01—Abstract
Summary
Summary of the 10-K filed March 30, 2022. Cited figures are marked; the original filing is the authoritative source.
Veeva Systems Inc. reported fiscal year ended January 31, 2022 total revenues of $1.85 billiona, up 26% from $1.47 billion, with subscription services revenues of $1.48 billion (up 26%) and professional services and other revenues of $367 million (up 28%).
Net income was $427 millionb, versus $380 million in the prior year, and GAAP diluted EPS was $2.63 compared with $2.36. Operating income rose to $505 million from $378 million, and gross margin was 73% versus 72%. Non-GAAP operating income was $759 million, and non-GAAP diluted EPS was $3.73, which excludes stock-based compensation of $235 million and amortization of purchased intangibles of $19 million.
The company reported operating cash flow of $764 millionc and ended the year with cash, cash equivalents and short-term investments of $2.4 billion. Customer count reached 1,205, up from 993, and the subscription services revenue retention rate was 119%, down from 124%. Management stated it expects revenue growth rates to decline over time, and it expects cost of revenues, operating expenses and stock-based compensation to rise in absolute dollars.
The company also cited expected sales-representative reductions of roughly 10% at life sciences customers, mostly during the fiscal year ending January 31, 2023, as a risk to its Commercial Solutions revenues. Key risks in the filing include ongoing trade secret litigation with IQVIA and Medidata, where IQVIA seeks monetary damages and Veeva counterclaims for over $200 milliond, and dependence on IQVIA data access and on salesforce.com for its Veeva CRM platform. Veeva is a Delaware public benefit corporation, and its dual-class structure gives Class B holders 51.4% of voting power, with Class B shares expiring from control on October 15, 2023.
02—Key points
Key Highlights
- Total revenues of $1,850.8 million for fiscal 2022, up 26% from $1,465.1 million; subscription services were 80% of revenues.
- Net income of $427.4 million, up from $380.0 million; GAAP diluted EPS of $2.63 versus $2.36 in fiscal 2021.
- GAAP operating income of $505.5 million versus $377.8 million, with gross margin improving to 73% from 72%.
- Non-GAAP operating income of $758.7 million and non-GAAP diluted EPS of $3.73, after excluding stock-based compensation of $234.6 million and amortization of purchased intangibles of $18.5 million.
- Operating cash flow of $764.5 million and $2.4 billion in cash, cash equivalents and short-term investments at January 31, 2022.
- Subscription services revenue retention rate of 119%, down from 124%, and 1,205 customers versus 993 a year earlier.
- Management expects revenue growth to decline over time, and cites expected reductions of roughly 10% in life sciences sales representatives as a risk to Commercial Solutions revenues.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2022, Veeva Systems kept $0.23.
- Revenue$1.85B100.0%
- Cost of revenue−$503.7M27.2%
- Gross profit$1.35B72.8%
- Operating costs−$841.6M45.5%
- Operating income$505.5M27.3%
- Interest, other & tax−$78.1M4.2%
- Net income$427.4M23.1%
Where FY2022 revenue went
$1.85B- Cost of revenue: $503.7M, 27% of revenue
- Other operating costs: $459.6M, 25% of revenue
- Net income: $427.4M, 23% of revenue
- R&D: $382.0M, 21% of revenue
- Interest, other & tax: $78.1M, 4.2% of revenue
Kept 23% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2022filed March 30, 2022Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $1.85B$1.47B | +26.3% |
| Cost of Revenue | $503.68M$408.93M | +23.2% |
| Gross Profit | $1.35B$1.06B | +27.5% |
| R&D Expenses | $382.04M$294.22M | +29.8% |
| Operating Expenses | $841.60M$678.35M | +24.1% |
| Operating Income | $505.50M$377.79M | +33.8% |
| Net Income | $427.39M$380.00M | +12.5% |
| EPS (Basic) | $2.79$2.52 | +10.7% |
| EPS (Diluted) | $2.63$2.36 | +11.4% |
| Shares Outstanding (Basic) | 153.25M150.67M | +1.7% |
| Shares Outstanding (Diluted) | 162.28M160.73M | +1.0% |
05—Questions
Frequently Asked Questions
How much did Veeva's revenue grow in fiscal 2022?
Total revenues were $1,850.8 million, up 26% from $1,465.1 million in fiscal 2021. Subscription services revenues were $1,484.0 million, up 26%, and professional services and other revenues were $366.8 million, up 28%.
Is Veeva's profitability improving?
GAAP net income rose to $427.4 million from $380.0 million, and GAAP operating income rose to $505.5 million from $377.8 million. The effective tax rate increased to 16.6% from 3.6%, which partly offset the operating gains at the net income level.
What is the status of Veeva's litigation with IQVIA and Medidata?
Veeva is in litigation with IQVIA over trade secret and antitrust claims, and IQVIA is seeking unspecified damages. Veeva's counterclaims seek more than $200 million in damages. Medidata's trade secret claims are set for trial on July 18, 2022. The company says it cannot estimate the amount or range of loss, if any.
What risks does the filing highlight for future growth?
The filing highlights expected reductions of roughly 10% in life sciences sales representatives, mostly in the fiscal year ending January 31, 2023, which could reduce demand for Veeva CRM. It also cites dependence on IQVIA's consent to use its data in Veeva applications, reliance on salesforce.com for Veeva CRM, and the expected decline in revenue growth rates.
How is Veeva's voting control structured?
Class B common stock carries ten votes per share. As of January 31, 2022, founder and CEO Peter Gassner held about 45.8% of voting power, and Class B holders collectively held about 51.4%. The dual-class structure expires on October 15, 2023, or earlier upon a Class B holder election.
06—Continue