Technology

Veeva (VEEV) Up 6.2% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Veeva Systems (VEEV). Shares have added about 6.2% 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 the most recent earnings report in order to get a better handle on the important drivers.

Veeva Systems Beats on Q4 Earnings, Gains From Subscription Service

Veeva Systems reported fourth-quarter fiscal 2019 adjusted earnings of 45 cents per share, which surpassed the Zacks Consensus Estimate of 31 cents. The bottom line also increased a whopping 87.5% on a year-over-year basis.

Total revenues came in at $232.3 million, outpacing the Zacks Consensus Estimate of $228 million. On a year-over-year basis, the top line improved 25%.

Segmental Details

Subscription Service

Fiscal fourth-quarter subscription service revenues summed $190.7 million, up 25.5% year over year. Per management, solid momentum in bookings continued across all areas of Vault, which was 45% of subscription revenues compared with 39% a year ago.

Professional Service and Others

Professional Service revenues rose almost 22.4% to $41.7 million from the figure registered in the year-ago quarter.

According to Veeva Systems, this improvement in revenues can be attributed to continued strong demand within Veeva Vault R&D (research and development). Management also remains optimistic about the segment’s impressive performance in the first quarter of fiscal 2020.

Margin Details

In the reported quarter, adjusted gross profit increased 31.2% to $171.9 million. Adjusted gross margin was 74%, which expanded 360 basis points (bps).

Adjusted operating income totaled $84.3 million, up 52.8% year over year. In the quarter under review, the adjusted operating margin was 36.3%, which expanded 660 bps. Per management, the upside was driven by impressive top-line performance.

However, adjusted operating expenses rose 15.7% year over year to $87.6 million.

Guidance

For first-quarter fiscal 2020, Veeva Systems expects total revenues to be between $238 million and $239 million.

Adjusted earnings are expected to be between 44 cents and 45 cents per share. Adjusted operating income is expected in the $85-$86 million band.

Veeva Systems issued guidance for fiscal 2020 as well.

Revenues are expected to be between $1.02 billion and $1.03 billion in fiscal 2020.

For the fiscal year, adjusted earnings are anticipated in the range of $1.91-$1.94 per share.

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 16.63% due to these changes.

VGM Scores

At this time, Veeva has a nice Growth Score of B, 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 C. 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 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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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