Veeva Systems (VEEV 0.61%) will release its quarterly report on Thursday, and the cloud-computing company has seen solid gains since its October IPO. With big players like Merck, Gilead Sciences, and several other major pharma and biotech players on its customer list, Veeva shares soared on its opening day. Given the increasing need for health-care companies to track more of their operations electronically, the IT company seems poised on the precipice of capturing a huge growth opportunity, thanks largely to its partnership with salesforce.com (CRM +0.84%).
Veeva Systems wasn't the first cloud-based company to take advantage of the favorable environment for IPOs, with several other players vaulting onto the public exchanges over the summer and fall months. But Veeva has ambitious plans, hoping to dislodge Oracle to provide a more customized cloud-based solution tailored specifically for the needs of life-sciences companies like Merck and Gilead Sciences. CEO Peter Gassner, a former employee at Salesforce, has said he believes the company's agility will allow it to play David to Oracle's Goliath, but can Veeva live up to the IPO hype? Let's take an early look at what's been happening with Veeva Systems over the past quarter and what we're likely to see in its report.
Stats on Veeva Systems
|
Analyst EPS Estimate |
$0.05 |
|
Change From Year-Ago EPS |
0%* |
|
Revenue Estimate |
$50.28 million |
|
Change From Year-Ago Revenue |
33%* |
|
Earnings Beats in Past 4 Quarters |
N/A |
Source: Yahoo! Finance. N/A = not applicable; this is Veeva's first report as a public company. *Comparison based on one-half of Veeva's results from the second half of 2012.
What's next for Veeva Systems earnings?
Analysts haven't had time to revise their earnings projections for Veeva Systems since it went public, as they've kept their initial estimates unchanged. The stock has continued doing well, adding another 12% since late October after its first-day gains of more than 85%.
Veeva emerged to huge fanfare in its initial public offering, with many investors pointing to the pedigree of the company's top executive. CEO Gassner originally worked for Salesforce before co-founding Veeva in 2007, and the company's products are built on Salesforce's own cloud platform. Salesforce even congratulated Veeva on its IPO, emphasizing the importance of the two companies' partnership to their respective business prospects.
As you'd expect, some investors are skeptical about Veeva's viability, arguing that cloud-based companies have taken advantage of a favorable IPO market to go public prematurely. Yet unlike many of its cloud-based peers, Veeva is already profitable, and the company is enjoying solid sales gains. Moreover, it has a flawless balance sheet, with substantial cash on hand and no outstanding debt.
Yet the real potential from Veeva lies in its customized solutions for pharma and biotech companies. Veeva CRM has many industry-specific features to handle customer-relationship management with health care in mind, but Veeva Vault is arguably even more important for the company's success. With Vault helping pharma and biotech companies manage content and handle workflow and approval processes, Veeva should benefit from customers looking to manage key trials effectively. Moreover, with Veeva having mastered regulatory requirements in dozens of countries around the world and in multiple languages, the company is positioned to gain global scope with its products.
In particular, Veeva could gain from big pharma's attempts to scale down its expenses. Merck and Gilead are both highly profitable, but they're also always on the lookout for ways to cut costs and divert more of their capital toward research and development. If Veeva's products can reduce overhead involved in handling relationships between drug salespeople and doctors and hospitals, Merck, Gilead, and other customers could boost their own profits while supporting Veeva's business.
Watch to see how Veeva Systems does in its first post-IPO earnings report. Investors will want to see continued strong growth, and anything short of that could send the wrong first impression to shareholders wanting to cash in on Veeva's cloud potential.
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