Veeva Systems (NYSE:VEEV) Posts Better-Than-Expected Sales In Q3 But Guidance Slightly Misses Estimates

Adam Hejl /
2021/12/01 4:18 pm EST

Healthcare software provider Veeva Systems (NASDAQ:VEEV) reported Q3 FY2022 results topping analyst expectations, with revenue up 26.1% year on year to $476.1 million. On the other hand, guidance for the next quarter slightly missed analyst expectations with revenues guided to $479 million at the midpoint, or 0.14% below analyst estimates. Veeva Systems made a GAAP profit of $105.8 million, improving on its profit of $96.9 million, in the same quarter last year.

Is now the time to buy Veeva Systems? Access our full analysis of the earnings results here, it's free.

Veeva Systems (VEEV) Q3 FY2022 Highlights:

  • Revenue: $476.1 million vs analyst estimates of $466 million (2.16% beat)
  • EPS (non-GAAP): $0.97 vs analyst estimates of $0.88 (10.6% beat)
  • Revenue guidance for Q4 2022 is $479 million at the midpoint, roughly in line with what analysts were expecting
  • Free cash flow of $112.9 million, roughly flat from previous quarter
  • Gross Margin (GAAP): 72.7%, in line with same quarter last year

"Innovation and consistent execution have us tracking ahead of our 2025 targets and set us up for significant growth beyond," said CEO Peter Gassner.

Built on top of Salesforce as one of the first vertical-focused cloud platforms, Veeva (NYSE:VEEV) provides data and customer relationship management (CRM) software for organizations in the life sciences industry.

The coronavirus pandemic has underscored the importance of high-quality health infrastructure in times of crisis. Coupled with intense competition between drugmakers and the growing volume of data in the health care sector, demand for data management solutions in the healthcare space is expected to remain strong in the years ahead.

Sales Growth

As you can see below, Veeva Systems's revenue growth has been strong over the last year, growing from quarterly revenue of $377.5 million, to $476.1 million.

Veeva Systems Total Revenue

This quarter, Veeva Systems's quarterly revenue was once again up a very solid 26.1% year on year. Quarter on quarter the revenue increased by $20.5 million in Q3, which was in line with Q2 2022. This steady quarter-on-quarter growth shows the company is able to maintain its steady growth trajectory.

Analysts covering the company are expecting the revenues to grow 18.8% over the next twelve months, although estimates are likely to change post earnings.

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Customer Growth

You can see below that Veeva Systems reported NaN customers at the end of the quarter, That is slower customer growth than what we are used to seeing lately, suggesting that the customer acquisition momentum is slowing a little bit.

Veeva Systems Customers

Key Takeaways from Veeva Systems's Q3 Results

With a market capitalization of $43.3 billion, more than $2.35 billion in cash and with free cash flow over the last twelve months being positive, the company is in a very strong position to invest in growth.

It was good to see Veeva Systems outperform Wall St’s revenue expectations this quarter. And we were also glad to see good revenue growth. On the other hand, it was unfortunate to see that the revenue guidance for the next quarter missed analysts' expectations. Zooming out, we think this was still a decent, albeit mixed, quarter, showing the company is staying on target. But the market was likely expecting more and the company is down 2.8% on the results and currently trades at $264.5 per share.

Should you invest in Veeva Systems right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

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The author has no position in any of the stocks mentioned.