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Veeva Systems (VEEV) Beats on Q4 Earnings and Revenues

Zacks Equity Research

Veeva Systems Inc. VEEV reported fourth-quarter fiscal 2019 adjusted earnings of 45 cents per share, which surpassed the Zacks Consensus Estimate of 31 cents. The bottom line also increased a whopping 87.5% on a year-over-year basis.

Total revenues came in at $232.3 million, outpacing the Zacks Consensus Estimate of $228 million. On a year-over-year basis, the top line improved 25%.

The company has a Zacks Rank #3 (Hold).

Segmental Details

Subscription Service

Fiscal fourth-quarter subscription service revenues summed $190.7 million, up 25.5% year over year. Per management, solid momentum in bookings continued across all areas of Vault, which was 45% of subscription revenues compared with 39% a year ago.

Professional Service and Others

Professional Service revenues rose almost 22.4% to $41.7 million from the figure registered in the year-ago quarter.

According to Veeva Systems, this improvement in revenues can be attributed to continued strong demand within Veeva Vault R&D (research and development). Management also remains optimistic about the segment’s impressive performance in the first quarter of fiscal 2020.

Margin Details

In the reported quarter, adjusted gross profit increased 31.2% to $171.9 million. Adjusted gross margin was 74%, which expanded 360 basis points (bps).

Adjusted operating income totaled $84.3 million, up 52.8% year over year. In the quarter under review, the adjusted operating margin was 36.3%, which expanded 660 bps. Per management, the upside was driven by impressive top-line performance.

However, adjusted operating expenses rose 15.7% year over year to $87.6 million.


For first-quarter fiscal 2020, Veeva Systems expects total revenues to be between $238 million and $239 million. The Zacks Consensus Estimate for the same is pegged at $234.2 million, below the guided range.

Adjusted earnings are expected to be between 44 cents and 45 cents per share. The Zacks Consensus Estimate for the same stands at 40 cents, below the projected figure. Adjusted operating income is expected in the $85-$86 million band.

Veeva Systems issued guidance for fiscal 2020 as well.

Revenues are expected to be between $1.02 billion and $1.03 billion in fiscal 2020. The Zacks Consensus Estimate for the same stands at $1.02 billion, in line with the lower end of the guided range.

For the fiscal year, adjusted earnings are anticipated in the range of $1.91-$1.94 per share. The Zacks Consensus Estimate for earnings is pinned at $1.79, below the projected range.

Wrapping Up

Veeva Systems ended the fiscal fourth quarter on a strong note, wherein earnings and revenues outpaced the Zacks Consensus Estimate. Also, the Subscription business segment performed impressively in the quarter.

These apart, the company continues benefiting from its flagship Vault platform. In fact, Veeva Vault’s customers have increased manifold in recent times. Markedly, Veeva Systems’ unique solutions include Veeva Vault, Veeva CRM, Veeva Network and Veeva OpenData. Veeva’s new CRM Sunrise UI and Nitro look promising as well. In Commercial Cloud, Veeva Systems secured a number of deals. The company is confident about growth in new markets with products like EDC, Safety, Nitro and Vault.

On the flip side, high expenses on the operational side are worrisome. Also, intense competition and a saturating life sciences market remain potent threats. Volatility in the foreign currency exchange rate is an added concern.

Key Picks

Some better-ranked stocks in the MedTech space are Surmodics, Inc SRDX, Abbott Laboratories ABT and Cardiovascular Systems, Inc. CSII.

Surmodics has a long-term expected earnings growth rate of 10%. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Abbott’s long-term earnings growth rate is projected at 11.7%. The stock carries a Zacks Rank #2 (Buy).

Cardiovascular Systems exceeded the Zacks Consensus Estimate in each of the trailing four quarters, the average being 77.1%. The stock sports a Zacks Rank of 1.

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