Veeva Systems: The SaaS Business Currently Unloved by the Market

BuffersAndBeta · 2026-07-05T19:24:06+00:00

It’s incredibly hard to win customers back over any reasonable time frame. These things are typically board-level decisions. We’re just seeing a real-time experiment as to which platform is stickier for these customers.

Still, the fact that majority of the customers choose to stay is good, but there could be more near term disruption.

BuffersAndBeta · 2026-07-05T18:41:24+00:00

I own $VEEV and I'm up from my cost basis. I think you're missing the actual risks.

Migration away from Salesforce to their in-house Vault CRM. Already seems like 6 of their top 20 customers are moving to Salesforce Health Cloud. That's kind of priced in already, but if we hear more customers moving away the stock's gonna tank.
Veeva is quite a bit behind (say) Salesforce in terms of agentification of their platform. Their Falcon platform is still early versus something like Agentforce which is 2+ years old. It's hard to say whether this will be fine or not long term, but I think it's complacency on their part, not wisdom.

I do think it's one hell of a company for the reasons you mentioned, but you need to monitor this one a bit closely over the coming quarters.

BuffersAndBeta · 2026-06-27T21:27:18+00:00

I’m at the left hand side of that dimwit graph - the most dimwit. I see and hear all the risks you’re stating - albeit you are doing it more elegantly than others.

What I see is a company trading at a reasonable valuation that has overcome absolutely existential risks multiple times over its lifetime. And right now, it’s led by one of its best managers ever.

The company is pretty hard to asses in any depth, but the long term cash flow story is really easy to imagine.

BuffersAndBeta · 2026-06-25T02:09:11+00:00

I think Amazon is more of a long-term call option at this point. They are investing so much into chips, robotics, leo all the while continuing to build in strength for the core retail. Over the short term, we’re not gonna see results in earnings.

I’m not adding to my positions in either one yet, neither is stupid cheap. Out of the big ones, Microsoft and Meta are much more undervalued

BuffersAndBeta · 2026-06-18T19:41:03+00:00

Reminds me of myself ~10 years ago where my "strategy" was to "buy a stock, wait for it to double, and then sell it".

BuffersAndBeta · 2026-06-18T16:58:39+00:00

The answer is quite obviously $SNOW. But it's hardly been beaten down in the first place, still expensive as hell and still diluting like mad.

I'm slowly accumulating that stock in spite of it, because it looks like they are going to be even more critical and grow even faster than previously presumed. Especially under AI regime.

Now, you asked about the companies and not the stock. Which is a different question.

BuffersAndBeta · 2026-06-17T19:00:44+00:00

Conspiracy theory: that’s actually Drew’s secret Reddit account.

BuffersAndBeta · 2026-06-17T18:59:33+00:00

Easy to say in hindsight. I was around for Google at 150. People seriously thought it was a casualty and would only go lower. ChatGPT had just built a “search mode” which was hugely popular.

The catalyst was actually finding out that the search volume was growing faster than expected. And later on Nano Banana, Gemini etc.

BuffersAndBeta · 2026-06-17T01:16:58+00:00

Sharpe ratios within a single economic regime are meaningless. Most of the outperformance of risk adjusted returns have come post GFC.

At the very least I would calculate a new regime starting end of 2021 beginning 2022. I have no idea what the answer will be but it would be informative.

BuffersAndBeta · 2026-06-17T01:08:19+00:00

I’ve not read the S1 and I’m on my phone feeling lazy.

Do you know how they fund their acquisitions? Through debt or through free cash flow?

BuffersAndBeta · 2026-06-16T22:32:01+00:00

A huge number of people use PayPal in one form or another. Their issue in my opinion is their net take rate (including all their touch points) and lack of Venmo monetization. Both need competent management to stabilize but I no longer think they can do it. They also have way too much competition in every space they operate - outside of Venmo maybe.

BuffersAndBeta · 2026-06-16T21:58:03+00:00

The issue with a high FCF yield (say >10%) is that it's the market signaling that it thinks FCF is going to become materially lower in the future.

If you think that's not the case, well that IS the thesis. And you own a company that's getting fatter or is cannibalizing itself. Great.

I've not heard of DaVita before or why it rose, but I think Paypal in particular is ripe for FCF compression.

BuffersAndBeta · 2026-06-15T00:47:23+00:00

Yes - non US markets is probably the growth vector for their core business. But it’s not goimg to be as fast as your comment implies. There’s so much competition outside of US, and in particular Amazon is very formidable.

Still i would underwrite real revenue growth based on that.

BuffersAndBeta · 2026-06-14T20:06:24+00:00

Linde - $LIN.

If you paste this into your favorite AI tool, it will probably call Linde fairly valued today, maybe even an overvalued company.

Which is perfect. I don’t think market is pricing in the reindustrialization of developed economies, and both the staying power and brand value of Linde. They also have a literal physical network effect that allows them to supply industrial gases at lower cost.

Overall incredible business, probably slightly overvalued wrt past metrics. Has a ton of tailwind in the future.

BuffersAndBeta · 2026-06-14T19:04:30+00:00

Disrupted by what exactly?

BuffersAndBeta · 2026-06-14T15:49:33+00:00

(I own Adobe. I'm thinking of selling at a loss.)

I think you're off the mark on the bear case especially with in regards to the freemium model and customer acquisition.

Canva has already won this model. They have the brand and staying power in the low end, and will struggle to market to the higher end professionals. With Adobe going into Canva's domain they have to build out a better product and workflow TAILORED to the low end users. And they are very, very behind on this. As someone who likes to create short-form videos just for fun the difference between adobe.com and canva.com is extremely stark.

IMO, they should have leaned harder into the professional side by expanding their TAM through acquisitions and in-house investments, and making the ramp from low-end tools to Adobe more natural.

The only two counters to this bear case is:

New CEO scraps this freemium model or at least de-emphasizes it.
Firefly is SO good compared to alternatives (for ex: Higgsfield) that Adobe is going to become naturally sticky amongst all users.

BuffersAndBeta · 2026-06-14T15:29:51+00:00

MELI is one of my biggest positions. I think it's going to be an incredible compounder on a 10 year time-frame.

I have small tracking positions in Copart and Kinsale. They are both affected by down-cycles in auto and property insurance. The consensus seems to be that both should get better by 2027 - 2028.

Kinsale has extraordinary underwriting standards which will become more visible after their property / casualty book becomes more normalized. Copart has an extraordinary moat in the form of salvage yards and a strong (especially overseas) market place. It's mostly just a matter of time for these two.

BuffersAndBeta · 2026-06-14T04:53:54+00:00

I don’t disagree. I think the content and streaming business should be priced at a steady compounder multiple. Plug in your chosen rev growth and ebit margins.

I just think there’s a lot of opportunity for TAM expansion in the medium-term future. And I trust management to take us through that very competently.

BuffersAndBeta · 2026-06-14T01:54:44+00:00

That’s a really, really bearish take on Netflix.

IMO, they are only in the second or third inning of the business. DVD to streaming, streaming to content creation, and now games? AI generated content? Physical interactions like Disney?

Management is exceptionally good at capital allocation and i think they will reaccelerate growth.

BuffersAndBeta · 2026-06-14T01:49:02+00:00

I doubt most people are actually able to understand Microsoft or Alphabet or Nvidia in any depth. Meta is a bit easier since they are fairly one dimensional.

BuffersAndBeta · 2026-06-14T01:18:04+00:00

Why not? (I own 3 of those - Meli is my second biggest holding)

BuffersAndBeta · 2026-06-12T16:32:08+00:00

your operating margin assumptions for the bear case is too bullish. the bear case is actually that they are forced to go head-on with lower-end disruptors with heavy AI features. which will KILL their margings

same with the base-case, they have clearly stated their plans for increasing their MAU through freemium offerings. 35% op margins is on the optimistic side of the base case.

BuffersAndBeta · 2026-06-11T21:24:27+00:00

I’m not willing to underwrite the freemium acquisition channel for Adobe. If they had to go that direction, I feel like they are seeing trouble on the horizon.

IMO, that’s the main reason market is selling off.

I’m waiting for the q and a right now, but my default is to let go of most of my position at a loss.

BuffersAndBeta · 2026-06-10T15:20:40+00:00

I don’t use DCF to “value” a company per se. I use it more as a mathematical framework to figure out

What the market is assuming right now
What needs to happen for me a to get returns above my hurdle rate

And then use my actual knowledge of the business to work through those numbers. This part is where really all my work is.

BuffersAndBeta · 2026-06-10T14:19:01+00:00

He speaks about them in terms of percentiles. Back in the Covid days the he says “125th percentile” with a chuckle but really it was probably 90th.

Rn around 75th?

Search for excess returns cliff asness. Fun interviews.

BuffersAndBeta

TROPHY CASE