01—Abstract
Summary
Summary of the 10-Q filed June 4, 2024. Cited figures are marked; the original filing is the authoritative source.
Veeva Systems Inc. reported results for the three months ended April 30, 2024 in its Form 10-Q.
Total revenues were $650.3 milliona, up from $526.3 million a year earlier, with subscription services revenue of $534.0 million (up from $414.5 million) and professional services and other revenue of $116.4 million (up from $111.8 million). Gross profit was $476.5 million and operating income was $155.2 million, compared with $61.5 million in the prior-year period. Net income was $161.7 million, or $0.98 per diluted share, versus $131.5 million, or $0.81 per diluted share, a year earlier.
Net cash provided by operating activities was $763.5 millionb, and cash, cash equivalents and short-term investments totaled $4.8 billion as of April 30, 2024. The filing states that the company expects revenue growth to accelerate in the fiscal year ending January 31, 2025, in part due to a contracting change in multi-year orders that reduced revenue in the prior fiscal year. It also expects cost of subscription services, research and development, and sales and marketing expenses to increase in that fiscal year, primarily from employee compensation costs.
The company notes that operating cash flow in this quarter represents a significant portion of expected fiscal-year operating cash flow, and that cash taxes related to the Tax Cuts and Jobs Act are expected to reduce operating cash flow in fiscal 2025. The filing describes ongoing litigation with IQVIA, including trade secret claims set for trial beginning February 10, 2025, and Veeva's antitrust counterclaims, for which no trial date has been set.
The company also reached a settlement with Mednet Solutions on May 30, 2024, which will result in dismissal of that case with prejudice. The company states it is unable to make a meaningful estimate of the amount or range of loss from the IQVIA matters.
02—Key points
Key Highlights
- Total revenues rose to $650.3 million from $526.3 million, with subscription services revenue up to $534.0 million from $414.5 million.
- Operating income increased to $155.2 million from $61.5 million, and gross profit reached $476.5 million versus $359.7 million a year earlier.
- Net income was $161.7 million ($0.98 diluted EPS), compared with $131.5 million ($0.81 diluted EPS) in the prior-year quarter; the effective tax rate was 21.9% versus (43.3)%.
- Net cash provided by operating activities was $763.5 million, versus $505.9 million, and cash, cash equivalents and short-term investments totaled $4.8 billion.
- Management expects revenue growth to accelerate in fiscal 2025, partly reflecting a contracting change that reduced fiscal 2024 revenue, and expects operating expenses to increase.
- IQVIA litigation continues, with IQVIA's trade secret claims expected to go to trial on February 10, 2025; no meaningful estimate of potential loss is possible, and the Mednet matter was settled on May 30, 2024.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2025, Veeva Systems kept $0.25.
- Revenue$650.3M100.0%
- Cost of revenue−$173.9M26.7%
- Gross profit$476.5M73.3%
- Operating costs−$321.3M49.4%
- Operating income$155.2M23.9%
- Interest, other & tax$6.5M1.0%
- Net income$161.7M24.9%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2025filed June 4, 2024Financial Statements
Q1 FY2025 against Q1 FY2024
| Line item | Q1 FY2025Q1 FY2024 | Change |
|---|---|---|
| Revenue | $650.35M$526.33M | +23.6% |
| Cost of Revenue | $173.88M$166.66M | +4.3% |
| Gross Profit | $476.46M$359.66M | +32.5% |
| R&D Expenses | $162.71M$146.96M | +10.7% |
| Operating Expenses | $321.29M$298.13M | +7.8% |
| Operating Income | $155.17M$61.53M | +152.2% |
| Net Income | $161.66M$131.52M | +22.9% |
| EPS (Basic) | $1.00$0.82 | +22.0% |
| EPS (Diluted) | $0.98$0.81 | +21.0% |
| Shares Outstanding (Basic) | 161.42M159.85M | +1.0% |
| Shares Outstanding (Diluted) | 164.39M162.52M | +1.2% |
05—Questions
Frequently Asked Questions
How did Veeva's revenue and profitability change in the first quarter of fiscal 2025?
Total revenues increased 24% to $650.3 million from $526.3 million. Operating income rose to $155.2 million from $61.5 million, and net income rose to $161.7 million from $131.5 million. The filing attributes most of the revenue increase to subscription services, which grew to $534.0 million from $414.5 million, with R&D Solutions subscription revenue accounting for $97 million of the increase.
Why did the effective tax rate change so much?
The effective tax rate was 21.9% in the current quarter compared with (43.3)% in the prior-year quarter. The filing states the increase was primarily due to reduced excess tax benefits related to equity compensation, which were $4 million in the current quarter versus $64 million in the prior-year quarter. The decrease was primarily due to stock option exercises by the CEO in the prior year and none in the current year.
What does management expect for the remainder of fiscal 2025?
Management expects revenue growth rates to accelerate in the fiscal year ending January 31, 2025, in part because of the reduction in fiscal 2024 revenue from a contracting change in multi-year orders. It expects operating cash flows to be substantially lower in future quarters than in this quarter, and expects cash tax payments related to the Tax Cuts and Jobs Act to reduce operating cash flow in fiscal 2025.
What is the status of the IQVIA litigation?
The IQVIA matters include IQVIA's trade secret claims against Veeva and Veeva's antitrust counterclaims. The court has bifurcated the claims, and the trade secret trial is expected to begin February 10, 2025; no trial date has been set for Veeva's antitrust claims. Veeva states it believes it has substantial defenses and intends to vigorously contest IQVIA's claims, but it is unable to make a meaningful estimate of the amount or range of potential gain or loss.
How strong is Veeva's balance sheet and liquidity?
As of April 30, 2024, total assets were $6.19 billion and stockholders' equity was $4.89 billion, up from $4.64 billion at January 31, 2024. Cash, cash equivalents and short-term investments totaled $4.8 billion, of which $85 million was held outside the United States. Deferred revenue was $1.03 billion, and the company stated that existing cash and operating cash flow are sufficient to meet needs for at least the next 12 months.
06—Continue