Bert likes $$VEEV…

Veeva reported the results of its fiscal Q4 last week.

The results were typical for Veeva, with moderate-size beats in terms of both revenues and EPS.

The results were less typical for Veeva in that bookings for the quarter ran substantially above expectations.

And the guidance Veeva provided was far from typical with a massive increase projected in terms of EPS - some of it because of a lower tax rate accrual - and a noticeable increase in expectations for both revenues and cash flow.

Veeva shares are seen by some as expensive. But in digging a bit deeper, the company’s business model yields relatively high rates of earnings and cash flow, well justifying its EV/S metric.

The company is seeing demand rise because it is addressing new markets in the bio/pharm space through its Vault solutions that are resonating strongly with users.

Commercial Cloud subscription revenues grew by 16% and Vault revenues grew by 57%, while even services revenues grew by 11%, despite a prior forecast of sequential revenue decline because of fewer billable days last quarter in the quarter.

The company’s customer acquisition count of 108 new name accounts in total was substantial,

Quite clearly, the reason for the success that Veeva is enjoying is basically two-fold. It has been able to sell its base of installed CRM customers far more functionality than many analysts had thought might be possible. These add-ons have sustained the growth of Commercial Cloud far longer than might have been anticipated. And it continues to sell existing customers more seats - mainly in geos that have yet to be penetrated by the CRM product that has been the mainstay of the company for many years. What Veeva calls Commercial Cloud is still 58% of revenues and managing to squeeze that base for double-digit growth is crucial for the overall investment thesis regarding the shares.

talks about their current and coming offers and then says…

if there is a single reason why I believe that the company will continue to grow in the low to mid 20% range for some years to come, it will be the acceptance of these set of interrelated solutions, available as part of a single cloud and with a consistent user interface, to achieve a level of penetration not quite contemplated in most estimates or by the company guidance. During the conference call, the company said that it has a large and growing pipeline for this set of solutions

They are displacing current “soloutions” (like OpenText) because they were originally adopted only becuase there was not purpose built tool, now Veeva is that tool so it is easy to capture those customers.

Veeva also has a significant initiative outside of the Life Sciences space that it calls QualityOne

Just 20 customers for this startup service/product, had to judge future. Possible enormous potential.

It is probably large - in the range of billions, perhaps - and over time it seems likely that Veeva will add to the functionality of the suite by releasing products for “adjacencies,” and it probably will move the needle in terms of revenue growth.

Unusually profitable company, heavily based on references and selling within its customer base.

Sales costs declining. Moderate amount of stock compensation.

Up 20% on earnings last week, but not that much higher than in May, and EPS is much better.

Most people think this is pricey valuation, but Bert does not. Better than Salesforce. Plus Veeva is small and could be a takeover target.

Veeva may not look cheap and certainly it has a high EV/S ratio. But it is very profitable and is generating a fair amount of cash these days. It is certainly no more expensive than many other SaaS vendors and its relatively lower stock-based compensation ratio gives it better quality of earnings. Veeva fits well in a high growth portfolio and does so even after its latest share-price spike. I think it can continue to generate positive alpha from this point.

I have been long for awhile.