Earnings Call: Q2 2022

Sep 1, 2021

Good day, and thank you for standing by. Welcome to Veeva Systems' Fiscal 2022 second quarter results conference call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. As a reminder, this conference is being recorded. I would now like to hand conference to the speaker to give the forward-looking statement. Thank you. Good afternoon, welcome to Veeva's Fiscal 2022 second quarter earnings conference call for the quarter ending July 31st, 2021. As a reminder, we posted prepared remarks on Veeva's investor relations website just after 1 P.M. Pacific today. We hope you've had a chance to read them before the call. Today's call will be used primarily for Q&A. With me today for Q&A are Peter Gassner, our Chief Executive Officer; Paul Shawah, EVP, Commercial Strategy; and Brent Bowman, our Chief Financial Officer. During the course of this call, we may make forward-looking statements regarding trends, our strategies, and the anticipated performance of the business. These forward-looking statements will be based on our current views and expectations and are subject to various risks and uncertainties. Our 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-Q. Forward-looking statements made during the call are being made as of today, September 1, 2021, based on the facts available to us 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. On the call, we may 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 and in the supplemental investor presentation, both of which are available on our website. With that, thank you for joining us, and I'll turn the call over to Peter. Thank you, Ato, and welcome to the call, everyone. It was another great quarter for Veeva with strength across the business. Total revenue was up 29% to $456 million. Subscription revenue was also up 29% to $366 million. Non-GAAP operating income was $192 million or 42% of total revenue. As noted in my prepared remarks, we did well in our established areas, but also had major progress in our newer areas, including safety, CDMS, digital trials, Link, and Data Cloud. At this point, I'd like to open up the call to questions for Brent, Paul, or myself. Ladies and gentlemen, if you would like to ask questions, please press star and 1 on your telephone. Again, if you would like to ask questions, press star 1 on your telephone. For our first question, we have Rishi Jaluria from RBC. Rishi, your line is open. Wonderful. Thanks so much for taking my questions and nice to see some acceleration in the business. Peter, in your prepared remarks, you talked a little bit about how there's some shrinking footprints and deployments at some of the on the CRM side. Can you maybe talk about how long you expect this headwind to last, you know, in terms of shrinking before it starts to stabilize? You know, alongside that, you talked a little bit about it, but, you know, commercial cloud growth still accelerated in the quarter, which is really nice to see in spite of these headwinds. Can you maybe talk about what is driving that and, you know, maybe offsetting the shrinking footprints and particularly what you're most excited about within Veeva Commercial Cloud and, you know, what you think is kind of a sustainable growth rate for this business? I've got a follow-up on the CDMS side. Yeah, I'll take that. Thanks, Rishi. This is Paul. Yeah, just to give you a little bit of color, if you remember back, probably two, three last year, we started talking about the idea that we were helping to make the industry more efficient. We were helping the industry move to digital. As we did that, in an accelerated fashion, they would realize the productivity and the efficiency gains of doing that, there would likely be some reductions coinciding with that. You know, we hadn't seen them up until actually this quarter. We started seeing some of the first reductions from a small number of our enterprise customers had some reductions that were a little bit out of the ordinary. We just started seeing it this quarter. I expect we'll continue to see it through the second half of this year and also into next year. We do expect that we'll offset those reductions as we have this quarter, with strength really broadly across Commercial Cloud. You know, we're gonna continue to gain share in CRM. We gained share in CRM this quarter. I expect we'll continue to do that over time, and then we'll see strength in the add-ons, and some of, some of the newer products that you heard Peter talking about, particularly in the data space like Link. Link had a particularly strong quarter, and that's progressing really well. Crossix will be a contributor, and then over the long term, we'll see more contribution from Data Cloud. A lot to be excited about going forward. All right. Wonderful. That's, that's really helpful. On, on the CDMS side, and maybe you wanna expand and talk a little bit about, your success in partnering with CROs because, you know, if we wind the clock back a couple years, there were, there were definitely investor concerns that, you know, CROs were gonna be a little bit of a headwind, to Veeva over time and clearly hasn't turned out to be that way. How that relates to CDMS. Can you talk a little bit about your strategy with CROs, particularly as it relates to the CDMS side, and how you've been able to gain that momentum with that as a channel? Thanks. I'll take that one. This is Peter. Yeah, CROs will be a especially important partner for CDMS because when CDMS becomes a part of their tech stack that they can offer to their customers, it's really an efficient channel. How are we gaining traction there? I would say number 1, by actually product excellence, creating a better, truly cloud CDMS product that's integrated in with the other Veeva products. As that has happened, you know, the sponsors, they'll start asking the CDMS. The CROs, sorry. They'll start asking the CROs about that, "Hey, are you offering Veeva? You know, maybe you should be offering Veeva. We're using Veeva." The CROs, they start to get to know more about Veeva, they start offering Veeva as a first experimentally, as a product if a sponsor would want it. As they start to like it and see the efficiencies, they start to make it their standard. It's really about customer success for the CRO. It's about having an excellent product, but also having a great partner program and providing them the support that they need. All right. Wonderful. Thank you so much. For our next question, we have Brian Peterson from Raymond James. Brian, your line's open. Thanks for taking the question. Maybe just a follow-up on Rishi's question. You know, I'm just curious on the timing of some of the sales rep trends for some of your customers. Like, how did that trend versus your expectation and how pervasive is that? I guess I'm trying to think about, you know, where that impact's gonna come in and how to think about what that could be in maybe fiscal year 2023 and beyond. Yeah. You know, in terms of timing, we talked about it as happening over, you know, the 1 to 2 years. It's not an exact science, we see a lot of our customers really thinking about you know, the industry hasn't hit a new steady state. If you remember, the industry was largely face-to-face, and now there was a massive shift to digital, and things are still using lingers on. If you're a life sciences, one direction or the other too quickly. That's why you're seeing a lot of this size of the field sales force. In general, on average, we do see, we are seeing our customers getting the benefit of becoming more digital. I think that trend is here to stay. That will happen over the long term. I think they'll take, you know, these reductions over the next 1 to 2 years. I think that timeframe, I think once we kind of hit a new steady state, I don't anticipate it changing much beyond that. You know, these are always reductions that we thought would happen as the industry became more efficient. We're just seeing them a little bit faster than we had anticipated. In efficiencies they're gonna gain maybe from, you know, attacking something with lower headcount, but there's a lot of opportunity to take some of those dollars and redeploy it. What have some of the customers maybe learned, or how are they thinking about, you know, attacking the opportunity with more of a digital motion? Yeah, you're exactly right. It's the right way to think about it. As we're able to make an individual company, 10% or 15% or 20% more productive because they're able to mix more digital in, because they're able to accomplish more, they have the option, right? They have the option to reduce their size by that same amount, or they have the option to take some of those gains and apply them just to reaching more customers. That is the calculus, and those are the kinds of discussions that we have with our customers all the time. You know, our strategy teams, our business consulting teams in terms of what's the right mix, the right mix of digital and field force engagement. You know, we're in active discussions with many of our customers on those kinds of things. I think it'll be a mix for most customers. They will not take all of the productivity gains as reductions. It'll be a mix based on geography and therapeutic area, and you know, the specific needs of each business. Thank you. For our next question, we have Brent Bracelin from Piper Sandler. Brent, your line is open. Thank you and good afternoon. I guess 1 for Peter and 1 for Brent, if I could. Peter, Safety really stood out this quarter, I think, with your first top 20 win. Do you think about that win as 1 of the early adopters? I mean, it seems like Safety is happening here maybe a little faster than I would anticipated, and just wondering if that win with the first top 20 is just an early adopter, or are you seeing a stronger interest and appetite to roll out that Safety Vault suite of products? Then again, 1 quick follow-up for Brent. We do have early adopters. You know, we have a number of customers, but smaller, and we have divisions of some large customers. This was the first one to go all in with us. You never know when that's gonna happen. The timing has to be right from the customer's perspective. They have to have a real need. To want to go early, they have to have a real need, and our product has to be ready, and the stars have to align. I thought it would happen sometime, you know, this year or early next year. It happened, so it happened a bit quicker than I thought. We would never take a deal like that before we were ready, right? We would turn down a deal like that if we weren't ready. It happened just at the right time with just the right customer, and it is gonna be a positive. I don't see it as a, I see it as a turning point for Veeva, but it's not gonna be a turning point in revenue and adoption. That still happens on its normal life cycles. You'll really see the impact of this deal and the follow-through on this deal, honestly, it's two, three years down the road. That's when it really starts moving the market. You saw this with CDMS. This was maybe a year and a half or so ago, where we announced our first enterprise top 20 for CDMS. Now what you're seeing is the echoes of that follow-through in our broad CDMS adoption. Super helpful color there. I guess, Brent, for you, referenced kind of a tight labor market. I think that's being referenced quite a bit. Just trying to think through the 5% salary increase. You know, never really done this before, but as you think about that, is that tied to, you know, a proactive view to kind of stem churn? Was it reactive? Just trying to think about that 5% salary increase, particularly as it relates to, I think, Workday last week also, was shifting some dollars out of sal- There was a broader trend happening in the Bay Area or not. Could you talk a little bit about that 5% salary increase, and is that proactive, reactive? Just trying to understand the logic there and timing. Yeah. I mean, this is proactive. You know, we're, you know, we're doing the right thing by our employee base. You know, we're in unusual times a bit with inflationary and a very competitive environment. You know, we took a look at that, and we thought that the timing was right and to make this investment in our people. It's, you know, effective as of today. Brent, I would add, we're pretty international as a company, so we have a high percentage of almost half of our people outside the U.S. Inside the U.S., our concentration is not really in the Bay Area, right? We have development centers, multiple development centers, Toronto, Boston, Raleigh, and a lot of our field people on the East Coast. Not having to do with the Bay Area per se. It was, as Brent mentioned, proactive and broad-based. Helpful color. Thank you. For our next question, we have Ken Wong from Guggenheim Securities. Ken, your line's open. Great. Fantastic. Maybe just a follow-up on that. You know, I think you quantified the $10 million impact on EBIT for the year. Just wondering how we should think about any potential impact on maybe the services revenue. Should we generally just kind of bump up our services run rate that we're modeling? Any thoughts on that, Brent? Then I had a follow-up for Peter. Yeah, I mean, I just it's a there's a nominal impact there on the, on the services revenue from that perspective, and it's something that it's normal course of business that we do flow that through on the services side, but nothing significant that I think warrants a change in your model. Got it. Got it. I guess another kind of follow-on on that, on that vein. I think I read in the script there, Peter, that you mentioned not raising prices for software or data at this time, and you guys have never raised prices in your history. Just wondering if that's something that you're contemplating with, as you mentioned, inflation, the salary bump. Is that something that might be in consideration down the line? It's a good question. Our, our philosophy has always been, you know, get the right price for our product and try not to increase the prices of our subscriptions. We, we haven't increased them 'cause customers generally don't like it, and we try to get efficient and deliver more, more value. We like to maintain doing that, and we think we can. Now, could we do that forever? You know, that depends on how many years out in the future and, and what inflation does. Certainly for the foreseeable future, we don't anticipate raising our prices for our subscriptions. Great. Thanks a lot, you 2. For our next question, we have Stephanie Davis from SVB. Stephanie, your line's open. Thank you guys for taking my questions. Congrats on the quarter. I was hoping you could give us some broader directional views on your digital trial suite, especially in light of the Delta variant. Could the macro backdrop result in a faster pace of adoption, does that impact your investment speed or priorities in light of that? Okay. Thanks, Stephanie. I'll take that. Digital trials is really about all types of trials, not really related to COVID or the Delta variant. It's about making the trials faster and less expensive. We have a target of 25% faster, 25% less expensive, and how we're gonna do that is have it be really patient-centric and really paperless. You might hear about something, you know, the category called decentralized clinical trials. There's a lot of talk about that. That's an area where Veeva is in too, but we're taking a broader approach of overall digitizing the whole clinical trial, starting from the sponsor side, the clinical data management, clinical operations, to the clinical research side, and then right out to the patient. That's how we think about it, Stephanie, really broad and very long-term. I kind of have to ask the flip side of the sales rep headcount reduction question, but you've been beating margins healthily despite this kind of looming fear over the past few quarters. What's been driving this outpaced margin expansion, and how sustainable is it? Hi, Stephanie. Regarding the margin, I mean, there's a few things that drove the outperformance. One is, you know, the top-line subscription beat is flowing through. There is some lumpiness on the timing of our new data suppliers. We had one that we thought would close in Q2. It actually closed in August. That is some timing that played in. That's factored into our guidance going forward. Timing of hiring. We hired 236 net employees in the quarter. We're slightly behind plan. We're looking to catch up in the back half of the year as well. Those all kind of got contemplated into the beat in the quarter and then kind of how you think about the guide for the balance of the year. All right. Helpful. Thank you, guys. Thank you. For our next question, we have Dylan Becker from William Blair. Dylan, your line is open. Questions here. I guess maybe first one, from a higher level for Peter. You touched on it kind of in the, in the prepared remarks, but thinking about, again, kind of your partnership approach with not only your business consulting segment, but as well as kind of with the CROs. I guess I'd love to understand how you guys are thinking of these as vectors to not only kind of drive that adoption of the existing platform, but also kind of as drivers of your innovation efforts over time, right? You've talked a lot about kind of the strategic partnership approach, but, would love to kind of understand how you're kind of viewing this to drive that innovation roadmap. Yeah, it is. That's an excellent question. I'll take the CROs first. We are partnering tightly with the CROs to, yes, serve our customers, to leverage the CROs as a channel, but also we can get very direct feedback from the CROs, and we've done that, including the CROs more as part of our design process, having talking directly to our product teams and just get that tight feedback loop going. We've put some great effort on that, and it's paying off. Business consulting, that's a little bit different. These are our consultants, our billable consultants that are doing business process work with our customers. There also we have a tight feedback because as our customers on the business side are talking with our business process consultants about the process changes they would like to make or the change management they would like to do, that's sometimes translating into requirements into our product or ideas into our product. I would say it's been a great addition to Veeva, this business consulting, and it is impacting our product roadmap for the better. Fantastic. That is excellent to hear. Maybe one for Paul. I think we've touched on this in the past too, but we've talked about the payments integration kind of into CDMS, a nice kind of extension of the platform given that unified approach to the clinical suite. I'd love to understand how you guys are thinking about that payments opportunity more broadly through the ability to expand use cases, and then how have you guys seen that from an initial adoption perspective given that CTMS in its own right is kind of still relatively early of an offering to the platform? Thank you, guys. This is Peter. I'll take the payments one. Payments as it relates to our clinical operations, you're right that it's going well, but it's early because payments requires our CTMS product. CTMS is still relatively early in our life cycle. The idea behind payments is to automate the payments to the clinical research sites based on the activities done, and that's where it's, you know, especially useful for the customer to get their clinical operations and their clinical data management from Veeva because the clinical data management that creates the activity, and it gets passed over into the clinical operations, and then the payment is sent out automatically. That's the value that the whole suite provides. Payments is going well, but still very early. Great. Thank you, guys. Taking questions. For our next question, we have Karl Keirsted from UBS. Karl, your line is open. Hey, Brent. Brent, Veeva beat this quarter on both revenue and billings, but relative to the last three or four quarters where you put up 4%-6% beats on revs and 7%-10% beats on billings, this quarter was a little skinnier, and I'm wondering what changed to create that result relative to your expectations. Thanks. Hi, Karl. You know, as you said, we did beat our guide. We were very pleased with the 29% year-on-year growth, Commercial Cloud at 22% and Vault at 37%. We are very happy with how we executed. An area that maybe call out is on the services side. We did talk about last quarter that we were running at a very high utilization rate and that we expected that to normalize a bit, and that definitely happened. In the quarter. On top of that, what we saw was an increased amount of PTO, not only on the Veeva delivery side, but also our customers. Services came in within guide, but on the lower end. All in all, we're very happy with the demand picture that we saw for the quarter. Great. Thank you, Brent. If I could just ask you a margin question. You indicated that the salary increase will occur over 5 months of this fiscal year. If we annualize that, should we think about the impact on next year's margins, all else equal being a roughly $25 million impact? I guess if we layer that into our models and assume a reversal, if you'd like, of the COVID savings you're experiencing this year, it feels like the more likely prospect is for margins to be down next year as a result of these two things. Is that at least directionally the correct approach, Brent? Yeah. I'm not gonna provide a guide on margins for next year, but what I can say is, you're right in your rough sizing. It's about $2 million a month, related to the 5% increase. Then time will tell on our travel and event savings that we see. You know, we have up 200 basis points in our margin this year. Over time, some of that will come back into play and time will tell. Awesome. Okay. Thanks for that color. Appreciate it. Yeah, thanks Karl. For the next question, we have Sterling Auty from JPMorgan. Sterling, your line is open. Thanks guys. This is Pinjalim Bora on for Sterling tonight. First question is on the strength in the SMB that you saw in the commercial cloud. How should we be thinking about kind of the direction here of strength in SMB versus the headwinds on the enterprise side for the rep count? Is there any worry that, you know, the strength in the SMB might feed its way into the same territory we're seeing in the enterprise? Yeah. Hey, Pinjalim. This is Paul Shawah. Yeah, you're right. We're continuing to see really good strength in the SMB. The SMB, the new companies in SMBs tend to be pre-commercial companies that are launching their first medicine. You know, we're winning the vast majority of those. You heard us talk about this concept of Veeva Commercial Cloud, where we're helping customers in a sense go a sense all in on a broad set of Veeva products and services all upfront, all at once. One thing we're seeing is the size of the deals with these customers. We're seeing kind of a longer-term emotional commitment and broader size and strength. We're also seeing that you know, we're consistently winning the vast majority of them. SMB is driving a lot of strength, and it's driving also a lot of future opportunity as many of these companies will grow and expand into bigger companies over time. You know, in terms of will they look like an enterprise in terms of rep reductions, some will and maybe for different reasons, as you know, the kind of their market position and what happens with their medicine in the marketplace and whether they continue to have, you know, good traction in the market or not. I think in general, the reductions that we have been seeing have largely been on the enterprise side because they're established sales forces. The SMB will scale over time to the right size, whereas an established company may have to do some adjustments as they become more productive. I think it'll be different than the enterprise side. Okay. That makes sense. A quick follow-up on the second CDMS deal with the top 20 pharma. Just any additional color you can give as to how this comparison first, is it, you know, a broader implementation? You know, is it standardizing the trials on the Veeva platform? Any additional color would be great. Thank you. This is Peter. On the second CDMS win, different companies than the first, similar needs and similar approach, similar rollout approach. They really need to modernize their environment. They had a environment that wasn't modern, it was fractured with a lot of point solutions, it just started slowing them down over time, they realized, wow, they need to really replumb the thing. They piloted with a few studies to kind of both to test it out, to change their internal processes. Because when you move to Veeva for CDMS, for example, it's an agile clinical study building environment. It's not a waterfall environment. It's a agile cloud-based environment, there's a lot of change management to happen. Now they're starting to put all their studies on Veeva, so very similar to the, to the previous one. Great. Thank you. Thanks. For our next question, we have Donald Hooker from KeyBanc Capital Markets. Great. Good evening. I just wanted to kind of follow up on the pharma sales reps pressures. I didn't think I heard. Would love to hear is this kind of a large pharma thing or maybe a little bit more clarity where you're seeing pharma sales rep pressure? Is there a possible explanation here that pharma is outsourcing more sales reps and sort of using third parties like Syneos and other CSOs as a shared service that could result from that pressure? Yeah, you know, it does tend to be a little more heavily weighted towards the larger of the enterprise companies. Again, companies that have established sales forces across diverse portfolios, many of them being larger sales forces where they establish for the more traditional primary care model. Think, you know, more traditional medicines where they have to reach large volumes of primary care physicians. They have larger sales forces. They tend to be the first place where they'll start to see some reductions, because those field forces may have been sized, you know, for a different time in a different era where there was less digital. Now as we move them to more digital, they have the opportunity to start to, you know, achieve some of those, some of those reductions. I think primarily it will be in the enterprise. Again, you will see some rightsizing in smaller or mid-sized companies. That, you know, the primary driver is kind of rightsizing and taking productivity and efficiency gains and being able to apply them, so they have the right mix in terms of their go-to-market. In terms of the contract sales organizations, I don't think we've seen a major trend there. That's gonna vary a little bit by region by region, but we haven't seen a major trend towards outsourcing at this time. Okay. Maybe just as a follow-up, maybe kind of a higher level, kind of a little bit of a random question, but I would love to hear your perspective if you have any on sort of the commercial IRB space. I guess we saw a recent S-1 filing by a large, I guess, WCG Clinical, a large IRB, and I know you have relationships in that area with some of the bigger ones, and would love to hear your perspective as to whether this could be a growth vertical for Veeva going forward or how you sort of think about that space as a growth market, either organically, inorganically, or through partnership. I haven't heard you talk about that in the past. Right. The IRB, these are organizations, they're centralized IRBs and localized IRBs to review the ethics of a clinical trial before the clinical trial starts. That's a very important function. That's an area where we don't provide those types of services. Also, we don't provide software to those. They need to have pre-specialized software. That's an area where we don't play at this time. As to, you know, what we would do going forward, we're always looking for places where we could add value. We don't have any specific, you know, concrete product plans in the IRB area at this time. Okay. Thank you. For our next question, we have Brad Sills from BofA Securities. Your line's open. Great. Hey, guys. Thanks for taking my question. Congratulations on a nice quarter here, certainly for Vault. I wanted to ask about that a little bit. The regulatory one business sounds like you've had a couple of good deals there. Could you provide a little bit of color on this top 5 CPG deal? Was this a new customer, or was it an existing customer adding another department? Then just more broadly, kind of where are we within CPG? That seems to be the industry where you saw early traction, and you continue to see some good results there. Is it just, you know, an opportunity here to win more new business there, or is it largely an expansion opportunity within some of these bigger accounts that you already have? Thank you. I would say it's both. There are more large CPGs. There's a few that we aren't in. We're probably in some form or another, well, you know, maybe almost half of them, the large ones. I guess maybe at least a third, between a third and a half of the large ones. There's some more to get, brand-new logos, but then it's expansion because they're very divisional in how they operate. The win we had, that was a regional division, actually, of a large CPG company, and they went with us because of success that they had in another division. That's generally how it operates in CPG. Very large, very distributed companies. Thanks, Peter. One more if I may please, just on quality and regulatory. They continue to remain strong here. These have been a couple that have been very early drivers of growth with Vault. You've seen some real success there early on, and it continues to be an enduring driver. Where are we in terms of industry adoption of those offerings and just the categories in general? Thank you so much. Yeah. I would say we're early, still early. We're early in regulatory, just because these are heavy systems to implement and to adopt. We're quite early in quality because the suite has been expanding a lot in quality. We started out with a product called QualityDocs, then we added QMS for a quality management system, then we added training. We recently bought a company called Learnaboutgmp for actually training content. We have more product plans, you know, underway in the quality area. Quality, I think if you look out towards, for example, 2030, people will be surprised at how big our quality business is. It's still quite early. Thanks, Peter. For the next question, we have Kirk Materne from Evercore. Kirk, your line's open. Okay. Thanks very much. Paul, I was wondering, can you just give us a sense on these customers that took down sales reps, you know, had they already been talking to you about products like Engage? I guess, meaning are you helping them actually become more efficient from a rep perspective already? Or is that something that happens and then you go back in and help them sort of retroactively deal with it? I just have one follow-up on the commercial side as well. Yes. I mean, all the ones that we saw reductions on, and it was a handful in the enterprise, they have all been Engage customers, and they all expand. I think most of them were even early pre-pandemic, where they started at some level of adoption of Engage, and then when the pandemic hit, they really scaled up. Yes, every one of them have been actively using. I would say even broader than Engage, you know, are the full kind of full suite of many of our digital products, you know, including email. They were full on kind of that face-to-face set up. They had these digital channels turned on. You know, again, you don't wanna overcorrect in this kind of market. It takes them a little bit of time to, one, to realize at those gains, but also to, you know, to make sure they're optimizing for the long term. Yeah. You know, it was longtime customers of Engage and really taking some of those productivity gains. Okay. That's helpful. That sort of leads to my second question, which is when you start thinking about the Veeva Commercial Cloud and all the products and data that you're bringing to the fore for the clients, are you moving away from per seat pricing? Meaning, you know, does at some point in time these discussions have to become more about outcomes versus just seats? I was kind of curious where you see that going because to a certain degree, if you're making them more efficient, you know, they should be hopefully they're growing with you on a net basis anyways. I'm sure they are in many cases. I'm just kind of curious if you're kind of getting away from having more per seat discussions versus kind of outcomes-based discussions and whatever kind of nomenclature that might mean from a pricing perspective. Thanks. Yeah. It's a good one and certainly as the Veeva Commercial Cloud portfolio has expanded, and particularly as we've added data products, and, you know, data combined with software, also services, the per seat model doesn't necessarily fit those kinds of products. We've already seen that shift happening over the last couple of years where, you know, more and more of our revenue is coming from things like ELAs. You know, most of our data products are Enterprise License Agreements with customers, we're naturally seeing that shift away from, you know, per seat to something like an ELA. We haven't yet gotten to the idea of outcomes yet. You know, we're always very thoughtful of as we introduce a new product in the marketplace, what is the right pricing model, what's the right licensing model for Veeva, but also in particular for our customers. We're happy to innovate in that area, and we have innovated a number of places in commercial on how they consume, how they buy. Yeah, that trend has already started happening. For the next question, we have Joe Vruwink from Baird. Joe, your line is open. I wanted to go back to Vault Safety, and I'm curious, does the application and the criticality it carries influence other spending decisions at a customer? I guess what I'm wondering is that once Vault Safety is established, is it perhaps more prone to being paired with, let's say, the rest of Development Cloud and MedComms, for instance? Yeah. That's a great question. It's certainly a very serious application because safety, if a pharmaceutical company doesn't have the right controls in the safety area, they can actually lose their license to operate, the whole company. It's a very serious one. When a customer has our safety system, I think it's a net positive and would somewhat help us getting other products because they would benefit from the integration with safety. Wow, if you're trusting Veeva for your safety system in the cloud, you're pretty likely to trust us, and you're having a good experience, you're pretty likely to trust us in these other areas. It's an excellent question. You know, if you step back, this is what we set out to do. You know, roughly 10 years ago, we started thinking about the Development Cloud, and this is what we had in mind, that we would have a suite of these applications for the drug development from safety, quality, clinical, you know, regulatory, and that they would all fit together, and they would work for small companies and big companies and become the way that the life sciences industry does drug development. It's happening. It's happening, and every one we get in helps every other one. That's great. Then you referenced it a few questions ago. I know it was a small acquisition, but in learning management, I am wondering is training becoming a more important consideration? Would you kind of equate this to some of the developments like realizing business consulting could ultimately be an inroad to bigger things, you know, a better relationship with your accounts? Is training proving to be that for maybe the quality suite or a broader set of applications? There are multiple types of training. This is true. For what we have here about Learnaboutgmp, that's for compliance-related training, good manufacturing processes. That's really related to our QualityDocs product, and the way to think about that is sort of like Peanut butter and jelly. You know, peanut butter is good, but if you get it with the jelly, you get, you know, it's easier. Because our QualityDocs is about the training software. Can it be accessible? Do you have the right roles and responsibilities? Is somebody overdue on their training? Can that inspector look at the records? Is it validated? Does it work in all your languages? All those types of things. But then by being able to come to Veeva and say, "But I actually need the training content. What in the clinical area for this type of certain area, what is the micro-training that I can use to refresh my employees in Poland and Spanish-speaking countries? You know, if you can get all that from Veeva with good customer service, that's what the customers are looking for, strategic partner. They don't really want to focus on that and build that themselves if they don't have to, because they have other things they wanna focus on. Thank you. Thanks. Now for our last question, we have Ryan MacDonald from Needham & Company. Ryan, your line is open. Hi, thanks for taking my questions. Congrats on a great quarter. You know, I continue to be impressed by the number of new logos in Core CRM, I think 21 in the quarter up quarter-over-quarter as well. Would just love to know, sort of beyond the preclinical success that you're having on how the competitive environment looks and the mix of maybe competitive replacements in that number this quarter and how you sort of see that pipeline looking moving forward. Thanks. Yeah, that's a good question. So you know, of the, of the 21, we'll dissect that a little bit first. You know, many of them are from the U.S. market, those wins, and a lot of them are pre-commercial companies, a handful from Europe. Then even the domestic companies in markets like Japan, as an example, domestics that may have a local solution. You know, some of these are their first, it's first CRM system and, you know, so we're not really replacing anything, and others are competitive wins. We did have an IQVIA OCE conversion this quarter. It was a biotech or specialty pharmaceutical company in the U.S. market. We are hearing more, you know, concern and frustration by a lot of IQVIA customers. We're, you know, we're gaining traction, but you know, certainly one was a direct conversion. The vast majority are a lot of companies that didn't have anything in place already. Overall, the competitive landscape is shaping up really well. You know, that plays out in our numbers with the market share gains that we have in CRM, the wins that we're having, that we talked about 21 of those. You know, even gaining traction with enterprise customers. Really happy with how the competitive landscape is shaping up. Excellent. Thanks for taking my questions. We don't have any further questions at this time. I'll now turn the call over to the management for closing remarks. Thank you everyone for joining the call today, and thank you to our customers for their continued partnership and to the Veeva team for their outstanding work in the quarter. Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you all for participating. You may now disconnect.