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Veeva Systems Inc (NYSE:VEEV)
Q1 2021 Earnings Call
May 28, 2020, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Thank you for standing by. And welcome to the Veeva Systems' Fiscal 2021 First Quarter Results Conference Call. [Operator Instructions] After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]

I'd now like to hand the conference over to your speaker today, Rick Lund, Head of Investor Relations. Thank you. Please go ahead.

Rick Lund -- Head of Investor Relations

Good afternoon, and welcome to Veeva's fiscal 2021 first quarter earnings call for the quarter ended, April 30, 2020. With me on today's call are Peter Gassner, our Chief Executive Officer; Paul Shawah, SVP of Commercial Cloud; and Tim Cabral, our Chief Financial Officer.

During the course of this conference call, we will make forward-looking statements regarding trends, our strategies and the anticipated performance of the business. These forward-looking statements will be based on management's current views and expectations and are subject to various risks and uncertainties, including those related to the impacts of COVID-19 on our business, the Life Sciences industry, and global economic conditions. Our actual results may differ materially. Please refer to the risks listed in our earnings release and the risk factors included in our most recent filing on Form 10-K, which is available on the Company's website at veeva.com under the Investors section and on the SEC's website at sec.gov.

Forward-looking statements made during the call are being made as of today, May 28, 2020, based on the facts available to us today. If this call is replayed or viewed after today, the information presented during the call may not contain current or accurate information. Veeva disclaims any obligation to update or revise any forward-looking statements. We will provide guidance on today's call, but we'll not provide any further guidance or updates on our performance during the quarter unless we do so in a public forum.

The guidance we will provide today is in part, based on our assumptions as to the macroeconomic environment in which we will be operating in the future, including the timing and pace of recovery from any negative effects caused by COVID-19. Such matters that are beyond our control in our assumptions may not be correct.

On the call, we will also discuss certain non-GAAP metrics that we believe aid in the understanding of our financial results. A reconciliation to comparable GAAP metrics can be found in today's earnings release, which is available on our website and as an exhibit to the Form 8-K filed with the SEC just before this call. One final note, concurrent with our earnings release, we have posted an Investor Presentation on our IR website that contains a summary of our Q1 and recent historical financial results and our updated guidance. We will continue to provide these materials on a quarterly basis going forward as a helpful reference for those interested in our business.

With that, thank you for joining us, and I will turn it over to Peter.

Peter Gassner -- Founder and Chief Executive Officer

Thank you, Rick. And thanks to everyone joining us today. Before I give an update on the business, I would like to extend our sympathies to all those who have been affected by the pandemic. I would also like to thank our customers who are supporting healthcare professionals and patients and working around the clock to produce diagnostics, equipments, vaccines and treatments for COVID-19.

We had a strong first quarter with results coming in ahead of our guidance. Total revenue was $337 million, up 38% year-over-year. Subscription revenue grew 36% year-over-year and our non-GAAP operating margin was 39%. We are slightly decreasing the top end of our full-year total revenue guidance by $10 million to $1,395 million, and raising our full-year top end operating income guidance by $10 million to $510 million. This is due to changes related to COVID-19 in certain segments of the business, particularly in the Physicians World and the Crossix areas where in-person events have largely stopped and advertising is down. This also reflects lower costs related to travel. Tim will discuss our guidance in more detail in his section.

This crisis has caused significant disruption, but it has also promoted innovation throughout the industry and of Veeva, which over time will be beneficial for life sciences and for Veeva. I am more confident than ever in our long-term opportunity and our ability to achieve our $3 billion revenue target in 2025.

The effects of the pandemic have been far-reaching and the world is looking to life sciences companies for solution. The industry is less affected financially than many others and remains relatively strong overall, but it is certainly a time of significant change as many of the industry processes become more virtual. Healthcare providers and patients are delaying many non-essential visits and elective procedures. When comparing February to April in the US using Crossix data, doctor visits were down by more than 50%. This is impacting some life sciences companies more than others depending on their product portfolio.

Many clinical trials have been delayed to avoid nonessential patient visits to doctors, in-person visits by sales reps or clinical research associates to doctors have also largely stopped. These changes are causing patients, doctors and the industry to rapidly adopt digital strategy. Necessity is creating innovation. Using Crossix data, we see that telemedicine increased rapidly in the US from less than 1% of doctor visits in February to more than 30% of visits in April. Doctors and patients are getting used to a mix of in-person and digital interactions and are finding it productive.

Using Veeva Pulse data from Veeva CRM, we see that in the US remote meetings between pharma and doctors with CRM Engage are up more than 30 times, and Approved Email communications are up more than 2 times from February to April. Doctors are telling us they find digital meetings effective and they look forward to a mix of in-person and digital interactions once things get back to normal. It's good to see the healthcare systems and the life sciences industry evolving so rapidly. It was a very busy quarter for Veeva.

We executed our first ever entirely remote product releases in both CRM and Vault. We made major changes to our product plans to release new digital capabilities customers need most right now. And our team in the field did an outstanding job supporting customers around the globe, ensuring these existing programs stayed on track, getting them live quickly with new digital capabilities and helping with many COVID-19 related special projects.

We also quickly and effectively turned all our customer summits through the end of the year into virtual events. Q1 has been our greatest quarter of innovation so far with innovations coming in all areas of the company, from product to sales, services and marketing right through the HR and finance. I'm so proud of the Veeva team and I'm personally thankful to be working around so many bright people executing together as a team.

I'd like to touch on two big new areas of innovation, Data Cloud and MyVeeva. We had a major announcement for commercial in March with Veeva Data Cloud planned for the US by year-end. Veeva Data Cloud will bring a better solution for patient data to the industry. This is a large underserved area and ripe for disruption. Like the other markets we've entered, we aim to bring much needed innovation.

Veeva Data Cloud is powered by the Crossix data platform, which gives us a distinct advantage. It's a world-class technology platform built for the development and delivery of large-scale patient data and analytics, all in a privacy safe way. Customer feedback on Data Cloud has been very positive, and we've already signed our first two early adopters for pilots, one emerging biotech and one top-20 pharma.

Over time, we will expand Data Cloud to more data offerings and countries. The Crossix data platform could be as important an asset to Veeva as the Vault platform. But just as we saw with Vault, it will take us many years to become the market leader. We are starting in a focused way around patient data for the US market. We will concentrate on early adopter success and product excellence and grow from there.

Just two weeks ago, at our R&D Customer Summit, we announced MyVeeva for clinical trials. This is our first patient-facing application. It will help patients through the clinical trial process from managing medications and appointments to participating in remote doctor visits. MyVeeva will enable clinical research sites around the world to eliminate paper and deliver a better patient experience. The product is planned for release in Q4 and will be free for clinical research sites.

MyVeeva has the potential to remove most of the paper from the clinical trial process and transform the patient site and sponsor experience. We are very excited about MyVeeva. We also reacted quickly in the quarter to add remote sample request management to Veeva Engage and remote source monitoring to Veeva Site Vault, our solution for clinical research sites. We are already seeing significant use of these new digital capabilities.

Overall, we are changing our product roadmap to add more digital capabilities and products and we are helping customers define and operationalize their new digital strategies. It's an exciting time to be in the industry and of Veeva. In uncertain times, people look to join high quality companies and companies look to partner with other high-quality companies. We are seeing both trends play out for Veeva. We have been able to attract great new talent and see an increase in qualified inbound candidates and faster interview cycles. Our customer relationships have always been strong, but now they're getting even stronger. We are deepening our partnerships and seeing greater collaboration around long-term roadmap. Customers appreciate how well Veeva has executed and gone the extra mile in this time of change.

Now I'd like to share a few additional highlights for the quarter by area. It was a very active quarter for commercial Cloud. Veeva CRM continue to gain market share as we added 10 new SMB logos in the quarter and saw further expansions at enterprise customers. OpenData also had a record number of wins in the quarter. Adoption of Approved Email and Engage Meeting was very strong. And Commercial Cloud expanded in important ways in digital and with Data Cloud as I mentioned earlier and also with the Crossix Veeva to better connect sales and marketing. We are bringing Veeva CRM field activity data into the Crossix Veeva marketing analytics solution to give brand marketers insights into how sales and marketing activities are working together.

For example, brands can see the impact of media campaigns on doctors recently called on by the field. We have a bold vision for Commercial Cloud. The acquisition of Crossix and the announcement of Data Cloud is a big start. Commercial Cloud is about connecting customer-facing teams, leveraging data in digital and solving for the specific needs of each major country and region. This is a type of strategic partner that industry needs in commercial. Our approach is resonating and giving us the opportunity to engage in even broader strategic planning with our customers.

Turning to Vault, we just held our very first virtual summit two weeks ago. It was our R&D event for Europe, and the feedback was very positive. We more than tripled attendance from last year, and we're pleased to see the online event was really effective in advancing customer success and for reference selling. Looking at Vault Development Cloud progress, customers continue to adopt more Vault applications. Vault QualitySuite is a good example, and had a very strong quarter, highlighted by another top 20 pharma selecting QualityDocs as their enterprise standard. This marks the 11th top 20 to select QualityDocs.

Clinical is another area where customers are standardizing on more Vault applications over time. This quarter, an existing top 20 pharma customer for CDMS, eTMF and Study Startup will round out the full Vault clinical suite by adopting CTMS. Additionally, another European top 20 decided to adopt eTMF and Study Startup as its enterprise standard after standardizing on RIM in Q4. We also announced that five of the seven top CROs have joined the Vault CDMS partner program. This is a very significant announcement. It shows increasing momentum of our CDMS product. Sponsors and CROs alike see that Vault CDMS has the potential to transform clinical data management.

Now to our work outside life sciences in cosmetics and consumer goods. These industries have experienced major impacts from COVID-19. Cosmetic companies have seen a significant drop in demand, while CPG companies selling essential products have benefited from consumer stockpiling and have seen higher demand for certain product. Our team continues to execute well. This quarter, a new top 10 CPG company selected QualityOne for an initial deployment. Since the onset of the pandemic, this customer has experienced a rapid spike in demand.

To secure their supply chain, they needed to quickly establish and track testing and auditing information for their suppliers. Our team was able to deliver a supplier quality management system within three weeks. So our outside of life sciences business is experiencing some disruption due to COVID-19, I'm very proud of how they have continued to build Veeva's reputation for customer success and as a trusted partner within these new industries. I'm also happy to announce that we've completed our search for our new CFO. He will start at Veeva in early June. We will issue a formal announcement and share further details at that time.

Tim is staying on to ensure a smooth transition and will remain an advisor to the company after the transition is complete. These have been tough times for everyone. But it's been inspiring to see what the industry and the Veeva teams have accomplished in such a short amount of time. I have never been more confident in Veeva's future.

With that, I'd like to turn it over to Tim.

Tim Cabral -- Chief Financial Officer

Thanks, Peter. Before I begin, I want to refer you to the investor presentation available on our IR website for a summary of our Q1 financial results and our updated guidance. Given the details included in that presentation, my comments on our Q1 results will be brief I'm very pleased with our Q1 performance. While the financial results were strong, I was most impressed with our team's response to the COVID-19 pandemic. Our office space staff quickly pivoted to working from home and our teams in the field showed tremendous execution on both the services and sales side during the quarter and everyone went the extra mile to support our customers. I'll first share some color on how those efforts impacted our Q1 results. Then I'll talk in more detail about our outlook for the rest of the year.

We entered the first quarter with significant momentum, subscription revenue benefited from strong bookings in both Commercial Cloud and Vault. Services had a record quarter primarily driven by Vault demand with good contribution from Veeva CRM Engage Meeting projects. This was partially offset by cancellations related to in-person speaker events, which impacted our recently acquired Physicians World business. Operating margin outperformance in Q1 was mainly due to revenue exceeding our expectations.

While we saw cost savings in the quarter primarily from less travel those were mostly offset by fees related to the cancellation of our in-person customer and employee events this year. Calculated billings for the quarter, slightly exceeded our guidance. However, in the quarter, a large customer change from an annual to quarterly billing cycle, which decreased Q1 calculated billings by roughly $10 million. Please note this change does not affect our full year billings and is not related to COVID-19, as the change was made well before shelter in place orders were widespread.

We also had a strong cash flow quarter with cash from operations coming in at $282 million, which included $20 million in excess tax benefit related to equity compensation. Q1 typically represents over 50% of cash from operations and this Q1 was no exception. Our expectation for full year cash flow from operations, excluding the excess tax benefit has been revised down slightly to about $450 million due to the lower expected billings for the year, which I will comment on later. Before I move on to guidance, I would like to address the impact of COVID-19 on our business and our observations on the impact to the industry we serve.

The life sciences industry has not been as negatively impacted as some other industries. Many of our customers have indicated that they expect the recovery to begin in the second half of the year and in most cases are not changing their appetite for continued investment. Our approach to guidance is informed by this outlook. While the life sciences industry remains relatively healthy. our customers have needed to make certain adjustments. For example, our Commercial Cloud customers are pushing out their advertising spend and canceling in-person speaker events, which has negatively impacted our Crossix and Physicians World businesses respectively.

Meanwhile, we are seeing customers shift our focus to enable field reps to maintain virtual contact with doctors which has benefited Commercial Cloud. And as Peter also mentioned certain segments of our target market has been more impacted than others by COVID-19 specifically pre-commercial SMBs, contract research organizations, med device and cosmetics companies. Combined, these represent a small portion of our recurring revenue base, but that exposure to the segments will have a modest impact on our Vault business this year. Based on this new market environment, we've reduced our top line guidance to account for those impacted customer segments and changing industry dynamics.

We have also widened our range to account for the increased uncertainty. For the full year, we expect total revenue to be $1,380 million to $1,395 million. This brings the top-end of guidance down by $10 million from a quarter ago. We now expect Crossix and Physicians World to contribute $90 million to $95 million for the year, which is down $15 million from our previous guidance. Subscription revenue is expected to be roughly $1,135 million for the full year. Commercial Cloud will contribute about $580 million in subscription revenue. This includes $76 million to $78 million from Crossix.

Within Commercial Cloud headwinds in the Crossix business are partially offset by strength in CRM add-ons. Please note, we do not expect any material benefit from adoption of Veeva CRM Engage Meeting in fiscal '21. We are currently provide this product to our customers free of charge to address the COVID-19 crisis, and we need to be flexible on the timing of when we start charging customers for their continued use of this product.

Vault subscription revenue is now expected to be roughly $555 million, with the reduction of $5 million driven by the customer segments I mentioned earlier. Professional services is anticipated to be $245 million to $260 million. This includes an expected $8 million to $9 million reduction in the Physicians World business, which is partially offset by strength in Vault and Commercial Cloud project demand.

For the full year, we anticipate non-GAAP operating income to be between $500 million and $510 million, a non-GAAP operating margin of over 36%. We expect to realize cost savings around travel and have moved to virtual customer events through the end of the year, while still maintaining our aggressive hiring plan. We are now targeting the full-year EPS of $2.50 to $2.55, on a fully diluted share count of approximately $161 million. Calculated billings for the year are expected to be $1,465 million to $1,480 million. This includes reductions to the Crossix and Physicians World businesses, impacted customer segments as mentioned earlier and potential COVID-19 related billing term changes.

Q2 calculated billings is projected to be about $280 million with Q4 billings expected to make up more than 40% of this year's totals. In Q2, we expect total revenue of $339 million to $341 million and professional services of $63 million to $64 million. Please note that sequential total revenue growth in Q2 will be muted relative to previous years. This is due to an expected greater impact of COVID-19 in Q2, Crossix seasonality, and Q1 revenue benefited from an extra day of revenue recognition in the quarter.

We expect non-GAAP operating income to be $126 million to $128 million and we expect non-GAAP EPS of $0.63 to $0.64 based on a fully diluted share count of approximately $161 million. In summary, we are fortunate to serve the life sciences industry. Their work to address the pandemic is inspiring and shines a spotlight on the industry importance. I am proud Veeva has been able to quickly step up to help our customers and the team continues to find ways to move the industry forward. Thank you for joining the call today and I will turn it back to the operator for your questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Your first question comes from Brent Bracelin with Piper Sandler. Your line is open.

Brent Bracelin -- Piper Sandler -- Analyst

Great. One for Peter, a quick follow-up for Tim. Peter, thanks for the industry stats here 50% reduction in doctor visits. The patient visits relative to the telemedicine now 30% increase. My question really is around what are you changing to the product roadmap as you think about this new world where there's less physical visits, more digital kind of doctor telemedicine visits. What are the type of things that you need to add to the platforms that kind of make it more digitally friendly.

Peter Gassner -- Founder and Chief Executive Officer

Yeah, Brent. Thanks for the question. So in terms the telemedicine and doctor visits, yes from February to April 50% reduction in doctor visits, and that's something we see from the Crossix data in near real-time, one or two days lag. So that's a tremendous asset that we have in Crossix. So I just wanted to take a moment there to recognize, yeah that's a tremendous asset and we're going to leverage that in many ways.

Now, the other one, the 30%, what that was is of the doctor visits in April, 30% of them were done by telemedicine. So now it's up from less than 1% in February. So clearly, what it means is patients and doctors are interacting with each other over the Internet. Life science has seized that and they have to adapt to that. So what we're doing is more investment in Veeva Engage and other digital things in the commercial area to enable more virtual interactions between healthcare providers and doctors rather than all of that happen to be in office. And then we announced MyVeeva for clinical trials. And that's a software that will allow clinical research sites to interact more remotely with their patients when they need to, so they can have a mix of in-office and virtual visits.

And then last thing was adding the remote site monitoring to the -- our Site Vault product to allow the clinical research associates from pharma to view the patient records remotely instead of having to go there and view them on the paper. So those are some things we're doing. In general what it means is we will enable pharma to be more virtual and more digital, on the R&D side, in clinical particularly and then in the commercial side. So they can have a mix of in-person and digital. Overall, like these will make the industry -- overall that will make the industry more efficient and that's why I am excited about it, it will make the industry more efficient, and it will bring more information to doctors and it will make it more convenient for patients. So it's a really a good thing overall it's rough, with COVID-19 definitely that's very hard to go through, but the benefit of it is this increased move to digital, which will help everybody in the healthcare ecosystem.

Brent Bracelin -- Piper Sandler -- Analyst

It sounds like these are unique additional add-on features, this isn't going to be a wholesale change to kind of the platforms, is that the right way to say that?

Peter Gassner -- Founder and Chief Executive Officer

Well, I would say it's a major -- I would say evolution of all our products and some of them are going to be new products as well. So yes it's an evolution, we'll bring our customers there for sure, but this will result in making existing products better and over time this will result in new products and it already has in MyVeeva.

Brent Bracelin -- Piper Sandler -- Analyst

Great, super helpful there. And then to Tim, as we think about the calculated billings guide here for Q2 of $208 million [Phonetic] that does imply a little moderation here from 30% billings growth to 20%. What's factored in there, are you factoring in larger deal delays, just trying to understand what you saw like in April, so far in May as it relates to what's baked into the assumptions for a site moderation here in billings in the short run.

Tim Cabral -- Chief Financial Officer

Yeah, Brent. I would say a couple of things and certainly, we haven't seen any material change in demand in the early May time period. But as it relates to the guide, two things are contributing to that. Number one, over the last year, the underlying renewal base for Q2 has reduced relative to other quarters. So Q1 has gone up quite a bit and Q2 has gone down a little bit. So that impacts the overall calculated billings number. You also see some assumption in there to what I talked about in my prepared remarks, Brent, which is around the potential for customers requesting change in payment timing, whether that's annual to quarterly, whether that's -- primarily it's annual to quarterly that we are talking about their brand.

So those two contributed to it. We do have, as I said a little bit of seasonality in the Crossix business. That is slightly impacting that as well.

Brent Bracelin -- Piper Sandler -- Analyst

Helpful color, and we all have that challenge of reporting from home, mine is a little loud with the family here, but appreciate the color and comments. Thank you.

Peter Gassner -- Founder and Chief Executive Officer

Thanks, Brent.

Tim Cabral -- Chief Financial Officer

Thanks, Brent.

Operator

Your next question comes from Kirk Materne with Evercore ISI. Your line is open.

Kirk Materne -- Evercore ISI -- Analyst

Yeah, thanks very much. Peter, just curious, obviously your client base is taking on a lot right now, and can you just talk to me about how they're thinking managing all of the new projects and studies that are going on, in addition to going through a digital transformation meaning, one would be concerned that they're dealing with so much from a science perspective, they are dealing with that plus IT and evolving from a digital perspective might be too much for them to handle, frankly. Can you just talk to me about how they may be dealing with that because I think that's sort of one of the things that's really impressive about your results is that, while they have budget, the question would be, can we have the ability to sort of take on these digital transformation projects at the same time that they are doing so many other things. Thanks.

Peter Gassner -- Founder and Chief Executive Officer

Yeah, yeah, I think our customers are doing a great job. First of all, they are working really hard, so that's bottom line. I think they are working extra hard, they're working -- they are rising to the challenge. So a lot of nights and weekends, so they're really going after it. But they are also thinking long cycles. That's the nature of the business. So they know that if they want to have a drug approved six years from now, they have to get going now. So they think in long term cycles. So they continue to do things. Now there are emergency projects that happened with COVID, they have a drug candidate, they have to pivot, they have to do this and that, they have to produce a new diagnostic, etc. So there are emergency projects. But that's not for, especially for a larger pharmaceutical company that's not the -- that's not the preponderance of what they're working on.

Their population maybe they are working on, 10% of the people are working on emergency projects. The rest of the 90% are working on the long-term things that they need to do to be successful as a provider of medicine to society and that's a long-term game. Now, those emergency projects, I mean those will go in our favor, a new clinical trial that uses our type of system or there is a company that's doing -- it's producing ventilators for the first time and it's a coalition of quite a few companies, they needed the distributed quality system and they needed it in three weeks. Okay, we're the only one that can do that. Right, so we benefited from that emergency project.

Sometimes there'll be an emergency projects, they don't relate to what we're doing, business process change, etc and then maybe one of our long-term investment type projects will be delayed because of that. But that's, that's on the margin and probably for us, the puts and takes are about equal.

Kirk Materne -- Evercore ISI -- Analyst

Okay, that's helpful color and maybe just one quick, real quick one for Tim. Tim is your customers from a commercial perspective, start thinking about selling more virtually. How about Veeva in that respect, do you think that you all can do more in terms of virtual selling not only in the near-term, but maybe in the long-term. And do you have any thoughts I guess on how that might impact sort of your efficiency from a cost to customer acquisition perspective, or maybe not even a CAC perspective, but just from a sales and marketing leverage perspective, just any, I know it's early but I was just kind of curious if you've given that any thought. Thanks.

Peter Gassner -- Founder and Chief Executive Officer

I'll start with that one and then we can have Tim as well. Yes, certainly Veeva is a company that's built on customer intimacy. Customer relationships are deep for us and we've had our in-person summits and our account executives live in the region, they are visiting customers often. Of course, we can't do that now. But we've been a very virtual company in terms of using Zoom and other products. So we'll continue to do that. We had our customer first customer summit virtually, it was quite effective at spreading knowledge. So I think largely we'll be OK. We'll be OK with that. Everybody likes to see people in-person. I'm missing our employees and our customers.

But also, we're also confident in the life sciences industry, they're going to have a treatment, they're going to have a vaccine for this. I believe it's a matter of time. And then and then we'll get back to a more normal mix of digital and in-person, which is where we were before COVID. Tim, in particular, as it relates to financing, I'll pass it over to you.

Tim Cabral -- Chief Financial Officer

Sure, yes Kirk, I would echo what Peter said, I think given the depth of relationships that we have, not only with our customers, but this industry in general really enables us to address a remote work environment. I think, relatively more effectively than I'd say horizontal companies or companies that don't have the depth and the intimacy of relationships that we have with the industry. So I would say Kirk over the last 10-ish weeks, we really haven't seen any impact to needing to work remotely in terms of our sales processes.

Kirk Materne -- Evercore ISI -- Analyst

Okay, thanks very much.

Operator

Your next question comes from Sandy Draper with SunTrust. Your line is open.

Sandy Draper -- SunTrust -- Analyst

Thanks very much. I guess the first question is on the Data Cloud. Peter, you commented obviously, it's early but this could be a very significant long-term opportunity. In terms of the release, it sort of came at a time when there's probably a lot of distraction, but I'd love to hear, I think you said you have one top 20 pharma company and one smaller biotech or early stage company signed up but just what is the response been like, what are -- why do people want to take a look at it because the main competitor out there, a lot of that data has been intensely operationalized. And so it's a very difficult decision, I would think to pull it out or switch.

So to the extent that you can give some comments on what's getting customers to take a look at it. And admittedly, there may have been a lot of distraction, but what is the general commentary or feedback then from customers? Thanks.

Peter Gassner -- Founder and Chief Executive Officer

Thanks Sandy. We launched it in March. Now, that was something planned, right? That was something planned even before the acquisition closed with Crossix and we mobilized the new development team around Data Cloud, we did a lot of things. And we announced Data Cloud six months to the day after the acquisition was announced. Now that happened to be in the middle of March in the pandemic, when there were a lot of eyes on that on many other things. But we decided, hey, this is a long-term thing.

We don't know when the pandemic is stopping or starting and we need to go forward. This is a long-term thing. So we launched it was certainly noticed, but when you launch something big and new like this, for most people, hey the proofs in the pudding, you're going to do something. Let's see if you can do it. Now, the premise that we're on is that the industry needs choice A, which I believe is true. And they have not had choice, and B, that it needs innovation. So I view the existing data solutions, they really are not modern.

They're the equivalent of client server software, when Veeva started, and yes, it's very difficult to uproot those entrenched players. In those days, it was difficult to uproot those deeply entrenched client server type of things, but you come with a better solution. You get early adopters and it starts to snowball. I feel that's what will happen here. It's the innovation that people are looking for, innovation in terms of timeliness and accuracy of patient data and completeness.

The type of thing that I talked about with the telemedicine, how we knew in two days and we could track it daily. That's what life sciences would like to track about the interactions of their medicines with patients and doctors all in a privacy and safe way, they can't do that today. In terms of -- I'll give a little color on the two early adopters. One of them is a group of brand in a large top 20 pharmaceutical company, they happen to be focusing on a relatively rare blood disorder. And that product is already in the market. And they're mapping patient journeys, not replacing anything.

They're mapping patient journeys, which they couldn't do before with their data sources. And they're doing a double check on whether they're targeting the right physicians. Now, the other company is a platform company, it's a precision medicine platform company going -- what that means is they're engineering different types of DNA and RNA, they are a platform company with many candidates, don't have any candidates on the market yet, but they have some candidates close. So what they're doing for is patient journeys and physician targeting and overall patient population, they're trying to find out how many patients really can they target and how many doctors are really seeing those patients but they don't have any products on the market yet. So those are examples of things that are going on with Data Cloud we are just focusing and help those customers be really, really successful and innovate and then I believe our business will grow from there.

Sandy Draper -- SunTrust -- Analyst

Great, excuse me, that's really helpful commentary. I guess my follow-up on the CRO announcement or the discussion about the five of seven CROs who are on signing up for a partnership program. One I want to make sure I understand are these customers, it doesn't sound like they're becoming enterprise customers, but maybe they're just willing to be more committed or looking more aggressively at the Veeva CDMS system. And then when you think, when I think about, since I cover the CROs, they are obviously under some near-term pressure, but they're all expecting a rebound, there's going to be, I think, a real sense of urgency for speed, innovation, getting trials restarted.

Do you think there are things about your platform that will in the new environment as people are looking for more, more speed, more flexibility? Do you think you guys have the differentiation is going to be even greater as we start to see the trials come back? Thanks.

Peter Gassner -- Founder and Chief Executive Officer

Yeah, so as it relates to CROs and our CDMS or EDC product, there's also a large, a couple large incumbents there. So overall the CRO business, yeah it's going to have a little dip now, clinical trials slow down and it's going to have a boom when they start up, right. So that's the overall dynamics. And then with CROs especially the large ones and the small ones, they're very customer focused companies. They are service oriented companies that really want to give the best service for their customers and what's happened and what's driven this five out of the seven, no, they are not enterprise deals, they're large CROs that are now prepared to offer their clinical trial services on Veeva technologies, prepared to build studies in Veeva tools, prepared to operate the Veeva technology for the companies that don't want to operate themselves, which would largely be the smaller biotechs.

And what's happening there is these companies, sponsors, small sponsors are coming to them and say, hey, we were interested in your CRO services, we really want you to use Veeva technology. That gets the CROs to pay attention. Now, why are the sponsors asking for that? Simply, we can build studies faster than the competition now, sometimes four weeks instead of an average of 12 weeks. And we can build more flexible studies. For example, oncology studies have amendments, the existing state-of-the-art in the industry is that data has to be unloaded and loaded for a new amendment. That doesn't happen in our system. So it's better technology.

Now, change takes time. This is a risk avoidance area of life sciences. So it's not going to come all at once nor do we, nor do we want all the customers at once. Our largest clinical trial in EDC, a huge trial with the company, their biggest trial ever was set to start in March was delayed actually, but good news is it's actually going to have its fate planned to have its first patient in, in the first week of June here, so just a few days. So that's really what we're focused on is the customer success in the CDMS market.

Sandy Draper -- SunTrust -- Analyst

Thanks so much for the comments, Peter.

Peter Gassner -- Founder and Chief Executive Officer

Thanks.

Operator

Your next question comes from Bryan Peterson with Raymond James. Your line is open.

Bryan Peterson -- Raymond James -- Analyst

Hi, thanks for taking the questions. So first, I wanted to hit on how some of your customers may be utilizing some of the Commercial Cloud technology. There have been some stats out there on the Engage Meeting usage. And I think it's seen rapid adoption. Is there anything that you can share on how that's trended? And I was also curious, as they're thinking about more of a digital motion, are there any potential headwinds from headcount cuts that could impact your business? Any thoughts there?

Paul Shawah -- Senior Vice President of Commercial Cloud

Hey, Bryan, thanks. This is Paul. I'll take that one. And yes you're right. I mean, but first, I want to just kind of take a step back on the Engage side and just Veeva is super proud and I'm super pleased with the Veeva team for coming together and being able to help the industry, if you think about what's happening out there is the sales channel has fundamentally shut down is largely shut down pretty much across the globe. It's starting to open up a little bit in different markets and countries and segments. And we've been able to help the industry turn that channel back on and we've been able to help them do that through things like Approved Email and Engage.

So it feels really good to be able to help to move, help move the industry up, lead the industry really getting into digital a whole lot faster which is just testament to the product team, the product quality, our services, so we are really pleased about that movement that's happened and you're right really significant kind of adoption.

One way that we think about the adoption is just utilization. And that's really the most important, it's the most important metric because there is a lot of change. So it doesn't matter so much how many people have access to it, it really matters how many are using it, and we are seeing that utilization, if you look at February compared with April, their utilization has increased by 30X. So we're really pleased with that shift and the industry is really starting to understand and appreciate and each week, we're continuing to see more and more adoption and more and more utilization of the product. And that's what we're focused on right now is just continuing that adoption and helping our customers be able to get the most out of using Engage.

Bryan Peterson -- Raymond James -- Analyst

That's good to hear. And maybe one for Peter. We've kind of gone through an earnings season here, and we've heard different messages from different software companies. I'm just curious. You came out on the call that you're very confident that that $3 billion target. I'm curious, how do you think about hiring in the pace of investments over that long-term framework? Has there been any change near-term or just curious how you think about the pace of investments? Thanks, guys.

Peter Gassner -- Founder and Chief Executive Officer

Yes, let's see at high level, yes I'm quite more confident than ever in the $3 billion and that's because part of it is just passage of time, we're getting closer to 2025 and no bad things would happen. Part of it is that but a part of it is we spend a lot of time building a great team here, a great, a great culture and innovation engine. And now you see this tremendous stress point of three months. And that's when good companies and good management teams that are prepared step-up. So that's what I felt and seen at Veeva, this innovation that will lead to better customer relationships, better innovation. So that's why I'm feeling quite confident in the future. And gosh, I didn't write it down Bryan. So feel confident in 2025 in the future, but you had a specific question there and I didn't write it down excuse me.

Bryan Peterson -- Raymond James -- Analyst

No, I guess I was sort of referencing how you're thinking about hiring right. So with hiring freezes, and obviously people are thinking differently short-term, long-term. So curious to get your thoughts on that?

Peter Gassner -- Founder and Chief Executive Officer

Yeah, hiring. So my main message is if any of you have people out there that would like to work at Veeva specially extra to the software engineering etc. We are hiring. Yes, we're definitely hiring because of the innovation that's going on. So we're hiring, we're finding in a good hiring environment too, we're getting good quality candidates. And the interview process is a little faster. So we think it's a great time to load up on great talent. In times of stress like this, there's a flight to quality. And companies want to do business with quality companies that they can count on. And people want to work for quality companies that they can count on. So I think it's going to be a real boost for our hiring.

Bryan Peterson -- Raymond James -- Analyst

Great, thanks, Peter.

Operator

Your next question comes from Rishi Jaluria with D.A. Davidson. Your line is open.

Rishi Jaluria -- D.A. Davidson -- Analyst

Hey guys, thank you for taking my questions. Glad everyone's staying safe and Tim certainly going to miss working with you, looking forward to working with your successor. Hopefully they can live up to the high standards you've set. I wanted to start by asking Peter, in the prepared remarks, you talked about some of the headwinds that some customers are facing from non-essential visits and elective procedures, and then even some delays in certain trials, wanted to get a sense for what are you seeing in Asia? And the reason I asked that is because they're ahead of us on the curve in terms of reopenings right. I mean, elective procedures and elective visits are allowed in Japan and a little bit more close to business as usual than we're seeing here.

So if we think of that as kind of an indication of the future, I wanted to get a sense for what does that, what are you seeing from your customers out there? And maybe what sort of conclusions can we draw for the rest of your business here in the future, and I've got a follow-up.

Peter Gassner -- Founder and Chief Executive Officer

I think as it relates to little different by region, China being different than Japan and Korea for example, but in general, it's a vigilant, it's a return to gradually to a guarded way of going about your normal business, certainly much more, not too big, large group events, clean your hands more, sanitation, etc because everybody knows there's no vaccine yet. There's no highly effective treatment. So you have to be careful. So they're getting about their business, but they're being more careful, I would expect that in the US and other countries that's where we're going to slowly return to that, a very careful return to visiting people, staying away from large groups. And people are just being a little more careful, now then we would need the vaccines or the effective treatments before we can fully get back to the larger group gatherings.

Rishi Jaluria -- D.A. Davidson -- Analyst

Got it. That's helpful. And then you're seeing some pretty impressive adoption of some of the virtual engagement products, right, Engage you're talking about 30 times on the remote meeting side Approved Email up 2 times in February to April. Philosophically, how are you thinking about how long lasting these changes are going to be in the life sciences industry? Is this something that's seeing a steep adoption because it's a necessity? And then hopefully the near medium term post-vaccine, things go kind of back to normal? Or is this a long lasting irreversible change? And more of these customers are going to be adapting remote engagement solutions on a greater basis no matter what happens? Thanks.

Peter Gassner -- Founder and Chief Executive Officer

Yes, that's a good one you know. I think what we're seeing is really an acceleration of what the industry was going to go through anyways, just over a longer period of time. So the industry was on track, was on pace to adopt digital and we saw that adoption and it was steadily increasing. And with COVID, with lockdown, the industry was now forced to accelerate that. And I think we saw, probably two or three years of digital transformation happening within just a couple of months. But what's been remarkable is I have never seen in my career, this shift over literally three months, the industry moving that fast to turn on digital channels.

So it's quite remarkable, one, from a technology standpoint, and I will call out shamelessly that Veeva product team and the people who made that technology to allow our customers to be able to turn that on, but also to our customers for putting the foundation in place to be ready and to be prepared. So the shift happened a whole lot faster. I do think obviously, we can't predict what happens with this pandemic, but I think it's going to make the industry more efficient. We're already seeing some of those benefits, the product is working, we are getting really deep engagement with customers.

And just like with telehealth and telemedicine, we're seeing more patients do telemedicine and they actually like it. So they're going to do more of it. I think that same analogy is true here, where doctors are more comfortable engaging digitally, where pharma is more comfortable engaging digitally, and they'll do more of it over time, they're starting to see that, really appreciate the benefits of moving to digital faster.

Rishi Jaluria -- D.A. Davidson -- Analyst

All right, great, that's helpful. Thank you so much guys.

Operator

Your next question comes from Ken Wong with Guggenheim Securities, your line is open.

Ken Wong -- Guggenheim Securities -- Analyst

Great, thanks for taking my question. Peter, you mentioned MyVeeva earlier and just wondering how this product could potentially help your CDMS push and then just kind of based on what it sounds like it's targeted very much toward the clinical trials but do you see a potential for this product to shift to more into more of the traditional doctor-patient, kind of telehealth manner. I know that's not really a market you guys typically cater in. But it does seem like something that could be transferable. Any thoughts there?

Peter Gassner -- Founder and Chief Executive Officer

Let's see. First, MyVeeva is actually about enabling the clinical research sites and the patients, thousands of them around the world and really just transforming the clinical research process for the whole industry. And when I say industry there, I mean, the patient's clinical research sites and sponsors, everybody involved. And there's a tremendous amount of excitement in that in Veeva. We're going to help bring medicines, to critical medicines to patients faster than they otherwise would.

And that's, that's a really great feeling. And that will help our business in the life sciences area, in the clinical area. Yes, we're giving the products for free to clinical research sites. But that'll over time I believe have a great business to our clinical business overall within Life Sciences, CDMS, CTMS, our whole clinical operations suite. So that is one and then sorry, I didn't write that. Your second question was, do I see that going into more telehealth and that type of thing?

Ken Wong -- Guggenheim Securities -- Analyst

Correct.

Peter Gassner -- Founder and Chief Executive Officer

Yeah, MyVeeva is to enable a remote visit from a doctor to a patient in a clinical trial. But I don't see Veeva going into the telemedicine business broadly, which is that's something different. I think you'll see the people that provide the EMRs and other things for the normal caregiving. Yeah, that's not for us at this time. We wouldn't be in that area. Some of the technology ideas are the same. But it's a really different market and you really have to focus and that's not an area we would focus on.

Ken Wong -- Guggenheim Securities -- Analyst

Got it. Thanks for that color. And then a quick one for you, Tim, in terms of the billings reduction, any sense for in terms of the inorganic part, should we just assume similar to what you're seeing on the revenue side in terms of what's coming out. And then any quantification of what you guys are baking in for the change in billings term and how that could be, that could weigh down or how much that weigh down the billings?

Tim Cabral -- Chief Financial Officer

Yes, Ken I do think you're right. The revenue guidance is a good proxy for billings for those two businesses. So I think that's how I would think about it. We haven't talked about or want to quantify yet the billings terms, there's so much uncertainty, they are trying to -- trying to really gauge exactly where that's going to land. What I would say is, as I said, there's a bit of a slight shift and a little bit more assumption around payment timing changes that will impact billing. All of the one we saw in Q1, where a customer now this wasn't COVID related of course, but a customer change from annual to quarterly billing. So we have some in there but not wanting to quantify it at this point.

Ken Wong -- Guggenheim Securities -- Analyst

Great, thanks a lot.

Operator

Your next question comes from Stan Zlotsky with Morgan Stanley. Your line is open.

Stan Zlotsky -- Morgan Stanley -- Analyst

Perfect. Thank you so much guys. Maybe if we can at a very high level help to characterize essentially, what you saw in your business as far as engagement with customers, prospects on the sales side within March, April, and what you're seeing quarter-to-date in May. And I would presume that those interactions right, consistently like the sales interactions varied quite drastically between your CPG customers versus your pharmaceutical customers? It's actually what everybody's looking for is kind of like the second derivative, right is the second derivative improving within like the CPG space, right is the Vault side of the business, has it seen did it see an uptick in sales activity in the March, April timeframe, that's continuing into May, and then I have a quick follow-up.

Peter Gassner -- Founder and Chief Executive Officer

I'll pick that one, to sales and engagement inside of Life Sciences. I think it's been high. Our account executives has been gosh busier than ever helping customers, helping communicate giving them the information they need. I would say, myself and the executive team boy, we've been on Zoom more customers than we had before because it's just a time of an intense pressure cooker right of information. So these sales engagements, I do think they'll bear fruit. Over the long-term, we have long sales cycles, we develop relationships.

In terms of the CPG that also happened in CPG. But I think CPG had more, relatively speaking to the percentage of what they had going on. They had more emergency projects, more supply chain things that they had to go on. So yes, conversations probably strengthened a bit, maybe not so much as they did in life sciences.

Stan Zlotsky -- Morgan Stanley -- Analyst

Got it. And then on, you're moving over to Vault and the drug trials, although everybody's listening and hearing all the drug trials, that kind of came to a sudden pause due to shut downs. But as far as the kind of like the economic impact to Veeva, if I recall like there's not necessarily usage components within Vault on the drug trial side. And if anything is the right to characterize Vault may have benefited a little bit from all the additional, all additional drug trials that would need to start in order to support COVID development?

Tim Cabral -- Chief Financial Officer

Yes, Stan this is Tim. So I would say you're right on the data operation side or clinical data operations side where we have a large penetration as we've talked about with eTMF and starting to get some good adoption on some of the other products we've introduced. It's not necessarily clinical trial driven, in terms of the demand there, it is more innovation driven, it is more driving to more effectiveness and efficiency to help start trials and help manage them over time.

On the CDMS side, as you know in a clinical data management side, we're still in the very early innings of that journey, and focused on our early adopters. So this doesn't impact our revenue in a material way, except for I will say, well, not anything in the material way, Stan. As I talked about, there are certain segments where we're seeing a little bit of impact and that informed us on our slight reduction in the Vault guidance for the year.

Operator

Your next question comes from Bhavan Suri with William Blair. Your line is open.

Bhavan Suri -- William Blair -- Analyst

Hey, guys. Thanks for squeezing me in here. Appreciate that, glad you're all safe and well, I wanted to touch a little bit on the CRO announcement. I think there was a question earlier, but you sort of answered that there's smaller biotech companies that may want to use Veeva until they tell the CRO, they want to work with Veeva, I guess when I look to larger pharma companies that have bought some of the other pieces, eTMF, is there a network effect there, whether the integration across those pieces with CDMS or EDC, whatever you want to call it right now. And that sort of plays out where they say, hey, if you're on a clinical trial, we want you to use this technology because it integrates better, it works better, we use it better. We have instances of that like pick a large pharma that's already done clinical case. We're doing trials with CDMS, is there a network effect did you see that at all, is that something that could play out? Or am I thinking about that incorrectly?

Peter Gassner -- Founder and Chief Executive Officer

Yes, Bhavan this is Peter. Yes, you're thinking about it correctly, we refer to that as the clinical suite. Customers are seeing that if they can have the sort of straight through processing and pre-built integrations from our clinical data management suite, to our clinical operations suite and have a full Veeva end-to-end experience in a clinical, there's material benefits and productivity for their people, for their operational people and their IT team. So and that's more pronounced in the larger companies, because they have more scale. And so then, then more integration and optimization gives them more benefits. So that's exactly the network effect.

It's a network effect between clinical operations and between clinical data management and then if you get at a higher level, there's really a network effect between having on your whole development cloud on Veeva, the quality and manufacturing, the regulatory, the clinical operations, clinical data management. And now since we've introduced safety and have some customers live on safety, they see the potential of it, you get an integrated suite of things. And that's compelling. It's a compelling message and it's driving some of the demand.

Bhavan Suri -- William Blair -- Analyst

Got it, got it. And so maybe the standardization at some point, the CROs and then I just guess I want to touch competitively. Obviously, you have a couple competitors in the CDMS, EDC space. One of them specifically actually does have a product for data capture from patients, again, slightly different than yours, but love to understand if you've seen any competitive reaction from them, that's been acquired. But now it's been a while since we've acquired, you've had the top and Phase III clinical trial wins, you've had multiple wins in the EDC space or CDMS space, sorry. So love to understand what you're seeing in the competitive environment out there. Thank you.

Peter Gassner -- Founder and Chief Executive Officer

In terms of competitive environment haven't seen any particular change. I think all companies at this time are focused on taking care of their customers and their internal operations. So it's still the same. And I think our advantage on it is we have, it's back to the basics. We have 100% Cloud based, real time real cloud clinical data management system.

There's two other large competitors in history that don't have that, every clinical data management customer Veeva is on exactly the same release. That's not the case with the other two. It's real cloud technology. And it's newer and more harder, more modern and then integrated with the whole suite. So those are our lasting advantages. And from now it's just customer success and focusing on that, so we really haven't seen any changes in the competitive environment.

We have seen, I would say at our R&D Summit, two weeks ago, our first virtual summit, which was gosh triple the attendance from last year was a really great summit. There's a couple impactful presentations by customers, good sized customers in certainly in the top 50 companies, and they just were about the basics, we were able to build our studies in four weeks much faster than we could before. And we're very happy with the nimbleness and the way we can run an agile trial. So those customer success stories in those public forums, they can change their competitive dynamics in our favor over time.

Operator

And our last question comes from Sterling Auty with JPMorgan. Your line is open.

Sterling Auty -- JPMorgan -- Analyst

Yes, thanks. Hi guys, and Tim this is your final earnings call, this is certainly one way to go out with the pandemic. So congratulations on a great tenure. Just wondering if we could unpack the Vault performance in the quarter from this perspective, given some of the headwinds, you're seeing in clinical, wondering what the key drivers in demand, in terms of how much of this is coming from new customer versus expansion in existing customer as one look, and then separate from that, just what are the key drivers in terms of within maybe the R&D areas specifically? What are the use cases that you're seeing most prevalently you gave some examples, but I wonder if you just from a high level characterize it? Thank you.

Paul Shawah -- Senior Vice President of Commercial Cloud

Hey Sterling, this is Paul. I'll comment on the key drivers from an industry perspective, and then I'll turn it over to Tim to talk a little bit about the performance. So, I think Tim alluded to this a little bit earlier with the idea that we're not so dependent on trial by trial. So as individual trials are being paused or delayed and generally we're not seeing cancellations, it's really just a shifting. That generally doesn't have an impact. So the projects that we're working on, these are projects and deals that have been budgeted and that have been kind of in the pipeline for some period of time. So that is kind of continued momentum. There is also a sense that in times like these, you need to be more efficient.

So there is a little bit of a tailwind, just in terms of companies thinking about accelerating some of these projects where they're able to improve efficiency, improve productivity. So I think that's a bit of the tailwind that we're seeing as well.

I'll turn it over to Tim to talk a little about the performance side.

Tim Cabral -- Chief Financial Officer

Sure. Thanks, Paul. And Sterling just so that you know the plan is for this to be my second to last earnings call. I intend to join you guys in August as well. So in terms of the performance in the last 10 weeks or so, we really haven't seen or looking at Q1, early Q2, we really haven't seen a material shift in the contribution of revenue from new versus upsell or cross sell opportunities. To Paul's point, I think the momentum of our pipeline coming into the quarter and throughout the quarter has been quite good on both fronts.

So there's no material change or change in shape from that perspective. While we're seeing modest impact on the clinical side for the comments we talked about, it's still very strong, and quality and regulatory continue to be strong as well. So the three engines of growth are still the same as we've seen pre-pandemic, if that makes sense, Sterling.

Sterling Auty -- JPMorgan -- Analyst

It does and then one housekeeping follow-up, just to make sure that we're on the same page. How much revenue did that extra day in the quarter contribute, so we can think about the sequential the right way?

Tim Cabral -- Chief Financial Officer

Yes, about $3 million. So the Leap Year day, February 29 roughly our subscription run rate is about $3 million a day. So...

Sterling Auty -- JPMorgan -- Analyst

Perfect, thank you.

Operator

So I will turn the call back to the presenters for any closing remarks.

Peter Gassner -- Founder and Chief Executive Officer

So thank you everyone for joining the call today. I'd like to thank our customers one more time for all the work they're doing to combat the pandemic. And I would like to thank the entire Veeva team for all your work supporting those customers. I'm really proud to work with you every day. Thanks very much.

Operator

[Operator Closing Remarks]

Duration: 69 minutes

Call participants:

Rick Lund -- Head of Investor Relations

Peter Gassner -- Founder and Chief Executive Officer

Tim Cabral -- Chief Financial Officer

Paul Shawah -- Senior Vice President of Commercial Cloud

Brent Bracelin -- Piper Sandler -- Analyst

Kirk Materne -- Evercore ISI -- Analyst

Sandy Draper -- SunTrust -- Analyst

Bryan Peterson -- Raymond James -- Analyst

Rishi Jaluria -- D.A. Davidson -- Analyst

Ken Wong -- Guggenheim Securities -- Analyst

Stan Zlotsky -- Morgan Stanley -- Analyst

Bhavan Suri -- William Blair -- Analyst

Sterling Auty -- JPMorgan -- Analyst

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