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Veeva Systems (VEEV) Stock Rallies on Q1 Earnings Beat
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Shares of Veeva Systems Inc. (VEEV - Free Report) surged almost 10% in after-hours trading following the company’s impressive first-quarter fiscal 2017 results. Veeva reported adjusted earnings of 11 cents per share (including stock-based compensation and deferred compensation associated with the Zinc Ahead acquisition), which beat the Zacks Consensus Estimate by four cents.
Adjusted earnings (excluding stock-based compensation) improved 25% on a year-over-year basis to 15 cents. The upside was driven by revenue growth of 33.2%, which totaled almost $120 million, well ahead of the Zacks Consensus Estimate of $115 million.
Revenue Details
Subscription revenues rose 39.4% year over year to $96 million, driven by growth across product lines. Professional services revenues increased almost 13% to $23.7 million, primarily owing to strong adoption of the Vault product.
Veeva noted that subscription revenues continued to grow faster than services, thereby increasing the recurring part of the revenue mix.
Veeva announced the launch of Veeva Vault QMS for the quality management market. The new application expands Vault’s presence into 10 markets. The addition of QMS doubles the company’s growth opportunities in the quality management market. Vault QMS will be available from late June.
Veeva’s regulatory application suite – Veeva Vault Registrations and Veeva Vault SubmissionsArchive – released in Dec 2015, gained solid traction within a short span of time, with 11 customers choosing the application.
Margin Details
Adjusted gross margin (including stock-based compensation and deferred compensation associated with Zinc Ahead acquisition) expanded 170 basis points (bps) to 66.8%.
Adjusted gross margin (excluding stock-based compensation and deferred compensation associated with Zinc Ahead acquisition) expanded 190 bps driven by favorable revenue mix (higher percentage of subscription revenues) and 100 bps expansion in subscription gross margin. On the contrary, services gross margin contracted almost 350 bps impacted by the zinc business.
The expansion in subscription gross margin was driven by faster growth of non-CRM products in the CRM add-ons, which have higher gross margin as compared to SFA products.
However, the strong gross margin expansion was fully offset by higher operating expenses.
Operating expenses (including stock based compensation and deferred compensation associated with Zinc Ahead acquisition), as a percentage of revenues, was 50.1% as compared with 41.1% in the year-ago quarter.
Operating expenses (excluding stock based compensation and deferred compensation associated with Zinc Ahead acquisition), as a percentage of revenues, was 43.3% as compared with 36.7% in the year-ago quarter. This was primarily due to higher sales & marketing (up 350 bps), research & development (up 360 bps), and general and administrative expenses (up 70 bps).
Veeva added 68 people in the quarter, taking the count to 1,542, up from 1,022 reported in the year-ago quarter.
As a result, operating margin (including stock based compensation and deferred compensation associated with Zinc Ahead acquisition) contracted 730 bps from the year-ago quarter to 16.6%.
Operating margin (excluding stock based compensation and deferred compensation associated with Zinc Ahead acquisition) contracted 470 bps to 24.6%, which was above the high-end of management’s guidance, primarily due to top-line growth.
Calculated billings totaled $143 million, up 62% on a year-over-year basis, which was better than management’s guidance of $125 million.
Guidance
Veeva expects total revenues in the range of $125.5–$127 million for the second quarter of fiscal 2017. Meanwhile, non-GAAP operating income is expected between $30 million and $30.5 million. Non-GAAP earnings are likely to be 13 cents per share.
For the second quarter, management expects calculated billings of roughly $110 million which represents about 14% growth on a year-over-year basis.
For fiscal 2017, total revenues are now expected in the band of $516--$520 million, up from $508–$513 million. Based on the strong first-quarter results, Veeva now believes that it will be able to achieve the projected billings growth range of 23% to 24% for the fiscal.
Veeva continues to expect subscription revenues to be up at least 30% for the fiscal. Management expects to achieve revenue run rate target of $1 billion by 2020, driven by strong adoption of its solutions in the life sciences market alone.
Non-GAAP operating income is likely to come in between $127 million and $131 million (margin of 25%), up from the previous guidance of $122.5 million to $127.5 million (margin of 24.5%).
Non-GAAP earnings are forecasted in the range of 55 cents and to 57 cents, up from the earlier guided range of 54 cents to 56 cents.
Zacks Rank & Key Picks
Veeva currently has a Zacks Rank #3 (Hold).
Better-ranked stocks in the same space are Paylocity Holding Corporation (PCTY - Free Report) , 2U Inc. (TWOU - Free Report) and Amber Road Inc. . While Paylocity Holding sports a Zacks Rank #1 (Strong Buy), 2U and Amber carry a Zacks Rank #2 (Buy).
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Veeva Systems (VEEV) Stock Rallies on Q1 Earnings Beat
Shares of Veeva Systems Inc. (VEEV - Free Report) surged almost 10% in after-hours trading following the company’s impressive first-quarter fiscal 2017 results. Veeva reported adjusted earnings of 11 cents per share (including stock-based compensation and deferred compensation associated with the Zinc Ahead acquisition), which beat the Zacks Consensus Estimate by four cents.
Adjusted earnings (excluding stock-based compensation) improved 25% on a year-over-year basis to 15 cents. The upside was driven by revenue growth of 33.2%, which totaled almost $120 million, well ahead of the Zacks Consensus Estimate of $115 million.
Revenue Details
Subscription revenues rose 39.4% year over year to $96 million, driven by growth across product lines. Professional services revenues increased almost 13% to $23.7 million, primarily owing to strong adoption of the Vault product.
Veeva noted that subscription revenues continued to grow faster than services, thereby increasing the recurring part of the revenue mix.
Veeva announced the launch of Veeva Vault QMS for the quality management market. The new application expands Vault’s presence into 10 markets. The addition of QMS doubles the company’s growth opportunities in the quality management market. Vault QMS will be available from late June.
Veeva’s regulatory application suite – Veeva Vault Registrations and Veeva Vault SubmissionsArchive – released in Dec 2015, gained solid traction within a short span of time, with 11 customers choosing the application.
Margin Details
Adjusted gross margin (including stock-based compensation and deferred compensation associated with Zinc Ahead acquisition) expanded 170 basis points (bps) to 66.8%.
Adjusted gross margin (excluding stock-based compensation and deferred compensation associated with Zinc Ahead acquisition) expanded 190 bps driven by favorable revenue mix (higher percentage of subscription revenues) and 100 bps expansion in subscription gross margin. On the contrary, services gross margin contracted almost 350 bps impacted by the zinc business.
The expansion in subscription gross margin was driven by faster growth of non-CRM products in the CRM add-ons, which have higher gross margin as compared to SFA products.
However, the strong gross margin expansion was fully offset by higher operating expenses.
Operating expenses (including stock based compensation and deferred compensation associated with Zinc Ahead acquisition), as a percentage of revenues, was 50.1% as compared with 41.1% in the year-ago quarter.
Operating expenses (excluding stock based compensation and deferred compensation associated with Zinc Ahead acquisition), as a percentage of revenues, was 43.3% as compared with 36.7% in the year-ago quarter. This was primarily due to higher sales & marketing (up 350 bps), research & development (up 360 bps), and general and administrative expenses (up 70 bps).
Veeva added 68 people in the quarter, taking the count to 1,542, up from 1,022 reported in the year-ago quarter.
As a result, operating margin (including stock based compensation and deferred compensation associated with Zinc Ahead acquisition) contracted 730 bps from the year-ago quarter to 16.6%.
Operating margin (excluding stock based compensation and deferred compensation associated with Zinc Ahead acquisition) contracted 470 bps to 24.6%, which was above the high-end of management’s guidance, primarily due to top-line growth.
Calculated billings totaled $143 million, up 62% on a year-over-year basis, which was better than management’s guidance of $125 million.
Guidance
Veeva expects total revenues in the range of $125.5–$127 million for the second quarter of fiscal 2017. Meanwhile, non-GAAP operating income is expected between $30 million and $30.5 million. Non-GAAP earnings are likely to be 13 cents per share.
For the second quarter, management expects calculated billings of roughly $110 million which represents about 14% growth on a year-over-year basis.
For fiscal 2017, total revenues are now expected in the band of $516--$520 million, up from $508–$513 million. Based on the strong first-quarter results, Veeva now believes that it will be able to achieve the projected billings growth range of 23% to 24% for the fiscal.
Veeva continues to expect subscription revenues to be up at least 30% for the fiscal. Management expects to achieve revenue run rate target of $1 billion by 2020, driven by strong adoption of its solutions in the life sciences market alone.
Non-GAAP operating income is likely to come in between $127 million and $131 million (margin of 25%), up from the previous guidance of $122.5 million to $127.5 million (margin of 24.5%).
Non-GAAP earnings are forecasted in the range of 55 cents and to 57 cents, up from the earlier guided range of 54 cents to 56 cents.
Zacks Rank & Key Picks
Veeva currently has a Zacks Rank #3 (Hold).
Better-ranked stocks in the same space are Paylocity Holding Corporation (PCTY - Free Report) , 2U Inc. (TWOU - Free Report) and Amber Road Inc. . While Paylocity Holding sports a Zacks Rank #1 (Strong Buy), 2U and Amber carry a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>