According to a Zion market research report, the global healthcare cloud computing market is estimated to grow 19% annually over the next few years to $61.84 billion by 2025 from $18.85 billion in 2018 driven by the continued adoption of IoT, wearable devices, and big data analytics in the healthcare sector, and the continued demand for regulatory compliance. Pleasanton, California-based Veeva (NYSE: VEEV) recently announced its quarterly results that continued to benefit from this rapid growth.
For the fourth quarter, Veeva’s revenues grew 25% over the year to $232.3 million, significantly ahead of the Street’s forecast of $228 million. Adjusted earnings grew 88% over the year to $0.45 per share and were far ahead of the market’s forecast of $0.31 per share for the quarter.
By segment, revenues from subscription services grew 26% to $190.7 million driven by the growing bookings for Vault. For the current quarter, Vault accounted for 45% of its subscription revenues compared with 39% a year ago. Professional services revenues grew 22% to $41.7 million.
Veeva ended the fiscal year with revenues growing 25% to $862.2 million driven by Subscription Services Revenues growing 24% to $694.5 million. Net income for the year grew 52% to $229.8 million. On an adjusted basis, the company reported an EPS of $1.63 compared with $0.96 a year ago.
Among key operating metrics, Veeva’s annual customer count grew to 715, from 625 a year ago and included 332 Veeva Commercial Cloud customers, up from 311, and 572 Veeva Vault customers, up from 449 a year ago.
For the current quarter, Veeva forecast revenues of $238-$239 million with an adjusted EPS of $0.44-$0.45. The market was looking for revenues of $234.2 million with an EPS of $0.40. Veeva expects to end the current year with revenues of $1.02-$1.03 billion and an EPS of $1.91-$.94. The market was looking for revenues of $1.02 billion with an adjusted EPS of $1.79 for the year. Veeva is crossing the billion dollar revenue milestone a year ahead of its plans.
Veeva’s AI Focus
Last year, Veeva introduced a new commercial data warehouse for life sciences called Veeva Nitro. Veeva Nitro focuses on eliminating the need for custom-built data warehouses with an industry-specific data model. It standardizes integrations that integrate most important data sources for companies. It boasts of being a ready-to-use commercial data warehouse in the cloud that has been tailored to the needs of the health services industry. Veeva built Nitro by using Amazon’s Redshift as the core database. Since Redshift is a petabyte-scale data warehouse service in the cloud, its use ensured that Nitro could access data much quicker. Veeva ended the recent quarter with six early adopters for Nitro, two of which are already live.
Veeva is now planning to use this strong data layer to provide advanced analytics and AI capabilities to its customers. It is currently focused on the development of its AI engine Veeva Andi. Veeva Andi is expected to be a 24×7 assistant that will analyze the vast troves of data available on Veeva Nitro to come up with a suggested best course of action. It is expected to help drive customer sales by suggesting visits or emails to a particular doctor, content sharing or invitation to special events that it believes will help spur potential client’s interest. Veeva has not disclosed too many details about Andi except that it is forecasting a release this year to help healthcare sales teams drive higher efficiencies.
Over the past few years, Veeva Vault has become a single stop-shop for drug companies. Today, it offers seven key categories of products – Commercial, medical, safety, regulatory, quality, clinical operations, and clinical data management. Each of these product categories has several tools and services available within them to help a drug company cover the entire stage of idea to drug trials to go to market while remaining on the Vault. By building such a self-sufficient platform, Veeva has ensured that once a drug company enters its ecosystem, Veeva can upsell its services and drive higher subscription revenues and retention rates. During the recently reported quarter, subscription revenue retention was 122% for the year suggesting that customers are not only staying on Veeva but also spending more on its services than a year ago.
The market is clearly pleased with Veeva’s performance. Its stock has soared to a life high. Currently Veeva owns the development, sales, and support of the applications on its platform. It does work with core partners such as Okta, Microsoft and others to deliver other solutions. Similarly, for Nitro, it has a few technology partners that are both providers of data and data aggregators who have worked with Veeva to ensure data is easy to use and accessible within Veeva Nitro. These partners are names like Qlik, Tableau, and Data Resources Group that provide access to market data for analysis and discovery. Veeva Nitro does allow organizations to extract personal data using UI-driven or API-driven methods, including reports, report/dashboard APIs, query tools, and third-party ETL (extract-transform-load) tools. I think Veeva should open Nitro to third party developers to develop adjacent applications upon. I would like to know what applications do you think developers ought to build on Nitro?
Veeva’s stock is currently trading at $120.24 with a market capitalization of $17.5 billion. It had peaked to a life high of $124 earlier last month. It has grown from the 52-week low of $68.11 that it was trading at in April last year.