01—Abstract
Summary
Summary of the 10-K filed March 25, 2024. Cited figures are marked; the original filing is the authoritative source.
Veeva Systems Inc. reported total revenues of $2,363.67 milliona for the fiscal year ended January 31, 2024, up from $2,155.06 million, with net income of $525.71 million compared with $487.71 million the prior year.
Subscription services revenues were $1,901.59 millionb (80% of total), and professional services and other revenues were $462.08 million. Operating income was $429.33 million, down from $459.09 million, as research and development expenses rose 21% to $629.03 million. Other income, net, increased to $158.69 million, driven mainly by $133.75 million of interest income, which lifted pre-tax income to $588.02 million.
The effective tax rate rose to 10.6% from 4.2%, mainly due to lower excess tax benefits from stock compensation. The company ended the year with cash, cash equivalents and short-term investments of $4.0 billionc and operating cash flow of $911.34 million. Management states that revenue growth was held back by lower customer funding, increased scrutiny of certain projects, a contract change to termination-for-convenience rights in multi-year master subscription agreements, and currency fluctuations.
It expects revenue growth to accelerate in the fiscal year ending January 31, 2025, partly because of the reduction in revenue from that contract change in the current year. The filing also highlights legal and commercial risks. Veeva is in ongoing litigation with IQVIA, which includes trade secret claims against Veeva and Veeva's antitrust counterclaims seeking more than $200 milliond in damages, with a trial date set for February 10, 2025.
The company also plans to migrate Veeva CRM customers to Vault CRM and not renew its Salesforce platform agreement when it expires on September 1, 2025. Top 10 customers accounted for 28% of total revenues in fiscal 2024.
02—Key points
Key Highlights
- Total revenues rose 10% to $2.36 billion, with subscription services at $1.90 billion (80% of revenues).
- Net income increased to $525.7 million from $487.7 million, while operating income declined to $429.3 million from $459.1 million.
- Other income, net more than tripled to $158.7 million, mainly from $133.7 million of interest income.
- Research and development expenses rose 21% to $629.0 million, and the effective tax rate increased to 10.6% from 4.2%.
- Cash, cash equivalents and short-term investments totaled $4.0 billion, and operating cash flow was $911.3 million.
- Management expects revenue growth to accelerate in fiscal 2025, partly because of the 2024 revenue reduction from the termination-for-convenience contract change.
- Ongoing IQVIA litigation includes trade secret claims against Veeva and Veeva's antitrust counterclaims seeking more than $200 million, with trial set for February 10, 2025.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2024, Veeva Systems kept $0.22.
- Revenue$2.36B100.0%
- Cost of revenue−$677.3M28.7%
- Gross profit$1.69B71.3%
- Operating costs−$1.26B53.2%
- Operating income$429.3M18.2%
- Interest, other & tax$96.4M4.1%
- Net income$525.7M22.2%
Where FY2024 revenue went
$2.36B- Cost of revenue: $677.3M, 29% of revenue
- R&D: $629.0M, 27% of revenue
- Other operating costs: $628.0M, 27% of revenue
- Operating income: $429.3M, 18% of revenue
Kept 18% as operating income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2024filed March 25, 2024Financial Statements
FY2024 against FY2023
| Line item | FY2024FY2023 | Change |
|---|---|---|
| Revenue | $2.36B$2.16B | +9.7% |
| Cost of Revenue | $677.29M$609.40M | +11.1% |
| Gross Profit | $1.69B$1.55B | +9.1% |
| R&D Expenses | $629.03M$520.28M | +20.9% |
| Operating Expenses | $1.26B$1.09B | +15.7% |
| Operating Income | $429.33M$459.09M | −6.5% |
| Net Income | $525.71M$487.71M | +7.8% |
| EPS (Basic) | $3.27$3.14 | +4.1% |
| EPS (Diluted) | $3.22$3.00 | +7.3% |
| Shares Outstanding (Basic) | 160.53M155.38M | +3.3% |
| Shares Outstanding (Diluted) | 163.49M162.44M | +0.6% |
05—Questions
Frequently Asked Questions
How did Veeva's revenue and profitability trend in fiscal 2024?
Total revenues grew 10% to $2,363.67 million. Net income rose to $525.71 million, but operating income fell to $429.33 million from $459.09 million because operating expenses grew faster than gross profit. The increase in net income was mainly due to higher other income from interest, which offset the lower operating income.
What caused the drop in revenue growth in fiscal 2024?
Management attributes the slower growth to lower funding among some customers, increased scrutiny of certain potential projects, a contract change that added termination-for-convenience rights to multi-year master subscription agreements, and foreign currency fluctuations. The termination-for-convenience change reduced revenue recognized for the year.
What are the main legal risks disclosed?
The most significant matter is the IQVIA litigation. IQVIA alleges trade secret misappropriation and false advertising, and Veeva's counterclaims allege antitrust violations and seek more than $200 million in damages. A trial date of February 10, 2025 has been set, though the court has not yet ruled on whether claims should be bifurcated or consolidated. Veeva also faces a Mednet trade secret lawsuit.
How concentrated is Veeva's customer base?
The top 10 customers accounted for 28% of total revenues in fiscal 2024, compared with 29% in fiscal 2023 and 31% in fiscal 2022. No single customer represented more than 10% of total revenues in any year presented. Veeva served 1,432 customers as of January 31, 2024.
What strategic changes could affect Veeva's future results?
Veeva plans to migrate its Veeva CRM customers to Vault CRM, which is built on its own Veeva Vault platform, and it does not intend to renew its Salesforce platform agreement when it expires on September 1, 2025. The filing notes that the migration could cause customer disruptions or lead some customers to choose competitors.
06—Continue