What: After Veeva Systems, Inc. (NYSE:VEEV) reported quarterly financial results that were ahead of industry watchers projections and offered a better outlook for the rest of the year, its shares were trading 10% higher earlier today.
So what: The makers of cloud-based software solutions that help drugmakers better market their medicines reports that total revenue surged 33% year over year to $119.8 million last quarter. The revenue growth was driven by a 39% increase in subscription revenue.
Veeva Systems' management also said that its first-quarter operating income improved to $29.4 million from $26.3 million last year, on a non-GAAP basis that takes out one-time events. That 12% improvement resulted in non-GAAP EPS in the quarter of $0.15, up from $0.12 a year ago.
The company also offered up color into the rest of the fiscal year, forecasting sales of between $516 million and $520 million and non-GAAP EPS of between $0.55 and $0.57.
Now what: A record number of drugs are in clinical trials and that means that the biopharma market is getting increasingly competitive. As drugmakers angle to outmaneuver each other, the use of cutting-edge software that can provide an edge in tracking and converting efforts to win over prescribers is increasing.
Although Veeva Systems fiscal Q1 results reflect significant tailwinds from this trend, investors interested in buying shares will have to pay dearly for them. The stock is trading at a price-to-earnings ratio of nearly 60 based on the company's current forecast. That's certainly not cheap. However, its rapid growth could still justify stashing this one in growth portfolios, especially if shares slip in the next couple of days.
Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may have positions in the companies mentioned. Like this article? Follow him on Twitter where he goes by the handle @ebcapital to see more articles like this. The Motley Fool owns shares of and recommends Veeva Systems. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.