Veeva Systems Inc [VEEV]
-0.33%
$
270.06 Exchange: NYSE Sector: Healthcare Industry: Medical Healthcare Information 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
"“I’m especially excited about the clear vision and rapid progress on Veeva AI.”" - Peter Gassner
Veeva Systems Inc. (VEEV) QQ2 2026 Earnings Analysis: AI-Driven Growth, IQVIA Resolution & Industry Cloud Leadership in Healthcare Information Services
Executive Summary
Veeva Systems delivered a solid QQ2 2026 performance, highlighted by revenue of $789.1 million, a gross margin of 75.25%, and net income of $200.3 million (EPS diluted $1.19). The quarter was characterized by continued momentum in core subscription revenue, strength in R&D-related subscriptions, and meaningful execution in Crossix, Nitro, and Network initiatives within the Commercial cloud. Management underscored a deliberate, platform-first approach to AI and industry-specific agents, signaling a multi-year roadmap that could reshape the size and nature of Veeva’s addressable market. The IQVIA data-resolution agreement removes historical data integration barriers and enables deeper cross-product monetization across Veeva’s Commercial cloud, with expectations of a material contribution longer term, even though near-term revenue from AI-driven agents is not expected to be material in 2026–2027. The balance sheet remains exceptionally strong, with substantial cash and short-term investments, a modest debt load, and ample free cash flow to support growth initiatives and potential M&A or partnerships.
The quarter also reinforced management’s confidence in the 6-9 quarter revenue pathway toward a $6 billion target, anchored by Vault platform penetration, CRM migrations to Vault CRM, expanding data and analytics capabilities, and a large, scalable AI runway that management anticipates will unlock billions in value for the industry—while recognizing that near-term AI monetization will ramp gradually as early adopters come online.
Net income: $200.3 million; net margin 25.39%; EPS diluted $1.19; basic $1.23.
Financial Highlights
- Revenue: $789.1 million, up 16.7% year-over-year; QoQ growth 3.96% (per earnings data).
- Gross margin: 75.25% (gross profit $593.8 million).
- Operating income: $226.5 million; operating margin 28.71%.
- EBITDA: $255.5 million; EBITDA margin 32.38%.
- Net income: $200.3 million; net margin 25.39%; EPS diluted $1.19; basic $1.23.
- Cash flow: net cash provided by operating activities $238.4 million; free cash flow $238.4 million; cash at end of period $1.930B; cash + short-term investments $6.404B; net debt = -$1.845B (net cash).
- Balance sheet: total assets $7.999B; total liabilities $1.361B; total stockholders’ equity $6.639B; deferred revenue ~$1.108B; long-term debt $149.6M; short-term debt $10.7M.
- Key utilization metrics: weighted average shares fully diluted 167.3 million; weighted average shares outstanding 163.1 million.
- Guidance/Market signals: annual billings up $35M in full-year guidance; management emphasized that annual billings are a better indicator than quarterly billings due to lumpiness.
- AI and product roadmap: rapid progress on Veeva AI; platform-first architecture (Vault) with agent-to-agent interoperability (MCP) and transactionally sound agents; quality cloud and horizontal software ambitions discussed; long-term AI monetization viewed as material, with near-term contributions not expected to be material in 2026–2027.
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
- Strategy and AI momentum: Peter Gassner highlighted a “clear vision and rapid progress on Veeva AI,” noting the move to Vault and the removal of previous data and OEM constraints as a catalyst for a broader commercial cloud strategy. “I’m especially excited about the clear vision and rapid progress on Veeva AI.”
- IQVIA settlement and commercial implications: Gassner explained the resolution eliminates long-standing barriers, stating, “There’s no reason for this conflict anymore,” and emphasized how IQVIA data can be integrated into Veeva’s Network, Nitro, and analytics offerings now that the Salesforce-related restrictions are lifted. The resolution enables “commercial cloud sort of like development cloud, really no limits.”
- Billings and guidance: CFO Brian Van Wagener noted that “annual is the better indicator” for billings and framed the company’s approach to guidance, signaling a measured transition with a raise in full-year guidance but acknowledging lumpiness in quarterly billings.
- Customer momentum and Vault CRM: Paul Shawah indicated nine top-20 Vault CRM commitments, with two live go-lives in major markets and Salesforce having three verbal commitments, underscoring a differentiated competitive dynamic and faster time-to-value for Veeva’s Vault CRM versus competitors.
- Crossix and analytics momentum: Crossix remains a meaningful growth driver within Commercial, with ongoing strength in audiences and measurement capabilities; management stressed expanding product footprints and market share as a key growth lever.
- AgenTeq AI and process transformation: Peter discussed potential efficiency benefits across Commercial, Safety/Clinical, and R&D via AgenTeq AI and IdentikAI, forecasting significant long-term productivity gains and a transformation of workflows, albeit with a measured near-term revenue trajectory due to platform onboarding and integration work.
- Migration and migration tooling: The team stressed that Vault CRM migrations are not constrained by IQVIA data relationships and that migration tooling and services capabilities are actively advancing, with substantial backlog and opportunities into 2026–2028.
“I’m especially excited about the clear vision and rapid progress on Veeva AI.”
— Peter Gassner
“Annual is the better indicator [for billings], and we’re really happy with the guide there.”
— Brian Van Wagener
Forward Guidance
- Near-term revenue from AI-enabled agents: Management indicated that there is no material revenue contribution expected from IQVIA-related data enhancements or AI agents in 2026 or 2027. Peter Gassner stated, “Nothing material for this year [IQVIA-related revenue], but it’ll contribute in the coming years.” Investors should expect a multi-year ramp as early adopters begin to implement AI agents and as MCP-enabled inter-operations mature across Vault and external systems.
- AI monetization trajectory: The company envisions “billions of dollars” in industry value from Veeva AI through both platform-enabled agents and industry-specific agents, with monetization occurring over time as customers progressively adopt AI-enabled workflows and as partner ecosystems (IQVIA, SAP, Microsoft, etc.) integrate with Vault.
- Roadmap discipline and go-to-market dynamics: The company intends to pursue a “platform-first” approach, delivering CRM as a use case initially, then expanding to a broader horizontal footprint guided by customer value and field execution. Early deployments (top-20s) demonstrate improved outcomes and better go-to-market motion, but large-scale migrations and horizontal expansion are expected to unfurl through 2026–2027 and beyond.
- Key monitoring factors for investors: AI agent adoption rates, vault ecosystem interoperability (MCP), progress of Vault CRM migrations, IQVIA data-enabled product enhancements, Crossix footprint expansion, and the pace of clinical/quality/ manufacturing use cases. Management cautions that while AI is transformative, the near-term impact will be gradual as customers test and scale pilots.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
VEEV Focus
75.26%
N/A
N/A
N/A
PGNY
22.50%
6.80%
3.61%
40.40%
TDOC
55.70%
-7.66%
-55.80%
-47.30%
GDRX
85.60%
10.30%
1.00%
109.89%
TXG
69.80%
-27.30%
-5.23%
-14.72%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Veeva’s QQ2 2026 results underscore a resilient, high-margin software platform with strong cash generation and an ambitious AI-driven growth trajectory. The company demonstrates operational discipline (significant gross margin, solid OCF/FCF, and a prudent approach to billings interpretation given lumpiness). The IQVIA settlement removes a material data integration constraint and should unlock deeper collaboration across Veeva’s Commercial cloud suite, accelerating cross-sell opportunities as Vault CRM migrations and network integrations mature. Management’s emphasis on a platform-first strategy, built around Vault, MCP, and industry-specific AI agents, positions Veeva to capture a multi-year runway of value creation in life sciences and healthcare information services.
Near-term, investors should expect a measured ramp to AI monetization, with “no material revenue contribution” in 2026–2027, but a substantial longer-term upside as early adopters expand usage and the ecosystem monetizes agent-to-agent interoperability and data-enabled workflows. The company’s balance sheet supports this investment cadence, with ample liquidity and minimal net debt, enabling continued product development, partnerships, and potential strategic acquisitions. Key catalysts include: (1) traction and global scale of Vault CRM migrations; (2) adoption and expansion of Veeva AI agents across Commercial, R&D, and Quality; (3) IQVIA data-enabled product expansion (Network/Nitro/Crossix); (4) upside from horizontal software initiatives as the company matures its go-to-market and delivery capabilities. Investors should monitor AI adoption rates, customer go-lives, and the velocity of CRM migrations, as well as any incremental data-sharing or regulatory developments that could affect the speed and scope of monetization.” } }4QuartersSummary: {
Key Investment Factors
Growth Potential
- AI-driven platform expansion via Veeva AI, AgenTeq AI, and IdentikAI; cross-functional agents across Vault, CRM, regulatory, clinical, quality, and manufacturing workflows.
- Conversion of Vault CRM wins to live deployments with global rollouts; up-weighting of network effects through Nitro, Network, and Crossix expansions.
- Large-scale data integrations with IQVIA to unlock new data analytics, insights, and analytics-based consulting across commercial, clinical, and safety domains.
- Horizontal software ambitions leveraging Vault technology to capture new addressable markets in healthcare information services.
Profitability Risk
- Execution risk in scaling AI agents across multiple lines of business and geographies; potential delay in achieving widespread customer adoption of AI agents beyond pilot programs.
- Competitive dynamics with IQVIA, Salesforce, SAP and others; reliance on ecosystem partnerships and integration capabilities.
- Data privacy and regulatory considerations around AI-generated recommendations and content handling in regulated life sciences environments.
- Short-term lumpiness in billings and dependency on large top-20 CRM deals that may not linearize revenue growth.
Financial Position
- Very strong liquidity and balance sheet health: cash and cash equivalents of $1.93B, short-term investments of $4.47B, total cash and short-term investments of $6.40B, and net debt of -$1.845B.
- Modest long-term debt ($149.57M) with a total liabilities base of $1.360B and stockholders’ equity of $6.639B, supporting sustained investment in AI, platform enhancements, and potential M&A.
- Operating cash flow of $238.4M and free cash flow of $238.4M in the quarter, underscoring durable cash generation to fund growth initiatives.
SWOT Analysis
Strengths
Scale in a focused life sciences cloud; deep Vault platform with integrated content, data, and workflows.
Strong gross margins (75.25%), robust cash flow and balance sheet strength (net cash of ~$1.84B).
Comprehensive data and analytics offerings (Veeva OpenData, Nitro, Network, Crossix) that broaden cross-sell opportunities.
Weaknesses
Near-term AI revenue contribution is limited; ramp to material profitability remains multi-year.
Execution risk in migrating customers to Vault CRM and in expanding horizontal product footprint.
Reliance on partnerships (IQVIA data) subject to regulatory and market dynamics.
Opportunities
Large AI monetization potential via industry-specific agents and platform-enabled workflows across Commercial, Clinical, Quality, Lab and Manufacturing.
IQVIA data integration enables richer analytics and broader product deployment (Network, Nitro, Crossix).
Expansion of Quality Cloud (LIMS, batch release, validation management) as a major growth vector.
Horizontal software ambitions leveraging Vault to capture adjacent markets in healthcare information services.
Threats
Regulatory changes affecting AI in life sciences; privacy and security constraints around data use and AI agents.
Competitive pressure from legacy CRM and data vendors; potential renegotiations of OEM terms or data-sharing arrangements.
Market macro uncertainty and potential slower-than-expected enterprise adoption of AI-led transformations.