Veeva Systems Inc (NYSE: VEEV) stock slightly corrects post an outstanding rally

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Veeva Systems Inc (NYSE: VEEV) stock rose 8.95% on November 28th, 2018 after the company posted better than expected results for the third quarter of 2018 and gave strong outlook for the year. Accordingly the stock slightly corrected over 1.7% on 29th November 2018 (as of 10:54 am GMT-5 · ‘ Source: Google finance).

The company delivered the third-quarter net income of $64.1 million, up from $34.9 million last year.

VEEV in the third quarter of FY 18 has reported the adjusted earnings per share of 45 cents, beating the analysts’ estimates for the adjusted earnings per share of 38 cents, as per analysts polled by Thomson Reuters. The company had reported the adjusted revenue growth of 27 percent to $224.7 million in the third quarter of FY 18, beating the analysts’ estimates for revenue of $216.02 million. Subscription services revenues for the third quarter were $178.2 million, up from $142.8 million one year ago, an increase of 25% year-over-year.  Vault represented 48% of total revenue, up from 40% in Q3 of last year. Strong momentum in Vault continued to drive revenue outperformance this quarter with particularly strong traction in Clinical and Commercial Vault. Vault represented 44% of subscription revenue, up from 36% one year ago. Services revenue totaled more than $46 million, reflecting a 36% increase from $34 million last year and was well above the company’s guidance. This material outperformance in services was due to greater demand across the business, particularly from the Vault R&D segment.

Moreover, non-GAAP operating income was $84 million resulting in an operating margin of over 37% above the high end of the guidance. The better than expected margin was driven primarily by top line outperformance. Meanwhile, deferred revenue was $196 million compared to $259 million at the end of the second quarter. Calculated billings was $156 million which was above the company’s guidance of $150 million. This was driven primarily by the outperformance in the services business. Contribution from better than expected bookings was mostly offset by lower than anticipated average billings duration for the new business closed in Q3. This is because many of the Q3 booking came from customers with Q4 renewals who were billed for only the stub period through the Q4 renewal.

For the fourth quarter, Veeva expects adjusted earnings of $0.40 per share and revenues of $226 million to $227 million. Analysts currently estimate earnings of $0.37 per share and revenues of $221.9 million.

For the full year, Veeva expects adjusted earnings of $1.58 per share and revenues of $855.8 million to $856.8 million. Analysts currently estimate earnings of $1.48 per share and revenues of $843.02 million.

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