Good afternoon. My name is Chantal, and I'll be your conference operator today. At this time, I would like to the call over to the be a question and Thank you. Rick Lund, Head of Investor Relations, you may begin your conference.
Good afternoon, and welcome to Veeva's fiscal 2020 first quarter earnings call for the quarter ended April 30, 2019. With me on today's call are Peter Gassner, our Chief Executive Officer Matt Wallach, our President Paul Shawaw Cloud and Tim Cabral, our Chief Financial Officer. During the course of this conference call, we will make forward looking statements regarding trends, our strategies and the anticipated performance of the business. These forward looking statements will be based on management's current views and expectations and 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 filing on Form Ten K, which is available on the company's website at www.viva.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, May 29, 2019. 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 updates on our performance during the quarter unless we do so in a public forum.
On the call, we will also discuss certain non 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.
Thank you, Rick, and thanks to everyone for joining us today. I'm pleased to report another great quarter with results ahead of our guidance. Total revenue for 7% year over year and our non GAAP operating margin was 38%. It was an outstanding start to the year. Congratulations to the Veeva team and thank you to our customers for your continued partnership.
I'll share some Q highlights, starting on the commercial side of the business, where we had another excellent quarter. We continue to extend our market leadership and core CRM. We added many new Veeva CRM customers on the SMB side in both the US and Europe. Many of these customers also purchased Veeva OpenData at the same time. We also made good progress with global CRM rollouts in existing enterprise customers.
CRM add ons also saw further adoption. Events management, align and engage continue to do well for example, a top 20 pharma added more than 700 engaged users in Europe after their success with initial pilots last year. We hosted our commercial summit a few weeks ago in Philadelphia. With more than 1600 attendees, it was our biggest event to date and is the largest of its kind in industry. The feeling and sense of community was great.
It's one of the highlights of our year. We and our customers always get a lot of ideas and energy from Summit. The major Summit themes were customer success and the emerging use of AI in multiple areas of our commercial cloud. In CRM, for instance, we announced Veeva CRM approved notes, which will use AI to reduce the compliance risk of taking pretax notes. Providing field reps a better way to manage relationships with doctors.
Approved notes will be part of our core CRM subscription in is planned for release early next year. Customers are excited about approved notes and our continued investment and innovation in CRM overall. In commercial, there is a strong desire to do more with AI and advanced analytics. At last year's summit, we announced we would build our first Viva Andy. Viva Andy is an artificial intelligence application designed to provide customer insights and next best action recommendations right in Veeva CRM.
I'm happy to announce that Andy is now available. We had a lot of great discussions about Andi at Summit and are developing a pipeline of early adopter candidates. Overall, it was another great commercial summit. Turning to Viva Vault. In Q1, we added almost 50 new Vault customers, which was a quarterly record.
We saw strength across each Vault application area, including early success with new products and continued momentum with more established products. We won our first top 20 enterprise deal for CDMS. This is a big milestone for the product and for Veeva. The customer was looking for a cloud EDC solution on a proven platform. Systems and are not true cloud applications.
The customer also liked some of the innovative ways our system handles data entry, data review, and protocol admin as well in the last 9 months and that went well. So last quarter, they decided to move forward with a multiyear enterprise deal for CDMS. This was a great win for Veeva. 1 of our top company priorities is to ensure the success of this project to in Europe for Vault in the clinical and regulatory areas. This customer just went live with Vault QualityDocs for over 50,000 users around the world.
After working with our product and services teams on the quality docs implementation, they decided to go forward with eTMF submissions and submissions archive. This is a great early adopters for Vault Safety, our newest product line in Development Cloud. It's still early days for Safety and these were small deals with small companies. I'm pleased with our overall progress. Product is maturing everyday and we have a growing pipeline of early adopter candidates.
Safety is a mission critical application for life sciences. It's complex and will have many integration points with our other Vault applications. So having a modern solution on a single platform is a great consumer goods, chemicals, and cosmetics. We recently announced a new application Vault claims. Claims will help manage the product claims lifecycle from creation to approval to marketing usage.
When speaking with early QualityOne customers, we our real need for a claims management application. We have already started a claims project at a new top 20 CPG customer have early discussions underway with others. Progress with QualityOne continues as well. Both expansions in existing customer and bringing on new customers. For example, this quarter, we closed an initial QualityOne deal with another major cosmetics company.
While still early, we're finding that companies are responding to our product offerings in consumer goods, chemicals, and cosmetics. In closing, we had and had exceptional traction in new markets. With that, I'll turn it over to Tim to review our financial results in more detail.
Thanks Peter. Q1 was another quarter of consistent execution across the company. Total revenue was nearly 2.40 $5,000,000, up from nearly 50% of $98,000,000 from $156,000,000 last year. Outperformance in this metric was driven by a very strong bookings quarter, favorable linearity of those bookings and a tailwind of a couple $1,000,000 more from 606 as compared to Q1 of last year. Services revenue was almost $47,000,000, up 18% from roughly $40,000,000 1 year ago.
Strength in services revenue continues to come primarily from R&D Vault Projects. I expect Q2 services revenue to be roughly flat with Q1. Our non GAAP end of our guide. This was driven primarily by outperformance on the top line. Across the company, we added 92 people net in the quarter finishing at 2645, up from 2243 1 year ago.
Turning to the balance sheet. Deferred revenue was 3.60 $1,000,000 compared to 3 $1,000,000, which was ahead of our guidance of $235,000,000. This result was primarily driven by strong bookings and outperformance in services revenue. The year over billings in Q1 of last year included an $18,000,000 renewal of a large customer that subsequently shifted its renewal date to Q4. Adjusting for this year over year calculated billings growth for the quarter would have been 26%.
Please remember that there are numerous factors that make of our business, and we do not manage to it internally. Our subscription revenue guidance and calculated billings guidance for the full fiscal year are the best indicators of momentum. Looking ahead, we expect calculated billings of roughly 220,000,000 in Q2 and a range of $1,115,000,000 to $1,120,100,000 for the full year. We is an increase from the $1,100,100,000 billings for the year to cash and short by our performance in cash from operations, which came in at $236,000,000 and included $14,000,000 in excess tax benefit related to $35,000,000, excluding $20,000,000, excluding the excess tax benefit. Let me wrap up by sharing the rest of our outlook for next quarter and for fiscal 2020.
For the second quarter, we expect revenue between $259,000,000 $260,000,000 non GAAP operating income of 94 $5,000,000 and non GAAP net
$158,500,000.
For the year, we expect revenue in the range of 1.40 $5,000,000 to $1,050,100,000,000, representing a $20,000,000 increase from our previous guidance. We expect subscription revenue to grow roughly 24%. And within that, we expect commercial cloud subscription revenue growth of at least 11% and Vault subscription revenue growth of roughly 40%. For fiscal 2020, we anticipate non GAAP operating income of $385,000,000 to 3 $90,000,000, a margin of about 37 percent. This is an increase in both dollars and margin from our previous guidance of 360 to $370,000,000 and a margin of almost 36%.
As you consider this margin guidance, note that we have an and we are expecting increasing litigation fees as we move into the next phase of our cases. We are now targeting non GAAP net income per share of between $2.01 $2.03, based on a fully diluted share count of approximately 159,000,000. To conclude, it was a great start to the year. Our product teams continue to lead the industry forward with innovation and our field teams continue to deliver customer success. Given this consistent execution, we remain confident in our ability to deliver at least 20 As always, thank you for joining the call.
And I will now turn it back to the operator
Your first question comes from Tom Roderick with Stifel. Your line is open.
Hi, guys. Good afternoon. Thanks for taking my question. So I wanted to ask the first question here just on the clinical side. It was, you know, looks like a tremendous Vault quarter again.
Pretty exciting to see CDMS get land your first top 20 enterprise deal. I was hoping you could talk about that a little bit more. Two parts to that question. And first, of course, being sort of the competitive dynamics. As you went in there, I gather you've probably been with this customer for a while.
Can you talk about what they were looking to to sort of to fix or to change or what the competitive dynamics were that got you over the top on that product? And then sort of secondarily, as you think about the opportunity set or the wallet share within CDMS, how do those deals compare at a top 20 compared to say CT PMS. Are those larger as you get into CDMS Enterprise wide?
Thanks, Tom. This is Peter. As far as the competitive landscape for the deal, we're certainly competitive. This is a customer, longstanding customer of Veeva's that had one of the large enterprise players for CDMS and had that for many years. So there was no formal RFP process, but there was certainly a selection process.
And in terms of what they were looking for, you know, the CDMS is really it's a it's a very critical process for for pharmaceutical companies. They're trying to collect clinical data from these research sites. You know, faster and more accurate they can do it, the better chance they have of completing their clinical trials and completing them quickly. So it's a really, really mission critical application. And they just needed a true cloud system that had better data collection and workflow, just really a better system overall in a chance to be great.
I think that's what they were looking for is a chance to be great. So it's competitive and we won. In terms of the size of the deal or you mentioned the wallet chair, this is CTMS is a bigger a larger application than, sorry, CDMS is a bigger and larger application than CDMS. So to give you an idea, this this deal, you know, it's a multi year deal. It'll roll out over time that the full rollout, it'll be an 8 figure per year deal.
It's certainly a significant application area for us. It's our largest single Vault application.
Fantastic. That's great. And maybe just a quick follow on in thinking about that opportunity. I know that, CTMS has worked really nicely in conjunction with eTMF given that you have a lot of sort of similar decision makers. This seems to be a little bit of a separate category and you've worked hard to integrate the workflows.
But from a resource standpoint, do you need separate independent sales reps and a different go to market strategy as you start to land these top 20s? Or does this go right in the existing bag of the same clinical sales rep that's been selling there already on the other products?
Yes. I'd say it's a combination of both. This is a different area, the clinical data management area, which different than the clinical operations of consultants and specialized salespeople, but they do work with the the broader R and D sales team. So it's a combination of specialization for certain people and then tying it together to the broader Veeva R and D vision.
Wonderful. Congratulations on those deals. I'll jump back in the queue. Thank you, Peter.
Your next question comes from Ken Wong with Guggenheim's Your line is open.
Great. Thanks for taking my question guys. I guess,
I wanted to focus also
a bit on Vault. You guys raised these subscription outlook there to 40%. Just wondering what kind of what's changed in that dynamic? Is it you guys called out faster growth of new customers? Also it sounds like the pipeline is getting more mature CDMS, you guys signed an enterprise customer.
Just trying to figure out kind of what are the puts and takes that got you to the higher number.
Yeah, Ken, this is Tim. I think you sort of answered the question a bit. It is a combination of all those things. Certainly, Q1 represented a very strong start to the year for Vault. We are seeing strength across the board across the entire development cloud.
And the contributing products are the ones that we've seen contribute in the past, meaning eTMF had great quarter. CTMS had a very good quarter. QualityDocs had a good quarter, and we also had a good quarter in regulatory. So across the board strength, a really strong start to the year enabled us not only to raise the Vault subscription revenue guidance roughly 40%, but the overall revenue guidance to roughly 24%.
Got it. Thanks, Tim. And then maybe for Peter or Matt, the quality one opportunity that, you know, you guys have touched on that for a while now. It feels like there you guys are focusing a little more aggressively on on being a kind of Veeva 2.0 for a bunch of these these verticals. Can you talk about, you know, whether or not you're going to have to accelerate some investments there And now that you guys have broadened out the portfolio a little bit, does it make more sense now to be aggressive in those markets or is this still something further down the line?
Hey, Ken, it's Matt. So we're already being aggressive in these markets. We've aggressively added people onto the product team, and we've just announced that first product specifically for those 3 market segments. And we've continued to add salespeople, in the U. S.
And Europe. So it feels like we're being aggressive already. Now we also are reminding everyone, we're still learning a lot, right? So this is not just another application that goes right in the bag of, the life sciences rep and we just turn the crank. Not that those are easy, but there are more moving parts these.
And so because we're going after multiple types of companies in multiple market segments with multiple products and now a brand new product, still a lot for us to learn. But I would say we're already being aggressive here, in making sure that early customers are super successful in that we use that and start the reference selling.
Perfect. Thanks a lot guys.
Your question comes from Bhavan Suri with William Blair. Your line is open.
Hey guys, thanks for taking my question and Congrats. I just wanted to touch a little bit, on the, the, the breakup of the Vault business. Sort of how you guys think about growth there. So if you think about Vault, obviously, growing really fast over the past few years, and Vault Customer Account now almost double CRM customer count. Can you just touch Peter, Peter, Tim, maybe both of you on how thinking about the growth formula with Vault going forward between new customers and new ads and how they expand versus the existing customers and the cross sell or expansion within that existing base?
Thank you.
Bhavan, this is Matt. I'll actually take that one. So, because we have so many of the large customers, top 50 pharma companies already, the vast majority of incremental new is going to come from existing customers. So that's just going to be the dynamic for Veeva going forward. We have multiple as you know, we had a target of 20 eight figure customers, hopefully by the end of 2020 and it looks we're on track for that.
Those are really significant relationships. And while when a new when an existing customer buys one more vault. It's certainly good for Veeva, but it's great for the customer because there's so many advantages that they get from having another and enterprise product on the same platform. They get IT benefits, they get administrative benefits, and they get tremendous benefit business benefits of having a single source of truth. So in terms of incremental revenue, it's always going to be a larger number from existing customers because we are going to become big.
Some of those customers, if they go with competitors, could help competitors get large. So those companies important to us from every different angle. But the large revenue story is going to come from existing customers. And I think we'll see that over time.
Got it. Got it. And one on Andy and AI in general. And maybe, Matt, this is for you, maybe, Peter, you think about AI, can that serve or Andy specifically a halo effect on the rest rest of the CRM suite, like, whether it's nitro or line CRM add ons. And then a quick follow-up to that is try to think about like introducing a similar sort of AI engine on the Vault side, right?
So I've got X number of steps in a particular submissions, regulatory, and we can optimize that. We can automate that. I guess, are you seeing an appetite on that site for AI, or is that still early. So, first, just sort of what the halo effect of sort of getting Andy and AI working on the core CRM side, obviously, with Nitro and then B, I guess, Is there an optionality and interest on the Vault side for that? Thank you.
Hey, Bhavan, this is Paul. Thanks for the question. Yes, so on know. Yeah, good to, good to speak. So, you know, this is something we announced a year ago, at our summit and then you know, at the time, we didn't have a product and we didn't have a team focused on it.
And, you know, at this summit this year, we announced, we actually demoed the product and showed real life back to customers and there was tremendous interest. We had hundreds of customers attend sessions focused on Andy. So, there's a very significant, halo because of the excitement around the product and the potential for what it can deliver. You know, Andy's focused on, delivering, you know, suggestions, next best actions to customers, which, you know, really we believe will have a significant impact on and potential to have sales uplift for our customers. But there's a lot of excitement, there's a lot of potential for what Andy can deliver.
And, you know, we're focused on improving a lot of that out in our, our earlier program, which we're kicking off over the next couple of months. That's next for us. In terms of, you know, the one other thing I'd say just beyond Andy is just around the concept of embedding AI into the application. So at summit, we had also 2 big announcements, you know, one in the space that Peter alluded to called Approved Notes, which is where we're using AI to drive, you know, compliance the ability to cut to, to all the notes that they have in the system. That's super valuable to customers that resonated extremely well.
And then also on the Vault side, as you mentioned, you know, we're starting in involve promo maps with AI, doing auto claim linking. So that means is as you make a claim about a specific product, you have to link that back to the, the underlying reference material. So we're already getting interest and excitement around Vault for AI and we're already making some strides in terms of embedding that in there. And I think you'll see more of that in the future.
That's really cool. I I
might squeeze 1 more in.
So as you think about outside life science, obviously, AI as it talks
to quality and quality process, quality management seems really interesting too. Is that an area? Are we talking 2 years down the road where that gets embedded in QualityOne, and OLS? Is that something near term? Thank you.
And thanks for taking my questions.
In terms of outside of life sciences, this is Peter. We're still early there. So we have our basic blocking and tackling to do our new claims product. What's going on outside of life sciences is we're learning a lot. We're developing deep customer memberships.
And what we're finding is they they have a need for a partner in the quality, regulatory, clinic and claims area of consumer packaged goods companies. What claim am I making about this new product. How how fast can I get things like the label approved? When I change ingredients, how do I need to do my regulatory filings in the different countries. If I were to have a complaint on this product, how do I register that if I need to change a process, how can I do that in a compliant way?
So that claims quality, legal, regulatory set of things is very highly related and there's a need for that integrated in together all on the same platform. So that's what we're focused on. AI will come outside of life sciences, but not in the immediate future.
Got it. Thank you guys. Thanks for taking my questions and congrats. Thank you.
Your next question comes from Sterling Auty with JP Morgan. Your line is open.
Great, thanks. Hi guys, it's Jackson Ader on for Sterling tonight. Question from our side, when when we're talking about an enterprise wide CDMS win, can you give us just a little bit more color on how that how CDMS is going
to be rolled out to Veeva?
Is it gonna be all trials and or all new trials in new phases going forward. What does that actually look like?
Yeah, I can take that one. Yeah, it has to be phased in because in the clinical data management system, there's many people inside of the customer that that work with many different groups from data people to statistical type people to the people that do the clinical monitoring. And there's also people in the research sites that that deal with with these systems too. So it'll be a phased approach because you have to you have to train people up and get them going on it. At some point, it will be all all clinical trials, all new ones started on Veeva that may be you know, between 18 months or so from now or 2 years from now.
That's how that's how long it will take because for example, if a therapeutic area where you have multiple related trials and you have some system of reuse going on on the system, you're going to be a little hesitant to break off the sort of add on trial and put it on a system, you're gonna wanna keep that with the family of other related trials. So it's a nuance thing, but certainly in the 2 years from now, we would expect the bulk of the trials to be on our system.
Okay. That makes a lot of sense. And then Can we just clarify, Peter, I think the comment you made about, the these types of deals for CDMO possibly being 8 figures. Is that on an annual basis, is that a total contract value? What kind of timeframe or subscription are we talking about?
Yeah. That's on a on an annual basis at the at the terminal at the hot, when it's fully ramped up, the subscription fees, and that rolls out over years, but not getting into the specifics of how many years. But that's the figure I quoted there for eight figures was on an annual basis at the terminal run rate.
Your next question comes from Scott Berg with Needham. Your line is open.
Hi everyone. Congrats on a great quarter. I have and a follow-up here. I guess kind of an extension to a couple of the outside life sciences questions. You're bringing claims there.
Can safety fit outside of life sciences going forward? I would imagine that there's some similarities between those types of customer set.
Yes. It will. Safety will. Now it'll have a slightly different flavor to it. Because of the the process is different and the regulatory obvious or different drugs, drug safety versus consumer product safety.
And that's something for the safety products outside of life sciences. That not for the immediate future. We feel that safety inside of life sciences, that's going to keep us really busy. And it's a critical to large applications. So we're talking probably a couple of years out for safety outside of life sciences.
Great. And from a follow-up question, Tim, I was just kind of reviewing the model a little bit and probably nitpicking on a company that has 38% operating margins in the current quarter, but why are you not seeing any leverage around G And A? I kind of look at the spend there and it's been relatively add as a percentage of revenue over the last 3 years? Thanks.
Yes. Scott, I would say we are seeing leverage in G And A, but also, as I mentioned in my prepared remarks, seeing increasing litigation fees for a couple of the lawsuits that we're working on and that is hiding the leverage we're seeing within G And A.
Great. That's all I have. Thanks for taking my questions.
Your next question comes from Stan Zoltke with Morgan Stanley. Your line is open.
Hey, gentlemen, good afternoon. And, Matt, good to here, you on the call. I'm guessing this is going to be your last one. Maybe just question for you in that case. Commercial cloud, the newly planned acceleration to over 11% this year, I don't think many people really expecting to see an acceleration here versus a year ago.
If you were to rank the drivers of the continuing growth in commercial cloud, what would they be? Would it be adoption by like, events, engage, any other add ons?
Hi, Stan. Yeah, this is Matt. Thanks for the call. I'm actually going to let Paul answer question though.
Hey, Stan, how are you? This is Paul. I get to steal this one from Matt. So, yeah, I mean, really excellent quarter in commercial as you've heard. You know, I wouldn't attribute, the strength in commercial to any one thing in particular.
I'd actually, you know, the strength is really from broadly in CRM and across the add ons in general. So, to be more specific in CRM, We saw a significant expansion from global customers, existing customers who were completing their global rollouts as they went and expanded into new markets. We also saw expansions from existing customers as they launch new drugs and they get approval and they build out a sales team. They've, we saw we've seen growth there as well. And also on the SMB side, we continue to win the vast majority of those deals also.
So that's continuing to add to the strength. And that foundation CRM that we're building is giving us really a, you know, the right foundation to sell the additional add ons too. And I and, you know, we've seen that pull through in this quarter as well with really great traction, from events. And then I know some of the other add ons that are building momentum like Engage, for example, which is, which is newer we had customers speak at our customer summit talking about, you know, how they're changing the selling model, how they're getting access to customers, the doctors that they've never been able to get access to in face to face, they're now accessing them in a video call, and they're getting more time, and video than they would have face to face. So we're starting to see that traction pull through on the add on So I would say that, that strength is really a CRM and the add ons pretty consistently.
Got it. What I was trying to get at was the guidance for commercial cloud for the full year to accelerate to 11%. And then I would presume answer still applies to the going forward for the rest of the year, right? Got
it. Those are the drivers of our. Yes, that's right.
Okay, got it. Great. And maybe a quick follow-up. How is the nitrile product doing? We heard in, on the Q4 call, there were 6 early adopters, and you already had a couple of live.
How is that product doing despite like the competitively restrictive practices diverse? We're seeing from some out in this space?
Yes. So, Nitro is doing really well. The quarter, we had a couple of early customers go live. In fact, we had 3 customers speak at our customer one was on the main stage and then 2, shared very detailed presentations about the benefits they're getting from Nitro, just getting metrics out to the fuels and to their office faster, you know, putting that foundation in for, for AI. So our customers, the early adopters are doing very We've also added some customers, to Nitro also.
You know, that, that growth that we have there is really measured. We're focused early adopters and customer success in the early market. We are, we're unfortunately still seeing some of the anticompetitive behavior, from IQVIA. So that's creating some headwinds for us with Nitro. You know, we're hopeful that we're able to get that resolved, over time.
But yeah, that has been an impact so far.
Perfect. And the last one, maybe for Tim. Tim, the strong operating margin performance in the quarter, you mentioned it's largely your revenue outperformance. Was there any kind of hiring linearity in the quarter because when when we've seen operating margin outperformance to this degree, it usually coincided with hiring maybe being a little bit more heavily skewed to the back half of the quarter, versus a little bit more, throughout? And that's it for me.
Thank you.
Yes, Stan, thanks for the question. We had a really good quarter from a hiring perspective, I think you're right. There was probably a little bit more backend loaded linearity, but overall, it was a very strong quarter. The one thing that I did say as it relates to the performance of revenue in my prepared remarks, especially on the subscription revenue line, is a couple more million of 606 impact. Than we had seen last year.
And Stan, I think you probably know this. That is 100% margin. So that drops right down to the bottom line. With no cost of goods sold and no really operating expenses against it. So I think that also benefited the operating margin performance But I would say lastly that the operating margin of a little over 38% was fairly consistent with what we saw in the second half of last year in terms what the operating model is starting to firm up and look like as we go forward.
Perfect. Thank you so much.
Your next question comes from James Rutherford with Stephens. Your line is open.
Hey, good afternoon. Thanks for taking the questions. A couple from me. First, I want to circle back on the CDMS win, obviously, a very nice milestone. But, the question is, perhaps it's too early, but I'm curious how you've seen customer conversations change since that deal was announced and whether it's starting to push things in your favor, when you kind of go up some of your, against your more, you know, legacy, competitor in that space?
Yes, I think it
was certainly noticed in the industry. Clinical Data Management is a community, they're kind of scientifically oriented, fact oriented, really interested in the patient comes and getting therapies out to patients, getting therapies approved. So information flows fast. I would say faster in the scientific and clinical community. It flows faster than in the commercial communities.
So there's a lot of interest, we've seen an we've seen an uptick in conversations. I think there's an uptick in customers thinking well maybe maybe that could be possible for me. So there's more interest, I think, in pilots by large customers. Now whether that will turn into fruition or not, that's something that we'll see over the next 12 months, but certainly the interest is up. And I think a lot of eyes are on this project.
How successful will it be? There's a lot of people wanting to know that.
Okay. That's helpful. And then a follow-up for Tim, if I may. I think last we heard, how set of life sciences was contributing, I think, over 10,000,000 of revenues is what you had said. I'm I'm curious if you can frame up where the ARR on that products or stands today and how much it might contribute to to fiscal 20.
Thank you.
Yes, James, thanks for the question. We haven't talked specifically this year about outside life sciences, in terms of what the contribution is. What I would say, quality is what Peter and Matt said earlier, which is we're seeing really good early progress with, our early adopter customer the innovation that we're seeing from the product team you heard in Peter's prepared remarks. So the momentum continues to be strong. We haven't specifically quantified what that the size of that business is at this time though.
Okay. Thank you very much.
Your next question comes from Brent Bracelin with KeyBanc Capital Markets.
Good afternoon and thanks for taking the question here. I had one question and one follow-up. The question I wanted to drill down again is something you've talked a lot about today, and that's on the demand side, but wanted to kind of help frame what's happening. Obviously, you're raising the full year guide by $20,000,000 subscription growth accelerated to 27 percent, the highest in more than a year. Is this a byproduct of customers going all in on Veeva that you talked about at the Analyst Day.
Is this more of a financial mechanics of just Vault increasing as the mix grows to close to 50%. Are you do you have increasing confidence on both the Vault And Commercial parts of the business as you think of out kind of what surprised you most this quarter and given you the optimism here, what would you attribute it to?
This is Peter. I it's overall good execution. Good execution in our product, good execution in our field. That that's number 1, you know, you can't take those things from granite, right, that's, you know, it's actually we used to have a saying that we say execution matters most. It's what you do every day, every week, every month, every quarter.
A grand idea is just a grand idea. So I think it's just consistent great effort by the by the Veeva team and partnership by our customers. That's the bulk of what's going on. Now what that I guess there's a couple other things. There's a backdrop involved.
We now have 17 Vault applications. And they're for very specific areas diverse sets of areas. So that's that does create a halo effect. Customers are starting to see, wow, I can my internal operations can be much more efficient with Veeva. I can get a lot of applications.
They're integrated together, and the projects are generally successful, and I like working with the people. So with 17 applications, now there's more there's more bytes at the apple with any particular customer. So I think those are those are the things going on. And then reputation, reputation grows every year with continued success as long as you continue have success. So the longer we have success, the reputation grows, we have more products and we're continuing the Veeva teams continue to hustle every day.
Go the extra mile for the customer. So that's it. No real magic, but just great Thank
you. That's helpful.
Nitro and Andy, we've certainly seen other SaaS companies kind of layer in and weave in, AI functionality with, as part of the platform to differentiate, what is the monetization path for you as you think about as we think about Nitro and Andy add ones? Are these going to be consumption based models tied to kind of usage as more people use Nitro or Andy, you're going to get revenue tied to it. Why us through the monetization opportunity
Yeah. Hey, Brent. So this is Paul. You mentioned, you mentioned 2 things there. One was Nitro and the other was Andy.
So I'll take them separately. Nitro is, is the commercial data warehouse. And, that there's certainly a monetization, you know, concept around Nitro, which will be driven you know, the basically the size of, of the organization, we're using, field users as a, as a metric for that. And that's a significant opportunity. We've talked about being, you know, roughly the size of, of CRM.
That's a foundation for AI. It's not necessarily the AI capability. It's what AI is driven, for Andy is the application engine. And that does a very specific thing that drives insights and it drives questions directly to the field. So the industry, people in the industry typically talk about that as next best action.
And we'll also monitor that as well. And that's on a per user per month basis for our customers. And then, you also heard, you know, Peter and prepared remarks talk about some of the AI that we're building into the application. And some of those components are just about really driving efficiency making the application more smart, as you know, kind of smarter or more compliant. And some of those are differentiating and just value add that are that, that, you know, just a part of the existing license.
So what Peter talked about as approved notes, that's part of the Veeva CRM core license. And what we talked about is auto claim linking, that's part of the Vault Promo Mats license. So you see a little bit of a mix of both where some are kind of very specific products and then others are embedded into the application.
Yeah. I would just add on to that. Broadly speaking, yeah, some AI is going to be added into the existing subscriptions Some are gonna be brand new AI applications that are a subscription on their own, and I wouldn't be surprised if we have transaction oriented AI pricing in the future where it fits. So Veeva, I think the thing to remember is Veeva will run to the complexity. We will really find the application that really, really fits for an area.
And part of that is finding the pricing model that that fits for that area. And that's going to depend on the use case just as it does in a transaction oriented system, it can depend on the use case and in the AI oriented system.
Thank you.
Your next question comes from Brian Peterson with Raymond James.
Hi, gentlemen. Thanks for taking the question and congrats on the quarter. So just on the record Vault wins, I'm just curious how much of is a function of having the 17 bolt applications that you referenced? Or is there anything that we can actually read into in terms of, deal close rates or anything with velocity that that's accelerating that as well? Well, so, and this is Matt.
It's a good question, Brian. So that was the number of new logos. So companies that bought their very first Vault. And so that is it's going to be because of success of those vaults that they bought at other customers. So is it because there's so many vaults.
I guess, yeah, I mean, that would contribute to it, that there's going to be more opportunities, more shots on goal per se. But I think that what is driving faster adoption by new companies is that these companies are all in the same industry. The overarching objective of people that work in the life sciences industry is to help patients. And so what we find and the reason why our reference selling is so intense is because they can help another company help patients, they'll do it. So our about their use of Vault.
And because their use has been so positive across so many of these applications, we're getting a lot of opportunity to introduce evolved to new companies. Got it. Thanks, Matt. And Tim, maybe one for view, view just on Vault, the success that you're having across the product portfolio, I'm curious, how should we be thinking about service capacity investments and any impact on margins going forward?
Yes. So, Brian, on the services side of Vault, we have a really strong team there. A lot of good domain expertise in that team. And as you've seen us grow the Vault business over time, obviously a lot of pattern recognition on best practices that a company like Veeva can be across pollinator or a pollinator of best practices across the industry. So that's happening.
In terms of the capacity model, we continue to not only build talent through our generation Veeva, which is our college recruiting engine, which is on fabulously well over the years. Certainly, in the last couple of years, we've accelerated that as well as finding great people in the industry. So, we're not necessarily capacity constrained. And one other thing I would add to that, Brian, is over time, like you saw in commercial cloud, we've built quite a nice ecosystem of partners in the perspective, we're in good shape, given those dynamics.
Your next question comes from Rishi Jaluria with D. A. Davidson.
Hey, guys. Thanks for taking my questions. I wanted to start on Veeva claims. It looks to be a brand new product versus quality one where you were taking existing solutions in QMS and then quality docs and kind of repackaging them into something new. Should we expect side that, is there potential for a little bit of a margin hit since you're actually investing like development versus retooling existing solutions.
And then I've got a follow-up.
Yeah, it is the right way to think about it that Lanes is a new, a brand new application. It's in a separate vault from the QualityOne Vault. It's a standalone the reason for that is it's a very specific use case. It has a different set of users, and it rolls out in a different way. So for example, our first customer from from for claims was with a top 20 CPG customer.
Now it turns out this is the first application that they bought from Veeva, because they had a very specific need in there in claims and it needs to roll out on its own way. Now that customer, and we believe, will buy other products from over time. So, now in terms of the margin hit, the other applications QualityOne the regulatory, they need effort and specific features for outside of life sciences. So I would see no really difference in in the margin in the margin hit. This will be small things that you won't be able to see in terms of overall COP.
You have to remember that we're getting a lot of leverage from the Vault platform. That is If you look at the maturity of the Vault platform now versus even 2 years ago, it's pretty striking. Like that's the if you look at the iceberg where most of the effort under the covers. The most of the effort in our product area is actually under the covers in our Vault platform. You see the application sales, but the leverage in the operating model and the power of the sales is actually a lot of it coming through the Vault platform where we've made tremendous strides over the really over the last 2, 3 years.
Got it. That's helpful. And then just as
a follow-up, I wanted to maybe take a step back. So in 2015, so 4 years ago, you put out this $1,000,000,000 target or $1,000,000,000 run rate target for calendar year 2020. Clearly, you've overachieved that. And if we go by your guidance, you're going to hit that. Dollars run rate next quarter, so about a year and a half or so ahead of schedule with significantly higher margins.
If you were to take a look back, where was it or what particular areas was it that you're able to kind of hit that goal significantly ahead of schedule and with higher margins, was it things like Vault taking off faster than expected? Was it a larger kind of set of solutions that you were able to go after or anything else, that would be helpful. Thanks.
Yes. That's a great question, right? As we think back to 2015, quite some time ago now and we had the plan. So your basic question is, what went better than affected. I would say the number one thing is that nothing bad happened, right?
And when you're making that long range of a plan, you have to assume that there will be some, you know, unexpected bad news along the way, right? Nothing bad happened. We I guess since 2015, we've roughly doubled the size of the company. Close to or so. And we've retained our energy.
And in fact, got some I think. We've actually got more efficient as as we've got larger, more efficient in our selling cycle. I don't I don't think we anticipated that we would get more efficient as grew larger. So that's happened well. I think those are really the things outstanding execution, good decisions on process and no unexpected bad news.
And so we got there. And I would say, you know, along the way, we probably had some key things that just happened to break our way. And, you know, that accelerates do that.
Question comes from Kirk Materne with Evercore ISI. Your line is open.
Hi. Thanks very much. Thanks for taking the question and congrats on the quarter. Given that you guys are just coming off Summit, I was actually curious just based on some of Matt's earlier comments, is there a number evolves that a customer after a customer buys that the discussion sort of tips more to a discussion, almost more about the platform, meaning we're at the point now where companies are betting on your platform as much as they are betting just on summer. I, they obviously expect really good products to go along with that, but I'm just kind of curious to even date or been talking about the benefits from just having everything on an integrated platform as they are about the specific product features for each of this specific, maybe too early for that, but I'm just kind of curious if you compare and say this year and last year if things are heading in that direction.
Sounds that it is, but just curious on your thoughts, maybe?
Yes, I don't think it's too early to think that way. I mean, when we 1st platform. So the idea was that companies would make that part of the electricity that runs the company. And we thought it could take 4, 5, 6 years before we got there. And we did get there faster than I think we expected at that time.
The way you ask your question is interesting. I think that when you buy the first application, you're probably not thinking this is my platform across the board. When you buy the second application and see the benefits of having 2 major systems of record on the same platform, which has never been possible before across clinical, regulatory, quality, medical and commercial. I think when you get the second one is when the discussion at least starts internally is like, Hey, we got great benefit from the second one. What if we got them all?
And so we don't have a formula here. And I think a lot of companies are different, but I don't think that the first successful project necessarily, is the entree to enterprise wide deployment, but I do think the second successful one is a good way to think. And so as a specific example, we talked in prepared remarks about one company just went live with all of their employees, 50,000 employees around the world with quality That was actually their 2nd Vault. They also had promo mats. And then their decision to expand to the submissions archive, submissions, and eTMF is basically making it an enterprise platform.
So I hadn't planned it this way, but that specific example, does support the answer there.
Okay. That's helpful. And then maybe just one last one on the last. You mentioned that obviously there's always been important reference so it's been key to your success. When you get into OLS, is there a certain size and scale in terms of the number of customers or amount of ARR where it's time to sort of turn on the gas even more from just a distribution and a sales perspective, meaning making sure that you're covering a bigger portion of the U.
S. Or amount of targets that you might have out there in those specific industries. Are we a year away from that or are we there? I'm just kind of curious about if you wanna have success with your customers and need your customer success translates into more selling opportunities, you know, where are we on on sort of, like, now it's time for us to sort of focus on adding distribution capabilities or just distribution coverage more broadly versus just having focused on making sure these guys are really successful from a customer perspective?
Yes. I would say we're early days. We're really focused more on the customer success. We just introduced this claims application, for example. We have some customers using regulatory application in outside of life sciences, but it's new.
It needs more features. We have our a top 20 CPG that's rolling out quality 1 through all their manufacturing sites, but they're less than halfway through that. And they have to get through that and then we have to optimize that. So we're really focused on the customer success. Now we're incrementally adding headcount in the field.
That's for sure. But, we feel we'll be tremendously successful outside of life sciences if we buckle down, stay true to the Veeva Way and use these projects to make our products excellent. And what can get in the way there is if it becomes a sales game. And you're just trying to complete as many sales as you can with a product that's not quite ready. Now one thing to know is we don't feel competitive pressure outside of Sciences.
We're doing something quite unique there with this Vault platform with applications for quality, regulatory, clinical and claims. That's So it's not that we're competing with anybody in that. We're sort of also evangelizing or espousing this model outside of life sciences that you can get this and there is value in that. And that takes time.
Great. Thanks very much for taking the questions.
Time. I'll now turn it back to Peter for closing remarks.
Thanks everyone for your time today. And we like to thank our employees
This concludes today's conference call. You may now disconnect.