Veeva Systems's (NYSE:VEEV) Q4 Sales Beat Estimates, Growth To Accelerate Next Year
Healthcare software provider Veeva Systems (NASDAQ:VEEV) beat analysts' expectations in Q4 FY2024, with revenue up 11.9% year on year to $630.6 million. On the other hand, the company expects next quarter's revenue to be around $641.5 million, slightly below analysts' estimates. It made a non-GAAP profit of $1.38 per share, improving from its profit of $1.15 per share in the same quarter last year.
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Veeva Systems (VEEV) Q4 FY2024 Highlights:
Revenue: $630.6 million vs analyst estimates of $621.1 million (1.5% beat)
EPS (non-GAAP): $1.38 vs analyst estimates of $1.30 (6.2% beat)
Revenue Guidance for Q1 2025 is $641.5 million at the midpoint, below analyst estimates of $647 million
Management's revenue guidance for the upcoming financial year 2025 is $2.73 billion at the midpoint, missing analyst estimates by 0.6% and implying 15.6% growth (vs 9.6% in FY2024)
Free Cash Flow of $50.03 million, down 34.8% from the previous quarter
Gross Margin (GAAP): 72.4%, up from 70.8% in the same quarter last year
Market Capitalization: $36.29 billion
"The fourth quarter was a strong finish to an important year for Veeva," said CEO Peter Gassner.
Built on top of Salesforce as one of the first vertical-focused cloud platforms, Veeva (NYSE:VEEV) provides data and customer relationship management (CRM) software for organizations in the life sciences industry.
Healthcare And Life Sciences Software
The coronavirus pandemic has underscored the importance of high-quality health infrastructure in times of crisis. Coupled with intense competition between drugmakers and the growing volume of data in the health care sector, demand for data management solutions in the healthcare space is expected to remain strong in the years ahead.
Sales Growth
As you can see below, Veeva Systems's revenue growth has been mediocre over the last two years, growing from $485.5 million in Q4 FY2022 to $630.6 million this quarter.
This quarter, Veeva Systems's quarterly revenue was once again up 11.9% year on year. However, its growth did slow down compared to last quarter as the company's revenue increased by just $14.11 million in Q4 compared to $26.28 million in Q3 2024. While we'd like to see revenue increase by a greater amount each quarter, a one-off fluctuation is usually not concerning.
Next quarter's guidance suggests that Veeva Systems is expecting revenue to grow 21.9% year on year to $641.5 million, improving on the 4.2% year-on-year increase it recorded in the same quarter last year. For the upcoming financial year, management expects revenue to be $2.73 billion at the midpoint, growing 15.6% year on year compared to the 9.7% increase in FY2024.
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Cash Is King
If you've followed StockStory for a while, you know that we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. Veeva Systems's free cash flow came in at $50.03 million in Q4, down 15.8% year on year.
Veeva Systems has generated $885.1 million in free cash flow over the last 12 months, an eye-popping 37.4% of revenue. This robust FCF margin stems from its asset-lite business model, scale advantages, and strong competitive positioning, giving it the option to return capital to shareholders or reinvest in its business while maintaining a healthy cash balance.
Key Takeaways from Veeva Systems's Q4 Results
It was great to see Veeva Systems beat analysts' revenue and EPS expectations, driven by strong outperformance in its subscription services. We were also happy its EPS guidance for the full year 2024 topped Wall Street's estimates, though its revenue forecast did slightly miss.
In January 2024, the company announced the launch of its commercial data product, Veeva Compass. Compass "uniquely supports the needs of today's medicines because it includes projected data for both retail products and complex in-office therapies".
We thought this was a mixed quarter because its revenue guidance could have been better, but the stock is up 4.7% after reporting. It currently trades at $235.7 per share.
So should you invest in Veeva Systems right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.
