Good afternoon. My name is Rob, and I will be your conference operator today. At this time, I would like to walk everyone to the Veeva Systems fiscal 2019 First Quarter Results Conference Call. All lines have been placed on mute to prevent any background Thank you. Mr.
Rick Lund, Head Investor Relations, you may begin your conference.
Good afternoon, and welcome to Veeva's fiscal 2019 first quarter earnings call. For the quarter ended April 30, 2018. 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 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 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 filing on Form 10 K, which is available on the company's website at veeva.com under the Investors section and on the SEC's website atsec.gov. Forward looking statements made during the call are being made as of today, May 24, 2018. 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 statement.
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 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 As a reminder, expected method, which means that we have adjusted certain of our fiscal 2018 financial information according to the new standard. Please note that all results and guidance mentioned on this call and contained in our earnings release reflect the application of ASC 606. With that, thank you for joining us I'll turn it over to
with financial year over year. Subscription revenue grew at 21% and our non GAAP operating margin was 32%. It was a great start to the year. The Veeva team executed exceptionally well. I'm encouraged by the pace and level of innovation we're delivering for customers and the life sciences industry overall.
I'm also encouraged by our continued execution and attention We just got back from Veeva Commercial Summit where we brought our customers together for a great event in Philadelphia, This year, we have 1500 attendees making it our largest event ever and the biggest commercial life sciences gathering in kind. At Summit, we announced generation commercial data warehouse built specifically for life sciences. Nitro was very well received because it has the potential eliminate another major custom system that has been a real burden for our customers. AI as they look ahead. Today, life sciences companies largely build and maintain their own custom data warehouses for the side of the business the right resources to build and maintain a data warehouse.
Once developed, these point in time systems quickly fall behind and they end up being replaced every 5 years or so. And most were built for business intelligence and reporting only, so they don't provide the right foundation to support AI. It's similar in many ways to what we saw with CRM 10 years ago or content management 5 years ago in that the market is not being served well with any package cloud solution. So customers are having to piece things together themselves. Veeva Nitro as a next generation data warehouse built specifically for commercial life sciences.
Even Nitro is a packaged cloud software solutions that continually improves over time and includes an ecosystem of services and solutions around it. It includes a pre built data model and pre built connectors for key data sources so companies have a data warehouse that's architected to quickly support their global and regional needs from analytics to reporting to AI. Viva Nitro is a big deal for the industry and for Viva. It's long term commitment to a significant and important area. It could eventually help to transform customer engagement in life science for the better and it's Veeva's first true analytics application, which will stretch us in new ways.
Nitro is about innovation for the industry and for Veeva. Nitro is currently available in Japan for early adopters, and plan for North America by to commercial life sciences that would use Nitro as its data source. It can provide a valuable offering. We also think choice is needed at the AI layer, and we fully support our partners like Aktana and Zs, who currently provide AI solutions for our joint customers. We're looking forward to working with Oktana and ZS to leverage Viva Nitro as a data foundation cloud, where we had another Pharma committed to use to expand their use of Veeva CRM to their European field force.
They chose Veeva because they know Veeva CRM works well and they trust Veeva as a long term partner. It also supports their drive to harmonized systems, which is a continuing trend we're seeing that's driving enterprise customers to standardized on Veeva CRM globally. We're seeing the continued momentum of Veeva CRM within small and midsize companies as well. With 14 new SMB customers added in the quarter. Uptake of the CRM add on products also progressed quite well in Q1, with a number of wins, including a top 20 pharma who selected Veeva CRM events management for their U.
S. Teams. Overall, we're very pleased with the performance of Veeva Commercial Cloud and excited about the opportunity to extend the value we provide with Veeva show. We also had another excellent quarter for Veeva Vault. On the R and D side, Veeva Development cloud is really resonating.
With Development Cloud, we are uniquely positioned to help customers streamline drug development with unique application suites for clinical, quality, regulatory, and soon, safety, all built on a single modern cloud platform. We believe this will be transformational for the industry over the long term. A key development cloud win in Q1 was with the top 50 pharma who selected Veeva Vault Etmf Vault submissions and Vault Solutions Archive as their enterprise standards worldwide. This customer was prompted by the need to unify systems and processes and improve compliance. They are an existing commercial cloud customer, and these new applications are their first purchases in R&D.
When they're successful with these products, there is the potential to expand to other areas of Veeva Development Cloud over time. In addition to the top 50 rim win in Q1, we also had a top 5 pharma go live in the quarter with the 1st phase of their Vault Rim project. This go live is very because it's our largest rim go live to date and a big milestone for our regulatory products. Congratulations to the customer and the Veeva team. For achieving this important milestone together.
It was also another great quarter in quality and clinical with a number of notable new wins and go lives. In the clinical operations area, eTMF continues growing strong. Q1 was our 2nd best quarter ever for Vault Etmf sales. We also secured our first win at a top 20 for Vault Study startup. Study Startup is a relatively new software category emerging to address an area that's historically been underserved.
Once live, we anticipate this could be an important Lighthouse account for the industry as they look to gain considerable efficiency in the study startup process. Vault CTMS also continues to gain traction. We now have 24 customers with 10 live. This is amazing progress for our product has only been available since April of last year and is a strong indication of the pent up need for innovation in clinical. Bulk EDC is also progressing well.
We now have 9 early adopters and 3 are live. Our early customers are happy and enthusiastic about the product. One of our first live customers and their CRO presented at a clinical data event we held in Q1 in Boston. They detailed their success with Vault EDC, specifically citing the modern technology and speed of study build advantages they gained with Veeva. It is still early days for Vault EDC, but I believe we are on the right track and continue to long term leader.
Finally, I want to customers in the customer event next month in Cincinnati, which is an important milestone and will be a great form for our early customers to share their successes and lessons learned. In summary, it was another great quarter. Our pace of innovation, technology leadership, and focus on customer success continues to give Veeva a major strategic advantage. We are paving the way for strong growth well into the future with a broad and growing suite of products. I appreciate the great execution 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 strong execution, subscription revenue was up 21 percent to $156,000,000 from $129,000,000 last year, Momentum across our product lines continue to drive strong growth, especially within Vault. Services revenue was more than $39,000,000, up 29% from over $30,000,000 1 year ago. This was a material outperformance from our expectations, primarily driven by heavy demand within Vault R&D. In addition, we did benefit from some one time items in Q1, so we expect Q2 will likely be $1,000,000 to $2,000,000 less sequentially.
Total revenue was 22% increase. Vault represented 44 percent of total revenue, up from 37% in Q1 of last year. Our non GAAP operating income came in at almost $63,000,000, a 32% operating margin, which was above the high across the company, we added 72 people net in the quarter, finishing at 2243 up from 1874 1 year ago. Turning to the balance sheet, deferred revenue was 290,000,000 compared to 267,000,000 at the end of the 4th quarter. This resulted in calculated billings of 214,000,000 which was ahead of our revenue, better than expected billings duration for the business closed in Q1 and strong bookings.
Please remember, that there are numerous factors that make year over year comparisons of this metric highly variable on a quarterly basis. Therefore We do not subscription revenue guidance and calculated billings guidance for the full fiscal year are the best indicators of our momentum. Looking ahead, we expect calculated billings of roughly $175,000,000 in Q2 and $900,000,000 to $905,000,000 which is an increase from the $875,000,000 to $880,000,000 guidance provided last quarter. As you consider the full year guide please note that during the first quarter, we had a large customer move their renewal date from Q1 to Q4. This means we build the customer for 9 months in Q1, and we will bill them again for the full annual amount toward the end of Q4.
This results in an incremental $18,000,000 worth of calculated billings for fiscal 2019, which is included in our guidance for calculated billings. Additionally, with this dynamic, we when considering calculated billings, please remember that with the adoption of 606, the new formula for calculated billings is now revenue plus change in deferred revenue minus change in unbilled receivables. Elsewhere on the balance sheet, we exited Q1 with $18,000,000 in cash and short term investments, up from $762,000,000 at the end of Q4. This increase was driven by One thing to note, we issued an invoice late, which resulted in a collection of $20,000,000 in early May that normally would have been collected in Q1. Also note that station.
For the full year, we now expect excluding this excess tax benefit. Let me wrap up by sharing our outlook for next quarter the rest of the year. For the second quarter, we expect revenue between $203,000,000 to $204,000,000 non GAAP operating income of $64,000,000 to $65,000,000, and non GAAP net income per share of $0.33 to $0.34 based on a fully diluted share count of approximately 155,500,000. For the previous guidance of $815,000,000 to $820,000,000. We now expect subscription revenue to be roughly $680,000,000 for the full year.
We continue to expect commercial cloud subscription revenue growth of about 10% over last year and Vault subscription revenue growth of more than 40%. For fiscal 2019, we now anticipate non GAAP operating income of $261,000,000 to $265,000,000, a margin of almost 32% This is an increase in 31%. We are now targeting non GAAP net income per share of between 1.36 and $1.38 based on a fully diluted share count of approximately $156,000,000. To conclude, I'm very pleased with the way that our team has started the year and with our increased outlook for the remainder of the year. Our field teams are executing and our product teams continue to innovate.
Given this consistent execution, we remain confident in our ability and new products like Nitro, an opportunity similar in size to our core CRM product, provide us with yet another vector for driving growth over the longer term. As always, thank you for joining the call.
And your first question comes from the line of Rishi Jaluria from D. A. Davidson. Your line is open.
Hey guys, thanks. Thanks for taking my questions. I want to dig a little bit more into Nitro definitely an exciting ment. I guess to start out with, can we can you talk a little bit about the decision to use AWS Redshift And maybe what the economics of the partnership looks like is it's going to be something similar to CRM and maybe alongside that, why the partner versus building kind of your own system from the ground up like you do with Vault. And then I have one follow-up.
Okay, great. This is Peter, I'll take that one. Yes, when you look at Nitro as being a commercial day warehouse, application. There's many technologies that would go into that, some of which we're going to build, some of which we're going to embed in. At the database, layer, Amazon Redshift is a clear right choice, because this is a data warehouse type application.
We want to do it in the cloud and Red shift has really emerged as a great database and a clear leader there. In terms of the economics, we won't get into the specifics there, but I think We're not going to see very material cost of goods sold on, on, on Nitro. And I would say less than what we'd see cost of goods sold on our CRM product, but we'll see how that plays out over time.
Okay, that's helpful. And I guess kind of following up on that. Can you give us a sense for how the integration between Nitro and Vault and commercial cloud solutions might look like once the product's scaled out?
In terms of the integration, that'll be key part of the value proposition. So between, for example, Nitro is focused on the commercial area. So the key integrations with a couple of our key products are Veeva CRM and the Vault promo So we'll build that integration in a very seamless way so that customers won't have to build it, won't have to maintain it. Integration. So you're right to point out these integrations are a core part of the value prop and that's a core part of the value we're delivering.
Okay, got it. That's helpful. And maybe if I can just sneak in a housekeeping question for Tim. When you talk about your calculated billings, for the next quarter and following year, that is including the new definition of calculated billings with unbilled accounts receivable, correct?
That's correct, Rishi.
Your next question comes from the line of Pat Walravens from JP
Just following up on Nitro, can you talk a little bit, Peter, about what the most common use cases would be? I mean, is it things like paraguised correlations between genes and specific diseases or is it things like sales force productivity?
The common use cases are Salesforce, productivity, marketing productivity, which types content are being the most effective predicting in some ways sales forecasting. And then also, when we look in the AI use cases, that's about for example, at this could be at a specific sales rep or the specific sales manager level, what to do in the next week some suggestions about what to do, also maybe what not to do in the in the next week. So those are the most common use cases.
Okay, thank you. And why start in Japan?
For Japan, Matt, do you want to take that one?
Sure. Yes. So Japan, it has some specific market dynamics that are different from anywhere else in the world, specifically the distributors actually send daily sales data that has to get all the way out to the sales reps. And so we had customers for the last few years really pushing us help them to solve that problem. And so just seemed like a right opportunity, to get started in the data warehouse seeing space there.
But with the use case that's slightly different than what we'll see in the rest of the world. Okay. Thank you.
Your next question comes from the line of Brad Sills from Bank of America Merrill Lynch. Your line is open.
Hey guys, great. Thanks for taking my question. Just wanted to ask about the top 5, you know, rim deal. Obviously, you're seeing real traction at the end of the market. Regulatory.
What's your expectation for clinical? Would you see some potential validate in regulatory for clinical in some of these top 20 accounts?
Sure. Hey, Brad, it's Matt. So yeah, it was a big deal that we celebrated that first big go live in rim. And clearly, there's Connect the clinical and that influenced their appetite for doing something in rim and for quality. And the one that we just referenced, this one that just went live, actually their first Vault Development cloud application was rim.
And so we're hopeful that over time that will influence the clinical and quality area. But for sure, we see that influence across the industry with large and small companies. And there have been some pattern in the order in which companies approach it, but it really just depends upon where their business needs start. What we've seen consistently though no matter where they've started is that the ability for us to cross sell the next solution is really aided by successful implementation of the first one, not unlike what we've seen in other parts of our business.
Great, thanks. Matt. And then maybe one on safety. I know it's early, but if you could provide any color on where you're seeing early interest, maybe some low hanging fruit in the pipeline, just opportunity for safety? Thanks so much.
So actually your first question is a good lead in into the safety one because safety systems have to be integrated to quality systems, clinical systems, and regulatory systems. So the more companies have adopted the development cloud the more likely they are to look at safety as a logical next step. What we've learned in the last 90 days was basically more confirmation that we're on the right track We've been engaging with dozens of companies that are getting more and more excited for the arrival of that product later this year.
Great. Thank you so much, Matt.
Your next question comes from the line of Kirk Materne core ISI. Your line is open.
Hi guys. Thanks for taking my question. This is Daniel Greenfield on Kirk. Just wanted to touch base on the partner channel again. I mean, do you guys feel like as your portfolio broadens, you're going to need to expand on that more.
I guess just talk about the evolution of that ecosystem as you guys become a more strategic platform vendor.
Hey, Daniel. So I would say if we look at it through 2 lenses, one is the very large systems integrators I think the broader product portfolio is making us a more and more important part of their go to market strategy and their revenue growth So large SIs are getting more interested in working with Veeva and our customers as we have a broader portfolio of solutions to bring. Then on the smaller sort of niche partner side, each time we go into a new space, there's a whole collection of companies that have specialized just there. So in safety is a great example. There's a big ecosystem of safety specific companies that we never spoke to that now we're starting to talk to.
I think we'll see similar things around data warehousing and AI as that evolves over time as well. So the partner channel is basically as important as it's always been, and we're able to replicate a lot of the way that we work with them when we go into new areas.
Great. That's helpful. Thanks.
Your next question comes from the line of Scott Berg from Needham. Your line is open.
Hi, everyone. Thanks for taking my questions here. I guess I've got just one quick one. Tim, you had kind of reiterated the company's expectations to continue growing subscription revenues at a a 20% plus rate through 2020. Just wanted to see how you guys are thinking about that from a, maybe a product contribution standpoint now that we're 6 months farther into discussing those goals is we we know Evolce is gonna be the major driver there at least, generic of that growth during that timeframe, but, you know, new products like Natro, how much do they factor into, helping drive those goals?
Yes, I think if
you think about Scott, the new products like Nitro, we will approach the go to market similarly to other new products that you've heard us announce and bring to market over time, which is we start with the early adopters And we spend a bit of time there, maybe the course of 1 to 2 years to really make sure that those early adopters are being incredibly successful before we move into the reference selling model and then revenue will scale out from there. So specifically Nitro doesn't really materially contribute to that time period that you're talking about. Will contribute more to the post 2020 timeframe.
Your next question comes from the line of Sterling Auty from JP Morgan.
Yes, thanks. Hi, guys. So just along the nitrile question line, I missed it if you said it, but how should we think about what the total addressable market for the solution would be and what are the technologies that it would actually be replacing from what companies
Sure. Hey, Sterling. Glad you're able to make it to the call. Data warehousing is a big and valuable space for life sciences companies. In the commercial space, It's one of the largest areas of spend.
So when we look at the market for Nitro specifically, we look at it as similarly sized to the base CRM market. In terms of what we replace, there is no single vendor that is the leader there. So it's a collection of companies that have outsourced data warehouses that are built on a number of different technologies there's still some old Terra data or NITIZA appliances and databases out there, but there's never been an application So there's never been a cloud application where on the 1st day of the data warehousing project, the data warehouse is done and all of the VIVAS CRM and all of the Vault Promomax data is already in it. And then the is to add other third party data sources and to build the BI layer with familiar tools like Tableau and So we're not replacing anything that looks like Nitro, but the job that Nitro will do has been done by collection of different kind of custom build and cobbled together systems over the last few decades.
Your next question comes from the line of David Hynes from Canaccord. Your line is open.
Hey, thanks guys. So just two related questions tied to the CRM, the core product. To curious update on kind of the add on pipeline. I mean, it seems like most of the innovation we're hearing you guys talk about is involved in new markets and now the data warehouse curious. Is there still a focus on the add on pipeline?
Should we expect to come? And then the second part of that question is, how do you think about pricing as a lever to growth for the core CRM? Thanks.
Sure. So I'll take the second question first. I really like looking customers in the eye and telling them that we have never raised their price. So companies that bought Veeva CRM 11 years ago pay the exact same price. And we hope to be able to do that in to the future.
So our we do not plan to use any kind of pricing power to grow the company. In terms of the add on pipeline, so I'm not sure. Are you asking about the add on products we have today that We haven't talked a whole lot about or are you asking about other potential products?
I was more asking Yes, I was more asking, not necessarily what's to come, but should we expect there to be the introduction of additional add ons? I mean, it was a pretty powerful lever to driving. I think you've talked in the past around 15% to 20% uplift on CRM pricing for every incremental add on. We haven't had many incremental add ons released lately. So curious how you're thinking about that as fiscal 2019 plays out?
Yes. So through this year, I think the focus is going to be on some of the ones that we still consider to be brand new, engaged meeting, and engaged webinar. Engage Webinar combined with the events management module is really quite powerful. And we're just at the very, very beginning of that. And then since we're talking about add ons, I think it's a good distinction that let's not think about Nitro as an add on.
Right? So Nitro is a market similarly sized to CRM. So we'll talk about CRM and CRM add ons in the similar way that we have been. And when we talk about Nitro, it's going to be with a little bit of a different narrative.
Your next question comes from the line of Bhavan Suri from William Blair. Your line is open.
Hey guys, thanks for taking my question and congrats. That Takeda Shahram merger. Does that have a name?
So, Bhavan, I'm sure the transcript won't get it, but I think I got the question. You're asking about the Takeda Shire merger. So we've always said
that Correct. That's the effect of EBIT.
Yes, we got it. So we've always said on these calls, the high volume of mergers and acquisitions in this industry have been neutral to positive for Veeva and couch that that a mega merger would be negative. Now the Takeda Shire merger would be the largest one that we've seen since starting the company, but the two companies don't operate in a large number of overlap therapeutic areas. It's just a couple. So they're unlikely to stop any clinical programs and unlikely to have large layoffs in the sales force.
So from a financial perspective, The future impact would be maybe a slight headwind, but it would not be a material change, even though it is such a large merger, But I would say more importantly, we have a strong partnership with both of those companies and we're going to work closely with them through this merger to make sure that it even gets stronger as a result.
Got it. Got it. That's helpful. Thanks. And then I'll just ask a quick one.
On, the CRO initiatives, sort of, you've been targeting those guys. Just have to get some color on where you are, any progress you've made and sort of how you've seen sort of any successful sort of engagements with those guys? I know I think Bard Sal may have been a rim and a submission customer. I forget exactly I was wondering if you had any updates to that business?
CRO business continues to go well. I won't give any comments on any particular customer, but the general dynamic that's going on, the CROs, they have to serve the life sciences industry. They serve the very large life sciences customers. They serve all the way down to the very small. So they have to be aware of their needs and what their doing, the CROs will see and are seeing our broadening footprint that is serving many different parts of life sciences especially on the R and D side.
So we're getting we Veeva are getting more strategic with their customers. So that's one thing they think about And the second thing is that our footprint that we can sell into CROs is continually getting broader, especially as EDC moves forward and when it moves out of the early adopter stage. So while I don't have anything specific to report, certainly our momentum in our pipeline is is doing well and we have a specialized team focusing on CROs. So I'm quite confident with that business over the long term. Great.
Thanks for taking my questions guys. Thank
you.
Your next question comes from the line of Brian Peterson from Raymond James. Your line is open. Question comes from Your next question comes from the line of Stan Zlotsky from Morgan Stanley.
Hey, guys. Thank you for taking my question. So a couple of quick ones for me. First one, just going back to Nitro How does the product fit in with your existing data products, right? So like network and everything else that you have on the data side, because that seems like a very natural extension.
And also, how is network, how is rather nitro go into your price? And then I have a quick follow-up for Tim.
In terms of nitro and how it relates to network and open data, nitro is not dependent on network or open data. So it will nitro will work whether the customer uses our network product or whether the customer uses a competitive product or whether the customer uses open data or they use a competitive product. There is a requirement for Nitro that you have to be using VIVAS CRM because that's where the core of all the activity data comes from, etcetera. So that's the lay of the land there. We want to be very open in the nitro layer, but it's just not there's, you know, a large part of the industry uses Veeva CRM and it wouldn't be practical to build nitro and try to figure out the data mapping with a non VIVAS CRM system.
And in terms of the pricing for the Nitro, was there a specific question there?
As in it's going to is it going to be per user pricing or is it going to be based on volume of data?
Yes. And then for the specific pricing that way, that's something we'll work out with our early adopters and Usually, we don't discuss that at this time, but we're looking at a variety of options and I'm sure we'll settle on the right things for the customers.
Okay, perfect. And then a quick follow-up for Tim on billings. Could you maybe help us quantify how much was the beat in billings in this quarter was from Pro Services and if there was any FX impact on billings. Calculated balance in the quarter? Thank you.
That's it for me.
Sure, Stan. So no FX impact on billings for the quarter. And in terms of the the percent of the beat that was in pro service outperformance, it was about half. So about 50% of that billings beat this quarter came from pro services.
And how would and duration was probably a quarter or so?
Duration was the next largest Stan, I'm sorry. Complete finish your question.
No, I just wanted to get the breakdown of the rest, the other 50%.
Yes. So the other 50%, I would say 2 thirds of it was duration and the other third, was better than expected bookings.
Your next question comes from the line of Tom Roderick from Stifel. Your line is open.
It's actually Parker Lane in for Tom. Thanks for taking my question. You alluded to some nice growth in the QualityOne. Customer base this quarter. I was wondering if you could go back though and discuss the expansion you've seen with some of your earlier adopters there and whether or not you've learned anything from those customers as far as product expansion and the product roadmap is concerned?
I'm sorry. Can you repeat that specific question? I couldn't catch the first part of it and I want to be accurate on it.
I was just mentioning that you have some nice sizable customers outside of life sciences. And I'm wondering, in your discussions with them being this is a new market, have there been any new product areas consider that are sort of adjacent to the QualityOne market that you could address over time?
Yes. So we are having good success with QualityOne outside of Life Sciences and in some large customers, particularly in the CPG and the chemicals area. And when we do that, we always get exposed to different product opportunities. And when a customer starts working with our platform, Hey, we're working with you here, Veeva. We have a need over on this side or over on that side, something adjacent.
So that's really been going on for the past year or so. We haven't locked in on any new product area that we're ready to talk about, but there certainly a lot of adjacent opportunity and the trick is to really figure out when to jump into one of those and which one to jump into. And we're not ready to talk about any specifics there just yet.
Got it. And then on the clinical front, you, you also referenced some nice customer wins in EDC and CTMS. It looks like you're doing pretty well there. Now can you tell us what the appetite is for a full clinical suite that you're seeing in the market and what sort of momentum you had in replacing some of the existing competitors out there that have been deeply embedded in this market person thought? Thanks.
Thanks, Parker.
So, yeah, we're definitely seeing an increased appetite for going all in with clinical. The really logical ones our eTMF study startup and CTMS. Those tend to go together. It's similar people, similar budgets. And very tight integration between the different pieces.
And so there's lots of examples of companies expanding. In fact, one specific example is I think almost every CTMS customer is an eTMF customer also. All of the study startup customers are eTMF customers. So those things go together and I think it as the CTMS product matures, it's going to when that is as mature as the eTMF and study start up, that is integrated suite that's never been possible before. I think EDC, we still see a lot of connections.
And sometimes it's the same people, sometimes it's different people, but people see it as their clinical IT landscape. And they understand that one platform is better than 2 or 3 or 5. Competitively, we see the same companies that we always saw in each of these areas. Some are strong in eTMF, some are strong in EDC, some are strong in CTMS. We don't have a competitive that is strong in all of them.
So not only do we try to have an integrated suite, but we also are trying to create the very best product in each one of those areas. And so we see a lot of momentum across clinical U. S. Europe and building in Japan as well.
Makes sense. Thank you guys.
Your next question comes from the line of Brian Peterson from Raymond James. Your line is open.
Thanks, guys, and sorry about that. Apparently, this telephone is bamboozling me here, but, so I wanted to get on looking at math. It hasn't really come up yet, but I think you mentioned that this was the 2nd best quarter ever for eTMF. So I just want to be clear, is that a new business dynamic or is that revenue? Expand a little bit on what drove that.
Thanks, Brian. And by the way, that congratulations. That's the first time we've heard the word bamboozle on our earnings call. That's pretty good. Well, now to the more serious question of, eTMF.
So the dynamics there at is the market's relatively big. This is something eTMF, even though we've been in this market for quite a while and we have a lot of customers there, there are large customers. It goes all the way down to quite small customers. There are pharma, biotech, med device, CRO customers. They all need eTMF.
And some of these implementations are long. So it's something sometimes a deal that we have entered into, maybe 2 years ago, there's still some revenue increase now as a customer would complete the rollout of an enterprise license agreement or maybe they would just add incrementally more studies. So There's really no change in the dynamics. It's just to point out that this is, this is a really large market and it plays out over over multiple years and over multiple geographies and customer segments.
Got it. Thanks for that. And maybe one for Tim just you kind of outlined the early adopter phase that you have with Nitro and how that's going to take play out over the next few years. We have a lot of products that are in this early adopter phase now. So when should we think about those transitioning out of that phase And is there any particular time period that we should really see some accelerated sales and marketing investments?
Yes, it's a good question, Brian, in that. We have announced a number of new products over the last 18 months and their in that early adopter stage or in the case of Nitro, as you mentioned specifically, we have it in Japan generally available and it will be later on this year that'll be in the United States. So the early adopter stage is in front of us. I think as we look to the subscription revenue guidance that we gave through 2020, the majority the vast majority of where that is coming from was from the core products in Vault and in the commercial cloud. That we had up into that time period, although we will see some contribution from some of the newer initiatives like QMS, like outside life science I think those will really start to contribute materially to revenue after that 2020 timeframe.
Is what I would say. So again, short strokes, there will be some contribution in revenue between now and 2020 with more of the material revenue contribution outside, you know, past that timeframe.
Your next question comes from the line of Ben Rose from Battle Road Research.
I have a couple of questions. First for Tim, I think this is the first time we've seen the unbilled receivables, account on the balance sheet and was curious to know if this is traceable to, a particular customer or product set and whether we should expect to see, the existence of this account going forward.
Yeah. Ben, the real driver here is the with the adoption of 606 and the way that we are treating the revenue recognition of some of our multi year arrangements. We have identified that account to articulate what the impact is from those particular accounts and how we are accelerating revenue in front of billings in some cases. Now what you'll see over time, Ben, just a little bit more detail there, typically that account was within accounts receivable and what that account would have had as a subaccount was we bill services revenue after we take the revenue. So when we take a month of revenue, like let's say April, we will take the revenue in Q1, but we'll bill it in Q2.
So that also is part of the unbilled receivables that you'll see going forward. So a month of services billing and revenue.
Okay. That's helpful. And then for Peter With regard to Nitro, is it logical to assume that your product, roadmap would include, the application of Nitro, to various parts of the development cloud.
Yes. Well, at this time, we're focusing nitro in the commercial area, in nitro and then we'll follow that on with an AI engine over time targeted to late 2019 late next year. So that's our focus right now. And that type of technology is very applicable to the development cloud, but we made no commitment to do that. At this time, we're going to really focus on our early adopter success and getting the technology right.
So type of a data warehouse application for the development cloud. That's something we'll always be evaluating, but we've made no decisions on that at this time.
There are no further questions at this time. I will turn the call back over to Mr. Peter Gassner for closing remarks.
Thanks for your time today, everyone, and thanks again to the Veeva team. We appreciate So have a great evening, everyone. Thank you.
This concludes today's conference call. You may now disconnect.