just along those lines, for the investors that are newer to the story, can you help them understand this idea of the one key data, they look at and say, wow, they've got this data that seems to be almost must have by the customers and they bundle it into the CRM. Is there a risk that you could lose market share before anything happens in the course or something else in the marketplace?

The anti-competitive behavior we've observed from IQVIA has mainly targeted three of our products: Network, Nitro, and more recently, Andi. However, we haven't noticed any effects on our core CRM. Therefore, I believe it is improbable that this will influence our core CRM business or hinder share growth in the future.

Great, thank you.

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

Great. Thanks for taking my question guys. Maybe the first one for Tim, when we're looking at that fiscal 2021 revenue outlook, I know the expectation is you guys aren’t going to really talk about the M&A too much there, but could you maybe help us unpack how much of that contribution is M&A specific versus what's organic?

Yes, Ken, as I mentioned in my prepared comments, we are fully integrating these two solutions into our Commercial Cloud business. Therefore, we do not plan to separately highlight the inorganic aspect going forward. We aimed to provide clarity this year to set expectations regarding the contributions of those businesses, especially when considering purchase accounting for the remainder of the year, but we do not intend to continue this practice as we are integrating these businesses into the overall Commercial Cloud offering.

Got it. Regarding the 250 basis point headwind to operating margins, can you provide any insight on how that may diminish after next year? I understand you can't guide for the following year, but should we anticipate that investments will continue to impact the business or is it more of a one-year effect?

Yes, so, I think, there were two components to that, Ken, as you think about next year, one is as you said, and you heard Peter and I talk about these are businesses or solutions that we’ll continue to invest in. I don't think that's a one-year phenomenon; I think that is probably over time. And the other piece of it is obviously some of the purchase accounting spills into next year, which also impacts the operating margin, impact that they have. So I think that obviously goes away after the first half of next year. But I think that these are businesses that we're bullish about and we think with investment we have an opportunity for customer success and long-term growth opportunities.

Got it. Peter, you mentioned that CDMS is advancing faster than expected and will move out of the early adopter phase next year. How should we interpret this in terms of customer adoption? Is this usually when we might see the slow adopters and fast followers dynamic begin to emerge, or should I understand that differently?

I don't expect a rush, as customers tend to adopt these things on their own timeline, and we won't significantly influence that. They will likely start small with a system like this. Therefore, I anticipate steady progress, with revenue becoming more significant in the coming years. Looking at the bigger picture, the key takeaway is that Veeva is managing the most complex and largest trials, indicating that our product has arrived and that is promising for our future.

Got it, great. Thanks, guys.

Your next question is from Bhavan Suri with William Blair. Your line is open.

Thanks for taking my questions guys and nice job there. I wanted to follow-up on Sterling's question a little bit on the competitive front. You touched, obviously, on the commercial side I'd love to see if you're seeing any more competitive changes on the clinical side. And then as you look at sort of the CDMS or specific EDC part of the clinical side any change in competitive environment given that obviously the big player there was acquired by yourself.

I'll take that one in terms of the CDMS of the clinical side, now we're seeing no change in the competitive environment as we are really focused on our own execution with our early adopters polishing out that product and the service offering and getting ready for that to become a very big business on the CDMS. On the broader R&D side Development Cloud also no changes in the competitive environment there. Development Cloud is really accelerating when you think about 2,000 people at R&D customer summit, that's one of the biggest events of the year in life sciences. So really there the momentum is increasing, I think customers are planning for Veeva over the long-term. On the Development Cloud these are very crucial systems, very sticky integrated systems. So customers are thinking 20 years down the road literally on these types of things.

Peter, that's helpful. I guess, I wanted to follow up a little bit on that. So if we pick the first part of that. I think the first real Vault product if we go back to traditional nomenclature was eTMF. And given so that's been in the market longest a little color on sort of growth rates and penetration of that business, given it's the most tenured from that space will be really helpful. Obviously CTMS balls kind of ties into the eTMF space, but letters and how eTMF has been doing. You touch on rim and other pieces but love to understand how that core first product is doing in terms of penetration and growth? Thank you.

Yes, it’s still experiencing significant growth. While I won't specify the exact penetration rates, we are seeing strong growth measured by bookings in eTMF this year. You might wonder why that is; it's because it's a large industry with many players. Our early adopters are transitioning into the late majority phase. According to the classic Crossing the Chasm model, there are still many customers who have not yet adopted our eTMF. Additionally, the life sciences industry as a whole is expanding, particularly with the shift towards precision medicine, which has increased the number of biotech companies significantly since Veeva's inception in 2007. Thus, the market for eTMF has likely grown considerably since we launched it in 2012, and it continues to grow.

Thank you guys. Appreciate the time.

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

Good afternoon and thank you for taking my question. I wanted to revisit the CDMS, which was a significant success for the Phase 3 drug trial. This achievement stood out to us because we hadn't seen a lot of major successes with Phase 2 trials, and now we have this substantial Phase 3 coming from a top 20 pharmaceutical company. Could you walk us through how this came about and are there similar engagements in the pipeline? I'm not specifically asking about Q4 or anything like that, but looking ahead, is the product developed enough to effectively manage these large Phase 3 trials? I also have a quick follow-up for Tim.

Yes, this large trial is with one of our top 20 pharmaceutical customers who has signed a long-term enterprise license agreement with us. They were the first in this group to do so. Initially, they will conduct smaller, less risky clinical trials, which could include smaller Phase 3, Phase 2, and Phase 1 trials. During this phase, they are testing our new product and making adjustments to their processes. Now that they have become familiar with their processes in relation to Veeva and our product has matured, they are ready to take on this significant trial. This situation is unique, as we currently do not have any other customers doing the same. However, we are in discussions with several potential customers that could lead to similar long-term agreements. The level of activity is quite high, though we cannot yet predict when it will translate into bookings or sales.

Okay, perfect. And a quick follow up for Tim. On billings, as we think about the Q3 and Q4, anything to call out from a onetime standpoint, either in Q3 maybe affects or anything like that? And just how we should think about Q4 billings if there's anything to be mindful of other than the $30 million have calculated the benefit to Q4 billings from acquisitions?

Yes, Stan, there is no foreign exchange impact. There was no impact from foreign exchange in Q3, and for Q4 and Q3, there are no one-time effects. I believe you are suggesting that there might be a change in someone's renewal date that could affect the dynamic of annual or quarterly billings. However, we did not observe any such changes in Q3, nor are we projecting any for Q4.

Perfect, thank you so much.

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

Hi, thanks for taking the question. So wanted to follow-up on Sterling's first question on the CRM side of things, but it sounds like you're continuing to gain share there. I'm curious where we are in terms of market share? Where do you think that number could get to? And just maybe an update on the penetration rates of some of the add-on products?

Yes, hey Brian, this is Paul. We’re above 80% and still growing. A quarter or two ago, we mentioned reaching that over 80% mark, and we believe there's a clear path to reaching 90%. Beyond that, it becomes a bit more challenging to forecast. Our market share continues to rise, which is connected to our capability in the marketplace. Customers are increasingly looking for a partner who can ensure their success. Therefore, our focus will be on customer success and innovation. I think achieving 90% seems quite attainable, but predicting beyond that could be more difficult.

And any perspective on the attach rates of similar other products like Approved Email and some of the add-ons that you've had?

Approved Email continues to perform very well, exceeding 60%. This success is largely due to Veeva's efforts in advancing digital solutions, allowing field teams to engage with customers through digital channels. We have effectively transitioned the industry in this direction, and our clients have achieved significant success as a result. Additionally, some of the other add-on products are also performing well, with event-related offerings surpassing 20%. Other add-ons, such as Align, are achieving closer to 10% in account penetration, indicating there is still considerable potential for growth in these areas.

Great. And maybe just one more follow-up on, obviously, we've seen two acquisitions in pretty short order here, curious appetite for additional M&A with the cash on the balance sheet? Thanks guys.

In terms of other M&A, we are always looking, right? You look a lot, you don't purchase very many, but you look a lot and we happen to find two that really fit for us. So we'll always keep doing that. What fits for us is I can just explain that a little bit. It's when we find a cultural fit and a synergistic fit with the business and we have the right leader to run that business. And when we can find where one plus one equals three. So we're always looking and sometimes we'll find those where we can add value for the customers. We can create new value and then we'll execute on that, but it's generally rare. You look a lot and you find a little.

Thank you.

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

Hey, guys. Thanks so much for taking my questions. First just wanted to maybe start off with a comment Peter you made in the prepared remarks on IQVIA and how you're seeing customers pushing back against their behavior and adopting OpenData. Is that something that if this trend kind of continues it can start to serve as a tailwind for adoption of products like Nitro that in the past have been hurt by the lack of access to data? And then I've got a follow-up.

Yes, if we look at the set the stage for the overall concept here with IQVIA. IQVIA has some near monopoly positions in two types of data. They have the sales data area and then they have the reference data, that's the open data. And they're preventing that data from going into some of the Veeva software products. And that's harming the uptake of those software products particularly that's network, that's Nitro and that's Andi. As it relates to OneKey, there is competition there now we have OpenData. So some customers are moving to OpenData. Unfortunately in the case of Andi and Nitro, they would need the sales data and the reference data. So I don't see good progress for Nitro and Andi until we can resolve this issue completely with IQVIA, which will have to probably be resolved by the court. Where we are seeing progress for Nitro, particularly, is in companies that use alternative data sources not in some markets, some certain types of countries, not all companies will need IQVIA data for example in Japan there's another data provider there called Encise. It's making great progress in Japan, particularly, with Japanese domestic. So that's kind of the lay of the land there. The extreme behavior by IQVIA on OneKey is actually helping our open data business a bit. That's not going to be the magic that will unlock network or Andi or Nitro; we’ll need a more fulsome solution for that.

I appreciate the information. I'd like to know if there are any updates on the Engage business, specifically if there are areas where you're noticing significant growth. Additionally, how should we view the future potential of Engage, especially considering our discussions around Commercial Cloud today? Thank you.

Yes, hi, this is Paul, and Engage is doing well. Again, as the industry is trying to become more digital, this opens up a channel for field reps to interact with customers remotely via live meeting. So it's really a way that's increasing access for customers so customers that may be difficult to see face-to-face or that want to interact with a pharmaceutical company online at their own convenience are using Engage and it's starting to catch on there. But it's a significant change management, remember this is an industry who’s called face-to-face on customers, on doctors who were a long time for putting much effort. And this is a change management from a rep perspective, but also from a doctor perspective. So the early what we're seeing with our early customers is they're getting great results. They're getting a lot of time with customers. Sales calls that may last between 15 and 20 minutes and they are also getting access to doctors that they may not have gotten access to face-to-face. So really significant benefit, but it will take time because of a change management. So I think as companies learned more over time I think you'll start to see this market play out over the next couple of years where it becomes more standard, a standard way of doing business. I think it's still in the early stages, but the results are proving out to play out well.

Great, that's helpful. Thank you so much, guys.

Your next question is from Scott Berg with Needham. Your line is open.

Hi, everyone. Thanks for taking my questions. I got one and a follow-up I don't know who wants to take the first one, but it’s Crossix acquisition. Spend a lot of time at Dreamforce last week at your booth trying to understand what the product is and came away with a good understanding, but could you help us understand maybe how you take some of that marketing data and actually integrate it with the rest of your commercial cloud and maybe have a mutual benefit to sell all the solutions more holistically.

Crossix specializes in data science and understands patient behavior, supported by extensive data on hundreds of millions of patients and doctors in the U.S. They utilize hundreds of terabytes of data and sophisticated algorithms to evaluate the effectiveness of digital marketing. We are currently refining our plans for the future, which include CRM, open data, and Crossix. We aim to enhance existing Crossix products and develop new ones. While we are not ready to disclose specific plans yet, we will inform you when we are. Overall, this is an exciting opportunity as Veeva steps into the data science arena. The company we acquired has 15 years of expertise in this field and has been a leader in data science even before the term became widely used. I am truly excited about how this acquisition will transform Veeva.

Great, helpful. And then from a follow-up perspective, Tim, you had a big jump in unbilled receivables in the quarter. I think we all understand in a 606 world what causes that generically, but was there a certain type of contract or a certain set of products that made that jumps so materially from one quarter to the next, just trying to maybe help understand that dynamic as it was a little bit unusual from your recent trends.

Yes, Scott, one thing to note is when you look at the unbilled receivables number that you'll see in our balance sheet that is a combination of subscription and services. And we'll typically see that in Q3 because October becomes a pretty big utilization month for whatever reason for us. So that was helped by services quite a bit. There wasn't any specific new types of subscription deals that we closed in the quarter that would have impacted that, Scott. So I think it's similar to what we've talked about in the past, in terms of these multiyear ramping fee deals that do not have the ability for renewal on an annual basis. So I think it's the same type of deal. But at the end of Q3, you'll see a little bit of a pop from services unbilled revenue there.

Very helpful. Thanks again.

Your next question is from David Hynes with Canaccord. Your line is open.

Hey, thanks for taking my questions. I want to ask about Physicians World. So maybe for Paul, a bit of a break from the norm acquiring a largely services business. So, I guess, the question is, do you see a big opportunity to sell events management software into their base? Was that part of the rationale for the deal? And then just standalone is there a significant opportunity for margin optimization in that business?

Yes, David, thank you. The reasoning behind this acquisition was primarily to merge excellent software with exceptional services. Physicians World mainly focuses on providing logistics services for their clients. When a life sciences company organizes an event, they need a thought leader to speak to various customers. This usually involves arranging hotel accommodations, compensating speakers, and managing various logistical tasks associated with the event. Physicians World excels in this area, catering to important thought leaders that are crucial to life sciences companies, thereby needing to deliver a high level of service. The opportunity for Veeva is to offer both software and services together, as our clients have expressed a desire for a single vendor to ensure a seamless and fully integrated experience, with the option of having one company provide a comprehensive solution. That was the basis for acquiring Physicians World. I'll let Tim elaborate on the margin optimization aspect of this acquisition.

Yes, to Paul's point, it's crucial that we maintain high quality and exceptional service. I wouldn’t say there’s no potential for margin improvement, particularly as the business expands. The integration of our events software and services is an opportunity for optimizing margins, both in terms of standard margins and through achieving some economies of scale.

Yeah. Okay, makes sense. And then, Peter, so you've taken a pretty prudent approach to scaling efforts outside of life sciences. And I know, this is the playbook you ran early days in kind of core life sciences markets. So I'm wondering, what is it that you're looking for in kind of your cornerstone OLS clients that could serve as a signal that the time's right to step on the gas in terms of incremental investment there?

What we are focusing on is whether we have a product that fits the market, if we have the capacity, and if we can handle more customers without encountering issues. In the core market we are currently pursuing, we are nearing our goals. We are engaged in numerous discussions within the quality and regulatory product sectors in CPG, chemicals, and cosmetics. We are making significant progress and will continue to stay in this market for a considerable amount of time since it is large and comparable to our CDMS. We will be very cautious about entering another market outside of life sciences. Veeva is characterized by its intense focus on the specific needs of both the product and the industry. We collaborate with early adopters to understand precisely who our target customers are and ensure we have the right product, which takes time.

Got it. Very good. Thanks, guys.

Your next question is from James Rutherford with Stephens Inc. Your line is open.

Hey, thanks. Good afternoon. Got a couple questions on commercial, if I may. Paul, you talked about winning back that top 50 European pharma from IQVIA. Just curious given how they oftentimes discount these deals pretty heavily, and they try to lock in customers for in some cases three to five years. I'm just curious what the situation was here and whether this customer was one that went live and wasn't pleased, or was it a failed implementation that brought this customer back into the fold, any color you can provide there.

Thank you, James. To clarify, this was a top 50 company that has been a long-time customer of Veeva CRM in the U.S. and has found considerable success with it. They also had legacy IQVIA in Europe, which meant they were operating under different systems regionally for a long time, a situation that is common for larger companies. They aimed to centralize and harmonize their operations globally. With a wealth of experience with both Veeva and IQVIA, they needed to select a trusted partner capable of executing a global program. Given their previous experience and our track record of success with them in innovation, they ultimately chose Veeva. I wanted to ensure you understood the context—they have significant familiarity with both Veeva and IQVIA.

Perfect. I appreciate that clarification. And a follow-up on commercial, a much longer term question. It seems like there has been a trend that physicians are having fewer and fewer in-person interactions with sales reps. But the reporting that I've seen has said that newer digital engagement formats like email or virtual meeting may not necessarily be filling that gap entirely, with the implication being that physicians are perhaps pulling the information they need directly from the pharmas or something like that. So I'm just curious given that you all see more data on these interactions than anybody else in the market, is that a fair description? And more generally, what do you think the long-term role is for the pharmaceutical sales rep in this industry?

It's a good question. I would say that in-person interactions are not really decreasing over time. The number of sales representatives globally in the industry has actually increased a bit over time, although there are variations by country, with some seeing decreases and others increases depending on portfolio changes or new drug launches. Overall, the number of reps has remained relatively constant. As the market introduces more specialized drugs that are more scientific in nature, the human element and relationships become crucial for getting those drugs to the right customers and locations. I don't see any evidence that these interactions are diminishing; rather, the data suggests they are stable. At the same time, digital engagement is increasing. Our usage of approved email and newer tools like Engage is on the rise over time. The industry is adopting digital strategies while maintaining similar levels of face-to-face interaction. Moving forward, especially as the industry becomes more scientific and leans towards precision medicine, I believe this balance will continue for a long time.

Got it. Very helpful. Thank you.

Your next question comes from Sandy Draper with SunTrust. Your line is open.

Hi, this is Stan Bernstein on for Sandy, thanks for taking my questions. A lot of my questions have been asked, but maybe to put a finer point on it. You mentioned IQVIA became more anti-competitive this quarter. Can you maybe elaborate on what exactly was escalated this quarter versus the past? And then, maybe as a follow up to what extent does Crossix have the capabilities to provide a data alternative to IQVIA? And Peter, maybe you already touched on that, but is there any potential to provide some kind of a data offset or data alternative to IQVIA? Thanks.

Yes, regarding IQVIA, it's largely the same situation as before, but there seems to be more rhetoric coming from their field team. This is reflected in some of our Vault products where customers attempted to integrate OneKey data but were told by IQVIA that it couldn't be included in the Vault product. In reality, OneKey data isn't crucial for the Vault products. Consequently, customers decided to proceed anyway, and in one instance, this led them to utilize OpenData. This is indicative of actions they haven't taken before, suggesting they might be feeling a bit desperate, which is causing some backlash from customers. As for Crossix, while they possess a lot of healthcare data and assets, they currently don't have all the necessary components for any sales data integration. However, exploring this in the future isn't out of the question, even though we lack specific plans at the moment. It remains a possibility.

Got it, thank you.

Your next question comes from Chris Merwin with Goldman Sachs. Your line is open.

Okay, thanks for taking my question. For Quality One you called out I think a CPG customer going live with the regulatory product and I know you mentioned multiple customers taking claims already as well. Can you maybe help us think about the magnitude of some of these deals or maybe how we should be thinking about milestones in general for Quality One as you continue to build up referenceable customers there?

The things I think about when we have activity in the top 20s that really can move the needle for us; not the initial activity, but over the long-term and as we look to have customers of $10 million a year or more revenue $8 million. So those would be milestones that we would look at. And that just takes time to build up and to do that you need to have multiple successful products into these large enterprises. And it all starts with a product somewhere in a division and even before that it starts with discussions building relationships and the customers really understanding their business. That's what I'm excited about over the last quarter or two, the depth of relationships we're building and the inquiries we're having and the discussions we're having.

Okay, great. And maybe just coming back to Crossix for a minute, it sounds like there's quite a bit of work being done not only in their products, but perhaps some new products as well. I know it's early, but is it fair to say that in the context of next year's guidance it doesn't really include any benefit of those new products or cross-sell with your existing sales force.

New products take time to develop and gain traction. Even products introduced three years ago, like safety and CDMS, are still in their infancy and not significantly impacting our financials at this stage. It typically takes three to five years for these products to become material. Looking forward, our investments reflect this, particularly in three key areas where we're committing considerable resources. First, our safety product is generating significant customer engagement, and we're expanding our product and field teams. Second, we're enhancing CDMS as that business begins to grow, which also requires further investment in product and field team development. Lastly, we're focused on advancing our new product roadmap in the Crossix area. These investments position us well for a bright future through 2025 and beyond.

Okay, thanks.

Your next question is from Tom Roderick with Stifel. Your line is open.

Hi everyone. Thank you for taking my questions. First, I want to revisit the topic that Stan raised earlier regarding the CDMS win, which I believe is significant as it involves landing a Phase 3 trial. Can you elaborate on what is necessary for that product beyond just scaling up to accommodate 12,000 patients? What additional features were necessary for you to achieve this win? I assume it was a lengthy competitive process, so I would appreciate your insights on that. Lastly, during the Analysts Day, you mentioned the clinical query language. I understand it’s still early, and customers likely haven’t seen much of it yet, but what has been their feedback regarding the concept of a new and potentially more flexible query language? Thank you.

Yes, regarding the CDMS and large trials, we had a lot to prepare not just for the product itself but also around it. For instance, we mentioned having 700 sites globally, across more than 30 countries, which required us to enhance our support infrastructure and ensure it was well-equipped to assist clinical investigators in places like Japan and Russia. This is just one example of what we needed to have in place. We needed to ensure our performance was adequate, with the right architecture and sample test environments prepared to manage the scale and complexity of data involved. Additionally, we had to consider how to administer all these clinical investigators worldwide, addressing the details that come with experience. Software development can be akin to personal growth; it often comes with challenges before reaching maturity. So, we are focusing on the software's maturity and the processes surrounding it, including the expansion of our professional services team and partner network. No one has conducted a study of this magnitude using Veeva CDMS before, and our approach differs significantly. The technology is more agile, requiring distinct operational roles to be established within pharmaceutical companies, and we need to work through those within the system. Regarding the CQL, there are not many individuals in the industry who fully grasp its potential. It's primarily the early adopters who are forward-thinking, and we must remember that the workbench is not yet accessible to any customers. We aim for it to be available to the first early adopters early next year, so we have yet to see the impact of CQL or the data workbench. Currently, the excitement focuses on our significantly improved clinical data management system.

Outstanding. Okay, that's great. Thank you, Peter. Tim, simple one for you, maybe we have to wait on this, I didn't hear if you gave the RPO number. Is that something we just need to wait for the Q on or do you have that handy that you can share that with us?

I don't have it right in front of me at the moment, Tom. We’ll definitely have it in the Q. Rick and I can wait for the Q.

I’ll wait for the Q. Perfect, that's it for me. Thank you guys, appreciate it.

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

Thank you. I wanted to inquire about the seven out of ten CPG firms that you mentioned; it seems like a significant advancement in the pipeline, especially in discussions outside of life sciences. Considering where those customers currently stand and their use of Quality One compared to earlier successes, how are you observing the use cases develop outside of life sciences, particularly in the CPG sector?

We are currently having productive conversations with seven of the top twenty consumer packaged goods companies. A key observation is the significant overlap between the quality and regulatory sectors, which appears to be a recurring theme. During discussions with these clients, we notice considerable concern and interest in environmental stewardship, as well as an awareness of the fast-paced nature of consumer goods in various global markets. These companies are eager to accelerate the process of bringing innovations to store shelves. Additionally, there is increasing emphasis on eco-friendliness and responsible environmental practices. Another common point is their search for a partner who can provide scalable solutions in both quality and regulatory areas. Many of these firms employ over 50,000 people and have struggled to find a partner capable of meeting their needs comprehensively. Historically, they may have implemented individual departmental solutions, such as separate quality systems for each manufacturing plant. Now, they are recognizing the potential benefits of having a unified quality or regulatory system instead of one tailored for every different country or facility. These themes are prevalent in our discussions.

Got it. Thanks, Peter. And then one more if I may please. I didn't hear you mentioned outside life sciences is one of the top areas of investment. Should we take that to mean that you're still kind of early on in your reference selling there such that maybe the investment cycle for go-to-market sales personnel might be longer term?

Yes, I believe we are making appropriate investments outside of life sciences. The increase in spending will be more significant in Crossix, particularly in the safety sector of the CDMS, as we have more product work to focus on in the long run. While we continue to invest outside of life sciences, it will be somewhat more concentrated in those three other areas.

And our last question is from Kirk Materne with Evercore ISI. Your line is open.

Hi, guys. This is actually, Peter Birkley on for Kirk. Thanks so much for taking the question. You mentioned a couple of times you're kind of growing partner ecosystem, I kind of just wanted to see if you could dive into that a little bit further provide some color on how you're continuing to leverage this partner ecosystem to drive sales and scale both within and outside of life sciences?

Hey, Peter, this is Paul. When we consider how to provide solutions to our customers, Veeva stands out as a crucial strategic partner in the industry, both in life sciences and beyond. However, we are certainly not the only technology provider for any company. A significant aspect of our model is to be partner-friendly and offer customer choice, which is why we maintain a very open partnership model, even in areas where we have our own solutions. For example, our acquisition of Physicians World reflects our commitment to entering areas where services are strategic and important to our customers. They requested our involvement in this area, and we continue to collaborate with other logistics service providers within the same field. Our philosophy is to remain open, giving our customers options and ensuring that it’s easy for them to do business with us, as we recognize that we won't be the only vendor they work with. Our mission is to help our customers succeed, and part of that is making integrations and services easy to access.

Okay, great. Thanks so much. That's very helpful. Just maybe one quick follow-up if I can, just curious, if you can provide any color on the continued search for a CFO to follow-up with Tim.

Hi, Peter, this is Tim. So we continue to build the pipeline on that particular role. It's very important as you can imagine to both Peter and myself. So we continue to build the pipeline both identifying candidates and getting some interesting inbound folks and talking to our network of people who know this role quite well. One thing to remember and I think you do remember this Peter is I've committed to the Board and to Peter and the management team and the company here that I'm here until we bring that person on and get that person on-boarded effectively. So there's no real timetable for my departure. So it gives us the opportunity to really be thoughtful here, and that's what we're doing.

Okay, great. Thanks very much, Tim. Appreciate it again.

Ladies and gentlemen, this does conclude the Q&A period. I'll now turn it back over to Peter Gassner for any closing remarks.

Thank you, operator. I would like to thank everyone for joining us today. We wish you all a wonderful holiday. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation and you may now disconnect.