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Why Is Veeva (VEEV) Up 15.1% Since Last Earnings Report?

Zacks Equity Research

It has been about a month since the last earnings report for Veeva Systems (VEEV). Shares have added about 15.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Veeva due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Veeva Systems Q1 Earnings and Revenues Beat Estimates

Veeva Systems, Inc. reported first-quarter fiscal 2021 adjusted earnings per share  of 66 cents, beating the Zacks Consensus Estimate of 58 cents by 13.8%.  The metric surged 32% on a year-over-year basis.

The company’s revenues totaled $337.1 million outpaced the Zacks Consensus Estimate by 3.8%. On a year-over-year basis, the top line improved 54%.

Segmental Details

Subscription Service

Fiscal first-quarter subscription service revenues summed $270.2 million, up 36% year over year.

Professional Service and Others

Professional Service revenues rose almost 43.6% to $66.9 million from the year-ago figure.

Per management, outperformance by Veeva Commercial Cloud and Veeva Vault drove revenues across all segments.

Margin Details

In the reported quarter, gross profit increased 35.1% year over year to $242.2 million. Gross margin was 71.9%, which contracted 138 basis points (bps).

Operating profit totaled $87.6 million, up 23% year over year. In the quarter under review, adjusted operating margin fell 310 bps to 25.9%.

Guidance

For the second quarter of fiscal 2021, Veeva Systems expects revenues between $339 million and $341 million. The Zacks Consensus Estimate for the same stands at $335.1 million.

Adjusted earnings per share is projected between 63 and 64 cents. The Zacks Consensus Estimate for the metric is pegged at 60cents.

Adjusted operating income is estimated between $126 million and $128 million.

For fiscal 2021, revenues are expected within $1.38-$1.39 billion. The Zacks Consensus Estimate for the same is pinned at $1.38 billion.

Adjusted earnings per share is expected in the range of $2.50-$2.55. The Zacks Consensus Estimate for the same stands at $2.46.

Adjusted operating income is expected between $500 million and $510 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 10.51% due to these changes.

VGM Scores

Currently, Veeva has a strong Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Veeva has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.



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