Veeva Systems inc (VEEV) Q2 2022 Earnings Call Transcript

Veeva Systems Inc. (NYSE: VEEV) Q2 2022 earnings call dated Sep. 01, 2021

Corporate Participants:

Ato Garrett — Investor Relations

Peter Gassner — Founder and Chief Executive Officer

Paul Shawah — Executive Vice President, Commercial Strategy

Brent Bowman — Chief Financial Officer

Analysts:

Rishi Jaluria — RBC Capital Markets — Analyst

Brian Peterson — Raymond James — Analyst

Brent Bracelin — Piper Sandler — Analyst

Ken Wong — Guggenheim Securities — Analyst

Stephanie Davis — SVB Leerink — Analyst

Dylan Becker — William Blair — Analyst

Karl Keirstead — UBS — Analyst

Jackson Ader — J.P. Morgan — Analyst

Donald Hooker — KeyBanc Capital Market — Analyst

Brad Sills — BofA Securities — Analyst

Kirk Materne — Evercore — Analyst

Joe Vruwink — Baird — Analyst

Ryan MacDonald — Needham Company — Analyst

Presentation:

Operator

Good day, and thank you for standing by. Welcome to Veeva Systems’ Fiscal 2022 Second Quarter Results Conference Call. [Operator Instructions]

I would now like to hand the conference to the speaker to give the forward-looking statements. Thank you.

Ato Garrett — Investor Relations

Good afternoon, and welcome to Veeva’s fiscal 2022 second quarter earnings conference call for the quarter ended July 31, 2021.

As a reminder, we posted prepared remarks on Veeva’s Investor Relations website just after 1:00 PM Pacific today. We hope you’ve had a chance to read them before the 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 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 the risk factors included in our most recent filing on Form 10-Q. Forward-looking statements made during the call are being made as of today, September 1, 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 any forward-looking statements.

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 — Founder and Chief Executive Officer

Thank you, Ato, and welcome to the call everyone.

It was another great quarter for Veeva with strength across the business. Total revenue was up 29% to $456 million. Subscription revenue was also up 29% to $366 million. Non-GAAP operating income was $192 million, or 42% of total revenue. As noted in my prepared remarks, we did well in our established areas, but also had major progress in our newer areas, including Safety, CDMS, Digital Trials, Link and Data Cloud.

At this point, I’d like to open up the call to questions for Brent, Paul or myself.

Questions and Answers:

Operator

[Operator Instructions] For our first question, we have Rishi Jaluria from RBC. Rishi, your line is open.

Rishi Jaluria — RBC Capital Markets — Analyst

Wonderful. Thanks so much for taking my questions and nice to see some acceleration in the business. Wanted to, Peter, talk — in your prepared remarks, you talked a little bit about how there are some shrinking footprints and deployments at some of the — on the CRM side. Can you maybe talk about how long do you expect this headwind to last in terms of shrinking before it starts to stabilize? And alongside that, you talked a little bit about it, but Commercial Cloud growth still accelerated in the quarter, which is really nice to see in spite of the headwinds. Can you maybe talk about what is driving that and maybe offsetting the shrinking preference? And particularly, what you’re most excited about within Commercial Cloud? And what you think is kind of a sustainable growth rate for this business? And I’ve got a follow-up on the CDMS side.

Paul Shawah — Executive Vice President, Commercial Strategy

Yeah, I’ll take that. Thanks, Rishi. This is Paul.

Yeah, so just to give you a little bit of color, if you remember back probably two — I think it’s Q2 [Phonetic] of last year, we started talking about the idea that we were helping to make the industry more efficient. We were helping industry move to digital. And as we did that in an accelerated fashion, they would realize the productivity and efficiency gains of doing that and there would likely be some reductions coinciding with that. We haven’t seen them up until actually this quarter. So, we started seeing some of the first reductions from — a small number of our enterprise customers had some reductions that were a little bit out of the ordinary. So, we just started seeing it this quarter. I expect we’ll continue to see it through the second half of this year and also into next year.

We do expect that we’ll offset those reductions, as we have this quarter, with strength really broadly across Commercial Cloud. We’re going to continue to gain share in CRM. We gained share in CRM this quarter. I expect we’ll continue to do that over time, and then we’ll see strength in the add-ons, some of the newer products that you heard Peter talking about, particularly in the data space like Link. Link had particularly strong quarter and that’s progressing really well. Crossix will be a contributor. And then over the long term, we’ll see more contribution from Data Cloud. So, a lot to be excited about going forward.

Rishi Jaluria — RBC Capital Markets — Analyst

All right. Wonderful. That’s really helpful. And then on the CDMS side, maybe you want to expand and talk a little bit about your success in partnering with CROs? Because if we rewind the clock back couple of years, there were definitely investor concerns that CROs were going to be a little bit of a headwind to Veeva over time, and clearly hasn’t turned out to be that way, and now you’re talking about the traction you’re seeing on CRO partner program and how that relates to CDMS. Can you talk a little bit about your strategy with CRO, particularly as it relates to the CDMS side? And how you’ve been able to gain that momentum with that as a channel? Thanks.

Peter Gassner — Founder and Chief Executive Officer

I’ll take that. This is Peter.

CROs will be, especially, important partner for CDMS, because when that — when CDMS becomes a part of their tech stack that they can offer to their customers, it’s really an efficient channel. So, how are we gaining traction there? I would say, number one, by actually product excellence, creating a better truly cloud CDMS product that’s integrated in with the other Veeva products. So, as that has happened, the sponsors, they’ll start asking the CDMS — the CRO, sorry, they’ll start asking the CROs about that, hey, are you offering Veeva? Maybe you should be offering Veeva. We’re using Veeva. And then the CROs, they start to get to know more about Veeva and then they start offering Veeva as a — first experimentally as a pack — as a product. If a sponsor would want it and then as they start to like it and see the efficiencies, then they start to make it their standard. So, it’s really about customer success for the CRO that’s about having an excellent product, but also having a great partner program and providing them the support that they need.

Rishi Jaluria — RBC Capital Markets — Analyst

All right. Wonderful. Thank you so much.

Operator

For our next question, we have Brian Peterson from Raymond James. Brian, your line is open.

Brian Peterson — Raymond James — Analyst

Thank you for taking the question. So, maybe just a follow-up on Rishi’s question, but I’m just curious on the timing of some of the sales rep trends for some of your customers, like how did that trend versus your expectation and how pervasive is that? I guess, I’m trying to think about where that impact is going to come in and how to think about what that could be in maybe fiscal year ’23 and beyond?

Paul Shawah — Executive Vice President, Commercial Strategy

Yeah. So, in terms of timing, we talked about it as happening over one to two years. It’s not an exact science, and we see a lot of our customers really thinking about — the industry hasn’t hit a new steady state. So, if you remember, the industry was largely face-to-face and now there was a massive shift to digital and things are still influx, a lot of things are changing with access to offices as the pandemic continues and lingers on. So, if you’re a life sciences company, you don’t want to overcorrect in one direction or the other too quickly. So, that’s why you’re seeing a lot of this just take some time for companies to be a little bit thoughtful about what’s the right size of the field sales force. But in general, on average, we do see, we are seeing — our customers getting the benefit of becoming more digital. I think that trend is here to stay. That will happen over the long term. And I think they’ll take these reductions over the next — still over the next one to two years. So, I think that timeframe — and I think once we kind of hit a new steady state, I don’t anticipate it changing much beyond that. So, these are always reductions that we thought would happen as the industry became more efficient, we’re just seeing them a little bit faster than we had anticipated.

Brian Peterson — Raymond James — Analyst

And, Paul, what would be — like if you’re thinking about the total investments they’re going to make, right, you can think about the efficiencies they’re going to gain maybe from attacking something with lower headcount, but there’s a lot of opportunity to take some of those dollars and redeploy it. So, what did some of the customers maybe learned or how are they thinking about attacking the opportunity with more of a digital motion?

Paul Shawah — Executive Vice President, Commercial Strategy

Yeah, you’re exactly right. It’s the right way to think about it. So, as we make — let’s say, as we’re able to make an individual company, let’s say, 10% or 15% or 20% more productive because they’re able to mix more digital and because they’re able to accomplish more, they have the option, right, they have the option to reduce the size by that same amount or they have the option to take some of those gains and apply them just to reaching more customers. So, that is the calculus, and those are the kinds of discussions that we have with our customers all the time. Our strategy teams or business consulting teams in terms of what’s the right mix, the right mix of digital and field force engagement and we’re in active discussions with many of our customers on those kinds of things. And I think it will be a mix for most customers. They will not take all of their productivity gains as reductions, there’ll be a bit of a mix based on geography and therapeutic area in the specific needs of each business.

Brian Peterson — Raymond James — Analyst

Thank you.

Operator

For our next question, we have Brent Bracelin from Piper Sandler. Brent, your line is open.

Brent Bracelin — Piper Sandler — Analyst

Thank you, and good afternoon. I guess one for Peter and one for Brent, if I could. Peter, Safety really stood out this quarter, I think with your first half ’20 win. Do you think about that win as one of the early adopters? I mean it seems like Safety is happening here maybe a little faster than I would anticipated and just wondering if that win with the first half ’20 is just an early adopter or are you seeing a stronger interest and appetite to rollout that Safety Vault suite of products? And then, again, one quick follow-up for Brent.

Peter Gassner — Founder and Chief Executive Officer

It’s — we do have early adopters. We have a number of customers, but smaller. We have divisions of some large customers. But this was the first one to go all in with — the first half ’20 to go all in with us for Safety. You never know when that’s going to happen. The timing has to be right from the customers’ perspective. They have to have a real need to want to go early. They have to have a real need, and our product has to be ready, and the stars have to align. I thought it would happen sometime in the next — sometime this year or early next year. And it happened — so it happened a bit quicker than I thought. But not — we would never take a deal like that before we’re ready, right? We would turn down a deal like that if we weren’t ready. So, it happened just at the right time with just the right customer and it is going to be a positive. But I don’t see it as a — I see it as a turning point for Veeva, but it’s not going to be a turning point in revenue and adoption, that still happens on its normal lifecycles. You’ll really see the impact of this deal and the fall through on this deal, honestly, it’s two, three years down the road, that’s when it clearly starts moving the market. You saw this with CDMS. This was maybe a year and a half or so ago where we announced our first enterprise top 20 for CDMS. And now what you’re seeing is the echoes of that follow through in our broad CDMS adoption.

Brent Bracelin — Piper Sandler — Analyst

Super helpful color there. And then I guess, Brent, for you, referenced kind of a tight labor market, I think that’s been referenced quite a bit. Just trying to think through the 5% salary increase, never really done this before. But as you think about that, is that tied to a proactive view to kind of stem churn? Was it reactive? Just trying to think about that 5% salary increase, particularly as it relates to — I think Workday last week also were shifting some dollars out of stock-based comp to cash and just didn’t know if there was a broader trend happening in the Bay Area or not, but could you talk a little bit about that 5% salary increase? And is that proactive, reactive? Just trying to understand the logic there and timing. Yeah. I mean this is proactive. We’re doing the right thing by our employee base. And we’re in unusual times a bit with inflationary and a very competitive environment. So, we took a look at that, and we thought that the timing was right and to make this investment in our people. So, it’s effective as of today.

Peter Gassner — Founder and Chief Executive Officer

And, Brent, I would add, we’re pretty international as a company. So, we have a high percentage of — almost half of our people outside the US. And inside the US, our concentration is not really in the Bay Area. We have development — there are multiple development centers Toronto, Boston, Raleigh, and lot of our field people on the East Coast. So, it’s not having to do with the Bay area per se, it was, as Brent mentioned, proactive and broad-based.

Brent Bracelin — Piper Sandler — Analyst

Helpful color. Thank you.

Operator

For our next question, we have Ken Wong from Guggenheim Securities. Ken, your line is open.

Ken Wong — Guggenheim Securities — Analyst

Great. Fantastic. Maybe just a follow-up on that. So, I think we — you’ve quantified the $10 million impact on EBIT for the year. Just wondering how we should think about any potential impact on maybe the services revenue? Should we generally just kind of bump up our services run rate that we’re modeling? Any thoughts on that, Brent? And then I had a follow up for Peter.

Brent Bowman — Chief Financial Officer

Yeah, it’s — there’s a nominal impact there on the services revenue from that perspective. And it’s something that — it’s normal course of business that we do flow that through on the services side, but nothing significant that I think warrants a change in your model.

Ken Wong — Guggenheim Securities — Analyst

Got it. And then I guess another kind of follow-on on that vein. I think I read in the script there, Peter, that you mentioned not raising prices for software or data at this time, and you guys have never raised prices in your history. So, just wondering if that’s something that you’re contemplating with, as you mentioned, inflation, the salary bump? Is that something that might be in consideration down the line?

Peter Gassner — Founder and Chief Executive Officer

It’s good question. Our philosophy has always been get the right price for our product and try not increase the prices of our subscriptions. We haven’t increased them, because customers generally don’t like it and we try to get efficient and deliver more value. And we like to maintain doing that, and we think we can. Could we do that forever? That depends on how many years out in the future and what inflation does. But certainly for the foreseeable future, we don’t anticipate raising our prices for our subscriptions.

Ken Wong — Guggenheim Securities — Analyst

Great. Thanks a lot you two.

Operator

For our next question, we have Stephanie Davis from SVB. Stephanie, your line is open.

Stephanie Davis — SVB Leerink — Analyst

Thank you guys for taking my questions. Congrats on the quarter.

I was hoping you could give us some broader directional views on your digital trials suite, especially in light of the Delta variant? Could the macro backdrop result in a faster pace of adoption? And does that impact your investment speed or priorities in light of that?

Peter Gassner — Founder and Chief Executive Officer

Okay. Thanks, Stephanie. I’ll take that. So, digital trials is really about all types of trials and not really related to COVID or the Delta variant. It’s about making the trials faster and less expenses. So, we have a target of 25% faster, 25% less expensive, and how we’re going to do that is to have it be really patient-centric and really paperless. So, you might hear about something the category called decentralized clinical trials. There’s a lot of talk about that. That’s an area where Veeva is in to, but we’re taking a broader approach. Overall, digitizing the whole clinical trials, starting from the sponsor side, the clinical data management, clinical operations to the clinical research side, and then right out to the patient. So, that’s how we think about it, Stephanie, really broad and very long-term.

Stephanie Davis — SVB Leerink — Analyst

And then a — I probably have to ask the flip side of the sales rep, headcount reduction question, but you’ve been beating margins healthy, despite this kind of being lumpier [Phonetic] over the past few quarters. What’s been driving this outpaced margin expansion? And how sustainable is this?

Brent Bowman — Chief Financial Officer

Yeah. Hi, Stephanie. So, regarding the margin, I mean, there’s a few things drove the outperformance. One is the top line subscription peak is flowing through. And there is some lumpiness on the timing of our new data suppliers. We had one that we thought we’d close in Q2 and it actually closed in August. So, that is some timing that played in, and that’s factored into our guidance going forward. And then timing of hiring, we hired 236 net employees in the quarter, and we are actually slightly behind plan, and we’re looking to catch up in the back half of the year as well. So, they all kind of got contemplated into the beat in the quarter and then kind of how you think about the guide for the balance of the year.

Stephanie Davis — SVB Leerink — Analyst

All right. Helpful. Thank you, guys.

Brent Bowman — Chief Financial Officer

Thank you.

Operator

For our next question, we have Dylan Becker from William Blair. Dylan, your line is open.

Dylan Becker — William Blair — Analyst

[Technical Issues] questions here. I guess maybe first one from a higher level for Peter. You touched on kind of in the prepared remarks, but thinking about, again, kind of your partnership approach with not only your business consulting segment, but as well as kind of with the CROs, I guess, love to understand how you guys are thinking of these as vectors that not only can drive that adoption of the existing platform, but also kind of as drivers of your innovation efforts over time? You talked a lot about kind of the strategic partnership approach, but we’d love to kind of understand how you’re kind of viewing this to drive that innovation roadmap?

Peter Gassner — Founder and Chief Executive Officer

Yeah, it is excellent question. I’ll take the CROs first. We are partnering currently with the CROs to, yes, serve our customers to leverage the CROs as the channel, but also we can get very direct feedback with — from CROs. And we’ve done that, including the CROs more as part of our design process, having talking directly to our product teams, and just get that tight feedback loop going, we put some great effort on that and it’s paying off.

Now, business consulting, that’s a little bit different. These are our consultants, our billable consultants, that are doing business process work with our customers. So, there also we have a tight feedback, because as our customers on the business side are talking with our business process consultants about the process changes they would like to make or the change management they would like to do, that sometimes translating into requirements, into our product or ideas into our product. So, I would say, it’s been a great addition to Veeva this business consulting and it is impacting our product roadmap for the better.

Dylan Becker — William Blair — Analyst

I think that’s excellent to hear. And then maybe one for Paul, and I think we’ve touched on this in the past too, but we’ve talked about the payments integration kind of into CDMS, a nice kind of extension of the platform given that unified approach to the clinical suite. But I’d love to understand how you guys are thinking about that payments opportunity more broadly through the ability to expand use cases? And then what — how you guys are seeing that from an initial adoption perspective, given that CTMS in its own right is kind of still relatively early of an offering to the platform? Thank you, guys.

Peter Gassner — Founder and Chief Executive Officer

Yeah. This is Peter. I’ll take the payments one. Payments as it relates to our clinical operations, you’re right that’s — it’s growing well, but it’s early, because payments requires our CTMS product. CTMS is still relatively early in our lifecycle. So, the idea behind payments is to automate the payments to the clinical research sites based on the activities done and that’s where it’s especially useful for the customer to get their clinical operations and their clinical data management from Veeva, because the clinical data management that creates the activity and it gets passed over into the clinical operations and then the payment is sent out automatically, and that’s the value that the whole suite sort of provides. So, payments is growing well, but still very early.

Dylan Becker — William Blair — Analyst

Great. Thank you guys for taking the questions.

Operator

For our next question, we have Karl Keirstead from UBS. Karl, your line is open.

Karl Keirstead — UBS — Analyst

Hey, Brent. So, Brent, Veeva beat this quarter on both revenue and billings, but relative to the last three or four quarters where you put up 46% beats on revs and 7% to 10% beats on billings, this quarter was a little skinnier. And I’m wondering what changed to create that result relative to your expectations? Thanks.

Brent Bowman — Chief Financial Officer

Yeah. Hi, Karl. Yeah. So, we — as you said, we did beat our guide. We’re very pleased with the 29% year-on-year growth, and Commercial Cloud at 22% and Vault at 37%. So, we are very happy with how we executed. An area that need to call out is on the services side. We did talk about last quarter that we were running at a very high utilization rate, and then we expected that to normalize a bit and that definitely happened in the quarter. On top of that what we saw was an increased amount of PTO, not only on the Veeva delivery side, but also our customers. So, services came in within guide, but on the lower end. But all in all, we’re very happy with the demand picture that we saw for the quarter.

Karl Keirstead — UBS — Analyst

Great. Thank you, Brent. And then if I could just ask you a margin question. So, you indicated that the salary increase will occur over five months of this fiscal year. So, if we annualize that, should we think about the impact on next year’s margins, all else equal, being roughly $25 million impact? And then I guess if we layer that into our models and assume a reversal, if you’d like, of the COVID savings you’re experiencing this year, it feels like the more likely prospect is for margins to be down next year as a result of these two things. Is that at least directionally the correct approach, Brent?

Brent Bowman — Chief Financial Officer

Yeah, I’m not going to provide a guide on margins for next year. But what I can say is, you’re right in your rough sizing, it’s about $2 million a month related to the 5% increase. And then, time will tell on our travel and event savings that we see. We have upped [Phonetic] 200 basis points in our margin this year. Over time, some of that will come back into play, and time will tell.

Karl Keirstead — UBS — Analyst

Awesome. Okay. Thanks for that color. Appreciate it.

Brent Bowman — Chief Financial Officer

Yeah. Thanks, Karl.

Operator

For the next question, we have Sterling Auty from J.P. Morgan. Sterling, your line is open.

Jackson Ader — J.P. Morgan — Analyst

Thanks, guys. This is Jackson Ader on for Sterling. First question is on the strength in the SMB that you saw in the Commercial Cloud. How should we be thinking about kind of the direction here of strength in SMB versus the headwind on the enterprise side for the rep count? Is there any worry that the strength in the SMB might feed its way into the same territory we’re seeing in the enterprise?

Paul Shawah — Executive Vice President, Commercial Strategy

Yeah. Hey, Jack. This is Paul. So, yeah, you’re right, we have — we’re continuing to see really good strength in the SMB. And also the new companies in SMBs tend to be pre-commercial companies, companies that are launching their first medicine, and we’re winning the vast majority of those. You’ve heard us talk about this concept of Commercial Cloud Accelerator where we’re helping customers, in a sense though — in a sense, all-in on a broad set of Veeva products and services, all upfront, all at once. So, one thing we’re seeing is the size of the deals with these customers, we’re seeing kind of a longer-term emotional commitment and broader size and strength. And we’re also seeing that we’re consistently winning the vast majority of them. So, SMB is driving a lot of strength and it’s driving also a lot of future opportunity, as many of these companies will grow and expand into bigger companies over time.

In terms of will they look like an enterprise, in terms of rep reductions, some will and maybe for different reasons as their — kind of their market position and what happens with their medicine in the marketplace and whether they continue to have traction in the market or not. But I think, in general, the reductions that we have been seeing have largely been on the enterprise sector, their established sales forces. The SMB will scale over time to the right size, whereas an established company may have to do some adjustments as they become more productive. So, I think it’ll be different, I think, on the enterprise side.

Jackson Ader — J.P. Morgan — Analyst

Yeah. Okay, that makes sense. And then a quick follow-up on the second CDMS deal with top 20 pharma. Just any additional color you can give as to how this comparison versus a broader implementation? Is it standardizing the trials on Veeva’s platform? Any additional color would be great. Thank you.

Peter Gassner — Founder and Chief Executive Officer

Yeah. On the second — this is Peter. On the second CDMS win, different companies in the first, but similar needs and similar approach, similar rollout approach, they really need to modernize their environment, they have a environment that wasn’t modern and it was fractured with a lot of point solutions. And it just started slowing them down over time and they realize why they need to really be promising [Phonetic]. So, they piloted with a few studies to kind of — both to test it out, but to change their internal processes. Because when you move to Veeva for CDMS, it’s an — for example, it’s an agile clinical study building environment. It’s not a waterfall environment. It’s an agile cloud-based environment. So, there’s a lot of change management to happen, but now they’re starting to put all their studies on Veeva. So, very similar to the previous one.

Jackson Ader — J.P. Morgan — Analyst

Great. Thank you.

Peter Gassner — Founder and Chief Executive Officer

Thanks.

Operator

For our next question, we have Donald Hooker from KeyBanc Capital Market.

Donald Hooker — KeyBanc Capital Market — Analyst

Great. Good evening. So, I just wanted to kind of follow up on the pharma sales reps pressures. I wanted to hear — I didn’t think I heard — love to hear is this kind of a large pharma thing or kind of maybe a little bit more clarity where you’re seeing the sales — pharma sales rep pressure? And is there possible explanation here that that pharma is outsourcing more sales reps and sort of using third-parties like Syneos and other CSOs as shared service that could result in that pressure?

Peter Gassner — Founder and Chief Executive Officer

Yeah, it does tend to be a little more heavily weighted towards the larger the enterprise companies, again companies that have established sales forces across diverse portfolios, many of them being larger sales forces where they established for their more traditional primary care model. So, I think, more traditional medicines where they have to reach large volumes of primary care physicians, they have larger sales forces. They tend to be the first place where they’ll start to see some reductions, because those field forces may have been sized for a different time in different era where there was less digital. And now as we move them to more digital, they have the opportunity to start to again achieve some of those reductions. So, I think primarily it will be in the enterprise, again we will see some right-sizing in smaller and mid-sized companies. So, that — the primary driver is kind of right-sizing and taking productivity and efficiency gains and being able to apply them, so they have the right mix in terms of their go-to-market.

And then in terms of the contract sales organizations, I don’t think we’ve seen a major trend there. Now, that’s going to vary a little bit by region by region, but we haven’t seen a major trend towards outsourcing at this time.

Donald Hooker — KeyBanc Capital Market — Analyst

Okay. And then maybe just as a follow-up. Maybe kind of a higher level, kind of a little bit of a random question. I would love to hear your perspective, do you have any on sort of commercial IRB space, I guess we saw recent S-1 filing by a large — I guess, WCG Clinical, a large IRB and I know you have relationships in that area with some of that some of the bigger ones and would love to hear your perspective as to whether this could be a growth vertical for Veeva going forward? Or how you sort of think about that space as a growth market either organically, inorganically or through partnerships? So, I haven’t heard you talk about that in the past?

Peter Gassner — Founder and Chief Executive Officer

Right. The IRB, these are organizations, there are centralized IRBs and localized IRBs, to review that effects of a clinical trial before the clinical trial start. So, that’s a very important function. In that scenario where we don’t provide those types of services, and also we don’t provide software to those pre-specialized software we don’t, in that scenario where we don’t play at this time. As to what we do going forward, we’re always looking for places where we could add value. We don’t have any specific concrete product plans in the IRB area at this time.

Donald Hooker — KeyBanc Capital Market — Analyst

Okay. Thank you.

Operator

For our next question, we have Brad Sills from BofA Securities. Your line is open.

Brad Sills — BofA Securities — Analyst

Great. Hey, guys. Thanks for taking my question. Congratulations on a nice quarter here, certainly for Vault. And I wanted to ask about that a little bit. The RegulatoryOne business, sounds like you’ve had a couple of good deals there. Could you just — could you provide a little bit of color on this top 5 CPG deal? Was it a new customer or was it an existing customer adding another department?

And then just more broadly, kind of where are we within CPG? That seems to be the industry where you’ve seen — you saw early traction and you continue to see some good results there. Is it just an opportunity here to win more new business there? Or is it largely an expansion opportunity within some of these bigger accounts that you already have? Thank you.

Peter Gassner — Founder and Chief Executive Officer

Yeah. I would say, it’s both. It’s — there are more large CPG, there’s few that we aren’t in. We’re probably in some form or another — maybe almost half of the large ones, I guess maybe at least between the third and half [Phonetic] of the large ones, but then it’s — so there is some more to get brand new logos, but then it’s expansion, because they’re very divisional on how they operate. So, the win we had, that was a regional division, actually have a large CPG company and they went with us because of success that they had in another division. That’s generally how it operates in CPG, very large, very distributed companies.

Brad Sills — BofA Securities — Analyst

Thanks, Peter. One more if I may please just on quality and regulatory. They continue to remain strong here. These have been — couple of that have been very early drivers of growth with Vault. You’ve seen some real success there early on and it continues to be an enduring driver. Where are we in terms of industry adoption of those offerings and just the categories, in general? Thank you so much.

Peter Gassner — Founder and Chief Executive Officer

Yeah. I would say, we’re still early in regulatory just because these are heavy systems to implement and to adopt. And then we’re quite early in quality, because the suite has been expanding lot in quality. We started out with a product called QualityDocs and we added QMS, or quality management system, then we added training. We recently bought a company called Learnaboutgmp for actually training content, and we have more product plans underway in the quality area. So, quality, I think if you look out towards, for example, 2030, people will be surprised that how big our quality businesses is. It’s still quite early.

Brad Sills — BofA Securities — Analyst

Thanks, Peter.

Operator

For the next question, we have Kirk Materne from Evercore. Kirk, your line is open.

Kirk Materne — Evercore — Analyst

Okay. Thanks very much. Paul, I was wondering, could you just give us a sense on these customers that took down sales reps, you had — they already have been talking to you about products like Engage, and I guess meaning, are you helping them actually become more efficient from a rep perspective already or is that something that happens and then you go back in and help them sort of retroactively deal with it? And then I just have one follow up on the commercial side as well.

Paul Shawah — Executive Vice President, Commercial Strategy

Yeah. So I mean, all the ones that we saw reductions, it was a handful in the enterprise. They have all been Engage customers and they all expanded, most of them were even early pre-pandemic where they started at some level of adoption of Engage, and then when the pandemic hit, they really scaled up. So, yes, every one of them have been actively using, and I would say, even broader than Engage, the full — kind of full suite of many of our digital products, including email. So, they were full on kind of face-to-face, they had the digital channels turn on. And again they don’t want to overcorrect in this kind of market. It takes them a little bit of time to realize in — at those gains, but also to make sure they’re optimizing for the long-term. So, yeah, it was long-time customers of Engage and clearly taking some of those productivity gains.

Kirk Materne — Evercore — Analyst

Okay. That’s helpful. And then that sort of leads to my second question, which is when you start thinking about the Commercial Cloud and all the products and data that you’re bringing to the forefront of the clients, are you moving away from the per seat pricing, meaning, does that at some point in time these discussions have to become more about outcomes versus just see? And I was kind of curious where you see that going, because to a certain degree, you’re making them more efficient. They should be, hopefully, they’re growing [Indecipherable] basis anyways, I’m sure there are in many cases. But I’m just kind of curious if you’re kind of getting away from having more per seat discussions versus kind of outcomes-based discussions and whatever kind of [Indecipherable] that might mean from a pricing perspective? Thanks.

Paul Shawah — Executive Vice President, Commercial Strategy

Yeah, it’s a good one. And certainly as the Commercial Cloud portfolio has expanded and particularly as we’ve added data products and data combined with software, also services, the proceed model doesn’t necessarily fit those kinds of products. So, we’ve already seen that shift happening over the last couple of years where more and more of our revenue was coming from things like ELAs, most of our data products are enterprise license agreements with customers. So, we’re naturally seeing that shift away from that proceed to something like an ELA. We haven’t yet gone through the idea of outcomes yet. We’re always very thoughtful of, as we introduce a new product in the marketplace, what is the right pricing model, what’s the licensing model for Veeva, but also, in particular, for our customers. We’re happy to innovate in that area. And we have innovated in a number of places in commercial on how they consume, how they buy. So, that trend has already started happening.

Operator

For the next question, we have Joe Vruwink from Baird. Joe, your line is open.

Joe Vruwink — Baird — Analyst

I wanted to go back to Vault Safety, and I’m curious does the application and the criticality you carry [Phonetic] is influenced other spending decisions at a customer? I guess what I’m wondering is that once Vault Safety is established, is it perhaps more prone to being paired with, let’s say, the rest of Development Cloud and MedComms, for instance?

Peter Gassner — Founder and Chief Executive Officer

Yeah. That’s great question. It’s certainly a very serious application for Safety. If pharmaceutical companies doesn’t have the right controls in safety area, they can actually lose their license to operate the whole company. So, it’s a very serious one. When a customer has their safety system, I think it’s a net positive and with somewhat help us getting other products, because they would benefit from the integration with Safety. And while if you’re trusting Veeva for your safety system in the cloud, you’re pretty likely to trust us and you’re having a good experience, you’re pretty likely to trust us in the — these other areas.

So, excellent question. If you step back, this is what we set out to do, roughly 10 years ago, we started thinking about the Development Cloud, and this is what we had in mind that we would have a suite of these applications for the product development from safety, quality, clinical, regulatory and that they would all fit together and they would work for small companies and big companies and become the way that like the life sciences industry does drug development. And so that — it’s happening and everyone we get in helps every other one.

Joe Vruwink — Baird — Analyst

That’s great. And then you referenced at a few questions ago, I know it was a small acquisition, but in learning management, I’m wondering is training becoming a more important consideration when you kind of equate this to some of the developments like realizing business consulting could ultimately be an inroad to bigger things, better relationship with your accounts, is training proving to be that or maybe the quality suite or a broader set of applications?

Peter Gassner — Founder and Chief Executive Officer

There are multiple types of training. This is true. For what we have here about the Learnaboutgmp that’s for compliance related training, good manufacturing processes. So, that’s really related to our QualityDocs product. And the way to think that — about that is sort of like peanut butter and jelly. Peanut butter is good, but if you get it with the jelly, you get — it’s easier. Because our QualityDocs is about the training software. Can it be accessible? Do you have the right roles and responsibilities? Does somebody over do on their training? Can that inspector look at the records? Is it validated? Does it work in all your languages? All those types of things. But then by being able to come to Veeva and say that I actually need the training content. What in the clinical area for this type of certain area, what is the micro training that I can use to refresh my employees in Poland and Spanish-speaking countries? If you can get all that from Veeva with good customer service, that’s what the customers are looking for, a strategic partner, because they don’t really want focus on that and build that themselves if they don’t have to, because they have other things they want to focus on.

Joe Vruwink — Baird — Analyst

Thank you.

Peter Gassner — Founder and Chief Executive Officer

Thanks.

Operator

And now for our last question, we have Ryan MacDonald from Needham Company. Ryan, your line is open.

Ryan MacDonald — Needham Company — Analyst

Hi, thanks for taking my question, and congrats on a great quarter. I continue to be impressed by the number of new logos in core CRM, I think 21 in the quarter, up quarter-over-quarter as well. Just love to know sort of beyond the pre-clinical success that you’re having, how the competitive environment walks in the mix of maybe competitive replacements in that number this quarter? And how you sort of see that pipeline looking moving forward? Thanks.

Paul Shawah — Executive Vice President, Commercial Strategy

Yeah. That’s good question. And so, of the 21, we’ll dissect that a little bit first, many of them are from the US market, those wins and a lot of them are pre-commercial companies, a handful from Europe and then even the domestic companies in markets like Japan as an example, domestics that may have a local solution. So, some of these are their first CRM system, and so we’re not really replacing anything and others are competitive wins. We did have a OCE — IQVIA OCE conversion this quarter, it was a biotech — a specialty pharmaceutical company in the US market. There is more — we are hearing more concern and frustration by a lot of IQVIA customers. So, we’re gaining traction. And — but certainly one was a direct conversion, but the vast majority are a lot of companies that didn’t have anything in place already.

Overall, the competitive landscape is shaping up really well, and that plays out in our numbers with the market share gains that we have in CRM, the wins that we’re having that we talked about 21 of those and we’ve been gaining traction and — within enterprise customers. So, we’re really happy with how the competitive landscape is shaping up.

Ryan MacDonald — Needham Company — Analyst

Excellent. Thanks for taking my questions.

Operator

We don’t have any further questions at this time. I’ll now turn the call over to the management for closing remarks.

Peter Gassner — Founder and Chief Executive Officer

Thank you, everyone, for joining the call today. And thank you to our customers for their continued partnership, and to the Veeva team for their outstanding work in the quarter. Thank you.

Operator

[Operator Closing Remarks]