Cloud-based software play Veeva Systems (VEEV) is set to report Q1 earnings tonight after the close with a conference call to follow at 4:30pm ET.

Current Capital IQ consensus stands at EPS of $0.45 on Revenue of $238.6 mln representing approx 23% yr/yr growth.

VEEV has been a strong performer in 2019 as its stock has rallied approx 60% YTD. The company operates in the hot CRM cloud space with a focus on the healthcare vertical for its SaaS solutions. As with so many of these names, valuation has become a focal point for investors with the name trading at 24x Price to Sales, near the high end for the industry. This comes as the revenue growth slows under the weight of tougher comps and economies of scale. The launch of the company's Vault product has been a positive and it is now 49% of total revenues with growth of approx 46% which is well above the 25% total revenue growth witnessed in Q4. 

Shares of VEEV are trading just above the 50-sma ($134.99) which stands as a big support line for the company. We have seen cloud companies get hit on beat and raise quarters so the pressure will be on for VEEV to produce a big quarter. Otherwise shares could be in danger of slipping back to the next key support level at $123. In a difficult tape, the $145 level will provide significant resistance on any attempt to press higher. 

Guidance

  • Q1

    • Q1 Total revenues between $238-239 mln;

    • Non-GAAP operating income between $85-86 mln;

    • Non-GAAP fully diluted net income per share between $0.44- 0.45

  • FY20

    • Total revenues between $1,025-1,030 million.

    • Non-GAAP operating income between $365-370 mln;

    • Non-GAAP fully diluted net income per share between $1.9- and $1.94.

    • Billings guidance of 20%

Q4 Recap

VEEV reported Q4 (Jan) earnings of $0.45 per share, $0.05 better than the S&P Capital IQ Consensus of $0.40. Revenues rose 24.9% year/year to $232.32 mln vs the $227.15 mln S&P Capital IQ Consensus.

Subscription services revenues for the fourth quarter were $190.7 million, up from $152.0 million one year ago, an increase of 25% year-over-year.

Billings Growth on a trailing twelve month basis was 23%.

Subscription Growth Margins were 85.2% which was best of any Public SaaS company over the past 18 months.

Other Items of Interest

VEEV's President and Co-Founder announced in the Q4 earnings call that he would be stepping down in January 2020. Mr. Wallach will remain on the Board and be a part of strategic decisions. Any updates on his replacement will be of interest. 

TECHS:

This stock is extremely expensive. Any miss or “subpar” result will likely create a capitulatory effect.

TRADE: VEEV JUL19 115P