Veeva reported a strong Q2 FY2027 with record CRM performance, raising guidance. Management emphasized the massive and high-interest market for its new AI agent product, Falcon, and highlighted progress in winning back customers from Salesforce, backed by strategic wins with Lilly and Biogen. Total revenue was $928M, a record quarter for the CRM segment with 13% year-over-year commercial subscription growth.
Veeva reported a strong Q2 FY2027 with record CRM performance, raising guidance. Management emphasized the massive and high-interest market for its new AI agent product, Falcon, and highlighted progress in winning back customers from Salesforce, backed by strategic wins with Lilly and Biogen. Total revenue was $928M, a record quarter for the CRM segment with 13% year-over-year commercial subscription growth.
Management says AI is enabling the next big chapter for Veeva, with Falcon (agentic labor) seeing very high customer interest and a fast value path, though the company is the rate limiter on getting the product ready. Aspen is being built for AI-enabled horizontal CRM on modern…
Total revenue was $928M, a record quarter for the CRM segment with 13% year-over-year commercial subscription growth.
Demand is strong across the business, with the best CRM quarter ever and broad-based commercial strength, including double-digit growth ex-Crossix. Falcon has high customer interest, but the company, not demand, is the limiting factor. The two remaining top-20 CRM commitments…
Veeva won two top-20 biopharma clients (Lilly and Biogen) for its Vault CRM, increasing its share of top-20 accounts to 12, with only 2 remaining undecided.
Management says AI is enabling the next big chapter for Veeva, with Falcon (agentic labor) seeing very high customer interest and a fast value path, though the company is the rate limiter on getting the product ready. Aspen is being built for AI-enabled horizontal CRM on modern technology. AI also supports cross-selling of Crossix as pharma moves to AI-driven commercial engagement.
Demand is strong across the business, with the best CRM quarter ever and broad-based commercial strength, including double-digit growth ex-Crossix. Falcon has high customer interest, but the company, not demand, is the limiting factor. The two remaining top-20 CRM commitments are expected to play out by year-end with good confidence in both.
Peter Gassner's repeated enthusiasm about Falcon, the strong CRM execution, and broad-based commercial growth indicate a confident, upbeat tone, though he is careful to temper Falcon expectations as early.
“The bulk of that win back would probably be in 2027 and 2028 because Viva CRM, they have that backstop until the end of 2029.”
“if you want a teenage falcon, it costs you X. And if you want a falcon that's 25-year-old, it costs you a bit more”
“there are two remaining and they'll play out by the end of this year, but we feel good about both of them.”
“the cost of these models are going to go down, whether they're with better hardware or open weight models or et cetera”
Biogen has selected Veeva's Vault CRM, another major competitive win in the top-20 pharma segment, showcasing product trust and execution.
“two in the top 20, Lilly selecting Vault CRM, Biogen selecting Vault CRM”
Thanks for taking my question. Peter, I wanted to ask you a question on a recent management change. It was announced that Tom Schwenger will be leaving the company to go to a long-standing partner of yours. And we understand that he played a pivotal role in many of the company's top 20 biopharma wins. So how should we be thinking about the current transition of his responsibilities and maybe the impact of his exit on the relationship he has helped curate over the years, if any?
Yeah, so first, we're excited about the exceptional quarter that we had, and that was one of the headlines. You heard us talk about three large companies, two in the top 20, Lilly selecting Vault CRM, Biogen selecting Vault CRM, and then, of course, we had Regeneron as well. The why is pretty simple, and I think we touched on it on this call, right? It goes back to trust, so they trust Viva to be able to deliver, and then product. Product Excellence. The product is working. We are delivering on the promise of all the innovation that we've pulled the market we would execute on and that's playing out in the marketplace. So it's trust and it's great product. I mean, it's really, it simply comes down to those two things. In terms of the remaining top 20 commitments that are out there, there's only two left. So we have 12 of top 20. and there are two remaining and they'll play out by the end of this year, but we feel good about both of them. They still need to be finalized, but we like our chances in both and we'll update you as things play out.
A top-20 pharma customer (likely Merck) has gone live with AI across its field force, validating Veeva's AI capabilities and creating a strong reference case.
“we had a big milestone in CRM this quarter where one of our top 20s turned AI on in CRM for their entire field force.”
All right. Thanks. I'm sorry to throw in another.
Yeah, it's based on our execution and what we're seeing with Salesforce as well. I think Peter alluded to earlier how Salesforce has been struggling with some of the larger projects that they have. They don't really have any customers live. And when you look at what Viva's doing, it contrasts pretty significantly. We have over 180 customers live. We have customers that are turning AI on. We had a big milestone in CRM this quarter where one of our top 20s turned AI on in CRM for their entire field force. So really significant milestones. So the contrast between how Viva's executing and what we're seeing on the other side is very significant. As Peter mentioned, we're very close with these customers. They buy a lot of products from Viva. We have deep relationships. We stay very close with them. And that's what gives us the confidence, our execution, our innovation, getting customers live, that trust. And that's why you hear the bullishness and the confidence in those win-backs. Just more broadly in the overall market, we're executing very, very well in CRM. It's really clear. We are the market leader. We're going to maintain the market leadership position. And just to kind of paint what we view as the end state, we see Viva maintaining over 70% share in the CRM space, which means we'll continue to execute, we'll continue to drive innovation for our customers. So we feel really good about how CRM is playing out. Let me say yes about our customers.
The Veeva-IQVIA partnership is strengthening, with both sides happy, citing less friction for customers and growing collaboration as AI transforms the industry.
“I feel 500% better about our IPV relationship now than I did two years ago.”
Thanks for fitting me in. I just wanted to ask one, first, I think you're coming up to the one year anniversary of your partnership with IQVIA and the settlement with them. So I just wanted to understand how's that going? Have you seen any more of them? Because we haven't heard much from that deal and wanted to know if you, is it going ahead of expectations or in line or below?
We're really happy with that IQVIA. Partnership, gosh, that's, and I discussed with the management team of IQVIA and I can represent that they represent to me that they're very happy with the partnership as well. So yes, and customers are especially appreciative of it, right? Much less hassle working with Viva and IQVIA. I think great things are going to come out of that partnership. They're already starting to come and I think there's more to come. When you look at it, IQVIA and Viva, We are both major players to the life sciences industry. We are the two major players. I think it's fair to say by far. And AI is transforming the industry. And for AI, you need services, you need data, you need software. So the more even IQVIA can collaborate, the better it is for the industry, helps the industry grow, helps Viva grow, helps IQVIA grow. So I couldn't be more happy with that. If you ask me, I feel 500% better about our IPV relationship now than I did two years ago. It's probably the best thing that happened to our company, you know, 12 months ago, and that was just outstanding. So super happy with that.
The cost of Anthropic's frontier models is expected to decrease due to ongoing hardware and open-weight model improvements, preserving Veeva's gross margins. — Declining AI inference costs will protect Veeva's gross margins, even as Falcon usage scales up significantly.
All right, that's really helpful. And then maybe just thinking through, you know, as Falcon and kind of your AI products grow, can you talk a little bit about, you know, under the hood, what sort of, you know, the AI stack looks like, and maybe more importantly, as these become a bigger portion of the business, drive greater usage, and obviously, as you pointed out, Peter, greater customer success, how should we be thinking about the impact on And, you know, is there opportunity over time to leverage more multimodality and even some of the open weight models as they improve to, you know, control some of that potential gross margin headwind? Thank you.
Yeah, you know, again, I don't really want to make predictions on Falcon because it's early. But in general, I don't think we're going to have a gross margin problem. I think the gross margins will be roughly similar to our software. And here is why. When we really go deep into Falcon and we have what we call Falcon copies where we have the real customer data that we're testing the agents with and developing the agents with, we know what's going on. So more and more and more of that work goes into the deterministic software. and we use the non-deterministic models, the anthropic models, et cetera, when we need to. So it's not, you know, a lot of this value is going into the agent. And then I believe everybody knows that the cost of these models are going to go down, whether they're with better hardware or open weight models or et cetera, et cetera. The current cost of the models is not sustainable, not based on what we're doing, but based on this notion of what software development is doing, you know, eating up 50% of the tokens in the world and hundreds of billions of dollars. Somebody's going to build a better mousetrap for that over time, and that'll compress the prices. That's our belief. But even if that wouldn't happen, I think Falcon would be a great business because we're pushing a lot of things into the deterministic layer.
Veeva's CRM win-backs from Salesforce are expected to materialize in 2027-2028, as the 'backstop' of Veeva CRM support ends in 2029. — This timeline suggests Salesforce's competitive inroads in pharma CRM could be temporary and reversed as large customers re-evaluate their choices.
Hey, good evening, everybody.
Yeah, Ryan, I do. There's a handful of customers, large customers that did select Salesforce, many of them. Even two years ago, those projects are having troubles, right? They're not going smooth and we have some project delays because it turns out the product is very deep and you need that. So yeah, I think we can win back some of those customers, maybe some of them completely, others of them in some certain regions and not others. I think the bulk of that win back would probably be in 2027 and 2028 because Viva CRM, they have that backstop until the end of 2029. So this is the time when it starts really to get real, right? Because during 2029, there's no more backstop of, oh, we can keep using Viva CRM because they know they have to go to vault CRM. Yeah, we're very optimistic about that. And the best thing we can do there to help that is really focus on our existing customers that did decide to go with us for CRM and make them very successful and improve the product. And for the customers that didn't choose Viva, we have a good relationship with them. And they've told us that, hey, you know, we said, hey, we want to be your plan B. And they really embrace that. And that's the way they view that because these customers, they have businesses to run, right? They got to get their medicines to patients. It's great. They love having a backup option if their Plan A doesn't work out.
Peter Gassner uses his experience on Zoom's board as a historical example of a fundamentally better product disrupting incumbents, drawing parallels to Aspen.
Yeah, just what are the specific, you know, customer problems that you're aiming to solve with Aspen versus what some of the existing, and other horizontal CRM platforms struggle with today?
Yeah. There's a couple. One is price, price being unpredictable, getting out of control. That would be one. The other one would be just sort of dependability of the vendors, right, that you can really count on the vendor to be on your side. Scalability of the vendor, right? Sometimes they want something that really works for a small company that can scale up to a very large. Now in the market, you have to pick like, do I want something that works for a small company or do I get something that's too big for me now, but I can scale up. Other things are just like, you know, data entry. The existing CRM systems really, if you get into them, like, okay, they require a heck of a lot of data entry. Most of that with AI doesn't need to be done anymore. And then I just, I think there's this other fundamental thing of better CRM system. And that's just the details of a fundamentally better data model, better business logic, better just details. Like how do you handle multi-currency? How do you handle forecasting? How do you handle implementation so that you can get the CRM you want for your company in three months rather than getting half of what you want in three years. So I was on the board of Zoom for many, many years, and Zoom was a very small company when I joined, and very few investors wanted to invest in Zoom because they thought, well, there's already WebEx, there's all these other things. But Eric had an idea, but mine will be fundamentally better, better, better. And that's the same idea here. Now that's unusual that that could be disruptive, but I think in this case it will be. Better, nicer, less expensive, more predictable, faster. I think all those things add up.
A departing executive is joining an unnamed services partner (likely a services firm) and is expected to remain a strong partner to Veeva.
Thanks for taking my question. Peter, I wanted to ask you a question on a recent management change. It was announced that Tom Schwenger will be leaving the company to go to a long-standing partner of yours. And we understand that he played a pivotal role in many of the company's top 20 biopharma wins. So how should we be thinking about the current transition of his responsibilities and maybe the impact of his exit on the relationship he has helped curate over the years, if any?
Yeah, Tom, we of course had Tom Gohut. Tom was at Accenture before he came to Viva many years ago and was a great Viva partner at Accenture. And Tom's going to go on to be a CEO of a services type partner. And we think that He will be a great partner for us there now. So, you know, all good there. Those relationships don't go away that Tom has, so he will keep those. And in terms of EVA, when customer, especially when you mentioned CRM, gosh, that's a business critical decision that lasts for 10 years. It's involved. There's many, many people involved in that, and there's a product involved with that. So I don't, that won't, Tom's departure won't have effect on our CRM business because that's more of a, it's an enduring longstanding thing. It's different than maybe consulting type work or something like that. This is a product attachment, so that's not gonna affect our business.
Only two top-20 pharma companies remain undecided on CRM vendors, and Veeva feels confident about winning both.
Thanks for taking my question. Peter, I wanted to ask you a question on a recent management change. It was announced that Tom Schwenger will be leaving the company to go to a long-standing partner of yours. And we understand that he played a pivotal role in many of the company's top 20 biopharma wins. So how should we be thinking about the current transition of his responsibilities and maybe the impact of his exit on the relationship he has helped curate over the years, if any?
Yeah, so first, we're excited about the exceptional quarter that we had, and that was one of the headlines. You heard us talk about three large companies, two in the top 20, Lilly selecting Vault CRM, Biogen selecting Vault CRM, and then, of course, we had Regeneron as well. The why is pretty simple, and I think we touched on it on this call, right? It goes back to trust, so they trust Viva to be able to deliver, and then product. Product Excellence. The product is working. We are delivering on the promise of all the innovation that we've pulled the market we would execute on and that's playing out in the marketplace. So it's trust and it's great product. I mean, it's really, it simply comes down to those two things. In terms of the remaining top 20 commitments that are out there, there's only two left. So we have 12 of top 20. and there are two remaining and they'll play out by the end of this year, but we feel good about both of them. They still need to be finalized, but we like our chances in both and we'll update you as things play out.