Q2 2024 Veeva Systems Inc Earnings Call

Participants

Brent R. Bowman; CFO; Veeva Systems Inc.

Gunnar Georg Hansen; Director of IR; Veeva Systems Inc.

Paul Shawah; EVP of Strategy; Veeva Systems Inc.

Peter P. Gassner; Founder, CEO & Director; Veeva Systems Inc.

Brent Alan Bracelin; MD & Senior Research Analyst; Piper Sandler & Co., Research Division

Brian Christopher Peterson; Senior Research Associate; Raymond James & Associates, Inc., Research Division

Craig Matthew Hettenbach; VP; Morgan Stanley, Research Division

Dylan Tyler Becker; Research Analyst; William Blair & Company L.L.C., Research Division

Hoi-Fung Wong; Research Analyst; Oppenheimer & Co. Inc., Research Division

Jack Dawson Wallace; Research Analyst; Guggenheim Securities, LLC, Research Division

Jailendra P. Singh; Analyst; Truist Securities, Inc., Research Division

Joseph D. Vruwink; Senior Research Analyst; Robert W. Baird & Co. Incorporated, Research Division

Lucas Cole Romanski; Equity Research Associate; TD Cowen, Research Division

Richard David Poland; Senior Associate; RBC Capital Markets, Research Division

Ryan Michael MacDonald; Senior Analyst; Needham & Company, LLC, Research Division

Saket Kalia; Senior Analyst; Barclays Bank PLC, Research Division

Stanislav Berenshteyn; Senior Equity Analyst; Wells Fargo Securities, LLC, Research Division

Tyler Maverick Radke; VP & Senior Analyst; Citigroup Inc., Research Division

Unidentified Analyst

Presentation

Gunnar Georg Hansen

Good afternoon, and welcome to Veeva's Fiscal 2024 Second Quarter Earnings Conference Call for the quarter ended July 31, 2023. As a reminder, we posted prepared remarks on Veeva's Investor Relations website just after 1:00 p.m. Pacific today. We hope you have 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 call, we may make forward-looking statements regarding trends, our strategies and the anticipated performance of the business, including guidance regarding future financial results. 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, August 30, 2023, 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. We may discuss our guidance on today's call, but we will not provide any further guidance or updates on our performance during the quarter unless we do so in a public forum.
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'll turn the call over to Peter.

Peter P. Gassner

Thank you, Gunnar, and welcome, everyone, to the call. We had another strong quarter, delivering results ahead of guidance, including total revenue of $590 million and non-GAAP operating income of $212 million. In commercial, I'm excited about our first Vault CRM customer win and planned general availability date in April 2024. That's really strong progress by the Veeva team as we deliver the next generation of CRM. We also saw great activity in clinical, both with our established products and our newer products in clinical operations and clinical data management.
At this point, we'll open up the call to your questions.

Question and Answer Session

Operator

(Operator Instructions) Your first question comes from the line of Joe Vruwink with Baird.

Joseph D. Vruwink

I guess I wanted to start with the news this week on Vault CRM signing its first new customer. And really the question with the go live later this year, that does strike me as a bit earlier of a timetable. I think in the past, there was talk of 2024, maybe ahead of the Summit next year. So if I'm right on maybe this being a bit earlier of a timetable, just any views on why that might be the case? And then does that at all influence kind of how you think about launch and strategy progressing from that point onwards?

Paul Shawah

Joe, yes, this is Paul. Thanks for the question. So yes, we are certainly very excited to announce our first customer win. This is an early adopter. They will go live that's the plan in Q4 this year. It is a little bit earlier than we had expected. But Vault CRM is progressing really well. The product team has really delivered with excellence over the last year since we announced Vault CRM. So we're excited with the progress, we're excited where we're headed.
In terms of the timing, it's generally in line with what we talked about. So we'll look at all new customers after April of next year. So that's what the general availability date means. We'll have our first migration starting in 2025. And we'll expect to migrate most of our customers in 2026 through 2028. So that fundamentally doesn't change that much. But yes, you're right, it's a good indicator of the progress we're making.

Joseph D. Vruwink

Okay. That's great. And then just pertaining to the strength in EDC with the wins this quarter and then really the highlighting of the broader clinical data management strategy in the prepared remarks. When you step back and look at all of this, would you say really it's no different than what Veeva has now done several times over its history in terms of product leadership, lighthouse account wins and then building out the suite? Or just given the size and consequence of this category, would you maybe start highlighting different things in terms of strategy, the consequences going forward about your clinical data specifically?

Peter P. Gassner

I'll take that one. The broader clinical overall, which is clinical operations and clinical data management, and they kind of -- they go together. A few high-level thoughts. When we started a new product area, we always have plans, and we always try to do our best. And sometimes, we exceed those internal goals for ourselves and sometimes we fall short. I think in the clinical area, we probably exceeded what we -- so far, what we thought we would set out to do when we first got into our first pieces of clinical with CPM was really eTMF in 2012 and CTMS in 2016. So we're a bit ahead. And then all product areas are important, but clinical is just a very, very big one. So maybe in that way, it's a bit more important than others.
A long way of saying we're really happy with our progress, and we've executed well. We've probably got some -- had some good luck along the way as well. And now we just really have to focus on our customer's success, and then we'll do just fine.

Operator

Your next question comes from the line of Ken Wong with Oppenheimer & Company.

Hoi-Fung Wong

Maybe this first question for Brent. Just wanted to understand the moving pieces on the billing side, exceptionally strong in Q2, held the line for the full year, just wondering if maybe some pull forward, some realignments, like what drove those moving pieces?

Brent R. Bowman

I'll take that one. So from a full year perspective, we reiterated the full year billings guide. So we're growing at about 15%. And what we've always said, when you look at any 1 quarter, it can be -- it can move a little bit. So in Q2, we are pleased to see some benefit from some linearity of some deals, so a little bit better deal timing. Those deals we expected to close within the year, we just happened to close in Q2. So that's not going to impact the full year number, but we'd rather have the business earlier than later. So overall happy with the execution.

Hoi-Fung Wong

Got it. It makes a ton of sense. And then for Peter, just you guys touched on SMB softness. I think that's something you called out a year ago, but it did sound like it was more towards the commercial side when you first called it out. Would you say you've seen any impact or more meaningful impact on clinical? Or has it held roughly the same in terms of how that SMB exposure has weighed on the business?

Peter P. Gassner

Well, I think we always knew that the macro wouldn't affect the commercial in SMB and particularly the smaller SMB, the emerging biotech because when the funding environment is down, they might not be able to fund their clinical trials, get the money they need to expand. So overall, I would say it's playing out as we expected. And that's -- I don't know when things would change, who knows, right? They may change in the future, but you won't know that until they change. Right now, it's business as we expected.

Operator

Your next question comes from the line of Rishi Jaluria with RBC Capital Markets.

Richard David Poland

This is Richard Poland on for Rishi. So just 1 for me on the China exposure that you called out in some of the prepared remarks, and you said that you kind of factored that into guidance. Just wanted to get a little bit of clarification on what exactly is factored into guidance on that side?

Paul Shawah

Yes, this is Paul. I can answer that. Just a little context. I think it might be helpful on China. This is in regards to some regulations that have come about over the last couple of years, which impact how data is transferred outside of China, which starts to impact Veeva CRM. Veeva CRM is the predominant CRM that's used for most of the multinationals in the Chinese market. So what it's doing is it's forcing them to rethink their solution. We have a solution for them in the Chinese market. That's our China SFA product.
In terms of the size and the impact of this, this is not material. It's all factored in, but it's really not a material impact, either in this year or next year. So maybe that's how to think about it.

Operator

Your next question comes from the line of Brian Peterson with Raymond James.

Brian Christopher Peterson

Congrats on the strong quarter. So I wanted to double-click on the Vault CRM, it's good to see the win this quarter. I'm curious, you did announce some other wins this quarter. As we progress towards GA, should we expect to hear more of the kind of net new CRM wins be Vault? Or would they still kind of go with the Salesforce CRM? Any way to kind of level set expectations there?

Paul Shawah

Yes, it's a good question. And it will be customer specific. So we'll think very deeply and work very closely with our customers. We're obviously very transparent about our direction. For some companies, Veeva CRM is the right thing to do, and that's what we will sell to them and work with them. But I do think it's a fair way to think about it. As we get closer to that April date and certainly after that April date, it will start to become more Vault CM -- Vault CRM and eventually all and exclusively Vault CRM, that's for new customers.

Operator

Your next question comes from the line of Dylan Becker with William Blair.

Dylan Tyler Becker

Maybe for Peter, you emphasized the multiproduct kind of strategy effort. It seems like as you guys are going wider, you're also going deeper functionally. I think you called out a number of new solutions that have the potential to be larger markets than in kind of what some of your respective offerings currently have. I guess how do you think about that in context to the durability of kind of the growth equation and what Veeva can look like over time as you go deeper from a functional perspective?

Peter P. Gassner

Yes, it's a really good way you said it. One of our special things is this multiproduct-company approach, our operating model that allows us to do that. So excellence in an area like clinical quality or safety. But because we have a lot of autonomy in those areas, we can go deep in those areas and provide the full suite of things, not just the surface level. So if we look actually in clinical there's not been a company that has attempted to do the full broad suite of clinical applications, such as Veeva is trying. Nobody's attempted that before, let alone succeeded at it.
So it is absolutely our strategy to go in each area with autonomy, deep in each area with excellent applications, the main ones that people need and then have things align across areas on a common set of values, how we operate as a company, how we strive for product excellence, how we do controls so that we see if we have some customer success issues and catch that.
One of the reasons why we're durable is we're optimizing for the whole and customers appreciate that. They know when we sell them, let's say, our RTSM solution, we care deeply about that success, not only for the reputation of our RTSM business but for the reputation of the overall Veeva, which is much more than RTSM business. So in other words, we have more to lose if we have an unhappy customer in an area. So we will work harder to protect that which is what the customers want. And that's the beauty of our operating model.

Dylan Tyler Becker

Got it. That's super helpful. And then maybe just kind of piggybacking off of that to I think the R&D Summit coming up here in a handful of weeks to support a lot of these kind of maturing product offerings, 2,000 attendees. I guess -- is it, maybe for Peter or Paul, highlight kind of the importance of what that event can mean as you build out that customer and product excellence into not only the existing platform set, but obviously some of these newer initiatives you guys are going after?

Peter P. Gassner

Yes, customer summit in Boston for R&D in the U.S. coming up here in a couple of weeks, and we'll have about 2,000 people. It's absolutely 1 of our key reference selling events. Now reference selling goes on all the time across the globe every day, people talking to other people, "Hey, what about those Veeva products? What do you think about that? Are you having a good experience, not a good experience? I'm thinking about using it? What do you think?" That's reference selling. But it happens really in a hurry in the customer summits because there's 2,000 people and they are there. Their time is focused and they have fortuitous run-ins with each other in the hallways, unplanned pollination, that's a little bit difficult to get without a physical event.
And I think you saw that not just with you, but with other companies during the COVID crisis, there was initially a massive spread of information, everybody getting on Zoom. But then after a while, you noticed information didn't spread as much because there weren't these spontaneous interactions happening. So you're right to say it's our massive cross-selling event.

Operator

Your next question comes from the line of Ryan MacDonald with Needham & Company.

Ryan Michael MacDonald

Congrats on the nice quarter. Peter, maybe first for you. Great to see the continued success with Compass patient and starting to get more wins there. Can you just talk about how you're sort of driving that success in an environment that seems to be quite tough in terms of data investment right now given the tight budgets?

Peter P. Gassner

Yes. For Compass, I'm very excited about that. Now in terms of the wins, those wins are going to happen. When there are a lot of companies wanting to buy a lot of data products and sometimes they buy multiple data products. They might some -- buy some data from company A and some data from company B and company C. That's going to happen. So the wins itself, they don't excite me that much. That's relatively easy to happen. What excites me is our product vision and the product team we put together and the goal we're setting out. We're setting out to have a unique, highly integrated, highly excellent suite of data products from Compass to Link to OpenData and to be the leader in life sciences data. Nobody else has set out to do that over the last -- as far as I know, over the last 20 years because IQVIA is the unquestionable leader. So we're setting out to do that.
And then we have this product team and architecture that's really clean. It's making a clean new way thing. It's sort of like there's client CRM, we're coming out with cloud, we're coming out with something fundamentally cleaner. And the real thing is getting the enthusiasm for the early customers, hearing not so much what they're saying, but why they're saying it. So the early intuition here is that it could be something great if we execute well.

Ryan Michael MacDonald

Maybe just a quick follow-up on that. I mean, from the customers you've won so far, do you get the sense that they're sort of committed and bought into the broader product strategy with the additional data sets coming out where you can start to have -- take that multiproduct adoption to sort of consolidate more on Veeva?

Peter P. Gassner

I wouldn't say the customers rightly so are committed yet, I do think they see the potential. This might be really good. This could be very differentiated. There is potential here, and I should keep my eyes on it. But I would -- no one committed because we haven't released these major products, which are Compass Prescriber and Compass National. So we have to deliver those. Customers have to start working with them, start to delivering them with quality month after month after month after month. That's how people really get enthused about it.

Operator

Your next question comes from the line of Tyler Radke with Citi.

Tyler Maverick Radke

If I look at the full year guidance, obviously, a lot of the metrics stayed pretty unchanged. It did look like you slightly took up the commercial guidance. But in the quarter, it seemed like R&D, at least outperformed consensus. So I know it's not big changes, but could you just talk to the modest changes you're expecting for the full year outlook? And I guess, to the extent macro is impacting the business, are you seeing it more in R&D versus commercial?

Brent R. Bowman

Yes. So Tyler, so what we did is we increased our full year subscription guide by about $5 million. So that was driven in the commercial space. So what we saw in the commercial space is we saw some favorable linearity with some deals close a little bit earlier. So that's what you're seeing kind of flow through to the full year.
R&D, it basically played out exactly. So we're executing well there and the linearity of the deals are as expected. So that's kind of what you see from a subscription perspective. The macro, again, no surreal surprises when we set out the year, we said it was going to be a continuation of what we have been seeing, so not better, not worse. And we saw that in the first half, and we expect that in the second half as well.

Tyler Maverick Radke

Got it. And maybe another follow-up for you, Brent, as I think about the billings guidance and your expectations for normalized billings versus calculated billings. I think last quarter, you were expecting more of a headwind on the normalized billings about an $8 million headwind. This quarter, it seemed like it maybe turned out to be a tailwind if I'm reading those signs correctly. Could you just talk through kind of what you saw in the quarter from a normalized-billings perspective that differed relative to your original guidance, and I guess, if there's any changes for the full year?

Brent R. Bowman

Yes. So from a normalized billings, so just to make sure we're level set. So what we're doing here is for our renewal business, we normalize for changes in frequency. That's when the customer goes from annual to quarterly or vice versa and also for things like the co-terms. So for that renewal business, that's what we're focused on is taking that noise out of the equation. So looking at normalized is the best way to look at the number.
Now there's always going to be movements between calculating that because what a customer may co-term or change that. So those term -- billing term changes is what you're seeing there. But that doesn't impact the normalized number. That's just an adjustment to calculate it. So I wouldn't be so worried about that $8 million versus $3 million, I'd look at the full year, the full year, we're growing at 15%, and we feel good about it.

Operator

Your next question comes from the line of Brent Bracelin with Piper Sandler.

Brent Alan Bracelin

Maybe first for Peter, I wanted to double click into the clinical data management space. I mean you talked about some pretty strong momentum with ePRO and RTSM. I think you framed that as an opportunity bigger than EDC. What are the catalysts that you think can drive broader adoption of ePRO and RTSM? Are we in an environment where this is still largely a push? Or are we starting to see kind of customer pull?

Peter P. Gassner

Good questions. RTSM and ePRO first, I would say, there are areas where these are 2 areas where life sciences is going to be cautious. The randomization and trial supply management, that's very, very critical. If that's done incorrectly, you could have patient safety problems. You could wipe out a significant part of the investment in your whole trial. So they're going to be cautious. There are companies are going to try some trials first and see how it goes, rightfully so.
And in the ePRO area, the patient reported outcomes, that's a patient-facing things. So again, they're going to be extra sensitive on that. So I think the way it will play out is, people experimenting a first trial at a time. And if they like it -- and try a little more and if they like it, what we see may happen over the coming years play out is they might look for an enterprise standard, for example, an enterprise standard for randomization and trial supply management, and they really haven't done that before because of the way the market dynamics have been, they genuinely would pick randomization and trial supply management on a trial-by-trial basis and have multiple vendors, almost as if they were using a contract research organization.
Our innovation and the way we're doing it, we're set up for scale such that a company might say, "You know, hey, I'm going with Veeva with all my trial for randomization and trial supply management". And in ePro over time, that may also play out as well, where they could use us not selecting on a trial by trial, who has the best ePro for this or for that. We would like to, over time, earn the right to have an enterprise agreement, that's one for the ePro.
And then the second, we're a big fan of what's called bring your own device, meaning that the patient would use their own web browser or their own iPhone, their own Android and put their own app on it rather than the pharmaceutical company provisioning a specific iPad application. So we've done a lot of things to make that happen and make that work really well, which, by the way, of course, you couldn't do 10 years ago when ePRO started or -- you couldn't do that. So we're taking a new approach. We think it's better, that will take time for it to work its way through the system and the company's sponsors and CROs to get comfortable with that. So we're taking an innovative approach and we hope to have innovative results.

Brent Alan Bracelin

Got it. Very clear. And if you become the standard, obviously, a lot to gain there. My last question for Brent here. If I just look at net cash, it's on pace to eclipse $4 billion for the first time in the second half of the year. You're now looking at generating $1 billion in cash flow annually here. What are the plans for that excess cash position? Is there an opportunity to maybe accelerate your product plan that's ambitious with more tuck-ins? How do you think about that $4 billion in the second half, going to $5 billion end of next year and what the appropriate uses for that cash would be?

Brent R. Bowman

Yes, sure. So Brent, yes, so you're right. We run a profitable business, and we're generating a good amount of cash, and we're at about $3.9 billion. But we're focused on M&A. M&A is a use of cash. If we see the right acquisition, that's what we're going to do. But as always, in Veeva fashion, we're going to be disciplined about it in our strategy and our approach. And we have done a few deals in the past, and we've been successful in those deals. So that's really our focus Brent right now is to really invest for growth and M&A is a big part of that.

Operator

Your next question comes from the line of Jack Wallace with Guggenheim Securities.

Jack Dawson Wallace

Brent, first one for you, diving into the rest of your billings guide. Am I right by inferring here that it looks like there's a little bit of a mix shift towards more subscription billings versus services and the read there would be from the services guide to the lower half of the prior range? And then within that, is that -- if that is the case, is that related to some of the larger deals that you're either signed this year or anticipate to sign later in the year that may need less of Veeva resources during implementation?

Brent R. Bowman

Yes. There's a few moving pieces there. Like if you take a big step back on -- in the area here, services, was down a little bit. So that will have a small impact, a small impact on billings. But what you saw happen in Q2 was some favorability, right? So the visibility we have to the business is still the same visibility. It's just we closed some deals a little bit earlier. And that takes some of the pressure out of the back half when you look at the growth rate. So we're very happy with the visibility we have and the growth rates we see in that business, which is in that metric, which is 15%.

Jack Dawson Wallace

Excellent. And then Peter and Paul, your question about the kind of competitive landscape in commercial. What have we seen since last quarter in terms of activity from Salesforce and essentially even IQVIA in and around the public migration taking place?

Paul Shawah

Yes, I can talk about that. So we haven't as it relates to Salesforce, really business as usual. They've been a good partner. They continue to support our existing customers. I expect they're going to continue to do that through the end of our agreement. So that's business as usual as far as that goes.
In terms of them in a competitive landscape, I can't comment on their direction, their plans. What I can tell you is this is really hard, building a pharma CRM. It's a really deep life sciences specific application. It's complex. It's different and different parts of the globe. Brazil is different than Japan is different than Italy. So it's really a -- it's a different beast from what Salesforce is accustomed to doing. And then there's the full Commercial Cloud. So we have CRM. We have full Commercial Cloud. There's software, there's data. They all interoperate and work together, and nobody else really has that. So as far as my perspective on Salesforce, I don't see this as an attractive market for them.
You asked about IQVIA also, nothing has really changed there. We haven't seen any difference. We still win most of the deals. We won 8 SMBs in the quarter. Maybe one thing to think about as you kind of think about the longer term here, also 1 data point to put things into perspective. Veeva CRM and our add-ons is roughly 25% of our total revenue. And we expect to move the vast majority of that over to Vault CRM over, let's say, the next 5 years. So just a way to frame kind of what that looks like. Yes, there's the competitive landscape and that may change, but that's how we're thinking about it. We expect to move the vast majority over and focus on our horse, and that's the next generation of CRM.

Jack Dawson Wallace

Got it. That's helpful. And then just a quick last one here. What should we be anticipating in terms of the migration costs maybe on the back-end side versus also the implementation side?

Paul Shawah

So I'm sorry, can you repeat -- you're talking about the migration path. Can you just repeat the question? Just so I understand...

Jack Dawson Wallace

The cost for migrating customers, incremental to the existing expense base?

Paul Shawah

Got it. So yes, costs for migrating. So the way to think about it is the cost -- there's a lot of variables that are going to go into what that cost looks like. And 1 big 1 will be the approach that customers take from a very lift and shift to something that may be more optimizing around business process. The way I would think about it is we're building a lot of the tools to make that migration a whole lot easier. So the cost of just moving to Vault CRM, I estimate could be 20% of the total cost of trying to do something new and build some new offering. So we have a significant advantage because our customers are going to get everything we've delivered in Veeva CRM in Vault CRM on day one, that's what happens with our existing customers, plus they'll get more on top of that. So it's a much more efficient way and it's a much better way. Ultimately, we'll deliver a better application.

Operator

Your next question comes from the line of Craig Hettenbach with Morgan Stanley.

Craig Matthew Hettenbach

In R&D, can you touch on the ramping nature of some of the larger wins in EDC, and how do you think about that in terms of layering on to the growth rate?

Peter P. Gassner

Brent, do you want to take that one?

Brent R. Bowman

Yes, I'm happy to -- yes, I'm happy to take that one. So if you think about these large EDC deals, these are not single-year deals. These are these multiyear arrangements, which could be 3, 4, 5 years. So think about them in the first year, it's not going to be a significant amount. And as you get into years 3, 4 and 5, it will become much more material. Revenue will follow that billings path as well. So those 2 will be aligned as you look forward. That's kind of a way to think about it.

Craig Matthew Hettenbach

And then just switching gears back to some of the questions on the data business in commercial. Can you touch on just how you're thinking about just from a timeline perspective when you could see some inflection in that business?

Peter P. Gassner

I'll take that one. Real inflection, I do think will be -- first, it's going to be customer success wise and product excellence. And that, I think, we'll have a pretty good view about 12 months from now, really. Now that is going to lead the financial significance by a long way. So it will be multiple years from now before -- Compass is not going to be a $60 million business, even a $50 million business. It's not going to be that anytime soon, anytime in the next few years. So that's how long of a path these things are. The leading indicator will be the customer success and the customers -- and it would start probably with the very small biotechs who can -- who would say, "Hey, I run my business, and I don't use any IQVIA data products". That's -- I just use the Veeva data products. That's -- and I'm happy with that. And I'm able to see things that I couldn't see before. That's when you know you have something. So that -- those are the things that we're really looking for every day trying to optimize for, trying to listen for, trying to make changes, so we can arrive at that next year.

Operator

Your next question comes from the line of Jailendra Singh with Truist Securities.

Jailendra P. Singh

Congrats on a strong quarter. First, I want to better understand the margin trends in the quarter, which came in nicely ahead of your quarterly guidance when you adjust for TFC and FX impact. Just trying to understand what drove the upside there? And it looks like you're only raising the EBIT guide for the full year to reflect outperformance in the quarter. So how are you thinking about those cost trends in the second half?

Brent R. Bowman

Yes. So yes, thank you. So we're really happy with the performance in Q2. And you're right, we did flow through that outperformance in op income about $10 million to the full year. So we increased our full year number by $10 million. So growing at 38% in the quarter, and that's really about just great focused execution across every one at Veeva, all functions. So really good execution. And so we're real pleased with that. And if you look at our full year guide, we're guiding to about 37%. Remember, there's a little bit of seasonality in Q4. But than that, it's just purely about execution, and we're going to continue to focus on investing in areas that make sense that can accelerate our value to our customers.

Jailendra P. Singh

Okay. And then following up on the question on macro front, asked earlier with respect to the funding environment putting pressure on smaller biotech companies. I understand your fiscal '24 guidance does not assume any change there. But what are you assuming in your fiscal '25 outlook, are you assuming any improvement in trends there?
And then my broader question on macro is that I completely understand that Veeva's products are core to pharma R&D, but some of your peers and competitors have been talking about shrinking R&D budgets for pharma and cut down on discretionary spending. What gives you comfort that these trends will not start spilling over to your focus area? Just trying to understand the comfort there.

Brent R. Bowman

Yes. Let me take the first one. So in our guidance, we've assumed that the macro environment will continue. And so we don't expect it to get better nor do we expect it to get worse. Fiscal year '25 is a long ways out, but that's our base assumption as you think about our guide.

Paul Shawah

I'll take the second part of that. The life sciences industry, it's a healthy industry. There's always going to be some level of ups and downs in a quarter, quarter-to-quarter as it relates to clinical trial activity. But as we look out over the next couple of years, we're seeing growth in R&D budgets on average around 3% growth in R&D spend. So it's a healthy industry, you'll certainly see a little bit of kind of ups and downs. And as far as that impact on our business, I don't expect that to be material, given where that focus is on the smaller segment of our business, and we're a little bit more ELA centric.

Operator

Your next question comes from the line of Stan Berenshteyn with Wells Fargo Securities.

Stanislav Berenshteyn

In the prepared remarks, you called out Veeva Link as contributing to commercial subscription growth in the quarter. Brent, could you maybe give us an update on the ARR under Link? And then Peter or Paul, can you share with us, what are some of the newer products under Link?

Brent R. Bowman

Yes. So not going to get into specific ARR values, but just what's important is Link is a big opportunity for us. We're executing well. Our first application Link for key people is getting really good traction, and you're seeing that as a driver to our revenue growth. So it's one of the -- that is 1 of the primary drivers you saw in Q2 and for the balance of the year from a commercial revenue growth perspective.

Peter P. Gassner

It's Peter. I'll start -- sorry for the audio there, I had a little issue. This is Peter. I'll talk about Link overall. We started out with Link for key people. And when we were building that, we were also building the Link platform so that we could expand it to different solution areas, and we're seeing that. We started seeing that last year. So Link for key accounts for multiple countries, Link for scientific awareness, for medical insights, Link Workflow and then over into the clinical area. We've announced Link TrialBase and Link SiteBase. So we've really announced a broad, broad set of products.
Now each of those products, they are going to take a long time to mature. As Brent said, the bulk of our Link revenue, I don't have the exact number, but let's say, probably more than 90% right now is in Link for key people. We think it can be a broad set of solutions that can add significant value, but we'll have to see. We'll have to see can we make excellent applications and make customers happy. We're very mature in Link Key People, a lot more customers to sell into, but the product is very mature. By far, the market-leading product. We have to see if we can get there with our other Link products.

Stanislav Berenshteyn

Got it. And then maybe just a quick one on Crossix. Obviously, that's a choppier business quarter-to-quarter. But can you share with us any trends you're seeing as it relates to pharma marketing activities and demand?

Peter P. Gassner

Marketing, no broad level trends that we haven't seen before, just increased scrutiny. Marketing is a spend. And I would say there's increased scrutiny, especially more than it was a couple of years ago. But it continues to go well for us Crossix, and it's going to have ups and downs quarter-to-quarter. But as companies -- they want to reach their customers in the U.S. specifically in 2 ways, face-to-face and through digital. And they're always going to use both methods. Digital marketing is a big part of it. Crossix is the leading measurement solution. So I think you have a good long-term business there. Our focus is to integrate Crossix more tightly with CRM so that it becomes more towards enterprise license agreements and becomes a little bit less of a stand-alone measurement tool.

Operator

Your next question comes from the line of Saket Kalia with Barclays.

Saket Kalia

Okay. Great. Apologies in advance if these questions have been asked, but I'm going to try it anyway. Peter, maybe first for you, great to see the growth in the EDC customer base. I think you said you added 8, right, in the quarter. Maybe the question for you is, are there any commonalities that you're seeing across some of those wins, whether it's coming from 1 or 2 specific competitors or maybe a common reasoning that you're seeing those customers choose to switch? Any observations that you would make just as you look at a bigger EDC customer base now?

Peter P. Gassner

Yes, there are some commonalities. I would say the bulk of them are either coming from Medidata, which is the leading by volume in industry solutions, or they're coming from a series of smaller competitors that are targeted for the SMB.
As it relates to Medidata, I would say, they like the EDC solution from Veeva, but they also like the integration with our clinical operations suite. In the EDC solution, why they like our solution better at times, sometimes is -- and that will be the primary driver. It's a specific, what I would call meat and potatoes things, for example, when you do a study amendment, you change the design of the study many times with competitive solutions, you have to unload the data, reload the data, the site can't -- the clinical research site can't operate during that time with Veeva because of the newer architecture that doesn't happen.
We also are able to -- through the use of our tooling, our customers can build their studies, can define their studies dramatically faster, they might do 4 weeks instead of 8 weeks. And then the way that Veeva system works, has less custom programming. There's custom programming needed in these other solutions. That is expensive, but also (inaudible) specialized skill, you don't need that, you can define that in Veeva. So these very specific things. And then as to why they would use Veeva instead of maybe smaller SMB solutions, I think, again, they would like to get solutions from 1 partner that fits together. And that's what we do.
A good example of that is we have a great clinical trial management system, and we have a great EDC system. You don't have to use both if you use both or better together. Our ePRO system and our RTSM system, they work fine if you don't have our EDC. They don't require our EDC at all. They're best stand-alone, and nobody else has done that before, right? Nobody else that has an EDC product. But if you have all of our products, the integration is even better and it's just easier to get these solutions from an integrated solution from 1 company. So that's what our -- what we're seeing. People want a broad clinical partner where all of the applications are excellent, and that's what they can find in Veeva.

Saket Kalia

Got it. Got it. That makes a lot of sense. Brent, maybe for my follow-up for you. And again, apologies if this has already been asked, but some competitors during the quarter talked about maybe some lower clinical trial volume just kind of industry-wide, and that potentially impacting their revenue. Maybe just to level set for all of us. Can you just remind us how much of Veeva's business, if any at all, is dependent on sort of near-term in-quarter clinical trial volume so that we could sort of get a sense for Veeva's exposure to that potential trend?

Brent R. Bowman

So minimal, a very small amount is going to be variable based on near-term trial volumes. If you think about our 6 top-20 EDC wins. Those are typically multiyear predefined ramping deals. So they're going to -- they're not going to move with the ebb and flow of the near-term trial volume. So I would say that has a minimal impact in kind of how we go to market and contract with our customers.

Operator

Your next question comes from the line of Brad Sills with Bank of America Securities.

Unidentified Analyst

This is [Carly] on for Brad. I know we talked about just the fiscal year guidance, I guess the implied Q3 guidance kind of assuming current macro to continue. I just want to dig in a little deeper into, I guess, specific cohort or product wise. I know you guys pointed out smaller biotech customers impacting the R&D business. But just wondering, going forward, looking at the second half, what segments do you expect to be impacted more than the other perhaps and maybe some that are going to recover sooner than the other, which will offset some of that weaker macro. Yes, I just want to like learn -- dig in a little deeper into nuances here.

Brent R. Bowman

Yes. So it's starting from the top. The macro again, we expect it to be a continuation of what we saw in the first half and the back half. If you look at our full year guide and you look at R&D, we're growing that business at about 28% adjusted for termination for convenience. So that's a very healthy business growing nicely, and we continue to execute, and we see the strength to be broad-based across clinical, quality, and safety in the rest of the businesses in regulatory. So broad-based strength there. The macro was going to impact both commercial and R&D, but nothing more than what we've been seeing. So we're happy with the execution we have broadly across the portfolio.

Unidentified Analyst

Got it. And then just a follow-up for me, if I may. You definitely have a broad solutions stack, 35 products. Just looking beyond the macro here, perhaps fiscal year '25, you reiterate your $2.8 billion target. So just wondering in your broad product suite, are there any ramping more meaningfully in the pipeline that might contribute more to the growth going forward?

Brent R. Bowman

Yes. So we reiterated the $2.8 billion. We're not going to get into specific splits of the product portfolio. But as Peter has indicated in his prepared remarks, we're less than 20% penetrated broadly and across R&D. So the beauty of being a multiproduct company and have 35 plus major products is you have broad-based strength, and that's what we're seeing. We see a broad opportunity and it's up to us to execute to that.

Operator

Your next question comes from the line of Charles Rhyee with TD Cowen.

Lucas Cole Romanski

This is Lucas on for Charles. Most of our questions have been asked. So I guess a longer-term question around Vault CRM. As we understand it, bringing the CRM product on to your own platform, give you guys the ability to develop some add-ons or added functionality that your customers may be currently going to other vendors for. So 2 questions, I guess. Would like to hear what sort of functionality this may entail? Maybe that's asking too far down the road map, but would be curious to hear how you guys are thinking about this opportunity?
And then 2, is the timelines for when you guys may look to such functionality?

Paul Shawah

Yes. Lucas, this is Paul. So the way I would think about it, first and foremost, the decision was mainly about having complete control over the platform, the application so we can deliver on customer success. That's the highest level. We want to make sure that we can do what we need to do to deliver the very best application and the best customer experience. That's the decision at the highest level. Now beyond that, that means we may be able to unlock new functionality, and we've announced some of that already.
I'm not going to introduce new announcements or new things that we may do in the future. But one really interesting one that's been really well received by our customers is this idea of how do we help the industry become more service-centric, enabling some of these new therapies, new complex medicines, complex therapies. It's important for doctors to be able to get information inbound from life sciences. And Service Center will allow them to do that. So that's just 1 example.
I would expect -- our model is we continue to innovate. So I would expect that over time, we'll do new things on Vault CRM that we haven't done before. But that's standard Veeva operating model.

Operator

There are no further questions at this time. I will turn the call back to Peter for closing remarks.

Peter P. Gassner

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

Operator

This concludes today's conference call. Thank you for joining. You may now disconnect your lines.