EX-99.2 3 a51765017ex99_2.htm EXHIBIT 99.2

Exhibit 99.2

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ASC 606 Investor Presentation


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Copyright © Veeva Systems 2018 Multi-year contracts with ramping fees: In multi-year arrangements with ramping fees (e.g., Year 1 fees of $1M, Year 2 fees of $2M, and Year 3 fees of $3M), 606 dictates that revenue be recognized equally over each year of the arrangement. −Relative to 605, more revenue (which will be unbilled) will be recognized in early years of the arrangement; less revenue in later years. −Application of this treatment depends on the terms of the customers’ arrangements. Capitalized commissions: We previously expensed commissions in the period they were incurred. Going forward we will capitalize commissions and amortize over a 3-year term. Calculated billings: Under 606, the billings calculation will have to change to account for unbilled receivables. −New formula Calculated billings = Revenue + change in deferred revenue –change in unbilled receivables. −Using this formula, there is no change to calculated billings. No change to cash flows Note: The following pages detail the anticipated impact of ASC 606 to FY17 & FY18 financials. These numbers are subject to change and will be finalized in our Form 10-K. Primary impacts from 606 transition FY17 & FY18 will be restated under the full retrospective method


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Copyright © Veeva Systems 2018 Total revenue ($M) 544 686 551 691 FY2017 FY2018 605 606 All 606 impacts are in subscription revenue; services revenue unchanged YOY growth: 26% YOY growth: 25%


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Copyright © Veeva Systems 2018 GAAP operating expenses & margin 262 323 256 321 FY2017 FY2018 605 606 Operating expenses ($M) 20% 22% 22% 23% FY2017 FY2018 605 606 Operating margin (%)


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Copyright © Veeva Systems 2018 Non-GAAP operating expenses & margin 223 277 217 275 FY2017 FY2018 605 606 Non-GAAP operating expenses ($M) 29% 31% 31% 32% FY2017 FY2018 605 606 Non-GAAP operating margin (%) Note: GAAP to Non-GAAP reconciliation tables available in the Appendix.


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Copyright © Veeva Systems 2018 Quarterly detail –GAAP ($M) FY'17 Q1'18 Q2'18 Q3'18 Q4'18 FY'18 ASC 605 reported Total revenue $ 544 $ 158 $ 167 $ 176 $ 185 $ 686 GAAP cost of revenue 174 49 51 53 59 212 GAAP opex 262 72 79 81 91 323 GAAP operating profit $ 108 $ 37 $ 37 $ 42 $ 35 $ 151 % operating margin 20% 24% 22% 24% 19% 22% GAAP diluted EPS $ 0.47 $ 0.24 $ 0.25 $ 0.22 $ 0.22 $ 0.92 ASC 606 restated Total revenue $ 551 $ 160 $ 168 $ 177  $ 186 $ 691 GAAP cost of revenue 174 49 51 53 59 212 GAAP opex 256 72 79 81 89 321 GAAP operating profit $ 121 $ 39 $ 38 $ 43 $ 38 $ 158 % operating margin 22% 24%  23% 24% 20% 23% GAAP diluted EPS $ 0.53 $ 0.25 $ 0.25 $ 0.23 $ 0.25 $ 0.97


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Copyright © Veeva Systems 2018 Quarterly detail –non-GAAP Note: GAAP to Non-GAAP reconciliation tables available in the Appendix. ($M) FY'17  Q1'18 Q2'18 Q3'18 Q4'18 FY'18 ASC 605 reported Total revenue $ 544 $ 158 $ 167 $ 176 $ 185 $ 686 Non-GAAP cost of revenue 162 45 47 49 55 197 Non-GAAP opex 223 62 68 69 78 277 Non-GAAP operating profit $ 159 $ 51 $ 52 $ 58 $ 52 $ 212 % operating margin 29%  32% 31% 33% 28% 31% Non-GAAP diluted EPS $ 0.73 $ 0.22 $ 0.23 $ 0.25 $ 0.23 $ 0.93 ASC 606 restated Total revenue $ 551 $ 160 $ 168 $ 177 $ 186 $ 691 Non-GAAP cost of revenue 162 45 47 49 55 197 Non-GAAP opex 217 62 68 69 76 275 Non-GAAP operating profit $ 172 $ 53 $ 53 $ 59 $ 55 $ 219 % operating margin 31% 33% 32% 33% 29% 32% Non-GAAP diluted EPS $ 0.79 $ 0.23 $ 0.24 $ 0.25 $ 0.24 $ 0.96


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Copyright © Veeva Systems 2018 Selected balance sheet items FY17 FY18 ($M) ASC 605 reported ASC 606 restated ASC 605 reported ASC 606 restated Assets Unbilled accounts receivable* $ 6 $ 9 $ 9 $ 13 Deferred costs, net, noncurrent — 28 — 30 Deferred income taxes, non-current 16 6 6 — Liabilities Deferred revenue $ 214 $ 209 $ 275 $ 267 Deferred income taxes, non-current 13 13 7 10 Stockholders’ equity: Retained earnings $ 213 $ 238 $ 355 $ 388 *Unbilled accounts receivable was previously reported as a component of Accounts Receivable, net, in consolidated balance sheet and prior to the adoption of 606 represented our unbilled professional services revenue for the last month of the fiscal period.


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Appendix


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Copyright © Veeva Systems 2018 Quarterly detail –GAAP to non-GAAP reconciliation ($M)As reportedASC606 restated As reportedASC606 restated As reportedASC606 restated As reportedASC606 restated GAAP cost of revenue49$ 49$ 51$ 51$ 53$ 53$ 59$ 59$ Stock-based compensation expense(2) (2) (2) (2) (3) (3) (3) (3) Amortization of purchased intangibles(1) (1) (1) (1) (1) (1) (1) (1) Amortization of internal-use software————————Deferred compensation associated with Zinc Ahead acquisition————————Non-GAAP cost of revenue46$ 46$ 48$ 48$ 49$ 49$ 55$ 55$ GAAP operating expenses72$ 72$ 79$ 79$ 81$ 81$ 91$ 89$ Stock-based compensation expense(10) (10) (11) (11) (11) (11) (12) (12) Amortization of purchased intangibles(1) (1) (1) (1) (1) (1) (1) (1) Capitalization of internal-use software————————Amortization of internal-use software1 1 ——————Deferred compensation associated with Zinc Ahead acquisition————————Non-GAAP operating expenses62$ 62$ 67$ 67$ 69$ 69$ 78$ 76$ GAAP operating profit37$ 39$ 37$ 38$ 42$ 43$ 35$ 38$ Stock-based compensation expense12 12 13 13 14 14 15 15 Amortization of purchased intangibles2 2 2 2 2 2 2 2 Capitalization of internal-use software(1)(1)——————Amortization of internal-use software————————Deferred compensation associated with Zinc Ahead acquisition————————Non-GAAP operating profit50$ 52$ 52$ 53$ 58$ 59$ 52$ 55$ GAAP operating margin24%24%22%23%24%24%19%20%Stock-based compensation expense7 7 8 8 8 8 8 8 Amortization of purchased intangibles1 1 1 1 1 1 1 1 Capitalization of internal-use software————————Amortization of internal-use software————————Deferred compensation associated with Zinc Ahead acquisition————————Non-GAAP operating margin32%32%31%32%33%33%28%29%GAAP diluted EPS0.24$ 0.25$ 0.25$ 0.25$ 0.22$ 0.23$ 0.22$ 0.25$ Stock-based compensation expense0.08 0.08 0.09 0.09 0.09 0.09 0.10 0.10 Amortization of purchased intangibles0.01 0.01 ——0.01 0.01 0.01 0.01 Capitalization of internal-use software————————Amortization of internal-use software————————Deferred compensation associated with Zinc Ahead acquisition————————Income tax effect of non-GAAP adjustments(0.11) (0.11) (0.11) (0.11) (0.07) (0.08) (0.10) (0.11) Non-GAAP diluted EPS0.22$ 0.23$ 0.23$ 0.23$ 0.25$ 0.25$ 0.23$ 0.25$ Three Months Ended Three Months Ended Three Months Ended Three Months Ended April 30, 2017July 31, 2017October 31, 2017January 31, 2018


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Copyright © Veeva Systems 2018 Fiscal year detail –GAAP to non-GAAP reconciliation ($M)As reportedASC606 restated As reportedASC606 restated GAAP cost of revenue174$ 174$ 212$ 212$ Stock-based compensation expense(7) (7) (10) (10) Amortization of purchased intangibles(4) (4) (4) (4) Amortization of internal-use software(1) (1) (1)(1)Deferred compensation associated with Zinc Ahead acquisition————Non-GAAP cost of revenue162$ 162$ 197$ 197$ GAAP operating expenses262$ 256$ 323$ 321$ Stock-based compensation expense(33) (33) (44) (44) Amortization of purchased intangibles(4) (4) (4) (4) Capitalization of internal-use software——2 2 Amortization of internal-use software1 1 ——Deferred compensation associated with Zinc Ahead acquisition(3) (3) ——Non-GAAP operating expenses223$ 217$ 277$ 275$ GAAP operating profit108$ 121$ 151$ 158Stock-based compensation expense41 41 54 54 Amortization of purchased intangibles8 8 8 8 Capitalization of internal-use software(1) (1) (1) (1) Amortization of internal-use software1 1 ——Deferred compensation associated with Zinc Ahead acquisition3 3 ——Non-GAAP operating profit160$ 173$ 212$ 219$ GAAP operating margin20%22%22%23%Stock-based compensation expense7 7 8 8 Amortization of purchased intangibles2 2 1 1 Capitalization of internal-use software————Amortization of internal-use software————Deferred compensation associated with Zinc Ahead acquisition————Non-GAAP operating margin29%31%31%32%GAAP diluted EPS0.47$ 0.53$ 0.92$ 0.97$ Stock-based compensation expense0.27 0.27 0.36 0.36 Amortization of purchased intangibles0.06 0.06 0.05 0.05 Capitalization of internal-use software——(0.01) (0.01) Amortization of internal-use software————Deferred compensation associated with Zinc Ahead acquisition0.02 0.02 ——Income tax effect of non-GAAP adjustments(0.09) (0.09) (0.39) (0.41) Non-GAAP diluted EPS0.73$ 0.79$ 0.93$ 0.96$ Fiscal Year Ended January 31, 2018Fiscal Year Ended January 31, 2017