01—Abstract
Summary
Summary of the 10-Q filed September 4, 2024. Cited figures are marked; the original filing is the authoritative source.
Veeva Systems Inc.'s Form 10-Q for the quarter ended July 31, 2024 reports total revenues of $676.2 milliona for the three months ended July 31, 2024, up from $590.2 million a year earlier, driven by subscription services revenue of $561.3 million versus $470.6 million.
Professional services and other revenues were $114.9 millionb, compared with $119.6 million. Operating income rose to $166.5 million from $104.0 million, and net income was $171.0 million, or $1.04 per diluted share, compared with $111.6 million, or $0.68 per diluted share, in the prior-year quarter. For the six months, total revenues were $1.33 billion and net income was $332.7 million.
The balance sheet shows cash, cash equivalents and short-term investments totaling $4.9 billionc as of July 31, 2024, against deferred revenue of $956.4 million. Net cash provided by operating activities was $856.4 million for the six months, versus $771.0 million a year earlier. The company states that its operating cash flows in the remainder of the fiscal year will be substantially lower than in the first half, and that tax payments related to the Tax Cuts and Jobs Act will reduce operating cash flow in fiscal 2025.
Management expects revenue growth to accelerate in fiscal 2025 and expects operating expenses, cost of subscription services, and general and administrative expenses to increase, in part due to the CEO equity grant. The filing describes ongoing litigation with IQVIA, including IQVIA's trade secret claims, for which trial is expected to begin on February 10, 2025, and Veeva's antitrust counterclaims, for which no trial date has been set.
The company reports that it could not make a meaningful estimate of the potential gain or loss from these matters. The filing also discloses a May 30, 2024 settlement with Mednet Solutions, Inc., and the planned migration of Veeva CRM customers from the Salesforce platform to Vault CRM.
02—Key points
Key Highlights
- Total revenues were $676.2 million for the quarter ended July 31, 2024, up 15% from $590.2 million, with subscription services revenues up 19% to $561.3 million.
- Operating income increased to $166.5 million from $104.0 million, and net income rose to $171.0 million from $111.6 million, or $1.04 per diluted share versus $0.68.
- Gross margin on total revenues was 75% for the quarter, compared with 71% in the prior-year quarter.
- Cash, cash equivalents and short-term investments totaled $4.9 billion as of July 31, 2024, and net cash provided by operating activities was $856.4 million for the six months ended July 31, 2024.
- Management expects operating cash flows to be substantially lower in future quarters of fiscal 2025, with cash tax payments under the Tax Cuts and Jobs Act expected to reduce operating cash flow.
- The IQVIA litigation continues, with IQVIA's trade secret claims set for trial beginning February 10, 2025, and no estimate of potential gain or loss.
- The company granted its CEO an option to purchase 2,650,000 shares at $236.90, with a grant-date fair value of approximately $172 million, and expects this grant to raise general and administrative expenses in fiscal 2025.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2025, Veeva Systems kept $0.25.
- Revenue$676.2M100.0%
- Cost of revenue−$170.4M25.2%
- Gross profit$505.8M74.8%
- Operating costs−$339.3M50.2%
- Operating income$166.5M24.6%
- Interest, other & tax$4.6M0.7%
- Net income$171.0M25.3%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2025filed September 4, 2024Financial Statements
Q2 FY2025 against Q2 FY2024
| Line item | Q2 FY2025Q2 FY2024 | Change |
|---|---|---|
| Revenue | $676.18M$590.23M | +14.6% |
| Cost of Revenue | $170.37M$169.02M | +0.8% |
| Gross Profit | $505.81M$421.21M | +20.1% |
| R&D Expenses | $176.43M$157.23M | +12.2% |
| Operating Expenses | $339.32M$317.16M | +7.0% |
| Operating Income | $166.49M$104.05M | +60.0% |
| Net Income | $171.04M$111.63M | +53.2% |
| EPS (Basic) | $1.06$0.70 | +51.4% |
| EPS (Diluted) | $1.04$0.68 | +52.9% |
| Shares Outstanding (Basic) | 161.71M160.40M | +0.8% |
| Shares Outstanding (Diluted) | 164.56M163.28M | +0.8% |
05—Questions
Frequently Asked Questions
How did Veeva's revenue and profitability change in the quarter ended July 31, 2024?
Total revenues rose to $676.2 million from $590.2 million, led by a $91 million increase in subscription services revenue. Operating income increased to $166.5 million from $104.0 million, and net income increased to $171.0 million from $111.6 million, or $1.04 per diluted share from $0.68.
What is the company's cash position and how is operating cash flow trending?
Cash, cash equivalents and short-term investments totaled $4.9 billion as of July 31, 2024. Net cash provided by operating activities was $856.4 million for the six months ended July 31, 2024, up from $771.0 million a year earlier. The company states that operating cash flows will be substantially lower in future quarters of fiscal 2025, in part because of cash tax payments.
What are the main litigation risks disclosed in the filing?
The company is in litigation with IQVIA. IQVIA's trade secret claims are scheduled for trial beginning February 10, 2025, and Veeva's antitrust counterclaims have no trial date. The company says it cannot make a meaningful estimate of the amount or range of any gain or loss. A separate case with Mednet Solutions was settled on May 30, 2024.
What does the company expect for the rest of fiscal 2025?
Management expects revenue growth to accelerate in the fiscal year ending January 31, 2025, compared with the prior year, in part because of the reduction in fiscal 2024 revenue from a contracting change in multi-year orders. It also expects increases in cost of subscription services, research and development, sales and marketing, and general and administrative expenses, the last driven in part by stock-based compensation for the CEO equity grant.
What is notable about the CEO equity grant?
During the quarter, the company granted CEO Peter P. Gassner options to purchase 2,650,000 shares at $236.90 per share, equal to the 52-week high trading price at the time of grant. The options vest in five equal increments from February 1, 2026 through 2030. No portion becomes exercisable unless the closing price is sustained at or above $236.90 for sixty consecutive trading days during the vesting period. The grant-date fair value is approximately $172 million.
06—Continue