Executive Summary

Q3 FY25 delivered solid upside to company guidance: revenue $699.2M (+13% YoY), non-GAAP EPS $1.75, and non-GAAP operating income $304.0M; management highlighted “results ahead of guidance on all metrics” and strong execution across Development Cloud and Commercial .
Mix and profitability improved: subscription revenue rose 17% YoY to $580.9M; non-GAAP operating margin reached 43.5% (vs. 38.1% a year ago), with margin outperformance driven by revenue upside, expense timing, and ongoing cost discipline .
Strategic momentum: >30 customers live on Vault CRM, the 4th top‑20 biopharma committed to Vault CRM, and new AI capabilities (CRM Bot, MLR Bot, Voice Control) position Commercial for 2025+; Boehringer Ingelheim’s commitment and the Walgreens data partnership bolster the data and CRM narratives .
Guidance raised: FY25 revenue raised to $2,722–$2,725M (from $2,704–$2,710M), non‑GAAP operating income to ~$1,120M (from ~$1,080M), and non‑GAAP EPS to ~$6.44 (from ~$6.22); Q4 guidance set at revenue $696–$699M, non‑GAAP op income ~$275M, and non‑GAAP EPS ~$1.57 .
Catalyst framing: beats vs company guidance and a FY25 raise amid visible CRM migrations and data wins are constructive; note that S&P Global consensus estimates were unavailable at run-time, so comparisons to Street were omitted (see Estimates Context) .

What Went Well and What Went Wrong

What Went Well

Broad beat and better margins: “We delivered results ahead of guidance on all metrics,” and margin outperformance was driven roughly half by revenue, one-quarter by expense timing, and one-quarter by cost discipline .
Commercial execution: attachment momentum and stabilizing seat counts; >30 live on Vault CRM, a 4th top‑20 biopharma commitment, and “virtually” winning new CRM deals, while Crossix and commercial content were key contributors earlier in the year .
Product innovation in AI: announced CRM Bot and Voice Control (no-charge features leveraging customer LLMs/Apple Intelligence) and MLR Bot (paid, Veeva‑hosted LLM) to accelerate productivity and approvals; management expects no material gross margin impact from the AI roadmap .

What Went Wrong

Services variability: earlier in the year, services faced timing and subcontractor dynamics; Q3 upside reflected projects progressing faster than expected, but services can remain lumpy quarter to quarter .
Macro/regulatory uncertainty: management flagged early-cycle uncertainty around a new U.S. administration (e.g., hypothetical DTC advertising changes), though noted “business as usual” so far for customers .
TFC comparability: the prior revenue timing change (TFC) continued to complicate year-ago growth comparability, with CFO noting a ~2% revenue growth impact when normalizing; normalization clarity improves next year .

Financial Results

Summary P&L and Margins (USD)

Metric	Q1 FY25	Q2 FY25	Q3 FY25
Revenue ($M)	$650.3	$676.2	$699.2
GAAP Diluted EPS	$0.98	$1.04	$1.13
Non-GAAP Diluted EPS	$1.50	$1.62	$1.75
GAAP Operating Margin (%)	23.9%	24.6%	25.9%
Non-GAAP Operating Margin (%)	40.1%	41.4%	43.5%

Q3 Actual vs Company Guidance (from Q2)

Metric	Q3 Actual	Q3 Company Guidance (as of Aug 28)	Result
Revenue ($M)	$699.2	$682–$685	Above high end
Non-GAAP Operating Income ($M)	$304.0	$273–$275	Above high end
Non-GAAP Diluted EPS	$1.75	$1.57–$1.58	Above high end

Subscription Services by Product Area ($M)

Metric	Q1 FY25	Q2 FY25	Q3 FY25
Subscription – Commercial Solutions	$261.3	$271.8	$278.4
Subscription – R&D Solutions	$272.6	$289.5	$302.5
Total Subscription Services	$534.0	$561.3	$580.9

Professional Services & Other by Product Area ($M)

Metric	Q1 FY25	Q2 FY25	Q3 FY25
Services – Commercial Solutions	$48.8	$45.1	$45.9
Services – R&D Solutions	$67.6	$69.8	$72.5
Total Services & Other	$116.4	$114.9	$118.4

KPIs and Balance Highlights

Metric	Q1 FY25	Q2 FY25	Q3 FY25
Net Cash from Ops (GAAP, period)	$763.5M (3 mo)	$92.9M (3 mo)	$164.1M (3 mo)
Deferred Revenue (period-end)	$1,029.5M	$956.4M	$739.7M
Cash & Equivalents (period-end)	$1,197.2M	$1,165.8M	$1,044.5M
Gross Margin (Non-GAAP, total rev)	75.6%	77.2%	77.3%

Non-GAAP adjustments primarily include stock-based compensation and amortization of purchased intangibles (plus a $5M G&A litigation settlement in Q1 FY25), with management’s reconciliation detailed in the 8‑K exhibits .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Total Revenue	FY25	$2,704–$2,710M	$2,722–$2,725M	Raised
Non-GAAP Operating Income	FY25	~ $1,080M	~ $1,120M	Raised
Non-GAAP Diluted EPS	FY25	~ $6.22	~ $6.44	Raised
Total Revenue	Q4 FY25	—	$696–$699M	Initiated
Non-GAAP Operating Income	Q4 FY25	—	~ $275M	Initiated
Non-GAAP Diluted EPS	Q4 FY25	—	~ $1.57	Initiated

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1–Q2)	Current Period (Q3)	Trend
Vault CRM migrations and commitments	GA in April; early go‑lives; 14 wins in Q2; migration tooling maturing; next releases won’t delay migrations	>30 live; 4th top‑20 commitment; 13 Vault CRM wins in Q3; first large migration completes by end of 2025	Improving
AI/GenAI roadmap	Direct Data API strategy; partners/apps; use cases in commercial and R&D	CRM Bot/Voice Control (no-charge, customer compute), MLR Bot (paid, Veeva-hosted LLM); no material GM impact expected	Expanding
Services environment	Deal timing/FX and customer-direct SI contracting pressured services; focus on customer success	Projects progressed faster; services contributed to revenue/billings upside; base stabilizing	Stabilizing
Macro/regulatory	AI planning caused enterprise timing disruptions; macro still challenging	Customers “focused on work” amid admin change; no decision changes; DTC elimination seen as remote/long process	Stable
Data Cloud/Compass & Crossix	Compass Patient traction; Link >100 customers; Crossix strengthening	Crossix growth aided commercial; leadership improving vs rivals; Walgreens partnership enriches data	Improving
Safety suite	—	Approaching a tipping point; broader suite (Signal/Workbench) fills gaps; automation across clinical/safety	Improving

Management Commentary

“We delivered financial results above our guidance, with total revenue of $699 million and non‑GAAP operating income of $304 million.” – CEO Peter Gassner .
“More than 30 customers are now live on Vault CRM… the fourth top 20 biopharma committed to Vault CRM… this month the latest release of Vault CRM will include the full functionality of Veeva CRM and additional new capabilities.” – Press release highlights .
“There won’t be any material impact to our gross margin [from AI]… where we have to use significant compute power, we will most likely charge [MLR Bot]; where we don’t, we most likely won’t [CRM Bot].” – CEO Peter Gassner .
“About half [of the margin outperformance] driven by the revenue beat, [about] a quarter driven by timing of expenses, [and] remaining quarter [by] continued expense discipline.” – CFO Brian Van Wagener .
“Crossix… real innovation… our data network is getting more rich… integration with our CRM product… but the main driver of our strength in commercial… [includes] CRM, Commercial Content, [and] Compass.” – CEO Peter Gassner .

Q&A Highlights

Vault CRM value proposition and migrations: Customers want continuous innovation and a unified platform (sales/medical/marketing/service); smaller biotechs migrate faster, top‑20s plan multi‑year transitions; recent 4th top‑20 commitment was an existing CRM customer (Boehringer Ingelheim) .
Margin dynamics: Margin upside breakdown tied to revenue beat and expense timing; management continues to emphasize disciplined investment and period‑by‑period cost control .
AI monetization and impact: MLR Bot will be a paid add‑on (Veeva‑hosted LLM costs), CRM Bot leverages customer LLMs and is included; no expected material gross margin impact from AI features .
CDMS ramps and visibility: CDMS ramps tracking as planned with multi‑year schedules; visibility into FY26 marginally better vs last year given ramps and more mature product set .
Competitive landscape: Salesforce is the primary CRM competitor post‑IQVIA OCE sunset; Veeva sees structural advantages and improving competitive position in Commercial and Development Cloud .

Estimates Context

S&P Global consensus estimates (revenue and EPS) for Q3 FY25 were unavailable due to a temporary request limit with the data provider at run-time; therefore, we did not include Street comparisons here. We will update this section upon successful retrieval from S&P Global. Company performance versus its own guidance is shown above .

Key Takeaways for Investors

Durable growth and profitability: Q3 beat across revenue, non‑GAAP EPS, and non‑GAAP operating income, with non‑GAAP margin at 43.5%, reflecting strong execution and cost discipline .
FY25 guide raised: Upward revisions to revenue, non‑GAAP operating income, and non‑GAAP EPS, with Q4 set up for continued solid performance .
CRM migration flywheel: >30 live Vault CRM customers, a 4th top‑20 commitment, and tooling/process maturity improve multi‑year migration visibility and reinforce competitive moat .
AI strategy is pragmatic: Clear monetization where Veeva bears compute (MLR Bot), no-charge where customer bears compute (CRM Bot), with no material gross margin impact anticipated .
Data assets compounding: Walgreens partnership and continuing Crossix/Compass traction enhance data breadth and differentiation across commercial offerings .
Services normalizing from earlier headwinds: Lumpy but stabilizing, with Q3 projects progressing faster-than-expected; continue to model variability but improving execution .
Watch items: Macro/regulatory developments (e.g., DTC advertising debate) and residual TFC comparability noise; management sees “business as usual” in decisions and improving normalization profile into next year .

VEEVA SYSTEMS INC (VEEV)·Q3 2025 Earnings Summary