Veeva Systems Inc up 149% Since March; Still Bullish
Veeva Systems Inc (NYSE:VEEV) is an excellent cloud stock that, despite its staggering long-term growth, doesn’t get a lot of attention around the water cooler. And that probably won’t change anytime soon. However, this doesn’t mean you should miss out on future gains.
A provider of cloud-based services for pharmaceutical and life science companies, Veeva Systems Inc stock has been, as you can see in its trading chart, rewarding buy-and-hold investors for years, with a five-year, compound annual growth rate of 59.62%.
Since 2016, VEEV stock has soared 936%. Most recently, the company’s share price is up 78.9% year-over-year and 106.2% year-to-date, and it has advanced approximately 149.0% since the coronavirus-fueled sell-off in March.
Why the long-term investor enthusiasm?
There’s no mystery. Veeva Systems has a long history of reporting strong revenue growth and ongoing profitability.
In the second quarter, Veeva Systems announced that revenue had climbed 33%, net income was up 18%, and adjusted earnings per share (EPS) had advanced 36%. For the fiscal year, Veeva expects revenue to grow 28% and adjusted earnings per share (EPS) to rise around 21%.
However, this pales compared to what management expects to achieve over the coming years.
By 2025, Veeva expects to report annual revenue of $3.0 billion. That’s 172% ahead of the $1.1 billion it generated in fiscal 2020.
Chart courtesy of StockCharts.com
VEEV Stock Overview
Veeva Systems provides cloud-based software for the pharmaceutical and life sciences industries in North America, Europe, Asia-Pacific, the Middle East, Africa, and Latin America.
The company’s co-founder and CEO is actually Peter Gassner, who was once the senior VP of technology at salesforce.com, inc. (NYSE:CRM). (Source: “About,” Veeva Systems Inc, last accessed September 1, 2020.)
Veeva’s services include “Veeva Commercial Cloud,” a suite of customer relationship management (CRM) applications, commercial data warehouse, allocation, and alignment applications, and data and services. “Veeva CRM” is built on the Salesforce platform, and brings together customer data, complaint content, and multichannel engagement for life sciences companies.
“Veeva Vault” is a cloud-based content and data management application that helps manage commercial functions, including medical, sales, and marketing, along with research and development functions.
Veeva currently helps more than 600 life sciences companies bring new medicines and treatments to patients faster. Here are some stats to back that up:
- 81% of new drugs approved were launched with Veeva CRM
- 90% faster data change request resolution with “Veeva Open Data”
- 99% faster assembly of supplement history with “Vault RIM”
- 40% cut time in trial master file (how a trial is conducted and managed) with Veeva CRM
Strong Q2 Revenue Growth of 33% & Ongoing Profitability
On August 27, Veeva Systems Inc announced that revenue for the second quarter of fiscal 2021, ended July 31, 2020, increased 33% year-over-year to $353.7 million.
Subscription services revenue was up 30%, at $283.5 million. (Source: “Veeva Announces Fiscal 2021 Second Quarter Results,” Veeva Systems Inc, August 27, 2020.)
Operating income climbed 22% year-over-year to $90.1 million, while adjusted operating income jumped 39% to $144.4 million.
Veeva reported second-quarter 2021 net income of $93.6 million, or $0.58 per share, an 18% increase over second-quarter fiscal 2020 net income of $93.6 million, or $0.50 per share. Adjusted EPS came in at $0.72, a 31% increase over adjusted EPS of $0.55 in the same period last year.
VEEV’s Business Outlook
For the third quarter of fiscal 2021, Veeva expects to report:
- Total revenue of between $360.0 million and $362.0 million; at the midpoint, that represents year-over-year growth of 28.5%
- Adjusted operating income of between $138.0 million and $140.0 million, representing a 24.5% increase over third-quarter 2020 adjusted operating income of $111.6 million
- Adjusted diluted EPS of between $0.66 and $0.68, compared to third-quarter 2020 adjusted diluted EPS of $0.60
For fiscal 2021, Veeva expects to report:
- Total revenue of between $1.41 billion and $1.42 billion, a 28% increase over fiscal 2020 revenue of $1.1 billion
- Adjusted operating income of between $540.0 million and $545.0 million, representing year-over-year growth of approximately 31.6%
- Adjusted diluted EPS of between $2.65 and $2.67, versus fiscal 2020 adjusted diluted EPS of $2.19
Veeva Systems Inc is one of the most reliable providers of cloud-based CRM solutions for the global pharma and life sciences industry. It has a strong balance sheet and long history of revenue growth and ongoing profitability.
The company’s outlook remains robust, too, as the entire life sciences industry moves to streamline drug development and enable digital engagement. And that’s not just because of the coronavirus pandemic, though that is one of the most important challenges today.