{"id":121379,"date":"2025-03-09T04:20:04","date_gmt":"2025-03-09T04:20:04","guid":{"rendered":"https:\/\/peraltafinancing.com\/business\/investing\/veeva-approaching-fair-valuation\/"},"modified":"2025-03-09T04:20:04","modified_gmt":"2025-03-09T04:20:04","slug":"veeva-approaching-fair-valuation","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=121379","title":{"rendered":"Veeva Approaching Fair Valuation"},"content":{"rendered":"


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\"Veeva<\/p>\n

I last reviewed Veeva Systems (VEEV) in this December 6, 2024 post<\/a> at which time the most current financial information was for Q3 and YTD2025. Unfortunately, Veeva is approaching fair valuation with the share price surge following the release of Q4 and FY2025 results after the March 5, 2025 market close.<\/p>\n

Let’s have a look at its valuation.<\/p>\n

Business Overview<\/strong><\/span><\/span><\/h2>\n

VEEV is the leading provider of industry cloud solutions for the global life sciences industry. Its offerings span cloud software, data, and business consulting and are designed to meet customers’ unique needs and their most strategic business functions ranging from R&D through commercialization. These solutions help life sciences companies develop and bring products to market faster and more efficiently, market and sell more effectively, and maintain compliance with government regulations.<\/p>\n

The best way to learn about the company is to review the company’s website and Part 1 in the most recent Form 10-K found in the SEC Filings section<\/a> of the company’s website.<\/p>\n

Financial Review<\/strong><\/span><\/span><\/h2>\n

Q4 and FY2025<\/strong><\/span><\/span><\/h3>\n

Material related to the Q4 and FY2025 earnings release is accessible here<\/a>.<\/p>\n

VEEV reports the following annual OCF over the past few years.<\/p>\n

\"VEEV<\/p>\n

Operating Cash Flow (OCF), Free Cash Flow (FCF), and CAPEX
<\/strong><\/span><\/span><\/span><\/h2>\n

VEEV deducts CAPEX from OCF to calculate its FCF. In recent posts, however, I explain my rationale for also deducting share-based compensation (SBC) from a company’s OCF.<\/p>\n

The following reflects VEEV’s FCF using the conventional and modified methods.<\/p>\n

\"VEEV<\/p>\n

VEEV issues a considerable amount of SBC. When we deduct SBC, the FCF\/share is much less robust than when it is excluded!<\/p>\n

Q1 and FY2026 Outlook<\/strong><\/span><\/h2>\n

The following reflect VEEV’s Q1 and FY2026 outlook.<\/p>\n

\"VEEV<\/p>\n

\"VEEV<\/p>\n

Risk Assessment
<\/strong><\/span><\/span><\/h2>\n

VEEV has no debt to rate.<\/p>\n

At FYE2025, VEEV had ~$1.119B in cash and cash equivalents and ~$4.031B in short-term investments for a total of ~$5.15B versus $0.703B and $3.324B at FYE2024.<\/p>\n

Its total liabilities at FYE2025 were ~$1.507B of which ~$1.274B was deferred revenue leaving ~$0.233B in all other liabilities; deferred revenue represents funds received from clients in advance of services being provided. Total liabilities at FYE2024 were ~$1.266B of which ~$1.050B was deferred revenue leaving ~$0.216B in all other liabilities<\/p>\n

VEEV satisfies my risk-averse investor profile.<\/p>\n

Dividends and Share Repurchases<\/strong><\/span><\/span><\/span><\/span><\/h2>\n

Dividends and Dividend Yield<\/strong><\/span><\/span><\/h3>\n

VEEV does not distribute a dividend.<\/p>\n

Share Repurchases<\/strong><\/span><\/span><\/h3>\n

The weighted average number of diluted shares outstanding (in millions rounded) in FY2021 – 2024 is 160.7, 162.2, 162.4, 163.5, and 165.2.<\/span><\/p>\n

VEEV typically does not repurchase shares to offset the shares it issues annually as part of its employee compensation structure.<\/p>\n

Valuation<\/strong><\/span><\/h2>\n

For the sake of brevity, my prior valuation calculations can be accessed by clicking on this link<\/a>.<\/p>\n

Broker earnings estimates are currently under revision. At the moment, however, the following are VEEV’s forward adjusted diluted PE levels using the current broker estimates and a ~$242 share price.<\/p>\n