01—Abstract
Summary
Summary of the 10-K filed March 30, 2020. Cited figures are marked; the original filing is the authoritative source.
Veeva Systems Inc. (NYSE: VEEV) reported fiscal 2020 (year ended January 31, 2020) total revenues of $1.10 billiona, up 28% from $862.2 million, with subscription services revenues of $896.3 million, up 29%.
Net income rose to $301.1 millionb from $229.8 million, and diluted EPS was $1.90 versus $1.47. Operating income was $286.2 million, and operating margin reflects gross margin of 73%. The company ended the year with cash, cash equivalents and short-term investments totaling $1.1 billion and no debt financing disclosed beyond leases, with operating cash flow of $437.4 million.
Veeva completed the acquisitions of Crossix (total cash consideration of $427.9 millionc) and Physicians World ($41.0 million) in November 2019, and it stated that it expects revenue growth rates to decline over time. The filing highlights concentration and competitive risk. The top 10 customers accounted for 36% of total revenues in fiscal 2020, down from 39% and 42% in prior years.
Veeva is in active litigation with IQVIA and Medidata over trade secret and antitrust claims, and it disclosed a remaining $140.0 milliond minimum purchase commitment to salesforce.com due by September 1, 2025. The company also disclosed that a significant CRM customer had launched a project to implement IQVIA's competing software for portions of its CRM users. Class B shares held by insiders and affiliates represent about 53.2% of voting power.
The filing also flags COVID-19 as a risk that could affect customer purchasing decisions and events, though its full financial impact was described as uncertain. For investors, the filing shows strong growth and profitability alongside concentrated customer exposure, ongoing litigation with a major data competitor, and a dual-class voting structure that limits outside shareholder influence over corporate matters.
02—Key points
Key Highlights
- Total revenues of $1,104.1 million, up 28% from $862.2 million; subscription services revenues of $896.3 million, up 29%
- Net income of $301.1 million (diluted EPS $1.90) versus $229.8 million (diluted EPS $1.47) in fiscal 2019
- Gross margin of 73% (72% prior year); operating income of $286.2 million
- Operating cash flow of $437.4 million; cash, cash equivalents and short-term investments of $1.1 billion at January 31, 2020
- Acquired Crossix ($427.9 million total consideration) and Physicians World ($41.0 million) in November 2019
- Top 10 customers represented 36% of total revenues, down from 39% and 42% in the two prior fiscal years
- Class B shares held by insiders and affiliates carry about 53.2% of voting power, with a 10-to-1 voting ratio
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2020, Veeva Systems kept $0.27.
- Revenue$1.10B100.0%
- Cost of revenue−$303.4M27.5%
- Gross profit$800.7M72.5%
- Operating costs−$514.5M46.6%
- Operating income$286.2M25.9%
- Interest, other & tax$14.9M1.3%
- Net income$301.1M27.3%
Where FY2020 revenue went
$1.10B- Other operating costs: $304.6M, 28% of revenue
- Cost of revenue: $303.4M, 27% of revenue
- Operating income: $286.2M, 26% of revenue
- R&D: $209.9M, 19% of revenue
Kept 26% as operating income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2020filed March 30, 2020Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $1.10B$862.21M | +28.1% |
| Cost of Revenue | $303.37M$245.28M | +23.7% |
| Gross Profit | $800.71M$616.93M | +29.8% |
| R&D Expenses | $209.90M$158.78M | +32.2% |
| Operating Expenses | $514.49M$394.06M | +30.6% |
| Operating Income | $286.22M$222.87M | +28.4% |
| Net Income | $301.12M$229.83M | +31.0% |
| EPS (Basic) | $2.04$1.59 | +28.3% |
| EPS (Diluted) | $1.90$1.47 | +29.3% |
| Shares Outstanding (Basic) | 147.80M144.24M | +2.5% |
| Shares Outstanding (Diluted) | 158.30M156.12M | +1.4% |
05—Questions
Frequently Asked Questions
How fast is Veeva's revenue growing, and does management expect that to continue?
Total revenues grew 28% in fiscal 2020 to $1,104.1 million, and subscription services revenues grew 29%. The filing states that management expects the growth rate of total revenues and subscription services revenues to decline in the future.
How profitable is the company?
Net income was $301.1 million in fiscal 2020, up from $229.8 million, and operating income was $286.2 million. Gross margin was 73%. The effective tax rate was 4.0%, and the filing attributes part of the low rate to excess tax benefits from equity compensation and tax credits.
What are the main risks from customer concentration and competition?
The top 10 customers accounted for 36% of fiscal 2020 revenues. The filing notes that IQVIA, a principal competitor, offers a CRM application and data products, and that a significant Veeva CRM customer had launched a project to implement IQVIA's competing software for portions of its CRM users.
What litigation is the company involved in?
Veeva is in active litigation with IQVIA and Medidata. IQVIA has alleged trade secret misappropriation and false advertising, and Veeva has counterclaimed for antitrust violations seeking damages exceeding $200 million. Veeva also filed suit against IQVIA over Veeva Nitro, and a Medidata trade secret case remains in discovery. The filing says the company cannot predict the outcomes or estimate the amount of any potential loss.
Who controls voting power at Veeva?
Holders of Class B common stock, which carries ten votes per share, held about 53.2% of the voting power as of January 31, 2020, including executive officers, directors and their affiliates. Those holders are able to control matters submitted to stockholders until October 15, 2023.
06—Continue