Veeva Systems Inc [0LO3.L]
-0.65%
$
268.56 Exchange: LSE Sector: Healthcare Industry: Medical Equipment Services
Q2 2026 ReportPublished: Aug 29, 2025
Earnings Highlights
Revenue of $789.08M up 16.7% year-over-year
EPS of $1.19 increased by 16% from previous year
Gross margin of 75.3%
Net income of 200.31M
"We continue to see durable demand for Vault and our data-driven platforms, with expanding multi-product deals and higher average contract values across top-tier life sciences customers." - CEO
Veeva Systems Inc (0LO3.L) QQ2 2026 Results Analysis: Robust Revenue Growth, High Margin Profile, and Strategic Upside in Life Sciences Cloud
Executive Summary
Veeva Systems delivered a robust QQ2 2026 quarter, underscoring the resilience of its software-as-a-service (SaaS) platform for the life sciences sector. Revenue reached $789.1 million, up 16.7% year over year, with a gross margin of approximately 75.3% and an operating margin near 28.7%, contributing to a net income margin of around 25.4%. The substantial cash generation drove a strong balance sheet, ending the period with roughly $1.93 billion in cash and cash equivalents and total cash-related investments of about $6.40 billion, translating to a net cash position (net debt negative) of roughly $1.84 billion. Deferred revenue sits at a meaningful $1.11 billion, signaling durable future revenue recognition and high visibility in the business model.
Management emphasized continued strength in Vault and Commercial Cloud adoption, multi-product per-customer expansion, and the importance of data-driven solutions (data cloud, open data, and Analytics) in accelerating customer value. While no formal long-term guidance is disclosed in this summary, the commentary points to sustained demand drivers, healthy renewal rates, and cross-sell opportunities within existing life sciences customers, supported by a high net retention framework typical of leading enterprise SaaS peers. The company’s cash generation and minimal net debt position bolster financial flexibility to fund R&D and go-to-market investments as the platform expands into adjacent data-centric offerings.
Net Income: $200.309 million; Net Margin 25.39%; Earnings per Share (basic): $1.23; Diluted EPS: $1.19; Weighted avg shares outstanding (GAAP): 163.13 million (diluted 167.27 million).
Financial Highlights
Revenue and profitability metrics (USD):
- Revenue: $789.081 million; YoY growth 16.7%; QoQ growth 3.96%.
- Gross Profit: $593.828 million; Gross Margin 75.26% (vs. prior similar period).
- Operating Income: $226.535 million; Operating Margin 28.71%.
- EBITDA: $255.542 million; EBITDA Margin 32.38%.
- Net Income: $200.309 million; Net Margin 25.39%; Earnings per Share (basic): $1.23; Diluted EPS: $1.19; Weighted avg shares outstanding (GAAP): 163.13 million (diluted 167.27 million).
- Cash Flow: Operating cash flow $238.433 million; Free cash flow $238.433 million (no capex noted in period); Net change in cash: -$34.551 million; Cash balance at period end: $1.930 billion.
- Balance Sheet Highlights: Total assets $7.999 billion; Total liabilities $1.3609 billion; Total stockholders’ equity $6.6385 billion. Cash and short-term investments total $6.4037 billion; Net debt is negative by approximately $1.8449 billion (net cash).
- Deferred revenue: $1.1077 billion, signaling strong future revenue recognition and high visibility in subscription-based product offerings.
Notes on YoY/QoQ context: The quarter shows sustained top-line expansion with improving profitability metrics, supported by a scalable SaaS model and a robust mix of Vault and CRM/Life Sciences data services. The large deferred revenue base reflects long-term customer commitments and favorable revenue recognition dynamics.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
789.08M
16.70%
3.96%
Gross Profit
593.83M
17.40%
1.47%
Operating Income
226.54M
36.07%
-3.08%
Net Income
200.31M
17.11%
-12.22%
EPS
1.23
16.04%
-12.14%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key management themes from the QQ2 2026 earnings call (themes grouped by topic):
- Strategy and product focus: Management reinforced the critical role of Vault as a data-backed, compliance-focused platform for life sciences workflows, alongside ongoing momentum in Veeva Commercial Cloud. The company stressed cross-sell opportunities and the increasing value customers derive from data-centric solutions (data cloud, analytics, patient data ecosystems).
- Operations and execution: The company highlighted disciplined go-to-market execution, high renewal rates, and expanding enterprise contracts. Management noted strong customer retention signals and the ability to increase deal sizes through modular scaling of Vault and associated data services.
- Market conditions and growth drivers: Management pointed to continued demand for cloud-based, compliant, scalable software in life sciences across geographies, with a favorable backdrop for digital transformation in clinical, regulatory, and commercial functions.
- Financial discipline: Emphasis on strong gross margins and robust cash generation; capital allocation favored R&D investment and potential strategic opportunities while maintaining a significant net cash position that underpins resilience in volatile cycles.
We continue to see durable demand for Vault and our data-driven platforms, with expanding multi-product deals and higher average contract values across top-tier life sciences customers.
— CEO
Our recurring revenue model and strong renewal rates provide excellent visibility, underpinning continued investment in R&D and go-to-market initiatives while maintaining a healthy cash position.
— CEO
Forward Guidance
Guidance commentary for the near term is not accompanied by explicit full-year projections in this summary. However, the QQ2 2026 results illustrate durable growth drivers: high gross margins, high operating margin, and significant deferred revenue indicating strong visibility. The key factors likely to influence the next quarters include (1) continued expansion of Vault and data-centric services within existing life sciences customers, (2) cross-sell acceleration between Vault, CRM, and data analytics offerings, (3) customer renewal velocity and net retention that underpin recurring revenue quality, and (4) ongoing investment in R&D to sustain product leadership in cloud-based life sciences software. Investors should monitor quarterly revenue growth pace, renewal rates, the rate of new logo formation in large strategic accounts, and any changes in the mix between Vault-based offerings and CRM platforms. Based on current momentum and a strong balance sheet, the company appears positioned to fund further product development and go-to-market expansion while preserving a solid net cash position.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
0LO3.L Focus
75.26%
N/A
N/A
N/A
0J50.L
79.90%
57.60%
7.22%
15.02%
0IDR.L
61.90%
36.70%
5.80%
10.67%
0LW9.L
15.10%
4.52%
0.15%
204.57%
0J66.L
31.00%
19.90%
3.51%
13.01%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Veeva rests on a durable, high-margin, recurring-revenue SaaS model with substantial cash generation and minimal near-term debt. The QQ2 2026 results reinforce a favorable long-term trajectory driven by Vault and data-centric offerings, supported by strong renewal rates and meaningful cross-sell opportunities. While management did not publish explicit long-term guidance in this recap, the combination of a large deferred revenue base, robust operating metrics, and a fortress balance sheet bodes well for sustained profitability and shareholder value creation. Investors should monitor ARR growth, renewal velocity, product mix shifts toward Vault/data services, and any shifts in customer concentration. Given the scale of existing deployments and the potential for expanding data capabilities, the investment thesis remains constructive, with upside potential from deeper platform adoption and geographic expansion. Valuation should be weighed against the company’s premium SaaS multiple, growth trajectory, and visibility provided by deferred revenue.
Key Investment Factors
Growth Potential
High-quality SaaS growth with multi-product cross-sell in life sciences. Vault and data cloud offerings are expanding within large, multi-product contracts, supported by a large deferred revenue base that indicates durable ARR and visibility. Net income growth of ~17.1% YoY and EPS growth of ~16% YoY suggest a sustainable path to operating leverage as the business scales.
Profitability Risk
Concentration risk in the life sciences sector; reliance on large, enterprise customers and long sales cycles. Competitive pressure from broader cloud vendors expanding industry-specific footprints. Macro uncertainties in healthcare IT budgets could impact new logo wins. Deferred revenue concentration could compress near-term revenue recognition if contract structures shift.
Financial Position
Very strong balance sheet with substantial liquidity: cash and short-term investments of $6.40B and net cash around $1.84B. No material debt maturities in the near term, which provides financial flexibility for R&D and strategic investments. High deferred revenue improves revenue visibility, though it also requires careful management of onboarding and customer success to sustain ARR growth.
SWOT Analysis
Strengths
Exceptional gross margin (~75%) and strong operating margin (~28.7%), indicating high operating leverage in a scalable SaaS model.
Large, durable deferred revenue base (~$1.11B) providing revenue visibility and cash collection resilience.
Robust balance sheet with substantial liquidity and a net cash position, enhancing strategic flexibility.
Market leadership in life sciences cloud software (Vault, Veeva CRM, data solutions) and a proven track record of multi-product adoption within customers.
Weaknesses
Heavy reliance on the life sciences segment; sector cyclicality could impact growth if healthcare IT budgets tighten.
Significant deferred revenue requires ongoing customer success initiatives to convert backlog into realized revenue over time.
Opportunities
Expansion of Vault and data analytics solutions across more stages of the drug development and commercialization lifecycle.
Cross-sell opportunities among vault, CRM, OpenData, and data cloud offerings to deepen wallet share.
Geographic expansion beyond North America, Europe, and APAC with scalable regulatory-compliant deployments.
Threats
Competitive threats from broader cloud providers expanding industry-specific solutions (e.g., large ERP/CRM ecosystems entering life sciences verticals).
Regulatory changes or privacy/security concerns could affect data-centric platforms and data monetization strategies.
Economic softness could pressure enterprise IT budgets and procurement cycles.