Exchange: LSE | Sector: Healthcare | Industry: Medical Equipment Services
Q1 2026
Published: Jun 2, 2025
Earnings Highlights
Revenue of $759.04M up 16.7% year-over-year
EPS of $1.37 increased by 40% from previous year
Gross margin of 77.1%
Net income of 228.19M
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Veeva Systems Inc (0LO3.L) QQ1 2026 Results Analysis: Strong Growth, High Margin, and Robust Free Cash Flow in Healthcare Cloud Software
Executive Summary
Veeva Systems delivered a standout QQ1 2026 quarter, reflecting durable demand for its cloud-based life sciences software platform. Revenue reached $759.043 million, up 16.71% year over year (YoY) and 5.29% quarter over quarter (QoQ), with gross margin of 77.1% and operating margin near 30.8%. Net income totaled $228.19 million, translating to a basic EPS of $1.40 and a diluted EPS of $1.37. The company generated robust operating cash flow of $877.16 million and free cash flow of $871.25 million, contributing to a net cash position that remains ample (net debt of approximately -$1.89 billion) and a cash balance at period-end of about $1.965 billion, complemented by $6.068 billion in cash and short-term investments. Deferred revenue stood at $1.246 billion on the balance sheet, underscoring the high visibility and capturable recurring revenue base.
These results reinforce Veeva’s position as a high-quality SaaS provider for the life sciences sector, characterized by sustained margin durability, strong cash conversion, and disciplined capital allocation. The quarter benefited from favorable working capital dynamics (change in working capital of $545.2 million) that boosted free cash flow relative to net income. Management commentary (where provided in transcript) typically emphasizes continued ARR expansion, cross-sell across Commercial Cloud and Vault, and ongoing global expansion, especially in Europe and Asia Pacific. Investors should monitor ARR growth, renewal rates, product mix (CRM, CLM, Vault, and data solutions), and any shifts in the competitive landscape or customer concentration risks as the lifecycle of multi-year contracts evolves.
Overall, the QQ1 2026 results deliver a compelling investment backdrop: high gross margins, strong profitability, substantial liquidity, and clear growth momentum in an essential enterprise software category for life sciences players.
Gross Profit: $585.219 million; Gross margin: 77.10% (YoY margin up ~22.83%, QoQ up 8.39%)
Operating Income: $233.732 million; Operating margin: 30.79% (YoY growth in operating income ~50.63%; QoQ growth ~24.05%)
Net Income and EPS: Net income $228.19 million; Net margin ~30.06%; EPS basic $1.40; EPS diluted $1.37; YoY EPS growth ~40.0%; QoQ ~16.67%
EBITDA: $243.554 million; EBITDA margin ~32.08%
Financial Highlights
Revenue Performance
- Revenue: $759.043 million; YoY growth: 16.71%; QoQ growth: 5.29% (from prior quarter)
- Gross Profit: $585.219 million; Gross margin: 77.10% (YoY margin up ~22.83%, QoQ up 8.39%)
- Operating Income: $233.732 million; Operating margin: 30.79% (YoY growth in operating income ~50.63%; QoQ growth ~24.05%)
- Net Income and EPS: Net income $228.19 million; Net margin ~30.06%; EPS basic $1.40; EPS diluted $1.37; YoY EPS growth ~40.0%; QoQ ~16.67%
Profitability and Efficiency
- EBITDA: $243.554 million; EBITDA margin ~32.08%
- D&A: $9.822 million; Tax rate (reported): 23.63% (based on tax expense of $70.631 million on pretax income $298.821 million)
Cash Flow and Liquidity
- Net cash provided by operating activities: $877.158 million
- Free cash flow: $871.248 million; FCF margin materially favorable due to working capital release
- Net change in cash: $846.197 million; Cash at end of period: $1.967 billion; Cash at beginning: $1.121 billion
- Investing: Purchases of investments $-667.1 million; Proceeds from investments $620.903 million; net investing cash flow $-52.107 million
- Financing: Common stock issued $40.605 million; Net cash provided by financing activities $20.38 million; Net effect of forex $0.766 million
- Balance sheet liquidity: Cash and cash equivalents $1.965 billion; Short-term investments $4.104 billion; Total cash and short-term investments $6.068 billion; Total debt $77.231 million; Net debt position: approximately -$1.888 billion (net cash)
Balance Sheet and Capital Structure
- Total assets: $7.765 billion; Total liabilities: $1.554 billion; Total stockholders’ equity: $6.211 billion
- Deferred revenue (current): $1.247 billion; Total current liabilities: $1.456 billion; Long-term debt: $66.565 million
- Deferred revenue non-current: $0; Goodwill $439.877 million; Intangible assets $40.519 million; Goodwill and intangibles total $480.396 million
- Leverage and liquidity metrics remain extremely favorable with a strong equity base and ample liquidity to fund R&D, product development, and potential strategic investments.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
759.04M
16.71%
5.29%
Gross Profit
585.22M
22.83%
8.39%
Operating Income
233.73M
50.63%
24.05%
Net Income
228.19M
41.15%
16.65%
EPS
1.40
40.00%
16.67%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
No earnings call transcript was provided in the supplied data; therefore, management quotes and thematic highlights from the QQ1 2026 call could not be quoted or summarized. If the transcript text is shared, I can extract themes (strategy, operations, market conditions) and provide attributed quotes with context.
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Forward Guidance
Management did not publish explicit numeric guidance in the provided data for QQ1 2026. However, the quarter’s results support a constructive, growth-oriented trajectory for Veeva’s cloud platform across CRM, Vault, and data solutions. Given the large deferred revenue base and continued ARR expansion, a reasonable base-case view is for continued double-digit revenue growth with high gross margins and stable operating margins in the low-to-mid-30s range over the next several quarters, assuming no major macro shocks. Key factors to monitor for forward guidance include: (1) ARR renewal and expansion rates across CRM, Vault, and Data Cloud; (2) contribution from new modules (e.g., Veeva OpenData, Veeva Link/Network) and cross-sell into existing customers; (3) geographic mix and international expansion traction, particularly in Europe and APAC; (4) operating expense discipline relative to revenue growth; (5) working capital trends that may bolster or compress free cash flow; (6) share count changes and their impact on diluted earnings per share; and (7) any changes in customer concentration or deal cycle length. Investors should be mindful of potential macro headwinds in healthcare IT budgets and regulatory dynamics that could influence multi-year contract commitments.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
0LO3.L Focus
77.10%
N/A
N/A
N/A
0J50.L
41.50%
26.60%
3.73%
28.66%
0IDR.L
68.30%
31.80%
4.96%
12.05%
0LW9.L
14.80%
3.35%
-0.22%
-119.04%
0J66.L
54.30%
17.90%
3.73%
10.00%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Veeva Systems presents a high-quality growth story within the health-tech software space. The QQ1 2026 results demonstrate durable top-line expansion, exceptional gross margins, and exceptionally strong cash flow generation, underpinned by a favorable balance sheet (net cash) and substantial liquidity. The revenue growth (YoY ~16.7%, QoQ ~5.3%) coupled with a gross margin near 77% and an operating margin around 31% signals a scalable platform with attractive profitability dynamics. The large deferred revenue balance adds visibility into future revenue recognition, supporting a positive long-term outlook if ARR growth is sustained. The primary risks center on sector-specific cyclicality and competition from broader enterprise cloud providers, as well as potential procurement-driven delays in large deals.
Overall, the investment thesis for Veeva remains favorable: high-quality, recurring revenue with strong monetization of its multi-product platform, ample liquidity to fund R&D and strategic actions, and a track record of generating substantial free cash flow. Valuation considerations should account for premium placed on durable SaaS margin profiles and the defensible nature of mission-critical cloud services for life sciences customers. Investors should monitor ARR growth, renewal rates, product mix progression, geographic expansion progress, and any shifts in customer concentration or deal cycle duration as leading indicators of sustained long-term value creation.
Key Investment Factors
Growth Potential
Continued double-digit revenue growth driven by cross-sell across the Veeva platform (CRM, Vault, OpenData, Crossix) and expanding data analytics capabilities. Global expansion, particularly in Europe and APAC, should sustain ARR growth. Free cash flow remains robust, enabling selective investments in R&D and potential tuck-in acquisitions.
Profitability Risk
Concentration risk within the life sciences sector; macroeconomic softness could impact large, multi-year contracts; competition from broader cloud platforms and legacy system integrators; regulatory changes and data privacy considerations; potential delays in large deals due to budget cycles or procurement processes; currency fluctuations.
Financial Position
Net cash position with substantial liquidity (net debt approximately -$1.889 billion; cash and short-term investments ~$6.068 billion). Very strong balance sheet allows for continued investment in R&D, potential strategic acquisitions, and capital returns opportunities (though the company historically has not prioritized large dividend payouts).
SWOT Analysis
Strengths
Industry-leading position in life sciences cloud software (CRM, Vault, and data analytics)
Very high gross margins (~77%) and strong EBITDA/operating margins (~30%)
Heavy cash generation with a robust net cash balance sheet (net cash ~-$1.89B)
Significant deferred revenue base providing revenue visibility and long-duration customer relationships
Global distribution and multi-product platform enabling cross-sell and stickiness
Weaknesses
High dependence on the life sciences sector and long multi-year sales cycles
Largely software-as-a-service exposure with potential exposure to R&D intensity and technology upgrades