Why Is Veeva (VEEV) Up 1.4% Since Last Earnings Report?

A month has gone by since the last earnings report for Veeva Systems (VEEV). Shares have added about 1.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Veeva due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Veeva Systems Q2 Earnings and Revenues Beat Estimates

Veeva Systems, Inc. reported second-quarter fiscal 2021 adjusted earnings per share  of 72 cents, beating the Zacks Consensus Estimate by 12.5%.  The metric surged 30.9% on a year-over-year basis.

The company’s revenues totaled $353.7 million, outpacing the Zacks Consensus Estimate by 4.1%. On a year-over-year basis, the top line improved 32.5%.

Segmental Details

Subscription Service

Fiscal second-quarter subscription service revenues summed $283.5 million, up 30% year over year.

Professional Service and Others

Professional Service revenues rose almost 41.5% to $70.2 million from the year-ago figure.

Per management, outperformance by Veeva Commercial Cloud and Veeva Vault drove revenues across all segments.

Margin Details

In the reported quarter, gross profit increased 30.4% year over year to $256.5 million. Gross margin was 72.5%, which contracted 117 basis points (bps).

Operating profit totaled $149.3 million, up 24.7% year over year. In the quarter under review, adjusted operating margin fell 264 bps to 42.2%.

Cash Position

The company exited the fiscal second quarter with cash and cash equivalent of $795.8 million compared with $720.8 million at the end of the fiscal first quarter. Cumulative net cash provided by operating activities came in at $387.5 million, up from $336.8 million at the end of the year-ago period.

Guidance

For the third quarter of fiscal 2021, Veeva Systems expects revenues between $360 million and $362 million. The Zacks Consensus Estimate for the same stands at $347.3 million.

Adjusted earnings is projected between 66 and 68 cents. The Zacks Consensus Estimate for the metric is pegged at 45 cents.

Adjusted operating income is estimated between $138 million and $140 million.

For fiscal 2021, revenues are expected within $1.41-$1.42 billion, compared with the previously-issued range of $1.38-$1.39 billion. The Zacks Consensus Estimate for the same is pinned at $1.39 billion.

Adjusted earnings is expected in the range of $2.64-$2.67 versus the previous range of $2.50-$2.55. The Zacks Consensus Estimate for the same stands at $1.80.

Adjusted operating income is expected between $540 million and $545 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 5.61% due to these changes.

VGM Scores

At this time, Veeva has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Veeva has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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