Veeva Systems Q1 FY1/24 Earnings Review
Still playing the long game.
DISCLAIMER: This note is intended for US recipients only and, in particular, is not directed at, nor intended to be relied upon by any UK recipients. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Cestrian Capital Research, Inc., its employees, agents or affiliates, including the author of this note, or related persons, may have a position in any stocks, security, or financial instrument referenced in this note. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice. Companies referenced in this note or their employees or affiliates may be customers of Cestrian Capital Research, Inc. Cestrian Capital Research, Inc. values both its independence and transparency and does not believe that this presents a material potential conflict of interest or impacts the content of its research or publications.
Every Picture Tells A Story
Here's the picture of Veeva Systems.
You can see the problem right there. TTM revenue growth (green line) is slowing markedly and has yet to accelerate. And the flywheel that drives TTM revenue growth - remaining performance obligation (= the total forward order book, comprising invoiced and yet to be invoiced customer contracts) - shows a nice step up in the January quarter (good) but a very unusual step down in the April quarter. In previous years, you can see that RPO in April is either down a little or, once, up a little, but it doesn't drop by around 25%, which is what just happened. This is so odd that it warrants checking with the company - we'll email them, they will probably ignore us (nobody likes difficult questions) but if we get an answer we'll let you know.
VEEV has not participated much in the 2023 software stock resurgence, which is likely because (1) the fundamentals are still on the dour side and (2) earnings calls have not been brought to you by the letters A and I.
Here’s where we think it’s headed.