Veeva Systems Inc. is a leading provider of industry cloud solutions specifically designed for the global life sciences industry. The company offers cloud software, data, analytics, professional services, and business consulting to help life sciences companies develop and bring products to market more efficiently, market and sell more effectively, and maintain compliance with government regulations . Veeva's solutions are organized into major product categories that address various business functions from research and development to commercialization .
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Commercial Solutions - Includes Veeva Commercial Cloud, Veeva Data Cloud, and Veeva Claims solutions, helping life sciences companies engage with healthcare professionals and organizations, and execute effective marketing campaigns .
- Veeva Commercial Cloud - Facilitates intelligent engagement across multiple communication channels.
- Veeva Data Cloud - Provides data management and analytics capabilities.
- Veeva Claims - Supports compliance and marketing claims management.
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R&D Solutions - Comprises Veeva Development Cloud, Veeva RegulatoryOne, and Veeva QualityOne solutions, streamlining product development processes and maintaining regulatory compliance .
- Veeva Development Cloud - Enhances clinical, regulatory, quality, and safety functions.
- Veeva RegulatoryOne - Manages regulatory documents and trial information.
- Veeva QualityOne - Ensures quality management throughout the product lifecycle.
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What went well
- Veeva achieved a record high operating margin of 43.5% in Q3 FY2025, showcasing strong execution and effective cost management.
- The company is enhancing its data network through strategic partnerships like Walgreens, strengthening products like Compass and Crossix, and solidifying its position with the strongest data network in the industry.
- Veeva's safety solutions are approaching a tipping point, offering a comprehensive suite that meets customer needs for modernization and advanced automation, positioning the company for further growth.
What went wrong
- Increased competition from Salesforce: Salesforce is increasingly present in Veeva's customer base, appearing as a competitor in the vast majority of their customers. This heightened competition from Salesforce, especially with their Life Sciences Cloud being part of top deals, could challenge Veeva's market position.
- Uncertainty in Veeva's horizontal enterprise applications strategy: Veeva has not provided a specific timeline or concrete product strategy for its pivot toward horizontal enterprise applications. This lack of clarity may limit investor confidence in Veeva's ability to expand beyond its core life sciences market.
- Regulatory uncertainty under a new administration: Potential changes in regulations with the new Trump administration create uncertainty for Veeva. While customers are accustomed to changes, new policies could impact how customers make decisions, potentially affecting Veeva's business.
Q&A Summary
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Vault CRM Adoption and Migration Progress
Q: How is the adoption of Vault CRM progressing among customers?
A: Veeva is making strong progress with Vault CRM, securing commitments from four top 20 biopharma companies, including Boehringer Ingelheim, an existing CRM customer. Additional commitments are expected over the next several months, and having a real product in the market has been a significant advantage. Migration timelines vary by customer size, with small customers taking 4–6 weeks and top 20 companies up to 2 years. -
Growth Visibility and Outlook
Q: How does Veeva's visibility into FY '26 growth compare to prior years?
A: Veeva has marginally better visibility compared to a year ago, as customers have settled into the current macro environment. The company is pleased with its updated guidance reflecting subscription growth of about 15% for the year. -
Impact of Macroeconomic Environment
Q: How is the current macro environment affecting Veeva's business?
A: Customers are settling into the current macro environment, viewing it as a "new normal". Veeva hasn't detected significant changes and notes that people are getting used to high interest rates and global uncertainties. -
Operating Margin and Cost Discipline
Q: What's driving the strong operating margin performance?
A: Veeva achieved an operating margin of 43.5%, the highest on record, driven by strong execution across sales, services, and product teams. Over half of the margin outperformance was due to revenue beat, with additional gains from expense timing and ongoing cost discipline. -
Development Cloud Strategic Partnerships
Q: What progress is Veeva making with large strategic partnerships in Development Cloud?
A: Veeva is making progress on several large strategic partnership opportunities in Development Cloud, similar but not identical to previous deals with Merck and Boehringer Ingelheim. Each partnership is unique, and discussions are more expansive due to a more mature product suite. -
Generative AI Products and Gross Margin Impact
Q: How will the adoption of generative AI applications impact gross margins?
A: Veeva introduced two generative AI solutions: CRM Bot and MLR Bot. MLR Bot will be charged for and may impact compute costs, but there won't be any material impact on gross margins, and AI is factored into the gross margin profile for 2030. -
Competitive Landscape with Salesforce
Q: Is Salesforce showing up more often in customer discussions?
A: Salesforce is present in the majority of Veeva's larger customers, which is expected. Veeva continues to compete primarily with Salesforce in the market, as IQVIA's product has sunset. -
Crossix Performance and Drivers
Q: What factors are driving Crossix's strong performance?
A: Crossix's growth is driven by good execution, innovation in micro audiences, and an expanding data network. Integration with Veeva's CRM suite is also a factor. Crossix is one of several drivers of commercial strength, alongside CRM products and Commercial Content. -
Impact of Regulatory Changes on Business
Q: How could potential regulatory changes, such as elimination of direct-to-consumer advertising, impact Veeva?
A: Such changes would require significant steps, including policy and legislation, and would likely be challenged. Veeva does not expect any near-term impact and hasn't seen customers reacting negatively. -
CRO Market Challenges and Veeva's Position
Q: Why is Veeva not affected by challenges facing CROs?
A: CROs are impacted by fluctuations in study volumes, while Veeva's revenue is less tied to study-by-study arrangements. Products like eTMF and CTMS are long-term enterprise licenses, insulating Veeva from short-term study volume changes. -
Services Revenue Outlook
Q: How is the services market outlook, and what growth is expected?
A: Veeva is pleased with execution and momentum in services, seeing stabilization after earlier factors impacted performance. Specific growth assumptions were not provided, with guidance to be given after Q4 results. -
Headcount Increase and Investment
Q: What's behind the acceleration in net headcount increase?
A: Veeva is investing in growth, with headcount increases focused on product areas. The company is pleased with hiring execution as it looks ahead to next year. -
Horizontal Enterprise Applications Strategy
Q: When will Veeva share more about its horizontal enterprise applications strategy?
A: Veeva is taking a platform-specific approach to horizontal business applications but has no specific timeline to share. Updates will be provided as more information becomes available. -
Replatforming Effort to Vault CRM
Q: How is the replatforming of Veeva CRM to Vault CRM progressing?
A: Veeva is very comfortable with the replatforming effort. They have live customers and the necessary product features are in place, with Vault CRM now offering full functionality compared to Veeva CRM. -
Contribution from MLR Bot and Monetization
Q: What is the early interest and monetization plan for MLR Bot?
A: There is significant customer excitement for MLR Bot, which will be offered as a separate license. Veeva is working through monetization details but anticipates it as an add-on to PromoMats.
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With the migration from Veeva CRM on Salesforce to Vault CRM progressing slowly and significant margin improvements spread out until 2030, can you provide more precise timelines on when investors can expect to see a noticeable impact on gross margins due to reduced Salesforce royalties?
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Despite announcing your pivot toward horizontal enterprise applications, you've yet to share a concrete product strategy or timeline; when can we expect more detailed information on the specific application areas or customer segments you plan to target, and how will this diversification impact your core life sciences focus?
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Given that clinical trial starts have been increasing globally over the past two quarters, how is Veeva leveraging this trend within your Development Cloud offerings, and are you seeing a corresponding uptick in demand that aligns with these industry metrics?
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You mentioned having only marginally better visibility into fiscal 2026 compared to prior years; given the uncertain macro environment, what factors are limiting your ability to forecast more confidently, and how are you addressing potential risks to maintain your growth trajectory?
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With CRO revenue remaining approximately 5% of total revenue and not materially changing, what strategies are you implementing to accelerate growth in this segment, and how critical do you view CRO partnerships to your long-term growth plans?