Veeva Systems Inc.VEEV reported adjusted earnings of 12 cents per share (including stock-based compensation) in the fourth quarter of fiscal 2016, beating the Zacks Consensus Estimate by a nickel.
Adjusted earnings (excluding stock-based compensation) improved 25% on a year-over-year basis to 15 cents. The upside was driven by robust revenue growth of 31.3%, which totaled $114.3 million, well ahead of the Zacks Consensus Estimate of $110 million.
Subscription revenues rose almost 36% year over year to $90.4 million, driven by growth across product lines. Professional services revenues increased 16.6% to $23.9 million, primarily owing to strong adoption of the Vault product.
In fourth-quarter 2016, a leading pharmaceutical company started using Veeva Commercial Cloud in its worldwide operations.
Adjusted gross margin (including stock-based compensation) expanded 150 basis points (bps) to 66.3%. However, this was fully offset by higher operating expenses.
Operating expenses (including stock based compensation), as a percentage of revenues, was 50.5% as compared with 40.5% in the year-ago quarter. This was primarily due to higher sales & marketing (up 530 bps), research & development (up 410 bps), and general and administrative expenses (up 70 bps).
As a result, operating margin contracted 850 bps from the year-ago quarter to 15.8%.
Fiscal Year Details
Revenues rose 30.6% to $409.2 million and adjusted earnings surged 37.8% to 51 cents in fiscal 2016. Veeva ended fiscal 2016 with 400 customers, up from 276 recorded in fiscal 2015. This included 212 Veeva CRM customers, 219 Veeva Vault customers, 35 Veeva Network customers and 70 Veeva OpenData customers.
At the end of the fiscal, 32 companies, including 12 of the top 50, were using Veeva applications for improved customer data, commercial content and customer engagement.
Total Vault revenues surged more than 100% in fiscal 2016. Subscription services revenue retention rate stood at 125% in fiscal 2016.
Veeva expects total revenues in the range of $114.5-116 million for the first quarter of fiscal 2017. Meanwhile, non-GAAP operating income is expected between $25.5 million and $26 million. Non-GAAP earnings are likely to be roughly 11 cents per share.
For fiscal 2017, total revenues are expected in the band of $508-$513 million. Non-GAAP operating income is likely to come in between $122.5 million and $127.5 million. Non-GAAP earnings are forecasted in the range of 54 cents to 56 cents per share.
Zacks Rank & Key Picks
Veeva currently has a Zacks Rank #3 (Hold).
Better-ranked stocks in the same space are Computer Programs & Systems CPSI , Allscripts Healthcare Solutions MDRX and Invitae Corp NVTA . While Computer Programs sports a Zacks Rank #1 (Strong Buy), Allscripts Healthcare and Invitae carry a Zacks Rank #2 (Buy).