Good afternoon. My name is Emma, and I will be your conference operator today. At this time, I would like to welcome everyone to the Veeva Systems Fiscal 2023 Third Quarter Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by one on your telephone keypad. If you would like to withdraw your question, again, press star one. Thank you. Ato Garrett, Senior Director of Investor Relations, you may begin your conference. Good afternoon. Welcome to Veeva Systems Fiscal 2023 Third Quarter Earnings Conference Call for the quarter ended October 31st, 2022. As a reminder, we posted prepared remarks on Veeva's Investor Relations website just after 1:00 P.M. Pacific today. We hope you've had a chance to read them before the call. Today's call will be used primarily for Q&A. With me today for Q&A are Peter Gassner, our Chief Executive Officer, Paul Shawah, EVP Commercial Strategy, and Brent Bowman, our Chief Financial Officer. During this 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, December 1st, 2022, 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. Thank you, Ato, and welcome everyone to the call. We had a strong Q3, delivering results ahead of our guidance. Total revenue in the quarter was $552 million, up 16% year-over-year, and subscription revenue was up 16% to $442 million. Non-GAAP operating income was $219 million or 40% of total revenue. Despite the difficult macro environment, we continue to execute well. Our innovation engine is strong and our strategic partnerships with the industry are increasing. We also had a record hiring quarter and a very strong quarter in clinical with some significant wins. We also announced that we are moving Veeva CRM to the Veeva Vault platform over time. This will allow us to deliver a better application and a better customer experience. At this point, we'll open up the call to your questions. Thank you. As a reminder, if you would like to ask a question, press star followed by the number one on your telephone keypad. Your first call question today comes from the line of Ken Wong with Oppenheimer. Your line is now open. Great. Thank you very much. Peter, I wanted to, I guess, just dive straight into the move to Vault with CRM. You guys are definitely keeping us on our toes these last few quarters. Maybe first, just for some clarity, when we think about the contract ending in 25 and then a grace period through 30, does the non-compete with Salesforce also end in 25? Just would love your takes on what that migration path looks like. What would be some potential hurdles that might slow down that transition? Then I got a follow-up for Brent. Yeah, Ken, it is the contract goes until 2025, so that's the, you know, where we're not competing together in the market there. That's according to the contract. Then there's a wind down period for existing customers that starts in 2025, and that goes till 2030. It's business as usual. There's nothing as to change about today, and the customers are supported with Veeva CRM until 2030. We expect to have early adopters on the Vault CRM in 2024, some early adopters and then, you know, the majority moving 2025 or so. That's when we'll be selling mainly Vault CRM, and customers will migrate over time. They have plenty of time. That's the basics of how to think about it, Ken. Okay, fantastic. Brent, just quickly on the numbers, in terms of the slight reduction to clinical subscription or R&D subscription, is that due primarily just to FX or are there some impact from the billing dynamic that you called out in the prepared remarks or perhaps some macro? Yeah. Overall, we're happy with R&D solutions, you know, growing about 18% adjusted for FX on a full year basis. The little bit of reduction you're seeing is a combination of two things. One is the FX incremental, as well as a little bit of deal timing. The two things which drove the little bit of reduction. Got it. Thanks a lot, guys. You bet. Your next question comes from the line of Brian Peterson with Raymond James. Your line is now open. Hi, gentlemen. Thanks for taking the question. You know, we're getting a lot of questions from investors on the new agreement. You know, and from a financial perspective, is it right to use the accrued fees payable to Salesforce that you guys disclose and kind of annualize that number on the potential impact that you guys would save or would there be some offsetting cost to that? I think everyone's just trying to think through the potential margin impact here over the long term. Yeah. I mean, how I would think about it is, first off, you know, if you look out to our 2025 targets, we don't expect there to be a material impact. We're still tracking about a year ahead, inclusive of this new announcement. We don't anticipate there to be any real significant investments required. We're gonna largely leverage our internal resources and also the power of our Vault platform. You know, beyond 2025, that's a long time out there. Yeah, there is some accounts payable you can see in our quarterly financials. You know, that's a monthly number, so you can use that as a ballpark estimate. Thanks, Brent. Maybe just a follow-up. You know, you mentioned last quarter that we'd seen some volatility in sales cycles, I'd just be curious, you know, how that progressed throughout the quarter. It sounded like there were some really strong clinical results, but would love to get any color there. Thanks, guys. Yeah. Really happy with the momentum. Those two deals we talked about in Q2 get closed in Q3, so we're very pleased about that. Overall, from a macro perspective, we've seen, you know, the kind of similar to what we said 90 days ago. Not better, not worse. That's basically a little bit of additional scrutiny that we saw 90 days ago, but nothing significantly different than that. Thanks, Brent. Yep. Thanks, Brian. Your next question comes from the line of Dylan Becker with William Blair. Your line is now open. Hey, guys. Thanks for taking the question. Maybe Peter too. I think you highlighted some strength in ADC, and we spend a lot of time talking about the complexity of that clinical data management piece, and the opportunity to expand beyond just pure EDC too. I know you guys have introduced a number of functional areas here, but can you give us a sense of how you're thinking about putting together that, I think you guys had a blog post, right? The proverbial Rubik's cube, around the sources and stakeholders there, not just from an existing process perspective, but unlocking and addressing almost an entirely new set of workflows and capabilities. Yeah. In the clinical, it's right that those are two very significant wins in the quarter. Two top 20s have selected our ADC. That's a very core application at the heart of the clinical data management. Then there are more applications that we are bringing out and have brought out, the RTSM, Randomization and Trial Supply Management, patient-reported outcomes, our CDB product. You know, that's. You know, when you looked at clinical operations, us getting eTMF in there early was a sign of very good things to come. Us getting EDC in at these large companies, that's a sign of very good things to come in clinical data management. You're right, that's will lead into a broader future for us in clinical as we connect up the clinical research sites, and there's many applications we can make on top of this as we connect. Clinical, I'm super excited about. We're in the very early days of clinical, especially the clinical data management area. Got it. That's helpful. Thanks. Maybe from a hiring perspective, as we look at it too, already added kind of more headcount than any prior period here or any prior year. I guess, how should we think about investment? Obviously, a lot of new initiatives and kind of that 2020 or that 2030 growth framework. How should we be thinking about kind of the resource allocation, and obviously the further pace of hiring down the road here? Thanks. It's a great hiring environment. People are looking for quality companies, stable companies doing great work where they feel aligned to the values and do their best work. The, this shiny penny of the crazy startup ideas is not so shiny anymore. It's a great hiring environment. We'll really invest across all areas of the business, sales, services, and especially product. You're not gonna see anything dramatic from Veeva. You know, you'll see the measured pace that we go at. We really focus on the quality hiring. We've often come in under our hiring targets and, you know, if this great environment continues, hopefully we won't come in under our hiring targets anymore. I'm really pleased about that. That's a leading indicator of for Veeva when we can hire great people. Got it. Thanks, guys. Your next question comes from the line of Anne Samuel with JP Morgan. Your line is now open. Hi. Thanks for taking the question. I was hoping maybe you could speak a little bit to the rationale behind moving away from the medtech CRM? You know, you spoke fairly positively to it at the Investor Day. Just wondering, you know, maybe what shifted? Yeah. Anne, this is Peter. med tech CRM and the pharma CRM, they share a common foundation. You have to do those things together. With moving Veeva CRM to the Vault platform, we really had to prioritize pharma CRM first, take care of our existing customers, get that base set up. Then, yes, med tech CRM, that may come later, we needed to prioritize and sequence since these applications are tightly interrelated. That makes a lot of sense. Then just you know, you had a lot of really nice outperformance on the operating income line in the third quarter, but you held onto the full-year guidance. I was just wondering, you know, is there any shift of expenses there or anything incremental in 4Q that we should be thinking about? Regarding Q4, it's always our seasonally, lower, operating margin quarter. Why is that? Service Services utilization with the holidays is always a factor, as well as kind of the reset on, you know, benefits and payroll tax type items. That's a big seasonal reduction you would see. You know, we're continuing to invest for long-term growth. Those are the two factors, nothing else unusual. Great. Thanks for the color. You bet. Your next question comes from the line of Craig Hettenbach with Morgan Stanley. Your line is now open. Yes. Thank you. Just following up on some of the macro commentary. Any sense in terms of just what you're seeing from the number of add-ons and any tightening on that front kind of quarter-to-quarter? The add-ons are pretty similar to what we've seen over the last couple quarters. You know, I think in, we were talking to you back in June, we highlighted, a little bit of a slowdown in the, in the SMB space, the, particularly the lower end, fewer expansions. Not improving significantly or not worsening either. Really haven't seen much of a change there. Got it. Just a question on Crossix you called out as growing about 10%, and clearly the broader advertising market's been under pressure, but that's an area of relative strength. Just, you know, what you're seeing in that market and any sense of when that market could maybe start to re-accelerate again. Any visibility into that? Certainly the overall a little bit of caution in the advertising spend as far as, you know, when that would turn around or stay the same or get worse, I, you know, I really don't have a crystal ball on that. What our focus on Crossix is just increasing the value from the application. Increasing functionality, increased integration with our other CRM products, CRM-related products, and moving to more multi-year agreements, enterprise license agreements with customers to provide a baseline of revenue and stability and service for the customers. Really excited about the Crossix business. I think we have a clear roadmap and it's going quite well. Got it. Thank you. Your next question comes from the line of Gabriela Borges with Goldman Sachs. Your line is now open. Good afternoon. Thank you. For Peter, could you walk us through what the transition looks like for a customer to switch from CRM with Salesforce to CRM with Vault? More specifically, is there a risk that they look to evaluate competitive products when they do that transition? What it looks like really, you could think of it as moving the back end of the application, the back end platform, and we'll have migration tools that will bring the data across, including the customer's customizations, and still be able to use all their content that they've developed, their Approved Email templates. We'll use the same front-end applications such as on the iPad. That's what it'll look like. We'll develop a lot of tooling. The customer will have integrations to write, things like that. In terms of competitive, that's always out there, right? It's always a competitive market, whether you're moving platforms or not, and you have to continue to mind your customer relationships, continue to add value and innovation. I don't really see anything different there. The main thing is we're re-platforming the application, Veeva CRM. We're not rewriting it. We're not introducing any kind of a new paradigm. I feel comfortable that the vast majority of customers will migrate over time. I guess the other thing is that the Veeva Vault platform is a very mature application. The bulk of Veeva's revenue is on the Veeva Vault application, and that's where our customers actually have the majority of their Veeva business for most of them is on the Veeva Vault platform. I think overall for customers, this is a positive. It simplifies their landscape. Thank you for the detail. The follow-up is for Paul. I believe last quarter you talked about budget planning at your customers hitting full swing into the second half. Just looking for an update here. What are you hearing on commercial budgets into 2023 and willingness to invest? Specifically, the response to the pricing increases, is there any negative impact on your ability to cross-sell because perhaps budget is fixed? Yeah. No, no significant change on the budget side. You know, our customers have gone through that planning process, we haven't, you know, really seen any pricing pressures. When you think about the industry, particularly in the large enterprise, you know, it's not as susceptible to, you know, some of these macroeconomic changes, we haven't seen any change there. You had a second question, which was around the inflation increase that we've had. By and large, we haven't seen any, you know. It really has been pretty seamless with our customers. The reason is, you know, we've built that really kind of long history of being a trusted partner. We haven't historically had any license pricing increases. Our customers know this is a different environment. By and large, it hasn't been an issue. Thank you for the detail. Your next question comes from the line of Joe Vruwink with Baird. Your line is now open. Hi. Great. Hi, everyone. Just staying on the CRM conversation. You know, in the past I think you've acknowledged that typically customer conversations are separate and distinct between commercial and R&D orgs. The shareholder letter made some comments about how, you know, a common platform for both now makes sense. I'm wondering, are customers approaching you differently, thinking about procurement differently, or is Veeva seeing, new product opportunities that will benefit by uniting the two offerings? No change in customer behavior, Joe. I would say yes, primarily, our customers are concerned with the excellence of the application in their area. As they get more Veeva applications and more Vault applications, they do look for synergies there. Synergies in they might create a Veeva Vault center of excellence, that type of thing, for efficient operations. They may be, you know, auditing the Vault platform and it's easier just to audit one platform. We see that there. Then the connectivity between the applications, between R&D and commercial, specifically between clinical, medical, and commercial, that's something we do see opportunity there, and I think Veeva will help drive that. Some customers are asking for that. I think mainly we're gonna be leading the way there. We really haven't had great solutions for that connectivity, and I think we'll bring innovation there and connectivity that will create the market there. Okay. That's great. One question on the numbers, and specifically just on 4Q billings. I think the outlook last quarter implied something like $927 million, now the guidance is $909 million. Brent, is that just the deal timing that's influencing the Vault, the new guidance? We're kind of looking at an annual impact and one number and the quarterly impact in the other? Yeah. I mean, part of it, Joe, you're right, that there always is some quarterization. you know, that's why we always say kind of look at it on a full year basis. Q3 benefited about $6 million of just more annual billers that would have otherwise likely billed in Q4, so that's part of the equation. It's just a little bit of timing of renewals in those annual billers. There's nothing fundamental to the business. you know, we're very, very happy with the momentum, as Peter mentioned around the clinical space and the EDC space. Really good business momentum and no underlying business concerns around the billings. Great. Thank you very much. Your next question comes from the line of Ryan MacDonald with Needham & Company. Your line is now open. All right. Thanks for taking my questions. maybe first one for Peter. you know, you talked about in the prepared remarks, about the impact of sort of having the first milestone Vault Safety customer live now. I would just be curious, you know, given that they spoke at the R&D Summit, you know, what you're seeing in terms of, you know, increased customer conversations or pipeline development sort of off of that, off of that event and the go live here. Excellent question there. I guess to step back, we have a safety application. That's a very complex application. It's case processing of what's called Adverse Events. Somebody takes a medicine, they either have a bad reaction or they think they have a bad reaction, then it has to be classified and routed and recorded to health authorities, et cetera, around the world. It's a very complex application. We're really the first company able to do that as a cloud-native application. That means, just like we do everything else, there's one version of the code. All customers run it. That's a breakthrough. Our customers are used to on-premise applications. They have to upgrade, lots of issues. Now that this customer is live, this, you know, it's a top 20, one of the larger top 20 customers. Now there's proof that that works. I think, you know, I wouldn't say all the way, but mainly customers are thinking, "I probably will go with Veeva for safety." The question is when. Is it next year? Is it three years from now? Five years from now? Seven years from now? That's really the significance of it. Now we have of course, the work's never done. I'll never be satisfied with our safety application. It always has to get better and better and better. It was a very significant milestone in Scroll Life for the industry and for Veeva. Just the other thing I'd add, the speed that that implementation happened, I won't quote the exact number of days, was probably about half the time that most customers would have expected that it would have taken. That was also seriously noticed by the industry. That's some pretty impressive implementation time and go live time. That's helpful color. Yeah. Can you tell that I'm enthused about that? Just a bit. Just a bit. Maybe my second question is around the Merck strategic relationship or partnership there. I'm curious, this sort of relates to the CRM strategy here, but in a strategic relationship like that, I'd be curious, within your discussions, how important it was to Merck to have sort of this unified platform of everything being on Vault in a type of long-term, you know, 10-year strategic relationship there, and how much that sort of guided the strategic decision-making here on the CRM change. Thanks. Yeah. In terms of Merck, I won't get into any detail specifically there on Merck. I would say that in a strategic agreement of that nature, generally, we're not talking at the platform level there. We're more talking about operating model, how we operate together, how we, the governance model. It's only done based on trust over many years when they see repeated patterns of a customer success orientation, of a strategic partnership orientation, and then it's really the governance model that we put in. It would be at a higher level versus individual products or platforms. Thanks for the color. Thank you. Your next question comes from the line of Tyler Radke with Citi. Your line is now open. Yes. Thank you for taking the question. You talked about some large Vault EDC customers, I believe that you signed in the November time frame. Could you just give a little bit of color on that? Is that, you know, were those kind of some displacements of kind of the main, you know, incumbent in the market and just give us a sense on the size of these contracts and kind of the opportunity in those accounts. Thanks. Yeah. These were wins with two top 20 customers. They were, yes, have to be displacing one of the market leaders because people do need a EDC application. In both cases, we're displacing one of the top two market leaders there other than Veeva. In terms of the deal sizes, I won't specifically say in that area, but EDC is one of our larger applications, so it would be one of our, y ou know, these are larger deals. These are certainly some of our largest deals. Now, these will ramp over multiple years because with the EDC application, you start study by study by study. It's a commitment for a long-term approach, but the revenue ramps very slowly, actually, slower than most of our applications. That's the way, that's the way that goes. Right now, we're progressing faster with EDC than I would have thought. If you would have asked me in the start of 2020, would we be where we are today with EDC, I probably wouldn't have been as bullish as what's actually happened. Our focus is gonna be extremely on the customer success there. Because the EDC also is the first part of clinical data management. That's what we're focused on. We're really happy with it, and we're gonna be laser-focused on having the implementations just be outstanding and improving our product through the feedback of these large customers. We have to do a lot of things there, right? Customer success, staffing and services. It's great work to do, but, we got to get better all the time. Yeah. It's great to hear. Maybe on Compass, turning to that, it sounded like you made some comments around, you know, continuing to optimize the approach there. Could you just give us an update on how that's tracking relative to plan and, you know, kinda when you're expecting that revenue ramp and the timing of, you know, when we start to see that in the numbers? Thank you. Yeah. Yeah, Veeva Compass, that's certainly a marathon. That's a tough market. You have a very entrenched player there that has some questionable business practices that make it hard. We're happy with our progress on the product, and we have, you know, a small-ish set of early adopters. I won't go into the specific count of customers. As to when we really start to generate momentum in the revenue, it's gonna be a while. It's not gonna be next year. It's a very long-term play. I'm confident in our position in the market and our product strategy. I'm confident that the market needs competition. That one's gonna be a marathon, and you just have to stay tuned for milestones. That's the thing about great milestones. You don't actually know when they're coming. We'll let you know when they get here. Thank you. Thank you. Your next question comes from the line of Stephanie Davis with SVB Securities. Your line is now open. Hey, guys. Thanks for taking my question. I know we've beaten this to death about the lift from moving off of the Salesforce platform. I thought I'd add to it. Could you walk us through the lift associated moving off of it? Is this hiring platform engineers? Is this resources that you already have? Or should we think of this as effectively built out since you've already had instances of med tech built on the Vault platform? Yeah. Stephanie, I'll take that one. The main thing to know is that when we build applications on Vault, we're highly efficient. We're highly efficient on that. There's a lot of work that has gone into the platform. We don't see really material incremental investment, and then we're reusing much of the parts of the CRM application. We're just porting over the back end. For example, we have a very robust iPad client for Veeva CRM that has all types of functionality into it. We're not gonna rewrite that application at all. That's why the investment is, it's not material to the rest of Veeva. It's because of the leverage both in the existing application footprint, template, and code, and then the leverage we get from the Vault platform. Asking this in kind of a different way, from more of a user perspective, are you taking more of an originalist approach and embracing the same look and feel as you move to the new platform? Are there any opportunities in the two platforms you've switched to either improve the CRM platform user experience or offerings? Excellent question. In general, we're gonna re-platform the back end, so we're not going to change up the user experience or do dramatic things at that time. Having said that, we have an existing roadmap for CRM that's been we've really been executing on. Our customers have a lot of new functionality. For example, Engage. New features that we have in Veeva Engage Connect, that allows compliant messaging between doctors and sales reps. That's just starting to get adopted now, because that's a, you know, that's a thing that needs compliance oversight. That's gonna continue right into Vault CRM. I would think of it as replatforming the back end and reinvigorating the front end and the functionality. That just keeps going on. That's been going on for a while, that will continue on. Sounds awesome. Let's speed up that roadmap. Thanks, guys. All right, thank you. Your next question comes from the line of Brent Bracelin with Piper Sandler. Your line is now open. Thank you for taking the question here. You know, Peter, you've lived through a few economic cycles. I'd be curious to get your view around what aspect of the pharma, med tech industry is a little unique that maybe investors don't appreciate. We're seeing obviously pretty material slowdown in growth profiles of some of the largest cloud software vendors. What parts of the market you serve maybe are underappreciated levers that allow you to kind of sustain durable growth? I mean, is it a trusted partner relationship? Is it having these multiyear roadmaps that they're gonna continue to execute and expand products? Is it just the fact that it's tied to really large, you know, strong vendors? Just trying to think through, some of the slowdown we're seeing in other vendors in the cloud space and perhaps a bit of a different picture here from your lens. Thanks. There's multiple ways to think about that one. I will start with, you know, last year and the year before, it's been quite unusual, right? We haven't seen the interest rates raise this far or this high since the early 80s. The same with inflation. It's gone up this high and raised this fast, not since the early 80s. A war in Europe like this, you know, I haven't seen in my lifetime. These are, you know, unusual times. Having said that, what makes Veeva, the factors that are going in Veeva's favor, first, I would say our customer feeling, our customer success feeling and track record of success that we built up over time. That is a tremendous insulator in down terms, in down times. The nature of the industry. The industry, when it's not recession-proof, but very recession-resistant. This is not like a airlines or hotels or luxury items, things like that, restaurants. People need their medicine in good times and bad. Medicine's a critical part of healthcare. Without medicines, you know, healthcare costs go up, et cetera. The spending doesn't change too much. The segment where it is affected a little bit is in smaller private companies, that if the funding environment goes down, they can't get as much funding. They have to be more conservative with their expansions. I would say the last thing is the type of products we do. They're mission-critical systems of record. Good times or bad, you need your clinical trial management system just like you need your financial system and you need your ERP system. What you may not need is the speculative piece of technology or add-on on the top of that. That's maybe what you don't need. We focus really on system of records. We have that going in favor for us. I think, a lot of things going in our favor, for stability. We do best in times of relative stability. When things go booming up fast, maybe that's not actually the best for Veeva. When things downturn a bit, maybe that's not all the best for Veeva either. We operate the best when things are pretty stable. Very helpful color. Thank you. Thank you. Your next question comes from the line of Rishi Jaluria with RBC Capital Markets. Your line is now open. Oh, wonderful. Thanks so much for taking my questions. I wanted to ask one CRM question and one non-CRM question to balance things out. On the CRM side, maybe I wanna ask a little bit more explicitly, right? The non-compete goes away in 2025. You know, Salesforce has obviously been vocal about wanting to get deeper in vertical software. They're obviously trying to find more avenues for growth now that the market continues to get saturated away. How should we think about the potential for, over time, Salesforce to actually become a competitor and start selling their solutions directly into life sciences, whether it's the out-of-the-box functionality or actually verticalizing the solution themselves? Then I've got a follow-up. Yeah. Hey, Rishi, this is Paul. Yeah, first, the way to think about the our partnership with Salesforce, we have a very long history of a really great partnership with Salesforce. The agreement goes through 2025. Through 2025, what that means is we are Salesforce's preferred partner for the life sciences industry. I don't expect that to change at all between, certainly between now and then. You know, we can't comment on, you know, where Salesforce decides to invest and how they decide to focus after that. I don't see, I don't see any change there. You know, we do know that, you know, the life sciences space is a highly regulated, very specialized industry. It takes a lot of time to get it right. It's a complex space. We're the market leader here and we expect to make, you know, the transition super easy for customers and continue to innovate here. We can only focus on our horse and not on what others do. Okay. That's, that's totally fair. Peter, in the prepared remarks, you talked about maybe some of the progress that you're making on the CDMS side with CROs. I was wondering if you can expand on that, what you're seeing out of them and maybe has there been any pushback from CROs to adopting the CDMS solution so far? What needs to happen for that to become a significant part of that business? Thanks. CROs, we just get continued interest and momentum in CROs. They're gonna be somewhat hesitant, somewhat not hesitant, but measured in their response. They have their policies and procedures that are set up the way they do things with their existing vendors. Change happens a little bit slowly there. What is causing the momentum is more sponsors asking about Veeva. More sponsors asking about Veeva, and then some of the CROs seeing proof in that it's actually more efficient to operate with Veeva. I think it's just a slow gradual change. The CROs in general will tend to use the market-leading technology. I think Veeva is on its way to being the market-leading technology, and the CROs will come along with that. Got it. Really helpful. Thank you so much. Thank you. Your next question comes from the line of Jack Wallace with Guggenheim Securities. Your line is now open. Thank you for taking my question. One more on the CRM side with Salesforce. Just trying to think about kind of why now to make the change in re-platforming to Vault? I think I understand the reasons why to switch, but why now? Why not before the last contract re-signing? And, you know, were there inflationary pressures going forward that you wanted to avoid and figured the cost saving was better, and maybe a, you know, better platform in-house? Just thinking about the timing around the change in platforms. Thank you. Yeah. In terms of the timing, first, it's always good to make changes when things are good. You know, the application is strong, the customer feeling is strong, so that's a good time to make a change. Also, if you look at why now versus, you know, five years ago or four years ago, the Vault Platform is very mature now, very robust now, and we have Safety going and we have CDMS going. Maybe four years ago, maybe the Vault Platform, maybe it couldn't have done that because maybe it wasn't quite mature enough, and also it had Safety and CDMS really stressing it out about four years ago. I think that would've been too early. Why now is, you know, why not wait? I guess that's the other question. It's the right timing. Gives our customers plenty of time to move, plenty of heads-up. Vault platform is clearly ready and it's just time. We can have a better customer experience and a better application. The bulk of our application revenue now, as you saw from the Analyst Day, is on the Vault platform, and that percentage is only increasing. It's time to bring CRM into the fold. It'll be better for Veeva and our customers. It's just the right timing. Gotcha. That, that's helpful. Brent, this one's for you. The R&D lift, sounds like that's ongoing and, you know, will continue, you know, through next year and probably 2025, support the migration. Just thinking about the context of that spend relative to the 2025 targets, obviously next year is gonna be a little bit of an odd year with the, your revenue cadence and the TFC changes. Thinking about the percentage of revenue, your targets there, is it 17%-18% still a good target for the year 2025 period? Yeah, we're not gonna, not gonna provide, you know, future guidance right now. You know, we're happy with the momentum and the execution, as Peter mentioned, you know, growing at 18%. We have our 2025 targets out there. We're tracking about a year ahead. Remember, that's a run rate target. We're on track for that about a year ahead, and we're pleased with the broad portfolio we have to execute against. Gotcha. Thank you. Your next question comes again from the line of Ken Wong with Oppenheimer. Your line is now open. Great. Thanks a lot, guys. Just lots of stuff spinning in my head right now. Maybe just back on the Vault CRM. Would just love a sense of, like any thoughts on how this could potentially impact pricing. Would that possibly change? Second, just one for Brent on the impact of kind of the TFC that you called out in Investor Day. Is that something that should hit at the start of the year for fiscal 2024? What's the right way to think about when we should start rolling that impact in? Hey, Ken, this is Paul. Yeah, I'll take the question on pricing. The way to think about it is the licensing model and the pricing will all stay the same. All of the same add-ons that we have will also be available with Vault CRM. Nothing really changes there. It'll be pretty seamless and easy for our customers. On the termination for convenience, Ken. Yes, the $60 million, this effective February 1 going forward. How you should think about that is about 60% of that we expect to have impact Q1 of next year. With the balance of that kind of diminishing over the balance of the year. One other point there is, the vast majority will be on the R&D solution side of the business. It's going well, we're working with customers and, yeah, we're on track. Okay, perfect. Thanks a lot for the clarity, guys. Yeah. Thanks, Jim. Your next question comes from the line of Brad Sills with Bank of America. Your line is now open. Oh, great. Thanks so much. I wanted to ask about the new hires. You mentioned 483 new hires this quarter. Just curious, where are the areas where you're focusing on new hires, you know, from a product standpoint and, you know, R&D versus, you know, sales and marketing, please? Thank you. Yeah, I believe that was 483 net additions in the quarter. It's really broad-based. You know, it's true, right? If you look at our account executives, our account partners, it's there. It's in our engineering, our product management, our services team, our support team. I think the area where the growth is a bit lower is in the G&A. We have a pretty efficient model there. It's customer-facing and product-facing people is where the growth is. Thanks, Peter. One more if I may, please. Outside life sciences verticals, not something you've talked about a whole lot here at the Analyst Day and here. Just any update on where you are with those verticals and, you know, could that be an increasing focus going forward, or are you still very much in that kinda early reference selling approach? Yeah. Our main focus is in the pharma and biotech. That's where our product portfolio is the broadest. That's where we have the bulk of our revenue. We're doing well in the consumer products areas. I think we just passed 100 customers, which is a sort of a milestone I noticed on the sheet there. It continues to grow, and that customer reference model is pretty strong there. Our product footprint is just smaller in that segment. Med tech is growing well as well, the med tech R&D side. It's just life sciences is bigger for us and our product footprint is broader. Thanks, Peter. Thank you. As a reminder, if you would like to ask a question, press star followed by the number one on your telephone keypad. Your next question comes from Saket Kalia with Barclays. Your line is now open. Hey, guys. Thanks for fitting me in here. I joined the call late, so apologies if some of these questions were asked. Maybe I'll start with the Merck deal. Congrats on that, by the way. It feels like one of those all-in Veeva deals that we were talking about at the beginning of this fiscal year. I guess the question is: How is the pipeline of those types of opportunities? I mean, clearly not, you know, to the extent of Merck, right? You know, these types of all-in consolidation deals, can you just talk about that pipeline and how you're thinking about it? Yeah, I'll take that one. The Merck was a, not a deal, but a strategic partnership over the long term. We have strategic partnerships with many customers, none quite to the level or structure that we achieved with Merck. We may get some more of those, but I can tell there's none of those imminent right now. We may get some more of those over time, and it's just a way to formalize our strategic partnership. They'll happen. Those will happen when they happen. You shouldn't think of them as deals or product bundles. They're really partnership agreements. In Merck's case, it was so they could make it easier to evaluate, consume, and operate, and purchase the Veeva products, just make it simpler for everybody. The idea is, hey, we're going with Veeva. When we need to make change and Veeva has a product, we go with Veeva. That's just what we do. It makes it very efficient and pleasurable to work on in an environment like that. Got it. Got it. That makes sense. Maybe I'll direct the next question to Paul. I understand the CRM item has been beat to death, maybe the question I have here is: With the switch in platform, is there any sort of joint IP or anything that will go away? Or is there anything that and of course, the timeframe for going away, I understand is very long. Just thinking about this, is there anything that will change with the look and feel with Vault as the back end? I'm just curious whether the customer will see anything different with the change in platform. Yeah. On the first one with regards to joint IP, it's pretty clear where, you know, there's IP in the platform. That is what Salesforce has, and there's IP in the application, and that's Veeva's. There's a pretty clear line there. I wouldn't think about it as kind of anything kind of that's joint or going away, that's combined. Regarding change in look and feel, part of our strategy is to migrate just, you know, the back end and to keep the front end as similar as possible. That will, you know, make it much easier for our customers to make that transition. It'll do things like limit retraining. The front-end experience is working for our customers. You know, there's a reason why much of the industry is using it, so we're not focused on changing a lot of that. Now, having said that, this does give us an opportunity over time to make some changes and deliver a better application. It's kind of that balance. We'll keep things very familiar and common, you know, in the short term, and then over time, it'll give us a platform to further innovate on. Makes sense. Thanks, guys. We are showing no more questions in the queue. I'll turn the call back over to Veeva management for closing remarks. All right. 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. This concludes today's conference call. Thank you for attending. 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