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Veeva’s third quarter 2025 results demonstrated that its growth is continuing to slow, yet this is still an incredibly profitable business.

• Total Revenue: Q3 total revenue was $699 million, up from $616 million one year ago and an increase of 13% year over year.
• Subscription Revenue: Subscription services revenue was $581 million, up from $495 million one year ago, an increase of 17% year over year.
• Operating Income: Q3 operating income was $181 million, compared to $128 million one year ago, an increase of 41% year over year. Non-GAAP operating income for the third quarter was $304.0 million, compared to $234.6 million one year ago, an increase of 30% year over year.
• Net Income: Q3 net income was $186 million, compared to $135 million one year ago, an increase of 37% year over year. Non-GAAP net income for the third quarter was $288.3 million, compared to $218.7 million one year ago, an increase of 32% year over year.

Veeva is a very profitable business, spending very little on its costs of goods sold (25% of sales) since this is cloud-based software and also requiring very limited marketing (11% of sales) since they already have all of the largest customers onboard.

Veeva is also a low-risk investment. It has zero debt and is converting 40% of revenue into free cash flow.

However, it doesn’t appear to know what to do with those cash flows. Its cash balance has doubled in three years, from $2.5 billion in early 2022 to more than $5 billion today.

And similar to previous quarters, VEEV the stock remains expensive and is still selling at 57x trailing earnings and 36x trailing free cash flow. While that sounds pretty steep in absolute terms, those are actually the most-attractive multiples we’ve seen for this stock in the past five years. I don’t think the contracting valuation multiples are unreasonable though, especially with the top-line (for recurring subscription services) growing at just 17% annually.

I like the management team here, especially seeing CEO and co-founder Peter Gassner still at the helm. I also love Veeva’s entrenched competitive position and its outsized profitability.

Yet even as one of the most stable companies in the health care sector, the stock’s investment returns are entirely a function of its growing fundamentals. It’s too expensive to see significant multiple expansion and it’s not paying a dividend.

I would really like to see them be more shareholder-friendly and to do something more aggressively with that rising war chest of cash. If nothing else, at least repurchase shares to offset the dilution of their stock-based compensation.

I’m reaffirming Buy conviction for Veeva Systems.