Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

Veeva Systems, Inc. (NYSE:VEEV)

F4Q 2014 Earnings Conference Call

March 4, 2014 4:30 PM ET

Executives

Rick Lund – Director, IR

Peter Gassner – Founder and CEO

Tim Cabral – CFO

Matt Wallach – Co-Founder and President

Analysts

Karl Keirstead – Deutsche Bank

Stan Zlotsky – Morgan Stanley

Richard Davis – Canaccord

Tom Roderick – Stifel

Brendan Barnicle – Pacific Crest Securities

Jason Maynard – Wells Fargo

Operator

Good afternoon, and welcome to the Veeva Systems Fourth Quarter and Full Year 2014 Earnings Conference Call. All participants will be in listen only mode. [Operator Instructions] After today’s presentation there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Rick Lund, Investor Relations Director. Please go ahead.

Rick Lund

Thanks Laura. Good afternoon and welcome to Veeva’s fiscal fourth quarter and yearend earnings call for the quarter and year ending January 31, 2014. With me on today’s call are Peter Gassner, our Chief Executive Officer; Matt Wallach, our President; and Tim Cabral, our Chief Financial Officer.

During the course of this conference call, we will make forward-looking statements regarding our trends, strategies and the anticipated performance of the business. These forward-looking statements will be based on management’s current views and expectations, and are subject to various risks and uncertainties. Actual results may differ materially. Please refer to the risks listed in our earnings release and the risk factors included in our most recent 10-Q, which is available on the company’s website at www.veeva.com, under the Investors section, and on the SEC’s website at www.sec.gov.

Forward-looking statements made during the call are being made as of today. If this call is replayed or viewed after today, the information presented during the call may not contain current or accurate information. Veeva disclaims any obligation to update or revise any forward-looking statements. We will provide guidance on today’s call, but will not provide any further guidance or update on our performance during the quarter, unless we do so in a public forum.

On the call, we will also discuss certain non-GAAP metrics that we believe aid in the understanding of our financial results. A reconciliation to comparable GAAP metrics can be found in today’s earnings release, which is available on our website, and as an exhibit to the Form 8-K filed with the SEC just before this call.

With that, thank you for joining us and I will turn it over to Peter.

Peter Gassner

Thank you, Rick. I will first summarize our financial results for the fourth quarter and the full year, then provide a few highlights before turning it over to our CFO Tim Cabral, for a detailed overview of our financials.

We had a strong Q4 with revenue of $62.8 million up 58% from a year ago. Full year total revenue was $210.2 million by 62% from the year prior. We also continued to deliver solid profitability with a non-GAAP operating margin of 23% for the quarter and 22% for the year.

We have had a great year, and I would like to thank our employees. It’s a lot of fun to work with such a talented, dedicated group of people. The spirit of teamwork makes Veeva a great place to work. And thanks to our customers for putting your trust in Veeva.

Our growth is a reflection of our customer success. We are executing well against our strategy to become one of the most important technology partners to the life sciences industry. I believe we are in the very early days of what will be a significant industry cloud opportunity. As customers move to more flexible tailored solutions and capitalize on unique data sets.

Last year we broadened our product portfolio. We grew Veeva CRM and the Veeva Vault content management platform and application suite. Late in the year, we introduced a Veeva network product line for customer master data management. At the end of the fiscal year $198 life sciences companies relied on Veeva Solutions. This includes 147 Veeva CRM customers, 69 for Veeva Vault and 6 for Veeva Network. In all, they utilized Veeva in more than 80 countries around the globe.

Our CRM business has had healthy growth in the quarter and the year. We are very pleased with the continued uptake of Veeva CRM and had a number of notable CRM expansions in Q4. One customer went live with 7000 users across 30 countries in the quarter. Another went live with more 6000 users in China after a project of less than six months.

Our Veeva CRM product is on release 20. Seven years of development as resulted in a product with considerable depth that meets most of our customers global, functional and regulatory requirements with no customization required. We have an outstanding product team, a highly skilled team of implementation consultants and a large and experienced global network of implementation partners because of this we have become very efficient getting users live and successful on Veeva CRM.

A prime example is one of our CRM projects for the top 20 pharma. By this summer, they expect to be live with their first 15,000 users across more than 40 countries. This project started only last summer. A 12-month project for 15,000 users in over 40 countries is a pace unheard off with traditional offerings. This is non-trivial in a validated environment that requires compliance with the ever changing government regulations of each major country and region.

To put this in perspective before Veeva global CRM deployments in pharma would take at least four years and were pretty good failures because there was so much customization and system validation required. A few years into the project there was already time for an upgrade which is in itself another major project.

Looking ahead, we see momentum building for multi-channel CRM as life sciences companies expand their Veeva deployments to better serve their customers across multiple communication channels. Our global content partner program of more than 200 trained, Veeva trained creative agencies provides considerable leverage in advancing Veeva’s multi-channel CRM products such as an Approved Email.

We also announced today, we have extended our partnership with salesforce.com through 2025. This additional 10-year joint commitment built on our successful longstanding relationship and its great news for our customers.

salesforce.com has been an outstanding partner for us in CRM right from the start. The advances in the salesforce.com one platform over these seven years have just been amazing. Thanks to Marc Benioff, Keith Block, George Hu and the whole of salesforce.com team for their partnership.

We are also seeing tremendous progress in Veeva Vault, our content management platform in suite of applications. Vault was our first major expansion outside of CRM into a new software category. Veeva Vault is now on release 7.

The opportunity for Veeva in content management is not only in pharma and biotech, but extends well beyond into many segments of life sciences including animal health, consumer health, medical device, diagnostics and to service providers like CROs. Today we have five of the applications. Each is focused on the different area and each represents a major market opportunity in its own right.

Vault is gaining momentum, we continue to add new customers and build traction with some of the biggest leaders in the industry. Vault had a great Q4.

In the quarter, we signed more than 10 new Vault customers including our first ever seven figure Vault deal. We were selected by a multi-billion dollar life sciences company outside of traditional pharma and biotech. This is a legacy system replacement and Vault will ultimately be the enterprise standard for all regulated content management across this enterprise. Vault is the first product from Veeva.

And just last week, we signed our second seven figure annual contract value deal, this one with a top 10 pharma company. A global Veeva CRM customer, they selected Vault eTMF as a standard to manage clinical trial documentation for all their clinical trials around the world. This is a large system with millions of documents, thousands of users, very complex work flow and strict compliance requirements.

Moving to Vault will provide this customer greater efficiency, visibility and flexibility in a crucial phase of the drug development process. We also helped them maintain compliance and collaborate more easily internally and with their CRO partners. Vault is replacing their custom application built by a systems integrator on our legacy clients’ server content management platform.

This selection is great validation that Veeva Vault eTMF is functionally rich enough to our top ten pharma and send the positive message to our customers and prospects. Our top priority is ensuring they are successful with their Vault eTMF implementation. Based on that success, we anticipate the potential to expand with additional Vault applications into other areas of the organization.

We are seeing good progress in Vault in Europe and Asia as well. In addition to the new deals I mentioned, we recently announced Ipsen, a $1.4 billion Paris based specialty pharma as committed to Vault as their enterprise standard to replace their legacy client server document and management system. Veeva Vault is their first Veeva product and they are starting with Vault submissions.

A pipeline for Vault continues to build and we are encouraged by what we are hearing from customers and prospects. The content management challenge is one of the biggest problems our customers face in one of our bigger opportunities. They see potential for material efficiency gains through use of the Vault platform in applications as an enterprise-wide standard.

We are also making great progress on Veeva Network, our newest product line. Version one of Veeva Network became generally available at the end of October for the U.S. and China and we are now on version two. We have a handful of early adopters, customers ranging from emerging biotechs to top 50 pharmas. Since the product launched, we have signed our first seven figure deal and we had our first customer a small biotech go live. In this market we are replacing a mix of data providers and customer applications built on client server platforms.

The Veeva Network pipeline is growing in the U.S. and China and we are also in early discussions with some of our strategic customers about the potential to utilize network globally over time. Veeva Network is a perfect example of what we see has a game changing data opportunity for industry cloud. Not only can we provide software and data together in one cloud-based solution, but with the critical mass of industry players in the cloud over time we can create a powerful network effect generating unique data assets that have never been available before.

Let me close by sharing my thoughts on the coming year. Our focus remains customer success. This success and our expanded product footprint position us to deliver sustained long-term organic growth, and become the life sciences industries most trusted technology partner. Our base CRM business is growing and provides a powerful foothold from which we will continue to expand into multi-channel CRM and our other product lines.

We are on a path to live, happy, reference customers in Network and Vault setting us ourselves for leadership in two substantial new markets. I’m pleased with our progress for both the quarter and the year and very excited about the opportunity ahead of us.

With that, I will turn the call over to Tim for more details on our financials.

Tim Cabral

Thanks Peter.

Q4 was a strong quarter and exceeded our guidance on the top and bottom line. Total revenue was $62.8 million up from $39.8 million one year ago, a 58% increase. These results were well above our guidance of $57 million to $58 million. This capped off a full year in which total revenue was $210.2 million up from $129.5 million in fiscal 2013, a 62% increase.

For the fourth quarter, subscription revenue was up 89% to $45.7 million from $24.1 million last year. This strong performance in subscription revenue in Q4 was driven by growth with new and existing customers and increase contribution from Vault to Network.

There were several deals signed in Q4 on an accelerated timeframe that were originally forecasted to fall in later quarters. In addition more deals closed earlier in the quarter than normal. The combination of the ongoing momentum in our business and these unexpected items in Q4 contributed to strong upside in the quarter.

We continued to see strong growth within our existing customer base as they expand their use of our solutions across new divisions, new geographies and new products. These factors drove a 166% revenue retention rate for the full fiscal year 2014.

As a reminder, this metric compares annualized subscription revenue of all customers at the end of the previous year with the annualized subscription revenue from that same group of customers at the end of the current year.

It therefore measures the growth of our business within existing customers net of attrition. Our number one value at Veeva is customer success. So I’m particularly proud of this metric as I believe that it speaks to a very high level of satisfaction among our customers.

Services revenue for the quarter was $17.1 million up from $15.7 million year-over-year. In Q4, we recognized revenue associated with the early completion of a few milestone based contract arrangements which contributed nearly $1 million to services revenue. This coupled with strong services activity especially in CRM deployments internationally and involves R&D projects drove the results and offset the expected seasonal dip Q4 services revenue.

In terms of geographic mix for the fourth quarter, approximately 57% of our total revenue came from North America and 43% came from outside North America based upon the estimated location of users for subscription revenue and the location of project for services revenue.

For the year, the mix was 59% North America and 41% international, which was a shift of 6 percentage points towards international versus fiscal 2013. Revenues from regions outside of North America is expected to gradually increase as a percentage of total revenue going forward.

In discussing the remainder of the income statement please note that unless otherwise stated all references to our expenses and operating results on a non-GAAP basis and are reconciled in the tables from our press release which is posted on our website and filed with the SEC.

Our subscription gross margin was 77% up from 75% a year ago largely driven by the increased contribution of Vault Network and CRM add-ons. We expect our subscription gross margin to inch up over time as these newer offerings account for a growing percentage of subscription revenue since these products have a slightly higher gross margin profile relative to core CRM.

In Q4, services gross margin was 28% compared to 31% one year ago. Our target utilization rates for our services business produced gross margins in the 20s. Our total gross margin for Q4 was 63% versus 58% one year ago. This five point increase was driven by the improvement in subscription gross margin and the increased contribution of subscription revenue as a percent of total revenue.

Turning to operating expenses, we continue to invest in our business as we added head count in key areas including our R&D focused sales force, our international sales team and our Vault and Network product teams.

Overall, operating expenses grew 88% from the same period last year. Sales and marketing expense was $11.9 million versus $6.1 million last year. R&D expense came in at $7.5 million up from $4.5 million one year ago. And G&A expense was $5.7 million compared to $2.7 million in Q4 of last year.

Overall, our operating margin of 23% in the fourth quarter was down slightly from 24% in the prior year period as we continue to balance profitability with investments in the business.

As I will outline in my guidance shortly, we currently anticipate some modest operating margin compression over the coming year as we continue to add headcount and make other investments to fuel growth across our product portfolio in the years ahead.

Net income was $9.5 million compared to $6 million last year, our fully diluted net income per share was $0.07 based on 143 million shares outstanding compared to $0.05 last year though that figure was based on 117 million shares outstanding.

Turning to the balance sheet, deferred revenue grew to $67.4 million up from $53.5 million in the previous quarter. A strength in the deferred revenue performance was driven by the closing of deals forecasted for future quarters, a Q4 seasonality of our renewal base and a higher than normal average billing duration for new bookings.

The seasonality of our renewals along with the variation in billing terms between clients and the co-terminus treatment of add-on sales make our calculative billings metric somewhat volatile on a quarterly basis. As a result, this metric is not necessarily indicative of the overall health of our business in any given period.

We do not expect all of these effects to reoccur in Q1, and therefore currently believe that calculated billings will decline on a sequential basis. We exited the quarter with $288.1 million in cash and short-term investments up from $273.4 million at the end of Q3.

Cash flow from operations came in at a $16.2 million more than tripled the prior quarters $5.3 million. This was primarily driven by the seasonal billings, strong bookings and collections performance.

For fiscal 2014, our cash from operations was $41.8 million up 36% from $30.8 million in fiscal 2013.

Let me wrap up showing our outlook for Q1 and the full fiscal year 2015. For the first quarter, we expect revenue between $62.5 million and $63.5 million. Non-GAAP operating income of $12 million to $13 million and non-GAAP net income per share of $0.05 to $0.06 based on a fully diluted share account were approximately $144 million.

As you review our guidance for Q1, there are few things to consider. Q1 contains 89 days compared to 92 days for other three quarters. A fewer days available for revenue recognition affects both our subscription revenue which is recognized on a daily prorated basis along with our services revenue which is largely based on time and expense projects. We currently believe this will impact our Q1 total revenue by $1.8 million.

As previously mentioned, we also had two items that positively affected subscription revenue in Q4, a large proportion of new business closing the first half of the quarter and several deals closed, I mean accelerated timeframe that were originally forecasted to fall in later quarters. We don’t expect either pattern to emerge in Q1.

Lastly, as discussed earlier we recognized about $1 million of services revenue associated with milestone based contract arrangements in Q4, which we don’t expect to reoccur in Q1.

For the year, we expect revenue in the range of $270 million to $275 million, while we are not guiding specifically to the subcomponents of revenue in fiscal 2015, currently we expect subscription revenue growth percentage to be in the low to mid 40s. We also expect, a shift in the mix of our total revenue towards subscription revenue to continue.

We are anticipating non-GAAP operating income of $51 million to $56 million and non-GAAP net income per share of $0.23 to $025 based on a fully diluted share count of approximately 145 million. Consistent with our prior commentary, we intend to continue to invest in the business to drive sustainable growth across product lines for the long-term.

Overall, we were pleased with our performance on both the top and bottom line. Our customer success continues to be our top priority and the ultimate source of our financial results. We remain excited about the current state of our business in the very large market opportunity in front of us.

With that let me thank you all for joining us on the call. I will turn it back to the operator for questions.

Question-and-Answer Session

Operator

At this time we will begin the question-and-answer session. [Operator Instructions] And the first question will come from Karl Keirstead of Deutsche Bank.

Karl Keirstead – Deutsche Bank

Thanks very much, and congratulations on a good quarter. And my question is on the salesforce.com tenure extension, I think you mentioned in the press release that it shouldn’t have any material impact on the margins, but I guess my question is, is there any change in the language vis-à-vis or a preferred partner status, that might create more or less room for salesforce to potentially enter the pharma and biotech markets with their own proprietary CRM product, is it tightening up, or is it really no change from the status quo?

Peter Gassner

I think, way to answer that, basically no change from the status quo, what it is, it’s a long-term partnership that’s been working for both salesforce.com and our customers and also ourselves, so we’ve extended it. We have always been salesforce.com’s preferred partner for that segment for our target market. The rules of engagement are largely the same; I think we tightened them up in some corner areas just because we’ve had more experience with the agreement over time, but largely the same. salesforce.com is definitely a partner and not a competitor in our market.

Karl Keirstead – Deutsche Bank

Got it. Okay, that’s helpful. And, if I could ask one follow-up to Tim. Tim, you mentioned a few things pulled forward, the RevRec on some deals as well as the closing partner you had some deals. And I’m wondering what was behind that, what happened in the end market demand that caused some stuff to close a little earlier and pull it forward if you like?

Tim Cabral

Yes, Karl. Thanks for the question. It really there – I don’t think there was a trend in the end market that necessarily dictated some of the pull forwards that happened or the early closure of some transactions earlier in the quarter that enabled subscription revenue contribution. I think we really – I think we talked about before, we work with our customers and they really dictate the timing of their need and when we want, when they need those extra users and want to close deals or need, our solutions they want to close deals. So no macro trend Karl there, it’s just a number of larger deals that made an impact this quarter.

Karl Keirstead – Deutsche Bank

Got it. Thanks so much.

Operator

And the next question comes from Jennifer Lowe of Morgan Stanley.

Stan Zlotsky – Morgan Stanley

Hey guys, it’s actually Stan Zlotsky sitting in for Jennifer. And thanks for taking my question. I want to start off first with the network product, six customers already live actually the product only was G8 back in October, that’s a very impressive number. What – well, all those customers really part of the pre – of the beta product or some of them new customers that were signed after the GA and they subsequently already went live?

Peter Gassner

But specific to that question, the eight customers on network and it’s going to have to – we might have to check – we might have to check on that one to see if there were any of them that were not involved in the beta program, I would say most of them were. But, your question – I think in your question you said that six of them were live, let me just correct that, so there is six network customers today, one of those six is currently live, it is one of the smaller biotechs in the U.S., so five of the customers are still in their implementation projects.

Stan Zlotsky – Morgan Stanley

Okay. All right. So that actually – that makes it little bit more sense. Okay. And just to switch gears a little bit, Tim you pointed out that you think billings will be – calculated billings was down on quarter-on-quarter in 1Q which makes sense. Just may be help us understand a little bit more of the magnitude of the decline quarter-on-quarter, is it more along the lines or what you saw that actually – now as you saw last year?

Tim Cabral

Yes. I think that’s a good guide to the starting point Stan. I do think that with the pull forward some material deals into Q4 as we discussed, you might see that to be a little bit bigger than sequentially you saw last year. And also, as the business and the renewal base grows year-over-year, that seasonality will feel a little bit larger quarter-to-quarter as we move forward.

Stan Zlotsky – Morgan Stanley

Thanks guys.

Operator

And the next question is from Richard Davis of Canaccord.

Richard Davis – Canaccord

Hey, thanks. I know it’s still early days, but with regard to Network, roughly kind of how does that market – the addressable market that you’re going after breakdown kind of between firms that targets that have kind of a fully finished out MDM system versus kind of the piece parts kind of thing because I’m trying to think about triangulating the relative sales opportunities, greenfield versus kind of we can replace over the next few quarters and years. Thanks.

Peter Gassner

Okay, sure. So I think that in the U.S. probably top 50 or so companies have kind of a well thought out MDM strategy. They have software. They’ve built custom applications on top of whatever software platform they have and they are buying data from multiple places. Outside the U.S., it’s not always the same in terms of kind of a real MDM strategy and installed software. But, what is consistent is that everywhere around the world whether it’s a large company or a small company, whether it’s in an emerging market or an industrialized market, they have to have a customer master.

And so, to answer your question specifically, I think probably, if I have to guess probably half of our opportunity is kind of rip and replace mature things, and half of it is probably creating an MDM infrastructure for a company that could never afford one. And that’s somewhat of the value and the beauty of software-as-a-services that we can provide a world-class solution for companies that didn’t used to be able to afford one either smaller companies in the U.S. and Europe, or large companies in smaller markets.

Richard Davis – Canaccord

Great. That’s very helpful. Thank you, so much.

Operator

And next, we have a question from Tom Roderick of Stifel.

Tom Roderick – Stifel

Hi, guys. Good afternoon. So the first question I want to ask you is just on Vault, and it seems like you’ve been making some very material progress with Vault and traction with major customers there, pretty short order. So I guess the question is. with respect to these deals particularly seven figure deals that closed in the quarter, can you talk a little bit about sales cycle, how long you had to work with each of those customers to achieve kind of an enterprise grade rollout.

And as you look at your pipeline, do you see similar opportunities where perhaps you’re in one region and they’re already talking about enterprise wide rollouts, curious as to what you’re seeing in terms of visibility there going forward as well? Thanks.

Peter Gassner

Thanks Tom. Yes, we did see – it’s just really strong momentum in Vault. And you asked about the sales cycles and the length of the sales cycle, it’s important to know that especially those large deals that we’re talking about, those represent real early adopters. So in some sense, those sales cycles probably started three years ago when we started Vault because you’re starting to get the word out the familiarity, you’re starting to collect the requirements from the customers keep close to them. But I would say the – what you would consider the classic part of the sales cycle for those opportunities in those cases were six to nine months sales cycle, and I think that will be pretty representative.

Now, Vault does have – generally the same characteristic like CRM where we will start small and then we will expand to different divisions, different applications, different geographies, and we see this in Vault. We see some of the Vault applications will expand for example in the eTMF area; they might start with a small set of trials and then expand to the complete set of trials. And promotional materials, we might see it started with one region and expand to another region. And this is what we see in Vault, which is also very similar to CRM.

Tom Roderick – Stifel

Great. Follow-up question, turning the tables here over to look at the salesforce.com deal extension, just a brief browse to the AK, it looks like there is no material impact or any sort of impact in the model. But, can you confirm that, that we shouldn’t expect any hit to gross margins. And then, a further extend to that question, can you help us understand what the nature of the true-up payments are as you look at 2020 and 2025, just want to make sure I understand the longer term impact to that. Thanks.

Tim Cabral

Yes, Tom. This is Tim. I’ll take that. I can definitely confirm that with the new extension of the agreement, we do not see an impact to our cost of goods sold or our gross margin model from a CRM base – CRM perspective. In terms of the nature of the true-up payments, I think they are very traditional true-up payments in any minimum commitment agreement where we will take a look at what we paid sort of extension starting point to-date at the end of a five-year period, and look at what that looks like compared to that minimum commitment and then what’s the next minimum commitment.

And one thing to note, that’s a little bit different as we’re actually starting to – the fees that we’re starting to pay today actually in the March month will start to go towards the new commitment actually. So for the first milestone at 6.5 years of payments, or nearly 6.5 years of payments and then the back half will be five years of payments.

Tom Roderick – Stifel

So in other words – I’m sorry, go ahead.

Peter Gassner

I’ll just add, we’re comfortable with that we’ll meet those minimum payment commitments.

Tom Roderick – Stifel

Okay. That’s helpful. I’ll follow-up back in queue. Thanks.

Operator

And our next question comes from Brendan Barnicle of Pacific Crest Securities.

Brendan Barnicle – Pacific Crest Securities

Thanks so much. Matt, I wanted to follow up on cross questions about the bigger deals and get your perspective on anything you saw on sort of the sales as on execution side, they might be driving some of those large transactions.

Matt Wallach

Brendan, do you mean the big Vault deals or do you mean just in general?

Brendan Barnicle – Pacific Crest Securities

In general.

Matt Wallach

Well, I think the competitive dynamics really haven’t changed that much lately. I think that on the CRM side, we have a lot of examples of major global rollouts within the largest companies. And so when the next company comes up to look for a new global CRM standard, we really have more references now than anyone else. So to certain extent, it’s getting a little easier to win that next big deal. But and it’s really from the service delivery side and being able to prove that the product works well in every major region. But in general, I don’t feel like the competitive environment has really changed on the CRM side. These large Vault deals, it actually feel a lot like the big CRM deals did in the beginning, I mean this is – we’re kind of legacy replacement guys.

So on the CRM side, this was how quickly can we replace the client-server Siebel stuff after it had been acquired by Oracle. And so we got good at how do you talk to an IT team, how do you talk to an operations team, how do you talk to a business team about what that change would be like and what it enables.

In Vault, it’s very much the same thing, it’s how fast can you replace the legacy client-server system from Documentum or from OpenText or from whoever competitor and the applications that they built on top. And so the conversation to actually feel very similar, the similar type of sale where we have to sell the IT guys that this is going to enable them to be a better partner to the business, we saw the operations guys that they’re able to run the platform more efficiently and with more flexibility than they used to before. And so the business guys that they’re able to actually create additional business value and to streamline their business processes. So I think at the high level, it kind of feels the same has it used to.

Brendan Barnicle – Pacific Crest Securities

Great. And I had a follow-up on Vault, maybe this is best for Peter, but if I remember it right, Vault did not built on the salesforce platform, if you could just remind us of why Vault has gone a different rather than the CRM product?

Peter Gassner

Yes, Vault is built on our own platform which we have assembled from a variety of open source tools and our own intellectual property. And the fundamental reason, Vault is a content management platform, it deals with the content rendering, document versioning, that type, it’s that type of a platform. And so especially when we built the Vault platform, when we built Vault, that was not a type of application that you can build well on force.com. So we have to build our own platform because of the nature of the application really.

Brendan Barnicle – Pacific Crest Securities

Great. Thanks guys.

Operator

And the last question will come from Jason Maynard of Wells Fargo.

Jason Maynard – Wells Fargo

Hi, guys. Good afternoon. I really just had two questions more focused on some of your assumptions for next year. And specifically what I love to get some color, or if you can quantify to the extent you want. How are you thinking about incremental contributions compared to this year from some of the newer products?

And then the second point would be, you made some comments about international perhaps growing a little bit faster becoming a bigger percentage, I’m just curious how you’re thinking about the international contributions growing faster, if you can put some numbers around it, or maybe talk about what you’re thinking about from your additional sales and marketing investments in some of the international segments? Thanks.

Peter Gassner

Thanks. So first about the assumptions of the new product lines. We’re really happy with our three product lines. We set up Veeva CRM and we’re just having incredible customer success in that area. And that’s creating value for our customers certainly and it’s also creating a halo effect for Veeva as we deployed to more geographies with Veeva CRM and more customers. So we are really happy with that. And we think that will grow and that’s leading – that’s providing the cover for Vault to Network, those products are younger, right? CRM is on version 20, Vault on version 7, Network on version 2. But, Vault is tracking in a similar way that CRM was tracking at the same stage in its life, and so what we expect is the percentage of our revenue that are coming from non-CRM applications will be increasing over time as our Vault to Network get to the appropriate stage in their life cycle.

Then as far as global, Veeva started in the U.S., when we started seven years ago. And I guess for the first roughly four years of the company or three-and-a-half, all of our revenue was basically from the U.S. So since then we have been expanding to other geographies in our percentage of revenue has been moving more towards the outside. And I think that trend will continue slightly but not dramatically.

Operator

This concludes our question-and-answer session. The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Veeva Systems' CEO Discusses F4Q 2014 Results - Earnings Call Transcript
This Transcript
All Transcripts