Veeva Systems (NYSE:VEEV) is based in Pleasanton, California. But the company's slogan could be a popular New Orleans phrase: "Laissez les bons temps rouler."
The good times have certainly been rolling for Veeva so far in 2020. The stock has soared more than 90% year to date. And the cloud-based software provider announced great second-quarter results after the market closed on Thursday. Here's why investors loved Veeva's Q2 update.
By the numbers
Veeva Systems reported revenue in the second quarter of $353.7 million, a 33% year-over-year jump. This result easily topped the average analyst estimate of $340.12 million.
The company announced net income in the second quarter of $93.6 million, or $0.58 per share, based on generally accepted accounting principles (GAAP). This reflected a significant improvement from the GAAP net income of $79.2 million, or $0.50 per share, posted in the prior-year period.
On a non-GAAP adjusted basis, Veeva's net income in the second quarter totaled $116.4 million, or $0.72 per share. The company's adjusted bottom-line numbers were much better than the $97.7 million, or $0.55 per share, recorded in the same quarter of 2019. Veeva also beat the consensus Wall Street Q2 earnings estimate of $0.64 per share.
Behind the numbers
Veeva Systems Chief Financial Officer Tim Cabral stated, "Demand for our products and services remains strong as life sciences companies pursue strategic initiatives across R&D and commercial." This robust demand showed up across the board in the company's Q2 results.
The life sciences software provider makes most of its money from subscriptions for its software-as-a-service (SaaS) products. Veeva said that its subscription services revenue in Q2 jumped 30% year over year to $283.5 million. Veeva also reported professional services and other revenue of nearly $70.2 million, up close to 42% over the prior-year period total.
In particular, the company's Vault Quality applications enjoyed a great quarter with record sales. Veeva said that two top 20 pharma companies standardized on the Vault QMS (Quality Management System) platform, while another top 20 pharma company adopted Vault QualityDocs across its enterprise.
Veeva projects sales of between $1.415 billion and $1.42 billion for full-year fiscal 2021. It anticipates adjusted earnings per share (EPS) will come in between $2.64 and $2.67.
The company also expects that revenue for the third quarter will be between $360 million and $362 million. Veeva looks for adjusted earnings per share (EPS) of $0.66 to $0.68. The low end of this range is above the average analyst adjusted earnings estimate of $0.63 per share.
Perhaps the biggest challenge for the healthcare stock now is its premium valuation. Shares trade at more than 106 times expected earnings. But steep valuation multiples haven't proven to be a big problem for Veeva in the past. If the good times keep rolling for its business, valuation probably won't be a significant issue in the future, either.