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Veeva Systems Struggles: Blows Cap in After Hours Trading On Surprisingly Low Q4 Revenue Forecast

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Veeva headquarters in Pleasanton, CA, USA

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Veeva Systems, listed as NYSE:VEEV, took a nosedive down to 7% in extended trading on Wednesday after the company revealed a soft sales forecast for the current quarter, causing a stir among investors who were already taken aback by a recent cut in its yearly revenue guidance. As a result, its Class A shares plummeted by approximately 3.3% to $172.55 after hours.

FQ3 2024 reported an adjusted earnings per share of $1.34, beating estimates by 5 cents. Despite a nearly 12% year-over-year rise in revenue to $616.51M, aligning with expectations, Veeva Systems faced a setback.

Based in Pleasanton, Calif., Veeva offers cloud-based software solutions, primarily to life sciences companies, with a reach to other industries like consumer packaged goods, food and beverage, and specialty chemicals.

β€œNormalized billings were $429M, up 15% year over year. The underperformance compared to our guidance was primarily due to the negative impact of macroeconomic factors on our professional services business … and, to a lesser extent, a smaller-than-expected FX tailwind,” said Veeva finance chief Brent Bowman.

According to executives from VEEV’s investor day call last month, clients have tightened spending due to macroeconomic conditions, resulting in an impact on services revenue.

VEEV’s head honcho, Peter Gassner, expressed concerns regarding the challenging macro environment that continues to affect the industry.

The company recently cut its annual revenue guidance to $2.353B-$2.355B, down from the prior outlook of $2.365B-$2.37B. The consensus estimate now hovers around $2.36B.

Adding to the woes, the FQ4 revenue guidance stands at $620M to $622M, compared to the consensus estimate of $622.48M.

β€œFor Q4, we expect normalized billings of about $1.040B. This includes the impact of the revised services outlook, a lower-than-expected proportion of anticipated new business having annual billing terms, and deal timing,” said Veeva CFO Bowman.

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