Summary
Veeva's fiscal 2024 third quarter showed steady top-line growth and a split profitability picture. Revenue was $616.5 million, up 11.6% from $552.4 million in the prior-year quarter. Gross profit rose 12.6% to $448.8 million, and gross margin improved to 72.8% from 72.1%. Operating income increased 5.8% to $128.5 million, yet operating margin fell to 20.8% from 22.0%. Net income was $135.2 million, up 24.6% from $108.5 million, and diluted EPS reached $0.83, up from $0.67.
On a year-to-date basis, revenue reached $1.73 billion, up 8.9% from $1.59 billion. Gross profit was $1.23 billion, up 7.2%, but gross margin slipped to 71.0% from 72.0%. Operating income fell 16.0% to $294.1 million from $350.2 million, and operating margin dropped to 17.0% from 22.0%. Net income was $378.3 million, up 26.5% from $299.2 million, while diluted EPS rose to $2.32 from $1.84. Deferred revenue, current portion, was $644.5 million at October 31, 2023, up 26.3% from $510.1 million a year earlier.
Operating cash flow was $82.6 million in the quarter, down 42.1% from $142.7 million. For the nine months, operating cash flow was $853.6 million, up 19.0% from $717.1 million. Management expects cash flows from operating activities to be substantially less in the fourth quarter of fiscal 2024. It also expects full-year fiscal 2024 operating cash flow to be reduced by approximately $90 million from tax payments tied to the Tax Cuts and Jobs Act of 2017. The first quarter is seasonally the strongest for cash inflows because of annual subscription billings and collections.
Veeva served 1,388 customers as of January 31, 2023, including 684 Commercial Solutions customers and 1,025 R&D Solutions customers. The company expects R&D Solutions to increase as a percentage of both subscription services revenues and total revenues. Since February 1, 2023, master subscription agreements that govern multi-year orders generally include a termination for convenience right. That change alters revenue recognition timing and will reduce revenue for the fiscal year ending January 31, 2024. Veeva expects total revenue growth and subscription services revenue growth for the full fiscal year ending January 31, 2024 to decline compared with the prior fiscal year. It expects operating margin to decrease for the full fiscal year, with research and development, sales and marketing, and general and administrative expenses all rising. The annual inflation adjustment is 4% for new or renewal order forms from April 1, 2023 to March 31, 2024 and 3.7% for order forms from April 1, 2024 to March 31, 2025.
Professional services and other revenues are expected to grow in the last quarter of fiscal 2024, but year-over-year growth should be negatively affected by increased project scrutiny and a challenging macroeconomic environment. Veeva also expects other income, net, to increase for the remainder of fiscal 2024 because of higher interest rates. Life sciences companies are still expected to reduce sales representatives through the end of fiscal 2024. Foreign currency fluctuations remain a risk, especially in the Euro, Japanese Yen, Canadian Dollar, British Pound Sterling, Hungarian Forint, Chinese Yuan, Israeli Shekel, and Brazilian Real. General and administrative expense growth in the quarter included third-party contractor costs related to ongoing litigation.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2024 | Q2 FY2024 | QoQ | Q3 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $616.5M | $590.2M | +4.5% | $552.4M | +11.6% |
| Gross profit | $448.8M | $421.2M | +6.6% | $398.4M | +12.6% |
| Gross margin | 72.8% | 71.4% | +1.4 pp | 72.1% | +0.7 pp |
| Research & development | $161.3M | $157.2M | +2.6% | $130.3M | +23.8% |
| Sales & marketing | $96.8M | $97.0M | -0.2% | $93.9M | +3.0% |
| General & administrative | $62.3M | $62.9M | -1.0% | $52.9M | +17.8% |
| Total operating expenses | $320.3M | $317.2M | +1.0% | $277.0M | +15.6% |
| Operating income (loss) | $128.5M | $104.0M | +23.5% | $121.4M | +5.8% |
| Operating margin | 20.8% | 17.6% | +3.2 pp | 22.0% | -1.1 pp |
| Net income (loss) | $135.2M | $111.6M | +21.1% | $108.5M | +24.6% |
| Net margin | 21.9% | 18.9% | +3.0 pp | 19.6% | +2.3 pp |
| Diluted EPS | $0.83 | $0.68 | +$0.15 | $0.67 | +$0.16 |
| Customers | 993 | 993 | ±0.0% | 861 | +15.3% |
Risks
Veeva plans to migrate multichannel CRM applications from the Salesforce platform to its own Veeva Vault platform and does not intend to renew the Salesforce agreement after September 1, 2025. Existing CRM customers must migrate by September 1, 2030, and delays or decisions to use competitor CRM solutions could disrupt customers and materially harm operating results.
Salesforce terminated certain competition restrictions in May 2023, releasing Veeva from minimum order commitments but allowing Salesforce to promote rival CRM products, treat third parties as preferred CRM vendors, or develop a product competing with Veeva CRM. This could intensify competition and hurt Veeva CRM sales.
IQVIA continues not to consent to customers uploading its healthcare professional or organization data into Veeva Network and has restricted use with Veeva Nitro and other Veeva applications, including new data types. These restrictions have harmed sales and adoption of Veeva Network and Veeva OpenData.
Nearly all revenues are generated from life sciences customers. Consolidation, drug pricing reforms such as the Inflation Reduction Act, reduced funding for early-stage life sciences companies, and expected additional sales representative reductions through the fiscal year ending January 31, 2024 could reduce demand for Veeva CRM and Commercial Solutions.
Veeva cites uncertain macroeconomic and geopolitical factors including inflation, interest rates, financial sector volatility, recession concerns, the Russian invasion of Ukraine, and the Israel-Hamas conflict. MD&A also says professional services growth will be negatively impacted by increased project scrutiny and a more challenging macroeconomic environment.
Since February 1, 2023, master subscription agreements governing multi-year orders generally include a termination for convenience right. MD&A says this changes revenue recognition timing and will reduce revenue for the fiscal year ending January 31, 2024, and operating margin is expected to decrease due to this and higher operating expenses.
Reported operating margin decreased 5.0 percentage points for the nine months ended October 31, 2023 versus the prior-year period. MD&A expects operating margin to decrease in the fiscal year ending January 31, 2024 due to increases in operating expenses and the revenue reduction from termination for convenience rights.
Veeva sales cycles can span 12 months or longer and require substantial investment. MD&A states that professional services and other revenue growth for the fiscal year ending January 31, 2024 is expected to be negatively impacted by increased project scrutiny and a more challenging macroeconomic environment.
Competition for highly skilled employees is intense, and Veeva has experienced difficulty hiring and retaining qualified employees. The company made significant awards to senior management in the fiscal year ended January 31, 2023 outside its regular compensation program but cannot guarantee those awards will retain all recipients.
Certain Veeva CRM customers in China had requests to transfer data outside China denied under China's PIPL/CAC process, and over the next 12 months they may be required to use a CRM solution that does not transfer data outside China, potentially a competitor's; China represents approximately 3% of total revenue. The Washington My Health My Data Act effective March 21, 2024 may curtail Veeva Crossix's use of Washington consumer health data and reduce demand.
Veeva is defending trade secret misappropriation claims from IQVIA since 2017 and has active litigation with IQVIA and Medidata. Such litigation can require significant management attention and legal expense, and an adverse outcome could require damages, royalty payments, or prevent Veeva from offering certain services.
The Tax Cuts and Jobs Act requirement to capitalize and amortize research and development expenditures is expected to reduce operating cash flow by approximately $90 million in the fiscal year ending January 31, 2024. The OECD global minimum tax of 15% for certain large multinational companies could also increase Veeva's effective tax rate.
Veeva says competitors may bring products to market earlier or become more technologically capable, including through new or better use of AI technologies, and may offer price concessions or favorable terms. This could reduce sales and margins for Veeva solutions.
As a Delaware public benefit corporation, Veeva's board must balance stockholders' financial interests, stakeholder interests, and its public benefit purpose. Limited legal precedent creates uncertainty, and in a change of control the board might accept an offer that does not maximize short-term stockholder value.
SaaS KPIs
All quarters →Total Customers
Commercial Solutions customers
R&D Solutions customers
Summary, forecast, risks and KPIs are extracted from VEEVA SYSTEMS INC's SEC filings for Q3 FY2024 (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.