According to a recent report, the global healthcare cloud infrastructure market is estimated to grow at 16% CAGR from $48.1 billion in 2021 till 2030. The growth will be driven by the continuing trend of digitalization of healthcare, the integration of advanced AI/ML algorithms, cloud deployment of healthcare systems, and the need to control rising expenditure, inefficient facility management, and overburdened systems. Veeva (NYSE: VEEV) recently announced its quarterly results that beat analyst estimates. Affected by global economic conditions, its outlook failed to meet market expectations.
Veeva’s Financials
Veeva’s Q2 revenues grew 17% over the year to $534.2 million, ahead of the Street’s forecast of $530.8. On an adjusted basis, EPS was $1.03, surpassing the Street’s estimates of $1.01.
By segment, revenues from subscription services grew 17% to $428.6 million. Professional services revenues grew 18.4% to $105.57 million.
For the third quarter, Veeva forecast revenues of $545-$547 million and an adjusted EPS of $1.07-$1.08. The market was looking for revenues of $557.29 million and an EPS of $1.07.
Veeva expects to end the current year with revenues of $2.14-$2.145 billion and an EPS of $4.17. The market was looking for revenues of $2.17 billion with an adjusted EPS of $4.14 for the year.
Veeva’s Focus on R&D
Veeva continues to expand its market presence through product excellence and customer success in core and new product areas. During the last quarter, it saw a major milestone with Veeva Vault Quality. More than 500 customers are using at least one Vault Quality Suite product, including over 200 Vault Training customers. Veeva Vault Quality has been expanding to modernize quality end-to-end and provide a solution on a common platform. Veeva’s QualityDocs, QMS, Training, and Laboratory Information Management are all being delivered in an integrated suite of products, thus helping it make bigger inroads into its customers’ wallets.
Veeva’s management is also worried about macro headwinds that will face its Commercial Solutions and SMB customers. It is already seeing slowdown in its pipeline from macro uncertainty impacting its Commercial Solutions business. Crossix revenue growth softened due to tightening advertising budgets and weakness in SMB spending, reflecting slower adoption of new products. However, it believes that its R&D segment will continue to deliver. Within Regulatory, it saw strong momentum with 15 customer wins in the quarter, including a top 20 customer selecting Vault Submissions, Vault Submissions Archive, and Vault Publishing. Veeva also saw growth in clinical data management and Vault CDMS, especially in enterprise accounts. Veeva believes that its R&D business will help grow subscription revenues by almost 30% in the coming quarters compared with the Commercial segment’s expected 7% growth.
Veeva’s stock is currently trading at $174.57 with a market capitalization of $27.1 billion. It had peaked to a high of $327.78 in October of last year. It hit a 52-week low of $152.04 in May.
Disclosure: All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own research of product-market fit, channel execution, and other factors. My primary interest is in product strategy. While this may have bearing on stock movements, my writings tend to focus on long-term implications. The information presented is illustrative and educational, but should not be regarded as a complete analysis nor recommendation to buy or sell the securities mentioned herein. I am not a registered investment adviser and I am not receiving compensation for this article. I am an investor in this company.
