Veeva Systems Inc. Class A

Pacific today. We hope you have 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 Schaue, EVP Strategy, and Brian VanWagener, our Chief Financial Officer. During this call, we may make forward-looking statements regarding trends, our strategies, and the anticipated performance of the business, including guidance regarding future financial results. 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, August 27, 2025, 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 may discuss our guidance on today's call, but we 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 may 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. With that, thank you for joining us, and I'll turn the call over to Peter.

Thank you, Gunnar, and welcome everyone to the call. We had another strong quarter, delivering Q2 results ahead of our guidance. Total revenue in the quarter was $789 million, with non-GAAP operating income of $353 million. Thanks to the team and our customers, our industry cloud vision is starting to come together. That means great industry-specific software, data, and business consulting all working together to help the industry become more efficient and effective. I'm especially excited about the clear vision and rapid progress on Viva AI. That will be transformative for Viva and the industry over time. We'll now open up the call to your questions.

Thank you, and we'll now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 a second time. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. To be able to take as many questions as possible, we ask that you please limit yourself to one question and one follow-up. Again, it is star one if you would like to join the queue. And our first question comes from the line of Ken Wong with Oppenheimer. Your line is open.

Hey, fantastic. Peter, I wanted to touch on the resolution in terms of that lawsuit with IQVIA. Can you help us walk through kind of what led to that resolution? and what potential opportunities this could potentially unlock. And then for Brian, just on the billing side, a nice increase there, although with an inline 2Q. Just help us understand the confidence in increasing the back half with what was a more inline-ish second quarter. Thank you.

Thank you, Mr. Peter. What led to the resolution? Well, we've had this dispute for about 10 years with IQVIA, and things were a lot different 10 years ago. IQVIA was still IMS, by the way, and just joining with IQVIA and Viva wasn't that strong and clinical, and IQVIA had a CRM product, and now they don't. So many things have changed, and we just got together sort of at the start of the year from the IQVIA leadership and myself and realized There's no reason for this conflict anymore. We can begin to learn about each other and partner for the benefit of customers and Viva and IQVIA. So it's just the passage of time. Things changed and we woke up and said, you know, well, what are we fighting about? There's no reason to be doing this anymore. So I'm super happy and I believe I can represent that IQVIA is very happy as well to have it resolved. Now, in terms of what is it in lock for us? Historically, in the commercial area, there was two barriers, two sort of artificial barriers. One was with Salesforce. Because of our OEM agreement, we couldn't develop the applications we wanted. We weren't allowed, and we couldn't develop it in the way we wanted them either. So now that's gone with Salesforce since we've moved to Vault, and we have 100 live customers in CRM. That's really an anchor tenant in commercial. And then we had these important products, Viva Network, Viva Nitro, our commercial analytics offerings. And we couldn't put IQVIA data in there. So this was sort of a hole in our boat. You know, these products were impractical because they couldn't put the industry-leading data in there. That's resolved now. So you've got the Salesforce thing resolved. The IQVIA restrictions resolved. So I'm really looking forward to making commercial cloud sort of like development cloud, really no limits. Very excited about that. The biggest news in commercial for a long time.

And, Ken, this is Brian. I'll pick up the second question on billings. So, you know, on billings, really annual is the better indicator. So we're pleased with the $35 million raise there to full-year guidance, which is roughly in line with the revenue increase. Quarterly billings, as we've spoken a bit about in the past, they're lumpy because there are a lot of timing factors. There's customer-specific items, operational things, mix on pre- and post-paid. And so it's just not a metric we use internally or a great indicator of the business. So annual is a better way to look at it, and we're really happy with the guide there.

Thank you, guys.

And our next question comes from the line of Joe Verink with Baird. Your line is open.

Great. Thank you for taking my questions. Nice to see R&D subscriptions and services with larger upside just relative to how we've been modeling it. I've been interested in the evolution of quality cloud. It seems like that's receiving an elevated stature inside Viva. I was hoping you can maybe just speak to what you're seeing. Is there a larger role for Viva to play and maybe extending that both into the lab and also manufacturing? And then looking ahead, is that maybe more of an outsized driver? Obviously, I appreciate it's broad-based, but His quality may be factoring more into the five-year plan than you thought perhaps a year ago.

I'll take that. And this is Peter for the last one. I think we're very happy with our five-year plan. We have a lot of confidence in our $6 billion revenue plan. And the changes in quality, you know, from what we see are not material. It's on track for where we thought it would be. It is a big area, and it has gotten elevated significantly. focus inside of even in the last couple of years. The start of that was to go after the limbs area, the laboratory information management. That's a super important area. And then we have batch release, we have a validation management product. So we really elevated up to the level of the full cloud because that can be a very big business for us quality.

Okay, that's great. Just on the excitement around AI, you know, the first products focused more in the commercial suite and then broadening out there into next year. I guess, how do you see the opportunity? You know, I think it's interesting that commercial cloud takes on basically the look of development cloud in terms of Viva controlling its whole destiny now. Do you think that starts to be a meaningful incremental driver, just monetizing agents into next year? Or do you actually think that the bigger consequences may be more strategic in that Vault has developed such a robust architecture and partner ecosystem that Viva is going to be a central role for the industry as they adopt AI, maybe regardless of whether it's a Viva agent or not. Vault's going to be a part of that mix one way or the other.

Let's see. How I would think of it. You asked a few questions there. Let me reframe a little. The basic way I would think about it, Viva Vault platform, we started that in 2010, actually, late 2010. It was around this, it had content and it had data and it could do both. And that was very unique. And users worked with content and data. And so we were able to make integrated suites and clinical and quality and regulatory and safety. And that's what we've been doing for the last 15 years and working very hard at it and making these deep industry applications, you know, the business rules around all the data and the content. Now this is the next phase where we're going to have agents. We still have our data. We have our content. We have our agents. And the users are going to interact with all the three. And the agents also interact with the content and the data. So it's a fundamental new thing. And what we've led really and are leading in this industry cloud area, industry-specific cloud applications, I think we're going to lead in industry-specific agents and certainly inside life sciences. So that's the way to think about it. The monetization will come from selling Viva AI, which is two things. The platform, so customers can create their own custom agents, but mainly our industry-specific agents that they'll get when they buy Viva AI. And with the model MCP, model context protocol, it's agent to agent interoperability is really easy and also vault to vault interoperability. We will, in terms of monetizing that, we will create billions of dollars of value for the industry. No doubt about that. No doubt about that. Sometimes making humans much more efficient, sometimes less. reducing the need for certain people doing certain types of tasks. So there's tremendous amount of value will be captured by the industry and we'll get our fair share of that for sure. But we're going to take that slow, work with our early adopters, you know, sort of end of this year and 26 or so. I don't expect any material revenue contribution for 26 or 27, for example, but I expected it's a significant increase in our market size. And that will play out over many years. But this is going to be a tremendous benefit for Viva, our employees who are building all these agents, and our customers who are getting the value. So we're very excited about it. We've done that hard work over the last seven months or so of plumbing it deeply into the Vault platform. That's the really hard work. And now the application agent work is really starting in earnest.

Thanks very much.

And our next question comes from the line of Brent Braceland with Piper Sandler. Your line is open.

Good afternoon. I guess first one for Peter here. I'd like to go back to the long-standing dispute with IMS and IQVIA that you settled. Specifically, we'd love to get your thoughts on, one, what's been the initial customer reaction feedback to the news just last week here? Do you have any? And then, two, How should we think about IQVIA that historically has been a CRM competitor as we're going back to the Segedine days, sold some of the CRM business to Salesforce, and how does that CRM-specific relationship with IQVIA change?

Okay, so customer reaction to Viva and IQVIA has just been overwhelmingly positive because it's such good news for customers. You know, if you're a life sciences company, especially a medium to large one, there's a few things you have to have. You have to have SAP for sure in the supply chain. You have to have Microsoft on your desktop for sure. You have to have that. You're going to have Viva inside your organization in one part, two parts, five parts, many parts. And you're going to have IQVIA as well, specifically the IQVIA data. That's what you're going to have. And what they had before was a problem and they needed a lot of band-aids because in a lot of situations IQVIA and Viva didn't fit well together. So it's just a sense of relief from customers and exploring, hey, what's possible? Can I do this? Can I do that? So very, very, very positive. In terms of IQVIA, they were a historical competitor in CRM. They're not anymore. When Salesforce got into that market of directly pharmaceutical CRM and said they were going to build a product, IQVIA went out of that market, and I don't know what was the timing of what decisions there. I just know that IQVIA is not selling that CRM product anymore, so there's no issues there. We still compete with IQVIA in areas of things like reference data, our open data product, our compass product, things like that, but that's okay. That's normal, healthy competition. We partner in many, many areas, and we compete in some, and customers benefit. And they don't need so many band-aids anymore to stitch things together between VEED and IQVIA.

A full color there. And then, Brian, just a quick follow-up on that R&D subscription growth. Sequentially, it looks like it rose the most in two years. What drove the momentum in my side in R&D this quarter? Thanks.

Hey, Brian. Yeah, so it continues to, again, be broad-based. We're really pleased with the execution of this team across all areas. And they're working in a pretty stable environment. So I think you saw a really strong Q2 and things firming up as we go into the second half of the year and Q3 and Q4. Broad-based, strong execution.

Wonderful. Thank you.

And our next question comes from Dylan Becker with William Blair. Your line is open.

Appreciate it, Vera. Nice job. Maybe, Peter, going back to the idea around the opportunity with AI, how you're kind of thinking about Viva's platform approach, the network you've built, the scale you've built, giving you kind of that right to win as you embed more AI functionality across the platform, and maybe how more of these top 20 enterprises are going all in, maybe how that can serve as kind of gravity supporting some of that AI momentum with embedded intelligence and things of the like in the future.

Yeah, the right to win. We refer to that as structural advantage. When you have an application that's a system of record, be it the email system or the supply chain system or all the 50 sort of applications that Viva has that are deep in life sciences, from the CRM system to the drug safety system to the clinical trial management system, when you have that system of record with the users in there, you have the right to win the deep industry-specific agents because it's in the user's workflow. Think about it. If you use Google for your email and your calendar, you would love an agent from Google that works seamlessly with that if you could get it. So we have a right to win there. You call it a right to win. I call it a structural advantage. We can knit that technology together so that it's a seamless platform that handles the agents, the content, the data. Another thing that Viva has is we have a platform that's broad. We make about 50 applications with our platform. So we can touch a lot of things with our Vault platform. We put it in the Vault platform once and it can extend area everywhere. So we have a structural advantage. I think it's early for customers to be going all in on AI with Viva because we haven't even released any agents yet. So we've got to work with our first early adopters and work that out. We have to execute. Everybody has a grand plan, but do you execute on it? That's what really makes a difference. So we have to execute. Google our value and over time, I'm quite confident when customers see the value, you know, they will come and they will want to go all in with Viva for AI around the things that we do, you know, and with Microsoft around other things that they do and with SAP around other things that they do. The nice thing about authentic AI that's framing up is these agents will be able to talk to each other, you know, in a much easier way than what's possible before AI.

That's very helpful. Thank you. And that does make sense. Maybe, Paul, for you, with the two top 20 customers live on CRM, and I know there's been a handful of more moments, some of others coming online over the past few months, wondering how kind of the evidence of that live and successful implementation is resonating with customers, maybe how that stacks up on a like-for-like cost basis versus some of the conviction that And maybe, again, the customer conviction in the fact that that's only going to get more efficient over time kind of compounding the obvious nature of maybe needing to migrate. Thank you.

Yeah. No, thanks. So let me step back a little bit and just give you a little bit of a broader context. We called out seven top 20s committed to Valve CRM in the prepared remarks. I can give you a little more context beyond that, including verbal commitments. We added two additional top 20s for a total of nine top 20s committed to Vault CRM. So we're doing really well in the market. And part of it is the go lives and the continued execution there. To be fair, we're also aware that Salesforce had one additional top 20 verbal commit for a total of three. So just to give you the full picture, The latest is Viva has nine top 20 wins, Salesforce is at three. All of the wins that I talk about are not equal. And this gets to your question here. There's a very big difference between a Viva win and a Salesforce win. So you asked about the two top 20s go live. Less than two years after they made an announcement, they're now live in major markets. And that just happened this quarter. So with Viva, a win almost becomes a certainty. We have to work at it. I don't want to make it sound too easy, but these are two significant live and happy customers now in some of their major markets, and they're going to continue to go live globally through the end of the year and beyond. So that's where we are with wins. That's a huge milestone that has a big impact. With Salesforce, that's obviously very different. The earliest that they'll have a go live with a top 20 in a single region is the end of 2026, possibly finishing in in let's say the 2029 timeframe, that's obviously a very long time. A lot of things can happen between now and then, especially as our customers get the benefit of all the things that Peter just talked about around Viva AI, being able to get started with AI this year, our partnership with IQVIA, that they can take advantage of today, but that will get better over time. So the chance that all three Salesforce customers go live in all regions is actually low. It's just not proven. It's going to require a lot of custom work. It's going to take years to mature if it even gets there. So all of those three wins that they have, they're not equal to a Viva win, and they all have a contingency plan, which is Viva. So that's where things play out. The two wins that we had that are now live customers, obviously critically important. And these are multi-factor decisions, but this is a pretty significant play in kind of how customers are thinking about where they place their chips. Beyond the top 20, that story even gets stronger, right? As smaller companies, they just can't afford to take a risk on, you know, a risky project. So we're feeling good about the competitive position, and this is a huge milestone that Viva had, and I have confidence we'll be able to continue to win and continue to convert to live, happy customers.

Very helpful. Thank you, guys.

And our next question comes from Brian Peterson with Raymond James. Your line is open.

Hey, gentlemen, congrats on the quarter. So I just wanted to take a step back and think about the agentic opportunity. And if you think about how we could maybe size that or where you could see some of the early opportunities, I think in commercial, we see that. But if we're looking at the R&D portfolio and what BALT could be with agentic opportunities, what are some of the early use cases you'd see there? And how would you kind of look at that opportunity, thinking about maybe commercial versus R&D?

I'll take that one. That's certainly different. We have a lot of variety. We do clinical trial operations. We do commercial and medical things and quality manufacturing. So each one is different. In the commercial area, I don't think it's about reducing the number of people too much inside of life sciences, if at all. But it's enabling them to be more productive and hold more relationships and get more work done. Now, so that's very valuable in itself. If you look at areas within safety and clinical, there's some areas where there's a lot of outsourced hundreds of millions of dollars of outsourced labor used to do processing type things. I think agentic AI can maybe remove the need for half of that. If you look at a clinical trial master file, agentic AIs can be pretty good at putting a document where it should go, and telling you if you have all the documentation you need for that trial based on the protocol. And is any document blurry? Is any document illegible, et cetera? It's going to be really darn good at that stuff. So it'll be different by each area, but agentic AI is going to do things. Some of the things that humans can do, agentic AI is going to be able to do that. That either frees up more human time, for humans to be more productive on what they need to do or reduces the need for humans. So it's going to apply to every area just like people apply to every area, but it's going to apply in different ways.

Thanks, Peter. And maybe a follow-up. I'd love to get an update on some of your horizontal software ambitions. I know that was a big theme at the Analyst Day last year. Any progress to date that you can share? Thanks, guys.

Yeah, no specific progress. I think just to reiterate, we're working on a platform-first approach here, and we're making great progress. We have a good team, pretty stable team, making excellent progress. Really excited about it. We have said in the CRM area will be our first use case, our first application. We're starting to talk to early customers and getting that feedback, et cetera. So I think we'll have a project or two starting this year. And then we'll give more of an update on our analyst day, more of a fulsome update. But if you think about Viva, what do we do? We make excellent products. We really buckle down and make excellent products. We sort of avoid the hype and all that stuff. And we improve those products with our customers. And we're very authentic. And maybe everybody thinks that, yeah, you can't do that in horizontal software. Well, I don't know. I think we'll buck the trend, and I think we'll do that. In the horizontal software, I think you'll see the flavor and the culture of Viva come through, and you'll see the product excellence come through. And you've got to remember, a lot of these cloud applications, they were made before, they were certainly made before AI, but a lot of them were made before the iPhone, too. So, you know, there's some structural things when we're starting from scratch here that we can really take advantage of and the whole new markets team is super excited about that so more to come but the activity is definitely going full steam good to hear thanks peter and our next question comes from the line of stan berenstein with wells fargo securities your line is open hi uh thanks for taking my questions uh first one peter for you um

Going back to the QVN news, just with Nitro and Network getting a second life here, can you just size the dollar opportunity for these products, and what kind of uptake should we anticipate from clients?

In terms of the dollar opportunity, I would say similar to some of our other add-on products, maybe a bit bigger, but similar. But the way to think about it is what it enables for our full commercial suite. So this helps our CRM products and all the different products we have, our events management, our patient CRM, our campaign management, our data products, because it's a more full solution. It really helps our business consulting too, which drives stickiness. I would say it lets customers over time take a bigger bite at the Viva Apple in commercial. And then you saw that in clinical. When our product suite got very mature and got fulsome and got practical for people you started customers hey maybe i'll just get all that viva stuff at once and i think that's going to happen a bit more in commercial so it's transformative i would say if you had to think about the benefit for viva maybe 25 of that benefit is related to actually revenue there you know business consulting and network and nitro, and 75% of it is related to the network and the network effect that it will have on the broader commercial.

Got it. Thank you. And then a follow-up for Brian. On the Marshall Path subscriptions, there were, I believe, kind of flattish quarter-on-quarter here, and in the prepared remarks, Cross-X was called out as seeing, you know, continued strength and momentum here in the quarter. So first wondering, Brian, If there's anything offsetting that momentum here in the fiscal 2Q, and then what is factored into the RAISE guidance for commercial subscriptions? Thanks.

Hey, Stan. So, yeah, great quarter for Cross-X and Q2. on the back of a few great quarters in a row now. So we're really pleased with the execution of that team. We expect that to continue to be a meaningful driver of growth in commercial going forward and in the balance of the year. And then I think more broadly, you see the growth, as you touched on earlier in the call, in R&D subscriptions, which we're picking up in the second half and seeing firming up of the pipeline in the second half. So good quarter of execution in Q2 and a solid view going into the second half of the year here.

I guess if you could just comment, why was the quarters like flatter sequentially, if there's any offsets there, and what drove the raised guidance for the back half of the year for commercial cloud?

Thank you. Well, in commercial, I think similar factors to what we've spoken about previously, Stan, so that we still see CrossFit being the main driver there. We saw that in the past quarter, continues to be a driver in Q2.

Got it. Thanks so much.

And our next question comes from David Windley with Jefferies. Your line is open.

All right. Thanks for taking my question. Management has talked about, I think, CRM evolving to a breadth of products that would rival what R&D looks like today with the – the kind of release or the transition over to Vault and away from Salesforce Reliance and now your IQV resolution that you talked about today, Peter, that seems to kind of open the path to do that more aggressively. You've already launched a couple. So the question here is, what is the path to a doubling or maybe even two and a half times number of products in CRM look like? And are AI agents part of the count along that path, or do you think of those as companions to that path? Thanks.

Excellent question. I think there may be some new applications, but that's probably not the main way I look at it. I look at it for Viva AI will expand our opportunity. Also, we have now opportunity to pull through some of the newer applications we already have. Campaign Manager, Service Center, patient CRM, network, nitro, some of our data products in our commercial analytics. So if you look at our revenue on the commercial side now, Crossix, you know, doing quite well, commercial content doing quite well, and the core CRM doing quite well. But these other applications were somewhat stalled for two reasons. First, things like campaign managers, service center, patient CRM, we couldn't develop them until we decided to move off of the Salesforce platform. That was about three years ago. So we had to develop those. And then for the ones that dealt with data and analytics, those were stymied due to the IQV restrictions. So long story short, we have the product footprint we need to really increase our revenue in commercial. And now we just have to mature those products and do that hard work of customer adoption and customer success. But You know, we're free in commercial. The runway is clear. You know, we just have to do that hard work to go down that path.

Excellent. Thank you for that. And then the follow up for me would be just to confirm and clarify that in your data products and development path that you're thinking about there, your agreement with IQV does not restrict you in any way from pursuing the development, the applications that you want to, the data that you want to.

Right. There's no restriction on Viva. There's no restriction on IQVIA where the market is open and free, and so we'll compete in some areas, partner in some areas. We both have an interest in customer success, but no restrictions on Viva. Got it. Thank you.

And our next question comes from Tyler Radke with Citi. Your line is open.

Thank you. Peter, on the IQVIA partnership, I know a lot of questions have been asked on that, but is there sort of immediate, imminent kind of revenue unlocks that is perhaps driving the higher forecast for this year around some of the data products? If you could just hit on like what this year this unlocks, if anything.

Yeah, nothing material for this year. Nothing that would, you know, our confidence in the year is just that Q3 and Q4 are closer now than they were 90 days ago, and things are firming up. So, you know, it's any additional revenue that was unlocked as it relates to IQVIA, not material for this year, but it'll contribute in the coming years.

Okay, great. And then more of a product and product technology question, but you talked a lot about your optimism, you know, maybe a bit more medium to long term around AI and agents. Could you just sort of articulate what you view as the unique differentiator from an architecture perspective of vault versus agent force or even, you know, the back end of IQ via like what what do you think is puts you at an advantage you know, whether certain design or technology decisions that you made? Thanks.

Yeah, our main advantage is that we have the deep applications. So, if we just take a clinical example, again, we have the clinical trial management application. So, that has all the people that deal with clinical and all the data about clinical and all the business rules and all the content and all the security about clinical trials. So, with Viva AI, when we build an application agent, that's built inside of the Vault platform. So it inherently knows all the security rules and how to deal with that. And it is running in the Vault application server. So it also has transaction control. So it can update the data and the content. It can act on behalf of the user inside of a workflow in a transactionally sound way. So that's a structural advantage if you have the application. So for example, what I said is, you know, if you're using Google for mail, and if you need an agent to help you write emails, boy, Google has the inside advantage on that one because they know what you're doing in the email. So that's the main thing. And then from the technology perspective, we have some good technologists here making good decisions. One of the nice things is we waited a little bit to help the large language models, help the base AI technology settled down a little bit so we could be really accurate on how to do things. And when we put it into the Vault platform, we took a platform-first approach, so it's going to have very wide adoption across our different applications. Now, you asked about something like agent force. You know, agent force really grew out of the use case of a call center agent. You know, your 1-800 number, and you used to outsource those people, and now you use agent force. That's a little bit different. What we're doing is more of a deep application. And there are other toolkit-based approaches that says, hey, you can build a bunch of AI with our toolkit. We're not like that. We are deeply embedded in the application, which I think is a structural advantage and makes you very sticky.

And our next question comes from the line of Rishi Jaluria with RBC. Your line is open.

Oh, wonderful. Thanks so much for taking my questions. Nice to see continued progress here. Maybe I want to ask two questions on the AI front, which I know has been dominating this call. Number one, Peter, you talked about the ability to leverage MCP and agent-to-agent transactions. I just want to kind of understand, you know, are you going to be architecting your agents out in a way, slash have you already started to see this, where, you know, it's not only living within the Vault ecosystem or the Viva ecosystem, but you have the ability to do agent-to-agent transactions outside of Viva, whether that's with, you know, completely different vendors like a workday or service now, or, you know, even something that might be a little bit co-op addition, like an agent force from Salesforce or something from IQVIA. And then I've got a quick follow-up.

Yeah, certainly we're architecting it that way, that if you have an agent inside Aviva, it can talk to an agent that might be inside of SAP or Workday or a different Salesforce one and vice versa. I think that's going to be one of the unheralded, you know, people don't realize how much of a benefit that is when you have agents that can talk to agents across systems because they're all following a common protocol, much less brittle than you're wiring things up with a mule soft and transferring data back and forth. I'm really excited about that potential. And it can expose from system to system communication, but also for a user. I might be in my Microsoft Office, and I might say, file this document in TMF. Well, the Microsoft Office co-pilot may have that agent the the tms filing agent from viva registered with it so it says hey any any of the agents know how to do this the tms agent would say i sure do okay i'll hand the document over to you and and away it goes and you know that that might have been just from within a person's email and they just said hey file this document in the tms well the agent would know by reading that document well what clinical site are you talking about and what type of a form is this And what investigator is this related to? And I have to fill out three or four fields. Okay, I got it from the definition of this particular trial. And I'll fish that out of the PDF. Okay, I got that. And I'm done there. So that, you know, can't happen without agentic behavior.

All right, that is really helpful. And then maybe just sticking with AI agents, you know, one of the, in our text, one of the kind of things that have led to some customers dragging their feet on migration to vault CRM have been, you know, rebuilding some of the customizations that they've done on the previous Viva CRM. Is there an opportunity that you can leverage, you know, agents to make that transition and movement of applications easier? Thank you. No, I would say,

Now, it wouldn't help the migration easier. Now, what's really helped there is we've really got our tooling really well refined. That's not AI-based tooling. That's very specific migration tooling. And we have our services team, our partners teams trained up because we have a lot of projects underway now. I think we've migrated over 20 customers, but we have about 300 more to go. So this is going to become a machine. Now, I think what it will do, and you're right, some customers are hesitant to migrate to Vault CRM, but the main reason is they're happy with Viva CRM. It's working for them, and they have other things to focus on. Now, I think the pull of AI in CRM will cause a little bit of a pull as it really starts to roll out. That'll cause a bit of pull, and then time marches on, right? When You know, we get into 26, certainly the end of 27, most customers are going to think, well, I'm not going to ride Viva CRM way till the end. I got to get going. I got to get this done. So we always thought the bulk of our migrations would happen in 2026 and 2027. And I still think that's true. We have to see how it plays out. But I got to believe more than two thirds are going to be done in 26 and 27.

All right. Very helpful. Thank you so much. Thanks.

And our next question comes from Ryan McDonald with Needham. Your line is open.

Thanks for taking my question. Congrats on a great quarter. Peter, I was fascinated about the comments on the use of Viva Business Consulting to sort of help push forward your AI initiatives, particularly because, you know, we obviously hear plenty about sort of agent fatigue amongst buyers and organizations just broadly these days. Can you just talk about sort of what level of sort of demand that you're seeing from customers for some of these consulting services to help with change management and moving forward, should we sort of look at, you know, projects from business consulting as sort of a leading indicator for agentic AI adoption of your, of your Viva AI tools? Thanks.

Agentic fatigue. I love that term. Did you make it yourself or is that an industry term?

I don't know about, I don't think I'm that clever. So I'll say it's the industry.

Okay. Well, I don't know, maybe I got it or maybe I don't, agentic fatigue, but that's a good term. You're right to pick up on this. In fact, sometimes when we have strategic meetings with the customer, I was thinking about a meeting we had a few weeks ago with the CEO and his management team of a medium-sized pharma company. I think the biggest eye-opener was actually what our business consulting can do for their companies. Because for the first time in the industry, you have a business consulting group that can do business process transformation that is aligned with the technology partner as well. So these are reinforcing things. Now, when AI comes in here, every AI project is a business consulting project because you're changing the boundaries of what the humans do and what the agents do. And that's not going to happen just by sending an email. It's not going to work like that. You're right, it's a major structural advantage. I guess if we would disclose how many specific business consulting AI projects we're starting in any one quarter, that would be a leading indicator. We don't break it down that way, but it's certainly something I watch because that's the start of an AI project. We have one going on right now, an early adopter that wanted to get going even far before the software was ready. and it started with a business consulting project in the commercial content area, which is a very intricate workflow of handoffs of people between medical, regulatory, and legal, and different brands in different countries, very intricate. So when an agent is going to do some of that, you have to figure out, well, what is my workflow and what is my expectation for that? And while if those people were doing that step, And they're not going to be doing that step anymore. What work do I want them to do? So that's all business consulting. Like I said, that's not just send an email and use the agent. That's not going to work.

Yep, makes total sense. I appreciate all the color there. Maybe as a follow-up, it's great to see some of the continued progress with the Compass product suite. But you did call out Compass prescribers seeing it. a bit of resistance in the marketplace or resistance to change. Can you just talk about maybe what's driving that resistance, whether it's sort of macro driven, is there sort of incremental product investments you need to make there? Just any color you can provide on that. Thanks.

I would say there's always incremental product investments we need to do. And, you know, sometimes you run the race and you run 100 miles an hour and that's faster than you expected. And sometimes you run 50 miles an hour and, you know, that's a little slower than you expected. This one's probably a little slower than expected. We ran into a few more bumps than we expected. I think in prescriber particularly, we probably underestimated just the resistance to change in that area. But we're turning the corner a bit. But really, customers are pretty happy with it. We project. This is the first product to project product and procedures 4,000 plus brands. That was just not available before. So people don't know really what to make of it too much. They're very used to the way things are. So it's just been a hard market. But when it goes, it'll go, I think.

Great. Thanks, Peter.

Thank you.

And ladies and gentlemen, to be able to take our remaining questions in the time that we have left, we ask that you please now limit yourself to one question. And our next question comes from Craig Hettenbach with Morgan Stanley. Your line is open.

Great, thanks. Just a question on the macro backdrop, which hasn't changed for prepared remarks kind of in the last 90 days. You know, Cross-X is highlighted as an area of relative strength. Any other kind of segments that you would call out in terms of despite some of the macro uncertainty that are, you know, still performing really well?

Hi, Craig. Yeah, this is Brian. I'll take this one. On the macro environment, I think what we're seeing overall is while there's still elevated uncertainty, there's really no change. It's fairly stable in that level of uncertainty. So we continue to see customers work effectively within that environment. We continue to see pipeline build and deals progress. And that's the main contributor to what you're just talking about is affirming up the view for Q3 and Q4. No one area that I would call out in particular. We're seeing good execution across the business, and customers stay focused on the task at hand.

Got it. Thank you.

And our next question comes from Kirk Matern with Evercore ISI. Your line is open.

Hi, this is Don for Kirk, and thanks for taking my question. Brian, you already have great margins, but are you seeing any in-house benefits yet from AI and R&D or sales and marketing functions?

So I think on AI internally, we don't expect a meaningful contribution from that in the short term. We think these have the potential to be a transformational tool over the long term. But for us, it's really a new tool about driving productivity and quality. And so we've got access that everybody internally has to some models that are integrated with our email system. Our engineers have specific tools that are in their flow of work, a lot like what Peter talked about with customers and building AI embedded in customers' flow of work. But I wouldn't expect a big sudden headcount change. It's a tool that we're using to continue to drive quality and productivity in our team. Great. Thanks.

And our next question comes from DJ Hines with Canaccord Genuity. Your line is open.

Hey, guys. So going back to the two top 20s that have gone live on Vault CRM and major markets, can you just speak to the economics of those very early large Vault CRM customers, both spend levels and margin contribution, maybe compared to what that may have looked like on, you know, legacy Viva CRM?

I guess I can take that one. Price is similar, I guess the best way you say it. It's not exactly the same because the packaging is somewhat different. It's a bit simplified in Vault CRM versus Viva CRM. But revenue-wise to Viva, about similar. Over the long term, our cost of goods sold will be smaller. In the short term, actually a little bit bigger because we have some transition costs. So during that transition time, the customer's We're getting them going on Vault CRM, and the customers are still using the Viva CRM, and they can continue that for a while to do a cutover and archive. So in the short term, a little more cost of goods sold, and then in the longer term, better cost of goods sold. But from a revenue perspective, it should be roughly neutral.

Okay, got it. Thank you.

And our next question comes from Jaylendra Singh with Truist Securities. Your line is open.

Thank you, thanks for taking my questions, I want to follow up on across six comments, can you be a little bit more specific there, it seems. process still remain strong, but how it turns their computer Q1 and broadly, what would you attribute from the key drivers behind classics performance. Is it strength in industry trends or are you gaining market share? Just trying to better understand if all the noise around other marketing channels for pharma companies is creating more opportunity for you guys and your confidence in sustainability of those trends going forward.

Hey, Jolanda. This is Brian. I'll take this one. On the cross-ex trends, I think we saw continued strong performance coming into Q2. You'll recall that in Q1 where we had some outperformance there, we said it was largely driven by audiences, and we're waiting to see some of those trends play out. We saw continued growth across the cross-ex business. We're not going to break it out specifically. but continues to be a meaningful driver of growth in commercial. And we see that continuing as we go into the balance of the year. There's some seasonality in cross-ex. It tends to be a little bit heavier in Q1 than over the course of the year, but that's really more about the nature of the market than any change in the macro trends. And we think we're positioned well there and continuing to pursue market leadership in that space.

If I would add on, I would say we are increasing market share is one thing we're doing. And then we're increasing our product footprint. So audience is relatively new for us. That's growing quite well. And then traditionally CrossX made, you know, it was very strong in the consumer measurement and optimization of the patients, the potential patients. Now we're getting quite a bit better and pharma is actually spending more incremental money in the marketing to healthcare providers. And so we're doing more measurement in what's called the HCP marketing. So That's what you're seeing. It's growth on two axes, both market share and product footprint. And that's really, you know, if you get down to it, that's driven by producing solid ROI and customer success. It's kind of a word-of-mouth business, and that's what's going on.

Great. Thanks a lot. Thank you.

And our next question comes from Socket Kalia with Barclays. Your line is open.

Okay, great. Hey guys, thanks for taking my question here. Peter, maybe for you, it's great to get to see the IQVIA stuff sort of behind us. You know, Nitro, in my view, was really one of Viva's early AI products. And we didn't hear much about that product earlier on because of the data challenges with IQVIA. But now that that's out of the way, how quickly can we get Nitro back in front of customers And how much of a multiplier could that be to your CRM deals or however you think about the revenue opportunity?

Yeah, it is. If you're happy to see it, I'm probably triply happy to see it. And the whole Viva team, imagine if you're working on the Nitro product or the Network product, you're going in there and you have one hand tied behind your back. Now, all of a sudden, you don't have that restriction. So Part of it is we have to relearn that motion and Viva, right? We have to invest in the people and invest in the product and the selling. We have to relearn that motion so that, you know, it's not going to happen overnight. Um, we need to do that. And in terms of the revenue, you know, again, I won't break it out, but it'll be significant, but mainly it's significant is we'll show up with a more wholesome, a more fulsome solution to the customer. It will enable us to do all types of things, make new data products, make new analytical products, and just show up with a better, more full suite. So I couldn't be more excited about it. And I think the main reason I'm excited is customers are excited about it, our joint customers. We had, I guess, just the week after it was announced, the following week, I believe, or maybe one week afterwards, We had a call, a joint call with Viva and IQVIA with, I believe that was certainly a top 20 pharma, if not a top 10, at their request. And there was high-level people from the customer. And that never happened before, as far as I know, in sort of the history of Viva here. And it was very productive information sharing. The Viva team came away energized. The IQVIA team came away energized. And the customer team came away energized, and there was actually specific follow-ups to explore this or to explore that. That never happened before. So I'm just optimistic that a lot of value can be created and ideas can come out of this that are super positive for the industry. You know, we do different things at QV and Viva, and then we compete in certain areas. But the one thing we do share deeply, both of us, proven, deep commitment and understanding of the industry. IQV is a much bigger company than us, and they do different things than us, but we share that in space. We're both deeply committed to the industry. We're probably the two largest companies that are deeply, deeply committed to, in terms of revenue anyway, or impact, deeply committed to life sciences, and now we're working together in the customer's interest. I'm pretty excited about it.

Sounds like a great outcome for everybody. Thanks.

Yeah, it is. Thank you.

Our next question comes from Jeff Garrow with Stevens. Your line is open.

Yeah, thanks for taking the question. I'll throw one more AI question out there, specifically around the R&D product set. The market seems to have a strong appetite for AI in clinical development, and you've outlined a measured approach to releasing AI agents into the market. So wondering if you could comment on how you plan to work with partners in the interim as you get to a fuller set of agents released and any early thoughts on where Viva can automate in a differentiated way versus partnerships effectively driving value for your life science sponsor clients.

Well, the partner work certainly continues and we have customers using partners and there's no issues there. You mentioned a measured approach about AI. I guess that's true, but the goals are pretty big. So when we talk about in the TMF area where we have 20 out of the top 20 using our TMF, you know, we have We have a goal internally about to see if we can reduce the processing and the outsourced labor needed in and around the TMS by 50% in the industry. And that's not measured. That's a very, very aggressive goal. So to do that, you got to start out with these big goals in mind, and then you got to incrementally make progress. Partners will play a part in that because with Viva AI and the ability to develop these agents, and for agents to interoperate, I think there's going to be good room for partners to develop agents and interoperate with our agents, and then customers to develop their own custom agents pretty quickly to do the small things that we're not going to get around to that might be very specific to that customer. So measured progress and very deliberate and platform first, but the goals are very large.

And our next question comes from the line of Stephen Valliquette with Mizuho Securities. Your line is open.

Yeah, thanks. Good afternoon. Yeah, so really just a quick follow-up, another one here on CrossX, which I think you kind of half-answered, but I'm just going to ask it anyway. You know, last quarter in fiscal 1Q, you mentioned the usage-based component of CrossX drove more of the upside. You mentioned back then that could be lumpy, and that was reflected in the full year guide. So I guess just one quarter later, I just want to confirm how you're still thinking about that lumpiness for the back half of fiscal 26. And then also for fiscal 1Q, you mentioned Cross-X was growing at over 30%. So I'm just wondering, are you able to comment on whether Cross-X is still or was still comping at 30% growth or more in the fiscal second quarter as well?

Thanks. We continue to see good growth in both areas of Cross-X, the measurement business, which is a little more consistent subscription-like business, as well as the audiences business, which is usage-based. Both are drivers of growth in Q2. Audiences was in Q1 and remains in Q2, the higher growth segment of the business, the smaller but higher growth segment of the business. We're not going to break down a specific growth rate quarter by quarter and speak to the 30% each quarter, but it still remains that audiences does the primary growth driver of that business.

And our next question comes from the line of Andrew D. Gasperi with BNP Paribas. Your line is open.

Thanks for taking my question and fitting me in. Just on a follow-up, I appreciate the color on the verbal commitments on the CRM side. I was just wondering, are you seeing any, can you comment on any potential verbal commitments on EDC? And if you can't answer that question, I was just going to add in terms of the headcount growth you had, I know it's the recent graduate class. I'm just wondering, is this like a once a year event? Because I didn't see that kind of level of additions in the past 12 months at least. Thank you.

Yeah, I'll take the verbal commitment one. We're always talking with the customers on EDC and other areas, but we really don't get into that level of verbal commitment. I think the Salesforce one is a little bit of a sort of a weird territory we're in here with the Viva CRM for the next nine months. So we wanted to give you updates there because we know people are interested in that one. And then Brian, in terms of the seasonality, do you want to take that one?

Yeah, absolutely. So on the hiring side, you know, the headline there is in line with our expectations and driven by the core business. Generation Viva, which is our hiring program for recent graduates, was, as you mentioned, the largest driver of that. That's a really important program for us. It feeds our consulting, our professional services, and our engineering. It had a larger class in Q2 relative to its usual mix, but was in line with our expectation. So a little bit of a shift in the mix versus prior years, but as we expected.

Thank you.

And our next question comes from David Larson with BTIG. Your line is open.

Hi. How many total vault CRM wins were there in the quarter? I think there were 28 last quarter. And just any color on the trend sequentially and where those wins are coming from, please. Thank you.

Yeah, David. This is Paul. We had 13 total, which was a mix of new customers that were mostly buying the first CRM, but also some of the migrations from Viva CRM. So I would think about each quarter having a mix of both of those categories, but also it being relatively lumpy because the number of companies that are coming online each quarter buying a new CRM, that will vary, that will change. It's not a linear thing. And then also the number of migrations In 2025, I expect that to be some of the lower years. I expect that number to ramp up as we get into 2026 and through 27 and even 2028.

And ladies and gentlemen, that concludes our question and answer session. I will now turn the conference back over to Mr. Peter Gaffner for closing remarks.

Thank you, everyone, for joining the call today, and thank you to our customers for your continued partnership and to the Viva team for your outstanding work in the quarter. I'm looking forward to talking with you again at our upcoming Investor Day, October 16th. Thank you.

And ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.