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

Kayode Omotosho /
2021/09/01 4:10 pm EDT

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.

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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.

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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.

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