Summary
Veeva Systems reported total revenues of $455.6 million for its fiscal 2022 second quarter, up 28.8% from $353.7 million in the prior-year quarter. Gross profit rose 30.0% to $333.5 million, and gross margin improved to 73.2% from 72.5%. Operating income climbed 38.3% to $124.6 million, lifting operating margin to 27.4% from 25.5%. Net income increased 16.4% to $108.9 million, and diluted earnings per share were $0.67, up from $0.58. For the six months ended July 31, 2021, revenue was $889.2 million, up 28.7% from $690.8 million, and operating cash flow was $597.5 million, up 54.2% from $387.5 million.
On a non-GAAP basis, operating income was $191.6 million, up 33% from $144.4 million a year earlier. Non-GAAP operating margin was 42.1% compared with 40.8%. Non-GAAP gross margin was 75.8% compared with 75.4%. Non-GAAP net income reached $152.7 million, up 31% from $116.4 million, and non-GAAP diluted earnings per share were $0.94 compared with $0.72. The company's operational momentum included 21 new Veeva CRM wins, most of which included multiple add-ons. Veeva Link added three new enterprise customers, including two top 20 pharmas. Veeva Vault Safety landed its first top 20 pharma win to become that customer's global standard, and Vault CDMS signed its second top 20 customer. Six early adopter customers now use Veeva Site Connect, and more than 1,000 clinical research sites actively use Veeva SiteVault Free. The subscription services revenue retention rate was 124% for the fiscal year ended January 31, 2021.
Deferred revenue was $558.7 million, up 32.7% from $421.2 million in the prior-year quarter; this is the current portion only. Operating cash flow for the quarter was $119.1 million, up from $105.3 million. Research and development, sales and marketing, and general administrative expenses all increased, driven by higher headcount. Veeva increased salaries for most employees by 5% effective September 1, 2021, which will raise operating expenses. The company also expects total operating expenses to continue to increase over time, which could have a negative impact on operating margin.
Guidance for the fiscal third quarter ending October 31, 2021 puts non-GAAP operating income between $179 million and $181 million and non-GAAP diluted earnings per share between $0.87 and $0.88. For the full fiscal year ending January 31, 2022, Veeva expects non-GAAP operating income of about $730 million and non-GAAP diluted earnings per share of approximately $3.57. The company also issued revenue guidance for both the fiscal third quarter and the full fiscal year. It did not provide GAAP targets for operating income or earnings per share, citing the difficulty of predicting items such as stock-based compensation expense.
Risks include the company's expectation that its total revenue and subscription services revenue growth rates will decline in the future. Veeva also expects life sciences companies to cut sales representatives by roughly 10% over the next one to two years, which could hurt sales of Veeva CRM and other Commercial Cloud applications. Other named risks include security breaches, competition and pricing pressure, customer consolidation, the COVID-19 pandemic, system unavailability, litigation, and the recent conversion to a Delaware public benefit corporation. The company also faces higher costs from headcount growth and the salary increase, which could pressure operating margin. Veeva has a remaining salesforce.com purchase commitment of $13 million due by September 1, 2025.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2022 | Q1 FY2022 | QoQ | Q2 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $455.6M | $433.6M | +5.1% | $353.7M | +28.8% |
| Gross profit | $333.5M | $317.4M | +5.1% | $256.5M | +30.0% |
| Gross margin | 73.2% | 73.2% | -0.0 pp | 72.5% | +0.7 pp |
| Research & development | $94.9M | $83.2M | +14.0% | $70.1M | +35.5% |
| Sales & marketing | $71.8M | $64.6M | +11.1% | $59.2M | +21.3% |
| General & administrative | $42.2M | $41.2M | +2.5% | $37.2M | +13.5% |
| Total operating expenses | $208.9M | $189.0M | +10.5% | $166.4M | +25.5% |
| Operating income (loss) | $124.6M | $128.4M | -3.0% | $90.1M | +38.3% |
| Operating margin | 27.4% | 29.6% | -2.3 pp | 25.5% | +1.9 pp |
| Net income (loss) | $108.9M | $115.6M | -5.8% | $93.6M | +16.4% |
| Net margin | 23.9% | 26.6% | -2.8 pp | 26.4% | -2.6 pp |
| Diluted EPS | $0.67 | $0.71 | -$0.04 | $0.58 | +$0.09 |
| Customers | 719 | 719 | ±0.0% | 625 | +15.0% |
Risks
IQVIA is the principal competitor for Veeva Commercial Cloud, and in 2020 a significant Veeva CRM customer launched a project to implement IQVIA's competitive software for portions of its CRM users. The filing states that deployment scope may expand, resulting in further Veeva CRM revenue losses or additional lost users or customers.
IQVIA will not consent to customers uploading its healthcare professional or healthcare organization data to Veeva Network Customer Master and has restricted use of its data in Veeva Nitro, Veeva Andi, and certain other applications. These restrictions have negatively affected sales and customer adoption and may continue to harm sales efforts and implementations.
Nearly all revenues come from life sciences customers, exposing Veeva to regulatory changes, consolidation, bankruptcy, and changes in sales and marketing practices in that industry. The filing states Veeva expects life sciences companies to reduce sales representatives by roughly 10% over the next one to two years, which could negatively impact Veeva CRM and other Commercial Cloud applications.
Top 10 customers accounted for 36% of total revenues in fiscal year ended January 31, 2021, and loss or non-renewal of key customers could slow revenue growth or cause revenues to decline. Veeva also expects increasing purchasing scrutiny at renewal of large customer subscription orders.
Veeva CRM and portions of multichannel CRM applications are built on salesforce.com's Salesforce Platform, and Veeva is bound by an agreement that limits sales to drug makers in pharmaceutical and biotechnology industries and excludes medical devices. The agreement expires September 1, 2025, and salesforce.com can terminate in certain circumstances, which would require a replacement CRM platform.
Veeva is defending trade secret misappropriation claims from competitors Medidata and IQVIA, with a trial expected in the Medidata case this fiscal year. An adverse outcome could require substantial damages, ongoing royalty payments, prevent offering services, or impose other unfavorable terms.
Competition for highly skilled employees is intense, and Veeva has experienced difficulty hiring and retaining qualified employees and intense recruitment by competitors. Veeva increased salaries for the majority of employees by 5% effective September 1, 2021, which increases expenses and may pressure operating margin.
Veeva expects the growth rate of total revenues and subscription services revenues to decline in the future. It also expects total operating expenses to continue to increase over time, which could have a negative impact on operating margin.
Increasingly complex data protection and privacy regulations, including GDPR, CCPA/CPRA, and China's PIPL, impose compliance burdens and may reduce demand for Veeva's solutions. The invalidation of the EU-U.S. Privacy Shield and reliance on Standard Contractual Clauses required management time and resources.
Veeva became a Delaware public benefit corporation on February 1, 2021, requiring directors to balance stockholder financial interests, stakeholder interests, and its public benefit purpose. Limited legal precedent creates uncertainty, and directors may make decisions that do not maximize short-term stockholder value.
Future growth depends on newer solutions such as Veeva Data Cloud, MyVeeva for Patients, and Veeva Engage Connect, for which Veeva has limited selling experience. If these solutions do not gain market traction in a timely manner, the growth rate of revenues and operating results will be adversely affected.
COVID-19 may continue to negatively impact Veeva's business, with customer travel restrictions and remote work measures potentially limiting sales and professional services. The filing also notes customer requests for lengthened payment terms or less favorable billing terms could adversely impact financial performance, though such requests have not been significant to date.
The sales cycle for a new customer may span 12 months or longer, and sales cycles for newer applications or markets are lengthy and difficult to predict. If sales cycles lengthen or Veeva invests substantial resources in unsuccessful opportunities, operating results and growth would be harmed.
The dual-class structure concentrates voting control with founder and CEO Peter Gassner, who holds approximately 45.9% of voting power, and Class B holders, who hold approximately 51.6% in aggregate, until October 15, 2023. This limits investors' ability to influence corporate matters and could depress the market value of Class A common stock.
SaaS KPIs
All quarters →Total Customers
Non-GAAP Operating Margin
Non-GAAP Operating Income
Summary, forecast, risks and KPIs are extracted from VEEVA SYSTEMS INC's SEC filings for Q2 FY2022 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 6, 2026.