Kelly Valenti: Very helpful color. Thank you.
Operator: Our next question will come from the line of Jailendra Singh with Truist Securities. Please go ahead.
Jailendra Singh: Thank you and thanks for taking my questions. I have a couple of clarification questions on your macro commentary. First, a quick clarification on the services side. You seem to be indicating that the environment has been largely unchanged since your last earnings call. But one of the factors you called out in your lower outlook for service its project timing. So have time lines been getting more elongated? Or is it more that your expectations from some of these projects coming back is now pushed out a little bit?
Brent Bowman: I mean it’s — so what we said was it hasn’t gotten worse or better in the last 90 days. So we did see an impact, obviously, in services, we talked about 90 days ago. So that has continued a bit on the project timing side. So that is what has largely driven the services reduction that we talked about in our guide. That was the primary driver. And there’s a couple of other items that we contemplated into the implementation excellence as well as some of the investments we’re making. So if you take all of that together, that’s what’s informing our guide and the slight reduction that we had.
Jailendra Singh: Okay. And then one quick follow-up on the R&D spending. Clearly, I think it’s very well-known that a lot of R&D dollars are going in, obviously, weight loss GLP-1 area and even you flagged that our understanding is pharma companies might be doing a decent chunk of these trials in-house versus outsourcing to CROs. Do you think those R&D dollar allocation to in-house trial is providing some tailwinds for your Development Cloud business?
Peter Gassner: I think I haven’t seen a dramatic shift in-source versus outsourcing on trials that goes back and forth. So I haven’t seen a dramatic change. And right now I think we — that doesn’t really affect our business too much the in-source or the outsource. If they outsource, maybe we can pick it up to the CRO. And the big companies, they’re always going to in-source a lot of their trials anyway. So it doesn’t really affect us right now.
Jailendra Singh: All right. Great. Thanks a lot.
Operator: Our next question will come from the line of Brad Sills at Bank of America. Please go ahead.
Bradley Sills: Great. Thank you so much. I wanted to ask about the Data Cloud. Peter, it looks like some pretty exciting releases here of enhancements here, the prescriber and Compass National. Could you just elaborate on those? It seems like no better time than the presence to come to market with a revamped data cloud. So what are you excited about there? And how could that cycle augment growth?
Peter Gassner: Yes. I am excited about it. And I think the timing is great. There hasn’t been a new entrance in that market for that type of data really for that projected data for more than 15 years since Veeva started. And it’s critical data. It’s used for segmentation and targeting, field force sizing, how big is your field team? Who are you going to call on the tactics that you’re going to use, use for incentive compensation, business planning, critical things. And I feel like we’re we had a vision when we bought Crossix, say we would get Crossix. It has a data network. We like the Crossix business. We can grow it and we can add more data sources, grow that data network and use that to really do something innovative in data around Compass.
And we stuck to the plan, and I’m proud of over the last couple of years, we’ve always taken the innovative approach on Compass, not the easy approach of copying what’s out there. And so now it’s coming to fruition and it feels great. It just feels like when we start involved. It’s innovative so that only one out of 20 people really get it, right? Because it’s innovative and it’s different and it’s, well, what is this? But I think the facts are on our side. So I think the timing couldn’t be better, and I’m really happy with the team we have. And I’m really happy we have some happy early customers. But I don’t want to get out ahead of our skis with prescriber and national, we just released them in the end of January, gosh. So we released the December data set in the end of January.
That’s a long way from having happy customers that are using it for a year, paying incentive compensation on it, really happy with the product and the service but that’s the hard work we got to do over the next year. But if we execute, I think the future is pretty bright.
Bradley Sills: That’s great, Peter. One more, if I may, please, on the Commercial Cloud. I understand that you’re going through the transition here to the new platform. It sounds like while that’s going on, that will weigh on the ability to cross-sell some of these newer solutions, should we take that to mean once you’re kind of through that transition, I guess, 1.5 years, 2 years from now, maybe that’s optimistic. But at that point, you will have the opportunity to better cross-sell and upsell some of these newer solutions in the suite and maybe we’re due for a reacceleration at that point?
Peter Gassner: Well, in terms of — we will have the re-acceleration, I don’t want to make any projections out that far. But certainly, the ability to cross-sell will start opening up in the next within two years or so, but that will then gradually open up, right? Because there’ll still be customers using Veeva CRM in 2028, I think, hopefully, by 2029. And certainly, by 2030, they’ll be all migrated, so it’s the correct way to think about it, this re-platforming, you think about it, since we’re in the life sciences industry, you could think about it as a strong medicine that Veeva has to take for the industry, right, to do this to the re-platforming. It’s not a positive to the revenue in the short term, but it’s the right thing and it will be a positive to the revenue in the long term.
For example, this marketing automation that we’re building, I think it could be extra, extra, extra innovative because it will be life sciences specific, it will be regionally aware which is the way you do this stuff in Japan and Germany and the US is quite different in life sciences. And it will be aware of the field, the sales team. So you could use our marketing automation to inform your sales team of marketing for sure, but let your sales team control some part of marketing or you could use a campaign to control your sales team because they’re all operating on the same date of the same segment. So it’s like having Marketo inside of Salesforce.com and industry specific. That’s not been done before. So as you can tell, I’m excited about the future, and we’ll be able to show some of these products at our Customer Summit in May, especially the call center one, the service center is really coming along.
So I’m really happy about it. But, yes, we’ve got to take this medicine for three or four years, and it doesn’t taste good right now. How about that?
Bradley Sills: Understood, Peter. Well, thanks for the optimistic view on the longer-term exiting that.
Peter Gassner: Thank you.
Operator: Our final question will come from the line of Charles Rhyee with TD Cowen. Please go ahead.
Charles Rhyee: Thanks for squeezing me in. Really just some follow-up questions, maybe for Brent on just the guidance then. Obviously, op margins, you’re guiding sort of 38% in the first quarter, full year, more like 39%. Any color you can give in terms of how we should think of cadence for margins through the course of the year? And then secondly, in the subscription revenue guidance, how much of that is already contracted at this point? And how much maybe do you need to win over the course of the year? Thank you.
Peter Gassner: Yes. What I would say on the — regarding the op income op margin, we feel — again, we provided guidance for the full year in Q1. There’s always going to be a little bit of movement between quarters. But overall, we feel really good about how we’re executing in the efficiency that we have. So I’m not going to provide any additional color on how Q2, Q3 and the slope of that curve. But just know that we’re executing well, and we feel good about those numbers. Then your other — your secondary question, sorry, I didn’t write it down. It was around subscription?
Charles Rhyee: In the subscription revenue guidance, how much of that is already contracted versus how much you maybe need to win through the course of the year?
Peter Gassner: Yes. What I would say is our visibility is at least equally as good, if not better than it was in previous times. So we have visibility and the part of that continues to get informed as we close more business and we have these ramping deals. So visibility is at least as good as we’ve had in the past.
Charles Rhyee: Okay, I appreciate that. Thanks so much.
Peter Gassner: Yeah, thank you.
Operator: I’ll now hand the call back to Peter Gassner for any closing remarks.
Peter Gassner: First off, thanks to everybody who asked these really thoughtful or insightful question, thanks for your interest in Veeva and your understanding of Veeva. The good questions help everybody have more clarity. I really appreciate that. And then I’d like to close by thanking our customers for their trust and partnership and the Veeva team for all the work in the year and that I believe will have a major impact on the industry and drive our growth for years to come. Thank you.
