Veeva Picked as CRM Partner by GlaxoSmithKline, Stock Up

Shares of Veeva Systems Inc. (VEEV) surged 11.23% ($2.80) to close at $27.73 on Mar 17, 2015, on the heels of an announcement that drug giant GlaxoSmithKline GSK has selected the company as its multichannel Customer Relationship Management (CRM) partner.

We believe that the GSK partnership positions Veeva as a leading provider of cloud-based CRM solutions for life sciences and pharmaceutical companies. A growing customer base will continue to drive subscription revenues, which soared 45.6% year over year to stand at $66.5 million in the recently concluded fourth quarter of fiscal 2015.

Veeva forecasts subscription revenues growth of over 30% for 2016. The company expects subscription revenues from the CRM product line to grow roughly 20% in 2016, while subscription revenues from non-CRM products are likely to increase over two-folds from 2015. We believe Veeva vault – the cloud-based content management solution – holds substantial long-term prospects.

In Dec 2014, Veeva opened two new European data centers in Germany and the U.K. The data centers are expected to support European and global customers’ needs for all of the company’s cloud-based solutions such as Veeva CRM, Veeva Network and Veeva Vault.

Veeva also announced the availability of the Veeva Network Provider Database in Europe. This is expected to provide life sciences companies with access to accurate healthcare professional (HCP), healthcare organization (HCO) and affiliations data. We believe that these new initiatives will boost Veeva’s top line in the European region.

Meanwhile, Veeva announced that Alan Mateo will join the company in mid-April as executive vice president of global sales. Mateo has over 30 years of experience in enterprise resource planning (ERP) systems that include deployments at Corning GLW, Pfizer PFE, Bausch & Lomb, and Bayer.

Our Take

We believe that the inclusion of an industry veteran like Mateo is a major positive for Veeva as it will most likely result in improved sales execution which in turn will boost the top line. However, foreign exchange volatility can offset growth from this prospect in the near term.

Currently, Veeva carries a Zacks Rank #3 (Hold).

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