01—Abstract
Summary
Summary of the 10-K filed March 18, 2014. Cited figures are marked; the original filing is the authoritative source.
Veeva Systems Inc. filed its first annual report on Form 10-K for the fiscal year ended January 31, 2014, describing itself as a provider of industry-specific, cloud-based software for the life sciences industry.
Total revenues rose to $210.2 milliona in fiscal 2014 from $129.5 million in fiscal 2013, with subscription services revenues of $146.6 million (70% of total revenues). Net income was $23.6 million, compared with $18.8 million a year earlier. The company served 198 life sciences customers as of January 31, 2014, including 33 of the top 50 global pharmaceutical companies, and derived about 41% of total revenues from outside North America.
The filing highlights concentration risks. About 95% of subscription services revenues came from Veeva CRM, and the company depends on a subscription agreement with salesforce.com that requires minimum order commitments of $500 millionb through September 1, 2025, with true-up payments. Subscription agreements are generally one year, and the top 10 customers accounted for 56% of fiscal 2014 revenues.
The company also faces a patent infringement lawsuit from Prolifiq Software, Inc. over Veeva CRM Approved Email, and the filing says the outcome cannot be reasonably estimated. Capital and ownership are also significant. The IPO closed October 21, 2013, with 11,646,750 shares sold by the company at $20.00c per share, for net cash proceeds of $214.5 million.
Cash, cash equivalents and short-term investments totaled $288.1 milliond at year-end. Class B shares carry ten votes each, and holders of Class B stock held about 98.6% of voting power as of January 31, 2014, which concentrates control with executives, directors and their affiliates.
02—Key points
Key Highlights
- Total revenues grew to $210.2 million in fiscal 2014 from $129.5 million in fiscal 2013; subscription services revenues reached $146.6 million, or 70% of total revenues.
- Net income was $23.6 million in fiscal 2014, up from $18.8 million; operating income was $39.3 million, and the effective tax rate was 39%.
- The customer base grew to 198 life sciences customers, including 33 of the top 50 global pharmaceutical companies; the subscription services revenue retention rate was 166% in fiscal 2014.
- About 95% of subscription services revenues came from Veeva CRM solutions, and the company's agreement with salesforce.com requires $500 million in minimum order commitments through September 1, 2025.
- The IPO closed October 21, 2013, raising $214.5 million in net cash proceeds; cash, cash equivalents and short-term investments were $288.1 million at January 31, 2014.
- Class B common stock holders, including executives and directors, held approximately 98.6% of voting power, limiting the influence of Class A investors.
- Prolifiq Software filed a patent infringement lawsuit over Veeva CRM Approved Email, and the company says the outcome and any loss cannot be reasonably estimated.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2014, Veeva Systems kept $0.11.
- Revenue$210.2M100.0%
- Cost of revenue−$82.6M39.3%
- Gross profit$127.5M60.7%
- Operating costs−$88.2M42.0%
- Operating income$39.3M18.7%
- Interest, other & tax−$15.7M7.5%
- Net income$23.6M11.2%
Where FY2014 revenue went
$210.2M- Cost of revenue: $82.6M, 39% of revenue
- Other operating costs: $61.9M, 29% of revenue
- R&D: $26.3M, 13% of revenue
- Net income: $23.6M, 11% of revenue
- Interest, other & tax: $15.7M, 7.5% of revenue
Kept 11% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2014filed March 18, 2014Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $210.15M$129.55M | +62.2% |
| Cost of Revenue | $82.60M$57.02M | +44.9% |
| Gross Profit | $127.55M$72.53M | +75.9% |
| R&D Expenses | $26.33M$14.64M | +79.9% |
| Operating Expenses | $88.25M$42.50M | +107.6% |
| Operating Income | $39.30M$30.03M | +30.9% |
| Net Income | $23.61M$18.78M | +25.7% |
| EPS (Basic) | $0.20$0.17 | +17.6% |
| EPS (Diluted) | $0.15$0.11 | +36.4% |
| Shares Outstanding (Basic) | 51.73M20.89M | +147.6% |
| Shares Outstanding (Diluted) | 68.02M30.60M | +122.3% |
05—Questions
Frequently Asked Questions
How fast was Veeva's revenue growing, and what does the filing say about future growth?
Total revenues grew 62% in fiscal 2014 to $210.2 million, after 111% growth in fiscal 2013. The filing states that the company expects its revenue growth rate to decline in future periods while expenses increase, as it invests in research and development, sales and marketing, and international expansion.
How concentrated is Veeva's business?
Veeva CRM accounted for about 95% of subscription services revenues in fiscal 2014. The top 10 customers accounted for 56% of total revenues. All revenues come from life sciences industry customers, so industry conditions directly affect results.
What are the main financial commitments in the salesforce.com agreement?
The amended agreement, signed March 3, 2014, extends through September 1, 2025, and requires minimum order commitments of $500 million, with true-up payments if orders fall short of $250 million by September 1, 2020 and the full $500 million by September 1, 2025.
Who controls the company's voting power?
Class B common stock carries ten votes per share and Class A carries one. As of January 31, 2014, Class B holders, including executive officers, directors and their affiliates, held about 98.6% of voting power, and that control is expected to last until October 15, 2023.
Does Veeva pay dividends, and how much cash does it have?
The company has never declared or paid cash dividends and intends to retain earnings for growth. Cash, cash equivalents and short-term investments totaled $288.1 million at January 31, 2014, and management believes this is sufficient to meet working capital and capital expenditure needs for at least the next 12 months.
06—Continue