Peter Gassner: In terms of data acquisition, yes, we make end data products that we sell to our customers. And of course, we buy data inputs, call it data acquisitions. We have a pretty unique strategy as it relates to Compass, where we’re really multi-sourcing. We’re sourcing data from a lot of different sources, and we have really excellent industry-leading patient tokenization process that’s kind of fundamentally different than the common one out there. So when we do this, we can multisource from a lot of different places bring it together and avoid duplicates. So when we do that, we’ll have more data sources than what’s common, but no data source will be particularly extra critical to us. So when we see a good deal for a data source and a good set of terms, which means we can contract it for a number of years, and we know what the cost is and it’s not that expensive.
We’ll do that. And if we see something that’s not good, such as, hey, we don’t have stability over multiple years or the cost is too high than we want to pay, then we just won’t purchase that. So you’re not going to see anything dramatic from Veeva. There’s no step function in cost or something like that. Very importantly for us, these data acquisitions, they power both our Crossix business and our Compass business. So that’s very different, right? With one set of data purchases, we’re able to power two good-sized businesses. And so that lowers our percentage data cost
Ryan MacDonald: Super helpful color. Thanks, Peter.
Operator: Your next question comes from the line of David Windley with Jefferies. Please go ahead.
David Windley: Hi. Good evening. Thanks for taking my question. Peter does Annex 1 have any stimulative impact on your quality products, the need for your quality products? Does that regulation in Europe influence that at all?
Peter Gassner: I don’t know that one. I probably — if I do some research, I can figure out what Annex 1 is, but we’ll have to get back to you. We can get back to you offline as long as it’s not a material non-public thing. So sorry about that one. You stumped me on that one.
David Windley: Well, I’m sorry, I did that, but I’ll ask a different one instead. So on the data comments that you just made about your data sourcing strategy, does the breadth I think I understood you to say that ability to be flexible allows you to buy when you see good deals. I was going to ask, does the breadth cause you to have to pay more money? Or does your operating expense base grow disproportionately because of the breadth of that data? Maybe the answer is the opposite.
Peter Gassner: I can only really comment on our strategy. I wouldn’t really know exactly as it compares to others. We believe we have a lower overall beta cost because of this. That’s what we believe. Now the main reason to do this is for data quality. So if you’re getting data from three different sources, that they’re somewhat overlapping, you have a better chance of getting data quality. And this is one of the reasons why we can project data for medical claims, which is — it might be something that’s done at an infusion center. We can also project something for something that you pick up at Walgreens or CVS. Why? Well, because we’re sourcing data from multiple points along the line. So the real benefit is more holistic view of the patient, we can project data for over 4,000 brands.
And you can only do that. You can’t do that if you’re just projecting based on a few large retailers’ data, you can’t do that because if you look at 20 years ago or 25 when these legacy data products were started, or even when Veeva started in 2007, the biggest brand at the time was Lipitor and you’ve got Lipitor at the drugstore. Biggest brand now is KEYTRUDA. And you don’t just walk into the drugstore and get that. It doesn’t work that way or HUMIRA, et cetera. So ours is a modern approach that I think is the only way really to do it well for today’s complex therapies. And I do think we’ll have lower data cost over time. I do think that, but I don’t have a proof of that.
David Windley: Got it. And then a follow-up relatedly, and again, not to ask a stumper, but this change health care cyber hack situation where some data is being held hostage in a fairly significant health care data switch, is that a situation that, say, in the future when your products are more mature that, that actually feeds to the way that you’re collecting data and makes you more reliable than maybe some others might be?
Peter Gassner: Yes. Now as it relates to change, I am we’re aware of that, of course, not the very specific details of the attack. I am aware of how the attack was made, but I’m not aware of the — what’s going on inside the change. But and I’m not going to disclose whether we get data from them or not. But yes, it is a switch. Now the good thing that happens here for the health care system most of the pharmacies are operating on relatively modern software such that they can point their software to different switches and there are standards that are in play. So that’s a good thing that the health care system can recover. For us, again, without going into a lot of details, whichever way the data gets routed, there’s a real good chance we’re going to pick it up because we’re picking it up in multiple places along the way.
So I’m not — even if we were at scale in our business, I would — it’s certainly unfortunate what happened with change, and I think it’s terrible what’s going on with the cyber tax, but it wouldn’t affect our Compass or Crossix business.
David Windley: Yeah, I appreciate you taking my questions. Great. Thank you.
Peter Gassner: Thank you.
Operator: Our next question will come from the line of Craig Hettenbach with Morgan Stanley. Please go ahead.
Craig Hettenbach: Thank you. A follow-up question for Brent on the margin. Nice to see the strong guidance on fiscal ’25. Can you just touch on — there’s some element of services OpEx coming down. Is this — do you think a new run rate beyond ’25 or is there normalization when you think about margin after this year?
Brent Bowman: Yes, and I would say, overall, the margin uplift we’re seeing isn’t really driven by services. I would say it’s really a more broad thing. It’s broadly how we’re executing and that’s how we leverage again our operating model, thinking about lean teams and really disciplined hiring broadly. So we feel good about how we’ve executed there. And that’s basically what’s informed our guide for the full fiscal year. I’m not going to talk beyond fiscal year ’25 at this point in time. But we feel good about our ability to hit those operating income and our margin targets.
Craig Hettenbach: Got it. And then just a follow-up for Peter. Just on the momentum you’re seeing in EDC wins. Can you touch on what you think is resonating most with new customers and then just key differentiating factors versus competitive offerings?
Peter Gassner: Well, as we get into this middle part of the market, I think a required thing would be positive customer references, right? If we — our existing customers weren’t happy and productive these current sales would not be happening because it is very easy for them to reach out to their peers and get a very authentic, hey, you’re using Veeva today. How are you feeling about that? So I would say our customer success is leading the way. And then in terms of capabilities, it’s agile study build to be able to build a complex study that has multiple arms quicker and more reliably. That’s a big benefit. I would say the sort of what I would say, no coding. A lot of the existing — at least a couple of the existing providers actually end up doing a lot of coding, actual coding work when you build a study.
Now that is interesting for whoever is coding that study, but it’s a bit of a headache for the people managing the study because when you have coding it’s hard to keep that under control and the complexity grows and there can be errors and unforeseen things. So with Veeva, you don’t do the custom coding, I would say the other one is people want a clinical platform, and that is clinical operations and clinical data management. And that’s not something you can get from the existing leaders in the clinical data management area. So that then the customer has to develop a common data architecture between their clinical operations and their clinical data management from two different vendors. They have to develop the integrations. They have to keep those integrations running as the both products change.
And that’s really a headache that people don’t want to deal with. So I would say it’s those things that are contributing. And you might ask, well, how come everybody is not buying it all today that well, customers have priorities, and this is changing a very, very critical system, and you better have a good reason to do it. You don’t do it unless you have pain in that area and not all customers have pain all at the same time.
Craig Hettenbach: Helpful. Thank you.
Peter Gassner: Thanks.
Operator: Your next question comes from the line of Anne Samuel with JPMorgan. Please go ahead.
Anne Samuel: Hi. Thanks for taking the question. I was hoping to go back to the earlier question around optimism. We’ve heard from some others in the industry that the annual budget flush did happen to some extent late in the quarter. Just curious, did you see that at all? And maybe any other notable green shoots that you can point to that are maybe driving your comments around optimism in the space? Thanks.
Peter Gassner: I guess I can take that one. For the budget flush, we don’t really see that too much because ours are more critical and complex things, not so much discretionary. So we don’t — we just don’t really see that as much. That may have happened. We just don’t see it as much. And then in terms of the optimism overall, it’s — I want everybody to be clear, this is based on a feeling on intuition based on lots of discussions. So we have deep relationships with the customers because we have big strategic partnerships. So that’s all. There’s no — I can’t calculate it down into science. It’s — you know it when you feel it, and we feel it, but there’s no — you can’t really quantify that.
Anne Samuel: Thanks very much.
Peter Gassner: Thank you.
Operator: Our next question comes from the line of Gabriela Borges with Goldman Sachs. Please go ahead.
Kelly Valenti: Hi. This is Kelly Valenti on for Gabriela. A question for me. Would be great to get an update on any impacts you’re noticing in the industry due to any regulatory changes, particularly as biopharma companies think about potential future impacts of the Inflation Reduction Act and how that might change the way they invest? And then also just how customers are thinking about the risks associated with the upcoming election and how you’re thinking about any potential impact?
Paul Shawah: Yes. Kelly, this is Paul. So I guess the way to think about regulations, and particularly, you brought up specifically the IRA. Our customers are certainly thinking about it, and they’re thinking about it, first and foremost, on the drug development side because that’s the long cycle in terms of what that starts to impact. The decisions that they make today around where the — which kinds of molecules they’re going to invest in small molecules, large molecules, which indications they’re going to try to get approval for. Those are the kinds of things that will have an impact as it relates to the IRA. So those decisions and those thinking is happening now. So I would say that it’s more acute on the R&D side than it is on the commercial side.
From a commercial standpoint the — it doesn’t really hit until 2026, and then it’s somewhat gradual and it’s somewhat focused and acute on specific companies. So more thinking and more action on R&D. And I think over time, it will start to impact more of the commercial side. But companies are responding. They’re making decisions. They’re making changes, and they’re also innovating. You heard some of the optimism around the science and the innovation of the new medicines. So I think there’s also a lot of optimism that the industry will continue to innovate and kind of drive through some of the negative or the potential headwinds of IRA. In terms of other things like elections and kind of other regulatory changes, those things are generally — this is a generalization, but they’re generally neutral to net positive because when you modernize and you become more digital, you generally need to — it helps companies become more agile.
When regulations are put in place, you need to comply, you may need to change, and drive change management. And that usually is to the benefit of becoming more digital and using technology to comply with regulation. So it’s kind of a generic answer, but hopefully, that gives you a sense of how we think about it and what we typically see.
