It has been about a month since the last earnings report for Veeva Systems (VEEV). Shares have added about 7.9% in that time frame, outperforming the S&P 500.
But investors have to be wondering, 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 catalysts.
Veeva Systems Q1 Earnings & Revenues Beat, Operating Margin Rise
Veeva Systems reported adjusted earnings per share of $2.24 for the first quarter of fiscal 2027, which increased 13.7% from the year-ago figure of $1.74. Adjusted earnings per share beat the Zacks Consensus Estimate by 5.2%.
GAAP earnings per share in the fiscal first quarter was $1.57, up 14.6% from the year-ago period’s $1.37.
VEEV’s Q1 Revenue Details
In the quarter under review, the company’s revenues totaled $882.9 million, beating the Zacks Consensus Estimate by 2.9%. On a year-over-year basis, the top line improved 16.3%.
The fiscal first-quarter top line was driven by Veeva Systems’ robust segmental performance.
Segmental Analysis of VEEV
Veeva Systems derives revenues from two operating segments: Subscription services and Professional services and other.
In the fiscal first quarter, Subscription services revenues improved 15% from the year-ago quarter to $730.2 million. Per management, this uptick was driven by both its established and newer solutions.
Professional services and other revenues increased 22.9% year over year to $152.8 million.
Q1 Margin Performance by VEEV
In the quarter under review, Veeva Systems’ gross profit improved 13.1% year over year to $662 million. However, the gross margin contracted 220 basis points (bps) to 74.9%.
Sales and marketing expenses increased 12.7% year over year to $111.1 million. Research and development (R&D) expenses rose 13.2% year over year to $208.3 million, while general and administrative expenses increased 0.9% year over year to $69.5 million. Total operating expenses of $388.9 million increased 10.6% year over year.
Operating profit totaled $273.1 million, which increased 16.8% from the prior-year quarter. The operating margin in the fiscal first quarter expanded 20 bps to 30.9%.
VEEV’s Financial Position
The company exited first-quarter fiscal 2027 with cash and cash equivalents and short-term investments of $7.31 billion compared with $6.56 billion at the fiscal fourth quarter of 2026-end.
Net cash provided by operating activities at the end of the quarter was $1.13 billion compared with $877.2 million a year ago.
Q2 & FY27 Guidance Provided by VEEV
Veeva Systems has issued its financial outlook for the fiscal second quarter and fiscal 2027.
For the fiscal second quarter, the company expects total revenues between $902 million and $905 million. The Zacks Consensus Estimate is currently pegged at $886.8 million.
Subscription revenues are estimated to be approximately $754 million, and revenues for Professional services and other are expected to be in the range of $148-$151 million for the fiscal second quarter.
For the fiscal second quarter, adjusted earnings per share is anticipated to be between $2.21 and $2.22. The Zacks Consensus Estimate is pegged at $2.19.
Veeva Systems now expects revenues for fiscal 2027 between $3,635 million and $3,645 million. The Zacks Consensus Estimate is currently pegged at $3.59 billion.
For fiscal 2027, Subscription revenues are now expected to be approximately $3,060 million. This consists of Commercial Solutions’ subscription revenues of around $1,395 million and R&D Solutions’ subscription revenues of approximately $1,665 million.
Professional services and other revenues for fiscal 2027 are now expected to be between $575 million and $580 million.
Adjusted earnings per share for fiscal 2027 is now expected to be approximately $9.05. The Zacks Consensus Estimate is pegged at $8.86.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in estimates revision.
VGM Scores
At this time, Veeva has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a score of C on the value side, putting it in the middle 20% for value investors.
Overall, the stock has an aggregate VGM Score of C. 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. Interestingly, Veeva has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
