Veeva Systems (VEEV) Q1 2022 Earnings Call Transcript

Veeva Systems (VEEV 0.91%)
Q1 2022 Earnings Call
May 27, 2021, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Greetings. Thank you for standing by, and welcome to the Veeva Systems fiscal 2022 first-quarter results conference call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session.

[Operator instructions] I would now like to hand the conference over to your speaker today, Ato Garrett, senior director, investor relations. Please go ahead.

Ato Garrett -- Senior Director, Investor Relations

Good afternoon, and welcome to Veeva's fiscal 2022 first-quarter earnings conference call for the quarter ended April 30, 2021. 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 them before the call.

Today's call will be primarily used for Q&A. With me today for Q&A are Peter Gassner, our chief executive officer; Brent Bowman, our chief financial officer; and Paul Shawah, EVP, strategy. During the course of this call, we may make forward-looking statements regarding trends, our strategies, and the anticipated performance of the business. 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 on 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, May 27, 2021, 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 forward-looking statements. We may discuss our guidance on today's call, but we will not provide any further guidance or updates on our performance during the quarter unless we do so in a public forum. On the call, we may also discuss certain non-GAAP metrics that we believe aid in the understanding of our financial results. A reconciliation to comparable GAAP metrics can be found in today's earnings release and in the supplemental investor presentation, both of which are available on our website.

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

Peter Gassner -- Chief Executive Officer

Thank you, Ato, and welcome to the call, everyone. We had an outstanding Q1 with results well ahead of guidance due to significant outperformance in Development Cloud and continued strength in Commercial Cloud. Total revenue in the quarter was $434 million, up 29% year over year, with subscription revenue up 26% to $341 million. Non-GAAP operating income was $181 million or 42% of total revenue.

You will find further details about the quarter in our prepared remarks posted on our website at 1:00 Pacific today. At this point, I would like to open up the call to questions for Brent, Paul, or myself.

Questions & Answers:

Operator

[Operator instructions] And your first question comes from the line of Brian Peterson with Raymond James. Please go ahead. Your line is open.

Brian Peterson -- Raymond James -- Analyst

Thanks. Congrats on the really strong results. So obviously, we saw an acceleration in the Vault services revenue. I know this has come up in the past.

But Brent, how do I think about the Vault services as an indicator of what's going on in the broader business? Is that a future indicator or coincident? Just trying to help me frame that a little bit.

Brent Bowman -- Chief Financial Officer

Yes. Thanks, Brian. Yes. So services, in general, is not a good leading indicator, I would say.

One thing to keep in mind is just -- there's just a lot of variability in services revenue. And why is that? I mean, different products have different service requirements and customers have different needs based on their in-house capabilities. But what I will say, we're very pleased with the overall service business, the strength that we saw on the development side and broadly.

Brian Peterson -- Raymond James -- Analyst

Got it. OK. And just maybe on the Quality strength, I know we heard that as an area of last quarter. Peter or Paul, I don't know who wants to take that but just what you're seeing in terms of the Quality product and how that's really ramping up with customers.

Paul Shawah -- Executive Vice President, Strategy

Yeah. Thanks, Brian. This is Paul. Yeah, we did have another strong quarter overall in Quality, really broadly across Development Cloud and in Quality, in particular.

And I guess I'd started at the highest level, the unified vision that we have in Development Cloud is working and Quality is just a perfect example where we're bringing together documentation with quality management with training, and they're all progressing really, really well. Customers are buying into that overall vision, and then they're rolling out and kind of driving that vision over time. So we had really strong performance in QualityDocs and really in all of the areas. And companies are looking to modernize in the Quality space, and they're looking at Veeva to be that partner to help them there.

So we're really pleased with our progress.

Brian Peterson -- Raymond James -- Analyst

Thanks, Paul.

Operator

And your next question comes from the line of Donald Hooker with KeyBanc Capital Markets. Please go ahead. Your line is open.

Donald Hooker -- KeyBanc Capital Markets -- Analyst

Great. Good afternoon. Thank you. Just like to hear a little bit more if you would all share with us some of your thoughts around the pharma sales force globally.

It seems like from the prepared comments, you're walking back some of your concerns or maybe pushing them out. Can you just maybe expand on your thinking there?

Paul Shawah -- Executive Vice President, Strategy

Yeah. Sure. I can give you some color on that. This is something we watch and keep an eye on very closely.

There's always some variability up and down every quarter. But we haven't seen any of the reductions so far that we've talked about, I guess, two quarters ago now. But having said that, I guess maybe the context and the color behind that, these are significant changes. The industry hasn't yet hit a new steady-state and stabilized yet in terms of what the field structure is going to look like.

So these are big changes for pharma companies, which is why I think it will take a little bit longer. And I think we'll start to see that impact closer to the second half of this year and then likely through the end of next year. So I wouldn't classify it as a walking back. I classify it more as just happening a little bit more over time.

Donald Hooker -- KeyBanc Capital Markets -- Analyst

OK. And then I guess in recent quarters, there's been a lot of buzz around decentralized clinical trials across the CRO space and pharma in general. Does that require for you guys any incremental investment? Is there something else you would need? There's a whole bunch of these decentralized clinical trial companies coming to market. I'm just wondering for you all if there's -- is that a new -- maybe new product area? Or is that sort of what you already have? Is there something else you need there?

Peter Gassner -- Chief Executive Officer

Yes. Decentralized trials, that's part of what we call digital trials, so that's moving clinical trials to paperless and patient-centric. Decentralized trials itself refers to, most often, to being able to do parts of the trial process with the patient in the patient's home, still supervised by a caregiver but that may be through in-home nurse or that may be through a Zoom call, something like that. So we do have significant technology investment in that area and that will be ongoing.

That's things like MyVeeva for patients, for example, that will fit into decentralized clinical trials. What we're doing for eConsent, our Site Connect product, and then we'll connect that into our Clinical Suite for the sponsor. So it's a big opportunity and area of investment but for us, it could be a bit broader. It's what we call digital trials.

Donald Hooker -- KeyBanc Capital Markets -- Analyst

OK. And maybe I'll just throw one last one in and just kind of one from left field for me. I guess have you all ever thought about or is there any kind of thought about expanding sort of into more preclinical functionality? Is there any opportunity there? I guess maybe the argument being with all these more advanced biotherapeutics and cell and gene therapies, is there a greater need to link together workflows perhaps across clinical and preclinical and discovery and all that? Is there sort of an expansion opportunity there for you at some point over time?

Peter Gassner -- Chief Executive Officer

Well, I'll play -- this is Peter and I'll play left fielder today and I got that one out of left field. So we broadly -- we characterize that as a preclinical. Some people would also characterize that as the research area of pharmaceutical. That's not an area where we're focused at this time when you keep an eye on it, and you never say never in the future, but there's no ongoing investment or product from Veeva at this time.

I would say it's lightly connected. That would be an area that would be lightly connected to the rest of our products, and we have no plans at this time.

Operator

And your next question comes from the line of Ken Wong with Guggenheim Partners. Please go ahead. Your line is open. Ken, your line is open.

Ken Wong -- Guggenheim Partners -- Analyst

Sorry about that mute button. This is an extension of the last question to some degree. Peter, when we talk to our contacts in the life science industry, a theme that keeps popping up is kind of this past year led to a potential reimagining of clinical workflows, from trials to submission to post-production, which could potentially lead to a replatforming for many customers. I guess how much truth is there in that particular statement, do you think? And then just given your end-to-end stack, is it fair to assume that Veeva would be a potential beneficiary of such a replatforming?

Peter Gassner -- Chief Executive Officer

Ken, that's fair to think that the customers are definitely reimagining things. COVID, and across all industries, has caused people to think maybe some assumptions that they had in the past were not valid. And so now they're trying to question everything more open to innovation, I think, tremendous downside of COVID in terms of loss life and freeze in mobility, that type of thing. But it is spurring innovation.

Adversity creates innovation. So that is what's going on, so there's questioning. When we look at replatforming, I think really, what I see from the customers is yes, reimagining efficiency, digital data investment. And yes, I think we're getting a slight tailwind from that.

Again though, we have a long cycle with our customers. So it's not something that you're going to immediately see but that will be a continued and moderate tailwind for us for the next three, four years, really. And it's a positive trend when customers look to innovation because our product footprint is well-positioned. We did a lot of things as we moved into digital last year, especially with MyVeeva and the digital trials and we have Engage that position us well.

So I think we're in a good position and a favorable position, Ken.

Ken Wong -- Guggenheim Partners -- Analyst

Got it. Very helpful, Peter. Thanks for the insight. And then a quick one for you, Paul.

Just wondering on Data Cloud, you guys talked out seeing more customer interest there. Any sense if there's a good amount of pent-up demand for when you guys finally roll out the rest of the prescription data and kind of across U.S. and, to the extent, international at some point?

Paul Shawah -- Executive Vice President, Strategy

Yeah. So we're certainly focused on the U.S. market at this point. And as you know, our first product in Data Cloud is patient data.

We will, as you mentioned, have prescriber and sales data over time. So the focus right now is patient data on building the best patient data product and launching patient data, and it's working in the early market. So we're really proud of the kind of success and the value that we're creating for customers in the early market. In terms of pent-up demand, this is a long journey.

We're investing for the long term here. We're excited about the innovation and our customers are excited about the innovation we can deliver but they recognize that this is really a long-term play. So really for the long haul and we're excited about the progress we've made so far.

Ken Wong -- Guggenheim Partners -- Analyst

Great. Thanks, Paul.

Paul Shawah -- Executive Vice President, Strategy

Thanks, Ken.

Operator

[Operator instructions] And your next question comes from the line of Bhavan Suri with William Baird. Please go ahead. Your line is open.

Dylan Becker -- William Blair -- Analyst

Great. Thanks, guys. This is Dylan Becker actually on for Bhavan tonight, but congrats on the quarter and appreciate you taking our question. I guess, first, as we're seeing kind of an increased willingness here, you noted kind of several customers throughout the quarter looking to standardize across kind of your Clinical Suite and leverage those solutions.

It makes a lot of sense to have all of this data across a common platform, right, to accelerate the development. So I guess the question is how should we be thinking about the importance of further standardization, the future driver supporting the cross-sell efforts, especially related to some of the earlier stage offerings, CTMS, CDMS, safety, etc.?

Peter Gassner -- Chief Executive Officer

And, Dylan, this is Peter. I'll take that one. What's going on is they're looking for an integrated suite, not so much -- standardization on technology is nice, and that's useful. They will get a common vendor that they can trust, common way to do audits, common way to do the integrations, that type of thing.

But the real benefit that they're looking for is common business practices. So when we have the clinical operations suite integrated with the Clinical Data Management Suite and that can be seamless flow across there, that's what's exciting people. And that will just be a long-term competitive advantage for Veeva because clinical trial efficiency, that is extra important to life sciences company. That's the essence of a life sciences company, getting products approved to market quickly.

So it's not the standardization of technology, but it's the seamless business process that they're looking for.

Dylan Becker -- William Blair -- Analyst

Right, right. Yeah. Thank you. And then maybe one for Paul, too.

And I don't want to dig kind of too deep into it, but I guess, can you talk about – well, you just kind of mentioned some of the early traction around the Data Cloud piece. But as this kind of is a driver of sustainability on the commercial side as well and kind of some of the releases that we've seen from IQVIA in recent days here, can you remind us if and kind of what any impact this might have on that Data Cloud segment as well?

Paul Shawah -- Executive Vice President, Strategy

Yeah. There's no impact in terms of IQVIA, and there's obviously been a lot of moves in the marketplace and kind of their competitive behaviors that they have a history of, but that really has no impact at all on Data Cloud. Data Cloud's our own product. It's data that we're sourcing and innovating in a really different way for the marketplace.

So no material impact that we -- no impact at all, I should say, around Data Cloud.

Dylan Becker -- William Blair -- Analyst

Perfect. Thank you, guys, very much.

Operator

And your next question comes from the line of Stephanie Davis with SVB Leerink. Please go ahead. Your line is open. 

Stephanie Davis -- SVB Leerink -- Analyst

Thank you for taking my question, guys, and congratulations on a very strong quarter. We've seen a pretty meaningful uptick in funding for health tech companies that compete with the Vault needed products. So I love your early take on how you're thinking about these players. Should we think of them as more pure-play competitors that are just subscale? Or is there a potential partnership and integration that maybe increase the value of Vault as a platform?

Peter Gassner -- Chief Executive Officer

Stephanie, this is Peter. Yes certainly, not just in health tech overall, the market, early market's awash with capital right now. And so you get multiple new entrants. Now, you get lower-quality entrants on the average because, you know, you're getting a few city and monies in a surplus.

So I think that's what's going on. In terms of some of those -- many of those will be competitors in one of our application areas, so they will be a competitor in one of our application areas. I think that's overall good for the industry. It will sharpen Veeva's competitive focus and lead to product innovation.

And then some of them will be partners and really fit into the Vault platform nicely. Those will tend to be smaller, more practical, lower funded companies because the high-funded companies, they have to go for the highest, highest market. I think that's fine. It's good competition.

I think it'd be difficult for them in many ways because the pharmaceutical companies are not looking for a quick win flash in a pan like that. They're really looking for a long-term partner that has a full suite. So overall, I view the trend as positive for Veeva.

Stephanie Davis -- SVB Leerink -- Analyst

Well, continuing on that thought of the less funded players and probably the most likely partners, how do you think about M&A for growing in that space?

Peter Gassner -- Chief Executive Officer

Yeah. M&A, I would say not different in that space versus other places that we've been in. We would look for M&A for growth. So where we can get a seed of something that will really either help the industry overall and thereby help Veeva.

You saw that with Zinc, right, we completed that acquisition or completed the migration of those customers. We did the acquisition five years ago, completed that. That was good for the industry, brought their DNA into Veeva, made our products better. You would see what we did with Crossix.

We bought Crossix. They had a certain asset. We're leveraging that asset and bringing them to Data Cloud. So that's what we would look for.

We look for seed of innovation that we can grow.

Stephanie Davis -- SVB Leerink -- Analyst

Very helpful. One quick one --

Peter Gassner -- Chief Executive Officer

Sorry, I didn't finish, sorry.

Stephanie Davis -- SVB Leerink -- Analyst

No, no. Continue.

Peter Gassner -- Chief Executive Officer

Those will often come in the smaller companies actually, the seed of innovation.

Stephanie Davis -- SVB Leerink -- Analyst

Impressive. So I just have a quick one because I feel like Ato's done so much work on this. He would kill us if we didn't at least mention it on the call.

Peter Gassner -- Chief Executive Officer

He's a very nice guy. He's not going to kill anyone --

Stephanie Davis -- SVB Leerink -- Analyst

Could you just qualify -- he might, though. So you've got a lot of noise about IQVIA. Could you just give us a refresh on litigation, what the worst-case downside scenario really is in some of the recent announcements?

Peter Gassner -- Chief Executive Officer

Yeah. Certainly a lot of noise. IQVIA issued a really intentionally misleading press release and disinformation campaign. But that situation there with their anticompetitive behavior, the case is all upside for Veeva because the status quo is this restricted data environment that IQVIA's created.

So that's the status quo. Nothing about this recent press release from IQVIA is really about the case. It's about a procedural, the procedural ruling. So our case, the antitrust case is going ahead.

But we expect the jury trial in 2023 and we are confident in our case and expect to win. Now if we did win, that would really provide more choice for the industry, and that would be an accelerant for Commercial Cloud if we would win. But we'll see, and that's in 2023.

Stephanie Davis -- SVB Leerink -- Analyst

All right. Very helpful. Thank you.

Peter Gassner -- Chief Executive Officer

Thank you.

Operator

Thank you. And your next question comes from the line of Tom Roderick with Stifel. Please go ahead. Your line is open.

Tom Roderick -- Stifel Financial Corp. -- Analyst

Thank you for taking my questions. Great to hear from you all. Congratulations for the great results. Peter, I'm glad Stephanie just kind of poked at the IQVIA thread there a little bit.

And I guess I wanted to ask a little bit of a different version of that question, which is, what are your customers saying to you about this? This is fairly sort of acrimonious discussions in the public arena between you and a competitor, both of which many, many of your customers use both parties. Are they getting nervous at all that perhaps IQVIA data might not be accessible inside of your CRM systems in the long run, that that could create some issues with respect to your core positioning on that front? I'd love to hear what they're saying to you. And then conversely, are they opening up and saying, "Hey, we really, really do want the choice, and it's about the time we get this choice." So I'd love to know which way they're pushing on that thread.

Peter Gassner -- Chief Executive Officer

Tom, I'll take that one. The customers, in general, this is not positive for them. This is noise. So they feel like, hey, there's two kids fighting on the lawn.

They don't really care who started the fight or why, it's just noise for them. So they don't appreciate it. I would say -- I think they generally know it's caused by IQVIA but still it doesn't matter. They don't appreciate it.

They're not nervous with IQVIA. Our customers, they're life sciences companies. They're really Veeva and IQVIA, we are the partners, the suppliers to the industry so I don't feel any nervousness from our customers. They knew that if IQVIA would do something like not allow their data into Veeva CRM, A, they'd find another way to analyze that data; and, B, they wouldn't appreciate that from IQVIA to end up IQVIA losing business.

So they're not willing to be pushed around by IQVIA. Where they think it this is about is choice. So I think Data Cloud, for example, that's really enthusiastic for the customers. They want us to hurry, get that mature faster, have a full complete faster.

More choice is always a positive for Veeva. Noise about fighting in press releases, that's not a positive -- sorry, more choice is a positive from customers. Noise about lawsuits is never a positive for customers.

Tom Roderick -- Stifel Financial Corp. -- Analyst

Great. That's excellent, Peter. I appreciate that. This is a little bit more in the weeds, but Brent, a question for you.

I mean, we look at these gross margins and they're at all-time highs here. Seemingly, no reason why they can't continue. I guess the one thing that stood out to me in the prepared remarks was the discussion point that the last Zinc customer has transitioned over to PromoMats. And it just sort of brings to mind anytime you can kind of end-of-life customers on one platform and move them all over to a modernized version, there might be lasting benefits to the gross margin line there.

How should we think about other opportunities across the platform outside of that? And is this kind of a high watermark for gross margins? Or then how do we get higher from here?

Brent Bowman -- Chief Financial Officer

Yeah. I mean -- thanks for the question. Yes, this was an outstanding quarter, obviously, from an op margin perspective, the highest op margin quarter that we've had to date. And how I think about it is we're in growth mode right now.

We're continuing to invest for customer success. And we're aggressively hiring specifically in the products, sales, and services area. Business consulting is a focus area. So we think that will pay off long term from a growth perspective.

There are some other things that are in that are in play regarding our gross margin as you look out during the course of fiscal year '22. We do expect travel to return to some level normalization. Services utilization was running at an all-time high this quarter as well. So there's a lot of things that happened in Q1 that drove the high op margin percentage.

So all in all, pleased with it. Great opportunity to continue to get leverage out of the model as we continue to sell the Vault product space as well.

Tom Roderick -- Stifel Financial Corp. -- Analyst

Great points. OK. Appreciate it. Great job.

Thank you.

Operator

And your next question comes from the line of Brad Sills with Bank of America. Please go ahead. Your line is open.

Sherry Guo -- Bank of America Merrill Lynch -- Analyst

Hi. This is Sherry on for Brad. Congratulations on a great quarter. I wanted to ask about the outside life sciences opportunity.

You touched a little bit on your prepared remarks, but can you maybe provide some updates on where you are today and where you are in terms of building out that go-to-market organization? Thank you.

Peter Gassner -- Chief Executive Officer

Hey, Sherry, this is Peter. Yes, we're on track with outside of life sciences there. We're focused on consumer goods and consumer packaged goods and chemicals. Maybe to add some customers and expand in existing customers, we believe we're on track to sort of in the $100 million, bringing the business, for 2025.

So we're on track for that. I'm really pleased with the customer success and that's what's fueling our business there. So all is going well outside of life sciences.

Sherry Guo -- Bank of America Merrill Lynch -- Analyst

Gotcha. And then are you seeing any changes in the app tech for like event services businesses or Physicians World as COVID headwinds start to dissipate? Thanks again.

Paul Shawah -- Executive Vice President, Strategy

Hey, Sherry, this is Paul. Yes, we are starting to see that demand return. And I guess I'd characterize the demand around digital events, which is ramping up. That's been ramping up for some time now, and we focused our business on to supporting customers doing digital events.

But we're also starting to see a little bit of an uptick in more of the in-person events as companies are starting to think about the reopening and getting back face-to-face. So yes, I expect that kind of demand to continue going forward. The good news is we're focused on supporting both. So as customers prefer, we can support whether it's digital or whether it's in person.

Sherry Guo -- Bank of America Merrill Lynch -- Analyst

Awesome. Thank you so much.

Operator

And your next question comes from the line of Stan Zlotsky with Morgan Stanley. Please go ahead. Your line is open.

Stan Zlotsky -- Morgan Stanley -- Analyst

Perfect. Thank you so much, guys. I wanted to switch for a second to billings, and obviously, a very strong start to the year. Is there anything in billings that we need to be mindful of as far as maybe like one-time in the quarter and how the strength of billings to start the year informed your overall confidence in the billings guidance increase for the full year?

Brent Bowman -- Chief Financial Officer

Yeah. Thanks, Stan. Yes. So in Q1, we had outstanding billings result growing at 26%.

There were no one-time items in the quarter to note that that was a tailwind or a headwind to that number. So that beat definitely formed our guide, a good portion of our guide as we looked out for the year. So good broad-based strength with Dev Cloud and Services both contributing nicely. I would say in the beat, probably about two-thirds of that was on the subscription side and about a third in services.

So overall, really good contributions to the billings growth rate.

Stan Zlotsky -- Morgan Stanley -- Analyst

Got it. Perfect. And I wanted to just go back to one of the earlier questions around the headcount, the overall reduction in headcount across the healthcare and the pharmaceutical sales industry. How does that inform your thinking around Commercial Cloud growth for the remainder of this year?

Paul Shawah -- Executive Vice President, Strategy

Yeah. So you know, the reductions have not a meaningful impact on the rest of this fiscal year. We've accounted for that into our modeling already, so we don't anticipate any material impact one way or the other. It's already accounted for in our guidance.

And typically, those trends of things, whether we saw a smaller or a larger reduction, one, we've modeled the name; and two, those things tend to play out over time based on renewal cycles. So really no change there.

Stan Zlotsky -- Morgan Stanley -- Analyst

I guess what I was trying to say is inasmuch as maybe those -- the potential headcount cuts would come in the back half of this year or begin to maybe impact you and you guys are on the long-term strategic annual-plus contract, is there a potential where we could see upside to the Commercial Cloud subscription revenue line if those cuts don't materialize like you guys have been talking about for the last couple of quarters?

Brent Bowman -- Chief Financial Officer

Yes. So, Stan, it's Brent. So for the fiscal year, so in my prepared remarks, I mentioned it, so we didn't see any increase in the reductions in Q1. And we do expect that to increase in the second half of the year.

And that increase, in fact, is included in our guide. So we contemplated that into the second half of fiscal year '22.

Stan Zlotsky -- Morgan Stanley -- Analyst

Got it. Thank you, guys.

Operator

And your next question comes from the line of Sterling Auty with JPMorgan Chase and Co.

Drew Glaeser -- JPMorgan Chase & Co. -- Analyst

Hey, this is Drew on for Sterling. You mentioned the return to travel and normalization of some of the operating expenditures. Are there any cost savings that you think are sustainable in the model after the post -- in the post-COVID environment?

Brent Bowman -- Chief Financial Officer

Yeah. So I'll talk about fiscal year '22 and what we're seeing a bit. So we're seeing travel start to return to normalization, and that's going to progress starting in the next couple of months as we work through the balance of the year. I believe that advance will largely be virtual for the balance of the fiscal year '22.

All of that's been contemplated into our guide, and that's why I explicitly stated about 175 bps of tailwind. Over time, how much of that will be permanent, time will tell. I don't feel confident with the information at hand to give you a number on that.

Drew Glaeser -- JPMorgan Chase & Co. -- Analyst

Got it. Thank you.

Operator

And your next question comes from the line of Chris Merwin with Goldman Sachs. Please go ahead. Your line is open.

Kevin Kumar -- Goldman Sachs -- Analyst

Thanks for taking my question. Kevin here on for Chris. Curious on Engage. Sounds like that was a tailwind to growth in the quarter.

How penetrated is that product across the CRM customer base today and how should we think about the runway there?

Paul Shawah -- Executive Vice President, Strategy

Yeah. This is Paul. Engage, we talked about last quarter as being roughly 60% penetrated in the overall Engage market. So if you think about the broader Engage opportunity we have, we've captured roughly 60% of the market.

And we'll expect to see continued growth in Engage normalizing to where it was. We obviously had a significant bump in Q4, given the conversion. But that will play out over time, whether it will be more of a normalized growth rate going forward.

Kevin Kumar -- Goldman Sachs -- Analyst

Got it. And then given the recent investments in headcount, curious about customer adoption, the process.

Paul Shawah -- Executive Vice President, Strategy

Yes. So Crossix is generally independent of the kinds of reductions that you're seeing. I would say that there is an overall shift to companies operating more digitally and trying to reach customers in new and different ways. And fundamentally, Crossix's business is based on supporting media and advertising and marketing, which is digital.

So we saw good strength this quarter in Crossix, and we anticipate that strength will continue going forward.

Kevin Kumar -- Goldman Sachs -- Analyst

Great. Thank you.

Operator

And your next question comes from the line of Ryan MacDonald with Needham. Please go ahead. Your line is open.

Ryan MacDonald -- Needham & Company -- Analyst

Hi. Thanks for taking my question. I apologize if it's repeated. I dead dropped temporarily here.

But I wanted to ask on the prepared remarks about the commentary around Veeva Link and the business consulting services. I think it's been an interesting dynamic that the comment around it is doubling year over year in terms of consulting. It's not the first time we've heard that, and it seems to be an emerging trend. Peter, I'd be curious just to hear your thoughts on what do you think is causing sort of this increased reliance on consulting services from customers.

And how does this change your view, if at all, on how the component of service as a percent of total revenue and how that grows going forward? Thanks.

Peter Gassner -- Chief Executive Officer

In terms of the percentage revenue and how that grows going forward, I don't expect any material change there. Consulting business is growing, but it's still small as when you look at the bulk of our business, which is actually subscription and professional services. Consulting is a bit -- a higher-value service that focus on business process, business process type things, not just implementing our software. So it's growing but it's never going to be the biggest part of Veeva and that type of thing.

But it is complementary, so it's been very complementary. And consulting needs will go up a little bit as we have multiple products. So one of the things that consulting is very good for us, stitching together the business processes that are needed when you're implementing processes, for example, across clinical and regulatory or commercial and medical. So that's where you get a lot of the value and when you redesign these business processes, roles, and responsibilities.

So necessary and view it as icing on the cake, but it's not the cake.

Ryan MacDonald -- Needham & Company -- Analyst

Great. Thanks for taking my question.

Operator

Your next question comes from the line of Tyler Radke with Citi. Please go ahead. Your line is open.

Unknown speaker -- Citi -- Analyst

Hi. It's [Inaudible] calling in from Tyler today. Congrats on the result that looks pretty strong. And then I just had a quick question regarding -- we are starting to see more customers going in full suite, especially in the last quarter and current quarter in Quality and regulatory and including new customers all in, in Commercial Cloud.

So I'd just like to see how is this full suite view trend like coming in versus your expectation initially? And then also, what are some of the implications that we might see going forward? Thanks.

Peter Gassner -- Chief Executive Officer

Yes. The full suite, that can happen also on the R&D side and the Commercial side. Generally, that will be with smaller biotechs because they're nimble, they don't have existing infrastructure. They want to get started in a very modernized way and they just go along with Veeva.

So I expect that trend to continue sort of as it is, maybe accelerate a bit in the small biotechs, but that's not really so applicable to our large enterprises because they have lots of people, lots of processes and they have to pick the parts that they optimize.

Operator

All right. That concludes all questions at this time. I would like to turn this call back over to Peter for closing remarks.

Peter Gassner -- Chief Executive Officer

All right. Thank you, everyone, for joining today's call. I'd like to thank our customers for their continued partnership and our employees for their commitment to customer success. Thank you.

Operator

[Operator signoff]

Duration: 37 minutes

Call participants:

Ato Garrett -- Senior Director, Investor Relations

Peter Gassner -- Chief Executive Officer

Brian Peterson -- Raymond James -- Analyst

Brent Bowman -- Chief Financial Officer

Paul Shawah -- Executive Vice President, Strategy

Donald Hooker -- KeyBanc Capital Markets -- Analyst

Ken Wong -- Guggenheim Partners -- Analyst

Dylan Becker -- William Blair -- Analyst

Stephanie Davis -- SVB Leerink -- Analyst

Tom Roderick -- Stifel Financial Corp. -- Analyst

Sherry Guo -- Bank of America Merrill Lynch -- Analyst

Stan Zlotsky -- Morgan Stanley -- Analyst

Drew Glaeser -- JPMorgan Chase & Co. -- Analyst

Kevin Kumar -- Goldman Sachs -- Analyst

Ryan MacDonald -- Needham & Company -- Analyst

Unknown speaker -- Citi -- Analyst

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