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Veeva (VEEV) Beats on Q4 Earnings, Narrows '23 Revenue View

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Veeva Systems, Inc. VEEV reported adjusted earnings per share (“EPS”) of 90 cents in the fourth quarter of fiscal 2022, reflecting an improvement of 15.4% from the year-ago EPS of 78 cents. Adjusted EPS surpassed the Zacks Consensus Estimate by 2.3%.

GAAP EPS in the fiscal fourth quarter was 60 cents, down by 6.3% from the year-ago EPS of 64 cents.

Full-year adjusted EPS was $3.73, reflecting a 26.9% increase over 2020. The metric surpassed the Zacks Consensus Estimate by 45.7%.

Revenues

For the quarter, the company’s revenues totaled $485.5 million, outpacing the Zacks Consensus Estimate by 1.2%. On a year-over-year basis, the top line improved 22.4%.

The fourth-quarter top line was driven by Veeva Systems’ robust segmental performances.

Full-year revenues were $1.85 billion, reflecting a 26.3% improvement from the year-ago period. The metric was in line with the Zacks Consensus Estimate.

Segmental Details

Veeva Systems derives revenues from two operating segments — Subscription services; and Professional services and other.

In the fiscal fourth quarter, Subscription services revenues improved 22.6% from the year-ago quarter to $395.7 million, primarily driven by the company’s Commercial Solutions. This included strong growth from Veeva Crossix, Veeva Link and Veeva Vault Commercial, as well as continued steady revenue growth from CRM add-ons and Veeva CRM Engage.

Professional services and other revenues were up 21.5% year over year to $89.8 million, primarily resulting from continued strong demand for services related to Veeva Systems’ Research and Development (R&D) Solutions, and further momentum in Veeva Business Consulting.

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

Margin Details

In the quarter under review, Veeva Systems’ gross profit rose 23.6% to $349.6 million. Gross margin expanded 71 basis points (bps) to 72%.

Meanwhile, sales and marketing expenses rose 27.6% to $79.2 million. R&D expenses went up 28.5% year over year to $105.3 million, while general and administrative expenses climbed 13.4% year over year to $45.4 million. Total operating expenses of $229.9 million increased 24.9% year over year.

Operating profit totaled $119.7 million, which surged 21.1% from the prior-year quarter. Operating margin in the fourth quarter contracted 25.4 bps to 24.7%.

Financial Position

The company exited fiscal 2022 with cash and cash equivalents, and short-term investments of $2.38 billion compared with $1.66 billion at the end of fiscal 2021.

Cumulative net cash provided by operating activities at the end of fiscal 2022 was $764.5 million compared with $551.2 million in the year-ago period.

Guidance

Veeva Systems has provided its financial outlook for fiscal 2023’s first quarter and revised its revenue estimates for the full fiscal year.

For the first quarter of fiscal 2023, the company expects total revenues in the range of $494-$496 million. The Zacks Consensus Estimate for the same is currently pegged at $506.3 million.

Subscription revenues are estimated to be approximately $398 million in the fiscal first quarter.

Adjusted EPS is projected to be in the range of 91-92 cents. The Zacks Consensus Estimate for the metric is pegged at 94 cents.

Veeva Systems now expects its revenues for fiscal year 2023 to be in the range of $2,160-$2,170 million, narrowed down from its earlier-provided outlook range of $2,150 million-$2,170 million. The Zacks Consensus Estimate for the same is currently pegged at $2.17 billion, which matches the upper end of the company-provided outlook.

Subscription services revenues are expected to be $1,745 million for fiscal 2023, consisting of Commercial Solutions’ subscription revenues of around $955 million and R&D Solutions’ subscription revenues of approximately $790 million.

Adjusted EPS for the year is expected to be $4.02. The Zacks Consensus Estimate for the metric is pegged at $3.95.

Our Take

Veeva Systems exited the fourth quarter of fiscal 2022 with better-than-expected results. Both of its segments performed impressively during the quarter. The company continues to benefit from its flagship Vault platform, which is encouraging. Veeva Commercial Cloud’s continued strength looks impressive. Robust adoption of Veeva Vault PromoMats and other products augers well for the company. Expansion of gross margin also bodes well.

On the flip side, rising operating costs putting pressure on the operating margin during the quarter is a headwind.

Zacks Rank and Stocks to Consider

Veeva Systems currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader medical space that have announced quarterly results include AMN Healthcare Services, Inc. AMN, Allscripts Healthcare Solutions, Inc. MDRX and Henry Schein, Inc. HSIC.

AMN Healthcare, currently flaunting a Zacks Rank #1 (Strong Buy), reported fourth-quarter 2021 adjusted EPS of $2.95, which beat the Zacks Consensus Estimate by 14.3%. Revenues of $1.36 billion also outpaced the consensus mark by 0.5%. You can check out the complete list of today’s Zacks #1 Rank stocks here.

AMN Healthcare has an estimated long-term growth rate of 16.2%. AMN’s earnings surpassed estimates in all the trailing four quarters, with the average being 20%.

Allscripts, presently sporting a Zacks Rank #1, reported fourth-quarter 2021 adjusted EPS of 79 cents, which beat the Zacks Consensus Estimate by 154.8%. Revenues of $391.7 million also outpaced the consensus mark by 0.1%.

Allscripts has an estimated long-term growth rate of 16.3%. MDRX’s earnings surpassed estimates in the trailing four quarters, with the average being 64.8%.

Henry Schein reported fourth-quarter 2021 adjusted EPS of $1.07, which surpassed the Zacks Consensus Estimate by 18.9%. Fourth-quarter revenues of $3.33 billion also outpaced the Zacks Consensus Estimate by 4.7%. It currently has a Zacks Rank #2 (Buy).

Henry Schein has an estimated long-term growth rate of 11.8%. HSIC’s earnings surpassed estimates in the trailing four quarters, with the average being 25.5%.


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