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Why Is Veeva (VEEV) Down 2.8% Since Last Earnings Report?
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A month has gone by since the last earnings report for Veeva Systems (VEEV - Free Report) . Shares have lost about 2.8% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Veeva due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Veeva Systems Beats on Q2 Earnings, Revises FY24 Outlook
Veeva Systems reported adjusted earnings per share of $1.21 in the second quarter of fiscal 2024, reflecting an uptick of 17.5% from the year-ago earnings per share of $1.03. Adjusted earnings per share surpassed the Zacks Consensus Estimate by 8%.
GAAP earnings per share 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.
Professional services and other revenues were up 13.3% year over year to $119.6 million, primarily resulting from continued strength in R&D Solutions services and Veeva Business Consulting.
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%.
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%.
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 earnings per share 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 earnings per share 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.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, Veeva has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Veeva has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Veeva (VEEV) Down 2.8% Since Last Earnings Report?
A month has gone by since the last earnings report for Veeva Systems (VEEV - Free Report) . Shares have lost about 2.8% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Veeva due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Veeva Systems Beats on Q2 Earnings, Revises FY24 Outlook
Veeva Systems reported adjusted earnings per share of $1.21 in the second quarter of fiscal 2024, reflecting an uptick of 17.5% from the year-ago earnings per share of $1.03. Adjusted earnings per share surpassed the Zacks Consensus Estimate by 8%.
GAAP earnings per share 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.
Professional services and other revenues were up 13.3% year over year to $119.6 million, primarily resulting from continued strength in R&D Solutions services and Veeva Business Consulting.
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%.
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%.
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 earnings per share 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 earnings per share 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.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, Veeva has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Veeva has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.