Veeva Systems, Inc. VEEV reported adjusted earnings per share (EPS) of $1.75 for the third quarter of fiscal 2025, which increased 30.6% from the year-ago figure of $1.34. Adjusted EPS surpassed the Zacks Consensus Estimate by 10.76%.
GAAP EPS in the fiscal third quarter was $1.13, up 36.1% from the year-ago period’s 83 cents.
VEEV’s Revenue Details
For the quarter under review, the company’s revenues totaled $699.2 million, outpacing the Zacks Consensus Estimate by 2.2%. On a year-over-year basis, the top line improved 13.4%.
The fiscal third-quarter top line was driven by Veeva Systems’ robust segmental performance.
Segmental Analysis of VEEV
Veeva Systems derives revenues from two operating segments — Subscription services and Professional services and other.
In the fiscal third quarter, Subscription services revenues improved 17.4% from the year-ago quarter to $580.9 million. Per management, this uptick was driven by both its established and newer solutions. Our projection for fiscal third-quarter revenues was $569.4 million.
Professional services and other revenues were down 2.7% year over year to $118.4 million. Our projection for fiscal third-quarter revenues was $114 million.
Q3 Margin Performance by VEEV
In the quarter under review, Veeva Systems’ gross profit improved 16.9% year over year to $524.8 million. The gross margin expanded 230 basis points (bps) to 75.1%. We had projected 73.1% of gross margin for the fiscal third quarter.
Sales and marketing expenses rose 1.9% year over year to $98.7 million. Research and development (R&D) expenses went up 6.9% year over year to $172.4 million, while general and administrative expenses increased 16.2% to $72.4 million. Total operating expenses of $343.5 million increased 7.2% year over year.
Operating profit totaled $181.4 million, which increased 41.1% from the prior-year quarter. The operating margin in the fiscal third quarter expanded by a huge 510 bps to 25.9%. We had projected a 23.6% operating margin for the fiscal third quarter.
VEEV’s Financial Position
The company exited third-quarter fiscal 2025 with cash and cash equivalents and short-term investments of $5.06 billion compared with $4.89 billion at the fiscal second-quarter end.
Cumulative net cash provided by operating activities at the end of the quarter was $1.02 billion compared with $853.6 million a year ago.
Guidance Provided by VEEV
Veeva Systems has revised its financial outlook for fiscal 2025 and provided its estimates for the fourth quarter of fiscal 2025.
For the fiscal fourth quarter, the company expects total revenues between $696 million and $699 million. The Zacks Consensus Estimate is currently pegged at $697.7 million.
Subscription revenues and Professional services and other revenues are estimated to be approximately $596 million and $100 million-$103 million, respectively, for the fiscal fourth quarter.
For the fiscal fourth quarter, adjusted EPS is projected to be approximately $1.57. The Zacks Consensus Estimate is pegged at $1.53.
Veeva Systems now expects revenues for fiscal 2025 between $2,722 million and $2,725 million compared with the earlier outlook of $2,704 million-$2,710 million. The Zacks Consensus Estimate is currently pegged at $2.71 billion.
For fiscal 2025, Subscription revenues are now expected to be $2,272 million, higher than the previous outlook of $2,257 million. This consists of Commercial Solutions’ subscription revenues of around $1,095 million (up from the prior outlook of $1,090 million) and R&D Solutions’ subscription revenues of approximately $1,177 million (higher than the previous outlook of $1,167 million).
Professional services and other revenues for fiscal 2025 are now expected to be between $450 million and $453 million, higher than the earlier guidance of $447 million-$453 million.
Adjusted EPS for fiscal 2025 is now expected to be $6.44, up from the previous guidance of $6.22. The Zacks Consensus Estimate is pegged at $6.23.
Veeva Systems Inc. Price, Consensus and EPS Surprise
Veeva Systems Inc. price-consensus-eps-surprise-chart | Veeva Systems Inc. Quote
Our Take on Veeva’s Q3 Results
Veeva Systems exited the third quarter of fiscal 2025 with better-than-expected results. The uptick in the overall top line and bottom line and robust performance by the Subscription services segment during the quarter were impressive. Per management, more than 30 customers are now live on Vault CRM, and the seven migrations from Veeva CRM to Vault CRM are on track for completion by year-end.
In November, the fourth top 20 biopharma committed to Vault CRM as its commercial foundation. In December, the latest release of Vault CRM is likely to include the full functionality of Veeva CRM and additional new capabilities, marking the availability of the next generation of CRM for the industry.
In the fiscal third quarter, Veeva announced three new AI innovations planned to be available in late 2025. Vault CRM is likely to have innovations like CRM Bot, a GenAI assistant, and Voice Control, a voice interface leveraging Apple Intelligence. The company also announced MLR Bot for Vault PromoMats, which uses a Veeva-hosted large language model to speed review and approval by checking the quality and content of promotional materials.
On the flip side, lower Professional services and other segment revenues raise our apprehension.
VEEV’s Zacks Rank and Stocks to Consider
VEEV carries a Zacks Rank #3 (Hold) at present.
Some better-ranked stocks from the medical industry are Masimo MASI, AngioDynamics ANGO and Globus Medical GMED.
Masimo, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated growth rate of 10.4% for 2025. You can see the complete list of today’s Zacks #1 Rank stocks here.
MASI’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 17.10%. Masimo’s shares have risen 37.2% year to date compared with the industry’s 6.7% growth.
AngioDynamics, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 38.2% for 2025. ANGO’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 31.71%.
AngioDynamics’ shares have lost 8.9% year to date against the industry’s 6.7% growth.
Globus Medical, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 12.7%. GMED’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 12.1%. Its shares have risen 56.5% year to date compared with the industry’s 6.7% growth.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
