When Veeva Systems filed its initial public offering papers last month, the sales software provider was looking to sell at $12 to $14 a share. It revised its target to $16 to $18 in the days before the IPO, but this too proved to underestimate what people were willing to pay.
In the end Veeva ($VEEV) and its existing stockholders sold 13 million shares priced at $20 apiece, generating $217 million for the company and valuing the business at upward of $2 billion. The first day of trading showed investors were willing to pay even more though. Veeva stock closed up 86% at the end of trading, giving the cloud company a market cap of nearly $5 billion.
In last month's S-1 filing Veeva said it had no specific plans for the cash, but acquisitions are a possibility. Veeva has already shown a willingness to expand through takeovers, having snagged AdvantageMS for $10.5 million in cash in June. Veeva is now in a position to consider bigger targets. As of the end of June, Veeva was sitting on $38.6 million in cash, and the IPO proceeds will further swell its coffers. The IPO has also served to make Veeva more visible, although its name was already ringing out in biopharma circles.
Since its founding in 2007, Veeva has signed up 33 of the top 50 biopharma companies--including Novartis ($NVS), Merck ($MRK) and Eli Lilly ($LLY)--as clients. In doing so, the company has eaten away at Oracle's ($ORCL) market share in the biopharma customer-relationship management software segment. The rapid rise has turned heads. Writing in VentureBeat, Comprehend Systems founder and CEO Rick Morrison called Veeva a great case study for vertically focused enterprise SaaS businesses.
"Veeva has only 170 customers, yet it's crossing over $200 million a year in revenue in 2013 and growing 100 percent year-over-year. It did all of this on one institutional round of $4 million," Morrison wrote.