Veeva Systems Inc. Class A

Ladies and gentlemen, thank you for standing by and welcome to Viva Systems Fiscal 2021 Second Quarter Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star and then 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to Rick Lund, Head of Investor Relations. Thank you. Please go ahead.

Good afternoon and welcome to Viva's fiscal 2021 second quarter earnings call for the quarter ended July 31st, 2020. 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, including those related to the impacts of COVID-19 on our business, the life sciences industry, and global economic conditions. 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, which is available on the company's website at veva.com under the Investors section and on the SEC's website at sec.gov. Forward-looking statements made during the call are being made as of today, August 27, 2020, 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. 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. The guidance we will provide today is in part based on our current assumptions as to the macroeconomic environment, Thank you for joining us. both of which are available on our website. The reconciliation can also be found 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 welcome everyone joining us today. Q2 was a strong quarter. Total revenue was $354 million, up 33% year-over-year. Subscription revenue grew 31% year-over-year and non-GAAP operating margin was 41%. We're also raising our full-year total revenue guidance to $1,420,000,000 on the top end, which is above the initial guidance we provided in March. This reflects improved visibility into the back half of the year now that we've had more time to understand how the life sciences industry is adapting to COVID-19. Our Life Sciences customers reported that the second quarter was as expected with fewer patient visits, delayed procedures, and a reversal of Q1 stockpiling. They see some areas improving and are more optimistic as they look to the second half. More clinical trials are starting back up as clinical research sites reopen. Of the studies that were disrupted, roughly half have now restarted. Crossix data shows in-office patient visits are turning up from a low of 52% of pre-COVID levels to 84% at the end of July. At the same time, telehealth visits are at 10% of total visits. While this is down from a peak of 30% a few months ago, it is significantly higher than the 1% before the pandemic. Overall, the industry is rethinking their approach to digital, and this aligns well with our current offerings and future strategy. One of the newer areas that's created a lot of excitement is MyViva. MyViva is the overall brand for our two consumer-facing applications, one targeted to patients in clinical trials and one for doctors. This is an important new territory for Viva and for the industry as we provide better ways for our customers to serve patients and doctors online. I talked about MyViva for clinical trials on our last earnings call, and this quarter I will give an update on MyViva for doctors. We announced MyViva for Doctors at Viva Commercial Summit in June. MyViva for Doctors is a website and mobile application to make it easier for doctors to connect with life sciences. It will provide a single place where doctors can go to get information, services, and contacts directly from life sciences companies in the standard, easy-to-use format. Today, there is no single place for doctors to go for this. MyViva for Doctors has the potential to be a game-changer. This product will be available at the end of the year for the U.S. market and we're currently in discussions with a handful of potential early adopters. This type of innovation and product leadership and commercial has allowed us to expand our position as a strategic partner to the industry and gain market share. We recently won two significant CRM deals for the domestic teams of large Japanese pharma companies. We've approved email and we've engaged meeting usage is increasing. and our virtual events business in the physician world is gaining momentum. Overall, customers are looking to Veeva as they define their digital engagement strategies. They appreciate the partnership we've provided since the earliest days of the pandemic, with Veeva teams going the extra mile, our product innovation and our support with programs like free engaged meetings, which we've extended now through the end of the year. In the data area, I also wanted to provide a quick update on Veeva Data Cloud. We are now working with three early adopters for our U.S. longitudinal patient data. This is our first Data Cloud offering and general availability is targeted for December. Leadership in the data market will take many years, but we are confident in our strategy and encouraged by early progress. The market needs innovation and an alternative to the legacy provider. Looking ahead in commercial, I have never been more excited. We are well positioned for the future and continue to increase our leadership position as we bring real innovation and partnership to our customers. Before I move to Vault, a brief update on our antitrust trial against IQVIA. For years, IQVIA has used illegal tactics to maintain their data monopoly and leverage that monopoly to benefit their software business. This harms customers, patients, and VIVA. Commercial cloud products impacted include Viva Network, Nitro, and Andy. We filed our antitrust case in 2017 and remain confident in our case. Due to COVID-19 related court delays, we now expect the case to go to trial near the end of 2022. On the vault side, customers increasingly look to Viva as they work to streamline drug development. We are seeing this across every area of Viva development cloud. Vault Quality Docs and Vault QMS both had record quarters. Two top 20 pharma selected QMS and one top 20 selected Quality Docs as their enterprise standards. It was also a great quarter for regulatory. A top 20 pharma made the decision to adopt a full RIM suite and another top 20 will deploy Vault registrations globally. Momentum is building in clinical as well. This is one of the areas of greatest need for our customers to modernize. For instance, in CTMS, which is the heart of clinical operations technology, we had an outstanding quarter. We now have more than 70 vault CTMS customers in just three years since we released the product. In the second quarter, we had our first go live with a top 20, added another top 20, and signed our first top seven CRO. We also had CTMS pilots start at two additional top 20 pharmas. We are also making good progress on the clinical data side. More than 100 studies have now started on Vault CDMS. Customers appreciate the innovation and agility that Viva CDMS brings, as well as the benefit of the integration with Vault ETMS and Vault CTMS. In the quarter, we had a win with the second top 20 pharma, who will run a handful of complex oncology trials on CDMS. If successful, this could lead to a broader deployment. I'm really excited about clinical. Our leadership position in clinical operations continues to expand. We're making great progress in clinical data, and there is a lot of interest in myVIVA for clinical trials. Clinical is a large area, and it's all coming together nicely. Finally, I'd like to share an update on our efforts outside of life sciences. The industries we serve continue to be impacted by the pandemic. But I'm encouraged by the success we're having with existing customers who continue to expand their use of EVA. For instance, a top CPG company will replace an established incumbent with our quality applications across all their business units. Additionally, we continue to make progress with new customers. A top 20 agrochemicals business has selected regulatory solutions as their enterprise standard. Overall, the team had a strong quarter and is executing well. Before closing, I want to give special thanks to Tim. This is his last earnings call with us, and I'm grateful for his many years of partnership. Tim is staying with Viva on a part-time basis going forward as an advisor and mentor to the Viva team. Finally, I'd like to acknowledge all the Viva employees for their innovation and creativity to come up with new and better ways to continue to support customers. and I'd like to thank our customers for their tireless efforts to fight this pandemic and to improve the lives of patients around the globe. I'm looking forward to deepening Veva's partnership with our customers for many years to come. With that, I'll turn it over to Tim.