Veeva Ended Fiscal 2023 With Strong Results

Wide-moat Veeva VEEV ended fiscal 2023 with strong results. Total sales were up 16% year over year as subscription services and professional services posted strong results, up 16.3% and 14.9%, respectively. After adjusting for full-year results, we raise our fair value estimate to $275 from $265, roughly a 4% increase, due to time value of money and a slightly raised long-term outlook.

In the quarter, commercial solutions was up 7.1%. Continuing its strong proven record of customer wins, Veeva added 44 new customers in its core CRM and ended the year with the number of seats unchanged despite the difficult macro conditions as the number of pharmaceutical field sales representatives saw a decline of roughly high single digits. We believe this shows Veeva’s resilience in the space and its importance to its customers. Key products in commercial that saw major wins during the quarter include Crossix and Link, which ended the year with two and five out of the top 20 pharma companies, respectively. While these two applications do not make up a large portion of commercial solutions yet, they have shown strong quarter-over-quarter growth, growing faster than the core CRM product.

R&D solutions continues to bolster the top line thanks to the firm’s continued investment into the area and new customer wins. In the quarter, its sales were up 27.1%. In R&D, Veeva has products that each tackle one of the four different functionalities of a life sciences company—regulatory, clinical trials, safety, and quality—and each area added more new customers during the quarter. Due to the larger number of applications in the suite and more new product launches, we expect R&D to continue growing faster than commercial and to make up a greater portion of Veeva’s total sales going forward.

For 2024, we expect some headwinds from changes that were announced in the third quarter, mainly costs regarding client terminations for convenience and multiyear ramping, but we expect those to be temporary.