Veeva Systems CEO: Going For Quality? | Mad Money | CNBC

This video provides an in-depth exploration of Veeva Systems' business strategy, financial performance, and future prospects, featuring an exclusive interview with its founder and CEO, Peter Gassner, on CNBC's Mad Money. The segment begins by addressing the market's seemingly harsh reaction to Veeva's recent earnings report, where the stock dropped despite beating analyst expectations for earnings and revenue, and raising full-year forecasts. Jim Cramer, the host, expresses confusion over this "clobbering," setting the stage for Gassner to clarify the company's long-term vision and operational strengths.

Gassner emphasizes Veeva's consistent focus on long-term fundamentals, highlighting the company's track record of growing both its top and bottom lines every quarter since going public. He attributes the stock's volatility to its significant run-up prior to the earnings report and potentially "spoiled" investor expectations. The discussion then shifts to Veeva's core offerings within the life sciences industry, which include cloud-based software to enhance pharmaceutical sales rep effectiveness, capture clinical trial data, and ensure regulatory compliance. Gassner details how Veeva's integrated cloud platform, encompassing products across clinical, quality, regulatory, and commercial areas, provides a unique and cohesive solution that customers highly value, differentiating them from competitors like Medidata in clinical or IMS in broader data.

A significant portion of the interview is dedicated to Veeva's strategic expansion beyond its traditional life sciences market. Gassner introduces "QualityOne," a product designed to manage quality processes, which is gaining traction in adjacent industries such as cosmetics, chemical, food, and industrial manufacturing. He explains that these sectors, much like pharma, require rigorous quality management and, critically, need cloud-based systems to effectively involve their suppliers in these processes. This expansion is framed as a natural extension of Veeva's expertise in health and human safety, brand reputation, and regulatory adherence, mirroring the successful market expansion seen with companies like ServiceNow in IT operations. Gassner concludes by reiterating Veeva's ambition to become one of the few multi-billion dollar profitable cloud companies, driven by hard work and a clear, targeted strategy.

Key Takeaways:

• Long-Term Fundamentals Over Short-Term Volatility: Veeva's CEO, Peter Gassner, stresses that the company prioritizes consistent growth in top and bottom lines every quarter, a strategy that has been successful since its IPO. Investors should look beyond short-term stock fluctuations, which can be influenced by prior stock performance or elevated expectations, and focus on the underlying business health.
• Integrated Cloud Platform as a Core Differentiator: Veeva's strength lies in offering multiple products across clinical, quality, regulatory, and commercial areas, all unified on a single cloud platform. This integration simplifies operations and provides a cohesive experience for life sciences customers, a key competitive advantage against more siloed solutions.
• Strategic Expansion into Adjacent Industries: Veeva is successfully leveraging its "QualityOne" product to enter new markets beyond life sciences, including cosmetics, chemical, food, and industrial manufacturing. This demonstrates a repeatable growth model based on applying proven software solutions to industries with similar needs for quality processes and regulatory compliance.
• Addressing Underserved Cloud Markets: The expansion strategy for QualityOne is driven by identifying "underserved markets" that have a significant pent-up demand for cloud-based solutions, particularly for managing quality processes that require seamless supplier involvement. This approach mirrors the successful market penetration strategies of other cloud giants like ServiceNow.
• Importance of Regulatory Compliance and Quality Processes: The video underscores the critical need for robust quality processes and regulatory compliance across various industries, not just life sciences. Veeva's solutions address both health and human safety concerns and the protection of brand reputation, which are paramount for manufacturers.
• The "Veeva Way" of Product Development and Market Entry: Veeva's methodology involves creating a high-quality product for a targeted area, securing early customers, ensuring their success, continuously improving the product, and then leveraging reference selling for broader adoption. This systematic approach facilitates effective market penetration and expansion.
• Cloud-Based Systems for Supplier Collaboration: A crucial driver for the adoption of Veeva's QualityOne in new industries is the necessity for manufacturers to involve their suppliers in quality processes. Only true cloud-based systems can facilitate this level of collaboration, highlighting a significant market gap Veeva is filling.
• Ambitious Long-Term Vision: Peter Gassner articulates a clear ambition for Veeva to become one of the few multi-billion dollar profitable cloud companies over time. This vision is grounded in consistent execution, strategic product development, and targeted market expansion.

Tools/Resources Mentioned:

• Veeva CRM: A leading platform in the pharmaceutical industry for customer relationship management.
• Veeva QualityOne: A product specifically designed for managing quality processes, now expanding beyond life sciences.
• Medidata: Mentioned as a competitor in the clinical area.
• IMS (IQVIA): Mentioned as a competitor in broader data and market intelligence.
• ServiceNow: Referenced as an example of a company that successfully expanded its cloud solution to a large, underserved market (IT operations).

Key Concepts:

• Cloud-based software: Software delivered over the internet, accessible from any device, central to Veeva's offerings.
• Multi-billion dollar profitable cloud companies: Veeva's aspirational goal, emphasizing both scale and profitability in the cloud sector.
• The "Veeva Way": A systematic approach to product development, customer acquisition, and market expansion based on quality, customer satisfaction, and reference selling.
• Health and human safety / Brand reputation: Key drivers for the adoption of quality management software in regulated industries.

Examples/Case Studies:

• Expansion into Chemical, Cosmetics, Food, and Industrial Manufacturing: Veeva's QualityOne product is gaining traction in these sectors, demonstrating the applicability of their quality management solutions beyond traditional life sciences.
• ServiceNow Comparison: The expansion of QualityOne is likened to ServiceNow's success in bringing cloud solutions to IT operations, highlighting a similar strategy of identifying and serving a large, underserved market with cloud technology.