01—Abstract
Summary
Summary of the 10-K filed April 1, 2015. Cited figures are marked; the original filing is the authoritative source.
Veeva Systems Inc. filed this annual report on Form 10-K for the fiscal year ended January 31, 2015.
The company describes itself as a leading provider of cloud-based software solutions for the global life sciences industry, offering Veeva CRM, Veeva Vault, Veeva Network and Veeva OpenKey. Total revenues were $313.2 milliona, up from $210.2 million, and net income was $40.4 million, versus $23.6 million in the prior year. Subscription services revenues were $233.1 million, or 74% of total revenues, and operating income was $70.0 million.
The company reported 276 life sciences customers, a subscription services revenue retention rate of 138%, and cash, cash equivalents and short-term investments of $397.9 millionb. The filing highlights several risks for investors. Veeva CRM accounted for approximately 89% of subscription services revenues, and the company expects its revenue growth rate to decline.
Its agreement with salesforce.com requires minimum order commitments of $500 millionc through September 1, 2025, with true-up payments tied to specified dates, and about $462.8 million of obligations remained as of January 31, 2015. The Class B common stock held by executives, directors and affiliates represented approximately 91.1% of voting power.
During the fiscal year, the company completed a follow-on offering of 1,390,000 Class A shares for $34.5 milliond in net proceeds and purchased its new Pleasanton, California headquarters for $24.0 million. In a subsequent event on March 31, 2015, it acquired the key opinion leader business of Qforma and Mederi AG for $10.0 million in cash.
02—Key points
Key Highlights
- Total revenues rose 49% to $313.2 million for fiscal 2015, with subscription services revenues of $233.1 million, up 59%.
- Net income increased to $40.4 million from $23.6 million, and operating income rose to $70.0 million from $39.3 million.
- Gross margin improved to 63.0% from 60.7%, driven by the growing mix of higher-margin subscription revenue.
- The subscription services revenue retention rate was 138%, down from 166% in fiscal 2014 and 187% in fiscal 2013.
- Customer count grew to 276 from 198, with Veeva CRM at 191 customers, Veeva Vault at 135, Veeva Network at 22 and Veeva OpenKey at 53.
- Cash, cash equivalents and short-term investments totaled $397.9 million, and the company had no debt disclosed in the filing.
- Class B shares held by insiders carry ten votes each and represent about 91.1% of voting power, with control lasting until October 15, 2023.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2015, Veeva Systems kept $0.13.
- Revenue$313.2M100.0%
- Cost of revenue−$115.7M36.9%
- Gross profit$197.6M63.1%
- Operating costs−$127.6M40.7%
- Operating income$70.0M22.3%
- Interest, other & tax−$29.6M9.4%
- Net income$40.4M12.9%
Where FY2015 revenue went
$313.2M- Cost of revenue: $115.7M, 37% of revenue
- Other operating costs: $86.4M, 28% of revenue
- R&D: $41.2M, 13% of revenue
- Net income: $40.4M, 13% of revenue
- Interest, other & tax: $29.6M, 9.4% of revenue
Kept 13% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2015filed April 1, 2015Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $313.22M$210.15M | +49.0% |
| Cost of Revenue | $115.66M$82.60M | +40.0% |
| Gross Profit | $197.56M$127.55M | +54.9% |
| R&D Expenses | $41.16M$26.33M | +56.3% |
| Operating Expenses | $127.60M$88.25M | +44.6% |
| Operating Income | $69.97M$39.30M | +78.0% |
| Net Income | $40.38M$23.61M | +71.0% |
| EPS (Basic) | $0.31$0.20 | +55.0% |
| EPS (Diluted) | $0.28$0.15 | +86.7% |
| Shares Outstanding (Basic) | 127.71M51.73M | +146.9% |
| Shares Outstanding (Diluted) | 144.20M68.02M | +112.0% |
05—Questions
Frequently Asked Questions
How concentrated is Veeva's revenue in its core CRM product?
Approximately 89% of subscription services revenues in fiscal 2015 came from Veeva CRM and complementary multichannel CRM solutions. The company says growth in its newer solutions, such as Veeva Vault and Veeva Network, which together exceeded 15% of total revenues, is important to reducing this dependence.
What financial commitments does Veeva have to salesforce.com?
Veeva must meet minimum order commitments of $500 million through September 1, 2025, including true-up payments if orders fall below $250 million by September 1, 2020 or the full $500 million by 2025. As of January 31, 2015, the company remained obligated to pay at least $462.8 million under the agreement.
How much customer concentration does Veeva have?
For fiscal 2015 no single customer accounted for more than 10% of total revenues. The top 10 customers together accounted for 54% of total revenues, down slightly from 56% in fiscal 2014.
What did Veeva do with its capital in fiscal 2015?
Veeva completed a $34.5 million net follow-on offering of Class A shares in March 2014 and bought land and a building for a new Pleasanton headquarters for $24.0 million in July 2014. Net purchases of marketable securities totaled $245.1 million, and the company does not expect to pay dividends.
What is the outlook for Veeva's revenue growth?
The filing states that Veeva expects the growth rate of its revenues to decline in future periods. It also expects cost of subscription services, research and development, sales and marketing, and general and administrative expenses to increase in absolute dollars in the near term.
06—Continue