VEEVA SYSTEMS INC [VEEV] Filings

10-Q 1 veev-20241031.htm 10-Q veev-20241031

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________________________________________________________________

FORM 10-Q

____________________________________________________________________________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number: 001-36121

____________________________________________________________________________________

Veeva Systems Inc.

(Exact name of registrant as specified in its charter)

____________________________________________________________________________________


Delaware						20-8235463
(State or other jurisdiction of incorporation or organization)						(IRS Employer Identification No.)

4280 Hacienda Drive

Pleasanton, California, 94588

(Address of principal executive offices, including zip code)

(Registrant’s telephone number, including area code) (925) 452-6500

(Former name, former address and former fiscal year, if changed since last report) N/A

____________________________________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Class A Common Stock,
par value $0.00001 per share

VEEV

The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of December 6, 2024, there were 162,350,353 shares of the Registrant’s Class A common stock outstanding. We refer to our Class A common stock as our “common stock.”

VEEVA SYSTEMS INC.

FORM 10-Q

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION		4
Item 1.	Financial Statements	4
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Comprehensive Income	5
	Condensed Consolidated Statements of Stockholders’ Equity	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8
	Note 1. Summary of Business and Significant Accounting Policies	8
	Note 2. Short-Term Investments	9
	Note 3. Deferred Costs	10
	Note 4. Property and Equipment, Net	10
	Note 5. Goodwill and Intangible Assets	11
	Note 6. Accrued Expenses	12
	Note 7. Fair Value Measurements	12
	Note 8. Income Taxes	14
	Note 9. Deferred Revenue, Performance Obligations, and Unbilled Accounts Receivable	14
	Note 10. Leases	14
	Note 11. Stockholders’ Equity	15
	Note 12. Net Income per Share	17
	Note 13. Commitments and Contingencies	18
	Note 14. Revenues by Product	19
	Note 15. Information about Geographic Areas	19
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
	Overview	21
	Components of Results of Operations	21
	Results of Operations	24
	Operating Expenses and Operating Margin	26
	Non-GAAP Financial Measures	28
	Liquidity and Capital Resources	30
	Critical Accounting Policies and Estimates	32
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	34
PART II. OTHER INFORMATION		35
Item 1.	Legal Proceedings	35
Item 1A	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	59
Item 3.	Defaults Upon Senior Securities	59
Item 4.	Mine Safety Disclosures	59
Item 5.	Other Information	59
Item 6.	Exhibits	60
SIGNATURES		62


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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report on Form 10-Q contains forward-looking statements that are based on our beliefs and assumptions and on information currently available to us. Forward-looking statements include information concerning our possible or assumed future results of operations and expenses, business strategies and plans, trends, market sizing, competitive position, industry environment, potential growth opportunities, and product capabilities among other things. Forward-looking statements include all statements that are not historical facts and, in some cases, can be identified by terms such as “aim,” “anticipates,” “believes,” “could,” “estimates,” “expects,” “goal,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “seeks,” “should,” “strive,” “will,” “would,” or similar expressions and the negatives of those terms.

Forward-looking statements are based on our current views and expectations and involve known and unknown risks, uncertainties and other factors—including those described in “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere in this report—that may cause our actual results, performance or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements.

Any forward-looking statements in this report are made only as of the date of this report. Except as required by law, we disclaim any obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

As used in this report, the terms “Veeva,” “Registrant,” “the Company,” “we,” “us,” and “our” mean Veeva Systems Inc. and its subsidiaries unless the context indicates otherwise.


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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

VEEVA SYSTEMS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except number of shares and par value)

(Unaudited)


	October 31, 2024		January 31, 2024

Assets
Current assets:
Cash and cash equivalents	$	1,044,511	$	703,487
Short-term investments	4,018,475		3,324,269
Accounts receivable, net of allowance for doubtful accounts of $157 and $520, respectively	255,817		852,172
Unbilled accounts receivable	45,472		36,365
Prepaid expenses and other current assets	82,885		86,918
Total current assets	5,447,160		5,003,211
Property and equipment, net	55,695		58,532
Deferred costs, net	22,515		23,916
Lease right-of-use assets	60,325		45,602
Goodwill	439,877		439,877
Intangible assets, net	48,527		63,017
Deferred income taxes	322,652		233,463
Other long-term assets	56,102		43,302
Total assets	$	6,452,853	$	5,910,920
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	31,845	$	31,513
Accrued compensation and benefits	34,634		43,433
Accrued expenses and other current liabilities	30,906		32,980
Income tax payable	10,803		11,862
Deferred revenue	739,657		1,049,761
Lease liabilities	9,156		9,334
Total current liabilities	857,001		1,178,883
Deferred income taxes	475		2,052
Lease liabilities, noncurrent	62,545		46,441
Other long-term liabilities	31,429		38,720
Total liabilities	951,450		1,266,096
Commitments and contingencies (note 13)
Stockholders’ equity:
Common stock	2		2

Additional paid-in capital	2,248,890		1,915,002
Accumulated other comprehensive loss	(6,459)		(10,637)
Retained earnings	3,258,970		2,740,457
Total stockholders’ equity	5,501,403		4,644,824
Total liabilities and stockholders’ equity	$	6,452,853	$	5,910,920

See Notes to Condensed Consolidated Financial Statements.


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VEEVA SYSTEMS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, except per share data)

(Unaudited)


	Three months ended October 31,				Nine months ended October 31,
	2024		2023		2024		2023


Revenues:
Subscription services	$	580,850	$	494,912	$	1,676,082	$	1,380,095
Professional services and other	118,357		121,593		349,651		352,960
Total revenues	699,207		616,505		2,025,733		1,733,055
Cost of revenues(1):
Cost of subscription services	82,638		74,435		239,577		213,179
Cost of professional services and other	91,751		93,247		279,068		290,184
Total cost of revenues	174,389		167,682		518,645		503,363
Gross profit	524,818		448,823		1,507,088		1,229,692
Operating expenses(1):
Research and development	172,411		161,278		511,551		465,466
Sales and marketing	98,695		96,773		297,524		282,269
General and administrative	72,359		62,283		195,001		187,887
Total operating expenses	343,465		320,334		1,004,076		935,622
Operating income	181,353		128,489		503,012		294,070
Other income, net	60,937		42,187		171,239		111,260
Income before income taxes	242,290		170,676		674,251		405,330
Income tax provision	56,482		35,518		155,738		27,023
Net income	$	185,808	$	135,158	$	518,513	$	378,307
Net income per share:
Basic	$	1.15	$	0.84	$	3.21	$	2.36
Diluted	$	1.13	$	0.83	$	3.15	$	2.32
Weighted-average shares used to compute net income per share:
Basic	161,987		160,768		161,707		160,344
Diluted	164,979		163,761		164,838		163,129
Other comprehensive income:
Net change in unrealized (loss) gain on available-for-sale investments	$	(738)	$	(2,637)	$	5,576	$	(6,100)
Net change in cumulative foreign currency translation loss	(146)		(518)		(1,398)		(309)
Comprehensive income	$	184,924	$	132,003	$	522,691	$	371,898


(1) Includes stock-based compensation as follows:
Cost of revenues:
Cost of subscription services	$	1,696	$	1,604	$	4,892	$	4,857
Cost of professional services and other	12,929		12,943		38,640		39,881
Research and development	48,014		45,711		138,741		129,909
Sales and marketing	21,214		23,460		67,928		67,084
General and administrative	34,006		17,508		71,945		53,109
Total stock-based compensation	$	117,859	$	101,226	$	322,146	$	294,840

See Notes to Condensed Consolidated Financial Statements.


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VEEVA SYSTEMS INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share data)

(Unaudited)


	Three months ended October 31, 2024											Three months ended October 31, 2023
	Common stock			Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss		Total stockholders’ equity		Class A & B common stock(1)			Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss		Total stockholders’ equity
	Shares	Amount										Shares	Amount


Balances at beginning of period	161,830,287	$	2	$	2,117,109	$	3,073,162	$	(5,575)	$	5,184,698	160,622,618	$	2	$	1,729,123	$	2,457,901	$	(34,383)	$	4,152,643

Issuance of common stock upon exercise of stock options	174,384	—		30,270		—		—		30,270		149,008	—		13,956		—		—		13,956
Issuance of common stock upon vesting of restricted stock units	240,316	—		—		—		—		—		297,002	—		—		—		—		—
Shares withheld related to net share settlement	(86,519)	—		(17,811)		—		—		(17,811)		(102,941)	—		(21,003)		—		—		(21,003)
Stock-based compensation expense	—	—		119,322		—		—		119,322		—	—		102,174		—		—		102,174
Change in other comprehensive loss	—	—		—		—		(884)		(884)		—	—		—		—		(3,155)		(3,155)
Net income	—	—		—		185,808		—		185,808		—	—		—		135,158		—		135,158
Balances at end of period	162,158,468	$	2	$	2,248,890	$	3,258,970	$	(6,459)	$	5,501,403	160,965,687	$	2	$	1,824,250	$	2,593,059	$	(37,538)	$	4,379,773


	Nine months ended October 31, 2024											Nine months ended October 31, 2023
	Common stock			Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss		Total stockholders’ equity		Class A & B common stock(1)			Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss		Total stockholders’ equity
	Shares	Amount										Shares	Amount


Balances at beginning of period	161,260,172	$	2	$	1,915,002	$	2,740,457	$	(10,637)	$	4,644,824	158,244,607	$	2	$	1,532,627	$	2,214,752	$	(31,129)	$	3,716,252
Issuance of common stock upon exercise of stock options	401,974	—		65,104		—		—		65,104		2,170,451	—		52,184		—		—		52,184
Issuance of common stock upon vesting of restricted stock units	782,798	—		—		—		—		—		852,037	—		—		—		—		—
Shares withheld related to net share settlement	(286,476)	—		(59,399)		—		—		(59,399)		(301,408)	—		(58,579)		—		—		(58,579)
Stock-based compensation expense	—	—		328,183		—		—		328,183		—	—		298,018		—		—		298,018
Change in other comprehensive loss	—	—		—		—		4,178		4,178		—	—		—		—		(6,409)		(6,409)
Net income	—	—		—		518,513		—		518,513		—	—		—		378,307		—		378,307
Balances at end of period	162,158,468	$	2	$	2,248,890	$	3,258,970	$	(6,459)	$	5,501,403	160,965,687	$	2	$	1,824,250	$	2,593,059	$	(37,538)	$	4,379,773

(1) Class B common stock was converted to Class A common stock on October 15, 2023. We refer to our Class A common stock as common stock. See note 12 Net Income per Share.

See Notes to Condensed Consolidated Financial Statements.


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VEEVA SYSTEMS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Nine months ended October 31,
		2024		2023

Cash flows from operating activities
Net income		$	518,513	$	378,307
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		29,451		24,000
Reduction of operating lease right-of-use assets		8,348		8,885
Accretion of discount on short-term investments		(20,442)		(19,298)
Stock-based compensation		322,146		294,840
Amortization of deferred costs		11,507		12,843
Deferred income taxes		(91,231)		(80,132)
(Gain) loss on foreign currency from mark-to-market derivative		(880)		841
Bad debt expense		415		630
Changes in operating assets and liabilities:
Accounts receivable		595,940		446,921
Unbilled accounts receivable		(9,107)		37,337
Deferred costs		(10,106)		(751)
Prepaid expenses and other current and long-term assets		1,354		(6,806)
Accounts payable		424		(5,502)
Accrued expenses and other current liabilities		(10,240)		(9,572)
Income taxes payable		(1,059)		1,614
Deferred revenue		(321,090)		(228,120)
Operating lease liabilities		(7,131)		(4,263)
Other long-term liabilities		3,695		1,796
Net cash provided by operating activities		1,020,507		853,570
Cash flows from investing activities
Purchases of short-term investments		(2,206,521)		(2,142,068)
Maturities and sales of short-term investments		1,537,874		1,170,881
Long-term assets		(15,799)		(18,461)
Net cash used in investing activities		(684,446)		(989,648)
Cash flows from financing activities
Proceeds from exercise of common stock options		65,104		52,184
Taxes paid related to net share settlement of equity awards		(59,800)		(57,888)
Net cash provided by (used in) financing activities		5,304		(5,704)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		(1,346)		(973)
Net change in cash, cash equivalents, and restricted cash		340,019		(142,755)
Cash, cash equivalents, and restricted cash at beginning of period		706,670		889,650
Cash, cash equivalents, and restricted cash at end of period		$	1,046,689	$	746,895

Cash, cash equivalents, and restricted cash at end of period:
Cash and cash equivalents		$	1,044,511	$	743,712
Restricted cash included in other long-term assets		2,178		3,183
Total cash, cash equivalents, and restricted cash at end of period		$	1,046,689	$	746,895

Supplemental disclosures of other cash flow information:
Cash paid for income taxes, net of refunds		$	238,935	$	100,856
Excess tax benefits from employee stock plans		$	5,160	$	68,575

See Notes to Condensed Consolidated Financial Statements.


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VEEVA SYSTEMS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Summary of Business and Significant Accounting Policies

Description of Business

Veeva is the leading provider of industry cloud solutions for the global life sciences industry. Our offerings span cloud software, data, analytics, professional services, and business consulting and are designed to meet the unique needs of our customers and their most strategic business functions—from research and development (R&D) through commercialization. Our solutions help life sciences companies develop and bring products to market faster and more efficiently, market and sell more effectively, and maintain compliance with government regulations. Our Commercial Solutions help life sciences companies achieve better, more intelligent engagement with healthcare professionals and healthcare organizations across multiple communication channels, and plan and execute more effective media and marketing campaigns. Our R&D Solutions for the clinical, quality, regulatory, and safety functions help life sciences companies streamline their end-to-end product development processes to increase operational efficiency and maintain regulatory compliance throughout the product life cycle. We also bring the benefits of our content and data management solutions to a set of customers outside of life sciences in the consumer product and chemical industries. Our fiscal year end is January 31.

Principles of Consolidation and Basis of Presentation

These unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (GAAP) and applicable rules and regulations of the Securities and Exchange Commission (SEC) regarding interim financial reporting and include the accounts of our wholly-owned subsidiaries after elimination of intercompany balances and transactions. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2024, filed on March 25, 2024. There have been no changes to our significant accounting policies described in the annual report that have had a material impact on our condensed consolidated financial statements and related notes.

The unaudited condensed consolidated balance sheet as of January 31, 2024 included herein was derived from the audited financial statements as of that date. These unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly our financial position, results of operations, comprehensive income, and cash flows for the interim periods but are not necessarily indicative of the results of operations to be anticipated for the full fiscal year ending January 31, 2025 or any other period.

New Accounting Pronouncements Issued and Not Yet Adopted

Improvements to Reportable Segment Disclosures

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. This new standard is effective for our fiscal year beginning on February 1, 2024 and interim periods beginning on February 1, 2025 on a retrospective basis. We are currently evaluating this ASU to determine its impact on our disclosures.

Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disaggregation of rate reconciliation categories and income taxes paid by jurisdiction, among other amendments. This new standard is effective for our fiscal year beginning on February 1, 2025 on a prospective basis and retrospective application is permitted. We are currently evaluating this ASU to determine its impact on our disclosures.


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Disaggregation of Income Statement Expenses

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosure (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disclosure, in the notes to the financial statements, of additional information about certain costs and expenses for interim and annual reporting periods. The amendments are effective for our fiscal year beginning on February 1, 2027 and interim periods beginning on February 1, 2028 on a prospective basis and retrospective application is permitted. We are currently evaluating this ASU to determine its impact on our disclosures.

Note 2. Short-Term Investments

As of October 31, 2024, short-term investments consisted of the following (in thousands):


	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Available-for-sale securities:
Certificates of deposit	$	64,045	$	121	$	(22)	$	64,144
Asset-backed securities	585,365		3,475		(427)		588,413
Commercial paper	112,898		205		—		113,103
Corporate notes and bonds	2,214,420		12,144		(5,685)		2,220,879
Foreign government bonds	148,622		373		(972)		148,023
Municipal securities	69,683		229		(82)		69,830
U.S. agency obligations	24,485		104		(2)		24,587
U.S. treasury securities	791,205		1,811		(3,520)		789,496
Total available-for-sale securities	$	4,010,723	$	18,462	$	(10,710)	$	4,018,475

As of January 31, 2024, short-term investments consisted of the following (in thousands):


	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Available-for-sale securities:
Certificates of deposit	$	94,210	$	87	$	(14)	$	94,283
Asset-backed securities	605,852		2,916		(1,787)		606,981
Commercial paper	144,218		47		(20)		144,245
Corporate notes and bonds	1,581,382		8,835		(5,188)		1,585,029
Foreign government bonds	50,180		206		(180)		50,206
Municipal securities	79,404		301		(231)		79,474
U.S. agency obligations	49,372		232		(12)		49,592
U.S. treasury securities	717,015		1,268		(3,824)		714,459
Total available-for-sale securities	$	3,321,633	$	13,892	$	(11,256)	$	3,324,269

The following table summarizes the estimated fair value of our short-term investments, designated as available-for-sale and classified by the contractual maturity date of the securities as of the dates shown (in thousands):


	October 31, 2024		January 31, 2024
Due in one year or less	$	1,122,445	$	919,871
Due in greater than one year	2,896,030		2,404,398
Total	$	4,018,475	$	3,324,269

We have not recorded an allowance for credit losses, as we believe any such losses would be immaterial based on the high credit quality of our investments. It is more likely than not we will hold the securities until maturity or a recovery of the cost basis.


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The following table shows the fair values of available-for-sale securities which were in an unrealized loss position, aggregated by investment category, as of October 31, 2024 (in thousands):


	12 months or less				Greater than 12 months
	Fair value		Gross unrealized losses		Fair value		Gross unrealized losses
Certificates of deposit	$	20,095	$	(22)	$	—	$	—
Asset-backed securities	35,132		(59)		52,463		(368)

Corporate notes and bonds	607,531		(5,178)		121,746		(507)
Foreign government bonds	80,926		(972)		—		—
Municipal securities	23,772		(82)		—		—
U.S. agency obligations	1,847		(2)		—		—
U.S. treasury securities	345,084		(2,835)		195,235		(685)

The following table shows the fair values of available-for-sale securities which were in an unrealized loss position, aggregated by investment category, as of January 31, 2024 (in thousands):


	12 months or less				Greater than 12 months
	Fair value		Gross unrealized losses		Fair Value		Gross unrealized losses

Certificates of deposit	$	22,465	$	(14)	$	—	$	—
Asset-backed securities	120,543		(343)		105,419		(1,444)
Commercial paper	70,037		(20)		—		—
Corporate notes and bonds	394,823		(1,560)		280,092		(3,628)
Foreign government bonds	8,915		(19)		9,784		(161)
Municipal securities	31,418		(122)		13,686		(109)
U.S. agency obligations	1,795		(3)		4,991		(9)
U.S. treasury securities	280,946		(1,227)		204,274		(2,597)

Note 3. Deferred Costs

Deferred costs, which consist of deferred sales commissions, were $23 million and $24 million as of October 31, 2024 and January 31, 2024, respectively. Amortization expense for the deferred costs included in sales and marketing expenses in the condensed consolidated statements of comprehensive income was $4 million and $12 million for the three and nine months ended October 31, 2024, respectively, and $4 million and $13 million for the three and nine months ended October 31, 2023, respectively. There have been no impairment losses recorded in relation to the costs capitalized for any period presented.

Note 4. Property and Equipment, Net

Property and equipment, net consists of the following as of the dates shown (in thousands):


	October 31, 2024		January 31, 2024
Land	$	3,040	$	3,040
Building	20,984		20,984
Land improvements and building improvements	22,392		22,392
Equipment and computers	2,545		2,551
Furniture and fixtures	15,710		15,498
Leasehold improvements	31,115		30,793
Construction in progress	881		31
Property and equipment, gross	96,667		95,289
Less accumulated depreciation	(40,972)		(36,757)
Total property and equipment, net	$	55,695	$	58,532


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Total depreciation expense was immaterial for the three and nine months ended October 31, 2024 and 2023. Land is not depreciated.

Note 5. Goodwill and Intangible Assets

Goodwill was $440 million as of both October 31, 2024 and January 31, 2024.

The following schedule presents the details of intangible assets as of October 31, 2024 (dollar amounts in thousands):


	Gross carrying amount		Accumulated amortization		Net		Remaining useful life (in years)
Existing technology	$	28,580	$	(23,812)	$	4,768	1.3
Customer relationships	113,157		(70,339)		42,818		4.7
Trade name and trademarks	13,900		(13,900)		—		0.0
Other intangibles	21,405		(20,464)		941		2.0
Total intangible assets	$	177,042	$	(128,515)	$	48,527

The following schedule presents the details of intangible assets as of January 31, 2024 (dollar amounts in thousands):


	Gross carrying amount		Accumulated amortization		Net		Remaining useful life (in years)
Existing technology	$	28,580	$	(20,646)	$	7,934	2.0
Customer relationships	113,157		(61,755)		51,402		5.3
Trade name and trademarks	13,900		(11,925)		1,975		0.8
Other intangibles	21,405		(19,699)		1,706		2.2
Total intangible assets	$	177,042	$	(114,025)	$	63,017

Amortization expense associated with intangible assets was $5 million and $14 million for the three and nine months ended October 31, 2024, respectively, and $5 million and $15 million for the three and nine months ended October 31, 2023, respectively.

As of October 31, 2024, the estimated future amortization expense for intangible assets is as follows (in thousands):


Fiscal Year	Estimated amortization expense
Remaining for 2025	$	4,067
2026	14,147
2027	8,922
2028	7,778
2029	7,782
Thereafter	5,831
Total	$	48,527


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Note 6. Accrued Expenses

Accrued expenses consisted of the following as of the dates shown (in thousands):


	October 31, 2024		January 31, 2024
Accrued commissions	$	2,889	$	9,848
Accrued bonus	3,870		3,481
Accrued vacation (1)	7,246		7,375
Payroll tax payable	11,672		13,829
Accrued other compensation and benefits	8,957		8,900
Total accrued compensation and benefits	$	34,634	$	43,433
Accrued fees payable to Salesforce, Inc.	$	6,635	$	6,562
Taxes payable	5,205		7,632
Other accrued expenses (2)	19,066		18,786
Total accrued expenses and other current liabilities	$	30,906	$	32,980

(1) Represents accrued vacation primarily for international employees. Vacation does not accrue for most U.S. employees.
(2) Prior period balances were adjusted to conform with current period presentation.

Note 7. Fair Value Measurements

The carrying amounts of accounts receivable and other current assets, accounts payable, and accrued liabilities approximate their fair value due to their short-term nature.

Financial assets and liabilities recorded at fair value in the condensed consolidated financial statements are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels, which are directly related to the amount of subjectivity associated with the inputs to the valuation of these assets or liabilities, are as follows:

Level 1—Observable inputs, such as quoted prices in active markets for identical assets or liabilities.

Level 2—Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Financial assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires management to make judgments and considers factors specific to the asset or liability.


12			Veeva Systems Inc. \| Form 10-Q

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The following table presents the fair value hierarchy for financial assets measured at fair value on a recurring basis as of October 31, 2024 (in thousands):


	Level 1		Level 2		Total
Assets
Cash equivalents:
Money market funds	$	275,389	$	—	$	275,389

U.S. Treasury securities	—		3,027		3,027



Short-term investments:
Certificates of deposit	—		64,144		64,144
Asset-backed securities	—		588,413		588,413
Commercial paper	—		113,103		113,103
Corporate notes and bonds	—		2,220,879		2,220,879
Foreign government bonds	—		148,023		148,023
Municipal securities	—		69,830		69,830
U.S. agency obligations	—		24,587		24,587
U.S. Treasury securities	—		789,496		789,496
Foreign currency derivative contracts	—		1,264		1,264
Total financial assets	$	275,389	$	4,022,766	$	4,298,155

The following table presents the fair value hierarchy for financial assets and liabilities measured at fair value on a recurring basis as of January 31, 2024 (in thousands):


	Level 1		Level 2		Total
Assets
Cash equivalents:
Money market funds	$	73,197	$	—	$	73,197
U.S. Treasury securities	—		9,969		9,969

Short-term investments:
Certificates of deposit	—		94,283		94,283
Asset-backed securities	—		606,981		606,981
Commercial paper	—		144,245		144,245
Corporate notes and bonds	—		1,585,029		1,585,029
Foreign government bonds	—		50,206		50,206
Municipal securities	—		79,474		79,474
U.S. agency obligations	—		49,592		49,592
U.S. Treasury securities	—		714,459		714,459
Foreign currency derivative contracts	—		616		616
Total financial assets	$	73,197	$	3,334,854	$	3,408,051
Liabilities
Foreign currency derivative contracts	$	—	$	(232)	$	(232)
Total financial liabilities	$	—	$	(232)	$	(232)

We determine the fair value of our security holdings based on pricing from our service providers and market prices from industry-standard independent data providers. The valuation techniques used to measure the fair value of financial instruments having Level 2 inputs were derived from non-binding consensus prices that are corroborated by observable market data or quoted market prices for similar instruments. Such market prices may be quoted prices in active markets for identical assets (Level 1 inputs) or pricing determined using inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs).


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Balance Sheet Hedges

We enter into foreign currency forward contracts in order to hedge our foreign currency exposure. These forward contracts are not designated as hedging instruments under applicable accounting guidance, and therefore, we account for them at fair value with changes in the fair value recorded as a component of other income, net in our condensed consolidated statements of comprehensive income. Cash flows from such forward contracts are classified as operating activities. Realized and unrealized foreign currency gains and losses on hedges were immaterial for the three and nine months ended October 31, 2024 and 2023.

The fair value of our outstanding derivative instruments is summarized below (in thousands):


	October 31, 2024		January 31, 2024
Notional amount of foreign currency derivative contracts	$	78,495	$	201,407
Fair value of foreign currency derivative contracts	77,274		201,024

Note 8. Income Taxes

For the three months ended October 31, 2024 and 2023, our effective tax rates were 23.3% and 20.8%, respectively. During the three months ended October 31, 2024, as compared to the prior year period, our effective tax rate increased primarily due to the reduced excess tax benefits related to equity compensation.

For the nine months ended October 31, 2024 and 2023, our effective tax rates were 23.1% and 6.7%, respectively. During the nine months ended October 31, 2024 as compared to the prior year period, our effective tax rate increased primarily due to the reduced excess tax benefits related to equity compensation. We recognized excess tax benefits of $3 million and $72 million in our provision for income taxes for the nine months ended October 31, 2024 and 2023, respectively. The decrease in excess tax benefits during the nine months ended October 31, 2024 was primarily due to stock option exercises by our Chief Executive Officer in the prior year and none in the current year.

Note 9. Deferred Revenue, Performance Obligations, and Unbilled Accounts Receivable

Of the beginning deferred revenue balance for the respective periods, we recognized $492 million and $914 million in revenue for the three and nine months ended October 31, 2024, respectively, and $425 million and $745 million for the three and nine months ended October 31, 2023, respectively.

Transaction Price Allocated to the Remaining Performance Obligations

As of October 31, 2024, the amount of the transaction price allocated to remaining performance obligations for non-cancellable subscription services contracts greater than one year was not significant with the substantial majority of such allocated transaction price included in deferred revenue and expected to be recognized over the next 12 months.

Unbilled Accounts Receivable

As of October 31, 2024, unbilled accounts receivable consisted of (i) a receivable of $39 million primarily for revenue recognized for professional services performed but not yet billed and (ii) a contract asset of $6 million primarily related to professional services performed but for which we are not contractually able to invoice until a future period.

As of January 31, 2024, unbilled accounts receivable consisted of (i) a receivable of $32 million primarily for revenue recognized for professional services performed but not yet billed and (ii) a contract asset of $4 million primarily related to professional services performed but for which we are not contractually able to invoice until a future period.

Note 10. Leases

We have operating leases for our corporate offices with various expiration dates, some of which include options to extend the leases for up to seven years.


14			Veeva Systems Inc. \| Form 10-Q

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For the three months ended October 31, 2024 and 2023, our operating lease expense was $3 million and $4 million, respectively. For the nine months ended October 31, 2024 and 2023, our operating lease expense was $10 million and $12 million, respectively.

Supplemental cash flow information related to leases was as follows (in thousands):


	Nine months ended October 31,
	2024		2023
Cash paid for operating lease liabilities	$	8,984	$	7,054
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities	21,480		3,839

Supplemental balance sheet information related to operating leases was as follows:


	October 31, 2024		January 31, 2024
Weighted Average Remaining Lease Term	8.0 years		6.6 years
Weighted Average Discount Rate	4.4	%	4.4	%

As of October 31, 2024, remaining maturities of operating lease liabilities are as follows (in thousands):


Fiscal Year
Remaining for 2025	$	2,962
2026	7,687
2027	12,388
2028	12,722
2029	9,633
Thereafter	43,001
Total operating lease payments	88,393
Less imputed interest	(16,692)
Total operating lease liabilities	$	71,701

Note 11. Stockholders’ Equity

Common Stock

As of October 31, 2024, we had 162,158,468 shares of common stock outstanding.

Stock Option Activity

A summary of stock option activity for the nine months ended October 31, 2024 is as follows:


	Number of shares	Weighted average exercise price		Weighted average remaining contractual term (in years)	Aggregate intrinsic value (in millions)
Options outstanding at January 31, 2024	11,147,810	$	157.20	6.7	$	626
Options granted	4,726,118	226.50
Options exercised	(401,974)	161.96
Options forfeited/cancelled	(463,663)	210.16
Options outstanding at October 31, 2024	15,008,291	$	177.29	7.0	$	619
Options vested and exercisable at October 31, 2024	6,332,488	$	132.76	4.8	$	526
Options vested and exercisable at October 31, 2024 and expected to vest thereafter	15,008,291	$	177.29	7.0	$	619

The options granted during the nine months ended October 31, 2024 consisted primarily of a grant made to our Chief Executive Officer and grants made in connection with our annual performance review cycle. The weighted


Veeva Systems Inc. \| Form 10-Q			15

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average grant-date fair value of options granted was $98.61 and $80.54 per option for the three and nine months ended October 31, 2024, respectively.

As of October 31, 2024, there was $533 million in unrecognized compensation cost related to unvested stock options granted under the 2012 Equity Incentive Plan and 2013 Equity Incentive Plan. This cost is expected to be recognized over a weighted average period of 2.6 years.

As of October 31, 2024, we had authorized and unissued shares of common stock sufficient to satisfy exercises of stock options.

The total intrinsic value of options exercised was approximately $7 million and $22 million for the three and nine months ended October 31, 2024, respectively.

Stock Option Valuation Assumptions

The following table presents the weighted-average assumptions used to estimate the grant date fair value of options granted during the periods presented:


	Three months ended October 31,						Nine months ended October 31,
	2024			2023			2024			2023
Volatility	39%	-	40%	41%			39%	-	41%	39%	-	41%
Expected term (in years)	5.54	-	7.25	6.25			5.54	-	7.63	6.25	-	7.00
Risk-free interest rate	3.46%	-	4.07%	4.44%	-	4.73%	3.46%	-	4.65%	3.34%	-	4.73%
Dividend yield	—%			—%			—%			—%

During the nine months ended October 31, 2024, we granted our Chief Executive Officer options to purchase an aggregate of 2,650,000 shares of our common stock at an exercise price of $236.90 per share, which was equal to the Company’s 52-week high trading price at the time of grant. The stock option will vest in five equal increments on February 1 of 2026 through 2030, subject to Mr. Gassner’s continuous service as Chief Executive Officer through each annual vesting date. In addition, no portion of the stock option will be exercisable unless the closing price of the Company’s common stock is sustained at or above $236.90 per share for a period of sixty consecutive trading days during the vesting period between February 1, 2025 and February 1, 2030. The grant date fair value of the stock option of approximately $172 million was calculated using a Monte Carlo simulation model and the following table provides the assumptions used in the simulation:


Volatility			39%
Expected term (in years)			7.63
Risk-free interest rate			4.18%
Dividend yield			—%

Restricted Stock Units

A summary of restricted stock unit (RSU) activity for the nine months ended October 31, 2024 is as follows:


	Unreleased restricted stock units	Weighted average grant date fair value
Balance at January 31, 2024	1,011,731	$	192.77
RSUs granted	970,708	212.92
RSUs vested	(782,798)	196.88
RSUs forfeited/cancelled	(69,486)	207.75
Balance at October 31, 2024	1,130,155	$	206.29

As of October 31, 2024, there was a total of $142 million in unrecognized compensation cost related to unvested RSUs. This cost is expected to be recognized over a weighted-average period of approximately 1.2 years. The total grant date fair value of RSUs vested was $50 million and $162 million for the three and nine months ended October 31, 2024, respectively.


16			Veeva Systems Inc. \| Form 10-Q

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Note 12. Net Income per Share

Basic net income per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period.

Diluted net income per share is computed by dividing net income by the weighted-average shares outstanding, including potentially dilutive shares of common equivalents outstanding during the period. The dilutive effect of potential shares of common stock are determined using the treasury stock method.

On October 15, 2023, all of our outstanding shares of Class B common stock automatically converted into the same number of shares of Class A common stock pursuant to the terms of our then effective Amended and Restated Certificate of Incorporation. Because shares of Class B common stock were outstanding for a portion of the three and nine months ended October 31, 2023, we have disclosed earnings per share for Class A and Class B common stock for the three and nine months ended October 31, 2023. For the three and nine months ended October 31, 2023, the computation of fully diluted net income per share of Class A common stock assumes the conversion from Class B common stock, while the fully diluted net income per share of Class B common stock does not assume the conversion of those shares.

The numerators and denominators of the basic and diluted net income per share computations for our common stock are calculated as follows (in thousands, except per share data):


	Three months ended October 31,					Nine months ended October 31,
	2024		2023					2024			2023
	Common			Class A		Class B			Common			Class A		Class B
Basic
Numerator
Net income, basic	$	185,808		$	124,569	$	10,589		$	518,513		$	345,597	$	32,710
Denominator
Weighted average shares used in computing net income per share, basic	161,987			148,172		12,596			161,707			146,480		13,864
Net income per share, basic	$	1.15		$	0.84	$	0.84		$	3.21		$	2.36	$	2.36
Diluted
Numerator
Net income, basic	$	185,808		$	124,569	$	10,589		$	518,513		$	345,597	$	32,710
Reallocation as a result of conversion of Class B to Class A common stock:
Net income, basic	—			10,589		—			—			32,710		—
Reallocation of net income to Class B common stock	—			—		2,277			—			—		5,901
Net income, diluted	$	185,808

VEEVA SYSTEMS INC [VEEV] Filings
10-Q	[2024-12]
10-Q	[2024-09]
10-Q	[2024-06-04]
10-K	[2024-03-25]
10-Q	[2023-12-07]
10-Q	[2023-09-01]
10-Q	[2023-06-02]
10-K	[2023-03-30]
10-Q	[2022-12-07]
10-Q	[2022-09-02]
10-Q	[2022-06-03]
10-K	[2022-03-30]
10-Q	[2021-12-03]
10-Q	[2021-09-03]
10-Q	[2021-06-04]
10-K	[2021-03-30]
10-Q	[2020-12-09]
10-Q	[2020-09-08]
10-Q	[2020-06-04]
10-K	[2020-03-30]
10-Q	[2019-12-05]
10-Q	[2019-09-05]
10-Q	[2019-06-06]
10-K	[2019-03-28]
10-Q	[2018-12-07]
10-Q	[2018-09-06]
10-Q	[2018-06-07]
10-K	[2018-03-30]
10-Q	[2017-12-06]
10-Q	[2017-09-07]
10-Q	[2017-06-08]
10-K	[2017-03-30]
10-Q	[2016-12-08]
10-Q	[2016-09-08]
10-Q	[2016-06-08]
10-K	[2016-03-31]
10-Q	[2015-12-10]
10-Q	[2015-09-04]
10-Q	[2015-06-04]
10-K	[2015-04-01]
10-Q	[2014-12-11]
10-Q	[2014-09-11]
10-Q	[2014-06-06]
10-K	[2014-03-18]
S-1	[2014-03-18]
10-Q	[2013-12-13]
S-1	[2013-09-11]