Veeva Systems Inc Class A Stock

Okay. Good morning, everyone. Tyler Radke, Citi's Co-Head of U.S. Software. Welcome to day 3 of the tech conference. We're happy to have Veeva here. We have Brian Van Wagener, the CFO of Veeva. Brian, I think you've been -- rejoined the company. It's been a little over 2 years now. Just give us a quick background on your time at Veeva, what have been kind of the key accomplishments?

Yes. Well, thanks for having us, Tyler, and thanks, everybody, for joining today. Yes, so I've been back at Veeva for about 2 years now. I was for almost 6 before that. So 8 years in total at the company and have seen it really grow up. Our vision, for those of you who may not know Veeva as well, is building the industry cloud for life sciences. We think of that as applications, agents, data and consulting working together. We are a vertical software company serving the life sciences industry predominantly. That's the vast majority of our revenue, roughly 98% of revenue across 2 or I guess, 3 major application areas. One is commercial, the products that allow our customers to go to market with their generally biopharmaceutical products. Second is R&D, the development side, so clinical trials and the processes that bring products to market and then quality, which is related to their manufacturing organization. We're split across those 3 areas into 10 different suites, well more than 50 products. We have software products and AI products. So it's a pretty diverse portfolio in the business.

And I think stepping all the way back to when I started in 2017, it was only a 15-product company across 5 different suites. And so it's the continued ability to innovate and to run a business that's increasingly both broad and deep. And I'm pleased with the progress that we're making. We've really accelerated our AI road map in the last 18 months as the underlying model technology has matured. We're making really good progress against that. The core business is continuing to execute well. So we're continuing to see really strong growth across our software suite as well as our services, which had its highest growth in 2 years last quarter. So really good execution across an increasingly broad range of opportunity in life sciences.

Yes. Certainly. And I think one of the things that stood out to me, just when AI first burst onto the scene, I guess it was GenAI at the time. I think Veeva took a little bit more of a wait-and-see approach versus the hype from vendors, and I'm sure we can all guess who hypes AI out there. But now it does seem like you guys are really talking about it more. We're starting to really hear about use cases, new monetization vectors. Can you just talk to us at a high level, what is Veeva's AI strategy?

Yes, absolutely. So I think that view of maybe Veeva being wait and see was probably a common opinion. I would say we were more patient with it. One of the things that's a little bit different about vertical software versus horizontal is, we make our money selling many applications, which means if you sell one, it has to work because you needed to sell the next 49. And so for us, that reputation of having things that work as advertised is essential. They've got to deliver value and they've got to work the way we promise. It was pretty clear early in the days of AI that the models were not mature enough for a highly regulated large enterprise setting like life sciences.

And so I think what you saw from us was not falling victim to the distraction of some of that early flailing around that happened in AI, where we're all worried about hallucinations and you spend a lot of money on these product development cycles, and you generally do them at the expense of something else. And so our view was continue to invest in the core applications, continue to invest in maturity there and scaling those and then really build AI when the underlying models are ready for the environment where we work in.

And that has really changed in the last 12 months. And so I think you saw last year, us notably accelerate our Vault AI road map at the time, which is agents that sit inside of our applications, generally helper agents that help you do work faster and to be more productive. And then about 3 months ago, we announced Falcon, which is a little bit broader vision of agents that do most of the work. So end-to-end, you can think of it as a agentic or digital labor rather than a helper agent. And so that, I think, is pretty expansive and will ultimately cover every product area that we sell into and can be a pretty significant financial opportunity over time.

Yes. And I'd love to stick on the Falcon topic because I agree, I think that was one of the more marquee announcements we've seen out of the company in quite some time. It's early, right? I mean this is -- I think you have some early customers. But is this -- what makes Falcon different from a productivity tool? I mean, agentic labor implies that this is taking over labor that humans used to do. So talk to us a little bit about the vision, where do you see kind of the most addressable use cases?

Yes. Ultimately, I think we see use cases across the entirety of the business. And so maybe I'll give a couple of examples of what Vault AI can look like and compare that to Falcon. So a great example of Vault AI in practice is our Agentic Call Report that sits inside of our CRM product. We've got top 20 customers using it today, one using it across the entirety of their sales force in the U.S. And what that helps their sales team to do is to not have to click around into 50 different records, synthesize all of that and remember what to do with the doctor they're going to see. They just type it in. The Agentic Call Report does all the preparation, delivers them a clear synthesis of the history of that doctor, their prescribing patterns and what it suggests you do in that call. Super valuable, saves a ton of time for the rep, right? It might save them 30 to 45 minutes getting ready for that call, which adds up across a 1,000-person field force. But it's ultimately a productivity tool inside the application.

What Falcon does in comparison is it does the work largely end-to-end. In general, these are critical enough workflows. They're still going to be reviewed by a human at the end. But this would be taking something like an inquiry from a health care authority that says, hey, we have this question about the clinical trial you're running. It's a serious question. So you need to pause your clinical trial while you're responding to this. And instead of a person having to go or a team of people go and receive it, figure out what the response strategy is, research it, develop the offering, get it all approved and submit it, we do that with an agent end-to-end. And we think we can take the time for some of those workflows from, in that case, a month down to under a week. So you have both labor savings from having the agent do this versus highly paid people as well as a speed and productivity benefit to the company.

So these are very high-value use cases, but they're different because these are more end-to-end workflows run over potentially long horizons versus something that's a tool helping an individual inside the application.

Yes. And Veeva's product portfolio, very extensive across commercial, R&D. I mean, you talked about like a regulatory use case. You also are in the clinical data management, quality, safety, et cetera. Do you see as the vision for Falcon to kind of touch all of those dimensions across the business?

That's our expectation right now is that Falcon will ultimately be embedded in each of our areas. It's a stand-alone platform that we've built outside of our main platform, we call Vault. So Falcon sits outside of Vault and is a power user of our applications. The early adopters that we have right now span clinical, quality, regulatory safety. And we also have Falcon agents inside our content area of commercial. We call that our MLR agent. And so I think ultimately, we'll see that expand, and we're likely to have coverage across every product area, but also multiple agents within each product area.

Yes. And just as we think about the technology that enables this agentic labor technology through Falcon, I know you've made a couple of acquisitions, Copli and Ostro. How -- are those kind of the underlying pieces of this Falcon vision? Or does kind of each area have its own approach from a technology perspective?

I think we're going to be opportunistic with M&A, but we don't need M&A to achieve our vision in Falcon. So I think we are planning to go out and build organically. But we found opportunities in Ostro as well as in Copli to accelerate in specific areas. So Ostro is not part of Falcon. It's part of our commercial suite. It's Precision AI that's compliant from a content perspective. So if you are a brand and you want to have an AI chatbot on your website, you cannot have that hallucinate. It has to work within specified content parameters. And so what Ostro has really mastered is the ability to do that at scale for these very sophisticated companies. So Ostro is really leaning in early to a very new way that patients and doctors are gathering information, and we want to be at the starting point there of that journey.

Copli was a really interesting company out of Europe that we felt had developed a really great product in MLR that was going to be similar to the kind of thing we were going to build in Falcon, and it made sense to accelerate that road map. We can help with scaling that more quickly. We can help with embedding it more deeply with the Vault applications. And so there may be more of those, but we're going to do that opportunistically rather than as the main pillar of the strategy.

Right, right. And I guess the MLR agent, which is this -- is it kind of a common foundation across the other Falcon agents? Or is that -- or should we think about this as kind of specific to MLR?

Fairly specific to MLR. So MLR is medical, legal and regulatory review. It's a specific process that our customers have to do inside of the content area. So all of the content that their sales reps share, that they put in an advertisement has to be reviewed by medical, legal and regulatory groups within the organization. That process is time-consuming and cumbersome. That's 3 acronyms means 3 different groups that have to review it. We think we can do all that in an automated way, and we're doing that with Copli right now. Our vision over time is to eliminate about 70% of the manual labor that's being done on MLR across the industry.

Yes. And thinking about that, I think the labor TAM certainly are way larger than software TAMs, right? And so how do you think about pricing agentic labor in that context?

I think we've got a couple of different pricing strategies. So we talked about the Vault AI, which is agents inside the applications and then Falcon, which is the agentic labor. On the Vault AI side, we're thinking about that right now as consumption-based. It's based on tokens. That's going very well. That may evolve over time, but for now, that's our strategy. In Falcon, I think that's more likely to look like a business transaction. So an MLR that might be a document reviewed or in the health inquiry, it would be an inquiry that was resolved and filed. It will be some business transaction that's relevant to that agent. A lot of that, we're still working through. It's really important when you're doing something new like this to evolve a little bit and be agile in your pricing strategy. So our current state is we're very focused on product excellence, getting the products to the point that they're really mature with a set of reference accounts and then building the commercial model on top of it, but there's still a couple of more steps in learning and likely some evolution there.

What I do think that, that model of pricing allows us to do is to get away from some of the really low or even negative margin that you've seen emerge in AI and other spaces, where you end up just getting marked down to what the underlying model cost is from Anthropic or OpenAI or whomever. I think by creating value through the Falcon agents and by talking about the business transaction, you can create a product that still delivers high margin.

Yes. And it kind of ties into that business outcome...

That's right.

Pricing strategy.

Yes, I think the thesis there is if you're creating a lot of value for customers, we should be able to capture a fair share of that.

Yes. Yes. No, it's super interesting. Shifting gears a little bit to the core businesses, commercial and R&D. I think certainly, the commercial growth has surprised a lot of folks. I mean, consistent double-digit growth. I think a couple of years ago, we were concerned this would be slowing into the single digits just given the maturity of the CRM franchise. But maybe help us unpack like what is driving that sustained double-digit growth? Would you say it's kind of more of your own execution? Obviously, the end market currently is quite strong in terms of trial volumes and everything. So how would you just sort of frame that growth profile?

Yes. We had commercial subscriptions growing about 13% year-over-year in Q2. That's a little bit higher than our long-range expectations, which were more in the high single digits for commercial. And I would say it was a pretty broad-based strength that we saw there, Tyler. So some of that is the continued strong performance of our Crossix business, which is on the marketing and media optimization side. It helps customers to measure and optimize their media spend as well as to place their digital media spend more effectively. That business, it's a growing end market and a place where we can continue to capture share. So we see that as a durable grower for many years. It's accretive to overall subscription growth and certainly to commercial subscription growth. So it's a key driver of that growth rate for the long term.

But we saw even outside of Crossix, strong growth across the commercial business. Still growing in CRM, the rumors of its demise notwithstanding, we're continuing to grow in CRM. We're seeing large accounts, in some cases, growing their field forces. We're continuing to win with new accounts in the SMB space as new companies form and commercialize. We're continuing to grow in our data business. We have a number of products that can grow for the long term. And we still see add-ons in places like content, which are very mature at this point.

So it's no one single thing. It was really broad-based strength across it. And I would say that, that's the industry cloud story coming together. It's that these products work so well together that customers are continuing to invest in their commercial capability broadly.

Yes. And I'd love to spend a little bit of time on Crossix, because I think it's an area that when you acquired it several years ago or many years ago, it sort of wasn't a small deal by any means, but sort of flew under the radar a bit, and now it's kind of burst onto the scenes just given the success of that. Where are those dollars coming from? And is this share gains, the consolidation from other platforms? And again, is there some element of cyclicality that you would be caution of us overextrapolating the recent success of it?

Yes. Crossix, it's a great acquisition story, but it's a great business, too. The original deal thesis when we brought the Crossix team in, I guess, about 6 years ago now, was that the IP they developed would be the foundation for what's now our Compass data business. We felt the Crossix business was attractive in its own right. But I think it's surprised us with the investments that we've made and the good execution from that team, just how significant that business can be.

When you think about marketers and advertisers, of course, they're going to measure their spend and try to make sure they're spending more effectively. That service can be done by third-party providers. Sometimes it's done by the agencies they work with. But there was really a need, an unmet need in that market for a strong third party that could do that very effectively, and to do it in a way that's now integrated with CRM, right, to build some of those linkages to the CRM and the marketing platforms over time.

So that media optimization business is the larger area of Crossix and has been a big driver of growth for the past several years. Last year, Crossix was a key part of the outperformance of the full fiscal year, and that was really driven by the other side of Crossix, the Audiences business. And that had been sort of a nascent business when we took over the Crossix team. We made a number of investments in the product over the last 2 or 3 years, and we saw that really explode. So we saw both a healthy end market again, but also a lot of share gain in Audiences last year, which is the other side of digital marketing.

So if optimization is about measuring and then optimizing the next year's spend, the Audiences business is around placing your digital spend upfront with the right segments. And our product is pretty unique in that it allows them to develop really precision segments for the specific therapy they're selling. You want to find cardiovascular patients in the western half of the United States, like we help you build that segment. So it's precision targeting in health care that's still HIPAA compliant and anonymized and meets all those regulatory requirements.

So it's super unique. And as we have success with that and helping customers get higher ROI on digital spend, they, of course, want to invest more behind it. So it's a market where success can feed growth of the market.

So it sounds like there's some like real kind of secular drivers on that more than cyclicality.

Yes, that's right. And that's why I think you hear us consistently say we think that can be a durable grower. We think there's headroom for growth from a share perspective. We also think the market itself will continue to grow.

Okay. Shifting to CRM. Obviously, that you get a lot of questions around top 20s, and I think at least we'll won't be having to track those top 20 wins for much longer, given we're kind of almost through those decisions. But how have the go-lives on Vault CRM been going versus your expectations? And I guess for the folks that have gone live, like what are the benefits that they've seen versus the legacy Veeva CRM?

Yes. So for those that may not be as familiar with the Veeva story, our very first product was CRM built on the Salesforce platform. We're in the process of migrating customers now from that Salesforce product to a Vault CRM product on our own Vault platform. That means we're now competing with Salesforce. And there's been a fair amount of noise, I would say, around that for the last couple of years. But we're making really great progress against that. We -- sometimes the top 20 is used as a yardstick for the overall migrations. Right now, of the top 20, 12 have selected Veeva, 6 have selected Salesforce, so there's 2 to go. We like our chances in both. We expect that those will largely be decided and announced by the end of the year.

So that's going really well. But more importantly is not the decisions. It's the execution against the decisions that have been made. We talked very early in this about a decision for Veeva is a little different than a decision for Salesforce that we are very confident that we're going to get customers live and happy and having success. And we're seeing that play out. We've got more than 180 customers live on Vault CRM. We're not aware of any customers that are live on Salesforce CRM products. We've got numerous top 20s live, 5 that are live in different regions, 2 that are live globally across all regions.

So it's going really well. The migrations are going well. And I think the feedback we've heard from customers is that the migrations have been very smooth. They've been on schedule. They've been on or under budget and that the product is delivering on its promise of innovation in AI, but also in sort of the core areas of the application. I think increasingly, as we get further down the road of that migration, we can shift even more of the resources away from the support of the legacy product into the new product. And so that acceleration in innovation is the thing that I think we get most excited about internally over the next few years.

Okay. And not to introduce a third CRM name, but you did recently introduce Aspen CRM. Talk to us a little bit about the strategy there? And you talked about this earlier, lots of products, lots of things going on. How much of a priority? How much investment dollars are you kind of putting behind Aspen?

Yes, just to keep you on your toes, we also brought another name in. So Aspen is something different for Veeva. We announced it about a year ago, I think, at our Investor Day, last year. And that's a move outside of life sciences. So everything we've been talking about so far is the life sciences space, which is 98% of our revenue today. Aspen is a move into horizontal software. And our first product in Aspen is going to be in CRM. We've got early adopters that we're working with right now. The team is making great progress. But we run that as a start-up inside of Veeva. It's got a lot of autonomy. It's got a lot of focus. It reports directly to Peter, and we do that pretty deliberately. It allows them to be able to work very differently from big Veeva and function more like a start-up with short-cycle road maps. It also means that Peter is working directly with them versus filtered through other things.

So that team is doing some really exciting work, and we think that the CRM market is ripe for a new entrant. And not everybody is going to agree with that. I think we're comfortable taking an unpopular opinion on that. But I think as we look across CRM, I don't talk to many people that say, I love working with my CRM. It really helps me. It's well designed. It's made for me, it's working effectively. We think there's an opportunity to do that much better to make a product that works better, like Zoom did with web conferencing several years ago and to sell that in a way that is much cheaper than the products on the market are today, and that's much more nimble and easier to evolve and sustain over time.

But it's early days there. I don't view that as a near or even midterm meaningful financial opportunity. That's more of something that plays out in kind of a post-2030 time line and that we're planting the seeds for now, and we're really pleased with the progress that team is making.

Okay. Brian, I'd be curious your take just on some of the big announcements from your peers in the CRM space around headless and partnerships with Anthropic and seemingly kind of giving up the UI layer, and maybe one interpretation of it. How does Veeva view that strategy? How important is it for you to own the UI layer for your customers?

I think of it less about do you have to own the UI layer than are you meeting the customer and the user where they are for the business process that has to be done. So our strategy is maybe a little bit broader than headless, which we've called dual-mode, which is just to say, yes, you can access our applications through Claude or ChatGPT or via an MCP server and navigate them that way. And for some use cases, for some queries, that's going to be the right thing to do. But most of my history at Veeva was leading our sales operations team. And so I could say personally, I would never want to give up the entirety of the UI. The UI is how you focus your team on the job to be done. These are the steps that you need to follow. These are the priorities for right now.

So UI adds a lot of value to many workflows and many processes. So I don't think it's either-or. I think it's the ability to support both, and that's how we're thinking about the development of our products that our customers would be able to use those MCP servers to navigate through their preferred AI pane if they want to do that and also have a UI in the application that it's using. And then the third is Falcon, which becomes a user outside of the individual human that's using the application. So there's a lot of ways that the applications will get used, we think.

Right. And maybe we could shift a little bit to the R&D side of the business. I think for basically, since the IPO many years ago, that had been a 20%, in some years, much higher than that type of growth. This year, the guidance assumes that, that growth rate does take a decent step down, I think, into the mid-teens or so. Help us understand what's driving that? Because on one hand, we look at the TAM, right? These are multibillion-dollars -- greater than $10 billion revenue markets. You're not highly penetrated there as you are in core CRM. So why is growth slowing if there's still so much more room to go?

Yes. I think overall, it's playing out largely as we had expected would be the headline there. When you think about R&D, we have a lot of products, but there have been sort of 5 or so that have driven the majority of growth to date and then some add-ons that sit around them. So eTMF, CTMS, QualityDocs, QMS and our Regulatory suite have been the 5 that really fueled growth to date in R&D. And they're large products, but they're getting to the point where they're at maturity. eTMF has 20 of the top 20 as customers. So there are some ramps continuing to come in, but there's no more selling to do on eTMF. It's just about making sure we maintain that position of product leadership. CTMS is not that far behind it. The quality products are not far behind it.

So those products are at a pretty high level of maturity and growth from here on out is driven by a different set of products. It's driven by products like EDC and eCOA and RTSM, I'm sorry for the acronym soup, but it's driven by a number of products across clinical, quality and safety. And so I think all you're seeing is that those S curves don't just stack up exactly right, but it takes some time to get the new products to the scale that they're fueling the overall business. And that's largely what we expected. We alluded to that at the start of the year pretty directly when we gave our guidance. And Q3 is where you start to see some of that step down happen.

Yes. And how do you think about -- I mean, clearly, you have long-term targets out there that embed some level of S curve, I'm sure. But how do you kind of think about this sort of gap in those S curves? And is there something we should track? I mean, I know you guys do a good job of usually calling out these top 20 wins. Are those kind of the leading indicators of these newer products starting to see ramps? Or how should we get comfortable around that, hey, that S curve is coming not too far down the road?

Yes. I think the main thing is obviously to look at the momentum of revenue in the business. And we're pretty transparent with how we call the business. We don't put a lot of hype into our numbers. And so we call it like we see it, and we're very direct on that. We'll give guidance for next year as we get closer to next year. We remain confident in the 2030 targets that were our long-range targets we announced a couple of years ago, just not quite a couple of years ago. So I think we're pleased with the progress that we're making on those new products and the trajectory that they're on and that we're still on pace.

Yes. Got it. And maybe as we think about the tying this back to the broader vision, and you led off saying, Veeva is a vertical software maker, right? You got to make sure all your products work together, and I think that was a big piece of also this Veeva CRM to Vault CRM, to kind of have it all on a common code base. Talk to us about like are there customers that have kind of gone all-in on Veeva? What does that look like? Is it a percentage of their wallet share? And just how do you think about how big this company could be if that vision is achieved?

Yes. I tend to think about it more on an area-by-area execution basis. We have a lot of different types of customers that we work with. So when you think about any large company, they have different ways of working. Some are more top-down and they drive things programmatically. Some are more decentralized, and they would operate application by application for us. And I think part of what's important for us to do is to be able to work in either mode, to be able to work with the CEO and the Board when that's a conversation that they want to have around transforming their company and to be able to work with the director of an area of clinical operations when they want to modernize one clinical application.

So there's no one right or wrong way to do it, and we work with our customers in both ways. We do have some customers that have said we are going to standardize on Veeva. If there's a Veeva application that's fit for purpose, we're buying it. And we have memos of understanding and contracts of different structures to do that. We have customers that have said, I'm going to standardize in one area. And we have customers that continue to go application by application. I think ultimately, our goal is to be the standard for the industry in every application we build. So that yardstick of eTMF supporting 20 of the top 20, that should be our yardstick. It should be 50 of the top 50. We've got to earn that. It's going to take time to do that, but our goal is to be that kind of industry partner to all of our customers across every area.

Yes. I did want to touch a bit on profitability. Brian, I think there's some debate in the software industry is AI a profitability booster or detractor for software companies. On one hand, you all are taking advantage of the efficiency that AI gives you in terms of operations, coding, et cetera. On the other hand, AI revenue has more COGS and certainly, AI talent is expensive. So how do you think about as Veeva becomes more of an AI company, what does that mean for profitability knowing that your long-term targets are, I'd say, a little flexible with the plus above, but they're a bit below where you are today. So how should we think about Veeva's profitability moving forward?

Yes. I think on the long range, we don't give long-range margin targets. We have a floor that we talk about to give people confidence we're not going to have an excessive investment cycle. But I think we've always thought about balancing growth and profitability. If you look at the early days of Veeva, I mean, Veeva was profitable very, very early on, a little bit unusual at the time for a tech company. And so that's pretty deeply embedded in the DNA of what we do.

So when I think about AI, I think what I think about is how do you build products that deliver clear and differentiated value to customers. Because if you do that, you can charge for it. If you're delivering commodity AI, then you're going to get marked down to the underlying commodity of the token input. But our Vault AI agents in the applications are definitely not commodity AI. They're -- we have full product teams building these things to work in pretty sophisticated ways. The Falcon products absolutely are not commodity. They're going to be taking a significant amount of manual repetitive labor cost out of our customers' operations that they can use to invest back in growth or pull through to the bottom line, they'll make decisions on how they want to redeploy those resources. But I don't worry about the ability to drive a profitable business when we deliver a product like that, that works.

Where exactly that lands? I think it's a little bit too early to say. Peter, our CEO, on the last call, was pretty direct in saying there's not a reason to think we can't get software-like margins out of the Falcon business, in particular, over time. That doesn't mean we will. We've got to go and create enough value that we can do that. But I believe we can. And it starts with picking the right use cases and building the agents to deliver enough value that we can capture a fair share of that for Veeva.

Yes. That makes sense. There's a lot of events coming up for you in the next few months. I think you have your -- both your R&D Summit and Commercial Summit, if I'm not mistaken, as well as Investor Day, probably in early November, typical timing holds true this year. What would you encourage investors to focus on, both from product announcements as well as what to look forward to at Investor Day?

Yes. We're excited about all of those. We've got our Europe Commercial Summit coming up a little bit later this year, North America R&D coming up and our Investor Day on November 5, Gunnar? November 5. So we hope to see some of you there, too. We, I think, have covered so many of the topics that are of focus for us. I mean it is a broad-based business at this point, 10 application areas, 50 applications, an entire new area of AI that we're opening up in Falcon. So I think really just leaning into the progress that we're making in those areas, the road map that we're talking about for Aspen. We're looking forward to giving more detail on those things, obviously, as we get a little bit closer.

But it is an exciting time for Veeva. You go through these waves in companies like ours where you are innovating and expanding the aperture of the business and then where you're focused on execution of the opportunity in front of you. And it feels a bit like we're doing both right now, which is exciting, but we're certainly expanding the aperture. There's a lot of new things happening. And I think also a lot of really strong execution of the things that we've been known for, for the last couple of decades.

So we look forward to sharing more about that with you at Investor Day and some of the announcements coming...

Yes. I look forward to a lot of exciting things ahead. Brian, I think it's a great place to wrap up as we're out of time. Thank you for a great discussion. Thanks, everyone, for joining. And I think we have the lunch keynote kicking off here in a few minutes. Thank you.

Thank you, everybody.

Welcome, everybody. My name is Stan Berenshteyn. I cover health care technology at Wells Fargo. With me is Paul Shawah. He is the EVP of Strategy; and Gunnar Hansen, he's the Head of IR. Welcome.

Thank you.

Paul, maybe before we begin, you want to just give us a quick overview of what's happening, and then we'll dive into some questions.

Yes. Sure. Sounds good to give you a brief overview of Veeva. So Veeva, we're building the industry cloud for life sciences, and that means applications and -- applications and agents and data and consulting, specifically for the life sciences business.

Our business is spread across 2 primary areas, R&D and commercial. R&D is a little bit of a larger portion of the overall business. And within each of those areas, we have suites of products and software products and data products and agents and that includes in areas like R&D, clinical, quality, regulatory, safety and then in commercial, a number of different areas from core CRM, commercial content, a number of data products that we call Data Cloud.

And we're helping to make the industry more efficient in how we operate. We're a public benefit corporation. So we serve the life sciences companies, the people in them, but also we're trying to advance the overall industry. And we're relatively early on our journey. Each quarter, we make more progress in terms of building the industry cloud and the adoption of that. But we're excited. We have a lot of opportunity and runway, particularly now with our focus on building agents for the industry.

You've been around for a while, and you've started out as purely a CRM for life sciences. You've broadened that out into the R&D, clinical cloud. You then tacked on data solutions. Where the company sits today, there's been a lot of change over the last, I guess, 12 months or 24 months. What are you most excited about right now? What is -- what has your attention when you go to work? Like what are you working on?

Yes. I mean our vision is broad. It is this industry cloud, and that means building these suites of applications that all work together, the core enterprise software, the core data and business consulting that all works together. The major shift that's happened over the last couple of years is now this agentic layer, which is super exciting.

And I think this is a core part of Veeva's advantage, a structural advantage in having the foundation that we have in the core enterprise applications, but also the agentic labor that will work interoperably with the core applications. And we're just in the early stages of building that out. We've announced a broad AI strategy, AI in all of our applications.

We call that Vault AI. Now, you probably heard us talk about something called Falcon and Falcon is the agentic labor that actually does work, and that works very closely with the core applications. So I'm excited about continuing to expand out the industry cloud, these suites of applications, but also AI enabling the industry. And we're in the early days, but super promising just really over the last several months seeing kind of the excitement and progress with the product, but also excitement and demand from the customer side.

If we can unpack the AI product suite a little bit, so -- and maybe layer that into the discussion of revenue. So you have given a 2030 target, I think, a year or 2 ago of hitting $6 billion in revenue by 2030. First question, is AI in any way part of that target? Or is that a layer on top of your longer-term targets?

Yes, that's right. So we gave a 2030 revenue target about 2 years ago, and that's a $6 billion target. And it was -- AI is largely incremental to that. So when we gave that target, it was largely the products that we -- the existing products that we had and with maybe some additional growth of products, but -- and primarily life sciences.

So think about it as life sciences core enterprise applications, things like agents and Falcon would be incremental to that. Also areas of our business like in horizontal markets that we are entering, that's also incremental.

So when we've had discussions with your customers, they've basically said, look, AI is new. You've just launched a bunch of AI products this year effectively. A lot of these are early adopters. They're using these products, but they're not necessarily paying for these products. So if we start thinking about the monetization of AI, what do you, I guess, envision happens in terms of monetizing? Is this become an unlock next year? And then to the extent that it is, what are the monetization models that can potentially drive the revenue here?

So I alluded to our overall AI strategy. And I'll reference that again because we think about monetization very differently in different parts of our AI strategy. So there's Vault AI. And again, that's AI in the core Vault applications. It's in every Vault application there is across CRM and commercial content and regulatory quality, clinical safety, every area will have Vault AI enabled in the application.

And that's AI to help the users of the applications, help them go faster, make better decisions, summarize things faster. It's making users more efficient. And in most cases, that will be more consumption-based based on just token usage. And so as we increase adoption and utilization, we'll expect to see additional monetization there. And then there's Falcon and Falcon is the agentic labor. It's the labor -- the layer that actually does the work for -- it replaces in a sense, it replaces humans and users, and that's the user of the application.

And we expect in those cases, it to be more outcome-based. So based on, let's say, number of documents processed as an example. So a specific business transaction. I could also anticipate in Falcon, we may have more enterprise license agreements. We may shift to a model that's more based on ELA. That is something we're still early days. We're working that out. Part of what we're doing with early adopters is establishing value for the products. Our main focus, maturing the products, establishing the right value proposition, and then we think the right licensing model will follow. So we may end up having multiple, in all likelihood, multiple licensing models based upon the specific use case, based upon the type of AI that a customer is using.

And if we think about the way that AI is monetized, right, there's, I guess, multiple vectors of value extraction. Gunnar, do you want to maybe comment on how AI can be monetized? Is it just a cost arbitrage or something else that can be involved here?

Yes. We get questions all the time of what use cases we're looking to solve for with things like Falcon. And the reality, as Paul mentioned, is that it's going to be very use case specific. There are certainly areas where we can help drive more efficiencies and potentially reduce some of the labor that's being done or used for some of these processes.

But it also -- there's an element of getting things through the process faster, and that means getting to market faster. So there's both kind of the cost arbitrage element, there's also the ability to monetize and get to market faster. And so I think our focus in the interim with AI is really about getting AI out the door in the hands of customers, delivering value.

If we can deliver on that, we think we'll -- we're confident in figuring out the licensing model and the revenue should follow thereafter.

Can you give us some examples of how can you get a drug to market faster using Falcon as an example?

Yes. One example in one of the areas we're focused on is in the regulatory side, health authority communication. So when you're going through the drug approval process, the regulatory authorities like, let's say, the FDA in the U.S. will have questions about your process.

And when they ask a question, they generally stop -- it puts a pause on the approval process, and you have to respond to those questions. And that doesn't only happen in one country, it may happen in multiple countries in different regions, in different parts of the world. You have to answer those questions consistently and accurately. And today, people answer those questions.

They formulate the answers. They may do translations. They may make sure that it's consistent. And that slows down the approval process. So if you can condense the time to respond to those health authority questions, you actually -- what you're doing is you're getting the drug approved faster, you may have more time in market.

So when you think about let's say, a potential blockbuster drug, a drug that has the potential to be over $1 billion in sales, getting that into market 30 days or 60 days or 90 days faster can be millions and millions of dollars to the life sciences company. One, it can get that drug to patients that need it sooner, but it also creates a significant revenue opportunity. So to Gunnar's point, yes, you're reducing labor. Yes, you're shifting labor from people over to agents. But more importantly, you're having an impact on how fast can I get that drug into the marketplace.

Okay. And Falcon, as you point out, is an AI that's replacing labor. We know that CROs are a labor-heavy industry, very necessary to conduct drug trials, you rely on CROs. Where does Falcon sit? Is Falcon displacing CROs at all? Is it displacing something else? Like obviously, headcount is being displaced. So where is that headcount coming from? And how are CROs in that picture?

Yes, it's very broad. I think if you think about the use cases we're focused on with Falcon, it's everything from the commercial side of a company. So things like commercial content process where CROs play no role at all. There are certain areas in R&D, like safety, very minimal role.

In clinical, to some extent, there's a role they play. And oftentimes, it's -- that's work that is done by the sponsor themselves directly or other types of service providers. So I think it's a relatively narrow place that may impact CROs, and it actually may be good for CROs over the longer term as CROs may be customers of Veeva. We're not focused on that part of the market yet. We're focused on directly selling into the sponsors. But this -- they sell a portfolio of services, and this could be labor that they provide. I think we'll see how that plays out over time.

And maybe one final question related on AI. Maybe there's more, I can't promise. But just as you think about the customers that are using AI right now, the products that you rolled out, I know Falcon is still up and coming. Can you just talk about how the reception has been? Are they using it? Are they using it more intently? Do they say that, okay, this is very valuable to my workflow?

Yes. All signs so far, and we do have a number of customers using AI from Veeva in its different forms, the things that I talked about, Vault AI in the core applications and CRM and our commercial content business and then also Falcon, Falcon MLR, we have a bit of a head start there that came -- that started as an acquisition with a company called Copli, where they're using agents for the review and approval process of commercial content.

Somewhat early days, but the reception has been great. We're seeing increased utilization, increased adoption. And I think there's -- we just had our first top 20 pharma company start small and expand to their U.S. field force for using our agentic call report in CRM.

So we're excited about all of the early signals, and we'll -- we're excited to kind of continue to expand that out over the next several months as we get more and more early adopters and more and more agents in the market.

Okay. And I want to talk about some other areas of your portfolio. Maybe we'll pivot here to R&D and Clinical Cloud. So you've -- in recent quarters, you've described that more of your mature products are -- because they're more mature, they're kind of slowing and then you have these other more nascent products that maybe haven't really reached the S-curve of adoption. How should investors think about the dynamic between the maturing products and the time lag between when these more nascent products can start to accelerate and maybe show up in the numbers?

Yes. And maybe to level set a little bit, just so people understand, we have those core markets that I talked about, clinical, quality, regulatory, safety, and they're all suites of products. And they all have a portfolio of products, some which were started many, many years ago and that have become more mature and some of which we've started over the last couple of years.

And in all of the cases, they're either really significant markets, some are smaller add-on type products. It's just a broad mix across all of those different areas. We've called out historically a handful of those that have contributed a significant part of our growth over the last several years. They will continue to contribute. They're not completely sold out. Those products aren't going away. We don't have 100% adoption in all those products.

So they will continue to contribute. But there's also a number of products that we've announced over the last handful of years, and we've called out some of the larger ones, EDC, safety, RTSM. You probably -- many of you know this industry well. You know a lot of those acronyms. ECOA is another example. They're in the earlier stage of that ramp.

The ramps don't necessarily line up perfectly. The ramp, the S curves don't line up exactly perfectly, but we've called this out as something that we see that's happening, and it will be -- it's a broad portfolio of products where we believe we have a unique advantage in all of them, the core underlying Vault platform. In general, we're replacing either legacy applications or we're becoming the standard. We're creating a market that didn't exist before.

And we have a very broad and strong value proposition by all these products working together. So we believe we have the right to win. And we called that out, and we see some of that transition happening already starting this year. So I think it's something we'll see play out over the next several years as we start to see that transition fully take place.

Okay. And you've also called out a $1 billion opportunity selling trial-based solutions like trial-by-trial solutions through the CRO channel. Historically, you've been primarily an ELA type of business where you get the enterprise contract and the visibility is there. You don't have that variability. Are you seeing traction in this new sales motion selling through the CROs? Can you just talk about what you're seeing, a level of excitement and how you expect that to progress over the next couple of years?

It is an exciting opportunity for us. When you look at the -- our revenue mix today, the majority of our revenue mix comes from ELAs from larger companies. There's a segment of the market that tends to buy the technology that we've been talking about, everything from EDC to the trial supplies and RTSM, they tend to buy it more trial by trial.

And we are approaching that market more cohesively in terms of how we position and sell the suite of products to that segment that buys for the trial, but also in terms of the importance of the relationships that we have with the CROs. The CROs are not only a customer of Veeva, but they're also a really core partner, and they can be an important channel to entering that market. They have -- particularly for small and midsized companies, they have an outsized influence in the decisions that those companies make.

So we're still in the early days as they become more adopted. They have to shift over. Remember, there -- they've been used to, in many cases, using legacy technology for a long period of time. So they may have thousands of people that are very comfortable with the legacy technology and even though we provide technology that may be better, significantly better, they have to go through that change management process to move their teams over to change how they position and how they think and how they interact.

So we're in that early stage, but it's great. It's a great longer-term opportunity for us to continue to sell through the CROs and to become the standard, hopefully, across many, if not all, of the CROs over time. Adding IQVIA was a really nice advantage. They're one of the largest CROs, as you know, and we're in the early stages of starting to see some of the benefits of that partnership play through.

So now it seems like all of the top CROs or channel partners potentially for you. And you're saying you have to have the sales motion, you have to -- these people have to be trained and understand how to maybe position Veeva as part of the sales discussion. What is going on right now? Like is -- when a trial sponsor goes to the CROs, is it just they declare who they want to use for their software, and that's basically what the CRO does? Or does the CRO actually have a preferred vendor that they recommend? Can you just take us through what's actually happening right now? And how do you expect that to change?

Yes. In some cases, the sponsor themselves would make a decision on the core technology. And in other cases, particularly the lower and smaller end of the market, the CRO would make a recommendation on the technology. And we're in different stages with different CROs in terms of some have standardized and they tend to recommend Veeva as a standard and others haven't yet, and they may do it more surgically or precisely.

And our expectation over time is that more and more CROs adopt the best technology in Veeva as the standard when they do their proposal. So that's a journey. That's something that takes a long time. We don't take that lightly. It's on us to make sure that we continue to have the very best products, technology that will help them deliver more effectively, deliver more efficiently. And that's what they want. They want to look to a provider and a partner who can help them provide their services more efficiently.

Now prior to the relationship with IQVIA becoming aligned commercially, I think historically, you've been better ahead, so to speak, and IQVIA's data solutions were not allowed in your platform, right? That has obviously changed. What does that mean for certain add-on products that you have related to data? And what does that mean for your own data product, which effectively competes with IQVIA and continues to compete. Is this now a headwind that IQVIA can be integrated? Is it a tailwind? Can you unpack that for us?

Yes. It really helps both areas. It's good for IQVIA and Veeva. It's also -- it's great for the industry. So historically, our customers were -- they weren't able to buy some of our software products because they had standardized on IQVIA data, and it just -- it wasn't going to work.

So we actually stopped selling some of these products in different segments of the market. And now we're ramping that up. We're building connectors between our software and IQVIA data. So we're able to create more value. They can continue to standardize on IQVIA. They can use Veeva software now. And master data management is a good example of that. Master Data, you master customer information, and they have a lot of that customer information are able to work together.

So that market, we are kind of restarting. We're kickstarting that market again, and that is a nice opportunity for us. It's a nice add-on that we didn't really -- we're really selling and now we can continue to sell. And then from a data perspective, there are areas where we compete, and we'll both compete respectfully and customers may make a single-source decision.

But I think what's also common is customers make more of like a dual source decision where they may have picked either IQVIA and other data providers or Veeva and other data providers. Now they just may pick Veeva and IQVIA together because our data is able to work well together. So I think it does create an opportunity for both companies to become more of that standard for data sourcing rather than relying on one in a portfolio or a niche -- a set of niche data providers.

Okay. And I did say I'm not going to ask an AI question, but I'm going to reneg on that. I'm going to ask another AI question. From a margin standpoint, I think historically, maybe historically a quarter or 2 ago, maybe you said that AI margins are going to be between services margin and software margin. Now that your thinking has evolved on this, where do you think the AI margins can actually get to?

Yes. I mean I think it's still a little bit early, quite frankly. I think Peter made some comments more recently on the call about how Falcon margins may be more comparable to our subscription margins. I think we'll have to see how that plays out. But I think the underlying assumptions there was with Falcon, the ability to use more deterministic software for certain parts of the process.

And then secondarily, to the extent that you see a reduction in token cost over time, we think we can -- because of the value we're delivering and because of those 2 points I just made, margins may be more comparable to our subscription. But again, it's still pretty early days with Falcon. I think we're expecting to have our first customer go live later this year and our first top 20 to go live in the first half of next year. We're really excited about it, but it still is a little bit early days, certainly when you think about the margin profile.

Okay. So let's pivot to the CRM side of the business. Within the top 20, you're now at 12. I think there's been 6 confirmed takeaways by Salesforce. There's 2 outstanding to be determined. Can you just talk about -- so that's pretty much already settled. We'll maybe talk about win backs in a second. But outside of the top 20, can you just talk about what's your win rate there? What's your traction there? And how does that compare to Salesforce?

Yes. The win rate is very, very high. You've heard us talk about where we are in top 20. There's only 2 decisions left in the 2 kind of outstanding in top 20, we're making a lot of progress on both of those. So we feel really good there. But outside of top 20, we're winning the vast majority. And this includes really 2 groups. One is companies that are on Veeva CRM that are making a decision to migrate.

We win the vast majority of those decisions in addition to companies that are selecting a CRM for the first time. These are net new logos, companies that didn't have anything in many cases before and they're choosing Veeva for the first time. And we've said our win rate is in both those areas is over 80% this year. That remains the same. That's unchanged.

So we're becoming -- and we've also -- just to frame the whole thing kind of where is this whole thing going to land? We've talked about over 70% market share in the CRM space is what Veeva will retain over time. So it's -- the market has spoken. It's very clear. We are the market share leader. We will continue to be the market share leader.

And just maybe tying in this recent quarter, core CRM was really strong. It seems like it's a legacy product. Why was it -- why was this quarter is actually a strong quarter for core CRM?

Well, it includes what we're doing with Vault CRM. So it was -- we -- in fact, we said it was our best quarter ever in CRM, and this includes decisions from some top 20s and some large enterprise customers, companies like Lilly and Biogen and Regeneron have made decisions to continue with Vault CRM.

And then we now have over 180 customers live on Vault CRM. So more migrations done successfully. We have -- we've gotten the migration process down to a science. These are on time. These are on budget. They're very, very efficient. So we've executed really well in the migrations, but it's also in the product progress.

We had our first top 20 go live in all of the U.S. market with the agentic call report in Vault CRM. So we've talked about the promise of AI in Vault CRM, and now it's becoming a reality with some significant companies. We expect more and more of that. As companies go live on Vault CRM, we expect some will turn AI on day 1, which is a -- that's always been the promise of more innovation, and it's becoming a reality. So we're just executing well on all cylinders in CRM.

And within the top 20, Salesforce did have 6 wins. What gives you confidence that maybe some of those are going to come back to you? And if that does happen, do you have some kind of line of sight of potentially when that could happen?

Yes. I mean we've talked about that for a number of quarters now. We do have confidence and conviction. And I think what's becoming more and more clear is as more time passes, there's a clear -- there's more evidence that supports Veeva's execution compared to what's happening on the other side.

Salesforce, a number of projects have been struggled. They've been delayed. On the Veeva side, we're executing, as I've talked about, getting customers live, getting them to turn on new innovation. We are in discussion with all of these customers. These companies that have made a Salesforce decision, they're very significant and meaningful customers of Veeva across many, many different areas. We stay close. We're working with them. And that's what gives us the confidence. the difference in execution with Veeva versus what they're running up against in Salesforce. And as more and more time passes, that becomes more and more clear to the overall market.

And on CRM front, you recently introduced Aspen CRM, which is your pursuit of the horizontal app strategy you've called out previously. I guess what do you think gives you the right to win in the horizontal space? CRM is a very crowded market, highly competitive. Can you just lay out your strategy and your vision here?

Yes, sure. It's certainly -- it's a very significant market, which I think speaks to the fact that it's crowded and there is a lot of competition. I think there's still a big opportunity to do CRM really well.

And I think historically, if you look back at the ROI that companies have -- the investments they've made in CRM have been disproportionate to the ROI that they've achieved. We think we can do something that's better, it's faster, it's cheaper. Like a CRM that you can get up and running very, very quickly that you can get a lot of value from. We would love nothing more than companies to say, "Hey, I love my CRM system. I'm getting all the value that I had anticipated out of that." That's uncommon today.

And it's -- we think it's uncommon, but unnecessary also. So our opportunity is not only to deliver the next generation of platform and technology, but also to be a more friendly company, a more transparent company to be easier to do business with. And you see that even on the website. It's just very clear what our licensing model is, how it's going to be. It's super transparent, and we want to do that from a partner and a company that people can trust, which Veeva has earned that right for sure in the life sciences industry. We think we can do it horizontally also.

Okay. And your CRM business, it's about 50% of your Commercial Cloud business. So Commercial Cloud obviously has Crossix, has Data Cloud, all these other products, I think PromoMats, MedComms. If we think about this other bucket outside of CRM, what's -- what are you excited about there? Where are you seeing traction and momentum in the business?

Yes. First and foremost, Crossix has been a very strong performer. After we made that acquisition about 6 years ago, we've continued to make investments in a lot of their products. Those investments are paying off in the products, also in the go-to-market, focusing on broader segments of the market.

So from a product perspective, it's measurement and audiences. We made huge investments in audiences. We've become the market share leader, the very best product in measurement. We're doing the same in the audience side. So we're increasing share in that part of the market. So Crossix has been a very nice and strong and will be a durable grower over many, many years to come, particularly as digital becomes more of an important channel to the market, a way that companies are investing in new digital engagements, they need to measure that effectiveness.

Beyond Crossix, we've seen strength really in all parts of the business. Commercial content, we're the established market share leader, but we're also innovating there and Falcon MLR is yet another layer to that, connecting the agentic layer that does the review and approval process with the core underlying enterprise application, big advantage for Veeva.

So I see that as a continued area of growth. And then in the data products, and Link has led the way from a data side, one of the first Link products is called Link Key People, and we've become the market share leader in that space. And there's a series of additional products that follow that, that are much earlier stage in the market, but we feel really confident in those.

And then some earlier-stage products like Compass, Compass patient data, Compass prescriber data, very significant market opportunities for us. These are markets that play out over a long period of time, but the early parts of the market, we're doing well, and we're getting those early customers. We're establishing the right to win in the broader market.

So 12 months from now, if you're back here, hopefully, and you're kind of recapping the success that you've seen over the previous 12 months, what do you think would be the 2, 3 things that you would highlight that really demonstrated that you've executed against your vision?

Yes. I think it will be broad -- I think it will continue to be broad-based. I think you'll hear me talk about Crossix again. I think you'll hear us talking more about the agentic layer. So what we're doing with Falcon and Falcon MLR is the one that's available today.

There may or may not be more in the commercial space. And I think you'll hear us talk about continued progress in data. Every quarter that goes by, we're making more and more progress from a product perspective, but also a market adoption perspective. So I think it will be more of the same and maybe even some new announcements.

That would be great. Awesome. Well, thanks so much. Thanks, everybody, for joining us.

All right. Thanks, Stan.

Hello, everyone. Thank you for joining us, and welcome to the Veeva Systems Fiscal 2027 Second Quarter Results Conference Call. [Operator Instructions]

I will now hand the conference over to Gunnar Hansen, Senior Director, Investor Relations. Gunnar, please go ahead.

Good afternoon, and welcome to Veeva's Fiscal 2027 Second Quarter Earnings Conference Call for the quarter ended July 31, 2026. As a reminder, we posted prepared remarks on Veeva's Investor Relations website just after 1:00 p.m. Pacific today. We hope you've had a chance to read the 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 Shawah, EVP, Strategy; and Brian Van Wagener, 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 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, August 26, 2026, based on the facts available to us today. If this call is replayed or reviewed 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 statement. 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, and I'll turn the call over to Peter.

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 million, with non-GAAP operating income of $416 million. Execution was exceptional this quarter as we made strong progress in many key areas. It was our best CRM quarter ever.

We also are accelerating rapidly in AI overall and especially with Veeva Falcon. And our focused acquisition strategy is working, bringing great people and capabilities to Veeva. It's in 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.

[Operator Instructions] Your first question comes from the line of Joe Vruwink with Baird.

I think it's evident over the past few months that biopharma R&D spending is headed in a positive direction, and that also is showing up that Veeva. As pipelines move forward, what are you finding the mentality to be at customers around assessing and adopting something that's brand new in thinking about the Vault application agents or even Veeva Falcon. I'm interested in levels of early interest taking place amidst what seemed 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.

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

Your question was related to Falcon. I think Falcon has a lot of interest right now because it's very clear that, that's a high priority, quick cost savings and compliance and efficiency that's 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.

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 may be 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 Veeva. So Falcon is agentic labor. That's something different than we've done before. We've done cloud software, data, consulting. Now we have this fourth thing, agentic labor. So it is transforming the discussion.

There's 2 different things you could do with Veeva. You can do some agentic labor, you can do core applications. That was never the case before. The important point is Veeva, 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 very well positioned. And the conversations are very rich. Gosh, I just hope we got to get that product going as soon as we can. If we had our early adopters live and successful right now, I don't want 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 of data mapping from one system to the other. There's not a cutover process. There's not ETL to do. So this implementation the full value is faster with Falcon, but the tech underneath it is newer and we have to get our motion down there. If you can tell I hope you can tell, I'm pretty excited about Falcon, and I really think we're on to something.

Your next question comes from the line of Brian Peterson with Raymond James.

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? Would love to get some more color there.

Yes. Brian, this is Brian. I'll take that one. Commercial subs, yes, a 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 even when we back out Crossix, it's double digits and the rest of commercial. So it's quite a broad-based strength in the commercial offering across CRM, content, data, Crossix, [ Astra ] most recently. 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 even is that going to go down, it's actually going up. And we're continuing to see a lot of room to continue growing in a healthy market and 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 in some of the investments that you're taking to kind of enable that revenue stream?

Aspen, 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 90-day plans. So we have a core market that we're going after, the horizontal CRM in a new way, in a new way that really enables AI and is built on modern technology.

So the thing to know that 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 we're making in Aspen. 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? And what kind of luck do you have along the way that plays into it? I've done the startup thing before starting Veeva. I've done the startup thing when we started Vault inside of Veeva. We're doing it again and they have lots of friends that have done it. And it's just like that. Can you execute well? Really, really well. And what kind of luck do you have on the way.

But sometimes you're wondering whether the market is there or not. You could say maybe we were wondering that when we were getting new markets going 18 months ago, et cetera. Right now, we have enough product, and we're working with some early customers, we are 100% clear that the market is there, 100% clear. It's just whether we can execute and we'll see.

So your question was about how to size the investment as well. That's not very small in the Veeva scale. It's not something that Brian, our CFO, notices really 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 base of the zone and is faster with AI, 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 train, and it's certainly not any kind of revenue that's figured into our plants at this time.

Your next question comes from the line of Ken Wong with Oppenheimer.

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 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 inter politics of shifting the budgets from an IT wallet to maybe an HR labor wallet. Any help in helping us think through that?

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 going to gauge into the future and tell you what we know so far. First off, it's actually going to be an easier selling cycle because IT is really not involved in the agentic labor. That's not something they're involved in because 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 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 super clear.

And the other question is, yes, it is a very related buyer. This is actually -- we have not hit the case for Falcon where we're selling into a bar that we are not selling into because we're always selling into the business side with our business applications. Now sometimes more or less. For example, in the areas of Falcon or Falcon is playing, for example, safety, clinical regulatory, that's always been somewhat more of a business to sell IT involved, but somewhat more of a business sell. CRM is the most IT heavy cell that we have in general. So these areas where we're doing Falcon, they were ready, I would say, on the average, 60% of business sell and those are people that we've been selling into for 10 years.

Understood. And then Brian, just a follow-up on some of the investments. It sounds like with Aspen, it might be sort of small upfront, but as we think about you guys ramping on Falcon, ramping on Aspen, ramping on some Vault, Vault agents, Vault AI. I mean should we expect maybe an uptick in terms of sales investments, R&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 be on. But you've also seen us over time consistently think about both growth and profitability. And so 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 scale investment as we scale revenue. There's certainly nothing material that I would call out for this fiscal year. It's all factored into the guidance that we've updated for FY '27. And as we get another couple of quarters ahead and gauge into the future of next year, we'll factor that into our guidance for next year.

Your next question comes from the line of Saket Kalia with Barclays.

This is [ Ryan Padle ] on for Saket tonight. Peter, maybe my first for you. From the customers that are planning to transition the 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?

Yes. Ryan, I do. There's a handful of customers -- large customers that did select Salesforce, many of them even 2 years ago. Those projects are having trouble, 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 that. So yes, I think we can win back some of those customers, maybe some of them completely, others of them in some certain regions and not others. I think the bulk of that win back would probably be in 2027 and 2028 because Veeva CRM, they have that backstop until the end of 2029. So this is the time when it 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 evolve here.

Yes, 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 a 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, we said, "Hey, we want to be your Plan B." And they really embrace that, and that's the way they view that because these customers they have businesses to run, right? They got to get their medicines to patients. It's great they love having a backup option if their Plan A doesn't work out.

Really interesting. I appreciate that. Brian, maybe my follow-up for you. Can you just talk a little bit about what you're seeing on the R&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 in. Just as we think about that revenue mix shift and how it's involving.

Yes, it's a great question, Ryan, because we're right in the middle of that transition that you pointed to. And 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 [ QDOC, in QMS ] and our regulatory suite that have fueled a lot of the growth in R&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, EDC, [ Eco, or TSM ], Safety, 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 guard 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&D business and obviously pleased to be raising the guide again here in Q2.

Your next question comes from the line of Alexei Gogolev with JPMorgan.

Hello, everyone. I wanted to go back to the Falcon discussion. So with [ 5 ] also early adopters and first go live as expected this year, what are the key readiness gates you most clear? And how do you expect the human in the loop requirement to evolve by workflow type?

I'm sorry, [indiscernible] 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 gate you must clear and how do you expect the human in the loop requirement to evolve by workflow trades?

The key sort of regulatory hurdles, if I heard correctly. Yes. Agentic labor is by human labor in a way. It's non-deterministic. 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 [indiscernible] as well because you can see the outcome of what the agent did and does inside of the Vault applications.

So from what we can see is it's working very well. It's not -- this approach is completely similar to what customers are doing today on certain internal projects. The difference is they would like to be able to do it at scale in a very repeatable motion. So I would guess, 3 years ago, we would probably have to be teaching the customers a lot about what is AI, what is the 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 a partner that can scale it across multiple areas.

And also on the Data Cloud topic that 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?

So we don't position Data Cloud as a prerequisite for AI. It's more of an accelerator. The claim in your data is, the better your AI process are going to work, especially in certain areas. What's working well for us in Data Cloud is OpenData, so clean reference data. Now that's a hard project to do because it involves changing a lot of things [indiscernible] systems. But we have some momentum there, and I think that's going to continue. We have strong momentum in Compass for certain therapeutic areas of complex therapies where our Compass products can see different things in the flow of complex products in the U.S. that other people -- other offerings can't see -- and then 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 I think medical insights, linked key accounts for the U.S., linked workflow for Congresses. So overall, data it is not a thing that can accelerate very, very fast. It's not like 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 not a random set of products. It's -- we're building the industry cloud and the more our customers realize it, the more benefits they get because things fit together.

Your next question comes from the line of David Windley with Jefferies.

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. And I say that carefully, interest, they're interested, but we really haven't engaged heavily there yet because 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. So we're focusing on the sponsors first, and I fully expect over time that this will be useful for outsourced service providers, but we have to work on the sponsors first.

Great. And 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, et cetera, how do you see the China market as an opportunity for Veeva right now?

Yes, China is certainly moving fast. I mean when we look at my track career standing it's over 30 years here, it's astounding the transformation in China and what it means for the global economy and what can be accomplished and the whole notion of a parallel tech stack antenna. So yes, it's moved so fast 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, et cetera. We have our data products made in China specific for the China market. And there's other things that we can do in China there in China for China. But one of the big benefits is those products fit with our global products. For example, China CRM fits with our global [ PromoMats ] product. So there's a synergy there. China is a 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 U.S. or Japan or Europe, they want a team, a global Veeva team that can help them with China also. So it's very synergistic. We really love our China business.

Your next question comes from the line of Rishi Jaluria with RBC.

It's nice to see continued strength in the business. I want to start with a question on Aspen and the pricing model. I can think the publicly posted pricing model is really interesting and compelling as application software companies were kind of figure out kind of the pivot to more consumption, et cetera, and you're talking about charging per human or per agent.

Can you maybe walk us through how you see that pricing model starting how the puts and takes of that and what lessons or learnings can kind of be picked up from that as you see more Falcon adoption, more AI adoption in the broader Veeva suite and trying to kind of price accordingly for this new AI world? And then I've got a quick follow-up.

Yes. So cloud software, we've got to remember, it hasn't been around for 50 years, right? I was counting in the early days of salesforce.com, and that was not even 25 years ago, right? It was for me, it was 23 years ago. So very early, and the pricing model sort of arrived and the technology model arrived and the way we do things arrive, and you see that all in the first-generation big cloud companies big cloud application company. There's a way you do things, right?

So Aspen is taking a different approach that may or not -- 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, $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 taggle with your sales rep for discounts and if your big companies this and that and 14 different additions. Now it's more like modeled off of Amazon Web Services. There's a price, okay? And it's a good product. You can buy us. 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 5 users, it's $50 a month and you put a terabyte of data in there for some reason. Well, okay. Well, that's not anything that anybody thought about. So there'll be overage charges that you will pay monthly on [indiscernible]. So you kind of is 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 patch to say, yes, I can't use unlimited compute because that's kind of -- that doesn't make sense.

So now we're also going to listen to our early customers, and we're a 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 got to remember, we're a public benefit corporation. We're after success for our customers, the industries we serve and Veeva on our investors. So the thing is make it simple, get rid of all this noise that have built up in the systems over time.

All right. That's really helpful. And then maybe just thinking through as Falcon and kind of your AI products grow, can you talk a little bit about under the hood, what sort of the AI stack looks like? And maybe more importantly, as these become a 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. And is there an opportunity over time to leverage more multimodality and even some of the open weight models as they improve to control some of that potential gross margin headwind?

Yes. Again, I don't really want to make predictions on Falcon because it's early. But in general, I don't think we're going to have a gross margin problem. I think the gross margins will be roughly similar to our software. And here is why when we really go deep into Falcon and 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. And we use the nondeterministic models, the anthropic models, et cetera, when we need to. So it's not a lot of this value is going into the agent.

And then I believe everybody knows that the cost of these models are going to go down versus whether they're with better hardware, or open weight models or et cetera, et cetera. The current cost of the models is not sustainable, not based on what we're doing, but based on this notion of what software development is doing, eating up 50% of the tokens in the world and hundreds of billions of dollars. Somebody is going to build a better mousetrap for that over time, and that will 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.

Your next question comes from the line of Tyler Radke with Citi.

Brian, just going back to your comments on the R&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 terms of the timing and when you see the kind of the growth inflection happening from those S curves. And if you were to just sort of stack rank those products, you mentioned what sort of have the biggest opportunity to be the next $500 million or $1 billion products within R&D?

Yes, thanks for the question, Tyler. I think we are excited, risky about all of those products, all the 5 that I mentioned, EDC, eCOA, RTSM, Safety, LIMS, 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, LIMS and Quality. So each of these is very significant opportunity and at 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 on the product, great progress in the execution, great progress getting customers live and happy and successful and reference selling.

We don't put exact timing on that, right? We don't generally talk year-by-year. So I'm not going to give guidance out beyond this year. But I think we feel very confident in the trajectory that we're on with those products in R&D.

Got it. And then in terms of Aspen and sort of your broader ambitions across industries outside of your traditional segments. Like just can you just remind us the sort of the ICT there? Is it smaller organizations or how do you mean to clearly such a broad opportunity. So how do you start and prioritize that and staff it?

For clarity, ICT, what is ICT?

Like the ideal [indiscernible]. Yes, yes.

Okay. I'll take that one. Yes, the ideal [indiscernible] 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, we're going probably get a lot of young tech start-ups, right? Because they're doing something really innovative in what they're doing, and they don't really want to do the same old thing in CRM for core account contact opportunity management. So I think we have early indications that there'll be great companies to work with. But we'll see. Again, I'll let you know a lot more in the year.

Your next question comes from the line of Jailendra Singh with Truist.

I want to go back to Falcon discussion in the 5 early adopters there. It seems 1 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 or pricing of the Falcon product?

In terms of where the labor is done or where will this be displaced, I think there'll be a combination of internal and outsourced, although generally not the CRO. That's not what I see. It's a different type of outsourcing some of it from the CROs, but not most of it.

And then in terms of the pricing, it's very early for that. I know we've been in discussions with customers and their desires for predictability. That's for sure, right? They want predictability for that. Because for one thing, they get that predictability when they either hire or outsourced labor. It's quite predictable, 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 you can't do the things that it will do 3 years from now. So how do you have a fixed price when your capabilities are rapidly improving.

So I think with some of our customers, we will end up having enterprise license agreements, enterprise subscription agreement 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 that cost you x. And if you want to a Falcon in this 25-year old, it cost you a bit more. I think it's going to be like that. But again, this is the type of thing you work out with the early adopters. 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 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 of this hinges is on having a product that works well. and that's really where our focus is.

I would say our early signs are good. When I talk to the engineering and the product management people at Falcon, there is an optimism, you'll see even the pessimistic ones saying like, "Oh my goodness, it would 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 the ready better than what the humans did. So there is a sense of optimism, but it's too early to declare success. We have to be very paranoid and pessimistic because 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 leader of Falcon reports right to me. This is a complete new market and a new motion for Veeva. So we don't have all the answers yet.

It makes sense. My quick follow-up on other points you raised in your prepaid remarks and somebody asked it earlier about you focus on CRM win backs among top 20 companies that did not select Vault CRM. I understand your point that you want to share, set for stories with them. But just curious, has 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 in rollout by Salesforce at giving you confidence or opening a window? Just curious like it seems like you're a lot more explicit this time around in the past.

Yes. It's based on our execution 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. We have over 180 customers live. We have customers that are turning [indiscernible]. We had a big milestone in CRM this quarter where one of our top 20s turned AI on in CRM for their entire Salesforce. So really significant milestone. 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. And just to kind of paint the kind of what we view as the end state, we see Veeva maintaining over 70% share in the CRM space which means we'll continue to execute. We'll continue to drive innovation for our customers. So we feel really good about how CRM is playing out.

I would say you asked about our customer interactions there. Yes, we have customer actions. Lots of people had Veeva with these customers, and I personally do at times too. And a common thing you might hear is from a customer is we're not ready to make that decision yet, right? So they're open to it. They're looking to it, they're not ready yet. So that's -- those types of things give us confidence.

Your next question comes from the line of Craig Hettenbach with Morgan Stanley.

Thanks and great discussion around all the AI developments. Peter, from a macro perspective, after a couple of years, whether it was IRA, MFN pricing, tariffs, the backdrop has steadied. So I'm curious, outside of agentic, in your customer discussions, what are they most focused on? What areas in terms of the leaning into investments that you're seeing in the business?

Yes, Craig, it is interesting. We think things are steady. It is an interesting comment on the world. We had 2 kind of major wars going on. We've got a complete tech disruption in AI that's going on and I think what happened is the life sciences industry has gotten used to, hey, the world is going to have a lot of moving parts. And they're just moving forward. So I think it's if 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 kind of was disrupting.

So for example, and I if we had a major, major shift in interest rates, all life sciences is a capital-intensive industry, that can do things. If major escalations in war that can do things. But so far, industry seems to be executing pretty well and focusing on the job to get done.

Got it. And then just my follow-up for the EDC segment. Compared to 1 or 2 years ago, 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?

Yes. EDC is one of the larger areas and it's certainly a long implementation cycle. So some of our wins are still ramping. And we're working with the other ones. We have, I believe, it's 9 out of the top 20. Most of the other ones are with [ Medidata ], not all. And 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 they have many other things to do.

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. More things to bring to the same buyer and especially in clinical, having the clinical operations, clinical data management and our site solutions. That site solutions is a very strategic to us, and we're introducing eSource there. So I think confident in EDC over time. It just takes a while, and that's something that I think you'll see progress in the next couple of years there.

Your next question comes from the line of Andrew DeGasperi with BNP Paribas.

I just wanted to ask one. First, I think you're coming up to the 1-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 more them because we haven't heard much from that deal. And I wanted to know if you -- is it going ahead of expectations or in line or below?

We're really happy with that IQVIA partnership, Gosh. That's -- and I discussed with the management team of IQVIA, and I can represent that they represent to me that they're very happy with the partnership as well.

So yes, end customers are especially appreciative of it, right? Much less half working with Veeva and IQVIA. I think great things are going to come out of 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 are both major players to the life sciences industry. We are the 2 major players. 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 you can collaborate, the better it is for the industry, help the industry grow. It helps Veeva grow, it helps IQVIA growth. So I couldn't be more happy with that. If you ask me, I feel 500% better about our IQVIA relationship now than I did 2 years ago. It's -- it's probably the best thing that happened to our company 12 months ago, and I was just outstanding. So super happy with that.

And then I'm curious about the double-digit growth you mentioned in the Commercial Cloud business, even excluding Crossix. And I just want to unpack that, like in terms of the -- was -- 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 acceleration?

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 what the result is that with CRM. It was add-ons and new customers in content. It was new customers and brands in Data Cloud. It was continued growth in Crossix on both the measurement and the audience side. 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, very strong quarter from commercial.

[Operator Instructions] Our next question comes from the line of Dylan Becker with William Blair.

Maybe Peter, 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 you 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. Because it does seem like that's another area. I know it's not perfectly correlated to the subscription side but continues to see healthy momentum in driving that change management for a lot of these enterprises.

I think that 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 $1 billion 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 implementations go and the more accurate, less cost, the more valuable your applications to come. So that's the big driver.

Yes, it probably means growth for us in services because people will buy more services, but it's about customer success and the industry's success and driving our application business. I overall think it will be a renaissance for services and consulting companies as we go forward because I think this notion of tech-enabled services specialized tech-enabled services is really going to drive growth rather than going to generalists that say, "Hey, I have people that can do a lot of things." Now 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 do more with partners rather than doing it internally because they can get the outcome quicker and better with the tech-enabled service.

Your next question comes from the line of [ Tami Chaudhry ] with Guggenheim Securities.

I guess, Peter, I wanted to ask you a question on our recent management change. It was announced that [ Tom Schwenger ] will be leaving the company to go to a longstanding 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 rig over the years, if any?

Yes. [indiscernible] first go [ Tom Gaetan ] was at Accenture before he came to me many years ago and was a great Veeva partner at Accenture and Tom is going to go on to be a CEO of a services-type partner, and we think that it will be a great partner for us there now. So all good there. Those relationships don't go away that Tom has, so he will keep those.

And in terms of Veeva, when a customer -- especially when you mentioned [indiscernible] gosh, that's a business-critical decision that lasts for 10 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 CRM business because that's more of a -- it's an enduring long-standing thing. It's different than maybe consulting type work or something like that. This is a product attachment. So that's not going to affect our business.

Your next question comes from the line of [ Billy Fitzsimmons ] with Piper Sandler.

Perfect. Congrats on the 2 big top 20 biopharma wins Vault CRM in the quarter. Could 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, 90 days ago?

Yes. So first, we're excited about the exceptional quarter that we had in -- that was one of the headlines. You heard us talk about 3 large companies, 2 in the top 20, really selecting Vault CRM, Biogen selecting Vault CRM. And then, of course, we have Regeneron as well.

The why 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. The 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 a great product. I mean, it's really -- it simply comes down to those 2 things.

In terms of the remaining top 20 commitments that are out there. There's only 2 left. So we have 12 of top 20, and there are 2 remaining and they'll play out by the end of this year, but we feel good about both of them. They still need to be finalized, but we like our chances in both, and we'll update you as things play out.

Your next question comes from the line of Ryan MacDonald with Needham & Company.

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 if they don't have the time to evaluate hundreds of new vendors. 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&A activity, acquire similar types of AI point solutions like [ Copley ] and sell it into your existing base faster than what one of these smaller AI solutions could do on their own?

Sorry, I was giving you a great answer on mute. The customers want to be out of the experimentation fix. 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 goodness, you're announcing that because that's I didn't want to evaluate all these small vendors. So now that you have an offering that obviously not have to go 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 [ Cola ] 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 any other part. That market 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 going to do an acquisition there, it would be more for talent acquisition and not for product because we've put a real good base in the Falcon product and Falcon platform. I don't think we'll need acquisitions for product anymore. We did look at some when we were just starting talking. We looked at a number, I would say, in at least 20 companies to look at. We found one that was the right fit of culture, product and that willingness to be acquired. And we found that in [ Copa ]. So it's sometimes like that, for Falcon, I don't actually expect us to find another acquisition that fits and we're not dependent on any acquisition, but we'll see what happens.

Your next question comes from the line of Gabriela Borges with Goldman Sachs.

This is [ Grayson ] on for Gabriela. 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?

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 going to really be visible milestones, I would say, we'll probably give you updates when the time is there. And the other question was basically how will things be better? Is that what the question? If you could rephrase that again?

Yes. Just what are the specific customer problems that you're aiming to solve with Aspen versus what some of the existing horizontal CRM platform struggle with today?

Yes. A couple, one is price being unpredictable getting out of control, that would be one. The other one would be just sort of the tangibility of the vendors that you can really count on the vendor to be 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 take 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 can scale up."

Other things are just like data entry, the existing CRM systems, really, if you get into the, like, okay, they require a heck of a lot of data entry. Most of that AI doesn't need to be done anymore. And then I just think there's 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 multicurrency, how do you handle forecasting? How do you handle implementation so that you can get the CRM you want for your company in 3 months rather than getting half of what you want in 3 years.

So I was on the Board of Zoom for many, many years, and Zoom was a very small company when I joined, and there -- and very few investors wanted to invest in to it because they thought, well, there's already WebEx, there's all these other things. But Eric set 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, it will be 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.

I wanted to drill more into Crossix. From 90 days ago, are you seeing from your purview from Crosstex, are you seeing pharma marketing advertising budgets become better than they were 90 days ago? And do you think that AI is helping to act as a catalyst for pharma budgets not only across expected overall pharmaceutical advertising space?

Yes. We continue to see strength in the pharma marketing budgets and spend on digital and that's playing out in Crossix. We had good another strong quarter of performance in Crossix. AI, what role is that playing? I think that's -- that's a nice long-term benefit and driver of what we're doing across excess companies. And we -- you 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, Crossix becomes more important in terms of measuring and understanding and optimizing against that spend.

So yes, absolutely, AI is a nice -- will be a nice tailwind for the foreseeable future for Crossix.

We have reached the end of the Q&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.

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. [Operator Instructions] I will now hand the conference over to Gunnar Hansen, Senior Director of Investor Relations.

Gunnar, please go ahead.

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 1:00 p.m. 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 Shawah, EVP, Strategy; and Brian Van Wagener, 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 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 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 measures 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 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 Instructions] Your first question comes from the line of Joe Vruwink with Baird.

Great. 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 Vault -- the Vault standard agent and Falcon.

Joe, this is Peter. I'll take that one. Yes, there's a lot of things to unpack there. What you're seeing is sort of the next chapter of Veeva in our industry cloud, right? We used to talk about applications, data and consulting to make the industry more efficient and effective. Now we're talking about software, AI, data and consulting, right? So Falcon specifically is that the agent layer and that's agentic labor.

So fully replacing arts -- jobs that people used to do. People who used to do these jobs using our applications, now we'll 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 would 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. .

Your next question comes from the line of Brian Peterson with Raymond James.

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 in pharma. Peter, I'd love to just get your perspective on that.

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 MAAP 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 showed 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. 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 e-mail 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 the 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 the clinical trial, what drug is that involved with?

We will make agents to do that and do 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 and solve 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 a 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 2 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.

Your next question comes from the line of Ken Wong with Oppenheimer.

Brian, I wanted to just touch on the R&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 kind of the rest of the year? Is that conservatism? Is there something that we're not seeing around the corner there?

Yes. Ken, I think first off, we are really happy with the growth of R&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.

Your next question comes from the line of Alexei Gogolev with JPMorgan.

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

Yes. Alexei, this is Paul. Really strong quarter, 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 had our Summit, lot of innovation at Crossix, measuring new channels like Open Evidence as an example, Meta, those are things that we didn't historically do. We didn't have to measure OpenEvidence 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.

Your next question comes from the line of Rishi Jaluria with RBC. .

Wonderful. 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 have 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 to a platform story.

Yes, Rishi, this is Peter. For Falcon, the actual effort there is taking the path less traveled. So that's a platform for us to build and operate standard agents to actually solve the problem for the industry. So 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 we're not -- with Falcon talking, 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 that really became apparent what we were doing. We're 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, right? That's the vision that we have, and that's not anything that anybody has 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 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. I was -- when we're starting off something big like this, we always think we want to deliver $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 Falcon is just going to deliver value. It's it going to be great revenue for Veeva, where 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 an incremental thing or a tool.

Your next question comes from the line of David Windley with Jefferies.

Good segue. Peter. 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?

Those are 2 great questions, and I'll take them in reverse order because the second one comes first, which labor rules are we looking to do? I think the most right there ones are actually the simplest and the highest volume. And actually, when you look inside of 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 million, 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 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 2 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.

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. So if you have an agent, first off it did is a very young kid outside the house, picking strawberries in the field. [indiscernible] would pick you up, you'd go out there and we didn't pay you by the hour, they paid you by the flat because that's how that worked. If we had an agent picking strawberries, they'd be paid by the flat.

Your next question comes from the line of Andrew DeGasperi with BNP Paribas.

I wanted to ask a clarifying point you mentioned earlier and then just really on the Veeva Falcon. You're 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 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?

Definitely all accretive because this is not a market we address today. We don't play in that market today. This is not 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. It'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.

Your next question comes from the line of Jailendra Singh with Truist Securities.

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. Just could you give us some flavor about in which areas you're seeing pockets of strengths? You've called out Crossix and areas where recovery is still ahead of us. Just give us a little bit color about the macro development.

Jailendra, 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 in there, 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 cloud and quality side, and we're feeling good about that, and that's all factored into our guidance for the balance of the year.

Your next question comes from the line of DJ Hynes with Canaccord.

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.

Yes. So DJ, yes, I can give you an update. First, things are going really well. Just across -- broadly across all CRM, we had -- you probably just saw over the last 2 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. .

Just maybe a clarifying point. We don't actually count them in the top 20. We built a top 20 list about 5 years ago. We created it. We use it across all of our products. We haven't changed it in the last 5 years. And that list includes the largest 17 biopharmas, which generally don't change year-by-year. And then kind of the final 3 on the list. They change a little bit annually, but we've kept our list the same. And those final 3 are Astellas, Biogen and Taichi Sankyo. So we won Merck KGAA and Teva, but we don't count them in that top 20. The remaining 4, there's 10 wins for veeva so far, 6 for sales force. So there's 4 decisions left. We expect to win the majority of those 4 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 is 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 at Vault CRM. So a lot of the innovation that we talked about, it's there, customers are using it. So it's just -- it's a lot of excitement. There's a lot of energy and a lot's happening in the CRM space. So we're pleased where things are headed there.

Your next question comes from the line of Charles Rhyee with TD Cowen.

Paul, I just want to follow up there because I think with the last quarter, the quarter before, you guys have kind of indicated that you could have 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. I appreciate it. .

Yes. No, there's only 4 decisions left that will play out through the rest of the year. We 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, it'll play out through the remainder of the year. .

Your next question comes from the line of Jeff Garro with Stephens.

I want to ask about the strength in professional services revenue, both in the quarter and in the outlook. Curious if 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?

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 2 together.

Your next question comes from the line of Ryan MacDonald with Needham & Company.

Maybe 1 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 due to prescription medication, drug-to-drug interaction type questions. And so it seems to be a natural fit there. But how do you drive sort of visibility and awareness of Ostro within that population and maybe get docs out of something like an OpenEvidence or Dr.GPT. And then, Brian, as you think about the commercial revenue -- subscription revenue guidance increase, how much of that was attributed to Ostro contribution?

Yes, Ryan. So Ostro is super exciting. If you -- the buyer of Ostro is the biopharma company, the user of Ostro is the health care professional or the patient. So it's a brand engagement platform for biopharma companies to help HCPs and patients ask questions and get answers instantaneously and do that in a compliant way. That's 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 Ostro 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 health care professionals that use that. Now it's why did we do this? And I talked a little bit earlier about how digital is increasing and we're seeing new channels, and you mentioned OpenEvidence. And OpenEvidence is important from a number of different perspectives, one which I referenced earlier from a measurement standpoint, as companies spend more with OpenEvidence, it's more important that you measure those channels. But also as they turn the channels like OpenEvidence for information, that's an entry point into going to a pharma company's digital site and using Ostro 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 at our -- 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 a potential long-term growth opportunity for us. It generated a lot of excitement for us as it relates to that. .

And on the second part of your question, this is Brian, we acquired Ostro late in Q1. We expect it to contribute about $10 million in the remaining 3 quarters of the year. So it's about 2/3 of the $15 million increase in commercial subs overall for the year. .

Your next question comes from the line of Tyler Radke with Citi. .

I was wondering if you could double-click on some of the wins on the R&D and quality and Development Cloud. Were there a lot of top 20s included there? Can you just talk about the pipeline, particularly in Development Cloud. I think last quarter, you did talk about maybe a bit of an air pocket, but just curious how the pipeline is shaping up for the rest of the year.

I'll take that one. It's Peter. Pipeline is good. The level of engagement is pretty comprehensive from all the way from Veeva Basics, small biotechs would continue to win a lot of those that are going on Veeva Basics. And by the way, those will be some of the first consumers of things like Falcon and our other AI solutions. To up -- we're right now talking about some of the most strategic deals we've ever done because the aperture in Development Cloud is just getting so much broader with Falcon and safety and clinical data management and clinical all working together and Vault AI in there as well.

So we're getting more and more strategic. Actually, in the quarter, we didn't have any particular large top 20 wins in Development Cloud in the quarter, and that happens sometimes. It's -- pipeline is strong. What happens sometimes where things don't align on the quarter boundaries, we had a number of great enterprise wins in safety, also in quality. I know we had some in clinical as well. So really happy with the progress there.

There's definitely growing momentum that I feel in the EDC area that's as a result of our eSource initiative. Now we have to prove that out first. if you look a step back, what are we doing in Development Cloud, we are expanding its potential super broadly. I think our vision is now very clear to our customers. So at our R&D Summit recently in Copenhagen for Europe, it was the largest crowd we've ever had and the most excitement than we've ever had by far.

Why is that? They're looking at Veeva doing an eSource initiative out to the clinical research sites to bring the data and documentation data, mainly in without any intermediary steps right into the pharmaceutical system that's never been done before.

Then they're looking at Falcon. Wow, that's never been done before. And they're looking at Vault AI, how productive that could make them plus the growth in our application areas, the growth we're getting in the RTSM area, the interest there. We signed our first top 20 last quarter on that for enterprise live ELA and our ePRO product in the clinical data management area. I think our vision is becoming clear and it's becoming very clear that we can execute on it and integrate it. So super exciting times. No particular top -- large top 20 applicant wins to report in the quarter, but that's just a timing thing.

Your next question comes from the line of Hannah Rudoff with Piper Sandler.

I wanted to ask another question on Falcon. On the development of that platform. Just wondering what exactly is going into the next 5-plus months ahead of your early adopter launch? And what has been done today and what still needs to be done? And how closely you're partnering with your customers out of that launch?

Lots of things need to be done, so developing the platform layer, which we're doing well, assembling the team, assembling that in the hurry -- we're really much in a hurry right now. And it's a disruptive technology. Falcon, for example, reports directly to me. This is our first step into digital labor. You can't -- you have to operate that effective back when we were the CRM company way back when before we went public, Vault was this tiny a little thing that reported directly to me.

Falcon is like that. So we have to build the platform out of the team, get the early customers sign early agreements with the early customers to use their data and documents to quality control and basically train our agents, get the first customers live and happy. It's great hard work to do Hannah, but it's something we're very used to. It's what you do on any new product, nothing particularly different there.

I guess 1 small 1 is there's a small part of it that goes a little faster than it used to, and that's the actual coding of the platform in the deterministic parts where we can lean in and leverage things like Claude Code to do that faster than we did before. But other than that, all parts of the cycle are actually the same.

Your next question comes from the line of Corey DeVito with Wells Fargo.

This is Stan on for myself. But Brian, I want to ask you for Q1 EBIT margin, I think it arrived at 45%, you're guiding for 44% for the year. Is there anything to call out on COGS or operating expenses as we think about the balance of the year? And is there any non-Ostro AI-related revenue embedded within guidance?

Stan. So on the first part of your question around COGS and overall margins for the year, I think the main factor that you see that's different this year is some of those services investments that we're making that we've talked about in the past and had been ramping up over the course of last year. And so you see that effect in the services gross margins if you look year-over-year. On the subscription side, year-over-year, it's a little bit of a dip in the margins. That's really more a function of last Q1's outperformance.

You recall we had a breakout quarter in Crossix audiences, which really flowed through to the bottom line as well as certain expenses that shifted at that time out into in Q2. So last Q1 was really an outlier, and subs is really on kind of a steady trajectory here. we're continuing to invest across the business. You see us making investments in our data network to support data cloud in acquisitions like Ostro in Falcon and Vault AI. So there are a lot of investments we continue to make to drive growth. but feeling good about the efficiency of the business and the guide that we're posting for the balance of the year.

The second part of your question, Stan, I think I missed.

Your next question comes from the line of Craig Hettenbach with Morgan Stanley.

Peter, given your furthest along on AI and kind of the Vault CRM agents launched back in December. Curious kind of what the initial uptake is there. If there's anything you want to tie in to the recent commercial Summit? And then for Brian, just a question on just kind of cost of compute and how you're thinking about the puts and takes on gross margin as AI ramps?

In terms of the commercial agents, it's actually the one where we were first out to market was in the commercial content area, and we have more than 10 customers live, and it's going really well in our Quick Check agents, and we're learning a lot there. At Commercial Summit, we had a number of customers live on some of our agents in CRM, actually generating commercial evidence in these agent call reports. So pretty happy with that. I think this is the year where we'll scale that more. So the -- I would say, Craig, early adopters or Stan, early adopters live, but now we have to scale it in both of the commercial areas.

Yes, this is Brian on the second part. So picking up the Stan's second question was around AI revenue, which I think for this year, our overall expectation had been for AI to be fairly immaterial outside of Ostro. And we're really focused on getting AI live in all of our customer areas, getting the product excellence, getting to customer success. It starts with that deep value creation for customers. So on the margin side, you also don't see a material impact, Craig. And in Vault AI, where it's usage based on tokens. I think we have a pretty good understanding of what that dynamic looks like, and it's factored into our guidance. But I don't expect there to be a material impact on margins driven by AI this year. .

Your next question comes from the line of Adam Hotchkiss with Goldman Sachs.

Peter, I wanted to ask another 1 on Ostro. I thought it was interesting in the prepared remarks that you characterized this as a start-up within Veeva. Just curious what the innovation framework looks like in that type of environment? And how it compares to how you've innovated historically?

And then Brian, just on AI driving efficiencies within your operating expense base. Maybe talk a little bit more about the progress in the R&D or again where else in the cost structure we might see some of that start to show up.

And in terms of operating as a start-up, we -- in an operating model for Veeva, we have a notion of the start-up models in the core models. And in the core models were organized functionally like the central sales team, engineering team, things like that. The startup model, it's all fully contained under CEO, and we use that either when the market is very different or when the product really needs to evolve. So Ostro is in the start-up model. Everybody who works on Ostro is fully reporting to the CEO of Ostro. There's guidance and help from other functional areas of Veeva, but it's -- and they're certainly inroads like, okay, Ostro doesn't have to use their own master subscription agreement anymore and all that type of stuff.

So it operates as a start-up, they can retain its speed, but it has a really smooth ramp up. And that's been a key to our success. If you look at how does veeva keep having good products all the way from manufacturing to drug safety to CRM clinical operations and everything else in between, we have a good model for knowing when something needs to be a start-up, but we also -- we build great pieces of the puzzle, but we know how the puzzle fits together.

So if you look at Ostro, so partnership with OpenEvidence, doctors on OpenEvidence, hand over to Ostro, can answer that question, hands over to CRM to human. So Ostro knows where you have the autonomy to function but they're part of a bigger picture and they know where they need to function and where they don't need to function so that we provide great value for the customer. That's our structural advantage, right? That's what -- why we're confident we're on track for our $6 billion of revenue and double that amount of value for our customers in 2030 because we're building a bigger picture that fits together.

You have to be able to be have a startup model to do that, and you have to be a very attractive place for start-ups of the right type to want to come to Veeva to create excellent value. We don't do that many start-ups, acquisitions, but when we do, we figure out how to operate them and then they succeed. We bought Crossix in 2019, Crossix I don't know how many times bigger than it was since then. And it spawned the whole compass as well. That was the plan for how to operate Crossix inside of Veeva. So that's something I'm very proud of. And then Brian, over to you.

Yes. On your second question around the use of AI internally. We use AI throughout the company, we've got general-purpose tools and then also specific tools and major functional areas. Probably the most significant push for using it is around the product because that's where we spend the most. And so you heard Peter mention earlier in product and engineering, we use Claude Code, come a long way. So we're seeing great efficiency from that tool. And I think in general, that means we'll hire a little less than we would have and accomplish more than we would have and go a little bit faster.

But for us, it's more about productivity and the combination of hiring a little less, accomplishing a little more, we think easily outweighs the token cost, and that's all factored into our guidance.

[Operator Instructions] Your next question comes from the line of David Larsen with BTIG.

Congratulations on another great quarter. Can you talk a little bit about your ability to take share from the broader ecosystem? -- in particular, like for CROs, for example, it sounds like you're expanding pretty deep and pretty fast into more R&D efforts, like, are you taking some of the long sort of expensive labor efforts that the CROs would do and enabling your biopharma clients to do that in-house with your AI? And then also on the commercial side, like, what is your vision for what the AI could actually do? Could they make calls to doctors? Could they send text messages to doctors? And would you potentially take share from Doximity, for example, or others like Doximity like LinkedIn. Just are you taking share from the ecosystem and enabling your clients to do that work internally?

Yes, I'll take that one. In terms of where can agentic labor play? And what kind of agents do. The best places to do are high-volume repetitive work that actually gets outsourced. So that type of work actually it's not so much the CROs, it's other specialized labor providers that do that. So I think this could actually be beneficial for the CROs because that we can do that lower volume work, which is generally done by the pharma company or a specialized outsourcer. We can do that cheaper, faster, better. That will hopefully allow pharma companies to run more trials, and that's where the higher margin work is for the CROs.

Then in commercial, that won't be -- agentic labor there will not be you're going -- you're going to have helper agents that help the field teams do things, but I don't think you'll have -- you will not going to replace a field person. That's about managing relationships, things like that. There may be some things in commercial for example, there's a medical legal regulatory process that is burdensome and expensive and occupies many parts of people's time in Life Sciences.

I think that can largely be automated, 70% or more with right agents over time. But the actual field person, I think, it's going to augment them. Yes, and the agent might send and it might help him draft an email, it might send a text reminder on their own behalf. And in commercial, mainly though, it's going to enable the field to be more productive and enable the pharma companies to do things they could never do before, which is have a conversation of a certain type with a health care provider at midnight when they wanted it.

Ostro can do that. and they never had anything that could do that before. So it's not one size fits all with these agents.

Your next question comes from the line of Steven Valiquette with Mizuho Securities. .

So I think just for us, it's good to see the positive Crossix results and outlook for the rest of this year, which is pretty consistent with what you communicated previously. But I guess, if you can just remind us maybe at a high level without giving any specific numbers just on the current level of customer concentration within Crossix. For example, if 1 single biopharma customer were to pull back, would that theoretically change the full year outlook? Or the Crossix revenue streams pretty diversified such that 1 customer is not really going to make a material difference in your outlook?

Stephen, this is Brian. I'll pick this 1 up. So overall, as Paul touched on earlier, I think really pleased with the progress in Crossix and selling into a really healthy and growing end market. For us, that means it's now quite a diversified business and that comes in a couple of different forms. One is between measurements and audiences, which are both very large businesses and growing well individually as well as within each of those, we have a number of clients. So we don't see that kind of major concentration risk that would impact the business over time.

So there are some areas like GLP-1s that maybe are a little bit larger as a proportion of revenues tied to overall industry spending patterns. But even as that trend has shifted, for example, you haven't seen that impact the trajectory of Crossix overall because there are so many customers across so many indications.

Our last question comes from the line of Sean Dodge with BMO Capital Markets. .

Yes. Peter, earlier, when you were talking about Veeva Basics, I think you mentioned those would be some of the first users of Falcon. And I'm just curious why that would be, why wouldn't it be some of the more sophisticated kind of longer-term users like large pharma that would be kind of positioned better to be initial Falcon adoptees.

Well, Basics are smaller companies, very nimble. Also, they're running not only our products, but they're running our processes. So they have an absolute standard configuration of Veeva, where they're running our processes. So we don't have to wonder how they have configured Vault or MAAP Vault or done this Vault or without Vault. They're running absolute -- let's say, we have over 100 Basics customers in the clinical area, their configuration is exactly the same. How they're using product is exactly the same.

And we operate those systems in a way for the customers. So that's -- if we have our agent working on for one Basics customers, it will work for them all. With the enterprises, the larger companies our agents have to be a little more adaptive. They have to first go through a phase of, okay, understanding how that customer is using that Vault, testing it out. Okay, I'm going to classify these documents that they've previously classified. Do I get the same of what they got. And if so, that's good. If not, what happened there? Basics is just going to be smoother, very, very smooth. It's the next step, obvious step for Basics, hey, we got the system and the processes from you, okay, let's just have it do the standard labor that goes along with that.

I would hope that all of our customers are in the clinical area, I would hope they're all using Falcon 3 years from now. But now whether that's going to be true or not, I don't know, but I can't see why they wouldn't.

We have reached the end of the Q&A session. I will now turn the call back to Peter 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. Thank you. .

This Concludes today's call. Thank you for attending. You may now disconnect.

Good afternoon, and welcome to Veeva's Fiscal 2026 Fourth Quarter and Full Year Earnings Conference Call for the quarter and fiscal year ended January 31, 2026. As a reminder, we posted prepared remarks on Veeva's Investor Relations website just after 1:00 p.m. 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 Shawah, EVP, Strategy; and Brian Van Wagener, 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, March 4, 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. I'll turn the call over to Peter.

Thank you, Gunnar, and welcome, everyone, to the call. We had a strong finish to the year, delivering results ahead of our guidance. Total revenue in the quarter was $836 million with non-GAAP operating income of $366 million. For the year, total revenue was $3.195 billion and non-GAAP operating income was $1.434 billion. 2025 was an outstanding year for Veeva. We surpassed our $3 billion revenue run rate goal and deepened our strategic partnerships across the life sciences industry through innovation and customer success. We'll now open up for your questions.

[Operator Instructions] Your first question is from Joe Vruwink with Baird.

I wanted to ask if Veeva is starting to see some programs funded maybe in the name of AI readiness. I would imagine for a top 20 to commit to Veeva in any of the R&D areas, RTSM, quality, safety, it would seem you're going eyes wide open into really viewing Veeva as a future foundation for everything AI related that is to come. And so I'm wondering if there's an AI influence that you're starting to see that's contributing to the strong demand here at year-end.

This is Peter. I wouldn't say that's a broad theme. There are cases, and it varies by area. More of the theme is, hey, we need core systems that will scale. Either their existing systems are aging. So we talked about a top 20 safety win. There their existing systems because they were doing other things over the past years and just lots of deferred maintenance, and that was going to become a critical risk for the company. So they have to get that in. There are sometimes where it will help our data business. They're trying to clean up their clean reference data because they know AI is not going to work because okay, garbage in, garbage out. So there's a little bit of that, but more it's just modernizing, getting rid of legacy and looking for increased automation. AI is really the goal there is automation, right? That's the goal. But AI is not the only way you do automation. part of it is you do automation through a system to have clean workflow. So it's a driver, but I wouldn't say it's a major driver.

Okay. Great. On CRM, Brian made, I thought interesting comments at a January conference around how that business is going to become about 10% of Veeva in 2030, so call it a $600 million run rate. I think that's a bigger number than many would have penciled in at the start of events and transitions happening there. Are there things like service center or campaign manager that are adding incrementally to the forecast? And how would you think about those increments rolling in versus the timing of what you know will roll off in probably that '28 and '29 time frame?

Yes, Joe, that's right. We did talk about CRM being roughly 20% of our total revenue today, going to about 10% by the 2030 time frame. And that's primarily driven by a lot of the growth that you're going to see. We have a broad, diverse business that's growing along multiple dimensions. So -- and CRM is relatively stable. So we project CRM will be a nice stable business for us over the long term. And that includes, to your question, some of the add-on products that you've mentioned like Campaign Manager and additional revenue from Service Center and other things that we may create over time, we may develop over time. But yes, that's -- think about that as the total kind of CRM seat-based revenue in 2030.

I'll just put a few puts and takes on that. The add-on products, patient CRM, Service Center, Campaign Manager, those can grow. And also, there are some puts and takes in the core CRM. So a couple of the large top 20, for example, were on IQVIA, okay, those are going on over to Veeva. We didn't have those before. some med tech companies. Yes, and Salesforce is getting a few of those as well. So there's puts -- we might focus on the takes, which -- but there's puts and takes in that area and then the add-ons will grow.

Your next question is from Saket Kalia with Barclays.

Okay. Great. Can you hear me okay?

Nice finish to the year. Peter, maybe if I could start with you, just to stay on the AI theme a little bit. You spent a lot of time with customers on both the R&D and commercial sides of the house. What are they saying about AI adoption right now within the life sciences industry? Maybe what role do they see the big LLM providers playing? And what role do they see Veeva playing, if that makes sense?

Yes. And in fact, you're right. I do spend a lot of time with customers. I was just reflecting when you ask that, it's one of the best parts of my day. And every day, at least I'm talking to one customer or another. It might be an individual person by text or a conference call or e-mail or whatever it is. So what -- first of all, there's extreme interest in AI because they're getting pressured by their bosses and their peers, right, to be, okay, how do we get more efficient with AI because it's a new computing paradigm. And I would say they bucket into 3 -- maybe 4 types of people that might be able to help them. One is the infrastructure providers, the LLM providers themselves, Anthropic, OpenAI, Microsoft in that camp, Amazon, NVIDIA, those types of things, what -- how can they be leveraged there? And then they would look for point solution providers. There's a specialized group of people in the specialized department and they can do this proof of concept or maybe you scale it for me here. And then there's their own employees doing custom software and then there's system integrators. And then you get the core application people like Veeva, like Workday, like SAP. And so when they're generally talking to us, they want us to provide more AI solutions that are tightly integrated with their core systems because they trust Veeva and they know we deliver quality and really know when we say something it's going to work, it's going to work, right, because our reputation is on the line versus a small start-up can just say whatever they want, right? It doesn't really matter. So they want us to get in there and make it work, and they want us always to go faster. So I feel that we have -- our customers really want us to win in AI applications. And so we have a right to win and we just have to execute. So it's pretty exciting. And then some of them have projects going with us, for example, in the promotional materials management area, and they're pretty excited that I can have a winning AI application that really works and is really durable and is from Veeva because they've been -- a lot of them have been burned on a lot of experiments, but it's not easy for customers to admit failed experiments because that's just the dynamics. You don't like to admit that. And failed is too hard of a word. Sometimes the experiment doesn't work out, but it's not a failure, you got a lot of learnings. But the experiments that can actually scale, they're rare so far, and they know Veeva's -- we won't do things unless we can scale them.

That's great and very, very helpful perspective, Peter. Brian, maybe for my follow-up for you. I was wondering if we could talk about the Crossix business here a little bit in fiscal '27. Obviously, you had a fantastic year in '26. So should we think about this year as a tough comp year? Or do you see some of the same trends continuing into '27?

Saket, I think both of those can be true. Crossix had an outstanding year last year, and it certainly exceeded our expectations. We're starting to lap some of those in Q4 and certainly into Q1. You'll recall that was the major driver of outperformance in Q1 of last year. So the compares do get tougher, but that is a business that's executing really well with a long runway for growth. And so we continue to expect very healthy growth from the Crossix team.

Your next question is from Brian Peterson with Raymond James.

Congrats on the very strong quarter. So Brian, I wanted to start with you. I've got the question. Any help on bridging the gap between the 13% growth for subscription in fiscal year '27 versus the 11% growth in normalized billings?

For FY '27?

Yes, for fiscal year '27.

Yes. I think the main thing as you think about subs growth in '27, Brian, is we've got some -- we just talked about Crossix. So we've got a little bit of slowing growth in commercial, very healthy growth, but just as Crossix laps some of those harder compares, and we've talked about CRM being a more mature business. In R&D, you'll see that the growth rate shifts a bit, and that's really driven by the shift from growth coming from our mature products like eTMF to the really big new products like RTSM and EDC and safety and LIMS. And so those products are very large and growing fast, but still early and getting to scale. And so you're primarily seeing the effect of that mix shift in the delta there between subs and billings. But it's not a major effect, and we remain very pleased with the progress and trajectory and the path towards our 2030 goals.

Got it. And maybe a follow-up for Paul. I know you have 125-plus customers live on Vault CRM. I'd love to understand for that customer cohort and even some that are looking at the transition, what are you seeing in terms of pipeline development of some of the other products? And would be curious about that cross-sell opportunity.

Yes, Brian, you're right. In the prepared remarks, I think we said 125-plus live. Actually, it's -- the actual number is closer to 140. So we're doing just really, really well in Vault CRM. -- pleased with our execution from the very largest of companies all the way to the very smallest and pretty much across every region. And yes, what we are seeing is, in some cases, when those migrations happen, it creates an opportunity to add a new product that they didn't have before. We've seen that in examples with Network and OpenData, a couple of the top 20s that we've announced. as they went to Vault CRM, they expanded globally with network and OpenData. And then also with some of the newer add-ons, some of the small and midsized companies, they're adopting some of the new products that we have, like they're turning on Service Center. We're turning on Campaign Manager. So it's absolutely an opportunity for us to pull a lot of that through, and I expect that's going to continue over time.

Your next question is from Alexei Gogolev with JPMorgan.

Peter, building on the AI theme, Veeva clearly has mission-critical software, strong network effect, proprietary data and domain expertise. How do your customers rank those key elements when they consider Veeva's right to win against those LM infrastructure peers?

Yes. I'm not sure how they would really rank that. I think they would kind of view it as altogether. Veeva understands our systems. They understand our processes. They understand our technology. But -- and more so, many of them think of Veeva as a company that's delivered on everything we've said we would do over the last 15 years. So the trust is there. And it's not just buying trust, it's earned trust. We're a company that really -- we really take customer success seriously. So when we commit to do something, we're going to do it. And we won't get a sale by committing to something we can't do. That's what we don't want to do. So I would say trust is the #1. And obviously, they know that we know our business, and we're tech experts. So that's kind of how they see it. It's pretty straightforward.

And Brian, I appreciate that you and Peter have confirmed the target of top 20 that you hope will switch to Vault CRM. Do you still think you may get the commitment from the remaining 4 customers by mid of calendar '26? And also related to the customer topic, it looks like customer growth has accelerated to 5%. What drove that?

Yes. So we -- as it relates to top 20, so most of the decisions have been made. There's a handful, roughly 5 that are left. We do expect -- we've said roughly 14 of 20 where we expect it will end up to be, and we still -- we're on track for that. Nothing has changed there. Maybe it's 13%, maybe it's 15%, but we think 14% is closest to the pin. Those decisions will play out this year. Some of them will happen over the next couple of months. There may be a few that go later in the year for no other reason than company-specific things like there's a couple of customers that have some launches that are upcoming. So they're obviously prioritizing that over anything else. So yes, we're on track in top 20. We think it will end up at roughly 14 of top 20. We're doing well there.

And I think the second part of your question was around the growth rate in customer count. Did I hear that correctly? I think so. I think you asked about the 5% growth in customer count. And I think what you're seeing there is just really strong execution from the team. We talked over the past few cycles about the progress we're making in the basics area, which is meant for some of the small emerging biotechs, and we've seen really good execution with that team in both commercial and R&D.

Your next question is from Ken Wong with Oppenheimer & Co.

I wanted to maybe touch on professional services. It looks like there was some outperformance there. Can you talk about what segment saw that outperformance? And then as we think about fiscal '27, should we assume the gross margin profile of that services pipeline is consistent with '26?

Ken, this is Brian. I'll pick that one up. So yes, very strong execution from the team in FY '26 and going into FY '27 on services. The main driver of growth there continues to be business consulting, but also the R&D team growing very healthily as well as other areas like our digital events business and commercial as well. We've had some of the uptick that we expected in CRM migration activity. And so you see that reflected in the top line. And we've been hiring to support that demand. You can see that in the margin profile over Q3 and Q4, continuing to run very profitably and expect that to continue over the coming year.

Got it. And then just a quick follow-up on the -- you mentioned on billings, no longer giving the quarterly guide. I guess as we think about our models, is it at least loosely fair to assume typical seasonality that we've seen these last few years?

Yes. Thanks for that question, Ken. So yes, our plan for the coming years, we'll continue to provide annual normalized billings. We'll update that on a quarterly basis alongside our other metrics. You've heard us say for several cycles, we think that's the better indicator of the underlying momentum of the business. So we're not going to give quarterly guidance. But with that said, we do expect the seasonality to be directionally similar to last year.

Your next question is from Stan Berenshteyn with Wells Fargo Securities.

So in the prepared remarks, you mentioned a top 20 standardizing on RTSM. I'm curious, will RTSM have a similar ramp to EDC? Or is there a different consideration there? And I want to understand the selling motion here. Was this a competitive takeaway? Does this top 20 standardize on any other major solutions for you?

Let's see. The selling motion there and the ramping -- these are long-term ramping deals with RTSM. RTSM is a significant product area. You could think of it as significant as the EDC area. So it's -- because it's very critical in what it does, shipping around drug supplies and blinded drug supplies to research sites all around the world and randomizing the patients into the right cohorts. This is extremely detailed and critical work. the selling motion there is different than many of other products because -- especially the top 20, they buy the RTSM solutions and services almost on a study-by-study or therapeutic area by therapeutic area basis. And we think Veeva can be just the enterprise solution for that. We have the scale to do that. We're not a small stand-alone RTSM vendor. We're a big Veeva that has a lot of scale and flex, but we have an outstanding stand-alone RTSM product. It's the best product in the business. So now you can standardize on Veeva and get a lot of synergies. So the selling motion is often showing people that you don't have to do it the old way. You don't have to have an RTSM procurement department in your company. So it's a different selling motion. You asked if the customer -- about other products that the customer has, the customer has been a long-standing clinical customer. They did actually buy some other clinical products from us in the clinical operations area at the same time as this. But these are -- I wouldn't say they're completely separate sales cycles, but it definitely -- this was an RTSM sales cycle, and we're really happy with that. It's a milestone deal for Veeva and for the industry. And I hope to have more of those over the next year or 2. Now our focus right there in the RTSM is going to be delivering on that promise for the customers so that they see these synergies of standardizing. That's #1 thing we got to do.

And then a quick follow-up on AI. So obviously, some of your clients are helping solutions that maybe are not widely available yet. Can you maybe speak to early proof points that you're seeing on AI agents that I guess you're planning to roll out over the course of the year? Are there any sort of ROI or tidbits from clients that you're hearing that you can kind of comment on ahead of these releases?

Yes. The one that's farthest along, and we have multiple projects underway is the commercial content area. And that -- the ROI is just very clear. It's faster content, lower cost to create that content, and that's what it's all about. Lower cost to create that content. I won't quote specific numbers, but that's pretty clear to quantify. Faster content just means better launches. That means that drives the top line before the on that product expires. So I get asked by that by customers all the time. They know in the age of really omnichannel experience for their customers, which are patients and health care providers, omnichannel experience that includes AI doctors and large language models, the speed that you can get your content out there in a compliant way is just going to be critical. So the old way of approving content is just not going to suffice anymore. You need to approve it. You can't do this. It's not legal to just throw content out there that's not compliant. They need to do it. But the old way of doing it is just not going to suffice. So there's intense interest in that area.

Your next question is from Rishi Jaluria with RBC.

Nice to see continued momentum in the business. Two questions. Maybe first, I would love to start out by exploring a little bit more. Obviously, Anthropic made a lot of noise when they launched Cloud for Life Sciences and signed up a lot of deals and maybe lost in that was Veeva is an enabling and launch partner of Cloud for Life Sciences. So Peter, how should we be thinking about the opportunity for Veeva to work with Anthropic, OpenAI, all the different kind of model providers out there, provide your domain expertise, provide the workflow expertise and kind of have a horizon tide list all boat situation rather than obviously the current market view of it being more cannibalistic? And then I got a quick follow-up.

Yes. I certainly don't view it being cannibalistic for Veeva, absolutely not. I mean let me state that clearly, AI is a very positive thing. So I'll get back to that in a minute. But address a higher level, AI is not replacing software. That's just not happening. And not all software is the same. I'll make a point on that. So AI, that's not going to replace things like Windows, iOS, Excel or core systems of record like SAP, Workday or Veeva. These core systems, they're essential. And we'll add core AI systems as will SAP, as will Workday. And these core systems are going to be used by agents as well as human users. Yes, that's new. But these systems are essential and they're they're not going away. But AI is going to enable a lot of new kinds of long-tail software. It's software could be only used by a few people or a specific software group in a company, company-specific software or types of software that couldn't be done before, self-driving cars and trucks, dramatically better coding tools, better Google search. And then in our case, industry-specific AI applications. So we're really in these early days of AI and people get a lot of hyper and they think it's going to play out over 1 or 2 months. It's not. It's going to play out over 10 or 20 years. Now for Veeva, specifically for Veeva, AI, that's going to help us create and improve our core systems faster than before. So that's where it will help our software development, but not at the expense of quality, predictability, regulatory compliance and the real value that customers depend on. Now as it relates to Anthropic or OpenAI and others, that's an engine and their engine will be used for a lot of things. They will be used by the Veeva applications or by custom applications that customers develop. So yes, it's good for those large model providers. Now they have to watch their profitability, et cetera. But they're an engine, then the new wave of cloud computing. So that's the new AWS, et cetera. So it's a good business there. But just as AWS itself and also Microsoft Azure, Google Cloud, et cetera, that was very good business for those hyperscalers. But I think what sometimes gets lost, that actually enabled Veeva. You couldn't have built the industry cloud for life sciences. You couldn't have built those long tail of applications without those cloud infrastructure providers. And it's the same way here with these large language models. Veeva could not build the AI applications that we're going to build without these foundational LLMs. So I don't know if I'll use this word correctly. I think the word is symbiotic. I think so. I'm more of a short -- I'm more of a hemming way really than anything else, but I think it's very symbiotic. And at times, especially in the early days, it can be chaotic. As people are bumping around, that's okay, but the large -- I should write a poem, I guess. But the large patterns are very clear, and it will be very symbiotic.

Very helpful. And then just quickly as a follow-up on that kind of thought experiment, Peter, and looking forward to a collection of PMs soon after this. But as we think about -- you talked about using AI for automating a lot within Veeva. Maybe building on top of that, given how mission-critical this is and maybe how much it can be tied not just to better revenue outcomes, but more importantly, better patient and better health care outcomes and better societal outcomes, do you see an opportunity to not just automate and drive faster time to value and efficiency, but even leveraging AI within the Veeva platform to allow for better drug development, safer drugs out of the market, basically better outcomes rather than just faster time to value.

Yes. Excellent question, and I hope I don't go too long on this because I have a real passion for this area. After working 18 years in this industry, I really know about it, I feel. And I really care about the people in it, and I see how it impacts patients. It's a real thing. Drug discovery is one thing, and there's a lot of focus on that. And yes, that will get faster, but that's not the real bottleneck. The real bottleneck is the clinical trial, the experiment that's done in the human. And we're always going to have to do those experiments in the human and the human biology runs at the same speed. So that always has to be done and the bottleneck now is finding the patients around the world that can get in those trials. So that's one. But the biggest bottleneck by far is there's a patient somewhere out there in the world, they're diagnosed with something by a doctor. How long did it take them to get diagnosed? And when do they get the right medicine that will best treat them? That's where 90% of the value in life sciences is lost because of that impediment, the basics of is the patient informed? Can they get to the right doctor? Is the right doctor informed? Is the payer informed? It's -- that's where 90% of the value is lost. And I said value is lost. But on the other side, there's a lot of people who don't get treated correctly or timely around the world. And that affects productivity, that affects their family. And some of -- not all of these people are in their 90s. Some of them are young parents or just young children. If you saw our partnership with BioMarin and you look at what they're doing, they're treating genetic diseases primarily in young and disadvantaged children who have parents and brothers and sisters. So this is really important for us -- and AI can definitely, definitely, definitely bridge that gap. AI doctors and large language models can help bridge that gap between doctors and patients. So maybe that 90% inefficiency goes down to 50%, and that will be a tremendous boom. And yes, Veeva will definitely play a part in that by connecting our customers, the industry to its external ecosystem. And its external ecosystems are clinical researchers, patients and doctors and regulators. And the industry is not well connected and AI is going to provide a better method to do that. So I think what people are missing is the benefit of AI over the next 10, 20 years on the life sciences industry because we'll be able to treat more patients faster, and that will transfer into our revenue and societal benefits.

Your next question is from Jailendra Singh with Truist Securities.

Congrats on a strong quarter. I want to talk about your comment that guidance assumes no significant changes in the macro environment. Just curious with pharma companies having some clarity on MFN tariff and with some deals with current administration over the last 6 months or so, why you don't think trends could start moving in the right direction as these large pharma companies now have some more clarity? Are you just being more prudent in your guidance? Or do you still see some cross trends pharma clients have to navigate?

Yes, Jailendra, the uncertainty has been out there for some time. We've been tracking it. The industry has been tracking it. You're right, there has been a trend towards things becoming more certain across a number of different dimensions. But I think there's some cautious optimism. -- about what's happening. Certainty is always better than uncertainty. And I think in a number of areas, things have become more certain. I think that's generally good for the industry. But we're in conversations with our customers. We know how they're thinking. We know how they're planning for the next year. So we provide guidance that's best in line what we anticipate the projects that they'll be focused on and less related to the specific ups and downs of the macro environment because they're -- over the short term, they're generally less influenced by that. They're more influenced by these longer planning cycles. So we do our best to incorporate kind of the discussions and conversations in the guidance more so than the overall macro environment.

Got it. And a quick follow-up on the CRM side. You recently moved the CRM end of support date from September of 2030 to December 29. What were the key drivers there? Are you still contractually paying sales force through 2030? And then related to that, I mean, you guys talked about a lot of other wins outside of top 20. Can you give us some number around your -- what is your win rate in that midsized pharma segment? Is it better than 70% lower? Can you give some color about the midsized pharma, how fast that's moving on CRM?

Yes. So the drivers, you're right. We moved the date to December of 29. It used to be roughly September of 2030. So we pulled it in about 8 or 9 months. The reason we did that is, one is Vault CRM is going well. I mentioned earlier, we're close to 140 customers live on Vault CRM. The momentum there is fantastic. The product is actually better than Veeva CRM and the migrations are going well. So we're executing well there. And we don't have any customers with projects planned into that 2030 time frame. So what we want to do, the further you get out, there's more uncertainty. So what we want to do is make sure there's no stragglers that go into 2030. So that was the intent there, and we think that's good for the industry and good for customers. You also asked about the royalty payments to Salesforce, and those will wind down as customers roll off of Salesforce. So once everybody is off, then those payments will stop. And then I think you had -- a last question, I think, was about win rates and win rates specifically outside of the top -- we spent a lot of time talking about top 20 outside of top 20, we expect the win rates to be even higher than inside of TOP 20, mainly because those companies, they want a product that they know will work. They want a trusted partner, a strategic partner, somebody who's innovating and actually delivering Agentic CRM today. This -- that was our promise was that our customers can innovate, get to CRM, get to Agentic CRM fast, and now it's available with Veeva. So I think it's a big advantage for Veeva with those small and midsized companies just going with somebody that they trust and that they know will work.

Your next question is from Dylan Baker with William Blair.

Maybe, Peter, sticking with the AI theme and topic, you kind of called out the value of platforms versus point solutions. I wonder -- and it kind of ties into trust, I guess, as well, too. But I wonder how you kind of delineate between those and how you think about your ability serving kind of the end-to-end workflow across the industry to maybe help solve the opaqueness or the uncertainty around the perception of AI and how that relates to maybe your ability to kind of quantify the value relative to a point solution that's maybe looking at the market, if that makes sense? And maybe how that kind of ties into your ability to -- as a right to win, if you will, in that intelligence layer.

Yes. I would say trust certainly has something to do with it. So we have deep customer relationships. We have the trust with the customers so we can get the requirements quickly, but it's also just a skill and an operating model. So we have the skills that know about the industry and have the operating model of discipline and pricing and account management, et cetera. And then I always view Veeva, we're developing pieces of a puzzle that the customers may purchase and they put in. But also and sometimes not as relevant to the customers, we're developing a plan and continually maintaining the plan about how the puzzle pieces fit together. So every time they get more Veeva pieces, it more fits together in their puzzle. Let's say they're doing something with us in safety and they start doing an AI solution with us in safety, -- and 2 years from now, they go with us in clinical data management. And a year later, they put in an AI solution for clinical data management. Well, that AI solution is going to work with their safety solution pretty much out of the box. And that's a benefit they never planned for, but they're going to get. So I think customers start to see that it kind of fits together with Veeva. I think the way back in the day, you saw this with Microsoft on the desktop too, way back in the day, they start to see, oh, it kind of fits together with Microsoft. Microsoft will take responsibility for fitting things together, and there's value in that alignment. That's our right to win and what gives us the ability to execute is just our operating model and our discipline for making great software.

Very helpful. And then I'm not sure if this is maybe for Paul or Brian here as well. But I think there were comments in the prepared remarks as well, too, around the opportunity to maybe lean more aggressively into the CRO channel. This might be a little bit more down market, it might be tied to Veeva Basics. But any kind of color on what you're seeing with traction and adoption of kind of bundling more services and software to tie into kind of Peter's point right there and maybe how you can kind of leverage that and lean more into the enterprise segment if that is tailored down market today?

Yes. I'll take that one. This is Peter. This is about the CRO or contract research organization, basically using them as a channel for what we call the study-by-study business. So when a small biotech, usually, when they run a clinical trial, they will get those services from a contract research organization. And with those clinical services, the CRO will provide technology as well. And so far, we have not participated too much in that. The CROs have had their established patterns and they've used a different variety of vendors and some homegrown things to provide to their customers. But we're putting an effort now, and we're making -- starting to make progress where they would offer the Veeva technology as they would OEM the Veeva technology to their customers for that study. And sometimes this can be significant, right? It's not unheard of for this technology if a lot of it is from Veeva on a big study, that might be $500,000, that might be $1 million. and there's a lot of studies that start every year. So this can be a very -- the study-by-study business internally at Veeva, we know that can be a $1 billion business for a couple of reasons. The breadth of products we have. So the EDC is sold study by study, the RTSM sold study by study, the ECOA sold study by study. Those are 3 very, very big product areas. So that's what we're talking about there. It's a new -- not new products, although we will adjust our products a little bit for that market. It's more a new focus on a go-to-market motion and operating model inside of our company.

Your next question is from David E. Hynes.

So Peter, I wanted to come back to some of your comments on automation. So it seems like to me that maybe to the point that you also just made around standardizing on, and I'm focused particularly on Development Cloud, should drive a lot of automation. You highlighted that AI is a way to automate, but not the only way. I guess I'm wondering if AI is shining a brighter light on the benefits of standardizing on Veeva for that automation. And in that context, I'm going to ask kind of the flip side of the question would be, why do you -- what's your view of the EDC market submarket within your Development Cloud portfolio? And why hasn't that been moving in your direction more lately?

Well, let's see. automate -- well, standardization and standardizing on Veeva, I haven't really seen that as a theme to say, hey, standardizing on Veeva is a way we can accelerate with AI in a few pockets, but not as a theme. Now I think that theme is probably coming, but we have to really prove out that Veeva AI is just available this year, right? But once we start really proving out the value and some of these point solutions start not doing so well, et cetera, that's, I think, where it can really accelerate. When we -- a year from now, 2 years from now, when we have companies thinking a big company thinking, I increased my revenue by $40 million because I lowered the time of drug approvals because of the Veeva regulatory solution allowed me to get back faster to the health authorities around the world, that's when things really start coming. So but we have to deliver on that. The promise is there, but I think I put in my prepared remarks, I used the words it's hard. This is very hard stuff. It's not simple. And so we have to get it right. And then -- so you talk about standardization, and then I did not write down the second part of your question. Could you ask that again? I'm sorry, David.

Just the EDC component of standardizing on Development Cloud. And I think you've been relatively stable, flat, but that's an area where you could penetrate more top 20s, it would seem.

Yes. I would say, yes, hit a bit of an air pocket there in the EDC, and that's just the random timings of life, I guess. So we certainly hope to make progress there in the coming years. And I think we have a structural advantage because the customers really -- they really want the combined clinical operations and clinical data management to work together, and we announced a real groundbreaking thing on our eSource initiative. So we have some late adopters there. And they also have other priorities that they have to get after, right? So it's a question of priorities. I think we'll -- arguably, we're the leader now. It's us in metadata, although they do better in the study-by-study area. But I think we're on a path to leadership. I guess that's one high-level thing to know. Our competitive environment has never been stronger. So I can -- I feel like I can see where we're going as long as we don't get arrogant, as long as we keep executing, we will complete that vision. But do you complete it -- do you complete that in 5 years and 7 years? When does the EDC breakthrough come? Does it come in 2 years or 1 year or 4 years? Those things are hard to predict, David, but we're well set up to get there because we have a structural advantage.

Your next question is from Andrew DeGasperi with BNP Paribas.

I just wanted a sort of a 2-part question, if I may, on the Vault CRM, the 10 that you said will stick with Vault CRM. I just wondered how firm are those commitments? I mean we've been hearing some questions from investors that some could still decide to move despite signing with you. And then separately, as the services revenue picks up, it sounds like those are tied to the 2 go-live decisions. Should we expect that to ramp up this year in fiscal '27 as more of those customers go live? And if so, have you accounted for that in the guidance?

Yes. I'll take the first part of that question, and I'll leave the services revenue part of it to Brian. So your question is how firm are those commitments? I think with Veeva commitments, they're generally pretty firm. Nothing is ever set in stone or final, but I feel really confident about the decisions that have already been made. Why? Because we have close to 140 customers live. We have 2 top 20s big complex companies operating in all of the major markets who are now live on Vault CRM. So we've proven that this is the fastest path to get to CRM and agentic CRM. So I feel really confident we're executing well. I don't see any risk there. I think actually, there's a greater risk that a customer that decided to do Salesforce and tries to go down the path of a custom build project, a big systems integrator project. I think there's greater risk that those companies see how difficult it is and come back to Veeva. So I think that's our opportunity over the next few years.

And then Andrew, on the I'll just put a fine point on that. It's Peter. So those top -- those 10 customers that have picked us, all those projects were started and they're all going, and they're all going to a very stable product that's already live. So I think those are pretty clear. Now on the other hand, not all the Salesforce projects are going so well, and they're different. So I know of one top 20 that has -- I won't say the exact number, but they have a large number of development team contracted in India from a third-party system integrator. They're coding basically a custom solution. And that may work out well or that may not work out well. And at some point, there may be a new regime and they might not want that custom build. So there's a complete difference in certainty. Those Salesforce projects, they might work well. But even the customers, they know it's going on to a speculative product. That's not the case with Veeva. So it's very different.

And Andrew, I'll jump in quickly. This is Brian. I think you hit for the cycle with all 3 of us in your question. Nice job. On the services guide, the short answer is yes. We've got top 20 projects at various phases wrapping up well underway, kicking off over the course of the year, and that's all factored into our guidance for FY '27.

Your next question is from Ryan MacDonald with Needham.

On the nice quarter. This is Matt Shea on for Ryan. Maybe sticking with the AI theme. You've noted in the past how AI could be a game changer in safety and how you potentially see faster adoption there than quality. But maybe if we take a step back, could you comment on why you're leaning into agent development and safety given how historically reluctant to change that segment of the market has been? And then do you think these 2 new agents in April can unlock demand? Or do you envision this -- or how do you ultimately envision this market adopting AI?

Yes. safety momentum, we internally call it the safety surge. We've been winning some deals and the projects are going well. We had another top 20 win this quarter, and we had our first top 20 go-live with Signal and -- now in terms of AI, it's pretty clear there in there's a lot of human processing of case intake and case narrative generation that's done by people. That's not necessarily that high risk, but it has to be done well and it's expensive to hire those people, and it's not easy. So in safety, it's just very clear. It's about replacing that type of labor with automation with AI software. Now what is risky for the customers or what they would claim is really important is when they switch from their current core safety system to Veeva, that project has to go really well, right? That's not easy to do. So that's more where the risk aversion is. But I think they're starting to realize if you if you want to have a potential future where you have a great core safety system that has safety AI on top of it and is connected to your other systems in your company, Veeva is the only place you're going to do that unless you're going to build it yourself. I think most people are starting also to realize now that it's not that easy to build and maintain these things themselves. So that's kind of what's leaning into our favor on the AI. Now of course, we have to deliver it. But what does make that market slow is people are very reluctant to change their core safety database because they have to report to health authorities all around the world. And if they can't do that, they have to pull their products off the market. So it's serious. I think that sometimes people don't understand. We're not making systems that help people write better e-mails or better spell checker. It's a big deal for a pharmaceutical company if your products get pulled off the market. So that's -- these things are very critical.

Your next question is from Gabriela Borges with Goldman Sachs.

Two-parter, if I can, just to follow up on Rishi's from earlier. As AI speeds up clinical trial time lines and trial success rates, I'm curious, first, how this dynamic impacts how customers use Veeva's R&D products? And then second, maybe for Brian, I know that pricing models differ within the R&D portfolio, but how could this impact, if at all, customer spend on Veeva?

About AI speeding up clinical trials, I think AI can speed up some maybe in the start-up and in the close down, but not that much really. It's still based on the clinical protocol of the medicine, which is based on the time of the human body. it takes to deal with that medicine and to prove it out. And then the patient recruitment, which I don't think is actually an AI problem, the patient recruitment. So speed it up some, but not so much in clinical trials. And then in terms of how -- so I don't think that really impacts their view of the core Veeva systems. Brian, did you want to follow up on that one?

Yes. I think the second part of the question was around how this can impact spend over time. And Adam, it's still very early there. What we're really focused on is product excellence and customer success right now. Last year was about putting the foundation in and the platform and the first agents. This year is about rolling out agents in all of our product areas, getting customers live, refining the product, really creating a lot of value. And then I think that we don't really expect it to be a major financial contributor this year. It's more in the out years and still pretty early down that journey.

Your next question is from Craig Hettenbach with Morgan Stanley.

Pete, I wanted to ask the AI question maybe in a different way. If I look at some of the success you've had in the R&D business, the breadth of the product offerings as you continue to layer on new capabilities, being able to bundle those products, offer a platform to customers. When we think about the LLM providers introducing some tools for clinical workflows, how do you think about the customer base, if they were to go direct to customer in terms of doing some things piecemeal on that versus working with kind of one large vendor with Veeva. Does that carry over in terms of the AI world in terms of how the opportunity set may evolve?

I think that's very similar, right? Some people will want to experiment and do solutions on their own and see if they can get that up working in scale. But I don't think the AI vendors are really making industry-specific software applications, right? It takes a lot of dedication and effort to do that. So I think it's a very symbiotic relationship. Just like the cloud area, yes, Amazon didn't make industry-specific applications either. I don't really see -- why would somebody like Anthropic do that, right? They're going to make broad applications and applications for coding itself, et cetera. That's what I feel would happen. And this is our domain. We know how to do this stuff. It takes software, data, consulting together. And so I think it's going to be a very symbiotic relationship.

Our next question is from David E. Hynes with Canaccord Genuity.

Brian, I'm going to take another cut at an AI finance question with you, realizing just how early everything is here. But based on the adoption trends you're seeing kind of customer willingness to pay, how you're thinking about pricing, do you expect your Agentic AI offerings to be immediately accretive to margins? Or will that take time? Like help us think about the kind of the curve to profitability. You're already at 45% margins. Like how does that ramp happen as the portfolio matures?

DJ, yes, it's a great question. And it is, as you said, still quite early. As we're starting this year, we're really expecting to be using a token-based pricing model. And so that gives us a little bit of predictability around the margin profile. But that may evolve over time. And it's really more around getting to product excellence and value creation and sort of less about pricing, revenue exact margin structure. So it's not a material impact on FY '27, and let's see how it plays out in the forward years.

Your next question is from Karl Keirstead with...

Okay. Great. Maybe, Brian, just back to the numbers and the total revenue guide of 13% for fiscal '27. A year ago, you started the total revenue guide at 11%, and you just finished with 16%, a really strong 5-point beat. So as we all assess your 13% starting point for this fiscal year, is there anything about the fiscal '26 5-point outperformance that in retrospect strikes you as somewhat nonrecurring and a reason to be a little bit more cautious in terms of modeling any upside this year?

Carl, the way we think about guidance is giving the best information we've got and calling it based on that. And so as we went into last year, I think we we provided that guidance and then had pretty strong outperformance in particular, out of Crossix. So that was really a major driver of the beat over the course of the year. We do expect to see continued healthy growth out of Crossix. I think we would be surprised at the same level of outperformance. But our guidance philosophy last year as this year is to give the best information that we've got to call it closest to the pin. So no change in the approach and not expecting specific outperformance in any area like we saw last year.

Your next question is from Hannah Rudoff with Piper Sandler.

Within Veeva AI, what is the mix of customer adoption you're seeing right now between prepackaged agents that you've built and custom agents that they're building using Veeva AI? And kind of by extension of that, I know you have plans to roll out a lot of the R&D agents this year. Are you seeing any customers that are so eager that they're building out these agents and workflows ahead of you launching them?

Yes. The bulk of it is with our agents that we're designing. So part of it is our -- I guess, our agents are probably a little more robust than our custom tooling right now. But if you look at our agents, there's detailed work in the agents, right? There's detailed data curation, there's detailed testing pipelines. There's a lot of logic in the agents, right? When we talk about AI agents, there's a lot of logic, specific logic written in our Java code that's hard that needs great product management. So in general, customers would rather get that solution rather than build that themselves. I think we'll see some adoption in the custom agents around lighter use cases where they're doing a little helper applications. And I think that will start, and we'll have a good amount of that in the second half of this year.

Our last question for today will be from Tyler Radke with Citi.

So going to the R&D business, a lot of great top 20 wins. It looks like the revenue outperformance on subscription was a bit stronger than normal. And I guess I'm wondering, are you seeing -- I know you've gotten half -- more than half the questions on AI, but just given the success in migration tools, code completion tools, are you seeing any acceleration in implementation times driven by AI or other things? And just sort of what drove that outperformance, whether it was timing or anything you'd call out?

I'll take that one actually. It was just good execution and some of the balls bounced our way, more of the balls bounced our way than bounced against us. So I really appreciate your question about whether implementation time lines are shortening. A couple of things are, I would say, yes, but that's natural as our products get better and our services people get better. We do have a push on -- a big push on tech enabling our services. That really hasn't borne a lot of fruit just yet, but I do expect it to in the next year or 2. So for example, we're working with a customer where actually they do have -- they don't have Medidata. They have a different EDC system. They've moved on to Veeva. They want to migrate their studies and AI is helping us -- will help us do that faster than we could have before. So I think that's not only specific to Veeva. I think system migration is a great use case for AI automation to cut down the time and reduce the cost of system migration, and we'll do our part in that, too, but it's early days.

The Q&A is now finished. I will turn the call back over to CEO, 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 and the year. Thank you.

This concludes today's call. Thank you for attending. You may now disconnect.

Hello, everyone. My name is Alexei Gogolev, Head of Vertical SaaS and Health Tech Equity Research here at JPMorgan. And today, I'm delighted to have Veeva's CFO, Brian Van Wagener here with us. Brian, welcome. We'll start with a quick presentation and then go into Q&A.

That sounds great. Alexei, thanks for having us. Thanks to all of you for being here with us today and spending a little bit of time with us. Great to be here at JPMorgan again. My goal today is to give you a clear picture of Veeva, who we are, the opportunity in front of us and where we're headed. So I'm going to cover a bit about our operating model, our portfolio, and it is JPM, so a few key metrics along the way. My goal is that you walk away from this with a straightforward understanding of who we are as a company and where we're headed. So with that, I know you've read every word on this. This is our safe harbor. You can find on our website, too. We'll make some forward-looking statements today. We'll move on from there.

So this is one of the key slides for us at Veeva. This is our vision and values. For us, this is really an operational slide. This is how we run the company. So our vision is building the industry cloud for life sciences. That means software, data, consulting, working together to make our company, our customers more efficient, more effective across R&D, manufacturing, commercial we think that our goal is to be essential and appreciated by every one of our customers and by the whole industry, which is a really high bar when you think about those two words, essential and appreciated.

So we may not get there, but this is what we're striving for and what drives us. The values below that, these really shape how we execute against that vision. So we put them in rank orders so we're clear, which ones come first and at the top is always do the right thing. This is a moral thing for us. This is about doing what we say, working with honesty, transparency, taking the long-term view and having integrity.

Second is customer success. Perhaps the most nuanced of the three of these. There's a few different levels to customer success. One is the people that we work with at our customers. We want them to love our products, love our people to have personal and professional success when they're working with Veeva. Second is the companies that we serve. We're a mission-critical provider for them across many systems. So they've got to get the value that they're paying for, get positive ROI and have systems they can count on.

And then the third and something a bit unusual as we think of the industry as a customer. We're working towards market leadership across a broad range of products, and that puts us in a position to be able to serve the life sciences industry to help make things easier across a connected set of stakeholders.

The next is employee success pretty straightforward. We've got more than 7,500 Veevans. We want them to work with great colleagues to be in a place where they can do their best work and to feel like they're having personal and professional success at Veeva. And then the last is speed. This is about working quickly, doing things the first time correctly. And it's a reminder to us that as we get bigger to still work with the pace and mindset of a startup. The other thing here is we're a public benefit corporation a PBC, which is pretty unusual. We were the first public company to convert to being a PBC. We announced it 5 years ago today actually, so it's a bit of an anniversary for us. And what this means is that our Board has the legal duty to balance multiple stakeholders.

Shareholders, of course, but also our customers, our employees, society at large. And we think that's really important and a responsibility because of the role we play in the life sciences industry, so we think it's a strength for us. So I'd love to break down the industry cloud in a bit more detail. The industry cloud for life sciences is software, data and consulting all working together to make the industry more productive. It's a very large opportunity. It's about a $20 billion market opportunity, which we're about 16% penetrated into.

So there's still a lot of growth opportunity for Veeva serving the industry cloud for life sciences. There are 4 major areas that, that breaks down into Development Cloud, which covers our customers' clinical, regulatory and safety or pharmacovigilance areas, quality, which is their manufacturing, Commercial Cloud, which is their go-to-market. So sales, medical, marketing and then Data Cloud, which is focused on commercial today, but that has possibilities across the ecosystem.

To give you a sense of how broad this really is in practice, it spans well more than 10 different product suites today and well more than 50 products. And some of those use cases are quite varied. So in clinical, which is part of our Development Cloud, these systems are the backbone of clinical trials. So they're managing real-time visibility across millions of data points. They've got to be inspection-ready at a moment's notice, and they're working in a condition of very high regulation and oversight. So a very high level of complexity. In quality, some of these systems sit on the manufacturing floor, and there are systems that help make sure that a contaminated ingredient, for example, doesn't ever make its way to a patient.

So absolutely mission-critical in the manufacturing setting. In commercial, we're often known for CRM, but another area is Crossix, which is a media optimization business that helps our customers spend their marketing dollars more efficiently and to target their marketing spend. So Veeva is not a software company, it's also an ad tech company. And then in data, we have a ton of different data products from reference data on physicians through to the data backbone on patient and prescriber journeys over time. So it is an incredibly broad and deep portfolio. And one of the attributes that I think is most unique about Veeva is really running into complexity and embracing some of these complex use cases. What we're trying to do is to help the whole life sciences industry to operate better, which is a unique approach to take. And the complexity that we're taking on is part of what makes what we do hard and I think, special.

Now the reward for that complexity is that when you do it well, it creates a long-term structural advantage. And there are 4 reasons that we see that at Veeva. First is what we call the suite effect. So I mentioned that across those 4 areas, we have more than 10 suites now. And within each of those suites, we have multiple products. We think about every product in that suite individually being the best product in the market at what it does, and that those products because they're part of a connected group of offerings, working even better together. And so for those of you that have bought software or bought data, you probably know the trade-off that you normally face. Do I want the very best or do I want a one-stop shop.

And with Veeva, our aspiration is that you don't have to make that trade-off that you're getting the best products and they're even better because they're in one place. And that means that the suite effect when you buy one product in a suite, in our clinical suite or in our quality suite or in our regulatory suite, it makes even more sense to buy the next one. So there's some inertia that builds over time as customers get going with Veeva. The second and third here, I'll cover together. Our products generally are the mission-critical systems of record for our customers. So those are not things that they generally have the option to have or not have and they're not things that they eliminate once they have them. There's a lot of work to change these system and to put them into place. And so there's some built-in effect over time as that builds up. And there's a lot of chatter for those of you that are in the technology space about AI.

What's AI going to do to enterprise software.

Is it going to get rid of enterprise software. We think actually the opposite of Veeva that in regulated industries like life sciences, AI demands strong platforms, it doesn't replace them. High-quality data, high-quality systems architecture. These are the things that feed AI and that allows it to be productive. So we get very excited about the potential to create value for our customers with AI and for their adoption of AI to increase the value of our platforms.

And then the last is product excellence here. This is something we absolutely obsess over at Veeva. It's the core of our business. We're really a product-driven company. And so this is about making sure the products are great and dependable. And then when customers adopt a product with Veeva, they know it's going to work for them. That builds a flywheel over time, too. And so building all this is extremely complex.

Life sciences is deeply regulated. And so doing all these products at depth is quite a lot. So the foundation of how we think about that, as I mentioned on the last slide, is product excellence. When we do that well, that creates customer success. And when we do those well, that means we enter a cycle of reference selling. So we have very low marketing and sales spend when you look at us versus other software companies. And that's because we let the product do the talking. Our customers are the ones that advocate for Veeva on their behalf. We hope they're doing that here at JPMorgan this week. They do that at our customer summit. We view our customers as our best sales and marketing engine.

And then the way that we think about executing across the broad portfolio as a multiproduct company, is by having focused teams and focused leadership. So for example, this week, our teams are at their field kickoff. And at that field kickoff, if you were there right now in Orlando, you'd see there's a CRM zone. There's a LIM zone. There's an EDC zone. Every one of those teams has its own road map, has a dedicated leader, has a ton of its own energy, but they don't worry too much about what the other teams are doing. And so we've got a unique model that allows us to do that at scale and an operating model that governs how our different teams work together. How does sales work with strategy, you got strategy and sales work with marketing? How do all the pieces fit together. And so it's pretty unique, and it lets us go deep like a specialist while scaling like a platform.

And so when you look at Veeva versus the broader landscape, what you generally find is most providers of software and life sciences are highly niche specialists in one very specific area, Veeva's unique in being able to go broad and deep across this range of applications. And we're executing really well against that. And I'm glad we are because it is yet another time of change for life sciences. I've been around this industry for a little more than 20 years. And I think you could probably put this headline up every year, but it feels like that pace of change is even accelerating in the last few years across at least 4 different dimensions that we think of.

One is that we're seeing AI move from hype to reality and getting real utility across discovery, development, commercialization of new therapies, things like AI doctors, AI-powered drug discovery are really becoming real. I saw a couple of presentations yesterday where folks are talking about in silico trials that they're running that have a high degree of accuracy and predictiveness. So this dream that's been a glimmer is starting to become real when it comes to AI and life sciences.

The second is that the industry is becoming even more connected. Life sciences has always been a place where a lot of companies collaborated together, but across patients, sites, partners, sponsors, health authorities, technology partners, there's just even more happening now. There's new models for patient recruitment. Recruiting is getting faster for trials. Trials are getting more inclusive. There's a lot of partnering happening in the life sciences industry. And the commercial models are changing as well. They're evolving towards more ongoing longitudinal care towards the layering of medicines and digital therapies together and precision medicine, which was a niche 20 years ago is becoming the expected standard of care in many conditions.

So the way companies are thinking about their commercial model is changing. All the while R&D productivity is becoming even more important. Access to capital is a little bit tighter. These capital constraints create a greater focus on earlier, more accurate decision-making, so there's a lot of change happening within the life sciences industry, and we're happy to be working on our small part of supporting that. And so we're doing a lot of innovating and executing within our products as well. First is we're innovating within our products and leaning into that change. Innovation in the digital infrastructure for a life sciences company is what feeds a lot of the trends that we saw on the last page.

So we're innovating across R&D, across manufacturing, across commercial. We're building products that are great that work well that help break down silos. And an example of that would be our safety product that sits inside the pharmacovigilance team. Classically, that is an isolated product that doesn't talk to anywhere else. And so it's very manual for the pharmacovigilance team to take an adverse event when it comes in. We think about how do we integrate the adverse events, the cases that come in for safety with the clinical team when there's an ongoing trial, with the regulatory team when there's a publication or a regulatory notice that needs to go out, with the medical team if they need to get their field engaged. So it's about bringing the connectivity to our customers through the software that they buy.

Second is innovating for the industry. We're approaching the position in many of our products where we support the vast majority of top 20 customers and of the overall industry. Our eTMF product, for example, is now in all of the top 20 biopharma companies. We think of that position of leadership is a great responsibility and a moment to lean into and accelerate innovation in our products because it's so rare to have that ability to influence the way and industry works. So we think about innovating on behalf of the industry and helping the whole industry be more productive. And then the third is AI. Tons of chatter about AI, of course, and we've really accelerated our road map here. Our approach is twofold. One is to embed AI directly within our platform. Our platform is called Vault, and AI agents sit at the same level of primacy data and content, so the Vault Platform is data, content and agents working together.

And then the second is we have agents rolling out in every one of our product areas over the course of this year. And so when you think about what the two of those things mean together, that means that you now have AI that is deeply aware of the context of your work because it can consume all the data and content in your system that has been built in a very deep industry-specific way. So it understands the heuristics, the objectives and the guardrails of a highly regulated industry. And it's working inside of the system you're already doing work on. So you're not copying and pasting stuff from an LLM back into your work.

It's deeply embedded into your work. We think the combination of those 2 things, AI in the platform and deep industry-specific agents is going to be transformational for the long term for our customers and is a place where we can bring a lot of value. So we're very excited about that and the ability to progress that over the course of the coming years. .

Another change that we're going through is our initial product, our first product, Veeva CRM is moving to the Vault Platform. And so that Vault Platform is something we purpose built for life sciences, data content agents all working together. And so customers have to make a decision on whether to stay on -- or sorry, to migrate to Vault CRM or to do something else. What that means is our main competitor now is Salesforce, which had been a partner of ours in the early days. And overall, this change, this migration is going really well. We expect to remain the clear market leader in biopharma CRM, as referenced, we've got a little more than 80% share of biopharma CRM today. We expect when the dust settles, we'll have more than 70% share. So it's going really well. We are getting really good at migrating customers from Veeva CRM on Salesforce over to the Vault CRM product.

We've got more than 115 customers live, including two top 20s that collectively are live in every major region, which is really hard to do. These are very complex products, and they differ greatly by region. The CRM for Japan is different than the CRM for Europe, which is different than the CRM for North America. Even within the United States, it can be different state by state. So very complex products. It's not a horizontal CRM with a life sciences sticker. It's a very deep product set. Overall, 10 of the top 20 biopharmas have committed to Veeva and all of those commitments are global. So one note there is that Novo and Roche, which had previously been Veeva customers only for their U.S. CRM have now committed to Veeva globally moving away from the OCE platform onto Veeva's Vault CRM product.

And we're already hearing that Salesforce projects are running into difficulty. And so we expect that some of the customers that have selected Salesforce will ultimately come back to Veeva over time. Our expectation is that about 14 of the top 20 would Select Veeva initially and then more will select Veeva over time with some of those win backs. So our focus right now is on getting customers live, happy innovating in the product bringing all the benefits of Veeva's AI, which is live and generally available in CRM today and making customers really successful on Vault CRM.

CRM is not the majority of our business anymore, but it is our home state. So I'm very pleased with the progress that we're making there. I mentioned that it's not the majority of our business. This is meant to put that in a little bit of perspective. Many people still think of us as the pharma CRM company because that's where we started back in 2007. But when you think of Veeva 10 years ago, CRM was about 75% of our business. It's about 20% of our revenue today. And in 2030, our expectation has been that it will be about 10% of our business.

And so we expect to remain the clear market leader in CRM. But when you think about Veeva, it's really a portfolio company and a broad portfolio of products, not the CRM business at this point. And so let's put that into context because you can see some of that in our 2030 goals. We released these a little more than a year ago. A key part of Veeva is thinking long term. And so we have a good history of setting these kind of long-range targets and meeting them. We set our first long-range target in 2015 for 2020. We achieved that about a year early. Our next was a $3 billion target for 2025, which we surpassed earlier this year. And our new target is $6 billion in revenue run rate by 2030, which we're on track for. It implies about 13% annual growth, and it's really a broad-based story when you look at how this is playing out here.

So on the subscription business, the first thing you can see is that our commercial business declines a little bit as a proportion of revenue. And that's really a function of the CRM business that we talked about being highly mature and other areas growing around it. Within commercial, the main growth drivers are Crossix, which is our media optimization business and then the data business. The most disproportionate driver of growth in our 2030 plan is the clinical business. Clinical is a very large area with a lot of headroom in many different products. So it's products like EDC, Site Connect, RTSM, eCOA, where we're connecting a fragmented ecosystem with an integrated clinical vision.

In quality, the next level up, we have some mature products like QualityDocs and QMS that are continuing to grow, but also newer products like LIMS, where we're very early on the journey. We have our first top 20 learn and confirm coming on LIMS later this year. And we're making really good progress and think we can make that a key part of the path to 2030.

And then the last area here that I would call out is safety, which is inside the regulatory and safety bucket. We have 5 customers, 5 top 20s who have selected Veeva, 3 who are live. So we're making great progress in the safety space, but still have a lot of headroom and expect that to be a big contributor to our growth through 2030. .

So the main takeaway here is meant to be there's no one area that drives the plan. Veeva is a portfolio business now, it's a lot of different products that contribute to our growth in the coming years. The things that we've been talking about have driven a consistent history of growth and profitability. As a CFO, this is the slide that probably warms my heart the most because it's so consistent.

You can see for this year, we expect about $3.17 billion in revenue for the year that ends in a couple of weeks here, which is about 15% growth, so a little bit ahead of the pace that we expect out through 2030. And we get excited about that because growth for us is a measure of value creation. What we say internally is that for every dollar of revenue we get, we want to have at least $2 of value creation for customers. So the more growth we have, the more the industry is getting value from Veeva.

And then we also expect about 45% non-GAAP operating margins this year. For us, this idea of having growth and profitability has always been core to Veeva because being profitable is what allows us to invest back in the business and in our products. And so then we're concentrating our investments back in the product. Product and people are really the two places that we find investment compounds. And so we spend about twice as much on product as we do on everything else in our business combined. .

We've talked about that product excellence being the driver of customer success. Customer success being the driver of reference selling. And so investing in the product encourages customers to continue adopting more Veeva products over time. When we say investment, what we really mean is people, the vast majority of where we spend our money is on people.

And so we think about that differently. We've put a lot of people science into place, and I'm really proud of the way that we're finding talent that others maybe don't see or find and the way that we're growing leaders and the culture that we're building at Veeva, it's really special, and it's one of the things that attracted me to the company and keeps me here.

When I think about capital allocation longer term, there are a few pillars to that. We've got a little more than $6.5 billion of cash, no debt, and we're generating still very strong cash flow. So our capital allocation strategy starts with organic growth, feeding those 2030 targets making sure the Veeva AI road map is going well and then entering new cross-industry software, which is a start-up within Veeva right now.

The second area I think about is M&A, and we'll continue to look at disciplined M&A within life sciences but also outside of life sciences to support cross industry. And then the last is a share repurchase program, which is new for us. We announced this last week. So our Board has authorized a $2 billion share repurchase over the next 2 years. We think it's a great way to return value to shareholders, and that it's a great time to do it.

So wrapping up and stepping back, Veeva is unique. We've got a clear long-term vision to build the industry cloud for life sciences. A broad portfolio of mission-critical products. We're growing well and growing profitably, and we're on track for our ambitious 2030 targets. We're investing in a disciplined way to drive product excellence and customer success. And our focus is the same. It's innovation, customer success, product excellence and working to be a trusted long-term partner to the life sciences industry. And so with that, thank you for your time, and I think we'll open it up for some questions.

Thank you, Brian, for the presentation, and we're happy to take questions. I guess I can kick it off. Brian, you've given us a great overview of the business. But maybe if you could go back and talk a bit about customer spending behavior, deal cycles and just the overall health of the end markets for life sciences?

Overall, it's going really well, Alexei. I think you can feel some of the energy here at JPMorgan this week. Customers are investing. They're investing in new therapies and new clinical trials. So it feels like a healthy -- I wouldn't say rebound yet but healthy shoots that are growing. We've been talking for the last several quarters about the macro environment still feeling like there was a heightened degree of uncertainty, but the customers had gotten quite adept at navigating that uncertainty. I think that's still true. But we're also seeing some of the signs of investment that are really encouraging for us.

Our business tends to be a little bit more insulated from some of the short-term macro pressures because some of the factors we talked about. Those mission-critical systems of record are not short-cycle sales processes. These are long-range investments, long-range strategic decisions. So we don't tend to see the macro environment impact our business as much in the very short term. But over the long term, of course, it's important for us that the industry is healthy.

And you talked a lot about competition with Salesforce and CRM specifically. How do you view the competitive landscape today, both on the commercial and R&D side and what do you think should help you sustain your strong positions longer term?

Yes. We faced a number of different competitors. So on the commercial and CRM side, Salesforce is our predominant competitor within our EDC and some of our clinical areas, we predominantly compete against Medidata. But I think what's a little bit unique about what we do is that the majority of companies we compete against are very small niche providers. They're not industry cloud types of providers. They're not competing with us on multiple products. So it's a very large number of competitors that we see in the market and the competitive dynamics differ a little bit product area by product area.

And then with regards to capital allocation, the announcement last week was indeed a positive surprise. Can you maybe give us a bit more color around the buyback cadence?

Yes. We were very excited about that. And we've been talking for couple of years now about always viewing capital allocation as -- or share repurchases or capital return is something we were going to be looking at, but at the right time. We felt that now is the right time to do it, because of some of the factors we talked about in the presentation, large cash balance continuing to generate very strong cash flow for the business. And so as we step back and look at it, we felt we had enough ability to continue to pursue M&A and to return capital to shareholders. We haven't talked a lot about the exact cadence, and I think we'll leave some room to be opportunistic in the market with those share repurchases. But we expect it to be roughly consistent quarter-over-quarter as we go through the $2 billion over about 8 quarters.

And then even after the buyback, you still -- as you pointed out, you'll have plenty of cash for possible future investments in M&A. Are there any particular adjacencies or capabilities you're looking at right now?

We're always very open in life sciences. The way inside the life sciences area that we think about it is predominantly investing in areas that help with product excellence or customer success. And so recently, we purchased the Crossix business about 5 or 6 years ago. And the Crossix business is a great business in its own right. For those of you that track us closely, you've seen it's driven a lot of our outperformance this year, but it was also the foundation with the team and with the IP to build our data business encompass.

We made a similar but smaller acquisition a couple of years ago that has accelerated our progress in our TSM, which is an area that we think there's a lot of opportunity and quietly sort of our largest single product area. And so we think about M&A within life sciences, not about buying revenue. We think about it more about surgical M&A that can help us accelerate the path on a product or in an area. So that's tranche #1. And I think I would expect between now and 2030 that there are some acquisitions inside of life sciences to support product excellence. But the second big area that we didn't focus on in this presentation, given that we're here for a health care conference is we're starting to build products outside of life sciences to support horizontal software. So we refer to that as a cross-industry.

And so I can see us potentially doing something there to accelerate progress in the cross-industry space over time. It's still really early there. That's a start-up within Veeva that reports the CEO directly. So it's a little too early to say. As we think about that and maybe larger M&A to support that we're quite proud of a very successful M&A track record, and so we will continue to be quite disciplined as we look at opportunities there.

On that last point, horizontal software, I understand that it's very early and probably too early to highlight any milestones. But how much investment it may require? And how you see it complementing your core life sciences business?

Yes, still quite early. Right now, it's fairly de minimis as you think about the investment that we're making because we always think about that idea of growth and profitability, not at a macro level, but also at a micro level. We think about managing profitability with lean teams is the language we use internally. And we like the focus on lean teams because smaller teams go faster, they innovate more. They're more accountable for excellence and for results. And so we don't tend to enter new spaces by throwing a ton of people at it. We start with very small teams in the beginning and then we scale those teams up as we get to milestones, as we get to first customer, as we get to first revenue. So we'll scale commensurate with the development of that product set, but it's still pretty early.

Great. If we don't have any questions in the room, I'll keep going. I was wondering, Brian, if you could maybe talk about the value customers are realizing from having everything on one single platform. You talked a lot about the breadth across R&D, the quality, the commercial at your presentation. So -- maybe help us understand how this is influencing buying decisions, especially as AI and agenting functionalities become more embedded.

It's a great question. And there are a couple of different levels to it. One is the suite effect that we talked about earlier where if you buy our eTMF product, it just makes absolute sense to buy our CTMS product inside of the clinical suite, because then you're not trying to keep up with a spaghetti string of integrations across systems and road maps that are incompatible over time. And so there's a lot of benefit working with a company that can be thinking in an integrated, holistic end-to-end way across your business for how all these different products work together and your business processes. So that's a key part of what I think our customers see when they sign up with Veeva.

And sometimes they do that product by product, but I think you've seen a number of announcements from us in the last few years for customers that decide they're going to take really a long-range strategic partnership for you. BI was one of the first ones we talked about. Merck was another one where they said, if anything is fit for purpose and Veeva sells it, then that's -- we're going to buy that. And so that simplifies a lot for them because you think about all the energy that goes into disparate teams, making independent valuations versus having one strategy for how you're going to pursue your systems over time.

So we think there's a lot of friction that you can remove when you sign on with Veeva. And then what we get excited about from a product excellence perspective is the ability when we work with the customer across what were previously siloed areas of their business, I gave the example of safety working with clinical and regulatory, for example, working with customers to build business processes that are integrated across that.

And so on the industry cloud, you saw that line for business consulting. It's fairly unique to see a software company that has business consulting on its product set. And we see that as a high area for growth because it's a place where our customers need help working with a trusted partner, but surgically and impact focused on how do they redesign their business processes, how do they innovate in the way that they're working. Because if you just throw technology at the same business process, you might get a slightly better result, but it's not going to be transformational. And so we work deeply with them, not just on implementing the software, but organizing their business processes to maximize the software so they get the most impact.

And Brian, double-clicking on that point. Obviously, as you mentioned, AI and agenting automation are front and center for Veeva this year. So can you walk us through how you're embedding AI into your platform and applications and how you think about monetization. What do you see as the next most transformative use case for your customers?

Yes, we're really excited about it. So I think for those of you that follow us closely, you've probably heard us beat the drum a little louder as we've gone through the year because we're making such great progress there. And it starts with as you said, building it into the platform. And so for us, what we've always talked about being unique about the Vault platform versus most other systems of record. Most other systems of record are data systems. They move data around, they're really transactional systems.

The Vault system is pretty unique because the platform was built to handle both data and content. And that's really important for life sciences because it's a very content-heavy business. Tons, thousands of documents, very long documents. So the Vault platform handles data and content natively. And now it's data, content and agents as the 3 pillars of the Vault platform. So that's a very deep level of build when we talk about positioning ourselves for AI growth. And then the next phase here is releasing AI in every one of our product areas. So it's now available with general availability in our CRM area as well as our content business.

And then over the course of this year, it will be released in every major areas, every major area and then more agents will follow over time. So it's going to be a very long road map here with AI. We think about monetizing it in a couple of ways. The main one initially is we're building a large number of agents in every one of those product areas that are Veeva agents. So we'll build them, construct them, maintain them, customize them. So we're working with customers around our own agents, but also customers can build their own custom agents within the Vault platform.

And then both of those are monetizable opportunities for Veeva. Our main focus there is creating value, but then also capturing some of that value as customers realize it. So we're doing that on a consumption basis. We're using a token-based system initially for charging customers, and that will start later this year.

And Brian, you've also spoken about the importance of business consulting as customers adopt AI and new cloud solutions. So how is Veeva supporting customers through these transitions? And do you see consulting as a growing part of your value proposition?

We absolutely do. So when you look at our 2030 plans, overall, we expect that services declines as a percentage of revenue, but it's still growing. And the main driver of growth within services for us is our business consulting area. And so we think that we bring a lot of value to customers with our professional services groups that do implementations. But then a lot of the value creation increasingly is coming from the business consulting team that as we talked about earlier, is helping to reorganize customer business processes, think about change management, think about training. And so that is absolutely a high-growth area for business and -- or for Veeva and one that we think is going to continue to contribute out for the next several years.

And then slightly changing gears, you spoke a lot about Crossix in your initial presentation, and it clearly continues to show very strong growth in digital marketing and measurement as it becomes more important for pharma. So how sustainable is the current growth trajectory in light of possible changes to DTC advertising? And also, on the other hand, how big are your HCP solutions in this segment.

It's a great question. So this is a very dynamic area. Coming into this year with the new administration, there had been quite a lot of noise in the system around what was going to happen to the direct-to-consumer advertising space. There were rumors that it was all going to stop, and that's proven to not be the case over the course of this year, obviously. And so we've seen very strong continued growth out of our Crossix business and had a really strong year this year.

We view that as a business with a lot of headroom. It's a large and growing market, a place where we are approaching market leadership in areas but are still not the market leader. So there's a lot of headroom to continue to gain share in a growing market, and those are great businesses to be in. The Crossix business today has a couple of major components. One is the measurement and optimization business, and that's where we measure customers marketing and media spend and then help them to optimize it and understand, is it reaching the right segments? How do they change their marketing approach to reach the targets that they're going after. And so that looks more like a subscription business. It's been historically the much larger part of the Crossix business, but also the slower growth, the more mature area. The area that's been growing substantially this year is our audiences business, which is a usage-based, so a consumption business, and that's where we help customers to place their digital advertising with very specific custom-built segments for life sciences.

And so it's a great business. It's a little bit lumpier by nature because it's consumption-based, but it's a place where success feeds on itself because as customers have more success with digital marketing, they steer more of their budgets to it. So we think that's a market that we can continue to have a lot of success and grow in and overall have a lot of excitement about the Crossix business.

Peter, our CEO, on our last earnings call, speculated that could be the same size of CRM over time. It's not today, to be clear, and that's not a forecast, but -- it's a business that we think can continue to grow and where we can continue to establish leadership and where the value proposition is very strong for our customers, both on a stand-alone basis and when it's integrated with CRM and their broader go-to-market infrastructure.

Thank you, Brian. And the final question on your profitability. As you've shown in your presentation, your EBIT margin remained well above the so-called 35% floor number that you put out there a few years ago, even despite the fact that you're investing in new products and AI. So how are you thinking about balancing margin expansion with continued investments? And where do you see most opportunity for leverage?

Yes. We've certainly seen strong profitability this year. I mean we think about having a long-range revenue target, not a long-range margin target. The way that we approach our business, given that it's bottoms up in each of those areas is every year, we do a pretty detailed planning cycle and decide what's the right way to grow that business. So we don't want to have artificial margin targets. We want to invest in each business the way that it needs to be invested in. So we're obviously operating well above that 35% floor that we think about, which is really sort of the third rail, but we're well above that today.

And as I look forward, without giving margin guidance here, we expect some puts and takes to margins over time. We expect the ability to generate some continued operating leverage. We have the sales force royalties that will wind down over the next several years. But we're also continuing to invest in the business. We're investing in the data network that supports our data products with Compass. We're investing in our AI products. So there are some puts and takes over time, but we're happy with where the business is performing now.

Great. Brian, thank you very much for your time today. We appreciate it.

Thank you.

All right, everyone. We're going to get started. My name is Brian Peterson. I'm the application software analyst here at Raymond James. Very happy to have Veeva back at the conferences here, Paul Shawah, EVP of Commercial Strategy, is with us today. We can make this interactive. If you guys have questions, raise your hand. Happy to hop in.

But Paul, maybe to kick things off, just -- you had an Analyst Day a couple of months ago, just had your fiscal third quarter. Anything you highlight in terms of kind of near-term developments that you think are important for investors?

Yes. Sure. First, good to be back. Good to have another conversation with you, Brian. So yes, we just had our third quarter results. We had really strong results in the quarter. We exceeded all of our guidance numbers. So we did well and I guess some of the highlights were we talked about broad, really strong execution across all parts of our business. We gave some very specific highlights, some I'll call out in particular. Clinical, we continue to do well and perform well in the clinical space. More broadly, we have more than 10 applications in clinical. We're making progress in each of these areas.

We called out a couple of top 20 wins in places like study start-up and in training, which I think are just indicators of the fact that it's a very broad portfolio of applications, and we're performing well across all those areas. We called out safety is another place where we're just kind of ramping up in that part of the market. We had another top 20 win. We had another top 20 go live in that space. So clinical safety in the commercial side, CRM is going well. We talked about how that market is stabilizing out, at least in the top 20 side where we'll end up with roughly 14 of top 20. So really good execution there. We have 115 customers live in that market, and we're innovating. And then I would say the last kind of highlight I'll call out is Veeva AI.

So we just announced the availability of Veeva AI in our commercial products, so commercial content and in CRM and early customers. We had our first early customer live on the commercial content side. That part of the business is going well. So I'm excited about the innovation that we're delivering. We've promised it. We're now delivering on it. We're getting customers live. So there's a lot to be -- we celebrate a lot of the focus on product excellence and innovation, and we're just executing really well across all the different parts of the business.

So I'm going to double-click on a lot of those, but maybe higher level too out of the Analyst Day, you guys gave a 2030 target or I guess you gave it the year before, but maybe as you think about that growth opportunity, what are some of the key markets and areas where you really think that you can go get more revenue?

Yes, that's right. And I'll point back to clinical. So clinical is an area that we're super excited about. It's obviously the lifeblood of the life sciences company. It's where they make significant investments, is where their future comes from is the drug development and launches of new products. So it's critical to the industry, but it's also traditionally highly inefficient. There's a lot of opportunity to create productivity gains in the clinical space. As I mentioned, we have 10 applications. And our unique value proposition is all of these applications are built on the core -- on the Vault Platform. So natively, they're connected to each other. So multiple connected products across clinical operations, clinical data management, which means we can help the sponsors, the pharma companies, operate more efficiently, but we also help connect them to the clinical research sites and to the patients. And that will drive -- the whole clinical segment will drive an outsized portion of our growth as we look to 2030, not the only growth driver. We'll have growth drivers in quality, regulatory, safety. And then, of course, commercial will continue to be a growth driver for the company. But -- so there's a lot of different areas, a lot of moving pieces.

All right. So we'll focus on commercial. Just on the kind of the CRM market share dynamics, like as you kind of zoom out, you think about some of the top 20s that you're retaining versus the top 20s maybe that didn't stay with you to the Vault transition. Any commonalities in terms of those that did and those that didn't, love to unpack that a bit.

Yes. The ones that have -- and we said roughly -- we think it will be roughly 14 of top 20. Remember, just kind of maybe set the expectation. We had 18 of top 20 globally. We had 2 additional ones in very specific regions. So roughly 18 to roughly 14 is where we think it will end up. Those decisions are not all final at this point. Why are companies choosing to do something different? I think, one, there is a segment that wants to do some custom building and that's essentially what they get with Salesforce is kind of an immature product and a custom project that they can run on top of that. That's not everybody. There's also other companies that are -- they are just -- there's a lot of overselling and there's a lot of hype out there and shifting through that and -- some of these decisions are made by just individuals, and they can go either way. So that's on that side.

On the Veeva side, what we generally see is companies want to -- they want to innovate fast. We talked about as being the fastest path to AI. So with Vault CRM, we're going to -- we're making that move to Vault CRM very easy. We now have 2 top 20s live in really in all regions, Japan, Europe, U.S. Now why do I say that? Because it's actually they're like different CRM systems, it's actually a very hard thing to do to get them live in all those regions. So we're executing well on the basics, but now we're also -- they have AI available. And I expect some of those companies will be starting to turn on AI in 2026. That will be years ahead of when you can do that any other way in the core CRM system. So they want stability, they want innovation. They want AI, and that's what they're going to get with Veeva.

And maybe just kind of looking at kind of outside of that top 20 lens. I know there's some customization aspects. But what are you seeing in terms of like the longer tail of customers in terms of Vault CRM?

Yes. So we talked about top 20, and you can kind of do the math on what that win rate is. And outside of top 20, I expect that win rate to be even higher. For kind of the opposite of what we just talked about, right? So those companies, they don't want custom projects. They don't want speculation. What they do want is something that they can rely on and trust. They can't afford for something to fail or to take some big gamble, they want something that's proven and a trusted partner, and they also want AI. And the promise of what we're making around AI is that it's going to be real. It's going to solve really very specific problems and that's what we're doing is we're building AI fundamentally into the platform and then into the applications that they're using, and they want to be able to get that soon, not over.

We talk about AI as a differentiator. Maybe some of the early use cases that you're talking about in commercial, you're clearly excited about that. So like maybe expand on where you see that value proposition for customers.

Yes. So in commercial, so I'll talk through kind of what are the -- what does a field rep do, right? They can use AI across their entire workflow. So for example, talking to the CRM, just using natural language to talk to the CRM and asking it questions or getting it to help you prepare for the conversation you're about to have with the customer. So talking to the system, creating a very specific call plan for that customer, all of the context of what's happening with that customer in their patient population and their prescribing history and making very specific suggestions about what they should be talking about with them. What are some things that -- some messaging that they may want to share based upon all that context and some very specific actions.

And then recording the result of that, listening to you as you talk about what actually happened during that conversation and recording that in the system and doing it in a compliant way. So everything I just talked about can be enabled by agents, a voice agent that can translate your voice and power the system, a precall agent, which will provide that summary in that context in very specific actions, a compliance agent, which looks at everything that you've recorded and make sure that it's compliant with what the pharma industry needs. So there's a lot to unpack inside of that. Those agents are just natively part of the workflow. They're just going to work, the rep is going to do their job in a very different way, but much more efficiently.

So how do you think about kind of that balance of value versus monetization? Like clearly, they're going to be able to drive much more efficiencies, but as you think about the evolution of AI pricing on top of what's historically been like a seat-based model, how does that evolve?

Yes. So we're thinking about it as usage-based and what that will allow customers to do, 1 is to get started in a very easy way. They'll just be able to turn on the agents and basically match the cost with the value that they create and that's the power -- the industry is accustomed to being able to license technology, server-based technology, in particular, on a usage basis. So they know that model. They understand that model and -- and the -- we're doing it in a way where, hopefully, they can create an outsized value with a predictable and a cost that they can justify.

And do you like -- I think you talked to a ton of customers, like there's been some debate longer term about the size of rep headcounts and how they're thinking about that versus the opportunity to automate. Like how are customers thinking about their size of their sales force in an agentic AI era?

Yes. So that's an interesting one. We know over the past handful of years, we've seen the industry kind of adjust -- roughly a 10% reduction in the overall number of reps that's happened, a little bit less than that. We've talked about that. We predicted it. We were part of driving that move as we made the industry more digital. So that reset has happened once already. You fundamentally need a core number of field people talking to -- if the number of HCPs hasn't changed in the U.S. market which -- or even globally, which it really fundamentally hasn't, you still need human beings to build those relationships and manage those relationships. So yes, I think there's an opportunity to make them more productive, but I think they're also going to be very thoughtful as to do we go through another reset of the market. I don't think there will be a significant reduction or change over the next couple of years. I think it's going to be relatively stable over the next handful of years. And then I think we'll just see how -- I think there's a lot to be learned what the potential is for AI, but I think it will be stable for some period.

I am going to have more AI questions on the R&D side of things. But as we're thinking about Vault CRM, I think 1 of the things that investors have debated is like the cost to implement that versus some potentially competitive solutions. How do you think about that in terms of like maybe a top 20 or maybe some of the smaller customers? Maybe help us understand that dynamic a little bit.

Yes. So what we have done, what we've promised the industry is we're going to make the migration to Vault CRM as easy as possible. it's not -- it's never 0 cost. For a small -- a very small customer, it gets close to that. It approaches that. But it's never 0. It's always a project. We built tooling to be able to migrate a customer. So fundamentally, what they're doing is they're taking everything they've done in Veeva CRM, and they're moving it over to -- we are moving it over to Vault CRM for them with some migration tooling. And then there's some work to do around that. Integrations that have to happen, for example, customizations that have to happen as an example. So those things we don't actually move. They need to be redone.

So for a Veeva customer, the vast majority moves and then there's some work to do around it. And for some top 20 customers, we've made some select services investments there because they have a lot of customizations, most companies that are small or midsize, they don't need that because they haven't done a whole lot of those customizations. Contrast that to what you may have to do with an alternative, let's say, with Salesforce, for example, you're basically starting more closely to a platform. It's like a -- you start with a platform with an immature product and what you have to do is build everything out and that's why a lot of the systems integrators are excited about the Salesforce model is because they start with something very basic, and they get to build these custom CRM systems for Japan and for Europe and for the U.S. market, which ends up being very, very expensive.

So we think it's going to be an order of magnitude difference in terms of risk but also in terms of costs. We think we'll be highly, much more efficient. And actually, ours is now well established and well-known because we've done it multiple times. We know exactly that path to get there. We're getting even more efficient at it. And I think with others, it's just -- it will be a whole lot riskier.

So I remember asking you a couple of years ago when the Vault CRM process started that the opportunity to unlock innovation in other commercial areas outside of that. So maybe update us on how that's gone and as you're thinking about marketing and some other areas, like what's the opportunity to expand that relationship with customers?

Yes. And that's playing out already. And when we announced Vault CRM, that was the promise. We can -- we have -- we control our destiny, we can build and innovate in new areas that we weren't able to before. Marketing, call center, patient and I would even include AI, Veeva AI in that category. So really 4 big areas that didn't previously exist that now we can help our customers innovate in and those areas are really just getting started and they're some of our early products and we have some early adopters in each of those areas. And as customers move to Vault CRM, that's really when they can start to take advantage of them. So a lot of excitement, a lot of potential, but still early days there.

My last commercial question, I promise. But I have to hit on Crossix, has been really strong this year. Can you talk about what's driven that? And what's the right way to think about the growth rate for that business?

Yes. Crossix has been a great growth driver for Veeva and will continue to be over the next several years. So Crossix is 2 businesses. It's the measurement and optimization, which is the larger part of the business. And we continue to gain share there. So what has happened over the past couple of years is we've clearly established ourselves as the market leader and the very best product in the M&O side, and then there's the audience side of the business, which is the smaller part of the business, but the faster-growing part. And we've invested a lot over the last handful of years. It feels like it's sudden to you that, like, hey, this Crossix thing is actually really a contributor. To us, we've been investing in that audience's side. And those investments are paying off in terms of market share gains, in terms of new product opportunities, we're expanding the size of that pie, and we're gaining a greater share of it. So that I expect will continue to be an exciting growth driver.

That's great. So maybe just pivoting to the R&D side, but AI and clinical, you mentioned some opportunities for efficiencies going forward. Like what do you see as maybe the low-hanging fruit and how will customers invest in Veeva to kind of drive those efficiencies?

Yes. So a lot of potential on the clinical side. When I think about kind of 2 big things that we can help you and really across the operational side and the data management side. But I would kind of put it into 2 big categories. One is automation. So there's a lot of manual labor that needs to happen in the clinical trials process. So in taking documents, classifying what a document looks like, verifying that the accuracy of a document is what it should be. Getting information from the source of a patient in a clinical trial that needs to be entered into a system and validating that it's -- is the blood pressure range, is it an accurate range that or is it something that's not even humanly possible, right?

So that is done today by humans. And it's very manual, and there's a possibility to dramatically improve the productivity there, 10%, 20%, 30% on the automation side. And then I think there's a generation side, which is what AI is natively good at is generating test data, generating protocols, as an example, helping to do that process much more efficiently. So I think there are many ways to really across the whole clinical life cycle from how you run and operate trials to how you automate some of the core capabilities to make it much more efficient. We're just at the beginning part of that. It's 1 of the exciting areas we'll have AI in clinical, starting in '26.

And how do you think about the AI evolution because it's not just in clinical for you on the R&D side, there's quality, there's regulatory, there's a lot of different areas. So is it starting in clinical and broadening or -- and I guess I'd love to understand, too, maybe as these customers kind of lean into AI, like where are they focused first? Is it clinical because there's a lot of opportunity for efficiency. So how does that all evolve?

Yes. And there -- I would think of them as all separate business areas, so we start -- Veeva started in commercial, and now it's generally available today in our commercial applications. As we go through next year, it will be available -- AI will be available on all of our applications across all the areas that you mentioned, clinical, quality, regulatory, safety. That's all coming in 2026. Now the way our customers will think about it is they won't necessarily make a trade-off of 1 area versus another because they're run by different people, so they may do AI and safety at the same time that they may do -- start AI and clinical as an example, or in commercial. So there's less of a single threaded here and a lot of it depends on the individual company, their priorities and the business units. So I think there's a lot of potential there for them to get started across many areas. Of course, we're getting started in 2026 in all of those areas, and we'll kind of see how that plays out. I think it will be a big year for kind of learning and establishing the value.

And I think AI or not, the quality and safety have been 2 pretty strong areas for you guys. So maybe talk about what's driven the strength there over the last few quarters, anything that you would call out?

Yes. Quality and safety, really strong areas for us. Quality is a really significant market for us. We've innovated by building many, many application areas all on the same Vault Platform that's unique. Nobody else is doing that. So quality documentation, quality management, so CAPAs and change controls and then a portfolio of other applications, laboratory information management, LIMS, and validation management and batch release and training, all on a common platform, all natively integrated. So what that replaces are lots of different fragmented players, lots of different vendors that they were stuck stitching together.

So that's a very strong value proposition for quality, and it's driving -- we have a starting point with many, many customers established market and quality documentation, quality management, and now we're expanding that. And then in safety, similar story, but I would say in safety, a very conservative market that's resistant to change. You kind of get the safety system working and you don't touch it. But now we're -- we have emerged as now with 5 top 20, and we have 3 top 20s live, we're -- we've emerged as the modern alternative there that can keep them current, but also connect a lot of these pieces just like we're doing in quality and clinical.

And maybe just on EDC a little bit, I know we're pivoting back to clinical here, but like can you talk about your share gains there, how that's continued to build and the value proposition versus some of the incumbents in those markets?

EDC is an exciting space for us. One, it's a really large market. It's a market that we continue to gain share in. We have 9 of top 20 in EDC. I expect that we're going to continue to be the -- the reason we're winning in that market is we have the very best product, right? We didn't on day 1, 5 or 6 and 7 and 8 years ago. We have matured the product to where it is -- it's faster at doing things like getting a study built and running the study and handling changes that happen along the study because we've taken a different approach. It's all modern cloud-based software. And we understood when we built this, we understood the challenges the industry was facing. So we're able to build the software to solve a lot of their roadblocks or their barriers or the challenges. So we're the -- we're the very best product with a broad and bold vision. So not only is it the best EDC, but it's also connected in to everything else that they're doing in clinical, the operational side, even connectivity into the research sites and into the patients, which is a very unique -- there's nobody else doing that, and we're well positioned.

Yes, I was going to say like, as you kind of build out this broader portfolio and you're innovating, I don't remember, there were a couple of modules, right? Now it's suites [indiscernible]. How does that change your right to win? And like when you sit down and talk to a customer, does it change kind of the nature of those relationships that they have so much more that they can buy from you today?

Very much so. So the customers make decisions kind of based on 2 things, right? One is they have to have the very best application for that specific area. It's got to be the best EDC. It's got to be the best clinical trial management system, that's super important. You -- that's table stakes. And what Veeva offers well above and beyond that is the fact that, that is interconnected with so many other areas. And Veeva is really the only company that can make that claim. And what is the structural advantage there is the Vault Platform is the fact that we have a platform that supports all of those different areas. Now 10 -- over 10 applications across all of clinical that we do that connectivity. They all need to be connected. We take that burden on, so customers don't have to do that. So their decision-making now shifts to I can be transformational in clinical. This is not like, hey, some better features and functions. This is how do I streamline my end-to-end clinical process and make clinical trials 10% or 20% or 30% more productive and efficient. That's what they're aiming for and that's what they can -- that's the potential with Veeva.

Maybe just hit on the IQVIA partnership that you guys announced this year. What does that mean in terms of your customers? Highlight that a little bit.

Yes, that has been super exciting. And it's been exciting because it really spans, it's 1 of those partnerships that spans commercial and clinical. So I'll start on the clinical side. IQVIA is 1 of the CROs that has not had -- 1 of the top CROs that has not had access to our software and our training and all of that capability. And I think what this does is it takes 1 of the leaders in the CRO space with the leading technology and allows them to work interoperably together. So this is hugely exciting. We're just at the beginning stages of what potential that has. I think it just takes a lot of friction out of the process for customers, a lot of uncertainty out of the game for customers and allows them to choose the top companies and provides great choice for them and flexibility.

So great potential there in clinical. And then in commercial, not dissimilar. It gives customers choice to be able to use data and software from any company interoperably together. We're now building a connector between some of the IQVIA data and some of the Veeva software like Veeva Network and Veeva Nitro, which is super exciting. So we'll -- again, customers have choice. It even helps in areas in some of our data products for example, right? So customers oftentimes don't go all in on 1 company for their data, they want to buy data from multiple different places.

So this provides them with that ability to be more interoperable. They could buy data from Veeva, and they can buy data from IQVIA and they can both work together. That's a huge advantage.

So how does that change like your optimism about your data strategy. I know there's multiple products there. But maybe talk about where you stand in that evolution and how you feel about that opportunity going forward?

Yes. You're right on the -- it's a broad portfolio. We call it the broad portfolio of data cloud. And in that, there are multiple different pieces. There's open data, there's length. There's compass, so lots of different data products. So to some extent, it allows companies to start to mix and match some of those pieces together. It just takes friction uncertainty out of the game there. And I think that just whenever any time you remove friction, you just -- you make it easier for somebody to make a longer-term decision and a commitment to our product. So I think that's a super exciting thing. And some companies, they now can go to Veeva and IQVIA and get everything that they need, which makes it a lot easier for them, where they may have had to have stitched that together with 3 or 4 or 5 or 6 different vendors, they can say, "Oh, Veeva and IQVIA, they are my standards, and I'm going to get to use multiple products, software and data products from both companies."

So I want to hit on the horizontal opportunity that you guys outlined, you mentioned that's going to be in CRM. Maybe give us kind of an update on where you are in those efforts and how you're thinking about building the products for that maybe a little bit more longer term?

Yes. So again, we're still very early. We're super excited by it. We have a focused team that's building a platform. We're taking -- we're calling it a platform-first approach. So they're -- they're building the platform. Yes, they will focus on CRM and actually a more specific area in CRM. We're working on getting some early customers and working with them and building the platform with real customers in mind. We're excited because this is kind of the next generation of a cloud-based platform. We're building it in the era of AI. We're building it having understood and actually having built multiple platforms before as a company and as the leadership of some of our company has built multiple platforms.

So we know some of the shortcomings of existing platforms and we're kind of taking that account and rethinking and reimagining what an enterprise platform should be. So it's an exciting area. We're early days, a very, very focused effort. But I think we're on the early days of something that could be really big and exciting.

That's great. I think we'll wrap it there. Paul, thanks for your time.

Awesome. Thank you, Brian.

Ladies and gentlemen, thank you for standing by. My name is Colby, and I will be your conference operator today. At this time, I would like to welcome you to the Veeva Systems Fiscal 2026 Third Quarter Results Conference Call. [Operator Instructions] I'd now like to turn the call over to Gunnar Hansen, Head of Investor Relations. Please go ahead.

Good afternoon. Welcome to Veeva's Fiscal 2026 Third Quarter Earnings Conference Call for the quarter ended October 31, 2025. As a reminder, we posted prepared remarks on Veeva's Investor Relations website just after 1:00 p.m. 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 Shawah, EVP, Strategy; and Brian Van Wagener, 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, November 20, 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. 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. Now I'll turn the call over to Peter.

Thank you, Gunnar, and welcome, everyone, to the call. We had an excellent Q3 with strength across the business and results above our guidance. Total revenue in the quarter was $811 million and non-GAAP operating income was $365 million. Veeva AI is a major initiative for Veeva, and we're making excellent progress. We think Veeva AI can be significant for customers, the industry and Veeva. We're also executing well and delivering significant innovation across all product areas, including Vault CRM, Crossix, Clinical and Safety. We'll now open up the call to your questions.

[Operator Instructions] Your first question comes from the line of Saket Kalia with Barclays.

I appreciate the prepared remarks that were posted. Brian, maybe I'd love to start with you and maybe just hit one of the points in the prepared remarks kind of head on, where I think we said that of 14 top 20 customers are expected to migrate to Vault CRM and so 6 are potentially opting for other solutions. Now there's clearly the potential for win back, as we said. But maybe the first question is, how do you sort of think about the size of the revenue that might be at risk from those 6 customers on the CRM side? And how do you think about the time line of that potentially kind of transitioning?

Saket, I'm not going to size it and there is the potential for win back, as you said. But maybe taking a step back, CRM is about 20% of total revenue today, down from about 25% 2 years ago, and that's because other product areas have been growing. And so in the shorter term, these are multiyear projects that we understand will take a long time to execute. So no impact expected this year and likely nothing material for next year either. Longer term, we don't expect any impact on our 2030 goals. It's a diverse business, and that means there's a lot of paths to get there, and we're still on track.

Got it. Got it. That's super helpful, actually. Peter, maybe for you. On the other side of the business, I'd love to talk about R&D a little bit with you. Of course, one of your competitors talked about winning back a top 20 on the EDC side. I was wondering, just since we're all together, can you just talk about that? And maybe just comment on kind of the state of the union in that EDC market in terms of the competitive landscape and your pipeline for further market share gains?

Yes. We did have one customer that said they were going to go back to their previous provider. Now they're still a broad clinical customer for us and even in the EDC area. So we'll just have to see how that goes. That's not a trend I see. I think we're still trending very well in clinical, and we have a number of opportunities in the pipeline for EDC, both with large sponsors and with CROs because most customers are looking for an integrated solution across clinical operations and clinical data because it just makes sense.

That's how you drive efficiency and efficiency is the name of the game. This particular customer has more of an integrated architecture of their own, for example, they have a custom CTMS solution and a variety of other things. So at this point, it was a sort of a more -- a decision that was something that we don't see repeating in other places.

Now -- and also the thing that I'm very excited about is our innovation in clinical, our next-generation innovation in clinical that we have in the kitchen that will help the life sciences companies bridge between sponsors and all the way out into clinical research sites and also really help in patient recruiting over time. So future is very bright in clinical. This one, honestly, a bit of an aberration.

Your next question comes from the line of Joe Vruwink with Baird.

I wanted to dig a bit more into the CRM topic. Obviously, attrition carries an implication on revenue over time. But I sit here today, and I think commercial subscription revenues have been raised by about $60 million year-to-date. And then every Vault CRM customer you're retaining now has the opportunity to add Service Center and marketing automation and Veeva AI, so how should we think about all of that netting together?

I mean, is it the case where ultimately, you're netting out and there's an increment here? I think the market is focusing on kind of the lost value to Saket's question, but how to think about the offsets in the equation over the next 5 years?

Yes. Joe, so you're absolutely right. I think there's been a lot of focus on what there is to lose. I think there's a lot of potential in what we've created, the innovation that we've delivered in some of the areas that you mentioned like service center and marketing and patient CRM and some of the new products, but then also in AI. So yes, each customer that we retain, we have the potential to sell a lot of these products and new innovations.

And I expect that over time, those customers will adopt more broadly the CRM suite, all the add-ons that are part of that. We're starting to see some of that happen already with some of the customers who've committed to Vault CRM starting to add additional products on. So that's really good. I think we'll also have the potential to win some of these customers back. We've talked about that in detail. So yes, I feel good about the upside as much as there is some potential attrition from some of the customers that we've decided to do something different.

This is Peter. I'll just add in. We've focused on the top 20 because that's how we do some things when we talk to the financial community. But it is important to remember, we have about 400 customers. So it's pretty distributed in what we do. So our CRM business is very healthy, and our win rate and our conversion rate is very strong and stronger in the smaller market because not -- the smaller customers, they don't have this appetite for a custom build. It's just not the risk they want to take or what they want to do, and they get a lot of other products of Veeva.

Also just on a side note, while we did have 20 of the top 20 customers -- 20 of the top 20 were our customers in some fashion for CRM, 2 of them were mainly IQVIA customers. So that's -- it's not to say that we're not going to gain some new customers here, right? And that can be significant as well. Bottom line is what you should take away is CRM business is healthy, and it is an important part of Veeva, but it's not the major -- it's not the largest part of Veeva anymore. That's for sure.

Okay. That's great color. Maybe one on Veeva AI. You had a few summits within the last quarter. I think you've also been making the rounds on forums, gathering feedback from your customers. I guess what stood out to you, both in terms of, I'll say, positive reception, but then also maybe any pushback or things where you walk away and you have more -- you need to work on coming out of this initial experience with AI?

Well, I think our customers are -- they're looking for practical solutions now, right? They're looking for solutions that can add value rapidly sort of getting out of this experimentation phase. And they want to use partners where partners can help them. So they want to use Microsoft where Microsoft can help them. They want to use Anthropic where Anthropic can help them. And they know where Veeva can help them is helping to automate industry-specific applications with AI, that deep domain knowledge and the business process consulting around it.

So how do you enable insight generation in CRM through your field team by the use of compliant free text, okay? That's a very specific thing. How do you dramatically increase the efficiency of Safety case processing for adverse events, okay? That's very specific. So that's what they're looking to us for, and that's what we deliver. That's what we specialize. In terms of what they would like differently, just like everybody else, can this be robust and proven and working tomorrow for our cases.

And so they just want us to go faster, but there's really rampant alignment on directions. Veeva is setting out to do exactly what they want Veeva to do. We just have to get there. And the customers also have to be able to adopt and do that change management work, which is that's not easy either. That's not going to happen overnight. That's one of our advantages is we have a great business consulting team.

So we have that integrated together, our product team, our selling team and our business consulting team to deliver AI value. That's going to be more holistic than others, and that's how you're going to have to do it in industry-specific solutions. The customers are not going to want to knit together consulting over here and software over there and AI over here. They're not going to want to do that over the long term.

Your next question comes from the line of Brian Peterson with Raymond James.

And Peter, maybe a follow-up to your last answer. But as we think about AI and how that will impact your products going forward, do you think that we'll see more of a monetization in terms of commercial where we've already kind of seen some aspects of that today, maybe more broadly in software. But I'm curious, what do you think that opportunity could be in R&D where there seems to be more of an opportunity of innovation? Any color on like how to think about that opportunity from AI?

I think it will be not exactly, but broadly even across the board. So with some areas a bit more than others. Safety, I think it's a big opportunity to reduce the amount of labor needed also in certain areas of the clinical. In commercial, it's more about insight generation and market advantage in terms of faster insights. In regulatory, it's again -- it's about speed. So the value is probably similar across all areas, but the way it's going to be implemented is differently. Some is going to focus on insight and agility. Some is going to focus on, hey, humans don't need to do that particular work anymore.

Got it. And maybe, Paul, a follow-up for you. I think there's been some debate broadly on AI and how that may impact sales reps or like how efficient sales reps could be. Like as you talk to some of your customers, like how are they thinking about the size of their sales force with the implementation of AI? Like what do you think that looks like going forward?

Yes. I mean we have seen some of the reductions that have played out over the past couple of years that we have talked about. We kind of predicted roughly about 10%. It ended up being a little bit less than that. The way to think about it is the customers that they're calling on the HCPs, number of doctors hasn't fundamentally changed. You still need people. You need a base level of sales reps to build those relationships, cover those doctors, deliver the information, the service that they need.

So I think the industry is cautious and thoughtful about making significant changes or adjustments. So I think there is a lot of potential for productivity gains and effectiveness gains. But I think it will likely be stable, at least for the next couple of years. We're not hearing of any AI-related reductions. It's more related to specific ramping up for launches or ramping down because of a pipeline challenge, but I think that's normal course of business.

Your next question comes from the line of Alexei Gogolev with JPMorgan.

Peter, I had my first question. Maybe I appreciate the comments you made in prepared remarks that you have not observed material change to customer buying behaviors. But could you double-click on the demand environment and the financial health of the pharma end market?

Yes. So the industry overall is pretty healthy. We've had a bit of chaos in the political environment with tariffs and other things and certainly conflicts, but the industry has gotten, I guess, used to that. And so I'm seeing no changes in the end market. Then the science is still rapidly evolving, right?

So there are many uncured diseases that are seriously affecting people's quality of life, the death of a child or a young parent, right, that happens. And the industry is working hard to be able to cure some of those things. And there's demand for that. So I'm pretty optimistic about the industry overall, and it's pretty steady right now.

And a very quick follow-up on the comments. First, congrats with another commitment for Vault CRM. So you suggested that you're looking to win another 4 out of the remaining 6 undecided. Do you have any verbal indications from those clients already?

No, I wouldn't get -- we'll probably let you know when we've been notified, we'll let you know in general, but we won't get into the fine-tune of that. Okay, we have some things that we think, and we have some things that we think we think, but we won't get any more fine grain than that.

Your next question comes from the line of Ken Wong with Oppenheimer.

The first one is for Paul. Crossix again, called out as a pocket of strength. Any way to help put a little context around it? Was that consistent with Q2? I just starting to normalize, level off? How should we think about kind of the Crossix dynamic?

Yes, it was in line with our expectations. You've seen nice outperformance of Crossix in the first couple of quarters of the year, and we expected that to continue to play out. The measurement business, very stable, and we've continued to perform well there. And then audiences, which can be a little bit more variable, has also delivered really nicely. So yes, Crossix continues to be a nice growth driver, and we expect it to be that. Although there may be some variability, we expect that to be a nice driver over the next several years.

Perfect. And then, Brian, 115 customers live on Vault CRM, including I think some top 20s kind of in the motions. How should we think about when you might see some gross margin tailwind as you start to work off of the Salesforce royalties? What's the right time frame for something like that?

There are some puts and takes in the short to midterm there, Ken. So you recall that in the next couple of years, as we have other customers going through their migration, there are some customers where we have both the Veeva CRM on Salesforce royalties and the AWS hosting costs. So we'll see some customers rolling off, some that have a mix.

So it's, I would say, a modest headwind actually over the next year or 2, but pretty immaterial in the grand scheme of things. You can see that the gross margins on subscriptions were essentially stable, slightly up year-over-year. So it's not a significant impact over the next couple of years, and then it starts to roll off a few years from now.

Your next question comes from Stan Berenshteyn with Wells Fargo Securities, LLC.

Well, first, a follow-up on Crossix. I'm just curious, given the regulatory focus on direct-to-consumer advertising, have you seen any changes in where audience targeting is happening on the platform? Is it changing at all?

I would say -- and I can take -- yes, I'll take that one, Paul. I think the thing that -- when I was listening about Crossix, thing to know is that digital -- overall digital marketing spending is going up, both in consumer and in HCP because there's better digital avenues to reach people. And you're seeing that with things like OpenEvidence and Doximity's new AI offering, right? So there's increasing effective use of that channel.

And then with Crossix, specifically, what's going on is -- as that channel gets more important, measurement and audiences and optimization get more and more important, that's one thing. And Crossix is becoming more of a standard. So there's really a compounding effect of the excellence that we're developing in Crossix. Crossix will be -- that's going to be a well-growing business for us. You should think of that as a well-growing business for the foreseeable future, 3, 4, 5 years type of thing.

This is -- we've put some serious innovation in Crossix over the past years. We've invested heavily in the data network because that's a data network that we share with Compass. Compass and Crossix share that data network. So it's -- digital is becoming more important, not less important. You will see maybe regulations around consumer TV ads. But overall, digital is growing. It's a very effective means to meet people, and you need to measure and optimize that, and that's what Crossix does.

Very helpful. And maybe a quick follow-up on your sales pipeline. I'm curious, a couple of comments here. First, I think historically, Peter, you called out Safety and regulatory as potentially having a little bit less of a predictable sales cycle, maybe a bit longer than usual. Any changes there from customers in the sales pipeline on those products? And then maybe related to this, I'm just curious, are you seeing anything coming from IQVIA partnership, any clients potentially coming through that pipeline?

Yes. For Safety and regulatory, they are, especially in the large companies that -- those are usually long sales cycles. Customers know they're making 10-year decisions plus. So these are very serious ones. So I don't see any change there. We have a lot of momentum in the Safety area. That's one thing I would say. And then the AI and Safety can kind of be a game changer as well.

So that might drive a little faster adoption there. In terms of IQVIA, it's been great having that partnership. So revenue impact takes a while to see on these partnerships, but the positive customer experience is really heartening. I think it's giving IQVIA a little spring in their step, this partnership with Veeva. It's certainly giving Veeva a spring in our step, this partnership with IQVIA.

It's a very positive macro level trend for the business, especially on the commercial side. The 2 big macro level positive trends for us on the commercial side -- or 3 are this increasing investment in digital and AI. You'll see Crossix taking advantage of that, and you'll see other things from Veeva over the time, right, where a lot of our revenue and our future things will come as it relates to digital, the IQVIA partnership, making the interop more easier.

That will help our data business, that will help our software business. And then the freedom that we're getting to develop our solutions without having to worry about the Salesforce platform and the limitations. All of these things are really going to be unleashing us on the commercial side. And then for IQVIA on the clinical side, that's been great, too, just more customer confidence in Veeva and IQVIA can bring solutions to our joint customers.

Your next question comes from the line of Dylan Becker with William Blair.

Maybe, Peter, starting with you, too, if we kind of think about the service strength, you hinted at this as it relates to business consulting, but maybe the need for change management that you're seeing and kind of the strong services outlook, how that -- or how you maybe think about the implications of that maybe driving more kind of wall-to-wall broad-based platform adoption in the future, the role that business consulting can play in driving kind of the broader platform momentum over time, whether that's commercial or R&D?

Yes. If you look at Veeva at a very high level, where we started, pharmaceutical CRM built on salesforce.com. Myself and my neighbor in our front yard -- in our front yards, which we joined. So there's 2 people and 1 product, right? Now we have 7,000 people and a lot of products. The way -- and now we have software that basically reports directly to me. We have a data business that reports to me, and we have a consulting business, and that consulting business reports to me.

So that's how we're building the Industry Cloud for life sciences. These 3 things working together, which is a lot of skills we have and capabilities we have to have in Veeva. We have to be an excellent consulting company. We have to be an excellent data company. We have to be an excellent software company. And we have to manage the interplay of those 3 things. But that's what our customers want.

They would rather have Veeva be the general contractor and fit this together. Sometimes I would talk to customers and I would say, well, if Veeva has 100 things, the nice thing is you might buy one thing today, but you can be assured that one thing 5 years from now will fit into all the other Veeva things that you have versus if you buy 100 things from 100 different vendors, those 100 things are moving in 100 different directions, and you'll be replacing pieces and parts forever.

So that's what we're bringing a more comprehensive solution across data software and the consulting, the operating models so that it fits together for life sciences. I guess that's why I think sometimes people underestimate what we'll end up doing for life sciences. It's a pretty significant thing, and it's not anything that any other vendor has actually ever tried to do for an industry so far. So that's why we're pretty excited about what we're doing.

Certainly. That makes sense. And maybe you just kind of teased this, and so I'd be remiss if I didn't kind of double-click on the momentum in Safety. I know you called out another top 20 customer and I think another top 20 go-live there alongside the fact that it's maybe the opportunity that's most ripe for labor disruption. I guess I know these are still long-term decisions, but how you think about kind of the innovation you're delivering to the Safety space and how that's met with receptivity from a decisioning perspective as you have kind of more of these proof points and validation points in market?

I think Safety, people are really excited about our architecture and how we're doing things, not only the core Safety processing, but the AI that sits on top of that and the analytics that go along with the analytical application. So people think that's good. People are very hesitant to change their Safety systems. It's such a core system, and it's been so complex. So we're still in the early customer phase of that. I'm hopeful that we'll get into the middle majority phase here in a couple of years, and then we'll have the late adopter phase.

I'm just very optimistic on it, but gosh, people don't change these things very, very fast. They just don't because there's -- it's such a critical area and there's not a lot of push from above the Safety teams because it's such a critical area and they've got it. So we just have to wait for the right time and then every project has to be successful, and that's really what we're focused on.

It's probably surprising -- it would be surprising to many people how complex a global drug Safety system is when you're coordinating with all the health authorities around the world, all the constantly changing regulations. I mean, just to give you an example, there's a lot of special functionality for vaccines that you need and over-the-counter medicines. Each therapeutic area has its own things, and each country has its own things. So it's complex. We've spent, I guess, it's getting close to, what, 8 years or so building this thing now. So that's a real competitive moat.

Your next question comes from Tyler Radke with Citi.

Peter, just going back to the CRM, top 20 customers there. You referenced that this was like kind of unique customer kind of one-off examples. I was wondering if you could just sort of elaborate on it. Is this something specific to their negotiations or discounts that they'd be getting with another vendor? If you could just sort of talk through that? And then maybe the time frame on when you think you could win them back?

Yes. I think when we say customer-specific situations in a very large company, there will be individual people and there'll be dynamics in between people. And there'll be how those people feel and where their cultural alignment is. Sometimes logic is only part of it. So that's what I was referring to. There's no particular pattern there. It's just customer-specific humans, right? And some like would just say, I just want to try something new, right?

I just want to try something new. We may think that's logical or not logical, right? Some people want to go with something that's proven, and some people would I just want to try something new. So you got all those kinds of dynamics going on. And then in terms of the win backs, you never know when that happens. Usually, it comes with, honestly, executive turnover, right? There's an executive turnover; somebody has a different idea.

Also, it can come in sometimes vendor not delivering, the current solution not delivering, or project failure, and then it can come in a hurry. It might come in 1 year; it might come in 10 years. In general, these will be more of a custom build type of thing with Salesforce and those -- on the outside, those could have a 10-year lifespan, but they might only have a 1-year lifespan. So we just have to see how that goes.

I do have a lot of confidence that the custom building is really -- it hasn't proven to be the way forward for most things over the years. And so that's what gives me a lot of comfort. But again, I don't want to over-index on that. We're just talking about these top 20s for transparency. Our CRM business is very healthy. We're winning some top 20s that we didn't have. We're losing some that we had, and we may win them back. But overall, the business is good.

Yes. And for sure, over 100 customers live is a good proof point. Maybe, Brian, just on the margin side, it looks like hiring ticked up again a little bit this quarter relative to kind of the trends we saw last year. Can you help us just understand where those heads are focused? And then anything you would call out in terms of how to think about margin expansion into next year.

Yes, absolutely. So the 2 main areas that we're hiring are in our product and then in our services team. You heard us speak to some of the services hiring coming out of Q2 with the large class for our college development program. So we're continuing to invest in the services business, both core professional services and business consulting, continuing to invest in the product. And there was some impact on the services margin in particular in this quarter, but we're really pleased with the overall performance of the business. And as those new hires start to ramp and build the projects, that will wind itself down over time.

Your next question comes from the line of Charles Rhyee with TD Cowen.

Peter, obviously, we're continuing to get these wins in Development Cloud with Study Startup and Study Training. For these clients, I guess, in Development Cloud, among the top 20 biopharma, what's the average number of Veeva Development Cloud products do they have on average? And where would you see as the tipping point?

Because if I recall a couple of years back, there was an announcement that Merck was going to move to sort of a full Veeva environment over time. Just trying to get a sense on what you would consider someone being sort of a full Veeva on development -- on the R&D side? Like what does that look like?

Yes. And as it relates to Merck, there was a strategic partnership we announced there was not really that they would use Veeva everywhere, but a strategic partnership that we announced. Now in terms of Development Cloud, I don't have any particular figures to share with you in terms of percentages or number of applications. It depends on the area. So in the eTMF area, we actually have 20 out of the top 20 now that have selected us.

That's really important. We can use that standardization to drive AI and industry standardization and help the industry and help the regulators. That's going on there. And then newer areas such as RTSM for the randomization and trial supply management, we don't have any top 20 that has selected us for an enterprise standard yet or eCOA, nobody yet because those are quite new in Safety, just a few. So it just depends. We have a lot of -- we have definitely more opportunities to go in Development Cloud than we've consumed now.

So surprisingly, it's still in the early days of Development Cloud for 2 reasons. One is these are super important systems that take time. You can't change them out all at once. You put them in most of them and you keep them for 15 years. The other is we're adding more applications. So RTSM is new, eCOA is new. The whole area of Quality control, LIMS is brand new. We just had our first early adopter in the top 20 for 2 manufacturing sites. So it's a lot more to do. I guess it's still early, surprisingly. These things take time.

That's helpful. And maybe just a follow-up there. Someone had asked earlier about one of your competitor's kind of won back an EDC client. But what does the overall competitive landscape look like currently? Because it seems like one of your other main competitors in development -- in R&D seems to be focused a little bit elsewhere in health care. Just curious how you're seeing the overall competitive landscape kind of shaping up currently?

Yes. We certainly have competitors in each area. There are competitors specific to randomization and trial supply management. There are competitors specific to regulatory and clinical operations and EDC. But we don't really have a competitor that's trying to do an overall Development Cloud like we're doing. So I feel like we just have to execute really well, excellence in each area, concentrate on our integrations and leverage our account partnerships.

So we have to compete with ourselves to push ourselves for excellence, for humbleness, for great hiring. The advantage that we have is we have a core platform that's used across all of these applications. So we can really invest in the platform, and there's commonality in the platform. And we have first mover advantage. We had this idea back in really 2012. And so you have a lot of core capabilities around it. I view our competition as ourselves. We have to execute and continue to improve and stay humble.

[Operator Instructions] Your next question comes from the line of Craig Hettenbach with Morgan Stanley.

On Crossix, before the acceleration this year, I think the business has grown roughly kind of low to mid-teens. You talked about some of the drivers that are driving growth above that. Do you think in the next couple of years, it reverts back to kind of that mid-teens level? Or do you think some of these drivers can kind of sustain stronger growth in the next few years?

Craig, this is Brian. Overall, we are really pleased with the progress of Crossix. Growth has been very healthy there for the full year-to-date. It's a large market with a long runway for growth, both in the measurement business and in the audience's business. We're not going to break out a specific long-range growth rate for each product area, but we think there's still plenty of room for that business to grow, and it's executing very well right now.

Your next question comes from the line of David Hynes with Canaccord Genuity.

Paul, maybe you could talk a little bit about how you're balancing go-to-market initiatives on the commercial side of the business and maybe how you see it evolving over time? I mean, obviously, Crossix is doing really well. I have to think CRM migration is kind of front and center of your mind right now, especially kind of these last top 20s make their decision.

You've tempered expectations around cross-sell during this migration period, but you have a ton of new product, right, Service Center, Campaign Manager, Patient CRM. Like when do you lean in on those products a little bit more with the top 20s? And just maybe talk about kind of how you balance all of this and see it evolving over time?

Yes, David, it's a good question. And maybe higher level, we have dedicated teams in each of these areas, dedicated strategy teams and product teams, and they're all focused on their different areas. So they're able to move -- advance the product forward, advance customer discussions forward. In some cases, there's dedicated sales teams. So it's not -- we don't necessarily have to kind of just focus on one thing and not focus on something else. We're able to kind of focus in multiple areas. But you're correct, right?

There's -- the migration thing is the transition of customers over to Vault CRM. That is creating -- in some cases, it's slowing things down. In other cases, it's actually creating opportunities for us. We're seeing as customers are making that decision, they're looking at their data. And maybe it's time that we switch out our customer reference data because Veeva has better data in this area or their Master Data Management with Network and Nitro are now coming -- becoming opportunities.

So as they're going through the migration, they're thinking about -- they're thinking more broadly because they're trying to get to broader efficiencies and they're able to get there as they adopt more pieces of Commercial Cloud. So it's -- we're able to focus in multiple areas. It does create openings for us to continue to expand in each of these areas. And it's -- as you've heard, there's kind of some stable businesses, and there's other areas that are growing a little bit faster. We're going to continue to drive and push in each area because we can add a lot of value when they put all these pieces together.

Your next question comes from the line of Andrew DeGasperi with BNP Paribas.

I wanted to ask the top 20 CRM question in a different way, in particular, how it relates to your 2030 targets. I know you mentioned that it doesn't impact that -- your capability to reach it. And I was just wondering why is that the case. Is it because you either -- the sort of lower expectations is mostly tied to a very small number of clients that have decided to go a different way, like 1 or 2? Or is it a factor of -- that you have these other Vault CRM customers that are smaller, the 100-plus that you've listed that could be also contributing and offsetting some of that potential weakness you would see in that business?

Andrew, this is Brian. I'll take this one. So when you step back, there are a few things, some of which you touched on. One is that the top 20 is certainly not the entirety of the CRM market. And you heard Peter speak to the fact that overall business is very healthy. We've got enterprise customers, SMB customers. We still expect to win the vast majority of customers to retain that. We will have the opportunity to win some of these customers back, and we think that's likely to come through.

And then the third and probably the biggest one is that this is a diverse business. It's not only a CRM business. CRM suite is about 20% of total revenue today. So the other 80% is continuing to perform really well. It's growing well, and there were always multiple paths to 2030. And so when we step back and look at the progress that we're making, we feel very good about the progress and how we're tracking out to the 2030 goals.

Yes. The way to think about it is the commercial is a part of the business, right, of our total addressable market and clinical is even a bit bigger than that, and then there's Quality and Safety and manufacturing and other things. And then inside of the commercial, the CRM suite is a part of that, but it's certainly not the majority of it. It's the minority of the commercial area. And we have to see how things play out.

It's not unforeseen that Crossix can be as big as the whole CRM suite by 2030 as well, right? That's -- it's a good business for CRM, and it's a strong business for us. But the CRM suite itself and the number of field reps and things, that's not a growing business. That's kind of a stable business. That's where Veeva started, but it's not our determinant at all for 2030.

Your next question comes from Jeff Garro with Stephens.

I want to ask about the comments in the prepared remarks on the Quality Cloud opportunity expanding. Is that expansion by reaching new customer types or more of a reference to product expansion? And just any further remarks on specific drivers of your success in Quality and -- with labs and CDMOs would be helpful.

Yes. I'll take that one. This is Peter. It's -- yes, Quality is one of these areas where we can reach a lot of customers, a lot of different customers, CDMOs, other regulated -- highly regulated services, industries that are close to life sciences. Our success has been -- we have 3 main core products, all on a common platform. We have the Quality documentation, which is used mainly in manufacturing for managing your standard operating procedures and your changes around that, your Quality management system for deviations and CAPAs, et cetera, and your GxP training, your validated training environment.

So we're the only vendor that has all those 3 all on a common platform. So that's what's really driving a lot of the growth. In addition, we have some new products there, batch release and computer systems validation. And we're very excited about LIMS. We announced that early customer in LIMS, Laboratory Information Management. That's used to test the medicine as it's being manufactured. And that's a growth area because there's new manufacturing plants being built because of -- for a variety of reasons, let alone political reasons, et cetera.

So new manufacturing plants being built and the medicine and the manufacturing of these medicines is becoming more expensive and more complicated. And there, there's 2 main solutions used out in that area, and they're both on-premise hosted solutions that are not modern, critically important, but not modern. So we have a real greenfield opportunity there. If you look at life sciences, they will -- generally, they will research and find a molecule.

They will run clinical trials. They will commercialize the product. But along the way, before they put that medicine even in the first human, they have to manufacture it first in a small volume and then in the large volume. And so that manufacturing area is critically important, and you're manufacturing something that's going to be either ingested by a human or put right into the bloodstream. So it's super important how you do that. So it's a great growing area for us, Quality in the manufacturing space.

Your next question comes from Jailendra Singh with Truist Securities.

I want to follow up on the macro environment question earlier. You did note in the prepared remarks that the guidance raise is driven by improved visibility into Q4. Can you elaborate on that? Is it stronger renewal activity, upsell momentum or new logo wins? And related to that, we have seen some good clarity for pharma industry in recent months with all the discussion with the administration. Do you get a sense based on your conversations that we could see a potential uptick in client buying trends in the coming year or so?

Jailendra, this is Brian. I'll take this one. So yes, I think really good execution coming out of Q3. We had some earlier timing of deal closure than we expected that contributed to some of the outperformance in the quarter and the raise in Q4 and therefore, for the full year. Overall, I think broad strength across the business.

On the commercial side, we saw Crossix continue to perform well, but also the SMB commercial side had stronger performance in the other areas of our commercial business, strong performance in R&D, which tends to be more predictable, but we saw strong performance in R&D and then strong performance as well in our services business and really across professional services and business consulting.

So we're very pleased with the momentum coming out of Q3 and what we see coming into the quarter. I think beyond that, we'll factor that into our guidance for next year, which we'll release following the fourth quarter here, but feeling good about the execution of the business as we enter the final quarter of the year.

Your next question comes from Steven Valiquette with Mizuho Securities.

So I guess for me, the -- my primary question was also going to be on your comments about the unique customer-specific factors driving a few less of the Vault CRM wins. Obviously, you talked about that already. But really, my quick follow-up question is, since it sounds like it really is truly scattered across these customer-specific factors, are there any learnings for Veeva from all of this, either on Vault CRM product design around pricing? Or does Veeva not really change anything going forward on the go-to-market strategy just on the back of all those?

It's a good question on the learnings. And we did look through that. I think a, there's -- we did things the way we wanted to do things with customer success in mind, and we've gotten our top 20s live. And I guess we thought more customers would -- 90% of customers maybe would put weight on that and some customers didn't. They just wanted to try something new.

So no particular learning. I would say there's a lot of enthusiasm around the Veeva team, product and the services team because it's kind of distracting to try to resell all those top 20 customers all at once, right, in a very short period of time and you're competing with a product that doesn't really exist yet and a lot of promises and things like that. So that's kind of distracting a little bit, but we're largely through that.

So now we used to have 18 out of the top 20. Now we're maybe going to have 14 or so. And now it's back to business as usual and really focusing on those customer success, but with a difference. Now we are entering the age of AI, probabilistic computing to really drive and change what a CRM system can do. So that's giving people a lot of excitement. This -- the Vault CRM of '26 and '27 and '28, that's not going to be like the Veeva CRM of 2022 and 2023. So that's where the real excitement is.

Your next question comes from Gabriela Borges with Goldman Sachs.

For Paul and Peter, I wanted to get your thoughts on the risk that the CRM market becomes more competitive over time. For example, could the large competitor that has 6 out of the top 20, could they use that as a beachhead to expand their presence with time -- with a road map that will improve over time? Or for example, the 14 that have committed to Veeva, could they be thinking about the structure of the ecosystem changing?

So for example, a year from now or 3 years from now, could they consider competition? So maybe just give us a little bit of a sense of your conviction on the long term and how Veeva can continue to have the dominant position that it has in the event that the competitive environment does change more structurally on the commercial side?

Yes. So as we think about other areas in commercial, they're generally separate decisions from CRM. The people who make decisions around Vault CRM are generally different than Commercial Content and Crossix and Data Cloud. Now we've actually done something unique, and we've connected all of those pieces together. One of the reasons we moved to Vault CRM is to make it feel more like Development Cloud.

So when you buy into Veeva, you have these really mission-critical areas, Crossix, you're seeing how important that is, Commercial Content that we have all plumbed up together. So we create a lot of value. So I think the customers that do decide to buy into Vault and Veeva will get additional value, the synergy of having everything on common platform where they know everything is just going to work together.

We've made a long-term commitment to life sciences. I think what we're seeing, Salesforce is kind of just entering, they have a very new product in the CRM space. They don't have everything that we've talked about, all of the other software products, commercial content, across its business, all of the data assets, what Peter has talked about earlier with business consulting. So we're building just something that's fundamentally very different than what Salesforce is trying to do.

So I think that's a very significant competitive advantage for us. And I think that's why we feel really confident about our long-term market position because, one, we're going to have a better CRM and a CRM suite area, but it's all going to be connected together and building the Industry Cloud, bringing all of those pieces together. So I feel good about the competitive position. I'm happy with where it's shaking out. Obviously, we'd love to win every customer, but we're executing well really across all the commercial.

Your next question comes from Tucker Remmers with Jefferies.

So my question revolves around the development of AI agents in the clinical suite. So I just want to get a sense of how soon you think you could develop some clinical AI agents, what examples you can give? And how can Veeva monetize that in the future?

Yes. We've published our road map around our agents. We're going to have agents in literally all of our software applications as we get through 2026. We started this year; we'll have them in commercial and CRM and Commercial Content. Next year, in roughly the first quarter, April, it will be in Safety and Quality. And then through the end of the year, we'll have agents in clinical operations and then by the end of the year, Clinical Data Management. We think it's one of those potentially transformative areas in clinicals. It's our largest single opportunity, the clinical business.

There's a lot of potential to just streamline a lot of core processes, eTMF, when you just intake a document and scanning through that and making sense of that with an agent as an example, just replacing core human labor with agents. So a lot of potential for productivity. That's just one example, but I think we see that pretty consistently across the broader clinical area. So super excited about AI because we've actually accelerated our agent road map. And we'll have it in, like I said, in virtually every application area as we get through 2026.

Your next question comes from the line of David Larsen with BTIG.

Just going back to these top 20 biopharma clients. Can you maybe -- I just have a tough time believing like with your R&D capabilities, if you have 20 of the top 20 on your electronic trial master file platform, that's where all of the R&D flows out of. Like did these 4 already sign with Salesforce. Or did they just sort of verbally tell you they're going to go with Salesforce? How sort of final are those decisions? And then we keep saying you may win them back. Like how would that work? Is there like a trial period they have with Salesforce?

I'll take that one. So in terms of the -- this is around the CRM product, right, we announced the Salesforce wins, particularly around our CRM product. And again, if I just reiterate, that's about 20% of our business today, 2 years ago, it was about 25% of it. We're not going to give a direction of what percentage of our business it would be in 2030, but you could -- that's going to be significantly less than 20%. So it's a minor part of our business has nothing to do with our clinical business, right? Nothing to do with our clinical business. And then in terms of the win back, how does that work?

Well, when you roll out a pharmaceutical CRM system, you'll do it by region, by [Audio Gap] and you might have a failure in one of those implementations. So you might say, well, okay, I'm not going to use Salesforce in that other region. I'll go to Veeva. Well, you might have a failure in your first region. And you're going to say, well, I'm going to cancel that overall. Or you might have an executive change, and they might have a different idea of what they want to do. But also, you might run with that system, sort of more of a custom-built system for 3 years, 5 years, 7 years, and then you feel like, okay, that's run at the end of the life.

We have a custom system and the industry has moved on, and we want to move back on to a more industry standard system because Salesforce is very open platform, so the IT team sometimes can build exactly what they want and the system integrators kind of feed into that as well. So you end up with a very custom system. So it's kind of -- the top 20 things had nothing to do with the bulk of our business, especially clinical and the winbacks happen over time as they naturally would.

Your next question comes from Sean Dodge with BMO Capital Markets.

Okay. Great. Maybe just on the Veeva Basics offering you rolled out, it was about, I think, a little over a year back. You had a release a few weeks ago that there are about 100 clients that have selected that. I guess just wondering how we should think about sizing the longer run opportunity for Veeva in that part of the end market. Obviously, R&D budgets for small biotechs are small. But on the other hand, there are a lot of them. So just maybe kind of thinking about does that have the potential to be a real needle mover for Veeva at some point here soon?

It's a very important thing for Veeva because it helps the smaller end of the life sciences industry, and that's critical. So for example, it's a very important thing in the clinical side for our larger customers. because when they need to evaluate an acquisition and that acquisition is using Veeva Basics in the clinical area, they're going to be much more organized and much easier to automate.

So Vault Basics helps -- the Veeva Basics helps the industry grow overall, and that's going to help Veeva. In terms of the -- how significant it can be, it's not going to be the significant part of our revenue driver. It's a part of the overall ecosystem. We have 100 customers now. It's -- I don't know where that ends up, but it's not impossible that we have 1,000 customers on Basics over time of the different offerings.

So it's a great business and more than anything, it's the right thing to do, giving a professional solution to these small biotechs so that in the unlikely event that their business really takes off and their molecule really takes off and they're going to be the next Pfizer, okay, they don't have to change systems. They can just graduate from Basics right in place and get enterprise Veeva. So super excited about the innovation that's happening in Veeva Basics.

Thank you. With no further questions in queue, I'd like to turn the conference back over to the CEO, 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. Thank you.

This concludes today's conference call. You may now disconnect.

Thank you for joining us on the webcast today for our 2025 Investor Day. I'm Gunnar Hansen, Head of Investor Relations here at Veeva. Feel free to contact me if you need anything during today's event or if you have any questions in the future. Some quick notes before we begin. [Operator Instructions] If you have any technical questions, please submit them through the Q&A widget or e-mail them to [email protected].

Before we get started, I'll read a quick disclaimer. During the course of today's presentations, we will make forward-looking statements, including statements regarding trends, our strategies, market size and opportunities and the anticipated performance of our business, including guidance regarding future financial results. These forward-looking statements are based on management's current views and expectations and are subject to various risks and uncertainties. Actual results may differ materially.

Please refer to the risk factors included in our most recent filing on Form 10-Q. Forward-looking statements made during today's presentations are being made as of today, October 16, 2025. If the presentations are replayed or viewed after today, the information presented may not contain current or accurate information. We disclaim any obligation to update or revise any forward-looking statements. In the presentations, we will 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 the appendix of today's presentation, which will be posted on our website.

And with that, I'll turn it over to our Founder and CEO, Peter Gassner.

Thanks, Gunnar, and welcome, everyone. As we get started, I'll take a minute on our vision and values. This is how we operate the company and how we make decisions. We're building the industry cloud for life sciences. That means cloud software, data and consulting to help the life sciences industry get more efficient and effective. We want to help the industry grow and bring better treatments to more patients. Our values help us make decisions. The first is do the right thing. This is about actively knowing what the right thing is and then going out there and doing it. customer success that comes in 3 parts. First, it's for the people in life sciences. They have to work -- enjoy working with our people and products. Second is for the companies in life sciences. Our products and services have to deliver positive ROI. And third is for the industry overall, Veeva has to be a positive force for the industry and help the industry grow. Employee success, that's for our people. Veeva has to be a positive place for them. and speed is remind us to get things done quickly and correctly with high quality, the first time and to retain that speed even as we grow.

And finally, Veeva is a public benefit corporation. We have to balance the interest of customers, employees and shareholders. You'll see 4 themes today. First, Veeva is a very durable company with a clear product strategy, and we're on track with our $6 billion revenue goal for calendar year 2030. Veeva AI is a significant opportunity, and we're also making great progress on new markets. First, we serve a big market. Life Sciences is a $2 trillion industry that continues to grow. And we have a big opportunity in Life Sciences. The reasoning behind our [ $20 billion ] TAM is very simple. Industry-specific software and data is critical to life sciences. It's really the only way in the long term that the industry can drive efficiency and some level of standardization and automation that helps the industry grow. Spending 1% on industry-specific technology to get more efficient is certainly reasonable. And that should be a win-win for Veeva, our customers and the industry. for every dollar of revenue we take in, we want to create at least $2 of value.

Today, we're about 16% penetrated in our TAM based on our estimated revenue for this year. So we have a long runway of growth ahead. Last year, we set out 3 goals for 2030. The first is to achieve a $6 billion revenue run rate in calendar 2030. The second is to enter new markets. We started that initiative last year, and I'll give an update on our progress. And the third is still Veeva to still live our common values as one team and to retain our ability to change. Setting long-term goals, that's something we have done before. It's part of the way we work. It helps us execute. We have annual plans each year, and we have 5-year milestone plans that we work towards.

We achieved our 2025 revenue goal last quarter, and I'm happy to report that we are on track for our 2030 goal. We've executed well in the past year across all product areas. This includes shorter-term things like sales cycles and customer projects as well as long-term things like product innovation and improving our operating model. This 2030 revenue plan considers mostly organic revenue, mainly in life sciences and mainly from existing products. We have to execute well in many areas over the coming years to make this happen, and there are certainly a lot of unknowns. But we have the right team and the right product strategy to do it.

All right. Let's talk about our products, the industry cloud for life sciences. That's Development Cloud, Quality Cloud, Commercial Cloud and Data Cloud, all supported by business consulting to help companies with the digital transformation that's enabled by our products. Development Cloud is going really well, and it's our largest cloud opportunity with plenty of room for growth. Development Cloud is pretty amazing. 19 great applications all integrated together on a common platform. There's really nothing like it. We have a mix of established applications with higher market share and newer applications that are earlier in their cycle. Development Cloud is modular. So customers can start in any area. It's configurable enough to work for a very large pharma company and simple enough, just work out of the box for a biotech with 100 employees, and that thanks to our Veeva Basics offering, which we're really excited about. QualityDocs is also going well in the quality assurance area, QualityDocs, QMS and training. These are leading applications and validation and batch release, those are gaining tractions. LIMS is in the early days, and it opens up a whole new area for us, the area of quality control. We expect to add more products in this area over time as LIMS gains traction.

Commercial Cloud is a really exciting and a broad area with lots of room to grow. In CRM suite, it's all about moving customers to Vault CRM and then bringing in the add-on products. In the medical area, we're investing with 2 new applications and our recent partnership with IQVIA opens up more potential and data management with Nitro and network. Crossix continues to do very well, both in measurement and in audiences. We have a really compelling vision for Commercial Cloud, but a critical step along the way is the migration of our current customers from Veeva CRM to [ Volturo ]. I'll give a brief update on that progress. In short, things are going well and going to plan. Over 100 customers are live on Vault CRM, including 2 of the top 20, we have done over 25 migrations.

We have many more migrations to go over the coming years. and we have the experienced team and the tooling to do that. Our competition here is Salesforce. We're winning most customers, and they're winning somes. Customer success and product excellence that will win the market over time, and we believe we're well positioned for that. Data Cloud is also doing well. In Data Cloud, you can think of OpenData as the base. OpenData is the global reference data for health care providers and health care organizations covering over 100 countries. Connected to that is HCP 360, which is detailed metrics at the HCP level, the individual level, and that's used for segmentation, targeting and access. Link is deep data on the most important people and accounts to life sciences encompasses very detailed patient and prescriber data specific to the U.S. market.

As you can see, we're investing in data cloud with new products, especially in the HCP 360 area. Our recent IQVIA partnership that will also be a positive for Data Cloud because it makes it easier for customers to use IQVIA data and Veeva Data together. Business Consulting is an important area for Veeva. We started this 6 years ago, and we've grown it organically to over 400 people and about a $90 million run rate. Business consulting that helps customers with change management, business process design and analytics. AI requires change management and process design to get the most value out of AI. So AI is a growth area for business consulting. Now let's talk about AI and AI in general in life sciences. AI is bringing change to life sciences in many ways.

In drug discovery, AI capabilities are well known and improving rapidly fundamentally changing drug discovery. In commercial, doctors are starting to use AI at the point of care with solutions like open evidence. And that's going to change so many things over time. And in all areas of life sciences from clinical to manufacturing to commercial companies are looking to AI for greater efficiency in operations. Veeva AI is our identic AI offering for life sciences, and there are 2 parts to Veeva AI. [ GenAI ] in the Vault platform and AI agents in all of the Veeva [indiscernible]. The goal of AI is to increase industry productivity, and we think that can be very significant over time. Let's get into the details and start at the platform level. The defining feature of the Vault platform has always been that it handles data and content together in a seamless way. Vault is still unique in this way in that it makes it the ideal application platform for the life sciences industry. This is why we can create content-rich applications like eTMF and submissions, but also data-rich applications. like CTMS and QMS, now we're adding agents into the platform, data content and agents.

This means that users can work with content and data and agents. And those agents will be able to do some of the work for the users. This is a fundamental change in the platform, the biggest change we've ever had. Veeva will deliver standard AI agents that run in Veeva applications and they get improved 3 times a year with every release, they keep getting better and better. Customers can configure our agents or they can create their own agents, their own custom agents using the tools in the Vault platform. Agents can answer questions for users, generate insights, take care of a workflow step or respond to requests from other agents.

So it's really broad what agents can do. The best way to understand Veeva AI is through a demo. Let's have a look at a short demo involving Veeva CRM and Veeva AI.

[Video Presentation]

The first release of Veeva AI is this December with the commercial products, followed by the other Vault areas throughout 2026. Next year, '26, that's going to be a busy year for Veeva AI. Veeva AI is a significant opportunity for the industry and for Veeva. For our early customers, we will require business consulting projects to make sure we have success and get the right feedback into our product team. So we have to get this right. Veeva AI has usage-based pricing based on tokens. This allows customers to start small and pay according to their usage, and that should align to value delivered over time. Veeva AI is a really big initiative for Veeva, and we're very integrated with our core business. We need focus on Veeva AI in all areas in products, in services, in consulting, strategy and sales, all areas. That's why I call it everything, everywhere all at once with Veeva AI.

Lots of things going on, very busy. Now Veeva AI, that's a really big opportunity for Veeva and the industry because our applications are all on a common platform spanning from clinical to quality to commercial we can have a broad impact fairly quickly, and we are committed to making Veeva AI a very positive force for the industry and a very significant opportunity for Veeva. Now let's talk about new markets. We announced new markets last year, and I called it the next big leap for Veeva. The first leap was starting Veeva in pharma CRM, and the second was starting Vault and building the industry cloud for life sciences. And the third is horizontal enterprise applications. That's what we call new markets. As you can see, each leap has bigger potential than the previously, and that's hard to do. But that's what we're going for. We have a small and focused team on new markets, and we're taking a platform-first approach. The team has a lot of autonomy from the rest of Veeva and they operate on 90-day plans. We will operate in the Veeva Way in new markets just as we do overall in Veeva. We'll think about growth and profit, customer success and taking the long-term view. It won't be flasher high, it's about product excellence innovation customer success and reference selling. In terms of progress, the platform work is coming along well. I'm really excited about the innovation there.

The first application will be in the CRM area and we're starting to work with early customers and hope to have some live in Q1. We'll keep the number of customers small. We won't have a sales team. It will only be word of mouth with a small number of customers. It's not about revenue at this stage. It's about product excellence, innovation and we're working very closely with early customers. I expect that to continue for the next year or 2. When you're making these kinds of core applications and going for greatness, that's really how long it takes. There aren't any shortcuts. Our company priorities for the coming year are pretty simple. We need to execute on our 2030 goals. We need to focus on Veeva AI and new markets. and these are big goals. These are lots of work. We have the right product strategy and operating model. We have to execute. And we always look for the right acquisitions. We have a good track record there. but it takes time and it takes discipline. You never know when the right thing comes along, either inside of life sciences or outside.

This could be an incremental acquisition or a transformative one. We need a culture fit, a product strategy fit and a willing seller. You just can't force it. And of course, capital return is always an option, although not something we're planning on in the coming year.

In summary, it's an exciting time for Veeva. Veeva is a very durable company, and we're on track with our 2030 revenue goal. Veeva AI is a significant opportunity and new markets is off to a great start. With that, I'll hand it over to Brian to give some detail on our financials.

Thanks, Peter. I'll share more detail on our progress towards our 2030 goal, the opportunity we see ahead and our continued focus on growth and profitability. Now before I dive in there, I'll give you a quick update on Q3. We've got about 2 weeks left in the quarter, and the team is executing well. We expect to meet or exceed our prior guidance across all metrics. We'll provide full Q3 results and updated fiscal '26 guidance on our Q3 earnings call on November 20. Now coming back to the big picture. First, just to ground us, the bulk of our revenue is from life sciences, 92% from biopharma and 5% for med tech.

Within biopharma, the top [ 20% ] are about half of our revenue. And if you expand that to the top [ 50% ] or so along with the large CROs, it's about 65%. SMB is the remaining 35% and is a diverse group. It runs all the way from midsized firms with billions in revenue through to pre-commercial companies with less than 100 employees. And there's room to grow in all of these segments, and we expect the revenue mix to be fairly consistent in the coming years. Now last year's Investor Day, we introduced the goal to grow our revenue run rate to $6 billion by the end of calendar 2030. We've made great progress towards that goal in the past year, and we're on track to meet it. It implies an annual growth rate of about 13%, driven by subscription revenue, particularly in R&D. Our expectation is to reach $6 billion largely from organic growth in existing products. Our 2030 goal does not include contribution from our new markets initiative or Veeva AI. And Veeva AI is progressing faster than we expected. We now plan to start charging for it next year, but it's still a bit too early to forecast. And our focus right now is on getting the product excellence and customer success.

Our AI pricing model will be usage-based and we'll share more information as we progress. Our non-GAAP operating margins were 45% in Q2 and the 35% that you see here for 2030 is a floor and not a target. It gives us room for outsized investment if we see significant opportunity and so it's important to keep in mind, our approach is that we have a long-range revenue goal, but not a long-range margin goal, and we provide margin targets annually. We have a very large market opportunity in life sciences to fuel that continued growth. Our TAM today is about $20 billion. And of the $20 billion commercial and clinical are each about 35%. The remaining 30% is quality, regulatory and safety. Our existing products address more than 50% of the TAM. And yes, we're only 16% penetrated to that $20 billion. So there's a lot of opportunity to grow, both within our existing products and also through new product development. We have a broad portfolio of more than 50 products and expect each area of our business to grow through 2030 with clinical growing the fastest. Commercial has higher share today, and so growth is a bit lower, and the other areas are roughly proportional. The main takeaway here is that our growth through 2030 will be broad-based with each product area contributing meaningfully. Our product quadrant gives you a sense of where our major suites are in terms of market share and product maturity.

And starting in the upper right, you see commercial content, regulatory and CRM, which are our most mature and have the highest market share. CRM is a large area today, and our main focus there is successfully migrating customers to Vault CRM. As we complete those migrations, we can grow with newer add-ons like campaign manager, service center and patient CRM. Crossix, which have been growing more than 30% and has been a key driver of overall commercial subscription growth. We continue to invest in Crossix and expect it to continue growing over time. There are 2 major areas in clinical here, clinical operations and clinical data. In clinical operations, we have mature and highly penetrated products like eTMF and CTMS but also large products with a lot of room to grow, like RTSM, Site Connect and study training. Clinical data also has a long runway for growth, in particular, with EDC, CDB and [ Eco ], and this is a key focus through 2030. In quality, QualityDocs and QMS are market leaders and still growing, and we also expect strong growth from newer products like limbs, validation management, batch release and training. And then lastly, on the bottom left, you see safety and 2 key areas of Data Cloud, Link and Compass. These are all large markets that will contribute to growth in the coming years, but we are still maturing and expanding the product suites.

Our growing product portfolio and customer success has allowed us to consistently deliver strong growth on both top and bottom line. Through product excellence and effective multiproduct operating model and financial discipline, we've delivered leading operating margins and have grown non-GAAP operating income by about 140% over the past 5 years. We focus on keeping our teams lean so they can innovate and execute with speed. Product is our main area of investment, and product excellence allows us to deliver customer success. And customer success and delivering on our commitments over time builds confidence and trust in Veeva. So we focused on execution, not hype, and a result, our sales and marketing expenses are fairly low. That's been our approach since the beginning, and it's also how we will operate and compete in new markets and with Veeva AI. We remain excited about the path ahead. The Veeva team is executing well on an ambitious 2030 goal. We have a long runway for growth, and we're continuing to deliver strong profitability. We're excited to continue expanding the value we bring to the life sciences industry and to its patients.

Now we'll take a 10-minute break before we turn to Paul to get a customer's perspective.

[Break]

Welcome back, everyone. I have the pleasure of introducing Dr. Evan Bailey, who's the Chief Medical Officer at Applied Therapeutics, which is an emerging biotech Dr. Bailey has a very deep and a broad perspective, having worked at in multiple biotechs, both large and small. He's also run a number of major technology projects across his career. And all along the way, he's been a practicing physician. Applied Therapeutics, now they're developing new medicines for metabolic disorders that address high unmet medical needs. So Dr. Bailey has a very deep and first-hand appreciation of the urgent need that the industry has to be more efficient in how they bring medicines to market. Now in past Investor Days, you've heard us talk to many large biopharma companies. And now you're going to get a view from an emerging biotech. These companies are certainly critically important in terms of the science that they bring and the innovation but also in terms of how they use technology and how they're able to operate. And that's what we're going to focus on today. Welcome, Dr. Bailey.

Thank you.

All right. So we know that there's a significant need in the industry to drive greater efficiency in drug development. The new medicines taking multiple years, billions of dollars. Can we start with your perspective on what's your view of the challenges and the opportunities in getting drugs to market today?

Of course. So first of all, as a physician and someone who's treated a multitude of rare diseases and other diseases first hand, the high unmet need is really what drives all of us to get new therapies that have the potential to be safe and effective to patients who have no treatment options. So in order to do that, you want to do it as quickly and as efficiently as you can. There are myriads and hundreds of steps in different studies that have to be conducted to file a new drug application and anything that delays that or any errors along the way is a delay for the drug potentially getting to that patient and having them experience potential efficacy as soon as they could.

So when you look across the industry, it overall is just not efficient. A lot of the companies use a variety of different CROs. They're using different databases. Their safety system is it necessarily connected to their their clinical trial database, like their clinical trial management system may not be connected to their safety database. And when you're planning also for a potential launch, if everything goes well, you're able to submit a new drug application, [indiscernible] up be planning for the other functions that are involved with that in terms of medical affairs, commercial, pharmacovigilance is a huge one. And so thinking about this globally is where you can find efficiencies and really have one source of truth, I think having worked in medicine and practicing still the EMRs or electronic metal proctors that are out there as one source of truth, they've been incredibly good for patient care and patient safety.

And the biggest thing is patient safety on that. Then when you do all you take a holistic look and try to get one source of treat with one system, you really start to eat away at cost, you either way at delays. And those are all things that can make you more successful in getting a drug that's efficacious and safe to patients in the end. Then I think for me, one of the biggest things is leveraging technology as a tool and what you can do with that technology to not just make things better for you as a person working in your company, but for the patients at the end of it for the regulators who are trying to evaluate your program for investors who may be looking at your company and what your systems are.

I love the perspective there and thinking about technology as a tool and enabler productivity. Now where do you think -- based on that, where do you see things headed? And more specifically, what approach did you take out in therapeutics?

Yes. So when I started here 4.5 years ago now, we had a couple of different CROs, a couple of different EDCs that have been used across the same program or multiple programs. And when it comes time to do a new drug application, you have to do all of these integrated analyses, et cetera. Now -- the problem is when things aren't integrated, you're pulling data from a multitude of sources and that means that the the different databases may not have included the exact same information and you're trying to put together apples, oranges and pears to come out with one end product, and it doesn't always line up and you end up wasting a lot of a lot of time going back and looking at coding and figuring out how why this was coded them. Was it a version difference? I don't know there was an error in the original database, how this come across. So for us, we stepped back and we said, well, we need to implement our own system. We were paying CROs to manage databases. That won't even their own databases doing program management that they weren't actually programming, we still were. So we looked at what was available. We had already had a couple of Veeva instances that we had implemented. And we decided to go kind of full in.

So we started with EDC, CTMS. And been expanding from there, including safety for safety valuation, pharmacovigilance. And then on the other sides of the business, we've implemented a myriad of other Veeva modules basically all because they all speak to each other, the data can flow from one system to the other. You're not reentering things, you're able to pull appropriate reports, whatever your subfunction is or if you have a request from an agency, et cetera. then all of that has really reduced costs, and it's really improved the efficiency of the team. We run very lean. We're a very small company, and we're able to do large CROs with multitudes of people to just in-house, and we have that control and insight into everything there.

I'd love for you to share, if you can, some specific examples of how that comes to life just for the investment community who may not have the visibility and the specific process knowledge that you have?

Yes. So kind of picking up on what I was saying before, when you have a new drug application, you have to do an integrated safety summary, it's one of the core things, they want to see all the safety together in one group to look for any major safety seen those that may not have been picked up in 1 trial that you may pick up when you look at 3 or 4 trials combined together. Now when you go to do this, which I have lived through in submitting a new drug application and there are multiple EDCs and you get those data sets things don't line up, and it literally added weeks to our time line for the ISS [indiscernible] 3 to be completed and it's going back to the original CRO, going back to the original database, going back to the original listings and trying to figure out why things aren't lining up or what the coating was and what the issues were. And that's one part of it. And then you're trying to assess adverse events, and you want to know the total if you have everything already in one system, you literally hit run and you get the totals of on an adverse event that you're curious of in particular. Let's say, upper respiratory infections. You look at it, you pull it out, you see it, you see this is what you had across our studies. It's all in one system, and that's why we've been doing this with Veeva.

Now for where we are, we do have to go back and back data enter the other EDCs that we had from older studies. But for the last couple of years, we've been in Veeva EDC just added on the functionality from the other modules. So with all of that, you know everything in the system is true. You're now looking at multiple systems. You're not missing a coding or missing the database line or a column in some output. And in the end, when you have all that at your fingertips when you submit a new drug application, A, you've got the economies of scale and efficiency before that. But when you get information requests from the agency, you're able to go back and ask those specific questions from the system you already have. Respond to the timely manner and get like reliable accurate data out of it. And that's the biggest thing because have to be able to convey reliable, accurate data to the agency because the patients are waiting there for it, right? And we want this to be the most successful system that we can have and implement it from there.

The final thing I'd say for Veeva is -- it's a validated standardized compliance system for regulatory authorities. So you basically say we use Veeva. They know it's valid issues, all of that's in place. So it's not this huge discussion in showing 8,000 supporting documents to prove it. So it's an added benefit of using a verified Value Data system that's compliant that the agencies know about and say, okay, that box is chat.

Awesome. And you talked about the connectivity across all of these different areas, drug development process. You highlighted even medical, how that's connected in you're not at a commercial stage yet, but as you look ahead into commercial, do you see some of those same benefits? How do you think about that?

Yes. What I'd say is as a physician in doing drug development and then knowing what it's like to write a prescription getting covered by getting covered by insurance. I try to look at everything from start to finish. And one of the best things that you can do with one system is look, start to finish and say, well, that's available within that system for where we hopefully will be in the future. So -- by implementing the safety module, we already are set up to do pharmacovigilance in a post-marketing setting should we be there. We already have medical affairs, MSLs out in the field visiting [ KOLs ] were we have the CRM, we have promo mats to approve their materials. And now we're implementing medical information. And all of those materials and recordings and visits, they all get tied together.

If medical information gets to call out an adverse event that gets entered it goes right over to our safety system. When the MSLs gets called, they directly have the material approved and pro on that out. If they have to make a medical information request that goes right into the medical information database with cone login that's all right there. So when the -- if the hope that we were able to have something approved in the future when you do, you need commercial on board too. And then you already have all those systems in place here have that info from that's all speaking to each other. So we're not working and doing that work at that time for launch readiness because it's there and done.

So you've spoken very clearly about a lot of the benefits of having a single source and the connectivity across these different systems. Is there any way to quantify that? How would you measure the impact of this asset on your company?

I think dollar-wise, we've saved millions just knowing what our CRO contracts were before, database maintenance fees, pass-through fees. Knowing that when we use an out-of-the-box solution and don't try to modify it, like Veeva we don't spend all that money on customization and we don't increase our risk of breaking the system that's already been validated and known. So right off the bat, we saved millions by getting rid of almost all CROs from there is the efficiency. Anyone on the team who has access to EDC, it's one log in their hand. They can look at a patient lab value if they need to or whatever the efficacy assessment was done or not done. And data management people are right in that system and then everyone is trained on it, right?

So everyone is familiar with Veeva. You're not saying for this, you log into this system, for this to log into this system, like you are log in to Veeva and click whatever function you need and you're in that already. So there's also a lot of automation for notifications when things come up. So basically, it streamlines a lot of our work. And as a small group of people, we need that efficiency because we're a lot of people wearing a lot of different hats. So to have one place to go, knowing where it is and now you can get whatever you need out of it whenever it's needed is a huge timesaver. And so it's not just the cost, it's just like the people time, which is important because people work hard and they're devoted to getting the drug to patients.

I mean remarkable results, of course, given what your company is trying to accomplish, bringing new medicines to the market, but also given the size of your company and the stage that you're at, being able to have that kind of impact. When we talk a lot about that being attributed to kind of the depths and the breadth and the connection of a lot of these pieces and giving you the ability to kind of change your operating model and make it more efficient. And that, of course, aligns with getting medicines to patients faster, less transition to the relationship that you have with Veeva. Can you talk a little bit about what that experience has been like for you?

Yes. No. I think that's been one of the more positive aspects of this. So it's one thing to get one solution that can cover a multitude of functions for you, but you need to kind of customer support and service for that. And our experience has just been excellent, no matter what function or what part of Veeva worked with, whether it's an inflammation team, implementation team or the sales team or some technical database back end group, it's always been positive professional and responsive. So I don't know you -- everyone's probably experienced this when you call for get a call center and you got on hold and you can't get to the right number, and you're waiting to hear back. You've messaged the CRO 10 times. They still haven't replied back, but you have a data inquiry for the agency and at the time clicking and there's something wrong with the database with Veeva like you get a response right away.

And even if their response is, we're going to have to look into this, they give you a time line, they're going to get back to you and they do get back to you. I think for me, it's one of the rare times when you work with a vendor that they actually are that responsive and available. And that's just been a huge plus. I think they're also -- Veeva in general is really good for taking feedback. So like I said, I don't like to break systems when they come out of the box. Like I want out of the box. It's already been proven. It's been validated like they have done the UAT testing like in the sandbox everything is done before production, right? But with Veeva, if you find something with a workflow that's weird or you think it could be done better, they actually will take that feedback, assess it. screening across other customers. And then that will all of a sudden show up in an update. So with their scheduled updates for the different systems, like you get the benefit of all of the customers using it and ways of improving workflows because just because I think I know how to do something, doesn't mean there isn't a more efficient way or a better way of not missing something, right?

Maybe there's an extra step to throw in to make sure you're not missing checking on A, B or C. And I think that's one of the biggest things is it's an iterative process that is collaborative. And those are the 2 biggest things to have with a vendor, especially when you're going to rely on them for a multitude of your functions within their one system.

You certainly hit on a couple of our core values that we talk about all the time, customer success and speed, and it's great to see that playing out every day at your company. Your story is a perfect example of bringing out to life and making it real. So with that, I just want to thank you again so much for taking the time to share thoughts about you and your company and the journey that you've been on, I wish you all the very best going forward. Thank you again.

All right. And with that, we'll turn it back over to Peter.

Thanks, Paul and Evan, and thank you to our customers for your partnership and to the Veeva team for your outstanding work and your dedication to customer success. We'll now open it up for questions.

[Operator Instructions] To kick us off, our first question will come from Saket Kalia with Barclays.

Okay. Great. Thanks and thanks for hosting this super helpful. Peter, maybe just to start us off, I know you spend a lot of time with customers. Maybe you could just talk a little bit about sort of the relative health of your end markets right now, just in terms of overall spending -- and there was a lot of focus on AI in the session, which I certainly appreciate. Maybe you can also touch on their appetite for investing in AI based on those conversations?

Thanks, Saket. The relative health is good, I would say. It's -- the macro environment, it is what it is. The political environment is what it is, but our customers are used to it, and they're executing. I don't feel a lot of delay or anything like that. We've got to remember that the science is still moving forward rapidly. There's therapies all the time, right? It's exciting times in life sciences. So that's good. The macro environment is good from the big pharma, big biotech, big biopharmas to the small biotechs. And then in terms of the appetite for AI, yes, everybody is looking for efficiency. So there's good appetite for that. But I think it's more pragmatic than it was 2 years ago. There's a little less experimentation and I would say there's more realization that the process change has to happen with it.

So there's an appetite for high-wind AI, there's less appetite for sort of speculation.

Our next question comes from Jeff Garro at Stephens.

Yes. I wanted to ask about the open evidence partnership announced this morning. Just welcome your comments there, but a few topics in particular would for you to touch on would be just who's going to be the main user of the products that come out of this partnership -- is this partnership exclusive one way or another? And any details you can provide on how the economic model is going to work for this partnership would be helpful, too?

Very good. Thanks, Jeff. Let's see, a couple of questions there. The users of this -- or the -- I guess, the beneficiaries of this would be the life sciences companies from large biopharma to small biotechs. So you wouldn't see the Veeva itself or our open Vista partnership, most likely not so much directly in front of the doctors. I would say the use cases, that's a better way to think about it. The use cases you're -- for example, if you're trying to enroll in a clinical trial, I think between Veeva and open evidence, we can help reach the doctors at the point of treatment, so they can be more aware of a clinical trial. That does help the doctor that does really help the patient if they can -- if that's a critical thing for them. but the economic benefit probably goes to the life sciences company.

So there is a good example. And then in terms of the economic model behind the partnership for the specifics there or the exclusivity -- those are details we're not getting into this that at this time, and it's very early days for that. We're focused on bridging the gap. Open evidence has a lot of doctors using AI we have a lot of pharmaceutical companies using our systems, how can we bridge the gap to provide better care in a more efficient ecosystem.

Our next question will come from Ken Wong with Oppenheimer.

Peter, Paul or I guess maybe even Brian, you guys touched on AI monetization. I know that details are still to come, but I would love to get a sense for how the token model will get kind of embedded into your current licensing model. And then Paul, specifically for you, like you guys are talking about productivity gains from we kind of just went through a cycle where digital engagement drove down head count across pharma sales. Like how should we think about the impact on head count as you guys kind of drive these productivity gains into the end market?

Okay. I can take that one on tokens and monetization and Paul, you can take the headcount. In terms of the model, we will give the -- well -- first of all, it will be we'll be billing in arrears for these services based on how many tokens, which it's approximation for use that our customers use will give them visibility to which agents are consuming which amount of tokens so that they can help the health plan, and that will be on top of the normal what they pay us for our applications. So the idea with the token-based usage is so that customers can start small in areas and align the value to the use. So a pretty simple model. It's very familiar to anybody when -- it's a web service. It's how you build web services based on usage. This is -- you could consider it that way. Did that make sense? .

Yes. Thanks a lot, Peter.

And then, Paul, do you want to take that in terms of the field sizes?

Yes. Your question is about the head count and AI productivity gains. And you're right. I mean we just saw that cycle play out over the last handful of years, it took about 3 years as we help the industry become more digital. They took some of those productivity gains. We had predicted roughly a 10% reduction, and we saw slightly less than that. So there was already a very recent reset I don't expect that same kind of reset to happen going forward with AI and the productivity gains. There will be some natural ups and downs. But I don't expect that same kind of reset in. And the reasoning is, yes, they will be more efficient. Yes, they'll be more productive. But in large companies take the enterprise companies, they still need a level of coverage for these HCPs. They've got to maintain these relationships they're very thoughtful and cautious about dramatically changing the size of the sales force is expensive.

Sometimes they go down only to go back up maybe in the next year to launch a medicine. So they have to be very thoughtful. I think it will be very stable. On average in the enterprise. And then, of course, with the emerging biotechs, these are companies that may be launching their medicines, they need the coverage. They need to break into a new market and establish those relationships. And I think AI will add to their productivity and not necessarily, they won't think about it as, hey, we need fewer of these people to go launch a medicine. So I see it being relatively stable over the next several years.

Our next question will come from Brian Peterson with Raymond James.

Thanks, guys. So I don't know who wants to take this, but I'd love to understand as AI and a genetic functionality comes into the development cloud what can that do to modernize applications that may still be on legacy or may still be on greenfield where that may drive people to a cloud refresh. And I guess if that is going to happen, where would we see that across the portfolio? Any thoughts there?

I can take that one. I don't think AI can do very well in modernizing legacy applications. I think that you need a current application, a good application with the right business rules. So Will it drive some upgrade cycles? Potentially -- potentially, it could do that. So for example, I could see that happening in the pharmacovigilance area, right? That area has been a little bit slow to change. So I could see that happening there over time. I could see it driving people to a more integrated clinical environment as well. If we have a an AI agent for a clinical research associate that has to use a modern -- they want to use a modern CTMS. They have to get into the EDC system, it's going to be better if that's all connected by a common AI. So I think those are the types of things that we'll see. They might want to connect the business process from the regulatory system to the quality management system.

Well, if you're on a legacy quality management system or legacy laboratory information system, it's harder to get the data out. So I do think it will cause modernization. Now not dramatically, not all at once, but I think it will happen over time.

Great. Peter?

Sorry, I just realized my video is off somehow.

I think we've just flipped off there for a second. Our next question comes from Andrew DeGasperi from BNP.

Maybe a question about the customer presentation earlier. I thought it was interesting in terms of how he was saving a lot of cost on the CRO side in terms of the pass-through and the database maintenance. And I was just wondering -- how typical is that -- do you think is happening in the near term? And is this something that changes your relationship with the CRO in any way?

Paul, do you want to take that one?

Yes. I'll give my thoughts on it. So he talked about a couple of things driving some of those efficiencies. And some of them were just core to centralizing data across multiple different CROs and all of the efficiencies associated with that. They got to do reporting. You talked about this integrated safety report as an example. In centralizing and standardizing what we talk about all the time, simplify, standardize and doing that across all your partners creates a lot of value. That in and of itself is a very significant value driver, the second piece you talked about, I think, is more -- maybe more related to what you're referring to, which is some of the, hey, we can maybe in-source some of this work -- and I think in some cases, I think they were leading and they were kind of innovating where they took some of that work in-house and they were able to do that and operate more efficiently.

It remains to be seen if that will be trend CROs are a very important partner to the industry. So yes, there's been some success there, but I don't know that yet, that will translate into a dramatic shift in all the CROs. I think we'll continue to remain important for a very long time.

Our next question will come from Matthew Matthew Shea of Needham. Matt, I think you're still on mute.

Thanks, Gunnar. Sorry I did not realize that was up -- maybe on the data side, remains a large opportunity, especially with Compass. And in the past, you've noticed that Compass is in part based on the Crossix data platform to source your data and match it I'm curious, has the recent strength in Crossix Enhanced Compass, is that the right way to think about it? And maybe more broadly, are there any interesting network effects or cross-sell opportunities to call out that the Crossix strength has created?

Yes. Great question, Matthew. The way to think about it is the data network that we source from all these different sources, it comes in, in a standardized way, and then it powers it provides the data needed for Crossix and it provides the data needed for Compass. So there's no direct correlation really between the success of Crossix and the success of Compass. There are 2 separate things, although they share the same data network. So they're independent businesses. Of course, when Veeva has success in one area of a company that reflects well on our other products, so there's reference selling there, but there's no direct connection, but you think there would be, but -- now they're same data network use for different purposes.

Next question comes from Craig Hettenbach with Morgan Stanley.

Great. Two questions actually. First is just on margins. You've seen really great operating leverage in the last couple of years. So Brian, how are you thinking about maybe additional efficiencies -- and then understanding the 35% is kind of a floor target. Do you think over time, maybe that even rises as the organization gets more efficient? And then second question on Vault CRM. Salesforce has won a couple of big customers -- how are you thinking about that process? I know there's a lot that still has to play out. But in the event that you do lose some additional share -- are there other parts of the business where you feel really good in terms of to kind of mitigate that on the path to the 2030 targets.

Great. Why don't I start with the margins question, Craig. Nice to see you. So on the 35%, you really do need to think about that as a floor. We don't adjust it year-to-year because it's more of a guardrail or the third rail, if you will, that we don't cross over. We think hard about balancing growth and profitability. And so we set our margin targets annually based on what we think is the best way to grow the business at that time. There are inevitably going to be puts and takes as we look at margins out through 2030. We've got the sales force royalties that will wind down. We'll have some AWS costs that come in. We've got the data cloud network we've got to build. We'll continue to make investments in new product development and Veeva AI and new markets. So we balance all those factors, but I think you've always seen from us, too, that focus on lean team. So we think a lot about having both innovation and efficiency and hopefully, our margins reflect that.

Yes. And then Craig, on your question with regards to Vault CRM, just first, to kind of level set on the overall state of the market. We've always talked about the fact that we wouldn't win every deal. We've referenced it as kind of winning the vast majority. We're on track for that. It's playing out largely as we expected. So I think we're executing well in the market. We're super excited by that. But your point is, yes, they may take some share, potentially, that could be a short-term thing. It could be a longer-term thing that remains to be seen. But -- and how do we mitigate that? There's upside potential in every Vault CRM deal that we win. There's upside potential in one, winning some new customers that we didn't have but also in the customers that commit to Vault CRM now have multiple additional products that we can sell into them that we weren't able to sell into them just a few years ago.

And that includes some of the new areas that we've talked about in our service center and our marketing solution and patient and then even somewhat unrelated to Salesforce thing, but opening up in data management with areas like Network and Nitro. So the breadth of the commercial cloud in a sense, has expanded -- and we have a lot of upside opportunity in addition to some potential new customers that we could also win. So we -- I think we'll mitigate that and I feel good about the competitive positioning and the potential to -- to keeping grow the business.

Our next question will come from David Larsen at BTIG.

Can you talk a little bit about your relationship with IQVIA and how you're sharing data with them? How is that progressing? And then Paul, I was pretty surprised to hear of the client talking about how effective and useful the single source of truth is. And it all sounds like you're taking share from the CROs , can you maybe just talk about how the CROs themselves are doing with all of the pricing activity that's going on from a regulatory perspective?

I'll take that one as it relates to IQVIA. We're happy with that partnership. Really happy. You can either fight our partner, and we are fighting for about 10 years and boy, partnering is a lot better. We've been doing that for a couple of months now, and it's just much better. We don't actually share data with IQVIA, right? They have their own data sets. We have our own data sets, but the customers can use those together. So that's the really nice thing. It used to be before the customers knew if they were getting data from IQVIA and some data from Veeva, they might have [ Ajita ] in their teams because IQVIA people not getting along with Veeva people. That's not the case anymore. So this partnership opens up new opportunities for us in data buy some data from Veeva some data from IQVIA. And between the 2 of us, we're going to have most of the data that the customer need. They don't need a lot of third-party band aids. And then as Paul mentioned, the software, right? We have our data management software network in Nitro, which we effectively couldn't sell before the IQVIA agreement now we can.

So it just opens up a new potential. Not to mention on the clinical side, right, there's partnership opportunities that we're working on there with IQVIA on the clinical side, they can provide services on top of our software, and we sure would like IQVIA to become a customer of our core clinical applications over time. So that's all to the positive.

David, on your question as it relates to our customer speaker and CROs, he did -- he attributed a lot of value, especially for a very small company. If you think about their size and scale are very small. They do obviously have a fair amount of spend in the clinical space. and clinical safety and beyond. The single source of truth offers a lot of value in connecting all of his departments and streamlining how they operate in many, many different ways, and I think he kind of spoke about that very clearly. And then he did talk a little bit about the kind of the -- in their specific situation, they were able to do some of the work on their own.

That -- I would say that's something that's somewhat leading in the industry. I don't know that that's not a standard practice yet. There's a very heavy reliance on the CROs. And I think there will continue to be for a very long time. They're required to help the industry move faster and provide critical services. And I think at certain parts of the market, companies may kind of take the same approach that apply therapeutics did, but I don't know yet that it's a -- I wouldn't call that a trend yet. But obviously, a lot of opportunity can be created.

How would you estimate the pace of clinical trials are now relative to the earlier part of the year?

I'm sorry, can you repeat that?

The pace of clinical trial activity?

Yes, the number of trials that are actually being run relatively stable. We watch it quarter-by-quarter and there's slight ups and slight downs, but it's relatively stable.

Our next question will come from Max Persico with RBC.

I wanted to kind of dig deeper into the capital allocation portion. And just thinking about the balance sheet, you guys have like $6 billion of net cash on the balance sheet. If you were to pursue inorganic opportunities, could you maybe just unpack what those look like and kind of what adjacencies or product or said differently, like gaps in the product portfolio where it might make sense to pursue something that's inorganic versus to build it internally?

Well, I can take that. We're always looking for a need, where do customers have a need. And then when we identify that, then it's either, hey, we don't have the capacity to do anything or maybe we do. And if we do, it's -- we're always evaluating first, is there something we can buy to give us a head start or critical, maybe it's a head start or maybe it's more than a head start. So it just depends on the areas we want to get into. So I would say we're still investing in the clinical area -- in the regulatory area, there are some things we're looking at, I would say, also in the new markets area, right? That's a brand new greenfield. So we may look at things there. But there's not there's not one particular thing that we're looking at. I would say there's new opportunities in AI as well. That's going to open up some very interesting areas, and that could be something interesting as well.

There's also tuck-ins, right, where we know that there's a stand-alone company that would just fit better inside of Veeva and be more efficient channel efficiency. So we'll look at those as well. Those would be inside of life sciences. I would say, Max, sometimes it can be transformative too, right? You saw that when we bought Crossix, great business. Now that business is well, I guess, roughly more than tripled since the 5-plus years it's been in Veeva, but that business spawned off a whole new business in Compass. So those kind of things can happen as well.

Our next question will come from Jailendra Singh with Truist. Maybe we'll come back to Jailendra. Our next question will come from David Windley at Jefferies.

This is going to be a good one because I'm in a car. Can you hear me okay? .

We can. And you look sideways, David, but that's okay.

How about that? Okay. So I'll ask 2, Peter, if I can. I believe since the last quarter, you've had a couple of the verbal CRM deals confirm and [indiscernible]

Maybe 12 total decisions, 9 for you all and 3 for Salesforce. It seems that those decisions are coming in pretty well, as was described earlier, but maybe the pace is running a little ahead of expectations. I wondered if there was an update on that by the end of [ '26 ] time and it has any implications for your forward look. And then my other question would be on the clinical side in EDC, you've been at kind of 9 there for a while. Is there something in the EDC market that has clients kind of standing pat with where they are?

Paul, do you want to take that CRM one? I can take the EDC one.

Yes, sure. So thanks for the question, David. So yes, you're right. We've -- we're making great progress in top 20. I talked -- I mentioned earlier, just looking across -- broadly across our customer base, we expect to retain the vast majority of customers -- if you look more specifically in top 20, we have 9 wins. I'd actually break top 20 down into 2 buckets. There's a win and there's a go live. And the wins we have 9 wins. Committed to us already. The companies that still need to make a decision will likely make a decision by the early part of 2026 in the -- at least in the top 20 segment of the market. So those are still playing out, they'll play out over the next several months. And then in terms of go lives, we've had 2 top 20s go live already in major markets in Europe and all across Europe and the U.S. will have our first top 20 customer go at globally, will have multiple additional top 20s go live throughout next year, throughout 2026.

So we're executing really well, and we're converting wings into go-lives. And I think that's -- it's just a different story. I want you to understand the nuance and there may be wins on the other side on the sales force side, but they're very different in terms of their risk profile in terms of turning them into a go-live. Because it's going to take multiple years to mature the product, if they get to the point where it's mature for what the industry actually needs. Which means when they have a win, the burden is on the customer or the customer's systems integrator to build out everything that they do need. And we know that, that's custom software. We know how hard that is, we know that a lot of that gets abandoned. So it's unlikely that all of those customers go live in all regions, and we think that opens the potential for us to win some of those customers back. So yes, there are numbers. We're going to be transparent about those where we post the latest on a blog on our website. So you can see the very latest kind of scoreboard day by day, but I wanted you to have that full context because there's a lot -- a lot behind there. And I think the long-term winner in the market, and Peter alluded to this is the one who's focused on product excellence and customer success, and I think we're very well positioned there.

All right.

And then, David, you had a question about EDC. Yes, we have 9 of the top 20. I think that's just a natural sort of break point in the market. We have some momentum with some other customers. Hopefully, we have some things to announce announce soon. We'll see about that. But there's no structural thing. I think the idea of having clinical operations and clinical data management, all in one platform together, that's a powerful thing. And that's what's that's what's motivating customers. So we're still very happy with our EDC and the innovation is strong there.

Our next question, we'll come back to Jailendra Singh. Are you there?

And sorry for the technical issue earlier. Thank -- so I actually want to follow up on open evidence partnership -- 2 parts there, are you guys building any incremental tailwinds in your 2030 road map app from the open Vista product offerings or that will be more incremental -- and related to that, the partnership seems to be focused on clinical trials today, but is there an opportunity to expand this partnership to other solutions such as digital marketing costs given the traction open evidence is getting with HCPs?

Yes. I'll take that one. Clearly, any -- nothing of that is figured into our 2030. So any of that would be incremental. As is Veeva AI, right, in our 2030 goal and Veeva AI revenue is also incremental or any major acquisitions would be incremental. Yes, we're focusing on the clinical trial area first. I also think Market Insights will be a great joint offering. We'll develop over time. Crossix. We have established a Crossix partnership already with open evidence. That's around measurement because as doctors are using AI. Pharmaceutical companies want to measure the effectiveness of that AI as a way to disseminate information. So we have a measurement partnership already. So yes, it's early days in the partnership. I love working with those guys because it's -- their customers are doctors, they are using all the time, and that's not our customers, our customers are life sciences companies.

Between the two of us, we can really create value.

Our next question will come from Stan Berenshteyn with Wells Fargo.

I want to focus on Data Cloud here. First, on Compass is just going back here, obviously, it's our biggest opportunity. I'm curious if you can give us an update on the progress of your data build-out? And if you can also comment on how receptive clients are here? And are there any hurdles for clients adopting this solution?

For Data Cloud overall, we'll talk about Compass specifically. We're always increasing our data network incrementally. I don't expect any dramatic shifts in our data network. We have overlapping data strategy. So we buy pieces of data that we know are overlapping and then we match in together some emerging. So it's -- I don't expect anything dramatic there in terms of cost or data network. The main barrier, I guess, to adoption [ Encompass ] is just change management with companies, right? Just change management. Do they want to do that change? I think some of the things that will work in our favor now are our partnership with IQVIA because I think customers will be more comfortable using Veeva Data and IQVIA data together and they'll be less likely to sort of use Band-Aid third-party solutions. I think between Veeva and IQVIA, you can get most of the data you need, just fit that together and move on.

That -- there's also a trend for people to be economical, right, to not want to spend on too many different vendors, that would play in our favor as well. Now in terms of Data Cloud overall, one of the exciting things is HCP 360. That's a newer offering. We're doing detailed level at the doctor at the health care provider level detailed metrics. That's a newer offering over time, that one can be significant. That, over time, may rival the value of Compass. That's a very significant thing that we couldn't really embark upon without the IQVIA partnership because, again, a customer might have the IQVIA data for certain things. Now that we can make HCP 360 and sell that in on top of the IQVIA data. The customers can match things together easily. We can match things together easily. That can be a growth driver as well.

So that was actually my follow-up question. Was that a rebrand of your Pulse product? And it looks like you have some new products, subproducts announced under the HCP 360 category? Comment on that as well.

Yes. We used to talk about CRM Pulse. We have rebranded that as ACP Access, but those other 2 products -- those are brand new. Those are -- the only thing they're not related to HCP Access is just they're related to the HCP level. So HCP metrics that's detailed topics on doctors around the world, 16,000 detailed topics having to do with what we call [ D4B ], drugs, diseases, devices, diagnoses and biomarkers. So this is used for advanced segmentation and targeting. If you have a very detailed topic of a biopark marker, and you want to know who in France is dealing with this. That's what HCP metric. HCP consent is a really groundbreaking thing that we're starting off actually in Asia, Southeast Asia is where it's starting off. That's where we're gathering industry consent at the HCP level so that a large pharma doesn't have to contact the doctor and say, "Hey, is it okay if we contact you? We get the industry-wide consent, and that makes it hold much more efficient for the whole industry. That's an extremely valuable offering as well. I think you'll see more in the HCP 360 area from Veeva over time. On me a little bit in I wouldn't say an explosion. We're not going to have 10 products in there. But there's not great individual doctor-level data that's outside of the U.S. that's available very much. that's what we're going to focus on real innovation there. AI could power that as well, right? When you think about how AI how you can determine what doctors are doing with AI, you can really power a lot of individual metrics there.

Our next question will come from Steve Valiquette with Mizuho?

I guess if you you could touch on this, and I missed it, I apologize. But just given the token-based economic model that you talked about for the AI agents, just curious among those 4 stepper rollouts that you are kind of planning between now and December of '26. Is there any way to rank order those for the greatest amount of revenue or monetization for Veeva or at a minimum, is there one that maybe just stands out more than the others, the way you see it right now just from a revenue potential?

That's an excellent question. Yes. The real answer is we don't quite know yet. I think one of the heavier usage is going to be in the safety area. Right. Because in that that will be a heavy usage of AI. It could be a significant labor savings for pharmaceutical companies. I would say CRM will be a little bit less so because that's more automation and helping the field teams do what they do. I think in the clinical area, not right away, but over time, it can be significant, particularly the clinical operations. One of the things we're looking at is can we make a self-managing trial master file, what's called an eTMF.

That would require a lot of processing and tremendous amount of value there. So long term, I think clinical and safety probably, in my mind, have the most automation, but we have to wait and see how that all plays out. Part of it is we have to develop excellent agents, right? We have to really do that. If they're excellent, people will use them a lot. If they're not, they won't. And I think you're seeing that in AI overall. Right? Anybody can introduce something and with a lot of hype and get somebody to experiment. But is it really repeatable? Is it a no-brainer to drive to drive value, then they'll use more of it. And that's -- Steven, that's why I like our pricing model because the more value the customer gets the more money we get. And that's how it should be. Otherwise, you're selling ferry tails and that comes home to roost over time.

Our next question will come from Charles Rhyee at TD Callon.

Thanks for taking the questions -- maybe if I could ask, obviously, with this administration -- two questions,. The first one is, if you think about the administration and a lot of focus on more restrictive to direct-to-consumer advertising -- can you talk to sort of what kind of impact could have to something like process? And I know the little pivot you talked about HCP 360 as another option here and some of the work we do with open evidence, maybe talk to so what we could foresee maybe over the next 2 years if such things kind of in place. Secondly, on Clinical Cloud here. I've done a great job. And obviously, the side have been one of the big growth areas and expect the 2030 plan -- how much of that you take is we see this impact, particularly in [indiscernible] in-sourcing. And I would think that would supplier pharma to really build up their internal technology erector. When we look at spend of growth expectations, how much of are you baking into that the assumption you're going to have more companies like maybe like Merck? And I think you announced a I know the top comment slows, that was going forward -- how much of that trend do you see continuing in to go in a -- so we think of that as a potential big driver of growth going forward?

Paul, can you hear that .

Yes. There's a little bit of feedback there. So maybe if everybody mutes. Peter, if you want me to -- if you want to take the fire, you want me to take the first one and you take the second?

I can take them. The first was a question about Crossix and the limitation related to the administration digital media, we haven't really seen an impact there. That's pretty targeted. They're talking about some things as it relates to TV ads. Of course, we have to see how that plays out. But remember Crossix is pretty broad. It's measurement of all types of digital information, right? So -- and that's not anything that the government is trying to stop or clamp down on. So we see the Crossix business is really growing. And AI, as more information is disseminated through AI, the measurement is going to be even more important there. And it's not only measurement with Crossix is also audiences.

So what are the audiences you're going to target that media at you feel that. So Crossix growth, we don't see impact there. Then your other question was with the large pharma companies, would they in-source more things or outsource more things. That's you call it FSP. For those who don't know about that, right? Sometimes phmcompanies will either in-source and run their own tech or they're outsourced, and they use clinical tech from a CRO. That -- that doesn't matter so much to our market. All of the large, let's say, the top 30 certainly all in-source their tech, even though they do some outsourcing. I think most of the smallest biotechs will outsource their tech -- but that won't impact Veeva because you -- hopefully, you're using [ VeevaTech ] either way. And now, your specific question was, is that anything that's driving the 2030 clinical growth No, not really what's driving that 2030 clinical growth, which, as you rightly pointed out, that's our biggest area of growth, both percentage-wise, volume-wise, et cetera. It's our depth of products. So if you look at our clinical operations suite, for example, that's our -- it's a pretty well established, right?

We've had eTMF and CTMS but that's actually the biggest single area of contracted backlog that we have. based on all those new applications, CTMS, Site Connect, study training. They've got disclosures in their payments, right? So there's a big backlog there. And then also in the EDC area. We have a large backlog there and we have eCOA coming in, and we're quite bullish on our randomization and trial supply management as well. So that's where it's coming from. It's broad product portfolio. And we're not done yet in clinical. There's more things to do. So that's where it's coming from.

And our next question will come from Bill McNamara with Evercore.

This is Dan for Kirk. Circling back to AI tokenization, how should we think about the margin profile? Do you see a lot of pricing power as capabilities improve over time?

I'll pick that one up?

Yes, anything that says margin, Brian, takes that. .

We've got our algorithm. Don't need the agent for that one. So on AI, I think a little bit too early to say, Bill. So what we've talked about is that we do expect our pricing will be usage based. And so to some degree, that aligns the revenue and the cost side. But very early days, right? We haven't even gotten into general availability for these yet, haven't started charging for it yet. So we're going to have to see how that plays out a bit. No impact this year and then for next year as we start to get our arms around, and we'll factor that into our guidance at that point.

I would say, Bill, in general, we focus on industry-specific things, right? We're not ChatGPT or Gemini to have thing consumer there. You do have to really watch your margins because it's very, very broad, right? Compute-intensive -- what we're doing is very specific, right, and very high value to the people that were doing it. So the value is not so much in the compute power. It's in the specific logic, the specific way the agents works. So I'm not that concerned about our margin profile really. I think it will be better than the horizontal applications. And you see that all right, you see that in general in industry-specific software. It's harder to make. There's fewer people you can sell it to, but it's a good, profitable business if you make a high-quality product. .

And our next and potential last question will come from Saket Kalia with Barclays.

Okay. Great. Guys, thanks for letting me back in queue here. I want to tuck on just one of the threads earlier on an earlier question. And Brian, maybe the question is for you. The bar chart that sort of showed the breakout of the 4 different product families was super helpful. So thanks very much for that disclosure. I'd love to maybe just dig into the clinical mix at about 21%. Maybe the first part of the question is how do you sort of rank order the products within that 21% in terms of size, qualitatively, of course, and maybe the follow-up to that is, I know that Peter dug into sort of the breadth of product there. But how do we sort of think about which of today's products are going to be the biggest drivers of taking that 21% to call it 30% of that $6 billion run rate in 2030. Sorry, there's a lot there, but does that make sense? .

Yes, a lot there. I think what I heard was what's the main driver of the growth, especially in clinical. And can we put a little more texture on that? I think part of what you're getting at, Saket, is just a big part of what makes Veeva unique, and that's the breadth of the product portfolio. So we'll dive into clinical here, but I think our intention in that chart was really to show how many areas are contributing so significantly to growth out through 2030. Commercial is still a very significant contributor to growth. The other areas outside clinical, quality, regulatory, safety, med tech, all growing proportionally with our overall growth rate. So it's a pretty significant growth story. And then as you touched on clinical, if you run the quick numbers, I don't know if everybody probably had their model handy like you did it implies a clinical growth rate of about 21% per year out through 2030.

And so that's the outsized driver of growth over this period. It is, as Peter touched on, it's such a broad growth story. There are so many products that are very significant market sizes. And significant in their growth contribution out through 2030. So in clinical operations, I'd point to RTSM, I would point to Site Connect. I would point to even CTMS and eTMF. Peter touched on some of our largest backlog, which has not yet converted into revenue is in the clean off space and CTMS specifically. So there are a lot of areas contributing there. Study training is quite new, but progressing very quickly. So it's a broad growth story within [ Clin data ]. It's really 3 major products. It's EDC, ECOA and then [ CVB ] are the 3 to watch and all pretty significant contributors out through 2030.

Thanks, Saket. And with that, we reached the end of the Q&A portion of the event. Peter, I'll turn it back over to you for any closing comments.

All right. Thanks, everyone, for joining today. I really appreciated your questions and thanks to the Veeva team and our customers for helping us build this great company and we'll see you on our Q3 earnings call. Thanks.

Tyler Radke here, I co-head the software team at Citi, and we are excited to have Veeva for the next presentation. We have Paul Shawah, the Chief Commercial Officer; and Brian Van Wagener, the relatively newly appointed CFO. I think it's been about a year now, but first appearance at the Citi Tech Conference. So thanks both for being here.

Brian, I thought we'd kick things off with you since you're a new face for the audience here. Give us a little bit about your background and kind of how the first year has gone as CFO?

Yes. Well, nice to see everybody, and thanks for having us, Tyler, and thanks, everybody, for joining. I am coming up on the end of my freshman year here. So a couple of bumbles and awkward movements along the way. I got stuffed in a couple of lockers, but we made it through. It's been a great ride so far.

My background is a little bit unusual for the CFO role. I come more out of the operations side of the business. I started out at Veeva as our COS, Chief of Staff and then moved into sales operations, which I did for several years. And then left for a bit and came back into this role. And I'd say in the first year back, it's been both rewarding and exciting. Rewarding on seeing some of the things we started back in 2017 really come to bear. So you think about Crossix and the physicians world investments that we made, really starting to scale in clinical. A lot of that was really getting started in 2017, and you see those growing into material businesses really contributing to the growth of the business now.

On the exciting side, this is definitely a time of transformation and inflection for Veeva. We talked at our Investor Day about entering new markets and horizontal software. That's going to be a big theme, I think, for the long term of Veeva, the third act of Veeva. But also, I think the opportunity that we see in AI, which we've really accelerated our investment and we think can be a big change to Veeva and to the industry. So a lot happening right now, feels a lot like those days in 2017 where we're building new things.

Yes. Great. Well, welcome, and thanks for joining. And I want to make this conversation more elevated and strategic, but I did want to give you the opportunity just to address Q2 results. And I'm sure in your meetings today, you've probably gotten too many questions on the billings performance in the quarter, but maybe could you just level set for folks like what were the highlights in your mind in the quarter, maybe the billings results not -- why were they more subdued, but what would you focus people on as you kind of come away from the quarter?

Yes. We haven't gotten too many questions. I think overall, folks have taken a long-term view on this, which is the view we encourage folks to take. We talk a lot about quarterly billings, not being a great metric for our business. Billings is just inherently a bit lumpy because of timing factors. And so whether it's a large beat or a skinnier beat like we saw in Q2, those are really timing factors, not representative, in my opinion, of the long-term trajectory of the business.

So we really look more closely at revenue in a particular subscription revenue as better indicators of the underlying momentum of where we're going. And so we've been very pleased with the execution of the team year-to-date in Q1 and then again in Q2. And you saw us raise our guidance pretty substantially for the full year on all lines, on revenue, on billings, on cash flow. So we're really proud of the results of the team. And I think our confidence in doing that is largely based on being 90 days further in and seeing the pipeline firm up as we look at the large base of renewals that we have in Q4 as well as the new business side. And we're looking forward to a good second half of the year.

Great. Great. So Paul, welcome back to Citi Tech Conference. I think it's been almost, what, 3 years since you announced the transition from Salesforce on the CRM side. And announce kind of the Vault CRM product. I think you're almost up to 10 large pharmas now that at least have verbally committed to Veeva. There's been a few that have gone to Salesforce potentially, but it appears that you're kind of getting about 2/3 to 3/4 of at least the announced decision so far. Is that kind of the way things have tracked relative to your own expectation? Just walk us through kind of how that decision in the last few years have gone relative to your plan?

Yes. So first, thanks for having us back. Good to be here. Thanks, everyone, for joining. So yes, I mean this looking back, this was the right decision. This has allowed us to innovate in a lot of new different ways. We've been able to announce new applications that we haven't been able to do before and move with speed. Some of the things we've announced just after the Vault CRM transition are now products that are live and have customers using them. So we're excited about the trajectory.

In terms of numbers of kind of expectations around customer wins, we've always talked about it as winning the vast or retaining the vast majority of our customers, and I think we're well on track for that. I think you alluded to the top 20 wins. We're at 9 commitments, and we talked about Salesforce at 3 commitments. So that's going very, very well on top 20. We never expected to win every deal.

If you look outside of the top 20, I think it's even a stronger win percentage. And when you think about why that is, Veeva has proven. We have over customers live on Vault CRM. We have 2 top 20 pharma companies who've already made decisions and have gone live in some of their major markets. So now it's very much proven. So a win for Veeva is very much -- it's think about it as almost a certainty that they're going to go live and be happy and start to take advantage of a lot of the innovations that Brian talked about with things like Veeva AI that we're super excited about.

Whereas with a win with a competitor, this means like this can be a long, extended, protracted custom build project, which does not necessarily turn into a successful and happy customer because we've seen that story play out a number of different times. So I'm very happy with the win rate. I also want to be clear that wins don't necessarily equal a successful and happy customer. We've proven that. So we feel really good about where we are.

Right. So potentially, there's even the opportunity for win backs from Salesforce if the implementations still don't go well?

I think there absolutely is. And remember, with a lot of these customers, we -- they use a lot of Veeva products in a number of different areas, in R&D and even in commercial in a number of different areas in commercial, our commercial content business, Link, Compass, multiple other products. So it's on us to continue to make them successful across all parts of their business. And I think they'll see that start contrast with really strong execution, great products, product excellence. And compared to things that might look more like a longer protracted custom-build project.

So when you speak with a customer today that hasn't made a decision yet, what is sort of a reasonable time frame for them in terms of that migration to go-live process? And I imagine there's a lot of things you've learned with some of these initial customers so that time frame shortened. But like what are you pitching to customers? And I guess, what's sort of the alternative with Salesforce in terms of that time to go live?

Yes, I'll give you kind of -- because it very much depends on the customer, the size and complexity...

Sure. Let's say, a top 20?

If you're talking about a top 20, I would say a fair estimate is about 2 years. You may have some that go live faster. You may have some that take a little bit more time. We have already seen with the 2 top 20s that have gone live. They've gone live in that -- within that 2-year time frame. The projects have even been a little bit faster. That's on the fast side.

We're really pleased, especially being some of our first projects to go live. We're pleased with the speed and the collaboration that we've had. So I think it's roughly that 2-year time frame. If you contrast that with a top 20 customer who chooses to try Salesforce, what they're doing essentially is -- Salesforce doesn't have a product today. At some point, they will. But that product won't be mature enough to support all of the requirements in the life sciences industry, which means they're going to have to custom build using services or big SIs, all of the functionality that they need to go live.

And that's why it's likely that they're expected to be long protracted projects, which may go through 2028 or 2029 or longer. If they even get to the point where they get it live because going live in one region is very different than going live in multiple regions where the requirements are all very, very different. So that's why we -- you've heard us talk about a win there is very different than a Veeva win because it's where we've proven we can get them live.

Yes. Yes. You talked about how Vault gives you the better capability to innovate faster relative to the Salesforce platform. Like what are some examples of that in terms of new functionality that you've added into Vault CRM that you didn't have in kind of the Salesforce or traditional Veeva CRM?

Yes. So you're right, Vault CRM is, I would say it's significantly better than Veeva CRM. One example is Veeva AI. We didn't have Veeva AI and Veeva CRM, starting the end of this year in CRM, we'll have our first agents. We have 4 agents coming out at the end of this year, and we'll have an additional road map of agents coming out in 2026 and beyond. I expect over time, we may have a library of 50 or even 100 agents that exist in all of our applications. So AI, for sure.

A second area which is more foundational or is equally foundational is bringing sales and marketing and medical and service all together in a single application. This is highly unique. The standard in the industry was you bought one system for your sales team and you bought a separate system for your marketing team. And you were kind of stock stitching those things together. It was never perfect, and it never created a great experience for our customers, but certainly, the health care professionals that they were marketing and selling to.

With Vault, we've changed that. We've built them all together in a single platform which will help companies be more customer-centric and help them collaborate. Sales and marketing can work together. That was hard to do historically. We're going to make that easier to do.

Righ. Right. Okay. And Brian, on the financial side of the CRM migration, clearly, running your own infrastructure and your own platform has a lot of gross margin benefits over time. Obviously, in the near term, you're kind of having to pay for 2 platforms. But how should we think about the financial benefits of from the gross margin side of this transition?

Yes. I mean the main story is all the things that Paul was talking about around product excellence and customer success and unlocking and recharging the growth engine for CRM. There is also some margin benefit. That's not the main story, I think, behind this transition. I think the best way to think about that is as customers complete their migration from Veeva CRM on Salesforce to Vault CRM on the Vault platform. We will stop incurring those royalty payments generally within 2 or 3 months of the customer completing that roll off.

We've quantified that at about $80 million in royalties that we currently pay to Salesforce that we would stop paying over time. That will be offset a bit by some of the hosting costs, as you mentioned. So the way that I would expect that to play out is in the short term, in the next couple of years, there's probably, if anything, a bit of a modest headwind to COGS because we have those migrations going on in parallel to the Veeva CRM still running on Salesforce. You'll start to see some net benefit to that as we get into the out years closer to 2030. And then as we get into 2029, 2030, certainly completing that cycle.

Got it. Okay. Going back to 2 quarters ago, Crossix was a big driver. I think we got the most questions on Crossix we've ever gotten maybe back to when the original acquisition was. But business seems to be doing well. You talked about it growing north of $200 million in ARR. What do you think is kind of unique about either the environment or that business this year that's kind of led to that strength?

I think a couple of things. So we -- sometimes these changes happen and these inflection points happen and they look sudden. I would say to us, this doesn't feel sudden. This is an area that we've been investing in since we made that acquisition more than 5 years ago now. And we made that investment along a couple of different fronts. One was continuing to really invest in the product, in particular, the audiences' product, which had been a little bit more passively managed kind of a nascent business. We put a lot of energy into that.

Second is putting a more dedicated and focused field team on it. And then third is really experimenting with different commercial models and pricing structures that better align to how customers want to buy. And so to us, that looks like actually sort of a gradual movement, and you saw that start to burst through over the past few quarters.

Under the hood, it's both segments of the business, the measurement business, which is more subscription-like and the larger part of the business continuing to perform well. And then this year, in both Q1 and Q2, we've seen particularly strong business out of the strong growth rather out of the audiences business, which is the usage-based component of Crossix. That's driven by, I think, healthy customer marketing budgets, a good proportion of that going through digital channels and then ultimately them selecting the Crossix audiences segments to target their advertising.

So we continue to see that as a growth engine for the company looking out. I think we've started to hit that point of market leadership in the measurement business. There's definitely still room to grow. And then the audiences business, which we've spoken about being the smaller part of that $200 million run rate but faster growth, we think has the potential to be quite a bit larger over time. So it's certainly got a healthy growth runway. So we're quite excited about the potential for where Crossix can go.

Got it. Okay. I wanted to talk about the legal dispute, which recently became a partnership with IQVIA. So I guess just to first start off on that, if you could just kind of walk us through the quick -- I know there's been a lot of back and forth, but the history of that and how you're viewing this partnership in terms of the benefits that it gives Veeva in the end to this dispute?

Yes. First, we're super excited about the partnership with IQVIA, and I think it's fair to say I can speak for them, where I think they're equally excited to have put a lot of the disputes behind us and also now start to think about the future and collaboration. This started roughly 10 years ago. We were primarily in the software business. They were primarily in the data business. And they entered the CRM market, which led to some issues around using their data and our software. And it's just kind of was focused on that for roughly the last 10 years. So some of our software products were blocked from being used by customers. That has since changed as they have exited the CRM business. We've become more of a leading player in the clinical space with our EDC product and certainly in clinical operations.

So the world has changed since then. And I think now we both decided that it's better that we put those disputes behind us, and there's a much, much bigger opportunity for both companies, but more importantly, from our customers to partner together. In terms of benefits for them, it opens up the commercial space for them to use their data and a lot of our products.

Our Network, master data management, Nitro, it's a data warehousing product. Also, our business consulting is now able to use their services. So it just creates less friction for customers. It makes it easier for them as they position their data products that they all just work in Veeva, which is good. They've also joined our partner program in other areas like AI. So they're now a Veeva AI partner. And who knows where that's going to lead. That I think offers a lot of potential for where we might innovate together.

And then on the clinical side, it opens up that clinical market where they were one of the top CROs that could not access Veeva software as equally as all of the other CROs who were existing partners of Veeva. So now this creates a lot of opportunity for them to use and get access to the best technology in the market.

And then for Veeva, for our customers, this is -- it reduces friction, it reduces uncertainty, it creates a platform for 2 of their most strategic partners now being able to work together and innovate on their behalf. So this is a significant win for our customers and I think for both companies as well.

Right. Right. Yes. It's definitely a long time coming in terms of that dispute. But I guess I'm curious, though, because Veeva historically has had some pretty big aspirations on the data side as well with Compass. And I think in some of the Analyst Days, Peter has almost described, the data business is like a third leg of growth beyond obviously, commercial and R&D. So how should we just think about the like relative scale of where those data businesses could be now? And are you able to like offset that now with kind of the growth in some of these other products, whether it's Network or Nitro, Andi, the data warehousing products?

Yes. So in the data space, really nothing changes from our strategy and our investments that we're going to continue to make in data. We still think data is a very significant opportunity today for sure in commercial. And potentially, it could be in clinical over time -- or the R&D or clinical segment over time.

So data is a big area of focus for us. We're making a lot of investments. The value proposition for our products hasn't changed. So Compass, for example, we have visibility to data that we think is highly unique to Veeva based on how we gather and collect the technology that we use, which is based on the Crossix data platform that source all of our data and match it. We think we have better visibility in a broader, more accurate data set.

And we also use technology to deliver that data to customers, which is more efficient. So we believe we can do it faster. So daily data versus things that historically have taken a whole lot longer, weekly or even monthly. So that value proposition has not changed, and we're going to continue to invest, and we'll compete respectfully with IQVIA in the data market, but we're in it to win in that market, and we think we will over the long term. And it's also a core part of building the industry cloud.

We talk about industry cloud as software, data and consulting. It's one very significant leg of the stool because companies need all 3 of those. They need to have all 3 of those pieces working well, and we think we're uniquely positioned to make them work well together. Software data consulting. It's never been done before in the industry by a single strategic partner, and we think we can add a lot of value by doing that.

Right. But I guess just to double-click on that, I mean, what does IQVIA -- like IQVIA obviously very dominant in the prescription data space, like what are you trying to build? Is it -- would you say it's kind of more complementary? Or is it, hey, we want to directly take on IQVIA maybe more respectfully than the past? Like does it -- and does the lawsuit resolution change the scope of that data business at all?

Yes, it can be complementary in some cases. Some companies like to source data from multiple sources. So that is a potential. But there's also the opportunity where companies want to standardize on a single data set. So I think both of those are possibilities. And I think we're setting ourselves up where this could be a replacement where a company can standardize on all Veeva software and all Veeva data. We're at least providing that as an option to our customers. It's on us to make sure we have the best software and the best data. And so yes, I think it's a significant opportunity for us, whether we're complementary or whether we are a full-on replacement.

I think what you're circling around, Tyler, is there's really no change to the way we're approaching the data business. So our conviction in it, our commitment to it. We still think we're building a better product and a more modern data platform, and we're going to go out and sell it. But -- we also think that we're both big companies. It's not uncommon in larger companies to have a situation where you're partners in some places and competitors in some places, and I don't think we foresee an issue with that.

So in other words, there's nothing you had to give up in terms of the ambition or the scope of what you do there as part of that?

No, I don't see either company giving up anything in this partnership. I see both companies actually gaining. I think there's a broader opportunity for both companies working together than there was where we were just a couple of weeks ago.

Righ. Right. Okay. Makes sense. I do want to talk about the R&D side of the business, which obviously is an important growth driver. Lots of different parts of the business, whether quality, regulatory, some of the clinical side. Maybe just starting off high level, like where do you feel like the industry is in terms of that modernization path? And how are you just sort of thinking about the biggest drivers of growth within R&D?

Yes. So you're right in that, R&D is broad, and it's clinical, which includes clinical data management and operations, quality, regulatory, safety. And each of those areas are multiple applications. So there are suites of multiple products. And we have -- we've delivered those products over many, many years now, starting back in 2010 and 2011 with some of our first products in the R&D space.

And some of our products now are reaching very high penetration in the market. We just announced this last quarter that we have 20 of top 20 with standardized on eTMF, which creates a very unique opportunity for us to continue to innovate, continue to advance and move the industry forward. That's a unique position to be in. We take that very seriously.

But you can see that, that's our first product, and it now has 20 of top 20, still has more room to grow in the long tail of R&D companies. So we're not completely sold out there. But what it gives us the opportunity to do is to expand into many of the other products in the suite. And you've seen that with CTMS as an example, which works closely with eTMF. We're not quite as high penetration, but we're high penetration in CTMS and then the broader suite of clinical operations and clinical data management products become more valuable because they're part of a suite of products that all work together.

Remember where a lot of these companies were coming from is each of these areas, they needed a different vendor with a different technology platform. And it was on them to stitch those pieces together. And what Veeva has is something very different, the Vault platform that natively makes all of these products work together. They don't have to spend time stitching products together. So that's a very unique value proposition. So the growth opportunity in front of us, where we have relatively low penetration. It's on the order of 15%. The growth opportunity is expanding these suites of -- expanding the adoption of these suites of applications and then even delivering new applications and Veeva AI and a lot of these products over the next several years.

Right. Right. What -- as you think about the sort of building blocks to the R&D growth this year and then obviously you have long-term targets that imply continued healthy growth in R&D? Like what do you think the biggest contributors from a net new ARR, net new ACV are going to be? Is it going to be -- I mean, obviously, clinical, massive market, but maybe you have like larger competitors in that space? Where do you kind of see it from a product perspective coming from?

It's pretty broad. It's -- it may not be the answer for you, but it's pretty broad-based because remember, a lot of these areas are -- clinical is a very significant area. It's about 1/3 of our overall company TAM. Quality is next and then regulatory and safety are behind those 2 in terms of relative size of the total market opportunity.

So that's one simple way to think about the contribution, but really, all of those areas will contribute. We expect significant contribution from safety. It's early stage. It's a really great product. It's at the right point in the market at this inflection point where we now have a number of top 20s who are live and happy in a very conservative area. So we'll see contribution from safety. We'll continue to see from regulatory and then certainly quality and clinical given the size, given the number of applications that we have. So I expect it to be broad-based.

Right. And you also recently announced plans to get more into the horizontal enterprise application market, which I think was maybe a little surprising, just to talk about products, quite broad. But what -- like where do you start in that? And are there specific industries or customers that you think are kind of the obvious use cases or low-hanging fruit?

I guess I'll pick that up. So on new markets, we're very excited about that, but it's a long-term play for Veeva. And I really think of this as the third act of the company. And we started with CRM. We moved into Vault and the R&D side, and this is really about the third act. If you think about it that way, it's going to take some time for that to get to a scale where it contribute meaningfully to growth and be a part of the growth engine of Veeva. So we talk about this and are talking about it quite early in the life cycle. But we've been focused for the past 9 months or so since we announced it at Investor Day last year, really on building the platform level and getting the platform constructed such that we can start to build our first applications on it.

And then in Q1, we spoke to the first application area being the CRM area. And that our goal for the balance of the year was to build that first application and sign up our first early adopter. So there's no change to the overall trajectory that we're on.

The reason we're excited about it is because we think there's a lot of potential to do things differently in horizontal software. I think sometimes we feel Veeva maybe get short shrift as being a really strong enterprise software company because we're focused on life sciences. People look at us and say, okay, you've got channel benefits or you've got something about the network of life sciences, but our core capability is really being an outstanding software company. And so as we look at the market for horizontal software, what sticks out primarily is that we're still largely on version 1 of horizontal, and it would be very surprising if version 1 were version final. There's very few examples of that if you trace back in the history of software.

And Peter specifically has pointed to the areas that he's very excited to drive innovation at the platform level and then to the ability to bring the same product excellence and customer success mindset that we bring to the life sciences industry to other places. I will say sometimes as a buyer of software, I wish I had Veeva to buy from because there's not often that same level of relentless commitment to making our organization successful with the software we buy, as I know we bring to our customers in life sciences. So I think it's that mindset and that approach and that software DNA that we're going to bring into a new space, and we think it could be -- a lot of potential in the long term, but also it's a long-term play, not short term.

Okay. Makes sense. Paul, I know you were meeting with customers a bunch in your day-to-day job. How have you seen kind of customers respond to what sort of feels like continuous headlines on policy changes for large pharmas in biotechs? How are -- how is this -- sorry, impacting their technology budgets or modernization initiatives, if at all?

Yes. I mean there's certainly a level of uncertainty and angst across a number of different areas, which we have seen and has been going on for some time. But I think the industry has done a really nice job of operating well through that. They're dealing with it appropriately. And in many levels, they're the CEOs and executives of life sciences companies are working closely with the administration on anything from tariffs to pricing, most favored nations and dealing with them appropriately because, ultimately, it's a shared ambition to have -- to be able to have access to new and innovative medicines for patients. So I think it's happening at the right level, but at the level of kind of how they operate, they continue to need to modernize their systems. These are projects that were often planned over a long period of time. They're staying very focused on executing well.

So we've very much seen business as usual in terms of how they're operating. And I give credit to the industry for being able to -- even in a somewhat uncertain environment, continue to execute really, really well.

Okay. So still kind of business as usual despite...

It has been. Yes.

Okay. Okay. Great. I know you probably have an Investor Day coming up this fall or at least that's kind of been the normal cadence for things. But as we think about the 2030 targets that you've put out sort of implying a low teens growth, which is a healthy number. What do you think maybe investors like underappreciated at least in terms of your visibility into that goal? Obviously, you have a great track record of setting targets and exceeding them and you're a leader in the space, but like what gives you the confidence that maybe is not as apparent to us, investors that are kind of just looking through the financials.

I would say the main thing, and this is the hardest one for us to communicate is what Paul mentioned earlier around that growth being so broad based. That's what gives me a lot of confidence as a leader in the company, and I think would give me confidence as an investor is that it's a portfolio approach to the business. So when I started in 2017, it was 15 products. Now it's 50. It will absolutely be more over time. And what that means is that there's not any one product that the future of the company hinges on.

And so when we look at it, this year, for example, you've had Crossix running above our expectations. There's going to be a product every year that's above expectations. There will probably be one that's behind expectations, but we've got that benefit of the portfolio. And so many products that are entering that very steep phase of adoption, that it's really about the execution against the opportunity in front of us.

When we released those goals, I think they were a little bit surprising to some people because it meant really sustaining a level of growth that we've been sort of working our way down towards. But I think what gives us the conviction in it is there's so many big products that still have a long way to go. There's QMS, there's RTSM. There's EDC, which still has a lot of growth yet to come. There's safety, which we think is at the inflection point. There's Crossix. There's a lot of business left to execute on. And so for us, it's really heads down and focused on the execution.

And then just finally, the other piece on margins. How -- I guess, how are you thinking about internally leveraging AI or just the incremental margin efficiencies going forward?

Yes. I think we're very excited about the potential for AI as others are. I would say we probably view it more as a new tool in the arsenal, not a revolution in our way of working. We've had a lot of tools that have helped our teams, in particular, our developers to get more productive and more effective over time. As we think about the purpose of AI, what are we using it to do? We're probably more focused on quality and speed than on margin accretion per se. So that doesn't mean there won't be opportunities to do that, but we think more about our values and using AI to help us drive customer success.

Awesome. Well, Paul, Brian, thank you very much for the time. We're at the end of the session and appreciate everyone joining us.