Veeva Systems (NYSE:VEEV) Q2 2027 Earnings Call

0:00 Hello, everyone. Thank you for joining us, and welcome to the Veeva Systems Fiscal twenty twenty seven Second Quarter Results Conference Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Gunnar Hansen, Senior Director, Investor Relations.

0:28 Gunnar, please go ahead. Good afternoon, and welcome to Veeva's fiscal twenty twenty seven second quarter earnings conference call for the quarter ended 07/31/2026. As a reminder, we posted prepared remarks on Veeva's Investor Relations website just after 1PM Pacific today. We hope you've had a chance to read them before the call. Today's call will be used primarily for Q and A. With me today for Q and A are Peter Gassner, our Chief Executive Officer Paul Shawa, EVP Strategy and Brian Van Wagner, our Chief Financial Officer.

1:01 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 used 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, 08/26/2026, 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.

1:50 We may discuss 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 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, I'll turn the call over to Peter.

2:20 Thank you, Gunnar, and welcome everyone to the call. Q2 was another strong quarter delivering results ahead of our guidance. Total revenue in the quarter was $928,000,000 with non GAAP operating income of 416,000,000. Execution was exceptional this quarter as we made strong progress in many key areas. It was our best CRM quarter ever.

2:43 We also are accelerating rapidly in especially with Veeva Falcon. And our focused acquisition strategy is working, bringing great people and capabilities to Veeva. It's an exciting time. AI is enabling the next big chapter for Veeva and the industry. We'll now open up the call to your questions. You will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q and A roster.

3:31 Your first question comes from the line of Joe Vruwink with Baird. Joe, your line is now open. Great. Thank you for the time today. I think it's evident over the past few months that biopharma r and d spending is headed in a positive direction, and that also is showing up at Veeva. As pipelines move forward, what are you finding the mentality to be at customers around assessing and adopting something that's brand new with thinking about the vault application agents or even Veeva Falcon? I'm interested in levels of early interest taking place amidst what seems like a busier environment and whether that's a reflection of the value customers are seeing pretty quickly when they start looking at, the new Veeva offerings?

4:29 I'll take that one. Yeah. There are a lot of things going on. Right? The funding environment is relatively good. There's a lot of changes with AI, and science is, you know, moving ahead. So there's a lot of priorities for the customers. And so they when that happens, they can't do all things at once, and they generally try to pick some things that they they can do and that are high priority.

4:53 Your question was related to Falcon. I think Falcon has a lot of interest right now because it's very clear that that's high priority. Quick cost savings and compliance and and efficiency, you know, that's high on everybody's priority. So I think there's a lot of interest in Falcon. We are the rate limiter right now. We have to get that product ready, start working with the early adopters, but interest in Falcon is very high.

5:25 That's great. And then maybe as you think about how customers can now engage with Veeva in an AI framework, you have the application agents, you have Falcon, You have a custom development framework that you've introduced. Are any of those modes of engagement maybe becoming larger or a bigger piece of the conversation? And do any of those modes matter more or less as you think about how your financial model evolves and what the impact might end up being to Veeva? Yes. It is a major change for for Veeva. So Falcon is agentic labor, but something different than we've done before. Right? We've done cloud software, data consulting.

6:12 Now we have this fourth fourth thing, agentic labor. So it's it is transforming the discussion. There's two different things you could do with Veeva. You can do some agentic labor. You can do core applications. That was never the case before.

6:27 The important point is, Veeva, it it very it fits very well. It's a structural advantage for Veeva to both have the agentic labor and across multiple areas in life sciences and have the core applications across multiple of those areas in life sciences. So that's why I feel like we're we're very well positioned, and conversations are very rich. Gosh. I just hope, you know, we gotta get that product going as soon as we can. If we had our early adopters live and successful

6:57 right now, I don't want it to be hyperbole, but Falcon would be flying off the shelf if that was the case. Because one thing to know is there's not an extensive Falcon implementation. There's not a data mapping from one system to the other. There's not a cutover process. There's not ETL to do to do. So this implementation, the full value is is faster with Falcon, but, you know, the tech underneath it is newer, and we have to get our motion down there.

7:29 If you can tell I hope you can tell. I'm pretty excited about about Falcon. I really think we're onto something. That's great. Thank you. Your next question comes from the line of Brian Peterson with Raymond James. Brian, your line is now open. Hey, gentlemen, thanks for taking the questions and congrats on a strong quarter. So the Commercial segment was really strong this quarter. I know you called out a record result. Could you maybe unpack what drove that acceleration in the subscription line item? We'd love to get some more color there. Yes. Hey, Brian. This is Brian. I'll take that one. Commercial subs, yes, very strong quarter. I think the culmination of many quarters of execution, but you see them showing up in the results here, up about 13% year over year. You know, even when we back out cross it's double digits in the rest of commercial. So it's quite a broad based, strength in the commercial offering across CRM, content, data, cross six, Astra most recently.

8:34 So we feel very good about the execution. Crossix continues to be a strong performer with a lot of headroom for growth. We're continuing to see growth in CRM, which I think a lot of the conversation has been, is that gonna go down? It's actually going up. And we're continuing to see a lot of room to continue growing in a healthy market in Crossix as well as the other areas. Great. I appreciate the color. I just want to follow-up on Aspen. I know you guys are excited about that as well. How should we be thinking about that market opportunity some of the investments that you're taking to kind of enable that revenue stream? Aspen,

9:11 I think it's very early, right? That's the thing to know. This is a start up inside of Veeva. It's moving very rapidly. It's on ninety day plans. So we have a, you know, a core market that we're going after, the horizontal CRM in a in a new way, in a new way that really enables AI and is built on on modern technology. So the thing to know that this is very agile now. So we're what we're focused on is getting the product right, working with our early adopter customers. I'm 100% convinced that there's a market for what we're making in Aspen. Can we can we execute well enough? That's always the hard thing in a start up. Can you do it? Can you do it better than your competition?

9:56 And what kind of luck do you have along the way that plays into it? I've I've done the start up thing before starting Veeva. I've done the start up thing when we started Vault inside of Veeva. We're doing it again, and I have lots of friends that have done it. And it's it's just like that. Can you execute well, really, really well?

10:14 And and what kind of luck do you have on the way? But sometimes you're wondering whether the market is there or not. You know, you could say maybe I we were wondering that when we were getting new markets going, you know, eighteen months ago, etcetera. Right now, we have enough product, and we're working with some early customers. We're 100% clear that the market is there. 100% clear. It's just whether we can execute them, and we'll see. So your question was about how to size the the investment as well. That's very small on the Veeva scale. It's not something that Brian, our CFO, notices really on the on the Veeva scale because you have to keep that very small when you're working with early customers and you're iterating an early product. And, actually, these days, you keep it smaller than normal because the pace of the development is faster with AI.

11:06 You actually need a smaller amount of developers, very, very, very skilled as well. So it's not a financial drain on the company. It's not a focus drain, and it's certainly not any kind of revenue that's figured into our plans at this time. Your next question comes from the line of Ken Wong with Oppenheimer. Ken, your line is now open. All right. Fantastic. Thanks for taking my question. I wanted to circle back on Falcon, Peter. It was great to hear the customer interest, also great to hear it's not an extensive implementation process. But what I didn't get a sense for was, as you're trying to introduce virtual labor to your customers, is that a different

12:00 counterparty that you're selling to versus maybe the CMO or the CIO? And then secondarily, how difficult do you expect it to be to maybe work through the inner politics of shifting the budgets from, you know, an IT wallet to maybe an HR labor wallet? Any any help in in helping us think through that?

12:24 Ken, great question. Now I'll be able to tell you this definitively now. In a couple of years when we're selling lots of Falcon, I'll be able to give you the readout. So I'm gonna gauge into the future and tell you what we know so far. First off, it's it's actually gonna be an easier sale selling cycle because IT is really not involved in the genetic waiver. That's not something they're involved in because it's it's not like that. If you're selling a solution to safety, this is about the budget of the safety team. So it's it's really the head of the unit, the business unit, and the head of the sort of the operations of that business unit. So that's that's super clear. And the other question is, yes. It is a very related buyer. It this is actually we have not hit the case for Falcon where we're selling into a buyer that we are not selling into because we're always selling into the business side with our business applications.

13:20 Now sometimes more or less. For example, in the areas of Falcon, where Falcon is playing, for example, safety, clinical, regulatory, that's always been somewhat more of a business cell. IT involved, but somewhat more of a business cell. CRM is the most IT heavy cell that we have in general. So the these areas where we're doing Falcon, they were ready, I would say, on the average, 60% of business that sell. And those are those are people that we've been selling into for ten years.

13:54 Understood. And then, Brian, just a follow-up on on some of the investments. So It sounds like with Aspen, might be sort of small upfront. But as we think about you guys ramping on Falcon, ramping on Aspen, ramping on some Vault agents, Vault AI, I mean, we expect maybe an uptick in terms of

14:18 sales investments, R and D investments? Anything we should be thinking about relative to how you guys are spending today? As Peter talked about, Ken, we're very excited about Falcon and the path that it can on. But but you've also seen us over time consistently think about both growth and profitability. And so it's it's not different entering a new market like Falcon. Maybe the dynamics of the market are very slightly different, but it's the same overall approach that we're taking there. And so we we scale investment as we scale revenue. There's certainly nothing material that I would call out for for this fiscal year. You know, it's all factored into the guidance that we've updated for FY '27. And as we get, you know, another couple quarters ahead and gaze into the future of next year, we'll we'll factor that into our guidance for next year. Okay, great. Thanks a lot, guys.

15:05 Your next question comes from the line of Saket Kalia with Barclays. Saket, your line is now open.

15:14 Hey. Good evening, everybody. This is Ryan Pazali on for a second tonight. Thanks for taking the question. Peter, maybe my first for you. If the customers that are planning to transition to Salesforce away from Veeva CRM, What do you hear from those customers? What are they saying right now about the decision? And do you think longer term, it could be possible for Veeva to win some of those back?

15:41 Yeah. Ryan, I I do. There's a handful of customers large customers that did select Salesforce. Many of them, you even two years ago, those projects are they're having troubles. Right? They're not going smooth, and we have some project delays because it turns out you the product is very deep, and you need you need that. So, yeah, I think we can win back some of those customers, maybe some of them completely, other others of them in in some certain regions and not others.

16:13 I think the bulk of that win win back would probably be in 2027 and 2028 because Veeva CRM, they have that backstop until the end of twenty twenty nine. So this is the time when it starts starts really to get real. Right? Because during 2029, there's no more backstop of, oh, we can keep using Veeva CRM because they know they have to go to Vault CRM.

16:39 Yeah. We're very optimistic about that. And the best thing we can do there to help that is really focus on our existing customers that did decide to go with us for CRM and make them very successful and improve the product. And for the customers that didn't choose Veeva, we have a good relationship with them, and they've told us that, hey. You know, we we said, hey. We wanna be your plan b, and they they really embrace that, and that's that's the way they view that because these customers, they have businesses to run. Right? They gotta get their medicines to patients. It's great. They love having a a backup option if their if their plan a doesn't work out. Really interesting. I appreciate that. Brian, maybe my follow-up for you. Could you just talk a little bit about what you're seeing on the R and D subscription line? And maybe specifically, where you see Veeva in the journey between some of the, let's call them, old guard products versus some of the newer growth areas that you're investing

17:37 in, just as we think about that revenue mix shift and how it's unfolding? Yes. It's a great question, Ryan, because we're right in the middle of that transition that you pointed to. I think very pleased with the progress and the execution that we're making. But the old guard that you're referring to would be things like, I guess, eTMF and CTMS and QDOCS and QMS and our regulatory suite that have fueled a lot of the growth in R and D to date. And a lot of the growth as you look out over the next few years to 2030 and beyond is being driven by a different set of products, EBC, ECOA, or TSM, safety,

18:13 LIMS. And these are big, very strategic products with a ton of headroom, but they're very early. So we're excited about that. We're executing really well against that, But there's a little bit of a changing of the guards that's happening there. And the S curves don't stack up exactly. So you see some of that factored into the guidance for the balance of the year. But we're very confident and excited about the long term trajectory of the R and D business and obviously pleased to be raising the guide again here in Q2. Very helpful. Thanks, guys. Your next question comes from the line of Alexey Gogilev with JPMorgan. Alexey, your line is now open. Hello, everyone. I wanted to go back to the FALCON discussion. So with five FALCON early adopters and first call eyes expected this year, what are the key readiness gates you must clear, and how do you expect the human and

19:14 the loop requirement to evolve by workflow type? I'm sorry. Let's see. There was a breakup, and it said, what are the key you have to clear? And I didn't hear the word in the middle. Peter, I was talking about the key readiness case you must clear, and how do you expect the human in the loop requirement to evolve by workflow type?

19:39 The the key sort of regulatory hurdles, if I if I heard correctly. Yeah. You know, agentic labor is like human labor in a way. It's nondeterministic. So you have to prove that you have the right training and guardrails around humans, and that's the same thing we have to do around our agents. And the human we provide for the human in the loop with Falcon as well because you can see the outcome of what the agent did and does in inside of the Vault application. So from what we can see, it's it's working it's working very well. It's not this approach is completely similar to what customers are doing today on certain internal projects.

20:24 The difference is they would like to be able to do it at scale in a very repeatable motion. So,

20:31 you know, I would guess three years ago, we would probably have to be teaching the customers a lot about what is AI, what is agentic labor, how do you do this, how do you do that. That's we really don't have to do that so much anymore. The customers know how to deal with it. They just want some a partner that can scale it across multiple areas.

20:53 Thank you, Peter. And also on the data cloud topic, so you added 14 data cloud customers. Where is Data Cloud proving most differentiated? And how are you positioning connected data as a prerequisite for AI outcomes in commercial workflows?

21:16 So we we don't position Data Cloud as a as a prerequisite for AI. It's more of an accelerator. The cleaner your data is, the better your AI processes are gonna work, especially in certain areas. You know, what's working well for us in in data cloud is open data, so clean reference data. Now that's a that's a hard project to do because it involves changing a lot of things in downstream systems. But we have some momentum there, and I think that's that's gonna continue. We have strong momentum in Compass for certain therapeutic areas of complex therapies where our Compass products can see different things in the in the flow of complex products in The US that other people other offerings can't see.

22:05 And then we're we have real market leadership with our link product and LINK Key people, and we're expanding there with the add on products of LINK. So LINK Medical Insights, LINK Key accounts for for The US, LINK

22:18 workflow for congresses. So overall, you know, data is not it is not a thing that can accelerate very, very fast. It's not like,

22:30 you know, selling fast fashion on Instagram. Right? That can accelerate fast and then disappear. Data is not like that. It's a long slow grind, but we're certainly happy with our progress, and it's very synergistic with Veeva. If you look at what Veeva why is Veeva being successful? We have a very synergistic product plan. We have software applications that work with our data and consulting that knows about our software and data, and we have agents that work with our applications that are known by our consulting and that leverage our data. So it's it's not a random set of products. It's a we're building the industry cloud, and the more more our customers realize it, the more benefits they get because things fit together.

23:18 Thank you, Peter. Your next question comes from the line of David Windley with Jefferies. David, your line is now open. Hi. Good afternoon. Thanks for taking my question. I wanted to ask Peter on Falcon quickly. Are your early adopters exclusively sponsors or OEMs? Or are you also seeing some service providers approach you to adopt Falcon capabilities? Our early adopters are with sponsors. Now we have had some interest with service providers. I would and I say that carefully, interest. They're interested, but we we really haven't engaged heavily there yet because you you have to be focused when you start working with your first customers. Service providers will have similar needs to sponsors, but not the same.

24:08 So we're focusing on the sponsors first, and I I fully expect over time that this will be, you know, useful for for outsourced service providers,

24:19 but we we have to work on the sponsors first. Great. Pivoting for my follow-up, a lot of moving parts in China over the course of this year, maybe over the course of the last several years, regulatorily, drug development wise, etcetera. How do you see the China market as an opportunity for Veeva right now?

24:43 Yeah. China is certainly moving fast. I mean, you know, when we look at my track career standing over, you know, it's over thirty years here. It's just, you know, just astounding the transformation in China and what it means for the global economy and what can be accomplished in in the whole notion of a parallel tech stack in China. So, yes, it's it's it's moved so fast, and and it continues. And it's great to see that from my perspective. It brings variety. So our opportunities there, we have quite a few products that are made by our Veeva China team in China for China. So we have our China CRM suite, and that's gaining market share. That's written on the China tech stack, etcetera. We have our data products made in China specific for for the China market. And there's other things that we can do in China there in China for China.

25:36 But one of the big, you know, benefits is those products fit with our global products. For example, China CRM fits with our global promo mats products. So there's a synergy there. China's good business for us, and we're proud to do that in China, and it's profitable for us there, and it's growing. But it's also synergistic with our global business because our global customers, when they have their headquarters in The US or Japan or or Europe, they they want

26:08 a team, a global Veeva team, that can help them with China also. So it's very synergistic. We're we we really love our China business. Thank you. Your next question comes from the line of Rishi Jaluria with RBC. Rishi, your line is now open. Wonderful. Thanks. Thanks so much for taking my questions. Nice to see continued strength in the business. I I wanna start with a a question on Aspen and the pricing model. You know, I think the publicly posted pricing model is really interesting and compelling as application software companies are kinda figure out kind of the the pivot to, you know, more consumption, etcetera, and you're talking about charging per human or per agent. Can you maybe walk us through, you know, how you see that pricing model starting? How you know, the the puts and takes of that, and what lessons or learnings can kinda be picked up from that as you see more Falcon adoption, more AI adoption within the broader Veeva suite and, you know, trying to kind of price accordingly for this new AI world? And then I've got a quick follow-up.

27:21 Yeah. The so cloud software, know, we gotta remember, it hasn't been around for fifty years. Right? I was working on it in the early days of salesforce.com, and that was not even twenty five years ago. Right? I was you know, for me, it was twenty three years ago. So very early, and the pricing model sort of arrived and technology model arrived and the way we do things arrived. And you see that all in the first generation big cloud companies, big cloud application companies. There's a way you do things. Right? So Aspen is taking a different approach that may or not prove may or may not prove effective. It's to say, well, it's a different approach. A different technical stack, a different approach there, and a different pricing approach. It's just much more simple. You get your productivity, $50, you know, $50 a user a month. So it's not this crazy price, and you can't you don't know what it is, and you have to aggle with your sales rep for discounts.

28:17 And if you're a big company, it's this and that and 14 different editions. No. It's more like modeled off of Amazon Web Services. There's a price. Okay? And it's a good product. You can buy it. You don't have to buy it. It's a good product. So we will lean into that. And then there's, of course, usage overage. Okay. Let's say you buy five users, it's $50 a month, and you put a terabyte of data in there for some reason. Well, okay. Well, that's not, you know, anything that any anybody thought about. So there'll be overage charges that you that you will pay monthly on overage. So you kind

28:53 of it's a mix. You get I would say, we're shooting for mostly predictable because that's at the end of the day, large businesses would really want mostly predictable, but you have to have this escape hatch to say, yeah. I can't use unlimited compute because that's that's, you know, that's kinda that doesn't make sense. So now we're also gonna listen to our early customers, and we're very customer friendly company. And if there's a better way to do it, we'll certainly do that. We're after authentically customer success. You gotta remember, we're a public benefit corporation. We're after success for our customers, the industries we serve, and Veeva and our investors. So the thing is make it simple.

29:38 Get rid of all this noise that it have built up in the systems over time. Alright. No. That's that's really helpful. And then maybe just thinking through, you know, as as Falcon and kind of your AI products grow, can you talk a little bit about, you know, under the hood, what what sort of, you know, the the AI stack looks like? And and maybe more importantly, as these become bigger portion of the business, drive greater usage and obviously, as you pointed out, Peter, greater customer success, how should we be thinking about the impact on margins, both gross margins as well as free cash flow margins?

30:15 And, you know, is there opportunity over time to leverage more multimodality and even some of the, open weight models as they improve to, you know, control some of that potential gross margin headwind? Thank you. Yeah. You know, I again, I don't really wanna make predictions on Falcon because it's it's early. But in general, I don't think we're gonna have a gross margin problem. I think the gross margins will be roughly similar to our software. And here here's why. When when we really go deep into Falcon and we we have what we call Falcon copies where we have the real customer data that we're testing, the agents with, and developing agents with, we know what's going on. So more and more and more of that work goes into the deterministic software.

31:02 And we use the nondeterministic models, the anthropic models, etcetera, when we need to. So it's not, you know, a lot of this value is going into the agent. And then I I believe everybody knows that the cost of these models are gonna go down versus whether they're with better hardware or open weight models or etcetera etcetera. The current cost of the models is not sustainable. Not not based on what we're doing, but based on this notion of what software development is doing. You know, eating up 50% of the tokens in the world and hundreds of billions of dollars. Somebody's gonna build a better mousetrap trap for that over time, and that'll that'll compress the prices. That's our belief. But even if that wouldn't happen, I think Falcon would be a great business because we're pushing a lot of things into the deterministic layer.

31:56 Alright. Very helpful. Thank you so much, Peter.

32:00 Your next question comes from the line of Tyler Radke with Citi. Tyler, your line is now open. Yeah. Thank you for taking the question. Brian, just going back to your comments on the R and D side of the business and talking about kind of the stacking of those S curves, I was wondering if you could just be a bit more precise in in terms of the timing and and when you see the kind of the growth inflection happening from from those s curves. And if you were to just sort of stack rank those products you mentioned, what what sort of have the the biggest opportunity to be the next $500,000,000 or $1,000,000,000 products within R and D?

32:48 Yes. Thanks for the question, Tyler. I think we are excited, Risky, about all of those products, All the five that I mentioned, EDC, ECOA, RTSM, safety, LEMS, every one of those is very large and very strategic in their area. Few of them are around clinical, safety in its own big space, LEMS is in quality. But each of these is very significant opportunities. And, you know, it's slightly different stages as you look across them, but all of them pretty early. And so I think that's what gives us the confidence as we look out to 2030, for example, that we're on track for those goals is we're making great progress in the product, great progress in the execution, great progress getting customers live and happy and successful in reference selling. We don't put exact timing on that. Right? We we don't generally talk year by year, so I'm not gonna give guidance out beyond this year. I think we feel very confident in the trajectory that we're on with those products in R and D.

33:45 Got it. And then in terms of Aspen and sort of your broader ambitions, you know, across, you know, industries outside of your your traditional segments, like, just can you just remind us the sort of the ICT there? Is it, you know, smaller smaller organizations? Or how do you mean, clearly, such a broad opportunity. So so how do you start and prioritize that and and and staff it? As a few of the staff Go ahead, Peter. For clarity, ICT. What what is ICT? Oh, like the the Ideal for ISO file. Yeah. Yeah. Uh-huh. K. I'll take that one.

34:34 Yeah. The ideal customer profile when you're just starting out is really a nimble type company that really wants to work with you. And I think in this area, you know, we're gonna probably get a lot of young tech startups. Right? Because they're doing something really innovative in what they're doing, and and they they don't really wanna do the same old old thing in in CRM for core, you know, account contact opportunity management. So I think we have early indications that they'll be great companies to work with, but we'll see. Again, I'll let you know a lot more in a year. All right. Thanks. I'm sorry to throw in a Your next question comes from the line of Jalendra Singh with Truist.

35:24 Jalendra, your line is now open. Thank you and thanks for taking my questions. I want to go back to Falcon discussion and the five early adopters there. It seems one of them is a top 20 pharma company. Based on your conversations with these top pharma companies around Falcon, do you believe that the work will be shifting to Falcon is something they were outsourcing to other partners such as CROs or should we think about something they were doing in house and now they are leveraging Falcon for that? And related to that, any incremental color on the pricing of the Falcon product? In terms of where the labor is done or where it will be displaced, I think there'll be a combination of internal and outsourced, although, generally, not the CROs. That's not what I see. It's a it's a different type of outsourcing, some of it from the CROs, but but not not most of it.

36:22 And then in terms of the pricing, it's very early for that. I know we've, you know, been in discussions with customers and their their desires for predictability. That's for sure. Right? They want predictability for that because for one thing, they get that per predictability when they either hire or outsource labor. It's very it's quite predictable, and and it's better for them. It's actually better for us too. So but what gets in the way of that a little bit is, well, Falcon is quite early now. So it can do certain things, but it's it it can't do the things that it will do three years from now. So how do you have a fixed price when your capabilities are are rapidly improving? So I think with some of our customers, we will end up having enterprise license agreements, enterprise subscription agreement for for the labor based on the size of their company or their function, but it will probably escalate over time. It will be lower in the beginning when Falcon is less mature. So if you want a teenage Falcon, it costs you x. And if you want a, you know, a Falcon in the 25 year old, it costs you a little a bit more. I think it's gonna be like that. But, again, this is the type of thing you work out with the early adopters. The nice thing here and the structural advantage that we have is this is the same buyer facing the same business problems as our applications. These are people we know deeply.

37:48 The trust is there. You will hear people say business moves at the speed of trust, and there's a lot to that. And we have the trust with these customers. So we'll get to the right story pretty quickly. All this hinges is on having a product that that works well, and that's really where our where our focus is. I would say our early signs are good. When I talk to the engineering and the product management people on Falcon, there's an optimism. You know, you'll see even the pessimistic ones saying like, oh my goodness. This could really work. And in some early test runs, it's like, wow. We tested this against the humans, what the humans did, and how can they're ready better than what the humans did? So there's this sense of optimism, but it's, you know, it's too early to declare success. We have to be very paranoid and pessimistic because we're we're going into something we haven't done before. Veeva has never done agentic labor, and the whole motion is new. That's why the the leader of Falcon reports right to me. This is a complete new market and a new motion for Veeva.

38:53 So we don't have all the answers yet. It makes sense. My quick follow-up on other points you raised in your prepared remarks, and somebody asked that earlier about your focus on CRM win backs among top 20 companies that did not select Vault CRM. I understand your point that you want to share success stories with them. But just curious, have there been any development or conversations with customers who have picked Salesforce that is driving that confidence that these opportunities are more actionable? Or is it more around delays and rollout by Salesforce that's giving you confidence of opening a window? Just curious like it seems like you're a lot more explicit this time around than the past. It's based on our execution and and what we're seeing with Salesforce as well. I think Peter alluded to earlier how Salesforce has been struggling with some of the larger projects that they have, and they don't really have any customers live. And when you look at what Veeva is doing, it contrasts pretty significantly.

39:54 We have over 180 customers live. We have customers that are turning AI on. We had a big milestone in CRM this quarter where one of our top 20s turned AI on in CRM for their entire field force. So really significant milestones. So the contrast between how Veeva is executing and what we're seeing on the other side is very significant. As Peter mentioned, we're very close with these customers. They buy a lot of products from Veeva. We have deep relationships. We stay very close with them. And that's what gives us the confidence, our execution, our innovation, getting customers live, that trust. And that's why you hear the bullishness and the confidence in those win backs. Just more broadly in the overall market, we're executing very, very well in CRM. It's really clear that we are the market leader. We're going to maintain the market leadership position.

40:48 And just to kind of paint the kind of what we view as the end state, we see Veeva maintaining over 70% share in CRM space, which means we'll continue to execute, we'll continue to drive innovation for our customers. We feel really good about how CRM is playing out. Now let's say you asked about our customer interactions there. Yes. We have customer actions. There are lots of people at at Veeva do with these customers, and and I personally do at times too. And, you know, a common thing you might hear is from a customer is we're not ready to make that decision yet. Right? So, you know, they're open to it. They're looking to it. They're they're not ready yet. So that's those types of things give us confidence.

41:36 Great. Thanks a lot. Your next question comes from the line of Craig Hettenbach with Morgan Stanley. Craig, your line is now open. Thanks, and great discussion around all the AI developments. Peter, from a macro perspective, you know, after a couple of volatile years, whether it was IRA, MFN pricing, tariffs, you know, the backdrop has steadied. So I'm I'm curious outside of AgenTic in your customer discussions, what are they most focused on? You know, what areas in terms of they leaning into investments that you're seeing in the business? Yeah. Craig, it is interesting. We we think things have steadied. It is an interesting comment on the world. Right? We had two, you know, kind of major wars going on.

42:23 We've got a complete tech disruption in AI that's, you know, going on. And and I think what happened is the life sciences industry has gotten used to, hey. The world is gonna have a lot of moving parts, and, you know, they're just moving they're just moving forward. So I think it's it's you're good to point this out. They're not being disrupted by these disruptions. If we would have something really catastrophic in the future, that can always disrupt them. So for example, you know, and I'd you know, if we had a major major shift in interest rates, well, life sciences is a capital intensive industry that that can do things. If major escalations in war, that that can do things. But so far, industry seems to be executing pretty well and and focusing on the jobs to get done.

43:15 Got it. And then just on my follow-up for the EDC segment, compared to one or two years ago, as that was ramping, that got a lot of attention. Can you just maybe give us an update on just how those ramping deals are progressing and then just the opportunity to capture additional top 20 over time? Yeah. The EDC is one of the larger areas and it's certainly a a long implementation cycle. So some of our wins are are still ramping. And, you know, we're working with the other ones. We have, I I believe, it's nine out of the top 20. Most of the other ones are are with Medidata, not not all. And, you know, we're we're working on those over time, but it's not the right time for all customers to change out all systems at one time, getting back to, you know, they have many other things to do.

44:04 I I would go back to the structural advantage we have. In the development cloud applications all on a common platform and then with Falcon as well. The structural advantage with Falcon's more things to bring to the same buyer. And especially in clinical, having the clinical operations, clinical data management, and our site solutions. That's a site solutions is very strategic to us, and we we we're introducing e source there. So I think confident on EDC over time. It it just takes a while, and that's something that I think you'll see progress in the coming year in the next couple of years there. Helpful. Thank you. Your next question comes from the line of Andrew DeGasperi with BNP Paribas.

44:52 Andrew, your line is now open. DELL: Thanks for fitting me in. I just wanted to ask one first, I think you're coming up to the one year anniversary of your partnership with IQVIA and the settlement with them. So I just wanted to understand how is that going? Have you seen any momentum? Because we haven't heard much from that deal and wanted to know if you you're is it going ahead of expectations or in line or below? We're really happy with that IQVIA partnership. Gosh. That's and I I discussed with the the management team of IQVIA, and I I can represent that that they represent to me that they're very happy with the partnership as well. So yes. And customers are especially appreciative of it. Right? Much less hassle working with Veeva and IQVIA.

45:45 I think great things are gonna come out of that that partnership. They're already starting to come, and I think there's more to come. When you look at it, IQVIA and Veeva, we're we're both major players to the life sciences industry. We are the two major players, I I think it's fair to say, by far. And AI is transforming the industry. And for AI, you need services, you need data, you need software. So the more even IQVIA can collaborate, the better it is for the industry, helps the industry grow, helps Veeva grow, helps IQVIA grow. So I I couldn't be more happy with that. If you ask me, I feel 500% better about our IPVR relationship now than I did two years ago. It's it's it's one it's probably the best thing that happened to our company, you know, twelve months ago, and that was just outstanding. So super happy with that.

46:41 Thanks. And then I I want I'm curious about the double digit growth you mentioned in this in the commercial cloud business, even excluding Crossix. And I just want to unpack that, like, in terms of the did it come from PromoMats and some of the other marketing tools? Or was there something unique about the CRM side that gave you was giving you that that that acceleration? Not not really any one factor that I'd point to, Andrew, and I think that's part of what actually makes us feel so much excitement and, you know, what the results is that it was CRM. It was add ons and new customers and content. It was new customers and brands in data cloud. It was continued growth in cross section, both the measurement and the audience aside.

47:29 It really was broad based growth around commercial. And I think I guess what I'd point to is some of what Peter and Paul have mentioned is that full commercial story and full capability of all those products on one platform from one provider really resonating in the market and driving growth. So very strong quarter from commercial. Thank you. Due to time, we ask that you limit yourself to one question. Thank you so much for understanding. Our next question comes from the line of Dylan Becker with William Blair. Dylan, your line is now open. Hey, guys. Appreciate it. Maybe, Peter, if we if we touch on the strength in consulting and services, I know that there's kind of several components to that. But how would you classify kind of the value of efficiency or kind of being able to do more with, the same kind of amount of your existing resources versus the efficiency gains you're seeing there enabling your customers to go faster and capitalize on kind of more of the AI opportunities, maybe meet their kind of increasing willingness, if that makes sense?

48:42 Because it does seem like that's another area. I know it's not perfectly correlated to the subscription side, but continue to see healthy momentum in driving that change management for a lot of these enterprises. I I think that the the big benefit for Veeva that we will hopefully see over time here is that by more tech enabling our consulting and our especially our services, our software will become more valuable. So for example, if somebody wanted to buy our EDC and if it took a billion dollars to implement, nobody would buy it. But if it took $10 in a week, everybody would buy it. So the faster you can have your your implementations go and the more accurate, the the less the less cost, the more valuable your your applications become.

49:32 So that's that's the big driver. Yes. It probably means growth for us in services because people will buy more services, but it's it's about customer success and the industry success and and driving our application business. I I overall think it'll be a renaissance for services and consulting companies as as we go forward because I think this notion of tech enabled services, specialized tech enabled services is really gonna drive growth rather than going to generalists that say, hey. I have people that can do a lot of things. No. You have a job to get done. You'll probably go to the specialist that has a tech enabled service that can get that done. And I think that will actually lead many companies to to do more with partners rather than doing it internally because they can get the outcome quicker and better with the tech enabled service.

50:33 Your next question comes from the line of Tamjeet Chowdhury with Guggenheim Securities. Tamjeet, your line is now open. Thanks for taking my question. I guess, Peter, I wanted to ask you a question on a recent management change. It was announced that Tom Schwenger will be leaving the company to go to a long standing partner of yours. And we understand that he played a pivotal role in many of the company's top 20, biopharma wins. So how should we be thinking about the current transition of his responsibilities and maybe the impact, of his exit on the relationship he has helped curate over the years, if any. Yeah. Tom, we've, of course, had to see go Tom go. He Tom was at Accenture before he came to Veeva many years ago and was a great Veeva partner at Accenture.

51:29 And Tom's gonna go on to be a CEO of a of a a services type partner, and we we think that he will be a great partner for us there now. So, you know, all good there. Those relationships don't go away that Tom has, so he he will he will keep those. And in terms of Veeva, when a customer especially when you mentioned CRM, gosh, that's a business critical decision that lasts for ten years. It's involved. There's many, many people involved in that, and there's a product involved with that. So I don't that won't Tom's departure won't have effect on our our CRM business because that's more of a it's an enduring long standing thing. It's it's different than maybe consulting type work or something like that. This is a product attachment, so, that's not gonna affect our business.

52:21 Your next question comes from the line of Billy Fitzsimmons with Piper Sandler. Billy, Perfect. Thanks so much for taking the question here. Congrats on the two big top 20 biopharma wins for Vault CRM in the quarter. Can you give a little more color on how those deals played out? What ultimately drove them to Veeva over Salesforce? And for the top 20 vendors that have not decided yet, has your level of confidence changed in potentially winning those versus say ninety days ago? Thank you. Yes. So first, we're excited about the exceptional quarter that we had, and that was one of the headlines. You heard us talk about three large companies, two in the top 20, Lilly selecting Vault CRM, Biogen selecting Vault CRM, and then, of course, we have Regeneron as well.

53:16 The why is is pretty simple, and I think we touched on it on this call. Right? It goes back to trust. So they trust Veeva to be able to deliver. And then product, product excellence. Product is working. We are delivering on the promise of all the innovation that we've pulled the market we would execute on, and that's playing out in the marketplace. So it's trust and it's great product. I mean, it's really it simply comes down to those two things. In terms of the remaining top 20 commitments that are out there, there's only two left. So we have 12 of top 20, and there are two remaining. And they'll play out by the end of this year, but we feel good about both of them. Still need to be finalized, but we like our chances in both, and we'll update you as things play out.

54:11 Your next question comes from the line of Ryan MacDonald with Needham and Company. Ryan, your line is now open. Thanks for taking my questions and congrats on a nice quarter. Peter, an emerging trend that we've been seeing across large health care and life sciences organizations within the industry this year is one in which customers want to embrace AI, but they don't want to take the risk on a new and unproven entrant that offers AI for only a specific point solution or a niche use case as they don't have the time to evaluate hundreds of new vendors. And it sounds like they'd rather consume AI from the incumbent platform vendors that they're already deeply embedded with. So one, are you getting this sort of same feedback from your customers? And two, does this dynamic create an opportunity for you to perhaps ramp up the M and A activity, acquire similar types of AI point solutions like Copely and sell it into your existing base faster than what one of these smaller AI solutions could do on their own?

55:20 Sorry. I was giving a great answer on mute. They the customers want to be out of the experimentation phase. They definitely want to be out of that. So some months ago when we first introduced Falcon, I had customers come up to me. Personally, we were at an event and they said, oh, thank goodness you're announcing that because that's thank thank goodness you're announcing that because that's I I didn't want to evaluate all these small vendors, you know. So now that you have an offering that helps me not have to to go and and look at all these small vendors. So, yes, it's absolutely what customers want. In terms of acquisitions, we may find others that are a cultural fit, but we'll be very discerning.

56:07 You know, CoPly was an excellent acquisition for us. And by the way, the Falcon, which is now Falcon MLR, that is maybe our sales cycles there are probably more advanced than in any other part. That market is is very, very ripe for things. But in these other areas, we're getting started, and we were making a lot of progress with Falcon. So if we're gonna do an acquisition there, it would be more for talent acquisition and and not for product because we've we've put a real real good base in in Falcon product and Falcon platform. I don't I don't think we'll need acquisitions for product anymore. We did look at some when we were just starting Falcon. You know, we looked at a number. I would say, you know, at least 20 companies to look at. We found one that was the right fit of culture, product, and that, you know, of willingness to be acquired.

57:06 And we found that in Coply, so it's sometimes like that. I for Falcon, I don't actually expect us to find another acquisition that fits, and we're not dependent on any acquisition, but but we'll see what happens. Your next question comes from the line of Gabriela Borges with Goldman Sachs. Gabriela, your line is now open. Hi, everyone. This is Grayson on for Gabriela. Thank you for taking our question. Just one on Aspen. What are the specific customer problems that Aspen is aiming to solve that maybe the existing horizontal CRM platforms struggle with? And what are the milestones that you would point investors to watch for over the next year? Thank you.

57:58 In terms of milestones, I think it's probably just the things that we say on our earnings calls and things like that. That would be because there's not gonna really be visible milestones, I would say. We'll probably give you updates when the time is there. And your other question was basically how will things be better? Is that what the question is? If you could rephrase that again. Yeah. Just what are the specific customer problems that you're aiming to solve with Aspen versus what some of the existing horizontal CRM platforms struggle with today? Yeah. There's a couple. One is price price being unpredictable, getting out of control. That that would be one.

58:46 The other one would be just sort of dependability of the vendors, right, that you can you can really count on the vendor to be in on your side. Scalability of the vendor. Right? Sometimes they want something that really works for a small company that can scale up to a very large. Now in the market, you have to pick, like, do I want something that works for a small company, or do I get something that's too big for me now, but I I can scale up? Other things are just like, you know, data entry. The the existing CRM systems really, if you get into them, like, okay. They require a heck of a lot of data entry. Most of that, but AI doesn't doesn't need to be done anymore. And then I just think there's this this other fundamental thing of better CRM system, and that's just the details of a fundamentally better data model, better business logic, better just details, like, how do you handle multi currency?

59:43 How do you handle forecasting? How do you handle implementation so that you can get the CRM you want for your company in three months rather than getting half of what you want in three years? So, I was on the board of Zoom for many, many years, and, you know, Zoom was a very small company when I joined. And there and very very few investors wanted to invest in Zoom because they thought, well, there's already Webex. There's all these other things. But Eric, you know, had an idea, but mine will be fundamentally better, better, better. And that's the same idea here. Now that's unusual that that could be disruptive, but I think in this case, will be.

1:00:28 Better, nicer, less expensive, more predictable, faster. I think all those things add up. Our last question comes from the line of Scott Schoenhaus with KeyBanc. Scott, your line is now open. Thanks, guys, for squeezing me in. I wanted to drill more into Crossix. From ninety days ago, are you seeing from your peer purview from Crossix, are you seeing pharma marketing advertising budgets become better than they were ninety days ago? And do you think that AI is helping to, act as a catalyst for pharma budgets, not only across across six, but the overall pharma digital advertising space? Thank you.

1:01:21 Yes. We continue to see strength in the Pharma marketing budgets and spend on digital. And that's playing out in Cross X. We had good performance another strong quarter of performance in Cross X. AI, what role is that playing? I think that's a nice long term benefit and driver of what we're doing in Cross X as companies. And you've probably heard us talk a little bit about helping companies become an agentic commercial, engage with doctors via AI. They're turning more and more to AI. And as that becomes a more important channel, cross checks becomes more important in terms of measuring and understanding and optimizing against that spend. So yeah, absolutely. AI is a nice will be a nice tailwind for the foreseeable future for cross checks.

1:02:12 We have reached the end of the Q and A session. I will now turn the call back to Peter Gassner for closing remarks. Thank you, everyone, for joining the call today, and thank you to our customers for your continued partnership and to the Veeva team for your outstanding work in the quarter. I'm looking forward to speaking with you again on our upcoming Investor Day on November 5. Thank you. This concludes today's call. Thank you for attending. You may now disconnect.