What happened

Shares of Veeva Systems (VEEV 1.10%) slumped on Thursday morning, falling as much as 16.5%. As of 2:20 p.m. ET, the stock was still down 16.3%.

The cloud provider to the life sciences industry announced financial results that were largely as expected, but its lackluster forecast spooked investors.

So what

For the fiscal 2023 second quarter (ended July 31), Veeva reported revenue of $534.2 million, up 17% year over year, fueled by subscription-services revenue of $428.6 million, also up 17%. This resulted in non-GAAP earnings per share (EPS) of $1.03, an increase of 10%.  

Analysts' consensus estimates were calling for revenue of $530.7 million and EPS of $1.01, so Veeva beat on both counts.  

Management said the company made progress with both established and newly launched products. "We are early in a large and growing opportunity," said CEO Peter Gassner, "and look forward to expanding our position as the strategic technology partner to the life sciences industry."

The company noted that it achieved a major milestone, with more than 500 customers using at least one product in the Vault Quality Suite, driven by a record 52 new customer additions during the quarter.

Now what

Management lowered its outlook for the full fiscal year, which likely sparked today's sell-off. Veeva is now guiding for revenue of roughly $2.14 billion at the midpoint of its guidance, which would represent growth of about 16% year over year, down from its previous forecast of 17% growth. The company left its bottom-line guidance largely unchanged, as Veeva expects adjusted EPS of $4.17, an increase of 12%.

On the conference call, CFO Brent Bowman pointed out that the nearly half-the-guidance change was the result of a strong dollar, which acts as a headwind for foreign currency translation. The remaining change was the result of slower adoption by small- and medium-sized businesses. 

Veeva is the industry leader and is well positioned for future growth. Furthermore, while it has never been cheap, the stock is currently trading for just 10 times next year's sales, a valuation not seen since 2016. For investors with the appropriate investing time horizon, Veeva stock is still a buy.