IPO Preview: Veeva Systems

Oct.15.13 | About: Veeva Systems (VEEV)

Based in Pleasanton, CA, Veeva Systems (NYSE:VEEV) scheduled a $223 million IPO with a market capitalization of $2 billion at a price range mid-point of $17 for Wednesday, October 16, 2013.

Four other IPOs are scheduled for this week. The full IPO calendar can be found at IPOpremium.

S-1 filed October 11, 2013.

Manager, Joint Managers: Morgan Stanley, Deutsche Bank Securities
Co-Managers: Pacific Crest Securities, Stifel; BMO Capital, Canaccord Genuity

Summary

Veeva is a leading global provider of industry-specific, cloud-based software solutions for the life sciences industry.

VEEV is a profitable cloud company with 67% of revenue from subscriptions, with a 70% increase in top line revenue increase for the six months ended July 31, '13 vs July 31, '12, to $92 million from $54 million.

Valuation

October 11, 2013, VEEV raised the price range mid-point to $17 from $13.

Valuation Ratios

IPO Mrkt

Price /

Price /

Price /

Price /

% offered

annualizing July 6 mos

Cap (mm)

Sls

Erngs

BkVlue

TanBV

in IPO

Veeva Systems (VEEV) @ $17

$2,079

11.3

94.5

10.5

11.2

11%

Veeva Systems (VEEV) @ $13

$1,590

8.6

72.3

9.8

10.7

11%

Click to enlarge

Glossary

Conclusion

Buy VEEV on the IPO based on subscription-based profitability in the cloud sector and top line revenue growth of 70% for the six months ended July 30 '13 vs July 30 '12.

To put the conclusions and observations in context, the following is reorganized, edited and summarized from the full S-1 referenced above:

Business

Veeva is a leading global provider of industry-specific, cloud-based software solutions for the life sciences industry.

VEEV's solutions enable pharmaceutical and other life sciences companies to realize the benefits of modern cloud-based architectures and mobile applications for their most critical business functions, without compromising industry-specific functionality or regulatory compliance.

VEEV's customer relationship management solutions enable customers to increase the productivity and compliance of their sales and marketing functions.

Products

VEEV's regulated content management and collaboration solutions enable customers to more efficiently manage a range of highly regulated, content-centric processes across the enterprise.

The customer master solution, including VEEV's proprietary database of healthcare provider and healthcare organization data, enables customers to more effectively create and maintain accurate customer data.

Competition

VEEV competes with offerings from large global enterprise software vendors, such as Oracle (NYSE:ORCL), and also compete with life sciences-specific customer relationship management providers, such as Cegedim SA. A number of vendors of cloud-based and on-premise customer relationship management applications address only a portion of VEEV's customer relationship management solutions.

VEEV's regulated content management and collaboration solutions compete with offerings from large global content management platform vendors such as EMC (NYSE:EMC), Microsoft (NASDAQ:MSFT) and OpenText Corporation.

VEEV alsos competes with professional services companies that provide solutions on these platforms, such as Computer Sciences Corporation (NYSE:CSC), and with other life sciences specific providers.

In the future, providers of horizontal cloud-based storage products may seek to compete with VEEV's regulated content management and collaboration solutions.

VEEV also expects continued consolidation among cloud-based technology companies that could lead to significantly increased competition.

5% stockholders pre-IPO

Emergence Capital Partners II, L.P., 31%
Craig Ramsey, 5.8%
Maja Ramsey, 5.8%

Use of proceeds

VEEV expects to net $151 million from its IPO from selling 9.7 million shares. Shareholders intend to sell 3.3 million shares.

Proceeds are allocated for working capital and general corporate purposes.

Disclaimer: This VEEV IPO report is based on a reading and analysis of VEEV's S-1 filing, which can be found here, and a separate, independent analysis by IPOdesktop.com. There are no unattributed direct quotes in this article.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.