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Veeva Systems (VEEV) Q1 Earnings Beat Estimates, '22 View Up

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·5 min read
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Veeva Systems, Inc. VEEV reported adjusted earnings per share (“EPS”) of 91 cents in the first quarter of fiscal 2022, reflecting an improvement of 37.9% from the year-ago EPS of 66 cents. Moreover, adjusted EPS surpassed the Zacks Consensus Estimate by 16.7%.

GAAP EPS in the first quarter was 71 cents, up by 31.5% from the year-ago EPS of 54 cents.

Revenues

For the quarter, the company’s revenues totaled $433.6 million, outpacing the Zacks Consensus Estimate by 5.9%. On a year-over-year basis, the top line improved 28.6%.

The first-quarter top line was driven by a solid performance by the Development Cloud and continued strength in Commercial Cloud, as well as by robust Subscription services revenues.

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 26.2% from the year-ago quarter to $341.1 million on the back of Veeva Development Cloud bookings momentum and increasing core CRM market share.

Veeva Systems Inc. Price, Consensus and EPS Surprise

Veeva Systems Inc. Price, Consensus and EPS Surprise
Veeva Systems Inc. Price, Consensus and EPS Surprise

Veeva Systems Inc. price-consensus-eps-surprise-chart | Veeva Systems Inc. Quote

Professional services and other revenues were up 38.3% year over year to $92.5 million, primarily resulting from rising demand for Vault Research & Development (R&D) services and business consulting. The segment also benefited from high utilization rates during the quarter.

Margin Details

In the quarter under review, Veeva Systems’ gross profit rose 31% to $317.4 million. Gross margin expanded 136 basis points (bps) to 73.2%.

Meanwhile, sales and marketing expenses rose 15.9% to $64.6 million. R&D expenses went up 33.7% year over year to $83.2 million whereas general and administrative expenses climbed 12.2% year over year to $41.2 million. Total operating expenses of $188.9 million increased 22.2% year over year.

Operating profit totaled $128.4 million, which surged 46.7% from the prior-year quarter. Further, operating margin in the first quarter expanded a huge 365 bps to 29.6%.

Financial Position

The company exited the fiscal 2022 first quarter with cash and cash equivalents, and short-term investments of $2.15 billion compared with $1.66 billion at the end of fiscal 2021.

Net cash provided by operating activities at the end of the first quarter of fiscal 2022 was $478.4 million compared with $282.2 million in the year-ago period.

Guidance

On the back of its fiscal first-quarter performance, Veeva Systems has provided its financial outlook for fiscal second quarter and has also upped its full-year projections.

For the second quarter of fiscal 2022, the company expects total revenues in the range of $450 million-$452 million. The Zacks Consensus Estimate for the same is currently pegged at $427.9 million.

Adjusted EPS is projected to lie within 85-86 cents. The Zacks Consensus Estimate for the metric is pegged at 80 cents.

For fiscal 2022, revenues are expected in the range of $1,815 million-$1,825 million (up from the previously issued guided range of $1,755 million-$1,765 million). The Zacks Consensus Estimate for the same is currently pegged at $1.76 billion.

Adjusted EPS is expected to be $3.49, up from the previously provided estimate of $3.20. The Zacks Consensus Estimate for the same currently stands at $3.24.

Our Take

Veeva Systems exited the first quarter of fiscal 2022 with better-than-expected results. Both the segments performed impressively during the quarter. The company continues to benefit from its flagship Vault platform, which is encouraging. Strength in core CRM and expanding market share, along with addition of new customers, look impressive.

Favorable feedback for Data Cloud and robust progress of Veeva Link raise our optimism. The recent launch of modular content capabilities in Veeva Vault PromoMats is encouraging. Expansion of both margins also bodes well. A raised guidance for the fiscal year is a major positive.

On the flip side, rising operating costs during the quarter is a headwind. Also, intense competition and a saturating life sciences market are concerning. Volatility in the foreign currency exchange rate is an added woe.

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 are National Vision Holdings, Inc. EYE, Henry Schein, Inc. HSIC and LHC Group, Inc. LHCG.

National Vision reported first-quarter 2021 adjusted EPS of 48 cents, beating the Zacks Consensus Estimate by 45.5%. Net revenues of $534.2 million outpaced the consensus estimate by 3.1%. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Henry Schein, a Zacks Rank #2 company, reported first-quarter 2021 adjusted EPS of $1.24, beating the Zacks Consensus Estimate by 49.4%. Revenues of $2.92 billion outpaced the consensus mark by 3.6%.

LHC Group reported first-quarter 2021 adjusted EPS of $1.39, surpassing the Zacks Consensus Estimate by 10.3%. It currently carries a Zacks Rank #2.

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