Veeva Systems Inc. Class A

Good afternoon. My name is Chantelle, and I'll be your conference operator today. At this time, I would like to welcome everyone to VIVA's fiscal 2020 second quarter results conference call. All lines have been placed on mute to prevent any background noise. After the speech remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star, then number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. Rick Lunn, Investor Relations Director. You may begin your conference.

Good afternoon and welcome to Viva's fiscal 2020 second quarter earnings call for the quarter ended July 31st, 2019. With me on today's call are Peter Gassner, our Chief Executive Officer, Paul Shawah, SVP of Commercial 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 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 10Q, 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, August 27, 2019. If this call is replayed or viewed after today, the information presented during the call may not contain current or accurate information. Viva 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-gap metrics that we believe aid in the understanding of our financial results. A reconciliation to comparable gap metrics can be found in today's earnings release, which is available on our website and as an exhibit to the Form 8K filed with the SEC just before this call. Finally, I'd like to welcome you to join us at our annual Analyst and Investor Day on October 2nd in San Francisco. If you haven't received an invite and would like to attend, please feel free to reach out via email at the address ir.viva.com. If you can't join in person, the event will be webcast with both the live and archived versions available on our Investor Relations website. And 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. Q2 was another strong quarter with results above our guidance. Total revenue was $267 million, up 27% year-over-year. Subscription revenue grew 28% year-over-year, and our non-GAAP operating margin was 39%. Viva has now passed a billion dollar revenue run rate. This is a year and a half ahead of the target we first laid out in 2015. With customer success as our driving force, we were able to exceed our goals through exceptional focus and execution. Thank you and congratulations to the Viva team. Today, we also announced our CFO, Tim Cabral, is retiring next year after a 30-year career and 10 years at Viva. A search for his replacement is underway, and Tim is staying at Viva through the hiring and onboarding of our new CFO to ensure a smooth transition. I'd like to express our appreciation and thanks to Tim. He's an exceptional leader, having helped guide Viva from a startup to our current scale. He also built a strong team. Working with Tim at Viva and at PeopleSoft before that has been a true partnership that I value deeply. Now, turning to the details of the quarter. Strong momentum in commercial cloud contributed to our outperformance in Q2. In core CRM, we continued to extend our leadership position with new SMB customers and additional enterprise expansions. And customers continued to adopt more CRM add-ons. This happens on a product by product and region by region basis. Let me give a couple of examples. Viva CRM Engage had one of its strongest quarters as four top 20 pharmas expanded their use of Engage to new field teams. Customers are attracted by the deep functionality and multi-platform support of Engage and the very tight integration with CRM. We also had an important design win at a top 20 pharma for events management. This customer has been using Core CRM globally for many years and recently decided to expand their Viva relationship to include events management in more than 90 countries over time. They chose Viva because we have the deep functionality and professional services capabilities needed for a global events management rollout. They will replace multiple custom systems and spreadsheets, leading to a more efficient and compliant global process. It's great to see this expanding relationship with a long-standing customer. Turning to Vault, we continue to have great momentum. Vault now has nearly 650 customers, and as of Q2, represents more than 50% of total revenue. This is an exciting milestone. When we started Vault a number of years ago, the potential was clear to me. And as I look ahead, it's also clear that we're in the early days of Vault. This quarter, a newly independent top 20 medical device company standardized on Vault across the organization, including clinical, quality, regulatory, and commercial. With the ability to start from a clean slate, they chose Vault because it's the only solution to provide best-in-class application suites on a single modern cloud platform. Our customer success focus and commitment to the medical device industry was also key. In clinical, they will use Viva ETMF, CTMS, and CDMS. Let's focus in on CDMS. They chose Viva CDMS over their incumbent system for a few reasons. First, they were looking toward the future and long-term partnership, so they liked our pace of innovation. They've seen Viva CDMS evolve rapidly over the past 12 months and are excited about what's ahead. They also saw that VIVIS CDMS is well suited to running all their types of studies. It can handle the complex studies, but also it's practical to use for small studies that are built on short notice. And they also wanted clinical data management and clinical operations all on a common platform to gain operational efficiency. We now have a top 20 pharma and a top 20 med device company as lighthouse customers for CDMS. These early adopter accounts are very important and their success is a major focus for the team. CTMS is also progressing well. We continue to win more deals and now have 50 customers signed in just two years since the product was released. That's amazing momentum in a highly complex area. Our progress here speaks to the significant need in the market for a modern CTMS solution. We believe Vault's ETMS is poised to be the leading solution over time. Drilling down into quality, we signed our 10th Top 20 Pharma for Vault Quality Docs. Following their success with Vault PromoMats, ETMF, and submissions, this customer selected Quality Docs as part of their move away from a legacy content management platform. On the QMF side of quality, we ended the quarter with more than 100 customers. The need for modernization is driving the move to Viva in this area, as is the benefit of having QMS integrated with quality docs and training on the Vault platform. This is another great example of the innovation we are bringing to an underserved market. Finally, I'd like to give an update on our efforts outside of life sciences. I'm pleased with the progress we are making within our three focus industries, PPG, chemicals, and cosmetics. Since announcing the new Vault Claims product last quarter, we now have projects in place at three top CPG companies. We are also executing well in chemicals and cosmetics. Customer success drives our business in all industries. This quarter we had major go-lives at a top 20 CPG, a top 20 cosmetics company, and two major go-lives in chemical. In closing, we had a great quarter. Our results reflect the customer trust we have gained through consistent innovation, focused execution, and our commitment to their success. With that, I'll turn it over to Tim.