Veeva Systems Inc. (VEEV) Earnings Call Transcript & Summary

Thanks, everyone, for joining us. My name is Sterling Auty. I am the software SMID cap -- so small, mid-cap and enterprise software analyst here at JPMorgan. And very happy to have with us for the next presentation at our '21 health care conference management team from Veeva. We have Brent Bowman, who is CFO; and Paul Shawah, who is EVP of Strategy. We're going to do a fireside chat rather than just presentation. I'm going to go ahead and start off with some questions. But I also want to incorporate your questions into the presentation as well. [Operator Instructions]

So with that, maybe just to get started. Paul, maybe for those that are not as familiar or new to the Veeva story, can you give us just a brief overview in terms of who is Veeva? What is it that you actually do? And who are your customers?

Sure thing, Sterling. First, thanks to you and thanks to JPMorgan for having us again this year. We always love being at this conference. I guess, this year is a little bit different. So thanks again for bringing us in. So yes, a quick overview into Veeva. So Veeva, we're founded in 2007. We're building the industry cloud for life sciences. So when we talk about that, what we mean is software and data and services and business consulting guidance to life sciences companies. Those are -- that's who our customers are, from the very largest life sciences companies all the way to pre-commercial companies who are maybe developing their first drugs or their first medicines. In terms of our business, the way to think about it is we're structured much like a life sciences company. We have a part of the company that's focused on the R&D side of a life sciences company and a part that's focused on the commercial side. Within commercial, we have a portfolio of products, and that's called Commercial Cloud, which includes a number of different products. A core foundational element is Veeva CRM, which is where we started. But we have a whole number of products in and around that, add-on products and additional data-related and content-focused products. And then in the R&D side, all of our products are built on Veeva Vault, the Vault platform. So the way that we reported out to the financial community is Commercial Cloud and Vault, and Vault is primarily for those R&D applications. And within R&D, we have a number of -- also have a number of applications in many different areas from clinical and clinical data management, regulatory, quality and safety applications. Our focus is -- we run the company based on delivering great customer success, making sure we do the right thing by the industry and for our customers. And we call all of that the industry cloud.

Excellent. And maybe just to round that out on the overview side, how do you actually charge for your solutions? So what's the pricing mechanism?

Yes. So it's all subscription, licensing revenue from the licensed products that we have. And based on the specific product, it can vary. So 2 common models -- not for every product, but 2 of the most common models. I would say, primarily on the commercial side, there are a number of products that are per user per month. More commonly is with some of our newer products in commercial. There, we have some enterprise license agreements. And then in the R&D side, what's most common in R&D are enterprise license agreements where customers would have a fixed annual fee that they would license -- that they would pay to license for the product, and they can have as many users as they need to.

Let's start on the commercial side and kind of dive in and peel back the onion a little bit. Is there a sense -- you mentioned the core CRM and then the add-ons. Is there a way to give investors a sense how much of that Commercial Cloud -- is that core CRM versus the add ons?

Yes. This is Brent. Maybe I could jump in and maybe just taking a step back and giving some context to the size of the opportunity. So overall, Veeva's TAM is about $12 billion plus. Within that, the Commercial Cloud that you explicitly asked about is about $6 billion. The CRM suite in that TAM, core CRM and add-ons and other like products, is about $3 billion. Then we have Data Cloud, which is another $2 billion, and data analytics at about $1 billion. So that's about $6 billion in the commercial side. The core CRM piece, as Paul said, is really -- was the genesis of the company. And over the last x number of years, we've added on a number of add-on products so there's a good amount of runway there. But to answer your question specifically, Commercial Cloud overall is about half of our fiscal year '21 revenue. And the core CRM is the largest contributor to that revenue with the add-ons becoming a larger percentage of the mix, and we expect that to continue over time.

So you've established and maintained a very large market share kind of in the space. What does that do in terms of the setup within that $6 billion TAM in terms of what's the growth profile of the commercial side? And where would you expect it to go in relation to that TAM opportunity?

Yes. I can jump in. So if you take a look at the -- if you look over time, the big opportunity is -- so on the core CRM piece is really the add ons. If you look at where that penetration is, the high penetration you're speaking to is around the core CRM. But the add-ons on average are penetrated at about 40%, and there's a wide range around that, varying from Approved Email to Engage, Align and the like. So there's a lot of green space in our add-ons to drive growth. The other areas that we're really excited about is on the Data Cloud as well. The opportunity there, we're very early innings. We're looking at doing something unique with technology, leveraging the Crossix platform that we think is going to be a really nice growth driver. Now that's a lot of work. That's not something that we're going to significantly monetize today or tomorrow. But as you think out for longer-term durable growth, that's definitely a growth driver for us.

So when you look at Data Cloud, I mean there's -- part of it seems self-explanatory. But there's a lot of different ways, I think, that your core customers are using data. What is it that you're actually providing to the customers as part of Data Cloud? And what would be the expectation in terms of how they would adopt the solution?

Yes. I can talk to that. So Data Cloud, think of Data Cloud as an umbrella name. And within that, we're going to have multiple different data products. We're starting with longitudinal patient data. So that's our early focus. So when you think about what longitudinal patient data means, it's really all of the data around a patient over time, including office visits, medical claims, prescription data, even lab work, all of that information around a patient. And that information is really useful to a life sciences company to think about the customers they target, what does the journey of that patient look like over time and where can they provide value and add value along the chain of the journey of a patient. So that will be -- that's the initial focus for us. The stage that we're in is, we call it, the early adopter phase of a product. So we are working with a very focused set of companies in this early adopter phase to build out and mature the product, and that's going extremely well. So we have our first handful of companies. One is a large top 20 company and then a couple of others are emerging biotech companies, and we're proving out that value proposition. Now over time, we'll add additional data sets within Data Cloud. But the one that we've talked about and we're now focused on is the longitudinal patient data.

It would seem like some of those data sets might actually offer the opportunity to expand your customer set as the use cases for that data, whether it be health care insurance, et cetera. Is that part of the longer-term strategy?

Yes. So you're right. The -- having the data sets that I just talked about and even the data sets that we'll be creating over time have a lot of potential. The focus will be certainly on the commercial side of a life sciences company. I do see the next area that we may -- we have the potential to expand to is using that data on the R&D side of a life sciences company because you think about their process. These require much of the same kind of data as they think about participation in clinical trials and how they target enrollment of patients. So I think that will keep us busy for some time, commercial over time expanding into R&D. And then I think we have some bigger decisions to make around what does that mean in terms of focusing on other industries. But that -- those decisions haven't yet been finalized.

What does -- let's take a step back and talk a little bit about the competitive landscape within Commercial Cloud. And I apologize if you can hear the dogs barking in the background, welcome to COVID land. But talk to investors around who do you see as the primary competition. And what does the competitive dynamic look like in the commercial cloud space specifically?

Yes. So I would classify competitors in 2 groupings. One is niche competitors that we see, and often, they may play in one country or in a specific region. So we may see specific competitors in Latin America, others in China, others in the Japanese market, so regional or country-focused competitors. And then there are companies like IQVIA which are -- generally play more globally. They have an established footprint in the life sciences industry, primarily in the data space. They sell -- as you know, they have significant data offerings and they're looking to enter the software space. So we see them more broadly. From a competitive landscape standpoint, we have a significant leadership position in the markets that we play in, particularly around software and CRM. The competitive landscape has gotten even better for us over the last 12 months or so as we've been able to help the industry operate through all of the challenges of COVID, helping the industry get more digital. As you know, offices were shut down, and they lost this kind of business continuity, and we were able to help the industry move to digital very quickly. And we're helping customers, not only from a technology standpoint and innovation standpoint, but from a business guidance standpoint. What should the structure of their sales force look like? What does the future role of the rep look like? What does that mix of -- that right mix of digital engagement and personal engagement look like? And they're looking to Veeva as that strategic partner. So over the last -- as rough as the last year has been for the industry, it's created an even greater leadership position for Veeva in the marketplace.

No, that's great. And you kind of talked a little bit to this, but there's been a lot of, let's say, press release back and forth around displacements, especially within core CRM. Where does that stand? And I think this last quarter, you mentioned some interesting wins as well. Maybe if you could touch upon that.

Sure. I mean you're always going to hear, Sterling, announcements from competitors with takeaways and wins. What I can tell you is we have consistently increased market share in core CRM pretty much quarter-over-quarter, every single quarter consistently. So the numbers speak for themselves. We win most deals that we compete in. And I see that trend continuing into the future. I do predict that we will continue to gain share, which means we're taking share in a market that's roughly the same size or with -- slightly reducing. It means we'll take share from competitors in the marketplace. Now the reason that's happening is because the focus on innovation and the product excellence that Veeva has been able to demonstrate in the market for such a very long time. We have very innovative solutions, starting with things like digital engagement and helping our customers be significantly more efficient. As it relates to some of the recent wins that we've had, we have had a couple of displacements of IQVIA's -- their newer product. They marketed product called OCE for the last couple of years. And what we're seeing is those companies were promised something yet weren't fully delivered on that promise. And those customers are looking for a partner that they can rely on, they can trust, they can innovate and that they can execute for them, namely getting them to be more digital and be more efficient. So I think those are trends. And the reason I believe they're trends is because there are a number of other conversations that are happening out in the marketplace. I do think our primary competitor, IQVIA, has -- is applying services essentially to some of the promises that they've delivered to try to have the -- try to deliver on the promises that they've made to the marketplace. And I think, ultimately, over time, that catches up. And I think we're the beneficiary of that. So we're going to play our game and bet on our horse, which is customer success, product excellence and innovation. And that model has worked for us, and I think it will continue to work in the future.

One of the trends that investors look at is, as you mentioned, the move to digital but kind of with it, the potential for a decrease in the number of pharmaceutical sales reps as you move forward. What have you seen in the market thus far? And how do you see that playing out in the coming years?

Yes. So I do think that there will be some modest reductions over the next 12 to 18 months. We spent a lot of time thinking about this and a lot of time talking to our customers about it. So over the last -- particularly over the last 12 months, as COVID has hit, as we've helped companies become more digital, we're in those conversations with customers. We'll help guiding them to, again, the future of the sales force, what does it look like, what should the sales force sizing be for the future selling model. So based on those conversations, but also based on our own estimates, our own beliefs about -- let's say, how much more efficient can your sales force be. If you have 100 units of capacity, and you're able to add 20 -- or the equivalent of 20 or 30 more units because you've applied digital to that as well, what might you do with that efficiency gain and how can you apply that. And we believe some of those efficiency gains will be applied to reductions. And I think those reductions will happen over, I would say, 12 to 18 months. We'll see a little bit starting sooner, and then we'll see it play out before the end of our fiscal year, next year and likely even the year after that. So I think the impact will be, over time, but I think it will largely be offset. There's a cause-and-effect relationship between consuming more Veeva products that help companies to be more efficient, which help give them those efficiency gains so they can have the reduction, so specifically with products like Engage, where we've seen really strong success and strong efficiency gains, that will offset a lot of the reductions that we've talked about.

One of the questions submitted by investors is, can you go over the business case for building MyVeeva for doctors organically versus perhaps acquiring a base of doctors externally.

Yes. So with MyVeeva for Doctors, it's different. So what we are doing there has never really been accomplished before. There is -- this is not a market where we're replacing an existing technology or an existing vendor. We're actually -- we're creating a market. So what we would have to do, as we think about it, is acquire in a space that might be adjacent and then try to backfill into something that looks like MyVeeva for Doctors. So there's a lot of learning that needs to happen. We're very, very early in the marketplace. We have some early customers that are live. And we're -- so we're very much in that early adopter phase. And I would say, we're always open to the idea of an acquisition if it's appropriate and if it's right. I think we're going through those early motions of learning what the market is and then figuring out the best way to accelerate. If it happens to be an acquisition, we're open to that. But certainly, all options are on the table. But we'll do the right thing to accelerate our -- that market position.

One of the other acquisitions that you did during calendar '19 was Physicians World. What does that kind of bring? And how has that kind of played out in -- during the pandemic? And maybe what's the opportunity? And has it changed? Have you morphed it under the Veeva umbrella?

Yes, you're right. A key way that life sciences companies educate and build awareness about their drugs are through events. Now historically, most of those events have been physical events. And an event, meaning they would bring in a speaker or a thought leader and then they would invite a physician audience to that event, and they would get to hear from a peer, a thought leader in the industry. It's a very common way to educate customers. And Physicians World helped enable those events and do all of the services around the events. So it's a really core part of promotion in the life sciences industry and really critical. Unfortunately, last year -- or the year that COVID hit, a lot of those physical events went away. What we're seeing now is those events starting to come back -- many of them coming back virtually. So we're seeing more digital events. And you're right, you're exactly right. We have -- Physicians World did actually support a number of virtual events. It just turns out the majority that they supported were physical. So we're continuing to pivot that business and support the variety of -- and now we can support really the mix. We can support 100% physical, 100% virtual or even events that are some hybrid mix thereof. So I'm really pleased with the speed that, that team has moved on. And we're starting to work more and more with companies that are more exclusively focused on digital events.

Another question that came in from an investor was back on Data Cloud, and you talked about kind of the focus on commercial but expanding into R&D over time. What would be an example of an R&D-specific offering for Data Cloud?

Yes. And again, I didn't -- I certainly didn't intend to announce a new product on this conversation. In no means that -- just so we're clear. But having said that, you could imagine the way that you think about running clinical trials and patient recruitment. So having patient data that you could start to identify or predict certain sets of behaviors or types of patient populations, that could be one use case where you'd want to use patient data in order to accelerate getting the right population for a clinical trial. But again, that's certainly well off into the future if we even decide to go down that path. The focus is very much on early customers, maturing the product. And following that, that essentially, I'll call it a recipe, the recipe that Veeva has for introducing products successfully into the marketplace.

Yes. For those investors that are familiar with Veeva over the years but maybe haven't been as close recently, when you talk about Data Cloud, how does that relate versus some of the data initiatives that have been talked about in the past, whether it be network or some of the physicians' data, et cetera? Where do they all sit? Are they all independent? Are they all part of data cloud? How does that all...

Yes. So a couple of the products, some of the ones that you referenced, some of them are software products. So Network is a software product and Nitro is a software product. Network is around managing master data, so making sure it's -- think of it as a foundational element to make sure that you have a customer, the single view of a customer across all of your systems. So that's more foundational. Nitro is a data warehouse. So it's also a software, but it's technology that Data Cloud data would flow into amongst many other types of data sources. Data that the pharma company generates, their sales activity data, their digital activity data, all of their Data Cloud and patient-related data would flow into the data warehouse so they can run analytics, and they can use it for things like AI. So Nitro is a foundation for data. The other product you referenced was our physician data and that's Open.Data. And OpenData, think of that as customer data. So who were the doctors and who were the hospitals and the accounts in a specific country. So we have OpenData in well over 30 countries across the globe and customers would buy that. And that would be who their customers are, who they're going to call on, who they're going to reach, who the key people are that they need to engage with. And we make it very easy when you buy OpenData. The data is very, very high quality. And we maintain that data for our customers because it always changes. It changes at 5% or 10% a year. We maintain it and make it easily accessible in -- within our software. So Data Cloud is very different than the products that you've heard us talk about in the past.

Before we switch over to Vault, because you did touch upon it a little bit, but I want to put a fine point. How has COVID impacted the commercial business? And I know you've mentioned several facts, but maybe just to kind of tie it together. And knock on wood, vaccinations work. We start to see things more open up. How much of that opportunity that you developed translates to a post-pandemic world?

Yes. So I would say we were already on the path -- well down the path of helping companies go through digital transformation, become more efficient, operate more effectively, engage with their customers in different ways. We saw that the model and we were leading the model to change more in that direction. What COVID has done is it's helped accelerate that. What we believed would happen over 3 and 4 and 5 years largely is happening over a much more condensed time frame, so a lot of it over the last 12 months but even still more to come. So I would look at COVID as an accelerator of digital transformation in the commercial side, even on the R&D side of our business. But certainly on the commercial side, forcing companies to kind of think differently a little bit faster and accelerate that transformation, which -- that move to digital is really good for Veeva. Even if it has some effects on making them more efficient, which drives reductions, it's actually really good for Veeva because it proves out the value proposition of our products, and it gives us an opportunity. We're embracing that, and that's why we're delivering on new products. You heard us talk about -- we talked a little bit about MyVeeva, new innovative digital products where we're going to lead the industry, continue to lead the industry to get to new and efficient models of engaging customers, reaching customers more efficiently. So it's an accelerant, but also a significant opportunity for innovation.

All right. Let's switch over to R&D and similar to what we do with commercial. Brent, maybe give us a sense of the revenue contribution from the R&D side. And how does that side break down in terms of the contributors?

Yes, certainly. So as we said earlier, commercial is about 50% of our revenue. So the other half of it is Vault on the development side. And that's today in fiscal year '21. And as we look out to 2025, we expect that to be 2/3. So we see good growth over the long term in the development side, Vault side. The TAM is $6 billion in this space. And if you want to think about what are the big contributors and blocks in this, it's a very diverse portfolio. So you have a number of products that are all kind of roughly the same size. You think of eTMF, CTMS in the clinical operations side. You think about QualityDocs, you think about QMS and the RIM suite. Those are all roughly similar size opportunities. Now they're in the different portions of the maturity curve, but the opportunities are kind of relatively the same. Then you have Safety, which is roughly double that of any one of those opportunities. And it's very, very early in the development cycle and the early adopter cycle, but we're very excited about that. And then you have CDMS, which is even larger than Safety. So those are the opportunities that we're really focused in on in the specific markets that are going to drive longer-term growth. Now if you ask today what's flowing through the financials, it's going to be our more mature products. So today, eTMF and the QualityDocs in the RIM suite is driving today. But the big drivers longer term are going to be things like the acceleration of CTMS, QMS, Safety and CDMS.

And you mentioned that enterprise agreements tend to be more common on this side. How is that adoption curve? Are you selling enterprise agreements right in the initial sale? Or is it you kind of phase in, maybe do a deal, an expansion and then get to an enterprise agreement?

Yes, that depends. On occasion, we do. We'll sell an enterprise deal right in it. It largely depends on the rate of adoption for the customer and the speed that they get there. Oftentimes, there's a ramp to that full enterprise license price.

And before they get there, how are things priced? Is it based on the amount of data that's stored in a vault or users or...

No. It still is the enterprise license agreement, and we match essentially the pricing to the timing, and the value that's expected from the customers' adoption. So yes, it's the consistent model. It's an enterprise license. So in some cases, they may go a little bit faster or in some cases, they may go a little bit slower. But the pricing matches the pre agreed to ramp in the license agreement.

So how do you grow? Once they get to full penetration on the use, how do you continue to grow? Is there built-in price escalators? Or is that ELA tied to maybe something specific like eTMF and you can do another ELA for CTMS or et cetera?

Yes. I mean our growth strategy is really focused on innovating. We're incented to continue to innovate and deliver new products into the marketplace. As you know -- or you may know, we've never had a price increase as a company. That's not how we -- it's not how we're approaching the marketplace. We try to be fair and consistent pricing across the entire industry. We don't do unnatural things to win deals in terms of pricing. And that's -- our customers in the industry appreciate that. They appreciate the fairness and the consistency. And they also appreciate that we will continue to innovate, and we'll get paid a fair value for new products that we deliver into the marketplace. So we look at it as -- and you've seen the trend with Vault over time, where we started with one Vault product and now we have many, many Vault products. We will continue to innovate, deliver new products that create significant value for our customers.

It's good to hear. Matt Wallach, one of the co-founders, was on this exact same platform a number of years ago. And when we got talking around the subject, his comment was, "If we have to raise price to grow, I don't want to do this anymore." So I think everyone would be glad to hear that the innovation is still there. Let's talk a little bit more about CDMS, in particular. Where are you on the adoption curve? One of the things I've always appreciated about Veeva is you've always take the long game. You're not looking to just sell a couple of quick deals to juice up revenue. But where are you in kind of the traction on the customer side? And when should investors look for that to be a more meaningful contributor to overall revenue?

Yes. So CDMS is going really well. It's actually going better than our expectations in terms of maturity of the product. I would call it still in the early adopter phase, but it's rapidly starting to exit that phase. We had a very focused number of companies. We've scaled that out. We have some very large companies that we've talked about before and announced as well as a number of smaller companies that are doing a variety of trials, trials that vary in complexity, but that also vary in size, which proves out the value proposition and the fact that the product is able to handle any type of trial at this point. So I would say we're -- you know our model is very much reference-selling based. It's making the early companies very successful, maturing the product and then starting the reference selling model. And we're just at the very beginning of that phase. And I'd say you'll see more material contribution from CDMS starting over the next couple of years. And certainly by 2025, it will be a material contributor.

And what do you think stands out? Are you seeing customers that want the complete clinical stack of -- the industry term is EDC, even though you call it CDMS. So pardon my -- if I get -- so the EDC, CTMS, eTMF, are they looking for a complete single-vendor stack for synergies? Or is there particular feature functionality that they're seeing within your product, within CDMS, as a stand-alone that is driving some of the adoption?

Yes. So fortunately, it's both. And this is how we think about our products. We want our products to be the very best when you buy an individual product, and we call that best-of-breed. But we also wanted to be unified and connected with all of the other applications that we deliver. So the value proposition of CDMS alone, or even the EDC aspect, is transformative. Much faster trial start-ups, much faster changes within -- once you're in the mid cycle of a trial because it's modern technology. You don't have to do migrations. So massive value proposition stand-alone. But to your point, it's also connected with the rest of the CDMS suite and also the rest of clinical operations. So what's happening more frequently and what will happen more over time, is this idea that companies buy in to the overall clinical vision. They know that they can replace 5 or 7 or 10 different technologies all with Vault. And they can all be fully and seamlessly unified and -- which creates very significant value for them. So the value of buying the second application is higher than the first because it's connected together. You get the benefit of each app plus the connectivity. And that message is -- our customers really clearly see that. And you'll look back, if you look at some of the recent announcements we've had, large enterprise -- large life sciences companies are buying into that vision. And the only decision then becomes, how do I get there? What's the road map to roll out all the applications within the clinical suite rather than going through multiple different selling cycles?

Yes, that makes sense. One of the other questions is around TAM. And I always tell investors when they ask me, what should I expect at this upcoming Investor Day? I'm like, well, expect them to increase the TAM because of the innovation and expect a real good in-depth discussion of the company. So the question is, where is there further TAM expansion possible when you look at the opportunity set that you're going after?

Yes. I mean there's certainly plenty of opportunity within life sciences. I mean we -- as you have seen over the last several years, we've continued to innovate. We've continued to increase. There is more potential. One area that I would point to is our broader vision for connecting the industry with some of the industry's most important stakeholders. So the way this plays out on the -- where we were just talking about on clinical is our vision for paperless and patient-centric clinical trials. So that's a very bold vision. And what it means is that we have to get software not only into the hands of life sciences companies, which we're well on our way of doing, but also into the clinical research sites and also into the hands of patients. And when you do that, we can connect all of those key stakeholders together and connect the industry. That is also transformative. Like we talked about MyVeeva for Doctors on the commercial side being transformative, this is massively transformative. And it has -- it's new. It's very, very different. There are niche vendors and technology players who are playing in each one of those individual areas. Veeva's unique in that we're focused on all of them. We have that connectivity back into the sponsor, but also great software designed very specifically for the research sites. And then software that we'll put in the hands of the patient, that will put the patient at the center of the trial, making it a great experience for the patient. That's a transformative vision. So that has -- that's one example of where you may see -- again, transformation and Veeva capturing fair value from that opportunity.

So I think you had a big vote this week where I think it was approved for you to become a public benefit corporation. For investors, and even for myself, what does that actually mean? And what does it mean to shareholders?

Yes. No, I'll take that one. So yes, you're right. We had our special shareholder meeting yesterday where it overwhelmingly passed. I think of the votes that were cast, approximately 99% voted in favor. So we're very, very excited about that. But maybe let me just take one second to make sure we know what is a PBC because I can tell you, 6 months ago, I had to go look it up myself. So a public benefit corporation or PBC is a for-profit corporation that has adopted a public benefit purpose. For Veeva, the public benefit purpose is to help make the industries we serve more productive and create high-quality employment for opportunities. So Veeva has always operated with a multi-stakeholder approach. It's kind of in our DNA. So Peter has always thought about, if I focus on our customers, if I focus on the industries we serve, if I focus on the employees, good things will happen for the shareholders. We will have good financial results. A C corp is -- traditional C-corp is not defined that way. So that multi-stakeholder concept was something that we have been pursuing for a number of years, and PBC was a way for us to make it formally part of our DNA. So what does it mean? So one -- a couple of ways to think about this is customers are making very large commitments to Veeva. And we're looking for them to make larger commitments over time to Veeva. This is a way for us to formally reciprocate with our commitment to do right by the industry and do right by the customer. So there's a lot of trust today with -- between customers and Veeva, 10, 15, 20 years. This is memorialized. This is the way the Board, this is the way the leadership team should think about serving the customers and the employees. As well, we do think this creates a greater long-term durable financial model. We think over the long term, this will be a benefit financially. And then also employees. We think it gives us, over time, an advantage. Employees want to work for a company with a purpose. So I think retaining and attracting top talent is part of the equation. So we're very happy with the outcome of it. And now the work starts. Effective February 1, we will officially be a public benefit corporation.

All right. We're within our last minute, one follow-up to that. An investor asked, does that mean you're a certified benefit corporation? Is there a difference in terminology? Or is it the same thing?

It's different. I think what you're referring to is B corp certified. A B corp is a nonprofit third party that can come in and certify your metrics and goals. A PBC does not require that. So they're independent. They can't have crossover, but they are different.

All right. Perfect. I think with that, it's a good spot to go ahead and say thank you. Paul, Brent, thank you so much for joining us today. Stay safe and stay healthy. Look forward to talking to you soon.

Thank you, Sterling.

Thank you, Sterling.

Take care.