2194

Veeva Systems (NYSE:VEEV) Q2: Narrowly Beats On Revenue But Stock Drops


Kayode Omotosho /
2021/09/01 4:10 pm EDT
Add to Watchlist

Healthcare software provider Veeva Systems (NASDAQ:VEEV) reported strong growth in the Q2 FY2022 earnings announcement, with revenue up 28.8% year on year to $455.5 million. Veeva Systems made a GAAP profit of $108.8 million, improving on its profit of $93.5 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) Q2 FY2022 Highlights:

  • Revenue: $455.5 million vs analyst estimates of $450.9 million (1.03% beat)
  • EPS (non-GAAP): $0.94 vs analyst estimates of $0.86 (9.03% beat)
  • Revenue guidance for Q3 2022 is $465 million at the midpoint, above analyst estimates of $459.7 million
  • The company reconfirmed revenue guidance for the full year, at $1.83 billion at the midpoint
  • Free cash flow of $118.9 million, down 75.1% from previous quarter
  • Customers: 1,100, up from 1,052 in previous quarter
  • Gross Margin (GAAP): 73.2%, in line with previous quarter

"Thanks to the team and the trust of our customers, it was another great quarter," said CEO Peter Gassner.

Founded in 2007, Veeva 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 $353.6 million, to $455.5 million.

Veeva Systems Total Revenue

This quarter, Veeva Systems's quarterly revenue was once again up a very solid 28.8% year on year. But the growth did slow down compared to last quarter, as the revenue increased by just $22 million in Q2, compared to $36.8 million in Q1 2022. We'd like to see revenue increase by a greater amount each quarter, but a one-off fluctuation is usually not concerning.

Analysts covering the company are expecting the revenues to grow 19.5% over the next twelve months, although we would expect them to review their estimates once they get to read these results.

There are others doing even better than Veeva Systems. Founded by ex-Google engineers, a small company making software for banks has been growing revenue 90% year on year and is already up more than 400% since the IPO in December. You can find it on our platform for free.

Customer Growth

You can see below that Veeva Systems reported 1,100 customers at the end of the quarter, an increase of 48 on last quarter. That is a bit slower customer growth than last quarter but still in line with what we are used to seeing lately, suggesting that the company still has decent sales momentum.

Veeva Systems Customers

Key Takeaways from Veeva Systems's Q2 Results

With a market capitalization of $50.7 billion, more than $2.26 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 deliver strong revenue growth this quarter. And we were also glad that the revenue guidance for the next quarter exceeded analysts' expectations. On the other hand, there was a slight slowdown in customer growth. Zooming out, we think this was still a decent, albeit mixed, quarter, showing the company is staying on target. The company is down -7.93% on the results and currently trades at $307.8 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.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

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