What Happened:
Shares of healthcare software provider Veeva Systems (NASDAQ:VEEV) jumped 6.99% in the morning session after the company reported second quarter earnings results, with revenue narrowly outperforming Wall Street's estimates. Earnings per share (EPS) also beat.
On the other hand, its revenue guidance for the next quarter missed analysts' expectations, although non-GAAP operating profit guidance exceeded expectations. Full year guidance was also slightly raised and is a bit ahead of Wall Street analysts' estimates.
Veeva also announced the first customer win for the new Vault CRM for the Life Sciences industry, which was launched in May 2023. Vault CRM has the full functionality of Veeva CRM, including two new applications: CRM Bot (AI-powered intelligent assistant) and Service Center (call center application). Management added during the conference call that "Veeva CRM and our add-ons is roughly 25% of our total revenue. And we expect to move the vast majority of that over to Vault CRM over, let's say, the next five years."
Overall, it was a stronger quarter for Veeva, and the early adoption of Vault CRM is also good to see, given that the initial projection was for the first Vault CRM customers to be live in 2024.
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What is the market telling us:
Veeva Systems's shares are quite volatile and over the last year have had 7 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was three months ago, when the stock gained 8.37% on the news that the company reported a "beat and raise quarter." First quarter results exceeded analysts' expectations across key metrics, including revenue, subscription revenue, free cash flow, and earnings per share (EPS). However, gross margin deteriorated.
Moving ahead, revenue and operating income guidance for the next quarter were roughly in line with consensus. Additionally, the FY'2024 revenue guidance was raised and in line with expectations. Management expressed optimism regarding the company's outlook, adding that "We see momentum in multiple product categories, which positions us well to deliver durable and profitable growth through 2025 and beyond."
Overall, it was a decent quarter for the company, with strong financial results and positive guidance, especially considering some of the mediocre quarters and cautious commentary from other software companies that reported the same day.
Veeva Systems is up 30.4% since the beginning of the year, and at $208.02 per share it is trading close to its 52-week high of $209.36 from July 2023. Investors who bought $1,000 worth of Veeva Systems's shares 5 years ago would now be looking at an investment worth $1,990.
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