Ladies and gentlemen, thank you for standing by. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the Veeva Systems Fiscal 2026 First Quarter Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one a second time. Thank you. And I would now like to turn the conference over to Gunnar Hansen, Senior Director, Investor Relations. You may begin.

Good afternoon, and welcome to Veeva's Fiscal 2026 First Quarter Earnings Conference Call for the quarter ended April 30, 2025. As a reminder, we posted prepared remarks on Veeva's Investor Relations website just after 1 PM Pacific today. We hope you have 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 Strategy, and Brian Van Wagener, our Chief Financial Officer. During this call, we may make forward-looking statements regarding the trends, our strategies, and the anticipated performance of the business, including guidance regarding future financial results. 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-K. Forward-looking statements made during the call are being made as of today, May 28, 2025, based on the facts available to us today. If this call is replayed or reviewed 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 a public forum. On the call, we may also discuss certain non-GAAP metrics that we believe aid in understanding 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, Gunnar, and welcome everyone to the call. It was a strong start to the year with results above our guidance. Total revenue in the quarter was $759 million and non-GAAP operating margin was strong. Thanks to the team and our customers, we have now achieved our calendar 2025 revenue run rate goal of $3 billion. Although the macro environment is more uncertain today compared to ninety days ago, we have not seen a material change to our financial results or pipeline at this time. Setting our sights on our 2030 goals last year has really aligned us. I consider this our best first quarter ever and how we're executing across the company. Veeva AI is a major initiative and off to a good start. I'm especially excited about the positive impact Veeva AI can have on the life sciences industry. We'll now open up the call to your questions.

Thank you. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asked your question. To be able to take as many questions as possible, we ask that you please limit yourself to one question and one follow-up. Again, it is star one if you would like to join the queue. Joe Vruwink with Baird, your line is open.

Great. Thanks for taking my questions. I wanted to start with your perspective on the 200 customers moving to Vault or considering Vault CRM for next year. I imagine many of these are migrations. Have the reasons customers cited behind migration decisions changed at all? And the reason I ask is it seems like Veeva at this point has really delivered on a product roadmap once shared. Customers can now see things like Service Center and Campaign Manager, and you also now have, I would say, more fidelity behind the AI strategy. Are these starting to factor into why now, why the decisions? And maybe on the flip side, when customers aren't moving with you, what's coming up in those decisions?

Hey, Joe. This is Paul. Thanks for getting us kicked off here. So just to be clear on that, remember one year ago, we were at a handful of customers live. Today, we're at about over 80 customers live, and I think the number you're referencing is about one year from now, where we're on track to be about 200 customers live on Vault CRM. So Vault CRM is going really well. It's working. Now the why is that? It's better than Veeva CRM. Customers like Veeva CRM, but it's better. And what makes up that 200 number are really two things. It's new customers and it's migrations. So in the quarter, as an example, we added 28 small CRM customers to that number. And where we added Vault CRM cost 28 Vault CRM customers total, and about half of those were migrations. And the other half were net new customers to Veeva. So that's how to think about what will make up that 200. New customers and migrations. And the reasons are everything that we've talked about. It's better, our AI strategy, we'll have agents in the product by the end of the year. They bring sales, marketing, and medical together. We're innovating in a lot of different ways. So new companies want to get started there and other customers want to migrate. In terms of why customers may not make a decision for Veeva, and we've seen some of this, some companies want more of a custom type product. So I don't expect that to be the path. We expect to win and retain the vast majority.

Okay. That's great. Thank you, Paul. I guess on the go-forward forecast, it's an interesting contrast when you get a more dynamic macro, but outright strength for Veeva. When you may be honing in on some of the more just discretionary aspects of your revenue model and on thinking about, like, services or maybe prospects audience building, would you expect to see those weaken at this point if there were maybe looming signs of pressure for the second half? And is the fact that maybe that pressure isn't being seen factoring into how you think about the rest of the year?

That's a pretty nice question. I was Peter, I'll take that one. So as we mentioned in the prepared remarks, you know, the macro environment is uncertain and there are some uncertainties largely caused by the, you know, dynamic in the US administration. Now we haven't seen that in our results, and we haven't seen that in our pipeline. It's not to say that we would or we wouldn't, going forward. But we haven't seen it so far. Generally, what we could see is, you know, funding issues could come if there's uncertainty, that could come in the small market. The smaller side of the biopharma, so that could, you know, delay projects and things like that. It could cause some conservatism in large pharma. But certain things like, you know, that may not be affected by that because Crossix has a sort of a shorter business cycle and is really humming along. And it's a way to get quick ROI. So I actually don't think it would affect Crossix that much. But we'll just have to wait and see how things play out. Thank you.

And our next question comes from the line of Ken Wong with Oppenheimer. Your line is open.

Fantastic. Peter, I wanted to perhaps address the comment you called out in the prepared remarks in terms of the horizontal market. Seems like you guys have made at least some progress there and you're moving forward on horizontal CRM. Could you provide us just a little more color in terms of your thinking about the approach there, the potential differentiation, and to the extent there's any kind of timeline? That'd be much appreciated.

Yeah. We're pretty excited about that new market. So horizontal business applications, which we announced last year, are now what we said in the prepared remarks that we're focusing in for our first area in the horizontal CRM. Now that when we look at that, there's many areas the exact product area, that's something you have to determine inside CRM, the exact customer segments. That's something we have to determine as well. So we'll go through those motions and figure that out. And I'm excited about getting customers. So I hope to have, you know, first customers by the end of the year. I hope to have that. And then you start making the customer successful, and that's really how we've grown our business. It's outside of life sciences, this new market. It's a new it's a different team. It's not gonna be confused with life sciences. It's a different operating model. But the one thing that is common is we can live our values customer success and employee success and speed and focus just on customer success and product excellence. I'm pretty excited about it, actually, what we're gonna do out there. It's a whole new Veeva out there.

Appreciate the color. We're looking forward to it as well. And then Paul, I wanted to maybe dive into the commercial strength meaningful acceleration there. I guess fairly surprising considering most of us view that as maybe a more mature business. Where are you seeing this outsized growth? You called out prospects. Are there other areas of the business whether it's cross-selling something or new products that's really driving that upside?

Yeah. So you're right. I mean, we're executing well across the entire commercial area, but I would specifically call out Crossix. We invested heavily in the product over the last couple of years. And that's paying off in both in the marketing and optimization space, also in audiences. I remember that can be a little lumpy. So there can be ups and downs quarter by quarter, but over the long term, that will be a really nice growth business for us. And so Crossix did well. And that works. We're executing well in all the other areas. CRM is relatively stable. But just nice momentum as we look across data cloud, and including LINC Compass, early days in those areas, but we're executing well.

Fantastic. Thanks, Paul.

And our next question comes from the line of Brent Bracelin with Piper Sandler. Your line is open.

Thank you. Good afternoon. Maybe for Brian sticking with commercial strength here. This is the highest growth rate we've seen in kinda three years. And as we double click, you flag Crossix. Any other drivers you would flag? I know data cloud's early, but is there a contribution there? Any color just given the magnitude of acceleration and highest growth in three years? Any other color would be appreciated. Thanks.

Hey, Brent. Really happy with the execution across the business. In Q1 and the revenue growth rate that we saw really reflects, I think, broad-based execution. We saw strong growth out of our R&D business as well. With guidance for the year now at 19%. So that remains a really strong growth engine for the business. And then the outperformance in the quarter, as we called out in some of the prepared remarks and you mentioned, was really driven by Crossix, which outperformed our expectations. Within Crossix, predominantly driven by the usage-based area of that business. That can be a little bit lumpy from quarter to quarter, and that's reflected in our guide for the full year. But we're seeing really strong growth out of that business over the long term. It's a business that's growing at more than 30% year over year, and so we think it can continue to contribute meaningfully to our growth over the long term.

Got it. Over 30% growth. Super helpful color there. And then Peter, just a follow-up on horizontal CRM. Again, it's your first area. Sounds like you're very excited. Why the excitement? And I ask why because you have, you know, Salesforce that's kind of a dominant player in the large enterprise space then you have HubSpot that's kind of emerged on the scene here in SMB. So what's unique about horizontal CRM that gets you excited about what Veeva is thinking about here? Thanks.

It's just unique in that there's so many things we can do. Now I would say Veeva is more expert at large markets as well as well large enterprises than we would be, you know, in the QuickBooks type or HubSpot area. So, yeah, I think you'll see us target there, but there's many, many entry points we can go after. And we just think it's in need of innovation. When we look at the technology that we can bring to it and our business model public benefit corporation orientation, where it will be a very differentiated offering. So we're excited about it. And, you know, it's this excitement of getting close to getting our first customers. And our first product and knowing that we have a great team on it. And also, I think something what you're hearing is the excitement of some of the fundamental technology breakthroughs, which you're not gonna go into on this call. But I think people got used to that there's nothing new that you could do. But actually, there is something new that you can do. So we're pretty excited about it.

Call me intrigued. Will be interesting to watch. Thank you so much.

Thanks. And our next question comes from the line of Saket Kalia with Barclays. Your line is open.

Okay. Great. Hey, guys. Thanks for taking my questions here. A nice start to the year. Peter, maybe for you, just to dig into the Crossix business because it's been mentioned a few times. And it seems like it was one of the main drivers to some of the billing strength outside of FX. Can we just dig into that? I mean, it seems like you're gaining market share. There have been questions just around macro uncertainty and whether customers would be willing to invest as much in tools like that. But this seems to be bucking the trend. You go one level deeper into what you think is really driving that strength in Crossix?

Yeah. At the highest level, I would say it's we're growing the product. You know, we started with clinical back in the day. We had one application, and then we had two. In the clinical operations, same ETMS and QTS. Now we have about five major applications in there. The same thing with Crossix. So our Crossix started historically with digital consumer measurement and optimization. Now we're getting starting to get very strong in A2P, healthcare provider, measurement optimization, and then audiences across both segments. So our offering is getting more broad and getting more valuable. So when we sell a pretty comprehensive Crossix deal, that value is maybe double in the size of what it was three years ago. Because of the value we can provide. Then we also are seeing companies really and it's a trend that continues to lean into leveraging their digital spend. So in the United States, if a company could spend, let's say, $500 million in digital advertising, if they could double the value of that, that's very fast ROI. That's not a twelve-month implementation. Right? That's a very quick implementation. So you're seeing that? Also, you're seeing us take a more strategic approach. Meaning the integration with our CRM products and optimizing more for long-term agreements other than shorter-term agreements. Just getting higher in the account. So it's a combination of factors. You know, I'll honestly say it's because I had a great team on Crossix too. Great leadership, all the way down to the analyst level and the leadership, and they're just executing. They're humming along. So they're kinda winning the race.

Got it. That was a super helpful answer. Brian, maybe for my follow-up for you. It's great to see the higher billings guide for the year. I don't think a lot of folks were expecting that even excluding the FX tailwind. Can you just maybe dig into some of the drivers there? Maybe we hit on some of it here with Crossix. But also some of the other drivers there, maybe, like, billing's duration or any other things that you wanna flag as we thought about the slightly higher guide for billings for the year?

Yeah. Hey, Saket. So, yeah, two major factors, as you mentioned, you know, one is the FX guidance that's flowing through to billings, but then the other is largely the revenue outperformance that we saw in Q1 from the subscription side coming through to billings. There's always a little bit of timing and duration things at the margin, and there's some of that in there. But the main two factors are FX then the revenue beat.

Super helpful. Thanks, guys.

And our next question comes from the line of Rishi Jaluria with RBC. Your line is open.

Oh, wonderful. Thanks so much for taking my questions. Maybe two strategically focused ones. Number one, you know, look, I wanted to think about the CRM business. You've talked about getting into marketing and service. We came out with some initial applications there. Maybe can you talk about what you're seeing from early customer feedback and adoption of these? And, you know, at what point whether it's, you know, in the next year, three years, five years, can we still actually become share gainers in the space? And I've got a quick follow-up.

Yeah. Hey, Rishi. So we're early in both of those areas. But to your point, since we made the move to Vault CRM, we've been able to innovate in totally different ways, new ways and that includes bringing sales and marketing and service altogether a single customer database that hasn't been done in life sciences. That's resonating. That's really good for customers. It'll help customers become more customer-centric. So this is a significant value proposition, but we're very early days. The exciting news is we have some early customers in both of those areas. We're just getting started. Remember, the requirement is that they're on Vault CRM. So for someone to get started with, let's say, Campaign Manager or Service Center, the first step is moving migrating to Vault CRM or getting started on Vault CRM. So it's a smaller pool to play in at least today, and we're gonna focus which means we'll largely focus on some smaller and mid-sized customers. But then over time, I expect that we'll make even more progress in the mid-size and even in the large companies. So it's a long journey, but we're innovating in a really different way. It's something to be excited about.

Alright. Wonderful. That's really helpful. And then Peter, on the AI front, look, I appreciate that you're taking a more gradual and slow approach to AI versus kind of overpromising and underdelivering, which I think is always a risk with any new technological wave. Maybe can you walk us through, you know, number one, how you're kind of thinking on AI in life sciences and the willingness to adopt it has evolved. And number two, if we think about kind of what this can really unlock for customers over time, where do you kind of see it shaking out other than, you know, the typical efficiency gains? Because I'm sure that there's a major unlock that you can see over time using AI.

Yeah. I do. I'm very bullish about what Veeva can bring with AI to the life sciences industry. I think, you know, if you look over the next three, four, five years, that's 2030. I think Veeva can help increase life sciences efficiency by 15% or so with deep AI. That's a huge number when you look at that. So I really think it will be a step change. Why I'm so bullish on it is because Veeva has the core applications, and we're building the AI very deeply embedded in the core application. So when we build AI, we're not building a generic AI. We're building a medical, legal, regulatory approval agent. A CRM agent to those pre-call planning a safety AI agent that can transcribe pretexts into a safety case. So these AI applications, and you need the deep core applications and the AI work together. And that's where the magic will happen. It's just very, very clear to me. That's what I'm excited about. I think the core technology has settled down a little bit in terms of large language models. What's going on there? And then it's very clear that this AI is a new computing paradigm. It's something that can automate certain things that humans can do. Which basic software traditional software can do that. It doesn't work like it anymore. This is nondeterministic computing. It can automate some things that a human can do, but it doesn't obviate the need for a core application. So let the core get settled down, of the large language models get settled down. We developed a partner program. We developed our direct data API. Now we got a specific and separate team working on Veeva.ai, and I couldn't be more pleased with our positioning. Where we're at right now with AI.

Very helpful. Thank you so much.

And our next question comes from the line of Brian Peterson with Raymond James. Your line is open.

Thanks, gentlemen. Congrats on the strong quarter. Paul, I know you talked with a lot of customers and how they're thinking about their go-to-market motion. Curious on the relative prioritization of IT spend if we think about it in the lens of sales versus marketing versus customer service. Are any of those areas seeing increased or decreased prioritization in kind of a Gen AI world? Any thoughts on that?

Yeah. Hey, Brian. Thanks for the question. Yeah. So where is AI likely to be in across sales, marketing, or service? Yeah. Two questions. Overall, a way to think about the pharma industry is the human relationships, the sales organizations to spend on the sales force. Is very significant and very meaningful. And if you can provide productivity gains and effectiveness gains for the field team, you have a very significant impact. So I think we're seeing a lot of focus on the sales side, which is why one of our first agents will be in the core CRM space. The CRM bot. We think we can make customers significantly more productive from a field team perspective. So it's not to say that we're not seeing investment in other areas. Certainly, customer service. Case intake is an example. There's a lot of examples on the marketing side. But I would prioritize sales higher given the size, the importance, the relationship, and the potential impact we're gonna have.

Got it. Appreciate the color. And, Brian, I know in the prepared remarks, Peter mentioned some unease from some of the customers. I'm curious as you think about the outlook for the remainder of the year, was there any incremental caution that you factored into the guidance? Thanks, guys.

Thanks, Brian. So, you know, without a doubt, I'd say there's more uncertainty today than ninety days ago. And so if that persists, it's not going to have a positive impact on the life sciences industry or on patients. You know, with that said, so much of our business is subscription-based. It's in mission-critical areas. The industry that we serve is more long-term oriented. So in the short term, we're a bit more insulated from some of those pressures. And as we said in the prepared remarks, we're not really seeing any material impact to our financials or pipeline yet. We've got deals progressing as expected. Contracts are renewing, projects are proceeding on or ahead of schedule. So given all that, our guidance right now assumes that things continue roughly as they are now. That means that there's more uncertainty in the world and the unease that comes with that that customers continue to navigate it effectively.

And our next question comes from the line of Stan Berenshteyn with Wells Fargo Securities. Line is open.

Hi. Thanks for taking my questions. First, maybe going back to Crossix. You know, we heard recently maybe there's been some pull forward in commercial activity by bifurcate into the first half of the year. I'm just curious if you're seeing any signs of this with Crossix, and maybe you can square that with how Crossix has performed year to date versus the same time last year?

Yeah. I'll take that one. This is Peter. I wouldn't say any particular pull forward we're seeing. No. I think we're seeing the case of Crossix, customers just wanting to build up their digital marketing capabilities, and part of that is being more effective on where they're putting their campaigns and their audiences. So I wouldn't say any particular forward.

Okay. And then I'll follow-up on the Compass product. I think it's been a little bit more than a year since you launched the Prescriber National Compass product. Was just hoping to get an update on the adoption and momentum trends under the segment. Thanks.

Yeah. Compass is doing well. We added about ten brands this quarter, mostly in the patient area, and that continues to grow. And, you know, it's about opposite. It encompasses a marathon. The industry is used to doing things in a certain way with data, and it's a hard business to get into. But we're making good progress there. In terms of Prescriber National, I would say we're still definitely an early adopter area. So we've got a few early adopters. Pipeline's getting a bit bigger. We're focused on adding to our data network and also focusing on customer success. So in Prescriber and National, it's just not a mature business yet. It's not a business scale yet. But we're encouraged by what we see from early adopters.

Alright. Thanks so much.

And our next question comes from the line of Tyler Radke with Citi. Your line is open.

Thank you for taking the questions. Peter, wanted to start with you on the macro environment. You talked about some of the tariff uncertainty not being great for business, which I think we can all appreciate. But one of the things that we have heard is some signs of potential reshoring in terms of the manufacturing within the pharma industry. To what extent do you view this opportunity? Is this a potential tailwind? I know it's potentially a ways away, but would just love to hear the conversations you're having with customers and how Veeva could potentially benefit from that.

Specifically about the tariffs and the potential, you know, reshoring, I wouldn't say that's a headwind or a tailwind for Veeva, actually. Looking at enterprise type of capabilities in our large customers. And then for small customers, for small biotechs, they wouldn't generally have multiple manufacturing sites and they would use contract manufacturers. So I think it's not a headwind. There could be a tailwind if they have to do things that take higher priority. Let's say they have some long-term capabilities projects in the quality area that they want to get started on. But there's some emergency reshoring that they have to do that could take strategic focus and delay projects. Now having said that, we've seen no evidence of that so far.

Okay. Great. And a follow-up on the updated guidance for the full year, and the earlier question was sort of asked, but I guess, are you if we think about the change versus ninety days ago, on, you know, the revenue and billings guide, are you increasing, you know, discount rates or any type of deterioration in close rate assumptions? Or are you assuming a consistent macro environment versus ninety days ago? And I think what us investors are trying to understand is, you know, this is a very solid quarter. Would the raise be even greater had you not seen kind of the macro and tariff uncertainty play out in the quarter?

Yeah. I think we really have not seen any impact from the macro on the velocity of business on close rates or those kinds of things. And so what you're seeing in Q1 is, again, that outperformance largely of the Crossix. And then the timing of services revenue. So that timing, we expect to kind of normalize back out as we go through Q2 to Q4 on services. And so the beat on the Q1 Crossix really pulls through to the balance of the year, and you see that reflected in the billings guide going up as well. So outside of those factors, I would say the business is largely as we expected it to be ninety days ago. We're seeing really good execution in all the areas of the business and feeling really good about the trajectory going forward for the year.

And our next question comes from the line of Craig Hettenbach with Morgan Stanley. Your line is open.

Great. Thank you. Just following up on the macro. What do you think would prove to be most insulate? Like, if things do get more difficult into the back half, are there parts of the business you would expect to be kind of most insulated versus some areas that, you know, you'd expect to maybe see some impact if things were to deteriorate?

Well, I'll take that one. Hard to estimate too much because, you know, there's multiple ways that things could deteriorate. It could be interest rate. It could be, you know, drug pricing. It could be specific to one country or another. It could be, you know, geopolitical conflict. So hard to really speculate there. The most durable part of the business is our long-term subscription contracts because they just don't really get affected by things. Then business consulting engagements, services engagements, those are quicker to get impacted. And the things get, you know, very tough, which we saw a number of years ago, can impact our really small emerging biotechs, yeah, because they can't get funding. And so projects would stop. And then sometimes, they may go out of business if the funding environment is dire enough. So the bulk of our business is in these long-term subscription projects and those just aren't susceptible to those short-term swings.

That's helpful. Thanks. And just as a follow-up, Peter, understanding it's Veeva.ai just recently kind of rolled out. Any initial feedback from customers and how you think, you know, in the coming years, how it might impact your overall business?

Yeah. The impact the reception from customers is very positive because it just makes sense. It's not a lot of hype. They need the AI working with the core applications. They know who cares about the industry will be responsible with the data. And they can see the tangible use cases. So there's a lot of excitement. How it can move our business forward? I think Veeva.ai is something that we will charge, you know, an appropriate license fee for. So I think it would be a net positive for Veeva. We don't have that packaging worked out yet. We do want to price it so that it can be very reasonable and broadly adopted to help the industry move forward. And, yes, that certainly helps our revenue over time, but we don't have any specific projections at this time.

And our next question comes from the line of Kirk Materne with Evercore ISI. Your line is open.

This is Bill on for Kirk, and thanks for taking my question. Peter, can you highlight some of the key takeaways from you from the commercial summit last week?

Sure. Commercial summit, you know, I would say the first thing I'd take away, it sounds very basic, but the customer's feeling is good. And I probably had more than fifty one-on-one conversations that were each, you know, five to ten minutes or more each. So that's a pretty representative sample size and non-scripted. So the customer's feeling is good, that means we're executing well. We are hiring good people. That have the right customer relationships, that are confident, that are bringing value in our sales, service, consulting, product management. So that's number one, and I think that is not to be underrated because that is the gift that will bring value over the next five to ten years. The next one is a whole different side around these here around Vault CRM. Eighty customers live this time versus just a handful last year. Products mature, a couple big top twenty customers, Midway and Slide, we had one of them zoom in to that. Couldn't actually be there. The person had things where they couldn't be there at the summit. So they zoomed in. This is the person, the SVP of digital from a top twenty pharma that's confirmed, yes, we'll be live here. In a month or so and fully live in all of our, you know, multiple, you know, close to twenty thousand people around the world by the end of the year. So that was a whole different vibe there, and then Veeva AI. Making it real. When I showed the demo of Veeva AI, one example of what Veeva AI can do with CRM bot, you can just see the moment go with the customers because, you know, what they want is they want AI to help them with the engagement planning. Right? Do all that work. And then all the data entry. Afterwards, do that work. So they can focus on the engagement in their field. And you just see the light bulbs going on and what I'm excited about about Veeva AI. I want to be known as the company that probably really did AI right. They did an incredible way. It's adding a ton of value where Veeva is bringing in one dollar and customers are getting four dollars of value. Wow. That they've done right. So there was that feeling for the first time of it's somewhat relieved because we have been we've been measuring carefully on AI and not jumping in, you know, and the hyping. So then there you could see that relief from the customer. Yeah. This is the Veeva. Here you go. Right? They have a plan. Now they're starting to execute and making plans around it. So that was the excitement. The and the last thing I'll mention is that our data centers, data cloud is becoming really real. And people are starting to understand, hey. We have commercial cloud. And data cloud, and they work together. They're modular, but you can connect them. And that's what our commercial solutions are. So Veeva, you know, not just the CRM company anymore, when I remember some years ago on an earnings call multiple years ago, I said, hey. You know, CRM over time will be not the major part of our commercial solutions. And man, could you see that at Summit. The CRM add-on products, marketing service center, data cloud, Crossix, business consulting, CRM is the start of our commercial. Core CRM. So that was you asked a small question. I guess you got more of an answer than you're looking for, but that you can tell the excitement about commercial summit. About two thousand people there. And so many ideas exchanged. It was wonderful. I think we should keep doing it. Paul, do you think we should keep doing our summits?

Count me in. Paul's not Absolutely. Do you think count you in? Okay. We're gonna keep going.

And our next question comes from the line of Jailendra Singh with Truist Securities. Your line is open.

Yeah. Thank you. Thanks for taking my questions, and congrats on a strong quarter. Wanted to ask about the CRM conversion to Veeva Vault CRM. I understand these top twenty pharma companies still have some time before they can decide, and you have three top twenty going live in 2026. But compared to your internal expectations, I mean, in expectations you had, like, maybe eighteen, twenty-four months back, are you surprised by the pace at which these top twenty are coming through? What are the most common decision-making drivers you come across in terms of these top twenty-five pharma companies?

Yeah. So first, I would say overall, we're making great progress in top twenty, and we're on track with our expectations. As I think back a year or two years ago on track, maybe even a little bit ahead, of what our expectations were. Now you think about what does that timing look like and what makes up that decision-making process. Customers are happy with Veeva CRM. We're not pushing anybody to move, so there's not really that urgency. Now eventually, there will be. We've talked about their red zone which starts to kick in in that 2027 time frame, particularly if you're a large customer, top twenty company, you want to make a decision before that 2027 time frame, which is why we've said most large companies will make decisions either in 2025 or in 2026. So they'll have plenty of time to migrate and move. So customers are happy. They're gonna make that decision when they're ready. We're not doing anything unnatural to force them into a specific timeline. Now the ones that have made decisions already and there's four that have publicly announced four top twenties, I should say, that have publicly announced their decision. They want to move fast. They want to get to all of the innovation that you heard us talking about. And they want to get this behind them and be able to take advantage of things like Veeva AI sales and marketing and medical and bringing all those pieces together and all the innovation, all the excitement. So we're doing this in a customer-friendly way. We're excited with the progress. I think we're very much on track.

Okay. Then, Mike, a quick follow-up. On the topic of takeaways from the Veeva commercial summit. Thanks for all the color. Very helpful. But as you compare to the conversations you were having, like, last year's summit, did you guys come across, like, pharma executives having like, increased focus on ROI, budget priorities, or is it more or less the same as compared to last year?

In terms of the feeling from the customers, similar to last year. I think they have last year, there was still, you know, some uncertainty how you know, how the administration was gonna pull. There was a US presidential election, things like that. That uncertainty in a way is gone because they have a new environment that they're working in. But similar in that they're, you know, they're focused on execution. And I think leaning into the digital a bit more. That's one thing I noticed. Leaning into the digital marketing a bit more. And the data and analytics. So getting more systematic, a bit more systematic in commercial.

Ladies and gentlemen, to be able to take all of our remaining questions in the time we have left, we ask that you please limit yourself to one question going forward. Our next question comes from the line of Jeff Garro with Stephens. Your line is open.

Yeah. Good afternoon. Thanks for taking the question. Follow-up on that last one and also some earlier ones on the momentum for Crossix. Was hoping you could discuss the mix of customers' commercial focus on digital versus in-person spend. And how Veeva is particularly differentiated there to enable both digital and in-person commercial activities and help your customers evaluate the effectiveness of both. Thanks.

Yeah. In terms of the mix, I didn't notice or sense any broad change in mix. Now we're not always in those discussions. But I didn't notice any them anymore. But what I did notice is, hey, using technology can I particularly Crossix, say have the same amount of spend in digital and, you know, double the impact? Right? That's really what Crossix is about. Now in terms of the field or the CRM, I think there's a lot of excitement about AI to say, you know, it's not easy to ramp up or ramp down my field force. So what I can do is I'd like to keep that field force the same roughly and just get more productivity out of my team as I have more launches and more content. So I think that's what I'm seeing there.

And our next question comes from the line of Andrew DeGasperi with BNP Paribas. Line is open.

Thanks for taking my question. Maybe as a follow-up to the horizontal CRM product, you mentioned it's a different team. I guess I'm wondering, number one, have those investments been made in terms of people and headcount? Is that already in place? And then secondly, is M&A on the horizon for this particular product, or is this something probably related to another opportunity? Thanks.

Yeah. The core team is in place. Of course, we'll be adding to that team incrementally when this you have to keep the team small at first so it can, you know, execute really fast. Speed and quality on the foundation. Then you incrementally add to that team, and I'm sure we'll be doing that over the next, you know, two, three, you know, year, two, three, four years. So that's normal, and we have a heartbeat for that. I'm sorry. So that was about the team, and then you asked the second question. I didn't catch it.

Oh, it was on the M&A. I know you mentioned this would be an area that you would focus on. I'm just wondering if your M&A will be focused on the CRM product, or would it be for other areas?

Yeah. For M&A, we're keeping a really wide aperture on that. If we can see something that would be synergistic with Veeva, most likely, that would be in the area that is horizontal applications. Could be CRM, could be other things, you know, we would look at that. We've been very disciplined on our acquisitions and we've not had any failed acquisitions, and that's unusual. But we like acquisitions like Crossix where we can really create a lot of value and create a lot of innovation. So that's the type of thing we'd be looking for outside of life sciences. It could be in CRM. It could be in a different area.

And our next question comes from the line of Gabriela Borges with Goldman Sachs. Your line is open.

Hi. Good afternoon. Thank you for taking the question. I'd like to follow-up on some of the positive commentary on eTMF with asking you about an update for EDC. Peter, perhaps you could comment on how are some of those conversations progressing on new customers for EDC and any updated color on how we should think about the ramp of revenue for the customer wins that you've already announced? Thank you.

Yeah. You touched on the eTMF, and I'll just spend a little bit there. We're really excited about that. The nineteenth top twenty, and we feel like we have a pretty good path to have twenty of the top twenty on eTMF, and that's just amazing, and we view that as just an honor. And what we want to do when we get that simplification is standardization to the industry is just double down and invest and help the industry get more efficient. So I want the whole Veeva team to know and yourselves as investors and our customers to know is that's a signal to me, but they really double down on investment. That's the type of company Veeva is. We view that as a privilege. So eTMF is there, and I'm confident over time, actually, you know, EDC will get there. I think but it will take time. Today, we have nine out of the top twenty are using our EDC. Now some of those are very early, and those are multiyear ramp deals. I think we have a path for additional top twenties in EDC. I don't see anything imminent right away, but I'm sure customer success will get there over time. Because we have a structural advantage. People want to integrate a clinical platform in the clinical operations for clinical data management, even reaching out to the research site. So if we keep executing, our future is very bright in clinical.

Thank you for the color. Congratulations on a strong Q1.

Thank you.

And our next question comes from the line of Allan Verkhovski with Scotiabank. Your line is open.

Hey, guys. Congrats from me as well on a great quarter. I want to just double click on how you mentioned the discussions with customers are starting to reflect the general unease. Can you just give more color on how that developed through the quarter? What types of customers are expressing this more? We just, in general, appreciate more color on this. Thank you.

Yeah. Now that color is, you know, things that we get in personal conversations, you know, mainly one-on-one. Conversations sometimes by hearing, sometimes in person. So it's not anything that shows up in the financial results or the pipeline. So as you would expect, it's multifaceted. Some people are concerned about drug launches, and they're concerned about what's called the phase to date, their approvals. And they see some open vacancies and they have FDA, and they wonder who's gonna fill those and whether they're gonna fill those in time. So they have a little logic in there. There's people concerned about what types of acquisitions they might do and if they might be them, well, there's gonna be impact on drug pricing down the executive order because that may, you know, deter or accelerate their plans for acquisitions. So it's just broad-based across life sciences. And then for the smaller biotechs, what they would be wondering about is how is this gonna affect the funding environment? It's pretty dynamic with, you know, which way will interest rates go and how will this affect funding, and they're watching the price of bonds and things. And they're wondering, well, when do we need another round? Are we gonna get it? So should we need to be more conservative or not? Those are the type of discussions. It's varied, not dominated by one particular topic.

And our next question comes from the line of Steven Valiquette with Mizuho Securities. Your line is open.

Good afternoon, Peter and Brian. Let me offer my congrats on the strong results as well. Really, for me, just a financial question. You know, the 79% non-GAAP gross margin and 46% operating margin were obviously pretty strong in the fiscal first quarter. And the guidance for the fiscal second quarter and for the full year imply that the margins will come back down a little bit relative to the F1Q trend. I guess just without getting too specific, is there anything high level you can point out, you know, one or two factors that just, you know, mechanically might bring the margins back down in the remainder of the year versus fiscal one Q? Thanks.

Yeah. Hey, Steven. You know, Q1 was a great quarter for the collective Veeva team, and you saw that reflected in the margins. The part that doesn't always show up in the margins is the impact that we'll see in years to come. When you look at the margins specifically in the quarter, about three-quarters of the outperformance was driven by revenue, and so that was mostly the usage-based elements across Crossix and the faster timing of services delivery. So things that we don't expect to be a recurring benefit to margins through the balance of the year. We also saw some benefit from expenses, which was really timing-related factors as well, things that occurred later than we'd otherwise expected. And so when you put all that together, we saw, you know, a high watermark for margins in Q1, and then we see it, you know, return back to 44% in Q2, which is about what we expect for the balance of the year.

And our next question comes from the line of David Larsen with BTIG. Your line is open.

Hi. With regards to Crossix, you mentioned investments in the Crossix, and you mentioned the word provider. Just with respect to the actual data itself, does it include, like, obviously, the retail sort of data but does it also include, like, the specialty script data for medications that could be supplied in a hospital? Does it include, like, part B drugs, drugs administered in clinic and a skilled nursing facility? And then when you use the word provider, would that also include, like, facility data? So if a hospital wants to look at all volumes, inpatient, ambulatory, and so forth, is that also included in Crossix or are there plans to eventually include it there? Thank you.

Yeah. The data sources, the data network, which supports Crossix, and it also supports Compass. It does work for retail, specialty drugs, specialty pharmacy, administered in the hospital, all types of drugs and especially as good at what we call complex therapies. And those are definitely ones that are, you know, you're not just going to the retail pharmacy and picking them up. That's one of the very unique things about our data sourcing strategy. So for example, in Compass, I know you asked about Crossix, but for example, in Compass, we can project data, sales data for about four thousand brands across retail and non-retail. And we can do that because of our data sources strategy. That data sourcing strategy makes us able to do great measurement and audiences also on Crossix. So in Crossix, what you're trying to do is, you know, figure out what segments you want to expose to media, and then what's that effective? At which media points was that effective at driving visits? To healthcare providers and then resulting in the uptake of the right medicine. So it's a pretty comprehensive data network. That's what we set out to build when we acquired Crossix about five years ago. It's been really great to see it coming to fruition now.

Okay. Great. Thanks very much. Thank you.

And our next question comes from the line of Faith Bruno with William Blair. Your line is open.

Hey, guys. Thanks for taking my question. I guess just diving into Summit again, you said that customers are feeling good about Veeva, but maybe from a broader industry perspective, what challenges were they bringing to you? What's top of mind for them? And has there been any shift when you compare the conversations you've had back in April to maybe more recent conversations you've had recently as we continue to try to navigate the changing effects?

Yeah. So I'll take that. Yeah. It's a good one. Challenges and has that shifted over time. So remember where the industry is. They've been in a place where in the commercial side, we've helped many companies be able to connect up a lot of their software systems. We're now going through the migration process, so that's certainly a big topic of conversation. But the industry still has fragmented data. And getting the data to work together, getting the data into the software so you can make decisions and you can get insights fast. About that. That is still a challenge for the industry. It's not a solved problem yet. So the topic of our can you hear Peter talk about this? Connected software, connected data, that's resonating. And it's a challenge that it's very clearly an unsolved problem in the industry, and our approach to that, harmonizing the datasets, harmonizing it with the software, fundamentally solving it at a very foundational level. The data model consistency of data attributes and elements across all these different datasets creating this connected environment. So that's top of mind, and that leads to things like helping them be more efficient, helping them get insights to the right people faster and make decisions. Helping them do AI. So that's an area. And then second is we talked a lot about the excitement around AI. But there's also a lot of unsolved problems in the AI space. And part of that is bringing together or the industry hasn't yet been able to bring together very industry-specific processes with deep industry-specific AI. That's a problem that they've made investments. They haven't often seen the full return on their investment in some of the AI projects. And I think that's another area where they're excited about our ability to help them over time. So those are some specific examples.

That's helpful. Thank you.

And that concludes our question and answer session. We will now turn the conference back over to Mr. Peter Gassner for closing remarks.

Thank you everyone for joining the call today and thank you to our customers for your continued partnership and to the Veeva team for your outstanding work in the quarter. Thank you.

Ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.