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Why Is Veeva (VEEV) Up 4% Since Last Earnings Report?

Zacks Equity Research

A month has gone by since the last earnings report for Veeva Systems (VEEV). Shares have added about 4% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important catalysts.

Veeva Systems Q1 Earnings Top Estimates, Margins Expand

Veeva Systems reported first-quarter fiscal 2020 EPS of 50 cents, well ahead of the Zacks Consensus Estimate of 45 cents. The metric shot up 61.3% on a year-over-year basis.

The company’s revenues totaled $244.8 million, outpacing the Zacks Consensus Estimate of $238.7 million. On a year-over-year basis, the top line improved 25.2%.

Segmental Details

Subscription Service

First-quarter subscription service revenues summed $198.1 million, up 27% year over year. Per management, the solid momentum in bookings was maintained in the quarter.

Professional Service and Others

Professional Service revenues rose almost 17.9% to $46.6 million from the figure registered in the year-ago quarter.

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

Margin Details

In the reported quarter, adjusted gross profit increased 31.9% to $183.3 million. Adjusted gross margin was 74.9%, which expanded 380 basis points (bps).

Adjusted operating income totaled $93.5 million, up 48.5% year over year. In the quarter under review, adjusted operating margin improved 600 bps to 38.2%.

However, adjusted operating expenses rose 18.2% year over year to $89.8 million.

Guidance

For the fiscal second quarter, revenues are expected within $259 million and $260 million. Adjusted earnings per share (EPS) is anticipated within 48-49 cents. Adjusted operating income is projected within $94-$95 million.

For fiscal 2020, Veeva Systems expects revenues in the band of $1,045-$1,050 million. Adjusted full-year EPS is expected within $2.01 and $2.03. Adjusted operating income is projected within $385 million and $390 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 5.14% due to these changes.

VGM Scores

At this time, Veeva has a great Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile 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 broadly trending upward for the stock, and the magnitude of these revisions 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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