[August 28, 2014] |
|
Veeva Announces Fiscal 2015 Second Quarter Results
PLEASANTON, Calif. --(Business Wire)--
Veeva Systems Inc. (NYSE:VEEV), a leading provider of industry cloud
solutions for life sciences, today announced results for its fiscal
second quarter ended July 31, 2014.
"Veeva's commitment to the customer provides us with a considerable
strategic advantage and is fueling our growth," said CEO Peter Gassner.
"With a foundation of customer success and innovative solutions that
deliver measurable impact and significant time to value, we are well
positioned for the tremendous industry cloud opportunity that lies
ahead."
Fiscal 2015 Second Quarter Results:
-
Revenues: Total revenues for the second quarter were $75.7
million, up from $49.6 million one year ago, an increase of 53%
year-over-year. Subscription services revenues for the second quarter
were $56.6 million, up from $34.1 million one year ago, an increase of
66% year-over-year.
-
Operating income and non-GAAP operating income(1):
Second quarter operating income was $16.8 million, compared to
$9.8 million one year ago, an increase of 71% year-over-year. Non-GAAP
operating income for the second quarter was $20.8 million, compared to
$11.1 million one year ago, an increase of 88% year-over-year.
-
Net income and non-GAAP net income(1): Second
quarter net income was $9.6 million, compared to $6.0 million one year
ago, an increase of 60% year-over-year. Non-GAAP net income for the
second quarter was $12.4 million, compared to $7.3 million one year
ago, an increase of 69% year-over-year.
-
Net income per share and non-GAAP net income per share(1):
For the second quarter, fully diluted net income per share was $0.07,
while non-GAAP fully diluted net income per share was $0.09.
"Our financial results were exceptional this quarter and we're seeing
continued momentum in the business," said CFO Tim Cabral. "Therefore, we
are raising our annual revenues guidance by over $20 million and expect
to cross the $300 million mark in total revenues this fiscal year."
Recent Highlights:
-
Moving the Industry to Multichannel CRM - In the quarter, Veeva
saw particular strength with Veeva CRM deployments globally, added 10
new Veeva CRM Approved Email customers, and signed its first customer
to Veeva CRM Engage, Veeva's cloud-based online detailing platform.
-
Momentum in Veeva Vault - Veeva made great progress with Veeva
Vault, a next-generation regulated content management solution, adding
more than 10 new customers in the quarter, including the second Top 10
pharma customer for Vault eTMF, Veeva's solution for the management of
clinical trial content.
-
Veeva Network Goes Global - Veeva delivered the first
single-instance global customer master solution with Veeva Network
Version 3. This new global capability generated strong interest and
prompted some early customers to expand their use of Network across
multiple countries.
Financial Outlook:
Veeva is providing guidance for its fiscal third quarter ending October
31, 2014 as follows:
-
Total revenues between $78 and $79 million.
-
Non-GAAP operating income between $19 and $20 million.
-
Non-GAAP fully diluted net income per share of $0.08.
Veeva is updating guidance for its fiscal year ending January 31, 2015
as follows:
-
Total revenues between $300 and $303 million, versus our prior
guidance of $277 to $282 million.
-
Non-GAAP operating income between $73 and $76 million, versus our
prior guidance of $58 to $63 million.
-
Non-GAAP fully diluted net income per share between $0.30 and $0.31,
versus our prior guidance of $0.26 to $0.28.
Conference Call Information
What:
|
|
|
|
|
Veeva's Fiscal 2015 Second Quarter Results Conference Call
|
When:
|
|
|
|
|
Thursday, August 28, 2014
|
Time:
|
|
|
|
|
1:30 p.m. PT (4:30 p.m. ET)
|
Live Call:
|
|
|
|
|
1-877-201-0168, domestic
|
|
|
|
|
|
1-647-788-4901, international
|
|
|
|
|
|
Conference ID 8534 8607
|
Webcast:
|
|
|
|
|
ir.veeva.com
|
(1) This press release uses non-GAAP financial metrics that
are adjusted for the impact of various GAAP items. See the sections
titled "Non-GAAP Financial Measures" and the tables entitled
"Reconciliation of GAAP to Non-GAAP Financial Measures" below for
details.
About Veeva Systems
Veeva Systems Inc. is a leader in cloud-based software for the global
life sciences industry. Committed to innovation, product excellence, and
customer success, Veeva has more than 200 customers, ranging from the
world's largest pharmaceutical companies to emerging biotechs. Veeva is
headquartered in the San Francisco Bay Area, with offices in Europe,
Asia, and Latin America. For more information, visit www.veeva.com.
Forward-looking Statements
This release contains forward-looking statements, including statements
regarding the market opportunity in industry cloud, Veeva's future
financial outlook and financial performance, market growth, the benefits
from the use of Veeva's solutions, our strategies, and general business
conditions. Any forward-looking statements contained in this press
release are based upon Veeva's historical performance and its current
plans, estimates and expectations and are not a representation that such
plans, estimates, or expectations will be achieved. These
forward-looking statements represent Veeva's expectations as of the date
of this press announcement. Subsequent events may cause these
expectations to change, and Veeva disclaims any obligation to update the
forward-looking statements in the future. These forward-looking
statements are subject to known and unknown risks and uncertainties that
may cause actual results to differ materially, including (i) adverse
changes in general economic or market conditions, particularly in the
life sciences industry; (ii) delays or reductions in information
technology spending, particularly in the life sciences industry,
including as a result of mergers in the life sciences industry; (iii)
dependence on revenues from our Veeva CRM solution, and the rate of
adoption of our new products; (iv) competitive factors, including but
not limited to pricing pressures, industry consolidation, entry of new
competitors and new applications and marketing initiatives by our
competitors; (v) our ability to manage our growth effectively; (vi) our
limited operating history, which makes it difficult to predict future
results; (vii) the development of the market for enterprise cloud
services, particularly in the life sciences industry; (viii) acceptance
of our applications and services by customers, including renewals of
existing subscriptions and purchases of subscriptions for additional
users and solutions; (ix) breaches in our security measures,
unauthorized access to our customers' data, or system availability or
performance problems associated with our data centers or computing
infrastructure; (x) our expectation that the future growth rate of our
revenues will decline, and that as our costs increase, we may not be
able to generate sufficient revenues to sustain the level of
profitability we have achieved in the past or achieve profitability in
the future; (xi) loss of one or more key customers; and (xii) changes in
sales that may not be immediately reflected in our results due to our
subscription model.
Additional risks and uncertainties that could affect Veeva's financial
results are included under the captions "Risk Factors" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations," in the company's filing on Form 10-Q for the period ended
April 30, 2014, which is available on the company's website at www.veeva.com
under the Investors section and on the SEC's website at www.sec.gov.
Further information on potential risks that could affect actual results
will be included in other filings Veeva makes with the SEC from time to
time.
|
|
|
|
|
|
|
|
VEEVA SYSTEMS INC.
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
July 31,
|
|
|
January 31,
|
|
|
|
|
2014
|
|
|
2014
|
|
|
|
|
(Unaudited)
|
|
|
Assets
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
140,116
|
|
|
|
$
|
262,507
|
Short-term investments
|
|
|
|
|
210,086
|
|
|
|
|
25,625
|
Accounts receivable, net
|
|
|
|
|
61,897
|
|
|
|
|
58,433
|
Deferred income taxes
|
|
|
|
|
2,075
|
|
|
|
|
2,075
|
Income tax receivable
|
|
|
|
|
4,840
|
|
|
|
|
1,389
|
Other current assets
|
|
|
|
|
3,991
|
|
|
|
|
3,703
|
Total current assets
|
|
|
|
|
423,005
|
|
|
|
|
353,732
|
Property and equipment, net
|
|
|
|
|
27,025
|
|
|
|
|
2,445
|
Capitalized internal-use software, net
|
|
|
|
|
1,428
|
|
|
|
|
1,585
|
Goodwill
|
|
|
|
|
4,850
|
|
|
|
|
4,850
|
Intangible assets, net
|
|
|
|
|
5,727
|
|
|
|
|
6,551
|
Other long-term assets
|
|
|
|
|
2,206
|
|
|
|
|
1,145
|
Total assets
|
|
|
|
$
|
464,241
|
|
|
|
$
|
370,308
|
|
|
|
|
|
|
|
|
Liabilities and stockholders' equity
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
|
$
|
1,798
|
|
|
|
$
|
2,117
|
Accrued compensation and benefits
|
|
|
|
|
6,975
|
|
|
|
|
8,750
|
Accrued expenses and other liabilities
|
|
|
|
|
8,249
|
|
|
|
|
7,931
|
Income tax payable
|
|
|
|
|
932
|
|
|
|
|
439
|
Deferred revenue
|
|
|
|
|
85,303
|
|
|
|
|
67,380
|
Total current liabilities
|
|
|
|
|
103,257
|
|
|
|
|
86,617
|
Deferred income taxes, noncurrent
|
|
|
|
|
1,698
|
|
|
|
|
1,698
|
Other long-term liabilities
|
|
|
|
|
1,899
|
|
|
|
|
1,897
|
Total liabilities
|
|
|
|
|
106,854
|
|
|
|
|
90,212
|
Stockholders' equity:
|
|
|
|
|
|
|
|
Class A common stock
|
|
|
|
|
-
|
|
|
|
|
-
|
Class B common stock
|
|
|
|
|
1
|
|
|
|
|
1
|
Additional paid-in capital
|
|
|
|
|
292,151
|
|
|
|
|
231,534
|
Accumulated other comprehensive income (loss)
|
|
|
|
|
(106
|
)
|
|
|
|
19
|
Retained earnings
|
|
|
|
|
65,341
|
|
|
|
|
48,542
|
Total stockholders' equity
|
|
|
|
|
357,387
|
|
|
|
|
280,096
|
Total liabilities and stockholders' equity
|
|
|
|
$
|
464,241
|
|
|
|
$
|
370,308
|
|
|
|
|
|
|
|
|
|
|
|
VEEVA SYSTEMS INC.
|
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
(In thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
July 31,
|
|
|
July 31,
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
|
(Unaudited)
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscription services
|
|
|
$
|
56,572
|
|
|
|
$
|
34,063
|
|
|
|
$
|
105,093
|
|
|
|
$
|
62,000
|
|
Professional services and other
|
|
|
|
19,092
|
|
|
|
|
15,518
|
|
|
|
|
37,292
|
|
|
|
|
30,369
|
|
Total revenues
|
|
|
|
75,664
|
|
|
|
|
49,581
|
|
|
|
|
142,385
|
|
|
|
|
92,369
|
|
Cost of revenues(2):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of subscription services
|
|
|
|
13,346
|
|
|
|
|
7,948
|
|
|
|
|
25,386
|
|
|
|
|
14,898
|
|
Cost of professional services and other
|
|
|
|
14,790
|
|
|
|
|
11,195
|
|
|
|
|
28,700
|
|
|
|
|
21,954
|
|
Total cost of revenues
|
|
|
|
28,136
|
|
|
|
|
19,143
|
|
|
|
|
54,086
|
|
|
|
|
36,852
|
|
Gross profit
|
|
|
|
47,528
|
|
|
|
|
30,438
|
|
|
|
|
88,299
|
|
|
|
|
55,517
|
|
Operating expenses(2):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
|
9,787
|
|
|
|
|
6,357
|
|
|
|
|
18,779
|
|
|
|
|
11,884
|
|
Sales and marketing
|
|
|
|
13,810
|
|
|
|
|
9,610
|
|
|
|
|
26,624
|
|
|
|
|
17,272
|
|
General and administrative
|
|
|
|
7,146
|
|
|
|
|
4,633
|
|
|
|
|
13,554
|
|
|
|
|
8,350
|
|
Total operating expenses
|
|
|
|
30,743
|
|
|
|
|
20,600
|
|
|
|
|
58,957
|
|
|
|
|
37,506
|
|
Operating income
|
|
|
|
16,785
|
|
|
|
|
9,838
|
|
|
|
|
29,342
|
|
|
|
|
18,011
|
|
Other expense, net
|
|
|
|
(101
|
)
|
|
|
|
(65
|
)
|
|
|
|
(131
|
)
|
|
|
|
(564
|
)
|
Income before income taxes
|
|
|
|
16,684
|
|
|
|
|
9,773
|
|
|
|
|
29,211
|
|
|
|
|
17,447
|
|
Provision for income taxes
|
|
|
|
7,106
|
|
|
|
|
3,775
|
|
|
|
|
12,412
|
|
|
|
|
6,604
|
|
Net income
|
|
|
$
|
9,578
|
|
|
|
$
|
5,998
|
|
|
|
$
|
16,799
|
|
|
|
$
|
10,843
|
|
Net income attributable to Class A and Class B common
stockholders, basic and diluted
|
|
|
$
|
9,490
|
|
|
|
$
|
1,275
|
|
|
|
$
|
16,643
|
|
|
|
$
|
2,222
|
|
Net income per share attributable to Class A and Class B common
stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
0.07
|
|
|
|
$
|
0.05
|
|
|
|
$
|
0.13
|
|
|
|
$
|
0.09
|
|
Diluted
|
|
|
$
|
0.07
|
|
|
|
$
|
0.03
|
|
|
|
$
|
0.12
|
|
|
|
$
|
0.06
|
|
Weighted-average shares used to compute earnings per share
attributable to Class A and Class B common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
127,314
|
|
|
|
|
24,418
|
|
|
|
|
125,632
|
|
|
|
|
23,440
|
|
Diluted
|
|
|
|
143,353
|
|
|
|
|
37,038
|
|
|
|
|
143,506
|
|
|
|
|
35,833
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in unrealized gains on available-for-sale investments
|
|
|
$
|
(114
|
)
|
|
|
$
|
(5
|
)
|
|
|
$
|
(68
|
)
|
|
|
$
|
(2
|
)
|
Net change in cumulative foreign currency translation gain
|
|
|
|
(23
|
)
|
|
|
|
-
|
|
|
|
|
(57
|
)
|
|
|
|
-
|
|
Comprehensive income
|
|
|
$
|
9,441
|
|
|
|
$
|
5,993
|
|
|
|
$
|
16,674
|
|
|
|
$
|
10,841
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
_________________________
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) Includes stock-based compensation as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of subscription services
|
|
|
$
|
54
|
|
|
|
$
|
6
|
|
|
|
$
|
107
|
|
|
|
$
|
9
|
|
Cost of professional services and other
|
|
|
|
580
|
|
|
|
|
135
|
|
|
|
|
1,162
|
|
|
|
|
228
|
|
Research and development
|
|
|
|
874
|
|
|
|
|
271
|
|
|
|
|
1,761
|
|
|
|
|
466
|
|
Sales and marketing
|
|
|
|
760
|
|
|
|
|
299
|
|
|
|
|
1,536
|
|
|
|
|
482
|
|
General and administrative
|
|
|
|
1,132
|
|
|
|
|
504
|
|
|
|
|
2,090
|
|
|
|
|
765
|
|
Total stock-based compensation
|
|
|
$
|
3,400
|
|
|
|
$
|
1,215
|
|
|
|
$
|
6,656
|
|
|
|
$
|
1,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VEEVA SYSTEMS INC.
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
July 31,
|
|
|
July 31,
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
|
(Unaudited)
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
9,578
|
|
|
|
$
|
5,998
|
|
|
|
$
|
16,799
|
|
|
|
$
|
10,843
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
991
|
|
|
|
|
511
|
|
|
|
|
1,921
|
|
|
|
|
778
|
|
Amortization of premiums on short-term investments
|
|
|
|
421
|
|
|
|
|
89
|
|
|
|
|
733
|
|
|
|
|
178
|
|
Stock-based compensation
|
|
|
|
3,400
|
|
|
|
|
1,215
|
|
|
|
|
6,656
|
|
|
|
|
1,950
|
|
Deferred income taxes
|
|
|
|
-
|
|
|
|
|
(173
|
)
|
|
|
|
-
|
|
|
|
|
(173
|
)
|
Bad debt expense
|
|
|
|
41
|
|
|
|
|
191
|
|
|
|
|
69
|
|
|
|
|
282
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
|
(721
|
)
|
|
|
|
453
|
|
|
|
|
(3,533
|
)
|
|
|
|
(435
|
)
|
Income taxes
|
|
|
|
(280
|
)
|
|
|
|
(3,590
|
)
|
|
|
|
(2,958
|
)
|
|
|
|
(3,983
|
)
|
Other current and long-term assets
|
|
|
|
511
|
|
|
|
|
(365
|
)
|
|
|
|
(1,350
|
)
|
|
|
|
(893
|
)
|
Accounts payable
|
|
|
|
(1,210
|
)
|
|
|
|
(401
|
)
|
|
|
|
(298
|
)
|
|
|
|
(2,103
|
)
|
Accrued expenses and other current liabilities
|
|
|
|
(6,544
|
)
|
|
|
|
(808
|
)
|
|
|
|
(1,226
|
)
|
|
|
|
4,139
|
|
Deferred revenue
|
|
|
|
10,431
|
|
|
|
|
3,897
|
|
|
|
|
17,923
|
|
|
|
|
9,353
|
|
Long-term liabilities
|
|
|
|
(10
|
)
|
|
|
|
221
|
|
|
|
|
2
|
|
|
|
|
325
|
|
Net cash provided by operating activities
|
|
|
|
16,608
|
|
|
|
|
7,238
|
|
|
|
|
34,738
|
|
|
|
|
20,261
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of short-term investments
|
|
|
|
(94,776
|
)
|
|
|
|
(1,414
|
)
|
|
|
|
(229,892
|
)
|
|
|
|
(2,771
|
)
|
Maturities and sales of investments
|
|
|
|
40,763
|
|
|
|
|
1,900
|
|
|
|
|
44,630
|
|
|
|
|
2,600
|
|
Purchases of property and equipment
|
|
|
|
(24,983
|
)
|
|
|
|
(884
|
)
|
|
|
|
(25,282
|
)
|
|
|
|
(1,101
|
)
|
Acquisitions, net of cash acquired
|
|
|
|
-
|
|
|
|
|
(12,149
|
)
|
|
|
|
-
|
|
|
|
|
(12,149
|
)
|
Payments for capitalized internal-use software
|
|
|
|
-
|
|
|
|
|
(293
|
)
|
|
|
|
(220
|
)
|
|
|
|
(293
|
)
|
Proceeds from (issuance of) note receivable-related party
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
253
|
|
Payments for restricted cash and deposits
|
|
|
|
4
|
|
|
|
|
215
|
|
|
|
|
1
|
|
|
|
|
3
|
|
Net cash used in investing activities
|
|
|
|
(78,992
|
)
|
|
|
|
(12,625
|
)
|
|
|
|
(210,763
|
)
|
|
|
|
(13,458
|
)
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from early exercise of common stock options
|
|
|
|
-
|
|
|
|
|
24
|
|
|
|
|
-
|
|
|
|
|
67
|
|
Proceeds from exercise of common stock options
|
|
|
|
1,527
|
|
|
|
|
146
|
|
|
|
|
2,212
|
|
|
|
|
377
|
|
Proceeds from Employee Stock Purchase Plan
|
|
|
|
5,951
|
|
|
|
|
-
|
|
|
|
|
5,951
|
|
|
|
|
-
|
|
Net proceeds from (payments for) offerings
|
|
|
|
(499
|
)
|
|
|
|
(529
|
)
|
|
|
|
34,495
|
|
|
|
|
(529
|
)
|
Excess tax benefits from employee stock plans
|
|
|
|
6,654
|
|
|
|
|
-
|
|
|
|
|
11,033
|
|
|
|
|
-
|
|
Net cash provided by (used in) financing activities
|
|
|
|
13,633
|
|
|
|
|
(359
|
)
|
|
|
|
53,691
|
|
|
|
|
(85
|
)
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
|
(21
|
)
|
|
|
|
-
|
|
|
|
|
(57
|
)
|
|
|
|
-
|
|
Net change in cash and cash equivalents
|
|
|
|
(48,772
|
)
|
|
|
|
(5,746
|
)
|
|
|
|
(122,391
|
)
|
|
|
|
6,718
|
|
Cash and cash equivalents at beginning of period
|
|
|
|
188,888
|
|
|
|
|
44,354
|
|
|
|
|
262,507
|
|
|
|
|
31,890
|
|
Cash and cash equivalents at end of period
|
|
|
$
|
140,116
|
|
|
|
$
|
38,608
|
|
|
|
$
|
140,116
|
|
|
|
$
|
38,608
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Measures
Veeva has provided in this release financial information that has not
been prepared in accordance with generally accepted accounting
principles in the United States, or GAAP. This information includes
non-GAAP net income, non-GAAP fully diluted net income per share,
non-GAAP operating income, and non-GAAP operating margin. Veeva uses
these non-GAAP financial measures internally for budgeting and resource
allocation purposes and in analyzing its financial results. Veeva
believes they are useful to investors, as a supplement to GAAP measures,
as a means to evaluate period-to-period comparisons, in evaluating
Veeva's ongoing operating results and trends and in comparing its
financial measures with other companies in Veeva's industry, many of
which present similar non-GAAP financial measures to investors. These
non-GAAP measures are adjusted for the impact of expenses associated
with stock-based compensation, amortization of purchased intangibles,
capitalization of expenses associated with development of internal-use
software and the subsequent amortization of the capitalized expenses,
and the tax effect of all of these non-GAAP adjustments.
As described above, Veeva may exclude the following items from its
non-GAAP measures:
-
Stock-based compensation expenses. Veeva excludes stock-based
compensation expenses from its non-GAAP measures primarily because
they are non-cash expenses and management finds it useful to exclude
certain non-cash charges to assess the appropriate level of various
operating expenses to assist in budgeting, planning and forecasting
future periods. Moreover, because of varying available valuation
methodologies, subjective assumptions and the variety of award types
that companies can use under FASB ASC Topic 718, Veeva believes
excluding stock-based compensation expenses allows investors to make
meaningful comparisons between our recurring core business operating
results and those of other companies.
-
Amortization of purchased intangibles. Veeva incurs amortization of
acquisition-related purchased intangible assets in connection with
acquisitions of certain businesses and technologies. Amortization of
intangible assets is inconsistent in amount and frequency and is
significantly affected by the timing and size of acquisitions.
Management finds it useful to exclude these variable charges to assess
the appropriate level of various operating expenses to assist in
budgeting, planning and forecasting future periods. Investors should
note that the use of intangible assets contributed to our revenues
earned during the periods presented and will contribute to our future
period revenues as well. Amortization of purchased intangible assets
will recur in future periods.
-
Capitalization of internal-use software development expenses and the
subsequent amortization of the capitalized expenses. Veeva capitalizes
certain costs incurred for the development of computer software for
internal use and then amortizes those costs over the estimated useful
life. Capitalization and amortization of software development costs
can vary significantly depending on the timing of products reaching
technological feasibility and being made generally available.
Moreover, because of the variety of approaches taken and the
subjective assumptions made by other companies in this area, Veeva
believes that excluding the effects of capitalized software costs
allows investors to make more meaningful comparisons between our
operating results and those of other companies.
-
Income tax effects on the difference between GAAP and non-GAAP costs
and expenses. The income tax effects that are excluded from the
non-GAAP measures relate to the tax impact on the difference between
GAAP and non-GAAP costs and expenses due to stock-based compensation,
purchased intangibles and capitalized internal-use software for GAAP
and non-GAAP measures.
There are limitations in using non-GAAP financial measures because
non-GAAP financial measures are not prepared in accordance with GAAP and
may be different from non-GAAP financial measures used by other
companies. The non-GAAP financial measures are limited in value because
they exclude certain items that may have a material impact upon our
reported financial results. In addition, they are subject to inherent
limitations as they reflect the exercise of judgments by management
about which items are adjusted to calculate our non-GAAP financial
measures. Veeva compensates for these limitations by analyzing current
and future results on a GAAP basis as well as a non-GAAP basis and also
by providing GAAP measures in our public disclosures.
Non-GAAP financial measures should not be considered in isolation from,
or as a substitute for, financial information prepared in accordance
with GAAP. Investors are encouraged to review the reconciliation of
these non-GAAP measures to their most directly comparable GAAP financial
measure and not to rely on any single financial measure to evaluate our
business. A reconciliation of GAAP to the non-GAAP financial measures
has been provided in the tables below.
Veeva is not able, at this time, to provide GAAP targets for operating
income and operating margin and fully diluted net income per share for
its fiscal third quarter ending October 31, 2014 or its fiscal year
ending January 31, 2015 because of the difficulty of estimating certain
items that are excluded from non-GAAP operating margin and non-GAAP
fully diluted net income per share, such as charges related to
stock-based compensation expense, capitalization of internal-use
software development expenses and the subsequent amortization of the
capitalized expenses and amortization of acquisition related
intangibles, the effect of which may be significant.
The following table reconciles the specific items excluded from GAAP net
income in the calculation of non-GAAP net income and non-GAAP net income
per share for the periods shown below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VEEVA SYSTEMS INC.
|
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
July 31,
|
|
|
July 31,
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
|
(Unaudited)
|
Cost of subscription services revenues on a GAAP basis
|
|
|
$
|
13,346
|
|
|
|
$
|
7,948
|
|
|
|
$
|
25,386
|
|
|
|
$
|
14,898
|
|
Stock-based compensation expense
|
|
|
|
(54
|
)
|
|
|
|
(6
|
)
|
|
|
|
(107
|
)
|
|
|
|
(9
|
)
|
Amortization of purchased intangibles
|
|
|
|
(369
|
)
|
|
|
|
-
|
|
|
|
|
(739
|
)
|
|
|
|
-
|
|
Amortization of internal-use software
|
|
|
|
(217
|
)
|
|
|
|
-
|
|
|
|
|
(416
|
)
|
|
|
|
-
|
|
Cost of subscription services revenues on a non-GAAP basis
|
|
|
$
|
12,706
|
|
|
|
$
|
7,942
|
|
|
|
$
|
24,124
|
|
|
|
$
|
14,889
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin on subscription services revenues on a GAAP basis
|
|
|
|
76.4
|
%
|
|
|
|
76.7
|
%
|
|
|
|
75.8
|
%
|
|
|
|
76.0
|
%
|
Stock-based compensation expense
|
|
|
|
0.1
|
|
|
|
|
-
|
|
|
|
|
0.1
|
|
|
|
|
-
|
|
Amortization of purchased intangibles
|
|
|
|
0.6
|
|
|
|
|
-
|
|
|
|
|
0.7
|
|
|
|
|
-
|
|
Amortization of internal-use software
|
|
|
|
0.4
|
|
|
|
|
-
|
|
|
|
|
0.4
|
|
|
|
|
-
|
|
Gross margin on subscription services revenues on a non-GAAP basis
|
|
|
|
77.5
|
%
|
|
|
|
76.7
|
%
|
|
|
|
77.0
|
%
|
|
|
|
76.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of professional services and other revenues on a GAAP basis
|
|
|
$
|
14,790
|
|
|
|
$
|
11,195
|
|
|
|
$
|
28,700
|
|
|
|
$
|
21,954
|
|
Stock-based compensation expense
|
|
|
|
(580
|
)
|
|
|
|
(135
|
)
|
|
|
|
(1,162
|
)
|
|
|
|
(228
|
)
|
Amortization of purchased intangibles
|
|
|
|
-
|
|
|
|
|
(196
|
)
|
|
|
|
-
|
|
|
|
|
(196
|
)
|
Cost of professional services and other revenues on a non-GAAP basis
|
|
|
$
|
14,210
|
|
|
|
$
|
10,864
|
|
|
|
$
|
27,538
|
|
|
|
$
|
21,530
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin on professional services and other revenues on a GAAP
basis
|
|
|
|
22.5
|
%
|
|
|
|
27.9
|
%
|
|
|
|
23.0
|
%
|
|
|
|
27.7
|
%
|
Stock-based compensation expense
|
|
|
|
3.1
|
|
|
|
|
0.9
|
|
|
|
|
3.2
|
|
|
|
|
0.8
|
|
Amortization of purchased intangibles
|
|
|
|
-
|
|
|
|
|
1.2
|
|
|
|
|
-
|
|
|
|
|
0.6
|
|
Gross margin on professional services and other revenues on a
non-GAAP basis
|
|
|
|
25.6
|
%
|
|
|
|
30.0
|
%
|
|
|
|
26.2
|
%
|
|
|
|
29.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit on a GAAP basis
|
|
|
$
|
47,528
|
|
|
|
$
|
30,438
|
|
|
|
$
|
88,299
|
|
|
|
$
|
55,517
|
|
Stock-based compensation expense
|
|
|
|
634
|
|
|
|
|
141
|
|
|
|
|
1,269
|
|
|
|
|
237
|
|
Amortization of purchased intangibles
|
|
|
|
369
|
|
|
|
|
196
|
|
|
|
|
739
|
|
|
|
|
196
|
|
Amortization of internal-use software
|
|
|
|
217
|
|
|
|
|
-
|
|
|
|
|
416
|
|
|
|
|
-
|
|
Gross profit on a non-GAAP basis
|
|
|
$
|
48,748
|
|
|
|
$
|
30,775
|
|
|
|
$
|
90,723
|
|
|
|
$
|
55,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin on total revenues on a GAAP basis
|
|
|
|
62.8
|
%
|
|
|
|
61.4
|
%
|
|
|
|
62.0
|
%
|
|
|
|
60.1
|
%
|
Stock-based compensation expense
|
|
|
|
0.8
|
|
|
|
|
0.3
|
|
|
|
|
0.9
|
|
|
|
|
0.3
|
|
Amortization of purchased intangibles
|
|
|
|
0.5
|
|
|
|
|
0.4
|
|
|
|
|
0.5
|
|
|
|
|
0.2
|
|
Amortization of internal-use software
|
|
|
|
0.3
|
|
|
|
|
-
|
|
|
|
|
0.3
|
|
|
|
|
-
|
|
Gross margin on total revenues on a non-GAAP basis
|
|
|
|
64.4
|
%
|
|
|
|
62.1
|
%
|
|
|
|
63.7
|
%
|
|
|
|
60.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expense on a GAAP basis
|
|
|
$
|
9,787
|
|
|
|
$
|
6,357
|
|
|
|
$
|
18,779
|
|
|
|
$
|
11,884
|
|
Stock-based compensation expense
|
|
|
|
(874
|
)
|
|
|
|
(271
|
)
|
|
|
|
(1,761
|
)
|
|
|
|
(466
|
)
|
Capitalization of internal-use software
|
|
|
|
-
|
|
|
|
|
293
|
|
|
|
|
220
|
|
|
|
|
293
|
|
Amortization of internal-use software
|
|
|
|
-
|
|
|
|
|
(116
|
)
|
|
|
|
-
|
|
|
|
|
(220
|
)
|
Research and development expense on a non-GAAP basis
|
|
|
$
|
8,913
|
|
|
|
$
|
6,263
|
|
|
|
$
|
17,238
|
|
|
|
$
|
11,491
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing expense on a GAAP basis
|
|
|
$
|
13,810
|
|
|
|
$
|
9,610
|
|
|
|
$
|
26,624
|
|
|
|
$
|
17,272
|
|
Stock-based compensation expense
|
|
|
|
(760
|
)
|
|
|
|
(299
|
)
|
|
|
|
(1,536
|
)
|
|
|
|
(482
|
)
|
Amortization of purchased intangibles
|
|
|
|
(43
|
)
|
|
|
|
-
|
|
|
|
|
(86
|
)
|
|
|
|
-
|
|
Sales and marketing expense on a non-GAAP basis
|
|
|
$
|
13,007
|
|
|
|
$
|
9,311
|
|
|
|
$
|
25,002
|
|
|
|
$
|
16,790
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expense on a GAAP basis
|
|
|
$
|
7,146
|
|
|
|
$
|
4,633
|
|
|
|
$
|
13,554
|
|
|
|
$
|
8,350
|
|
Stock-based compensation expense
|
|
|
|
(1,132
|
)
|
|
|
|
(504
|
)
|
|
|
|
(2,090
|
)
|
|
|
|
(765
|
)
|
General and administrative expense on a non-GAAP basis
|
|
|
$
|
6,014
|
|
|
|
$
|
4,129
|
|
|
|
$
|
11,464
|
|
|
|
$
|
7,585
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VEEVA SYSTEMS INC.
|
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (continued)
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
July 31,
|
|
|
July 31,
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
(Unaudited)
|
Operating expense on a GAAP basis
|
|
$
|
30,743
|
|
|
|
$
|
20,600
|
|
|
|
$
|
58,957
|
|
|
|
$
|
37,506
|
|
Stock-based compensation expense
|
|
|
(2,766
|
)
|
|
|
|
(1,074
|
)
|
|
|
|
(5,387
|
)
|
|
|
|
(1,713
|
)
|
Amortization of purchased intangibles
|
|
|
(43
|
)
|
|
|
|
-
|
|
|
|
|
(86
|
)
|
|
|
|
-
|
|
Capitalization of internal-use software
|
|
|
-
|
|
|
|
|
293
|
|
|
|
|
220
|
|
|
|
|
293
|
|
Amortization of internal-use software
|
|
|
-
|
|
|
|
|
(116
|
)
|
|
|
|
-
|
|
|
|
|
(220
|
)
|
Operating expense on a non-GAAP basis
|
|
$
|
27,934
|
|
|
|
$
|
19,703
|
|
|
|
$
|
53,704
|
|
|
|
$
|
35,866
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income on a GAAP basis
|
|
$
|
16,785
|
|
|
|
$
|
9,838
|
|
|
|
$
|
29,342
|
|
|
|
$
|
18,011
|
|
Stock-based compensation expense
|
|
|
3,400
|
|
|
|
|
1,215
|
|
|
|
|
6,656
|
|
|
|
|
1,950
|
|
Amortization of purchased intangibles
|
|
|
412
|
|
|
|
|
196
|
|
|
|
|
825
|
|
|
|
|
196
|
|
Capitalization of internal-use software
|
|
|
-
|
|
|
|
|
(293
|
)
|
|
|
|
(220
|
)
|
|
|
|
(293
|
)
|
Amortization of internal-use software
|
|
|
217
|
|
|
|
|
116
|
|
|
|
|
416
|
|
|
|
|
220
|
|
Operating income on a non-GAAP basis
|
|
$
|
20,814
|
|
|
|
$
|
11,072
|
|
|
|
$
|
37,019
|
|
|
|
$
|
20,084
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin on a GAAP basis
|
|
|
22.2
|
%
|
|
|
|
19.8
|
%
|
|
|
|
20.6
|
%
|
|
|
|
19.5
|
%
|
Stock-based compensation expense
|
|
|
4.5
|
|
|
|
|
2.5
|
|
|
|
|
4.7
|
|
|
|
|
2.1
|
|
Amortization of purchased intangibles
|
|
|
0.5
|
|
|
|
|
0.4
|
|
|
|
|
0.6
|
|
|
|
|
0.2
|
|
Capitalization of internal-use software
|
|
|
-
|
|
|
|
|
(0.6
|
)
|
|
|
|
(0.2
|
)
|
|
|
|
(0.3
|
)
|
Amortization of internal-use software
|
|
|
0.3
|
|
|
|
|
0.2
|
|
|
|
|
0.3
|
|
|
|
|
0.2
|
|
Operating margin on a non-GAAP basis
|
|
|
27.5
|
%
|
|
|
|
22.3
|
%
|
|
|
|
26.0
|
%
|
|
|
|
21.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income on a GAAP basis
|
|
$
|
9,578
|
|
|
|
$
|
5,998
|
|
|
|
$
|
16,799
|
|
|
|
$
|
10,843
|
|
Stock-based compensation expense
|
|
|
3,400
|
|
|
|
|
1,215
|
|
|
|
|
6,656
|
|
|
|
|
1,950
|
|
Amortization of purchased intangibles
|
|
|
412
|
|
|
|
|
196
|
|
|
|
|
825
|
|
|
|
|
196
|
|
Capitalization of internal-use software
|
|
|
-
|
|
|
|
|
(293
|
)
|
|
|
|
(220
|
)
|
|
|
|
(293
|
)
|
Amortization of internal-use software
|
|
|
217
|
|
|
|
|
116
|
|
|
|
|
416
|
|
|
|
|
220
|
|
Income tax effect on non-GAAP adjustments
|
|
|
(1,246
|
)
|
|
|
|
62
|
|
|
|
|
(1,737
|
)
|
|
|
|
(9
|
)
|
Net income on a non-GAAP basis
|
|
$
|
12,361
|
|
|
|
$
|
7,294
|
|
|
|
$
|
22,739
|
|
|
|
$
|
12,907
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income allocated to participating securities on a GAAP basis
|
|
$
|
(88
|
)
|
|
|
$
|
(4,723
|
)
|
|
|
$
|
(156
|
)
|
|
|
$
|
(8,621
|
)
|
Net income allocated to participating securities from non-GAAP
adjustments(3)
|
|
|
(26
|
)
|
|
|
|
4,541
|
|
|
|
|
(56
|
)
|
|
|
|
8,273
|
|
Net income allocated to participating securities on a non-GAAP basis
|
|
|
(114
|
)
|
|
|
|
(182
|
)
|
|
|
|
(212
|
)
|
|
|
|
(348
|
)
|
Net income attributable to common stockholders on a non-GAAP basis
|
|
$
|
12,247
|
|
|
|
$
|
7,112
|
|
|
|
$
|
22,527
|
|
|
|
$
|
12,559
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per share on a GAAP basis
|
|
$
|
0.07
|
|
|
|
$
|
0.03
|
|
|
|
$
|
0.12
|
|
|
|
$
|
0.06
|
|
Stock-based compensation expense
|
|
|
0.03
|
|
|
|
|
0.01
|
|
|
|
|
0.05
|
|
|
|
|
0.01
|
|
Amortization of purchased intangibles
|
|
|
0.00
|
|
|
|
|
0.00
|
|
|
|
|
0.00
|
|
|
|
|
0.00
|
|
Capitalization of internal-use software
|
|
|
-
|
|
|
|
|
(0.00
|
)
|
|
|
|
(0.00
|
)
|
|
|
|
(0.00
|
)
|
Amortization of internal-use software
|
|
|
0.00
|
|
|
|
|
0.00
|
|
|
|
|
0.00
|
|
|
|
|
0.00
|
|
Income tax effect on non-GAAP adjustments
|
|
|
(0.01
|
)
|
|
|
|
0.00
|
|
|
|
|
(0.01
|
)
|
|
|
|
(0.00
|
)
|
Impact of assumed conversion of preferred stock(3)
|
|
|
-
|
|
|
|
|
0.02
|
|
|
|
|
-
|
|
|
|
|
0.03
|
|
Diluted net income per share on a non-GAAP basis
|
|
|
0.09
|
|
|
|
|
0.06
|
|
|
|
|
0.16
|
|
|
|
|
0.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3) In computing the net income attributed to common
stockholders for the three and six months ended July 31, 2013 for
non-GAAP purposes, the net income allocated to participating securities
was adjusted for the convertible preferred stock that was assumed to be
converted to common shares. In computing the fully diluted shares for
the three and six months ended July 31, 2013 for non-GAAP purposes, the
85,000,000 shares of convertible preferred stock that was issued and
outstanding as of July 31, 2013 were assumed to be converted to common
shares.
[ Back To TMCnet.com's Homepage ]
|