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Veeva Systems (NYSE:VEEV) Q4: Beats On Revenue But Stock Drops On Weak Guidance


Adam Hejl /
2022/03/02 4:22 pm EST
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Healthcare software provider Veeva Systems (NASDAQ:VEEV) reported Q4 FY2022 results topping analyst expectations, with revenue up 22.3% year on year to $485.4 million. However, guidance for the next quarter was less impressive, coming in at $495 million at the midpoint, being 3% below analyst estimates. Veeva Systems made a GAAP profit of $97 million, down on its profit of $102.9 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) Q4 FY2022 Highlights:

  • Revenue: $485.4 million vs analyst estimates of $480.3 million (1.06% beat)
  • EPS (non-GAAP): $0.90 vs analyst estimates of $0.88 (1.95% beat)
  • Revenue guidance for Q1 2023 is $495 million at the midpoint, below analyst estimates of $510.3 million
  • Management's revenue guidance for upcoming financial year 2023 is $2.16 billion at the midpoint, missing analyst estimates by 0.22% and predicting 16.9% growth (vs 26.4% in FY2022)
  • Free cash flow of $50.1 million, down 55.6% from previous quarter
  • Customers: 1,205, up from 1,000 in previous quarter
  • Gross Margin (GAAP): 72%, in line with same quarter last year

"We founded Veeva 15 years ago with a clear vision of the industry cloud for life sciences," 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 $396.7 million, to $485.4 million.

Veeva Systems Total Revenue

This quarter, Veeva Systems's quarterly revenue was once again up a very solid 22.3% year on year. But the growth did slow down compared to last quarter, as the revenue increased by just $9.38 million in Q4, compared to $20.5 million in Q3 2022. We'd like to see revenue increase by a greater amount each quarter, but a one-off fluctuation is usually not concerning.

Guidance for the next quarter indicates Veeva Systems is expecting revenue to grow 14.1% year on year to $495 million, slowing down from the 28.6% year-over-year increase in revenue the company had recorded in the same quarter last year. For the upcoming financial year management expects revenue to be $2.16 billion at the midpoint, growing 16.9% compared to 26.4% increase in FY2022.

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Customer Growth

You can see below that Veeva Systems reported 1,205 customers at the end of the quarter. That is quite a bit decent growth, demonstrating that the business itself has good sales momentum. We've no doubt shareholders will take this as an indication that the company's go-to-market strategy is working very well.

Veeva Systems Customers

Key Takeaways from Veeva Systems's Q4 Results

Sporting a market capitalization of $35.6 billion, more than $2.37 billion in cash and with positive free cash flow over the last twelve months, we're confident that Veeva Systems has the resources it needs to pursue a high growth business strategy.

We were very impressed by Veeva Systems’s very strong acceleration in customer growth this quarter. And we were also happy to see it topped analysts’ revenue expectations, even if just narrowly. On the other hand, the revenue guidance for next year indicates a significant slowdown and the revenue guidance for the next quarter missed analysts' expectations. Overall, this quarter's results could have been better. The company is down 9.17% on the results and currently trades at $209.96 per share.

Veeva Systems may have had a tough quarter, but does that actually create an opportunity to invest 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.