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Peter Gassner

Thank you, Gunnar. Welcome, everyone, to the call.
The fourth quarter was a strong finish to a great year for Veeva, with strengths across the business and results above guidance.
Total revenue in the quarter was $721 million, with non-GAAP operating income of $308 million. For the year, total revenue was $2.75 billion and non-GAAP operating income was $1.15 billion.
This past year was a significant year for Veeva. We executed well and delivered significant innovations across all product areas and made great progress on our AI strategy.
The year was also about looking forward. We set our 2030 revenue goal of $6 billion, which reflects the significant opportunity we have ahead. And we announced our planned expansion into new markets.
We'll, now, open up the call to your questions.

Question and Answer Session

Operator

Thank you. We will now begin the question-and-answer session.
(Operator Instructions)
Joe Vruwink, Baird.

Joe Vruwink

Great. Good afternoon. First, congrats on the top 20 customer that went all in with Veeva, in Clinical, after you mentioned seeing these opportunities, last quarter.
I think there's, maybe, a trend in the large pharma community to, perhaps, reduce procurement risk and consolidate around strategic vendors. Is that part of why these opportunities are, now, arising? And how do you generally think about large strategic transactions, like this, when thinking about what you might see in the upcoming year?

Peter Gassner

Hi, Joe. This is Peter. I'll take that one.
I think, for this particular customer, this is really about speed - just more efficient to make a combined decision for the full Clinical platform, in a better way to align their different clinical teams onto a shared goal and shared technology.
I didn't sense any risk avoidance in this particular case. And, in general, for the top 20 pharmas, they're more, with us, focusing on competitive advantage, speed, compliance; not really in risk avoidance.
Also, there's some desire to somewhat standardize because they know in the clinical area, the more they standardize together, it'll make it easier for the clinical research sites they deal with.
Now, I wouldn't draw any particular conclusion to other customers. The one pattern would be we are getting more strategic with our customers, as we have more product solutions and more of our product solutions are proven.
But each of the top 20 is going to take a different path. This is due to their -- it's just where they are in their technology journey. And, also, where they're at in their pipeline and the things they need to accomplish.

Joe Vruwink

Okay. That's great, Peter. Thank you.
And, then, I wanted to ask just on recent industry developments, even though, I think, recently, there was even some news over my -- just now, in terms of research funding. But Veeva's always been very thoughtful. I remember back when the IRA was approved, you were very early in addressing what drug price legislation might mean.
Along those same lines, if there are changes to indirect research funding, how do you think about potential knock-on effects, over time? What customers might be thinking about? And, then, how that ultimately impacts Veeva?

Paul Shawah

Yeah. Hey, Joe. It's Paul.
Yeah. We're certainly paying attention to what's happening around research funding. But I'll take your question, maybe, a little bit more broadly. There's certainly a lot that's happening, right? There's a lot of proposed changes across many different areas.
We're seeing changes in the news, daily, about FDA or NIH or price negotiations. So there's a whole lot going on. It's early, right? It's a little bit early to predict, exactly, what the impact may or may not be.
One thing I can tell you is our customers -- there's really no impact to our customer decision-making process, so far. We're not really seeing any change there.
We're going to have to see how things play out, particularly as it relates to the (inaudible). There's just a lot of factors that come into play. It's super early to predict.
Maybe, two things that I might point out for you, though. Life sciences is generally more resilient to economic cycles or potential changes that you're talking about because it's an adaptable industry. They're accustomed to these kinds of change.
And, then, as it flows through to Veeva, our revenue tends to be more predictable, right? It's core systems, it's annual subscriptions, projects may get delayed. But if there is disruption due to something like this, those projects, typically, come back.
So it's early to give you a detailed assessment of what the impact looks like. But it's something we're keeping our eye on, closely.

Operator

Saket Kalia, Barclays.

Saket Kalia

Okay. Great. Hey, guys. Thanks for taking my question, here.
Peter, maybe for you. I thought it was interesting, in the prepared comments, how you called out 17, of the top 20s, using CTMS, which I think replicates some of the success that you've had with eTMF.
As you think about the growing success with different parts of the development cloud, what are the products could that success in eTMF and CTMS, maybe, pull-through, as you think about the next product cycles, here?

Peter Gassner

Thanks, Saket. Yeah. That's very insightful of you to let out that the industry -- the top 20 seem to be standardizing on our eTMF and CTMS. And I think for good reasons.
These are innovative products that fit together. And, if we step back, that was an innovation that Veeva created. These systems never got together before Veeva. There was a document system way over someplace else and a transactional system someplace else.
The Viva Vault Platform enabled this transition. And I was, there, in the beginning, when people called us heretics, right? These things don't -- you cannot put peanut butter and jelly together, it's not going to be good, right?
But, now, it obviously enables this seamless flow. So they are standardizing on that. And we have to keep up the good work and the customer success. We can't rest on our laurels, at all. And we're not, so far.
But your question is what can it lead to? That leads to the broader clinical suite and you saw that with one top 20, which is things like Study Training and Site Connect. These are both major applications -- very deeply connected with CTMS, and eTMF.
The payments module. We'll be doing for further investments, there, so that payments product can become a suite of products for Veeva.
And, then, that also leads into the clinical data management, the EDC, CDB. Also, these big new areas of RTSM, Randomization and Trial Supply Management, and, also, the eCOA, the Clinical Outcomes Assessment.
Just to give a perspective, roughly speaking -- I wouldn't hold a ruler up to this -- EDC is one of our larger product line areas, larger opportunities. But RTSM is roughly equivalent to EDC. And eCOA is, on its own, roughly equivalent to EDC. So these are not small areas -- big areas.
Clinical is roughly one-third of our of our opportunity, our TAM, because it's such an important area and there's a long way to go. And eTMS and CTMS' success, not just selling the product in, but the success and the fact that our implementations are getting faster and faster. Our implementations, now, are faster than they were before. And that's really what people are looking off into Veeva.
And I know I'm going a little long on this but that's an insightful question.
Sometimes, the question is I'm going to go to Veeva but how can I get there the fastest and the most economically, and the most accurately? And we're much better at that than we were two or three or four years ago.

Saket Kalia

It makes a ton of sense, Brian. Maybe, for my follow-up for you, just building off of what Peter talked through, I was wondering if you could just touch on CTMS or EDC. I was wondering if you could just touch on how that's contributing to billings in fiscal '26. You had some big top 20 wins, in EDC, a couple of years ago. And if I recall correctly, those are ramping contracts. How do you think about that contribution, in fiscal '26?
And, maybe, the corollary of that, since we're at the end of the year and to make sure the question is asked, as you build scale in that EDC business, is there a finer point that you could give us, just on relative size of that business?

Brian Van Wagener

Hey, Saket. Thanks for the question.
As you just heard Peter speak to, about one-third of our overall TAM is in the clinical space. So it's certainly a large opportunity. And within that, EDC is a pretty significant component.
We were very pleased that, in the quarter, we had our ninth of the top 20 commit to VV EDC. And we've had a steady advancement in EDC, with top 20s.
So from a ramp perspective, there are ramps that are steadily contributing to our revenue base, both to billings and to revenue. And ramps are not limited to EDC.
So we see that dynamic with top 20 customers in, really, all of our R&D products. So there's no one product, no one customer, no one year where that really spikes. But it's factored into our guidance for FY26.

Operator

Brent Bracelin, Piper Sandler.

Brent Bracelin

Thank you for taking the question, here. Peter, great to see the momentum. Great to hear the peanut-butter-and-jelly narrative is actually starting to work.
I wanted to drill down into data cloud. You really brought up the point, in the prepared remarks, that Compass represents the biggest single -data opportunity for you. You've got over 100 brands, here. I think, a year ago, nine months ago, you talked about your first seven-figure customer.
What's the momentum you're seeing on the expand side? Are you seeing larger seven-figure deals? I asked because, obviously, a lot of those Compass customers can start small. But would love to get any color you had on larger transactions, any expansion opportunities you're seeing. Thanks.

Peter Gassner

Yeah. For Compass, and if I go up one level to data cloud, I think that's probably the biggest change I've seen in the last six months, in terms of tone -- is more interest in data cloud, overall.
Now, that doesn't translate into deals or revenue, right away. But we've organized, internally, a little bit more around data cloud, which is -- that's Compass, that's open data, that's Link, and that's Pulse, a new product we just announced.
I think we're getting that vision out there and I think that's starting to resonate. That's, like, going back to eTMF and CTMS, back in 2018. That's the way I feel; that people are starting to get the glimmer of, oh, okay, that might really work.
Now, in terms of Compass, most of our progress in Compass is on -- we have two main products, there: the Compass Patient and the Compass Prescriber. Most of our progress and revenue, in our earlier product, is in the Compass Patient.
And, now, we haven't seen really a trend to ELAs, yet. We're still on the brand-by-brand. I think that trend to ELAs, large-enterprise ELAs -- we might be a year or so out, for that. But the trend is escapable.
I also think I'm very excited about bringing this value of data cloud into the smaller market, companies of under 50 employees, because when you think about it, they critically need data. They have to decide: Are they going to run this clinical trial? Which indication are they going after? How are they going to do this? What's the patient pathway? And they really don't have a good source of that data.
So I want to make something great for these small companies. Really great, really easy, integrated patient and prescriber data. I think we can really help boost the life sciences industry around that.
So as you can tell, I really think we've got something in data cloud. But the adoption is early.

Brent Bracelin

(inaudible) color there. And, then, Brian, just a follow -up for you. The full-year margin guide, here -- highest we've ever seen. That comes at a time where you're investing in R&D; you have the whole investment focus around a Vault CRM, additional products, here.
What's driving the guide, here, above the 42%, on margin? Thanks.

Brian Van Wagener

Yeah. Great question. The main way that we think about margin is investing the right amount in the business. We've always thought about growth and profitability and don't really view those in conflict with each other.
So what you're seeing is that we're always trying to get more efficient. And it's because that efficiency allows us to execute better and faster. We find that lean teams are more agile, they've got better speed. And so, we think there's going to continue to be efficiency in economies of scale.
But what we're optimizing for and what you're seeing reflected in the guide is that we're optimizing for speed and execution, not margin. We're continuing to invest in the business for growth. We're spending about twice on product -- like we do on sales and marketing -- and keeping that focus on product excellence and innovation in our products.

Operator

Rishi Jaluria, RBC Capital Markets.

Rishi Jaluria

Oh. Wonderful. Thanks so much for taking my questions. Nice to see you continue the momentum in the business.
Maybe, I want to start with the AI offerings that you've built out. Peter, maybe, if we rewound the tape back, a year, there was a little bit of a perception from the investment community that you were coming off as, maybe, a little bit skeptical on GenAI. But, now, you've come out with a lot of these products.
Maybe, can you walk us through what's driven the desire or the momentum to push out these products, quickly? And what is early customer feedback and use cases been?
And, then, I've got a quick follow-up.

Peter Gassner

Yeah. AI strategy is certainly a captivating technology, right? So much money going into it, so much progress and so much hype. And, if we just stay at that level, I'm really pleased that things are starting to shake out, roughly, how we thought they were going to shake out.
There's not going to be one Large Language Model. There are going to be multiple. There's not going to be 50 but there's going to be a good handful. And they're going to specialize in different areas. And it's not so unstable, anymore, where you wake up and everything changes, right?
DeepSeek came out. Yes. Well, guess what, the world keeps turning. Nvidia is going to have their own models. Okay, that's okay. And the world keeps turning.
So I think it's starting to settle out. And, Amazon, people were counting them out, on AI, for a while. Well, okay, they're back in the game, in a major way.
So it's settling out that these core Large Language Models are going to be at the platform level. And the real -- a lot of core value, and that's super valuable, right? That's not where companies like Veeva play -- at that core infrastructure level. It's very valuable.
But there's a lot of great value on the specific use cases, on top, that can be used in the workflow. So that's what we're doing, now: focusing on our AI solutions. We have our TMF Bot to classify documents. That was a very early experiment.
Now, with CRM Voice Control that we'll be bringing out this year and, also, CRM Bot and the MLR Bot to medical legal regulatory review. We have quite a few others in the plan too. We don't know exactly which ones we'll bring out when but we're putting more investment in AI solutions.
We centralized the group around that so we can develop. I have a strong leader, there, and develop more core competency around AI. And I think our timing is just right because the base of the technology is, now, stable enough.
And, while that base was getting stable instead of running around and typing things, we were focusing on things like EDC and TMF, et cetera. So I'm pretty happy with how things are playing out with AI.

Rishi Jaluria

All right. Wonderful. That's really helpful, Peter. Thanks.
And, then, maybe, wanted to get a sense -- I know it's still really early -- but the Analyst Day, prior to the last quarter, you did talk about this potential move or planned move into horizontal ops.
Now that we've got three or four months under our belt and you've been talking to your existing customer base, I imagine, your engineering team.
Just how have those discussions shaked out? Where have you seen where there's opportunity, for you, in the market? Anything that you're willing to share would be really helpful, right now. Thanks.

Peter Gassner

Yeah. I'll start with our existing customers. I may have asked a little bit what will we do in new markets. But, not so much because they know we have a dedicated -- almost everybody in the company is on life sciences. So they really think of Veeva in life sciences and are more curious than anything else, what will we come out with.
And, then, in terms of the product areas, we're just doing a lot of great work on the platform. It's a really lean, really great team. Very close to me. I had a good leader, there. I'm having so much fun reviewing the individual engineers that go into that group and making sure we get the special sauce of the right 7 people, the right 12 people doing what in what order. So I'm really enjoying that.
And we're focused on innovation, in that platform. If you look at the application-tech platforms -- and that's something I've known about, all the way back from PeopleSoft, Salesforce, et cetera -- most of the cloud application platforms, now, are really, version 1. And, maybe, there's a need for a version 2-type of thing, maybe or maybe not.
But that's the risk we're taking. That we think there's a version 2-type of thing that can come out. That's where we're focused. And we don't have anything to announce, at this time, about which application area we're going into.

Operator

Ken Wong, Oppenheimer.

Ken Wong

Great. Thanks for taking my question.
Peter, good to see the momentum on the EDC side, with another all-in customer. Just wanted to circle up on, just, the competitive landscape, there. You had a competitor call out a potential win back. Are you, guys, sensing any changes in the customer conviction for EDC, CDMS? Any color there would be great.

Peter Gassner

Yeah. In terms of the competition there, in the clinical, there would be Metadata and Oracle in the EDC area; not so much in the clinical operations area.
I think, increasingly, people -- they do want an integrated system between clinical operations and clinical data management or the EDC area. I think that gives us a bit of a structural advantage over our competitors. We have nine out of the top 20 doing the EDC, now. And about half came from -- and there was Oracle and Metadata, about half came from each.
But we're trying not to focus on that a lot, right? We really need to focus on the value. Sometimes, I look at all the clinical trials that are running on our platforms and some of the really innovative companies that are that are growing so much and doing so many clinical trials. That's where our focus is: How can we make that even more efficient?
And, then, looking towards 2030, we reset our goals, as a company, 2025 goals to 2030 goals. And really starting to think about if we would have most of the market in the EDC, one day, what kind of innovation can we do to put on top of that to really fundamentally change clinical trials?
So our focus is not on the competitor. It's on us doing a great job capturing the remaining part of that market share. But I'm already thinking ahead, what amazing innovation can we put on top of that, once we've standardized this core EDC, a little bit more?

Ken Wong

Got it. And, Brian, just a quick question on cash flow guidance.
It looked a little light, relative to the billings growth. I think we're calculating about 8% growth on cash flow versus you got 10% on billings and some slight margin in expansion. Any one-time items or some working capital movements that we should be aware of, there?

Brian Van Wagener

Hey, Ken. Yeah. The main thing, there, we see a pretty standard relationship between our operating margins and operating cash flow. The main two differences, obviously, are taxes and then SBC, Stock Base Comp.
But the one-time difference we had, last year, is we had about a $50 million-dollar impact of collections pushing from the prior year. So what you're really seeing is just a harder year-over-year compare, rather than anything else.

Operator

Brian Peterson, Raymond James.

Brian Peterson

Thanks, guys. Congrats on the solid billings. It definitely sounds like it's peanut-butter-jelly time.
But I'll keep it to one. Paul, the prepared marks referenced some expected Vault CRM commitments from top 20 customers, in 2025. I'm curious: How have the decision timelines gone versus your initial expectations? And would you expect 2025 to, maybe, be a bigger year or 2026? Any color there. Thanks, guys.

Paul Shawah

Yes. Sure, Brian. First, it's going along exactly as we expected, right? We're not forcing customers and doing anything unnatural and to force customers into a specific timeline. We want to do this in a very customer-friendly way.
Having said that, we're in discussions with all of top 2 and we're progressing them every month, every week that goes by. We progress those conversations. There's a lot that they're excited about, everything from our delivery or consistent execution, the migration progress that we've made.
So there's a lot of really good momentum. Also, the roadmap of our products, innovation roadmap, everything that we're doing.
So the conversations are going very well. But we want it to happen on the customer's timeframe.
And, having said that, we expect more announcements in 2025. And I expect the vast majority of decisions, particularly in top 20, will happen by the end of 2026.
So that's how to think about it. We're not forcing anything but we're excited. And we're excited that the momentum's in our direction and we'll win most of the decisions.
We still expect to win the vast majority.

Peter Gassner

(multiple speakers) add there is customers are starting to get aware of the concept of a red zone, right? You can't let this decision go too long because, then, you won't have enough time.
So, '25, '26 is reasonable for many customers, depending on the complexity of what they're doing. Maybe, the early part of '27 could be there. But, after that, you really start getting into the red zone, for most customers.
So that's why we -- even though we will support Veeva CRM all the way till 2030, when you're talking about change management with well over 10,000 people and functions and de-customizing and reappointing integrations, it's not something you can do in six months.

Operator

Dylan Becker, William Blair.

Dylan Becker

Hey, gentlemen. Maybe, pulling on that thread, on the CRM front. You touched on the accelerated innovation cadence, right? We've seen a number of new product releases within the CRM suite. I'm wondering how much of that is driving this appetite and interest?
Obviously, in the platform, as well too, where there's clarity on the product roadmap. How's that helping give confidence in this decision and cadence, maybe, over the next two years or so?

Paul Shawah

Yeah. Dylan, the new product -- the innovation roadmap and core CRM is one thing and that's driving a lot of our momentum. But, also, I would say the new products that we've announced in areas like Service Center and Campaign Manager and Patient CRM, that's super exciting.
It's exciting for -- across all of our customers, top 20, all the way down to SMB because we are making, really, for the first time in life sciences, this idea of customer centricity simpler, easier, everything in one database.
That's never been done before. So there is a sense of -- we have a clear vision. Our customers see a path to getting there. And they see Vault CRM as the foundation to making that happen.
So that's not the only part of the decision-making process but it's a key thing. And we're bringing this customer centricity to life. So we're excited about the new potential, there.
And, then, of course, it unlocks potential for these new markets, right? New expansion opportunities to sell additional products, as customers migrate over.

Dylan Becker

Okay. That's helpful, Paul. Thank you.
Maybe, for Peter and/or Brian, here, too, going back to the topic of AI, as well too. You announced the direct-data API and the value of interoperability, wondering if you're seeing any accelerated momentum around being able to build on top of the accessibility of your data sets?
And, maybe, if that's the view, externally, how you're leaning into internal utilization too, if we think about some of the margin strength you're delivering throughout the business? Thanks, guys.

Peter Gassner

Let's see, in terms of the margin, Brian, I'll leave that one to you.
Yeah. We are seeing good tech uptake of the direct-data API. And we, as you mentioned, recently announced that that's going to be free to all of our customers. And the reason, there, is we want everybody building on that type of API.
It's just a much better, faster API for many use cases. And we found a way to do it, where it was not going to consume as many compute resources as we thought it was.
So we're pretty excited about that. We're using it, internally. For example, for connecting different parts of our clinical suite, different parts of our safety suite, together.
And our partners are starting to do it. We have more than 10 customers that are already doing it. Some of them are large customers.
It takes some time because it's a different paradigm for integration. People have been using the hammer for a long time and, now, you're giving them a jackhammer and they got learn how to use it. But we are super enthused. It's a fundamental new type of API, where you can get, like, all of the data out of your vault, super quickly, in one F3 file every night and transactionally sound deltas every 15 minutes, in one pile.
Nobody has that type of thing. And AI is just pumping up the demand for data everywhere. AI and data science. And, overall, that's just the trend. As the compute powers get more and more accessible, people want that data in more and more places, all the time.
So I'm really enthused about what we're doing for the life sciences industry because many of their core systems are Veeva. And, now, their core systems are going to be enabled with this fundamental new API that's going to allow them to leverage their core data faster than any other industry.
So, hopefully, we're doing our part to help the life sciences industry grow. And that will be good for (inaudible).

Brian Van Wagener

Dylan, this is Brian. You'd asked the second part of the question around the internal use of AI and the extent to which that was contributing to margins, I think.
And I think the short answer, there, is it's an area that we're really excited about, internally, as well. We're building strategies around. But it's not a major contributor to the margin expansion that we saw in Q4 or in the coming year.
So it's something we're looking into. We're building strategies around it. It's not something we're counting on, though, to deliver on this year's guidance.

Operator

Stan Berenshteyn, Wells Fargo Securities.

Stan Berenshteyn

All right. Thanks for taking my questions.
I want to go back to the prepared remarks. I believe you called out positive momentum in a variety of products, including Site Connect, Study Startup, RTSM, eCOA. Now, to me, that seems that these are precisely the products that a customer would want to buy, if they were ramping in EDC.
So my question is: Are these add-ons being sold in parallel to when you're selling EDC? Or are these opportunities emerging, once these clients are starting to ramp their EDC? And, therefore, is there more to come, in that regard? Thanks.

Peter Gassner

Yeah. I'll take that one.
In general, I wouldn't say connected to EDC. EDC is, in some ways, a special area of a life science company. It's pretty specific, pretty standalone.
But if you look at Site Connect, Study Training, eCOA, RTSM, those come when a customer makes more of an emotional commitment on two things: One, hey, we're going to invest in modernizing our clinical tech. Because, sometimes, they may not want to do that. Sometimes, they want to have a status quo. We've got other things going on. We don't want to move one thing because it might break another thing. So they may be in that mode or they may be, hey, I'm going to invest in our clinical tech.
The other one would be: We've decided Veeva is a very strategic partner. Maybe, we're not buying all things at once, like that one customer did. But we've decided, well, that's where we're going. So when we do modernize, we'll get Veeva.
So those two trends, more than any type of EDC attachment, is what's causing those other products to move.

Stan Berenshteyn

Got it. And, then, a quick follow-up on the top 20 announcement. I'm just curious how long will it take for this to fully ramp in revenue? And can you ballpark the size of this contract, once it's fully ramped?
Thank you.

Peter Gassner

Yeah. I want to ballpark the size of that contract. It's certainly a large deal. But I think it's not -- there's only 20 top 20s and I wouldn't want to want to ballpark anything, there.
In terms of the full ramp, this would be one of our longer ramps. There's a lot of things in there. So you could consider this in the area of five years or so.

Operator

Dave Windley , Jefferies.

Dave Windley

Hi. Thanks for taking my question.
Perhaps, a good segue from the last one. Peter, we recently surveyed clinical development folks about their tech stack and they said they're very fragmented, today, and would desperately like to move to an integrated solution, which is, I'm sure, music to your ears. I'm wondering, in your answer, about this all-in client and speed being a driving factor, is that speed to get the full implementation? Or is that efficiency and speed of their organization, once they are fully implemented, on a more integrated system, like yours?
And, then, part B of the question would be to what degree can you measure and use that, as your selling point? How you're enhancing the efficiency of your clients, when they do move to an integrated technology stack, like yours?

Peter Gassner

That first question, really, what I was referring, there, is speed of getting to value. So, for example, there's quite a few products they purchased, together. Now, what it could have been instead, and in a very quick -- not very quick -- but over a set of months, really, looking at, hey, we would like an integrated system, who is the partner we can depend on? Who has these things? Who has a track record of success?
Okay, that's Veeva, let's go that way. And that was driven from a high level of the organization, not from within one of one of the subdepartments.
If the customer doesn't go that way, there might be an 18-month sales cycle for each of those applications, in each of those departments, with a different start date, with independent projects planned and temporary integrations. So you double your speed of evaluation and implementation, when you go all at once.
So that's the main thing that I was referring to -- speed to value and cost, right? Eliminate these RFPs, these seven RFPs. Don't do that, go with Veeva, make it easy.
Now, in terms of quantifying the value when they get in there, that's something that is not so easy because different customers different measure value, differently. Generally, what people do is they will ask for references. They will ask each other: Hey, we're thinking of using Veeva. Hey, I know, this person, at that other company, is using Veeva and I'll ask him, hey, how's it going? Do they like it? Are they getting what they expect?
So it's really that. And I think those are actually more accurate because those are leading indicators versus depending on a lagging measurement and did you measure it correctly. So for better or for worse, that's how that usually goes.

Dave Windley

Got it. A quick follow-up on Compass. You, in the past, have used what I think are the magic words of compensation-grade data. Where would you say you are, in terms of validating, at that level, a compensation-grade data set that could begin to displace the competitor, at that important level of consideration? Thanks.

Peter Gassner

Yeah. Compensation incentive, Incentive Compensation grade -- sometimes, we shorten it to IC, Incentive Compensation-grade data. There's a few things.
Our two main products, in Compass, are Patient and Prescriber -- patient data and prescriber data. For some types of products, because of the complexity of the products, they're really paying on the individual patient data. So it's sometimes done with our patient data, today.
For the prescriber data, which is a more common way -- they'll pay on Incentive Comp. We're early in that cycle. We don't have anybody, today, using our prescriber data for Incentive Comp. I would say, next year at this time, we will. But that's a pattern where they will view that, over time.
Hey, how is Veeva's projections on this month, on that month? How do they line up with what we're doing? Do we see stability and consistency?
So that will take some time. But, in the meantime, for prescriber, there's another great use for it, which is segmentation and targeting, at the prescriber level. And, sometimes, there, we're going to have better coverage than our competitors.
So it's a long road for Compass. But we're definitely starting down that path. So we'll see how it goes.
And one thing I can tell you is we're not giving up on it, that's for sure, right? It's just a matter of how long it's going to take.

Operator

Kirk Materne, Evercore ISI.

Kirk Materne

Yeah. Thanks and congrats on a nice fourth quarter.
I don't know if this is for Peter or Paul but I was wondering if you guys, could, just talk about any potential risk, in terms of the amount of consultants needed to help your clients move on to Vault CRM? Or what that dynamic looks like in the industry, right now?
I know everybody's making a decision around this. They obviously need help making this transition. How do you feel about the bandwidth? Being there to help them get over from the other system, onto the Vault CRM?

Peter Gassner

Yeah. That's a good question. For Veeva, right, we have our products, our software data, our software products, our data products. We also have our services team. And we have our consulting team. And, then, we have a network of partners.
One thing to know about Veeva -- and it gets the core to who we are -- we don't rampantly hire-up people and services in the boom times and, then, let people go in the bust times. What we do is we flex utilization.
So when the boom times come, our services team knows, okay, you might be running hot, you might be running at 120% utilization for a while but it won't last forever. Just get through it, right? So our service team, I would say, is amazing and complex and can flex very well.
We, also, see that in our partner ecosystem, like Accenture. They are the masters at flexing to meet demand, much more so even than Veeva, right? And they can do that scale. So I, really, honestly don't worry about that.
They have a lot of Veeva expertise. Accenture does. We do too. Both of us kind of flex and we're not the only ones. So I don't minimize the hard work and your question is very good. We can flex.
Also, we're automating a lot. The data migrator, we put a tremendous investment in that. So the actual data migration part, which in -- and it's not just the initial migration, it's the delta migrations, et cetera -- that's a lot of work, which is largely going to be automated, in here, because we control both the source and the target.

Kirk Materne

Okay. And, then, just one last one here, Peter. Obviously, in the life sciences industry, people are thinking a lot about tariffs and how they have to move things around, potentially, in terms of their supply chain. Do you worry, at all, about those decisions distracting from, say, signing new contracts with you, all?
Or where do you think that stands, right now? I know it's sort of in flux. But I was just curious on your opinion on that. Thanks.

Peter Gassner

Yeah. It's very early and we see that there's different announcements every day. And, Paul alluded to that. If there ends up being a lot of disruption, that can cause lack of focus and delayed contracts. We haven't seen that, yet, but that could happen.
It's just too early to know whether that's really going to happen. We've seen no sign, yet. And, again, what Paul mentioned is if that were to happen, the nice thing is it really just delays things, it may push it out a little bit. It's not a consumable product, where you lose the opportunity.
I hope it doesn't happen. It's just don't have enough data, yet, to know.

Operator

Anne Samuel, J.P. Morgan.

Anne Samuel

Hi. Thanks so much for the question.
You highlighted, in your prepared remarks, that safety was an area with a lot of opportunity for AI innovation. I was hoping, maybe, you could just speak to why that is? And, maybe, just expand on that? Maybe, provide some examples of what kind of technologies you might be able to use there? Thanks.

Peter Gassner

I can take that one. I guess I'm doing a lot of talking, today. But it seems to be a lot of product-related questions, Brian. And I love that.
Well, it's not that complicated in the safety area. We are the first true-cloud integrated set of safety applications. So the core Safety Processing, Safety Signaling, the Safety Workbencher reporting. Nobody has had that in the cloud before.
And when you have it in the cloud, there's benefits. There's benefits of performance. You don't have to manage the infrastructure; you don't have to manage the upgrades; you can configure it. So that's, probably, honestly the main thing.
There are some other benefits with the Veeva system. I think it's a better safety system than what's out there. There's different features and functions, things like that.
For some, they're really enthused about the connection into clinical, which is a real cost saver.
But I'll bring it back to the number 1 basics -- is they'd like to have a cloud-based safety system that's high quality and, then, finally, they can have it.

Anne Samuel

Great. Thank you.

Operator

Ryan MacDonald, Needham.

Ryan MacDonald

Hi. Thanks for taking my questions.
Maybe, I'll start with one, for Brian, just to get him in, on the action here. Brian, as you think about the strong op margin guide for the start of the year, can you call out, maybe, the areas where you expect to get the most incremental leverage?
It sounds like R&D is going to be a continued area of focus, from an investment perspective. But how should we think about those incremental leverage points?

Brian Van Wagener

Hey, Ryan. Thanks for getting me in here. Peter was on a roll, though. But I'll do my best to jump in.
So it's really pretty broad-based. I think, first, you see that there's a bit of improvement on the gross margin side. And that's part of a secular increase, as we grow in R&D and move more of the business over to the Vault platform. And, then, from better efficiency in the services business.
And, then, beyond that, on the OpEx side, it's quite broad-based. It's just us looking to be efficient and execute better across the business. That's in our sales teams, it's in our marketing teams, it's in our product teams -- so looking to be efficient and effective and execute well, across the business.

Peter Gassner

If I could just tell you a little bit of the why on that. As we get more products, as you know that the field tends to get a little bit more efficient, right? There's relationships you can leverage. Sometimes, there's a broader decision made, rather than fixed decisions. So that's where efficiencies, in the field, come.
Also, every year -- and we have to keep it up -- but, every year, if we execute well, we develop more trust. And when you develop more trust, that translates into more efficient sales because communication is higher fidelity. So that's on the sales side.
On the product side, there's more of a mathematical reason. The more products we develop on Veeva Vault, the more efficient we get, the more economies of scales we drive out of the platform. The better the platform gets and the more economies of scale.
So we have a platform. If we have 20 applications on that platform, it's an efficiency of one thing. If we have 40, it's an efficiency of another. And if we have 80, it's a whole efficiency of another thing.
So that one's just more mechanical, on that side.

Ryan MacDonald

Super helpful color, there. Paul, maybe, a follow-up for you.
Crossix, obviously, continues to perform really well. But, as you're getting into the new calendar year, we started to hear, maybe, a little bit more of pull-forward of spend, like, early in the year or more upfront purchasing around marketing spend.
Are you seeing similar trends, within Crossix, at all? Or any reason to think that -- we see a greater mix of upfront or beginning of the year spend versus years past?

Brian Van Wagener

Thanks. This is Brian. Why don't I pick up that one, Paul?
On Crossix, obviously, very pleased with the result that we had last year -- was a major driver of the outperformance that we saw in commercial, throughout the year. And feeling really good about the trajectory, there.
I think no change that we're seeing to the overall shape of revenue in Crossix, if you're asking about linearity, there.
We saw a strong close to Q4 and expecting continued growth out of that business, in the year ahead.

Operator

Craig Hettenbach, Morgan Stanley.

Craig Hettenbach

Yes. Thank you. Peter, just going back to the commentary around AI and the strategy, there. Any milestones to watch for this year, as that business develops?
And, then, also from a customer base, I think, last year, there was a bit of a pause, as customers are evaluating new technologies like AI. Where are their heads at, in terms of what they're most focused on, today?

Peter Gassner

The milestones to look for are the releases of our CRM Bots and our MLR Bots and the success we start having with customers -- those are really the milestones. And it could be new products that we announced, as it relates to the new AI solutions. So those are the things to look for.
And in terms of, I believe we called it before, AI disruption -- maybe, that was 18 months or so, a year ago -- and I think that's largely behind us. Our customers have settled in to what AI is and what it does. They're still doing some innovation projects. But it's not consuming them or distracting from the core work.
So I think we're largely through that area of AI distraction, now.

Craig Hettenbach

Okay. That's helpful. Thanks.

Operator

Gabriela Borges, Goldman Sachs.

Gabriela Borges

Hey. Good afternoon. Thank you for taking the question. And thanks for all the product detail, on the call.
Paul, I wanted to follow-up on your earlier comment, on commercial. You mentioned that there are several customers that you've been speaking with, that are looking to make decisions in 2025 and, ideally, before the (inaudible) in 2027.
The customers that you're talking to -- what do they tell you are the reasons for hesitation? Meaning, if they're telling you, hey, we're not ready to make a decision yet, what are some of the reasons that they tell you that is? And what do you do, then, to help them feel better about making a decision or to help them along in their discovery?

Paul Shawah

Yeah. Hey, Gabriela. Every customer's a little bit different, in terms of their process and the internal process they have to go through.
Some companies have to go through a formal or a pre-process, as an example. Other companies are, really, frankly focused on other priorities, right? It may be something related to a launch of a medicine coming up in 2025 or 2026. And they want to focus their resources there. And, then, think more deeply about the CRM decision.
So I would say there's no single answer. It certainly varies by customer. And I think each month that goes by, we continue to hit new milestones, which make the case even more interesting and more compelling.
So we're focused on -- our strategy to deal with that is to continue delivering. Deliver new products, deliver innovation, deliver on the CRM Bot -- that Peter just talked about -- deliver on the migrations.
And that's our answer -- is delivering. Our customers are looking for delivery. They're not looking for big, bold statements-type, that sort of thing.
Again, we're not forcing them down a path. I think it's a customer-friendly way of approaching the market.

Gabriela Borges

Absolutely. Thank you. Peter, the follow-up is for you. You made an earlier comment on your thinking around horizontal applications, longer term, and version 1 versus version 2. I'd love to hear your thoughts, if you're willing to share them.
What do you think the limitations are on some of the version 1 cloud-fast applications, today? And where do you think version 2, from an innovation standpoint, could really shine? Thank you.

Peter Gassner

I don't think there's any one particular area. I think there's core set of things of better, stronger, faster, right? Accumulation of five, six, seven, eight things that have been core learnings. And, then, putting that together. And so, when you put those together, it has a compounding effect, I would say that.
Also, AI will change the user interfaces on the operating systems, over time. Not tonight but sometimes over the next five years. There'll be some fundamental change, just in the way that the graphical user interface or the browser-based interface change things.
I think a platform that's designed with that in mind; that knows it's: Yes, it's going to be used as a core system of record. Some of us have heard this thing from the Microsoft CEO about these system of record application, SaaS applications are going away.
I don't believe that. I don't think any of our customers are removing their SAP application, anytime, in the next 100 years. But there is going to be a way to use AI to dip into multiple of these applications and add value.
And that's going to be a critical component. I think the newer platforms are going to be designed, with that in mind, because it's obvious that's coming. I think it's pretty hard to retrofit, pretty hard.

Operator

(Operator Instructions)
Jailendra Singh, Truist securities.

Jenny Cao

Hi. Thanks for taking my question. This is Jenny Cao, on for Jailendra Singh.
Just a quick question on your guidance. I think your guidance assumes no major changes in the macro environment. But I think fiscal '26 guide reflects, maybe, a little bit of growth deceleration, particularly in the subscription business, from 20% growth last year, in fiscal '25, to 13% growth this year, according to the guide.
Can you help us break down the key factors and the moving pieces, there?

Brian Van Wagener

Hey, Jenny. First off, on the guide, you're exactly right. We've not factored in any macro changes into the guide. And, as Paul touched on, obviously aware of all the shifting government policies. There's a lot of discussion around it. But we just haven't seen any impact, yet, in our customers' decision making. So it doesn't reflect any change in macro.
From a subscription perspective, one thing to remember is that, last year, we still had the impact of [T4C]. We're celebrating over here. So last year, we have to talk about [T4C]. But we were normalizing out the TFC impact.
And so normalizing for that, subscription growth, in FY25, was 15%. And, then, excluding FX, it's about 14%, this year. So it's a minor deceleration. It's mostly driven by commercial. And, within commercial, it's Crossix. And that Crossix deceleration is mostly a function of last year's very strong outperformance, making for a hard year-over-year compare.
So we're feeling really great about the momentum of the business, about the execution of the Veeva teams -- seeing very strong growth in R&D and good growth in commercial, as well.

Operator

Jeff Garro, Stephens.

Jeff Garro

Yeah. Good afternoon. Thanks for taking the question.
I want to ask another one on the new CRM Pulse product. Clearly, unique in how Veeva Systems are originating in the data, there. I want to ask about the differentiation, from the global scope that you are already offering, on launch?
And, then, the release mentions additional countries being added to the scope. And it looks like you have most of Europe. Want to follow-up on adding additional Asian countries? And how much of a catalyst that could be, down the line? Thanks.

Peter Gassner

Yeah. I'm very excited about Veeva Pulse -- this is Peter -- because this is where we're generating the Pulse data, privacy-safe Pulse data, at the small groups of physicians, from the activity data in our CRM products.
So that's revolutionary and that's going to help the life sciences industry to be more efficient and effective because this is used for segmentation and targeting. In other words, understanding which -- a pharmaceutical company has a field force, of a certain size, in a certain country and they want to be very effective on where do they tell those people to go? So they do what's called segmentation and targeting.
But they don't have any feedback into how the industry does it. So they're not able to catch their own internal errors that that creep up, over time. So with Pulse, they can get a privacy-safe industry view: Of the of the urologists in this country, who did the industry, generally, call on and am I calling on them? And in what way? What types of patterns?
So that's what it's used for. It's very unique. And it's going to be a great compliment to CRM and to data cloud.
The countries we'll add are -- you're right -- from Southeast Asian countries and, then, also Japan. And we may add a European country or two. One of the other European countries or two, we'll see by 2026.
It's early. We've signed our first deal, actually, for Pulse. Signed it, roughly, right before it was available. It was for a top 20 pharma, in the US. And it's interesting to know that's one of our first products, where the first deal was actually with a seven-figure deal.
So Pulse is a very interesting product and unique product from Veeva.

Operator

Steven Valiquette, Mizuho Securities.

Steven Valiquette

Oh. Great. Thanks. Yeah. Most of my product questions were answered.
Maybe, just a financial question, here. With the fiscal '26 EPS guidance coming in, well above street consensus, the revenue growth more in line. You did call out that 1% revenue growth headwind from FX, which was, probably, not baked into the street view, before today. (inaudible) guidance, rev guidance also about the street view.
But, really, my question is: Can you just remind us how much of that FX revenue headwind falls to the bottom line versus any natural offsets in the cost lines that might mitigate some of that? Thanks.

Brian Van Wagener

Okay. So it is primarily a revenue-side impact. There's a natural hedge built in on expenses because we have some expenses that are not denominated in dollars, as well.
And so, there's not as much of an impact on operating income. There's a bit of a revenue headwind. But it shakes out on the op income line.

Operator

David Larsen, BTIG.

David Larsen

Did I see, in the prepared remarks, that you won 20 Vault CRM clients, in the quarter? And I think that's up a lot. It was like 5, 14, and 13.
Just any color there would be very helpful. Thank you.

Paul Shawah

Yeah. David, that's, in fact, right. 20 Vault CRM new customers. And think of most of these companies as -- first, the vast majority of them in the US market, a small number in Europe, and, then, most of them, small, mid-sized companies -- the vast majority selecting their first CRM system.
So they're betting there. They want to launch. They may be starting in the medical area, moving into the commercial space, getting ready for their launch. And they want something that's proven and the best solution.
And we're winning, virtually, all of those deals. So, yeah, we did well there.
That's a chunky number. It's an unusually high number. But we're virtually winning every one of those.

Operator

Andrew DeGasperi, BNP Paribas.

Andrew DeGasperi

Thanks. Maybe, on the trial starts. We've seen an inflection since October, just in terms of how that's growing. And I was just wondering: Is that part what's giving confidence, in terms of the R&D growth, for the year? Just any comments on that would be great. Thanks.

Paul Shawah

Yeah. On the trial starts, our confidence, and our clinical performance is not related to that. Remember, the way to think about our Clinical business is that most of our contracts are Enterprise License Agreements, Particularly, as you look at the enterprise side, which is the vast majority of the contribution to Clinical, today.
So given that, our enterprise agreements are not really impacted by clinical trial volumes, whether that goes up or down. So that's not really a driver. We're performing well, broadly across all the Clinical -- and you heard Peter talk about a lot of the reasons why that is.

Operator

Allan Verkhovski, Scotiabank.

Allan Verkhovski

Hey, guys. Thanks for squeezing me, in here. And congrats on the strong end of the year.
Peter, it's interesting to hear you say how you could be through the period of customers being distracted by AI. Can you talk about what your top learnings were, in the past three months? And the conversations you have with top 20 CRM customers?
And to just to close the loop, here, on AI, just how important is having a strong AI product roadmap in customers' decisions, whether or not to move to Vault CRM? Thanks.

Peter Gassner

What I've been seeing in, I think, the learnings and the customers is that AI is one part of the technology strategy. Many of them did quite a few experiences, in quite a few areas. And rightfully so, they wanted to really learn fast and see where they could apply things.
So what they're finding is they need to be focused, right? They need to focus on a few areas that can really draw out -- really return on investments. And they can't ignore the core capabilities. And, just, the execution -- that matters.
So they're segregating things, doing a little bit less experimentation and segregating that. And I think that's normal. That's about part of the process.
And, in terms of the Vault CRM, about AI and how that plays into things. Well, it will depend on the size of the customer. For the smaller biotech, they have a lot of things going on and they get a lot of things from Veeva. And, boy, their first launch is critical. It'll be a make or break for their company. It'll either go or it will go out of business.
There, they don't want risk and they don't want messing around. They can't -- they'll go from an unproven product on salesforce.com and some custom build and, then, piece it together with content and this and that. They just don't have the people.
So, there, it's: I get Veeva. That's one thing I don't have to worry about and I'm moving on.
In the larger customers, that's where -- I would think, a couple of things. AI is certainly a big part of it. And what we believe is, for the case for Veeva CRM, there's two things. One, salesforce.com doesn't have a product, yet. You're really signing up for a custom build that takes a long time and a certain IT skill set. Most customers don't want that. Some customers do. But most customers don't want that.
And, then, the second, it turns out Veeva is the fastest path to AI that you can use in CRM because it has to be done in the workflow of what you're doing. This is not some generic AI. This is AI for pre-call planning, for compliance, for the things that a pharmaceutical rep does in a compliant way, based on the data sources that are needed in CRM.
So Veeva is the fastest path to AI. And so, I think that's why Veeva Vault CRM is appealing.

Operator

Charles Rhyee, TD Cowen.

Charles Rhyee

Yeah. Thanks for taking the question. Peter. I wanted to follow-up on, I think, it was David's question, earlier. Maybe, ask it in a slightly different way.
Obviously, in the last year-plus, we've seen many large pharma companies undertake significant restructurings of their development processes. And, in many cases, taking more of those capabilities in-house and moving to more of a functional FSP model of development, which certainly should give them greater control and gain efficiency through standardization.
Has this been, maybe, a driver of growth for Development Cloud? Or, maybe, it's the reverse -- finally having something like Development Cloud available to them allows them to start this process, take more in-house. Whereas in the past, maybe, the efficiencies weren't there for them. And so, they maintain these more broader CRO relationships and really outsourcing development.

Peter Gassner

Yeah. I think, in an interesting way, the Veeva Development Cloud has played a small part in the move from the large pharma to do more functional outsourcing, rather than full service, because they're able to get a bit more efficiency and have an integrated tech stack.
So they want to take advantage of that. Now, that doesn't apply to many small biotechs, right? They need the speed and they use CROs. And they want the tech and the process and everything, all together.
So I think it's -- in general, I wouldn't say it's driving the large percentage of the Veeva Development Cloud uptake but it's helping a little bit. And Development Cloud is contributing to the functional outsourcing a little bit versus the full service.

Operator

Peter Griffith, Citi.

Peter Griffith

Hey. It's Peter, on the line, here, for Tyler Radke. Congrats on the great quarter.
EDC has been really strong, here, over the past few years. And it still seems like there's a good opportunity for [attach racing pinnacle].
I believe you touched on it a bit but I'd like to get some detail on what products you usually see customers choosing to adopt in the Clinical suite, after choosing EDC? Just trying to understand if there's a typical pathway for product adoption or if it varies by customer. Thanks.

Peter Gassner

It is going to vary by customer. Oftentimes, our EDC and our CDB, our Clinical Database, they go together. Then, I think the typical things, after that, would be -- well, I start looking at eCOA a little bit more.
I think it would be relatively unusual for a customer to go with our eCOA before our EDC because our eCOA is -- it started much later than our EDC and it's not as mature.
And those two departments are highly close to each other, the ECOA and the EDC. So I think EDC success will be a good indicator of eCOA success.
And I don't think it influences the other ones too much, really. I think those are independent groups, when you look at RTSM Study Training, Site Connect payments, those are more influenced by the eTMF and CTMS.

Operator

Ladies and gentlemen, that concludes our question-and-answer session. I will, now, turn the conference back over to Mr. Peter Gassner for closing remarks.

Peter Gassner

Thank you, everyone, for joining the call, today. And thank you to our customers for your trust and partnership.
And thanks to the Veeva team for your outstanding work in the quarter and year. You're the best and I love working with you.
Thank you.

Operator

Ladies and gentlemen, this concludes today's call. We thank you for your participation. You may now disconnect.