Laying the foundation
Jamie Louko (Veeva Systems): When building a portfolio, it is much like a house: The most vital aspect is a solid foundation. Portfolio foundations should be built on stable companies that could still be thriving decades from now, and Veeva Systems fits this bill.
The company provides cloud-based software and data storage tools mainly to pharmaceutical and biotech companies, and with numerous tools getting adopted by many of the top 20 largest pharmaceutical companies in the world, Veeva leads the pack in terms of dominance. It also has products for businesses of all sizes. If you’re a startup looking for an end-to-end drug trial management tool, Veeva has you covered. But it also has customer relationship management tools and a data cloud for the largest of businesses.
In short, Veeva is there for any pharma company at any point in their lifecycle, and as they grow, their usage of Veeva can expand in line. That’s why the company had over 100 customers using eight or more commercial tools and over 200 customers using five or more research and development products as of fiscal Q2 2023.
Once the software gets built, it takes little cost to allow another customer access, so the widespread use of Veeva has resulted in incredible profitability. Over the trailing 12 months, Veeva posted a free cash flow margin of 37% and a net income margin of 19%.
Veeva could provide a level of safety and stability for the long haul because of its dominance in the pharmaceutical industry. However, it can also deliver growth in the coming years. Veeva sees a total addressable opportunity worth $13 billion ahead. Considering the company made just $2.1 billion in trailing 12-month revenue, Veeva clearly has room to take a larger grasp of the market. That’s why I would invest in Veeva if I were building a portfolio from scratch.
