Veeva had been in hibernation for the past 2 years, following rather average results and a slightly slowing market. It has to be said that when a software star doesn't regularly exceed expectations, investors start to get impatient. After declining in line with the tech sector over the first half of 2022, the stock treaded water until August 28, the day of the post-closing publication of Q2 2025 results (the company publishes on a delayed basis).

That evening, Veeva announced solid results, with total revenues of $676.2 million, up 15% on the previous year. Subscription service revenues reached $561.3 million, up 19% year-on-year. Net income for the quarter was $171.0 million, up 53% year-on-year. The stock gained nearly 9% the following day.

Chart Veeva Systems Inc.

Source : Veeva Systems

Analysts have revised upwards their EPS estimates for next year:

These results are in line with Veeva's decade-long track record. In fact, over the long term (10 years, for example), the American company has increased its sales from $313 million in 2014 to $2.36 billion in 2023 (i.e., a more than 7-fold increase) and net income from $40 million to $526 million over the same period, i.e., a near doubling of margins. What's more, this growth is linear from quarter to quarter, with no top-line seasonality.

To understand this extraordinary growth, we need to delve into its high-potential market. Developing and launching new drugs is a complex and time-consuming process. Veeva helps pharmaceutical, biotech and medical device companies save time and secure processes with its software suite.

Veeva is distinguished by its three main product categories: Veeva Development Cloud, Veeva Commercial Cloud and Veeva Data Cloud :

  • Veeva Development Cloud includes applications for the clinical, regulatory and security functions of life science companies. For example, Veeva Vault Clinical facilitates the execution of clinical trials by providing a comprehensive, connected technology ecosystem.
  • Veeva Commercial Cloud brings together software and analytics solutions, including Veeva CRM, Veeva Vault PromoMats, Veeva Vault Medical and Veeva Crossix. These tools help sales and marketing teams to collaborate effectively.
  • Veeva Data Cloud includes Veeva OpenData, Veeva Link and Veeva Compass, providing essential data for life sciences companies.

In addition, Veeva is gradually integrating artificial intelligence into its solutions. In the second quarter, the Vault Direct Data API is already enabling customers to extract data faster than competitors.

The majority of Veeva's sales are generated in North America (58.7%), followed by Europe (28.03%), Asia-Pacific (10.6%) and the Middle East, Africa and Latin America (2.67%). This diversified geographical spread enables Veeva to minimize the risks associated with over-dependence on a specific market.

The company works with key players in the pharmaceutical industry such as Eli Lilly, Merck & Co, Novo Nordisk, Johnson & Johnson, Astrazeneca, Gilead Sciences, Bayer, Novartis, Moderna and Sanofi. Customer satisfaction is essential to Veeva, which works hand in hand with its major customers. This is reflected in the particularly low churn rate (less than 4%, with over 80% of sales being recurrent). Once installed, Veeva 's software suite is sticky because staff are already trained, and the switching cost would be enormous in terms of time, energy and expense. Betting on Veeva is a roundabout way of betting on the success of big pharma in a more diversified way.

However, Veeva faces significant competition from players such as IQVIA Holdings, Dassault Systèmes-owned Medidata and Oracle. However, thanks to its commitment to innovation and product excellence, Veeva has managed to maintain a leading position in the sector. Another risk is that Salesforce has entered the Healthcare segment after recruiting Veeva's former CEO of Vault (Frank Defesche). A potentially major new competitor.

The company can count on an experienced management team with integrity and skin in the game. Veeva is still headed by Peter Gassner, co-founder and 7.59% shareholder.

Veeva forecasts revenues of between 2.704 and 2.710 billion USD for fiscal year 2025, with non-GAAP earnings per share of 6.22 USD. The company continues to innovate with products such as MyVeeva, an app for patients and doctors, and Veeva Site Connect, which simplifies clinical trials.

Forecasts for 2025 :

Source: Veeva Systems

Return on capital employed (ROCE) has averaged 16% over the last 5 years. Last quarter, operating margin was 41.3% and net margin 25.3%. Cash conversion is currently around 150%. CAPEX is around 2-3% of EBITDA.

In terms of valuation, the company has always been expensive, as is endemic to the SaaS sector. But valuation has clearly deflated since the post-covid bubble. Whereas the P/E ratio stood at 117x in 2021, it has now contracted to 51x on the basis of estimated earnings for this year, both as a result of the fall in share prices since the 2021 highs and, above all, thanks to the rise in earnings since then. Given that Veeva converts well into cash and benefits from a capex-light business model, its FCF margin exceeds 37%. FCF Yield currently stands at 3.5%, or less than 30 times cash earnings. This does not seem to me to be overvalued at current levels.

All in all, Veeva Systems is a solid company with robust fundamentals and a capacity for continuous innovation. Despite the few risks mentioned, its financial performance and growth prospects make it an attractive option for long-term investors. With a leading position in the life sciences cloud solutions sector, Veeva is well placed to continue to grow and deliver value to its shareholders as long as it leaves its competitors in the lurch!