Core Insights - TimesSquare Capital Management's "U.S. Focus Growth Strategy" reported a fourth-quarter 2025 return of -3.55% (gross) and -3.76% (net), underperforming the Russell Midcap Growth Index which returned -3.70% [1] - For the full year 2025, the strategy achieved a return of 14.84% (gross) and 13.88% (net), significantly outperforming the index's 8.66% return [1] - Global equity markets ended the quarter positively, with Europe leading and large caps outperforming small caps [1] Company Insights - Veeva Systems Inc. (NYSE:VEEV) is highlighted as a key stock in the strategy, providing a cloud-based software platform for the life sciences industry [2] - As of March 19, 2026, Veeva's stock closed at $185.59, with a one-month return of 2.93% and a 52-week loss of 21.62% [2] - Veeva has a market capitalization of $30.51 billion [2] Competitive Positioning - The strategy emphasizes Veeva's focus on providing novel therapies and specialized services, with confidence in achieving its 2030 financial targets despite competitive pressures from Salesforce.com in the CRM market [3] - Veeva's management remains optimistic about its long-term trajectory, although the stock experienced a -25% decline due to competitive concerns and lower projections for Vault CRM customers [3]

Core Insights - Veeva Systems, Inc. reported adjusted EPS of $2.06 for Q4 FY26, an 18.4% increase from $1.74 a year ago, beating estimates by 7.3% [1] - Total revenues for the quarter reached $836 million, exceeding estimates by 3.4% and reflecting a 16% year-over-year growth [2][3] Financial Performance - For FY26, Veeva Systems achieved total sales of $3.19 billion, marking a 16% increase year over year [4] - Adjusted EPS for FY26 was $8.10, up 22.7% compared to FY25 [4] Revenue Breakdown - Subscription services revenues rose 16% to $707.7 million, driven by demand for both established and new solutions [7][8] - Professional services and other revenues increased 14.1% year over year to $128.2 million [8] Margin and Expense Analysis - Gross profit for Q4 improved 15.3% year over year to $622.5 million, with a gross margin of 74.5% [9] - Operating profit totaled $245.9 million, a 30.5% increase from the prior year, with an operating margin expansion of 330 basis points to 29.4% [10] Financial Position - At the end of Q4 FY26, the company had cash and cash equivalents of $6.56 billion, slightly down from $6.64 billion in Q3 [11] - Cumulative net cash from operating activities was $1.42 billion, up from $1.09 billion a year ago [11] Guidance for FY27 - For Q1 FY27, Veeva expects revenues between $855 million and $858 million, with adjusted EPS anticipated between $2.13 and $2.14 [12][13] - Full-year FY27 revenue guidance is set between $3.585 billion and $3.600 billion, with adjusted EPS expected around $8.85 [13][14] Strategic Initiatives - Veeva is expanding AI capabilities across its platforms, with several AI agents already launched and more planned for release throughout 2026 [18] - The company secured multiple top-20 biopharma wins and is advancing its next-generation Vault CRM, with over 125 customers now live [19][20]

Core Viewpoint - Veeva Systems Inc. reported strong fourth-quarter fiscal 2026 results, with continued growth in its Vault CRM product, despite a recent price target reduction by analysts due to SaaS market compression [2][3]. Financial Results and Guidance - Veeva Systems reported a strong close to fiscal 2026, with over 125 customers now using Vault CRM, indicating successful penetration into the top 20 pharmaceutical companies and improved win rates in the mid-market [2]. - Needham lowered its price forecast for Veeva from $335 to $270 while maintaining a Buy rating, reflecting concerns over SaaS market multiple compression [2][3]. Position in AI Space - Veeva is positioning itself as a centralized system in the AI space, regardless of individual AI adoption decisions by life sciences companies, suggesting a strong potential for leadership in AI applications [4]. - Analysts believe that Veeva's recent product releases in commercial, safety, and professional areas highlight its capability to lead in AI, supported by its core systems [4][5]. Analyst Ratings and Price Targets - Piper Sandler maintains an Overweight rating on Veeva, lowering the price target from $355 to $285 [6]. - Morgan Stanley keeps an Equal-Weight rating, raising the price target from $205 to $215 [6]. - At the time of publication, Veeva Systems shares were up 2.75% to $201.33 [6].

Financial Data and Key Metrics Changes - Total revenue for the quarter was $836 million, with non-GAAP operating income of $366 million. For the full year, total revenue reached $3.195 billion, and non-GAAP operating income was $1.434 billion [5]. Business Line Data and Key Metrics Changes - The CRM business is currently about 20% of total revenue but is projected to decrease to approximately 10% by 2030, driven by growth in other business areas [12][14]. - The Crossix business had an outstanding year in 2026, but the company anticipates tougher comparisons in 2027 while still expecting healthy growth [25]. Market Data and Key Metrics Changes - Customer growth accelerated to 5%, attributed to strong execution in the Veeva Basics area targeting small emerging biotechs [40]. - The company has close to 140 customers live on Vault CRM, with significant momentum in migrations and expansions into new products [33][100]. Company Strategy and Development Direction - The company aims to deepen strategic partnerships across the life sciences industry through innovation and customer success, focusing on modernizing core systems and increasing automation [6][10]. - Veeva is positioning itself to leverage AI as a tool for automation, emphasizing the importance of clean data for effective AI implementation [9][10]. Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the macro environment, noting that while some uncertainties remain, there is a trend towards greater clarity in the industry [70]. - The company is focused on delivering value through its core systems and is optimistic about the long-term benefits of AI in improving patient outcomes and operational efficiency [66][67]. Other Important Information - The company has moved the CRM end of support date from September 2030 to December 2029, reflecting strong momentum in Vault CRM and a desire to avoid uncertainty in the future [74]. - Management highlighted the importance of trust and customer relationships, which are seen as critical to Veeva's competitive advantage [36][37]. Q&A Session Summary Question: Is Veeva seeing programs funded for AI readiness? - Management indicated that while there is interest in AI, the primary focus is on modernizing core systems rather than a broad AI theme [9][10]. Question: What is the outlook for the Crossix business in fiscal 2027? - Management expects tough comparisons due to an outstanding previous year but anticipates continued healthy growth [25]. Question: Can you explain the growth in customer count? - The growth rate is attributed to strong execution in the Veeva Basics area, particularly among small emerging biotechs [40]. Question: What is the status of the CRM business and its future? - CRM is expected to stabilize at about 10% of total revenue by 2030, with ongoing development of add-on products [12][14]. Question: How does Veeva view the role of AI in the life sciences industry? - Management sees AI as a significant opportunity to enhance efficiency and improve patient outcomes, emphasizing the need for integrated solutions [66][67].

Financial Data and Key Metrics Changes - Total revenue for Q4 was $836 million, with non-GAAP operating income of $366 million. For the full year, total revenue reached $3.195 billion, and non-GAAP operating income was $1.434 billion, indicating a strong performance exceeding guidance [5][6]. Business Line Data and Key Metrics Changes - The CRM business is currently about 20% of total revenue but is projected to decrease to approximately 10% by 2030, driven by growth in other business areas [12][13]. - The Crossix business had an outstanding year in fiscal 2026, but growth comparisons for fiscal 2027 may be tougher due to high performance in the previous year [25]. Market Data and Key Metrics Changes - Customer growth accelerated to 5%, attributed to strong execution in the Veeva Basics area targeting small emerging biotechs [40]. - The company has close to 140 customers live on Vault CRM, with significant momentum in migrations and expansions into new products [33][101]. Company Strategy and Development Direction - The company aims to deepen strategic partnerships across the life sciences industry through innovation and customer success, focusing on modernizing core systems and increasing automation [5][10]. - There is a strong emphasis on leveraging AI to enhance operational efficiency, with a focus on integrating AI solutions tightly with core systems [22][60]. Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the macro environment, noting that while some uncertainties remain, there is a trend towards greater clarity in the industry [71]. - The company is focused on delivering value through its AI initiatives, which are expected to improve patient outcomes and operational efficiencies over the long term [68][69]. Other Important Information - The company has moved the CRM end of support date from September 2030 to December 2029, reflecting strong performance and execution in the Vault CRM product [76]. - The management highlighted the importance of trust and customer relationships in maintaining competitive advantage, particularly in the context of AI adoption [36][82]. Q&A Session Summary Question: Is Veeva seeing programs funded for AI readiness? - Management indicated that while there is interest in AI, the primary focus is on modernizing core systems rather than a broad theme of AI readiness [9][10]. Question: What is the outlook for the Crossix business in fiscal 2027? - Management expects healthy growth from Crossix despite tougher comparisons due to its outstanding performance in the previous year [25]. Question: How firm are the commitments from customers for Vault CRM? - Management expressed confidence in the commitments, noting that close to 140 customers are live and that the product is performing well [101][102]. Question: What is the growth rate in customer count? - The growth rate in customer count has accelerated to 5%, driven by strong execution in the Veeva Basics area [40]. Question: How does Veeva view the role of AI in the life sciences industry? - Management sees AI as a positive force that will enhance core systems and improve patient outcomes, emphasizing the importance of integrating AI with existing workflows [60][68].

Financial Data and Key Metrics Changes - Total revenue for Q4 2026 was $836 million, with non-GAAP operating income of $366 million. For the full year, total revenue reached $3.195 billion, and non-GAAP operating income was $1.434 billion, indicating a strong performance exceeding guidance [4]. Business Line Data and Key Metrics Changes - The CRM business is projected to decrease from approximately 20% of total revenue today to about 10% by 2030, driven by growth in other business areas [10][11]. - The Crossix business had an outstanding year in 2026, but the growth rate is expected to face tougher comparisons in 2027 due to previous high performance [23]. Market Data and Key Metrics Changes - The company is seeing strong demand for core systems that can scale, particularly as clients modernize and automate their operations [7][8]. - Customer growth accelerated to 5%, attributed to strong execution in the Veeva Basics area targeting small emerging biotechs [38]. Company Strategy and Development Direction - The company aims to deepen strategic partnerships across the life sciences industry through innovation and customer success, focusing on automation and modernization of legacy systems [4][8]. - There is a significant emphasis on integrating AI solutions with core systems, as customers seek reliable and scalable applications [20][21]. Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the macro environment, noting that while some uncertainties remain, there is a trend towards greater clarity in the industry [68]. - The company is focused on delivering value through AI applications, which are expected to enhance operational efficiency and improve patient outcomes over the long term [64][65]. Other Important Information - The company has moved the CRM end of support date from September 2030 to December 2029, reflecting strong momentum in the Vault CRM product [72]. - The company is exploring opportunities to leverage contract research organizations (CROs) as a channel for study-by-study business, which could significantly contribute to revenue growth [84]. Q&A Session Summary Question: Is Veeva seeing programs funded for AI readiness? - Management indicated that while AI is a theme, the primary focus is on modernizing core systems and increasing automation [6][7]. Question: What is the outlook for the Crossix business in fiscal 27? - Management expects healthy growth from Crossix despite tougher comparisons due to last year's strong performance [23]. Question: How does the company view the CRM business's future? - The CRM business is expected to stabilize, with add-on products contributing to revenue, but overall revenue share is projected to decline by 2030 [10][11]. Question: What is the company's strategy regarding AI integration? - Management emphasized the importance of integrating AI solutions with core systems, as customers are looking for reliable and scalable applications [20][21]. Question: How firm are the commitments from top customers for Vault CRM? - Management expressed confidence in the commitments from customers, noting that projects are underway and the product is stable [98]. Question: What is the expected ramp-up in services revenue? - Management confirmed that the ramp-up in services revenue is accounted for in the guidance, with several top 20 projects at various phases [106].

Core Insights - Veeva Systems reported total revenues of $3,195.3 million for fiscal year 2026, reflecting a 16% year-over-year increase, with fourth-quarter revenues reaching $836.0 million, also up 16% year-over-year [1] - Subscription revenues for fiscal year 2026 were $2,684.2 million, a 17% increase year-over-year, while fourth-quarter subscription revenues were $707.7 million, up 16% year-over-year [1] - The company aims for a $6 billion revenue run rate by 2030, supported by strong momentum in its core business areas [1] Financial Performance - For Q4 2026, fully diluted net income per share was $1.45, up from $1.18 a year ago, while non-GAAP fully diluted net income per share was $2.06, compared to $1.74 [1] - Q4 net income was $244.2 million, a 25% increase from $195.6 million year-over-year, and non-GAAP net income was $346.1 million, up 20% from $287.9 million [1] - Fiscal year 2026 net income reached $908.9 million, a 27% increase from $714.1 million year-over-year, with non-GAAP net income at $1,352.5 million, up 24% from $1,090.4 million [1] Operational Highlights - Veeva's Vault CRM has over 125 customers, including two top 20 biopharmaceutical companies, with expectations for more to go live in 2026 [1] - The company made significant advancements in its Development Cloud and Quality Cloud, securing several top 20 biopharma wins [1] - Veeva AI is being integrated into core applications, with several customers already live and more projects in progress [1] Customer Base and Market Position - Veeva ended the year with 1,552 total customers, including 1,196 in R&D and Quality Solutions and 767 in Commercial Solutions [1] - The company achieved a $3 billion revenue run rate in early 2025, highlighting its consistent execution against growth goals [1] Financial Outlook - Guidance for Q1 fiscal 2027 includes non-GAAP fully diluted net income per share between $2.13 and $2.14, total revenues between $855 and $858 million [2] - Updated guidance for fiscal year 2027 anticipates total revenues between $3,585 and $3,600 million, with non-GAAP fully diluted net income per share projected at approximately $8.85 [2]

Core Insights - Veeva Systems (VEEV) is set to report its fiscal fourth-quarter 2026 results on March 04, with expectations of continued strong performance driven by its diversified revenue streams and ongoing CRM transition [1][8]. Segment Performance - Subscription revenue, a key driver of Veeva's margins, is anticipated to show sustained double-digit growth, supported by demand for R&D, Quality, and Crossix solutions [2]. - Professional Services are expected to reflect ongoing Vault CRM migrations and Development Cloud rollouts, indicating continued platform expansion despite potential near-term margin pressures [2]. CRM Transition - The ongoing Vault CRM transition is a major focus, with management noting that while most top biopharma customers are migrating, some are exploring alternative options. CRM now accounts for approximately 20% of total revenue, highlighting the company's diversification [3][17]. AI Integration - Veeva is accelerating AI integration across its product portfolio, which is expected to enhance productivity and drive long-term revenue growth. Early customer adoption signals and pricing commentary will be critical indicators of AI's impact on deal sizes and pipeline velocity [4][19]. Growth Drivers - Crossix and Development Cloud are emerging as significant growth drivers outside of CRM, with Crossix benefiting from increased digital marketing spend in pharma [5]. - Updates on R&D initiatives, particularly in Safety and newer modules like RTSM and eCOA, are crucial as they represent a significant portion of Veeva's revenue mix [6]. Financial Estimates - For the fourth quarter, revenues are projected at $808.9 million, reflecting a 12.2% year-over-year increase, while EPS is expected to grow by 10.3% to $1.92 [9]. Valuation Metrics - Veeva's forward price-to-sales (P/S) ratio stands at 8.4X, which is a premium compared to the industry average of 3.5X but a discount to its five-year median of 12.4X [15][16]. Long-Term Growth Potential - Veeva's long-term visibility is bolstered by its expanding Industry Cloud strategy and diversified revenue mix, with CRM now being a smaller part of the overall business [17]. - The integrated model across software, data, and consulting enhances product control and customer retention, positioning Veeva favorably in the market [18].

Group 1: Fund Performance - Baron Asset Fund achieved a return of 7.89% in Q4 2025, outperforming the Russell Midcap Growth Index by 11.59 percentage points, which ended the quarter down 3.70% [1] - The Fund held a total of 53 positions as of December 31, 2025, with the 10 largest holdings representing 52.8% of net assets and the 20 largest holdings representing 73.3% of net assets [1] Group 2: Veeva Systems Inc. Analysis - Veeva Systems Inc. (NYSE:VEEV) was highlighted as a notable detractor for the Baron Asset Fund, with a one-month return of -19.20% and a 12-month decline of 21.22% [2] - The company's market capitalization is reported at $30.347 billion [2] - Following a quarterly update in November, Veeva's management tempered expectations for customer retention, expecting only 14 of the top 20 global pharmaceutical companies to adopt its next-generation Vault CRM product, down from 18 for the legacy Veeva CRM [3] - The termination of Veeva's long-standing partnership with Salesforce has allowed for greater control over its product roadmap but has also introduced direct competition with Salesforce, which has announced its own product development efforts [3] - Despite recent challenges, the company retains long-term conviction in Veeva due to favorable secular tailwinds and confidence in its 2030 financial targets [3]

Market Overview - U.S. equity markets ended the fourth quarter positively, with the S&P 500 and Nasdaq 100 rising 2.4% and 2.6% respectively, while the Dow Jones Industrial Average led with a 3.6% return [2] - The Russell 1000 Growth Index lagged, increasing only 1.1% as investors shifted from high-growth technology stocks to more defensive sectors [2] - The quarter was marked by significant volatility, influenced by a 43-day government shutdown that affected market transparency and risk appetite [2] Economic and Monetary Policy - Approximately 83% of S&P 500 companies reported positive earnings surprises, indicating a broadening economic recovery beyond the "Magnificent Seven" [4] - The Federal Reserve implemented two 25-basis point cuts, bringing the federal funds rate to a range of 3.50% to 3.75% by year-end, and concluded its quantitative tightening program [4] - The Fed's balance sheet expanded by approximately $100 billion to $6.6 trillion, reflecting a shift from "abundant" to "ample" bank reserves [4] Sector Performance - Ithaka's portfolio underperformed the Russell 1000 Growth Index by 700 basis points, with stock selection detracting 740 basis points from relative performance [6] - Positive relative returns were generated in the Materials and Processing sector, while Technology and Consumer Discretionary sectors were significant sources of underperformance [7] - Weakness in Technology was attributed to fears of AI disintermediating software stocks, while Consumer Discretionary faced pressures from consumer spending concerns [7] Top Contributors and Detractors - Top contributors included Intuitive Surgical (26.6% return), Advanced Micro Devices (32.4%), and Alphabet (28.9%), driven by strong earnings and positive investor sentiment [9][10][12] - Major detractors were ServiceNow (-16.8%), Netflix (-21.8%), and Veeva Systems (-25.1%), with concerns over AI impacts and unexpected financial disclosures affecting stock performance [9][15][16] Investment Strategy and Outlook - Ithaka initiated three new positions and eliminated four during the quarter, with a trailing 12-month turnover of 22.1% [17] - The investment approach focuses on long-term wealth creation through concentrated positions in high-quality companies with strong management and favorable market conditions [4][19] - The narrative around AI is shifting towards tangible productivity gains, suggesting that the economic opportunities from AI will continue to expand [18]