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Posts Tagged ‘IPO Research’

Veeva Systems: Taking the Cloud to Life Sciences

September 20th, 2015

veevaWith projected calendar 2015 sales of $410 million and a market cap of roughly $3.3 billion, Veeva Systems is a leading provider of cloud software for salesforce automation, content management, and sales contact data to the global life sciences industry. Based on an exclusive software license from salesforce.com (NYSE: CRM), Veeva’s CRM software is now utilized by 17 of the top 20 largest pharmaceutical and biotech companies, including eight of the top 10. Within the top 20, only three have thus far not made the switch to Veeva: Switzerland-based Roche Holding, France-based Sanofi, and France-based Novo Nordisk, which ranks in the top 15.

Veeva has identified an annual market spend of over $5 billion in software for CRM, content management, and sales data, and so it has much running room ahead. Veeva has already captured an estimated 50 percent of the CRM market for pharma and biotech, and could very well capture as much as 60 percent of the market over the next several years, as the company continues to roll out new seats to existing customers, and sell additional CRM add-on modules.

Since Veeva is cloud-based, and features a multi-tenant architecture, the company can update the software of its entire customer base at the same time, reducing the time, aggravation, and cost associated with maintaining and updating several versions of the same software program. Veeva’s cloud-based product set stands in contrast to two of its largest competitors, Oracle (NASDAQ: ORCL), and IMS Health Holdings (NYSE: IMS), which support and maintain several software packages simultaneously, many of which have been developed for older client server computer systems, and are not hosted in the cloud. Support for these older software products detracts from keeping their cloud products up to date, which will likely lead to further market share erosion.

Veeva’s newer products for content management and sales data, respectively, accounted for less than 10 percent of sales a year ago, but now account for about 20 percent of product sales. These products carry slightly higher gross margins than the company’s CRM products, and more than double its addressable market. Veeva has additional room to sell Veeva CRM, Veeva Vault, and Veeva Network to existing and new customers, as well as to sell the new products to other segments in the life sciences market, such as medical devices, laboratory instruments, and CROs—segments with which the company conducts limited business currently.

Veeva benefits from an experienced management team, led by Peter Gassner, a former SVP of Technology at saleforce.com, and at Peoplesoft (later acquired by Oracle), where he was Chief Architect and General Manager for PeopleTools, and at IBM Silicon Valley Lab, where he participated in database research and development. Matt Wallach, co-founder and President, was formally GM of the Pharmaceuticals and Biotechnology division of Siebel Systems (later acquired by Oracle). CFO Tim Cabral has held financial management positions at Peoplesoft and other technology companies. Detailed knowledge of the specific needs of the pharma and biotech segments, gives Veeva a leg up over its competitors, many of whom have only general knowledge of the life sciences sector.

Veeva has a strong balance sheet, which features $438 million in cash and no debt, and continues to generate very solid cash flow, all the while growing the business, while running at a 30 percent operating margin in the most recent quarter.

The Battle Road IPO Review

September 18th, 2012

A Monthly Screen for New Ideas

October 13, 2014

Research on companies which have come public in the last several years is available mostly from the investment banks who were paid by the companies during the IPO process. This leads to a conflict of interest as the investment bank seeks to please the owners of the company, as well as provide an objective assessment of the company’s growth prospects to investors, the other group of clients whom the bank serves through its brokerage arm.

This conflict continues long after the IPO is complete, for once a company becomes public, investment bankers and analysts who played a role in the IPO may advise the company on future stock offerings, mergers and acquisitions, and customized plans for insiders to sell their stock.

As a research-only firm, Battle Road is focused on helping asset managers seek out stocks to buy and stocks to avoid, without the conflict presented by conducting business with the subject of its research. Since our founding in 2001, we have remained true to this principle.

The idea for the Battle Road IPO Review originated with one of our clients, a portfolio manager, who sought our help in seeking out solid companies with sustainable competitive advantages –and reasonable valuations—from among the many companies which have come public in recent years. Using quantitative and qualitative measures we developed a methodology for screening for new buy ideas.

The Battle Road IPO Review has become a monthly service that screens for new ideas from a uniquely designed universe of over 180 growth-oriented IPOs of the last seven years. The universe includes software, internet, computer hardware, cyber security, consumer, and business services companies. The median market cap. in the Battle Road IPO universe is $1.1 billion. The universe is rapidly growing with the addition of newly-minted IPOs on a regular basis.

We rank order the stocks by group each month and call out names for further exploration, based on our assessment of the company’s strengths and weaknesses, as well as other measures which include our interpretation of the company’s current valuation, balance sheet, quality of earnings, and other metrics. We draw upon these metrics, as well as qualitative factors to determine our monthly Exploration List, which is a sub-set of all stocks that we believe should out-perform the overall coverage universe. The Exploration List is therefore a screening tool for new ideas. We strive to develop a list that features both growth and value-oriented stocks. Our goal is for the median stock performance of the Exploration List to exceed the median stock performance of the coverage universe.

Our clients use the Battle Road IPO Review to:

  • Screen for new stock ideas;
  • Consult an independent source on growth-oriented IPOs, free from the influence of company management and investment bankers;
  • Keep apprised of the Exploration List of long-oriented ideas selected by Battle Road;
  • Stay abreast of the best and worst performing sectors, and best and worst performing stocks in each sector;
  • Keep current on recently-minted IPOs;
  • Identify broken IPOs which have fallen off Wall Street’s radar;
  • Discover and track over-heated IPOs prior to their pull-backs;
  • Screen for meetings with company management at investor conferences;
  • Listen in on a monthly dial-in call to keep current on Battle Road’s research findings.

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About Battle Road Research

Battle Road Research provides fund managers and analysts with an independent voice on technology and consumer stocks. Our research process combines rigorous financial analysis with insights gleaned from industry sources. We present our findings in straight-forward Buy, Hold, or Sell research reports. In addition, we publish The Battle Road IPO Review, a monthly screen for new ideas that examines the prospects of more than 180 growth-oriented IPOs of the last seven years. Since our founding in 2001 we have refrained from investment banking, company consulting, company-paid reports, and personal investment in the stocks we research.

Battle Road Research was one of the first eleven members of the Investorside Research Association, www.investorside.com, the only trade group that certifies its members are free of investment banking, consulting, and research for hire conflicts.