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Veeva Systems (VEEV) Beats on Q2 Earnings, Revises FY24 Outlook
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Veeva Systems, Inc. (VEEV - Free Report) reported adjusted earnings per share (EPS) of $1.21 in the second quarter of fiscal 2024, reflecting an uptick of 17.5% from the year-ago EPS of $1.03. Adjusted EPS surpassed the Zacks Consensus Estimate by 8%.
GAAP EPS in the fiscal second quarter was 68 cents, up 21.4% from the year-ago period’s 56 cents.
Revenues
For the quarter, the company’s revenues totaled $590.2 million, outpacing the Zacks Consensus Estimate by 1.4%. On a year-over-year basis, the top line improved by 10.5%.
The fiscal second 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 second quarter, Subscription services revenues improved 9.8% from the year-ago quarter to $470.6 million. Our projection for fiscal second-quarter revenues was $465 million.
Professional services and other revenues were up 13.3% year over year to $119.6 million, primarily resulting from continued strength in Research and Development (R&D) Solutions services and Veeva Business Consulting. Our projection for fiscal second-quarter revenues was $116.7 million.
Veeva Systems Inc. Price, Consensus and EPS Surprise
In the quarter under review, Veeva Systems’ gross profit improved 10.1% to $421.2 million. However, the gross margin contracted 25 basis points (bps) to 71.4%.
We had projected 70.7% of gross margin for the fiscal second quarter.
Sales and marketing expenses rose 8.2% to $96.9 million. R&D expenses went up 17.3% year over year to $157.2 million, while general and administrative expenses climbed 8.8% year over year to $62.9 million. Total operating expenses of $317.2 million increased 12.7% year over year.
Operating profit totaled $104 million, which increased 2.9% from the prior-year quarter. However, the operating margin in the fiscal second quarter contracted 129 bps to 17.6%.
We had projected 16.4% of operating margin for the fiscal second quarter.
Financial Position
The company exited second-quarter fiscal 2024 with cash and cash equivalents and short-term investments of $3.87 billion compared with $3.61 billion at the fiscal first-quarter end.
Cumulative net cash provided by operating activities at the end of second-quarter fiscal 2024 was $770.9 million compared with $574.4 million in the year-ago period.
Guidance
Veeva Systems has revised its financial outlook for fiscal 2024 and provided its estimates for the third quarter of fiscal 2024.
For the third quarter of fiscal 2024, the company expects total revenues between $614 million and $616 million. The Zacks Consensus Estimate is currently pegged at $616.6 million.
Subscription revenues are estimated to be approximately $493 million in the fiscal third quarter.
Adjusted EPS is projected to be between $1.26 and $1.27. The Zacks Consensus Estimate for the metric is pegged at $1.24.
Veeva Systems now expects revenues for fiscal 2024 between $2,365 million and $2,370 million, narrowed from the earlier outlook of $2,360 and $2,370 million. The Zacks Consensus Estimate is currently pegged at $2.37 billion.
Subscription revenues are now expected to be $1.895, reflecting an uptick from the earlier projection of $1.890 billion. This consists of Commercial Solutions’ subscription revenues of around $985 million (up from the prior projection of $980 million) and R&D Solutions’ subscription revenues of approximately $910 million (unchanged from the prior projection).
Professional services and other revenues for fiscal 2024 are now expected to be between $470 million and $475 million, narrowed from the earlier projection of $470 million-$480 million.
Adjusted EPS for the year is now expected to be $4.68, indicating an increase from the previous outlook of $4.59. The Zacks Consensus Estimate for the metric is pegged at $4.57.
Our Take
Veeva Systems exited the second quarter of fiscal 2024 with better-than-expected results. The uptick in the overall top and bottom lines and robust performances by both segments during the quarter were impressive. The company continues to benefit from its flagship Vault platform, which is encouraging. Veeva Systems’ continued strength in its Commercial Solutions with new small- to mid-sized customer additions and strong win rates in core Veeva CRM looked promising.
Veeva Systems registered great traction in newer areas, including Veeva Vault Safety, Vault LIMS and Veeva Compass, which augurs well. The continued momentum in CTMS and eTMF in clinical operations raises our optimism.
On the flip side, the rising operating costs putting pressure on the margins during the quarter was concerning. The continued project scrutiny across the board and the challenging funding environment are putting pressure on smaller companies while some smaller companies have been acquired, sold assets or ceased operations. These dynamics are impacting some of Veeva Systems’ smaller biotech customers using its R&D products. This raises our apprehension.
Zacks Rank and Other Key Picks
Veeva Systems currently carries a Zacks Rank #2 (Buy).
A few other top-ranked stocks in the broader medical space that have announced quarterly results are DaVita Inc. (DVA - Free Report) , Integer Holdings Corporation (ITGR - Free Report) and McKesson Corporation (MCK - Free Report) .
DaVita, carrying a Zacks Rank of 2, reported second-quarter 2023 adjusted EPS of $2.08, beating the Zacks Consensus Estimate by 25.3%. Revenues of $3 billion outpaced the consensus mark by 1.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DaVita has a long-term estimated growth rate of 12.7%. DVA’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 21.4%.
Integer Holdings reported second-quarter 2023 adjusted EPS of $1.14, beating the Zacks Consensus Estimate by 15.2%. Revenues of $400 million surpassed the Zacks Consensus Estimate by 8.9%. It currently carries a Zacks Rank #2.
Integer Holdings has a long-term estimated growth rate of 12.1%. ITGR’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 8.4%.
McKesson reported first-quarter fiscal 2024 adjusted EPS of $7.27, beating the Zacks Consensus Estimate by 24.3%. Revenues of $74.48 billion surpassed the Zacks Consensus Estimate by 6.6%. It currently carries a Zacks Rank #2.
McKesson has a long-term estimated growth rate of 10.7%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 8.1%.
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Veeva Systems (VEEV) Beats on Q2 Earnings, Revises FY24 Outlook
Veeva Systems, Inc. (VEEV - Free Report) reported adjusted earnings per share (EPS) of $1.21 in the second quarter of fiscal 2024, reflecting an uptick of 17.5% from the year-ago EPS of $1.03. Adjusted EPS surpassed the Zacks Consensus Estimate by 8%.
GAAP EPS in the fiscal second quarter was 68 cents, up 21.4% from the year-ago period’s 56 cents.
Revenues
For the quarter, the company’s revenues totaled $590.2 million, outpacing the Zacks Consensus Estimate by 1.4%. On a year-over-year basis, the top line improved by 10.5%.
The fiscal second 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 second quarter, Subscription services revenues improved 9.8% from the year-ago quarter to $470.6 million. Our projection for fiscal second-quarter revenues was $465 million.
Professional services and other revenues were up 13.3% year over year to $119.6 million, primarily resulting from continued strength in Research and Development (R&D) Solutions services and Veeva Business Consulting. Our projection for fiscal second-quarter revenues was $116.7 million.
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 improved 10.1% to $421.2 million. However, the gross margin contracted 25 basis points (bps) to 71.4%.
We had projected 70.7% of gross margin for the fiscal second quarter.
Sales and marketing expenses rose 8.2% to $96.9 million. R&D expenses went up 17.3% year over year to $157.2 million, while general and administrative expenses climbed 8.8% year over year to $62.9 million. Total operating expenses of $317.2 million increased 12.7% year over year.
Operating profit totaled $104 million, which increased 2.9% from the prior-year quarter. However, the operating margin in the fiscal second quarter contracted 129 bps to 17.6%.
We had projected 16.4% of operating margin for the fiscal second quarter.
Financial Position
The company exited second-quarter fiscal 2024 with cash and cash equivalents and short-term investments of $3.87 billion compared with $3.61 billion at the fiscal first-quarter end.
Cumulative net cash provided by operating activities at the end of second-quarter fiscal 2024 was $770.9 million compared with $574.4 million in the year-ago period.
Guidance
Veeva Systems has revised its financial outlook for fiscal 2024 and provided its estimates for the third quarter of fiscal 2024.
For the third quarter of fiscal 2024, the company expects total revenues between $614 million and $616 million. The Zacks Consensus Estimate is currently pegged at $616.6 million.
Subscription revenues are estimated to be approximately $493 million in the fiscal third quarter.
Adjusted EPS is projected to be between $1.26 and $1.27. The Zacks Consensus Estimate for the metric is pegged at $1.24.
Veeva Systems now expects revenues for fiscal 2024 between $2,365 million and $2,370 million, narrowed from the earlier outlook of $2,360 and $2,370 million. The Zacks Consensus Estimate is currently pegged at $2.37 billion.
Subscription revenues are now expected to be $1.895, reflecting an uptick from the earlier projection of $1.890 billion. This consists of Commercial Solutions’ subscription revenues of around $985 million (up from the prior projection of $980 million) and R&D Solutions’ subscription revenues of approximately $910 million (unchanged from the prior projection).
Professional services and other revenues for fiscal 2024 are now expected to be between $470 million and $475 million, narrowed from the earlier projection of $470 million-$480 million.
Adjusted EPS for the year is now expected to be $4.68, indicating an increase from the previous outlook of $4.59. The Zacks Consensus Estimate for the metric is pegged at $4.57.
Our Take
Veeva Systems exited the second quarter of fiscal 2024 with better-than-expected results. The uptick in the overall top and bottom lines and robust performances by both segments during the quarter were impressive. The company continues to benefit from its flagship Vault platform, which is encouraging. Veeva Systems’ continued strength in its Commercial Solutions with new small- to mid-sized customer additions and strong win rates in core Veeva CRM looked promising.
Veeva Systems registered great traction in newer areas, including Veeva Vault Safety, Vault LIMS and Veeva Compass, which augurs well. The continued momentum in CTMS and eTMF in clinical operations raises our optimism.
On the flip side, the rising operating costs putting pressure on the margins during the quarter was concerning. The continued project scrutiny across the board and the challenging funding environment are putting pressure on smaller companies while some smaller companies have been acquired, sold assets or ceased operations. These dynamics are impacting some of Veeva Systems’ smaller biotech customers using its R&D products. This raises our apprehension.
Zacks Rank and Other Key Picks
Veeva Systems currently carries a Zacks Rank #2 (Buy).
A few other top-ranked stocks in the broader medical space that have announced quarterly results are DaVita Inc. (DVA - Free Report) , Integer Holdings Corporation (ITGR - Free Report) and McKesson Corporation (MCK - Free Report) .
DaVita, carrying a Zacks Rank of 2, reported second-quarter 2023 adjusted EPS of $2.08, beating the Zacks Consensus Estimate by 25.3%. Revenues of $3 billion outpaced the consensus mark by 1.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DaVita has a long-term estimated growth rate of 12.7%. DVA’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 21.4%.
Integer Holdings reported second-quarter 2023 adjusted EPS of $1.14, beating the Zacks Consensus Estimate by 15.2%. Revenues of $400 million surpassed the Zacks Consensus Estimate by 8.9%. It currently carries a Zacks Rank #2.
Integer Holdings has a long-term estimated growth rate of 12.1%. ITGR’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 8.4%.
McKesson reported first-quarter fiscal 2024 adjusted EPS of $7.27, beating the Zacks Consensus Estimate by 24.3%. Revenues of $74.48 billion surpassed the Zacks Consensus Estimate by 6.6%. It currently carries a Zacks Rank #2.
McKesson has a long-term estimated growth rate of 10.7%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 8.1%.