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Veeva Systems (VEEV) Beats on Q1 Earnings, Ups FY23 View
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Veeva Systems, Inc. (VEEV - Free Report) reported adjusted earnings per share (“EPS”) of 99 cents in the first quarter of fiscal 2023, reflecting an improvement of 8.8% from the year-ago EPS of 91 cents. Adjusted EPS surpassed the Zacks Consensus Estimate by 7.6%.
GAAP EPS in the fiscal first quarter was 62 cents, down by 12.7% from the year-ago EPS of 71 cents.
Revenues
For the quarter, the company’s revenues totaled $505.1 million, outpacing the Zacks Consensus Estimate by 1.9%. On a year-over-year basis, the top line improved 16.5%.
The first-quarter top line was driven by Veeva Systems’ robust segmental performances.
Segmental Details
Veeva Systems derives revenues from two operating segments — Subscription services; and Professional services and other.
In the fiscal first quarter, Subscription services revenues improved 18% from the year-ago quarter to $402.6 million, primarily driven by the company’s Commercial Solutions. This included strong growth from Veeva Crossix and Veeva Vault Commercial, as well as continued strength in the CRM Suite (driven by increased adoption of CRM add-on products).
Professional services and other revenues were up 10.8% year over year to $102.5 million, primarily resulting from continued strong demand for professional services related to Veeva Systems’ Research and Development (R&D) Solutions and sustained contribution from Veeva Business Consulting.
Veeva Systems Inc. Price, Consensus and EPS Surprise
In the quarter under review, Veeva Systems’ gross profit rose 17.7% to $436.9 million. Gross margin expanded 86 basis points (bps) to 86.5%.
Meanwhile, sales and marketing expenses rose 17.8% to $76.1 million. R&D expenses went up 36.3% year over year to $113.5 million, while general and administrative expenses climbed 17.4% year over year to $48.3 million. Total operating expenses of $237.9 million increased 25.9% year over year.
Operating profit totaled $199.1 million, which surged 9.1% from the prior-year quarter. Operating margin in the first quarter contracted 265 bps to 39.4%.
Financial Position
The company exited first-quarter fiscal 2023 with cash and cash equivalents, and short-term investments of $2.84 billion compared with $2.38 billion at the end of fiscal 2022.
Net cash provided by operating activities at the end of first-quarter fiscal 2023 was $481 million compared with $478.4 million in the year-ago period.
Guidance
Veeva Systems has provided its financial outlook for fiscal 2023 second quarter and upped its estimates for the full fiscal year.
For the second quarter of fiscal 2023, the company expects total revenues to be $529-$531 million. The Zacks Consensus Estimate for the same is currently pegged at $528.7 million.
Subscription revenues are estimated to be approximately $426 million in the fiscal second quarter.
Adjusted EPS is projected to be $1.00-$1.01. The Zacks Consensus Estimate for the metric is pegged at 98 cents.
Veeva Systems now expects its revenues for fiscal year 2023 to be in the range of $2,165-$2,175 million, up from its earlier-provided outlook range of $2,160-$2,170 million. The Zacks Consensus Estimate for the same is currently pegged at $2.17 billion.
Subscription services revenues are continued to be expected to be $1.745 billion for fiscal 2023, consisting of Commercial Solutions’ subscription revenues of around $955 million and R&D Solutions’ subscription revenues of approximately $790 million.
Adjusted EPS for the year is expected to be $4.16, up from its earlier projection of $4.02. The Zacks Consensus Estimate for the metric is pegged at $4.02.
Our Take
Veeva Systems exited the first quarter of fiscal 2023 with better-than-expected results. Both of its segments performed impressively during the quarter. The company continues to benefit from its flagship Vault platform, which is encouraging. Veeva Commercial Cloud’s continued strength looks impressive. Robust adoption of Veeva Systems’ products augers well for the company. Expansion of gross margin also bodes well.
On the flip side, rising operating costs putting pressure on the operating margin during the quarter is a headwind.
Zacks Rank and Stocks to Consider
Veeva Systems currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader medical space that have announced quarterly results are UnitedHealth Group Incorporated (UNH - Free Report) , AMN Healthcare Services, Inc. (AMN - Free Report) and Masimo Corporation (MASI - Free Report) .
UnitedHealth, having a Zacks Rank #2 (Buy), reported first-quarter 2022 adjusted EPS of $5.49, which beat the Zacks Consensus Estimate by 1.7%. Revenues of $80.1 billion outpaced the consensus mark by 1.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
UnitedHealth has an estimated long-term growth rate of 14.8%. UNH’s earnings surpassed estimates in the trailing four quarters, the average surprise being 3.7%.
AMN Healthcare, sporting a Zacks Rank #1, reported first-quarter 2022 adjusted EPS of $3.49, which beat the Zacks Consensus Estimate by 7.4%. Revenues of $1.55 billion outpaced the consensus mark by 3.7%.
AMN Healthcare has an estimated long-term growth rate of 1.1%. AMN’s earnings surpassed estimates in the trailing four quarters, the average surprise being 15.6%.
Masimo reported first-quarter 2022 adjusted EPS of 93 cents, which surpassed the Zacks Consensus Estimate by 1.1%. Revenues of $304.2 million outpaced the Zacks Consensus Estimate by 3.6%. It currently carries a Zacks Rank #2.
Masimo has an earnings yield of 3.4% against the industry’s negative yield. MASI’s earnings surpassed estimates in the trailing four quarters, the average surprise being 4.4%.
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Veeva Systems (VEEV) Beats on Q1 Earnings, Ups FY23 View
Veeva Systems, Inc. (VEEV - Free Report) reported adjusted earnings per share (“EPS”) of 99 cents in the first quarter of fiscal 2023, reflecting an improvement of 8.8% from the year-ago EPS of 91 cents. Adjusted EPS surpassed the Zacks Consensus Estimate by 7.6%.
GAAP EPS in the fiscal first quarter was 62 cents, down by 12.7% from the year-ago EPS of 71 cents.
Revenues
For the quarter, the company’s revenues totaled $505.1 million, outpacing the Zacks Consensus Estimate by 1.9%. On a year-over-year basis, the top line improved 16.5%.
The first-quarter top line was driven by Veeva Systems’ robust segmental performances.
Segmental Details
Veeva Systems derives revenues from two operating segments — Subscription services; and Professional services and other.
In the fiscal first quarter, Subscription services revenues improved 18% from the year-ago quarter to $402.6 million, primarily driven by the company’s Commercial Solutions. This included strong growth from Veeva Crossix and Veeva Vault Commercial, as well as continued strength in the CRM Suite (driven by increased adoption of CRM add-on products).
Professional services and other revenues were up 10.8% year over year to $102.5 million, primarily resulting from continued strong demand for professional services related to Veeva Systems’ Research and Development (R&D) Solutions and sustained contribution from Veeva Business Consulting.
Veeva Systems Inc. Price, Consensus and EPS Surprise
Veeva Systems Inc. price-consensus-eps-surprise-chart | Veeva Systems Inc. Quote
Margin Details
In the quarter under review, Veeva Systems’ gross profit rose 17.7% to $436.9 million. Gross margin expanded 86 basis points (bps) to 86.5%.
Meanwhile, sales and marketing expenses rose 17.8% to $76.1 million. R&D expenses went up 36.3% year over year to $113.5 million, while general and administrative expenses climbed 17.4% year over year to $48.3 million. Total operating expenses of $237.9 million increased 25.9% year over year.
Operating profit totaled $199.1 million, which surged 9.1% from the prior-year quarter. Operating margin in the first quarter contracted 265 bps to 39.4%.
Financial Position
The company exited first-quarter fiscal 2023 with cash and cash equivalents, and short-term investments of $2.84 billion compared with $2.38 billion at the end of fiscal 2022.
Net cash provided by operating activities at the end of first-quarter fiscal 2023 was $481 million compared with $478.4 million in the year-ago period.
Guidance
Veeva Systems has provided its financial outlook for fiscal 2023 second quarter and upped its estimates for the full fiscal year.
For the second quarter of fiscal 2023, the company expects total revenues to be $529-$531 million. The Zacks Consensus Estimate for the same is currently pegged at $528.7 million.
Subscription revenues are estimated to be approximately $426 million in the fiscal second quarter.
Adjusted EPS is projected to be $1.00-$1.01. The Zacks Consensus Estimate for the metric is pegged at 98 cents.
Veeva Systems now expects its revenues for fiscal year 2023 to be in the range of $2,165-$2,175 million, up from its earlier-provided outlook range of $2,160-$2,170 million. The Zacks Consensus Estimate for the same is currently pegged at $2.17 billion.
Subscription services revenues are continued to be expected to be $1.745 billion for fiscal 2023, consisting of Commercial Solutions’ subscription revenues of around $955 million and R&D Solutions’ subscription revenues of approximately $790 million.
Adjusted EPS for the year is expected to be $4.16, up from its earlier projection of $4.02. The Zacks Consensus Estimate for the metric is pegged at $4.02.
Our Take
Veeva Systems exited the first quarter of fiscal 2023 with better-than-expected results. Both of its segments performed impressively during the quarter. The company continues to benefit from its flagship Vault platform, which is encouraging. Veeva Commercial Cloud’s continued strength looks impressive. Robust adoption of Veeva Systems’ products augers well for the company. Expansion of gross margin also bodes well.
On the flip side, rising operating costs putting pressure on the operating margin during the quarter is a headwind.
Zacks Rank and Stocks to Consider
Veeva Systems currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader medical space that have announced quarterly results are UnitedHealth Group Incorporated (UNH - Free Report) , AMN Healthcare Services, Inc. (AMN - Free Report) and Masimo Corporation (MASI - Free Report) .
UnitedHealth, having a Zacks Rank #2 (Buy), reported first-quarter 2022 adjusted EPS of $5.49, which beat the Zacks Consensus Estimate by 1.7%. Revenues of $80.1 billion outpaced the consensus mark by 1.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
UnitedHealth has an estimated long-term growth rate of 14.8%. UNH’s earnings surpassed estimates in the trailing four quarters, the average surprise being 3.7%.
AMN Healthcare, sporting a Zacks Rank #1, reported first-quarter 2022 adjusted EPS of $3.49, which beat the Zacks Consensus Estimate by 7.4%. Revenues of $1.55 billion outpaced the consensus mark by 3.7%.
AMN Healthcare has an estimated long-term growth rate of 1.1%. AMN’s earnings surpassed estimates in the trailing four quarters, the average surprise being 15.6%.
Masimo reported first-quarter 2022 adjusted EPS of 93 cents, which surpassed the Zacks Consensus Estimate by 1.1%. Revenues of $304.2 million outpaced the Zacks Consensus Estimate by 3.6%. It currently carries a Zacks Rank #2.
Masimo has an earnings yield of 3.4% against the industry’s negative yield. MASI’s earnings surpassed estimates in the trailing four quarters, the average surprise being 4.4%.