Veeva Systems Vs Salesforce Stock: Veeva and Salesforce make cloud-based customer relationship management (CRM) solutions. Practically all businesses use CRMs to help them communicate with customers, improve customer services, predict what products and services customers want, and automate everyday tasks.
Pros and Cons of Investing in Cloud Computing
Cloud computing has changed the way people and businesses use technology. You probably use cloud technology daily without thinking about it.
Pros of Investing in Cloud Computing
Enterprise cloud computing can save companies a lot of money by reducing their server and software costs. Instead of buying servers upfront, companies can simply rent them from Amazon AWS for example.
CRMs can also make it easier and cheaper for companies to manage relationships with their customers. Ever wonder how some companies are so good at knowing precisely what email to send you after you purchase or fail to purchase? CRMs automate the email process and help businesses communicate at scale with customers.
But they also do much more. They track customer activity too, and sales, and refunds, and all sorts of other key performance indicators for businesses.
The upfront savings and benefits of cloud software from developers like Veeva Systems and Salesforce likely mean that they will have steady streams of revenue for the foreseeable future. Unless something radical disrupts the industry, the companies should prosper.
The Cons of Investing in Cloud Computing
As with any investment opportunity, buying stock in Veeva Systems or Salesforce creates some risk. When cloud services go offline, the risks to businesses dependent on them is significant.
Plus businesses who choose to rely on them are essentially signing up for in recurring monthly costs forever more. So what does that mean for investors?
While these cloud computing companies almost certainly won’t fail, unless a worldwide recession makes it difficult for clients to buy their services. If a worldwide recession happens, it doesn’t matter what stock you own. The market will fall quickly.
Small businesses in particular who make up a large chunk of cloud computing companies’ clients may be tempted to cut ties and find cheaper solutions, which in turn would impact Veeva top line revenues and those of CRM too.
Is Salesforce Stock a Buy?
Salesforce Is a sales juggernaut. Still growing at around 20% annually, the company has a reputation for delivering on its top line.
But investors in the past have expressed concern that the company issues too much of its stock to employees. Employee stock compensation dilutes investors over time so it becomes every more challenging to discern how much your investment will be worth after dilutive effects, even if the company delivers on its financial projections.
Customers are loyal to CRM for its extraordinary flexibility. Any business owner who wants to track their own customers’ interactions can do so easily using Salesforce. However, the upfront learning curve is significant which is why smaller businesses tend to migrate towards solutions like Keap.
Following the COVID scare, the future is likely more bright than gloomy for Salesforce. More and more companies will remove manual tasks and move to automated solutions, and Salesforce enables businesses who have remote teams to work collaboratively easily.
Is Salesforce stock a buy? If you’re not worried about the dilutive effects of employee issued stock compensation, it remains a top tier investment opportunity.
Should You Invest in Veeva Systems?
Veeva Systems hasn’t been in business six years less than Salesforce, so it had some catching up to do for a while.
Indeed Veeva has in some ways been inspired by Salesforce. Its founder was a CRM employee previously and spotted a market opportunity to apply customer relationship management software to the life science industry.
Life sciences is a tricky area that spans everything from regulatory documentation to clinical processes. Historically companies had relied on various vendors to support them but Veeva bundled all their needs into a single offering that has allowed it capture significant market share.
For investors the opportunity for Veeva lies beyond life sciences. The company is looking to branch out beyond its core client base to serve other industries and believes an additional billion dollar opportunity lies there.
Plus its Veeva Vault product has catalyzed rapid revenue acceleration. The combination bodes very well for the future of Veeva Systems and investors who are keen to ride the coattails of its financial growth.
Veeva Systems Vs Salesforce Stock: The Bottom Line
Veeva Systems is a smaller niche play in the world of customer relationship management cloud-based computing offerings. But it’s growing fast, and expanding beyond its original vertical of life sciences.
Salesforce is the big gorilla in the industry and dominates others CRMs with its robust platform. It is a very attractive investment opportunity because once its own customers have adopted its CRM, the friction to leave is very high. That means constant recurring revenues for the foreseeable future.
Plus Salesforce is still growing at a rapid pace. The question for investors may not be so much Veeva vs Salesforce as much as it is VEEV + CRM? Both companies are delivering sales growth and offer significant upside potential, albeit with slightly different customer focuses so you can capitalize by spreading risk between both companies.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.