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What's in the Offing for Veeva Systems (VEEV) in Q2 Earnings?

Zacks Equity Research

Veeva Systems Inc. VEEV is scheduled to release second-quarter fiscal 2020 results on Aug 27, after the market closes.

In the last reported quarter, the company delivered a positive earnings surprise of 11.1%. Further, it has positive average surprise of 14.2% for the trailing four quarters.

Let's take a look at how things are shaping up prior to this announcement.

Which Way Are Q2 Estimates Treading?

The Zacks Consensus Estimate for the company’s fiscal second-quarter earnings is pegged at 49 cents, suggesting an improvement of 25.6% from the year-ago quarter’s reported number. The same for its revenues is pegged at $259.3 million, indicating growth of 23.7% from the year-ago reported figure.

Veeva Systems Inc. Price and EPS Surprise

 

Veeva Systems Inc. Price and EPS Surprise

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

Factors to Influence Q2

Veeva Systems boasts of a unique product portfolio, comprising Veeva Vault, Veeva CRM, Veeva Network and Veeva OpenData. We expect this robust product portfolio to have driven results in the to-be-reported quarter.

With respect to Veeva Vault — its first cloud-based content management system, built specifically for life sciences — Veeva Systems has likely added new Vault customers in the fiscal second quarter.

Additionally, Veeva Andi — the new AI application released by the company in the first quarter of fiscal 2020, which delivers insights and next best action suggestions right in Veeva CRM — has likely contributed to the fiscal second-quarter results.

Management stated that, in fiscal 2020, Veeva Systems aims to release major capabilities within Vault CDMS, which are expected to be real game changers for the life sciences industry. Consequently, we expect the to-be-reported quarter to have witnessed a similar trend.

In the to-be-reported quarter, the company has likely witnessed strength across each Vault application area, including continued momentum in more established products and early success for new products. This in turn might have aided its top line in the fiscal second quarter.

Notably, the company anticipates Vault subscription revenue growth of approximately 40% for fiscal 2020.

Veeva Systems is likely to have delivered growth in subscription revenues, primarily driven by a possible increase in bookings in the to-be-reported quarter. In fact, the company projects subscription revenue growth for fiscal 2020 to be around 24%. We expect a similar trend to reflect in the fiscal second-quarter results. (Read more: Veeva Systems to Report Q2 Earnings: What’s in Store?)

Further, the company has likely witnessed growth in services revenues in the fiscal second quarter on R&D Vault projects.

Also, Veeva Systems might have experienced higher revenues in Professional Service and Other segment, primarily driven by Veeva Commercial Cloud as well as Veeva Vault.

Possible strength in bookings as well as outperformance in services revenues has likely driven higher calculated billings in the to-be-reported quarter. In fact, the company anticipates calculated billings of about $220 million in the fiscal second quarter.

However, high expenses on the operational side raise concern. The company might have incurred rise in adjusted operating expenses in the fiscal second quarter.

Moreover, intense competition across most of the product lines might have hampered Veeva Systems’ overall performance.

Here’s What the Quantitative Model Shows

Our proven Zacks model clearly predicts that a company with a solid Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has fair chances of beating estimates if it also has a positive Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Veeva Systems currently has a Zacks Rank #3 and an Earnings ESP of 0.00%, a combination that makes surprise prediction difficult.

Please note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks Worth a Look

Here are a few stocks, which have the right combination to post an earnings beat this season.

The Cooper Companies COO presently has an Earnings ESP of +1.50% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Costco Wholesale COST currently has an Earnings ESP of +0.30% and a Zacks Rank #3.

Burlington Stores BURL has an Earnings ESP of +1.13% and a Zacks Rank #2 at present.

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Veeva Systems Inc. (VEEV) : Free Stock Analysis Report
 
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Burlington Stores, Inc. (BURL) : Free Stock Analysis Report
 
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