Things to love about Veeva Systems second quarter results
Veeva Systems (NYSE: VEEV) provided its FY2022 second quarter update earlier this month. In this Motley Fool Live video, recorded on September 8Fool contributors Keith Speights and Brian Orelli discuss what investors should like about Veeva’s latest results.
Keith Speights: Brian, we are hedging earnings at the height of earnings season, and it’s now over. Most healthcare companies have already released their quarterly results for this earnings season. However, Veeva Systems, a ticker there is VEEV, is reporting a little later than most, and the company recently announced its second quarter results.
What do you think were the things that stood out in the last quarterly update from Veeva?
Brian Orelli: Veeva, their quarters are one month behind most other companies, so their fiscal second quarter ended on July 31, which is why they report after everyone else. Revenue increased 29% year-over-year.
Veeva’s Vault platform is really leading the way. The company started out as a CRM, customer relationship manager for life sciences, so think of it like salespeople interacting with doctors, but they’ve really developed a whole product line for pharmaceutical companies to do it all, from the interaction of their salespeople to physicians right through to the end of a product’s lifecycle, right through to the start, whether it’s clinical trials and even preclinical data.
Cloud-based data storage, this Vault system, has several different aspects. There’s TMF, and it’s not The Motley Fool, it’s a trial master file, and then there’s CTMS, which is a clinical trial management system, and they have CDMS, which is a clinical data management system, and then they have a safe to save clinical trial data. They even have a free product that helps clinical trial researchers reconnect with clinical trial sponsors. They really do a lot.
They offer a whole bunch of different options for businesses, and businesses seem to swallow it, and that’s the reason revenue has increased 29% year over year. [laughs] I like the second quarter for companies that give quarterly advice and annual advice because you already have two quarters under your belt, and they give you the third, and they give you the year, so you do a little bit of calculation, and you can also understand the first trimester.
First quarter, Veeva brought in 433 million, then in second quarter it was up to 455 million, then in third quarter they guide between 464 and 466 million, then for the fiscal year they ‘guide for 1.83 billion dollars or so, so it comes down to $ 476-480 million for the fourth quarter.
They keep increasing quarter over quarter, and it’s amazing how close they can get, so 464 million to 466 million, it’s really subscription based, so I think they know roughly what their sales will be in Q3 because everyone’s already committed to using their products, they’re going to be using them mostly in Q3, and so their advice can be pretty tight.
Speights: Veeva is a big company with a big company, a lot of recurring revenue. We will point out that it also has an exorbitant valuation.
All the growth you mentioned, the business has to deliver. I arrived very quickly. Their final P / E ratio is 121. The stock is trading at almost 31 times sales, so it has to grow to even have any hope of justifying this valuation. But it’s a big company, and I think it has a lot of growth prospects for the future.
Orelli: Yeah, I think they’re trying to expand beyond the pharmaceutical companies, and I think that’s really what investors should be focusing on if you’re a shareholder or want to be a shareholder. These are not necessarily the products of the pharmaceutical companies, although they continue to capture more and more pharmaceutical companies, and it seems that there are more and more pharmaceutical companies going public, which increases their size. market potential, but I also think just expanding into chemicals and cosmetics and those other things, I think, will also help Veeva continue to grow in the future.
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