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Why Is Veeva (VEEV) Down 3.5% Since Last Earnings Report?
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A month has gone by since the last earnings report for Veeva Systems (VEEV - Free Report) . Shares have lost about 3.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Veeva due for a breakout? 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 Q2 Earnings & Revenues Beat, Operating Margin Up Y/Y
Veeva Systems reported adjusted earnings per share of $1.62 for the second quarter of fiscal 2025, which increased 33.1% from the year-ago figure of $1.21. Adjusted earnings per share surpassed the Zacks Consensus Estimate by 5.88%.
GAAP earnings per share in the fiscal second quarter was $1.04, up 52.9% from the year-ago period’s 68 cents.
VEEV’s Revenue Details
For the quarter under review, the company’s revenues totaled $676.3 million, outpacing the Zacks Consensus Estimate by 1.34%. On a year-over-year basis, the top line improved 14.6%.
The fiscal second-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 second quarter, Subscription services revenues improved 19.3% from the year-ago quarter to $561.3 million. Per management, this uptick was driven by both its established and newer solutions. Our projection for fiscal second-quarter revenues was $553.8 million.
Professional services and other revenues were down 3.9% year over year to $114.9 million. Our projection for fiscal second-quarter revenues was $112.8 million.
Q2 Margin Performance by VEEV
In the quarter under review, Veeva Systems’ gross profit improved 20.1% to $505.8 million. The gross margin expanded 340 basis points (bps) to 74.8%. We had projected 71.1% of gross margin for the fiscal second quarter.
Sales and marketing expenses rose 4.7% to $101.5 million. Research and development (R&D) expenses went up 12.2% year over year to $176.4 million, while general and administrative expenses declined 2.5% to $61.4 million. Total operating expenses of $339.3 million increased 6.9% year over year.
Operating profit totaled $166.5 million, which increased 60% from the prior-year quarter. The operating margin in the fiscal second quarter expanded a huge 700 bps to 24.6%. We had projected a 22.7% operating margin for the fiscal second quarter.
VEEV’s Financial Position
The company exited second-quarter fiscal 2025 with cash and cash equivalents and short-term investments of $4.89 billion compared with $4.77 billion at the fiscal first-quarter end.
Cumulative net cash provided by operating activities at the end of the quarter was $856.4 million compared with $770.9 million a year ago.
Guidance Provided by VEEV
Veeva Systems has revised its financial outlook for fiscal 2025 and provided its estimates for the third quarter of fiscal 2025.
For the fiscal third quarter, the company expects total revenues between $682 million and $685 million. The Zacks Consensus Estimate is currently pegged at $681.3 million.
Subscription revenues and Professional services and other revenues are estimated to be approximately $571 million and $111 million-$114 million, respectively, for the fiscal third quarter.
For the fiscal third quarter, adjusted earnings per share is projected to be between $1.57 and $1.58. The Zacks Consensus Estimate is pegged at $1.54.
Veeva Systems now expects revenues for fiscal 2025 between $2,704 million and $2,710 million compared with the earlier outlook of $2,700 million and $2,710 million. The Zacks Consensus Estimate is currently pegged at $2.71 billion.
For fiscal 2025, Subscription revenues are now expected to be $2,257 million, higher than the previous outlook of $2,245 million. This consists of Commercial Solutions’ subscription revenues of around $1,090 million (up from the prior outlook of $1,080 million) and R&D Solutions’ subscription revenues of approximately $1,167 million (higher than the previous outlook of $1,165 million).
Professional services and other revenues for fiscal 2025 are now expected to be between $447 million and 453 million, lower than the earlier guidance of $455 million and $465 million.
Adjusted earnings per share for fiscal 2025 is now expected to be $6.22, up from the previous guidance of $6.16. The Zacks Consensus Estimate is pegged at $6.15.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, Veeva has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. 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. Notably, 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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Why Is Veeva (VEEV) Down 3.5% Since Last Earnings Report?
A month has gone by since the last earnings report for Veeva Systems (VEEV - Free Report) . Shares have lost about 3.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Veeva due for a breakout? 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 Q2 Earnings & Revenues Beat, Operating Margin Up Y/Y
Veeva Systems reported adjusted earnings per share of $1.62 for the second quarter of fiscal 2025, which increased 33.1% from the year-ago figure of $1.21. Adjusted earnings per share surpassed the Zacks Consensus Estimate by 5.88%.
GAAP earnings per share in the fiscal second quarter was $1.04, up 52.9% from the year-ago period’s 68 cents.
VEEV’s Revenue Details
For the quarter under review, the company’s revenues totaled $676.3 million, outpacing the Zacks Consensus Estimate by 1.34%. On a year-over-year basis, the top line improved 14.6%.
The fiscal second-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 second quarter, Subscription services revenues improved 19.3% from the year-ago quarter to $561.3 million. Per management, this uptick was driven by both its established and newer solutions. Our projection for fiscal second-quarter revenues was $553.8 million.
Professional services and other revenues were down 3.9% year over year to $114.9 million. Our projection for fiscal second-quarter revenues was $112.8 million.
Q2 Margin Performance by VEEV
In the quarter under review, Veeva Systems’ gross profit improved 20.1% to $505.8 million. The gross margin expanded 340 basis points (bps) to 74.8%. We had projected 71.1% of gross margin for the fiscal second quarter.
Sales and marketing expenses rose 4.7% to $101.5 million. Research and development (R&D) expenses went up 12.2% year over year to $176.4 million, while general and administrative expenses declined 2.5% to $61.4 million. Total operating expenses of $339.3 million increased 6.9% year over year.
Operating profit totaled $166.5 million, which increased 60% from the prior-year quarter. The operating margin in the fiscal second quarter expanded a huge 700 bps to 24.6%. We had projected a 22.7% operating margin for the fiscal second quarter.
VEEV’s Financial Position
The company exited second-quarter fiscal 2025 with cash and cash equivalents and short-term investments of $4.89 billion compared with $4.77 billion at the fiscal first-quarter end.
Cumulative net cash provided by operating activities at the end of the quarter was $856.4 million compared with $770.9 million a year ago.
Guidance Provided by VEEV
Veeva Systems has revised its financial outlook for fiscal 2025 and provided its estimates for the third quarter of fiscal 2025.
For the fiscal third quarter, the company expects total revenues between $682 million and $685 million. The Zacks Consensus Estimate is currently pegged at $681.3 million.
Subscription revenues and Professional services and other revenues are estimated to be approximately $571 million and $111 million-$114 million, respectively, for the fiscal third quarter.
For the fiscal third quarter, adjusted earnings per share is projected to be between $1.57 and $1.58. The Zacks Consensus Estimate is pegged at $1.54.
Veeva Systems now expects revenues for fiscal 2025 between $2,704 million and $2,710 million compared with the earlier outlook of $2,700 million and $2,710 million. The Zacks Consensus Estimate is currently pegged at $2.71 billion.
For fiscal 2025, Subscription revenues are now expected to be $2,257 million, higher than the previous outlook of $2,245 million. This consists of Commercial Solutions’ subscription revenues of around $1,090 million (up from the prior outlook of $1,080 million) and R&D Solutions’ subscription revenues of approximately $1,167 million (higher than the previous outlook of $1,165 million).
Professional services and other revenues for fiscal 2025 are now expected to be between $447 million and 453 million, lower than the earlier guidance of $455 million and $465 million.
Adjusted earnings per share for fiscal 2025 is now expected to be $6.22, up from the previous guidance of $6.16. The Zacks Consensus Estimate is pegged at $6.15.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, Veeva has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. 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. Notably, Veeva has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.