On Wednesday, Veeva Systems (NYSE:VEEV) discussed first-quarter financial results during its earnings call. The full transcript is provided below.

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Summary

Veeva Systems Inc reported total revenue of $883 million for the fiscal 2027 first quarter, exceeding guidance with a non-GAAP operating income of $395 million.

The company highlighted its strategic focus on AI-driven initiatives, particularly through its Veeva Falcon product, aiming to automate labor-intensive tasks within life sciences.

Veeva anticipates continued growth in its R&D and Quality Cloud segments, despite maintaining conservative full-year guidance adjustments.

Crossix had a strong quarter due to increased pharma digital spending, with ongoing innovation supporting market share gains.

Management confidence remains high in winning the majority of remaining CRM migration decisions, with significant recent wins from Teva and Merck KGaA.

The acquisition of ASTRO aligns with Veeva's strategy to enhance brand engagement platforms for biopharma companies, leveraging AI for compliance and efficiency.

Professional services revenue saw a record quarter, driven by strong project execution and consulting work, though not necessarily a leading indicator of subscription growth.

Full Transcript

OPERATOR

Hello everyone. Thank you for joining us and welcome to Veeva Systems fiscal 2027 first 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 Gunner Hanson, Senior Director of Investor Relations. Gunner, please go ahead.

Gunner Hanson, Senior Director of Investor Relations

Good afternoon and welcome to Veeva's fiscal 2027 first quarter earnings conference call for the quarter ended April 30, 2026. As a reminder, we posted prepared remarks on Veeva's Investor Relations website just after 1 PM Pacific today. We hope you have 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 Shawah, EVP Strategy, and Brian Van Wagner, 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-K. Forward-looking statements made during the call are being made as of today, June 3, 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. 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 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 and I'll turn the call over to Peter.

Peter Gassner, Founder and CEO

Thank you, Gunner, and welcome everyone to the call. We had a strong start to the year, delivering results ahead of our guidance. Total revenue in the quarter was 883 million with non-GAAP operating income of 395 million. Our execution continues strong across the business and it's an exciting time for Veeva and for Life Sciences overall as we execute against a clear vision for Industry AI. We'll now open up the call to your questions.

OPERATOR

We will now begin the question and answer session. Please limit yourself to one question. 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. Your first question comes from the line of Joe Verwink with Baird.

Joe, your line is now open.

Joe Verwink, Analyst at Baird

Great. Thanks for taking my question this afternoon. I was hoping to go into a bit more detail on Veeva Falcon. This certainly seems more complex and consequential in scope. I think you call it disruptive in the remarks. Can you maybe expand on what this product is targeting and how you envision customers operating in drug development with maybe now this interplay between the Bolt Standard agents and Silken?

Peter Gassner, Founder and CEO

If that was Peter, I'll take that one. Yeah. There's a lot of things to unpack there. What you're seeing is sort of the next chapter of Veeva. In our industry class, we used to talk about applications, data, and consulting to make the industry more efficient and effective. Now we're talking about, you know, we're talking about software, AI data, and consulting. Right. So Falcon specifically is at the agent agent layer. And it's agentic labor. So fully replacing arts, you know, jobs that people used to do.

People who used to do these jobs using our applications now will deliver the agentic labor to do that. So it's a big new area for Veeva. It's something we haven't done before, and that's why it's disruptive. Those agents have to become users of our applications, which means our applications have to become very good in operating at a headless manner. Now, at the same time, we have agents inside of the vault applications. So that's vault AI inside of the applications.

That's where when people are actually using the application, because there's definitely things that people still need to do in our applications. That's where the AI agents can help them do it more efficiently. Much like you might use ChatGPT or Gemini at your work. Okay, that helps you do it more efficiently. But for life sciences, because it's kind of specific what they do, and some of it is a bit standardized due to regulations and just efficiency concerns.

Some of those jobs or slices of people's jobs, our agents will just do those for them. And that's never something that we set out to do when Veeva started. Why? Because there was not technology available, there was not probabilistic technology available to do this. There was no AI that could do this. Now there is. So that's why you see Veeva leaning into this new market.

OPERATOR

Your next question comes from the line of Bryan Peterson with Raymond James. Brian, your line is now open.

Bryan Peterson, Analyst at Raymond James

Guys, thanks for taking the question. So maybe just a follow-up on that. As we think about pharma appetite for AI applications more broadly, I'm curious what areas you think they lean into first and how we should think about the transition from traditional SaaS applications to AI and pharma. Peter, I'd love to just see your perspective on that.

Peter Gassner, Founder and CEO

Thanks. Well, I would say it's not that they're thinking mainly about transition from applications into AI applications. What they're really leaning into is this new technical architecture, we call it the MAP architecture of models, agents, and applications. So the applications that they get from Veeva, they're looking for them to be more efficient, to have AI in there and help the users. What they really want to get to be is an agentic biopharma so that agents can do a lot of the work and so the humans can do the more higher value work.

And of course, to do that, they leverage models like Anthropic or Gemini. To put it in perspective, there's, I don't know the exact number I should off the top of my head, but let's just say there's 100 million documents collected from clinical research sites around the world every year having to do with clinical trials. They have to be checked for quality and they have to be sorted into the right places. You know, that's work that agents can do.

It's difficult specific work, but we can make agents that are very specific on that. Agents that take in a bunch of free text via email or other channels and have to sort it out to see is this a product complaint, if so, how to handle that and categorize that or no, this is an adverse event. This is an issue with a medicine making somebody potentially ill. Okay, well what is that illness? Is that a headache or a throbbing headache? How serious is that?

Is that involved in a clinical trial? What drug is that involved with? We will make agents to do that to those very standard things. And this is an area where I'm enthused because Veeva can lead. This is where just like for cloud applications you got the very specific, industry-specific cloud applications could add tremendous value if you went to the last mile, installed the thing in industry-specific agents, agentic labor. We may be able to go the last mile and make specific agents that just do the thing for life sciences because we'll go to that last mile and make it work.

We may make agents that are better safety case processors and more reliable than humans. That's a heck of a lot of work. But we have a structural advantage to do that because we're deep in life sciences. We have the consulting in life sciences and we have the applications that those agents can use. It's the same reason why Claude is getting very good at Claude code because they have the agent, the coding agent, and they have the model and they have two layers.

We don't have a model we use, but we have applications and the agents. So that is a structural advantage. And I do want to emphasize again the consulting because a lot of this is about change management.

OPERATOR

Your next question, Jen, comes from the line of Ken Wong with Oppenheimer. Ken, your line is now open.

Ken Wong, Analyst at Oppenheimer

Brian, I wanted to just touch on the R and D business real quick. It looks like a really strong start to Q1, potentially kind of outpacing the full year guide by a couple of points, yet only raised the full year by 5 million. Can you provide some context into the rest of the year that conservatism? Is there something that we're not seeing around the corner there?

Brian Van Wagner, Chief Financial Officer

Yeah. Hey, Ken, I think first off, we are really happy with the growth of R and D in Q1. It's a healthy business overall in DevCloud and Quality Cloud. Very long way to go in that business. I think the main factor you're seeing there is the same dynamic that we called out at the start of the year, which is we've got a number of products that are very large but are also early in their life cycle. Ecoa, RTSM, EDC, Safety, LIMS. And so we're seeing those products scale and grow, but they're still early in their scaling.

And you're seeing that factor drive the full year growth. But pleased with the progress that we're making, with the momentum coming out of Q1 and what we see for the balance of the year.

OPERATOR

Your next question comes from the line of Alexei Gogolev with JPMorgan. Alexei, your line is now open.

Alexei Gogolev, Analyst at JPMorgan

Thank you. Glad to hear you had another strong quarter for Crossix. What did you see in cross activity in the quarter in terms of demand and deal size and mixed in verticals? And how should we think about growth durability through the year? Specifically, what's driving the share gains that you called out?

Paul Shawah, EVP Strategy

Hey Alexei, this is Paul. Really strong, really strong quarter with another continued strong quarter with Crossix. But just take a step back and think about the overall market. Digital is a very healthy end market. Pharma companies are spending more and more in the digital space because there's more channels, they're making more investments in those markets. So that's really good for Crossix over the long term. You'll see fluctuations quarter by quarter, but it's a really healthy market for us and we are investing a lot in the product.

And I saw some of this at our summit. We were, at our summit, we had announced a lot of new innovation with Crossix, measuring new channels like Open Evidence as an example Meta. Those are things that we didn't historically do. You didn't have to measure Open Evidence before because it wasn't a thing and now it's a thing and Crossix is doing that. So we're innovating across the product in a really, really deep way and that's driving market share gains for us.

So really pleased with the execution in Crossix and a lot of the progress we're making and I expect that to be a durable growth business for us over the long term.

OPERATOR

Your next question comes from the line of Rishi Jalaria with RBC. Rishi, your line is now open.

Rishi Jalaria, Analyst

Oh, wonderful. Thanks so much for taking my questions. Just wanted to drill a little bit more into Falcon. I think one thing that we've seen increasingly in this AI era versus the SaaS and cloud era is there's more desire for customization, especially as a result of how flexible these tools will become. How do you think about the opportunity not just to build your own custom Falcon agents to solve industry-specific problems, but also give your customers and your partners the ability to build heavily customized, heavily tailored solutions for the unique problems that they may have and kind of open up a little bit more of a platform story?

Peter Gassner, Founder and CEO

Thanks so much. Yeah, Rishi, this is Peter for Falcon. The actual effort there is taking the task less traveled. So that's enough a platform for us to build and operate standard agents to actually solve the problem for the industry. It's not really a platform for customers to develop their custom agents. For custom agents that live inside of our applications, of course they can use Vault AI for that. For custom agents that are outside the applications, there are many agent-building tools and they will dip into the Veeva applications operating in a headless manner.

But with Falcon, we're not making AI tooling. We're actually agentic labor to solve the problem. We are the believers in simplification and standardization of the industry, and that's how the industry will grow, and Veeva will grow along with it. I think the thing to parallel with is in 2012, for the first time, we laid out our first visions for Development Cloud 2014. They got sharper. In 2016, it really became apparent what we were doing. We were trying to simplify and standardize and integrate the tech of the development area of life sciences.

That's not anything that anybody asked us for. That's a vision that we had, and that's not anything that anybody tried to do before. Falcon is the same thing. It's the same magnitude of disruptive innovation. It's not giving tooling to people, to design agents. This is to designing and operating the standard agents for the industry, rather than the industry having to hire humans for those specific jobs. So that way humans can do the more important things and the industry can produce more medicines at the end of the day.

And if that's how the industry grows, if they can get more of the right medicines to the right patients, because that doesn't always happen today, if that can happen, that's how the industry grows, and Veeva grows along with it. When we're starting off something big like this, we always think we want to deliver, you know, $10 of value. And if we do that, it's okay to take $5 for Veeva, right? If we're delivering that much value, I think. I think Falcon is just going to deliver value.

It's going to be great revenue for Veeva, but it's going to deliver value far above and beyond that for the industry, and that's going to allow the industry to grow. It's a disruptive thing. It's not a. It's not an incremental thing or a tool.

OPERATOR

Your next question comes from the line of David Winley with Jefferies. David, your line is now open.

David Winley, Analyst at Jefferies

Thanks. Good segue, Peter. Thanks for taking my question. How are you on Falcon? How are you pricing Falcon? And how are you deciding which labor roles to address or to attack with Falcon agents?

Peter Gassner, Founder and CEO

Those are two great questions. I'll take them in reverse order because the second one comes first. Which, you know, which labor rules are we looking to do? I think the most ripe ones are actually the simplest and the highest volume. And actually, when you look inside life sciences, those are the areas where they have a tendency, some of the companies, to do some outsourcing today already. So that makes it also. They're used to outsourcing, of course, they would outsource that to humans.

In Falcon, the first ones we're looking at are processing of documentation involved with clinical trials, specifically the stuff that comes from clinical sites. The millions and millions, hundreds of millions, tens of millions of documents that come from research sites. They need to be collected, inspected for quality, categorized, the metadata pulled out of them, filed in the TMF, the right, right, right way. So that's one, the intake and control of documents.

Another one is the safety cases. The safety cases that come in the triage and the categorization and the collection of the safety cases. So those are the two main ones. We'll also take on regulatory health authority correspondences because that's another high-value one and there'll be more. Now in terms of how we're going to charge for those, you can imagine most likely that Falcon will be charged by the document. Most likely, most likely. We haven't fully decided that.

You can imagine that safety will be most likely charged by the case. So that's how that is. You know, some if you're, if you have an agent, first job I did as a very young kid, outside the house picking strawberries in the fields, bus would pick you up, you'd go out there, they didn't pay you by the hour, they paid you by the flat, you know, because that's how that worked. If we had an agent picking strawberries, they'd be paid by the flat.

OPERATOR

Your next question comes from the line of Andrew De Gaspari with P. And P. Pareva. Andrew, your line is now open.

Andrew De Gaspari, Analyst

Yeah, thanks for this. I wanted to ask a clarifying point you mentioned earlier and just really on the Veeva Falcon, mentioning the displacement of potential roles at these larger firms. I'm just wondering, is there anything that you would consider timing wise from an economics perspective? So if, let's say these roles were to move in another direction, do you think it could potentially cannibalize some of the revenue that you get from those customers?

Or do you think it would be all accretive?

Peter Gassner, Founder and CEO

Definitely all accretive because this is not a market we address today. We don't play in that market today. This is not the type of labor or work that we supply. So it's definitely going to be accretive. And these agents, they need a system of record. You can't operate them without a system of record. So it definitely doesn't cannibalize the systems of record. That's an excellent question, but I actually hadn't considered that and I don't see, I mean the future is pretty difficult to predict, but as of now, I can't see any potential for cannibalization.

OPERATOR

Your next question comes from the line of Jailandria Singh with Truist Securities. Jaylandria, your line is now open.

Jailandria Singh, Analyst at Truist Securities

Thank you and thanks for taking my question. So I want to better understand your comments about the guidance. Assuming no significant changes in the macro environment, clearly Q1 results came in ahead of expectations. Did you see macro trends improving in Q1 versus when you gave guidance and now you assume that guidance reflects trends remain at these levels? Give us some flavor about in which areas you're seeing pockets of strength, you called out CrossFit and areas where recovery is still ahead of us.

Just give us a little bit of color about the macro development.

Brian Van Wagner, Chief Financial Officer

This is Brian, I'll take this one. I think overall what we see in the macro is an environment that is unchanged from when we gave guidance a few months ago. And so there are pockets that are always relatively stronger or weaker. But overall the business is performing well and our customers are performing really well. And there are times of change that they go through regulatory changes, changes in their business and the patent profile of their portfolio.

But that ebbs and flows and they're quite adept at navigating that change. And so we continue to see a strong and healthy end market that we're selling into. We see that across the commercial as well as the DevCloud and Quality sides. And we're feeling good about that. And that's all factored into our guidance for the balance of the year.

OPERATOR

Your next question comes in the line of DJ Hines with Canaccord. DJ, your line is now open.

DJ Hines, Analyst at Canaccord

Hey, thank you, Paul. I'm curious if you've had any update on top 20 CRM migration decisions or discussions that you're having and I guess related to that, I think at one point you had said, hey, we're going to kind of pause on the commercial cross-sell opportunity and focus on migration first. When do you start leaning in on the cross-sell conversations with the customers that have made a decision to go with Vault?

Paul Shawah, EVP Strategy

Yeah. Hey DJ. So yeah, I can give you an update first. Things are going really well just across, broadly across Vault CRM. You probably just saw the last two weeks. We had a couple of big announcements with Teva and Merck KGaA. Those are significant wins. Obviously very proud they selected us globally. We're going to make them very successful. But just maybe a clarifying point, we don't actually count them in the top 20. We built the top 20 list about five years ago.

We created it, we use it across all of our products. We haven't changed it in the last five years. And that list includes the largest 17 biopharmas, which generally don't change year by year. And then kind of the final three on the list, they change a little bit annually, but we've kept our list the same. And those final three are Astellas, Biogen, and Taiichi Sankyo. So we won KGAA and Teva, but we don't count them in that top 20. The remaining four, there's 10 wins for Veeva so far, six for Salesforce.

So there's four decisions left. We expect to win the majority of those four remaining decisions, and we're very confident in that. And we have. I'll give you maybe one stat from this year. Overall, our win rate's over 80%, so we're just executing really, really well in the Vault CRM space. I expect that win rate to continue, and that showed through with all of the innovation that we have. We have customers now, over 150 customers live on Vault CRM.

We've done a lot of migrations. It's over 40 migrations that we've done. We're just executing well. And now we have customers turning on AI in Vault CRM. So a lot of the innovation that we talked about, it's there. Customers are using it. So it's just a lot of excitement. There's a lot of energy and lots happening in the CRM space. So we're pleased where things are headed there.

OPERATOR

Your next question comes from the line of Charles Rye with TD Cohen. Charles, your line is now open.

Charles Rye, Analyst at TD Cohen

Yeah, thanks, Paul. I just wanted to follow up there because I think for the last quarter, the quarter before, you guys had kind of indicated that you kind of expected 14 of the top 20 to retain 14. Listening to your comments now, it sounds like maybe you are stepping back from that. Is maybe 13 the right number to think about? Just maybe help us understand that part of it? Appreciate it. Thank you.

Paul Shawah, EVP Strategy

Yeah, no, there's only four decisions left. They'll play out through the rest of the year. We. I think we're going to win the majority of them all. The decisions are not made, so you certainly don't want to make a prediction on them before the decisions are final. So we still feel really good. And that's why I said the majority. We expect to win the majority and again will play out through the remainder of the year.

OPERATOR

Your next question comes from the line of Jeff Garo with Stevens. Jeff, your line is now open.

Jeff Garo, Analyst at Stevens

Yeah, good afternoon. Thanks for taking the question. I want to ask about the strength in professional services revenue both in the quarter and in the outlook. Curious what the drivers are there, whether it's just overall demand, whether it's insourcing versus outsourcing, or if it's driven by AI or other products. And on that last note, if professional services demand is at all a leading indicator of future monetization opportunities with some of these usage-based models in AI.

Brian Van Wagner, Chief Financial Officer

Hey Jeff, this is Brian. I'll take this one. Really proud of the services quarter in Q1. It was a record quarter for our services team and we saw strength really across services and across the entire breadth of our portfolio. The main drivers of the outperformance were strong project execution in R&D as well as in our business consulting team. But I think the main thing here is that it was not just in implementations. A lot of that outperformance was in the consulting work and the work that happens outside of implementations, including things like digital events that are completely unrelated to deployments.

We also saw some of the expected uptick from vault CRM migrations. It contributed to some of the increase year over year. It wasn't the main driver of top line outperformance, but a contributor to the year over year growth. And so all those factors, when you bunch them together, is why we generally caution against using services as a leading indicator of subscriptions. There are a lot of services that we provide, especially in business consulting, that really are not related to the underlying subscription implementations.

And so I wouldn't read those two together.

OPERATOR

Your next question comes from the line of Ryan McDonald with Needham Company. Ryan, your line is now open.

Ryan McDonald, Analyst at Needham Company

Thanks for taking my questions. Congrats on the quarter here. Maybe one for Peter or Paul on this. Can you just provide a bit more color on the strategic rationale around the OSTRO acquisition? Obviously we're seeing sort of doctors increasingly using AI applications to do prescription medication, drug to drug interaction type questions. And so it seems to be a natural fit there. But, but how do you drive sort of visibility and awareness of Astra within that population and maybe get docs out of something like an open evidence or docs gbt.

And then for Brian, as we think about the commercial revenue subscription revenue guidance increase, how much of that was attributed to OSTRO contribution? Thanks.

Paul Shawah, EVP Strategy

Yeah, Ryan, so ASTRO is super exciting. The buyer of OSTRO is the biopharma company. The user of ASTRO is the healthcare professional or the patient. So it's a brand engagement platform for biopharma companies to help ACPs and patients ask questions and get answers instantaneously and do that in a compliant way. That's very, very hard to do. It's hard to do that at scale. It's hard to do it in a compliant way. And that's exactly what Astra does. So we are marketing to, we're selling to the biopharmas and they're driving the engagement and the traffic to the patients and the healthcare professionals that use that.

Now. It's, why did we do this? I talked a little bit earlier about how digital is increasing and we're seeing new channels and you mentioned open evidence. And open evidence is important from a number of different perspectives. One which I referenced earlier, from a measurement standpoint, as companies spend more with open evidence, it's more important that you measure those channels. But also as they turn to channels like open evidence for information, that's an entry point into going to a pharma company's digital site and using Astra on that site to get information really quickly.

So all these pieces, they all natively work together. This is a core part of our strategy. It unlocks better engagement with HCPs and patients. It also unlocks something that we talk a lot about, we introduced at our commercial summit called commercial evidence. You may have seen Peter refer to that in the prepared remarks, but this is groundbreaking. This is about understanding what HCPs and patients are thinking about, what are they asking about and getting it in an unfiltered way so that you can gain this commercial evidence which can help you identify barriers to getting medicines to patients.

So it's a really exciting area. It's going to play a bigger and bigger role in commercial cloud over time. And we see it as a really significant acquisition and.

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