Veeva Earnings: Broad-Based Customer Wins and Margin Gains Mark a Strong Quarter; Shares Look Cheap

Wide-moat Veeva reported solid second-quarter results that came in above our expectations. Total sales of $676 million were up 14.6% year over year and beat our forecast of $670 million. The firm demonstrated strong performance throughout the customer size spectrum with wins from both large pharmas and small biotechs. Veeva also executed well on the cost-control front and margins for both subscription and services were lifted during the quarter. We think a favorable product mix, a headcount reduction, and an increased efficiency all drove the improvement. On the backdrop of a successful quarter, the firm inched up the low end of the sales guidance range about 1% and raised EPS guidance to $6.22 from $6.16. After updating our model and accounting for time value of money, we raise our fair value estimate to $273 per share from $270.