VEEV · Research
Veeva Owns the Regulated Records Drug Agents Must Write To, but Salesforce Is Fighting It for the Sales Desk
Veeva holds the validated clinical, safety and quality records of drug development and kept $1.14B for owners after stock pay over the last year, but its move off the Salesforce platform has opened its CRM business to Salesforce.
- Owner cash after all capex and stock pay
- $1.14B
- Stock pay as a share of operating cash flow
- 30%
- Top 20 drugmakers committed to Vault CRM
- 12 of 20
1. Our call: Buy the strongest owner of regulated records we have tested
Our call: Buy. Veeva owns the regulated records of drug development.
Clinical trial files, regulatory submissions, safety cases and quality documents for most large drugmakers live in its Vault applications, and those records must meet validation rules that regulators inspect [1]. Any agent that prepares a submission, triages an adverse event or checks a batch record has to write into a validated system, and Veeva is that system for much of the industry.
Owners are well paid. Owner cash, meaning operating cash flow of $1,665M less $27M of capital spending less $495M of stock pay, was $1,144M for the twelve months ended Jul 31, 2026, our calculation, and it has been positive in every fiscal year we track [2][12].
On the clinical side the 10-K says no single company offers products that compete with all of its Development Cloud or Quality Cloud applications, though IQVIA, Dassault Systemes, OpenText, Oracle and others compete with some of them [1]. The CRM risk sits in commercial work, which is 45% of subscription revenue, our calculation, while the larger research and quality side grows faster [2].
We would move to Hold off if commercial subscription growth falls below 10%, or if a top 20 drugmaker goes back to Salesforce for CRM.
2. Strong margins, heavy research spending and a clean bill on stock pay
| Metric | Value |
|---|---|
| R&D share of revenue | 24.0%, research and development expense of $767M on $3,195M of revenue, fiscal 2026 [1][12]. Over the twelve months ended Jul 31, 2026 it was $822M, 23.8% of revenue, our calculation [2][12] |
| GAAP net margin | 28.4%, net income of $909M on $3,195M of revenue, fiscal 2026 [1][12]. Twelve months ended Jul 31, 2026: $1,015M, 29.3%, our calculation [2][12] |
| API quality | 3 of 5, our scoring: Veeva's developer site documents the Vault API, the Vault Java SDK for extending Vault, a Direct Data API and a Vault MCP section for agent connections [13]. The Q2 fiscal 2027 release describes standard agents and tools for customers to build their own [3]. Neither the filings nor the developer site show public pricing for agent use [1][3][13] |
| Toll-gate score | 2 of 4 pass, 2 partial (section 2b) |
2b. Veeva owns the regulated record, but the sales desk is contested
Veeva sells in two product areas. R&D and Quality Solutions, the Development Cloud for clinical, regulatory and safety work and the Quality Cloud for manufacturing documents, training and quality events, brought in $419M of the second quarter's $767M subscription revenue, up 19.3% [2].
Commercial Solutions, CRM, content, data and the Crossix measurement business, brought in $347M, up 13.0% [2]. Professional services and other revenue was $161M, our calculation, up about 24% [2][3].
The bet management describes is agents built into the applications that already hold the records: agents built into every Vault application, and Veeva Falcon, which the company calls an agentic labor platform for clinical, regulatory and safety work, with five early adopters and initial go-lives expected this year [1][3]. Falcon MLR automates medical, legal and regulatory review of promotional content [3].
The logic is that the agent that does regulated work is most valuable inside the system where the audit trail already lives.
| Test | Result | Evidence |
|---|---|---|
| Owns the record | Pass | Trial master files, submissions, safety cases and quality records sit in Vault, and Veeva Safety passed 100 customers in the second quarter [1][3]. These records are validated for regulatory inspection, which makes them slow and costly to move [1]. |
| Owns the connection | Partial | In R&D and quality, agents work inside Vault [1][3]. In commercial work the 10-Q names Salesforce as the primary CRM competitor and IQVIA as a data competitor, and some large customers have told Veeva they are moving their CRM to Salesforce [2]. |
| Prices close to outcomes | Partial | Subscriptions are sold mainly by user and application [1]. Falcon is described as agentic labor, which points toward pricing by work done, but no pricing or revenue for it is disclosed [3]. |
| R&D on the gate vs features | Pass | R&D runs near 24% of revenue, the highest in its peer set in this series, and the stated priorities are the Vault platform, Vault CRM and agents inside regulated workflows [1][2][12]. |
3. Growth is running at 16% to 18%, carried by research and quality
| Measure | Value | Change |
|---|---|---|
| Fiscal 2024 revenue (year ended Jan 31, 2024) | $2,364M | +9.7%, our calculation [12] |
| Fiscal 2025 revenue | $2,747M | +16.2%, our calculation [12] |
| Fiscal 2026 revenue | $3,195M | +16.3%, our calculation [12] |
| Twelve months ended Jul 31, 2026 | $3,458M | Our calculation [2][12] |
| Q1 fiscal 2027 revenue | $883M | +16.3%, our calculation [12] |
| Q2 fiscal 2027 revenue | $928M | +18% [3] |
| Q2 fiscal 2027 subscription revenue | $767M | +16% [3] |
| Q3 fiscal 2027 revenue guide | $932M to $935M | +14.9% to +15.2%, our calculation [3][12] |
| Fiscal 2027 revenue guide | $3,682M to $3,687M | +15.2% to +15.4%, our calculation [3][12] |
Growth recovered from about 10% in fiscal 2024 to 16% in each of the last two years and 18% in the second quarter [3][12]. The guide implies about 15% for the third quarter, so the second quarter's pace is not expected to hold, partly because professional services, which grew about 24%, are lumpier than subscriptions [2][3].
Subscription growth by product area tells the story. Research and quality subscriptions grew 19.3% and are now larger than commercial subscriptions, which grew 13.0% [2].
The 10-Q says remaining performance obligations on contracts longer than a year are not significant, because CRM orders generally run one year and most of the contracted amount sits in deferred revenue, so there is no long backlog to cushion a slowdown
4. Agents are shipping across the platform, with first go-lives due this year
The second quarter brought new standard agents in Vault, broader capabilities for existing agents and tools for customers to build their own [3]. Vault CRM added an agent that writes up sales calls, which one top 20 drugmaker rolled out across its full United States field team in the quarter [3].
Falcon, aimed at clinical, regulatory and safety work, has five early adopters and is expected to reach initial go-lives this year, and Falcon MLR launched to automate promotional content review [3].
Vault CRM had what the company called its best quarter ever: more than 180 customers live, including five top 20 drugmakers, and three new top 20 or large enterprise commitments in August, bringing top 20 commitments to 12 [3]. In research and quality, a large drugmaker chose Veeva's electronic data capture product, Safety passed 100 customers, and Quality added more than 30 customers [3].
The filings give no counts of active agents or agent revenue.
5. Retention is not disclosed, and the CRM switch is the test
Veeva does not disclose a net or gross revenue retention rate in its 10-K or 10-Q [1][2]. It serves more than 1,500 customers, from the largest drugmakers to emerging biotechs, and counts divisions ordering under one master agreement as a single customer, so customer count says little about spending per customer [2][3].
The CRM migration is the closest thing to a retention test. The 10-Q says certain customers have chosen, and others may choose, to buy CRM from a competitor as they leave the legacy product, and that Salesforce has announced commitments from certain large Veeva CRM customers [2].
With 12 of the top 20 committed to Vault CRM, as many as eight of the largest accounts are not yet committed, our calculation
6. Owners kept $1.14B, and stock pay takes less each year
Owner cash has been positive and rising in every period we track [12]. Capital spending is the long-term assets line in the cash flow statement; Veeva shows no separate capitalized software line, so we treat this line as full capex [1][2].
It is unusually small, under 1% of revenue, because the company runs on third-party cloud infrastructure, including Amazon Web Services and Salesforce [1].
Two adjustments matter. First, taxes: cash paid for income taxes fell to $230M in fiscal 2026 from $322M in fiscal 2025, and the 10-Q credits a further reduction to the 2025 federal tax law [1][2].
Yet cash taxes paid in the first half rose to $152M from $127M, so the two statements point different ways (see filing notes) [2]. If fiscal 2026 cash taxes had stayed at the fiscal 2025 level, twelve-month owner cash would be about $1,052M, our calculation, still well above any prior year
7. Two small purchases, both aimed at agents
Veeva has made only small acquisitions in the last 24 months. On Mar 9, 2026 it bought Rise Healthcare Tech, known as Ostro, an engagement platform that answers patient and doctor questions through a compliant chat tool, for $90M, or $70M net of cash acquired [2].
The results release says Veeva also acquired Copli in the second quarter; the 10-Q note does not describe it, but cash paid for acquisitions was $82M in the first half, which leaves about $12M not explained by Ostro, our calculation [2][3].
The pattern is to build rather than buy. With about $7.2B of cash and short-term investments, Veeva could afford a large deal, but it has instead started its first buyback, a $2B program announced Jan 5, 2026 [2][8][12].
8. The CRM fight could break the thesis, and Falcon go-lives could prove it
Risks. CRM losses: Salesforce is the primary CRM competitor and has won commitments from certain large Veeva CRM customers [2].
Migration cost: moving customers to Vault CRM takes time and expense and could disrupt them [2]. Concentration: the largest drugmakers account for a large share of revenue, so a lost top 20 account is material [1].
Industry policy: the 10-K names drug pricing rules, tariffs and research funding changes as risks to customer spending [1]. Agent substitution: if general agents can read and write validated records through other tools, the advantage of agents inside Vault narrows [1].
9. A fortress balance sheet that has only just started buybacks
Owner cash has been positive for three full fiscal years, so our standard allows a base value. The anchor is twelve-month owner cash of $1,144M.
The band across the last three fiscal years runs from $491M to $913M, and the base would be set from the low end, $491M, fiscal 2024, a year when growth slowed to about 10%. That is deliberately harsh [12].
The balance sheet holds about $7.2B of cash and short-term investments and the 10-Q shows no borrowings [2][12]. Buybacks of $643M over the twelve months took about 56% of owner cash, our calculation, so the company still adds to its cash pile each year even after the new program [12].
10. Agents doing regulated work need a validated home, and Veeva is it
Tailwind, with a commercial caveat. The work in drug development that agents can take on, assembling trial files, writing regulatory documents, coding adverse events, reviewing promotional content, is document-heavy and rule-bound, and every step must be recorded in a validated system that inspectors can audit [1].
An agent that does this work outside Vault still has to file its output inside Vault, so Veeva sits at the gate either way [1][3].
The commercial side is different. Sales-team software is less regulated, more seat-based and open to Salesforce and to general agents that plan calls and write follow-ups [2].
If agents reduce the number of field representatives, seat-based CRM revenue shrinks. Falcon is the company's answer: if Veeva can charge for agent labor in regulated work rather than for human seats, it captures the gain instead of losing seats [3].
11. A founder still runs the company, and holders pushed back on two directors
Peter Gassner co-founded Veeva in 2007 and has been Chief Executive Officer and a director since; he earlier ran technology at Salesforce and was chief architect at PeopleSoft [4]. He beneficially owns 9.4% of the stock, including options [4].
Brian Van Wagener has been Chief Financial Officer since September 2024 [4]. E.
Nitsa Zuppas is President and Chief of Staff [4]. There is a single class of common stock, and Veeva is a public benefit corporation that must weigh customers, employees and communities alongside holders [1][4].
Turnover by 8-K is notable. Thomas Schwenger, President and Chief Customer Officer, resigned effective Oct 2, 2026 to become chief executive of a long-standing Veeva partner, and Dan Rizzo took over sales, consulting and services as Executive Vice President [6].
The executive who ran customers is leaving in the middle of the CRM switch, which puts the top 20 conversations in new hands
12. The questions we would ask management, and the calls we are tracking
Question one: of the top 20 drugmakers not yet committed to Vault CRM, how many have chosen Salesforce, and what share of commercial revenue do they represent?
Question two: how will Falcon be priced, per user, per task or per outcome, and when will its revenue be disclosed?
Question three: why did cash taxes rise in the first half when the 10-Q credits the 2025 tax law with lowering them?
Question four: will buybacks rise to match owner cash, or will the cash pile keep growing past $7B?
Question five: what would it take for a top 20 drugmaker that has committed to Vault CRM to go back to Salesforce, and how much notice would Veeva have? That answer sets our conviction.
Prediction one: third quarter fiscal 2027 revenue lands above $935M, the top of the guide (75%).
Prediction two: Veeva announces at least one more top 20 Vault CRM commitment by Jan 31, 2027 (55%).
Prediction three: commercial subscription growth stays at or below 13% in the third quarter (60%).
Prediction four: fiscal 2027 stock pay stays below $540M (65%).
Prediction five: Veeva discloses Falcon revenue or a Falcon customer count as a standing metric by Jan 31, 2027 (20%).
Bottom line: the clearest toll gate we have tested, and owners get paid to hold it
Veeva owns the validated record that every agent doing drug development work must write into, and no single rival competes across its clinical and quality applications. Owners are paid: owner cash was $1,144M over the last twelve months, positive in every fiscal year we track, and stock pay took only 30% of operating cash.
The CRM fight with Salesforce is real but confined to commercial work, about 45% of subscription revenue. We would move to Hold off if commercial subscription growth falls below 10% or a top 20 drugmaker goes back to Salesforce for CRM.
Our call: Buy, conviction 4 of 5.
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