Veeva Systems's (NYSE:VEEV) Q1 Sales Top Estimates But Stock Drops

Petr Huřťák /
2024/05/30 4:19 pm EDT

Healthcare software provider Veeva Systems (NASDAQ:VEEV) reported Q1 CY2024 results beating Wall Street analysts' expectations, with revenue up 23.6% year on year to $650.3 million. On the other hand, next quarter's revenue guidance of $667.5 million was less impressive, coming in 1.1% below analysts' estimates. It made a non-GAAP profit of $1.50 per share, improving from its profit of $0.91 per share in the same quarter last year.

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Veeva Systems (VEEV) Q1 CY2024 Highlights:

  • Revenue: $650.3 million vs analyst estimates of $642 million (1.3% beat)
  • EPS (non-GAAP): $1.50 vs analyst estimates of $1.42 (5.3% beat)
  • Revenue Guidance for Q2 CY2024 is $667.5 million at the midpoint, below analyst estimates of $675.3 million
  • The company dropped its revenue guidance for the full year from $2.73 billion to $2.71 billion at the midpoint, a 1% decrease
  • Gross Margin (GAAP): 73.3%, up from 68.3% in the same quarter last year
  • Free Cash Flow of $755 million, up from $50.03 million in the previous quarter
  • Market Capitalization: $32.4 billion

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.

Healthcare And Life Sciences Software

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 mediocre over the last three years, growing from $433.6 million in Q1 2022 to $650.3 million this quarter.

Veeva Systems Total Revenue

This quarter, Veeva Systems's quarterly revenue was up a very solid 23.6% year on year, above the company's historical trend. On top of that, its revenue increased $19.73 million quarter on quarter, a very strong improvement from the $14.11 million increase in Q4 CY2023. This is a sign of acceleration of growth and great to see.

Next quarter's guidance suggests that Veeva Systems is expecting revenue to grow 13.1% year on year to $667.5 million, improving on the 10.5% year-on-year increase it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 13.5% over the next 12 months before the earnings results announcement.

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Cash Is King

If you've followed StockStory for a while, you know that we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. Veeva Systems's free cash flow came in at $755 million in Q1, up 50.1% year on year.

Veeva Systems Free Cash Flow

Veeva Systems has generated $1.14 billion in free cash flow over the last 12 months, an eye-popping 45.7% of revenue. This robust FCF margin stems from its asset-lite business model, scale advantages, and strong competitive positioning, giving it the option to return capital to shareholders or reinvest in its business while maintaining a healthy cash balance.

Key Takeaways from Veeva Systems's Q1 Results

It was good to see Veeva Systems slightly improve its gross margin this quarter. We were also happy its revenue narrowly outperformed Wall Street's estimates. On the other hand, its revenue guidance for next quarter missed analysts' expectations and its full-year revenue guidance--which was lowered--also came in below Wall Street's expectations. Overall, this was a mediocre quarter for Veeva Systems. The company is down 5.3% on the results and currently trades at $183.84 per share.

Veeva Systems may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.