Veeva Systems Inc. Class A

Welcome to the VIVA Systems Fiscal 2021 Third 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 your speaker today, Hato Garrett, Senior Senior Director, Investor Relations. Thank you, and please go ahead.

Good afternoon, and welcome to VBIS Fiscal 2021 Third Quarter Earnings Call for the quarter ended October 31st, 2020. With me on today's call are Peter Gassner, our Chief Executive Officer, Paul Schella, EBP Strategy, and Brent Bowman, our Chief Financial Officer. During the course of this conference call, we will make forward-looking statements regarding trends, our strategies, and 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 impact 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 www.viva.com under the Investors section and on the SEC website at www.sec.gov. Forward-looking statements made during the call today are being made as of today, December 1, 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 the public forum. The guidance we will provide today is in part based on our current assumptions as to the macroeconomic environment in which we will be operating in the future, including the timing and pace of recovery from any negative effects caused by COVID-19. Such matters that are beyond our control and our assumptions may not be correct and may change rapidly. 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 gap metrics can be found in today's earnings release and in the supplemental investor presentation, both of which are available on our website. A reconciliation can also be found as an exhibit to the Form 8K filed with the SEC just before the call. With that, thank you for joining us, and I'll turn it over to Peter.

Thank you, Atto. Before we get started, I'd like to extend our sympathies to everyone affected by the pandemic and our gratitude to all those working to help in so many ways, including our customers. The industry has produced effective vaccine candidates, rapid diagnostics, and approved treatments, all in a matter of months. We are proud to be working with these amazing companies, and I'm proud of how the Viva team has stepped up to help. Now, turning to Q3, we had another quarter of consistent execution and results ahead of guidance. Total revenue was $378 million, up 34% year over year. Subscription revenue also grew 34% year-over-year, and non-GAAP operating margin was 41%. We're pleased with our results and how we're expanding customer relationships during a major digital transformation. We've been able to help customers with immediate needs to open up digital channels in commercial and clinical, and we're also helping them define the right digital models for the long term. For example, on the commercial side, we recently announced a strategic partnership with an emerging biopharma to help them define and execute an innovative digital-first commercial model. They will utilize the full commercial cloud, including Viva CRM, Data Cloud, Viva Link, MyViva, and business consulting. That level of trust and confidence in our ability to deliver came through strongly in our Q3 new wins and expansions. We added 19 new CRM customers, our biggest quarterly increase yet. We continued to grow market share and had multiple international expansions in CRM with existing customers. We also progressed well in our newer areas, including Data Cloud, MyViva for Doctors, and VivaLink. We expect these products will set us up for a long runway of growth in commercial. It's an exciting time in commercial and a time of change. We think our customers can generate meaningful productivity gains over the coming years as they increasingly leverage digital. We're excited to enable that transformation through our technology. For VivaVault, we've seen significant progress in development cloud adoption. Customers are increasingly purchasing multiple products at once, including a recently announced top five pharma who selected VivaVault products in clinical operations, quality, and regulatory. This is a major transformation, which they will implement over the next two to three years. We're also seeing more customers expand Vault usage within each area of development cloud. In clinical operations, Vault CTMS had a standout quarter. We now have more than 75 customers, including six of the top 20, that have chosen to standardize on Vault CTMS. This is a remarkable pace of adoption, given the product was launched just over three years ago. This rapid uptake is based on the trust we've built in clinical operations with Vault ETMS and the power of having a unified suite for clinical operations. An area of clinical I'm particularly excited about is Viva Clinical Network, where we're bringing real innovation to the industry to help advance the move to paperless and patient-centric clinical trials. Clinical Network connects sponsors, sites, and patients, and has the potential to fundamentally change how the industry conducts trials. We announced our first clinical network application, Viva SiteConnect, to connect sites and sponsors, and in Q3 closed our first top 20 customer for SiteConnect. In quality, we had 20 net new customers select Vault Quality Docs, and we now have 12 of the top 20 farmers as Quality Docs customers. Safety also continues to progress well with our early adopters, and we added four new customers. We also started our first safety AI project in the quarter. Outside of life sciences, as the pandemic continues to drive changes in consumer goods and cosmetics, companies are looking to us for agile global solutions that can help them quickly adapt. This dynamic drove a major win in Q3 with another large CPG customer. We also brought together nearly 800 leaders from across consumer goods, cosmetics, and chemicals for an online quality and regulatory summit to share best practices and insights. Overall, we are pleased with our growing reach and momentum in these industries. Now I'll share some additional thoughts as we look ahead to next year. On the commercial cloud side of the business, customers will find new ways to be more efficient by adopting our digital solutions. we believe this will likely drive field force reductions in the neighborhood of 10% over the coming year. At the same time, we expect to increase market share in CRM and see further adoption of CRM add-on products such as Engage, Events, and Align. We also expect greater adoption for VivaLink, and it will be an important early adopter year for Data Cloud and MyViva. We expect Vault to continue its strong growth, particularly development cloud, with progress across the board in clinical quality and regulatory. It's still early in terms of revenue for CDMS and safety, but we have very strong early adopter momentum and broad customer interest, which will serve us well in these large markets in the coming years. We're also excited about the future of clinical networks. And we expect another year of consistent growth outside of life sciences in CPG, chemicals, and cosmetics. And finally, I'd like to update you on our proposed conversion to a public benefit corporation. We have completed our communication process with customers and investors, and the feedback has been largely positive. We also completed the comment process with the SEC and are filing a revised proxy this week. We will hold a special shareholder meeting to vote on the proposed PBC conversion on January 13th. In closing, I'd like to say how proud I am of the Viva team for the exceptional teamwork, flexibility, innovation, and execution throughout the year. It's that combination of trust, great people, and great products that has put us in a position to really help the industry during this time of change. Now, I'll turn it over to Brent for a financial update.