Veeva sells cloud software, data and consulting almost exclusively to pharmaceutical, biotechnology and medical device companies. Development Cloud and Quality Cloud are reported together as R&D and Quality Solutions; Commercial Cloud, which includes the CRM used by sales representatives, and Data Cloud are reported as Commercial Solutions. Subscriptions are billed annually or quarterly in advance and recognised ratably over terms that are usually one year, so visibility extends about a year and no multi-year backlog exists. There were 1,552 customers and 7,928 employees at year end, and the ten largest customers were 28% of revenue in each of the three years, none above 10%.
The business in one page
Revenue was $3,195.3 million, up 16.3%, and every cost line grew more slowly: cost of subscription 12.3%, research and development 10.7%, sales and marketing 8.1%. The operating margin went from 18.2% to 28.7% in two years and the subscription gross margin from 84.7% to 86.5%. R&D and Quality overtook Commercial as the larger subscription area, 44.6% of total revenue against 38.3% two years earlier, growing 20.9%. Growth was organic: there was no acquisition line in the cash flow statement and goodwill was unchanged at $439.9 million.
Three things sit against that. Stock-based compensation of $472.7 million, 14.8% of revenue, is the entire difference between free cash flow of $8.30 per diluted share and $5.47 after it, and diluted shares still grew 1.1%. The reseller agreement with Salesforce, on whose platform the legacy Veeva CRM runs, expired on September 1, 2025 and entered a five-year wind-down, while the 10-K records that a number of customers have stated their intent to move to Salesforce as their CRM provider; Commercial subscription revenue of $1,257.6 million is not split between CRM and data products, so the exposure cannot be measured. And the cash compounds at a portfolio rate: 82.1% of three years' operating cash went into securities earning about 4.6% before tax.
Figures for 3 fiscal years, taken from the Key Metrics tables of each annual report. When a later filing restates a figure, we use the figure reported for that year's own filing.
Key metrics
| Metric | FY2024 | FY2025 | FY2026 |
|---|---|---|---|
| Revenue | $2.36B | $2.75B | $3.20B |
| Gross margin | 71.3% | 74.5% | 75.5% |
| Operating margin | 18.2% | 25.2% | 28.7% |
| Net margin (GAAP) | 22.2% | 26.0% | 28.4% |
| Operating cash flow | $0.91B | $1.09B | $1.42B |
| Capex | $0.03B | $0.02B | $0.03B |
| Free cash flow | $0.89B | $1.07B | $1.39B |
| Stock-based compensation | $0.39B | $0.44B | $0.47B |
| Dividends + buybacks | $0.00B | $0.00B | $0.17B |
| Net cash | – | $5.07B | $6.47B |
| Total debt | – | $0.08B | $0.10B |
| Shareholders’ equity | – | $5.83B | $7.22B |
| Effective tax rate | 10.6% | 22.3% | 23.9% |
| ROIC (year-end net operating assets) | – | 70.9% | 93.0% |
How Veeva Systems makes money
Competitive advantage
Customers expand rather than arrive: management attributes subscription growth in both areas primarily to expanding use by existing customers. The customer count grew 5.1% while revenue per customer rose from $1.86 million to $2.06 million.
Concentration is stable. The top ten customers were 28% of revenue in each of three years, which says the large accounts neither left nor came to dominate.
The products sit inside regulated processes: validation under FDA and EU rules is part of what Veeva sells, which makes replacement a regulatory project as well as a software one. The 10-K does not quantify switching costs.
The counter-evidence is in the same filing and only in words: Salesforce, now also a licensee of IQVIA's CRM software, has announced wins among large Veeva CRM customers. Whether the advantage is widening or narrowing cannot be established from the document.
Pricing power
Some contracts carry an annual inflation adjustment at the lower of 4% or the Consumer Price Index: a capped contractual mechanism rather than discretion.
Management says price contributed to subscription growth to a lesser extent than usage, without quantifying it.
The filing records pressure the other way: competitors' price concessions and rising purchasing scrutiny at large renewals.
Pricing power is therefore documented as a mechanism whose yield is not disclosed.
Transparency of growth
Growth in the three years shown is entirely organic: no acquisition line in the cash flow statement and goodwill unchanged at $439.9 million.
The effect of currency on growth is not disclosed, although about 83% of revenue and 80% of expenses are denominated in US dollars.
Subscription revenue grew 17.5% and deferred revenue 16.9%, so billings and revenue moved together; 96.2% of the opening deferred balance was recognised during the year.
The Ostro acquisition of March 10, 2026, about $100 million, falls after year end and will be the first change in scope.
Scalability
Revenue grew 16.3% while every cost line grew more slowly: cost of subscription 12.3%, research and development 10.7%, sales and marketing 8.1%. Headcount grew 8.7%.
General and administrative costs rose 13.2%, but most of the increase was $26 million more in litigation settlement charges.
Subscription gross margin rose from 84.7% in FY2024 to 86.5%, and the operating margin from 18.2% to 28.7% in two years.
Operating leverage, not capital, is the source of profit growth, and the 10-K expects operating costs to keep growing primarily with employee compensation.
Catalysts identified in the filing
- The R&D and Quality mix
Now 53% of subscription revenue and growing 20.9%, with management expecting its share to keep rising. It is the area where the 10-K names no single competitor across the whole suite.
- Litigation charges that will not recur
Litigation charges of $30.6 million in FY2026, mostly the IQVIA settlement of August 13, 2025 and about $31 million of success fees. The 10-K expects general and administrative costs to fall in FY2027.
- Cash tax savings still to come
A deferred tax asset of $246.0 million for capitalised research and development unwinds under the One Big Beautiful Bill Act. The 10-K expects higher operating cash but gives no figure.
- Buyback capacity
$1.82 billion of the $2 billion authorised in January 2026 remains, over a two-year programme. It is the first repurchase in the three years shown.
- The end of platform fees, and Veeva AI
Once CRM customers are on Vault CRM the fees paid to Salesforce stop, though the amount is not disclosed. Veeva AI adds agents across the applications and Ostro extends that to patient and doctor engagement, while the 10-K lists large language model costs among expected new expenses.
Financial analysis
Click any line to chart it.
| Income statement · $ thousands | FY2024 | FY2025 | FY2026 | Where in the filing |
|---|---|---|---|---|
| Subscription revenue | 1,901,593 | 2,284,659 | 2,684,194 | IS, Subscription |
| Professional services and other revenue | 462,080 | 461,960 | 511,117 | IS, Professional services and other |
| Total revenues | 2,363,673 | 2,746,619 | 3,195,311 | IS, Total revenues |
| % change year on year | – | 16.2% | 16.3% | computed |
| Cost of subscription | 290,577 | 323,070 | 362,888 | IS |
| Cost of professional services and other | 386,714 | 376,566 | 419,131 | IS |
| Total cost of revenues | 677,291 | 699,636 | 782,019 | IS |
| Gross profit | 1,686,382 | 2,046,983 | 2,413,292 | IS |
| % gross margin | 71.3% | 74.5% | 75.5% | computed |
| Research and development | 629,031 | 693,078 | 767,386 | IS |
| Sales and marketing | 381,472 | 396,726 | 428,798 | IS |
| General and administrative | 246,545 | 265,744 | 300,739 | IS |
| Total operating expenses | 1,257,048 | 1,355,548 | 1,496,923 | IS |
| Operating income | 429,334 | 691,435 | 916,369 | IS |
| % operating margin | 18.2% | 25.2% | 28.7% | computed |
| Other income, net | 158,689 | 227,946 | 278,139 | IS; detail in N11 |
| of which interest income, net | 133,748 | 207,987 | 267,219 | N11 |
| of which accretion on investments | 24,817 | 22,622 | 8,451 | N11 |
| of which foreign currency gain (loss) | 124 | (3,274) | 1,535 | N11 |
| of which miscellaneous income | – | 611 | 934 | N11 |
| Interest expense on borrowings | not applicable | not applicable | not applicable | No borrowings in BS or notes |
| Income before income taxes | 588,023 | 919,381 | 1,194,508 | IS |
| Income tax provision | 62,318 | 205,243 | 285,602 | IS |
| Net income | 525,705 | 714,138 | 908,906 | IS (no minority interests: N1, wholly-owned subsidiaries) |
| % net margin | 22.2% | 26.0% | 28.4% | computed |
| EPS basic ($) | 3 | 4 | 6 | IS |
| EPS diluted ($) | 3 | 4 | 5 | IS |
| Weighted average shares, basic (thousands) | 160,532 | 161,879 | 163,667 | IS; N12 |
| Weighted average shares, diluted (thousands) | 163,486 | 165,232 | 166,995 | IS; N12 |
| Stock-based compensation (in costs above) | 393,733 | 437,350 | 472,703 | IS footnote (1); CF |
| — in cost of subscription | 6,483 | 6,591 | 7,342 | IS footnote (1) |
| — in cost of professional services | 53,237 | 51,377 | 57,376 | IS footnote (1) |
| — in R&D | 172,876 | 185,901 | 204,893 | IS footnote (1) |
| — in sales and marketing | 90,865 | 90,178 | 97,355 | IS footnote (1) |
| — in G&A | 70,272 | 103,303 | 105,737 | IS footnote (1) |
| Amortization of purchased intangibles | ~19,000 ("$19 million") | 18,558 | 14,146 | MD&A non-GAAP table; N5 |
| Litigation settlement-related charges | not available | 5,000 | 30,627 | MD&A non-GAAP table |
| Balance sheet · $ thousands | FY2025 | FY2026 | Where in the filing |
|---|---|---|---|
| Cash and cash equivalents | 1,118,785 | 1,421,233 | BS |
| Short-term investments | 4,031,442 | 5,139,581 | BS; N2 |
| Cash and short-term investments | 5,150,227 | 6,560,814 | BS, sum |
| of which held outside the United States (cash and equivalents) | not available | ~86,000 ("$86 million") | MD&A, Liquidity |
| Restricted cash (in other long-term assets) | 2,178 | 2,179 | CF, reconciliation |
| Accounts receivable, net | 1,016,356 | 1,259,737 | BS |
| Allowance for credit losses | 57 | 256 | BS, AR caption |
| Unbilled accounts receivable | 40,761 | 50,609 | BS; N8 |
| Prepaid expenses and other current assets | 101,458 | 126,470 | BS |
| Total current assets | 6,308,802 | 7,997,630 | BS |
| Property and equipment, net | 55,912 | 70,261 | BS; N4 |
| Deferred costs, net (sales commissions) | 26,383 | 29,961 | BS; N3 |
| Lease right-of-use assets | 63,863 | 75,626 | BS |
| Goodwill | 439,877 | 439,877 | BS; N5 |
| Intangible assets, net | 44,460 | 30,314 | BS; N5 |
| Deferred income taxes (asset) | 343,919 | 273,417 | BS |
| Other long-term assets | 56,540 | 62,257 | BS |
| Total assets | 7,339,756 | 8,979,343 | BS |
| Accounts payable | 30,447 | 37,644 | BS |
| Accrued compensation and benefits | 39,429 | 45,857 | BS |
| Accrued expenses and other current liabilities | 35,557 | 45,885 | BS |
| Income tax payable | 9,024 | 6,698 | BS |
| Deferred revenue | 1,273,978 | 1,488,819 | BS; N8 |
| Lease liabilities, current | 9,969 | 12,153 | BS |
| Total current liabilities | 1,398,404 | 1,637,056 | BS |
| Deferred income taxes (liability) | 587 | 558 | BS |
| Long-term lease liabilities | 65,806 | 83,706 | BS |
| Other long-term liabilities | 42,586 | 43,271 | BS |
| Total liabilities | 1,507,383 | 1,764,591 | BS |
| Common stock (par) | 2 | 2 | BS |
| Additional paid-in capital | 2,386,192 | 2,843,089 | BS |
| Accumulated other comprehensive income (loss) | (8,416) | 8,160 | BS |
| Retained earnings | 3,454,595 | 4,363,501 | BS |
| Total stockholders' equity | 5,832,373 | 7,214,752 | BS |
| Minority interests | not applicable | not applicable | N1 (wholly-owned subsidiaries) |
| Shares issued and outstanding (number) | 162,583,789 | 163,778,271 | BS; N10 |
| Stockholders' equity, Jan 31, 2024 | – | 4,644,824 | SE |
| Cash and cash equivalents, Jan 31, 2024 | – | 703,487 | CF |
| Cash flow statement · $ thousands | FY2024 | FY2025 | FY2026 | Where in the filing |
|---|---|---|---|---|
| Net income | 525,705 | 714,138 | 908,906 | CF |
| Depreciation and amortization | 32,628 | 39,383 | 37,972 | CF |
| Reduction of lease right-of-use assets | 11,691 | 11,547 | 12,499 | CF |
| Accretion of discount on short-term investments | (26,515) | (24,443) | (9,693) | CF |
| Stock-based compensation | 393,733 | 437,350 | 472,703 | CF |
| Amortization of deferred costs | 18,177 | 15,528 | 16,423 | CF |
| Deferred income taxes | (105,374) | (112,273) | 65,094 | CF |
| Other, net | 471 | 1,201 | 3,259 | CF |
| Accounts receivable | (149,810) | (164,572) | (244,704) | CF |
| Unbilled accounts receivable | 45,809 | (4,396) | (9,848) | CF |
| Deferred costs | (10,268) | (17,995) | (20,001) | CF |
| Prepaid expenses and other current and long-term assets | 414 | (17,453) | (33,825) | CF |
| Accounts payable | (10,230) | (1,961) | 6,080 | CF |
| Accrued expenses and other current liabilities | (4,249) | (1,414) | 2,982 | CF |
| Income tax payable | 6,916 | (2,838) | (2,326) | CF |
| Deferred revenue | 188,164 | 227,838 | 213,056 | CF |
| Lease liabilities | (6,879) | (9,835) | (5,822) | CF |
| Other long-term liabilities | 956 | 246 | 2,470 | CF |
| Net cash provided by operating activities | 911,339 | 1,090,051 | 1,415,225 | CF |
| Purchases of short-term investments | (2,697,968) | (2,581,968) | (3,133,080) | CF |
| Maturities and sales of short-term investments | 1,647,813 | 1,902,349 | 2,057,849 | CF |
| Long-term assets (capital expenditure) | (26,196) | (20,519) | (29,131) | CF; labelled "Long-term assets" |
| Acquisitions, net of cash acquired | 0 | 0 | 0 | CF (no line) |
| Net cash used in investing activities | (1,076,351) | (700,138) | (1,104,362) | CF |
| Proceeds from exercise of stock options | 62,687 | 105,538 | 253,863 | CF |
| Repurchases of common stock | 0 | 0 | (169,949) | CF |
| Taxes paid on net share settlement of equity awards | (78,875) | (79,423) | (93,247) | CF |
| Debt issued / repaid | 0 / 0 | 0 / 0 | 0 / 0 | CF (no line) |
| Dividends paid | 0 | 0 | 0 | CF; Item 5 ("never declared or paid") |
| Net cash (used in) provided by financing | (16,188) | 26,115 | (9,333) | CF |
| Effect of exchange rates | (1,780) | (1,735) | 919 | CF |
| Net change in cash, equivalents, restricted cash | (182,980) | 414,293 | 302,449 | CF |
| Cash paid for income taxes, net of refunds | 134,473 | 322,048 | 229,965 | CF supplemental |
| Excess tax benefits from employee stock plans | 71,049 | 8,932 | 25,273 | CF supplemental |
| Per share · $ per diluted share | FY2024 | FY2025 | FY2026 | Where in the filing |
|---|---|---|---|---|
| Revenue | 14.46 | 16.62 | 19.13 | computed |
| Net income | 3.22 | 4.32 | 5.44 | computed |
| Shareholders' equity | – | 35.30 | 43.20 | computed |
Computed on the weighted average diluted share count the filing reports (166,995 in FY2026, 165,232 in FY2025, 163,486 in FY2024, in thousands), checked against the diluted earnings per share printed in the filing.
| Ratios · percent | FY2024 | FY2025 | FY2026 | Where in the filing |
|---|---|---|---|---|
| Returns and margins | ||||
| Revenue growth | – | 16.2% | 16.3% | computed |
| Gross margin | 71.3% | 74.5% | 75.5% | from the statements |
| Operating margin | 18.2% | 25.2% | 28.7% | from the statements |
| Net margin | 22.2% | 26.0% | 28.4% | from the statements |
| ROIC (year-end net operating assets) | – | 70.9% | 93.0% | our construction |
| Effective tax rate | 10.6% | 22.3% | 23.9% | from the statements |
| Cash | ||||
| Operating cash flow / revenue | 38.5% | 39.7% | 44.3% | computed |
| Capital expenditure / revenue | 1.1% | 0.8% | 0.9% | computed |
| Free cash flow / revenue | 37.4% | 39.0% | 43.4% | computed |
| Stock-based compensation / revenue | 16.7% | 15.9% | 14.8% | computed |
| Dividends and buybacks / free cash flow | 0.0% | 0.0% | 12.3% | computed |
| Balance sheet | ||||
| Total debt / equity | – | 1.3% | 1.3% | computed |
| Net cash / equity | – | 87.0% | 89.6% | computed |
Every ratio is computed from the figures in the statements on the left; none is a target or a benchmark.
The three statements as the filing presents them, with the note or schedule each line comes from. Percentage rows are computed from the lines above them; nothing is restated. Negative figures are the ones the filing itself signs as negative.
Key risks
The main weaknesses and risks identified in the latest annual report, in the order the report presents them.
- The Commercial platform is migrating, and its size cannot be measured
Commercial subscription revenue of $1,257.6 million faces a forced migration to Vault CRM after the Salesforce reseller agreement expired on September 1, 2025, with a named competitor announcing wins among large Veeva CRM accounts. The 10-K does not report CRM revenue separately, does not count migrated or lost customers, and does not quantify the fees paid to Salesforce inside cost of subscription.
- Stock compensation is the whole gap between the two cash flow figures
Stock-based compensation of $472.7 million is 14.8% of revenue and turns free cash flow of $8.30 per diluted share into $5.47. Diluted shares still grew 1.1% after the first buyback, and about $482 million of unrecognised compensation means the cost continues.
- Almost half the increase in free cash flow came from outside operations
Of the $316.6 million increase in free cash flow, 47.8% came from lower cash taxes and higher interest income rather than from the business. Interest income alone was $267.2 million, and other income is 23.3% of pre-tax profit.
- Receivables grew half again as fast as revenue
Gross receivables rose 24.0% against revenue at 16.3% and deferred revenue at 16.9%, absorbing $244.7 million of operating cash. The 10-K does not explain the gap.
- Retained profit compounds at the portfolio rate
Veeva earns about 93% on operating capital but redeploys roughly a tenth of NOPAT into operations: 82.1% of three years' operating cash, $2,805.0 million, went into securities yielding about 4.6% before tax. The high return is a rent on a business that needs no capital, not a rate at which retained earnings compound.
Open questions the filing does not answer
- How much of Commercial subscription revenue is Veeva CRM, and how much has already migrated or been lost? The 10-K reports the two product areas but not the products inside them.
- How large are the Salesforce fees sitting inside cost of subscription? Without them the margin effect of the migration cannot be estimated.
- What explains gross receivables growing 24.0% against deferred revenue at 16.9%?
- How much internal-use software is capitalised each year? It is amortised over three years but the amount is not disclosed, sitting inside other long-term assets of $62.3 million.
- How much of the tax cash benefit remains under the new law, against the $246.0 million deferred tax asset for capitalised R&D?
- How many shares do the CEO and the directors own? Related-party and ownership disclosures are incorporated by reference to the proxy statement, which was not attached.
- What revenue and profit does Ostro bring for its roughly $100 million, announced on March 10, 2026 with purchase accounting still in progress?
Separating the cash does not make the shares cheaper. At $207.36 the market capitalisation is $33,868.3 million, 37.3 times net income, while enterprise value of $27,403.3 million is 39.3 times NOPAT: the portfolio yields about 3.2% after tax against an earnings yield of 2.7%, so the cash pulls the headline multiple down rather than up. On free cash flow the price is 24.4 times before stock compensation and 37.1 times after it, and on every basis that treats stock compensation as a cost and separates the cash, the price is about 38 to 39 times what the operating business earned in FY2026.
The reading holds while Commercial subscription growth stays above Commercial customer growth and deferred revenue keeps pace with subscription revenue; it fails if those lines slow together, which is how non-renewals would show under one-year terms. It also depends on what the company now does with its cash: it redeploys about a tenth of NOPAT into operations, so retained profit has been compounding at the portfolio rate rather than at the operating rate. The $2 billion buyback authorised in January 2026 and the Ostro acquisition in March are the first moves away from that pattern, and the first repurchase was priced 8.2% above the year-end close.
Strengths
- A subscription margin that keeps rising
Subscription gross margin of 86.5%, up from 84.7% in FY2024, on subscriptions that are 84.0% of revenue. Revenue grew 16.3% against a cost base growing 10.9%, taking the operating margin from 18.2% to 28.7% in two years. The services margin held between 16.3% and 18.5%.
- Growth that consumed no capital
Return on year-end net operating assets of about 93%, against 70.9% a year earlier, while invested capital fell $8.1 million and NOPAT rose $160.2 million. Capital expenditure was 0.9% of revenue, and customer prepayments fund the entire working capital: deferred revenue of $1,488.8 million equals 170 days of revenue.
- No borrowing and $6.47 billion of net cash
There are no bonds, loans or credit facilities; the only debt-like item is $95.9 million of lease liabilities, about five weeks of operating profit. Cash and short-term investments of $6,560.8 million are 73.1% of total assets, and 91% of equity is cash and securities.
- Organic growth concentrated where competition is weakest
R&D and Quality subscription revenue grew 20.9% and is now 53% of subscription revenue; it is the area where the 10-K names no single competitor across the suite. The top ten customers held at 28% of revenue for three years, and revenue per customer rose from $1.86 million to $2.06 million.
- Entirely self-financed
Three years of equity flows — option proceeds less buybacks and net-settlement taxes — net to $0.6 million, no debt was raised, and cumulative free cash flow was $3,340.8 million.
Last year’s watch-list, checked against this filing
| What we flagged | What happened | Result |
|---|---|---|
| Prior-year targets and guidance | The 10-K contains no targets set in the prior year; the MD&A refers to last year's filing for FY2025 against FY2024, and guidance is published elsewhere. | NOT VERIFIABLE - no targets in the document |
| Market condition on the CEO's option award | The filing states it has been achieved. | DONE - stated in the filing |
| General and administrative costs expected to fall in FY2027 | Stated in this filing, on litigation charges of $30.6 million that are not expected to recur. G&A rose 13.2% in FY2026. | TO BE CHECKED NEXT YEAR |
| Cost of subscription and research and development expected to rise | Stated in this filing, primarily on employee compensation and the cost of large language models. | TO BE CHECKED NEXT YEAR |
| $2 billion share repurchase authorised in January 2026, $1.82 billion remaining | The first repurchases, $169.9 million of cash in FY2026, were priced 8.2% above the year-end close; diluted shares still grew 1.1%. | IN PROGRESS - two-year programme |
What to watch in the next filing
- Commercial subscription revenue, $1,257.6 million across 767 customers. The first full year after the Salesforce agreement expired will show whether the aggregate keeps outgrowing the customer count.
- Deferred revenue, $1,488.8 million. Under one-year terms it is the earliest place non-renewals appear.
- The diluted share count, 166,995 thousand, read against the use of the $1.82 billion remaining authorisation. It shows whether buybacks reduce the count or merely offset grants.
- Cash taxes against the provision, $230.0 million against $285.6 million. It shows how much of the growth in operating cash is tax timing under the new law.
- Goodwill, unchanged at $439.9 million with no acquisition in three years. It will measure what Ostro and any later deal cost, against the revenue they add.
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