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Earnings preview: Veeva Systems likely to continue the momentum in Q2

Veeva Systems Inc. (NYSE: VEEV) is set to release its second-quarter earnings on Tuesday, August 27 after the market closes. The results will be benefited by the subscription services, professional services and other services that are delivered primarily to the life sciences industry.

The fees from customers accessing cloud-based software solutions and subscription or license fees for data solutions remained the primary source of revenues for the company. It also includes fees from implementation services, configuration, data services, training, and managed services related to solutions.

The company has invested and plans to continue investing aggressively in expanding the breadth and depth of its product portfolio. The company expects to invest in research and development, sales and marketing, professional services, and other operational and administrative functions.

Earnings preview: Veeva Systems likely to continue the momentum in Q2
Photo Courtesy: Veeva Systems / Facebook post

Veeva predicts its headcount to increase as a result of the investments. The company expects its total operating expenses to continue to increase over time, which could have a negative impact on its operating margin. However, the bottom line is likely to benefit by income taxes, higher top-line growth, and improved leverage of the expenses.

Analysts expect the company’s earnings to jump by 25.60% to $0.49 per share and revenue will climb by 23.70% to $259.39 million for the second quarter. In comparison, during the previous year quarter, Veeva Systems posted a profit of $0.39 per share on revenue of $209.61 million. The company has surprised investors by beating analysts’ expectations in all of the past four quarters.

Read: Hibbett Sports Q2 earnings review

For the first quarter, Veeva Systems reported a 66% jump in earnings helped by the outperformance in Veeva Commercial Cloud and Veeva Vault. The top line increased by 25% year-over-year helped by solid subscription revenue growth of 27%.

For the second quarter, Veeva expects revenue in the range of $259 million to $260 million and adjusted earnings in the range of $0.48 to $0.49 per share. For the full year 2020, the company predicts revenue in the range of $1.045 billion to $1.05 billion and adjusted earnings in the range of $2.01 to $2.03 per share.

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