Veeva Systems (VEEV) Q1 2024 Earnings Call Transcript

Veeva Systems (VEEV 1.54%)
Q1 2024 Earnings Call
May 31, 2023, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Hello and welcome to the Veeva Systems fiscal 2024 first-quarter results conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator instructions] I will now turn the conference over to Gunnar Hansen, director of investor relations.

Please go ahead.

Gunnar Hansen -- Senior Director, Investor Relations

Good afternoon and welcome to Veeva's fiscal 2024 first-quarter earnings conference call for the quarter ended April 30th, 2023. As a reminder, we posted prepared remarks on Veeva's Investor Relations website just after 1 p.m. Pacific today. We hope you have had a chance to read them before our call.

Today's call will be used primarily for Q&A. With me today for Q&A are Peter Gassner, our chief executive officer; Paul Shawah, EVP, commercial strategy; and Brent Bowman, our chief financial officer. During this call, we may make forward-looking statements regarding trends or strategies and the anticipated performance of the business, including guidance regarding future financial results. These forward-looking statements will be based on our current views and expectations and are subject to various risks and uncertainties.

Our actual results may differ materially. Please refer to the risks listed in our earnings release and the risk factors included in our most recent filing on Form 10-K. Forward-looking statements made during this call are being made as of today, May 31st, 2023, based on the facts available to us today. If this call is replayed or viewed after today, the information presented during the call may not contain current or accurate information.

Veeva disclaims any obligation to update or revise any forward-looking statements. We may discuss our guidance on today's call, but we will not provide any further guidance or updates on our performance during the quarter unless we do so in a public forum. On the call, we may also discuss certain non-GAAP metrics that we believe aid in the understanding of our financial results. A reconciliation to comparable GAAP metrics can be found in today's earnings release and in the supplemental earnings investor presentation, both of which are available on our website.

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

Peter Gassner -- Chief Executive Officer

Thank you, Gunnar, and welcome everyone to the call. We had a great start to the year delivering results ahead of guidance with total revenue coming in at 526 million. The macroeconomic environment was stable and -- and it was another quarter of strong execution across R&D and commercial. In commercial, development of Vault CRM is on track, and we gave a compelling demo at Summit.

We expect to have our first customers live on Vault CRM early next year. We also announced two new Compass data products and our first AI application, CRM Bot, for Vault CRM. We also saw continued momentum in development cloud across all areas. Our product strategies in R&D and commercial are clear and compelling, and we have a long runway of growth ahead.

At this point, we'll open up the call to your questions.

Questions & Answers:

Operator

Thank you. [Operator instructions] Your first question comes from the line of Joe Vruwink of Baird. Please go ahead.

Joe Vruwink -- Robert W. Baird and Company -- Analyst

Oh, great. Hi, everyone. Maybe just to start off, the Commercial Summit a few weeks ago, curious to hear feedback from customers and partners on what they saw and liked or maybe didn't like at Vault CRM. And any key messages out of the summit that maybe help inform or change how you're thinking about introducing the product starting, you know, 2024 and in the 2025?

Paul Shawah -- Executive Vice President, Commercial Strategy

Hey, Joe, this is Paul. Thanks for the question. So, Summit was great. We had nearly 2,000 people there.

It was a great event. It was our first showcase of all CRM. We demoed to -- to a broad audience and generated a lot of excitement. I'd say there was a couple of specific things that our customers were excited about.

First is the idea that they're going to get the full functionality of everything we've delivered in Veeva CRM over the past 15 years. All of that plays forward into Vault CRM. So, what that means for our customers is they never have to go backwards. They -- everything they've invested in, they'll -- they'll get the advantage of, so full functionality was a really big -- big value prop for our customers.

I would say number two is the -- the big announcements that we have. Service center, which is for inside sales reps and hybrid reps, these are people that need access to the core Veeva CRM functionality, but they also need access to things like handling inbound calls and cases. So, they're excited that this -- this is all going to be part of one application, but also CRM which is super exciting. You saw some of Peter's remarks about generative AI, and this is going to be the first application that we're building.

It's going to be part of all CRM. So, that generated a lot of excitement. And I guess maybe the third thing was the approach we're taking to helping the industry move to Vault CRM. So, same application, same data model, helping customers move their data, their configuration.

They're excited about how we're going to help them make the transition. So, overall, really positive events, a lot of really positive feedback on our direction in Vault CRM.

Joe Vruwink -- Robert W. Baird and Company -- Analyst

OK, that's all great. Thanks, Paul. And then, maybe just on the macro, it's been a few quarters now where Veeva said, you know, ultimately, macro meeting your expectations. I guess sitting here on the outside, the macro and things like biotech funding, you know, it seems pretty dynamic over that same stretch of time.

Is the delta here just maybe Veeva's opportunity, is it your execution? You know, how do you maybe reconcile kind of those -- those two comments?

Peter Gassner -- Chief Executive Officer

Yeah, I'll take that one. This is Peter. You know, in general, the industry operates on pretty long cycles, especially our very established and large customers. So, the ups and downs of the macro environment don't really affect them too much.

We do see a little bit more effect in what called are emerging biotech. These are small customers, generally don't have approved product. So, we see -- when funding gets tight, we see, you know, a little bit of pressure there. But nothing really has changed in the last 90 days at a macro level.

So, I guess that's why we're not so susceptible to those small up and downs, and the business just continues to move forward.

Operator

Thank you. Your next question comes from the line of Ken Wong of Oppenheimer and Company. Please go ahead.

Ken Wong -- Oppenheimer and Company -- Analyst

Hey, fantastic. Hey, this first question is for -- for Brent. Just wanted to -- to -- to ask about unbilled AR, saw a big spike up on the cash flow. What drove that? And how should we think about that trajectory? Is it just going to be a tailwind until the balance sheet runs to zero? What's the -- what's the right mapping on that?

Brent Bowman -- Chief Financial Officer

Yeah, so a couple of things there. On the unbilled AR, I think there was -- there was a decline, right? So -- and that part of what you're seeing there was on the termination for convenience pan through. But on the OCF's line, overall, we were really pleased with our strong execution in the quarter. On a full-year basis, we've increased the number by $30 million.

So, we're at 840 million, which is growing about 20%. So, feel really good about the execution and -- for the quarter and for the outlook for the year.

Ken Wong -- Oppenheimer and Company -- Analyst

Got it. So, it wasn't any kind of abnormal contract, this is the -- this was kind of how you expected it to play out with the -- with the removal of -- or the inclusion of the TFCs?

Brent Bowman -- Chief Financial Officer

Absolutely correct. So, from a TFC perspective, just put it in complete context, we -- what we expected to happen happened in Q1, and what we expected to happen for the full year is still intact. So, no surprises.

Ken Wong -- Oppenheimer and Company -- Analyst

Got it.

Operator

Thank you. Your next question comes from the line of Brian Peterson of Raymond James. Please go ahead.

Brian Peterson -- Raymond James -- Analyst

Hi, guys. Thanks for taking the question. Maybe just one for Paul. So, Paul, I think there's been some debate on -- at least from investors on how customized some of the CRM implementations are and -- and how big of a lift it may be to actually migrate over to Vault.

Has there been any feedback on that so far? And also, love to understand, there was a comment in the prepared remarks that you expect to have some early customers live at the summit next year. How is that trending relative to your expectations? Thanks, guys.

Paul Shawah -- Executive Vice President, Commercial Strategy

Yeah, hey, Brian, thanks for the question. Yeah, so the way I would think about it is some companies have -- have adhered pretty close to what Veeva delivers kind of standard in our standard product or have done relatively straightforward configurations, and other companies have done more customizations, particularly some of the larger companies. So -- and then, there's different ways to make the move to Vault CRM. So, one way is to just do, in a sense, a technical migration, and then another way is to think about changing process -- business process change as they make that transition.

So, the level of complexity of the move is going to depend on how much customization they've done but also the approach that they're taking to move over, if they're going to change process or if they're just going to keep things and just do a simple technical migration. So, lots of variables going on there, but what we are doing is we're trying to make it as easy as possible for our customers. And we made some really important design decisions to try to make that simple, keeping the data model the same, keeping the application the same; moving all of their data for them, moving their configuration for customers. So, we're automating as much of the move as possible.

Now, you're right, we did talk about early customers going live potentially as early as our summit next year. Likely, what those will be, will be some net new customers. For example, this quarter, we announced 11 new SMB wins. It would likely be a company like that that would go live in that -- in that first move.

And then, I would expect migrations to happen starting in 2025. So, the first customers who are on Veeva CRM moving over to Vault CRM starting in 2025, with most of those still happening in the 2026 to 2029 time frame.

Brian Peterson -- Raymond James -- Analyst

Great. Thanks, Paul.

Operator

Your next question comes from the line of Rishi Jaluria of RBC Capital Markets. Please go ahead.

Richard Poland -- RBC Capital Markets -- Analyst

Great. Thanks. This is Rich Poland on for Rishi. So, first question would just be, on the 2026 to 2029 time frame, just curious, with some of the new functionality that you're adding into -- to the platform like the bots as well as the service center, should we think about that as being something that could help, you know, those migrations happen a little bit earlier on that curve? Is that something that's kind of, I guess, specific to -- to the Vault platform?

Paul Shawah -- Executive Vice President, Commercial Strategy

Yeah, you're right, those announcements will be specific to the Vault platform. So, we'll build service center that will be part of the Vault CRM application. And also, the same with CRM Bot, that will be part of Vault CRM. So, that may -- it may or may not be additional incentive for customers to move.

But I can tell you that, based on the feedback that we've heard from some of the customers, they are excited about -- both of them, they're excited about those opportunities. And that was the promise. The promise was they get the full functionality of Veeva CRM, they get a deep market-leading application, and they're going to get new innovation over time.

Richard Poland -- RBC Capital Markets -- Analyst

Great, thank you. And then, just to follow up, on some of the -- I note Compass with all of the, I guess, new data personas that have been added there, it seems like you're now kind of ready to take on the incumbents in that space, and the messaging has kind of come across that in the past two quarters. So, am I thinking about that right? And how should we think about the timeline, I guess, for starting to really attack that opportunity?

Peter Gassner -- Chief Executive Officer

Yeah, that's -- that's the right way to think about the full suite of data products for the commercial area, in a streamlined, simplified suite of data products. One thing you could compare it to, it's a different domain but in our quality area, and that's something we've had for many years now. And we introduced -- we have quality docs -- document management system, regulated content management system. We have QMS, which is a structured data quality management system, and we have training.

It all fits together on a unified data model on one common platform. That's what we're doing for Compass. So, we have Patient now, which is the anonymous patient data, you know, 60 billion rows of patient data in the U.S. about prescriptions, procedures, diagnoses.

Now, what we're adding in January is Compass Prescriber and Compass Sales, and those are projected data products about prescribers, prescribing patterns, the individual prescribers, and also at the ZIP and state level and the national level. So, they all fit together on one common data model. They're separate products, very, very separate, different purposes. So, for the first time in January, we'll have this suite of products.

And I think that's what customers will find compelling. And then, just like we always do, we have to get a customer to have all three of those products. You have to get them live using it, have to get them happy, round off the corners, have to get them talking to other customers. And that's one thing about competition, you know.

Usually, the best product and the best service will win. And when you -- when you look at Compass and how we talk to customers there, our message is pretty simple. It's about better data and better service. And, you know, so, it's just a execution game.

I feel very comfortable about our product strategy. It feels so similar to what we've done in some of our -- our Vault suites before, and now it's just down to executing.

Operator

Thank you. Your next question comes from the line of Dylan Becker of William Blair. Please go ahead.

Dylan Becker -- William Blair and Company -- Analyst

Hey, guys, appreciate you taking the questions and really, really nice job here. Maybe, Peter, I wanted to hone in on two comments in the prepared remarks. First, you talked about kind of serving AI as the focal point for the industry. I know you rolled out CRM Bot but wondering how you're thinking about the long-term optionality there to utilize AI and machine learning models to automate these key processes.

Again, you have highly specialized unique data that gives you a holistic view through the commercial, the clinical, and the compass kind of datasets. So, I'm wondering how you're thinking about the evolution of the AI capabilities over time.

Peter Gassner -- Chief Executive Officer

Yeah, we -- I like our position as it relates to AI because we're a core system of record. So, that's -- that's something you're always going to need. I think that's one thing that people should always understand. Core system of records will be needed even in the world of AI.

You know, if I ask Brent, "Hey, Brent, do you think 10 years from now you'll need a financial system to -- to manage your financials?" He's going to tell me, "Yes, I really need one. You can't take it away. ChatGPT won't do it for me," right? I'm making a joke there. But our customers have these same critical operational systems around drug safety, around clinical trials, around regulatory, around their quality processes.

So, those are always going to be needed. Now we're also building our data assets, and these are proprietary data assets, Link, Compass, and we're building more data assets. Those will also be not affected by AI, but AI will be able to leverage those assets and make those assets more valuable. So, I think we'll develop more -- we'll do basically three things.

We'll develop more applications over time. CRM Bot is first. We got to get that right. We also will, you know -- our proprietary data will get more valuable.

And the third thing we'll do is make our applications fit very well when customers have their own proprietary AI applications. So, especially the Vault platform will do a lot of work in there to make it fit really well with the other AI applications they have from other vendors or that they develop themselves because it's an open ecosystem. And that's how, you know -- that's part of being Veeva. We are this broad platform for the customers, and we're an ecosystem in which they can plug in their own intelligence and their own partnerships.

So, I'm really excited about how AI is going to play out for Veeva. It's very clear what we need to do.

Dylan Becker -- William Blair and Company -- Analyst

That's -- that's crystal clear and appreciate -- appreciate the color there. Maybe another one, too, and maybe this kind of piggybacks off that a little bit. But I think there was a comment around the innovation engine being as strong as ever at Veeva today too, which is, again, impressive given the historical track record of the business. I wonder, is this a function of the relative kind of maturation of some of these larger opportunities like Compass clinical data, safety, quality, etc.

that you've been able to maybe scratch the surface on and now dig deeper in with those customers? Maybe how that compares with the customers that are now increasingly look to you for standardization and maybe opening up their road maps of saying, "Hey, here's how I want to develop a plan with Veeva." Thank you, guys.

Peter Gassner -- Chief Executive Officer

Yeah, two -- two things. I think the main thing is we're getting very good at being a multi-product company. We've -- we've been working on that for -- we've been in business for, what, 16 years now. We've been a multi-product company really, I guess, since 2012-ish, something like that, so more than 10 years now.

We have a lot of products, and we're getting good at it in our operating model, how we manage autonomy, what roles and responsibilities are. And there's a lot of people in Veeva that know that operating model and know how to fit into it. So, 6,000 people at Veeva, so we can do more parallel processing. And we just keep doubling down and getting better at being a true great multi-product company, which is -- which is relatively rare air.

And then -- so, that -- I would say, at the macro level, that's what I mean by our innovation engine. For instance, we have people at Veeva now, other than me, who are good at overseeing others who are doing the innovation. So, we have that level of scale, and it's relatively rare. Now also, we have a -- deeper customer relationships than we've got -- than we've ever had.

And that -- that just really helps because you get the benefit of the doubt when you have that customer relationship. You get early customers faster; you get more clear feedback. And I would say the third thing is also, when we make an innovation, we're often making an integration to our existing products. So, if you look at, for example, our safety product, it's a very good product on its own, but the promise of having it integrated into our clinical products, that's an advantage that another company doesn't have if they're -- if they're just starting up a safety product on their own.

So, long-winded answer there, but it is an insightful question. It's something I'm very proud of our innovation engine. It's rare air.

Operator

Thank you. Your next question comes from the line of Craig Hettenbach of Morgan Stanley. Please go ahead.

Craig Hettenbach -- Morgan Stanley -- Analyst

Yes, thank you. Just following up on the macro commentary. Are you able to provide some context, just the rough exposure to emerging biotech, given that's kind of a source of debate in terms of funding? And then, more broadly, I think last year, you talked about in the SMB space kind of impact to add-ons, just kind of what you're seeing on that front.

Brent Bowman -- Chief Financial Officer

Sure, Craig, this is Brent. I'll take that. Yeah, so as Peter mentioned earlier, we're not -- we don't have a significant exposure to the emerging biotech. And if you think about it in terms of total revenue, it's about 4%.

So, you can think about that, and that's comprised of about 1,000 employees with no approved product. So, that kind of gives you some context of that -- that part of the business. And then, your second question, Craig, I want to make sure I get it right.

Craig Hettenbach -- Morgan Stanley -- Analyst

Oh, just on SMB more broadly in terms of the macro, just maybe some impact to add-ons, kind of what you've been seeing recently.

Brent Bowman -- Chief Financial Officer

Yeah, so over the last 90 days, we really haven't seen a significant change in the macro. So, you know, we -- it continues to be impacted, but we factored that all into the guide and -- and we're -- we're executing well in that area.

Craig Hettenbach -- Morgan Stanley -- Analyst

Got it. And then, just a quick follow-up for Peter. Just on the Sanofi announcement recently, and more broadly, kind of what's resonating in the R&D space and what that means for your target, the multiyear target of a 30% CAGR, how you're feeling about that?

Peter Gassner -- Chief Executive Officer

Sorry, I didn't catch that question. About which announcement?

Craig Hettenbach -- Morgan Stanley -- Analyst

The Sanofi announcement.

Peter Gassner -- Chief Executive Officer

OK. And that one, I know we do a lot of work with Sanofi. I don't know the specifics of the announcement. Paul, are you more into the detail of that?

Paul Shawah -- Executive Vice President, Commercial Strategy

Yeah, I think you're -- I think you're probably referring to the Sanofi quality announcement where they've adopted our quality documentation, quality management suite, is that --

Craig Hettenbach -- Morgan Stanley -- Analyst

Yes.

Paul Shawah -- Executive Vice President, Commercial Strategy

Yeah, so I think what you're -- what you're seeing there -- first of all, we're excited about quality. It's a significant market. We've introduced a lot of new applications and innovation in there. And this is another good example of that unified quality suites that value proposition playing through.

And I think that's what Sanofi saw. They're trying to streamline and modernize their quality processes and they're standardizing on -- on both quality to do that. So, super exciting, a good example of another large company kind of, in a sense, going all in to modernize the quality and manufacturing process.

Operator

Thank you. Your next question comes from the line of Brent Bracelin of Piper Sandler. Please go ahead.

Hannah Rudoff -- Piper Sandler -- Analyst

Hi, guys. This is Hannah Rudoff on for Brent today. Thanks for taking my questions. Just first one for you, Paul.

I guess, are there customers that are waiting for all three of your Compass products to BGA before adopting them as a full suite rather than just adopting one at a time?

Paul Shawah -- Executive Vice President, Commercial Strategy

You know, we have been focused -- the way we announced and launch this, we focused in on patient data. So, we're focused in on customers that can get started relatively quickly. And they're exploring, they're testing our patient data. Most of them are finding that, to Peter's point earlier, it's actually better data.

They're getting a broader view into the market. They're finding more patients; they're finding more doctors. So, that's the very specific market segment that we've been focused on. We haven't been focused on trying to sell the full suite because it hasn't been available yet.

So, I wouldn't say that -- that companies are holding back because we're not really focused on that part of the market yet. Now given the fact that we're not that far away from having that full set of products, by January of next year, we'll have everything we need to be a full replacement. It will open up a broader part of the market for us.

Hannah Rudoff -- Piper Sandler -- Analyst

OK, makes sense. And then, second one for you, Brent, how are you thinking about the monetization of your CRM Bot product and then any future AI products you release?

Brent Bowman -- Chief Financial Officer

Yeah, it's really early. Right now, we're focused on ensuring that we have the right product working with our customers. So, you know, that's our -- that's our focus right now. Let's get the product right, and then we'll get into more of the details on kind of the sizing and the opportunity there.

But we're excited overall about the opportunity we have in front of us.

Operator

Thank you. Your next question comes from the line of Ryan MacDonald of Needham. Please go ahead.

Matt Shea -- Needham and Company -- Analyst

Hey, thanks for taking the question. This is Matt Shea on for Ryan. I wanted to start with some of the new applications you guys announced around Vault CRM, the Service Center and the CRM bot. I know with the service center you announced, it would be free, but the CRM Bot, it's not clear if it'll be free.

So, do you plan on monetizing the CRM Bot or some of your other generative AI investments in the future? And as we think about likely additional applications you add around the CRM, do you view this as a lever to potentially increase revenue per account over time or more so as a retention tool as you go through the replatforming onto Vault?

Peter Gassner -- Chief Executive Officer

Yeah, I can take that one. So, if we start with Service Center, that's included in Veeva CRM. It will probably result in more CRM licenses over time because maybe somebody that was a pure inside sales rep, maybe they didn't use Veeva CRM, some type of thing like that. So, it's included in the license, but it may mean more users.

CRM Bot will -- that's not an included product, so that will have a license that'll most likely be licensed by the user. So, that'll be net new. But as Brent mentioned, we're focused on getting the product right, and we don't have pricing for that or sizing for that yet.

Matt Shea -- Needham and Company -- Analyst

Got it. That's helpful. And then, with your data assets, Link and Compass, what has been the selling point when competing against some of the other data incumbents? Has service quality and the integrations across the broader platform been enough to displace existing vendors? Or do you anticipate being competitive on price as well? Just would love to get some of your strategic go-to-market thinking around those data assets.

Peter Gassner -- Chief Executive Officer

With Link, which we've had for a while, specifically, Link key people, that's -- it's often somewhat of a new category for customers, this real-time customer intelligence. So, either they did it internally or they had a vendor that was sort of substandard in that area. So, it's kind of there, it's -- we're kind of creating the market and teaching people here's the value you can get with a data asset like that. And that then is continuing on as we broaden out the Link suite and Link for key accounts, and then we're bringing it out for clinical trials and for clinical research sites.

So, that's more of an education campaign. For Compass, yeah, that's a direct replacement where the major incumbent there is -- is IQVIA, and IQVIA has a set of data products, there are quite a few, that they've built up over the time -- over time. And they're -- it's more simple, hey, we have a more modern solution, fewer moving parts. They can probably save some -- some money on that, but I don't think that's the primary -- you know, primary reason they would go with us.

It'd be a more -- more modern product that works for more complex medicines, better data, and better delivery. But that one's a replacement. Just like, originally, when the company started, there was a Siebel CRM that was from Oracle. That was the dominant market leader in pharma CRM, and -- and that was a replacement job -- replacement parts.

Veeva CRM is better. It's cloud, it's better. You know, out with the Siebel, in with the Veeva. This is going to be similar type of thing.

You know, out with the IQVIA for that data, in with the Veeva. Now, make no mistake, that's hard work, right? We have to execute well to make that happen.

Operator

Thank you. Your next question comes from the line of Gabriela Borges of Goldman Sachs. Please go ahead.

Carolyn Valenti -- Goldman Sachs -- Analyst

Hi, this is Carol Valenti on for Gabriela. So, you provided some visibility into fiscal year '25 last quarter. Can you just walk us through under what circumstances that outlook could turn out to be too bullish, or in what circumstances you kind of exceed that outlook, and how your visibility into that now compares -- compares now to last quarter?

Brent Bowman -- Chief Financial Officer

Yeah, so thanks for the question. So, yeah, looking out to fiscal year '25, we reiterated our guidance, so at least 2.8 billion and at least a billion in operating income. And, you know, we're expecting that the current macro situation is constant. There's no change, there's no improvement, it doesn't get worse.

So, that's kind of our assumption as we look out in time. So, you know, we're excited about the opportunity if we're early days in a large market opportunity, and that -- that's the best look of the business we have right now.

Carolyn Valenti -- Goldman Sachs -- Analyst

All right, thank you. And then, I wanted to circle back to the Merck partnership you announced last year. Realize it's still early days with that, but are you seeing any impact of Veeva's business as a result of that partnership either from a product road map perspective or any additional product adoption from Merck?

Peter Gassner -- Chief Executive Officer

I'll pick that one. I couldn't comment on the specifics of Merck product adoption. I would really say that the partnership is working. We're thrilled with the partnership.

I think Merck is getting value from it by a very open relationship with -- with Veeva that's helping to transform their business to be more digital and data-driven. We're certainly getting value out of it because we're learning how to manage a customer with a true true partnership with that -- like that that starts at the CEO level. So, we're rethinking about what's possible. I don't -- it's not shaping our product strategy so much, as you know, specifically what we'll do and what products.

But I think it is shaping our delivery strategy and how we manage and partnership -- and partner with customers because it's a whole different selling motion. It's a more -- it's not a selling motion; it's a -- it's a partnership motion. So, couldn't be more happy with that. It's, to me, it's one of the highlights of our year.

Operator

Thank you. Your next question comes from the line of Jack Wallace of Guggenheim Securities. Please go ahead.

Jack Wallace -- Guggenheim Partners -- Analyst

Hey, thanks for taking my questions. I wanted to ask about the competitive environment for the CRM business. Been six, seven months since the -- the announcement to move to your own platform. What have you seen so far from your larger of your other -- other competitors, Salesforce and IQVIA? Thank you.

Paul Shawah -- Executive Vice President, Commercial Strategy

Yeah, Jack, thanks. I can take that. So, we still -- we still see IQVIA pretty consistently. We also see regional competitors.

None of that has changed. You know, we continue to compete with them. We win most of the time. I'm excited about the 11 new wins that we've added in the quarter.

So, we're -- we're continuing to add customers in a -- in a pretty tight environment. So, I'm excited about our progress, our execution in -- in CRM. With regard to -- you asked about IQVIA, you asked about Salesforce also. I'll give you some commentary on -- on Salesforce.

It's been six months since we made that announcement. The partnership, the way we're working together to support joint -- to support our joint customers is working well. I'm not surprised by that, but I'm pleased that that's continuing. So, we continue to work well together from an operational day-to-day standpoint.

I would add the -- maybe the one thing that's changed is Salesforce does have the -- technically, the right to compete with us in the pharma CRM space. We did terminate -- we announced terminating our agreement with them. There's language in the contract which gives them that right. So, I guess that -- maybe that's a little bit of a difference.

But the reality is, I guess, maybe the bigger picture is the space needs pharmacy CRM. We're the -- we're the market leader in the space for a reason. We've invested a lot in building a very, very deep industry-specific application, and I haven't seen any competitor, any company really go down that path. Nobody's there and nobody's really even close to that.

So, we continue to focus on customer success, continuing to innovate, and really enabling that very deep functionality for the industry. So, pleased where the competitive environment is.

Jack Wallace -- Guggenheim Partners -- Analyst

Thanks, that's helpful. And just as a follow-up to that, the -- the wins in the quarter, particularly the competitive wins for those in North America and Europe or most of those in Latin America and Asia, where you're still muscling out local players?

Paul Shawah -- Executive Vice President, Commercial Strategy

Most of them were in North America. There were a couple -- you know, one or two, I believe, in Europe, but the majority were in North America. And these are -- most of them were also companies commercializing for the first time. There were a couple of competitive displacements that we had.

So, companies that had existing products like IQVA and we replaced them. So, it's a bit of a mix but biased more toward the U.S. market.

Operator

Thank you. Your next question comes from the line of Jailendra Singh of Truist Securities. Please go ahead.

Jailendra Singh -- Truist Securities -- Analyst

Thank you and thanks for taking my questions. I want to go back to a discussion around macro environment. In your prepared remarks, you called out the funding environment continuing to put pressure on project scrutiny. Can you provide a little bit more color there? What kind of projects are being scrutinized? Is it across the board or specific to certain type of solutions? Are you seeing these projects, like, getting pushed out to a later date or getting canceled? Like -- and what does your guidance assume in terms of these projects going through?

Peter Gassner -- Chief Executive Officer

Yeah, so we haven't seen any real changes in the last 90 days. We -- if you compare with two years ago, for example, funding environment is tighter. It's not as easy for small biotechs to get funding at the valuations that they want, and project scrutiny is tighter. It's not as easy for large companies to justify spending for the future because they're a little more apprehensive about the current.

So -- but none of that has changed in the last 90 days, and it's been included in our guidance. And you asked specifically how does that project scrutiny play out. Honestly, just extra extra scrutiny, let's say. They're going -- it doesn't depend on product area.

It could be in the quality area and the CRM area and the safety and the regulatory area. And there's just extra scrutiny. This project is going to be done, how much is the budget for this project, when is the ROI going to happen for our company, and just double-check that. Now, with that project scrutiny, we -- we do -- our projects generally do pretty well on that.

What has not done well is companies that focus on more discretionary spend or more just one-off project type of stuff. That doesn't do -- that doesn't do well. And you see a lot of those companies having -- having more -- more issues. But ours are -- our projects are investment in core capabilities that people need for the long term, and those -- those tend to be a little more thoughtful and go through.

Jailendra Singh -- Truist Securities -- Analyst

That's very helpful.

Peter Gassner -- Chief Executive Officer

I would say, just to put a clearer point of that, experimentation -- there's less experimentation going on now as -- than there was two -- two years ago. And that's due to more scrutiny.

Jailendra Singh -- Truist Securities -- Analyst

OK, that makes sense. And then, a quick follow-up on normalized billings quarterly cadence now, kind of we can calculate what the growth is for -- implied in Q -- fiscal Q3 number. Can you remind us of the drivers behind the growth acceleration you expect -- from what you expect in Q2 fiscal quarter to Q3? And of course, obvi, we have talked about Q4 but just curious if you can remind us on the growth drivers for -- for billings in the second half.

Brent Bowman -- Chief Financial Officer

Yeah, sure. And so, yeah, so we provided normalized billings to try to take some of the noise out of the equation for you. So, just to anchor on a full-year basis, we increased our number by 5 million. So, that's growth of about 15 %.

So, real pleased with the execution there. Specifically, Q3, what you've seen in some of our newer business, the underlying renewal base has shifted a bit. So, it was shifting away from the first half more to the back half, Q3, Q4. So, that's part of why you're seeing an acceleration in the billings growth.

Also, the price increase, CPI, will start to come into play in Q3 and Q4 as well. So, those are a couple of the contributors and why we are confident in the acceleration in the back half of the year.

Operator

Thank you. Your next question comes from the line of Saket Kalia of Barclays. Please go ahead.

Saket Kalia -- Barclays -- Analyst

OK, great. Hey, guys, thanks for -- for -- for taking my questions here. Peter, maybe for you, I was wondering if you could just talk a little bit about the clinical data management business a little bit and maybe specifically whether you think some of the displacements -- which have been great, by the way, you know, I think It was six of the top 20 -- whether some of those displacements are adding more value and potentially higher revenue run rates than what customers were paying for before. Does that sort of make sense like -- or do you feel like -- do you feel like Veeva EDC is kind of replacing what a customer had before kind of one for one? Or do you find that -- that Veeva is able to add more value and maybe command a little bit more?

Peter Gassner -- Chief Executive Officer

Yeah, I think we're able to add more value because we're modernizing. So, if you look in the clinical data management area, one of the core areas of that are EDC, electronic data capture. We're able to -- customers are able to build their clinical studies faster. So, that means getting their clinical studies going faster, and they're being able to do their amendments to studies without downtime, without data unloads.

So, that means they can work better with their clinical research site. Those are just a couple of the examples. So, it's a better system that helps them with their efficiency. In terms of what they pay for it, I think they probably pay us actually a little bit less, usually.

It depends, right? Customers are all over the map with the different competitors, but maybe on the average, they pay us a little bit less. But I think they -- their cost is significantly less because they have to put less people -- manpower on it. So, we always want to do that. We want to deliver more value at a lower price.

We want to innovate and make things better, more efficient. We want to share some in some of that return, but the customer -- the industry gets some of that return. And then, if you look in the clinical data area, one point I want to bring up, we -- we have two top 20 customers now that have our clinical data management and our safety product, only two. And only one of them is live with -- with both and just recently live with both.

Now, what we will do here over the next 12 months is develop a highly efficient integration between those systems, highly efficient and a standardized integration at the business process level. The industry hasn't seen that before because no company has had both of those systems, clinical data management and the drug safety system. That efficiency, the customers are just going to going to get and it's going to make the industry just much, much more efficient. So, that's what we always want to do: charge less, deliver more, and run a real profitable business.

Saket Kalia -- Barclays -- Analyst

Yeah, absolutely. It shows. Brent, maybe -- maybe for my follow-up for you, very helpful answer, by the way, before just on -- on -- on the billings acceleration in the second half. I have a little bit more of a mechanical question, which was just the normalized billings and calculated billings, I think there was a minor difference between the two before.

Now, we're thinking about them being roughly equal. Just to -- just for our own sort of edification, can you just go one level deeper just into what changed, if anything, around your expectations on billings terms that -- that maybe make both of those now a little bit -- a little bit more similar than what you were thinking before?

Brent Bowman -- Chief Financial Officer

Yeah, happy to, Saket. So, you know, first, you know, what are we normalizing? So, what we're normalizing is for our renewal business, if there's a change in frequency or a code term. So, we have a view entering the year what that's going to look like for the full year. So, once we got into Q1, there were a few customers where they had changing billing terms.

So, basically, those -- those new deals offset what we thought before. So, on a full-year basis, you know, calculated billings and normalized billings are one and the same. You're going to have differences quarter to quarter, but for the full year, it nets out.

Operator

[Operator instructions] Your next question comes from the line of Stephanie Davis of SVB Securities. Please go ahead.

Stephanie Davis -- SVB Securities -- Analyst

Hi, guys. Thank you for taking my question. I -- I just wanted to follow up on the Salesforce questions that you had a little bit earlier. Asked another way, what is feedback been so far from your client base about the transition off of the platform and into your new in-house platform? Is it appearing on the radar yet?

Paul Shawah -- Executive Vice President, Commercial Strategy

Yeah, I mean for -- it is a topic of conversation certainly with our larger customers. The global customers, companies in the large enterprise, they're focused on this. This is something that they know they're going to have to do at some point and focus on over the next several years. Remember, our customers have through 2030, but for some of these large companies, this is -- this is a big deal.

They have to make sure that they plan and think about this. So, we're working very closely with all of our large customers to help them understand the implications, what it means for them, and also the benefit that they get out of this. So, I think there's a lot of -- the last six months was about understanding what does this mean and the rationale. And, you know, I think the summit helped with that, having them see it and understand that it's real and understanding that there's a path forward and that they're ultimately going to get a new level of innovation for them.

Now, there's certainly going to be work to do to get there. Our customers will have to -- this will be projects for our customers. It's on us to make sure that we minimize the size of that, and certainly relative to doing some other alternative. That doesn't really exist in the market today.

This will be a whole lot easier. So, that's how they're thinking about it. They're helping -- last six months was about digesting and understanding and now appreciating some of the innovation we're going to deliver over time.

Stephanie Davis -- SVB Securities -- Analyst

All right, helpful. And then, just a quick follow-up on billings. You know, you had the 554 million of normalized billings this quarter. Could you kind of parse out the unbilled receivables, take down benefit -- the benefit from some of the new clients that you called out? And how are you bridging that growth rate to the -- the acceleration in the second half to 80%?

Brent Bowman -- Chief Financial Officer

Yeah, so if we maybe just break it down to what happened in Q1, so from a Q1 perspective, we had a nice beat. And, you know, a portion of that was from more annual builders than we expected. And then, part of that was the underlying strength in the business. So, we flowed that through.

The -- the unbilled AR, the T for C, for -- like that question you're asking me, had no impact on how we look at the full-year normalized billings. So, there's not a direct impact there.

Stephanie Davis -- SVB Securities -- Analyst

Awesome. Thanks, folks.

Brent Bowman -- Chief Financial Officer

Sure.

Operator

Thank you. Your next question comes from the line of Tyler Radke of Citi. Please go ahead.

Tyler Radke -- Citi -- Analyst

Yeah, thanks for taking the question. Wanted to come back to the Compass suite. It sounds like you're expecting some customers next year at your -- your summit to be rolled out on that product. Is that -- is that going to be kind of net new customers similar to the ones you referenced in terms of adopting the Vault CRM suite? Or are you actively engaging in customers who look to be displacing IQVIA and rolling out on the Compass suite?

Peter Gassner -- Chief Executive Officer

I think it would be a mix. It may be a mix of a particular brand, maybe for our patient product in a -- in a large customer, it could be in a top 20. But for a full replacement sort of being IQVIA free, that will come from a small customer. Whether they're existing or a brand-new customer, that will come from a company that sort of maybe has one brand or they're just pre-commercial, they're not quite ready to launch.

That'll -- that'll be the pattern, which is very similar to what we see in many of our products, right? Easier for a smaller, more nimble company to just go all in with Veeva.

Tyler Radke -- Citi -- Analyst

Got it. That's helpful. And then, on the R&D side, you talked about a lot of nice wins and EDC and the broader clinical suite. I was wondering if you could just talk about the trends you're seeing in CDMS.

And I believe you have had some product and sales leadership departures on the R&D side but just -- just kind of help us understand how you're adapting to some of the changes. And -- and just given CDMS tends to be longer sales cycles, just how -- how customers are thinking about that in the current environment.

Peter Gassner -- Chief Executive Officer

Yeah, it's going very well in the clinical data management area. You know, what I mentioned in my prepared remarks is actually not a new deal there so much as that customer that went live in six month -- a top 20 customer that went live in six months on a core EDC product. That's kind of -- for all new studies, that's kind of unheard of. That's super, super fast.

That's the thing that many customers generally would do in 12 months, 18 months, even two years. So, I think that's going to generate its own -- its own kind of momentum. Especially we have our R&D summit coming up in the fall, that customer will be talking there about what they did. So, I'm really pleased with that.

And the competitive environment is actually quite benign. It's not -- it's not moving. If you look at the competitive environment, it's not -- it's not moved since we entered into it. Now, that's just with our core -- with our EDC product.

We also call that CDMS, but that's a core electronic data capture. We're also starting to make early progress in our other areas. Randomization and trial supply management, that's a -- that's a big area as well. And then, the ePRO, patient-reported outcomes, that's a big area as well.

And there's never been a company that has been a leader in all of those three categories before. I think we're set out to do that over time. And it's just sort of what Veeva does: make integrated suite of products that's all great and effective in the clinical data management area. There's never been a company that's accomplished that.

So, while I'm very excited about our EDC product progress, that's -- that's just getting started for clinical data management.

Operator

Thank you. Your next question comes from the line of Charles Rhyee of TD Cowen. Please go ahead.

Charles Rhyee -- Cowen and Company -- Analyst

Yeah, thanks for taking the question. Peter, I think you guys mentioned Crossix briefly that it kind of contributed revenue growth. If I recall, you know, this is one that you've called out in the past. You're talking about the environment being tough, maybe causing some slowing growth in the near term.

Can you give us an update here? Has the environment improved at all, you know, for Crossix? Maybe give us a little bit more details there.

Brent Bowman -- Chief Financial Officer

Yeah, this is Brent. I'll take that question. So, you know, overall, you know, we've talked about the macro over the last 90 days hasn't changed and that's applicable for Crossix as well. It was one of the areas in the back half of last year that had a little bit more of the headwinds with marketing budgets.

So, it is still in that unchanged state. So, it's still a very exciting business for us with a lot of -- very very strategic and meaningful to our customer base. So, we're excited about the opportunity but -- but no change in the macro.

Charles Rhyee -- Cowen and Company -- Analyst

OK. And then, Brent, maybe just to follow up, you know in the guidance you're -- you're implying a step up in the operating margins to, you know, call it 30, 34%. You had these summits and kickoffs. Can you give us a little bit more sense for the mix and the opex lines that we should kind of expect -- imagine, sales and marketing steps up in the second quarter? Maybe just give us a little sense for the cadence, how we should think about sort of the various opex lines?

Brent Bowman -- Chief Financial Officer

Yeah, it's going -- I mean, it's going to flow through -- through the course of the year because think about we have field kickoffs in one quarter. We'll have a commercial summit in another quarter and R&D summit in a different quarter. So, I don't think I would try to over -- over model that. Think about that as an incremental step up overall for the year, and it's relatively smooth.

Q1 was the field kickoff. That would be the one example where it's a little bit larger.

Charles Rhyee -- Cowen and Company -- Analyst

OK, perfect. Thank you.

Brent Bowman -- Chief Financial Officer

Sure, no problem.

Operator

Your next question comes from the line of Stan Berenshteyn of Wells Fargo Securities. Please go ahead.

Stan Berenshteyn -- Wells Fargo Securities -- Analyst

Hi. Thanks for taking my questions. Maybe just revisiting the EDC. When you announced, I'm just curious, have they provided any feedback as to why they switched away from their legacy EDC provider? And can you share with us who their legacy EDC vendor was or is, I should say?

Peter Gassner -- Chief Executive Officer

Yeah, and I wouldn't mention -- in general, we're always replacing one of the two main incumbents for large systems. That would be metadata or Oracle, and we've replaced both of those. And the case for change is really around modernization. And it's around modern modernization, better customer relationship.

So, modernization would be around better application, better experience for the clinical research site, faster to build a clinical research study, faster to do a change of a clinical research study, and then also the ability that Veeva has a clinical operations suite, as well as a clinical data management suite. And we deliver, maintain, and update, and upgrade that integration between those two things. So, we completely take that burden on for the customer. So, that's -- that's what it is.

It's not that complicated: more modern, better service, and more integrated because we have the clinical operations suite.

Stan Berenshteyn -- Wells Fargo Securities -- Analyst

OK. And then, maybe a quick one on commercial. Can you give us any updates on Crossix? Are you seeing any changes in the growth rates there? And any updates on global pharma sales rep numbers?

Peter Gassner -- Chief Executive Officer

In terms of Crossix, I'll take that one, and then Paul maybe the former sales reps number. Crossix business continues on. You know, it'll have its ups and downs quarter by quarter because it's related to marketing spend and campaigns, and that -- that can go up and down a little bit. So, in that way, it's a little bit more like our professional services business.

The directions we're taking Crossix is to use it to -- Crossix and our CRM system to integrate them more tightly together going forward. They're integrated now, integrated more tightly, more bi-directionally to help integrate sales and marketing at our customer sites. And that's -- that's something they're really excited about. And remember, for the -- for Crossix, that's the same core data platform that we use to leverage to build Compass as well.

So, we're committed to Crossix and excited for Crossix and looking forward to converting more of our customers to enterprise license agreements over time, and that -- that will then smooth out some of that up and down in the quarter. And then, in terms of the pharmaceutical sales reps, Paul?

Paul Shawah -- Executive Vice President, Commercial Strategy

Yeah, I'll give you an update there. You know, just in terms of the reductions, the -- the majority of the reductions have already played out through the system. And then, most of the remaining reductions that we had talked about for a long time will play out through the remainder of this year. And I expect, when it's all said and done, it'll end up being slightly less than the 10% that we initially had -- had projected and talked about.

We did see very slight reductions in the quarter, roughly in line with what we had anticipated.

Operator

Thank you. Your next question comes from the line of Natalie Howe of Bank of America. Please go ahead.

Natalie Howe -- Bank of America Merrill Lynch -- Analyst

Thanks for taking my question. So, earlier, you touched a bit on Veeva quality, and in the press release, you mentioned that Vault QMS won a top 20 pharma. So, the quality segment seems to have a pretty large opportunity. Can you talk a bit more on what has been driving the strength in that category and expand a bit more on how you're really going to capture the opportunity there? Thank you.

Peter Gassner -- Chief Executive Officer

Yeah, we have -- quality is a big area for us. So, in that quality suite, we have QualityDocs which is the quality documentation management, standard operating procedures, things like that. We have the quality management system which is managing quality events, deviations, things called CAPAs. Then we also have training in there.

Then we also announced LIMS, our laboratory information system, for manufacturing; and our validation product, which is computer systems and other validations. And then, also, we have what's called LearnGxP, which is our learning content for quality. So, it's a -- it's a very -- it's a very big area, and that's never been available from -- from one vendor before, all on a unified data model and platform. So, that's -- that's what we have, it's quite unique.

We set out to build that. The early plans of doing that were roughly 10 years ago, and it takes a long time to execute on that. We're very excited. What's fueling the momentum there is customer success.

First of all, these systems are not things you change out easily or lightly. Long implementations, and you don't do it unless you need to do it. So, each customer has their own time frame when their existing systems are running out of gas. I would say they're not investing much these days in their legacy systems because there's broad awareness that Veeva is probably a better alternative.

I do get the feeling now for most customers. They think they probably will be going to Veeva for our core established products, training, QualityDocs, QMS, and the question is when. And then, there's a lot of wait-and-see about our new products, Validation and LIMs, "Hey, is that product going to be real? I don't want to be first, " you know, "Let's -- let's get that going." So, that's how it is. It's a long, long replacement cycle.

When we talk about, you know, a long runway for growth ahead, those are the types of things, the seeds we've planted in, things like LIMS, or we don't even have our first customer. ePRO, where we just have a few customers. Compass, we have nobody on patient and prescriber, you know. Our safety suite, we have more to build out in our safety suite.

That's why I say long runway of growth, and there's no magic to it. It's driven by customer success.

Operator

Thank you. There are no further questions at this time. I would like to turn the call back to Peter Gassner for closing remarks. Please go ahead.

Peter Gassner -- Chief Executive Officer

All right. Thank you, everyone, for joining the call today, and thank you to our customers for your continued partnership and to the Veeva team for really an outstanding work in this quarter. Thank you.

Operator

[Operator signoff]

Duration: 0 minutes

Call participants:

Gunnar Hansen -- Senior Director, Investor Relations

Peter Gassner -- Chief Executive Officer

Joe Vruwink -- Robert W. Baird and Company -- Analyst

Paul Shawah -- Executive Vice President, Commercial Strategy

Ken Wong -- Oppenheimer and Company -- Analyst

Brent Bowman -- Chief Financial Officer

Brian Peterson -- Raymond James -- Analyst

Richard Poland -- RBC Capital Markets -- Analyst

Dylan Becker -- William Blair and Company -- Analyst

Craig Hettenbach -- Morgan Stanley -- Analyst

Hannah Rudoff -- Piper Sandler -- Analyst

Matt Shea -- Needham and Company -- Analyst

Carolyn Valenti -- Goldman Sachs -- Analyst

Jack Wallace -- Guggenheim Partners -- Analyst

Jailendra Singh -- Truist Securities -- Analyst

Saket Kalia -- Barclays -- Analyst

Stephanie Davis -- SVB Securities -- Analyst

Tyler Radke -- Citi -- Analyst

Charles Rhyee -- Cowen and Company -- Analyst

Stan Berenshteyn -- Wells Fargo Securities -- Analyst

Natalie Howe -- Bank of America Merrill Lynch -- Analyst

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