Veeva Systems reports stellar Q1 earnings, outlook beat estimates

Veeva Systems (NYSE: VEEV) reported yet another solid earnings beating analyst estimates. The company also raised its full-year outlook and gave guidance for the Q2 period. The CRM provider’s stock surged above 5% after the strong first quarter results primarily due to the fact that guidance surpassed street estimates.

The company has been having a dream run in the bourses with the stock surging above 50% in 2019. In addition, the SaaS firm is expected to hit $1 billion in the calendar year 2019, compared to the prior outlook of 2020 backed by the solid demand for its products in the current fiscal period.

Strong Outlook

For the Q2 period, Veeva expects revenue to be between $259-260 million and adjusted EPS of $0.48-0.49. Analysts are forecasting non-GAAP earnings of 46 cents on revenues of about $250 million. Based on the historical track record, investors would be anticipating yet another earnings beat in the second quarter.

Looking ahead for the full year, the company raised its outlook for both the top and bottom line provided in the last quarter. Revenue is revised upwards to $1.045-1.050 billion and non-GAAP EPS of $2.01-2.03.

On the flip side, the street is forecasting sales of $1.04 billion and adjusted earnings of $1.92 per share. In the fourth quarter, Veeva anticipated revenues of $1.025-1.030 billion and non-GAAP EPS of $1.91-1.94.

Commenting on the guidance CFO Tim Cabral said: “Our outperformance in Veeva Commercial Cloud and Veeva Vault allowed us to post another strong quarter of growth and profitability. These results enabled us to meaningfully raise fiscal 2020 guidance across all metrics.”

Q1 Performance

Revenue rose 25% to $244.8 million backed by solid subscription revenue growth of 27%. Adjusted earnings soared above 51% to $0.50. The Q1 results exceeded estimates comfortably. Analysts were expecting non-GAAP earnings of 44 cents on revenues of about $238 million.

Focus Beyond Life Sciences

It’s important to remember that last year the top 10 clients contributed 39% to the top line compared to 42% in the fiscal 2018 and 45% in 2017. This is a good sign for investors as the company has been able to reduce its dependency from this group, by adding more clients to its roster.

Right from inception, Veeva has been focusing exclusively on the life science domain, offering products customized to the needs of the pharma sector, which has been well received by its clients.

The company has decided to foray into highly-regulated industries like consumer goods, chemicals, cosmetics, and industrial products. To address the needs of these industries, Veeva launched QualityOne in December 2016.

QualityOne helps customers to manage documents, training, audits, and quality management, all under one roof. At the investor day, the company claimed to have added 31 clients including a $1 million customer.

Last week, Veeva Claims was launched for non-pharma clients to help them with end-to-end claims management.

Bottom Line                      

Apart from QualityOne, Veeva is focusing on adding more clients to Veeva Nitro and Veeva Andi in 2019. Nitro is a data warehouse which helps pharma companies to analyze all kinds of data they have and get insights. This product is expected to gain traction in the near future.

Andi is an artificial intelligence platform launched earlier this month. This would help life sciences firms to analyse all kinds of data from its stakeholders and gain insights to improve customer engagement.

Veeva is on a solid growth trajectory in 2019 as there is still a huge opportunity and demand to upsell and cross-sell its services to the existing and new pharma clients.

In addition, with the focus now shifting also to other highly-regulated industries with recently launched product offerings, the SaaS provider is expected to comfortably beat its outlook for the full-year period.

With fundamentals intact, Veeva’s dream run in the stock exchange would continue this year, which is a good sign for its shareholders.

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